Notice - Insurance (Prudential Standards) (Insurance Group Solvency Requirement) Amendment Rules 2012 (2012-11-14)

Summary

This is a BMA notice summarizing industry feedback on the draft Insurance (Prudential Standards) (Insurance Group Solvency Requirement) Amendment Rules 2012 and confirming the Authority's near-final proposals following the June 2012 consultation. It applies to insurance groups and designated insurers subject to Bermuda's group solvency return regime, and describes changes to the declaration requirements, currency reporting, and several technical schedules in the underlying 2011 Rules.

• Declaration signatories: The group capital and solvency return declaration must be signed by two directors of the insurer (one of whom may be the chief executive) and either the chief risk officer or chief financial officer of the parent company.
• Bermuda dollar reporting: Where a group maintains accounts in a foreign currency, all amounts in the group capital and solvency return must be converted and shown in Bermuda dollar equivalents, using the bank exchange rate on the last day of the group's financial year (US dollar to Bermuda dollar is treated as 1:1).
• Intra-group transaction disclosure: Amended paragraph 8 and Schedule V expand disclosure requirements for material intra-group transactions, intra-group reinsurance/retrocession arrangements, and the ten largest unaffiliated counterparty exposures exceeding 10% of statutory capital and surplus.
• Schedule revisions: Schedules I, IVB, V, IX and XII are revoked and replaced, and Schedules VII and VIII are amended to delete the 'Net Premiums Written' column.
• Housekeeping changes: Minor amendments align the Rules with the Insurance Act 1978 and other prudential standard rules.

The Authority states these proposals are final unless substantive policy issues warrant further review, and invited comments by 7 December 2012 to policy@bma.bm. The draft Rules were set to come into operation on 1 January 2013 once made.

Key obligations

• Designated insurers must ensure the group capital and solvency return declaration is signed by two directors (one of whom may be the chief executive) and either the parent company's chief risk officer or chief financial officer.
• Groups reporting accounts in a foreign currency must convert and state all amounts in the group capital and solvency return in Bermuda dollar equivalents using the specified exchange rate methodology.
• Designated insurers must disclose material intra-group transactions, intra-group reinsurance/retrocession arrangements, and the ten largest unaffiliated counterparty exposures exceeding 10% of statutory capital and surplus as part of the group return.
• Industry stakeholders wishing to comment on the final draft Rules must submit comments to policy@bma.bm by 7 December 2012.

Applies to

designated insurers, insurance groups, parent companies of insurance groups

Deadlines

• 7th December 2012: Deadline for industry comments on the draft Rules, to be sent to policy@bma.bm
• 1 January 2013: Proposed commencement date for the Insurance (Prudential Standards) (Insurance Group Solvency Requirement) Amendment Rules 2012

Related documents

• This document amends Insurance (Prudential Standards) (Insurance Group Solvency Requirement) Rules 2011