Insurance (Prudential Standards) (Class C, Class D and Class E Solvency Requirement) Amendment (No. 2) Rules 2022

Summary

This instrument amends the Insurance (Prudential Standards) (Class C, Class D and Class E Solvency Requirement) Rules 2011 by introducing a new quarterly financial return requirement for certain Class D and Class E insurers and adding a new Schedule IVF (Schedule of Risk Exposure) referenced in Schedule XIII. It is deemed to have taken effect from 1 July 2022, ahead of its formal making on 4 November 2022.

• Quarterly filing requirement: Every Class D and Class E insurer that is not a member of an insurance group for which the BMA is the group supervisor must prepare and file quarterly financial returns on or before the last day of May, August and November each year.
• Content of the return: The return must include quarterly unaudited financial statements (at minimum a balance sheet and income statement, no more than two months old), details of material intra-group transactions and risk concentrations, intra-group reinsurance and retrocession exposures, the ten largest unaffiliated counterparty exposures (or exposures exceeding 10% of statutory capital and surplus), the ECR ratio for the quarter, and quoted and unquoted bond totals by BSCR rating.
• New Schedules: A new Schedule IVF (Schedule of Risk Exposure) is inserted after Schedule IVA, and a corresponding new Part IVF is inserted in Schedule XIII; both are published on the BMA website rather than in the Rules text itself.
• Cross-reference amendments: Paragraph 6(1), (2) and (3)(b) of the 2011 Rules are amended to insert references to the new Schedule IVF alongside existing references to Schedule IVA.
• Possible exemption or modification: Under section 6C of the Insurance Act 1978, the Authority may exempt a Class D or Class E insurer from filing, or modify the filing requirements, where equivalent information is filed with (or obtainable from) the insurer's Group Supervisor within the same timelines.

The changes are administrative and reporting-focused rather than capital or solvency-margin changes, but they create a new recurring filing obligation and associated risk-exposure disclosure content for affected insurers.

Key obligations

• Class D and Class E insurers that are not members of an insurance group for which the BMA is the group supervisor must prepare and file quarterly financial returns with the Authority on or before the last day of May, August and November each year.
• The quarterly return must include quarterly unaudited financial statements (balance sheet and income statement) no more than two months old.
• The quarterly return must include details of material intra-group transactions, risk concentrations, and intra-group reinsurance/retrocession arrangements that have arisen since the last quarterly or annual return.
• The quarterly return must disclose the ten largest exposures to unaffiliated counterparties (or any exposures exceeding 10% of statutory capital and surplus), the ECR ratio for the quarter, and quoted/unquoted bond totals by BSCR rating.
• An insurer seeking exemption or modified filing terms under section 6C must be able to demonstrate that equivalent information is filed with, or obtainable by the Authority from, its Group Supervisor within the required timelines.

Applies to

Class C insurers, Class D insurers, Class E insurers

Deadlines

• last day of May, August and November of every year: Deadline for Class D and Class E insurers (not part of a group for which BMA is group supervisor) to file quarterly financial returns.
• 1 July 2022: Deemed commencement/operative date of these Amendment Rules.

Related documents

• This document is made under Insurance Act 1978
• This document amends Insurance (Prudential Standards) (Class C, Class D and Class E Solvency Requirement) Rules 2011