Insurance (Prudential Standards) (Insurance Group Solvency Requirement) Amendment Rules 2024

Summary

This is a draft amendment to Bermuda's Insurance (Prudential Standards) (Insurance Group Solvency Requirement) Rules 2011, made by the Bermuda Monetary Authority under section 6A of the Insurance Act 1978. It restructures how insurance groups calculate their Group Bermuda Solvency Capital Requirement (BSCR) and Group Statutory Economic Balance Sheet, and introduces a new mechanism for designated insurers to apply for capital adjustments. As a draft, it has not yet been made into final, binding rules and no commencement date has been inserted.

• New adjustment application right: Inserts a new paragraph (6) allowing a designated insurer to apply to the Authority under section 6D(7) of the Insurance Act 1978 to make adjustments in accordance with new Schedule XXIV.
• Cross-reference update: Amends paragraph 6(1)-(3) to add references to new Schedules XXIV and XXV alongside existing Schedule XXIII.
• Schedule I replaced: Revokes and replaces Schedule I (Group Bermuda Solvency Capital Requirement), which sets out the detailed BSCR formula and risk charge tables (fixed income, equity, interest rate/liquidity, currency, credit, underwriting, operational risk, capital adjustments, and transitional factors).
• Schedule V replaced: Revokes and replaces Schedule V (Schedule of Risk Management).
• Schedule XIV replaced: Revokes and replaces Schedule XIV (Group Statutory Economic Balance Sheet).
• New Schedules inserted: Inserts new Schedule XXIV (Schedule of Adjustments) and new Schedule XXV (Schedule of Economic Balance Sheet Valuation Principles) after Schedule XXIII.
• Cross-references updated: Amends Schedules VII, VIII, VIIIA, XV, XXI and XXIA by replacing references to 'Schedule XIV' with 'Schedule XXV' throughout.

The substantive technical content (capital charge formulas, valuation principles, and transitional arrangements for long-term business) is contained in the replaced and inserted Schedules, which prescribe how insurance groups must calculate solvency capital requirements, technical provisions, and economic balance sheet values going forward.

Key obligations

• A designated insurer that wishes to apply adjustments under new Schedule XXIV must apply to the Authority under section 6D(7) of the Insurance Act 1978.
• Insurance groups must calculate their Group BSCR using the revised formula and risk charge tables set out in the replaced Schedule I.
• Insurance groups must prepare their Group Statutory Economic Balance Sheet in accordance with the replaced Schedule XIV and new Schedule XXV valuation principles.
• Insurance groups must follow the revised risk management requirements set out in the replaced Schedule V.
• Where relying on the sixteen-year transitional arrangements for long-term business written on or before 31 December 2015, insurance groups must calculate technical provisions using the prescribed linear interpolation formula and provide details of the business and allocation methods used when applying for the transitional adjustment.

Applies to

insurance groups, designated insurers

Related documents

• This document is made under Insurance Act 1978