Back Custom print Link Text Only Rich Text Print

  • GR-4 GR-4 Business Transfers

    • GR-4.1 GR-4.1 CBB Approval

      • GR-4.1.1

        In accordance with Article 66 of the CBB Law, an insurance licensee must seek prior written approval from the CBB before transferring any of its business to a third party.

        Amended: January 2007

      • GR-4.1.2

        Rule GR-4.1.1 is intended to apply to circumstances where an insurance licensee wishes to transfer all or part of its business to a third party. A business transfer is not the same as an insurance firm ceding (reinsuring) some or all of its policyholder liabilities to a reinsurer. Reinsurance creates an additional set of rights and obligations between the insurance firm and the reinsurer but does not change the insurance firm's obligations to its policyholders nor does it create any direct obligations (to each other) between the insurance firm's policyholders and the insurance firm's reinsurer.

        Added: January 2007

      • GR-4.1.3

        In the case of a Bahraini insurance licensee, Chapter GR-4 applies both to business booked in Bahrain and in the licensee’s overseas branches. In the case of an overseas insurance licensee, Chapter GR-4 applies only to business booked in the firm's Bahrain branch.

        Amended: January 2007

      • GR-4.1.4

        In all cases, CBB approval to transfer business will only be given where:

        (a) The transfer of business will not damage or otherwise prejudice the legitimate interests of the licensee’s customers;
        (b) The transferee is duly licensed to undertake the business which it is to receive; and
        (c) The CBB is satisfied that the transfer will not breach any applicable Laws and regulations, and would not create any supervisory concerns.
        Added: January 2007
        Amended: October 2007

      • GR-4.1.5

        For purposes of Paragraph GR-4.1.1, a business transfer refers to a transfer of all the rights and obligations of one insurance licensee to another insurance licensee, so that the policyholders and reinsurers continue to be subject to the same terms and conditions as those originally agreed. Business transfers may enable licensees that have ceased writing certain lines of business to manage their affairs more effectively and be beneficial both to the insurance licensee and the policyholders, particularly if the insurance licensee that is assuming the business is financially stronger than the insurance licensee transferring the business.

        Amended: January 2007

      • GR-4.1.4

        A portfolio transfer is not the same as an insurance firm ceding (reinsuring) some or all of its policyholder liabilities to a reinsurer. Reinsurance creates an additional set of rights and obligations between the insurance firm and the reinsurer but does not change the insurance firm's obligations to its policyholders nor does it create any direct obligations (to each other) between the insurance firm's policyholders and the insurance firm's reinsurer.

      • GR-4.1.5

        Where the proposed transfer involves a transfer of obligations under contracts of insurance in respect of risks situated inside the Kingdom of Bahrain, the transferee must be licensed to carry on insurance business in Bahrain.

      • GR-4.1.6

        In assessing the criteria outlined in Paragraph GR-4.1.4, the CBB will, amongst other factors, take into account the financial strength of the transferee; its capacity to manage the business being transferred; its track record in complying with applicable regulatory requirements; and (where applicable) its track record in treating customers fairly. The CBB will also take into account the impact of the transfer on the transferor, and any consequences this may have for the transferor’s remaining customers.

        Amended: January 2007

    • GR-4.2 GR-4.2 Procedure with Respect to Applications

      • GR-4.2.1

        Insurance licensees seeking to obtain the CBB’s permission to transfer business must apply to the CBB in writing, in the form of a covering letter, together with supporting attachments. Unless otherwise directed by the CBB, the application must provide:

        (a) Full details of the business to be transferred including a detailed list of all liabilities that will be transferred, including the name of the individual policyholder, where applicable, related outstanding liabilities and the jurisdiction where the insurance risk is situated;
        (b) The rationale for the proposed transfer;
        (c) If applicable, an assessment of the impact of the transfer on any customers directly affected by the transfer, and any mitigating factors or measures;
        (d) If applicable, an assessment of the impact of the transfer on the transferor’s remaining business and customers, and any mitigating factors or measures; and
        (e) Evidence that the proposed transfer has been duly authorised by the transferor (such as a certified copy of a Board resolution approving the transfer).
        Amended: January 2007

      • GR-4.2.2

        Subject to the CBB's review, the requirements of Paragraph GR-4.2.1 do not apply to the transfer of the portfolio from a captive insurer or to a business transfer entirely comprising reinsurance business, where all of the policyholders affected by the transfer have given their consent.

