Notice - Information Bulletin on Waivers and Modifications to S17A (2014-04-04)

Summary

This is an Information Bulletin issued by the Bermuda Monetary Authority explaining how it will exercise its power under Section 56 of the Insurance Act 1978 to waive or modify the additional financial statement disclosure requirements imposed on insurers by Section 17A of that Act. It is intended to give insurers clarity and transparency on the circumstances in which such relief may be considered, but does not create automatic entitlements.

The Authority stresses that any application for a waiver or modification will be assessed case by case, taking into account implications for policyholders and the market, and the examples given are illustrative rather than exhaustive.

• Group supervision: Where the Authority is group-wide supervisor, legal entity disclosures may be waived in favour of group disclosures if they do not materially differ or better reflect the insurer's economic characteristics.
• Not yet operating: A waiver may be granted for an insurer that has not commenced business, upon confirmation of compliance with the Insurance Act, no business written in the relevant year, and expected commencement date.
• Dormant or in liquidation: Insurers that are dormant, in liquidation or provisional liquidation may qualify for relief.
• Run off insurers: Relief may be considered where public disclosure is unnecessary, could prejudice the insurer's commercial position, or where the cost of preparing audited GAAP statements could affect ability to meet policyholder obligations.
• Parent in administration/receivership: Applicable where the parent or ultimate parent of the Bermuda-licensed insurer is subject to court-appointed administration, receivership or liquidation.
• Competitive disadvantage: The Authority may grant relief where publication would create a competitive disadvantage, but may require a release letter be provided to policyholders or stakeholders who request the financials.
• Affiliated business: Applicable where the insurer writes 100 percent affiliated insurance business.
• Existing modified filings: Relevant where an insurer already has approved modified filing arrangements, such as branch operations submitting the parent company's audited statements.
• Alternative filings: Applicable where the insurer submits other comparable financial information, such as filings with a recognised securities exchange or another supervisor.

Where the Authority agrees to a waiver or modification, it will issue formal directions to the insurer setting out the waived or modified requirements.

Key obligations

• Insurers seeking relief from Section 17A disclosure requirements must apply to the Authority under Section 56 of the Insurance Act 1978.
• Insurers relying on the non-commencement of business ground must confirm compliance with the Insurance Act, confirm no business was written in the relevant financial year, and provide the expected date operations will commence.
• Insurers granted a competitive disadvantage waiver must provide a release letter to policyholders or stakeholders who request copies of the financial statements.
• Insurers must comply with any directions issued by the Authority specifying the waived or modified Section 17A requirements.

Applies to

insurers licensed in Bermuda, group-supervised insurers, branch operations of insurers, dormant insurers, insurers in run-off, insurers in liquidation or provisional liquidation