Directive No 44/2026 Implementing Risk-Based Capital Requirements for Insurers

The Governor
DIRECTIVE NO 44/2026 OF 09/01/2026 IMPLIMENTING REGULATION NO 88/2024 OF 19/12/2024 GOVERNING RISK BASED CAPITAL REQUIREMENTS FOR INSURERS

THE NATIONAL BANK OF RWANDA:
Pursuant to Law n° 48/2017 of 23/09/2017 governing the National Bank of Rwanda as amended to date, especially in Articles 6, 6 bis, 8, 9, 10 and 15; Pursuant to Law n° 030/2021 of 30/06/2021 governing the organisation of insurance business, especially in Article 78; Having considered Regulation n° 88/2024 of 19/12/2024 governing risk-based capital requirements for insurers in Article 51. ISSUES THE FOLLOWING DIRECTIVE:
CHAPTER ONE: GENERAL PROVISIONS
Article One: Purpose of this Directive
This Directive operationalizes Regulation n° 88/2024 governing risk-based capital requirements for insurers by prescribing the methodologies for determining eligible capital, calculating risk￾based capital requirements and the capital adequacy ratio, valuing assets and liabilities for solvency purposes, establishing risk charges, reporting, stress-testing, and Own Risk and Solvency Assessment requirements.
Article 2: Interpretation
In this Directive –
(a) "Basis Point" means a unit measure describing the percentage change in the value or rate of a financial instrument; (b) "Capital Adequacy Ratio (CAR)" means the ratio, expressed as a percentage, of an insurance company's Total Available Capital (TAC) to its Risk-Based Capital Required (RCR), used to assess the company's capacity to absorb losses relative to the level of risks it is exposed to; (c) "Capital Adequacy" means the extent to which eligible capital resources are higher than the capital required under this Directive; (d) "Capital Resources" means financial instruments and other capital elements that provide loss absorbency on a going concern, in adverse circumstances and during a winding-up for the purposes of policyholder protection and financial stability; (e) "Counterparty" means any person who is under a financial obligation to the insurance company; (f) "Eligible Capital" means qualifying capital resources that can provide loss absorbency on a going concern, in adverse circumstances, and during a winding-up for the purposes of policyholder protection and financial stability;

(g) "Equity" means a share or any other form of ownership interest in a legal entity; (h) "Equivalent" means the rate presented in a form different from that indicated under this Directive but which carries the same weight; (i) "Fair value reserve" means unrealized gains/losses resulting from the valuation of available-for-sale and held-for-trading financial assets based on current market prices; (j) "Inadmissible Asset" means an asset of an insurance company, or a reinsurance company specified in this Directive that is required to be deducted from the total Tier I capital and eligible Tier II capital in accordance with the requirements of the Directive; (k) "International Financial Reporting Standards (IFRS)" means financial reporting standards prescribed by the International Accounting Standards Board, as currently applied in Rwanda; (l) "Investment Grade" means a credit rating for a financial instrument that has a relatively low level of default; (m)"Loss absorbing capacity" means the extent to which the capital element absorbs losses; (n) "Minimum capital requirements" means the level of capital below which an insurance company is regarded as not viable to operate effectively; (o) "Risk-Based Capital" means the aggregate of the capital required to address all relevant and material risk categories; (p) "Risk margin" means the component of the value of the insurance liabilities that relates to the inherent uncertainty that outcomes will differ from the best estimate; (q) "Risk-Based Capital Required (RCR)" means the minimum amount of capital determined in accordance with this Directive that an insurance company must hold to cover all relevant and material risks to which it is exposed; (r) " Prescribed Capital Requirement" means the level of capital above which the supervisory authority shall not intervene on capital adequacy grounds; (s) "Subordination" means the degree to which and in what circumstances the capital element is subordinated to the rights of policyholders and non-subordinated creditors during the winding up, insolvency, bankruptcy and liquidation of the insurance company; (t) "Tier I Capital " means the highest quality, most loss-absorbent and permanent form of capital; (u) "Tier II Capital" means capital resources that possess characteristics of subordination to policyholders; and

(v) "Total Available Capital (TAC)" means the aggregate amount of qualifying capital resources, net of all deductions and adjustments, that are eligible to support the insurance company’s ongoing operations and meet its risk-based capital requirements.
CHAPTER II: RISK-BASED CAPITAL
Article 3: Minimum and prescribed capital requirement
(1) The Minimum Capital Requirement is a Capital Adequacy Ratio of 100%. (2) The Prescribed Capital Requirement is a Capital Adequacy Ratio of 150%. (3) An insurer must, at all times, maintain a Capital Adequacy Ratio above the Minimum Capital Requirement. (4) An insurer reports its Capital Adequacy Ratio quarterly, within fifteen (15) days after the end of the relevant quarter.
Article 4: Determination of capital adequacy ratio
An insurer's Capital Adequacy Ratio is calculated as Total Available Capital divided by the Risk-Based Capital Required.
Article 5: Classification of capital resources
(1) The Total Available Capital of an insurer or a reinsurer consists of the sum of its Tier I Capital and Tier II Capital, less the sum of the inadmissible assets. (2) Tier II capital may exceed Tier I capital in the balance sheet. However, in calculating Total Available Capital under the risk-based capital framework, Tier II capital must not exceed 30% of Tier I capital. Any excess is not included in calculating Total Available Capital.
Article 6: Deductions from total available capital
(1) An insurer must deduct inadmissible assets from Tier I and Tier II capital as prescribed in the Regulation governing risk-based capital. (2) An insurer must deduct assets that exceed the investment concentration limits prescribed by the regulation on investment operations from Tier I and Tier II. (3) Investment concentration limits are prescribed in Appendix 3.
Article 7: Methodology for the computation of the risk-based capital required
(1) An insurer’s Risk-based Capital Required comprises capital for insurance risk, market risk, credit risk, and operational risk.

