2022 Year-End Insurance Group Instructions Handbook

Summary

This is the Bermuda Monetary Authority's instruction handbook for completing the 2022 year end Capital and Solvency Return (the BSCR model) for insurance groups. It is a detailed technical filing guide covering every form and schedule in the return, rather than a stand alone rule, and it explains how the group's Enhanced Capital Requirement (ECR), Target Capital Level (TCL) and Bermuda Solvency Capital Requirement (BSCR) are calculated and reported.

• 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: Cover Sheet, Solvency Certificate, Financial Condition Report, Forms 1, 2, 8 and 1EBS, and numerous supporting schedules covering investments, reserves, premiums, risk management, group structure, intra group transactions, catastrophe risk, eligible capital and solvency self assessment.
• Capital calculations: ECR is calculated at year end as the higher of the BSCR model and an approved internal capital model, and must equal or exceed the Minimum Solvency Margin; TCL is 120% of ECR.
• Consequence of shortfall: Groups that fail to hold eligible capital to cover the TCL face additional reporting requirements, enhanced monitoring, and must submit a capital remediation plan.
• 2022 specific methodology: For the 2022 year end only, groups must complete certain schedules (IIB, IIC, IID, IIE, IIF, IVD, IVE, XXA, XXIA, XXIII) under both the 2018 and 2019 year end methodologies, unless the BMA grants permission by email to use the 2019 methodology only.
• Submission mechanics: Filing may be electronic only (via the model's submit macro) for 2019 year end and beyond; otherwise both an electronic and a printed version must be sent to the BMA by the filing date, and the return must not be altered.
• Sign off: The capital and solvency return declaration must be signed and dated by two directors (one may be the chief executive) and either the chief risk officer or chief financial officer of the parent company.

The handbook also requires groups to retain work papers and supporting documents for BMA examination, and to attach financial statements and the Financial Condition Report (required under section 3 of the Insurance (Public Disclosure) Rules 2015) as single consolidated attachments within the return.

Key obligations

• Every Class 4, Class 3B, Class 3A, Class E, Class D and Class C insurer and Insurance Group shall submit a completed capital and solvency return to the BMA on or before its filing date.
• The ECR must be calculated at year end as the higher of the BSCR model and an approved internal capital model, and must equal or exceed the Minimum Solvency Margin.
• Insurance groups whose eligible capital does not cover the Target Capital Level (120% of ECR) must submit to additional reporting requirements, enhanced monitoring, and a remediation plan to restore capital above the TCL.
• The capital and solvency return, including the BSCR model, must not be altered or modified by the filer.
• For 2019 year end and beyond, insurers may file electronically only via the model's submit macro; otherwise both electronic and printed versions must be submitted by the filing date.
• For the 2022 year end, insurance groups must complete Schedules IIB, IIC, IID, IIE, IIF, IVD, IVE, XXA, XXIA and XXIII under both the 2018 and 2019 year end methodologies, unless permission to use only the 2019 methodology is obtained by emailing RiskAnalytics@bma.bm.
• Work papers and documents used to prepare the BSCR submission must be retained and made available to the BMA on request.
• The capital and solvency return declaration must be signed and dated by two directors (one of whom may be the chief executive) and either the chief risk officer or chief financial officer of the parent company.
• The Financial Condition Report must be attached as required under section 3 of the Insurance (Public Disclosure) Rules 2015.
• Attachments for General Purpose Financial Statements (audit report, financial statements and notes) must be combined into one document, and any additional Financial Condition Report material must go in the Other Attachments section.

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 the completed capital and solvency return to the BMA on or before its specified annual filing date.