نـــرســـــــــي ثـقــــــافـــــــة الــتــمـــيــــــز

Transcription

1 التـقـــــــــريـر الســـــــنـوي ANNUAL REPORT نـــرســـــــــي ثـقــــــافـــــــة الــتــمـــيــــــز CRAFTING A CULTURE OF EXCELLENCE التـقــــــــــــــريــــر الســــــــــــنـــــوي A N N U A L R E P O RT

2 CONTENTS Directors and Executive Management 6 Chairman s Report 10 Chief Executive Officer s Report 14 Corporate Governance Report 18 Financial Highlights 30 Financial Information Independent Auditors Report 33 Statement of Financial Position 36 Statement of Profit or Loss 37 Statement of Comprehensive Income 38 Statement of Cash Flows 39 Statement of Changes in Equity 40 Notes to the Financial Statements 41 Minute of the Annual General Meeting 83 Licensed by the Central Bank of Bahrain as a General Insurance Company

3 H.M. King Hamad Bin Isa Bin Salman Al Khalifa The King of the Kingdom of Bahrain H.H. Sheikh Sabah Al Ahmed Al Jaber Al Sabah The Amir of the State of Kuwait

4 GENERAL INFORMATION HEAD OFFICE BKIC Tower 2775, Road 2835 Seef District 428 Kingdom of Bahrain PO Box Telephone: Telefax: Website: Commercial Registration: 4745 SALMABAD BRANCH Building 1390, Road 426, Salmabad 704 Kingdom of Bahrain PO Box Telephone: Telefax: ARAD BRANCH Shop 83, Airport Highway Entrance 145, Road 44, Arad 243 Kingdom of Bahrain PO Box Telephone: Telefax: EAST RIFFA BRANCH Shop 13A, Abu Shaheen Avenue Al Reem Centre, East Riffa 923 Kingdom of Bahrain PO Box Telephone: Telefax: SAAR MALL BRANCH Kiosk 24, Building 133, Road 25, Block 525, Saar, Kingdom of Bahrain PO Box KUWAIT OFFICE BBK Building, Floors 5 & 6 Ahmed AlJabar Street, Safat 13128, Al Sharq State of Kuwait PO Box Telephone: Telefax: , info@gigbk.com.kw Commercial Registration: License: 23 PRINCIPAL BANKERS BBK Ahli United Bank National Bank of Bahrain Burgan Bank Gulf Bank SHARE REGISTRARS Bahrain Karvy Computershare WLL Manama, Kingdom of Bahrain PO Box 514 Telephone: Telefax: Kuwait Kuwait Clearing Company Safat 13081, State of Kuwait PO Box Telephone: Telefax: AUDITORS Ernst & Young Manama, Kingdom of Bahrain PO Box 140 Telephone: Telefax: Telephone: Telefax: BAHRAIN KUWAIT INSURANCE (BSC)

5 COVER STORY Creativity knows no bounds. When infused with imagination, it takes the traditional to express the contemporary. Arabic Calligraphy, which has always been perceived as a highly skilled traditional art form, takes a creative leap to convey multiple values of BKIC in an amazingly appealing manner. BKIC stands apart with its core values such as Strength, Endurance, Vision and Responsiveness all leading on the path to Growth, upholding its corporate motto: From Origin to Excellence. BKIC bridges the traditional with the modern catering to the requirements of the contemporary insurance market through imbibing the inspiring values of the land. And grows through crafting a culture of excellence. ANNUAL REPORT 3

6 4 BAHRAIN KUWAIT INSURANCE (BSC) Strength, grace, beauty and speed the thoroughbred Arabian horse defies all odds to transport the rider into the high pursuit of glory.

7 STRENGTH The leader gains strength by building confidence and trust of the community and meaningfully contributes to its security. This is what BKIC commits itself to: serving its customers to ensure maximum security and contributing to the overall development of the society in line with its proud Arabian traditions. BKIC leads by virtue of its profound experience and qualitative edge acquired over decades. It enjoys the reputation as a performancedriven, resultoriented institution offering comprehensive insurance products and services. ANNUAL REPORT 5

8 BOARD OF DIRECTORS Murad Ali Murad Chairman 6 Adnan Ahmed AlBaghli Director 2 Khalid Saoud Al Hasan Vice Chairman 7 Bijan Khosrowshahi Director 3 Hassan Mohammed Zainalabedin Director 8 Dr. Abdul Rahman Ali Saif Director 4 Shawqi Ali Fakhroo Director 9 Mohamed Ebrahim Zainal Director 5 Dr. Emad Jawad Bukhamseen Director 10 Khalil Abdeljawad Khamous Director Abdulla Ahmed Abdulrahim Secretary to the Board 6 BAHRAIN KUWAIT INSURANCE (BSC)

9 EXECUTIVE MANAGEMENT Ebrahim Alrayes Chief Executive Officer BAHRAIN 2 Waleed Mahmood General Manager KUWAIT 7 Abdulla Rabia General Manager 3 K. M. Kurien Chief Underwriting Officer 8 S. Ramakrishnan Deputy General Manager 4 R. Sundaram Chief Financial Officer 9 K. Gandhi Assistant General Manager 5 Ahmed Bucheeri Chief Investment Officer 6 Manoj Badoni Assistant General Manager Technical ANNUAL REPORT 7

10 ENDURANCE BKIC endeavours to carry its customers through all conditions, giving security and hope through an array of resources, talents and intelligence to the service of the community. At BKIC, this is realized by a strong team equipped with vast knowledge and skills in designing and delivering customerfriendly insurance products and services that ensure complete peace of mind. 8 BAHRAIN KUWAIT INSURANCE (BSC)

11 The tenacious perseverance of the camel, known as the ship of the desert, inspires fortitude and resilience, leaving enduring impressions on the sands of time. ANNUAL REPORT 9

