Notice - Insurance (Prudential Standards) (Insurance Group Solvency Requirement) Amendment Rules 2015

Summary

This is a Bermuda Monetary Authority notice and draft rules proposing amendments to the Insurance (Prudential Standards) (Insurance Group Solvency Requirement) Rules 2011. The changes implement the Economic Balance Sheet (EBS) framework for insurance groups, replacing the existing statutory balance sheet (Form 1) with a new Form 1EBS and introducing a new Group Actuary's Opinion requirement on EBS technical provisions.

• New Schedule XIV: Introduces the Group Statutory Economic Balance Sheet (Form 1EBS), which becomes the basis for calculating the group Bermuda Solvency Capital Requirement (BSCR).
• New Schedule XV: Introduces initial requirements for the Group Actuary's Opinion on the EBS technical provisions, including best estimates, risk margin, and commentary on assumptions and uncertainty.
• Consequential amendments: Numerous other Schedules (I, II, IIA, III, V, VI, VII, VIII, VIIIA, XIA, XIII) and defined terms are amended to replace references to 'Form 1' and 'available statutory capital and surplus' with 'Form 1EBS' and 'available statutory economic capital and surplus'.
• Schedule XIII replaced: The Schedule of Group Eligible Capital is repealed and replaced to align capital tier calculations with the new EBS figures.
• Group Actuary Guidance Note: The Authority states this will require significant revisions, to be subject to further consultation.

The Authority proposed these amendments become effective for submissions made after the end of the financial year starting on or after 1 January 2016, though the draft rules text itself states a commencement date of 31 December 2016. As a consultation notice, this document invited comments from interested parties and does not itself impose binding obligations unless and until finalised.

Key obligations

• Interested parties were invited to submit comments on the draft Rules to policy@bma.bm by 27 February 2015
• Once effective, insurance groups subject to group supervision must prepare and submit a Group Statutory Economic Balance Sheet (Form 1EBS) in place of the former Form 1
• Once effective, the group actuary must provide a Group Actuary's Opinion on the EBS technical provisions, including best estimates, risk margin calculations, and commentary on assumptions, uncertainty, and conflicts of interest, as set out in new Schedule XV
• Once effective, the group's schedule of eligible capital (Schedule XIII) must be calculated using the new Table 17 based on Form 1EBS figures

Applies to

insurance groups, registered insurers subject to group supervision, group actuaries

Deadlines

• 27th February 2015: Deadline for interested parties to submit comments on the draft Amendment Rules to policy@bma.bm
• submissions made following the end of the financial year starting on or after 1st January 2016: Proposed effective date for the EBS-related amendments to apply to group submissions
• 31 December 2016: Commencement date stated in the draft Rules text (paragraph 18)

Related documents

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