(2) The Risk-Based Capital Required is the square root of the sum of squares of the capital required for insurance risk, market risk, and credit risk, with the capital charge for operational risk added separately, as illustrated in the formula below:
CHAPTER III: APPLICATION OF CAPITAL RISK CHARGES
Article 8: Capital charges
An insurer must apply the capital charges for credit, market, insurance, and operational risks as prescribed under this Directive.
Article 9: Credit risk capital
An insurer must determine credit risk capital by summing up the asset default risk capital and reinsurance counterparty risk capital as specified in Articles 10 and 11.
Article 10: Asset default risk
(1) An insurer must determine the asset default risk capital as the sum of each asset default risk exposure multiplied by the asset default risk charge that applies to that exposure. (2) An insurer must determine the asset default risk exposure as the current value of the asset using the prescribed valuation basis provided in Chapter IV of this Directive. (3) An insurer must determine the asset default risk capital charge using the risk capital charges prescribed in Appendix 1 (A). (4) An insurer applies the applicable asset default risk charge to the current value of the related assets using the categories of asset classes listed in column 1 of Appendix 1 (A). (5) A public insurer calculates asset default risk capital by applying the applicable risk charges as specified in Appendix 1 (B).
Article 11: Reinsurance counterparty risk
(1) An insurer must calculate the reinsurance risk capital for each reinsurance counterparty as a product of reinsurance risk exposure and counterparty credit risk charge, where the reinsurance risk exposure is determined as specified in Article 12 of this Directive. (2) The counterparty credit risk charges are specified in Appendix 2. (3) An insurer aggregates the risk capital charges calculated for each reinsurance counterparty to form the total reinsurance risk capital.

Article 12: Reinsurance risk exposure
(1) Without prejudice to the provisions of Article 11 of this Directive, an insurer determines the reinsurance risk exposure of each reinsurer as the aggregate of the following:
(a) amounts due, including claims recoverable and ceding commissions. (b) liabilities ceded in respect of claims incurred; and (c) liabilities ceded in respect of future coverage obligation. (2) An insurer determines ceded policy liabilities for long-term insurance as the portion of gross policy liabilities that is transferred to reinsurers under reinsurance arrangements, measured as the difference between the gross policy liabilities and the net policy liabilities retained by the insurer after reinsurance. (3) An insurer determines ceded policy liabilities for short-term insurance as the portion of the gross premium liabilities that is transferred to reinsurers under reinsurance arrangements, measured as the difference between the gross premium liabilities and the net premium liabilities retained by the insurer after reinsurance.
Article 13: Market risk capital
(1) An insurer calculates the total market risk capital as the sum of the separate risk charges for each of the risks related to the following and as prescribed in Articles 14 to 17 of this Directive:
(a) investments in equities;
(b) investments in properties;
(c) interest rate; and
(d) foreign exchange rate.
(2) A public insurer calculates market risk capital by applying the applicable risk charges as specified in Appendix 8 of this Directive.
Article 14: Equity risk capital
An insurer calculates equity risk capital by applying the applicable equity risk charges to the current market value of the equity investments, as specified in Appendix 4, and aggregating the results.
Article 15: Property risk Capital
(1) An insurer calculates a property risk capital applicable to assets whose value is sensitive to the volatility of market prices for property.

(2) The following assets are treated as property:
(a) land;
(b) buildings;
(c) other rights in immovable property; and
(d) direct or indirect participation in real estate companies that generate income from property holdings. (3) Applicable property risk capital charges are specified in Appendix 5. (4) Where the market value of property investments exceeds the applicable concentration limit specified in Appendix 4, the excess value is not included in the property risk charge calculation.
Article 16: Interest rate risk charge
(1) An insurer calculates an interest rate risk charge as follows:
(a) calculate the present value of interest rate sensitive assets and liabilities under the base scenario, referred to as A0 and L0, respectively, where the present values are calculated using the interest rates based on the yield curve published by the National Bank of Rwanda; (b) recalculate the present value of the interest rate sensitive assets and liabilities under the up-shock scenario, referred to as A1 and L1, respectively, where the up￾shock scenario uses interest rates that are 200 basis points higher than the interest rates used in (a); (c) recalculate the present value of the interest rate sensitive assets and liabilities under the down-shock scenario, referred to as A2 and L2, respectively, where the down-shock scenario uses interest rates that are 200 basis points less than the interest rates used in (a); (d) calculate the value of the surplus under each scenario as the difference between the present value of the assets and liabilities; and (e) determine the reduction in surplus in the up-shock and down-shock scenarios, relative to the surplus in the base scenario. (2) The interest rate risk charge is the greater of the difference in surplus between the up￾shock and down-shock scenarios. (3) If there is an increase in surplus under both shock scenarios, then the interest rate risk charge must be zero.

