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  • CA-4.2 CA-4.2 General Asset Valuation Rules

    • Asset Limits per Category of Assets

      • Investments in Non-Insurance Subsidiaries and Associates

        • CA-4.2.1

          Investments in subsidiaries and associates that are not carrying out regulated insurance services as defined in Chapter AU-1.4, must be valued at an amount not exceeding the insurance firm's proportionate share of the subsidiary's or associate's net asset value, determined as if that subsidiary or associate applied these Rules in determining its net asset value.

          Amended: January 2007

        • CA-4.2.2

          The net asset value determined in Paragraph CA-4.2.1 must be reduced for any amounts that cannot be made available to the insurance firm in the ordinary course of business. This includes but is not limited to:

          (a) Required solvency margins, base capital requirements or any other amounts required to be maintained in order to comply with regulatory requirements applicable to the subsidiary or associate in Bahrain or any other jurisdiction. This restriction applies to any subsidiary or associate (including banks and investment firms) subject to regulation in any jurisdiction;
          (b) Assets subject to currency control restrictions; and
          (c) Surplus assets in long-term insurance funds, as these assets belong to the long term policyholders.
          Amended: January 2007

        • CA-4.2.3

          Where a subsidiary or associate carries on a regulated activity either in Bahrain or any other jurisdiction, an insurance firm may, with the consent of the CBB, determine the net asset value of that subsidiary or associate (as specified in Paragraph CA-4.2.1) in accordance with the Rules applicable in the jurisdiction where that subsidiary or associate has both its head office and principal supervisor.

          Amended: January 2007

        • CA-4.2.4

          In determining the net asset value of a subsidiary or associate (as specified in Paragraph CA-4.2.1) where that subsidiary or associate is not carrying out regulated insurance services, if the value of any single asset under Paragraph CA-4.2.1 exceeds 5% of the insurance business amount, the admissible value of the said asset for the purpose of this Paragraph must be restricted to 5% of the insurance business amount.

          Amended: January 2007

      • Real Estate Assets

        • CA-4.2.5

          Real estate assets such as land and buildings must be valued at market value as assessed by an independent qualified valuer at a date no earlier than 3 years from the end of the financial year under consideration. An insurance firm may elect to use book value where that value is less than market value however where no proper valuation exists the value is deemed by this Module to be nil.

          Amended: January 2007

        • CA-4.2.6

          If the value of any single asset under Paragraph CA-4.2.5 exceeds 10% of the insurance business amount, the admissible value of the said asset for the purpose of this Paragraph must be restricted to 10% of the insurance business amount.

        • CA-4.2.7

          The 10% admissibility test of Paragraph CA-4.2.6 is to be applied in total to both land and building, in instances where the realisable value of the asset is dependent on both the land and the building.

      • Debt Securities

        • CA-4.2.8

          Debt securities (both fixed and variable interest securities) issued by, or guaranteed by, governments rated investment grade, or public authority with investment grade security must be valued at:

          (a) In the case of listed securities, the closing market quotation or the latest available market quotation;
          (b) In the case of securities which are not transferable, the amount payable on surrender or redemption of such securities as at the date the security is being valued; and
          (c) In any other case, the amount which would reasonably be paid by way of consideration for an immediate transfer or assignment thereof.
          Amended: January 2007

        • CA-4.2.9

          There are no admissibility restrictions for fixed and variable interest securities meeting the requirements of Paragraph CA-4.2.8. However, admissibility restrictions pertaining to counterparties may apply (CA-4.2.33).

          Amended: January 2007

        • CA-4.2.10

          Debt securities (both fixed and variable interest securities) not covered by Paragraph CA-4.2.8 must be valued at:

          (a) In the case of listed securities, the closing market quotation;
          (b) In the case of securities which are not transferable, the amount payable on surrender or redemption of such securities as at the date the security is being valued; and
          (c) In any other case, the amount which would reasonably be paid by way of consideration for an immediate transfer or assignment thereof.
          Amended: January 2007

        • CA-4.2.11

          If the value of debt securities, other than those to which Paragraph CA-4.2.8 relates, (both fixed and variable interest securities), which are listed securities, in any one company together with its associated companies exceeds 5% of the insurance business amount, the admissible value of the said assets for the purpose of this Chapter must be restricted to 5% of the insurance business amount.

