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  • CA-6.1 CA-6.1 Currency Matching and Localisation Requirements

    • CA-6.1.1

      The provisions of this Chapter do not apply to:

      (a) Insurance business carried on by an insurance firm outside Bahrain;
      (b) Reinsurance business (unless it is facultative reinsurance written by an insurer who also carries on insurance business that is not reinsurance business); or
      (c) To unit-linked business.
      Amended: January 2007
      Amended: April 2009

    • CA-6.1.2

      Where an insurance firm's 'liabilities' in any particular currency exceed 10% of its total 'liabilities', the insurance firm must hold sufficient 'assets in that currency' to cover at least 80% of its 'liabilities' in that currency.

    • CA-6.1.3

      For the purposes of Paragraph CA-6.1.2 'assets in that currency' is extended to include the currency itself (Currency A) and any other currency (Currency B) where Currency A is officially linked to Currency B.

      Amended: January 2007

    • CA-6.1.4

      Where an insurance firm carries on both long term insurance business and general insurance business, the requirements of Paragraph CA-6.1.1 apply to the 'assets' and ' liabilities' of each kind of business separately.

      Amended: January 2007

    • CA-6.1.5

      Where a contract of insurance expresses any 'liability' in terms of a particular currency, that 'liability' must be regarded as a 'liability' in that currency.

    • CA-6.1.6

      For the purposes of the Rules in this Chapter:

      (a) Assets means admissible assets valued in accordance with Chapter CA-4 General Assets Valuation Rules;
      (b) Liabilities means provision, net of reinsurance recoveries, made by an insurance firm to cover liabilities arising under (or in connection with) contracts of insurance, excluding those liabilities exempted by Paragraph CA-6.1.1;
      (c) References to assets in a currency (or similar expressions) are construed as references to 'assets' expressed in or capable of being realised (without exchange risk) in that currency; and
      (d) An 'asset' is capable of being realised (without exchange risk) in a currency if it is reasonably capable of being realised in that currency without risk that changes in exchange rates would reduce the cover of 'liabilities' in that currency.
      Amended: January 2007
      Amended: October 2007

    • CA-6.1.7

      The currency of an insurance firm's general insurance business liabilities must, for the purposes of Paragraph CA-6.1.2 be determined as follows:

      (a) Where the 'liabilities' are not expressed as 'liabilities' in terms of a particular currency, they must be treated as 'liabilities' in the currency of the country in which the risk is situated or, if the insurance firm on reasonable grounds so decides, in the currency in which the premium payable under the contract is expressed;
      (b) Where a claim has been notified to an insurance firm and the insurance firm's 'liability' in respect of that claim is payable in a currency other than one which would result from the application of the above provisions, the insurance firm must regard its 'liability' as a 'liability' in the currency in which the insurance firm is actually obliged to pay it;
      (c) Where a claim is assessed in a currency that is known to the insurance firm in advance but which is different from a currency that would result from the application of the above provisions, the insurance firm may regard its 'liability' as a 'liability' in that currency.
      Amended: January 2007

    • CA-6.1.8

      'Assets' held pursuant to Paragraph CA-6.1.2 above must be held:

      (a) If they cover 'liabilities' in Bahrain Dinars, in Bahrain;
      (b) If they cover 'liabilities' in any other currency, in Bahrain or in the country of that currency, unless they cover liabilities in Bahrain in which case they must be held in Bahrain.
      Amended: January 2007