The South African Financial Services Board (FSB) has proposed updates to alter the regulatory framework under which reinsurance business will be carried out in the country in the future, according to law firm Clyde & Co.
The FSB plans to allow foreign reinsurers to operate in South Africa through a branch, as long as their home jurisdictions have equivalent regulatory frameworks.
Regulatory tweaks such an adjustment to the credit rating of locally registered reinsurers, as well as prohibitions on fronting and soliciting business in South Africa on a cross-border basis, have also been proposed.
According to Ernie Van der Vyver, partner, and Johann Spies, senior associate, both of Clyde & Co: “[The proposals] reflect a substantial deviation by the FSB from its previous proposals, which included assumed downward credit rating adjustments in respect of foreign reinsurance supplied on a cross-border basis, branches of foreign reinsurers and Lloyd's, and a prohibition on reinsurers conducting composite business, both proposals which appear to have been abandoned.”
“While the FSB has yet to propose draft regulations for public comment encapsulating the amendments to the reinsurance framework, it would appear that the proposals are crystallising.”
