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
General business insurers with segregated and separate accounts In July 2024, the BMA released a guidance note setting out its expectations with respect to insurers who maintain segregated accounts (as defined in the SAC Act) or separate accounts (where the insurer is incorporated by private act). The guidance note is intended to support policyholder protection and includes ensuring that clear contractual arrangements governing each segregated or separate account are set out, effective governance and risk management frameworks are implemented, reporting is adequate, loss reserve specialist opinions and audits (subject to materiality) relating to all accounts are provided and returns of capital are appropriate. The guidance note indicates the BMA’s expectations regarding collateral quality, impairment and disclosures. The BMA also prescribes certain matters that will amount to a mate- rial change in the insurers business, requiring approval of the BMA. Enhancements to Insurance Group Supervision There have been recent changes to Bermuda’s group supervision regime as a result of the Insurance Amendment No 2 Act 2025 (the “Amendment Act”) which became operative on 7 January 2026 (the com- mencement date). Pursuant to the Amendment Act, the BMA shall be group supervisor of an insurance group in the follow- ing instances: (a) when the insurance group is headed by a specified insurer (Class 3A, 3B, 4, C, D or E, or another class designated by the BMA); (b) where (a) does not apply, when the group is headed by a parent entity that is a body corporate incorpo- rated or formed, including by way of continuation, in Bermuda, that is not itself a subsidiary of any other entity (an ultimate parent entity in Bermuda); and (c) where (b) does not apply, when the BMA is satisfied that (i) the insurance group is directed and managed from Bermuda; or (ii) the insurer in the group with the largest balance sheet is a specified insurer.
• whether the insurer is subject to enhanced super- visory monitoring by the BMA or another relevant supervisory authority. The BMA will tailor the scope and requirements of a recovery plan based on the insurer’s specific char- acteristics, including its class of registration, size or market share; its external and internal interconnected- ness; the complexity, business model and risk profile of the insurer; the substitutability of the insurer; and any cross-border activities of the insurer. The new recovery rules come on the back of previ- ous global financial crises where the Financial Stability Board set out new standards applicable to systemical- ly important financial institutions. The intention of the regime is to aid the insurer in understanding its own risk in severe stress scenarios, and to help strengthen Bermuda’s regulatory framework by ensuring insurers have a plan to act in an orderly and timely manner should they find themselves under severe stress. To help achieve this, the BMA invited Class C, D and E (re)insurers to participate in their Global Financial Crisis Stress Test to help gather market-wide informa- tion from commercial insurers on their sensitivity to a severe economic crisis. Revisions to the prudential framework Pursuant to Section 6D of the Insurance Act, the BMA may make adjustments to the ECR, available statutory capital and surplus, and available statutory economic capital and surplus of an insurer. The BMA has revised the framework according to Section 6D adjustments in order to align with international standards and best practices. Three routes exist: (i) simple adjustments; (ii) simple complex adjustments; and (iii) complex adjustments. Each route has a framework that must be met. The BMA acknowledges that there are certain other adjustments that fall out of the foregoing, and these can be applied for separately. Each application should be submitted with a formal pack that, at mini- mum, evidences the relevant requirements for grant- ing the adjustment are met. Each adjustment shall be reviewed annually. Certain transitional arrangements for adjustments granted prior to 31 December 2023 but which fall outside of the revised framework have been proposed.
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