REPUBLIC OF LITHUANIA                                     
                                                                                
                                                                                
                               LAW                                              
                          ON INSURANCE                                          
                                                                                
                                                                                
                                                                                
                            Chapter 1                                           
                                                                                
                       General Provisions                                       
                                                                                
                                                                                
                                                                                
     Article 1. Relations Regulated by the Law on Insurance                     
               in the Republic of Lithuania                                     
                                                                                
     This  Law   shall  regulate   relations  between   insurance               
agencies,  between   said  agencies  and  the  insured,  and  the               
procedure  for   the  founding,  operation,  and  liquidation  of               
insurance agencies.                                                             
This  law   shall  also   regulate  activities  of  organisations               
performing operations  of insurance and reinsurance as a business               
in addition to their principal business activity.                               
                                                                                
     Article 2. The Insured                                                     
                                                                                
     The insured  shall include  the following  natural and legal               
persons bound by an insurance contract to pay insurance premiums,               
of other wise obligated to pay same pursuant by law:                            
1) all  legally capable citizens of Lithuania, foreign nationals,               
as well  as persons  without citizenship,  provided they  are  16               
years of age and over; and                                                      
2) firms,  offices, and organisations located on the territory of               
the Republic of Lithuania or beyond its borders.  Where permitted               
under the insurance regulations, the insured shall have the right               
to conclude insurance contracts in the name of a third person.                  
                                                                                
     Article 3. Insurance Agencies                                              
                                                                                
     The following  insurers shall  have the  right  to  conclude               
insurance contracts in the Republic of Lithuania:                               
1) the State Insurance Agency;                                                  
2) joint stock insurance companies;                                             
3) insurance societies; and                                                     
4) mutual insurance societies.                                                  
                                                                                
     Insurance agencies  shall have  the status of legal persons,               
and shall  function in  accordance with  their respective by-laws               
and the laws of the Republic of Lithuania.                                      
     Insurance agencies  shall make  payments to  the appropriate               
budgets according to the procedures established under the laws of               
the Republic of Lithuania.                                                      
                                                                                
     Article 4. Insurance Council                                               
                                                                                
     For the  coordination of  matters related  to insurance, the               
Insurance Council  shall be  formed under  the  auspices  of  the               
Ministry of Finance.                                                            
     The  composition  of  the  Insurance  Council  shall  be  as               
follows:                                                                        
     one-third of  its members  shall be  representatives of  the               
Ministry of  Finance, the Ministry of Internal Affairs, and other               
bodies having an interest in insurance-related activity;                        
     one-third of  its members  shall be representatives of other               
insurance agencies and of various insured persons.                              
     The activities  of the  Insurance Council shall be regulated               
by rules  and regulations  approved  by  the  Government  of  the               
Republic of Lithuania.                                                          
                                                                                
     Article 5. Licence to Engage in the Insurance Business                     
                                                                                
     Licences to engage in the insurance business shall be issued               
by the Insurance Council.                                                       
     When applying  for a  licence to  engage  in  the  insurance               
business, an  insurance agency must file its underlying agreement               
and its by- laws with the Council.                                              
     The  Insurance   Council  shall   consider   the   submitted               
instruments within  a month,  and then  issue a licence, provided               
the financial  terms and  conditions of  the agency guarantee the               
discharge of its obligations to the insured, and provided its by-               
laws do not contradict the laws of the Republic of Lithuania.                   
     A licence  to engage  in the insurance business, when issued               
to foreign  natural and  legal persons,  shall become  valid only               
after it  has been  approved by the Government of the Republic of               
Lithuania.                                                                      
     Upon receipt  of the  licence to  engage  in  the  insurance               
business, the  insurance agency's  by-laws  shall  be  registered               
with:                                                                           
     the  Government   of  the  Republic  of  Lithuania,  if  the               
insurance agency plans to operate in more than one town or region               
of the Republic;                                                                
     or   the appropriate  municipal or  regional board,  if  the               
insurance agency  plans to  operate in only one town or region of               
the Republic.                                                                   
     Amended by-laws  of insurance  agencies must  be coordinated               
with the Insurance Council prior to registration.                               
                                                                                
