Notice - Insurance (Prudential Standards) (Class 3A Solvency Requirement) Amendment Rules 2016 (2016-05-09)

Summary

This is a Bermuda Monetary Authority notice and consultation draft proposing amendments to the Insurance (Prudential Standards) (Class 3A Solvency Requirement) Rules. It sets out proposed changes to the risk management and solvency reporting schedules applicable to Class 3A insurers and invites public comment before finalisation.

• Intra-group transactions: Schedule V paragraph (b) would be replaced to align Class 3A intra-group transaction reporting with the requirements already applying to Class 4, 3B, C, D and E insurers.
• New standalone schedules: Existing Schedule V items on ceded reinsurance, cash and cash equivalent counterparty analysis, currency risk and concentration risk would be removed and replaced with new Schedules XVIII (Particulars of Ceded Reinsurance), XIX (Cash and Cash Equivalent Counterparty Analysis), XX (Currency Risk) and XXI (Concentration Risk).
• Gross premium disclosure: Schedule XVII would be amended so Class 3A insurers must disclose gross (as well as net) premiums written in relation to entities within the insurer's group structure.
• Terminology updates: References to 'a consolidated' basis throughout multiple schedules (I, II, IIA, III, IIIA, VI, XII) would be replaced with 'an EBS Valuation' basis, and various housekeeping/cross-reference corrections would be made.
• Proposed commencement: The amendment rules, if made, would come into operation on 1 January 2017 and apply to financial years commencing on or after that date.

As a consultation notice, the document does not itself impose binding obligations; it describes changes the Authority proposed to make and asks stakeholders to comment before the rules are finalised.

Key obligations

• Interested parties must submit comments on the proposed amendment rules to riskanalytics@bma.bm by 23 June 2016
• If finalised as proposed, Class 3A insurers would be required to report intra-group transactions using the expanded criteria in amended Schedule V paragraph (b)
• If finalised as proposed, Class 3A insurers would be required to complete new Schedules XVIII, XIX, XX and XXI covering ceded reinsurance, cash and cash equivalent counterparty analysis, currency risk and concentration risk, in place of the removed Schedule V sub-paragraphs
• If finalised as proposed, Class 3A insurers would be required to disclose gross premiums written by group entity under amended Schedule XVII

Applies to

Class 3A insurers

Deadlines

• 23rd June 2016: Deadline for submitting comments on the proposed amendment rules to riskanalytics@bma.bm
• 1 January 2017: Proposed effective date on which the amendment rules would come into operation and apply to financial years commencing on or after that date