Consultation Paper – Special Purpose Insurer Accounts, Returns and Solvency Rules 2019

Summary

This is a Bermuda Monetary Authority consultation paper proposing new Special Purpose Insurer (SPI) Accounts, Returns and Solvency Rules 2019, made under section 6A of the Insurance Act 1978. The Rules would codify and formalise the existing ad hoc annual filing requirements for SPIs (previously handled through individual Section 56 Directions) into a single standardised set of rules, without changing the substance of the 2018 year end filing requirements.

• Annual filing: Each SPI would be required to file a Statutory Financial Return (SFR) annually through the Authority's Electronic Statutory Financial Return (ESFR) system, populated from its GAAP financial statements.
• Audit requirement: GAAP financial statements must be audited unless the SPI writes only restricted special purpose business or has an audit exemption from the Authority; GAAP statements must be attached to the SFR in all cases, audited or not.
• Combined declaration: A single Annual Statutory Declaration and Solvency Certificate, signed by at least two directors and the principal representative, would replace the previous separate director declaration and principal representative letter.
• New schedules: SPIs would need to complete and submit additional schedules covering Cyber Risk Management, Compliance with Sanctions, Governance Structure, an Alternative Capital Schedule, and an Own Risk Assessment.
• Statement of control: SPIs must complete a Statement of Control and Changes of Control detailing any changes in shareholder controllers since the last return.

The BMA sought written comments on the proposed Rules and invited alternative suggestions. Subject to the outcome of the consultation, the Authority intended the new Rules to take effect from 1 January 2020.

Key obligations

• Each SPI would be required to prepare and file an annual Statutory Financial Return (SFR) via the ESFR system within four months after the end of its financial year, or up to seven months with the Authority's approval
• GAAP financial statements must be attached to the SFR in all cases, and must be audited unless the SPI writes only restricted special purpose business or has an audit exemption
• An SPI not required to have audited financial statements but that obtains an audit for another purpose must submit those audited statements to the Authority
• The Annual Statutory Declaration and Solvency Certificate must be signed by at least two directors of the SPI and its principal representative and attached within the ESFR
• Each SPI must complete and submit Schedules of Cyber Risk Management, Compliance with Sanctions, and Governance Structure along with its SFR
• Each SPI must complete a Statement of Control and Changes of Control and an Own Risk Assessment as part of its return
• Comments on the proposed Rules were to be submitted in writing to riskanalytics@bma.bm by Friday 29 November 2019, with hardcopies delivered to the BMA reception desk

Applies to

Special Purpose Insurers (SPIs)

Deadlines

• Friday 29 November 2019: Deadline for submitting written consultation comments to riskanalytics@bma.bm, with hardcopies to BMA reception
• 1 January 2020: Proposed effective date for the new Special Purpose Insurer Accounts, Returns and Solvency Rules 2019, subject to consultation outcome
• four months after the end of the financial year: Proposed deadline for an SPI to prepare and file its annual statutory financial return
• up to seven months after the end of the financial year: Extended filing deadline if allowed by the Authority upon application