In brief:
- On 10 October 2025, the Central Bank of the UAE issued circular No. 4/2025 dated 1 May 2025 entitled the Insurance Group Supervision Regulation (“Regulation”).
- The Regulation aims to ensure effective supervision of insurance companies at both individual and group levels. Further, the Regulation formalizes the regulatory framework for holding companies and facilitates supervisory cooperation.
- The Regulation applies to insurance companies incorporated in the UAE that are parents of at least one company, holding companies identified by the Central Bank and companies that are part of a group led by a parent or holding company. However, the Regulation does not apply to branches of foreign insurance and reinsurance companies.
The Central Bank of the UAE (“CBUAE”) issued the Regulation in its capacity as the regulator of the insurance sector. Although the CBUAE sent the Regulation to insurance companies licensed by the CBUAE, it has not yet come into force. The circular issued by the CBUAE provides that the Regulation will be published in the official gazette and shall become effective one month from the date of its publication in the official gazette. As at the date of this article, the Regulation has not yet been published in the official gazette.
When is the entity considered a parent or holding company?
The Regulation defines the holding company to be based on either of the two following criteria: (a) controlling 15% of the insurance market or (b) deriving over 50% of its revenue from insurance activities. The CBUAE may exclude entities that meet the criteria temporarily from the scope of application of the Regulation and such entities will not be required to comply with the Regulation. Being identified as a holding company by the CBUAE triggers certain responsibilities and reporting obligations on the holding company/parent.
What are the responsibilities of a parent/holding company?
The parent/holding company must:
- Ensure compliance with CBUAE laws and regulations, including corporate governance and risk management;
- Report significant risk concentrations and intragroup transactions to the CBUAE; and
- Take corrective actions as required by the CBUAE.
What are the reporting obligations of the parent/holding company?
The reporting obligations of a parent/holding company under the “Regulation" are as follows:
1. Immediate Notifications:
Holding companies must promptly notify the CBUAE in the following cases:
- Changes in ownership: Increase or decrease of 10% or more in ownership of capital or voting rights.
- Changes in board composition: Any change in the board of directors, including vacancies.
- Mergers or acquisitions: Plan to merge with or be acquired by another entity.
- Financial distress: Becoming insolvent, likely to become insolvent, inability to meet obligations, or suspension of payments.
2. Meeting Records:
- The board of directors must maintain records of meetings where insurance-related issues are discussed.
- Copies of meeting minutes must be provided to the CBUAE upon request.
3. Audited Financial Statements:
- Holding companies must submit their audited annual consolidated financial statements to the CBUAE.
Authority of the CBUAE to designate a reporting entity
The CBUAE may designate one company within the group to fulfill the reporting requirements at the group level, including those outlined in Articles 4 (Risk Concentration Reporting) and Article 5 (Intragroup Transactions Reporting).
Are other parties subject to reporting obligations under the Regulation?
Not only does the Regulation impose obligations on the parent/holding, but also imposes obligations on the external auditors of insurance groups.
The external auditor of the holding company must meet with the CBUAE as required for insurance supervision purposes. The external auditor must also report to the CBUAE any issues related to the holding company as per the insurance law. Reports made in good faith will not be considered a breach of the external auditor’s professional obligations.
The CBUAE powers under the Regulation
The CBUAE may conduct on-site inspection to verify information related to insurance group supervision, financial soundness, and compliance with regulations.
Holding company board members, senior management, and employees must not:
- Prevent or obstruct inspections or audits;
- Conceal requested data, records, or books; or
- Issue inaccurate or misleading statements or provide false data.
In summary, the CBUAE, through the Regulation, extends its supervisory authorities to even the companies that are not licensed by the CBUAE as insurance companies, provided that such companies can be classified as parent or holding companies and form an insurance group within the meaning of the Regulation. Once classified by the CBUAE as a parent or holding company, for an insurance group, the company will be subject to the Regulation. Such classification triggers all the reporting obligations as well as the supervisory authorities of the CBUAE. Therefore, investment companies need to reconsider their position in respect of their investment in the insurance sector and whether they fall under the Regulation.
Should you require any information on the Insurance Group Supervision Regulation, please contact Yasser Omar, Executive Partner, and Head of Corporate and Commercial, Abu Dhabi. Telephone +971 2 205 5300 or y.omar@hadefpartners.com.