Oman's Capital Market Authority (CMA) has approved a revised regulation for insurance companies that will allow them to invest up to 30% of their investment portfolio abroad. Currently, the cap on investments overseas is 75%.
Mr Ahmed bin Ali Al-Maamari, Vice President for the Insurance Sector at CMA, told independent news service WAF News that the new regulation has been approved by CMA’s board of directors. Currently, approval is being sought from other relevant authorities.
The new investment cap seeks to achieve a balance in directing insurance companies’ to invest at least 70% of their funds in Oman, Mr Al-Maamari said. The changes will allow insurance companies to invest in Shariah-compliant investment vehicles locally and abroad.
According to the Insurance Sector Indicators Report 2018-2019 issued by CMA, the insurance sector's investments exceeded OMR754m ($1,958m) in 2019, an increase of 22% compared to 2018 when it stood at OMR618m. The average growth of investments by insurers reached 6% over the past five years.
The same report states that the return on insurance companies’ investments increased by 29% between 2018 and 2019, to OMR23.9m in 2019, compared to OMR18.5m in 2018.
The sector’s current investment regulations were issued in 2007 and cap insurance companies' investments abroad at 75%.
Mr Al-Maamari added that the draft regulation had been deliberated on by the sector’s players.
The revised regulation sets the quota for each investment category in the insurance sector’s investment portfolio “in a manner that ensures the diversification and distribution of assets adequately so that the companies can respond efficiently to changes in the financial markets,” Mr al-Maamari told WAF.
It mandates insurance companies to furnish an investment policy approved by their boards annually. The policy must cover the company’s plans to manage risks, investment system and risk appetite. Each insurance company will produce analysis and evaluation of the risks and possible results for each and the correlation between internal risks and external factors. The companies will have to show their abilities to meet their obligations, and that the adequacy of its capital will not be affected by these risks.