Legal Counsel Receiving Agent Auditor to the Offeror

Transcription

1 OFFER DOCUMENT Bahrain Kuwait Insurance Company B.S.C. s ( BKIC ) unconditional mandatory cash offer to acquire up to 36.31% of the issued and paid up ordinary shares of Takaful International Company B.S.C. ( Takaful ), representing all the outstanding shares of Takaful not currently held by BKIC, at an offer price of 95 fils (ninety-five fils) for every share in Takaful. Financial Advisor to the Offeror Legal Counsel Receiving Agent Auditor to the Offeror DISCLAIMER STATEMENT THE CENTRAL BANK OF BAHRAIN, BAHRAIN BOURSE AND THE MINISTRY OF INDUSTRY, COMMERCE AND TOURISM, IN THE KINGDOM OF BAHRAIN, ASSUME NO RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS OF THE STATEMENTS AND INFORMATION CONTAINED IN THIS OFFER DOCUMENT AND EXPRESSLY DISCLAIM ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWSOEVER ARISING FROM THE RELIANCE UPON THE WHOLE OR ANY PART OF THE CONTENTS TO THIS OFFER DOCUMENT This Offer Document is dated 10 May 2017

2 DIRECTORS DECLARATION THE DIRECTORS OF BAHRAIN KUWAIT INSURANCE COMPANY B.S.C. ISSUING THIS OFFER DOCUMENT, WHOSE NAMES APPEAR BELOW, JOINTLY AND SEVERALLY ACCEPT FULL RESPONSIBILITY FOR THE ACCURACY OF INFORMATION CONTAINED IN THIS OFFER DOCUMENT. TO THE BEST OF THE KNOWLEDGE AND BELIEF OF THE DIRECTORS, WHO HAVE TAKEN ALL REASONABLE CARE TO ENSURE THAT SUCH IS THE CASE, THE INFORMATION CONTAINED IN THIS OFFER DOCUMENT IS IN ACCORDANCE WITH THE FACTS AND CONTAINS NO OMISSIONS LIKELY TO AFFECT THE IMPORTANCE AND COMPLETENESS OF THIS OFFER DOCUMENT. STATEMENT FROM THE BOARD OF DIRECTORS OF BAHRAIN KUWAIT INSURANCE COMPANY B.S.C. This Offer Document has been prepared by Bahrain Kuwait Insurance Company B.S.C. in accordance with Appendix TMA-C of the Central Bank of Bahrain ( CBB ) Rulebook, Volume 6, Takeovers, Mergers and Acquisitions ( TMA ) Module to provide information to the shareholders of Takaful International Company B.S.C. in connection with the offer made by Bahrain Kuwait Insurance Company B.S.C. to acquire up to 36.31% of the issued and paid up ordinary shares of Takaful International Company B.S.C., representing all the outstanding shares of Takaful International Company B.S.C. not currently held by Bahrain Kuwait Insurance Company B.S.C. This Offer Document has been filed with the CBB. The Board of Directors of Bahrain Kuwait Insurance Company B.S.C. hereby declare that, having taken all reasonable care to ensure that such is the case, the information contained in this Offer Document is, to the best of its knowledge, in accordance with the facts and contains no material omissions. Board of Directors Title Signature Murad Ali Murad Chairman Khalid Saoud Al Hasan Vice Chairman Hassan Mohammed Zainalabedin Director Dr. Abdul Rahman Ali Saif Director Dr. Emad Jawad Bukhamseen Director Bijan Khosrowshahi Director Shawqi Ali Fakhroo Director Mohamed Ebrahim Zainal Director Thamer Ebrahim Arab Director Mubarak Othman Al Ayyar Director 2

3 IMPORTANT INFORMATION This Offer Document has been prepared in connection with a mandatory and unconditional cash offer (the Offer ) made by Bahrain Kuwait Insurance Company B.S.C. (the Offeror or BKIC or the Company ) to acquire up to 36.31% of the issued and paid up ordinary shares of Takaful International Company B.S.C. (the Offeree or Takaful ), representing all the outstanding shares of Takaful not currently held by BKIC, on the terms and conditions set out in this Offer Document. This Offer has been prepared in accordance with and is made pursuant to the TMA Module of the CBB Rulebook, Volume 6. This Offer as well as acceptance thereof is subject to Bahrain law and jurisdiction. If you have sold all your shares in Takaful prior to the Record Date, you should immediately forward this Offer Document to the person to whom the shares have been sold, or to the person authorized by Takaful or Bahrain Bourse or other agent through whom the sale was made to effect the sale or transfer in favour of the person to whom the shares have been sold. However, this document should not be forwarded to or distributed in any jurisdiction where such transfer would constitute a violation of the relevant laws in such jurisdiction. If you have sold only part or otherwise transferred only part of your shares in Takaful, you should retain this document. This Offer Document has been prepared in compliance with the provisions of the TMA Module of the CBB Rulebook, Volume 6. This Offer Document has been filed with the CBB and it does not constitute a guarantee by the CBB that the facts stated in this Offer Document are accurate or complete. This Offer to Takaful Shareholders resident in or citizens of countries other than the Kingdom of Bahrain may be affected by the laws of their respective country of residence or citizenship and shall not be deemed to be an Offer in any jurisdiction where the Offer would violate the laws of such jurisdiction. All Takaful Shareholders wishing to accept the Offer must satisfy themselves as to the due observance of the laws in the jurisdictions relevant to them, including the receipt of any necessary governmental consent or the payment of any taxes due. The information in this Offer Document regarding the Offeror has been provided by the Offeror. The Financial Advisor, the Legal Counsel and the Receiving Agent make no representation or warranty, express or implied, as to the accuracy or completeness of such information, and nothing contained in this Offer Document is, or shall be relied upon as, a promise or representation by the Financial Advisor, the Legal Counsel or the Receiving Agent. 3

4 The information in this Offer Document pertaining to Takaful has been prepared in good faith based on publicly available information and in cooperation with the management of Takaful. Consequently, the Offeror, the Financial Advisor, the Legal Counsel and the Receiving Agent do not accept any liability for the accuracy or completeness of the information in this Offer Document regarding Takaful. All inquiries relating to this Offer Document should be directed to the Offeror. No person has been authorized to provide any information or make any representation on behalf of the Offeror other than as indicated in this Offer Document. The information contained in this Offer Document is correct as of the date of this Offer Document. Any new material information will be published and announced promptly as a supplement to this Offer Document in accordance with the provisions of the TMA. Important: If you are in any doubt about the contents of this Offer Document and the aspects of the Offer, you should consult a licensed securities dealer or an institution licensed in securities, a bank manager, solicitor or attorney, professional accountant or any other professional advisor. The fact that this Offer has been filed with the CBB, does not mean that the CBB takes responsibility for the performance of the Offeror or the Offeree, nor the correctness of any statements or representations made by the Offeror. Copies of this Offer Document and of the Acceptance and Transfer Form can be obtained from the Receiving Agent in the Kingdom of Bahrain. This Offer Document has been prepared in an Arabic version and an English version. Please refer to section 4 titled Procedures for Accepting the Offer for further details. FORWARD LOOKING STATEMENTS This Offer Document contains words or phrases such as will, aim, expect, anticipate, forecast, estimate, intend, future, objective, project, should, and similar expressions or variations of such expressions which are Forward-Looking Statements. Such Forward Looking Statements are based on assumptions and should not be construed as being indicative of the actual events which will occur or a guarantee of future performance. 4

5 TABLE OF CONTENTS 1. GLOSSARY RESOLUTIONS AND APPROVALS BOARD OF DIRECTORS CBB - NO OBJECTION CBB - CAPITAL MARKET SUPERVISION DIRECTORATE THE OFFER LEGAL BASIS OF THE OFFER SECURITIES FOR WHICH THE OFFER IS MADE THE OFFEREE THE OFFEROR CONSIDERATION FOR THE OFFER SHAREHOLDERS ELIGIBLE FOR THE OFFER SUSPENSION OF TRADING CONDITIONS PRECEDENT TO THE OFFER OFFER ACCEPTANCE PROCEDURES ACCEPTANCE IRREVOCABLE TIMELINE PROCEDURES FOR ACCEPTING THE OFFER ENSURING TAKAFUL SHARES ARE DEMATERIALIZED AND HELD WITH A BROKER REGISTERED WITH THE BHB SUBMISSION OF THE ACCEPTANCE AND TRANSFER FORM PURCHASE OF TAKAFUL SHARES OUTSIDE THE OFFER SETTLEMENT TAX PRIOR CONTACTS THE OFFEROR BAHRAIN KUWAIT INSURANCE COMPANY B.S.C CAPITAL AND MAJOR SHAREHOLDERS

