FRA rolls out new rules regulating ins. companies’ investments: The Financial Regulatory Authority (FRA) introduced new investment allocation requirements for ins. and rein. companies, according to a statement.

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Mandatory investment in stock market funds: Under the new rules, ins. and rein. players will need to invest at least 5% of their free funds in open-ended funds that invest in EGX-listed equities. A single fund investment cannot exceed 5% of an insurer’s paid-up capital or 15% of the fund’s total assets — whichever is lower.

A chunk of their paid-up capital is also going to EGX-listed stocks: The new rules also require ins. players to invest at least 2.5% of their paid-up capital in open-ended funds that invest in EGX-listed stocks. The investment in a single fund cannot exceed 5% of the insurer’s paid-up capital or 15% of the fund’s total assets — whichever is lower.

Companies can opt to invest in stocks directly: With the FRA’s approval, companies can instead directly invest in listed stocks and have that account toward the new requirements.

The new rules also introduce a cap on equity investments: The FRA introduced a cap on the total amount ins. and reins. companies can invest in stocks or funds — their investments now cannot exceed 30% of their total funds allocated for investment. Under the new rules, no more than 5% of a company’s total investments can go to commodities and metals — be it through related funds or other instruments.

What about real estate investment funds? Under the new regulations, personal ins. companies can invest up to 10% of their investment-allocated funds in real estate investment funds. Meanwhile, the cap for property and liability ins. players comes in at 5%. The investment in a single fund cannot exceed 5% of the ins. firm’s paid-up capital or 15% of the fund’s total assets — whichever is lower.

The exception: The caps don’t apply to real estate funds the ins. company had a hand in setting up.

SOUND SMART- Free funds refer to shareholder equity, used for general business operations and investments, while allocated funds are the reserves insurers must maintain to meet future claims. The new regulations ensure a clear distinction between the two, setting different investment rules for each category to balance risk and return while protecting policyholders.

What’s next? Ins. players will have six months to meet the new investment thresholds but must immediately halt additional investments in asset classes where they have exceeded the new caps.

Stronger oversight and transparency requirements: The new regulations introduce measures tightening oversight and governance requirements for ins. firms’ investment practices, requiring companies to implement control systems to prevent errors and submit their investment policy to the FRA annually and keeping the authority up to date with any amendments to the policy.

FRA has been revisiting ins. companies’ investment guidelines: The country’s regulator amended the rules governing private ins. funds and the caps on their investments last month, a move aimed at helping them diversify their investment portfolios.

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