Insurance Returns and Solvency Amendment Regulations 2008
INSURANCE RETURNS AND SOLVENCY AMENDMENT
REGULATIONS 2008
1
BR 2/2009
INSURANCE ACT 1978
1978 : 39
INSURANCE RETURNS AND SOLVENCY AMENDMENT
REGULATIONS 2008
ARRANGEMENT OF REGULATIONS
1 Citation and
commencement
2 Interpretation
3 Regulation 5
amended
4 Regulation 9A
added
5 Regulation 12A
added
6 Schedule I replaced
In exercise of the powers conferred upon the Minister of Finance
by sections 18 and 53 of the Insurance Act 1978 (“the Act”), the following
Regulations are made─
Citation and commencement
1 These Regulations may be cited as the Insurance Returns and
Solvency Amendment Regulations 2008 and shall come into operation on
31 December 2008.
Interpretation
2 In these Regulations, “principal Regulations” means the
Insurance Returns and Solvency Regulations 1980.
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Regulation 5 amended
3 Regulation 5 of the principal Regulations is amended—
(a) in paragraph (1)(bb)(ii), by inserting “and Part IV where
applicable” after “Part II”;
(b) in paragraph (1)(d), by inserting “Class 3A, Class 3B
and” after “in the case of a”;
(c) by inserting after paragraph (1)(d)—
“and
(e) where the insurer carried on special purpose business in
the relevant year, a special purpose business solvency
certificate;”
(d) by deleting paragraph (2) and substituting the
following—
“(2) Regulations 6, 7, 8, 8A, 9, 9A, 13, 14 and 14A
shall have effect as to the form and content of the cover
sheet, the auditor’s report, the general business solvency
certificate, the loss reserve certificate, the long-term
business solvency certificate, the special purpose
business solvency certificate, the declaration of the
statutory ratios, the actuary’s certificate and the
schedule of ceded reinsurance respectively.”
Regulation 9A added
4 (1) The principal Regulations are amended by adding the
following regulation after Regulation 9─
“Special purpose business solvency certificate
9A (1) A special purpose business solvency certificate
shall relate to the special purpose business of the insurer
and shall be signed—
(a) by at least two directors of the insurer (of
whom one must be a director resident in
Bermuda if the insurer has a director so
resident); and
(b) by the insurer’s principal representative in
Bermuda.
(2) The said certificate shall state—
(a) whether or not the insurer has prepared
statutory financial statements in respect of
the relevant year;
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(b) whether or not the said statements are
available at the insurer’s principal office in
Bermuda pursuant to section 17(1) or, as the
case may be, have been filed pursuant to
section 17(3) of the Act;
(c) whether or not the insurer has complied with
every condition attached to its certificate of
registration;
(d) the aggregate value of the insurer’s assets as
shown in the statutory balance sheet for the
relevant year, in this sub-paragraph called
“the statutory balance sheet assets value”,
and whether or not in the opinion of those
signing the certificate—
(i) the statutory balance sheet assets
value was determined in accordance
with the requirements of the Act and
of any applicable regulations;
(ii) the value of the insurer’s assets at the
end of the relevant year was in the
aggregate at least equal to the
statutory balance sheet assets value;
(e) whether or not in the opinion of those signing the
certificate the aggregate amount of the insurer’s
liabilities at the end of the relevant year (after taking into
account all prospective and contingent liabilities, but not
liabilities in respect of share capital) is not more than
the aggregate amount of the liabilities as shown in the
insurer’s statutory balance sheet for that year;
(f) the following amounts as shown in the insurer’s
statutory statement of income for the relevant year—
(i) the aggregate amount of the gross premiums
written;
(ii) the aggregate amount of the reinsurance
premiums ceded;
(iii) the aggregate amount of the net premiums
written shown on line 3 of the insurer’s
statutory statement of income for the relevant
year;
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(iv) the aggregate amount of the premiums and
other considerations shown on line 19(d) of the
insurer’s statutory statement of income for the
relevant year;
(g) whether any accounts of the insurer for the relevant year
have been audited for any purpose other than the
purposes of these Regulations;
(h) the minimum special purpose business solvency margin
prescribed by regulation 12A, and whether that margin
was met;
(i) whether the insurer’s special purpose business is fully
funded in accordance with the definition of special
purpose business in section 1 of the Act;
(j) the aggregate amount of the statutory capital and
surplus as shown in the insurer’s statutory statement of
capital and surplus for the relevant year;
(k) the currency in which amounts in the insurer’s statutory
financial statements for the relevant year have been
shown;
(l) the rate of exchange used, in compliance with
paragraphs (2) and (3) of regulation 16, for the purposes
of any statement called for by this regulation;
(m) if any question in sub-paragraph (c), (h) or (i) of this
paragraph has been answered in the negative, whether
or not the insurer has taken corrective action in any
case and, where the insurer has taken such action, a
description of the action in a statement attached to the
certificate.”