          Amended: January 2007

        • CA-4.2.12

          For debt securities (both fixed and variable interest) which are not listed securities, if the value of those securities in any one company together with its associated companies exceeds 1.0% of the insurance business amount the admissible value of the said assets for the purpose of this Chapter must be restricted to 1.0% of the insurance business amount.

          Amended: January 2007

      • Equity Shares

        • CA-4.2.13

          Equity shares that are listed securities must be valued on the closing market quotation or the latest available market quotation.

          Amended: January 2007

        • CA-4.2.14

          If the value of equity shares, that are listed securities, in any one company together with its associated companies exceeds 5% of the insurance business amount the admissible value of the said assets for the purpose of this Chapter must be restricted to 5% of the insurance business amount.

          Amended: January 2007

        • CA-4.2.15

          Equity shares that are not listed securities must be valued at the lower of:

          (a) The carrying value of these shares on the books of the insurance firm;
          (b) 75% of the net asset value for each share owned by the insurance firm (based on the most recently available financial information); and
          (c) The amount which would reasonably be paid by way of consideration for an immediate transfer or assignment of the investment.
          Amended: January 2007

        • CA-4.2.16

          If the value of equity shares, that are not listed securities, in any one company together with its associated companies exceeds 1.0% of the insurance business amount, the admissible value of the said assets for the purpose of this Chapter must be restricted to 1.0% of the insurance business amount.

          Amended: January 2007

      • Unit Trust or Mutual Funds

        • CA-4.2.17

          Where the issuer can be required to purchase the units or other beneficial interests from the holder upon the holder giving notice of one month or less and the value of the holdings or other beneficial interests in any one unit trust or mutual exceeds 5.0% of the insurance business amount, the admissible value of the said assets for the purpose of this Chapter must be restricted to 5.0% of the insurance business amount.

          Amended: January 2007

        • CA-4.2.18

          Where the issuer is not required to purchase the units or other beneficial interests from the holder upon the holder giving notice of one month or less and the value of the holdings or other beneficial interests in any one unit trust or mutual fund exceeds 1.0% of the insurance business amount, the admissible value of the said assets for the purpose of this Chapter must be restricted to 1.0% of the insurance business amount.

          Amended: January 2007

      • Traded Derivative Contract

        • CA-4.2.19

          A traded derivative contract that is a listed security, for a share or a debenture must be valued at the closing market quotation, and otherwise at the amount which would reasonably be paid by way of consideration for an immediate transfer or assignment thereof. If the value of the contracts in any one company or its connected companies exceeds 0.1% of the insurance business amount, the admissible value of the said assets for the purpose of this Chapter must be restricted to 0.1% of the insurance business amount.

          Amended: January 2007

      • Loan

        • CA-4.2.20

          A loan secured by a policy of insurance issued by the company must be valued as the amount of the loan but not exceeding the amount payable on a surrender of the policy as at the date the policy is being valued.

        • CA-4.2.21

          A loan to an individual or an unincorporated body of persons shall be valued at the lower of the outstanding amount of the loan and the amount that would reasonably be paid by way of consideration for an immediate assignment of the loan together with the benefit of any security held in respect thereof.

        • CA-4.2.22

          Where paragraph CA-4.2.21 applies and the loan to any one individual or unincorporated body of persons is fully secured on assets whose value at least equals the amount of the loan and the loan exceeds 5% of the insurance business amount, the admissible value of the secured loan for the purpose of this Chapter must be restricted to 5% of the insurance business amount.

        • CA-4.2.23

          Where Paragraph CA-4.2.21 applies and the loan to any one individual or unincorporated body of persons is not fully secured on assets whose value at least equals the amount of the loan and the loan exceeds 1% of the insurance business amount, the admissible value of the unsecured loan for the purpose of this Chapter must be restricted to 1% of the insurance business amount.

      • Other Assets

        • CA-4.2.24

          Deposits and current account balances with approved financial institutions must be valued at their full face value. The admissible value of these assets is their face value.

        • CA-4.2.25

          Amounts due under contracts of insurance and reinsurance (either ceded or accepted), including salvage and subrogation rights, must be valued at the amounts that can reasonably be expected to be recovered. The exceptions being:

          (a) All debts (net of provisions) which have been due for more than 6 months, in which case they must be valued at nil;
          (b) Advance commission paid to intermediaries which must be valued at nil; and
          (c) Amounts that pertain to a subsidiary or associate of the insurance firm must be valued in accordance with Paragraph CA-4.2.4 above.
          Amended: April 2014
          Amended: October 2007
          Amended: January 2007

        • CA-4.2.25A

          The value of unearned reinsurance premiums is the value as determined in accordance with generally accepted accounting concepts, bases and policies or other generally accepted methods appropriate to insurance firms.

