Insurance and reinsurance companies operating in the 14 member states of the Inter-African Conference of Insurance Markets (CIMA) will have to meet stricter financial requirements before distributing dividends to their shareholders.
A regulation, published on 17 July, stipulates that an insurance or reinsurance company may only distribute dividends to its shareholders if it meets three requirements regarding solvency margin, equity capital, and coverage of regulated liabilities. This seeks to ensure that insurance companies have the necessary resources to fulfil their obligations to policyholders before paying dividends to shareholders.
Microinsurance
The regulation also modifies the rules applicable to microinsurance companies. It maintains the minimum share capital for microinsurers at FCFA500m ($868,000), and sets out the procedures for the formation of microinsurers. Shareholders must pay at least three-quarters (75%) of their capital contributions in cash, with the remainder to be paid within three years. The same rules will apply to capital increases.
At the same time, the regulation stipulates that the equity capital of microinsurance companies is to be at least 80% of the minimum share capital.