2018 General Business Capital and Solvency Return Instructions Handbook

Summary

This is the BMA's 2018 instruction handbook explaining how Class 4, Class 3B and Class 3A general business insurers (and related insurance groups) must complete and submit the annual Bermuda Capital and Solvency Return, including the Bermuda Solvency Capital Requirement (BSCR) model used to calculate the Enhanced Capital Requirement (ECR) and Target Capital Level (TCL).

• Who must file: Every Class 4, Class 3B, Class 3A, Class E, Class D and Class C insurer, and every Insurance Group, must submit a completed capital and solvency return to the BMA on or before its filing date.
• What the return covers: The return includes statutory statement forms (1SFS, 2SFS, 8SFS, 1EBS), an Insurer Information Sheet, a Financial Condition Report, and numerous supporting schedules covering investments, reinsurance, premiums, loss reserves, catastrophe risk, eligible capital, concentration risk and other risk elements feeding into the BSCR model.
• Submission mechanics: Insurers must submit both an electronic and a printed version of the return, must not alter the template, should use the Contents/Import/Export/Attachments tabs as instructed, and should consult the BSCR E-Filing Manual for electronic filing issues.
• Sign-off requirements: For Class 4 and Class 3B insurers, the declaration must be signed by two directors (one may be the CEO) and either the chief risk officer or chief financial officer; for Class 3A insurers, by two directors and the principal representative. The original signed declaration must accompany the printed return.
• Record retention: Work papers and supporting documents used to prepare the BSCR submission must be retained and made available to the BMA on request.
• Capital adequacy consequences: Failure to hold eligible capital covering the TCL results in additional reporting requirements, enhanced monitoring, and a required remediation plan submission to the BMA.

The handbook is primarily a completion guide rather than a standalone rule; the underlying legal requirements derive from Prudential Standard Rules made under section 6A of the Insurance Act 1978 and the Insurance Accounts Rules 2016.

Key obligations

• Every Class 4, Class 3B, Class 3A, Class E, Class D and Class C insurer, and every Insurance Group, must submit a completed capital and solvency return to the BMA on or before its filing date.
• Insurers must submit both an electronic version and a printed version of the capital and solvency return, without altering or modifying the template.
• The printed return's declaration must be signed and dated by two Directors (one of whom may be the chief executive) and either the chief risk officer or chief financial officer for Class 4 and Class 3B insurers, or by two Directors and the insurer's principal representative for Class 3A insurers, and the original signed declaration must be submitted with the printed return.
• Work papers and supporting documents used to prepare the BSCR submission must be retained and kept available for examination by the BMA.
• If an insurer's eligible capital falls below the Target Capital Level, it must submit a remediation plan to the BMA to restore capital above the TCL.
• Insurers should review validation checks on the Contents tab prior to submission and include a comment explaining any flagged validation errors.

Applies to

Class 4 insurers, Class 3B insurers, Class 3A insurers, Class E insurers, Class D insurers, Class C insurers, Insurance Groups

Deadlines

• on or before its filing date: Each insurer/insurance group must submit its completed annual capital and solvency return to the BMA by its specified filing date.