6 5.3 BOARD OF DIRECTORS MANAGEMENT TEAM RISKS ASSOCIATED WITH THE BUSINESS OF THE OFFEROR RELATED PARTY AND BUSINESS MODEL REGISTERED ADDRESSES AND CONTACT INFORMATION INDEPENDENT AUDITOR S REPORT ON THE SUMMARY FINANCIAL STATEMENTS TO THE SHAREHOLDERS OF BAHRAIN KUWAIT INSURANCE COMPANY B.S.C OVERVIEW OF BAHRAIN S INSURANCE SECTOR CROSS SHAREHOLDINGS BY THE OFFEROR AND ITS DIRECTORS IN TAKAFUL BKIC BOARD OF DIRECTORS OWNERSHIP IN BKIC AND TAKAFUL BKIC OWNERSHIP IN TAKAFUL BKIC POST-ACQUISITION STRATEGY TAKAFUL INTERNATIONAL COMPANY B.S.C. COMMERCIAL REGISTRATION, LEGAL STATUS AND TRADE NAME TAKAFUL S CURRENT EMPLOYEES AND ORGANIZATIONAL STRUCTURE MAINTAINING TAKAFUL S SHARI AH COMPLIANT INSURANCE OFFERINGS LONG TERM COMMERCIAL JUSTIFICATION FOR THE OFFER SHARE OWNERSHIP IN BKIC AND TAKAFUL OFFER FINANCE OFFER FINANCE SOURCES CONFIRMATION BY THE ESCROW ACCOUNT AGENT THE OFFEROR S CONFIRMATORY STATEMENTS MARKET PRICE AND HISTORICAL STOCK TRADING SUMMARY TRADING PRICE OF THE OFFEREE TRADING PRICE OF THE OFFEROR EFFECT OF THE OFFER LEGAL CONSEQUENCES Of THE OFFER NO SPECIAL BENEFITS TO EXECUTIVES, MANAGERS AND DIRECTORS THE EFFECT Of THE OFFER ON THE DIRECTORS OF THE OFFEROR

7 14.4 IMPACT ON OFFEREE'S EMPLOYEES ADDITIONAL INFORMATION ARRANGEMENTS SIGNIFICANT ACCOUNTING POLICIES SHAREHOLDING AND DEALINGS IN OFFEREE COMPANY MATERIAL LITIGATION NO MATERIAL LIABILITY DOCUMENTS ON DISPLAY CONFLICTS OF INTEREST KEY PARTIES ANNEXURE AUDITED FINANCIAL STATEMENTS 31 DECEMBER

8 1. GLOSSARY Words and expressions not otherwise defined in this Offer Document have, unless the context otherwise requires, the following meanings: Acceptance The acceptance of this Offer by a Takaful Shareholder by signing the Acceptance and Transfer Form and submitting the same to the Receiving Agent within the Offer Period as per the procedures prescribed in this Offer Document Acceptance and The form to be distributed by Takaful and/or the Receiving Transfer Form Agent to Takaful Shareholders to accept the Offer Bahrain Kingdom of Bahrain BHB The Bahrain Bourse BHD Bahraini Dinar, the legal currency of the Kingdom of Bahrain BKIC Bahrain Kuwait Insurance Company B.S.C. Block Purchase The block purchase from Bahrain Islamic Bank B.S.C. of 14,220,486 Takaful Shares (22.75%) effected by BKIC on Bahrain Bourse on 2 April 2017 Board of Directors The Board of Directors of BKIC Business Day A day on which banks, financial institutions and the BHB are open for general business in the Kingdom of Bahrain CBB The Central Bank of Bahrain Company Bahrain Kuwait Insurance Company B.S.C. CSD Central Securities Depository of the Bahrain Bourse Escrow Account The account setup by the Offeror with the Escrow Account Agent to hold in escrow the funds required for the Offer Escrow Account Securities and Investment Company B.S.C.(c) Agent Financial Advisor Securities & Investment Company B.S.C.(c) Firm Intention The firm intention to make an Offer issued by BKIC to the board of directors of Takaful on 20 April 2017 GCC The Gulf Co-operation Council comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates ISIN International Securities Identification Number Legal Counsel ASAR Al Ruwayeh & Partners MOICT Ministry of Industry, Commerce and Tourism, Kingdom of Bahrain Offer The unconditional mandatory offer by Bahrain Kuwait Insurance Company B.S.C, to acquire up to 36.31% of the issued and paid up ordinary shares of Takaful International 8

9 Offer/Acceptance Rejection Announcement Date Offer Closing Date Offer Document Offer Opening Date Offer Period Offer Price Offeree Offeree Board Circular Offeror Receiving Agent Record Date Settlement Date Company B.S.C., representing all the outstanding shares of Takaful not currently held by BKIC, as described in this Offer Document One (1) Business Day after the Offer Closing Date, being the date by which the acceptance or rejection of the applications will be communicated to Takaful Shareholders The date falling 15 calendar days after the Offer Opening Date being the last date for receiving the completed Acceptance and Transfer Forms This offer document, prepared in connection with the Offer The offer opening date to be subsequently published by the Offeror on the Bahrain Bourse being the date from which the completed Acceptance and Transfer Forms may commence being received by the Receiving Agent from Takaful Shareholders The 15 calendar day period beginning on the Offer Opening Date (included) and ending on the Offer Closing Date (included) The offer price of 95 fils per share offered by BKIC to Takaful Shareholders to acquire the remaining 36.31% stake not currently held by BKIC Takaful International Company B.S.C. The board circular to be issued by board of directors of the Offeree and delivered to all Takaful Shareholders along with the Acceptance and Transfer Form Bahrain Kuwait Insurance Company B.S.C. Bahrain Bourse Company B.S.C.(c), a closed shareholding company established in the Kingdom of Bahrain with registration number 76907, authorized to receive Acceptance and Transfer Forms in accordance with the Offer Document The date preceding the Offer Opening Date which will be subsequently published by the Offeror on the Bahrain Bourse being the date established for the purpose of identifying the Takaful Shareholders entitlement to receive the Offer. Takaful Shareholders whose names appear in the Takaful Share register on the Record Date will be eligible to receive the Offer The date falling no later than 7 calendar days after the Offer Closing Date which will be subsequently published by the Offeror on the Bahrain Bourse and being the date on which those Takaful Shareholders accepting the Offer will receive payment against delivery of the Takaful Shares within the 9

10 SICO Special Order Market Takaful Takaful Shareholder Takaful Shares TMA securities settlement system of the CSD provided that if such date falls on a day which is not a Business Day, the Settlement Date shall be the immediately subsequent Business Day. Securities and Investment Company B.S.C.(c), a Bahraini Shareholding Company (closed) established in the Kingdom of Bahrain with registration number appointed as Financial Advisor to the Offeror and Escrow Account Agent The special order market as defined in the Bahrain Bourse Market Rules Takaful International Company B.S.C. A holder of Takaful Shares as of the Record Date Takaful s issued and paid up ordinary shares totaling 62,500,000 shares The Takeovers, Mergers and Acquisitions Module of the CBB Rulebook, Volume 6 10

