Egypt Financial Regulatory Authority amends insurers’ investment fund activity rules to impose minimum net equity and free funds surplus thresholds

The Egypt Financial Regulatory Authority has issued a decision amending the rules governing insurance companies’ conduct of investment fund activities, whether on their own or with others, as part of implementing the Unified Insurance Law. The amendments require insurers to maintain sufficient allocated funds to meet policyholder obligations and introduce solvency parameters tied to investment risk through minimum thresholds for net equity and the surplus of free funds. Decision No. 304 of 2025 requires the availability of allocated funds covering an insurer’s obligations to policyholders under Article 175 of the Unified Insurance Law and full compliance with financial solvency standards based on the latest approved financial statements. Net equity must not fall below the minimum issued capital for insurance companies after excluding amounts set aside to subscribe to investment fund units (including any fund to be established) and amounts invested in the share capital of investment fund companies; the minimum capital for both life and non-life insurers is about EGP 600 million under the Authority’s Decision No. 196 of 2024. The decision also requires the surplus of free funds to be at least 10% of the minimum issued capital, applying the same exclusions; free funds are defined as funds not allocated to meet direct policyholder liabilities and form part of equity, retained earnings, or general reserves. The decision cancels the Authority’s Board Decision No. 46 of 2014 and notes the Authority’s prior requirement for insurers and reinsurers to invest at least 2.5% of paid-up capital in units of open-ended investment funds investing in listed equities, capped at 20% of paid-up capital.