Notice - Insurance (Group Supervision) Amendment Rules 2012

Summary

This is a Bermuda Monetary Authority notice and accompanying draft amendment rules to the Insurance (Group Supervision) Rules 2011. It is a consultation document, not yet in force, and sets out proposed clarifications and technical changes to the group supervision framework for insurance groups, along with an invitation for industry comment.

• Capital instrument transition: Extends the period during which certain eligible capital instruments that do not meet the indefinite coupon cancellation/deferral requirement may still count toward regulatory capital, from 2018 to 1 January 2024.
• Governance terminology: Clarifies the wording describing parent company responsibilities within a group.
• Insurance reserves defined: Introduces a definition of insurance reserves for group actuary reporting purposes, tied to specific lines of Form 1, Schedule 1.
• Compliance function: Rewords the compliance function's responsibilities to focus on identifying, measuring, monitoring and reporting compliance risk and mitigating material compliance risk across the group.
• Audit function and actuarial function: Reworks the internal audit function (including independence and compensation safeguards) and replaces the actuarial function provisions with more detailed responsibilities, including annual written reporting to the parent board.
• Reporting forms: Amends Schedule 1 forms (Form 1, Form 2, Form 8) to add reinsurance receivables from foreign and domestic affiliates, expand segregated accounts company categories, and expand preferred share disclosure to include shares issued by a subsidiary.
• Terminology change: Changes the Group Actuary's Certificate to the Group Actuary's Opinion in Schedule 2.
• Other changes: All remaining changes are described as minor housekeeping amendments.

The notice invites comments on the draft rules by 15 August 2012, to be sent to policy@bma.bm. The draft rules state they would come into operation on 1 January 2013 if adopted, but as a consultation draft the document does not itself create binding obligations at this stage.

Key obligations

• Submit comments on the draft Insurance (Group Supervision) Amendment Rules 2012 to policy@bma.bm by 15 August 2012.
• Once in force, insurance groups would be required to file all required returns and financial statements in an accurate, complete and timely manner.
• Once in force, group actuaries would be required to provide a written report on insurance reserves and policyholder obligations to the parent board and other appropriate boards or committees at least annually.
• Once in force, group financial statements would need to be accompanied by an unaudited statement for public disclosure regarding the group's compliance with the MSM and ECR.

Applies to

insurance groups, parent companies of insurance groups, group actuary, registered insurers subject to group supervision

Deadlines

• 15th August 2012: Deadline for submitting comments on the draft Insurance (Group Supervision) Amendment Rules 2012 to policy@bma.bm.
• January 1, 2013: Date on which the amendment rules would come into operation if adopted, per the draft citation clause.
• 1st January, 2024: Extended date until which certain non-compliant capital instruments may continue to be included in the applicable capital tier.

Related documents

• This document amends Insurance (Group Supervision) Rules 2011