12 CHAIRMAN'S REPORT The gross written premium had increased by 10%, from BD 38.1 million in to BD 42.1 million in. Net profit at the end of the year had increased by 5.5%, from BD 2.71 million in to BD 2.86 million in. Dear Shareholders, It is my pleasure to present you the report of the Board of Directors and to review with you the fortieth Annual Report of Bahrain Kuwait Insurance Company for the financial year ended December 31,. Despite many challenges faced by the Kingdom of Bahrain in the past year, it managed to overcome these challenges successfully, and was able to accomplish significant progress in many key sectors that have positively contributed in pushing the development wheel forward in the country to achieve the anticipated growth. Of these challenges, the most prominent was the economic challenge caused by the decline in oil prices; equally important was the challenge encountered in maintaining the security and stability of the nation. During the year, Bahrain had witnessed implementation of many infrastructure projects such as roads, bridges, and the Ministry of Housing s ambitious plans for construction of housing units for citizens. Bahrain International Airport expansion project works also began during the year to increase the capacity to receive largest number of aircrafts which will contribute to support and stimulate the growth of tourism sector in the country. In addition, the country had also witnessed implementation of a number of vital developmental projects in oil and aluminium sectors. There is no doubt that the revival of economic activity in the Kingdom had a positive impact on the insurance sector, which is expected to grow more than the growth achieved in the previous year, and this growth is reflected on the company s activity too, where the gross written premium had increased by 10%, from BD 38.1 million in to BD 42.1 million in. As for the obstacles faced by the insurance sector in Bahrain and the region in general, it is the intense competition on prices, which impacted negatively on the financial results of companies, including that of BKIC. In its meeting held previously to discuss the company s business plan, the Board of Directors had prescribed necessary measures for implementation in an endeavor to prevent possible deterioration of the company s results due to unhealthy competition, in the future. The Board of Directors at the end of last year discussed and approved three years business plan ( ) for the company. It is an ambitious plan which includes the development of insurance services and products along with the development of skills of the administrative and technical staff, with a focus on the use of latest technology, and to search for varied investment opportunities in order to achieve the best returns for the shareholders. This business plan was translated into goals set for the executive management to achieve. 10 BAHRAIN KUWAIT INSURANCE (BSC)

13 As for the legislative and regulatory matters, the Central Bank of Bahrain had issued Resolution No. 23/ on the unified document for compulsory insurance, and Circular No. 35/ on the aspect of reconciliation of subrogated motor claims among insurance companies, and the Circular No. 8/ on sharing of data on vehicle insurance with the General Directorate of Traffic through egovernment portal. The Ministry of Industry, Commerce and Tourism had issued Resolution No. 128 of on commercial registration fees, and the Resolution No. 129 of on imposition of penalty for delayed renewal of the commercial registration. Also, during the year under review, the Inspection Department of the Central Bank of Bahrain had conducted an audit on the company s books of business to check on the integrity of its internal procedures. With regard to credit rating, A.M. Best had affirmed the company s credit rating (Awith stable outlook) after reviewing the company s business in the first half of the year; the rating reflects on financial strength and durability enjoyed by the company in meeting its financial commitments. In the Annual General Meeting held on March 20,, Ernst & Young was reappointed as external auditors for the year ended December 31,. Net profit at the end of the year had increased by 5.5%, from BD 2.71 million in to BD 2.86 million in. The total equity registered a marginal reduction of 1%, from BD 34.2 million in to 33.8 million in. This was due to the large decline in the fair value computation of investment reserves. The Board of Directors has recommended a cash dividend of 30% to the shareholders for the year ended December 31,, equivalent to 30 Fils per share. Total profit available for distribution is BD 9,695,870 The Board of Directors proposes the following allocations: It may be noted that the company had reached out to the community as usual to provide contributions and donations to charities, and various cultural, sports and social associations, in view of the important roles played by these institutions in the service of society. I wish to express my sincere thanks and appreciation to the shareholders for their unstinted cooperation and support. I wish to thank our esteemed customers for their confidence and trust in the company and its services. I would like to express my sincere gratitude and appreciation to the management and staff for their continued diligence, dedication and determination. I would also like to thank the intermediaries, reinsurance companies and other business associates for their cooperation and support. I would like to acknowledge with gratitude the support given to our company by all the official bodies in the Kingdom of Bahrain and the State of Kuwait, the Central Bank of Bahrain, the Ministry of Industry, Commerce and Tourism in the Kingdom of Bahrain, the Ministry of Commerce and Industry in the State of Kuwait, Bahrain Bourse and Boursa Kuwait. Finally, I am thankful to His Majesty King Hamad Bin Isa Bin Salman Al Khalifa, the King of the Kingdom of Bahrain and His Highness Shaikh Sabah Al Ahmed Al Jaber Al Sabah, the Amir of the State of Kuwait and the respective governments, for their support and assistance to the insurance sector in both countries. I wish the people of the Kingdom of Bahrain and the State of Kuwait continued peace and prosperity. Thank you. Cash dividend (30%) of the paidup capital BD 2,143,847 Retained earnings BD 7,552,023 During the year sum of BD 178,338 was paid to the directors towards the following: Directors remuneration BD 150,000 Sitting fees BD 21,300 Travel expenses BD 7,038 Murad Ali Murad Chairman 23rd February 2017 ANNUAL REPORT 11

14 VISION BKIC s ability to foresee market trends equips itself to fulfill customers demands in a better way. This sharp vision is a value and practice applied to conquer perfection in everything BKIC offers. Planning ahead is one of the most valuable virtues in the business of insurance. BKIC believes that insurance is not just about money but about enhancing people s lives and empowering them to act for the better. 12 BAHRAIN KUWAIT INSURANCE (BSC)

15 Sharp, agile and swift, the falcon sees farther and perceives the winds of change like no other, gracefully soaring in the heights of perfection. ANNUAL REPORT 13

