CBB to amend insurance capital rules
Manama, June 25, 2007
The Central Bank of Bahrain (CBB) is proposing amendments to capital requirements for branches of foreign insurance firms operating in Bahrain, the bank said.
The proposed amendment gives recognition to the support provided to the branches from their overseas parent company.
The CBB is proposing that branches of overseas insurance firms not be required to maintain a minimum amount as capital. The branches would, however, continue to be required to maintain solvency margins as set by the CBB.
At the moment these are BD500,000 ($1.3 million) for general insurance and BD400,000 for life insurance.
The CBB is currently consulting the industry and relevant market players on the proposed new requirements.
Once finalised, the new capital requirements is likely to be effective at the end of this year and will apply to all overseas insurance firms operating in Bahrain.
'The CBB has revisited the rules determining how much minimum fund overseas insurance firms should hold,' said Abdul Rahman Al Baker, executive director for financial institutions supervision at the CBB.
'We feel the new approach would be more equitable as it takes into account the support provided to the branch by its parent company overseas, while recognising that a minimum net asset value must be maintained in relation to the volume of business undertaken in Bahrain.'
The review follows discussion and feedback from key market players since the issuance in 2005 of the CBB insurance rulebook, which included new capital requirements for all insurance firms, both local and overseas.
The capital requirements for local insurers writing direct insurance business in Bahrain, as contained in the rulebook, will remain unchanged.
These require direct insurance firms to maintain a minimum tier-one capital of BD5 million, in addition to meeting the minimum solvency margin requirements.
'We welcome comments from industry and other interested parties to the proposed amendment, contained in a consultation paper which has gone out to the industry,' said Al Baker. TradeArabia News Service