BR-A.1.1

This Module sets out the Central Bank of Bahrain ('CBB')'s financial reporting requirements, as well as notifications and CBB prior approvals required from insurance licensees, except for licensees exempted as per Chapter BR-1. This Module also outlines the methods used by the CBB in gathering information required in the supervision of insurance licensees.

BR-A.1.2

This Module contains the CBB's (as amended from time to time) Directive relating to reporting requirements of the CBB and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Directive in this Module is applicable to insurance licensees (including their approved persons).

BR-A.1.3

For an explanation of the CBB’s rule-making powers and different regulatory instruments, see Section UG-1.1.

BR-1.1.5

For every insurance firm who undertakes insurance business, an Insurance Firm Return must be submitted within three months of its financial year end, using the prescribed form IFR from Part B of Volume 3 (Insurance), together with where applicable, Actuary's Certificate and report.

BR-1.1.6

For purposes of Paragraph BR-1.1.5, captive insurers are required to submit additional information, as outlined in prescribed Form IFR. This information covers:

BR-1.1.7

The content of the Insurance Firm Return required to be submitted by an insurance firm in accordance with BR-1.1.5 must be in the format prescribed by the CBB and completed in accordance with any instructions specified by the CBB.

BR-1.1.8

The Insurance Firm Return must be completed by every insurance firm licensed in Bahrain, in the following manner:

BR-1.1.9

The format of the Insurance Firm Return is included in Part B of the Rulebook as Form IFR, with forms applicable for conventional business, IFR(C) and for takaful business, IFR (T).

BR-1.1.10

For the purposes of the Insurance Firm Return, the information submitted must include the amounts as per the audited financial statements, the value or amount given for an asset or a liability of the insurance licensee as determined in accordance with Chapter CA-4, Valuation of Assets and Chapter CA-5, Valuation of Liabilities, as well as the admissibility and counterparty limits of the firm's assets for purposes of calculating the firm's capital available.

BR-1.1.11

The valuation of liabilities in respect of long-term insurance business must be made on a basis not less stringent than the minimum basis specified in Chapter CA-5. Should this long-term business relate to a jurisdiction other than Bahrain, the valuation basis adopted must be the more stringent of:

BR-1.1.14

The Insurance Firm Return (IFR) of every insurance firm must be reviewed in accordance with the International Standard on Related Services applicable to agreed-upon procedures engagements. The review must certify that the information provided in the IFR is in agreement with the books and records of the company and its audited financial statements.

BR-1.1.15

The Insurance Firm Return must be reviewed by the firm's external auditor, appointed in accordance with Module AA, or by other qualified persons as directed by the CBB.

BR-1.1.16

The insurance firm must provide to the CBB within four months of the financial year end, an auditor's report, in the format prescribed by the CBB, stating the auditor's opinion on the matters identified in this Module.

BR-1.1.17

The format of the Auditor's Report is included in Part B of the Rulebook, as part of the Supplementary Information.

BR-1.1.18

An actuary's certification is included as part of the IFR. The certification must be in the format prescribed by the CBB and signed by the actuary. It must state that, in his opinion, the actuary has satisfied himself as to the accuracy of the valuations made for the purposes of the investigation and as to their adequacy to meet the obligations of the insurance firm and the financial statements fairly present the results of the valuation. In addition, the actuary will have verified the consistency of the valuation data with the insurance firm’s financial records.

BR-1.1.19

The format of the Actuary's Certification is included as part of the IFR.

BR-1.1.20

The actuary must also disclose and quantify in his certification the effect on his valuations of any material event that occurs after the valuation date.

BR-1.1.21

The Actuary's Certificate must be submitted every year where an Actuary's financial condition report is submitted in accordance with Chapter AA-4.

BR-1.1.22

An insurance firm carrying on long-term insurance business must commission a financial condition report (FCR) as required under Paragraph AA-4.1.3 and made pursuant to Paragraph AA-4.3.1 and must submit to the CBB an abstract of the actuary's report as prescribed in Paragraph BR-1.1.23.

BR-1.1.22A

An insurance firm carrying on general insurance business must commission a financial condition report (FCR) as required under Paragraph AA-4.1.4 and made pursuant to Paragraph AA-4.3.1 and must submit to the CBB an abstract of the actuary's report as prescribed in Paragraph BR-1.1.23.

BR-1.1.23

An abstract of the actuary's report must be submitted in the prescribed form in compliance with the Valuations of Liabilities rules outlined in Chapter CA-5 and Rules outlined in Sections AA-4.3 and AA-4.3A, wherever applicable. The abstract must be signed by the actuary, recognised by the CBB in accordance with Chapter AA-4.