16 CHIEF EXECUTIVE OFFICER S REPORT The company attaches special importance to the training of its personnel. 48 training courses in various specialty subjects were held during the year of which 46 were at the Bahrain Institute for Banking and Finance and two training sessions were outside of Bahrain. Despite the difficult circumstances witnessed by the insurance markets in the region, the company achieved a reasonably good growth rate of 10% in gross written premium, to record BD 42.1 million in compared with BD 38.1 million in. This is an impressive achievement in the given market conditions. We have managed to secure a number of projects in some key sectors in the Kingdom of Bahrain and in the State of Kuwait, which reconfirms the good reputation enjoyed by BKIC in the local as well as international markets. It also underscores the leading position of the company in the Bahraini market. Technical profit recorded was BD 1.76 million in compared with BD 3 million in. This reduction was mainly due to provision of additional loss reserves (IBNR) in the motor class as assessed by the external actuary, which amounted to nearly BD 953 thousands. The net investment income recorded a significant growth of 162%, which mainly contributed to the overall growth in net profit to reach BD 2.86 million in compared with BD 2.71 million in, thus registering an increase of 5.5%. I am pleased to present the highlights of the results below: Fire and General Accident insurance Despite the prevailing soft reinsurance market conditions and extreme competition among local insurance companies which contributed to considerable decrease in the renewal premiums of some major risks in, this department had achieved a significant increase in the gross premium from BD 27.7 million in to BD 32.2 million in recording a growth of 16%. The engineering class predominantly contributed to this increase as we had secured many vital construction projects in various sectors. The gross earnings rose by 5%, from BD 6.2 million in to BD 6.5 million in. This increase translated to the department profit which stood at BD 2.5 million compared with BD 2.3 million in, registering a growth of 11%. Marine Insurance The large decline in imports and exports, as well as severe competition among companies had contributed to the decline of marine insurance premium. The gross premium dropped down by 16%, from BD 2.2 million in to BD 1.9 million in, which impacted adversely on the net premium and commission income. The gross earnings stood at BD 779 thousands compared to BD 933 thousands in. The above factors contributed to the decline in profit in this class to BD 389 thousands compared to BD 519 thousands in. 14 BAHRAIN KUWAIT INSURANCE (BSC)

17 Motor Insurance The gross premium decreased by 3%, from BD 8.2 million in to BD 8 million in due to the decision taken by the management in not renewing an insurance policy with high loss ratio which negatively impacted the results in Kuwait. The loss ratio was 92% in compared with 76% in. Added to this, a provision of BD 953,000 was made towards Incurred but not reported claims (IBNR) and Premium Deficiency Reserve (PDR) as recommended by the external actuary. These factors contributed to a loss of BD 1.1million as against a profit of BD 258 thousands in for this class of business. Investment Department The company achieved good returns in investments, as net investment income increased by 57%, from BD 1.12 million in to BD 1.75 million in due to profit booked on sale of investments, following the decision taken by the Board to restructure the investment portfolio with a view to achieve the best returns in the coming periods. The provision made for investment impairments was BD 626 thousands. The income from associates was BD 162 thousands in as against a loss of BD 386 thousands in. General and administrative expenses and operating expenses The company continued to monitor the expenses with a view to control and reduce the expenses which has a direct impact on the profits of the company. The company has achieved reduction in operating expenses from BD 3.42 million in to BD 3.36 million in. The general and administrative expenses also decreased from BD 1.05 million in to BD 822 thousands in. In the area of business development, the company opened its new branch during the year under review in the Saar area in the Northern Province to service personal insurance clients in addition to other existing branches located in the Capital and the provinces of Muharraq, Central and South. The sale of personal insurance products through our online platform has picked up in and we are seeing growth in the number of users. Besides a new service of renewing the cars through egovernment portal has been enabled to facilitate the clients to insure and register their cars at the same time. The company also revamped its website to enhance design and speed apart from increasing the pages to display more information, enhanced user experience when the site is accessed through mobile devices. Outlook for 2017 Though the forecasts indicate that 2017 will be a difficult year for the financial sector in general and the insurance sector in particular, but we are determined to meet these challenges by redoubling our efforts to achieve the targets set with a view to maximize returns to our shareholders, we have been witnessing such challenges during the past five years but with determination have been able to successfully manage our affairs well to overcome the same. We appreciate the dedication and loyalty demonstrated by our staff in the performance of their duties and also the continued strong support extended by our Board of Directors. Thank you. Training and Business Development The company attaches special importance to the training of its personnel. 48 training courses in various specialty subjects were held during the year of which 46 were at the Bahrain Institute for Banking and Finance and two training sessions were outside of Bahrain. Two employees were able to achieve certificates of insurance from the Chartered Insurance Institute, London. The numbers of staff benefited from these courses were 40. Ebrahim Alrayes Chief Executive Officer 23rd February 2017 ANNUAL REPORT 15

18 16 BAHRAIN KUWAIT INSURANCE (BSC) Adaptability and quick response are the traits of a gazelle. It befits a smart leader who s seeking to influence the world of insurance and financial solutions.

19 RESPONSIVE At BKIC, we place emphasis on being extremely responsive to customer requirements. This is one of the fundamental attributes that builds customer relationship and motivates our customers to trust and respect our timehonoured ideals. We remain focused on creating longterm value to the shareholders and policyholders alike. And it helps us face business challenges to emerge successful every time in our pursuit of excellence. ANNUAL REPORT 17

