2019 Year-End General Business Instructions Handbook

Summary

This is the Bermuda Monetary Authority's 2019 Instruction Handbook for completing the Bermuda Capital and Solvency Return (BSCR model), which insurers use to calculate their Enhanced Capital Requirement (ECR) and Target Capital Level (TCL). It provides line by line guidance for Class 4, Class 3B, Class 3A insurers and Insurance Groups on filling out the various forms and schedules that make up the annual capital and solvency return.

• Annual filing: Every Class 4, Class 3B, Class 3A, Class E, Class D and Class C insurer and Insurance Group must submit a completed capital and solvency return to the BMA on or before its specified filing date.
• Capital calculation: The ECR is calculated as the higher of the BSCR model output and any approved internal capital model, subject to being no less than the Minimum Margin of Solvency; the TCL is 120% of the ECR.
• Consequences of shortfall: Failure to hold eligible capital covering the TCL triggers additional reporting requirements, enhanced monitoring, and submission of a remediation plan.
• Submission mechanics: Insurers must file electronically via the model's submit macro, or provide both electronic and printed versions if not using the macro, and must not alter the return.
• Declaration and sign off: The capital and solvency return declaration must be signed by two Directors and either the CRO/CFO (Class 4 and 3B) or by two Directors and the principal representative (Class 3A), and included as an attachment.
• Recordkeeping: Work papers and supporting documents used to prepare the BSCR submission must be retained and made available to the BMA on request.
• 2019 transitional schedules: For 2019 year-end, insurers must complete certain schedules (IIB, IIC, IID, IIE, IIF, IVD, IVE, XXA, XXIA, XXIII) under both the 2018 and 2019 methodologies unless permission is obtained from the BMA to file only under the 2019 methodology.

The bulk of the document (Sections B through E) sets out detailed completion instructions for each schedule, statutory statement form, risk category (fixed income, equity, currency, concentration, premium, reserve, credit, catastrophe risk) and a glossary of defined terms, but does not itself impose additional obligations beyond the filing and governance requirements summarized above.

Key obligations

• Class 4, Class 3B, Class 3A, Class E, Class D and Class C insurers and Insurance Groups must submit a completed capital and solvency return to the BMA on or before their specified filing date.
• Insurers must calculate their ECR as the higher of the BSCR model result and any approved internal capital model, ensuring it is not less than the Minimum Margin of Solvency.
• Insurers failing to hold eligible capital resources covering the Target Capital Level must submit a remediation plan to restore capital above the TCL and are subject to enhanced monitoring and additional reporting.
• Insurers must file the return electronically using the BSCR model's submit macro, or otherwise submit both electronic and printed versions by the filing date, and must not alter or modify the return.
• The capital and solvency return declaration must be signed and dated by two Directors and either the chief risk officer or chief financial officer (Class 4 and 3B insurers) or by two Directors and the principal representative (Class 3A insurers), and included in the attachments.
• Work papers and supporting documents used to prepare the BSCR submission must be retained and made available to the BMA for examination if requested.
• For the 2019 year-end, insurers must complete specified schedules under both the 2018 and 2019 methodologies unless they obtain BMA permission via email to complete only the 2019 methodology.

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: Deadline by which each insurer or insurance group must submit its completed capital and solvency return to the BMA.
• 2019 year-end: Reporting period for which insurers must complete specified schedules under both 2018 and 2019 methodologies unless BMA grants permission to use only the 2019 methodology.