(4) An insurer determines the present value of interest rate-sensitive assets and liabilities as illustrated in Appendix 6.
Article 17: Foreign Exchange Rate Risk Capital Charge
An insurer determines the foreign exchange rate risk capital charge by calculating the following:
(a) determine the foreign exchange risk exposure for each currency by calculating the net open position in that currency, equal to the sum of all asset values less all liability values denominated in that currency, including any accrued interest or expenses that may be subject to currency rate fluctuations; (b) convert the net open position in each currency to Rwandan francs using the same foreign exchange rate used to prepare the insurer’s financial statement for the same period; (c) apply the applicable foreign exchange rate risk factor for that currency to the net open position, converted to Rwandan francs, using the risk factors specified in Appendix 7; and (d) aggregate the risk capital charges for all currencies.
Article 18: Insurance risk capital for short-term insurance products
A short-term insurer calculates insurance risk capital by aggregating the risk charges for claims liabilities and premium liabilities as follows:
(a) an insurer determines premium liability risk charges for each sub-class of short-term insurance separately by multiplying the net premium liability by the corresponding premium liability risk factor specified. (b) an insurer determines claims liability risk charges for each sub-class of short-term insurance, separately, by multiplying the net claims liabilities by the corresponding claims liability risk factor specified. (c) Appendix 9 specifies premium liability risk factors and claims liability risk factors per class of business. (d) net premium liabilities and net claims liabilities are the liabilities determined net of reinsurance, using the valuation methodology prescribed in Chapter IV of this Directive.
Article 19: Insurance risk capital for long-term insurance products
(1) A long-term insurer calculates an insurance risk capital by aggregating the liability risk charges calculated for each sub-class of long-term insurance using the method and risk factors prescribed for that sub-class of insurance business as specified in Appendix 10. (2) An insurer determines and classifies liabilities on a policy-by-policy basis using the sub￾classes specified in Appendix 10.

(3) A long-term insurer determines the capital as follows:
(a) factor-based risk charge where the liability capital risk charge is determined by multiplying the product liability amount by the applicable risk charge factor; and (b) stress-based risk charge where the liability capital risk charge is determined as the difference between the liability amount calculated under a base scenario and the liability amount calculated under a stress scenario. (4) An insurer determines the liability calculated under the base scenario, using the methodology, assumptions, and appropriate risk margin prescribed in Chapter IV of this Directive. (5) An insurer determines the stress scenario by adjusting the base set of assumptions by the relevant stress factor for each assumption, as specified in Appendix 10.
Article 20: Insurance risk capital charges for Health Maintenance Organisation, Micro
insurance and public insurers
(1) A Health Maintenance Organisation and dedicated micro-insurer calculate insurance risk capital by aggregating the risk charges for claims liabilities and premium liabilities, as per Appendix 11 (A) and Appendix 11 (B), respectively. (2) A public insurer calculates insurance risk capital by aggregating the risk charges for claims liabilities as per Appendix 11 (C).
Article 21: Operational Risk
An insurer calculates the operational risk capital charge as 30% of the square root of the sum of the squares of the capital requirements for market risk, credit risk, and insurance risk. As illustrated below:
CHAPTER IV: VALUATION OF ASSETS AND LIABILITIES
Article 22: Requirement for valuation of assets and liabilities
(1) The Supervisory Authority must establish requirements for the valuation of assets and liabilities for solvency purposes. (2) An insurer undertakes the valuation of assets and liabilities on a consistent basis, in a reliable, decision-useful, and transparent manner. (3) The valuation of assets and liabilities is an economic valuation that reflects the risk￾adjusted present values of their cash flows.

Article 23: Valuation of assets
An insurer must value assets in accordance with the valuation principles prescribed under the International Financial Reporting Standards.
Article 24: Valuation of technical provisions for life insurance business
(1) The technical provisions for a long-term insurer are the sum of best estimate provisions and the risk margins. (2) An insurer must calculate the best estimate provision on a gross basis without deduction of the amounts recoverable from reinsurance contracts.
Article 25: Method for variation of technical provisions
(1) An actuary may vary the method used in the valuation of technical provisions and the assumptions of the valuation from one year to the next. However, these variation shall not have effect unless approved by the board of directors of an insurer. (2) An insurer that adopts another method for the valuation of technical provision must disclose:
(a) that other method;
(b) the reasons for adopting the different valuation method; and (c) the details of the alternative assumptions and methodologies that an insurer must rely on. (3) The gross premium valuation method considers all relevant cash flows and uses the appropriate discounting rates for life insurance businesses.
Article 26: The technical provision for unit-linked business and the non-unit fund
The technical provision in respect of unit-linked business is partly composed of the unit fund and the non-unit fund. The liability relating to the unit fund is the number of units allocated to the policy multiplied by the prevailing unit price as at the valuation date. The liability relating to the non-unit fund is the amount required to ensure that an insurer is able to meet the death benefits, other benefits, and expenses under the policy.
Article 27: Valuation of investment contracts
An insurer must evaluate investment contracts using the interest rate earned from the investments, less any expenses and taxes incurred, while taking into account the policyholder's savings or deposits and accrued interest to the valuation date.