BR-1.1.24

The abstract must include:

BR-1.1.26

Every Insurance Firm Return, including the Actuary's Certificate made pursuant to Paragraph BR-1.1.18 and any report made by the actuary pursuant to Paragraph BR-1.1.22 and/or Paragraph BR-1.1.22A, whichever is applicable, must be submitted to the CBB electronically within 3 months of the financial year end.

BR-1.1.27

If the CBB notifies the insurance firm that a document deposited under Paragraph BR-1.1.26 appears to be inaccurate or incomplete, the insurance firm must consider the matter and within one month of the CBB notification, it must correct any inaccuracies and make good any omissions and submit the amended parts of the Insurance Firm Return.

BR-1.1.28

The external auditor and actuary must consider the impact on their report of any amendment referred to in Paragraph BR-1.1.27, and withdraw and correct their original report based on the revised information.

BR-1.1.29

The audited financial statements submitted to the shareholders and policyholders (or participants, in the case of Takaful companies) of the insurance firm and the management letter issued by the external auditor must be deposited with every Insurance Firm Return in respect of the financial year to which the Insurance Firm Return relates.

BR-1.1.29A

For Takaful firms, the audited financial statements submitted to the CBB along with the IFR, must provide a detailed breakdown of the statement of financial position and statement of comprehensive income for the shareholder fund and for any participant fund(s) of the Takaful firm.

BR-1.1.30

[This Paragraph was deleted in October 2023].

BR-1.1.31

[This Paragraph was deleted in October 2023].

BR-1.1.32

While certain information related to insurance firms is subject to public disclosure as prescribed by Module PD, the Insurance Firm Return is not a public document and as such will not, unless otherwise provided in the CBB's Rulebook, be disclosed to third parties by the CBB without the insurance firm's consent.

BR-1.1.33

Whilst the Insurance Firm Return is not a public document, the CBB may from time to time publish aggregate information derived from the Insurance Firm Return relating to classes of insurance firms and the Bahrain insurance industry as a whole.

BR-1.1.34

Whilst the Insurance Firm Return is not a public document, as per Paragraph BR-1.1.32 insurance firms are not prevented from providing complete copies (including all relevant certifications and reports) to third parties.

BR-1.1.35

The IFR Form also includes other reporting requirements found throughout Volume 3 (Insurance), including:

BR-1.1.36

All insurance firms must submit a copy of the external auditor's management letter no later than three months of the insurance firm's financial year end.

BR-1.1.37

The first Insurance Firm Return (IFR) for both conventional and takaful insurance firms, required under Section BR-1.1, must be submitted to the CBB for the financial year ending 31 December 2006 (refer to ES-2.7.1).

BR-1.2.1 BR-1.2.1

Insurance consultants and insurance managers must submit to the CBB the audited financial statements for each financial year, within 3 months of the insurance consultant's and insurance manager's financial year end.

BR-1.2A.1

Insurance brokers must prepare and submit to the CBB an Insurance Broker Return (Form IBR) for each financial year, within 2 months of the insurance broker's financial year end.

BR-1.2A.2

The first annual return (IBR) for insurance brokers is to be submitted to the CBB for the annual period ending 31st December 2012 (refer to ES-2.7.4).

BR-1.2A.3

The financial year of an insurance broker must be a 12-month period ending on 31 December, except where the licensee has obtained the written consent from the CBB for either the period or the period end to be other than 12 months and 31 December respectively. In any event, the financial year can never be less than a 6-month period or greater than an 18-month period.

BR-1.2A.4

Except in exceptional circumstances and subject to Paragraph BR-1.2A.3, an insurance broker's financial year, for the purposes of preparing the Insurance Broker Return, and the financial year for the purposes of preparing the shareholder accounts, must coincide.

BR-1.2A.5

For the purposes of Paragraph BR-1.2A.4, the CBB would usually accept that the financial year end of an overseas insurance broker would be the same as that of the company itself. The only times that the CBB would be likely to consider allowing an insurance broker to adopt a financial period of other than 12 months would be the year in which it is authorised (i.e. a period of less than 12 months) or when the company itself changes its reporting period for the purposes of its shareholder accounts.

Content of the Insurance Broker Return

Valuation of Assets and Liabilities

Directors' Certificate

Audit and Auditor's Report

Preparation and Deposit of the IBR

Submission of Audited Financial Statements and Management Letter

Public Disclosure

Other Reporting Requirements

Group Insurance Firm Return

BR-1.4.1

Except as provided for under Paragraph BR-1.4.2, every insurance firm required to submit an Insurance Firm Return must prepare and submit to the CBB selected Sections of the Insurance Firm Return for each quarters ending 3, 6 and 9 months after its financial year end, except where the written consent of the CBB has been obtained to modify the length of these quarters.

