2019 Year-End Insurance Group Instructions Handbook

Summary

This is the Bermuda Monetary Authority's 2019 instruction handbook explaining how insurance groups must complete the Bermuda Capital and Solvency Return (the BSCR model), used to calculate an insurance group's Enhanced Capital Requirement (ECR) and Target Capital Level (TCL) under Prudential Standard Rules made under section 6A of the Insurance Act 1978. It sets out the forms, schedules and supporting information required for the 2019 year-end filing, and gives line-by-line guidance for completing them.

• 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.
• Capital calculations: The ECR is calculated at year end as the higher of the BSCR model result and an approved internal capital model, and must be at or above 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.
• Required components: The return includes Forms 1, 2, 8 and 1EBS, the Cover Sheet, Solvency Certificate, Financial Condition Report, and numerous numbered Schedules (II through XXIII) covering investments, reinsurance, premiums, reserves, risk management, group structure, catastrophe risk and eligible capital, with different requirements on a consolidated versus Economic Balance Sheet (EBS) basis.
• 2019 transitional methodology: For certain schedules (IIB, IIC, IID, IIE, IIF, IVD, IVE, XXA, XXIA, XXIII), insurance groups must complete both the 2018 year-end and 2019 year-end methodologies unless they obtain BMA permission by email to use the 2019 methodology only.
• Submission mechanics: Groups may file electronically only if using the embedded submit macro; otherwise both an electronic and printed version must be forwarded to the BMA by the specified filing date, and the return must not be altered or modified.
• Sign-off: The capital and solvency return declaration must be signed and dated by two directors of the parent company, one of whom may be the CEO, and either the chief risk officer or chief financial officer.
• Recordkeeping: Work papers and documents used to prepare the BSCR submission must be retained and made available to the BMA for examination if requested.

The handbook is primarily technical guidance for accounting, finance and actuarial staff preparing the annual group solvency filing, rather than a standalone legal instrument, but it operationalises binding filing and capital-adequacy obligations under the Insurance Act 1978 and related Rules.

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.
• The ECR must be calculated at year end as the higher of the BSCR model and any approved internal capital model, and must be equal to or exceed the Minimum Margin of Solvency.
• Insurance groups are expected to hold eligible capital resources covering the Target Capital Level (120% of ECR); failure to do so requires additional reporting, enhanced monitoring, and submission of a remediation plan.
• Groups must complete all applicable Forms and Schedules (Cover Sheet, Solvency Certificate, Financial Condition Report, Forms 1/2/8/1EBS, and Schedules II-XXIII) as indicated for consolidated and/or EBS reporting.
• For the 2019 year-end, groups must complete both the 2018 and 2019 methodology versions of specified schedules unless BMA grants permission via email to file the 2019 methodology only.
• Submissions must be filed electronically via the BSCR model's submit macro, or, if not, both electronic and printed versions must be forwarded to the BMA by the filing date; the return must not be altered or modified.
• The capital and solvency return declaration must be signed and dated by two directors of the parent company (one may be the CEO, plus either the CRO or CFO).
• Work papers and supporting documents used to prepare the BSCR submission must be retained and made available to the BMA on request.

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: Deadline for submitting the completed capital and solvency return, specific to each insurer/group's designated filing date.