20 CORPORATE GOVERNANCE REPORT Year ended 31 December 1. CORPORATE GOVERNANCE PHILOSOPHY The Company has a policy of benchmarking against established best practice in the field of corporate governance. The Board has adopted core values and standards which set out the behaviors expected of staff in their dealings with shareholders, customers, colleagues, brokers and other stakeholders of the Company. One of the core values communicated within the Company is a belief that the highest standard of integrity is essential in business. The governance of the Company remains under constant review, in order to enhance compliance levels according to international standards and best practice. The direct responsibility of the Board of Directors is to endeavor to be in line with policies of regulatory authorities and statutory requirements. 2. COMMUNICATION STRATEGY The Company has a clear policy in relation to its communication with its stakeholders, shareholders, employees, customers, government bodies, regulators and society. Shareholders are invited by the Chairman of the Board to attend the Annual General Meeting in the presence of the Chairman and other directors including the Executive Committee Chairman, the Audit Committee Chairman, the Nomination, Remuneration and Governance Committee Chairman and the External Auditors, who are available to answer any questions raised by shareholders or media representatives with regard to the operations and performance of the Company. Additionally, the Company is cognizant and fully aware of its regulatory and statutory obligations regarding dissemination of information to its stakeholders. Without prejudice to the disclosure standards, guidelines on key persons and other requirements of the relevant statutory bodies, financial and nonfinancial information is provided by the Company on all events that merit announcement, either on its website: or through local newspapers or other means of communication. The financials and annual reports of the Company are made available on the Company s website. 3. SHAREHOLDERS INFORMATION BKIC s shares are listed on the Bahrain Bourse and Boursa Kuwait. The Company has issued 71,500,000 equity shares, each with a face value of 100 fils. All shares are fully paid SHAREHOLDERS (%) Shareholders Name Nationality No. of % of shares holding Citizens of the 16,959, Kingdom of Bahrain and Others Gulf Insurance Kuwait 40,126, Group (KSC) Warba Insurance Company (KSC) Kuwait 9,533, BBK BSC Bahrain 4,879, Distribution schedule of each class of equity Category No. of No. of % of outshares share standing holders shares Less than 1% 13,894,462 3, % up to less than 5% 3,065, % up to less than 10% 4,879, % up to less than 20% 9,533, % and above 40,126, Total 71,500,000 3, BOARD OF DIRECTORS INFORMATION Board composition The Board composition is based on the Company s Memorandum of Association and Articles of Association and comprises ten Members. The Board represents a mix of highlevel professional skills and expertise. Furthermore, in compliance with the corporate governance requirements, the Board Committees consist of Members with adequate professional background and experience. The Board periodically reviews its composition and the contribution of its Directors and Committees. The appointment of Directors is subject to prior approval of the Central Bank of Bahrain (CBB). The classification of executive Directors, nonexecutive Directors and independent nonexecutive Directors is as per definitions stipulated by the CBB. Directors are elected / appointed by the shareholders at the AGM. Election or reelection of a Director at the AGM shall be accompanied by a recommendation from the Board, based on a recommendation from the Nomination, Remuneration and Governance Committee with specific information such as biographical and professional qualifications and other directorships held. Citizens of the Kingdom of Bahrain and Others Gulf Insurance Group (KSC) Warba Insurance Company (KSC) BBK BSC 18 BAHRAIN KUWAIT INSURANCE (BSC)

21 CORPORATE GOVERNANCE REPORT Year ended 31 December The Board is supported by the Board Secretary who provides professional and administrative support to the general assembly, the Board, its committees and members. The appointment of the Board Secretary is subject to the approval of the Board. The Secretary is also assigned with the responsibility of liaising with the regulatory agencies in both Bahrain and Kuwait. Directors roles and responsibilities The Company is governed through its Board of Directors. The Board s main roles are to create value to shareholders, to provide entrepreneurial leadership of the Company, to approve Company s strategic objectives and to ensure that the necessary financial and other resources are made available to enable them to meet those objectives. The Board, which meets at least four times a year, has a schedule of matters reserved for its approval. The specific responsibilities reserved to the Board include: Reviewing Company strategy and approving the annual budget for revenues and capital expenditure; Reviewing operational and financial performance; Approving acquisitions and divestments; Reviewing the Company s systems of financial control and risk management; Ensuring that appropriate management development and succession plans are in place; Approving appointments to the Board and the Company Secretary; and Ensuring that a satisfactory dialogue takes place with shareholders. Director s induction and professional development The Board is required to be up to date with current business, insurance industry, regulatory and legislative developments and trends that will affect the Company s business operations. Immediately after appointment, the Company will provide a formal induction, if necessary. Meetings will also be arranged with Executive Management and the Company s Heads of Departments. This will foster a better understanding of the business environment and markets in which the Company operates. A continuing awareness programme is essential and it may take many different forms, through distribution of publications, workshops, presentations at Board meetings and attendance at conferences encompassing topics on directorship, business, insurance industry and regulatory developments Status of Executive, Nonexecutive and Independent Directors as at year end Executive Directors NonExecutive Directors Independent & NonExecutive Directors Board and committees evaluation The Board performs a selfevaluation on an annual basis. The Board annually reviews its Charter and its own effectiveness; and initiates suitable steps for any amendments. The Board will also review selfevaluations of the individual Board members and the Board Committees and consider appropriately any recommendations arising out of such evaluation. Whistle blowing policy The Board has approved the whistle blowing policy with designated officials to whom the employee can approach. The policy provides adequate protection to the employees for any reports in good faith. The Board s Audit Committee oversees this policy. Code of conduct The Board has approved a Code of Conduct for the Company s Directors. The Board has also approved a Code of Ethics for the Executive Management and employees. These codes outline areas of conflict of interest, confidentiality and the responsibilities of signatories to adhere to best practices. Key persons trading policy The Company has established a Key Persons Trading Policy to ensure that insiders are aware of the legal and administrative requirements regarding holding and trading of BKIC shares, with the primary objective of preventing abuse of inside information. Key Persons are defined to include the Directors, Executive Management, designated employees and any person or firm connected to the identified key persons. Responsibility for ensuring compliance with the Key Persons Trading Policy is entrusted to the Secretary to the Board. The policy covers the regulation of Bahrain Bourse relating to key persons. Conflict of interest policy The Board has also approved the policy for dealing with situations involving Conflict of Interest of Directors. In the event of the Board or its Committees considering any issues involving Conflict of Interest of Directors, the decisions are taken by the full Board / Committees. The concerned Director abstains from the discussion / voting process. These events are recorded in the Board / Committees proceedings. The Directors are required to inform the entire Board of Conflicts of Interest (potential or otherwise) in their activities with, and commitments to, other organisations as they arise and abstain from voting on the matter. This disclosure includes all material facts in the case of a contract or transaction involving the Director. Corporate social responsibility BKIC s contribution towards the well being of the community is an integral part of its corporate role. This corporate social responsibility is translated by the Company through an annual appropriation of a budget allocated for donations to finance community related projects and initiatives. The projects varying in nature fall into any one of the following fields; education & scientific centers, medical centers & facilities, social activity, public awareness programs and environment protection programs. ANNUAL REPORT 19