BR-1.4.2

This Chapter does not apply to captive insurers in recognition of the structure of these licensees and limited exposure to policyholders. Insurance firms who are in run-off and whose license is restricted from entering into new contracts of insurance as per Paragraph GR-8.1.8, are grandfathered and not required to apply the requirements of Paragraph BR-1.4.1.

BR-1.4.3

The format of the information required to be submitted on a quarterly basis is included in Part B of Volume 3 (Insurance) of the Rulebook, as Insurance Firm Quarterly Return (IFRQ).

BR-1.4.4

For the purposes of BR-1.4.1 the financial year end will be the year end as determined for the purposes of the preparation and submission of the Insurance Firm Return (Form IFR) required under Chapter BR-1.1 of this Module.

BR-1.4.5

The circumstances where the CBB will consider requests to modify BR-1.4.1 are equivalent to those set out in BR-1.1.

BR-1.4.6

Quarterly financial reporting consists of such parts of the Insurance Firm Return as may be specified by the CBB and must be completed in accordance with the rules, formats and instructions applicable to those parts that apply to the Insurance Firm Return.

BR-1.4.7

Quarterly financial reporting must be submitted to the CBB within 30 calendar days of the relevant quarter end.

BR-1.4.8

The first quarterly return (IFRQ) for insurance firms must be submitted to the CBB for the quarter ending 31 March 2007 (refer to ES-2.7.3).

BR-1.4A.1

Every insurance broker required to submit an Insurance Broker Return under Section BR-1.2A, must prepare and submit to the CBB selected Sections of the Insurance Broker Return semi-annually 6 months after its financial year end.

BR-1.4A.2

The first semi-annual return (IBRS) for insurance brokers is to be submitted to the CBB for the semi-annual period ending 30th June 2012 (refer to ES-2.7.5).

BR-1.4A.3

The format of the information required to be submitted on a semi-annual basis is included in Part B of Volume 3 (Insurance) of the Rulebook, as Insurance Broker Semi-Annual Return (IBRS).

BR-1.4A.4

For the purposes of BR-1.4A.1, the financial year end will be the year end as determined for the purposes of the preparation and submission of the Insurance Broker Return (Form IBR) required under Section BR-1.2A of this Module.

BR-1.4A.5

Semi-annual financial reporting consists of such parts of the Insurance Broker Return as may be specified by the CBB and must be completed in accordance with the rules, formats and instructions applicable to those parts that apply to the Insurance Broker Return or as specified by the CBB.

BR-1.4A.6

Semi-annual financial reporting must be submitted to the CBB 30 calendar days of the end of semi-annual period, by 30^th July.

IIS Reporting Requirements

Complaint Handling Procedures Report

Compliance with Module CL (Client Assets)

BR-1A.5.1

For the purpose of onsite inspection by the CBB, Insurance licensees must submit requested documents and completed questionnaires to the Inspection Directorate at the CBB three working days ahead of inspection team entry date.

BR-1A.5.2

Insurance licensees must review the contents of the draft Inspection Report and submit to the Inspection Directorate at the CBB a written assessment of the observations/issues raised within fifteen working days of receipt of such report. Evidentiary documents supporting management’s comments must also be included in the response package.

BR-1A.5.3

Insurance licensees' board are required to review the contents of the Inspection Report and submit within one month, of the report issue date, a final response to such report along with an action plan addressing the issues raised within the stipulated timeline.

BR-1A.5.4

Insurance licensees failing to comply with the requirements of Paragraphs BR-1A.5.1 and BR-1A.5.2 are subject to date sensitive requirements and other enforcement actions as outlined in Module (EN) Enforcement.

BR-2.2.1

An insurance licensee must provide written notification to the CBB immediately it becomes aware, or has information which reasonably suggests, that any of the following has occurred, may have occurred or may occur in the foreseeable future:

BR-2.2.2

The circumstances that may give rise to any of the events in Paragraph BR-2.2.1 are wide-ranging and the probability of any matter resulting in such an outcome, and the severity of the outcome, may be difficult to determine. However, the CBB expects insurance licensees to consider properly all potential consequences of events.

BR-2.2.3

In determining whether an event that may occur in the foreseeable future should be notified to the CBB, an insurance licensee should consider both the probability of the event happening and the severity of the outcome should it happen. Matters having a supervisory impact could also include matters relating to a parent undertaking or controller that may indirectly have an effect on the insurance licensee.

BR-2.2.4

An insurance licensee must notify the CBB of:

BR-2.2.5

An insurance licensee must make the notification in Paragraph BR-2.2.4 immediately it becomes aware, or has information which reasonably suggests, that any of the matters in Paragraph BR-2.2.4 has occurred, may have occurred or may occur in the foreseeable future (refer also to Paragraph EN-8.2.3).

