Mohamed Omran, Chairperson of the Financial Regulatory Authority (FRA), said that the authority aims to develop a “special model for self-assessment of risk management for private insurance funds”, after the total investments of private insurance funds in Egypt had jumped to about EGP 102bn.
The new model will help to better understand and manage the risks these funds face, enabling those in charge of managing private insurance funds to take the necessary effective corrective and preventive measures, limiting the negative effects of the various risks they are exposed to.
In a step to overcome the uncertainty faced by non-banking financial institutions and bodies, at the heart of which are voluntary retirement funds, when drawing up their investment policies, which benefit about 5 million Egyptian citizens who pay annual contributions estimated at about EGP 13.6bn at the end of 2021.
This came during the participation of Omran as a speaker in the Fifth Annual Conference on Alternative Investments for African Pension Funds, which was held in Mauritius on 14-15 July, to discuss how to increase the investments of pension funds – known in Egypt as private insurance funds – and to search for investment alternatives to achieve the highest returns, taking into account the risks associated with these alternative investments and seeking to enhance their sustainability for the funds, in light of the uncertainty caused by successive international crises, and the consequent need to explore the global economic environment in addition to the environment associated with Africa, and to study performance expectations on the medium and long term, in light of the continuing global trend to recover from the effects of the Coronavirus pandemic.
Omran spoke in the first session of the conference under the title “Regulatory Radar, and the Most Important Developments in Non-Banking Financial Markets” about the importance of private insurance funds in Egypt – the number of which is in effect about 694 at the end of 2021 – as financial systems that provide optional pension (retirement) benefits to a broad sector. It is monitored according to the risk-based control method to ensure the financial stability of the fund and the quality of managing its investments, which were estimated at EGP 102.3bn at the end of last year.
He added that upgrading private insurance funds – which include funds with specific retirement benefits or funds with retirement benefits and monthly pensions – requires continuous assurance of the funds’ ability to fulfil their obligations towards their members, and to maximize their performance in accordance with international standards in supervising and controlling the activity of funds, especially the principles of the International Organisation of Pension Supervisors (IOPS).
Omran reviewed the most important features of the Egyptian experience and the current development of private insurance funds, praising the amendments to the executive regulations of the Law of Private Insurance Funds, which were issued in 2015, which allowed the appointment of an investment manager responsible for managing the investments of these funds, as well as issuing a guide to governance rules for private insurance funds – for the first time – with the aim of enhancing the performance of the rational management of these funds.
