2021 Year-end General Business Handbook

Summary

This is the Bermuda Monetary Authority's 2021 Instruction Handbook for the Capital and Solvency Return (the BSCR model), covering Class 4, Class 3B and Class 3A general business insurers (and referencing Class E, D, C and Insurance Groups). It explains how to complete and submit the annual capital and solvency return used to calculate an insurer's Enhanced Capital Requirement (ECR) and Target Capital Level (TCL) under Rules made under section 6A of the Insurance Act 1978.

• 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.
• ECR and TCL: The ECR is calculated as the higher of the BSCR model and any approved internal capital model, and must be at least equal to the Minimum Margin of Solvency; the TCL is 120% of the ECR, and insurers are expected to hold eligible capital to cover it or face enhanced monitoring and remediation plan requirements.
• Submission method: Filing is via the BSCR model's embedded submit macro (electronic-only permitted from 2019 year-end onward, otherwise both electronic and printed copies are required); insurers must not alter the return template.
• Declarations and signatories: Class 4 and 3B insurers require the declaration to be signed by two directors (one may be the CEO) plus the CRO or CFO; Class 3A insurers require two directors plus the principal representative.
• Required attachments: Insurers must attach general purpose financial statements with audit report, a signed Declaration of Compliance under section 15A of the Insurance Act 1978, and a Financial Condition Report as required under section 3 of the Insurance (Public Disclosure) Rules 2015.
• Record retention: Work papers and supporting documents used to prepare the BSCR submission must be retained and made available to the BMA on request.
• Content covered: The handbook also details completion guidance for numerous supporting schedules (fixed income and equity investments, loss and premium provisions, catastrophe risk, risk management, eligible capital, currency and concentration risk, CISSA/CIRA, and others) feeding into the BSCR calculation.

The document is technical filing guidance rather than a standalone rule change; it operationalises existing statutory requirements for insurers to calculate and report their capital adequacy annually.

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.
• An insurer's ECR must be calculated at the end of its relevant year using the higher of the BSCR model and an approved internal capital model, and must be equal to or exceed the Minimum Margin of Solvency.
• Insurers whose eligible capital falls below the Target Capital Level must submit a remediation plan to restore capital above the TCL and are subject to additional reporting and enhanced monitoring.
• Insurers 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 CEO) and either the CRO or CFO for Class 4 and 3B insurers, or by two Directors and the principal representative for Class 3A insurers.
• Insurers must attach a signed Declaration of Compliance as required under section 15A of the Insurance Act 1978.
• Insurers must include a Financial Condition Report as required under section 3 of the Insurance (Public Disclosure) Rules 2015.
• Work papers and documents used to prepare the BSCR submission must be retained and kept available for examination by the BMA.

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 for submitting the completed annual capital and solvency return to the BMA.