BR-2.2.6

An insurance licensee must notify the CBB immediately of any legal, professional or administrative or other proceedings instituted against the insurance licensee, controller or a close link including a parent undertaking of the insurance licensee that is known to the insurance licensee and is significant in relation to the insurance licensee's financial resources or its reputation.

BR-2.2.7

The requirement imposed on insurance licensees under Paragraph BR-2.2.6 applies whether the event relates to a matter that has occurred in Bahrain or in any other jurisdiction.

BR-2.2.8

An insurance licensee must notify the CBB immediately if one of the following events arises and the event is significant:

BR-2.2.9

For the purposes of this Chapter, in determining whether a matter is significant, an insurance licensee should have regard to:

BR-2.2.10

In addition, if the insurance licensee may have suffered significant financial losses as a result of the incident, or may suffer reputational loss, the CBB will wish to consider this and whether the incident suggests weaknesses in the insurance licensee's internal controls.

BR-2.2.11

Except in instances where the CBB has initiated the following actions, an insurance licensee must notify the CBB immediately of any of the following events:

BR-2.2.12

An insurance licensee must notify the CBB immediately if it becomes subject to or ceases to be subject to the supervision of any overseas supervisor (including a home supervisor).

BR-2.2.13

The supervisory regime and any legislative or foreign provisions to which the insurance licensee, including its branches, is subject, influence the CBB's approach to the supervision of the insurance licensee.

BR-2.2.13A

If, as a result of circumstances outside the Bahraini insurance licensee's knowledge and/or control, one of the changes to their controllers specified in Paragraph GR-5.1.1 is triggered prior to CBB approval being sought or obtained, the Bahraini insurance licensee must notify the CBB as soon as it becomes aware of the fact and no later than 15 calendar days after the change occurs (ref. GR-5.1.5).

BR-2.2.13B

Overseas insurance licensees must notify the CBB of any new significant ownership in excess of 50% of the issued and paid up capital of the concerned licensee's direct parent undertaking as soon as the licensee becomes aware of the change (see Paragraph GR-5.5.1).

BR-2.2.14

An insurance licensee must notify the CBB of the following:

BR-2.3.1

In accordance with Paragraph GR-2.1.1, an insurance licensee must seek prior written approval from the CBB and give reasonable advance notice of a change in:

BR-2.3.2

A notification under Paragraph BR-2.3.1 must include the details of the proposed new name and the date on which the insurance licensee intends to implement the change of name.

BR-2.3.3

An insurance licensee must seek approval from the CBB and give reasonable advance notice of a change in any of the following addresses:

BR-2.3.4

A notification under Paragraph BR-2.3.3 must include the details of the proposed new address and the date on which the insurance licensee intends to implement the change of address.

BR-2.3.5

An insurance licensee must seek CBB approval and give reasonable advance notice of a change in its legal status that may, in any way, affect its relationship with or limit its liability to its policyholders or customers.

BR-2.3.6

In accordance with Chapter GR-4, an insurance licensee must seek prior written approval from the CBB before transferring to a third party all or a significant portion of all its rights and obligations under contracts of insurance that it has underwritten or provided to policyholders.

BR-2.3.7

In accordance with Section GR-5.1, a Bahraini insurance licensee must seek CBB approval and give reasonable advance notice of any of the following events concerning the insurance licensee:

BR-2.3.8

As part of the CBB's function of monitoring an insurance licensee's continuing satisfaction of the Principles of Business, the CBB needs to consider the impact of any significant change in the circumstances of one or more of its controllers, for example: changes in their financial standing; changes in respect of their corporate controllers; and changes in their governing bodies. Consequently, the CBB needs to know if there are any such changes.

BR-2.3.9

Every insurance licensee authorised in Bahrain is required to submit an annual report on its controllers, as per Paragraph GR-5.1.7 and GR-5.5.3, and close links as set out in Paragraph GR-6.1.3.

BR-2.3.10

An overseas insurance licensee must seek CBB approval and give reasonable advance notice of any of the following events concerning the overseas insurance licensee:

BR-2.3.11

If there is uncertainty whether a particular relationship constitutes control, it may be appropriate for the insurance licensee or controller or proposed controller to ask the CBB for guidance and to obtain its own legal advice.

BR-2.3.12

In accordance with Paragraph GR-6.1.3, an insurance licensee must submit within 3 months of its financial year end, a report on its close links. This report must identify all undertakings closely linked to the licensee, as defined in Section GR-6.2. In addition, where at any time requested by the CBB, insurance licensees must provide information on undertakings with which they are closely linked.

BR-2.3.13

Insurance licensees must satisfy the requirements of Paragraph GR-6.1.3 by submitting a corporate structure chart, identifying all undertakings closely linked to the licensee.

