BMA regulatory requirements
The Bermuda Monetary Authority (BMA) framework is a supervisory regime for commercial insurers and insurance groups which has full equivalence with the EU’s Solvency II regime. It has enhanced statutory and prudential reporting requirements for Bermudan entities, promoting transparency. Companies must calculate their capital according to their individual risk profile and produce a forward-looking Solvency Self-Assessment (GSSA/CISSA). This brings increased demand for modelling expertise and sound risk management.
BMA published a Guidance Note outlining their expectations for climate risk management in August 2022. (Re)insurers are expected to address climate change risk in their governance, risk management framework and GSSA/CISSA. Progress on the implementation of the guidance will be monitored during 2023, with full adaptation by 2025. See further information on the new requirements for climate change risk here.
Finalyse offers a comprehensive set of managed services and tailored solutions. Finalyse can assist you in complying with these new regulations, including meeting the recently published climate risk management requirements for 2023.
How does Finalyse address your challenges?
HoAF Support:
Calculation of technical provisions for EBS, assessing appropriateness of the methods, models and assumptions, sufficiency & quality of data. And providing an opinion on the CISSA
Capital Modelling support:
Production of the BMA Capital Requirement supporting analysis and maintaining capital model is maintained in line with the internal governance framework
CISSA/GSSA support:
Capital planning and optimisation, GSSA projections and stresses, including climate risk scenarios (see also here). Communicating complex concepts and enabling management decision-making through sound analytical rationale
Strategic and operational:
Providing actuarial support on strategic initiatives, streamlining the actuarial process and enhancing to the Actuarial Function including policies, processes and tools
SAA support:
Specifying asset classes, defining objectives and constraints, forming capital market expectations, establishing asset class bandwidths, validating the optimal allocation and optimizing the asset mix
Peer reviews:
Review of assumptions, methodologies, material uncertainties and potential deteriorations, expert judgement, appropriateness of models and reasonableness of the AA’s conclusions
How does it work in practice?
The Bermuda Monetary Authority (“BMA”) is responsible for the licensing, supervision and regulation of financial institutions including those conducting deposit-taking, insurance, investment and trust business in Bermuda.
The BMA has a Solvency II equivalence and has a similar 3 pillar approach.
Principles of Economic Balance Sheet (EBS):
Principles of Bermuda Solvency Capital Requirements (BSCR)
Our subject matter experts
Yannis is a qualified actuary with experience in risk management, actuarial modelling and capital management for insurers. He has acquired in-depth knowledge of the insurance sector through the performance of key roles such as CRO and Head of Actuarial Function. He is a subject matter expert in the fields of Solvency II, Risk Appetite Frameworks, Balance Sheet Valuation and ORSA projection models.
Francis is an actuary within the life and non-life (re)insurance industry. His expertise covers the areas of financial reporting and prudential regulation. He worked in the life insurance industry in a financial reporting and capital modelling capacity with extensive exposure to domestic and international clients with a keen eye on new regulatory developments.
Bence is an accomplished senior life actuary with 19 years of experience, including 15 years in management roles. His core expertise is in life reporting across IFRS, US GAAP, Solvency II, and BMA EBS. Bence had exposure to a wide range of projects from capital and risk management, reinsurance, IFRS17 to new authorisations and M&A. He has substantial experience in building, calibrating, or reviewing capital projection models.
Key Features
- Finalyse offers extensive experience and expertise on both the asset and liability sides of the balance sheet, which provides the necessary scope of knowledge and skills to help determine the solution that is optimal for your business.
- Leverage on our experience in areas beyond financial reporting, such as actuarial models, IT systems including data management and storage capacities, risk management including ALM and hedging, product design, business strategies and remuneration.
- You can choose from a comprehensive set of managed services and tailored solutions to support you with various elements of BMA compliance, such as implementation of the key functions, performing and reviewing technical calculations, actuarial model development, risk management (including ALM and hedging), CISSA production and reporting.
- You can also fully outsource the various key functions required by the BMA to Finalyse by appointing one of our senior experts with previous experience to fulfil these functions.
What Finalyse experts say
On 27 January 2022, the European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the methodological principles of developing bottom-up stress tests for climate change risks focusing on the design and calibration of stress tests for climate change risks as part of the future supervisory testing framework. This article examines EIOPA's methodological considerations outlined in this paper.
ReadClimate change poses a serious risk for society and for (re)insurers, with the harmful impact of global warming already being visible. Without further international climate action, global average temperatures and the associated physical risks will continue rising, resulting in increased underwriting risk of insurers, impacting asset values, and challenging their business strategies. On the 5th October 2020, the EIOPA has published a consultation paper on the use of climate change risk scenarios in the ORSA in the form of a draft supervisory Opinion. The consultation is a follow-up to the Opinion on Sustainability within Solvency II released in September 2019 which recommended that (re)insurers should consider climate risks beyond the one-year time horizon within their system of governance, risk-management system and ORSA.
Read