The Board of Directors of Egypt’s Financial Regulatory Authority (FRA), chaired by Mohamed Farid, has issued Decree No. 196 of 2024, setting new minimum capital requirements for insurance companies. The decree implements provisions of the Unified Insurance Law issued in July 2024.
The decree mandates a phased capital increase for most insurers over two years. Companies must increase their issued and paid-up capital to EGP 400m within one year of the decree’s effective date. By the end of the second year, the minimum capital will rise to EGP 600m..
Specific minimum capital requirements are set for different types of insurers. Property and Liability Insurers (including Petroleum, Aviation, or Energy) must have EGP 400m in the first phase, plus EGP 50m for each petroleum, aviation, or energy branch operated. This rises to 600 million Egyptian pounds in the second phase, with the same additional requirement for specified branches.
Microinsurance Companies require EGP 40m. Specialized Insurance Companies (single branch) and Specialized Medical Insurance Companies each need EGP 75m. Reinsurance Companies face the highest requirement at EGP 1bn. All companies subject to the decree must comply within one year of its effective date.
The FRA stated that the increased capital requirements aim to enhance the financial solvency of insurance companies, enabling them to underwrite larger risks and contribute to greater financial stability within the sector.
The increased capital base is also intended to support the expansion of insurance coverage and financial inclusion. Additionally, the FRA stated that the decree facilitates companies’ adoption of modern software and information systems to improve service delivery and ensures their ability to meet obligations to policyholders.
The decree also establishes minimum capital requirements for related businesses. Medical Insurance Programme Management Companies require EGP 20m. Insurance and Reinsurance Brokerage Companies need EGP 5m. Risk Assessment, Damage Assessment and Appraisal, Insurance Consulting, and Actuarial Expertise Companies each require EGP 3m.
All capital must be fully paid in Egyptian pounds or the equivalent in freely convertible foreign currencies accepted by the Central Bank of Egypt. Companies are required to submit a schedule outlining their capital increase plans within one month of the decree’s effective date. They are also prohibited from distributing cash dividends to shareholders before meeting the minimum capital requirements without prior approval from the FRA.
This decree aligns with the FRA’s mandate to supervise and regulate non-banking financial markets and instruments. The FRA says that the decree aims to strengthen the insurance sector’s capacity and contribution to the national economy, implementing the provisions of the Unified Insurance Law issued in July 2024. This law consolidates four previously separate insurance laws, which the FRA describes as a step towards streamlining and digitizing financial transactions and leveraging financial technology to broaden insurance coverage.