BR-2.3.14

An insurance licensee must seek CBB approval and give three months notice of its intention to undertake insurance business in a jurisdiction other than Bahrain, or in the case of an overseas company licensed in Bahrain, a jurisdiction other than Bahrain and its country of incorporation or establishment, prior to commencing that business and where the effect of commencing that business may have a significant impact on:

This requirement applies whether or not the insurance licensee is required to be regulated locally in the jurisdiction where it proposes to undertake insurance business.

BR-2.3.15

In the case of an insurance licensee incorporated in Bahrain, the CBB will use this information to consider whether or not it should object to or impose additional requirements on the licensee. In the case of an overseas insurance licensee, the CBB would normally expect that were such action deemed necessary that it would be taken by the company's home supervisor and not the CBB.

BR-2.3.16

Insurance licensees are reminded that with limited exceptions (refer Section AU-1.1.10) that an insurance licensee must not carry on any commercial business in the Kingdom of Bahrain or elsewhere other than insurance business and activities directly arising from or incidental to that business. In instances where an insurance licensee carries on a commercial business, at the time where the Insurance Rulebook becomes effective, the insurance licensee must notify the CBB to establish the transitional rules in relation to this prohibited activity.

BR-2.3.17

An insurance licensee incorporated in Bahrain must seek CBB approval and give reasonable advance notice of its intention to:

BR-2.3.18

Bahraini Insurance licensees will in addition to this approval requirement need to consider the implications of a merger, acquisition, disposal or establishment of a new subsidiary undertaking in the context of the controllers and close links Rules set out in Module GR. Where an insurance licensee proposes to enter into a merger, the CBB would ordinarily expect to be notified in the context of the controller notification requirements set out in Module GR and Paragraph BR-2.3.17.

BR-2.3.19

Overseas insurance licensees, whilst not having to give advance notice of a proposed merger with another undertaking, a proposed acquisition, disposal or establishment of a new subsidiary undertaking under Paragraph BR-2.3.17, will still need to consider the implications of such transactions in the context of the controllers and close links rules set out in Module GR. Where an overseas insurance licensee proposes to enter into a merger, the CBB would ordinarily expect to be notified in the context of the controller notification requirements set out in Module GR and Paragraph BR-2.3.16.

BR-2.3.20

An insurance licensee must seek prior approval from the CBB of its intention to carry on its business from new or additional premises in Bahrain. This requirement applies whether or not the premises are to be used for the purposes of transacting business with policyholders or customers, administration of the business or as the head office in Bahrain of the insurance licensee.

BR-2.3.21

Insurance licensees are not required to notify the CBB of premises where business on behalf of the insurance licensee is carried out by appointed representatives of the insurance licensee. However, the CBB expects the insurance licensee to maintain a record of all such premises and to be able to produce that record should it be requested by the CBB.

BR-2.3.22

An insurance firm that is not a captive insurer must obtain the prior approval of the CBB of any proposed transaction with a related party (a related party transaction) where the fair value of that related party transaction exceeds 10 per cent, or where several smaller transactions that appear to be linked fall above this threshold, of the insurance firm's capital available, as defined in Paragraph CA-1.2.21.

BR-2.3.23

In the case of insurance contracts, for purposes of Paragraph BR-2.3.22, prior approval of the CBB is required where the sum insured under the insurance contract exceeds 10 per cent of the insurance firm's capital available.

BR-2.3.24

For the purposes of this Section, 'fair value' is the market value being the amount that would be paid or received in a transaction between a willing buyer and a willing seller that are themselves not related parties.

BR-2.3.25

The only exceptions to Paragraph BR-2.3.22 are:

BR-2.3.26

For the purpose of this Section, a related party of an insurance firm includes:

BR-2.3.27

For the purposes of this Section, a related party transaction means the transfer of assets or liabilities or the performance of services by, to or for a related party irrespective of whether a price is charged.

BR-2.3.28

For purposes of Paragraph BR-2.3.26, insurance firms should note the use of "includes" in the definition of related party. The CBB is of the view that whilst the definition should be sufficient to identify most related parties there may be individual circumstances were a related party exists that is not explicitly within the definition. Accordingly where an insurance firm is in any doubt as to whether or not a party is a related party they should notify and seek the CBB's advice accordingly.

BR-2.3.29

An insurance licensee must seek prior approval from the CBB for the following:

BR-2.3.30

Before submitting a proposal for a distribution of profits (dividends) to a shareholder vote, an insurance licensee must obtain a letter of no objection from the CBB (ref: Paragraph GR-3.1.1).

BR-3.1.2

The CBB may ask an insurance licensee to provide it with information at the request of or on behalf of other supervisors to enable them to discharge their functions properly. Those supervisors may include overseas supervisors or government agencies in Bahrain. The CBB may also, without notifying an insurance licensee, pass on to those supervisors or agencies information that it already has in its possession.

