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Location: Central Bank of Bahrain Volume 3—Insurance > Part A > Sector Guides > TA Takaful / Retakaful > TA-3 Business Standards > TA-3.1 Capital Adequacy > TA-3.1.14
  • TA-3.1 Capital Adequacy

    • TA-3.1.1

      Principle 9 requires insurance licenseesG to hold adequate financial resources for the needs of the business. Module CA (Capital Adequacy) sets out in detail the minimum financial resources requirements for insurance licenseesG . In addition, it is the responsibility of Boards of insurance licenseesG to make their own assessment of the financial resources needed to meet their liabilities.

      Rulebook Reference PB-1.9

    • TA-3.1.2

      The base requirement is for firms to maintain at all times capital available in excess of the higher of its required solvency marginG and minimum fundG .

      Rulebook Reference CA-1.2.1
      Amended: January 2007

    • TA-3.1.3

      The takaful firmG is subject to capital available and solvency requirements. Should the Takaful firmG not meet the solvency requirements, it must inject capital.

      Rulebook Reference CA-8.4.1 and CA-1.2.3
      Amended: April 2014

    • TA-3.1.4

      The minimum fundG that must be maintained by the each takaful fund at all times, is:

      Category 1 firm: — BD 300,000;
      Category 2 firm: — BD 500,000;
      Category 3 firm: — BD 400,000; and
      Category 4 firm: — The relevant minimum fundG for Category 1 or 2 (depending on the type of general business underwritten) PLUS the Category 3 minimum. These amounts are to be maintained separately by the insurer.

      These minimum requirements are equivalent to those amounts for conventional insurance firmsG .

      Rulebook Reference CA-2.1.5
      Amended: January 2007
      Amended: October 2007

    • TA-3.1.5

      For each general participants' fund, the required solvency marginG is calculated on the basis of the premiums written and claims incurred by the fund.G A risk factor is applied, to reflect the differing risk profiles of different classes of insurance. Refer to Chapter CA-2 for the detailed rules governing the calculation of the required solvency marginG .

      Rulebook Reference CA-2
      Amended: April 2014
      Amended: January 2007

    • TA-3.1.6

      For each family participants' fund, the required solvency marginG is calculated on the basis of the aggregate of the mathematical reserves calculationG and the capital sum at risk calculationG .

      Rulebook Reference CA-2
      Amended: April 2014
      Amended: January 2007

    • TA-3.1.7

      The Valuation and Admissibility of Asset Regulations are contained in Chapter CA-4. Assets of an insurance firmG may only be given value for regulatory purposes in accordance with the Valuation of Assets Regulations. Surplus (inadmissible) assets are valued at zero for the purposes of calculating the firm's capital available. Assets considered inadmissible include those that exceed permitted categories and counterparty limits and intangible assets (e.g. brand value).

      Rulebook Reference CA-4
      Amended: January 2007

    • TA-3.1.8

      The Valuation of Liability Regulations are contained in Chapter CA-5. Liabilities must be valued in accordance with International Accounting Standards (to the extent available) or, until such standards come into effect, with Section CA-5.1.

      Rulebook Reference CA-5.1
      Amended: January 2007

    • TA-3.1.9

      There are also Rules concerning the matching of assets and liabilities, to minimise the risk of maturity and/or currency mismatch in the portfolio.

      Rulebook Reference CA-6.1
      Amended: October 2007

    • TA-3.1.10

      The CBB may require a takaful firm to provide:

      (a) A statement of the consolidated financial position of any group of which the insurance firmG is either the holding company, a subsidiaryG or a branchG of that group; and
      (b) A statement of the solvency margin that would be determined by this Module if the group identified in part (a) of this Rule were a Bahrain authorised insurance firmG .
      Rulebook Reference CA-7.1
      Amended: January 2007
      Amended: October 2007

    • TA-3.1.11

      All takaful firmsG licensed in Bahrain must organise and operate their business according to the al wakala model. Specifically, in exchange for the provision of management services to takaful fund(s), the shareholdersG of the takaful firmG will receive a specific consideration (wakala fee). For the insurance assets invested on behalf of takaful funds, the takaful operator will use the al mudaraba model, and will receive a set percentage of the profits generated from the investment portfolio.

      Rulebook Reference CA-8.2.1
      Amended: January 2007

    • TA-3.1.12

      The wakala fee charged in respect of a takaful contract must be directly proportional to the costs associated with establishing and maintaining that contract.

      Rulebook Reference CA-8.2.2

    • TA-3.1.13

      Takaful firmsG must maintain separate books of account in respect of each kind of business and for each fund.

      Rulebook Reference CA-8.3
      Amended: January 2007

    • TA-3.1.13A

      Where a participants' fund(s) has a cash deficit which results in its inability to meet its day to day expenses and obligations, a Qard Hassan must be extended immediately to the shareholder fund.

      Rulebook Reference CA-8.4A
      Added: April 2014

    • TA-3.1.14

      Takaful firmsG by definition are co-operative in nature and as such participants (policyholdersG ) are entitled to a return of any surplus of the takaful funds operated by a takaful insurer. Takaful firmsG must establish a policy for the distribution of surplus but may only distribute a surplus if the firm meets its required solvency margin requirements both prior to and after the distribution.

      Rulebook Reference CA-8.5
      Amended: January 2007

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