Insurance Amendment (No. 2) Act 2015
FA E R
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AT F
TQUO U

BERMUDA

INSURANCE AMENDMENT (NO. 2) ACT 2015

2015 : 31

TABLE OF CONTENTS

Citation
Amends section 1
Amends section 6A
Amends section 6D
Amends section 8B
Inserts section 8C
Amends section 14
Amends section 18B
Amends section 26
Amends section 27
Amends section 27B
Amends section 27G
Inserts section 30EA
Amends section 30G
Amends section 30JA
Amends section 31AA
Consequential amendments
Commencement

SCHEDULE
AMENDMENTS TO THE INSURANCE RETURNS AND SOLVENCY REGULATIONS
1980

WHEREAS it is expedient to amend the Insurance Act 1978 and to make
consequential amendments;

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INSURANCE AMENDMENT (NO. 2) ACT 2015

Be it enacted by The Queen’s Most Excellent Majesty, by and with the advice and
consent of the Senate and the House of Assembly of Bermuda, and by the authority of the
same, as follows:

Citation
This Act, which amends the Insurance Act 1978 (the “principal Act”), may be cited

as the Insurance Amendment (No. 2) Act 2015.

Amends section 1
Section 1 of the principal Act is amended by inserting in the appropriate

alphabetical order the following definitions—

“ “available statutory economic capital and surplus” means an amount
equal to the total statutory economic capital and surplus including any
adjustments thereto made under section 6D or by or under Rules made
under section 6A of this Act;

“statutory economic balance sheet” means the balance sheet required to
be produced in accordance with the prudential standards made under
section 6A of this Act; that are applicable to any Class 3A, Class 3B,
Class 4, Class C, Class D or Class E insurer or insurance group;

“total statutory economic capital and surplus” means the total statutory
economic capital and surplus of a Class 3A, Class 3B, Class 4, Class
C, Class D or Class E insurer or insurance group; calculated in
accordance with prudential standards made under section 6A of this
Act;”.

Amends section 6A
Section 6A (1) of the principal Act is amended—

in paragraph (c), by deleting “insurance reserves; and” and substituting
“insurance technical provisions;”;

in paragraph (d) by deleting the comma and substituting “; and”;

by inserting after paragraph (d) the following new paragraph—

public disclosures,”.“(e)

Amends section 6D
Section 6D of the principal Act is amended—

by deleting the section heading and substituting the following—

“Authority may make adjustment to enhanced capital requirement, available
statutory capital and surplus, and available statutory economic capital and
surplus”;

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(a)

(b)

(c)

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(a)

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INSURANCE AMENDMENT (NO. 2) ACT 2015

in subsection (1), by deleting “and available statutory capital and surplus ”
and substituting “, available statutory capital and surplus, and available
statutory economic capital and surplus”.

Amends section 8B
Section 8B (1) of the principal Act is amended by deleting “insurance loss reserves”

and substituting “insurance loss reserves or insurance technical provisions”.

Inserts section 8C
The principal Act is amended by inserting after section 8B the following new

section—

“Class 3A, Class 3B, Class 4, Class C, Class D and Class E insurer to maintain
head office in Bermuda

Every Class 3A, Class 3B, Class 4, Class C, Class D and Class E
insurer that satisfies the requirements of subsection (2) shall maintain its head
office in Bermuda.

The insurance business of the insurer must be directed and managed
from Bermuda and, in determining whether the insurer complies with this
requirement, the Authority shall consider, inter alia, the factors set out in
subsection (3).

The factors referred to in subsection (2) are—

where the underwriting, risk management and operational
decision making of the insurer occurs;

whether the presence of senior executives who are responsible for,
and involved in, the decision making related to the insurance
business of the insurer are located in Bermuda;

where meetings of the board of directors of the insurer occur.

Notwithstanding the considerations set out in subsection (3), the
Authority may also have regard to the following matters—

the location where management of the insurer meets to effect
policy decisions of the insurer;

the residence of the officers, insurance managers or employees of
the insurer; and

the residence of one or more directors of the insurer in Bermuda.

Subsection (1) shall not apply to a Class 3A, Class 3B, Class 4, Class
C, Class D or Class E insurer which has a permit under section 3 of the Non-
Resident Insurance Undertakings Act 1967 or a permit under section 134 of the
Companies Act 1981.”.

8C (1)

(2)

(3)

(a)

(b)

(c)

(4)

(a)

(b)

(c)

(5)

(b)

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INSURANCE AMENDMENT (NO. 2) ACT 2015

Amends section 14
Section 14(1) of the principal Act is amended—

in paragraph (e), by deleting “and”;

in paragraph (f), by deleting the period and substituting a semicolon;

by inserting the following after paragraph (f)—

application for approval to exempt or modify prudential standard
requirements applicable to an insurer in accordance with the
provisions of section 6C(1); and

application under section 6D (7) for an adjustment to an insurer’s
or insurance group’s enhanced capital requirement or available
statutory capital and surplus or available statutory economic
capital and surplus, as the case may be.”.

“(g)

(h)

Amends section 18B
Section 18B of the principal Act is amended in—

subsection (1) by deleting “Class 2, Class 3, Class 3A, Class 3B or Class 4
insurer” and substituting “Class 2 or Class 3 insurer”;

subsection (2)(a), by deleting the words “, Class 3A, Class 3B or Class 4”.

