Back Custom print Link Text Only Rich Text Print

  • AA-4.3 AA-4.3 Content of Financial Condition Report (FCR)

    • AA-4.3.1

      The FCR must provide an objective assessment of the overall financial condition of the insurance firm. The report must also comply with the following conditions:

      (a) The actuary responsible for the FCR must comply with the relevant professional standards;
      (b) Where relevant, the FCR must include:
      (i) A business overview;
      (ii) An assessment of the insurance firm's recent experience and profitability, including as a minimum the experience for the year ending on the valuation date;
      (iii) An assessment of all insurance liabilities outlined under Chapter CA-5;
      (iv) An assessment of the adequacy of past estimates for all insurance liabilities, particularly where there has been a change in assumptions or in the valuation method adopted for previous valuations;
      (v) Where there has been a change in assumptions or in the valuation method from that adopted previously, the effect of those changes on the insurance liabilities and assets arising in respect of those liabilities;
      (vi) An explanation of the assumptions used in the valuation process including, without limitation, assumptions made as to inflation and discount rates, future expense rates and ,where relevant, future investment income;
      (vii) An assessment of the adequacy and appropriateness of data made available to the actuary by the insurance firm;
      (viii) A description of the procedures undertaken by the actuary to assess the reliability of the data provided;
      (ix) The model(s) used by the actuary;
      (x) The approach taken to estimate the variability of the estimate; and
      (xi) The nature and findings of the sensitivity analyses undertaken;
      (c) The establishment of the surplus or deficit on any conventional long-term insurance fund and in the case of a surplus, the amount that is proposed to be transferred to the shareholder fund and available for distribution;
      (d) The establishment of the surplus or deficit, if any, for all participants' funds for Takaful firms. In the case of surplus, the amount available for distribution must be specified;
      (e) For long-term insurance and Family Takaful, include an assessment of asset and liability management, including the insurance firm's investment strategy;
      (f) An assessment of current and future capital adequacy and a discussion of the insurance firm's approach to capital management;
      (g) An assessment of pricing, including adequacy of premiums;
      (h) An assessment of the suitability and adequacy of reinsurance/retakaful arrangements, including documentation of reinsurance/retakaful arrangements and the existence and impact of any limited risk transfer/sharing arrangements;
      (i) Where the implications of the report have an adverse impact on the financial condition of the insurance firm, the report must include recommendations on how to address any shortcomings and eliminate any negative trends; and
      (j) For overseas insurance firms, the report must be prepared for Bahraini operations, but consideration must be given to the financial position of the head office.
      Amended: April 2014
      Amended: October 2007
      Amended: January 2007

    • AA-4.3.1A

      The signing actuary or registered actuary may rely on other expert opinions in order to address those matters required in the FCR that are outside of scope of the actuary's qualifications. Where such outside opinions are sought, these should be clearly identified in the report.

      Added: April 2014

    • AA-4.3.2

      The report required under Article 72(a) of the CBB Law must accompany the Insurance Firm Return (Form IFR) submitted to the CBB and cover the period covered by that return, as required under Paragraph BR-1.1.22.

      Amended: January 2007
      Amended: October 2007

    • AA-4.3.2A

      The CBB may require a FCR on a more frequent basis than the requirement outlined. In addition, the CBB may appoint an actuary as an appointed expert as outlined in Section BR-3.5 to conduct a special purpose review of the insurance firm's operations, risk management, financial affairs or other areas as specified by the CBB.

      Added: April 2014

    • AA-4.3.3

      In accordance with Article 73 of the CBB Law, the evaluation should include:

      (a) A valuation of the liabilities of the insurance firm attributable to its long-term insurance business;
      (b)The establishment of the surplus, if any, on any long-term insurance funds that it is proposed be transferred to shareholders' funds and available for distribution; and
      (c) The establishment of the deficit, if any, on any long-term insurance funds established by the insurance firm.
      Amended: January 2007
      Amended: October 2007

    • AA-4.3.4

      Where the Registered Actuary's or Signing Actuary's investigation establishes a deficit on any fund or part of any fund, the insurance firm concerned must immediately notify the CBB and ensure that remedial action is taken to make good the deficit.

      Amended: January 2007
      Amended: October 2007

    • AA-4.3.5

      Possible remedial action to address the deficit noted in Paragraph AA-4.3.4 may include a transfer to be made from shareholders' funds of sufficient assets to make good the deficit or a reduction in non-guaranteed bonuses.

      Amended: January 2007
      Amended: October 2007

    • AA-4.3.6

      [This Paragraph was deleted in April 2014.]

      Deleted: April 2014
      Amended: October 2007
      Amended: January 2007

    • AA-4.3.7

      [This Paragraph was deleted in April 2014.]

      Deleted: April 2014
      Amended: October 2007
      Amended: January 2007

    • Signing Actuary Criteria

      • AA-4.3.1

        The Signing Actuary may be a Director or employee of the licensee concerned, an independent party, or an employee of a firm providing actuarial consulting services.

        Amended: January 2007

      • AA-4.3.2

        Where the Signing Actuary is a Director or employee of the licensee concerned, he must hold appropriate professional qualifications from a relevant, recognised professional body and is subject to approval by the CBB (ref AU-1.3.1). Where the Signing Actuary is an independent party or employee of a firm providing actuarial consulting services, he or his firm must be registered to carry on the business of an actuary in the Kingdom of Bahrain, in accordance with the requirements of Article 74 of the CBB Law.

        Amended: January 2007

      • AA-4.3.3

        Fellows (or members of equivalent status) in good standing of the Society of Actuaries (USA), the Institute and Faculty of Actuaries (UK) or the American Academy of Actuaries, or any other similar body with mutually reciprocal licensing arrangements with any of these bodies, will satisfy the requirement in Paragraph AA-4.3.2.

    • General Insurance Business

      • AA-4.3.8

        [This Paragraph was deleted in April 2014.]

        Deleted: April 2014
        Amended: October 2007

    • Qualified FCR

      • AA-4.3.9

        While the actuary is not required to check the data on which the report is based, he should disclose any material concerns in respect of data accuracy, integrity and sufficiency in the context of the work undertaken.

        Amended: October 2007

      • AA-4.3.10

        If, for whatever reason, the actuary is unable to give an unqualified report, he must inform the CBB as soon as possible.

        Amended: January 2007
        Amended: October 2007

      • AA-4.3.6

        The Directors of the insurance firm must provide the Signing Actuary with the data and information required for the preparation of the actuarial evaluation and report. The insurance firm must advise the Signing Actuary of all known changes in internal methods or procedures that could materially affect the determination of reserves.

      • AA-4.3.7

        Claims development data provided to the Signing Actuary must be reconciled to the accounting information forming the basis of the statutory accounts.

    • Duties of the Insurance Firm

      • AA-4.3.11

        The Directors of the insurance firm must provide the Registered Actuary or Signing Actuary with the data and information required for the preparation of the FCR. The insurance firm must advise the Registered Actuary or Signing Actuary of all known changes in internal methods or procedures that could materially affect the determination of reserves and financial condition.

        Amended: April 2014
        Added: October 2007

      • AA-4.3.12

        For general insurance business, claims development data provided to the Registered Actuary or Signing Actuary must be reconciled to the accounting information forming the basis of the statutory accounts.

        Added: October 2007