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Location: Central Bank of Bahrain Volume 3—Insurance > Part A > Business Standards > CA Capital Adequacy > CA-2 Solvency Margin Requirements > CA-2.1 Solvency Margin Requirements > Long-term Insurance Business
  • Long-term Insurance Business

    • CA-2.1.9

      For long-term insurance businessG the solvency marginG must be determined by taking the aggregate of the results arrived at by applying the calculations described in Paragraph CA-2.1.10 ('the mathematical reserves basis calculationG ') and Paragraph CA-2.1.11 ('the capital sum at risk basis calculationG '). Where the aggregate falls below the minimum fundG , it must be substituted by the amount of the minimum fundG .

      Amended: January 2007

    • CA-2.1.10

      The mathematical reservesG are defined as the provision made by an insurer to cover liabilities (excluding liabilities which have fallen due) arising under or in connection with long-term insurance businessG . The mathematical reserves basis calculationG for:

      (a) Traditional long-term insurance businessG must be either 2% of mathematical reservesG before deduction for reinsurance cessions or 4% of mathematical reservesG after deduction for reinsurance cessions whichever produces the higher result;
      (b) The mathematical reservesG basis calculation for linked long-term insurance businessG where the company bears an investment risk must be as in Subparagraph CA-2.1.10 (a); and
      (c) The mathematical reservesG basis calculation for linked long-term insurance businessG where the company bears no investment risk must be either 0.5% of mathematical reservesG before deduction for reinsurance cessions or 1% of mathematical reservesG after deduction for reinsurance cessions whichever produces the higher result.

      No negative value can be used as the mathematical reserveG under any policy.

      Amended: January 2007

    • CA-2.1.11

      The capital sum at riskG is defined as the benefit amounts payable as a consequence of the happening of the contingency covered by the policy contract less the mathematical reservesG in respect of the relevant contract. The capital sum at riskG calculation is the greater of:

      (a) 0.15% of the capital sum at riskG before deduction for reinsurance cessions; or
      (b) 0.30% of the capital sum at riskG after deduction for reinsurance cessions.

      In either case no negative value can be used as the capital sum at risk under any policy.

      Amended: January 2007

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