Insurance (Prudential Standards) (Class 4 and Class 3B Solvency Requirement) Amendment Rules 2012

Summary

This is a BMA notice and draft amendment rules updating the Insurance (Prudential Standards) (Class 4 and Class 3B Solvency Requirement) Rules 2008. It clarifies certain defined terms, revises the quarterly financial return requirements on intra-group transactions, and replaces several solvency-related schedules to align with the 2011 year-end BSCR model and new statutory forms.

• Definitions clarified: Adds and clarifies the terms group, unaffiliated and materialised for interpretation purposes.
• Quarterly financial returns (paragraph 6AB): Clarifies that intra-group transaction and exposure reporting relates only to transactions that have materialised since the most recent annual or quarterly filing, with consequential changes to Schedule V and its instructions.
• Schedules replaced: Schedules VII, VIII, IX and X are repealed and replaced with new Schedules IX (CISSA), X (Catastrophe Risk Return), XI (Loss Triangles / Net Loss Reserve Reconciliation) and XII (Eligible Capital), primarily to align with the 2011 year-end BSCR model, Form 1A, Form 8 and the Eligible Capital Rules.
• Effective date: The amendment rules were proposed to come into operation on 1 January 2013.
• Consultation: BMA invited comments on the draft Rules by 15 August 2012, to be sent to policy@bma.bm.

This document is a consultation notice with an attached draft of the amendment rules; it does not itself confirm final enactment, though the drafted commencement date and requirements described are those proposed for Class 4 and Class 3B insurers.

Key obligations

• Non-group (or group-supervised) Class 4 and Class 3B insurers must prepare and file quarterly financial returns to the BMA on or before the last day of May, August and November each year, comprising quarterly unaudited financial statements and details of intra-group transactions and exposures that have materialised since the last filing.
• Insurers must include in quarterly returns details of the ten largest exposures to unaffiliated counterparties, and any other unaffiliated exposures exceeding 10% of statutory capital and surplus.
• Insurers must file the CISSA insurer-specific report (Schedule IX) containing a description of business and strategy, material risk assessment, capital determination, forward-looking analysis, business continuity description, and board-approved signed declaration.
• Insurers must complete and submit the new Schedule X (Catastrophe Risk Return), Schedule XI (Loss Triangles/Net Loss Reserve Reconciliation) and Schedule XII (Eligible Capital) in the prescribed format aligned with Form 1A and Form 8.

Applies to

Class 4 insurers, Class 3B insurers

Deadlines

• 15th August 2012: Deadline for submitting comments on the draft Rules to policy@bma.bm.
• 1st January 2013: Proposed effective/commencement date of the Amendment Rules.
• last day of May, August and November of every year: Deadline for filing quarterly financial returns under revised paragraph 6AB.