2020 Year-End Insurance Group Instructions Handbook

Summary

This is the Bermuda Monetary Authority's 2020 Instruction Handbook for the Capital and Solvency Return filed by insurance groups. It explains how to complete the Bermuda Solvency Capital Requirement (BSCR) model and related schedules used to calculate an insurance group's Enhanced Capital Requirement (ECR) and Target Capital Level (TCL), and sets out submission mechanics for the annual group return.

• 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 by its filing date.
• What the return covers: Cover Sheet, Solvency Certificate, Financial Condition Report, Forms 1, 2, 8 and 1EBS, and numerous BSCR schedules (investments, loss provisions, premiums, risk management, reinsurance, group structure, catastrophe risk, eligible capital, concentration and currency risk, etc).
• 2020 year end specifics: For schedules IIB, IIC, IID, IIE, IIF, IVD, IVE, XXA, XXIA and XXIII, groups must complete both the 2018 year end and 2019 year end methodologies unless they obtain BMA permission (via email to RiskAnalytics@bma.bm) to use only the 2019 methodology.
• Submission method: Electronic filing only is permitted for 2019 year end and beyond if submitted via the embedded 'submit' macro; otherwise both electronic and printed copies must be forwarded by the filing date. Groups must not alter the return format.
• 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.
• Record keeping: Work papers and supporting documents used to prepare the BSCR submission must be retained and made available to the BMA on request.
• Capital shortfall consequence: If eligible capital resources fall below the Target Capital Level, the group faces additional reporting requirements, enhanced monitoring, and must submit a remediation plan to restore capital above the TCL.

The handbook is technical guidance supporting an existing statutory filing obligation under the Insurance Act 1978 and the Prudential Standard Rules and Insurance (Group Supervision) Rules 2011; it does not itself create new statutory requirements but operationalises how designated insurers must compute and submit the group BSCR data.

Key obligations

• Every Class 4, Class 3B, Class 3A, Class E, Class D and Class C insurer, and each Insurance Group, must submit a completed capital and solvency return to the BMA on or before its specified filing date.
• For the 2020 year end, insurance groups must complete both the 2018 year end and 2019 year end methodologies for Schedules IIB, IIC, IID, IIE, IIF, IVD, IVE, XXA, XXIA and XXIII, unless BMA grants permission by email request to complete only the 2019 methodology.
• Groups filing on paper (i.e. not using the electronic submit macro) must forward both an electronic and a printed version of the return to the BMA by the filing date.
• 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 of the parent company, one of whom may be the chief executive, and either the chief risk officer or chief financial officer.
• Work papers and supporting documents used to prepare the BSCR submission must be retained and made available for BMA examination on request.
• If a group's eligible capital falls below the Target Capital Level, it must submit a remediation plan to the BMA to restore capital above that level.

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 insurer/insurance group must submit its completed capital and solvency return to the BMA by its specified filing date.