Stakeholder Letter - Insurance (Prudential Standards) (Solvency Requirement) Amendment Rules 2014 (2014-10-09)

Summary

This is a stakeholder letter from the Bermuda Monetary Authority (BMA) summarizing feedback received on draft amendment rules to the Insurance (Prudential Standards) regime covering Insurance Groups, Class 4 and 3B, Class 3A, and Class C, D and E insurers, which were issued for comment in June 2014. It reports on the comments received and sets out the Authority's position and next steps rather than imposing new binding requirements itself.

• Mutual Fund Disclosure rules: No comments were received on the Class 4, 3B and 3A Amendment Rules relating to Mutual Fund Disclosure.
• Variable Annuity capital model: One comment was received on the Insurance Group and Class C, D and E Amendment Rules concerning the Long-Term Variable Annuity Guarantees Internal Capital Model Actuarial Memorandum, specifically completion of the supplementary schedule in the Bermuda Solvency Capital Requirement (BSCR) model.
• BMA's position: The Authority states that where an Internal Capital Model is used for Variable Annuity Business, the supplementary schedule in the BSCR model should be completed in full.
• Next steps: The Authority is working towards having revised BSCR models available by the end of November 2014 and will advise the market if this timing changes.

Key obligations

• Insurers using an Internal Capital Model for Variable Annuity Business must complete the supplementary schedule in the BSCR model in full.

Applies to

Insurance Groups, Class 4 insurers, Class 3B insurers, Class 3A insurers, Class C insurers, Class D insurers, Class E insurers, (Re)insurers

Deadlines

• end of November 2014: BMA expects revised BSCR models to be available by this time (subject to change, with market to be advised).