Insurance (Prudential Standards) (Class 3A Solvency Requirement) Amendment Rules 2018 (BR 67 / 2018)

Summary

These Rules amend the Insurance (Prudential Standards) (Class 3A Solvency Requirement) Rules 2011, updating the Bermuda Solvency Capital Requirement (BSCR) framework that Class 3A insurers use to calculate and report their solvency position. They revise paragraph 6 and Schedule I of the principal Rules and add a number of new supporting schedules covering specific risk categories.

• New schedules inserted: Adds Schedules IIB to IIF (fixed income/equity investments, ceding insurer and retrocession funds, segregated account company assets/liabilities, deposit assets/liabilities, other sundry assets/liabilities, each by BSCR rating), IVD and IVE (premium exposure measure and geographic diversification), XIXA (cash and cash equivalents counterparty analysis), XXA (currency risk), XXIA (concentration risk), and XXIII (interest rate sensitive assets and liabilities).
• Schedule I amendment: Schedule I of the principal Rules is amended as set out in a separate Schedule A published on the BMA website, updating the BSCR formula calculation.
• Transitional arrangement: During the applicable transitional period, Class 3A insurers must file the relevant percentage required under the Transitional Factor calculation in their capital and solvency return; where no internal capital model has been approved, these transitional amounts are treated by the Authority as the insurer's applicable Enhanced Capital Requirement (ECR).

The amendments took effect on 1 January 2019, meaning Class 3A insurers' capital and solvency filings from that date must reflect the updated BSCR formula, revised Schedule I, and the newly inserted schedules, subject to the transitional factor provisions.

Key obligations

• Class 3A insurers must calculate their BSCR formula using the amended Schedule I and include the newly inserted Schedules IIB-IIF, IVD, IVE, XIXA, XXA, XXIA and XXIII where applicable when filing their capital and solvency return under paragraph 6 of the principal Rules.
• During the applicable transitional period, Class 3A insurers must file in their capital and solvency return the relevant percentage required under the Transitional Factor calculation set out in the BSCR formula.
• Where a Class 3A insurer has not had an internal capital model approved by the Authority under paragraph 3(1)(b) of the principal Rules, the transitional Transitional Factor amount is treated as its applicable ECR for purposes of the Rules during the transitional period.

Applies to

Class 3A insurers

Deadlines

• 1 January 2019: Commencement date on which these amendment Rules come into operation, applicable to Class 3A insurers' BSCR calculations and capital and solvency return filings.

Related documents

• This document is made under Insurance Act 1978
• This document amends Insurance (Prudential Standards) (Class 3A Solvency Requirement) Rules 2011