11 2. RESOLUTIONS AND APPROVALS 2.1 BOARD OF DIRECTORS This Offer is made pursuant to the resolutions adopted by the Board of Directors at their meeting held on 23 February The Board of Directors resolved to authorize the acquisition of up to 22,696,669 of the issued and paid up ordinary shares of Takaful International Company B.S.C. in cash at an Offer Price of 95 fils (ninety five fils) for every share in Takaful International Company B.S.C. Such resolution has been implemented, in a first phase, through the acquisition on 2 April 2017 from Bahrain Islamic Bank B.S.C. of 14,220,486 shares of the issued and paid up ordinary shares of Takaful International Company B.S.C., which purchase triggered the obligation to launch a mandatory tender offer under the TMA, and, in a second phase, is being implement through the Offer. 2.2 CBB - NO OBJECTION BKIC have received from the CBB a no objection letter (dated 6 March 2017) pertaining to undertaking the mandatory Offer. BKIC have received from the CBB Capital Market Supervision Directorate a no objection letter (dated 9 May 2017) on this Offer Document. 2.3 CBB - CAPITAL MARKET SUPERVISION DIRECTORATE Copies of the Board of Director s resolutions and this Offer Document have been filed with the Capital Market Supervision Directorate of the CBB. 11

12 3. THE OFFER The Board of Directors refers to the Firm Intention dated 20 April 2017 whereby the board of directors of Takaful were notified of BKIC s Firm Intention to make an Offer to the Takaful Shareholders to acquire their shares in Takaful. The details of the Offer are set out below. 3.1 LEGAL BASIS OF THE OFFER On 2nd April 2017, BKIC purchased from Bahrain Islamic Bank B.S.C. 14,220,486 shares (22.75%) of Takaful thereby triggering an obligation to launch a mandatory tender offer on the remaining Takaful Shares not owned by BKIC pursuant to Rule TMA of the TMA and in compliance with Section 3.1 (Mandatory Offer) of the TMA. Immediately following the incurrence of the obligation to launch a mandatory tender offer on the shares of Takaful, the Offeror notified the Bahrain Bourse and the market of the incurrence of such obligation on 3 April 2017 by means of a notice published pursuant to Rule TMA Following submission of the Firm Intention, the Offeror notified the Bahrain Bourse and the market the details of such Firm Intention on 20 April SECURITIES FOR WHICH THE OFFER IS MADE As of the date of this Offer Document, BKIC owns 39,803,331 (thirty-nine million, eight hundred three thousand, three hundred thirty-one) Takaful Shares, representing 63.69% of Takaful s issued and paid up share capital. This mandatory Offer is extended to all other Takaful Shareholders to acquire their Takaful Shares in order to increase BKIC s ownership in Takaful to up to 100%. The Offer is to acquire up to 22,696,669 (twenty-two million, six hundred ninety-six thousand, six hundred sixty-nine) Takaful Shares of a nominal value of 100 fils each in Takaful comprising up to 36.31% of Takaful s issued and paid up share capital. According to the information publicly available, none of Takaful s issued and paid up shares for which the Offer is made is included within an employee share benefit plan. 12

13 3.3 THE OFFEREE Takaful International Company B.S.C. is registered with the MOICT under Commercial Registration number as a Public Bahraini Shareholding Company whose ordinary shares are listed on the BHB. Takaful is licensed by the CBB as a locally incorporated insurance firm operating under Islamic principles and provides its clients with a range of takaful and related products and services which are organised according to the principles of Shari'ah. Takaful has an authorized capital of BHD 20,000,000 with an issued and paid up capital of BHD 6,250,000 divided into 62,500,000 ordinary shares with a nominal value of BHD each. 3.4 THE OFFEROR Bahrain Kuwait Insurance Company B.S.C. is registered with the MOICT under Commercial Registration number 4745 as a Public Bahraini Shareholding Company whose ordinary shares are listed on the BHB and the Kuwait Stock Exchange. BKIC is licensed by the CBB as a locally incorporated insurance firm under license number LII/001 and provides its clients with all classes of general insurance, the major categories being Fire, General Accident, Engineering, Marine Cargo, Motor, Group Life and Health. BKIC has an authorized capital of BHD 10,000,000 with an issued and paid up capital of BHD 7,150,000 divided into 71,500,000 ordinary shares with a nominal value of BHD each. 3.5 CONSIDERATION FOR THE OFFER The Offer Price is 95 fils (ninety-five fils) per share. Assuming that all Takaful Shareholders accept the Offer, the total cash consideration of the Offer would be BHD 2,156, (two million, one hundred fifty-six thousand, one hundred eighty-three Bahraini Dinars and five hundred and sixty fils). Considering the mandatory nature of the Offer and taking account of the structure of the transaction triggering the obligation to launch the Offer, the Offer Price was set in accordance with the provisions of Rule TMA , pursuant to which the Offer must be launched at a price no lower than the highest price paid by the Offeror and any person acting in concert to purchase Takaful Shares in the 3 months preceding the date of commencement of the Offer. 13

14 In fact, the Offer Price is the same as the price paid by BKIC in the Block Purchase. Neither the Offeror nor any person acting in concert with it have made any other purchase of the Offeree s shares in the last 12 months. Any dividends paid or other distributions made by Takaful to Takaful Shareholders in whatever legal form they may be made (other than in respect to dividends already approved by the general assembly of Takaful before the date of this Offer Document) shall be reduced pro-quota from the Offer Price. 3.6 SHAREHOLDERS ELIGIBLE FOR THE OFFER Takaful Shareholders whose names appear in the Takaful Share register on the Record Date will be eligible to receive the Offer. 3.7 SUSPENSION OF TRADING Trading in Takaful Shares will be suspended on the Record Date. Trading in Takaful Shares is expected to resume on the Settlement Date unless, as a result of the Offer, (i) BKIC will own Takaful Shares representing at least 95% of Takaful s issued and paid share capital in which case BKIC will compulsorily acquire all remaining Takaful Shares pursuant to Rule of the TMA and Takaful will be converted into a Bahraini Shareholding Company (closed) and Takaful Shares may be de-listed, or (ii) the conditions for continuous listing of Takaful Shares cease to exist. 3.8 CONDITIONS PRECEDENT TO THE OFFER The Offer, being a mandatory tender offer pursuant to TMA 3.1, is not subject to any conditions. In particular, the Offer is not conditional on reaching a minimum threshold of tenders and is directed, on a non-discriminatory basis and on equal terms, to all holders of the Takaful Shares. In addition, there are no conditions imposed by law for the Offer to become effective. 3.9 OFFER ACCEPTANCE PROCEDURES Takaful Shareholders willing to accept the Offer may potentially be holding the Takaful Shares in one of the following forms: a) Takaful Shares in dematerialized form (i.e., electronic form) held in a brokerage account with a broker registered with the BHB; b) Takaful Shares in dematerialized form directly held in the Clearing, Settlement and Depository system of the BHB ( CSD ); and/or 14

15 c) Takaful Shares in physical form with original share certificates only. All the Takaful Shareholders willing to accept the Offer, prior to acceptance, are required to hold the Takaful Shares in dematerialized form in a trading account with a broker registered with the BHB. As part of the acceptance procedures, accepting Takaful Shareholders are required to forward to the Receiving Agent, a completed Acceptance and Transfer Form, copies of identification documents, and a statement of account from the BHB. Any Takaful Shares held by an accepting Takaful Shareholder in physical forms must be deposited through the applicable forms (as detailed in section 4 of this Offer Document) prior to submitting the Acceptance and Transfer Form. Please refer to section 4 titled Procedures for Accepting the Offer for further details ACCEPTANCE IRREVOCABLE Upon a Takaful Shareholder submitting the completed Acceptance and Transfer Form to the Receiving Agent, the Acceptance becomes irrevocable and cannot be withdrawn by that Takaful Shareholder either in whole or in part TIMELINE The Record Date, the Offer Opening Date, the Offer Closing Date, the Offer Acceptance/Rejection Announcement Date and the Offer Settlement Date are not known as at the date of this Offer Document as they may either be determined by reference to the date of submission of the Offeree Board Circular by Takaful to Takaful Shareholders or, if earlier, as published by the Offeror on the Bahrain Bourse. The Offeror will subsequently publish a supplement to this Offer Document on the Bahrain Bourse setting forth the Record Date, the Offer Opening Date, the Offer Closing Date, the Offer Acceptance/Rejection Announcement Date and the Offer Settlement Date. 15