Article 28: Technical provisions for group life business
The insurance technical provisions for group life business consist of premium and claims provisions.
Article 29: Embedded policyholder options or guarantees
The insurance technical provisions for embedded policyholder options or guarantees include:
(a) guaranteed minimum benefits;
(b) guaranteed interest rates; and
(c) the option to renew the policy at a guaranteed premium rate.
Article 30: Determination of the current estimate
(1) An insurer must determine the best estimate of liability as the value of the expected future payments and premiums under the policy, gross of reinsurance, based on obligations at the reporting date. (2) The best estimate of liability is equal to:
(a) the value of expected future benefit payments, plus (a) the value of expected future expenses; less (b) the value of expected future premiums.
Article 31: Expected future cash flows for the long-term insurer
(1) In projecting the expected future cash flows, the long-term insurer makes assumptions about the expected future experience, taking into account all factors which are considered to be material to the calculation, including:
(a) investment earnings;
(b) inflation;
(c) taxation;
(d) expenses;
(e) mortality and morbidity; and
(f) policy discontinuance.

(2) The assumptions must reflect a best estimate of the likely experience. (3) The best estimate assumption for mortality for valuation purposes is the assurance and annuity mortality table approved by the Supervisory Authority.
Article 32: Adjustments for the best estimates
(1) An insurer may adjust the best estimate for mortality and morbidity experience to take into consideration, where appropriate:
(a) the age, sex, smoking habit, occupation, industry, health, and lifestyle of the insured lives in the portfolio; (b) the duration since the policy was issued; (c) the size of policy; (d) seasonal variations; (e) environmental factors; (f) the past experience of the portfolio; and (g) any changes in future experience. (2) An insurer must consider the use of its experience data in determining the best estimate of lapse and surrender rate assumptions. An insurer must also consider its changing practices and market conditions that may affect the lapse and surrender patterns of the policies in the future.
Article 33: Best estimate assumption for lapse and surrender rates
(1) The best estimate assumption for lapse and surrender rates may take into consideration, where appropriate:
(a) the policy plan and options;
(b) the life insured’s attained age;
(c) the duration since the policy was issued;
(d) the method of payment and frequency of premiums; (e) the premium paying status; (f) the policy size; and (g) the policy competitiveness, surrender charges, persistency bonuses, charges upon withdrawal and other incentives and disincentives for withdrawal.

(2) The future bonus rates assumption assumed in the valuation must consider the policy assets and bonus policy of the company. An insurer refers to the latest bonus investigation study that supports the derivation of the current applicable bonus and dividend rates in setting the bonus rates assumption.
Article 34: Discount rate requirements for life insurance business
(1) The gross rate used to discount the expected future cash flows must, to the extent that the benefits under the policy are contractually linked to the performance of the assets held, reflect that linkage. (2) The discount rate must:
(a) reflect the expected investment earnings applicable to the assets backing the liabilities being valued; (b) be risk-free, based on the current observable, objective rates that relate to the nature, structure and term of the future liability cash flows; and (c) reflect the characteristics of the cash flows and the liquidity characteristics of the insurance contracts. (3) An insurer must base the risk-free discount rates on the yield curve published by the National Bank of Rwanda. (4) An insurer adjusts the estimates of future cash flows to reflect the time value of money and the financial risks related to those cash flows. (5) The insurer must disclose the approach adopted when deriving the discount rate to be used and provide reasons for the allowance for the illiquidity of the insurance contracts when deriving the discount rate.
Article 35: Risk margin requirements for life insurance business
(1) The risk margin is the component of the value of the technical provisions that relates to the inherent uncertainty in the best estimate. The risk margins must represent an additional component of the technical provisions (2) An insurer must determine the risk margins relating to mortality, longevity, morbidity, lapses, and expenses for policies under consideration. (3) An insurer must disclose the approach used and the level of confidence adopted in the determination of the risk margin. (4) An insurer determines the risk margin using an approach that ensures the value of its insurance liabilities meets at least a 75% confidence level of sufficiency, measured on the basis of Value at Risk.

