CIMA Tightens Dividend Payouts and Microinsurance Capital Rules for African Insurers

Insurance and reinsurance firms operating within the 14 member states of the Inter-African Conference on Insurance Markets (CIMA) now face significantly stricter financial prerequisites before distributing dividends to shareholders. This regulatory shift, detailed in CIMA’s first regulation of 2026, Regulation No. 0002/CIMA/PCMA/CE/2026, published on July 17, amends key provisions of the Insurance Code, with a particular focus on dividend payments and the operational framework for microinsurance companies.

The core of the new dividend rules mandates that insurers and reinsurers must satisfy three critical financial conditions: maintaining an adequate solvency margin, meeting minimum shareholders’ equity requirements, and ensuring sufficient eligible assets back their regulatory obligations. This prudential enhancement aims to bolster the financial resilience of the insurance sector across Benin, Burkina Faso, Cameroon, the Central African Republic, Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Guinea-Bissau, Mali, Niger, Senegal, Chad, and Togo. By prioritising policyholder protection over immediate shareholder returns, CIMA ensures that companies retain profits when their financial strength is insufficient to absorb potential losses or meet outstanding claims.

Emmanuel Badolo, secretary-general of the Federation of African National Insurance Companies (FANAF), highlighted that the regulation pursues two primary objectives: tightening dividend distribution conditions and enforcing a minimum shareholders’ equity level for microinsurance entities. This move is designed to prevent undercapitalised microinsurers from operating without the necessary financial buffer to manage claims and losses effectively.

For microinsurance companies, the regulation retains the minimum share capital requirement of 500 million CFA francs ($870,300) but introduces specific stipulations on its payment schedule. At least 75% of cash-subscribed capital must be paid before incorporation, with the balance due within three years. This payment timeline also applies to subsequent capital increases. Furthermore, a new shareholders’ equity floor has been established, requiring microinsurance firms to maintain equity equivalent to at least 80% of the minimum share capital, or 400 million CFA francs. Companies falling below this threshold will have one year to rectify their position, facing potential penalties under the Insurance Code if they fail to comply. This measure aims to bridge the gap between initial capitalisation and ongoing financial resource preservation, ensuring a more robust operational foundation for the microinsurance sector.

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