Regulatory Alerts2021-01-01
Decision of the Board of Directors No. (7) for 2021 Regarding Insurance Transactions Concluded by Property and Liability Insurance Companies with Their Shareholders
The Financial Regulatory Authority issued Board Decision No. 7 of 2021 to cap annual direct insurance transactions between property and liability insurers and their shareholders at 10% of the company's total direct premiums, with a maximum of 20% per insurance branch. The decision mandates quarterly detailed reporting to the Authority, requires disclosure of pricing and reinsurance arrangements in annual financial statements, and establishes compliance as a mandatory condition for obtaining and maintaining operating licenses. Related persons are defined per the Capital Market Law, and proportional allocation applies when multiple shareholders compete for transaction limits.
FINANCIAL REGULATORY AUTHORITY
--- Chairman of the Authority ---
Decision of the Board of Directors No. (7) for 2021 dated 31/1/2021 Regarding Insurance Transactions Concluded by Property and Liability Insurance Companies with Their Shareholders
The Board of Directors of the Financial Regulatory Authority, Having reviewed the Insurance Supervision and Control Law No. (10) of 1981, issued by law, and its executive regulations; Having reviewed the Capital Market Law No. (95) of 1992, issued by law, and its executive regulations; Having reviewed Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments; Having reviewed the Board of Directors Decision No. (53) of 2018 regarding licensing conditions, continuity, and share ownership rules for companies operating in non-banking financial activities; And after the approval of the Board of Directors at its meeting held on 31/1/2021;
HAS DECIDED
(Article One)
The maximum limit for the total annual direct premiums of insurance transactions concluded by property and liability insurance companies with their shareholders and related persons shall be (10%) of the company's total annual direct premiums, provided that this premium ratio in any insurance branch of the company does not exceed (20%) of the total premiums of that branch. In case of competition among shareholders, the ratio allocated to annual direct premiums shall be according to each shareholder's proportion in the company's capital. The aforementioned companies must provide the Authority with a detailed statement every three months regarding insurance transactions concerning their shareholders and related persons, including policy numbers, type and amount of insurance, and value of direct premiums. Furthermore, when submitting their annual financial statements to the Authority, they must disclose pricing and reinsurance arrangements for insurance transactions specific to shareholders. Related persons, as applied in this Decision, refer to the definition provided in Article (326) of the Executive Regulations of the Capital Market Law.
(Article Two)
Property and liability insurance companies undertake to comply with the provisions of this Decision when obtaining a license to operate, and compliance with these provisions is considered one of the conditions for license continuity.
(Article Three)
This Decision shall be published in the Egyptian Gazette and on the Authority's website, and shall be effective from the day following its publication in the Egyptian Gazette.
Chairman of the Board of Directors Dr. Mohamed Omran