Ownership and organisational requirements
Ownership of (re)insurers
Are there any restrictions on ownership of or investment in (re)insurers in your jurisdiction, including any limits on foreign ownership/investment?
In order to hold 5% means of control in an insurer, the holder must receive the approval of the controller of capital markets, insurance and savings.
The term ‘means of control’ covers:
- the right to vote in the general assembly of a company or in a parallel body of another incorporation;
- the right to nominate a director to a board of directors;
- the right to participate in a company’s profits by way of dividends; and
- the right to receive the balance of a company’s assets in case of liquidation after payment of the company’s debts.
There are no specific restrictions on the domicile of the owner of the means of control.
During the past few years, several foreign companies have tried to gain control over Israeli insurers. The controller demanded full disclosure of the chain of companies behind the candidates in order to ensure that they had sufficient capital and did not represent hostile buyers. As a result, most of these potential buyers (mainly Chinese investments companies) were denied the right to purchase means of control.
What regulations, procedures and eligibility criteria govern the transfer of control of/acquisition of a stake in a (re)insurer?
In order to hold 5% means of control in an insurer, the holder must receive the approval of the controller of capital markets, insurance and savings.
The term ‘means of control’ covers:
- the right to vote in the general assembly of a company or in a parallel body of another incorporation;
- the right to nominate a director to a board of directors;
- the right to participate in a company’s profits by way of dividends; and
- the right to receive the balance of a company’s assets in case of liquidation after payment of the company’s debts.
There are no specific restrictions on the domicile of the owner of the means of control.
During the past few years, several foreign companies have tried to gain control over Israeli insurers. The controller demanded full disclosure of the chain of companies behind the candidates in order to ensure that they had sufficient capital and did not represent hostile buyers. As a result, most of these potential buyers (mainly Chinese investments companies) were denied the right to purchase means of control.
Organisational requirements
Must (re)insurers adopt a certain legal structure in order to operate? If no mandatory company organisation applies, what are the common structures used?
In order to receive a licence to operate as an insurer in Israel, the applicant must:
- establish a company in Israel; or
- if the applicant is an insurer incorporated outside Israel, be registered in Israel as a foreign company.
Do any particular corporate governance requirements apply to (re)insurers, including any eligibility criteria for directors and officers?
Several circulars issued by the controller specify various corporate governance rules that insurers must adhere to, including:
- nominating an internal auditor;
- ensuring boards receive periodical information from various departments within the organisation;
- reviewing cyber risks and other potential exposure; and
- supervising outsourcing activities.
Before granting an insurer's licence, the controller will consider the suitability of the insurer’s directors, senior officers, actuaries and external and internal auditors.
When dealing with a foreign insurer, the commissioner will consider the fulfilment of capital requirements, management and types of representative in Israel.
For the controller to consider the above, applicants must submit to the controller details of the abovementioned parties, including personal details and education and professional qualifications and experience.