Regulation 12A added
5 The principal Regulations are amended by adding after
regulation 12 the following—
“Minimum margin of solvency for special purpose business
12A (1) The amount of $1 dollar is hereby prescribed—
(a) for the purposes of section 6(1) of the Act as the
prescribed amount; and
(b) for the purposes of the statement called for by
regulation 9A(2)(h), as the minimum special
purpose business solvency margin,
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by which the value of the special purpose business
assets of an insurer carrying on special purpose
business must exceed the amount of its special purpose
business liabilities.
(2) In this regulation—
“special purpose business assets” and “special purpose
business liabilities” respectively mean assets and
liabilities established in conformity with the
requirements of the Insurance Accounts Regulations
1980 for the statutory balance sheet of a special
purpose insurer carrying on special purpose
business;
“insurer” includes, in relation to section 6 of the Act, a
body applying for registration as an insurer under the
Act.”.
Schedule I replaced
6 Schedule I to the principal Regulations is amended by revoking
Schedule I and replacing it with the following—
“SCHEDULE I (Reg. 10(1))
GENERAL BUSINESS SOLVENCY MARGIN
Figure A
1. For the purposes of regulation 10, figure A has the following
value in relation to the class of insurer indicated—
Class 1 $120,000
Class 2 $250,000
Class 3 $1,000,000
Class 3A $1,000,000
Class 3B $1,000,000
Class 4 $100,000,000
Figure B
2. (1) For the purpose of regulation 10, sub-paragraphs (2) and (3)
set out the method of calculating figure B in relation to Class 1, Class 2,
Class 3, Class 3A, and Class 3B insurers, and sub-paragraph (4) in
relation to Class 4 insurers.
(2) Where the net premiums—
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(a) written by a Class 1, Class 2, Class 3, Class 3A or Class
3B insurer in its current financial year, or
(b) projected to be written by an insurer, on application
for registration as a Class 1, Class 2, Class 3, Class 3A
or Class 3B insurer, in its first financial year,
do not, or (as the case may be) are not projected to, exceed
$6,000,000, figure B shall be calculated as 20% of those net
premiums.
(3) Where the net premiums—
(a) written by a Class 1, Class 2, Class 3, Class 3A or Class
3B insurer in its current financial year, or
(b) projected to be written by an insurer, on application for
registration as a Class 1, Class 2, Class 3, Class 3A or
Class 3B insurer
do, or (as the case may be) are projected to, exceed $6,000,000,
figure B shall be calculated as $1,200,000 plus the following
percentage of the net premiums written which exceed
$6,000,000 in relation to the class of insurer indicated─
Class 1 10%
Class 2 10%
Class 3 15%
Class 3A 15%
Class 3B 15%
(4) Figure B shall be calculated as 50% of the net premiums
written by a Class 4 insurer in its current financial year, or projected to
be written by an insurer on application for registration as a Class 4
insurer.
(5) In this paragraph, “net premiums written” in relation to any
financial year means─
(a) in relation to a Class 1, Class 2, Class 3, Class 3A or
Class 3B insurer, the net amount, after deductions of
any premiums ceded by the insurer for reinsurance, of
the premiums written by the insurer in that year in
respect of general business; and
(b) in relation to a Class 4 insurer, the net amount, after
deductions of any premiums ceded by the insurer for
reinsurance (not exceeding 25% of gross premiums
written), of the premiums written by the insurer in that
year in respect of general business,
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and “net premiums projected to be written” has a corresponding
meaning.
Figure C
3 For the purposes of regulation 10, figure C shall be calculated as
the following percentage of the aggregate—
(a) of the amounts shown by the insurer in completing lines
17 and 18 of Form 1 or Form 1A (as applicable) in the
Insurance Accounts Regulations 1980, or
(b) of those amounts as projected by the insurer on
application for registration,
in relation to the class of insurer indicated─
Class 1 10%
Class 2 10%
Class 3 15%
Class 3A 15%
Class 3B 15%
Class 4 15%”
Made this 24th day of December, 2008
Minister of Finance
