Notice - Insurance (Eligible Capital) Amendment Rules 2012 (2012-11-14)

Summary

This is a Bermuda Monetary Authority (BMA) notice announcing a final amendment to the Insurance (Eligible Capital) Rules 2012. The amendment relaxes, on a transitional basis, the conditions under which certain capital instruments may qualify as Tier 1, Tier 2 or Tier 3 capital for insurers subject to the Rules.

• What changes: Tier 1, Tier 2 and Tier 3 capital instruments no longer have to satisfy the previous requirement that they be non-redeemable or settled only through issuance of an instrument of equal or higher quality upon breach (or possible breach) of the Enhanced Capital Requirement (ECR), provided this relief applies only until 1 January 2024.
• Legal mechanism: The amendment inserts a new subparagraph (9)(c) into paragraph 2 of the principal Insurance (Eligible Capital) Rules 2012, made under section 6A(1) of the Insurance Act 1978.
• Status of amendment: The Authority states the amendment is final, unless substantive policy issues are later identified requiring review or revision.

The amendment itself comes into operation on 1 January 2013, while the substantive relief it grants (allowing non-compliant redeemability features in eligible capital instruments) is time-limited and expires on 1 January 2024.

Applies to

insurers registered under the Insurance Act 1978 subject to the Insurance (Eligible Capital) Rules 2012

Deadlines

• 1 January 2013: Date the Insurance (Eligible Capital) Amendment Rules 2012 come into operation
• 1 January 2024: Date until which Tier 1, Tier 2 and Tier 3 capital instruments may qualify despite not meeting the non-redeemable/settlement requirement upon ECR breach