Notice - Bermuda Long-term Insurance Market Analysis and Stress Testing Report (2024-01-24)

Summary

This is a BMA notice announcing publication of an inaugural Bermuda Long-term Insurance Market Analysis and Stress Testing Report. It is informational in nature, summarising macroprudential analysis of Bermuda's commercial long-term (life and annuity) insurance sector and referencing earlier regulatory enhancements, rather than imposing new direct requirements.

• Background enhancements referenced: Prior approval required for long-term block reinsurance transactions, tailored asset reporting, enhancements to technical provisions and BSCR calculation methods (lapse and expense capital charges), and an educational paper on Private Equity insurers.
• Report content: Overview of sector growth (2.2% asset increase, -1.1% gross written premium), business mix, geographic concentration of reserves (US over 60%, then Asia), investment allocation (55.7% corporate bonds, 77.3% investment-grade), and a median solvency ratio of 261% at year-end 2022.
• Stress and liquidity testing: Results of macro-level stress tests and a pilot liquidity study showing companies held adequate liquidity, with the liquidity stress test framework still under development.
• Future reporting plans: BMA intends to expand future reports with more comparison years, new Capital and Solvency Return data, deeper asset and stress-test insights, and new or enhanced stress scenarios.

The notice itself does not create new compliance deadlines for insurers beyond noting that previously announced BSCR and technical provisions enhancements take effect 31 March 2024. It mainly serves to publish the report and outline BMA's ongoing macroprudential monitoring approach for the long-term insurance market.

Applies to

commercial long-term (life and annuity) insurers, Private Equity (PE) insurers

Deadlines

• 31 March 2024: Previously announced enhancements to technical provisions calculation and BSCR computation (lapse and expense capital charges) come into force.