16 4. PROCEDURES FOR ACCEPTING THE OFFER 4.1 ENSURING TAKAFUL SHARES ARE DEMATERIALIZED AND HELD WITH A BROKER REGISTERED WITH THE BHB To participate in the Offer, Takaful Shareholders must ensure that their Takaful Shares are dematerialized (i.e., held in electronic form) and deposited with a broker that is registered with the Bahrain Bourse. In the event that a Takaful Shareholder holds the Takaful Shares in dematerialized form at the CSD, but without a trading account with a broker registered with the BHB, such Takaful Shareholder will be required to open a trading account with a broker registered with the BHB and transfer their Takaful Shares from the CSD to the selected broker by completing the BHB s Application Form Number (6) - Transfer application between CSD and Broker and submitting such completed application at the Bahrain Bourse prior to the submission of the Acceptance and Transfer Form. In the event that a Takaful Shareholder holds the shares in physical form only (via share certificates), such shareholder shall be required to: a) deposit the shares at the CSD by completing the BHB s Application Number (3) - Securities Deposit Form (together with the original share certificates) and submitting such completed forms at the Bahrain Bourse; and b) subsequently transfer such shares from the CSD to a trading account with a broker registered with the BHB by completing the BHB s Application Form Number (6) - Transfer Application Between CSD and Broker and submitting such completed forms at the Bahrain Bourse. 4.2 SUBMISSION OF THE ACCEPTANCE AND TRANSFER FORM Takaful Shareholders who wish to accept the Offer must submit the completed Acceptance and Transfer Form, copies of identification documents and a statement of account from the BHB for the Takaful Shares they wish to sell in the Offer, to the following offices of the Receiving Agent during the Offer Period: 16

17 Receiving Agent Details Bahrain Bourse Bahrain Financial Harbour Harbour Mall, 4 th floor P.O. Box 3203 Manama - Kingdom of Bahrain Phone : Fax : Working Days and Time Sunday to Thursday 8:30 AM to 2:00 PM The above documents can be handed out in person to the above address or can be sent by registered mail or registered courier to the above address. In all cases they should reach the above offices no later than the close of business on the Offer Closing Date. The date of delivery indicated by the Bahrain Post Services or by the private courier shall be conclusive evidence as to the date of receipt. The following important directions should be followed when completing the Acceptance and Transfer Form: a) Only the prescribed Acceptance and Transfer Form collected or received from the offices of the Receiving Agent should be used, and completed in full in accordance with the instructions contained therein. In the case of joint owners of Takaful Shares only one Acceptance and Transfer Form may be used and signed by all such joint owners; b) Individual shareholders should enclose copies of their latest passport or national identity card to prove their identity. Institutional shareholders should enclose constitutive documents including copies of the Commercial Registration Certificate, memorandum and/or articles of association and documents to delegate authority to the signatory of the Acceptance and Transfer Form. In case of Institutional Shareholders that are not commercial companies, they should provide equivalent constitutive documents and documents showing authority of the signatory of the Acceptance and Transfer Form; c) If any Takaful Shareholder is deceased, the personal representatives/administrators of the estate/executors of the deceased s estate shall enclose the death certificate and a valid letter of administration and any other document that the Offeror or the Receiving Agent may require on or before the Offer Closing Date. d) In the case of any Takaful Shares held by investment managers, the Acceptance and Transfer Form should be signed by the investment manager and sent along with a copy of the document reflecting the investment manager's position as the investment manager for the Takaful Shareholder. The Acceptance and Transfer 17

18 Form must state the beneficial owners of Takaful Shares together with their specific signed mandate; and e) All Takaful Shares to be surrendered with the Acceptance and Transfer Form must be in electronic form. Takaful Shareholders should obtain from the BHB a statement of account in respect of their Takaful Shares and enclose it with the Acceptance and Transfer Form. The Offeror and the Receiving Agent reserve the right to reject any Acceptances if: i. the Acceptance and Transfer Form is not completed in all respects or is completed with incorrect information; ii. any of the information stated in (a) to (d) above is not included in or with the Acceptance and Transfer Form; or iii. the Acceptance and Transfer Form along with all of the above documents is received by the Receiving Agent after the close of business on the Offer Closing Date. After the Offer Closing Date and after receiving CBB approval, BKIC will arrange to make an announcement of the results of the Offer in two newspapers in the Kingdom of Bahrain and the websites of the BHB, Takaful and BKIC. Any queries regarding the application procedure should be directed to the Financial Advisor and the Receiving Agent on telephone number PURCHASE OF TAKAFUL SHARES OUTSIDE THE OFFER BKIC reserves the right to purchase Takaful Shares outside the Offer in accordance with the TMA and applicable laws. BKIC will not deal in Takaful Shares during the Offer Period. 4.4 SETTLEMENT The settlement shall be effected by BHB on the trading system via the Special Order Market through registered brokers. On the Settlement Date, BHB shall effect the transfer of shares and update the shareholders registry of Takaful to reflect change of ownership. Based on the actual number of Takaful Shares transferred, the settlement consideration at 95 fils per share shall be settled by the broker acting on behalf of the Offeror to BHB. In turn, BHB shall settle amounts due to each broker acting on behalf of each selling Takaful Shareholder subject to and as per the BHB settlement rules. Takaful Shareholders who accept this Offer need to fulfill the procedures prescribed in the acceptance procedures above in order to facilitate their rights and obligations being performed. Settlement of the consideration to which any Takaful Shareholder is entitled 18

19 under the Offer will be implemented in full in accordance with the terms of this Offer Document. If the Offer Period is extended, the revised Settlement Date will be notified to Takaful Shareholders accordingly. No interest will be paid on the Offer Price. The Takaful Shareholders shall be responsible for all brokerage fees and other costs arising from their sale of Takaful Shares pursuant to the Offer 4.5 TAX The tax consequences for Takaful Shareholders who tender their Takaful Shares pursuant to the Offer depend upon the shareholders individual circumstances. Shareholders should therefore consult their own tax advisors as to the particular tax consequences on them of accepting the Offer 4.6 PRIOR CONTACTS On 2 April 2017 BKIC purchased, from Bahrain Islamic Bank B.S.C., 14,220,486 Takaful Shares (22.75%) thereby triggering an obligation to launch a mandatory tender offer on the shares of Takaful pursuant to Rule TMA On 3 April 2017, BKIC communicated to Takaful s board of directors its requirement to undertake the mandatory Offer. On 20 April 2017, BKIC communicated to Takaful's board of directors its Firm Intention to make an Offer to Takaful Shareholders to acquire their shares in Takaful. 19

20 5. THE OFFEROR 5.1 BAHRAIN KUWAIT INSURANCE COMPANY B.S.C. Bahrain Kuwait Insurance Company B.S.C. ( BKIC ) was established on 4 April 1976 with Bahraini and Kuwaiti shareholders. The Company is registered with the MOICT with Commercial Registration number 4745 as a Public Bahraini Shareholding Company and its shares are listed on the Bahrain Bourse and the Kuwait Stock Exchange. BKIC is licensed by the CBB as a locally incorporated insurance firm under license number LII/001 and provides its clients with all classes of general insurance, the major categories being Fire, General Accident, Engineering, Marine Cargo, Motor, Group Life and Health. Since its establishment, BKIC has achieved steady growth in various areas and built a solid relationship with its customers based on integrity, mutual trust and financial strength. BKIC was the first insurance company in Bahrain to have been rated by an independent international rating agency and currently enjoys A- (Excellent) rating of A M Best. The Company has grown to become the market leader in the insurance industry in Bahrain since the year 2008 in terms of gross premium and net profits, with a total gross premium income of BHD million in Gulf Insurance Company ( GIC ), which in turn is owned by Kuwait Projects Company ( KIPCO ) and Fairfax Financial Holdings Limited, became the largest shareholder of the BKIC in 2008, with a current ownership stake of 56.12%. In May 2013, BKIC launched the newly adopted identity by the Gulf Insurance Group ( GIG ) companies to reflect a unified brand identity across the group companies. The GIG companies currently operate in Kuwait, Bahrain, Jordan, Lebanon, Syria and Egypt and this helps BKIC to extend services to clients across the Middle East. BKIC is among the founders of the following companies which helped enrich insurance services in Bahrain: United Insurance Company Bahrain; and Gulf Assist Bahrain. In 2015, BKIC increased its stake in Takaful to 40.93%, and therefore became the largest shareholder of the company. Furthermore, on 2 April 2017 the Company increased its ownership in Takaful to reach 63.69%. 20

