The FRA's board of directors, headed by Chairman Mohamed Farid, issued Decision No. 148 of 2025, which sets new financial solvency standards for insurance and reinsurance companies.
The decision is in line with the new unified insurance law
(No. 155 of 2024) and the FRA's strategy to promote proactive oversight and
improve risk management in non-banking financial activities.
The new rules establish a clear framework for financial
solvency margins, ensuring that insurance and reinsurance firms maintain
sufficient capital to cover future obligations. This is intended to support the
sector's continuity and protect policyholders and beneficiaries.
For property and liability insurance companies, the new
rules mandate two methods for calculating the solvency margin:
First; 20% of net premiums until the end of the 2027 fiscal
year,
Second: Based on net compensatory provisions.
The FRA will apply the higher value of the two calculations
to ensure an adequate solvency margin for all obligations, particularly in
high-risk sectors like oil, aviation, and energy.
For life and capital accumulation insurance companies, the
solvency margin will be calculated based on the technical provisions of
contracts, adjusted for reinsurance impacts and in compliance with Egyptian
accounting standard No. 50.
The decision also outlines strict criteria for the quality
of assets included in solvency calculations. Certain assets, such as intangible
assets, overdue client balances, and investments in subsidiaries operating in
the same sector, will be excluded. Technical provisions will also not be
counted as assets to ensure a more objective assessment of a company's ability
to meet its obligations.
The FRA has also been granted new oversight powers to be
used if a company's solvency margin falls below the legal limit. These powers
include requiring a company to submit a plan to correct its status within a
specific timeframe. Such a plan may involve retaining profits, increasing
capital, or securing conditional financial support from shareholders.
The FRA said that these new regulations are part of its
ongoing efforts to modernize Egypt's insurance sector, aligning it with
international standards and practices. The authority believes that these
measures will enhance stakeholder trust, improve companies' crisis resilience,
and protect policyholders' funds.
The FRA said it remains committed to developing and updating Egypt's insurance system by enhancing its regulatory tools, promoting transparency, and improving risk management to ensure the sector's sustainable growth and its vital role in supporting the national economy.