2021 Year-End Long-Term Instructions Handbook

Summary

This is the Bermuda Monetary Authority's 2021 year end instruction handbook for the Capital and Solvency Return (the BSCR model) applicable to Long-Term (life) insurers. It explains how to complete and submit the annual return used to calculate an insurer's Enhanced Capital Requirement (ECR), Target Capital Level (TCL) and Bermuda Solvency Capital Requirement (BSCR), and sets out the forms, schedules and attachments required.

• 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 covers: Includes the Insurer Information Sheet, AML and Sanctions questionnaires, Financial Condition Report, Forms 1SFS/2SFS/8SFS and 4EBS, and numerous BSCR schedules (II, IIA, IVB, V, VI, VII, VIII, VIIIA, IX, XII, XVI, XVII, XVIII, XIX, XX, XXI) depending on whether reporting is unconsolidated, consolidated or EBS basis.
• Submission method: For 2019 year end and beyond, insurers may file electronically only via the model's Submit macro; otherwise both an electronic and printed copy must be sent to the BMA by the filing date. Insurers must not alter or modify the return.
• Attachments required: General Purpose Financial Statements (audit report, financial statements and notes) in one document; a signed Declaration of Compliance as required 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.
• Declaration signatures: The capital and solvency return declaration must be signed and dated by two Directors and the insurer's principal representative, and included as an attachment.
• Record retention: Work papers and documents used to prepare the BSCR submission must be retained and kept available for examination by the BMA.
• 2021 specific transitional requirement: For the 2021 year end, insurers must complete both the 2018 year end methodology and the 2019 year end methodology for Schedules IIB, IIC, IID, IIE, IIF, XXA, XXIA and XXIII, unless they obtain BMA permission via email to use the 2019 methodology only.

The handbook is an operational guidance document rather than a standalone rule; it operationalises requirements already imposed under the Insurance Act 1978, the Insurance Accounts Rules 2016, the Prudential Standard Rules made under section 6A of the Act, and the Insurance (Public Disclosure) Rules 2015. Failure to maintain eligible capital above the TCL triggers additional reporting, enhanced monitoring, and a remediation plan requirement.

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.
• 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 included in the attachments section.
• Insurers must attach a General Purpose Financial Statements document (audit report, financial statements and notes) as one combined document.
• Insurers must include 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 supporting documents used to prepare the BSCR submission must be retained and made available to the BMA on request.
• For the 2021 year end, insurers must complete both the 2018 and 2019 year end methodologies for specified schedules unless BMA grants permission (via email request) to use the 2019 methodology only.
• If an insurer's eligible capital falls below the Target Capital Level, it must submit a remediation plan to restore capital and is subject to additional reporting and enhanced monitoring.

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: Each insurer/insurance group must submit the completed capital and solvency return to the BMA on or before its specified (insurer-specific) filing date.