Insurance companies' investments reach record highs
Egypt, Economics, 9/30/1997

Economic changes in Egypt such as the increasing application of market based economy, the privatization of the services sector, and expanding the owning ratio have affected the insurance market with regards to both the volume of work and the tools that these companies offered to improve and develop the economic performance of projects in the investment environment and to provide more investments in the Egyptian economy.

Numbers indicate that the investments of the 9 insurance companies are LE 8.5 billion in December 1996 compared to LE 7.4 billion in 1995, an increase of 14.4%. Investments in the public sector alone are about LE 6.6 billion which represents 92.4% of the total investments of the Egyptian insurance market.

The increase in the investments this year is mainly in the real estate field. The profits from investing in this field are about LE 700 million. The insurance companies' investments in the deposits and the treasury bonds decreased which is in line with the policy of the government aiming to support the stock exchange.

It is worth mentioning that the investment activities of the insurance companies are subject to the law No. 91 issued in the year 1995 and its executive regulations. This law specifies the types of investments for the insurance companies.

The investments of the insurance companies are as follows: 52% in government treasury bonds, 15% in fixed proceeds bonds, the rest, 33%, in shares in investment companies.

The first legislation on overseeing and inspecting insurance work was issued in 1939. After the passage of tens of years it was found that the legislation contains many shortcomings. So the Law No. 156 for the year 1950 was issued followed by the Law No. 195 for the year 1959 to regulate the supervision operations. The Law No. 10 for the year 1981 was issued to regulate the operations of the Egyptian insurance market.

But the government's reform policies aiming at boosting the role of the private sector, encouraging the foreign capital and liberating all the economic sectors including the insurance sector necessitated amending Law 10.

Consequently the Law 91 for the year 1995 was issued and since then the percentage of the insurance companies' investments in stocks increased from 15% in the past to about 30% of their total investments. The insurance companies started to put more investments in the stock exchange market to invest in all circulated shares, stocks and treasury bonds.

It is expected that the insurance companies' investments in this sector will increase when privatization will be applied to the insurance companies.

In short, the horizons of the insurance companies' investments in Egypt got wider, and the stock exchange market got stronger when the insurance companies entered it.

Previous Stories:
  American ambassador in Cairo: Egyptian economy was not affected by the current tension in ME   (9/26/1997)
  Egyptian Ministry of Supply increases exports to US   (9/25/1997)
  Egyptian businessmen visit North African countries   (9/23/1997)

Please add a link on your webiste pointing to ArabicNews.com and bookmark ArabicNews.com & subscribe to our daily email news bulletin.

Search