Insurance (Special Purpose Insurers) (Statements, Returns and Solvency Requirement) Rules 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 and Statutory Financial Return that every Special Purpose Insurer (SPI) must file. They prescribe the required forms, supporting statements, minimum solvency margin, and general presentation rules (language, currency, comparatives) for these filings.

• Statutory Financial Statements: Must comprise a Statutory Balance Sheet, Statement of Income and Statement of Capital and Surplus, prepared using the prescribed Forms (1A/2A for general business, 4/5 for long-term business, Form 8 for capital and surplus) populated from GAAP financial statements and following Schedule II instructions.
• Statutory Financial Return components: Must include GAAP financial statements, a Cover Sheet, a Statement of Control and Changes of Control, a Solvency Certificate, an Annual Statutory Declaration, an Own-Risk Assessment, and schedules on Alternative Capital Arrangements, Cyber Risk Management, and Compliance with Sanctions.
• GAAP financial statements: Must be prepared under IFRS, Bermuda/Canada/UK/US GAAP, Condensed GAAP under the Insurance Accounts Rules 2016, or other Authority-approved GAAP; audited if the SPI writes unrestricted special purpose business, unaudited if restricted.
• Cover sheet content: Must disclose the insurer's identity, registration number, return period, currency, parent and ultimate parent details, ownership and company structure, business nature, registration conditions or directions, lines of business data, branch/subsidiary details, and director and officer particulars.
• Statement of Control and Changes of Control: Must confirm changes to shareholder controllers since the last Return, attach a controller register, and state parent and ultimate parent jurisdiction and industry information.
• Solvency Certificate: Must confirm preparation and filing of the Statutory Financial Statements, compliance with registration conditions, asset and liability values, premium figures, whether the minimum solvency margin was met, full collateralization, statutory capital and surplus, currency used, and any corrective action taken; must be signed by at least two directors and the Bermuda principal representative.
• Annual Statutory Declaration: Must state whether the financial statements fairly represent the SPI's financial condition, whether it has sufficient resources to continue as a going concern and meet obligations for the next twelve months, and describe any corrective action; signed by at least two directors and the Bermuda principal representative.
• Own-Risk Assessment: Must set out the insurance program overview, planned changes, fronting insurer confirmation, collateral details, Bermuda employee numbers, legal actions, risk register, risk appetite and investment guidelines.
• Minimum margin of solvency: Fixed at $1.00, being the amount by which an SPI's prescribed assets must exceed its liabilities under section 6 of the Act.
• General presentation requirements: All statements and returns must be in English, shown in a single currency (normally that of the insurer's Bermuda books and records, converted to Bermudian dollars where directed), and must show prior-year comparative amounts.

The Rules came into operation on 30 April 2020 and remain in force; the detailed prescribed Forms and Schedules I to V are published separately on the BMA website rather than in the Rules text itself.

Key obligations

• Every Special Purpose Insurer must prepare Statutory Financial Statements using the prescribed Forms and file them with the Authority together with the Statutory Financial Return.
• Every SPI must prepare annual GAAP financial statements in accordance with IFRS, recognized national GAAP, Condensed GAAP, or other Authority-approved GAAP; unrestricted special purpose business statements must be audited, restricted business statements may be unaudited.
• Every SPI's Statutory Financial Return must include a Cover Sheet, Statement of Control and Changes of Control, Solvency Certificate, Annual Statutory Declaration, Own-Risk Assessment, and schedules on Alternative Capital Arrangements, Cyber Risk Management and Compliance with Sanctions.
• The Solvency Certificate and Annual Statutory Declaration must each be signed by at least two directors of the SPI and by its principal representative in Bermuda.
• Every SPI must maintain a minimum margin of solvency of $1.00 by which its assets must exceed its liabilities.
• All statements and returns must be prepared in English, use a single specified currency (converted to Bermudian dollars where the Authority directs), 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