The Bahrain Monetary Agency (BMA) has granted the first licence for a captive insurance management company.

The licence has been granted to Bahrain-based investment advisory firm, Stratum WLL, which focuses on the development of regional private equity opportunities.

The granting of the licence is in line with BMA’s efforts to develop Bahrain as a viable captive domicile, said Mr Ahmed Al Bassam, Director, Licensing & Policy, at the BMA.

“There is potential demand in the region from large corporates wishing to exploit the flexibility and cost-effectiveness, in terms of insurance premiums, that captives can provide, and we intend to develop Bahrain as the regional location of choice for such activities,” said Mr Al Bassam.

BMA, last year, carried out a consultation on proposed rules, which would allow captive insurers to establish in Bahrain. The rules are now being finalised and will be part of the new Insurance Rulebook, which will be issued later this year. All of the new rules will come into effect for existing licensees in January 2005. For new licensees, the rules will be effective as soon as they are issued.

“BMA is working to foster a sound, competitive and market-responsive insurance industry by delivering a more efficient regulatory environment, including licensing procedures and criteria,” said Mr Al Bassam.

Marwan Tabbara, a Managing Partner at Stratum, said his firm has invested in establishing an independent, dedicated captive management company with a pure strategic focus on establishing regionally domiciled captives.

“This captive management operation is a critical part of the professional infrastructure required for captive insurance and we see this company as a key enabler for the growth of the emerging regional captive insurance market,” he said.

Stratum is establishing the Bahrain-based captive manager, the first such operation in the region, in collaboration with International Advisory Services (IAS). IAS manages over 180 captives, with written premiums in excess of $1.75bn. The firm has a presence in most major captive domiciles in the world.

David Ezekiel, President and Managing Director of IAS, said: “We are pleased to see the Kingdom of Bahrain emerge as the next captive insurance domicile and hope to work closely with Stratum to develop and manage the next generation of captive insurance companies in the Middle East and wider Asia region.

Stratum is also working with The Nottingham Company, a US-based back office accounting and compliance administration firm, with over $20bn in assets under administration. Steve Keenan, special insurance advisor to The Nottingham Company and member of the Bahrain captive manager’s executive team, said: “We look forward to working with Stratum to build the business processes and technical capabilities to develop Bahrain into a world-class captive insurance domicile in line with global best practices.

Ahmed Alumran, also a Managing partner at Stratum, said the firm was committed to developing professional training opportunities for the Bahraini insurance workforce through specialised captive insurance internships in USA, Bermuda and Ireland.