BR-3.5.1

The content of this Chapter is applicable to all insurance licensees and appointed experts.

BR-3.5.2

The purpose of the contents of this Chapter is to set out the roles and responsibilities of appointed experts when appointed pursuant to Article 114 or 121 of the CBB Law (see EN-2.1.1). These Articles empower the CBB to assign some of its officials or others to inspect or conduct investigations of insurance licensees.

BR-3.5.3

The CBB uses its own inspectors to undertake on-site examinations of licensees as an integral part of its regular supervisory efforts. In addition, the CBB may commission reports on matters relating to the business of licensees in order to help it assess their compliance with CBB requirements. Inspections may be carried out either by the CBB's own officials, by duly qualified appointed experts appointed for the purpose by the CBB, or a combination of the two.

BR-3.5.4

The CBB will not, as a matter of general policy, publicise the appointment of an appointed expert, although it reserves the right to do so where this would help achieve its supervisory objectives. Both the appointed expert and the CBB are bound to confidentiality provisions restricting the disclosure of confidential information with regards to any such information obtained in the course of the investigation.

BR-3.5.5

Unless the CBB otherwise permits, appointed experts should not be the same firm appointed as external auditor of the insurance licensee.

BR-3.5.6

Appointed experts will be appointed in writing, through an appointment letter, by the CBB. In each case, the CBB will decide on the range, scope and frequency of work to be carried out by appointed experts.

BR-3.5.7

All proposals to appoint appointed experts require approval by an Executive Director or more senior official of the CBB. The appointment will be made in writing, and made directly with the appointed experts concerned. A separate letter is sent to the licensee, notifying them of the appointment. At the CBB's discretion, a trilateral meeting may be held at any point, involving the CBB and representatives of the licensee and the appointed experts, to discuss any aspect of the investigation.

BR-3.5.8

Following the completion of the investigation, the CBB will normally provide feedback on the findings of the investigation to the licensee.

BR-3.5.9

Appointed experts will report directly to and be responsible to the CBB in this context and will specify in their report any limitations placed on them in completing their work (for example due to the licensee's group structure). The report produced by the appointed experts is the property of the CBB (but is usually shared by the CBB with the firm concerned).

BR-3.5.10

Compliance by appointed experts with the contents of this Chapter will not, of itself, constitute a breach of any other duty owed by them to a particular insurance licensee (i.e. create a conflict of interest).

BR-3.5.11

The CBB may appoint one or more of its officials to work on the appointed experts' team for a particular insurance licensee.

BR-3.5.12

The scope of the required report will be determined and detailed by the CBB in the appointment letter. Commissioned appointed experts would normally be required to report on one or more of the following aspects of a licensee's business:

BR-3.5.13

Appointed experts will be required to form an opinion on whether, during the period examined, the licensee is in compliance with the relevant provisions of the CBB Law and the CBB's relevant requirements, as well as other requirements of Bahrain Law and, where relevant, industry best practice locally and/or internationally.

BR-3.5.14

The appointed experts' report should follow the format set out in Appendix BR-(iii), in part B of the CBB Rulebook.

BR-3.5.15

Unless otherwise directed by the CBB or unless the circumstances described in Section BR-3.5.19 apply, the report must be discussed with the Board of directors and/or senior management in advance of it being sent to the CBB.

BR-3.5.16

Where the report is qualified by exception, the report must clearly set out the risks which the licensee runs by not correcting the weakness, with an indication of the severity of the weakness should it not be corrected. Appointed experts will be expected to report on the type, nature and extent of any weaknesses found during their work, as well as the implications of a failure to address and resolve such weaknesses.

BR-3.5.17

If the appointed experts conclude, after discussing the matter with the licensee, that they will give a negative opinion (as opposed to one qualified by exception) or that the issue of the report will be delayed, they must immediately inform the CBB in writing giving an explanation in this regard.

BR-3.5.18

The report must be completed, dated and submitted, together with any comments by directors or management (including any proposed timeframe within which the licensee has committed to resolving any issues highlighted by the report), to the CBB within the timeframe applicable.

BR-3.5.19

Appointed experts must communicate to the CBB, during the conduct of their duties, any reasonable belief or concern they may have that any of the requirements of the CBB, including the criteria for licensing a licensee (see Module AU), are not or have not been fulfilled, or that there has been a material loss or there exists a significant risk of material loss in the concerned licensee, or that the interests of customers are at risk because of adverse changes in the financial position or in the management or other resources of a licensee. Notwithstanding the above, it is primarily the licensee's responsibility to report such matters to the CBB.

BR-3.5.20

The CBB recognises that appointed experts cannot be expected to be aware of all circumstances which, had they known of them, would have led them to make a communication to the CBB as outlined above. It is only when appointed experts, in carrying out their duties, become aware of such a circumstance that they should make detailed inquiries with the above specific duty in mind.

