The Bank of Bahrain and Kuwait (BBK) is holding talks with key shareholders in an effort to obtain a controlling stake in Bahrain Kuwait Insurance Company (BKIC).

In a recent interview with Gulf News, Dr Farid Al Mulla, BBK general manager, said the bank wanted to diversify its operations into other financial services and to expand into a full-fledged financial services company.

"We hold a seven per cent stake in BKIC, which we will try to raise substantially so as to have a controlling stake in the insurance outfit," said Dr Al Mulla.

Since both insurance and banking in Bahrain come under a single regulator - the Bahrain Monetary Agency (BMA) - a bank raising its stake in an insurance company falls within the regulatory regime.

There are blocks of BKIC shares held by key investors in Bahrain and Kuwait who are not keen to sell them, and this makes acquiring BKIC shares in large volumes a difficult task for BBK.

BKIC was established in 1975 and the shares in the company are equally divided between Bahraini and Kuwaiti shareholders.

While in Bahrain the shareholding is widely distributed among more than 4,000 shareholders, the Kuwaiti shares are held by five Kuwaiti insurance and reinsurance companies.

By virtue of its shareholding structure, BKIC is allowed to operate as a national insurance company both in Bahrain and Kuwait, the only company to enjoy such a privilege. BKIC is involved in all classes of insurance with the major categories being fire, general accident, engineering, marine, motor, group life and health.

In the past 28 years that BKIC has been operating, the company has grown to occupy a leading position in the Bahrain insurance market.

The gross premium income written by the company in 2001 amounted to 13.15 million Bahrain dinars and exceeded 16.64 million dinars last year.

The net profit reached 1.316 million dinars for the period ended September 30 this year compared with 889,651 dinars for the same period last year.

The underwriting profit recorded a growth of 117 per cent to 407,871 dinars as of September 30 this year against 188,164 dinars the company posted for the same period last year.