21 BKIC continues to play a leading role in planning more such ventures which are aimed at offering better insurance services to the public. 5.2 CAPITAL AND MAJOR SHAREHOLDERS BKIC s authorized capital currently stands at BHD 10,000,000 with an issued and paid up capital of BHD 7,150,000 divided into 71,500,000 ordinary shares with a nominal value of BHD each. The Company is currently listed and publicly traded on the Bahrain Bourse and Kuwait Stock Exchange with the following shareholders owning more than 5% each: Major Shareholders Nationality Number of Percentage Shares Owned Gulf Insurance Group K.S.C. Kuwait 40,126, % Warba Insurance Company Kuwait 9,533, % K.S.C. BBK B.S.C. Bahrain 4,879, % 5.3 BOARD OF DIRECTORS BKIC s Board of Directors currently comprises of ten board members, as follows: No. Board Member Nationality Title 1 Murad Ali Murad Bahraini Chairman 2 Khalid Saoud Al Hasan Kuwaiti Vice Chairman 3 Hassan Mohammed Bahraini Zainalabedin Director 4 Dr. Abdul Rahman Ali Saif Bahraini Director 5 Dr. Emad Jawad Bukhamseen Kuwaiti Director 6 Bijan Khosrowshahi American Director 7 Shawqi Ali Fakhroo Bahraini Director 8 Mohamed Ebrahim Zainal Bahraini Director 9 Thamer Ebrahim Arab Kuwaiti Director 10 Mubarak Othman Al Ayyar Kuwaiti Director Murad Ali Murad - Chairman Director since 28 March 2004 Fellow Member of Chartered Institute of Management Accountants, UK Chairman of BBK (BSC), Bahrain Chairman of the Board of Trustees for Human Resources Development Fund in Banking Sector, Bahrain Chairman of Al Janabya Company W.L.L. (Family Company), Bahrain Member of Council of Vocational Training in Banking Sector, Bahrain 21

22 Khalid Saoud Al Hasan Vice Chairman Director since 28 March 2006 Bachelor Degree in Political Science and Economics-Kuwait University 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., 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 - Director Director since 1975 (Inception) Bachelor Degree in Economics from Cairo University, Egypt 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 - Director Director since 28 February 2011 Ph.D. Economics from University of Leicester, UK 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 - Director 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 Bradford College, America Chairman of Al-Arabiya Real Estate Co., Kuwait Chairman of Layan Real Estate Co., Dubai 22

23 Chairman of Gourmania International Chairman of Al-Baraka Media Group, Kuwait Chairman of National Arabic Company for Restaurant Management WLL, 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 Beverage 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.com-Real Estate Marketing, Kuwait Managing Director of Blue Nile Travels, Egypt Editor in Chief of Annahar Newspaper, Kuwait Bijan Khosrowshahi - Director Director since 28 February 2011 MBA and Bachelor Degree in Mechanical Engineering from Drexel University, USA 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 - Director Director since 25 February 2008 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 23

24 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 - Director 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 Board Member of Mohamed Ali Zainal Abdulla BSC,Bahrain Board Member of Zainal Enterprises WLL, Bahrain Thamer Ebrahim Arab - Director Director since 23 March 2017 BSc. in Computer Science from California University, America Deputy CEO for Support Departments in Gulf Insurance & Reinsurance Co., Kuwait Mubarak Othman Al Ayyar - Director Director since 23 March 2017 BSc. in Management from Ajman University of Science & Technology, UAE Deputy Manager of Reinsurance Dept. in Gulf Insurance & Reinsurance Co., Kuwait Board Member of Egyptian Life Takaful, Egypt 24

25 5.4 MANAGEMENT TEAM The following organizational chart depicts the current management structure of the Group: Secret ary t o t he Board BOARD OF DIRECTORS Nomination, Remuneration & Governance Committee Executive Committee Audit Committee Chief Executive Officer Internal Auditor General Manager Bahrain General M anager Kuwait Deputy General Manager Chief Underwriting Officer Deputy General Manager Chief Investment Officer Assistant General Manager Technical Assistant General Manager Chief Financial Officer Risk M anagement & Quality Control Officer HR & Administration Legal & Compliance Officer 25

26 The Company s senior management team includes: Management Team Office Title Ebrahim Alrayes Bahrain/Kuwait Chief Executive Officer Waleed Mahmood Bahrain General Manager K.M.Kurien Bahrain Chief Underwriting Officer R. Sundaram Bahrain Chief Financial Officer Ahmed A. Rahman Bucheeri Bahrain Chief Investment Officer Abdulla Rabia Kuwait General Manager S. Ramakrishnan Kuwait Deputy General Manager K. Gandhi Kuwait Assistant General Manager Ebrahim Alrayes - Chief Executive Officer Joined BKIC in 8 January 1984 B. Com (Accounting)-Arab University of Beirut, Lebanon Certificate of Insurance Proficiency (COP) from Chartered Insurance Institute, UK 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 1 February 2005 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 Board Member of Gulf Assist, Bahrain Ex-General Manager of United Insurance Co., Bahrain More the 26 years of experience, of which 20 years have been in Insurance Industry 26

27 K.M.Kurien - Chief Underwriting Officer Joined BKIC on 22 October 1977 Associate of Insurance Institute of India Bachelor of Arts Ex-Chairman 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 R. Sundaram - Chief Financial Officer Joined BKIC on 28 September 2013 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 Heads the Finance, Accounts and IT Departments of BKIC More than 32 years of experience in Insurance/Reinsurance Sectors Ahmed A. Rahman Bucheeri - Chief Investment Officer Joined BKIC on 1 December 2011 Chartered Alternative Investment Analyst Commercial studies Diploma Treasury and capital markets Diploma Investment representative program (Series 7) 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 KUWAIT OFFICE Abdulla Rabia - General Manager Joined BKIC on 20 January 1990 Diploma in Motor Vehicle Engineering 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 27

28 Ex-Loss Adjuster with Bayne Adjusters and Surveyors Bahrain, Dubai and Saudi Arabia Experience in handling Engineering claims with Arab Insurance Group (ARIG) Bahrain S. Ramakrishnan - Deputy General Manager Joined BKIC on 16 October 2001 Fellow of Insurance Institute of India, India Associate of Chartered Insurance Institute Chartered Insurer Master of Business Administration Bachelor of Law 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 K. Gandhi - Assistant General Manager Joined BKIC on 2 July 2006 Post Graduate in Engineering Associate of Indian Institute of Bankers, India Master of Business Administration Holds the overall functional responsibility of Underwriting, Claims and Reinsurance of Non-Life Division Actively involved in serving major Corporate Clients and assists DGM in the day-today 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 5.5 RISKS ASSOCIATED WITH THE BUSINESS OF THE OFFEROR BKIC has described only those risks relating to its operations that it considers material. There may be additional risks that it currently considers not to be material or of which it is not currently aware, and any of those risks could adversely affect the market price of BKIC shares. In common with other players in the insurance sector, BKIC faces a range of risks in its business and operations as follows: GEOGRAPHIC RISK BKIC operates predominantly in Bahrain and Kuwait s insurance sector which subjects the Company to country-specific economic slowdowns or political issues related to Bahrain and Kuwait. 28