BR-3.5.21

If appointed experts decide to communicate directly with the CBB in the circumstances set out in Paragraph BR-3.5.19, they may wish to consider whether the matter should be reported at an appropriate senior level in the licensee at the same time and whether an appropriate senior representative of the licensee should be invited to attend the meeting with the CBB.

BR-3.5.22

Information which is confidential and has been obtained under, or for the purposes of, this chapter or the CBB Law may only be disclosed by the CBB in the circumstances permitted under the Law. This will allow the CBB to disclose information to appointed experts to fulfil their duties. It should be noted, however, that appointed experts must keep this information confidential and not divulge it to a third party except with the CBB's permission and/or unless required by Bahrain Law.

BR-3.5.23

The CBB may, at its discretion, call for a trilateral meeting(s) to be held between the CBB and representatives of the relevant insurance licensee and the appointed experts. This meeting will provide an opportunity to discuss the appointed experts' examination of, and report on, the insurance licensee.

PD-A.1.1

The purpose of this Module is to set out the minimum requirements applied by the Central Bank of Bahrain (‘CBB’) to insurance firms, with respect to corporate and financial transparency through meaningful public disclosures. Such disclosures help protect customers of insurance firms and facilitate market discipline.

PD-A.1.2

The CBB's disclosure requirements vary according to the Category of insurance licensee. Certain categories are exempt from these requirements, because of the limited nature of their business. The scope of application of these requirements is given in Section PD-B.1.

PD-A.1.3

The CBB encourages insurance firms to go beyond the minimum requirements specified in this Module. Further guidance on international best practice in this regard is provided in Chapter PD-3.

PD-A.1.4

In setting out certain detailed disclosure requirements, this Module supports various other parts of the Rulebook, namely:

PD-A.1.5

This Module contains the CBB's Directive (as amended from time to time) relating to public disclosure and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Directive in this Module is applicable to insurance licensees.

PD-A.1.6

For an explanation of the CBB’s rule-making powers and different regulatory instruments, see Section UG-1.1.

PD-1.1.1

Bahraini insurance firms must publish an Annual Report, in the manner prescribed in this Section, within 3 months of the end of the firm's financial year.

PD-1.1.2

In addition to the requirements specified in this Module, Bahraini insurance firms are also required to comply with the requirements regarding the publication of audited financial accounts, as specified in Article 62 of the CBB Law, the Bahrain Commercial Companies Law 2001 (as amended) and the Bahrain Stock Exchange Regulations (where applicable).

PD-1.1.3

Bahraini insurance firms must apply financial years that end on 31 December, unless prior written approval has been obtained from the CBB for a different year-end.

PD-1.1.4

The Annual Report must be made available in printed form.

PD-1.1.5

The Annual Report must be published in both Arabic and English.

PD-1.1.6

The requirement to publish an Annual Report will be met where firms publish financial information (balance sheet and income statement) and any financial penalties paid to the CBB, in two local (Bahrain) daily newspapers (one in Arabic, one in English), containing details of where interested parties may obtain a copy of the full Annual Report in either electronic or paper form.

PD-1.1.6A

Bahraini insurance firms must submit a newspaper copy of the published financial statements (referred to under Paragraph PD-1.1.1) to the CBB within three months from the statements’ date clearly showing on which date and in which publication(s) the statements were published.

PD-1.1.7

The Annual Report must include the information that insurance firms are required to disclose on an annual basis as set out in this Module, together with additional information that may facilitate the understanding by prospective and existing policyholders and other market participants of the financial position of the firm and the risks to which it is subject.

PD-1.1.8

Bahraini insurance firms whose business is limited to reinsurance activities, are exempt from publishing summary financial information in local newspapers. However, their Annual Report must be made available in electronic format via the firm's web site.

PD-1.1.9

Bahraini insurance firms must provide printed copies of their Annual Report on request, but may charge a fee for providing a printed copy to persons who are neither policyholders nor shareholders of the firm.

PD-1.1.10

Bahraini insurance firms must, in their Annual Report, provide timely information that facilitates market participants' assessment of the firm. There are five broad categories of information, each of which must be addressed in clear terms and with appropriate details to help achieve a satisfactory level of transparency. The five categories are:

PD-1.1.11

The disclosure requirements listed in this Module are in addition to or serve to clarify the disclosure requirements under International Financial Reporting Standards ('IFRS'). These requirements may either be integrated into the Notes to the Accounts, or addressed in the Directors' Report.

PD-1.1.12

The Annual Report must contain a copy of the firm's annual, audited financial statements in accordance with the requirements contained in the CBB Law, the Bahrain Commercial Companies Law 2001 (as amended) and the Bahrain Stock Exchange regulations (where applicable). The financial statements must contain the auditor's opinion which must be made in accordance with the International Standards on Auditing, established by the International Federation of Accountants. The Annual Report must also contain a solvency statement and the auditor's report.

