Notice - Insurance (Group Supervision) Amendment Rules 2013 - Update (2013-10-31)

Summary

This is a Bermuda Monetary Authority notice confirming the final form of the Insurance (Group Supervision) Amendment Rules 2013, following the consultation draft published on 2 July 2013. It summarises the substantive changes made in response to market feedback and confirms the effective date of the amended Rules.

• Capital offset change: Adopts the market's proposal allowing capital requirements associated with policyholder obligations to be offset against excess encumbered assets transferred from Tier 1 to Tier 2 capital.
• Housekeeping amendments: Various minor drafting and clarifying amendments made after internal review and market input, including changes to paragraph 21(3) definitions of policyholder obligations and related capital requirements, and treatment of assets pledged solely for risk management purposes.
• Balance sheet schedule changes: Schedule 1 (Group Statutory Balance Sheet instructions) is amended, replacing Lines 17 and 20 through 27 covering loss and loss expense provisions, claims reserves, policy reserves, policyholders' funds on deposit, dividend liabilities, and long term business insurance reserves.
• Group actuary opinion: Schedule 2, paragraph 3 is replaced to require the group actuary's opinion to address compliance with Lines 17(d) and 27(d) of the Group Statutory Balance Sheet and the procedures used to reach that opinion.
• Stakeholder letter: The Authority published a separate general stakeholder letter on its website responding to issues raised by the market during consultation.

The amendments took effect on 1 January 2014, replacing the corresponding provisions of the Insurance (Group Supervision) Rules 2011.

Key obligations

• Insurance groups subject to group supervision must prepare their Group Statutory Balance Sheet in accordance with the amended Lines 17 and 20 through 27 of Schedule 1 from the effective date.
• The group actuary must provide an opinion, per amended Schedule 2 paragraph 3, addressing the group's compliance with Lines 17(d) and 27(d) of the Group Statutory Balance Sheet and the procedures used to reach that opinion.
• Groups must calculate capital requirements for policyholder obligations using the revised methodology in amended paragraph 21(3), including the new offset against excess encumbered assets transferred from Tier 1 to Tier 2.

Applies to

insurance groups subject to group supervision, insurers within a supervised group, group actuaries

Deadlines

• 1st January 2014: Effective date on which all amendments in the Insurance (Group Supervision) Amendment Rules 2013 come into operation.

Related documents

• This document amends Insurance (Group Supervision) Rules 2011