The Financial Regulatory Authority (FRA) has given authorisation for commercial insurance companies to make capital contributions to Takaful-branded insurance entities. The contributions would be considered as logistical support for Takaful insurance activity.
In Resolution No 53 of 2020, the FRA confirmed that Takaful insurance presents a different set of activities from the traditional commercial insurance. Therefore, this case is not subject to Article 40 of the Insurance Supervision and Control Law No 10 of 1981, stating that “the insurance company may not contribute to the capital of another insurance company that is engaged in its activity in Egypt”.
The FRA added that, since Takaful insurance is considered different in nature and practice from traditional commercial insurance, commercial insurance companies may contribute to the capital of Takaful insurance companies.
The FRA’s support to Takaful insurance activity has encouraged global entities to enter the Egyptian insurance market. Kenya Reinsurance Corporation (Kenya Re) has announced in March its intention to establish a Takaful reinsurance company in Egypt.
The FRA decision also prevents the legal confusion over the ownership structure of Misr Takaful Insurance – Hayat.
Misr Holding Insurance and its subsidiaries, Misr Insurance and Misr Life Insurance, in partnership with the National Bank of Egypt, Banque Misr, and Misr Financial Investment Company, signed an agreement to establish Misr Takaful Insurance – Hayat. The agreement comes with a capital of EGP 150m.
According to the FRA data, Takaful insurance companies succeeded in increasing their share of the premiums collected over the course of 2019 to 15.1%, at a value of EGP 535.6m, compared to EGP 398.7m (9.1%) in 2018.