Insurance (Technical Standards) (Class IIGB Insurers) (Statements, Returns, and Capital Solvency) Rules 2020 (BR 42/2020)

Summary

These Rules, made by the Bermuda Monetary Authority under section 6A of the Insurance Act 1978, set out the technical standards for Class IIGB insurers covering statutory financial statements, statutory financial returns, and capital and solvency requirements. They prescribe the content and format of the statutory balance sheet, income statement, and statement of capital and surplus, and set minimum margin of solvency and minimum liquidity ratio requirements.

• Statutory Financial Statements: Must comprise a Statutory Balance Sheet, Statutory Statement of Income, and Statutory Statement of Capital and Surplus, prepared using the prescribed Forms (Schedule I) and instructions (Schedule II), on both a consolidated basis (where the insurer controls affiliates) and an unconsolidated basis.
• Filing requirement: A copy of the Statutory Financial Statements, together with Notes and the Auditor's Report, must be filed with the Authority under section 17(4)(b) of the Act, accompanied by the Statutory Financial Return.
• Auditor's Report: Must be signed by the insurer's approved auditor, addressed to the Authority, and must state whether the statements comply with the Act and these Rules; qualifications required where specified deficiencies (e.g. scope restrictions, going concern doubt, non-compliance) occur.
• Statutory Financial Return: Consists of the Class IIGB Insurer Information Cover Sheet, requiring disclosure of registration details, ownership and company structure, group membership, solvency margin compliance, liquidity ratio compliance, registration conditions, and any corrective action taken.
• Language and currency: Statements and returns must be prepared in English and shown in a single currency (generally that of the insurer's Bermuda books and records), with foreign currency amounts converted to Bermudian dollar equivalents using specified exchange rates; prior year comparatives must also be shown.
• Minimum margin of solvency: Statutory assets must exceed statutory liabilities by the greatest of figures A, B, C and D calculated under Schedule IV, and in any event not less than figure D.
• Minimum liquidity ratio: The value of relevant assets (as defined by reference to specific lines of Form 1SFS) must be not less than seventy five per cent of relevant liabilities.

The Rules commenced operation on 30 April 2020 and apply to financial years commencing on or after 31 December 2019. The detailed Forms and Schedules (I to IV) have been omitted from the published Rules and are instead published separately on the Authority's website.

Key obligations

• File a copy of the Statutory Financial Statements, Notes, and Auditor's Report with the Authority under section 17(4)(b) of the Act, accompanied by the Statutory Financial Return
• Prepare the Statutory Balance Sheet, Statutory Statement of Income, and Statutory Statement of Capital and Surplus using the prescribed Forms and instructions in Schedules I and II
• Where the insurer has control of affiliates, consolidate affiliate operations in the consolidated Balance Sheet and Income Statement, and also prepare an unconsolidated version
• Set forth Notes to the Statutory Financial Statements per Schedule III on an unconsolidated basis
• Ensure the Auditor's Report addresses compliance with the Act and Rules and qualifies the report where specified deficiencies exist
• Complete the Class IIGB Insurer Information Cover Sheet with all specified particulars, including solvency margin and liquidity ratio compliance
• Prepare statements and returns in English, in a single currency, converting foreign currency amounts to Bermudian dollar equivalents where required
• Show corresponding prior financial year amounts for all items in any account (except statutory open year business revenue statements)
• Maintain statutory assets exceeding statutory liabilities by at least the greatest of figures A, B, C and D per Schedule IV, and never less than figure D
• Maintain relevant assets of not less than seventy five per cent of relevant liabilities as the minimum liquidity ratio

Applies to

Class IIGB Insurers

Deadlines

• 30 April 2020: Date these Rules come into operation
• financial years commencing on or after 31 December 2019: Period to which these Rules apply

Related documents

• This document is made under Insurance Act 1978