The Egypt Financial Regulatory Authority issued a board decision establishing updated solvency margin standards for insurance and reinsurance companies under the Unified Insurance Law. The framework aims to ensure firms maintain sufficient capital to cover future obligations and strengthen proactive supervision and risk management. For property and liability insurers, the rules require solvency margin calculations under two methodologies, applying the higher of the two results, with one method set at 20% of net premiums through the financial year ending December 2027 and the other based on net claims. For personal insurance and fund formation business, the solvency margin is calculated from a prescribed percentage of insured capital plus technical provisions, net of corresponding liabilities after reinsurance, taking into account Egyptian Accounting Standard No. 50. The decision also emphasises asset quality in solvency calculations by starting from net balance sheet assets while excluding specified asset categories including certain investments, insurance contract assets and fixed assets, as well as any assets the authority deems insufficiently secured following technical review. Intangible assets, overdue receivables and investments in insurance subsidiaries are among the excluded items, and technical provisions may not be counted as assets. Where a company’s solvency margin falls below legal limits, the authority may require a time-bound remediation plan that can include profit retention, capital increases or conditional shareholder financial support, without prejudice to Article 201 of the Unified Insurance Law.
Egypt Financial Regulatory Authority 2025-08-05
Egypt Financial Regulatory Authority issues updated solvency margin rules and tightens asset eligibility for insurers and reinsurers
The Egypt Financial Regulatory Authority updated solvency margin standards for insurance and reinsurance companies under the Unified Insurance Law to ensure sufficient capital coverage and enhance supervision. Property and liability insurers must calculate solvency margins using two methodologies, applying the higher result, while personal insurance calculations are based on insured capital and technical provisions. The decision mandates asset quality considerations and allows remediation plans if solvency margins fall below legal limits.