2021 Year-End Insurance Group Instructions Handbook

Summary

This is the BMA's 2021 year end Instruction Handbook for completing the Bermuda Capital and Solvency Return (BSCR) for insurance groups. It is a technical guidance and forms document explaining how to populate the BSCR model, its schedules, forms and supporting attachments used to calculate an insurance group's Enhanced Capital Requirement (ECR) and Target Capital Level (TCL) under the Prudential Standard 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.
• What the return calculates: The BSCR model produces the ECR (the higher of the BSCR model and any approved internal capital model, subject to being at least the Minimum Margin of Solvency) and the TCL (120% of ECR); shortfalls against TCL trigger enhanced monitoring and a remediation plan requirement.
• Contents and schedules: The return comprises the Cover Sheet, Solvency Certificate, Financial Condition Report, Forms 1, 2, 8 and 1EBS, and numerous supporting schedules (investments, loss provisions, premiums, risk management, group structure, intra-group transactions, catastrophe risk, eligible capital, currency and concentration risk, among others).
• 2021 year-end specific requirement: For the 2021 year-end, insurance groups must complete schedules under both the 2018 and 2019 year-end BSCR methodologies included in the latest model release, unless they obtain BMA permission (by email request to RiskAnalytics@bma.bm) to complete only the 2019 methodology.
• Submission mechanics: Filing may be electronic only via the model's Submit macro (from the 2019 year-end onward); otherwise both electronic and printed versions are required. Groups must not alter the return format and should retain work papers for BMA review.
• Declaration and attachments: The capital and solvency return declaration must be signed and dated by two directors (one of whom may be the CEO) and either the chief risk officer or chief financial officer of the parent company; audited financial statements and the Financial Condition Report (per the Insurance (Public Disclosure) Rules 2015) must be attached.

The handbook itself is instructional guidance rather than a standalone legal instrument; the underlying obligations derive from the Insurance Act 1978, Prudential Standard Rules, the Insurance (Group Supervision) Rules 2011 and the Insurance (Public Disclosure) Rules 2015, which this handbook explains how to satisfy through the BSCR model.

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.
• For the 2021 year-end, insurance groups must complete BSCR schedules under both the 2018 year-end methodology and the 2019 year-end methodology, unless BMA permission is obtained to file only the 2019 methodology (via email request to RiskAnalytics@bma.bm).
• The capital and solvency return declaration must be signed and dated by two directors (one may be the CEO) and either the chief risk officer or chief financial officer of the parent company.
• Insurance groups must attach a single combined document of audit report, financial statements and notes, and must include the Financial Condition Report as required under section 3 of the Insurance (Public Disclosure) Rules 2015.
• Work papers and supporting documents used to prepare the BSCR submission must be retained and made available for BMA examination on request.
• Insurance groups must not alter or modify the capital and solvency return form.
• If the ECR ratio falls below the Target Capital Level, the insurance group must submit a remediation plan to restore capital above the TCL and is subject to additional reporting and enhanced monitoring.
• Insurance groups should review validation checks prior to submission and provide a comment explaining any acknowledged validation errors on the Submission tab.

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 an insurer or insurance group to submit the completed capital and solvency return to the BMA.
• 2021 year-end: Reporting period covered by this handbook; groups must complete both 2018 and 2019 year-end BSCR methodology schedules for this year-end unless permission is granted to use only the 2019 methodology.