2024 Interim Long-Term Instructions Handbook

Summary

This is the Bermuda Monetary Authority's 2024 Interim Instructions Handbook for the Bermuda Capital and Solvency Return (BSCR), specifically covering Class E, Class D and Class C (long-term/life) insurers. It is a detailed how-to guide explaining how to complete, populate and submit the annual capital and solvency return, including the BSCR model, supporting schedules, the Financial Condition Report, and the Scenario-Based Approach for variable annuity business. It does not itself create new capital rules but operationalises requirements already set out in the Insurance Act 1978, the Prudential Standard Rules, and related BMA rules.

• 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 return is used to compute the insurer's Enhanced Capital Requirement (ECR) and Target Capital Level (TCL) using the BSCR model (higher of BSCR and any approved internal model, subject to the Minimum Solvency Margin).
• Submission format: Insurers filing for 2019 year-end and beyond may submit electronically only via the model's 'Submit' macro; otherwise both electronic and printed copies must be forwarded to the BMA by the filing date.
• Required components: Depending on class and consolidation basis, insurers must complete forms 1SFS, 2SFS, 8SFS, 4EBS, the Insurer Information Sheet, AML and Sanctions Questionnaires, the Financial Condition Report, and numerous numbered schedules (e.g. Schedules II, V, VI, VII, IX, XII, XVI, XVII, XVIII to XXIII).
• 2024-specific dual methodology: For the 2024 year-end, insurers must complete certain schedules (IIB, IIC, IID, IIE, IIF, XXA, XXIA, XXIII and VIIA, VIIB) under both the older and newer year-end methodologies, unless they obtain BMA permission by email to use only the newer methodology.
• Declaration and attachments: The Capital and Solvency Return Declaration must be signed and dated by two directors and the insurer's principal representative and attached; audited financial statements, the Declaration of Compliance under section 15A of the Act, and the Financial Condition Report under the Insurance (Public Disclosure) Rules 2015 must also be attached.
• Recordkeeping: 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 sets out detailed instructions for the Scenario-Based Approach (SBA), including attestations, model change policy, and approval processes for assets and derivatives used in variable annuity risk calculations, plus a glossary of defined terms used throughout the return.

Key obligations

• Every Class 4, Class 3B, Class 3A, Class E, Class D and Class C insurer and Insurance Group must submit a completed capital and solvency return to the BMA on or before its specified filing date.
• Insurers must complete the Insurer Information Sheet in its entirety and submit the Financial Condition Report as required under section 3 of the Insurance (Public Disclosure) Rules 2015.
• 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.
• For the 2024 year-end, insurers must complete both the 2018/2019 year-end methodology and the 2019/2024 year-end methodology for specified schedules unless they obtain BMA permission (via email to RiskAnalytics@bma.bm) to use only the newer methodology.
• 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 not alter or modify the capital and solvency return or any part of it.
• Insurers should review validation checks prior to submission, acknowledge any errors via 'Confirm Message', and include an explanatory comment on the Submission tab.

Applies to

Class E insurers, Class D insurers, Class C insurers, Class 4 insurers, Class 3B insurers, Class 3A 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 by its individually specified filing date.
• 2024 year-end: Insurers must complete dual (old and new) methodology schedules for the 2024 year-end submission, unless permission is obtained to use only the newer methodology.