الهيئة العامة للرقابة المالية

Dr. Mohamed Farid – FRA Chairman:

• The new controls represent a cornerstone in FRA’s strategy to develop the insurance sector and mitigate national economic risks.
• The Authority is committed to consumer protection; ensuring new standards enhance insurers’ financial resilience and capacity.
• The approved list ensures market alignment with international standards, substantially enhancing investor confidence.
• The new controls mandate a dedicated registry for reinsurers and their branches, establishing a new precedent for sector development.
• Egyptian insurance companies are now strictly obligated to conduct reinsurance transactions exclusively with firms or branches listed in this new registry.
• A one-year transition period is granted to existing Egyptian insurers to regularize their operational status, effective immediately.
• Registration requires the parent company to be registered first and subject to the control of an equivalent foreign regulator.
• A valid credit rating from an international rating agency is mandatory for all applicants.
• The company must confirm it has not engaged in any market-harming practices in Egypt over the preceding three years.

Marking a significant regulatory milestone, Financial Regulatory Authority (FRA), chaired by Dr. Mohamed Farid, has released the first-ever framework to regulate reinsurance companies and their branches in the Egyptian market. This action is integral to the Authority’s strategy to comprehensively upgrade the insurance sector, guaranteeing greater stability and reliability and fortifying its contribution to national economic growth.

The move is part of the Authority’s strategy to develop the non-banking financial sector and raise insurance market efficiency. By adhering to best international practices, FRA aims to both safeguard policyholders’ rights and enhance the financial stability of insurance companies.

The reinsurance process acts as a safety net, allowing primary insurers to mitigate exposure to large risks by sharing them with specialized reinsurance companies. This strengthens the capacity of the original insurer to fulfill customer obligations and promotes long-term market stability.

The new resolution introduce unprecedented regulation of reinsurance operations in the Egyptian market, establishing new and stricter controls for registration. Crucially, it obligates Egyptian insurers to deal exclusively with FRA-approved entities, thereby ensuring reliance only on reinsurers possessing strong financial solvency and high international credit ratings.

Dr. Mohamed Farid, FRA Chairman stated that this resolution represents a fundamental step in FRA’s  strategy to develop the insurance sector, which stands as a key pillar in managing Egypt’s economic and social risks. By setting clear and binding standards for selecting reinsurers, the Authority is not only protecting the rights of policyholders, but also significantly enhancing the ability of Egyptian insurance companies to meet their financial and technical obligations.

FRA Board resolution no. (230) of 2025 creates a new, exclusive registry for reinsurance companies and branches approved to deal with Egyptian insurers. Registration also requires a history free of activities that harmed the Egyptian market in the preceding three years.

FRA Chairman added that establishing this approved list, which is based on credit ratings and financial solvency, will raise the market’s operational efficiency, limit concentration risks and ensure greater compliance with international standards, thereby boosting investor confidence in the Egyptian insurance sector.

The Authority established strict rules to ensure financial solvency, requiring that reinsurance companies be subject to foreign regulatory body equivalent to the Authority’s jurisdiction. This serves as an operational guarantee to ensure the company adheres to strict laws and standards and is not a shell entity established without proper controls.

The new controls require obtaining a valid credit rating issued by one of the international credit rating agencies, provided that it is not less than (B+) from A.M Best, or (BBB) from Standard & Poor’s (S&P) or (BBB) from Fitch or (Baa) from Moody’s.

For the registration of commercial reinsurers, the Authority demands compliance with at least two specific financial metrics: a minimum credit rating of BBB- (Fitch or equivalent) for the country of operation, paid-up capital of not less than $75 million USD, or shareholders’ equity of not less than $125 million USD. Takaful reinsurance companies are subject to a less stringent requirement, needing to satisfy only one of these three conditions.

Through these conditions, the Authority aims to create a strong market that includes only reinsurance companies with large financial capacities capable of paying compensation during crises. This provides the necessary protection for Egyptian insurance companies from insolvency, thereby safeguarding policyholders’ rights.

For the registration of reinsurance branches, the parent company must first be registered in FRA’s registry. The parent is required to provide a binding guarantee that acknowledges complete liability for all reinsurance business undertaken by the branch in Egypt.

Additionally, the new controls mandates that registering companies submit an application using the official form, backed by robust documentation. This includes the foreign regulatory license, the latest international credit rating and financial statements with the auditor’s report for the past three years. Key submissions also require a detailed technical feasibility study outlining the business plan and company’s commitment to transfer technical expertise to the Egyptian market, alongside the full organizational structure and manager details in addition to any other documents requested by the Authority.

The Authority imposes several continuous compliance duties on insurance companies. These obligations require companies to set aside technical provisions and ensure their timely release in the corresponding quarter of the following year. Furthermore, insurers must verify the accuracy of all submitted data and documents during both registration and subsequent re-registration periods. For ongoing oversight, companies must provide the Authority by the end of March each year with documentation confirming their continued dealings exclusively with registered reinsurance entities. They are also required to submit an annual statement detailing the concentration calculation for all reinsurance companies, branches and brokers they deal with, including the countries of origin and must immediately notify the Authority of any changes affecting the previously submitted data or documents.

To control concentration ratios, the controls set explicit limits for reinsurance operations in both property and life/persons insurance. Specifically for property insurance, no more than 25% of the total reinsurance portfolio may be ceded to any single reinsurer. Furthermore, the total business ceded to multiple reinsurers controlled by the same legal entity must be capped at 30% of the total portfolio.

The regulation also stipulates that the ceded ratio must not exceed 50% if the reinsurer holds 50% or more ownership of the insurance company. Additionally, the percentage of operations with all reinsurers in a single country must not exceed 40%. This single-country limit is raised to 60% only if the local insurance company is majority-owned (directly or indirectly by a percentage exceeding 50%) by one or more reinsurers from that specific country.

As for life/persons insurance, FRA controls obligates companies whose reinsurance operations exceed 30% of the total risk premiums not to allow the percentage of current reinsurance operations with a single reinsurer to exceed 30% of the total portfolio.

The new controls empower FRA Board to de-list any firm or branch if it fails to maintain any required registration condition, remains inactive by failing to cede any operations for two consecutive years, or is found to have violated its obligations or engaged in practices that harmed the Egyptian insurance market.

The Authority emphasizes that while a company may be de-listed, this action does not relieve the reinsurer of its financial and technical liability for existing obligations with Egyptian insurers. Re-registration is permissible once the violation leading to the de-listing has been resolved.

Insurance companies must regularize their status under the new rules within one year of the effective date (extension possible by FRA). Non-compliant companies and branches will be excluded from the approved list. Excluded entities have a two-month period to submit a request for re-registration with justification.

The Authority is currently developing an official online registry that will feature only those reinsurance companies compliant with the new controls.

It is noteworthy that FRA’s previous approved reinsurers’ registry, which operated under the now-revoked controls, was comprehensive. It contained 268 active reinsurance companies across 47 countries globally, in addition to 16 active branches of foreign firms, guaranteed by their parents, representing 10 countries.

FRA Board resolution no. (230) of 2025 requires all current and new companies and branches to meet the new controls, particularly the credit rating and solvency requirements. Compliance is mandatory within one-year grace period to ensure continued registration.