Bahrain aims for new business with takaful, sukuk rules

Bahrain's central bank will release a new regulatory framework for takaful this quarter. Bahrain already has takaful-specific rules but the regulatory refom could help it grab a larger chunk of the sector. The new rules, developed after two years of consultations with the industry, cover the operations and solvency of takaful firms. They are expected to increase takaful firms' ability to distribute surpluses to policy holders and dividends to shareholders. In addition, the new rules require financial reporting by takaful firms annually rather than once every three years, restrict the use of performance fees, and introduce the concept of earmarked assets. In December, the central bank formally combined existing rules for issuing and listing financial securities, including sukuk, in an effort to make the process more efficient.