22 CORPORATE GOVERNANCE REPORT Year ended 31 December 5. DISCLOSURES RELATING TO BOARD OF DIRECTORS Directors profile Murad Ali Murad (Independent & NonExecutive) Chairman Director since 28 March 2004 Fellow Member of Chartered Institute of Management Accountants, UK Director s external appointments Chairman of BBK (BSC), Bahrain Chairman of the Board of Trustees for Human Resources Development Fund in Banking Sector, Bahrain Chairman of AlJanabya Company WLL (Family Company), Bahrain Member of Council of Vocational Training in Banking Sector, Bahrain Khalid Saoud Al Hasan (Executive) Vice Chairman Director since 28 March 2006 Bachelor degree in Political Science and Economics from Kuwait University, Kuwait Director s external appointments Chairman of Syrian Kuwaiti Insurance Co., Syria Chairman and General Manager of Fajr Gulf Insurance and Reinsurance Co., Lebanon Vice Chairman of Gulf Insurance and Reinsurance Co. (GIRI), Kuwait Vice Chairman of Arab Orient Insurance Co., Jordan Vice Chairman of Arab Misr Insurance Group, Egypt Vice Chairman of Gulf Sigorta, Turkey Board Member of Arab Reinsurance Co., Lebanon Board Member of Egyptian Takaful Property & Liability, Egypt Board Member of Algerian Gulf Life Insurance Co., Algeria Board Member of Takaful International Company (BSC), Bahrain Managing Director of Buruj Cooperative Insurance Co., K. Saudi Arabia Chief Executive Officer of Gulf Insurance Group (KSC), Kuwait Hassan Mohammed Zainalabedin (Independent & NonExecutive) Board Member Director since 1975 (Inception) Bachelor Degree in Economics from Cairo University, Egypt Director s external appointments Chairman of SYSCON Trading and Mechanical Services Co, WLL, Bahrain Chairman of ZEN Trading and Contracting Co., WLL, Bahrain Chairman of FAZ Trading and Supplies Co., WLL, Bahrain Dr. Abdul Rahman Ali Saif (Independent & NonExecutive) Board Member Director since 28 February 2011 Ph.D. Economics from University of Leicester, UK Director s external appointments Chairman, BBK Geojit Securities (KSC), Kuwait Board Member of the Automotive Board and Board Member of National Motor Company, Bahrain Board Member of Bahrain Commercial Facilities Company (BCFC), Bahrain Deputy Chief Executive, Wholesale Banking Group in BBK (BSC), Bahrain Dr. Emad Jawad Bukhamseen (NonExecutive) Board Member Director since 7 August 2005 Ph.D. in Hotel and Tourism Industry from American University, UK Doctor in Business Administration from European School of Management (DBA), UK Master of Business Administration and Economics from University of Liverpool, UK Bachelor of Financing Accounting from Beirut College, Lebanon Bachelor of Business Administration from Brad Ford College, USA Director s external appointments Chairman of AlArabiya Real Estate Co., Kuwait Chairman of Layan Real Estate Co., Dubai Chairman of Gourmania International, Kuwait, Dubai and London Chairman of AlBaraka Media Group, Kuwait Chairman of National Arabic Company for Restaurant Management (W.L.L.), Kuwait Chairman of Al Huda Medical Services Co., Kuwait Vice Chairman & CEO of Bukhamseen Group Holding, Kuwait Vice Chairman of Arabiya Real Estate Investment Co., Egypt Vice Chairman of Arabian Beverages Company, Kuwait, Saudi Arabia, Iraq Vice Chairman of Kuwait International Education, Kuwait Board Member of Kuwait Clearing Company, Kuwait Board Member of Al Houda Hotels for Travels & Tourism Co., Kuwait Board Member of Misr International Towers, Egypt Managing Director of National Aviation Center Co., Kuwait Managing Director of Bukhamseen Travels & Tourism, Kuwait Managing Director of Al Baraka Kuwait General Trading & Contracting Co., Kuwait Managing Director of Interiors Collaborative, Kuwait Managing Director of Bukhamseen General Trading & Contracting Co., Kuwait Managing Director of Al Arabia.comReal Estate Marketing, Kuwait Managing Director of Blue Nile Travels, Egypt Editor in Chief of Annahar Newspaper, Kuwait 20 BAHRAIN KUWAIT INSURANCE (BSC)

23 CORPORATE GOVERNANCE REPORT Year ended 31 December Adnan Ahmed AlBaghli (NonExecutive) Board Member Director since 27 March 2005 Master Degree in Business Administration (Marketing) from Armstrong University, USA BA (Sociology) from Helwan University, Egypt Director s external appointments ExVice Chairman of Gulf Life Insurance Co., Kuwait Bijan Khosrowshahi (NonExecutive) Board Member Director since 28 February 2011 MBA and Bachelor Degree in Mechanical Engineering from Drexel University, USA Director s external appointments Board Member of Gulf Insurance Group (KSC), Kuwait Board Member of Gulf Insurance and Reinsurance Co. (GIRI), Kuwait Board Member of Arab Misr Insurance Group, Egypt Board Member of Commercial International Bank (CIB), Egypt Board Member of Arab Orient Insurance Company, Jordan Board Member of Jordan Kuwait Bank, Jordan Board Member of Alliance Insurance (PSC), Dubai President and CEO of Fairfax International, London Shawqi Ali Fakhroo (NonExecutive) Board Member Director since 25 February 2008 Director s external appointments Chairman & Managing Director of Ali Bin Yousif Fakhro & Sons WLL, Bahrain Chairman of Shawki Ali Fakhroo & Sons WLL, Bahrain Vice Chairman & Managing Director of Mohammed Fakhroo & Brothers WLL, Bahrain Board Member of Zallaq Resort Co. (BSC), Bahrain Board Member of BMMI (BSC), Bahrain Board Member of Bahrain Cinema Co. (BSC), Bahrain Board Member of Fakhroo Information Technology Service WLL, Bahrain Board Member of Shutdown Maintenance Services WLL, Bahrain Board Member of Arab Life & Accidents Insurance Company, Jordan Managing Director of Fakhroo Trading Agencies WLL, Bahrain Managing Director of Fakhroo Investment WLL, Bahrain Mohamed Ebrahim Zainal (Independent & NonExecutive) Board Member Director since 5 March 2014 Masters of Business Administration from University of Strathclyde, Glasgow, UK BSc. in Management Information Systems from University of Texas, Arlington, USA Khalil Abdeljawad Khamous (Executive) Board Member Director since 1 January Bachelor Degree of Accounting and Administration from Beirut Arab University, Lebanon Director s external appointments Deputy Chief Executive Officer of Arab Orient Insurance Company, Jordan Directors and related parties interests The number of shares held by Directors and related parties as of 31 December was as follows: Name Type of shares 31 Dec 31 Dec Murad Ali Murad Ordinary 143, ,000 Hassan Mohammed Ordinary 462, ,028 Zainalabedin Shahnaz Ishaq Ordinary Abdulrahman Ishaq* Faisal Hassan Ordinary 29,782 29,782 Mohammed Zainalabedin* SYSCON Trading Ordinary 150, ,773 & Mechanical Services Co.* Shawqi Ali Fakhroo Ordinary 250, ,467 Ali Shawqi Ali Ordinary 6,544 6,544 Fakhroo* Inheritors of Ali Ordinary 421, ,553 Bin Yusuf Fakhroo* Mohamed Ordinary 33,434 31,917 Ebrahim Ali Zainal** Ebrahim Mohamed Ordinary 2,338,671 2,338,671 Ali Zainal* Mohammed Ali Ordinary 726, ,808 Zainal Abdulla BSC (MAZA)* * Related Party. ** Mr. Mohamed Ebrahim Zainal Purchased 1,517 shares in November. Other Board members did not trade in the shares of the company during the financial year ended 31 December. The Chief Executive Officer, General Managers and other members holding positions of approved status within the company do not hold any shares of the Company in their names or in the names of their families. Director s external appointments Board Member of Mohamed Ali Zainal Abdulla BSC, Bahrain Board Member of Zainal Enterprises WLL, Bahrain ANNUAL REPORT 21