PD-1.1.12A

For Takaful firms, the published financial statements must provide a detailed breakdown of the statement of financial position and statement of comprehensive income for the shareholder fund and for any participant fund(s) of the Takaful firm.

PD-1.1.13

The solvency statement specified in Paragraph PD-1.1.12 must include a breakdown of the firm's CBB capital available (as specified in Paragraph CA-1.2.21) and a summary of the firm's CBB solvency margin requirements (as prescribed in Chapter CA-2).

PD-1.1.13A

In instances where a Takaful firm has opted to write-off a Qard Hassan granted to meet solvency requirements under the CBB Rules at that time, the amount of the Qard Hassan must be disclosed as an off-balance sheet item in accordance with Subparagraph CA-8.4.16.

PD-1.1.14

Firms must disclose in their published accounts all information which policyholders and shareholders would reasonably expect to enable them to form a view of the firm's ability to meet its obligations.

PD-1.1.15

Firms are encouraged to include within the annual reports key ratios that would assist readers in understanding the firm's financial performance, performance on its insurance account and in making comparisons with previous financial periods on a like-for-like basis. Possible ratios include those contained in the Insurance Firm Return (cf. Module BR (CBB Reporting)).

PD-1.1.16

The following information relating to the financial performance and position of the firm must, where relevant to an understanding of the firm's financial performance, be included in the Annual Report:

PD-1.1.17

The Annual Report of insurance firms must contain details of any shares in the firm held by its Directors and Chief Executive/General Manager. Such details must include:

PD-1.1.18

For the purpose of the disclosures required under Paragraph PD-1.1.17, shares held by Directors and Chief Executives/General Managers also include any shares held in the firm by their spouses, children or any other person whose share holdings may fall under their control.

PD-1.1.19

The following information relating to corporate governance must also be included in the firm's Annual Report:

PD-1.1.20

The Annual Report must include a declaration by the external auditor that no violations have taken place of:

insofar as the violations have any material impact on the financial statements of the firm.

PD-1.1.21

In accordance with Paragraph EN-B.4.5, insurance firms must disclose in their Annual Report the amount of any financial penalties paid to the CBB, together with a factual description of the reason(s) given by the CBB for the penalty. Insurance firms which fail to comply with this requirement will be required to make the disclosure in the annual report of the subsequent year and will be subject to an enforcement action for non-disclosure.

PD-1.1.22

The following information relating to the firm's risk management strategies and practices must be included in the Annual Report:

PD-2.1.1

This Chapter applies to all insurance firms.

PD-2.1.2

Insurance firms must publish interim summary financial statements, in accordance with IAS 34 (International Accounting Standards). Insurance firms must also provide prior year comparative figures, as dictated by IAS 34, when disclosing semi-annual results.

PD-2.1.2A

For Takaful firms, the published interim financial statements must provide a detailed breakdown of the statement of financial position and statement of comprehensive income for the shareholder fund and for any participant fund(s) of the Takaful firm.

PD-2.1.3

The statements referred to under Paragraph PD-2.1.2 must be reviewed by the firm's external auditor, in accordance with International Standards on Auditing (ISA) applicable to Review engagements.

PD-2.1.4

The statements referred to under Paragraph PD-2.1.2 must be published in two local newspapers (one in Arabic, one in English), within two months of the statements' date.

PD-2.1.4A

Insurance firms must submit a newspaper copy of the published financial statements (referred to under Paragraph PD-2.1.4) to the CBB within two months from the statements’ date clearly showing on which date and in which publication(s) the statements were published.

PD-2.1.4B

Bahraini insurance firms, whose business is limited to reinsurance activities, are exempt from publishing semi-annual interim financial statements in local newspapers. However, interim results must be made available in electronic format via the firm's web site.

PD-2.1.5

Insurance firms are required to comply with the requirements of Chapter PD-2, effective for the period ending 30 June 2008. (Refer to ES-2.8.1).

PD-3.2.1

This paper provides guidance on the public disclosure of reliable and timely information, involving both the quality of disclosure by insurers and the nature of the information being disclosed. Disclosure improves the understanding of policyholders and market participants of the financial position of insurers. The CBB encourages insurance licensees to refer to this document and to apply the disclosure principles it contains (see www.iaisweb.org).

PD-3.2.2

The CBB requires takaful companies to follow Financial Accounting Standard 12 (General Presentation and Disclosure in the Financial Statements of Islamic Insurance Companies) published by the Accounting and Auditing Organisation for Islamic Financial Institutions — www.aaoifi.com (refer to Section BC-3.4).