What is the Minimum Capital Requirement (MCR)?
The minimum capital for Lebanese insurance companies should be no less than 2,250m LBP.
Any decrease in capital should be pre-approved by the Minister of Economy and Trade based on a report prepared by the ICC, and after consulting with the National Insurance Board. MCR cannot be violated under any circumstances.
For branches of foreign companies, the minimum capital should be at least equal to 6,750m LBP
Legal references: Insurance Law, articles 13 and 15.
What are the minimum guarantees requirements?
Insurance companies should maintain guarantees as follows, subject to a minimum of 750m LBP:
1,200m LBP for each of the life, general accident, and credit branches
350m LBP for each of the fire and marine branches
750m LBP for the agriculture branch
The company may represent guarantees using cash, treasury bills, real estate or other approved financial securities.
Cash guarantees may be deposited in foreign currencies
Cash guarantees or other approved securities should be deposited and blocked with Lebanese-based banks
Real estate guarantees may not exceed 40% of the total required amount. For these guarantees, a special flag is placed on the official real estate registry
The requirement on branches of foreign companies is twice the standard requirement.
Legal references: Insurance Law, article 26.
What is the minimum solvency capital (MSC)?
The minimum solvency capital at the end of a reporting period may not be less than 10% of the total annual premiums, less cancellations, written during the 12-month period preceding the reporting period. The assessment of the solvency capital factors-in the adjusted retained earnings, following the review performed by the ICC.
The minimum solvency capital for Lebanese companies is assessed taking into consideration the paid-up capital, the retained earnings and the legal reserves. For foreign branches, it is the sum of the guarantees blocked in favor of the MOET.
Legal references: Insurance Law, article 27.
What are the admitted assets requirements?
Insurance companies should have admissible assets in excess of their technical liabilities.
Admitted assets computation is outlined in decree 2441 dated 29/6/2009.
The assessment of technical reserves is outlined in articles 22 till 24 of the Insurance Law, and in decree 10109 dated 22/3/2013.
. Insurance Law, articles 22, 24, and 27
. Decree 2441 dated 29/06/2009
How is the control fee computed?
The control fee is 2 per mil of the Gross Premium written by the insurance companies subject to a minimum equal to 2m LBP for each line of business in which the insurance company operates.
Insurance Law: article 52.
What are the main reporting requirements for insurance companies?
- >Annual financial reports should be submitted by insurance companies once every year by 31 May. They include a set of audited standard regulatory forms and the auditors annual audit report on the company’s financial statements.
Semi-annual financial reports should be submitted by insurance companies once every year by 1 October. They include a set of standard reviewed regulatory forms and the auditors semi-annual review report on the company’s financial statements.
Standard Quarterly regulatory forms are reports submitted within one month from the end of each quarter and they include some basic information reported on a quarterly basis.
The standard actuarial report must be filled by companies licensed to operate under the 1st branch of the insurance law (life companies). The report is submitted once every year at the end of May.
Published balance sheets, as per Article 101 of the Code of Commerce, all joint-stock companies including insurers must publish their balance sheets to the public within two months from the date of approval of accounts by the general assembly. Insurance companies publish their balance sheet using a standard template.
Lawyers letters declaration as per ICC circular number 1/ICC, dated 15/3/2005 is a report required to be submitted by the companies’ lawyers on a yearly basis describing the pending legal proceedings and seizures between the companies and third parties.
Declaration of Sum insured as stipulated in Ministerial Decision number 208 dated 01/08/2001, all supervised entities are required to submit on a quarterly basis, a declaration of all the underwritten policies having sum insured exceeding the Equity of the insurer.
Quarterly Auto Reports received from insurance companies as required by ICC circular reference number 2312/ICC dated 10/9/2013. They include information on the compulsory motor third party liability bodily injury line of business.
CPIS automatic email is required as per the ICC circular reference number 2741/ICC dated 10/10/2013 according to the standard template circulated by the Central Bank. It is a Quarterly Coordinated Portfolio Investment Survey which provides information on Equity Securities issued by non-residents on the assets side of insurers.
CDIS is an Annual Coordinated Direct Investment Survey which provides information on a category of international investment that implies a long-term relationship between the investor and the direct investment enterprise, with a certain degree of influence by the investor over the management of the concerned institution. It includes three subcategories: equity capital, reinvested earnings, and other capital. It is mainly classified according to its destination: direct investment abroad and direct investment in Lebanon.
What is the information that must be present in the communications of the insurance companies?
Insurance companies must clearly specify, alongside their trade names, on all papers, policies, publications, books, leaflets or printed matters that they produce and distribute to the public or publish in newspapers, the number and date of registration of insurance companies in Lebanon, and also mentioning that they are governed by the provisions of the Insurance Law.
Each insurance company has to publish its full name, paid up capital, its tax number, its commercial registration number and place of registration.
Legal references: Insurance Law, article 53.
Should a notification be made in case of changes in top management or board of directors?
The ICC should be notified of any changes in the members of the board of directors, general manager or legal representative (for foreign companies). This notification should be done in writing within two months of the change at most.
Legal references: Insurance Law, article 5 paragraph 3.
What are the requirements for external auditors and actuaries?
Insurance companies should appoint an external auditor (member of the Lebanese Association of Certified Public Accountants – LACPA). Insurance companies who sell life insurance products should appoint an actuary.
There is an obligation upon the chairman of the board of directors of Lebanese companies, or the legal representative of foreign companies and all external auditors (appointed and resigned) to notify, each separately, if the external auditor resigns or stops performing his duties within a one month period. If his post remains vacant for more than two months, the MOET warns the company to appoint a substitute within a maximum period of one month. If the company fails to comply, it will be banned by a decision from the minister from issuing new policies or renewing old ones.
Legal references: Insurance Law, articles 17 and 18, paragraphs 4 and 5.
Should insurance contracts be pre-approved by the ICC or other regulatory bodies?
All new insurance contracts or amendments to existing ones must be reviewed by the ICC. Insurance contracts should be worded in Arabic. They could be worded in other foreign languages as well which will be considered the authentic in case of any variances. The Minister of Economy and Trade may exempt some type of contracts from being written in Arabic.
. Insurance Law, article 10
. ICC Guidelines 2288/ICC dated 16/9/2015