(5) An insurer must disclose the risk margins used to determine the technical provisions as prescribed in the table below. Assumption Risk Margin Adopted Mortality x% increase for assurance Longevity x% decrease for annuities Morbidity x% increase in morbidity rates Lapse x% increase in lapse rates Expenses x% increase in the baseline expense assumption
Article 36: Liabilities for short-term insurance
A short-term insurer must maintain, at a minimum, the following technical provisions:
(a) unearned premium provision;
(b) additional unexpired risk reserve or premium deficiency provision; (c) outstanding reported claims provisions; (d) incurred but not reported claims; (e) incurred but not enough reported claims ; and (f) margin for adverse deviation.
Article 37: Methods for valuation of the unearned premium provision
(1) An insurer determines the valuation of the unearned premium provision using any of the following methods:
(a) the 1/365th method; or
(b) the 1/24th method or
(c) In the case of the unearned premium provision for insurers and reinsurers engaged in short-term insurance business, the 1/8th method or any other method approved by the supervisory authority. (2) An insurer must determine the additional unexpired risk reserve or premium deficiency provision if the sum of expected claim costs exceeds the unearned premium provision for unexpired contracts or the combined ratio for a particular class of business exceeds 100%. (3) An insurer determines the valuation of the outstanding reported claims for a short-term insurer or reinsurer in the following ways:

(a) by considering the number of claims reported and their average claim cost; or (b) case-by-case estimation for each claim. (4) The claims handling expense provision covers the estimated expenses of settling all claims, both reported and unreported, and outstanding as at the valuation date and is based on the insurer’s own historical experience.
Article 38: Methods for valuation of incurred but not reported provisions for a short￾term insurer
(1) An insurer determines the valuation of the Incurred but Not Reported provisions for a short-term insurer using any of the following methods:
(a) the basic chain ladder method (both on incurred and paid claims); (b) the Bornhuetter-Ferguson method (both on incurred and paid claims); (c) the average cost per claim method; (d) the Cape Cod method; or (e) any other generally acceptable actuarial method. (2) The methods to be adopted for the valuation of technical provisions depend on – (a) the particular characteristics of the class of business; (b) the reliability and volume of the available data; (c) past experience of the insurer and the industry; (d) the robustness of the valuation’s models; and (e) considerations of materiality. (3) The Bornhuetter-Ferguson method requires the use of a loss ratio assumption. (4) Historical data of an insurer engaged in short-term insurance business must back an assumption of the loss ratio. (5) An insurer computes the incurred but not enough reported provision using the loss development actuarial methods or by estimating the difference between the actual claim payments and the case estimates. (6) A short-term insurer or reinsurer must use a minimum of two generally accepted actuarial methods in determining the value of its incurred but not enough reported provisions and reflect these results in its valuation report.

(7) Where an insurer adopts another valuation method for the valuation of technical provisions, that insurer must disclose:
(a) the reasons for adopting the different valuation method; and (b) the details of the alternative assumptions and methodologies that insurer relies on.
Article 39: Minimum risk margin factors for short-term insurance liability
(1) A short-term insurer must include a margin for adverse deviation to allow for inherent uncertainty of the best estimate of the provisions and variability of the claims experience within a class of business. The margin for adverse deviation must be based on the historical experience of the insurer. (2) The risk margin is the component of the value of the insurance liabilities that relates to the inherent uncertainty that outcomes will differ from the best estimate. Its purpose is to ensure that the value of the insurance liabilities is established at an appropriate and sufficient level. (3) An insurer determines risk margin for each class of business and in total on a basis that reflects the experience of the insurer. (4) In the determination of the risk margin, the insurer discloses the approach used and the level of confidence adopted. (5) An insurer determines the risk margin using an approach that ensures the value of its insurance liabilities achieves at least a 75% level of sufficiency, measured on the basis of Value at Risk.
CHAPTER V: STRESS TESTING
Article 40: Stress testing requirement
(1) An insurer must establish stress-testing processes to identify, monitor, and analyse market and financial developments that may affect their operations. (1) A stress testing framework must be appropriate to the size, business mix, and risk profile of an insurer. (2) The board of directors of an insurer is responsible for the stress testing framework. (3) An insurer must conduct stress tests to determine its stability to shocks. (4) An insurer must use the results of stress tests in risk management, capital adequacy, liquidity and business decision making.

(5) An insurer reports the stress test results to the board of directors at relevant levels of aggregation. The reports include the main modelling and scenario assumptions and any significant limitations.
Article 41: Stress test focus areas
An insurer must conduct stress testing at least on the following:
(a) credit risk;
(b) market risk i.e. foreign exchange risk and equity prices; (c) liquidity risk; (d) interest rate risk; (e) insurance risk i.e. underwriting and reserving; and (f) climate risk.
Article 42: Approaches to stress testing
At minimum, an insurer must adopt the following stress testing approaches:
(a) reverse stress testing and
(b) scenario analysis.
Article 43: Submission of the results of the stress test
An insurer must submit to the Supervisory Authority the results of its stress testing on an annual basis, alongside its annual audited financial statements.
CHAPTER VI: OWN RISK AND SOLVENCY ASSESSMENT REQUIREMENTS
Article 44: Own risk and solvency assessment framework
(1) The board of directors of an insurer must approve its own risk and solvency assessment framework. (2) The own risk and solvency assessment framework must address at least the following:
(a) the procedures in place to conduct the own risk and solvency assessment; (b) the link between the risk profile, the approved risk tolerance limits, and the overall solvency needs; (c) the methods and methodologies on:

