A.M. Best has issued a briefing report, which notes that “Bermuda moved one step closer to achieving Solvency II equivalence on November 26, 2015 when a delegated act regarding the equivalence of the supervisory regime for insurance and reinsurance undertakings in force in Bermuda was sent to the EU Parliament and Council for a three-month scrutiny period.”
Best explained that the “delegated act summarizes the conclusions of the European Insurance and Occupational Pensions Authority (EIOPA), who conducted a review of the solvency, supervisory, and prudential regimes of Bermuda, on Bermuda’s equivalence with Solvency II.
“The delegated act details Bermuda’s compliance with three articles of the European Directive commonly known as Solvency II, namely Reinsurance, Group Solvency, and Group Supervision. Provided the act is accepted, Bermuda’s equivalence with the provisions of Solvency II for insurance and reinsurers, with the exception of captives and special purpose insurers, takes effect January 1, 2016.”
Best’s analysis indicated that the “achievement of Solvency II equivalence will provide the Bermuda commercial reinsurance sector confirmation that the EU views them as equivalent to reinsurance companies that are regulated by EU member states.
“In addition to the financial benefit of reduced collateral requirements for business ceded by EU companies, equivalence will also confirm that Bermuda will remain a major platform for global reinsurance companies, who can transact business in the EU as easily as an EU-based reinsurer.”
Best described the equivalency initiative as a “positive development for the market profile of Bermuda-domiciled entities,” an important element for Best’s rating criteria. The briefing also stressed that “equivalence is particularly important for Bermuda, where international business is the nation’s largest industry. The Bermuda Monetary Authority (BMA) is the financial services regulator with responsibility for the insurance, banking, and investment and trust sectors.”
Source: A.M. Best
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