Transcript The Bermuda Market in 2005

www.bermudacaptive.bm
JUNE 2 - 4, 2014
Introduction to Captives and the
Bermuda Domicile
Introduction to Captives and the
Bermuda Domicile
Moderator:
• Federico Candiolo, Counsel, ASW Law Ltd
Panelist(s):
• Roger Aliaga-Diaz, PhD, Senior Economist, Vanguard Investment
Strategy Group
• Gerardo Filorio, Business Administration, Director, Lockton, Mexico
• Dr. Marcelo Ramella, Deputy Director, Policy and Research, Policy,
Legal Services & Enforcement Department, Bermuda Monetary Authority
• Tino van den Heuvel, Partner, Tax Attorney, Hill Smith King & Wood New
York
Introduction to Captives and the
Bermuda Domicile
Marcelo Ramella
Deputy Director, Policy and Research
Policy, Legal Services & Enforcement Department
Bermuda Monetary Authority
Regulatory Overview
BMA - Background
• The Bermuda Monetary Authority Act 1969
• Independent Regulatory Body / Separate from
Government
• Board of Directors
• Integrated regulator of Bermuda’s Financial Services
Sector
BMA’s Main Functions
• Under the BMA Act we are:
• Issuer of Bermuda’s notes and coins
• Manages exchange control transactions
• Regulates & Supervises
• Insurers
• Banks, trust companies, investment businesses, investment
funds, fund administrators
• Money service businesses
• Bermuda Stock Exchange
Regulatory Framework
Supervision
The way in which the rules are applied
Regulation
The rules and conditions
Legislation
The Acts, laws passed by Parliament
The Insurance Code of Conduct
• Builds on previous longstanding practice and guidance for
governance standards, specifically guidance notes on:
•
Corporate Governance
•
Risk Management
•
Internal Controls
• Codifies these existing guidance notes on governance standards
such that they are now legally binding.
• Captive insurers should be mindful of the proportionality
principle in establishing a sound corporate governance, risk
management and internal controls framework
Insurer Class Structure
•
General Business Insurers
– Class 1, 2, 3 – Captive Classes
– Class 3A, 3B, 4 – Commercial Classes
•
Long-Term Business Insurers (annuity, life,
some accident & health)
– Class A, B – Captive Classes
– Class C, D, E – Commercial Classes
•
SPIs (insurer fully funds liabilities through a
debt issuance or some other approved
financing mechanism)
Minimum Solvency Margins
General Business
Class 1
100%
Related
Class 2
<20%
Unrelated or
Multi-owned
Class 3
20% to 50%
Unrelated
a) Minimum Statutory
Capital & Surplus
$120,000
$250,000
$1 million
b) Premium Test: First
$6 million of Net
Premium Written
20%
20%
20%
Net Premiums Written
in excess of $6 million
10%
10%
15%
c) Loss Reserve Test:
Loss and Loss
Expense Reserve
10%
10%
15%
Class of Insurer
Greater of:
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Minimum Solvency Margins
Long-Term Business
Class of Insurer
Greater of:
a) Minimum Statutory
Capital & Surplus
b) Asset Test: Total
Assets
Class A
100%
Related
Class B
<20%
Unrelated or Multiowned
$120,000
$250,000
0.5%
1.5%
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Bermuda’s Captive Regulation
• Captive vs. Commercial
• Risk-Based Approach
• Role of Principal Representative and
Insurance Manager
• Insurance Manager On-sites
• Segregated Accounts Companies (Rent-aCaptives)
Pragmatic Approach to Regulation
• Bermuda: The World’s Risk Capital
• Creativity and Innovation
• Modifying accounting regulations/ Section 56
Directions
• Other approvals
• Approving “relevant assets”
• Admitting assets
• Regulations consistent with International
Standards but applied appropriately for Bermuda
Market.
How BMA interacts with service providers
Lawyers
Bermuda
Government
International
Standard
Setting Bodies
Auditors
BMA
Other
Regulators
Banks
External
Actuaries
Insurance
Managers/
Principal
Reps
Captive registrations: by the numbers
Full Year 2013
•91 – New insurers registered (up 72% from 53 in
2012)
•24 – New captives registered (up 100% from 12 in
2012)
•YTD April 2014
•21 – New insurer registrations (up 5% year-on-year)
•4 – New captives registered (flat year-on-year)
International Participation
• The BMA contributes to international regulatory
developments via active participation in international
standard setting bodies, e.g.
• International Association of Insurance Supervisors (IAIS)
• Financial Stability Board’s Regional Consultative Group for the
Americas
• National Association of Insurance Commissioners (NAIC)
• Leadership positions/membership of key working groups and
committees
• Bermuda influences, as well as keeps abreast of, global
regulatory developments
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International Developments
• Qualified Jurisdictions Status –NAIC
• Solvency II Equivalence – European Insurance and
Occupational Pensions Authority (EIOPA)
• Bermuda’s Anti-Money Laundering Regime –
International Monetary Fund (IMF)
• TIMELINE FOR ASSESSMENTS
• NAIC - 2014
• EIOPA- 2015
• IMF- 2016