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Location: Central Bank of Bahrain Volume 3—Insurance > Part A > Reporting Requirements > BR CBB Reporting > BR-2 Notifications and Approvals
  • BR-2 Notifications and Approvals

    • BR-2.1 Introduction

      • BR-2.1.1

        Insurance licenseesG are required to provide the CBB with a wide range of information to enable it to meet its responsibilities for monitoring the insurance licensee'sG compliance with requirements imposed by or under the CBB Law. Some of this information is provided through regular reports, whereas others are in response to the occurrence of a particular event such as a change in name or address. The following sets out several of the commonly occurring reports for which an insurance licenseeG will be required to notify the CBB or seek its approval.

        Amended: January 2007
        Amended: October 2007

      • BR-2.1.2

        All notifications and approvals required in this Chapter are to be submitted by insurance licenseesG in writing.

    • BR-2.2 Notification Requirements

      • Matters Having a Serious Supervisory Impact

        • BR-2.2.1

          An insurance licenseeG must provide written notification to the CBB immediately it becomes aware, or has information which reasonably suggests, that any of the following has occurred, may have occurred or may occur in the foreseeable future:

          (a) The insurance licenseeG failing to satisfy one or more of the Principles of Business referred to in Module PB;
          (b) Any matter which could have a significant adverse impact on the insurance licensee'sG reputation;
          (c) Any matter which could affect the insurance licensee'sG ability to continue to provide adequate services to its customersG and which could result in serious detriment to a customerG of the insurance licenseeG ; or
          (d) Any matter in respect of the insurance licenseeG that could result in serious financial consequences to the financial system or to other insurance licenseesG .
          Amended: January 2007
          Amended: October 2007

        • BR-2.2.2

          The circumstances that may give rise to any of the events in Paragraph BR-2.2.1 are wide-ranging and the probability of any matter resulting in such an outcome, and the severity of the outcome, may be difficult to determine. However, the CBB expects insurance licenseesG to consider properly all potential consequences of events.

          Amended: January 2007

        • BR-2.2.3

          In determining whether an event that may occur in the foreseeable future should be notified to the CBB, an insurance licenseeG should consider both the probability of the event happening and the severity of the outcome should it happen. Matters having a supervisory impact could also include matters relating to a parent undertakingG or controllerG that may indirectly have an effect on the insurance licenseeG .

          Amended: January 2007

      • Breaches of Rules and Other Requirements

        • BR-2.2.4

          An insurance licenseeG must notify the CBB of:

          (a) A significant breach of any provision of the Rulebook (including a Principle);
          (b) A breach of any requirement imposed by the relevant law or by Regulations or an order made under any relevant law by the CBB; or
          (c) The bringing of a prosecution for, or conviction of, any offence under any relevant law against the insurance licenseeG that would prevent the insurance licenseeG from meeting the Principles or Business (Module PB) or any of its DirectorsG , officersG , approved personsG , or appointed representativesG from meeting the fit and proper requirements of Module AU.
          Amended: January 2007
          Amended: October 2007

        • BR-2.2.5

          An insurance licenseeG must make the notification in Paragraph BR-2.2.4 immediately it becomes aware, or has information which reasonably suggests, that any of the matters in Paragraph BR-2.2.4 has occurred, may have occurred or may occur in the foreseeable future (refer also to Paragraph EN-8.2.3).

          Amended: January 2007

      • Legal, Professional, Administrative or other Proceedings Against an Insurance Licensee

        • BR-2.2.6

          An insurance licenseeG must notify the CBB immediately of any legal, professional or administrative or other proceedings instituted against the insurance licenseeG , controllerG or a close linkG including a parent undertakingG of the insurance licenseeG that is known to the insurance licenseeG and is significant in relation to the insurance licensee'sG financial resources or its reputation.

          Amended: January 2007

        • BR-2.2.7

          The requirement imposed on insurance licenseesG under Paragraph BR-2.2.6 applies whether the event relates to a matter that has occurred in Bahrain or in any other jurisdiction.

