Gulf Finance House to set up first captive insurance firm in Middle East
Bahrain-based Islamic investment bank, Gulf Finance House (GFH) is to set up a captive insurance firm in Bahrain. The proposed venture, which will be the first-of-its-kind in the Middle East, follows recent moves by the Bahrain Monetary Agency (BMA) to develop Bahrain as the regional center for captive insurance activities.
The commitment from GFH, which is spearheading the one billion dollar Bahrain Financial Harbor project, is the first to be received by the BMA on captive insurance, said Anwar Khalifa Al-Sadah, executive director of Financial Institutions Supervision at the BMA, who was speaking at a joint BMA-GFH press conference, to announce plans for the new venture.
GFH Chief Executive Officer Esam Janahi said he was very pleased that GFH was supporting BMA’s initiative and taking a leading role to establish a captive insurance market in Bahrain. The growth of GFH’s investment activities has meant that GFH is now reviewing how it organizes insurance cover, he said.
“The Bahrain Financial Harbor is a very important infrastructure project for the future of Bahrain,” said Janahi. It is to be built at Mina Manama and will house institutions operating in capital and retail banking markets and asset management as well as insurance, and will also provide residential accommodation and leisure facilities.
As a financial city, the Bahrain Financial Harbor is hoped to attract both local and international captive insurers. Al-Sadah said that developing the captive insurance sector is a key element of BMA’s new strategic policy to further advance the Kingdom’s insurance industry.
Captives insure the risks of their parent’s group and are a well-established tool used by many leading corporates as part of their overall risk management strategy. “We are seeing a demand from corporates based in the Gulf Cooperation Council (GCC) and the wider Middle East and South Asia region wishing to establish a captive insurer,” said Al-Sadah.
Currently, corporates based in the Middle East and South Asia have no local financial center in which to base such an entity. “We, at the BMA, have taken the initiative to develop the rules which would allow captive insurers to establish in Bahrain,” said Al-Sadah.
The rules, the first of their kind in the region, are scheduled for issuance next month. The proposed rules are part of a BMA initiative aimed at developing and enhancing the regulatory framework for the insurance sector and position Bahrain as the leading regional center for insurance business, said Al-Sadah.
The Kingdom of Bahrain hosts the largest concentration of banks and other financial institutions in the Middle East. The institutions offer a diverse range of services, including money market and portfolio management, corporate and private banking, investment advisory as well as insurance products and services.
The Bahrain Monetary Agency (BMA), the Kingdom’s central bank and sole regulator for the financial system, currently regulates a total of 347 institutions, of which 180 are banks and banking-related institutions, 154 insurance and insurance-related firms and 13 capital market brokers.
Bahrain has also emerged as the world’s Islamic financial capital, with 26 Islamic financial institutions, five key industry-support organizations and six Islamic insurance companies.
Gulf Finance House is a leading Islamic investment bank, with a paid up capital of $65 million. — (menareport.com)
© 2003 Mena Report (www.menareport.com)