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Egypt: Industry head calls for doubling the minimum capital to EGP120 mln

Source: Middle East Insurance Review | Nov 2017

Egypt Regulation

The new head of the Insurance Federation of Egypt (IFE) has endorsed an increase in the minimum capital requirement of insurers.
 
   Mr Alaa El Zoheiry, who is also the Managing Director of the Arab Misr Insurance Group “gig”, said that the increase is necessary especially after the decision to liberalise the exchange rate last November that led the Egyptian pound to lose half its value against the US dollar. He suggested that the minimum capital be doubled to EGP120 million (US$6.8 million) from EGP60 million currently.
 
   He pointed out the importance of capital to retention ratios. The higher the capital, the higher the retention of business, and consequently the reduction in exporting premiums abroad, reported Al Mal.
 
   The Egyptian Financial Supervisory Authority (EFSA) is currently working on revising the insurance law that would provide for the minimum capital of insurers to increase to EGP120-150 million. The insurance law was last amended in 2008.
 
   On the readiness of insurers to list on the stock market, he said that most insurers report annual profits and growth rates. He noted that there is reluctance among shareholders of some insurers to introduce new partners.
 
   As for Arab Egyptian Insurance Group “gig” itself, Mr El Zoheiry said that the capital of the company currently exceeds EGP200 million.
 
   He also identified several growth areas in the insurance market, namely, engineering insurance, due to the increase of new projects; oil & gas insurance after recent major discoveries; and microinsurance. 
 
   He added that the IFE is currently finalising studies related to the proposed establishment of a natural disaster insurance pool.
 
   Mr El Zoheiry said that it would take time for the insurance industry to double its premium volume, which currently stands at around EGP17 billion a year. Achieving this target would require the introduction of new products, modernised marketing methods, improved after-sales service and insurance awareness development, he said. M 
 
EGP1 = US$0.06
 
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