The Financial Regulatory Authority has issued a new rule requiring government insurance funds to invest 5%-20% of their total assets in shares listed on the Egyptian Stock Exchange through open-ended investment funds, applicable when a fund's total investments exceed EGP100m ($2.1m).
The regulation sets limits on concentration risk, capping investment in any single open-ended fund at the lower of 5% of the insurance fund’s total assets or 10% of the fund’s net asset value, with an initial six-month grace period to comply, which may be extended if needed, reported Almal News.
FRA Chairman Dr Mohamed Farid emphasised that regulating government insurance fund investments is essential to maximising returns, improving fund management and protecting beneficiaries, noting that “every pound in these funds belongs to citizens and must be preserved and grown”.
He added that since the funds serve groups often excluded by commercial insurers, their assets must be managed with the highest standards of governance and risk management.
The decision builds on earlier measures by the Authority requiring private insurance funds and companies to invest portions of their assets in open-ended funds holding listed stocks, strengthening the stock exchange’s role as a key channel for institutional investment in Egypt.