FRA Allows Insurance Companies to Invest Directly in Precious Metals, Led by Gold, for the First Time in Egypt

The Financial Regulatory Authority (FRA) has approved a groundbreaking decision allowing life insurance and savings companies to invest directly in precious metals, particularly gold, marking the first initiative of its kind in the Egyptian market. The move aims to expand savings tools and diversify investment portfolios within the non-banking financial sector.

According to an official statement, Decision No. 228 of 2025 aligns with the FRA’s broader strategy to maximize investment returns for insurance companies and foster innovation in the non-banking financial system.

The decision permits insurance companies to invest directly in gold and other precious metals, whether through funds allocated to the investment portion of insurance policies or savings and accumulation contracts, provided that they first obtain prior approval from the FRA.

The FRA explained that the investment portion of insurance policies represents the part of premiums allocated for investment rather than risk coverage, while savings and accumulation contracts are long-term programs designed to help clients build wealth through safe, profitable assets.

Mohamed Farid, Chairman of the FRA, described the move as a “strategic shift in developing Egypt’s savings and investment tools,” emphasizing that it “opens new avenues for insurance companies to enhance policyholders’ returns within a strong regulatory framework that ensures transparency and protects client rights.”

Farid added that the decision reflects the FRA’s proactive approach to financial development, noting that the authority is not only creating new investment tools but also providing safe alternatives like gold-backed investments through insurance policies, offering Egyptians diverse and secure savings options.

The new regulations introduce strict governance measures, including board-level approvals for companies, transactions conducted only through FRA-accredited entities, and independent valuation of precious metals to prevent speculative or unregulated investment practices.

Farid stressed that the decision “balances innovation with risk management,” highlighting that no investments in metals can proceed without the explicit and informed consent of the client. Customers must receive written and visual explanations of the associated risks and benefits before approving the investment, ensuring they remain the ultimate decision-makers.

Insurance companies are also required to include approved metals and targeted returns in their official investment policies, along with defined liquidity ratios to meet obligations.

The decision further sets clear rules for buying, selling, and safekeeping metals, requiring all operations to be conducted through entities registered with the FRA, in accordance with Board Resolution No. 52 of 2023, and subject to prior notification and approval from the Authority.

Companies must separately evaluate metals purchased from different sellers and contract with licensed management firms to conduct periodic valuations of metal investments, submitting all contracts to the FRA for review.

To protect investors, the FRA also mandated that companies educate clients about the nature, advantages, and risks of investing in metals through simple written materials and explainer videos, before allocating any portion of insurance premiums toward gold investments.

Additionally, insurance firms are required to disclose full details of their precious metal investments in their annual and quarterly reports, including their share of total portfolios, returns achieved, and related costs—strengthening transparency and governance, in line with Egypt’s Unified Insurance Law No. 155 of 2024.

In a related move, the FRA instructed insurance companies to invest at least 2.5% of paid-up capital in open-ended equity funds and allocate a minimum of 5% of free funds (shareholders’ equity) to these funds, as part of a broader policy to stimulate the capital market and promote institutional investment.

The FRA also announced plans to issue a new decision regulating investment rules for government insurance funds, which will set a minimum 5% allocation to the stock market and open-ended funds, further reinforcing the insurance sector’s role in financing economic growth and enhancing financial stability.