Notice - Stakeholder Letter on Public Disclosures (2014-04-04)

Summary

This is a stakeholder letter from the Bermuda Monetary Authority setting out its policy approach to public disclosures by (re)insurers, following its 2009 consultation paper on transparency and disclosure. It clarifies how existing and planned disclosure requirements under the Insurance Act 1978 will apply, and how breaches of solvency requirements will be handled publicly.

• Section 17A extension: Section 17A of the Insurance Act 1978 currently requires Class 3A, 3B, 4 and E insurers to prepare and submit additional GAAP financial statements for possible publication; the Authority advises this will be extended to Class C and Class D insurers via an amendment planned for 2016.
• Class 3A exemption: The Authority will continue allowing exemptions under Section 17A for all Class 3A insurers until 2016.
• Economic balance sheet framework: A Consultation Paper on the economic balance sheet framework was planned for 2014, proposing that GAAP/IFRS general purpose financial statements form the basis for statutory accounting under Section 15; public disclosure for Class C, Class D and Class 3A insurers will not be enforced until this statutory accounting basis changes.
• Disclosure exemption condition: Insurers seeking exemption from publishing general purpose financial statements may be granted this, but must still provide policyholders with access to audited general purpose financial statements upon request.
• Certificate of compliance: Policyholders and other stakeholders may apply in writing to the Authority for a certificate of compliance confirming an insurer's compliance with the Act and its licence conditions.
• MSM/ECR disclosure: Commercial insurers (Class 3A, 3B, 4, C, D, E) may disclose compliance with the minimum margin of solvency and enhanced capital requirement in the notes to their annual financial statements; modified filers may make a similar attestation.
• Publicising breaches: The Authority will not automatically publish the names of insurers in breach of the MSM or ECR, but will decide case-by-case through its enforcement process, guided by its Statement of Principles on the Use of Enforcement Powers.

The letter is primarily explanatory and forward-looking, describing policy direction and timing rather than imposing new immediate filing obligations beyond those already in the Insurance Act.

Key obligations

• Class 3A, Class 3B, Class 4 and Class E insurers must prepare and submit additional GAAP financial statements under Section 17A of the Insurance Act 1978
• Insurers granted an exemption from publishing general purpose financial statements must still provide policyholders with access to audited general purpose financial statements upon request
• Commercial insurers (Class 3A, 3B, 4, C, D, E) are expected to disclose in their annual financial statement notes whether they are in compliance with the minimum margin of solvency and enhanced capital requirement, or make a similar attestation if modified filers

Applies to

Class 3A insurers, Class 3B insurers, Class 4 insurers, Class C insurers, Class D insurers, Class E insurers, commercial insurers, (re)insurers

Deadlines

• 2016: Section 17A of the Insurance Act 1978 will be amended to extend additional GAAP financial statement requirements to Class C and Class D insurers, and the current Class 3A exemption will end