i. how and how often stress tests, sensitivity analyses, reverse stress tests or
other relevant analyses are to be performed;
ii. data quality standards;
iii. the frequency of the assessment itself and the justification of its adequacy
that considers the risk profile and the volatility of its overall solvency needs related to its capital position; and
iv. the timing for the performance of the own risk and solvency assessment
and the circumstances which would trigger the need for an own risk and solvency assessment outside of the regular timescales.
Article 45: An own risk and solvency assessment framework process
(1) An own risk and solvency assessment framework process considers the nature, scale and complexity of the risks inherent to the business of an insurer. (2) The insurer's own risk and solvency assessment process must include an assessment of the risks it faces or may face in the future.
Article 46: Actuarial function in own risk and solvency assessment
The actuarial function of an insurer must, as part of own risk and solvency assessment process:
(a) provide input as to whether the undertaking would comply continuously with the requirements regarding the calculation of technical provisions; (b) identify potential risks arising from the uncertainties connected to this calculation; and (c) provide a statement that own risk and solvency assessment has been prepared in accordance with this directive and generally accepted actuarial principles.
Article 47: Requirements on own risk and solvency assessment
(1) An insurer, while conducting own risk and solvency assessment, must:
(a) use appropriate and adequate techniques, tailored to fit into its organizational structure and risk-management system; (b) demonstrate a link between business strategy, risk, capital, and stress testing; (c) highlight proposed management actions upon a perceived risk that may fall outside its appetite; (d) provide a quantification of capital needs and a description of other means needed to address all material risks irrespective of whether the risks are quantifiable or not;

(e) subject the identified material risks to a sufficiently wide range of stress tests or scenario analyses; (f) ensure that its assessment of the overall solvency needs is forward-looking, including a medium or long-term perspective as appropriate; (g) analyze whether it complies on a continuous basis with the regulatory capital requirements, and as part of this assessment, it includes at least:
i. the potential future material changes in its risk profile;
ii. the quantity and quality of its own funds over the whole of its business
planning period; and
iii. the composition of capital resources across tiers and how this composition
may change as a result of redemption, repayment and maturity dates during its business planning period;
iv. the impact of internal and external risks when presenting their strategy.
(2) The insurer must identify the key risks to their strategy and show how these drive current and future risk profiles.
Article 48: The use of own risk and solvency assessment results
The insurer must consider the results of own risk and solvency assessment and the insights gained during the process of this assessment in at least:
(a) its capital management;
(b) its business planning; and
(c) its product development and design.
Article 49: The contents of own risk and solvency assessment report
The insurer must include at least the following in the Own Risk and Solvency Assessment report:
(a) a summary of the key results and considerations arising from the insurance liability valuation, including an assessment of the adequacy of past estimates of either outstanding claim liabilities or all insurance liabilities against the subsequent actual claims experience over at least three years if experience exists; (b) the adequacy of premiums and material issues arising from the insurer’s pricing processes including underwriting and claim management practices; (c) asset and liability management;

(d) capital adequacy and insurer’s capacity to meet its prescribed capital requirement and its capital targets over at least the next three years; (e) the adequacy of reinsurance arrangements; (f) insurer’s risk management framework, comprising the insurer’s risk management policies and procedures, processes, and controls; (g) material risks identified and recommendations intended to address the risks; and (h) a statement by an actuarial function that own risk and solvency assessment has been prepared in accordance with this Directive and generally accepted actuarial principles.
CHAPTER VII: FINAL PROVISIONS
Article 50: Repealing provision
All previous provisions contrary to this Directive are repealed.
Article 51: Entry into force
This Directive comes into force on the date of its signature.
Done at Kigali, January 9, 2026
Soraya M. HAKUZIYAREMYE
Governor

APPENDIX 1 (A): ASSET DEFAULT RISK CHARGE FACTORS (EXCEPT PUBLIC INSURERS)
Asset Class Asset Type International Credit
Rating
Capital Risk
Charge
Factor
National
Credit
Rating*
Capital Risk
Charge
Factor*
Debt securities issued or fully guaranteed by a government or central bank or guaranteed by recognised multilateral agency [consider differentiating between those in local or foreign currency]. Debt securities issued or fully guaranteed by the government of Rwanda/ Central Bank Sovereign risk rating of at least B or equivalent. 0% Below B 15% Securities Invested in International Agencies/. At least A or equivalent 0% Investments in corporate debt securities that are listed on Rwanda Stock Exchange (bonds, debentures and other long-term debt obligations). 1.20% Investments in corporate debt securities that are listed on any other recognised stock exchange (bonds, debentures and other long-term debt obligations) At least AA or equivalent 0.00% At least AA or equivalent 2.50% A or equivalent 0.50% Aor equivalent 3.00% BBB or equivalent 1.00% BBB or equivalent 3.50% BB or equivalent 2.00% BB or equivalent 5.00% At most B 15.00% At most B or equivalent. 17.00% Unrated 100% Unrated 100% Investments in unlisted corporate debt securities 100% Short-term debt obligations such as commercial paper and preferred A1, P1 or equivalent 0.25% A1, P1 or 2.75%