Amends section 26
Section 26(1) of the principal Act is amended by deleting “long-term insurance

reserves” and substituting “long-term insurance reserves or long-term insurance technical
provisions”.

Amends section 27
Section 27(1) of the principal Act is amended by deleting “An insurer to which this

Part applies” and substituting “Every Class A and Class B insurer”.

Amends section 27B
Section 27B of the principal Act is amended by inserting after subsection (11) the

following new subsection—

Sections 14(5), (6), (7), (8) and (9) shall apply mutatis mutandis in
relation to the payment of an annual fee by a designated insurer under subsection
(11) in respect of an insurance group.”.

“(11A)

Amends section 27G
Section 27G (1) of the principal Act is amended by deleting “insurance reserves as

reported in its statutory financials” and substituting “insurance technical provisions in
accordance with the requirements of Schedule XIV “Group Statutory Economic Balance

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(a)

(b)

(c)

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(a)

(b)

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INSURANCE AMENDMENT (NO. 2) ACT 2015

Sheet” of the Insurance (Prudential Standards) (Insurance Group Solvency Requirement)
Rules 2011”.

Inserts section 30EA
The principal Act is amended by inserting after section 30E the following new

section —

“Notification by shareholder controllers of disposal of shares in public and
private companies

No person who is a shareholder controller in accordance with section
30D, shall reduce or dispose of his holding in a Class 3A, Class 3B, Class 4, Class
C, Class D or Class E insurer, where the proportion of the voting rights held by the
shareholder controller in the insurer will reach or fall below 10 per cent, 20 per
cent, 33 per cent or 50 per cent, as the case may be; unless that shareholder
controller has served on the Authority a notice in writing stating that he intends to
reduce or dispose of such holding.

A person who is a shareholder controller in accordance with section
30E, shall serve on the Authority a notice in writing that he has reduced or disposed
of his holding in a Class 3A, Class 3B, Class 4, Class C, Class D or Class E insurer,
where the proportion of the voting rights in the insurer held by him will have
reached or has fallen below 10 per cent, 20 per cent, 33 per cent or 50 per cent as
the case may be, not later than 45 days after such disposal.”.

30EA (1)

(2)

Amends section 30G
The principal Act is amended in section 30G—

by inserting after section (5A) the following new subsection—

Any person who contravenes section 30EA by failing to give the notice
required by subsections (1) and (2) of that section shall be guilty of an offence.”;

“(5B)

in subsection (6) by deleting “(1) or (5A)” and substituting “(1), (5A) or (5B)”.

Amends section 30JA
Section 30JA of the principal Act is amended—

in subsection (1)—

in paragraph (j), by deleting the full-stop and substituting a semicolon;

by inserting after paragraph (j) the following new paragraph—

outsourcing of an officer role.”;“(k)

by inserting after subsection (3) the following—

“ “officer” means in relation to an insurer, a chief executive or senior
executive performing the duties of underwriting, actuarial, risk

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(a)

(b)

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(a)

(i)

(ii)

(b)

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INSURANCE AMENDMENT (NO. 2) ACT 2015

management, compliance, internal audit, finance or investment
matters.”.

Amends section 31AA
Section 31AA(1)(b) of the principal Act is amended—

in subparagraph (i), by deleting “unaudited interim statutory financial
statements” and substituting “unaudited statutory economic balance
sheets and unaudited interim financial statements prepared in accordance
with GAAP”;

in subparagraph (ii), by deleting “in relation to line 17(d) of those
statements” and substituting “in relation to line 19 of the statutory
economic balance sheet”;

in subparagraph (vi), by deleting the words “in relation to line 27(d) of those
statements” and substituting “in relation to line 27C of the statutory
economic balance sheet”.

Consequential amendments
The Schedule, which amends the Insurance Returns and Solvency Regulations

1980, has effect.

Commencement
Subject to subsection (2), this Act shall come into operation when assented to.

Sections 2, 4, 5, 6, 8, 9, 10, 11, 13, 14, 15 and 16 of this Act shall come into
operation on 1 January 2016.

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(b)

(c)

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(2)

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INSURANCE AMENDMENT (NO. 2) ACT 2015

SCHEDULE

(Section 17)

AMENDMENTS TO THE INSURANCE RETURNS AND SOLVENCY REGULATIONS 1980

The Insurance Returns and Solvency Regulations 1980 are amended—

(a) by deleting regulation 8(2)(a) and substituting the following—

“(a) in relation to Class 1 insurers, Class 2 insurers and Class 3 insurers, the
amount prescribed by regulation 10 as the minimum margin of solvency,
and whether it was met;”.

(b) in regulation 8A(2) by deleting “and Part IV (Classes 3A, 3B and 4)”;

(c) by deleting regulation 9(2)(e) and substituting the following—

“(e) in relation to Class A insurers and Class B insurers, the minimum margin
of solvency for long-term business prescribed by regulation 12(1), and
whether that margin was met;”;

(d) in paragraph 14(1), by deleting “of the insurer” and substituting “of a Class A or
Class B insurer”; and

(e) in paragraph 14 (2) by deleting “The insurer’s” and substituting “A Class A or
Class B insurer’s”.

[Assent Date: 13 July 2015]

[Operative Date: 13 July 2015]

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