Insurance (Special Purpose Insurers) (Statements, Returns and Solvency Requirement) Rules 2020 (BR 40 / 2020)

Summary

These Rules, made by the Bermuda Monetary Authority under the Insurance Act 1978, set out the detailed content and preparation requirements for the Statutory Financial Statements, Statutory Financial Return, and minimum solvency margin applicable to Special Purpose Insurers (SPIs). They prescribe the forms, certificates, declarations and disclosures an SPI must prepare and file with the Authority each financial year.

• Statutory Financial Statements: Must comprise a Statutory Balance Sheet, Statement of Income and Statement of Capital and Surplus, prepared on prescribed Forms (1A/2A/8 for general business, 4/5/8 for long-term business) populated from GAAP financial statements and Schedule II instructions.
• Statutory Financial Return: Must include GAAP financial statements, a Cover Sheet, Statement of Control and Changes of Control, Solvency Certificate, Annual Statutory Declaration, Own-Risk Assessment, Alternative Capital Arrangements (Schedule III), Cyber Risk Management (Schedule IV), and Compliance with Sanctions (Schedule V).
• GAAP basis: Financial statements must be prepared under IFRS, GAAP applying in Bermuda, Canada, the UK or the US, Condensed GAAP under the Insurance Accounts Rules 2016, or other GAAP recognised in writing by the Authority; unrestricted special purpose business requires audited statements, restricted special purpose business may be unaudited.
• Solvency Certificate and Annual Statutory Declaration: Each must be signed by at least two directors of the SPI and by its principal representative in Bermuda, covering solvency margin compliance, asset and liability adequacy, and going-concern status for the following twelve months.
• Minimum margin of solvency: Set at $1.00, being the amount by which an SPI's prescribed assets must exceed its liabilities under section 6 of the Act.
• General filing requirements: All statements and returns must be in English, shown in a single currency (with prescribed conversion rules for foreign currency amounts), and include comparative figures for the prior financial year.

The Rules came into operation on 30 April 2020. The detailed Forms and Schedules referenced (Schedules I to V) are omitted from the Rules text itself and are published separately on the BMA's website.

Key obligations

• Special Purpose Insurers must prepare Statutory Financial Statements (Balance Sheet, Statement of Income, Statement of Capital and Surplus) using the prescribed Forms for their business type (general or long-term).
• SPIs must file a copy of the Statutory Financial Statements with the Authority together with the Statutory Financial Return.
• SPIs must prepare GAAP financial statements each financial year using an approved accounting basis, audited if writing unrestricted special purpose business, unaudited if restricted.
• SPIs must complete a Cover Sheet, Statement of Control and Changes of Control, Solvency Certificate, Annual Statutory Declaration, and Own-Risk Assessment as part of the Statutory Financial Return.
• The Solvency Certificate and Annual Statutory Declaration must each be signed by at least two directors and the principal representative in Bermuda.
• SPIs must maintain a minimum margin of solvency of $1.00 (assets exceeding liabilities by at least that amount).
• All statements and returns must be prepared in English, presented in a single specified currency with prescribed conversion methodology, and show comparative figures for the immediately preceding financial year.

Applies to

Special Purpose Insurers

Deadlines

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

Related documents

• This document is made under Insurance Act 1978