shares equivalent
A2, P2 or equivalent 0.32% A2, P2 or equivalent 2.82% A3, P3 or equivalent 0.58% A3, P3 or equivalent 3.08% Unrated 15.00% Unrated 15.00% Debt Securities not prudentially regulated 6% Deposits with a licensed commercial bank or a licensed and regulated financial institution 0% Debt investments in related parties (affiliates and subsidiaries) that are not prudentially regulated financial institutions. 6.00% Cash and cash equivalents. 0.0% Outstanding Premiums from Individuals and Other Insurers 100% Outstanding Premiums from Corporates (Not exceeding 30 days). 15% Outstanding Premiums from Corporates (more than 30 days). 100% Outstanding premium from Government institutions and international agencies (Not exceeding 60 days). 15% Outstanding premium from Government institutions and international agencies (more than 60 days). 100% Policy Loans. 7.50% Loans to Agents, Directors & Employees. 7.50% Loans to Entities. 13.00% Mortgages secured by residential property. 6.50%

Mortgages secured by commercial property. 17.50% Other receivables 10.40%

APPENDIX 1 (B): ASSET DEFAULT RISK CHARGE FACTORS FOR PUBLIC INSURERS
Asset Type Capital Risk Charge Factor
Receivables from Individuals 20%
Receivables from Corporate Companies 15%
Receivables from Government 15%
Other Receivables 20%
Loans to Individuals 7.50%
Loans to Companies 13%
Loans to Government 6.50%
Other Loans 20%

APPENDIX 2: REINSURANCE CAPITAL RISK CHARGE FACTORS
Risk Type International Credit Rating of Reinsurer (claims-paying basis) Capital Risk Charge Factor Reinsurance exposure At least AA or equivalent 0.00% Local regulated reinsurer 1.00% A or equivalent 0.50% BBB or equivalent 1.00% BB or equivalent 2.17% At most B or equivalent 14.93% Unrated but approved by the Supervisory Authority 50.00% Unrated 100.00%

APPENDIX 3: INVESTMENT CONCENTRATION LIMITS
Asset Class
Total Portfolio Limit Single Issuer/
Counterparty Limit
General insurers
Life
Insurers
Public Health
Insurers
Cash and bank deposits 70% 50% 70% 15%
Government securities 100% 100% 100% n/a
Corporate debt securities (excluding related party debt) 60% 50% 60% 10% Total equity investments 30% 40% 30% 10% Unlisted equity investments 10% 10% 10% 5% Total Property investments 30% 35% 35% 20% Property held for own use 20% 20% 20% 20% Investments in related parties 10% 10% 10% 7.5% Investments held outside Rwanda (East African Community excluded) 20% 20% 10% 10% Investment in domestic investment funds 10% 15% 10% 5% Derivative securities Subject to approval by the Central Bank

APPENDIX 4: EQUITY RISK CHARGE FACTORS
Asset Class Asset Type Risk Capital Charge
Factor
Equities Listed equities 37.5%
Unlisted equities 50%
Equity investments in related parties (affiliates and subsidiaries) that are not prudentially regulated financial institutions 50% Unit trusts Any combination of equities and debt securities 20%

APPENDIX 5: PROPERTY RISK CHARGE FACTORS [PROPERTY MEANS REAL ESTATE]
Asset Class Asset Type Risk capital charge factor Property Investments Property held for own use 18% For Commercial purposes or in related party 20%

APPENDIX 6: INTEREST RATE RISK CHARGE CALCULATION
Scenario Value of
Assets
Value of
Liabilities
Surplus
Base scenario – assets and liabilities valued as for risk-based balance sheet A0 L0 S0 Up shock – assets and liabilities valued assuming market interest rates increase by 200 basis points A1 L1 S1 Down shock – assets and liabilities valued assuming market interest rates decrease by 200 basis points A2 L2 S2 Interest rate risk capital charge Maximum of {S0-S1, S0-S2, 0}

APPENDIX 7: FOREIGN CURRENCY RISK CHARGE FACTORS
Foreign Exchange Risk
Exposure (converted into RWF)
Risk Capital Charge Factor (assets greater than liabilities) Risk Capital Charge Factor (assets less than liabilities) Net open position – USD 0.25% 2.50% Net open position – EUR 2.50% 5.75% Net open position – KES 2.50% 3.50% All other currencies 4% 6.00%

APPENDIX 8: MARKET RISK CHARGE FACTORS FOR PUBLIC INSURERS
Asset Type Capital Risk Charge Factor
Government Bonds and Treasury Bills 0%
Corporate Bonds 4%
Commercial Papers 4%
Investment in Equities - Local 50%
Investment in Equities - Offshore 50%
Investment Funds 20%
Investment Property 20%
Bank Term Deposits 0%
Cash Balances 0%
Cash in Hand 0%
Deposits in MFIs and SACCOs 0%

