الهيئة العامة للرقابة المالية

• Standardizing insurance activity rules in accordance with the Unified Insurance Law.
• Mandating a minimum free surplus to strengthen capital adequacy of insurance providers.
• Maintaining net equity at a level no less than the minimum issued capital required for insurance companies.

Financial Regulatory Authority (FRA) chaired by Dr. Mohamed Farid, has issued a resolution amending the controls governing insurance companies’ management of investment funds, whether individually or jointly. This move aligns with the Unified Insurance Law and aims to balance the expansion of insurance companies’ investment activities with the protection of policyholders’ rights.

The new amendments prioritize the requirement for insurance companies to maintain adequate ‘allocated funds’ to fulfill their direct liabilities to policyholders. Furthermore, the new resolution introduces a risk-based solvency framework by establishing mandatory minimum thresholds for both net equity and free surplus.

FRA resolution No. 304 of 2025 mandates the availability of allocated funds to cover policyholder liabilities, in accordance with Article (175) of the Unified Insurance Law. Companies must strictly adhere to financial solvency standards based on their latest audited financial statements.

“Allocated funds” are defined as the capital mandatorily reserved within an insurance company to meet its direct obligations toward policyholders.

Under the Unified Insurance Law, insurance companies are required to establish necessary technical provisions based on reports prepared by FRA-registered actuary.

The resolution stipulates that net equity must not be less than the minimum issued capital required for insurance companies. This calculation is performed after deducting amounts set aside for subscribing to investment certificates – including any proposed new funds – as well as amounts invested in the capital of fund management companies.

The minimum capital for life and property insurance companies is approximately 600 million EGP, pursuant to FRA resolution No. 196 of 2024.

The resolution further mandates that the ‘free surplus’ maintain a minimum threshold of 10% of the company’s issued capital. This calculation excludes amounts allocated for subscribing to investment certificates – including those currently under establishment – as well as capital investments in fund management companies.

“Free funds” refer to capital not allocated for direct policyholder obligations. They represent the company’s safety margin and additional financial capacity, typically comprising equity, retained earnings, or general reserves.

This resolution cancelled FRA Board resolution No. 46 of 2014 to harmonize operations with the Unified Insurance Law. It reflects FRA’s comprehensive update of solvency standards, ensuring unified rules under a more integrated and modern regulatory vision.

Previously, FRA mandated that insurance and reinsurance companies invest at least 2.5% of their paid-in capital in open-ended funds targeting listed equities, with a maximum cap of 20% of capital.

FRA emphasized that this resolution is part of its ongoing efforts to regulate non-banking financial activities. It seeks to balance the growth of insurance companies’ investment portfolios with financial stability and protection of market participants.