Board of Directors Secretariat

Decision of the Board of Directors of the Financial Regulatory Authority

No. (46) of 2014 dated 24/3/2014
Regarding the regulations for insurance companies to conduct the activity of open-ended investment funds, money market funds, and debt instrument funds

Board of Directors of the Financial Regulatory Authority

Having reviewed the Insurance Supervision and Control Law issued by Law No. 10 of 1981 and its amendments, and its executive regulations and amendments;
And the Capital Market Law issued by Law No. 95 of 1992 and its amendments and its executive regulations and amendments;
And Law No. 10 of 2009 regulating supervision over non-Egyptian financial markets;
And the Bylaws of the Financial Regulatory Authority issued by Presidential Decree No. 192 of 2009;
And the approval of the Authority's Board of Directors in its session held on 24/3/2014.

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Has Decided

(Article One)

Approval and Licensing for an Insurance Company to Establish a New Investment Fund:

The following conditions are required for the approval and licensing of an insurance company to establish a new investment fund:

1. The company must have regularized its status in accordance with the provisions of Article (27) of the aforementioned Insurance Supervision and Control Law issued by Law No. 10 of 1981.

2. No measures stipulated in Article (59) of the aforementioned Egyptian Insurance Supervision and Control Law must have been taken against it, unless the reasons for the measure were removed and six months have elapsed since then.

3. The company must have sufficient earmarked funds to meet its policyholder obligations in accordance with Article 38 of Law No. 10 of 1981.

4. The company's assets must exceed its total liabilities and the minimum paid-up capital in accordance with Article 39 of Law No. 10 of 1981, based on the company's latest financial statements, provided that the company maintains a ratio of 110% of the adequate capital for property insurance companies and 105% of the adequate capital for life insurance and funds companies.

5. The insurance company must have its paid-up capital fully released in accordance with Article 27 of Law No. 10 of 1981.

6. The net equity, after deducting the amount earmarked by the insurance company for the proposed investment fund in accordance with Law No. 95 of 1992 and its executive regulations, and amounts earmarked or invested in the capital of existing funds, must not fall below the minimum capital prescribed in Article 27 of Law No. 10 of 1981.

7. The surplus of free funds after deducting the amount required to establish the investment fund in accordance with Law No. 95 of 1992 and its executive regulations, and amounts earmarked or invested in the capital of existing funds, must represent a ratio of not less than 10% of the value of funds earmarked to meet policyholder obligations, for property insurance companies, and not less than 5% for life insurance and funds operations.

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(Article Two)

Increases in Earmarked Amounts for Investment Funds by an Insurance Company

The Financial Regulatory Authority's approval must be obtained for any increases in earmarked amounts, and compliance with the provisions of Article One of this Decision is required. The Authority must be notified immediately, and funds affiliated with the company must cease issuing new policies exceeding the ratio between earmarked amounts and policy value until the Authority approves the increase in earmarked amounts.

The company must obtain the Authority's approval upon meeting the conditions and before reissuing policies for its affiliated funds.

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(Article Three)

Regularization of Status

The regulations of this Decision shall apply from the day following its publication in the Egyptian Gazette to the company's direct conduct of investment fund activities for which applications were submitted since this date and which have not yet received a no objection from the Authority.

Existing funds and those that received a no objection from the Authority prior to the Decision's publication must comply with the regulations herein by no later than July 1, 2014.

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(Article Four)

This Decision shall be published in the Egyptian Gazette and shall take effect from the day following its publication.

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Chairman of the Board of Directors
Sherif Samy

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