Egypt's Financial Regulatory Authority (FRA) on Monday introduced its first comprehensive regulations for reinsurance companies and their branches, aiming to strengthen the insurance sector, protect policyholders, and align the market with international standards. The new framework, outlined in Decision No. 230 of 2025, creates an official list of approved reinsurers that licensed Egyptian insurers can work with, barring entities that have harmed the market in the past three years. The decision also imposes strict requirements on financial solvency, international credit ratings, and operational oversight. Under the decision, reinsurers must be supervised by a foreign regulatory authority and hold a valid credit rating of at least B+ (A.M. Best), BBB (S&P or Fitch), or Baa (Moody's). Commercial reinsurers must at least two of the following criteria: operate in a country with a Fitch credit rating of BBB- or higher, maintain at least $75 million in paid-up capital, or have shareholders' equity of at least $125 million. For Takaful reinsurers, must meet at least one of these standards. The authority aims to create a robust reinsurance market by applying these requirements, ensuring that only companies with strong financial capacity capable of covering claims during crises can operate in Egypt. This, in turn, protects Egyptian insurers and safeguards policyholders' rights. For the registration of reinsurance branches, the authority requires that the parent company be registered with the FRA and provide a letter of guarantee assuming full responsibility for the branch's activities carried out on behalf of Egyptian insurers. Companies seeking registration must submit an application using the designated form, accompanied by a reinsurance license from the foreign regulatory authority, the latest international credit rating report, and financial statements with auditors' reports for the past three years. They must also provide a technical feasibility study detailing their planned operations in Egypt, including the business and operational plan, contribution to technical expertise transfer, organisational structure with key managers and authorised signatories, contact details, and any additional documents requested by the authority. Egyptian insurers are required to reserve technical provisions and release them in the corresponding quarter of the following year. They must also verify the accuracy of all submitted documents and data for registration or re-registration, provide an annual report to the authority by the end of March confirming continued dealings with registered companies and branches, including a concentration account for companies, branches, and reinsurance brokers involved and their countries of origin, and report any changes to the required information or documents. The rules also limit risk concentration. In property insurance, no single reinsurer may cover more than 25 per cent of a company's reinsurance portfolio, while total exposure to related entities may not exceed 30 per cent. In personal insurance, reinsurance operations exceeding 30 per cent of total risk premiums must not allocate more than 30 per cent to any single reinsurer. The decision also sets a 50 per cent limit if a reinsurer owns 50 per cent or more of an insurance company. Exposure to reinsurers in a single country cannot exceed 40 per cent, and it must not exceed 60 per cent if the insurance company is directly or indirectly owned by one or more reinsurers in that country holding more than 50 per cent. For life and personal insurance, the decision requires that if reinsurance operations exceed 30 per cent of total risk premiums, no single reinsurer may cover more than 30 per cent of the portfolio. The authority's board has the right to delist any company or branch that fails to meet registration criteria, does not assign business for two consecutive years, breaches its obligations, or engages in practices that harm the Egyptian insurance market. Delisting does not exempt the company from fulfilling its obligations to Egyptian insurers, and re-registration is permitted once the reason for delisting has been resolved. All existing and new reinsurers and branches must comply with the rules within one year, with the FRA permitted to extend the deadline if needed. The authority plans to publish the approved list of compliant companies on its official website. Under the previous framework, 268 active reinsurance companies from 47 countries and 16 foreign branches from 10 countries were registered; all must now meet the updated standards. Attribution: Amwal Al Ghad English
