Insurance (Prudential Standards) (Insurance Group Solvency Requirement) Amendment (No. 2) Rules 2019

Summary

This instrument makes technical amendments to the Insurance (Prudential Standards) (Insurance Group Solvency Requirement) Rules, which set out the Bermuda Solvency Capital Requirement (BSCR) framework for insurance groups. It removes fixed, embedded lists and tables of credit rating agencies and BSCR rating schedules from several Schedules of the principal Rules, replacing them with a rule that the Authority will separately prescribe the list of approved credit rating agencies and how their ratings must be applied.

• Schedules II, IIA to IIF: Paragraphs on credit rating agencies are revoked and replaced so that the Authority (rather than the Rules themselves) prescribes the list of credit rating agencies and how ratings are applied to fixed income securities and preferred stock; the embedded BSCR Ratings Schedules are deleted.
• Schedule XVIII: The BSCR Ratings Chart after paragraph (a)(vii)(D) is deleted.
• Schedules XIX and XIXA: Provisions on short-term credit ratings for cash and cash equivalent balances are revoked and replaced to refer to ratings prescribed by the Authority, and the associated BSCR Ratings Tables are deleted.
• Publication of schedules: The omitted Schedules referenced in the amendment are instead published separately on the Authority's website under section 6A(8) of the Insurance Act 1978.

The changes take effect on 1 January 2020 but apply retroactively to financial years commencing on or after 1 January 2019, meaning affected insurance groups must apply the revised approach to credit rating agencies for their BSCR calculations from that financial year onward.

Key obligations

• Insurers and insurance groups subject to the Insurance Group Solvency Requirement Rules must determine BSCR ratings for fixed income securities and preferred stock using the list of credit rating agencies prescribed by the Authority (not the previously embedded schedules).
• Insurers and insurance groups must apply the credit rating agency list and methodology prescribed by the Authority for short-term ratings of cash and cash equivalent balances, with long-term ratings usable as an alternative where prescribed by the Authority.
• Affected insurance groups must apply these amended BSCR rating provisions to financial years commencing on or after 1 January 2019.

Applies to

insurers, insurance groups subject to the Insurance Group Solvency Requirement

Deadlines

• 1 January 2020: Date the Amendment (No. 2) Rules 2019 come into operation.
• financial years commencing on or after 1 January 2019: Period to which the amended BSCR credit rating provisions apply.

Related documents

• This document is made under Insurance Act 1978