      • Fraud, Errors and other Irregularities

        • BR-2.2.8

          An insurance licenseeG must notify the CBB immediately if one of the following events arises and the event is significant:

          (a) It becomes aware that an employeeG may have committed a fraud against one of its customersG ;
          (b) It becomes aware that a person, whether or not employed by it, is acting with intent to commit fraud against it;
          (c) It identifies irregularities in its accounting or other records, whether or not there is evidence of fraud;
          (d) It suspects that one of its employeesG may be guilty of serious misconduct concerning his honesty or integrity and which is connected with the insurance licensee'sG regulated or ancillary activities; or
          (e) Conflicts of interest.
          Amended: April 2010
          Amended: October 2007
          Amended: January 2007

      • Meaning of the term 'significant'

        • BR-2.2.9

          For the purposes of this Chapter, in determining whether a matter is significant, an insurance licenseeG should have regard to:

          (a) The size of any monetary loss or potential monetary loss to itself or its customersG (either in terms of a single incident or group of similar or related incidents);
          (b) The risk of reputational loss to the insurance licenseeG ; and
          (c) Whether the incident or a pattern of incidents reflects weaknesses in the insurance licensee'sG internal controls.
          Amended: January 2007
          Amended: October 2007

        • BR-2.2.10

          In addition, if the insurance licenseeG may have suffered significant financial losses as a result of the incident, or may suffer reputational loss, the CBB will wish to consider this and whether the incident suggests weaknesses in the insurance licensee'sG internal controls.

          Amended: January 2007

      • Insolvency, Bankruptcy and Winding Up

        • BR-2.2.11

          Except in instances where the CBB has initiated the following actions, an insurance licenseeG must notify the CBB immediately of any of the following events:

          (a) The calling of a meeting to consider a resolution for winding up the insurance licenseeG , a controllerG or close linkG , including a parent undertakingG of the insurance licenseeG ;
          (b) An application to dissolve the insurance licenseeG , a controllerG or close linkG , including a parent undertakingG of the insurance licenseeG or to strike the insurance licenseeG off the Register of Insurance Companies;
          (c) The presentation of a petition for the winding up of the insurance licenseeG , a controllerG or close linkG , including a parent undertakingG of the insurance licenseeG ;
          (d) The making of any proposals for the making of a composition or arrangement with any one or more of the insurance licensee'sG creditors;
          (e) An application for the appointment of an administrator or trustee in bankruptcy to the insurance licenseeG , a controllerG or close linkG , including a parent undertakingG of the insurance licenseeG ;
          (f) The appointment of a receiver to the insurance licenseeG , a controllerG or close linkG , including a parent undertakingG of the insurance licenseeG (whether an administrative receiver or a receiver appointed over particular property); or
          (g) An application for an interim order against the insurance licenseeG , a controllerG or close linkG , including a parent undertakingG of the insurance licenseeG under the Bankruptcy and Composition Law, Decree Law No (11), 1987 or similar legislation in another jurisdiction.
          Amended: April 2010
          Amended: January 2007

      • Other Supervisors

        • BR-2.2.12

          An insurance licenseeG must notify the CBB immediately if it becomes subject to or ceases to be subject to the supervision of any overseas supervisor (including a home supervisorG ).

          Amended: January 2007

        • BR-2.2.13

          The supervisory regime and any legislative or foreign provisions to which the insurance licenseeG , including its branchesG , is subject, influence the CBB's approach to the supervision of the insurance licenseeG .

          Amended: January 2007
          Amended: October 2007

        • BR-2.2.13A

          If, as a result of circumstances outside the Bahraini insurance licensee'sG knowledge and/or control, one of the changes to their controllersG specified in Paragraph GR-5.1.1 is triggered prior to CBB approval being sought or obtained, the Bahraini insurance licenseeG must notify the CBB as soon as it becomes aware of the fact and no later than 15 calendar days after the change occurs (ref. GR-5.1.5).

          Added: October 2015

        • BR-2.2.13B

          Overseas insurance licenseesG must notify the CBB of any new significant ownership in excess of 50% of the issued and paid up capital of the concerned licensee'sG direct parent undertakingG as soon as the licenseeG becomes aware of the change (see Paragraph GR-5.5.1).

