2023 Year-End General Business Handbook

Summary

This is the Bermuda Monetary Authority's 2023 instruction handbook for completing the Capital and Solvency Return (the BSCR model), which insurers use to calculate their Enhanced Capital Requirement (ECR) and Target Capital Level (TCL) under the Prudential Standard Rules made under section 6A of the Insurance Act 1978. It is a technical guidance and form-completion manual rather than a standalone rule, walking preparers through each form, schedule and declaration required in the annual 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 on or before its filing date.
• What the return covers: Forms 1SFS, 2SFS, 8SFS and 1EBS, the Insurer Information Sheet, Financial Condition Report, Sanctions Questionnaire, and numerous supporting schedules (risk management, assets, loss reserves, premiums, catastrophe risk, eligible capital, solvency, ceded reinsurance, currency and concentration risk, etc.), varying by whether reporting is unconsolidated, consolidated or on an Economic Balance Sheet (EBS) basis.
• Declaration signing: For Class 4 and 3B insurers, the 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. For Class 3A insurers, it must be signed by two directors and the insurer's principal representative.
• Attachments: Insurers must attach audited financial statements, the signed Declaration of Compliance (required under section 15A of the Act), and the Financial Condition Report (required under section 3 of the Insurance (Public Disclosure) Rules 2015) via the model's Attachments tab.
• Record-keeping: Work papers and supporting documents used to prepare the BSCR submission must be retained and made available to the BMA on request.

The handbook also details the mechanics of the BSCR model itself (Import, Export, Contents/validation tabs, submission via the embedded macro or, where needed, printed copies) and provides a glossary of risk terms and detailed methodology for each risk module (fixed income, equity, interest rate, currency, concentration, premium, reserve, credit and catastrophe risk) used to derive the BSCR.

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 (BSCR) to the BMA on or before its filing date.
• Insurers must not alter or modify the capital and solvency return template.
• If filing electronically only, insurers must submit via the embedded 'submit' macro in the BSCR model; otherwise both electronic and printed versions must be forwarded to the BMA by the filing date.
• The signed capital and solvency return declaration must be included in the attachments section: for Class 4 and 3B insurers, signed by two directors (one may be CEO) and either the CRO or CFO; for Class 3A insurers, signed by two directors and the principal representative.
• Insurers must attach general purpose financial statements (audit report, financial statements and notes) as a single document.
• Insurers must include the signed Declaration of Compliance required under section 15A of the Insurance Act 1978.
• Insurers must include the Financial Condition Report required under section 3 of the Insurance (Public Disclosure) Rules 2015.
• Insurers must retain work papers and supporting documents used to prepare the BSCR submission and make them available to the BMA on request.
• Insurers must review validation checks in the model prior to submission and provide a comment on the Submission tab explaining any acknowledged validation errors.

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: Annual deadline by which every applicable insurer or insurance group must submit its completed capital and solvency return (BSCR) to the BMA.