24 CORPORATE GOVERNANCE REPORT Year ended 31 December 6. BOARD MEETINGS As per the charter of the Board, the directors are required to meet at least four times in a given financial year to discharge its responsibilities effectively. Board meetings and record of attendance During the year, the Board of Directors met six times, and a record of the member s attendance at the meetings is set below: Name of Director Title 21 Feb 20 Mar 5 May 4 Aug 3 Nov 12 Dec Meetings % of meetings attended attended Murad Ali Murad Chairman 5 83 Khalid Saoud Al Hasan Vice Chairman Hassan Mohammed Zainalabedin Board Member 5 83 Dr. Emad Jawad Bukhamseen Board Member Dr. Abdul Rahman Ali Saif Board Member Adnan Ahmed AlBaghli Board Member Bijan Khosrowshahi Board Member 3 50 Shawqi Ali Fakhroo Board Member Mohamed Ebrahim Zainal Board Member Khalil Abdeljawad Khamous Board Member The summary of final decisions taken on Key Matters discussed during the meetings is also stated below: Meeting Date Key Matters Discussed Final Decision 21/2/ Financials at 31/12/ Approved 21/2/ Recommendation to AGM to reappoint E&Y as external auditors Approved 21/2/ Recommendation to AGM to pay cash dividend 30% of paidup capital to the shareholders Approved 21/2/ BOD remunerations for Approved 21/2/ Payment of bonus for Approved 21/2/ Authorized the Vice Chairman to continue negotiating with investors in Takaful to buy their shares Approved 20/3/ Donations list for Approved 20/3/ The audit fees for E&Y Approved 20/3/ Appointment of GMKuwait office to be a member in Takaful BOD Approved 5/5/ Financials at 31/3/ Approved 5/5/ Amend the bonus policy Approved 5/5/ The objectives for senior managements Approved 5/5/ Promotion of AGMTechnical to CUO Approved 5/5/ Appointment of new advocate for Kuwait Officer Approved 4/8/ Financials at 30/6/ Approved 3/11/ Financials at 30/9/ Approved 3/11/ Budget for 2017 Approved 3/11/ Amend the HR manual Approved 22 BAHRAIN KUWAIT INSURANCE (BSC)

25 CORPORATE GOVERNANCE REPORT Year ended 31 December 6. BOARD MEETINGS (continued) The summary of final decisions taken on key matters discussed during the meetings is also stated below: (continued) Meeting Date Key Matters Discussed Final Decision 12/12/ Business plan for three years ( ) Approved 12/12/ Appointment of Secretary to the Board Approved 12/12/ Appointment of CIO to be a member in INVITA BOD Approved 12/12/ Amend the authorized signatories list Approved 7. BOARD COMMITTEES Board committees are formed and their members are appointed by the Board of Directors at the beginning of each Board term. They are considered the high level link between the Board and the Executive Management. The objective of these committees is to assist the Board in monitoring the actual operations of the Company, by reviewing issues that are submitted by management to the Board and making recommendations to the Board for their final review. The Board reserves the right to form temporary committees and discontinue them from time to time and as it deems necessary. Further, the members of the Board are provided with copies of meeting minutes of the said committees, as required by the regulators. Board committees responsiblities, meetings and record of attendance Executive Committee The Board has delegated the following responsibilities to the Executive Committee The development and recommendation of strategic plans for consideration by the Board that reflect the longterm objectives and priorities established by the Board; Implementation of the strategies and policies of the Company as determined by the Board; Monitoring of the operational and financial results against plans and budgets; Monitoring the quality and effectiveness of the investment process against objectives and guidelines; Prioritizing allocation of capital, technical and human resources; The members of the Executive Committee and their attendance at the four meetings held during the year were as follows: Name of Director Title 21 Feb 5 May 4 Aug 3 Nov Meetings % of meetings attended attended Khalid Saoud Al Hasan Chairman Dr. Emad Jawad Bukhamseen Vice Chairman Dr. Abdul Rahman Ali Saif Member Bijan Khosrowshahi Member 2 50 Mohamed Ebrahim Zainal Member ANNUAL REPORT 23

