Decision No. 162 of 2020 of the Authority's Board Regarding the Establishment of a Reserve for Risks from Applying Egyptian Accounting Standard No. 47 on Insurance Companies

Financial Regulatory Authority
FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

Decision No. (162) of 2020 of the Authority's Board of Directors dated 30/9/2020 Regarding the Establishment of a Reserve to Mitigate Risks Arising from the Application of Egyptian Accounting Standard No. (47) Financial Instruments on Insurance Companies

Board of Directors of the Financial Regulatory Authority Having reviewed the Law on Supervision and Regulation of Insurance in Egypt issued by Law No. (10) of 1981 and its Executive Regulations; and Law No. (10) of 2009 on Regulating Supervision over Markets and Non-Banking Financial Instruments; and Prime Ministerial Decision No. (1871) of 2020; and Minister of Investment Decision No. (10) of 2015 on Egyptian Accounting Standards, as amended by Minister of Investment and International Cooperation Decision No. (69) of 2019; and Authority Board Decision No. (70) of 2016 issuing the Implementation Guide for Egyptian Accounting Standards in the Insurance Sector; and after approval by the Authority's Board of Directors in its session held on 30/9/2020;

Decided

(Article One)
Insurance companies shall establish a reserve to mitigate risks arising from the application of Egyptian Accounting Standard No. (47) Financial Instruments, equivalent to (1%) of total assets, funded from the net profit of the year after deducting the year's tax, for the financial year ending on 30/6/2020. This reserve shall be included within shareholders' equity and shall not be utilized except upon approval by the Authority.

The company's Board of Directors shall monitor compliance with the preceding paragraph and ensure verification of the following:

1. Providing the necessary requirements for implementing the standard and removing any obstacles that may hinder execution.
2. Determining the business models to be used upon applying the standard.
3. Assessing the efficiency of information systems and the availability of human resources and expertise.
4. Developing the company's risk management environment and credit and investment policies.

(Page 2)

5. Coordinating among the company's various departments, including technical, financial, risk management, information technology, internal audit departments, and all other relevant departments in this regard.

(Article Two)
This Decision shall be published in the Egyptian Gazette and on the Authority's website.

Chairman of the Authority's Board of Directors Dr. Mohamed Omran

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