          Inserted: October 2008

        • CA-4.2.26

          In the case of general insurance business, the value of deferred acquisition costs is the value as determined in accordance with generally accepted accounting concepts, bases and policies or other generally accepted methods appropriate to insurance firms.

          Amended: January 2007

        • CA-4.2.27

          The admissible value of any cash holding is its face value.

        • CA-4.2.28

          Office machinery, furniture, motor vehicles, computer and other equipment belonging to the company must be valued at an amount not greater than its book value. If the value of office machinery, furniture, motor vehicles computer and other equipment exceeds 3% of the insurance business amount the admissible value of the said assets for the purpose of this Chapter must be restricted to 3% of the insurance business amount.

          Amended: January 2007

        • CA-4.2.29

          Life interests, reversionary interests and similar interests in property must be valued as the amount which would reasonably be paid by way of consideration for an immediate transfer or assignment thereof.

        • CA-4.2.30

          Investments, except investments that are specifically covered above, must be valued in accordance with this Paragraph:

          (a) If the investment is due, or will become due, within twelve months from the date at which the investment is being valued at (or would become so due if the company exercised some right), the amount which can reasonably be expected to be recovered in respect of the investment, taking due account of any security held in respect thereof;
          (b) Otherwise, the amount that would reasonably be paid by way of consideration for an immediate assignment of the debt together with the benefit of any security held in respect thereof.
          Amended: January 2007

        • CA-4.2.31

          Where Paragraph CA-4.2.30 applies to an investment in any one individual or unincorporated body of persons and the aggregate value of those investments (for that individual or unincorporated body of persons valued in accordance with Paragraph CA-4.2.30) exceeds 1% of the insurance business amount, the admissible value of those investments for the purpose of this Chapter must be restricted to 1% of the insurance business amount.

          Amended: January 2007

        • CA-4.2.32

          Where Paragraph CA-4.2.30 applies to an investment in any one company and the aggregate value of those investments (for that company valued in accordance with Paragraph CA-4.2.30) exceeds 2.5% of the insurance business amount the admissible value of those investments for the purpose of this Chapter must be restricted to 2.5% of the insurance business amount.

          Amended: January 2007

      • Counterparty Exposure Limits

        • CA-4.2.33

          The admissible value for counterparty exposure limit is:

          (a) Where the counterparty is an individual or an unincorporated body of persons, 5% of the insurance business amount;
          (b) Where the counterparty is a government of a jurisdiction, other than a Zone A Country, GCC country, the Kingdom of Bahrain and any other jurisdiction approved by the CBB, the jurisdiction together with all the public bodies, local authorities or nationalised industries of that jurisdiction, 10% of the insurance business amount;
          (c) Where the counterparty is a body corporate or group, and:
          (i) The counterparty is an approved financial institution, 25% of the insurance business amount or BD 1.5 million, whichever is the larger for all exposures including short term (3 months or less) deposits;
          (ii) The counterparty is an approved financial institution, 10% of the insurance business amount or such lower amount as the insurance firm may decide for all exposures other than short term deposits; and
          (iii) The counterparty is not an approved financial institution, 10% of the insurance business amount for all exposures to that counterparty.
          Amended: April 2012
          Amended: January 2007

        • CA-4.2.34

          For the purposes of Section CA-4.2, 'insurance business amount' means 'general insurance business amount' or 'long-term insurance business amount' as follows:

          (a) In terms of general insurance business, the general insurance business amount is the value of the insurance firm's assets (other than long-term insurance business assets) and excluding reinsurance recoveries as determined in accordance with Chapter CA-4; and
          (b) In terms of long-term insurance business, the long-term insurance business amount is the value of the insurance firm's assets (other than those relating to general insurance business) and excluding reinsurance recoveries and assets required to match property-linked liabilities in accordance with Chapter CA-4.
          Amended: January 2007

        • CA-4.2.35

          For purposes of Paragraph CA-4.2.34, the value of an insurance firm's assets refers to the valuation assigned in this section, but does not refer to the admissible value of these assets, i.e. after adjusting for category limits and counterparty limits.

          Amended: January 2007
          Amended: October 2007