Egypt’s financial watchdog will allow insurance and reinsurance companies operating in the country to assign part of their investment portfolios to portfolio management or investment funds in Egypt, its chairman Sherif Samy told Reuters on Tuesday.
Insurance firms previously managed their own funds and did not outsource to fund managers. The change aims to boost fees for fund managers and improve returns for the insurers.
Egypt’s economy has been battered by more than three years of political turmoil since a popular uprising ousted Hosni Mubarak in 2011, driving away tourists and foreign investors.
“The decision is not mandatory for firms. It helps firms manage their fund portfolios in a professional manner and helps portfolio management companies and investment funds to find an additional source of income,” Samy said.
According to the country’s official gazette, which published the decision, insurers’ funds can be invested in cash deposits, bank saving certificates, government securities, bonds and sukuk or Islamic bonds as well as mutual funds and stocks.
“This decision will surely increase the profits of fund management companies and financial portfolios,” said Karim Abdelaziz from al-Ahly Fund & Portfolio Management.