26 CORPORATE GOVERNANCE REPORT Year ended 31 December Audit Committee The Board has delegated the following responsibilities to the Audit Committee: Reviewing the Company s draft financial statements and interim results statement prior to Board approval and reviewing the external auditor s detailed reports thereon; Reviewing the appropriateness of the Company s accounting policies and other operational procedures; Reviewing regularly the potential impact in the Company s financial statements of certain matters such as impairment of fixed asset values and proposed changes in International Financial Reporting Standards and International Accounting Standards applicable to the Company; Reviewing compliance of requirements specified in the Rulebook issued by the Central Bank of Bahrain; Reviewing and approving the terms of engagement for the audit; Reviewing an annual report on the Company s systems of internal control and its effectiveness, reporting to the Board on the results of the review and receiving regular updates on key risk areas of financial control; and Reviewing the internal audit functions terms of reference, its work programme and quarterly reports on its work during the year. Under its charter, the Audit Committee monitors the integrity of the Company s financial statements and any formal announcements relating to the Company s performance. The Committee is responsible for monitoring the effectiveness of the external audit and internal process. It is responsible for ensuring that an appropriate relationship between the Company and the external auditors is maintained. It also reviews annually the Company s systems of internal control and the processes for monitoring and evaluating the risks facing the Company. The Committee reviews the effectiveness of the internal audit and is responsible for approving, upon the recommendation of the Chief Executive Officer, the appointment and termination of the internal auditors. The Committee reviews its charter and its effectiveness annually and recommends to the Board, any changes required as a result of the review. The Committee meets with the Directors and management, and as and when considered required with both the external and internal auditors. The internal audit function is outsourced to KPMG, Bahrain who conduct their procedures as per the agreed terms of reference, and provide their periodic reports directly to the Audit Committee. The members of the Audit Committee and their attendance at the four meetings held during the year were as follows: Name of Director Title 20 Feb 4 May 3 Aug 2 Nov Meetings attended % of meetings attended Hassan Mohammed Zainalabedin Chairman 3 75 Shawqi Ali Fakhroo Vice Chairman Adnan Ahmed AlBaghli Member Khalil Abdeljawad Khamous Member Nomination, Remuneration and Governance Committee The Board has delegated the following responsibilities to the Nomination Remuneration and Governance Committee: Assist the Board of Directors in identifying and nominating individuals qualified to serve as Board and committee members of the Board. Recommend the remuneration and rewards policy for the Company and in particular, for the directors and senior management team, and lead the performance review of Board and committees. Enhance the Company s governance and compliance levels according to international standards and best practice to be in line with policies of regulatory authorities and statutory. The members of the Nomination, Remuneration and Governance Committee and their attendance at the three meetings held during the year were as follows: Name of Director Title 14 Feb 3 May 2 Nov Meetings attended % of meetings attended Dr. Abdul Rahman Ali Saif Chairman Hassan Mohammed Zainalabedin Vice Chairman Khalid Saoud Al Hasan Member BAHRAIN KUWAIT INSURANCE (BSC)

27 CORPORATE GOVERNANCE REPORT Year ended 31 December 8. RISK MANAGEMENT, COMPLIANCE AND ANTIMONEY LAUNDERING Bahrain Kuwait Insurance Company BSC is fully aware of its responsibilities in observing all regulatory provisions and the best international practices in relation to its functioning. It is committed to complying with the international best practices on risk management, compliance and antimoney laundering as reflected by the requirements of the Central Bank of Bahrain. The Company has Risk Management, Compliance and AntiMoney Laundering Officers. These functions are independent of business lines and the daytoday running of the various business areas and are separate from the Internal Audit function. In addition, following a rigorous review to ensure compliance with the regulatory requirements in regard of these functions, the Risk Management, Compliance and AntiMoney Laundering Officers now reports directly to the Chief Executive Officer and has full access to the Board of Directors through the Board Audit Committee. The Company retains an approved AntiMoney Laundering Policy, which contains Customer Due Diligence measures, procedures for identifying and reporting suspicious transactions, an annual awareness programme for staff training, record keeping requirements and documentation. The Internal and External Auditors regularly carry out an independent review of Anti Money Laundering controls for the attention of the Central Bank. 9. SOLVENCY Solvency margin requirements are determined in accordance with the regulatory requirements established by the Central Bank of Bahrain and are calculated with reference to a prescribed premium and claims basis. Where these calculations resulting solvency margin requirements falling below the minimum fund size prescribed by regulations, such minimum fund size is considered as the required margin of solvency. Summarised solvency position of the Company is given below: Summarised solvency position of the Company is given below: 31 Dec. 31 Dec. Capital available 30,977 28,744 Solvency margin required 3,861 3,462 Total excess of capital available over the solvency margin required 27,116 25, REMUNERATION POLICY For directors The Board of Directors is paid an annual remuneration as approved by the shareholders at the annual general meeting. While the amount of remuneration is not directly linked to the performance of the Company, factors such as the Company s performance, industry comparison and the time and effort committed by the directors to the Company, are considered for determining the total remuneration. Directors remuneration is accounted as an expense as per International accounting standards and CBB regulations, the payment of which is subject to approval by the shareholders at the annual general meeting. In addition, the members are paid sitting fees for the various subcommittees of the Board of directors. For employees As the quality of human capital is fundamental to success, the Company s remuneration policy is to attract, retain and motivate the best talent. In line with this strategy, employee remuneration and benefits are reviewed and revised annually in the context of business performance, industry and local practices. The executive management under the guidance of the CEO is responsible for administering the employee performance process. While a major component of employee remuneration consists of fixed monthly salaries and allowances, employees are provided with several other benefits like performance bonus, medical, life insurance cover and retirement benefits. 11. AUDITORS The Audit Committee reviews the appointment of the external auditors, as well as their relationship with the Company. This includes monitoring the use of the auditors for audit and nonaudit services, and also the budget of the total fees paid to the auditors. Deatils with regards to the audit and nonaudit fees for, paid by the company are stated below: Audit fees BD 60,618 Nonaudit fees BD 32,528 ANNUAL REPORT 25

