2018 Group Capital and Solvency Return Instructions Handbook

Summary

This is the Bermuda Monetary Authority's instruction handbook for the 2018 Group Capital and Solvency Return (GSCR), the annual filing that insurance groups and certain classes of insurer use to calculate their Enhanced Capital Requirement (ECR) and Target Capital Level (TCL) under the Bermuda Solvency Capital Requirement (BSCR) model. It sets out line by line guidance for completing each form and schedule in the return, rather than imposing new obligations beyond the existing statutory filing requirement.

• 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.
• Core content: The return includes the Cover Sheet, Solvency Certificate, Financial Condition Report, Forms 1, 2, 8 and 1EBS, and numerous supporting schedules covering investments, loss and premium provisions, risk management, group structure, intra-group transactions, catastrophe risk, regulated and unregulated entities, group minimum margin of solvency, and eligible capital.
• Purpose of ECR and TCL: The ECR is calculated as the higher of the BSCR model result or an approved internal capital model, and must be at least equal to the Minimum Margin of Solvency; the TCL is 120 percent of the ECR, and failure to hold eligible capital above the TCL triggers additional reporting, enhanced monitoring and a required remediation plan.
• Submission mechanics: Both electronic and printed versions of the completed return must be forwarded to the BMA by the filing date, using the BSCR model without alteration, and the declaration must be signed and dated by two directors (one may be the CEO) plus either the CRO or CFO of the parent company.
• Record-keeping: Work papers and supporting documents used to prepare the BSCR submission should be retained and made available to the BMA on request.
• Forward-looking schedules: Certain new schedules (IIB, IIC, IID, IIE, IIF, IVD, IVE, XXA, XXIA, XXIII) are included for informational purposes only in the 2018 filing and are not required until the 2019 year-end BSCR methodology.

The handbook is primarily a technical completion guide rather than a standalone source of new legal obligations; the underlying filing duty and capital requirements derive from the Insurance Act 1978, the Insurance (Group Supervision) Rules 2011, and related Prudential Standard Rules referenced throughout.

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.
• Both an electronic version and a printed version of the capital and solvency return must be forwarded to the BMA by the specified filing date.
• Insurance groups must not alter or modify the capital and solvency return template.
• The capital and solvency return 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 of the parent company, with the original sign-off submitted alongside the printed return.
• Work papers and documents used to prepare the BSCR submission must be retained and made available for examination by the BMA if requested.
• Insurance groups must review validation checks in the Contents tab prior to submission and acknowledge any errors, including a comment on the Submission tab explaining the check.
• Where the ECR/TCL is not met, the insurance group must submit a remediation plan to restore capital above the Target Capital Level and is subject to additional reporting and enhanced monitoring.

Applies to

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

Deadlines

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