The Financial Regulatory Authority (FRA) has revived and officially taken over the initiative to establish a national reinsurance company. Moves to set up such a reinsurer had failed to take off with several stops and starts, since a committee was formed to oversee its establishment in 2014.
The goal in reviving the initiative is to reduce the outflow of foreign currencies through premiums payable to foreign reinsurers, reported Al Mal News. This was also the reason for the original plan to set up the reinsurer.
Mr Reda Abdel Moaty, FRA Vice Chairman, said that the Authority is coordinating with the Insurance Federation of Egypt (IFE) and the country’s biggest insurance group, Misr Insurance Holding, to study the details of the project and the obstacles that could be faced when setting up a national reinsurer.
FRA may add a provision in the proposed new insurance law, currently being prepared, to allow for the establishment of a national reinsurance company. A senior official said the new legislation may mandate that insurers contribute a share of their premiums to the new entity.
The Authority will lend full support to the reinsurer, including coordinating with the Ministry of Investment, to promote the proposed reinsurer to investors domestically and abroad.
The idea of a Egyptian national reinsurer had been mooted for more than three years. The reinsurer was proposed to replace Egypt Re after the latter was merged in 2007 with state-owned Misr Insurance. The aim was to serve the Egyptian, Arab and African insurance markets. Its objectives were also to retain business in Egypt and maintain foreign exchange resources in the country.
In December 2016, Misr Insurance Holding officially took over the lead in the project from the IFE.
The stumbling block to the creation of the reinsurer has been insufficient investor interest. The previous IFE-led committee, which oversaw preparations for the establishment of reinsurance company, said it had attracted 37% of the total proposed capital of the reinsurer. The lack of interest led the committee to slash the proposed capital of the reinsurer from US$200 million to $50 million. M