28 CORPORATE GOVERNANCE REPORT Year ended 31 December 12. THE ROLES OF THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER The division of responsibilities between the Chairman of the Board and the Chief Executive Officer is clearly defined and has been approved by the Board. The Chairman leads the Board in the determination of its strategy and in the achievement of its objectives. The Chairman is responsible for organizing the business of the Board, ensuring its effectiveness and setting its agenda. The Chairman has no involvement in the day to day business of the Company. The Chairman facilitates the effective contribution of Directors and constructive relations between them, ensures that the directors receive accurate, timely and clear information and effective communication with shareholders. The Chief Executive has direct charge of the Company on a daytoday basis and is accountable to the Board for the financial and operational performance of the Company. SENIOR MANAGEMENT S PROFILE Ebrahim Alrayes Chief Executive Officer Joined BKIC in 8th January 1984 Academic & Professional Qualification B. Com (Accounting) Arab University of Beirut, Lebanon Certificate of Insurance Proficiency (COP) from Chartered Insurance Institute, UK Assignments Held Vice Chairman of the Board & Chairman of Executive Committee of United Insurance Co., Bahrain Board Member & Member of Audit Committee of Arab Orient Insurance Co., Jordan Member of Technical Committee & Chairman of Audit Committee of AWRIS, Bahrain Board Member & Chairman of Audit Committee of Egyptian Life Takaful, Egypt Board Member & Member of Audit Committee of Takaful International Company, Bahrain Board Member of Bahrain Insurance Association More than 33 years of expertise in Insurance Industry BAHRAIN OFFICE Waleed Mahmood General Manager Joined BKIC on the 1st February 2005 Academic & Professional Qualification Chartered Insurer and an Associate of Chartered Insurance Institute, UK Master of Business Administration, Westminster University, UK Bachelor in Industrial Management (Marketing) King Fahad University of Petroleum & Minerals, KSA Assignments Held Board Member of Gulf Assist, Bahrain ExGeneral Manager of United Insurance Co., Bahrain More the 26 years of experience, of which 20 years have been in Insurance Industry Jalal Khalil Deputy General Manager Joined BKIC on 3rd October 2010 Academic & Professional Qualification Master of Science in Insurance & Risk Management, UK (with distinction) Associate of Chartered Insurance Institute Assignments Held Leads the Marketing, Business Development, Personal Lines and Bancassurance Operations of BKIC and assisting GM in all other functions of General Management ExDirector, Risk Management Solutions of GAB Robins Middle East S.A.R.L ExActing General Manager of Ensurion W.L.L 26 BAHRAIN KUWAIT INSURANCE (BSC)

29 CORPORATE GOVERNANCE REPORT Year ended 31 December K. M. Kurien Chief Underwriting Officer Joined BKIC on 22nd October 1977 Academic & Professional Qualification Associate of Insurance Institute of India Bachelor of Arts Assignments Held ExChairman of Marine Committee of Bahrain Insurance Association and widely regarded as an expert in this field Currently overseeing all aspects of Underwriting, Claims, and Reinsurance across all classes of BKIC business Actively involved in serving major Corporate Clients 43 years of substantial experience in Insurance Industry Ahmed A. Rahman Bucheeri Chief Investment Officer Joined BKIC on 1st December 2011 Academic & Professional Qualification Chartered Alternative Investment Analyst Commercial studies Diploma Treasury and capital markets Diploma Investment representative program (Series 7) Assignments Held Board Member of Takaful International Company, Bahrain Board Member INVITA Claims Management Company, Bahrain Manages investments and treasury of BKIC 17 years of experience in banking and investments R. Sundaram Chief Financial Officer Joined BKIC on 28th September 2013 Academic & Professional Qualification B.Sc. with Mathematics Associate of The Institute of Chartered Accountants of India Associate of Chartered Insurance Institute, UK Associate of Insurance Institute of India Intermediate of Institute of Company Secretaries of India Assignments Held Heads the Finance, Accounts and IT Departments of BKIC More than 32 years of experience in Insurance/Reinsurance Sectors ANNUAL REPORT 27

30 CORPORATE GOVERNANCE REPORT Year ended 31 December KUWAIT OFFICE Abdulla Rabia General Manager Joined BKIC on 20th January 1990 Academic & Professional Qualification Diploma in Motor Vehicle Engineering Assignments Held Board Member of Takaful International Company, Bahrain Holds the overall responsibility of all functions of general management of BKIC Kuwait office 35 years of substantial experience in Insurance Sector all over GCC, of which 25 years have been in Insurance Industry in Kuwait Market ExLoss Adjuster with Bayne Adjusters and Surveyors Bahrain, Dubai and Saudi Arabia Experience in handling Engineering claims with Arab Insurance Group (ARIG) Bahrain K. Gandhi Assistant General Manager Joined BKIC on 2nd July 2006 Academic & Professional Qualification Post Graduate in Engineering Associate of Indian Institute of Bankers, India Master of Business Administration Assignments Held Holds the overall functional responsibility of Underwriting, Claims and Reinsurance of NonLife Division Actively involved in serving major Corporate Clients and assists DGM in the daytoday General Administration and Management of the Technical functions of the Company More than 32 years of experience in Insurance Industry, out of which 15 years in Gulf S. Ramakrishnan Deputy General Manager Joined BKIC on 16th October 2001 Academic & Professional Qualification Fellow of Insurance Institute of India, India Associate of Chartered Insurance Institute Chartered Insurer Master of Business Administration Bachelor of Law Assignments Held Holds the responsibility of Technical Department and Key Accounts Member of Referral Committee of Gulf Insurance Group 41 years of experience in Insurance Industry, out of which 21 years in Kuwait 28 BAHRAIN KUWAIT INSURANCE (BSC)

31 CORPORATE GOVERNANCE REPORT Year ended 31 December 13. ORGANIZATIONAL STRUCTURE Secretary to the Board BOARD OF DIRECTORS Nomination, Remuneration & Governance Committee Executive Committee Audit Committee Chief Executive Officer Internal Auditor General Manager Bahrain General Manager Kuwait Deputy General Manager Chief Underwriting Officer Deputy General Manager Chief Investment Officer Assistant General Manager Technical Assistant General Manager Chief Financial Officer Risk Management & Quality Control Officers HR & Administration Legal & Compliance Officer ANNUAL REPORT 29