Bermudan insurers to face 'intensive' supervisory engagement over illiquid/non-traditional assets

Written by Adam Cadle

12/12/2022

Bermudan insurers with high asset allocations to illiquid and other non-traditional assets can expect intensive and comprehensive supervisory engagement as part of the Bermudan Monetary Authority’s (BMA) upcoming proposed enhancements of regulatory and supervisory regimes.

The Authority also said it expects insurers’ Own Risk Self Assessments (ORSA) to demonstrate that the insurer can properly identify, measure, monitor, manage, control and report risks associated with illiquid assets and appropriately take these into account in the assessment of its overall solvency and liquidity needs.

“The data used to support the investment decision and ongoing risk management must be high-quality”, it added.

Where concerns are noted, as consistent with existing BMA practice, the Authority said there could be a need for the imposition of additional measures such as additional reporting on assets, bespoke stress testing, capital and reserve add-ons, investment restrictions, dividend restrictions and the requirement for additional sources of capital to be put in place.

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