Notice - Insurance (Eligible Capital) Rules 2012 (proposed Eligible Capital Amendment Rules 2013)

Summary

This is a consultation notice from the Bermuda Monetary Authority proposing amendments to the Insurance (Eligible Capital) Rules 2012. It sets out draft Eligible Capital Amendment Rules 2013 and invites stakeholder comments before the Authority finalises the changes.

• Encumbered assets: Adds a new consideration to the calculation of the amount of encumbered assets to be transferred from Tier 1 basic capital to Tier 2 basic capital, clarifying that assets pledged solely for risk management purposes should not be deducted.
• Preference shares: Clarifies the loss absorbency criteria for preference shares qualifying as Tier 1 basic capital, including treatment of write downs and non-cumulative dividends.
• Housekeeping changes: Other amendments described as housekeeping in nature, intended to ensure clarity and consistency in how the Rules are read and interpreted by stakeholders.

The notice is a proposal only, not yet in force. The Authority invited comments by 6 September 2013 and indicated the amendments would become effective from 1 January 2014, though the draft Rules text attached shows a commencement date of 1 January 2014 as currently drafted.

Key obligations

• Interested parties wishing to comment on the proposed Eligible Capital Amendment Rules 2013 must submit comments to policy@bma.bm by 6 September 2013

Applies to

Class 3A insurers, Class 3B insurers, Class 4 insurers, Class E insurers, Class D insurers, Class C insurers, composite insurers

Deadlines

• 6th September 2013: Deadline for stakeholders to submit comments on the proposed Eligible Capital Amendment Rules 2013
• 1 January 2014: Proposed effective date for the amendments to the Insurance (Eligible Capital) Rules 2012 (stated in the notice as 1st January 2014 and in the draft Rules as 1 January 2014)