     Article 6. Property Insurance                                              
                                                                                
     The subject  matter of  a property insurance contract may be               
property that  is owned  by a  person outright,  is leased, is in               
someone's custody,  or is held for sale or repair, as well as any               
other property,  civil  liability,  credits  or  other  financial               
resources, provided  the insurance  contract contains  provisions               
therefor.                                                                       
                                                                                
     Article 7. Personal Insurance                                              
                                                                                
     Personal insurance is insurance on human lives and insurance               
of human  beings against  the happening  of particular events, as               
specified by insurance contracts.                                               
                                                                                
     Article 8. Compulsory Insurance                                            
                                                                                
     The objects  of compulsory  personal and property insurance,               
and contractual  conditions thereof  shall be  established by the               
Supreme Council of the Republic of Lithuania.                                   
                                                                                
     Article 9. Voluntary Insurance                                             
                                                                                
     Contractual  conditions  of  voluntary  insurance  shall  be               
defined in  the regulations  of insurance agencies, which must be               
defined in  the regulations  of Insurance agencies, which must be               
filed with  the Insurance Council, or in insurance policies, i.e.               
agreements of effecting insurance.                                              
                                                                                
     Article 10. Insurable Events                                               
                                                                                
     Insurable events  shall be  events specified  by legislative               
acts on  compulsory insurance,  or  by  provisions  of  voluntary               
insurance contracts, upon happening of which the insurance agency               
must pay  the insurance  indemnity, or  the insured  sum, or  the               
amount of  the supplemental  pension insurance, or other payments               
provided by insurance contracts.                                                
                                                                                
     Article 11. Insurance Contracts                                            
                                                                                
     Upon agreement  between the insured and an insurance agency,               
a written contract of voluntary insurance shall be concluded. The               
contract shall  state the  names of  the insured and the insurer,               
the insured  sum or  the  amount  of  the  supplementary  pension               
insurance, the  term of the contract, definition of the insurable               
event, as well as other significant insurance provisions.                       
     Concluding an  insurance  contract  with  the  insured,  the               
representative of  an insurance  agency shall  have no  right  to               
exceed his powers, or to change the insurance provisions that are               
prescribed by law or regulations.                                               
                                                                                
     Article 12. Term of Insurance Contract                                     
                                                                                
     Insurance contract  may be  concluded for a specified period               
or for an indefinite period of time.                                            
     The beginning,  duration and  expiration  of  the  insurance               
period shall  be established  by the  insurance regulations.  The               
insurance  period   and  the  period  of  enforceability  of  the               
insurance contract  may not  coincide in  time. If  the insurance               
contract prescribes  that the  insurer  shall  have  to  pay  the               
insured sum  or the  amount of the supplemental pension insurance               
upon the  expiration  of  the  insurance  period,  the  insurance               
contract shall  remain valid  until the  insurer  discharges  his               
obligations.                                                                    
                                                                                
     Article 13. Termination of Insurance Contract                              
                                                                                
     An insurance contract shall be terminated, if:                             
     the insurance agency has discharged all its obligations;                   
     the insured has not timely paid the insurance premiums; or                 
     there are no persons to whom the insured, who has terminated               
his activities, could assign his rights and obligations.                        
     Upon  the   termination  of   an  insurance  contract,  paid               
insurance premiums  or a  portion thereof  may be refunded to the               
insured -  by paying  said sums  to the  insured or to the person               
assigned by  him, or  to  his  heirs  -  provided  the  insurance               
regulations contain  provisions there  for.  Upon the termination               
of an insurance contract, disputes related to the amounts payable               
to the insured shall be resolved in court or by arbitration.                    
     In  the   event  the  court  declares  the  insured  legally               
incapable or  partially incapable,  the rights and obligations of               
the insured may be assigned to his guardian or trustee.                         
                                                                                
     Article 14. Unenforceable Insuran