          Added: October 2015

      • Other Notifications

        • BR-2.2.14

          An insurance licenseeG must notify the CBB of the following:

          (a) Removal or resignation of auditors (ref. AA-1.2.1);
          (b) Change in audit partner (ref. AA-1.3.2);
          (c) Removal or resignation of the actuaryG (ref. AA-4.4.1).
          (d) Appointment of appointed representativesG , variations in terms of appointment and cancellations of appointment (ref. GR-9.1.13); and
          (e) Reinsurance exposure in excess of 25% limit (ref. RM-2.1.7); and
          (f) When an approved personG ceases to hold a controlled functionG (ref AU-5.2.6).
          Amended: January 2007
          Amended: October 2007
          Amended: April 2009

    • BR-2.3 Approval Requirements

      • Change in Name

        • BR-2.3.1

          In accordance with Paragraph GR-2.1.1, an insurance licenseeG must seek prior written approval from the CBB and give reasonable advance notice of a change in:

          (a) The insurance licensee'sG name (which is the registered name if the insurance licenseeG is a body corporate); or
          (b) Any business name under which the insurance licenseeG carries on a regulated activity or ancillary activity from an establishment in Bahrain.
          Amended: January 2007
          Amended: October 2007

        • BR-2.3.2

          A notification under Paragraph BR-2.3.1 must include the details of the proposed new name and the date on which the insurance licenseeG intends to implement the change of name.

      • Change of Address

        • BR-2.3.3

          An insurance licenseeG must seek approval from the CBB and give reasonable advance notice of a change in any of the following addresses:

          (a) The insurance licensee'sG principal place of business in Bahrain; or
          (b) In the case of an overseas insurance licenseeG insurance licenseeG , its registered office (or head office) address.
          Amended: January 2007
          Amended: October 2007

        • BR-2.3.4

          A notification under Paragraph BR-2.3.3 must include the details of the proposed new address and the date on which the insurance licenseeG intends to implement the change of address.

      • Change in Legal Status

        • BR-2.3.5

          An insurance licenseeG must seek CBB approval and give reasonable advance notice of a change in its legal status that may, in any way, affect its relationship with or limit its liability to its policyholdersG or customersG .

          Amended: January 2007
          Amended: October 2007

      • Business Transfer

        • BR-2.3.6

          In accordance with Chapter GR-4, an insurance licenseeG must seek prior written approval from the CBB before transferring to a third party all or a significant portion of all its rights and obligations under contracts of insuranceG that it has underwritten or provided to policyholdersG .

          Amended: January 2007
          Amended: October 2007

      • Controllers and Close Links

        • BR-2.3.7

          In accordance with Section GR-5.1, a Bahraini insurance licenseeG must seek CBB approval and give reasonable advance notice of any of the following events concerning the insurance licenseeG :

          (a) A person acquiring control or ceasing to have control;
          (b) An existing controllerG acquiring an additional type of control (such as ownership or significant influence) or ceasing to have a type of control;
          (c) An existing controllerG increasing his or her percentage in the issued or paid up capital or voting power beyond 10%, 20%, 30% or 40%; and
          (d) An existing controllerG becoming or ceasing to be a parent undertakingG .
          Amended: October 2015
          Amended: January 2007

        • BR-2.3.8

          As part of the CBB's function of monitoring an insurance licensee'sG continuing satisfaction of the Principles of Business, the CBB needs to consider the impact of any significant change in the circumstances of one or more of its controllersG , for example: changes in their financial standing; changes in respect of their corporate controllersG ; and changes in their governing bodies. Consequently, the CBB needs to know if there are any such changes.

          Amended: January 2007

        • BR-2.3.9

          Every insurance licenseeG authorised in Bahrain is required to submit an annual report on its controllersG , as per Paragraph GR-5.1.7 and GR-5.5.3, and close links as set out in Paragraph GR-6.1.3.

          Amended: October 2015

        • BR-2.3.10

          An overseas insurance licenseeG must seek CBB approval and give reasonable advance notice of any of the following events concerning the overseas insurance licenseeG :

          (a) A person acquiring control or ceasing to have control; and
          (b) An existing controllerG becoming or ceasing to be a parent undertakingG .
          Amended: January 2007

        • BR-2.3.11

          If there is uncertainty whether a particular relationship constitutes control, it may be appropriate for the insurance licenseeG or controllerG or proposed controllerG to ask the CBB for guidance and to obtain its own legal advice.

          Amended: January 2007

        • BR-2.3.12

          In accordance with Paragraph GR-6.1.3, an insurance licenseeG must submit within 3 months of its financial year end, a report on its close linksG . This report must identify all undertakings closely linked to the licensee, as defined in Section GR-6.2. In addition, where at any time requested by the CBB, insurance licenseesG must provide information on undertakings with which they are closely linked.