29 SHORTAGE AND DIFFICULTY OF OBTAINING ADEQUATE FINANCING Should BKIC need additional funding for expansion of its activities or products, or to improve its financial solvency in the future, it might encounter difficulty in securing sources of funding at suitable cost. The Company s ability to obtain financing depends on several factors, including those related to BKIC s ability to obtain regulatory approvals, as well as BKIC s operational and financial performance. The difficulty of obtaining adequate financing in the future may have negative impact on the Company, its financial performance and business plan. INCREASED COMPETITION A number of institutions are offering insurance and takaful products and services in Bahrain and Kuwait. Additionally, competition in Bahrain and Kuwait for insurance products and services are expected to increase in the future. Some of the competitors may be more flexible and better positioned to take advantage of market opportunities. Increased competition could have a material adverse effect on business, financial condition and operating results of BKIC through pricing pressure, loss of market share and other factors. REGULATORY CHANGES Regulatory changes, including but not limited to capital and solvency requirements, within the geographies BKIC operates in may have an adverse effect on the Company s profitability. MARKET RISK A large number of BKIC s customers are based within the GCC. An economic slowdown in the region as well as fluctuations in interest rates, foreign exchange rates or equity prices may impact the individual and corporate clients utilizing BKIC s services which may in turn have a negative impact on the BKIC s revenues, margins and profitability. LIQUIDITY RISK BKIC may encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk may result from an inability of BKIC to sell a financial asset quickly at close to its fair value or to secure alternative funding. CURRENCY RISK The Company's principal transactions are carried out in Bahraini Dinars and Kuwaiti Dinars and its exposure to foreign exchange risk arises primarily because the Kuwaiti Dinar is not pegged to the United States Dollar or Bahraini Dinar. Any fluctuations in the Kuwaiti Dinar against the United States Dollar may impact BKIC s profitability. Furthermore, any revaluation or depegging of these currencies may have a negative impact on BKIC. 29

30 INTEREST RATE RISK BKIC's short-term deposits are at fixed interest rates and mature within six months. Investments in bonds are at fixed rate and have maturities ranging from 1 year to 10 years. The Company does not use any derivative financial instruments to hedge its interest rate risk. Therefore, any fluctuations in the interest rate would impact the Company s profitability. CREDIT RISK BKIC s key areas of exposure to credit risk include: Placements with financial institutions, investment securities, financial instruments and cash and cash equivalents; and Receivables, including amounts due from insurance and investment contract policyholders, reinsurers share of reinsurer liabilities, amounts due from reinsurance operators in respect of payments already made to policyholders. 5.6 RELATED PARTY AND BUSINESS MODEL Board members and shareholders of the Offeror may have cross shareholdings and cross-directorships in organizations which may provide services to the Offeror and/or the Offeree. Furthermore, the Offeror and Offeree currently have competitive services and subsidiaries and/or associate companies and/or business relationships. 5.7 REGISTERED ADDRESSES AND CONTACT INFORMATION The Offeror Financial Advisor to the Offeror Bahrain Kuwait Insurance Company B.S.C. BKIC Tower 2775, road 2835, block 428, Seef District P.O. box 10166, Manama Kingdom of Bahrain Telephone: Fax: Web: info@gig.com.bh Securities & Investment Company B.S.C.(c)(SICO) BMB Center, 1 st floor, Diplomatic Area P.O. box 1331, Manama Kingdom of Bahrain Telephone: Fax: Web: corporatefinance@sicobahrain.com 30

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38 7.OVERVIEW OF BAHRAIN S INSURANCE SECTOR 1 The Insurance sector in Bahrain is divided into two primary segments; conventional and takaful. The industry is further subdivided into general insurance (making up 80% of gross premiums and include medical, motor, fire, property and liability coverage) and long-term insurance (making up 20% of gross premiums and include life and saving products). The sector as a whole is comprised of 25 locally incorporated firms and 11 overseas firms (i.e., branches of foreign companies). Six of these firms are in the takaful segment. In 2015 the sector employed 1,613 employees, 65% of whom were Bahraini. The industry maintained its underwriting size between 2014 and 2015 with gross premiums written of around BD 272 million (a reduction of 0.6% year on year). Of this, takaful firms represented around 23% of the total in 2015 with a larger percentage of growth (3%) compared to the conventional segment which was slightly negative. Furthermore, the insurance penetration rate increased marginally to 2.32% in 2015 compared to 2.15% in Within the various general insurance segments, motor insurance comprises the largest contribution of gross premiums at 28% and the highest claims at 42%. Gross Premiums for the Bahrain Insurance Sector Gross Claims for the Bahrain Insurance Sector Others 12% Medical 20% Long-term 20% Fire, property & Liability 17% Others 4% Medical 26% Long-term 26% Fire, property & Liability 1% Motor 28% Marine & Motor 42% Marine & 1% 3% With regards to growth in the industry, the medical segment had the highest growth rate in gross premiums at 11.5% between 2014 and 2015, followed by the motor segment at 3.6%. The remaining segments contracted during this period, led by the long-term segment at a negative 9.5%. 1 Source: Insurance Market Review 2015 as published by the CBB 38

39 Growth in Gross Premiums and Gross Claims 2014 / 2015 BD' 000s Gross Premiums Gross Claims % % Long term 60,837 55, % 37,415 39, % Fire, property & Liability 49,010 47, % 27,202 2, % Marine & Aviation 7,939 7, % 590 1, % Motor 73,114 75, % 60,612 62, % Medical 47,894 53, % 32,585 39, % Others (inc. Engineering) 35,151 33, % 13,498 6, % Total 273, , % 171, , % In 2015, BKIC was the largest conventional insurance underwriter with a 15.8% share of the local conventional sector, and an 8.7% share of the total industry (including conventional, takaful and overseas insurance firms operations in Bahrain). BKIC was followed by Life Insurance Corp and Bahrain National Insurance with 14.5% and 14.3% of the total conventional gross premiums underwritten, respectively. Breakdown of Bahraini Conventional Insurance Providers 2015 Insurer Gross Premiums (BHD 000s ) % of Total Conventional Providers % of Total Conventional and Takaful Providers (i.e., total market share) Bahrain Kuwait Insurance (BKIC) 23, % 8.7% Life Ins. Corp 21, % 8.0% Bahrain National Insurance 21, % 7.9% AXA Insurance 19, % 7.0% Saudi National Insurance 18, % 6.9% Gulf Union Insurance 14, % 5.4% Al Ahlia Insurance 10, % 4.0% United Insurance 7, % 2.8% Bahrain National Life Assurance 5, % 2.0% Saudi Arabian Insurance 4, % 1.5% Royal & Sun Alliance 1, % 0.7% Al Hilal Life % 0.2% Mediterranean & Gulf % 0.1% Total Bahraini Conventional Insurance 150, % 55.4% In 2015, Takaful International Company B.S.C. was the largest takaful provider in Bahrain in terms of gross premiums with close to 30% of all takaful gross premiums underwritten. Solidarity, followed in second place with 23.5%, and T azur with 21.8%. 39

40 Breakdown of Takaful Providers in Bahrain 2015 Insurer Gross Premiums (BHD 000s ) % of Total Takaful Providers % of Total Takaful and Conventional Providers (i.e., % of total market share) Takaful International 18, % 6.9% Solidarity General Takaful 14, % 5.5% T'azur Company 13, % 5.1% Medgulf Takaful 8, % 3.0% Al Hilal Takaful 4, % 1.5% Chartis Takaful Enaya 3, % 1.4% Total of Takaful Firms 63, % 23.2% In December 2016, Solidarity s shareholders acquired 71% of Al Ahlia Insurance, with the intention of converting the company from a conventional insurance company into a takaful provider, providing further impetus to the takaful sector. 40

41 8. CROSS SHAREHOLDINGS BY THE OFFEROR AND ITS DIRECTORS IN TAKAFUL 8.1 BKIC BOARD OF DIRECTORS OWNERSHIP IN BKIC AND TAKAFUL The table below depicts the Board of Directors share ownership in BKIC and Takaful as of the date of this Offer Document: BKIC Takaful* BKIC Board of Directors Shares Currently Owned or Controlled Shares Currently Owned or Controlled % Ownership No. of Shares % Ownership No. of Shares Murad Ali Murad 0.20% 143, Khalid Saoud Al Hasan Hassan Mohammed Zainalabedin 0.65% 462, Dr. Abdul Rahman Ali Saif Dr. Emad Jawad Bukhamseen Thamer Ebrahim Arab Bijan Khosrowshahi Shawqi Ali Fakhroo 0.35% 250, Mohamed Ebrahim Zainal 3.27% 2,338, Mubarak Othman Al Ayyar Total 4.47% 3,194, * None of the Directors of BKIC have any direct or deemed interest in Takaful Shares as of the date of this Offer Document. 8.2 BKIC OWNERSHIP IN TAKAFUL The table below shows BKIC s ownership in Takaful as of the date of this Offer Document: Current Shareholding % owned in Takaful No. of Shares Bahrain Kuwait Insurance Company B.S.C 63.69% 39,803,331 As of 31 December 2015, BKIC owned 25,582,845 shares of Takaful s share capital, representing 40.93% ownership in Takaful. During the last 12 month period prior to the date of this Offer Document, BKIC increased its ownership (on 2 April 2017) in Takaful 41

