Consultation Paper - Proposed Enhancements to Public Disclosure Regime - Public Disclosure of Assets and Liabilities for Commercial Long-term Insurers (2024-12-23)

Summary

This consultation paper sets out BMA proposals to require Bermuda commercial long term insurers (Class C, D and E) to publicly disclose detailed information on their assets and liabilities, aiming to improve transparency for policyholders and other stakeholders. It follows BMA's existing disclosure regime (Financial Condition Reports, Audited Financial Statements) and builds on recent Prudent Person Principle guidance concerning illiquid and affiliated assets.

• Proposal 1 - Asset disclosure: Public disclosure of all assets on a consolidated basis, including equities, fixed income, mortgage loans, derivatives, alternative and structured assets, and assets held under Modified Coinsurance or Funds Withheld arrangements, using unique identifiers (e.g. CUSIP) or position level detail where none exist; affiliated/related party assets must also be disclosed.
• Proposal 2 - Liability disclosure: Public disclosure of reserves at product type level, including currency, gross and net reserves, reinsurance recoverable, average duration and year on year change in reserves.
• Proposal 3 - ALM disclosures: Qualitative disclosures covering asset allocation suitability versus liability profile, stress/scenario testing practices, portfolio liquidity under normal and stressed conditions, risk management practices (including derivatives use), significant changes in asset allocation, and other relevant ALM information.
• Proposal 4 - Format and frequency: Annual submission of these disclosures as part of the Capital and Solvency Requirements filing, using a standardised reporting template attached to the consultation paper.

The BMA intends the new requirements to take effect on 31 December 2025, though insurers may volunteer to have their assets and liabilities publicly disclosed starting from 31 December 2024. Formal rulemaking consultation is expected to begin in Q1 2025. Stakeholders are invited to comment on the proposals, including on potential implementation challenges and the draft template, by 28 February 2025.

Key obligations

• Long-term insurers (Class C, D, E) will be required, once rules are finalised, to publicly disclose consolidated asset holdings including affiliated assets, using unique security identifiers or position level detail
• Long-term insurers will be required to publicly disclose liability/reserve information at product type level (currency, gross/net reserves, reinsurance recoverable, average duration, year on year change)
• Long-term insurers will be required to provide qualitative ALM disclosures covering asset allocation suitability, stress testing, liquidity, risk management and significant strategy changes
• Disclosures must be submitted annually as part of the Capital and Solvency Requirements filing using the standardised reporting template
• Stakeholders wishing to comment on the proposals must submit feedback to riskanalytics@bma.bm by 28 February 2025

Applies to

Class C long-term insurers, Class D long-term insurers, Class E long-term insurers, commercial long-term insurers

Deadlines

• 28 February 2025: Deadline for stakeholders to submit comments on the consultation paper to riskanalytics@bma.bm
• first quarter of 2025: BMA intends to commence consultation on the draft rules governing the disclosure requirements
• 31 December 2025: Intended effective date for the new public disclosure requirements
• 31 December 2024: Start date from which BMA will publicly disclose assets and liabilities for registrants who volunteer