          Amended: January 2007
          Amended: October 2007

        • BR-2.3.13

          Insurance licenseesG must satisfy the requirements of Paragraph GR-6.1.3 by submitting a corporate structure chart, identifying all undertakings closely linked to the licensee.

      • Carrying out Business in Another Jurisdiction

        • BR-2.3.14

          As specified in Article 51 of the CBB Law, an insurance licenseeG must seek CBB approval and give three months notice of its intention to undertake insurance business in a jurisdiction other than Bahrain, or in the case of an overseas company licensed in Bahrain, a jurisdiction other than Bahrain and its country of incorporation or establishment, prior to commencing that business and where the effect of commencing that business may have a significant impact on:

          (a) The insurance licensee'sG business in Bahrain; or
          (b) The capital resources, required solvency marginG or Bahrain required solvency margin (whichever applies) of the insurance licenseeG .

          This requirement applies whether or not the insurance licenseeG is required to be regulated locally in the jurisdiction where it proposes to undertake insurance business.

          Amended: April 2013
          Amended: October 2007
          Amended: January 2007

        • BR-2.3.15

          In the case of an insurance licenseeG incorporated in Bahrain, the CBB will use this information to consider whether or not it should object to or impose additional requirements on the licensee. In the case of an overseas insurance licenseeG , the CBB would normally expect that were such action deemed necessary that it would be taken by the company's home supervisorG and not the CBB.

          Amended: January 2007
          Amended: October 2007

        • BR-2.3.16

          Insurance licenseesG are reminded that with limited exceptions (refer Section AU-1.1.10) that an insurance licenseeG must not carry on any commercial business in the Kingdom of Bahrain or elsewhere other than insurance business and activities directly arising from or incidental to that business. In instances where an insurance licenseeG carries on a commercial business, at the time where the Insurance Rulebook becomes effective, the insurance licenseeG must notify the CBB to establish the transitional rules in relation to this prohibited activity.

          Amended: January 2007

      • Mergers, Acquisitions, Disposals and Establishment of New Subsidiaries

        • BR-2.3.17

          As specified in Articles 51 and 57 of the CBB Law, an insurance licenseeG incorporated in Bahrain must seek CBB approval and give reasonable advance notice of its intention to:

          (a) Enter into a merger with another undertaking;
          (b) Enter into a proposed acquisition, disposal or establishment of a new subsidiaryG ; or
          (c) Open a new place of business as a subsidiary, a branch or a representative office within the Kingdom of Bahrain or other jurisdiction.
          Amended: April 2013
          Amended: October 2007
          Amended: January 2007

        • BR-2.3.18

          Bahraini Insurance licenseesG will in addition to this approval requirement need to consider the implications of a merger, acquisition, disposal or establishment of a new subsidiaryG undertaking in the context of the controllersG and close linksG Rules set out in Module GR. Where an insurance licenseeG proposes to enter into a merger, the CBB would ordinarily expect to be notified in the context of the controllerG notification requirements set out in Module GR and Paragraph BR-2.3.17.

          Amended: January 2007
          Amended: October 2007

        • BR-2.3.19

          Overseas insurance licenseesG , whilst not having to give advance notice of a proposed merger with another undertaking, a proposed acquisition, disposal or establishment of a new subsidiaryG undertaking under Paragraph BR-2.3.17, will still need to consider the implications of such transactions in the context of the controllersG and close linksG rules set out in Module GR. Where an overseas insurance licensee proposes to enter into a merger, the CBB would ordinarily expect to be notified in the context of the controllerG notification requirements set out in Module GR and Paragraph BR-2.3.16.

          Amended: January 2007
          Amended: October 2007

      • New or Additional Premises

        • BR-2.3.20

          An insurance licenseeG must seek prior approval from the CBB of its intention to carry on its business from new or additional premises in Bahrain. This requirement applies whether or not the premises are to be used for the purposes of transacting business with policyholdersG or customersG , administration of the business or as the head office in Bahrain of the insurance licenseeG .

          Amended: January 2007
          Amended: October 2007

        • BR-2.3.21

          Insurance licenseesG are not required to notify the CBB of premises where business on behalf of the insurance licenseeG is carried out by appointed representativesG of the insurance licenseeG . However, the CBB expects the insurance licenseeG to maintain a record of all such premises and to be able to produce that record should it be requested by the CBB.

