News05 Dec 2017

UAE:Reinsurers should be public companies -- IA

| 05 Dec 2017

The UAE Insurance Authority (IA) will require reinsurers to be public shareholding companies with at least 51% of the capital to be owned by UAE nationals or GCC nationals or by legal persons fully owned by UAE nationals or GCC nationals, according to draft regulations on reinsurers promulgated by the regulator.

The draft regulations provide for the establishment and licensing of reinsurance companies in the UAE; the registration and licensing of branches of foreign reinsurers in the UAE and the endorsement of IA-licensed insurers, to carry on reinsurance business. 

The subscribed and paid-up capital of the reinsurance company shall not be less than AED250 million (US$68 million) and the authority may determine a minimum capital for the company greater than AED250 million, the draft regulations say.

The regulations, when they take effect, will have other far-reaching provisions.

Among them, a local insurer cannot cede a risk to another insurance company "unless the other company is licensed by the competent regulatory and supervisory authority to practise the type and class of insurance entrusted to it to reinsure".

Takaful insurers can obtain reinsurance from reinsurers that also carry on takaful/non-takaful provided their reinsurance is only funded from the takaful operations of the reinsurer.

Applicants for a reinsurance company licence need to provide comprehensive information as part of their application including a five-year feasibility study, details as to their retrocession coverage as well as general fit and proper eligibility of founders/key management.

Foreign company branches must supply similar information albeit in respect of parent/wider group operations. They must also provide a three-year work plan, actuarial certification of the applicant’s compliance with technical provisions, solvency margin and minimum capital requirements and the proposed funds to be held in the UAE to meet local obligations.

Foreign reinsurers need to maintain a rating at least equivalent to Standard & Poor’s – BBB, Moody's – Baa, AM Best – B+, or Fitch Ratings – BBB. Importantly, the rating must be granted on the basis of the internal information of the company, not on its published financials alone, and the company cannot be incorporated in a state that has a lower rating than the above minimum ratings.

The draft regulations state that insurance and reinsurance companies must reconcile their positions with the provisions stipulated in the regulations within 12 months from the date they come into effect.



| Print | Share

Enter the code shown above in the box below.

Note that your comment may be edited or removed in the future, and that your comment may appear alongside the original article on websites other than this one.


Recent Comments

There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.

Follow Asia Insurance Review