BERMUDA Law and Practice Contributed by: Brad Adderley, Matthew Carr, Max Tetlow, Cathryn Minors, Josephine Noddings, Aleisha Hollis, Melinda Mayne, Milaun Perott and Mya Gibbons, Appleby
liabilities to its insureds through the proceeds of a debt issuance, cash, time deposits or other financ- ing mechanism. There are eight general business classifications (Classes 1, 2, 3, 3A, 3B, 4, IGB and IIGB) and six long- term business classifications (Classes A, B, C, D, E and ILT), as well as restricted special-purpose insurer (SPI), unrestricted SPI insurer and collateralised insur- er classifications, which can be further classified as either general business or long-term business. Insurers are sub-divided into three categories: • captive insurers (Classes 1, 2, 3, A and B); • commercial insurers (Classes 3A, 3B, 4, C, D and E); and • SPIs and collateralised insurers. The IGB, IIGB and ILT categories can be either captive or commercial insurers. General Business Class Requirements A Class 1 insurer is: • wholly owned by one person and intends to carry on insurance business consisting only of insuring the risks of that person; or • an affiliate of a group that intends to carry on insur- ance business consisting only of insuring the risks of any other affiliates of that group or of its own shareholders. A Class 2 insurer is wholly owned by two or more unrelated persons and intends to carry on insurance business in respect of which not less than 80% of the net premiums written will be for the purpose of either of the following: • insuring the risks of any of those persons or of any affiliates of any of those persons; or • insuring the risks that, in the BMA’s opinion, arise out of the business or operations of those persons or any affiliates of any of those persons, and that would be registrable as a Class 1 insurer but for the fact that (i) not all of the business that it intends to carry on, but at least 80% of the net premiums written, will consist of the business described
under the requirements for a Class 1 insurer; or (ii) it intends to carry on insurance business in respect of which not less than 80% of the net premiums written will, in the BMA’s opinion, arise out of the business or operations of the person by whom it is owned or any of the affiliates of that person. A Class 3 insurer is not registrable as a Class 1, Class 2, Class 3A, Class 3B, Class 4 insurer or SPI. A Class 3A insurer intends to carry on insurance business in circumstances where: • 50% or more of the net premiums written, or 50% or more of the loss and loss expense provisions, represent unrelated business; and • the total net premiums written from unrelated busi- ness are less than BMD50 million. A Class 3B insurer intends to carry on insurance busi- ness in circumstances where: • 50% or more of the net premiums written, or 50% or more of the loss and loss expense provisions, represent unrelated business; and • the total net premiums written from unrelated busi- ness are BMD50 million or more. A Class 4 insurer: • has total statutory capital and surplus of not less than BMD100 million; and • intends to carry on insurance business including excess liability business or property catastrophe reinsurance business. A Class IGB insurer intends, at the time of its registra- tion, to carry on general business in an innovative and experimental manner, whereas a Class IIGB insurer intends to carry on business in an innovative manner. Long-Term Business Class Requirements A Class A insurer is: • wholly owned by one person and intends to carry on long-term business consisting only of insuring the risks of that person; or • an affiliate of a group that intends to carry on long- term business consisting only of insuring the risks
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