Digest of the regulation on change in shareholding, amalgamation, and transfer of a portfolio of insurers and reinsurers

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REGULATORY DIGEST- REGULATION N° 46/2022 OF 02/06/2022 GOVERNING CHANGE IN SHAREHOLDING, AMALGAMATION AND TRANSFER OF PORTFOLIO OF INSURERS AND REINSURERS

1. Background

Recently, following the newly enacted Insurance law, the above regulation was reviewed in the preamble to refer to the new laws. It reviewed and repealed Regulation n° 34/2020 of 08/06/2020 governing change in shareholding, amalgamation, and transfer of portfolio of insurers and reinsurers.

2. Regulatory Key highlights

Prohibitions:Article 4 of this regulation prohibits any licensed insurer or reinsurer from carrying out one of the following actions before the approval of the Supervisory Authority:

  1.  increase, acquire, or transfer significant holding or controlling interest; and

  2.  carry out transactions of amalgamation or portfolio transfer or demutualization.

A general insurer shall not amalgamate or enter into an agreement of acquisitions or portfolio transfer with a long-term insurer and vice versa.

Restrictions on shareholding:Article 5 provides that no natural person including his or her related party or a corporate body including its related party owned or controlled by one natural person other than a sound financial institution or commercial public institutions shall directly or indirectly own or acquire more than 25% of the shares of a private insurer.

Requirements for increase and acquisition of shares in an insurer or reinsurer: An insurer or reinsurer seeking to increase, acquire, or transfer shares equivalent to significantholding or controlling interest, apply in writing to the Supervisory Authority, by fulfilling the personal declaration form annexed to regulation on licensing requirements, for assessment and approval as per Article 8.

Amalgamation and portfolio transfer: According to Articles 12-17 of this regulation, any insurer or reinsurer seeking to affect amalgamation or portfolio transfer shall seek non-objection to the Supervisory Authority by submitting relevant documents, including BoD resolution, actuarial reports, financial projections for the next 3 years, proposed staff rationalization, operational contingencies, business continuity management and the new name to use.

3. Implications for concerned stakeholders

Any insurer must comply with provisions of the above regulation to avoid regulatory sanctions for its violation as per Article 183 of Law n° 030/2021 of 30/06/2021 governing the organization of insurance business and Regulation no 48/2022 of 02/06/2022 on administrative and pecuniary sanctions applicable to insurers, especially in Articles 5 and 6.

To read the whole Regulation, please visithttps://www.bnr.rw/laws-and-regulations/insurance-and-pension/insurance-laws-regulations/