        Amended: January 2007

      • GR-4.2.3

        Insurance licensees intending to apply for a transfer of business are advised to contact the CBB at the earliest possible opportunity, in order that the CBB may determine the nature and level of documentation to be provided and the need for actuarial or other expert opinion to be provided to support the application. Transfers of long-term business will in all cases require an actuarial evaluation to be provided to the CBB. An affected policyholder is a policyholder whose policy is included in the transfer, or his policy is with the transferor and the CBB has ruled, after consulting the transferor, that the policyholder's rights and obligations under the policy will or may be materially affected by the transfer.

        Amended: January 2007

      • GR-4.2.4

        The CBB will consider an application under Paragraph GR-4.1.1 if it is satisfied that:

        (a) Any objections received to the application to transfer the business following its publication in the Official Gazette and in two daily newspapers in the Kingdom of Bahrain (one in Arabic and one in English) as required under Article 66(b) have been reviewed and resolved by the CBB;
        (b) Except in so far as the CBB has otherwise directed, a copy of the notice that has been sent to every affected policyholder and every other person who claims an interest in a policy included in the proposed transfer (and has given written notice of his claim to the transferor);
        (c) Copies of a statement setting out particulars of the transfer, approved by the CBB, have been available for inspection at one or more places in Bahrain for at least 30 days, from the date of publication of the notice specified in GR-4.2.4(a); and
        (d) Where the proposed transfer includes any contract of direct insurance and the risk is situated in a jurisdiction other than Bahrain, a statement setting out particulars of the transfer, approved by the CBB, has been available for inspection at one or more places in that jurisdiction for at least 30 days, starting with the date of publication of the notice specified in sub- Paragraph GR-4.2.4 (a).
        Added: January 2007

      • GR-4.2.5

        The CBB notice referred to in Paragraph GR-4.2.4 (a) will include a statement that written representations concerning the transfer may be sent to the CBB within three months from the date of publication. The notice shall specify the period during which the policyholder may exercise any right to cancel the policy. The CBB will not decide on the application until after considering any representations made to the CBB within the prescribed time period. In all cases, the costs of publication of this notice must be met by the transferor.

        Amended: January 2007

      • GR-4.2.6

        Where the risk is situated in a jurisdiction other than Bahrain, the law of the jurisdiction in which the risk is situated shall determine whether the policyholder has a right to cancel the policy, and the conditions applicable to any such right.

        Added: January 2007

      • GR-4.2.7

        The CBB reserves the right to impose additional requirements if, in the opinion of the CBB, additional requirements are necessary to protect policyholder interests. In all cases where requirements are imposed, the CBB shall state the reasons for doing so.

        Amended: January 2007

    • GR-4.3 GR-4.3 Determination of Applications

      • GR-4.3.1

        The CBB will not approve the transfer, under the terms of Paragraph GR-4.2.1, unless it is satisfied that:

        (a) The transferee is authorised to carry on regulated insurance services in Bahrain or (where relevant) is authorised or otherwise permitted to carry on regulated insurance services in the jurisdiction where any overseas risks are situated;
        (b) Every policy included in the transfer evidences a contract which was entered into before the date of the application;
        (c) The transferee possesses the necessary margin of solvency, required by the regulatory authorities to which he is subject to, after taking the proposed transfer into account;
        (d) Where policies are being transferred from an overseas branch of the insurance licensee, or the transferee is an overseas insurance licensee, the relevant overseas regulatory authority has been consulted about the proposed transfer, the law of that jurisdiction provides for the possibility of such a transfer, and the relevant supervisory authority in that jurisdiction has agreed to the transfer; and
        (e) There are no material adverse consequences from the transfer on the transferee or the security of policyholders.
        Amended: January 2007

    • GR-4.4 GR-4.4 CBB Decision

      • GR-4.4.1

        In accordance with Article 67 (d), the CBB’s decision regarding the application for transfer made under Section GR-4.3, will be published as a notice in the Official Gazette and in two local news papers (one in Arabic and one in English). If the liabilities are located in a jurisdiction outside Bahrain, the CBB may also publish such notice in the jurisdiction in which the risk is situated. In all cases, the costs of publication of this notice must be met by the transferor.

        Amended: January 2007

      • GR-4.4.2

        [This Paragraph was deleted in January 2007].

        Amended: January 2007

      • GR-4.4.3

        [This Paragraph was moved to Section GR-4.2 in January 2007].

        Amended: January 2007

      • GR-4.4.4

        The requirement in Paragraph GR-4.4.1 does not have to be met in respect of a transfer of business where the transferor is a Category C1 captive insurance firm.

      • GR-4.4.5

        Article 67(e) notes that where the application for business transfer has been turned down by the CBB or includes restrictions, the applicant may appeal to a competent court within 30 calendar days from the date of publication referred to in Paragraph GR-4.4.1.

        Added: January 2007