42 to 63.69% by acquiring an additional 22.75% stake equating to 14,220,486 ordinary Takaful Shares for 95 fils per share equating to BHD 1,350, (one million, three hundred fifty thousand, nine hundred forty-six Bahraini Dinars and one hundred and seventy fils) through a block transaction on the BHB. It should be thus noted that the Offeror is a related party of the Offeree because it holds a total stake of 63.69% of the Offeree s share capital, that is a majority of the voting rights in the Offeree as of the date of this Offer Document. 42

43 9. BKIC POST-ACQUISITION STRATEGY BKIC is already Takaful s largest and controlling shareholder. Accordingly further consolidation of ownership through the Offer will not result in any further changes to Takaful s strategy. 9.1 TAKAFUL INTERNATIONAL COMPANY B.S.C. COMMERCIAL REGISTRATION, LEGAL STATUS AND TRADE NAME Following the successful completion of the Offer and the acquisition of Takaful Shares, BKIC intends to maintain Takaful s trade name, commercial registration and its listing on the Bahrain Bourse unless BKIC acquires, as a result of the Offer and/or compulsory acquisition pursuant to Rule of TMA, the entire share capital of Takaful (or the conditions for continuous listing on Bahrain Bourse otherwise cease to exist). Takaful will continue to operate in accordance with its normal course of business as a subsidiary of BKIC where disruption to or cessation of any significant line of operations of Takaful is not expected to occur as a result of the proposed acquisition of shares under the Offer. 9.2 TAKAFUL S CURRENT EMPLOYEES AND ORGANIZATIONAL STRUCTURE The successful completion of the Offer will not result in any immediate effect on Takaful s employees and there is no intention to effect a change in management or in Takaful s current organizational structure except for any changes which may be implemented as part of Takaful s existing strategy. 9.3 MAINTAINING TAKAFUL S SHARI AH COMPLIANT INSURANCE OFFERINGS Whilst BKIC offers conventional insurance products, Takaful s insurance services will be maintained in the Shari ah compliant segment. 9.4 LONG TERM COMMERCIAL JUSTIFICATION FOR THE OFFER BKIC is a market leader in the conventional insurance segment and increasing its shareholding into the takaful segment would provide the Company with diversification benefits, increased market share, cross-selling opportunities as well as potential cost synergies. 43

44 10. SHARE OWNERSHIP IN BKIC AND TAKAFUL Currently, the following shareholders own 5% or more in BKIC and Takaful respectively: Current and Pre-Offer Ownership Structure Bahrain Kuwait Insurance Company B.S.C. % owned in BKIC No. of Shares Gulf Insurance Group K.S.C % 40,126,909 Warba Insurance Company S.A.K % 9,533,332 BBK B.S.C. 6.82% 4,879,818 Other Public 23.72% 16,959,941 Total % 71,500,000 Takaful International Company B.S.C. % owned in No. of Shares Takaful Bahrain Kuwait Insurance Company B.S.C 63.69% 39,803,331 Al Amana Alama State of Kuwait 8.40% 5,250,000 International Investment Group 6.39% 3,991,187 Other Public 21.53% 13,455,482 Total % 62,500,000 Based on the public information available, Takaful does not have any outstanding treasury shares and has not issued any warrant, right or other instrument entitling the holder thereof to subscribe to newly issued Takaful Shares Upon the successful completion of the Offer, BKIC may potentially own up to 100% of Takaful Shares and therefore Takaful may become a fully owned subsidiary of BKIC. 44

45 11. OFFER FINANCE 11.1 OFFER FINANCE SOURCES The Offer is a cash offer and will be financed using BKIC s internally generated funds. BKIC has established an Escrow Account with Securities and Investment Company B.S.C. (c)(sico) and has deposited a sum of BHD 2,200,000 (two million, two hundred thousand Bahraini Dinars) in this Escrow Account, which is sufficient and in excess to the total consideration of the Offer (being BHD 2,156, with the assumption that all Takaful Shareholders holding the remaining 36.31% of Takaful s issued and paid up share capital will accept the Offer and surrender their shares) CONFIRMATION BY THE ESCROW ACCOUNT AGENT SICO, in its capacity as the Escrow Account Agent, has confirmed to the board of directors of Takaful and the Central Bank of Bahrain the availability of the funding in the Escrow Account for the Offer. 45

46 12. THE OFFEROR S CONFIRMATORY STATEMENTS The Offeror confirms that: a) settlement of the Offer consideration to which all of the Offeree s shareholders are entitled under this Offer will be implemented in full in accordance with the terms of this Offer; b) no arrangements involving rights over shares, nor any indemnity agreements, nor any agreements or understandings, both formal or informal, relating to the shares pertaining to this Offer (that may be an inducement to deal or refrain from dealing) exist between the Offeror or any person acting in concert with the Offeror and any other party; c) none of the Takaful Shares being acquired in pursuance of the Offer will be transferred to any other persons other than the transfer of one (1) Takaful Share to a third party in case of acquisition by BKIC of 100% of the share capital of Takaful in order to maintain the requirement as to minimum number of shareholders applicable to Bahraini Shareholding Companies; d) it has not entered nor made any agreements, arrangements or understandings, nor has it undertaken any compensation agreements, both directly or through any person acting in concert with the Offeror, in connection with the Offer with the directors or shareholders of the Offeree other than as disclosed in this Offer Document; e) should the Offeror achieve 95% or more ownership in the Offeree as a result of this Offer, the Offeror has to compulsorily and therefore will offer to acquire the remaining voting rights within 3 months from the date of acquisition of 95% or more. Any compulsory acquisition is expected to occur at a price equal to the Offer Price, but adjusted for any dividends or other distributions paid by Takaful to Takaful Shareholders in whatever legal form they may be made (other than in respect to dividends already approved by the general assembly of Takaful before the date of this Offer Document) between the date of settlement of the Offer and the date of settlement of the compulsory acquisition. f) none of the Offeror s directors are considered interested shareholders as defined by the TMA; and g) no material changes in the financial or trading position or outlook of BKIC has occurred following the last published audited accounts, excerpts of which are included in this Offer Document, and entire audited accounts and annual reports are publicly available through the BKIC s website and the Bahrain Bourse. 46

47 13. MARKET PRICE AND HISTORICAL STOCK TRADING SUMMARY 13.1 TRADING PRICE OF THE OFFEREE Takaful Shares are listed on Bahrain Bourse under ISIN securities code BH and the symbol TAKAFUL. Market price of Takaful Shares on the key dates is given below: On 9 May 2017, the last practicable date prior to publication of this Offer Document Takaful Shares closing market price on 9 May 2017 was BHD per share On 19 April 2017, the last Business Day prior to the date of the announcement of the Firm Intention Takaful Shares closing market price on 19 April 2017 was BHD per share Source: Thomson Reuters Eikon, Bahrain Bourse as of 9 May 2017 Over the last six months, only one transaction occurred (on 2 April 2017) on Takaful Shares with a total number of shares traded of 14,220,486 shares at a price of BHD per share (however such transaction was executed in the Special Order Market and is therefore not reflected in the quoted closing price nor in the actual volumes traded) with a total value traded of BHD 1,350, Such transaction relates to the Block Purchase by BKIC. Market price movement for Takaful Shares for the period from 9 November 2016 to 9 May 2017 at the BHB is given in the chart below: 47

