2019 Year-End Long-Term Instructions Handbook

Summary

This is the Bermuda Monetary Authority's 2019 Year-End Long-Term Instructions Handbook, which provides detailed guidance for completing the Bermuda Capital and Solvency Return (the BSCR model) for Long-Term (life) insurers in Classes E, D and C, as well as reference to Class 4, 3B and 3A insurers and insurance groups. It explains how to calculate the Enhanced Capital Requirement (ECR) and Target Capital Level (TCL), and walks through each form, schedule and supporting document that must be completed and submitted as part of the annual 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 filing date.
• Return contents: The return includes the Insurer Information Sheet, AML and Sanctions Questionnaires, Financial Condition Report, Forms 1SFS/2SFS/8SFS/4EBS, and numerous supporting schedules (risk management, fixed income, long-term insurance data, variable annuity, CISSA, eligible capital, solvency, ceded reinsurance, currency and concentration risk, among others).
• Declaration and sign-off: The capital and solvency return declaration must be signed and dated by two Directors and the insurer's principal representative, with the signed declaration attached to the submission.
• Electronic submission: Insurers may file electronically via the embedded submit macro; otherwise both electronic and printed versions must be forwarded to the BMA, and the return must not be altered or modified.
• 2019 transitional schedules: For year-end 2019, insurers must complete both the 2018 and 2019 methodology for Schedules IIB, IIC, IID, IIE, IIF, XXA, XXIA and XXIII, unless they obtain BMA permission (via email to RiskAnalytics@bma.bm) to use only the 2019 methodology.
• Capital shortfall consequences: If an insurer's eligible capital does not cover its Target Capital Level, it faces additional reporting requirements, enhanced monitoring, and must submit a remediation plan to restore capital above the TCL.
• Recordkeeping: Work papers and supporting documents used to prepare the BSCR submission must be retained and made available for BMA examination on request.

The handbook is an instructional/form document supporting statutory filing obligations set out under the Insurance Act 1978 and related Prudential Standard Rules; it does not itself create new statutory requirements beyond directing insurers how to comply with the existing capital and solvency return filing obligation.

Key obligations

• 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 filing date.
• Insurers must not alter or modify the capital and solvency return or any part of it.
• The capital and solvency return declaration must be signed and dated by two Directors and the insurer's principal representative, and the signed declaration attached to the submission.
• Work papers and supporting documents used to prepare the BSCR submission must be retained and kept available for BMA examination.
• For the 2019 year-end, insurers must complete both the 2018 and 2019 methodology for Schedules IIB, IIC, IID, IIE, IIF, XXA, XXIA and XXIII unless BMA grants permission to use only the 2019 methodology (via email request to RiskAnalytics@bma.bm).
• If an insurer's eligible capital resources do not cover its Target Capital Level, it must submit a remediation plan to the BMA to restore capital above the TCL.

Applies to

Class 4 insurers, Class 3B insurers, Class 3A insurers, Class E insurers, Class D insurers, Class C insurers, Insurance Groups (Long-Term)

Deadlines

• on or before its filing date: Deadline for submitting the completed capital and solvency return to the BMA (insurer-specific filing date, not a fixed calendar date in this document).