APPENDIX 9: GENERAL INSURANCE LIABILITY RISK CHARGE FACTORS
Products Included Premium Liability Risk Capital Charge Factor Claims Liability Risk Capital Charge Factor Aviation Insurance 12% 25% Engineering Insurance 30% 35% Marine Insurance 12% 25% Energy Insurance 30% 35% Liability Insurance 15% 35% Motor Insurance 14% 10% Personal Accident 18% 30% Workmen's Compensation 20% 20% Health and Medical 25% 12% Theft Insurance 10% 12.5% Fire Insurance 10% 12.5% Agricultural Insurance 20% 20% Bond Insurance 35% 30% Microinsurance 20% 20% Miscellaneous Insurance 20% 20%

APPENDIX 10: RISK CAPITAL CHARGES FOR LONG-TERM INSURANCE
Individual
/ Group
Par/
Non￾par
Policy Type Product Types Risk
Capital
Charge
Method
Risk
Capital
Charge
Factor
Stress Scenario
Factors
Individual Non-par Savings, with death benefits Individual/Personal Pension Plans with death benefits; Individual Education Plans (savings/ endowment phase) Assumption -based n/a Mortality rates +20%. Lapse rates +/-40%. renewal expenses +20% Savings, with no guarantees or death benefits Individual/Personal Pension Plans with no death benefits Factor￾based 2.50% n/a Individual credit life Loan protection, mortgage protection Factor￾based 20.00% n/a Individual term life Funeral coverage (short-term renewable, with policy term 1 year. or less) Factor￾based 20.00% n/a All other non-par term life products Assumption -based n/a Mortality rates +20%. Lapse rates +/-50%. renewal expenses +20% Annuity/ pay-out benefits Pension annuity benefits (paid as annuity not as lump sum). Assumption -based n/a Mortality rates -30% Education annuity benefits (pay-out phase of education policy). Assumption -based n/a Mortality rates -30%. Lapse rates +/- 40% Individual Par Savings, with no guarantees or death benefits. Individual/Personal Pension Plans with no death benefits Factor￾based 6.50% n/a Savings, with death benefits Individual/Personal Pension Plans with death benefits; Individual Education Endowment Plans (savings Assumption -based n/a Mortality rates +20%. Lapse rates +/- 40%. renewal expenses

phase). +20%
Individual term life
Term life policies with bonuses or dividends
Assumption
-based n/a Mortality rates +20%.
Lapse rates +/- 40%. renewal expenses
+20%.
Individual whole life
Traditional whole life; endowments
(with bonus dividends); all other individual par products Assumption -based n/a Mortality rates +20%. Lapse rates +/- 40%. renewal expenses +20%. Group Non-par Savings, with no guarantees or death benefits. Group pension plans, with no death benefits Factor￾based 2.50% n/a Savings, with death benefits Group pension plans, with death benefits Assumption -based n/a Mortality rates +20%. Lapse rates +/- 40%. renewal expenses +20%. Group credit life Loan protection, mortgage protection, bancassurance. Factor￾based 20.00% n/a Group term insurance Short-term renewable group life insurance; any other group term insurance. Factor￾based 20.00% n/a Group Par Savings, with no guarantees or death benefits. Group pension plans, with no death benefits Factor￾based 2.50% n/a Savings, with death benefits Group pension plans, with death benefits Assumption -based n/a Mortality rates +20%. Lapse rates +/- 40%. renewal expenses +20%.

APPENDIX 11: CAPITAL CHARGES FOR HEALTH MAINTENANCE ORGANIZATION, MICRO INSURANCE AND PUBLIC
INSURERS
11 (A) Health Maintenance Organization
Products Included Premium Liability Risk Capital Charge Factor Claims Liability Risk Capital Charge Factor In-patient 25% 12% Out-patient 25% 12% Other General Insurance 25% 12% 11 (B) Micro insurance Products Included Premium Liability Risk Capital Charge Factor Claims Liability Risk Capital Charge Factor Personal Accident 10% 12% Group Personal Accident 10% 12% Micro Credit Life 10% 12% Group Credit Life 10% 12% Last Expense 10% 12% Medical Expenses 10% 12% Hospital Cash 10% 12% Domestic Package 10% 12% Micro Property Insurance 10% 12% Crop 10% 12% Livestock 10% 12% Parametric 10% 12% Bundled Insurance 10% 12%

11 (C) Public Insurers
Products Included Risk Capital Charge Factor
Rwanda Social Security Medical Scheme 12%
Community-Based Health Insurance Scheme 12%
Maternity Leave Benefit Scheme 12%
Military Medical Insurance (MMI) 12%
SEEN TO BE ANNEXED TO DIRECTIVE NO 44/2026 OF 09/01/2026 IMPLIMENTING REGULATION NO 88/2024 OF 19/12/2024 GOVERNING RISK BASED CAPITAL REQUIREMENTS FOR INSURERS Kigali, 09/01/2026 Soraya M. HAKUZIYAREMYE Governor