Insurance (Collateralized Insurers) (Statements, Returns, Solvency and Capital) Rules 2020

Summary

These Rules, made by the Bermuda Monetary Authority under the Insurance Act 1978, set out the statutory financial reporting, solvency margin and capital requirements applicable to Collateralized Insurers. They prescribe the content and preparation of statutory financial statements, statutory financial returns and capital and solvency returns, and fix a minimum solvency margin and an Economic Capital Requirement (ECR) based on the Bermuda Solvency Capital Requirement model for Collateralized Insurers.

• Statutory Financial Statements: Must comprise a Statutory Balance Sheet, Statement of Income and Statement of Capital and Surplus, prepared using Forms 1SFS, 2SFS and 8SFS by populating line items from audited GAAP financial statements; insurers with segregated accounts must prepare combined statements plus uncombined general account statements.
• Statutory Financial Return: Must include a Collateralized Insurer Information Sheet disclosing registration details, ownership and organizational structure, insurance business nature, audit opinion status, solvency margin compliance, registration conditions and any corrective actions taken.
• Capital and Solvency Return: Must consist of the electronic BSCR model (Schedule IIA), audited GAAP financial statements (IFRS, recognized GAAP, or Condensed GAAP under the Insurance Account Rules 2016), and a loss reserve specialist opinion or actuary certificate, accompanied by a declaration signed by two directors and the Bermuda principal representative.
• Filing: A copy of the Statutory Financial Statements must be filed with the Authority together with the Statutory Financial Return and the Capital and Solvency Return.
• Currency and language rules: All returns must be in English; amounts shown in a single currency (generally the currency of the insurer's Bermuda books and records), with foreign currency conversion rules and prior-year comparatives required.
• Minimum margin of solvency: Statutory assets must exceed statutory liabilities by at least $250,000.
• ECR and capital maintenance: ECR must be calculated annually using the BSCR model and must never be less than the minimum margin of solvency; insurers must maintain total statutory capital and surplus equal to or exceeding the ECR.

The Rules apply to all Collateralized Insurers, subject to any exemptions or modifications the Authority grants under section 6C of the Insurance Act 1978, and came into operation on 30 April 2020.

Key obligations

• Every Collateralized Insurer must prepare Statutory Financial Statements (Balance Sheet, Statement of Income, Statement of Capital and Surplus) using the prescribed forms populated from audited GAAP financial statements
• Every Collateralized Insurer must prepare a Statutory Financial Return consisting of a Collateralized Insurer Information Sheet with specified disclosures
• Every Collateralized Insurer must prepare, for each relevant year, a Capital and Solvency Return comprising the BSCR model, audited GAAP financial statements, and a loss reserve specialist opinion or actuary certificate
• The Capital and Solvency Return must be accompanied by a declaration signed by two directors and the insurer's principal representative in Bermuda attesting the Return fairly represents the insurer's financial condition
• A copy of the Statutory Financial Statements must be filed with the Authority together with the Statutory Financial Return and Capital and Solvency Return
• Insurers with segregated accounts must prepare combined statements for segregated and general accounts, plus uncombined statements for the general account alone
• All statements and returns must be prepared in English and in a single specified currency, with foreign currency conversion where directed by the Authority
• Statutory assets must exceed statutory liabilities by at least $250,000 (minimum margin of solvency)
• Each Collateralized Insurer must calculate its ECR at the end of its financial year using the BSCR model, ensuring it is never less than the minimum margin of solvency
• Each Collateralized Insurer must maintain total statutory capital and surplus equal to or exceeding the ECR

Applies to

Collateralized Insurers

Deadlines

• 30 April 2020: Commencement date on which these Rules came into operation

Related documents

• This document is made under Insurance Act 1978