Notice - Deferred Tax Asset Adjustment 2019 Year-End (2020-03-13)

Summary

This BMA notice informs insurers that the 2019 year-end Bermuda Solvency Capital Requirement (BSCR) models have been updated to remove the equity risk capital charge previously applied to Deferred Tax Assets (DTA) under the 'Other Tangible Assets' calculation. The change was needed for a small number of insurers holding DTA and is now reflected in the models posted on the Authority's website.

• Who is affected: Commercial general business insurers (Class 3A, 3B and 4), insurance groups, and commercial long-term insurers (Class C, D and E).
• What changed: The equity risk capital charge calculation for Other Tangible Assets no longer includes a charge on Deferred Tax Assets.
• No action needed: Insurers without DTA that already completed the BSCR models released on 20 December 2019 do not need to do anything further.
• Groups and long-term insurers: The DTA amendment was already incorporated into the updated models for insurance groups and Class C, D and E insurers released on 24 February 2020.
• Contact: Questions on this amendment or BSCR reporting generally should be directed to riskanalytics@bma.bm.

Key obligations

• Insurers with Deferred Tax Assets should use the updated BSCR models (posted on the BMA website) reflecting the removed DTA capital charge for their 2019 year-end filing.
• Insurers without DTA who already completed the prior (20 December 2019) BSCR models need take no further action.

Applies to

commercial general business insurers (Class 3A, 3B, 4), insurance groups, commercial long-term insurers (Class C, D, E)

Deadlines

• 20 December 2019: Date the prior BSCR models (without the DTA amendment) were released; insurers without DTA who completed these need no further action.
• 24 February 2020: Date the updated models for insurance groups and commercial long-term insurers (Class C, D, E) incorporating the DTA amendment were released.