According to Sultan bin Saeed Al Mansouri, the UAE minister of the economy and the chairman of the Insurance Authority, the regulations "put the UAE at the forefront of the Middle East with regard to adopting the latest solvency requirements similar to the European model."
The Insurance Authority has set a ceiling of 30% for overall exposures to real estate assets. For equity assets including units in mutual funds in listed and unlisted companies within the UAE, 30% has been set as the ceiling for overall exposures; for equities outside the UAE the limit is 20%.
The authority has also set a limit for exposure to cash and deposits of 5%.
Any companies with asset allocations that are higher than these limits have three years from the start of February 2015 to adjust their positions in accordance with the new regulations.
Rating agency AM Best said that it views the move by the authority as a positive development for the insurance market.
"The introduction of the new financial regulation should improve the consistency of financial reporting, create greater transparency and improve disclosure requirements for companies in the market," Mahesh Mistry, director - analytics at AM Best, said. "The scope of changes outlined by the Insurance Authority will see the regulatory framework within the United Arab Emirates moving towards stronger regulatory principles. The new regulations should ultimately remove inconsistencies between companies and allow the same basis for comparison."