          Amended: January 2007

      • Transactions with Related Parties

        • BR-2.3.22

          An insurance firmG that is not a captive insurerG must obtain the prior approval of the CBB of any proposed transaction with a related party (a related party transactionG ) where the fair value of that related party transaction exceeds 10 per cent, or where several smaller transactions that appear to be linked fall above this threshold, of the insurance firm'sG capital available, as defined in Paragraph CA-1.2.21.

          Amended: January 2007
          Amended: October 2007

        • BR-2.3.23

          In the case of insurance contracts, for purposes of Paragraph BR-2.3.22, prior approval of the CBB is required where the sum insured under the insurance contract exceeds 10 per cent of the insurance firm'sG capital available.

          Amended: January 2007

        • BR-2.3.24

          For the purposes of this Section, 'fair value' is the market value being the amount that would be paid or received in a transaction between a willing buyer and a willing seller that are themselves not related parties.

          Amended: January 2007
          Amended: October 2007

        • BR-2.3.25

          The only exceptions to Paragraph BR-2.3.22 are:

          (a) In the case of an overseas insurance firmG , Paragraph BR-2.3.22 applies only in relation to transactions initiated or made on behalf of the overseas insurance firmG or with an approved personG of the overseas insurance firmG ; or
          (b) Where the related party transactionG is one involving the effecting or carrying out of a contract of insuranceG and that transaction is on terms no more favourable than those that would apply were the transacting parties not related parties.
          Amended: January 2007
          Amended: October 2007

        • BR-2.3.26

          For the purpose of this Section, a related party of an insurance firmG includes:

          (a) A controllerG of the insurance firmG as defined in Module GR;
          (b) A close linkG of the insurance firmG as defined in Module GR;
          (c) An associate of a controllerG as defined in Module GR;
          (d) The extended family of a controllerG including a father, mother, father-in-law, mother-in-law, brother, sister, brother-in-law, sister-in-law, or grandparent; and
          (e) A corporate entity, whether or not licensed or incorporated in Bahrain, where any of the persons identified in Sub-Paragraphs (c) and (d) is a DirectorG or would be considered a controllerG were the definition of controllerG set out in Paragraph GR-5.2.1 applied to that corporate entity.
          Amended: January 2007
          Amended: October 2007

        • BR-2.3.27

          For the purposes of this Section, a related party transactionG means the transfer of assets or liabilities or the performance of services by, to or for a related party irrespective of whether a price is charged.

          Amended: October 2007

        • BR-2.3.28

          For purposes of Paragraph BR-2.3.26, insurance firmsG should note the use of "includes" in the definition of related party. The CBB is of the view that whilst the definition should be sufficient to identify most related parties there may be individual circumstances were a related party exists that is not explicitly within the definition. Accordingly where an insurance firmG is in any doubt as to whether or not a party is a related party they should notify and seek the CBB's advice accordingly.

          Amended: January 2007

      • Other Prior Approvals Required

        • BR-2.3.29

          An insurance licenseeG must seek prior approval from the CBB for the following:

          (a) Outsourcing of the internal audit function (ref. HC-3.3.2) and other material functions (RM-7.1.2);
          (b) Appointment or re-appointment of external auditorsG (ref. AU-2.7.1 and AA-1.1.1);
          (c) Appointment of actuaryG (ref. AU-2.7.2 and AA-4.1.1);
          (d) Appointment of persons undertaking a controlled functionG in an insurance licenseeG (ref. AU-1.2.1);
          (e) Appointment or cancellation of appointment of an insurance managerG in accordance with AU-2.2.4; and
          (f) Any material changes or proposed changes to the information provided to the CBB in support of an authorisation application that occurs after authorisation has been granted. Insurance licenseesG must, in particular, seek prior CBB approval before undertaking activities in new classes of insurance. (ref. AU-5.4.1).
          Amended: October 2014
          Amended: January 2007
          Amended: October 2007

      • No Objection Requirement

        • BR-2.3.30

          Before submitting a proposal for a distribution of profits (dividends) to a shareholder vote, an insurance licenseeG must obtain a letter of no objection from the CBB (ref: Paragraph GR-3.1.1).

          Added: October 2014

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