Egypt: Regulator issues decision on insurers allocating funds to asset managers
Source: Middle East Insurance Review | Apr 2023
The Financial Regulatory Authority (FRA) has released rules governing insurance companies commissioning investment companies to manage their investment portfolios. The goal is to help insurers earn more attractive investment returns.
Decision No 3 of 2023 sets out the criteria to be met when insurance companies choose asset managers to handle their investment funds, according to a report by Amwal Alghad.
Investment companies eligible to manage the funds of insurance companies must meet several requirements, among which are:
- The asset management company must be licensed by the FRA;
- The asset management company has been engaged in investment activities for at least five years;
- The average value of the portfolios the asset management company manages should not be less than EGP2bn ($65m) in the year preceding its sealing of a fund management contract with the insurance company, after excluding the value of the portfolio or funds transferred to it from the insurer; and
- The value of the portfolio assigned by the insurer to be managed does not exceed 50% of the total value of all portfolios managed by the asset management company.
FRA chairman Mohamed Farid said the decision grants flexibility to insurance companies to increase their investment returns, by allocating some of their funds to portfolio management companies. The insurers can also leverage the capabilities of investment management companies in research and analysis. M