Notice - Guidance Note Group Actuary's Opinion (2013-11-08)

Summary

This is a Bermuda Monetary Authority notice and accompanying Guidance Note (November 2013) explaining the Authority's revised expectations for the Group Actuary's Opinion (GAO), which insurance groups must obtain on the adequacy of their group insurance reserves. It replaces a June 2012 consultation draft and reflects industry feedback and forthcoming changes under the Insurance (Group Supervision) Amendment Rules 2013.

• Scope: Applies to Bermuda insurance groups subject to the Insurance (Group Supervision) Rules 2011, and to the natural persons appointed as Group Actuaries (GAs) for those groups.
• Appointment: The designated insurer of an insurance group must appoint a Group Actuary, subject to Authority approval, to opine on the group's Insurance Reserves (Line 17(d) General Business and/or Line 27(d) Long-Term Business).
• Approval process: Sets out the documentation required for GA approval, including a cover letter, letter of resignation from any outgoing GA, letter of undertaking and acceptance from the candidate, resume, and evidence of good standing with a recognised actuarial body.
• Fit and proper criteria: Describes the qualifications, professional membership, continuing professional development, experience and independence/objectivity requirements a GA must meet, and roles that generally disqualify a candidate (e.g. CEO, CFO, director of the group).
• Ongoing duties: Requires the insurance group to notify the Authority forthwith of any material changes to information in the GA's approved application, and requires the GAO to be provided annually with the Statutory Financial Return.
• Opinion content: Details expected content of the GAO, including reliance on other actuaries' opinions, materiality and adverse deviation assessments, work papers to be retained and made available on request, and signature requirements.

The notice portion also records the Authority's consultation timeline: the revised Guidance Note was expected to be published in January 2014, with GA approval applications to be accepted during 2014 ahead of the first GAO filings (based on year-end 2014 reserves) due in May 2015. This document is now marked as superseded by later guidance.

Key obligations

• The designated insurer of an insurance group must appoint a Group Actuary, and that appointment is subject to approval by the Authority.
• The insurance group must apply in writing to the Authority for approval of its candidate(s) for Group Actuary.
• The insurance group must forthwith provide written notice to the Authority of any material changes to information included in the GA application after approval.
• The Group Actuary's Opinion must be provided annually together with the group's Statutory Financial Return.
• The Group Actuary must undertake to perform functions in accordance with the Group Rules, the group's accounting standards, and the professional standards of their official actuarial body, and must meet continuing professional development requirements.
• The Group Actuary must provide a letter of resignation to the group upon leaving the role, as committed to at appointment.
• The Group Actuary's Opinion must include specified sections (e.g. materiality/adverse deviation discussion, reliance on other actuaries, work papers, signature) as set out in the Guidance Note.

Applies to

insurance groups, designated insurers, Group Actuaries, insurers, reinsurers and insurer/reinsurer Bermuda groups

Deadlines

• 6th December 2013: Deadline for industry stakeholders to send comments on the revised Guidance Note to policy@bma.bm.
• 1st January 2014: Expected effective date of the Insurance (Group Supervision) Amendment Rules 2013.
• January 2014: Expected publication date of the revised Guidance Note on the Group Actuary's Opinion.
• during 2014: Period during which the Authority planned to receive applications for Group Actuary approvals.
• May 2015: Due date for the first GAO filings, reflecting held Insurance Reserves valued at year-end 2014.