48 Market Price Per Share (BHD) Takaful Share Price (BHD) 9 November May Nov Dec Jan Feb Mar Apr May-2017 Source: Thomson Reuters Eikon, Bahrain Bourse as of 9 May 2017 *Last trade on Takaful Shares is pertaining to the Block Purchase on 2 April 2017 at a price of 95 fils per share (Block Purchase price not reflected on the Bahrain Bourse as a Special Order Market transaction) which is the first trade since 22 April 2015 (closing price on 22 April 2015 was 100 fils per share) Takaful Shareholders are urged to obtain a current market quotation per Takaful Share TRADING PRICE OF THE OFFEROR Market price of BKIC shares on the key dates is given below: On 9 May 2017, the last practicable date prior to publication of this Offer Document BKIC Shares closing market price on 9 May 2017 was BHD per share On 19 April 2017, the last Business Day prior to the date of the announcement of the Firm Intention BKIC Shares closing market price on 19 April 2017 was BHD per share Source: Thomson Reuters Eikon, Bahrain Bourse as of 9 May 2017 Over the last six months, total number of shares traded in BKIC stood at 48,882 shares with an average traded price per share of BHD with a total traded value of BHD 25,456. The following table details the trading history in BKIC s shares over the last six months: 48

49 Date Closing Price Per Share (BHD) Volume Value Traded (BHD) 03-May ,022 12, May ,016 10, Mar ,844 1, Total 48,882 25,456 Average Price Per Share (BHD) Market price movement for BKIC shares for the period from 9 November 2016 to 9 May 2017 at the BHB is given in the chart below: Market Price Per Share (BHD) BKIC Share Price (BHD) 9 November May 2017* 09-Nov Dec Jan Feb Mar Apr May-2017 Source: Thomson Reuters Eikon, Bahrain Bourse as of 9 May 2017 * Last trade on BKIC shares was on 3 May 2017 at a price of 540 fils per share 49

50 14. EFFECT OF THE OFFER 14.1 LEGAL CONSEQUENCES Of THE OFFER The Offer, if completed, will result in BKIC becoming the legal owner of all Takaful Shares validly tendered under the Offer together with all rights and interests associated with such ownership. All Takaful Shares to be sold to BKIC pursuant to the Offer must be free from any and all charges, liens and other encumbrances. Takaful Shareholders accepting the cash Offer and surrendering their shares to BKIC pursuant to this Offer shall forfeit the rights associated with their ownership of Takaful Shares, including but not limited to, rights concerning share ranking, voting, dividend and liquidation (other than any dividend which has been approved by the general assembly of Takaful prior to the date of this Offer Document). Takaful Shareholders rejecting the cash Offer from BKIC shall continue to retain their rights associated with their ownership of such Takaful Shares, including but not limited to, rights concerning share ranking, voting, dividend and liquidation in the absence of a compulsory acquisition under Rule of the TMA Module of CBB Rulebook, Volume NO SPECIAL BENEFITS TO EXECUTIVES, MANAGERS AND DIRECTORS No payments of any kind will be made by BKIC to the executive managers, the directors or the employees of Takaful in connection with the Offer, except as ordinary settlement pursuant to the Offer for any Takaful Shares held by such persons. BKIC's executive managers, its directors and its employees will not receive any payments of any kind from Takaful or any other third party in connection with the Offer, except as ordinary settlement pursuant to the Offer for any Takaful Shares held by such persons THE EFFECT Of THE OFFER ON THE DIRECTORS OF THE OFFEROR The Offer will not have any material effect on the current directors of BKIC and no change in the composition or the number of member of the board will be effected or triggered by the Offer. 50

51 14.4 IMPACT ON OFFEREE'S EMPLOYEES It is the intention of BKIC to keep the commercial registration and license of Takaful and continue running Takaful as a going concern. The successful completion of the Offer will not result in any immediate effect on Takaful s employees and there is no current intention to implement changes in management or organizational structure except for any changes which may be implemented as part of Takaful s existing strategy. 51

52 15. ADDITIONAL INFORMATION 15.1 ARRANGEMENTS No arrangements have been made involving rights over shares, indemnity arrangements or any other agreements or understandings relating to relevant securities which may be an inducement to deal or refrain from dealing between BKIC or any person acting in concert with BKIC. Securities acquired in pursuance of this Offer shall be retained by BKIC and no arrangement has been made for transfer of securities acquired through this Offer to any other person other than the transfer of (1) Takaful Share to a third party in case of acquisition by BKIC of 100% of the share capital of Takaful in order to maintain the requirement as to minimum number of shareholders applicable to Bahraini Shareholding Companies. No arrangement, agreement or understanding, including any compensation agreement, exists in connection with the Offer between BKIC and any person acting in concert with it and the directors of Takaful or Takaful Shareholders SIGNIFICANT ACCOUNTING POLICIES All the significant accounting policies as contained in the annual report for the financial year ended 31 December 2016 have been mentioned in Annexure 17.1 of this Offer Document, under the heading Notes to the Financial Statements SHAREHOLDING AND DEALINGS IN OFFEREE COMPANY As of 31 December 2015, BKIC owned 25,582,845 of the issued and paid up ordinary shares of Takaful, representing 40.93% stake in Takaful. Furthermore, on 2 April 2017 BKIC increased its ownership in Takaful to reach 63.69% by acquiring 14,220,486 ordinary shares in Takaful at a price of 95 fils per share through a block transaction on the BHB. 52

53 The following table highlights BKIC ownership in Takaful over time up to the date of this Offer Document: Share ownership in Takaful by BKIC % Owned in Takaful No. of Shares Ownership at all times between 2 April 2015 and 1 April % 25,582,845 Acquired on 2 April % 14,220,486 Total Current Ownership 63.69% 39,803,331 As of the date of this Offer Document, none of the directors of BKIC hold Takaful Shares as highlighted in section 8 titled Cross Shareholdings by the Offeror and its Directors in Takaful of this Offer Document MATERIAL LITIGATION At the date of this Offer Document, there is no material litigation to which BKIC is a party or to the best of the knowledge of BKIC, to which BKIC may become a party NO MATERIAL LIABILITY There are no material loans, mortgages, charges or guarantees other than those entered into in the normal course of business or other contingent liabilities of BKIC at the date of this Offer Document. Please refer to section 6 for further information regarding the financial position of BKIC DOCUMENTS ON DISPLAY During the Offer Period, the following documents (or copies thereof) may be inspected at the head office of BKIC in Manama, Kingdom of Bahrain: 1) The Memorandum and Articles of Association of BKIC; 2) Any document evidencing an irrevocable commitment from Takaful Shareholders or a letter of intent which may be procured by BKIC in the course of this Offer; 3) Annual reports of BKIC for the years ended 31 December 2013, 2014, 2015 and 2016; 4) Letter of Firm Intention from BKIC to Takaful dated 20 April 2017; 5) SICO s letter of confirmation of receipt of funds in escrow; and 6) Any Non-Disclosure Agreement entered between BKIC and Takaful pertaining to the Offer. 53

54 15.7 CONFLICTS OF INTEREST None of the board members and the major shareholders (holding 5% or more) of BKIC own shares in Takaful as highlighted in section 8 Cross Shareholdings by the Offeror and its Directors in Takaful and section 10 Share Ownership in BKIC and Takaful. Additionally, the Offeror and the Offeree currently offer competitive insurance services and products. However, BKIC does not offer or compete in the area of takaful insurance services nor Takaful offers conventional (non-shari ah Compliant) insurance services and products to its clients. BKIC owns 63.69% of the Offeree s share capital, which is a majority of the voting rights in the Offeree as of the date of this Offer Document, and has appointed four of the board directors of the Offeree. 54

55 16. KEY PARTIES The Offeror P.O. Box Manama Kingdom of Bahrain Telephone: Fax: Financial Advisor to the Offeror P.O. Box 1331 Manama Kingdom of Bahrain Telephone: Fax: Legal Counsel P.O. Box Manama Kingdom of Bahrain Telephone: Fax: Auditor to the Offeror P.O. Box 140 Manama Kingdom of Bahrain Telephone: Fax: P.O. Box 3203 Receiving Agent Manama Kingdom of Bahrain Telephone: Fax:

56 17. ANNEXURE 17.1 AUDITED FINANCIAL STATEMENTS 31 DECEMBER

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