A new report has highlighted the resilience of Bermuda’s long-term insurance sector against liquidity-related shocks in the current volatile global environment.

The Bermuda Monetary Authority has just released its Liquidity Risk in the Bermuda Long-term Insurance Market report which said the industry had demonstrated robustness against the recent stress of quickly increasing interest rates and liquidity risk.

It said this was due to a mix of “product structure, investment diversification, a solid regulatory liquidity risk framework, and, strong asset and liability management and liquidity risk management”.

The report said: “Despite this resilience shown over the last few years, long-term insurers in Bermuda continue to enhance their liquidity risk management processes.

“The characteristics of Bermuda’s long-term insurance products and the asset allocation data presented in this report reveal that long-term insurers in Bermuda have a diverse range of assets and liability profiles.

“Because of these differences in portfolio features, current regulatory standard stress tests may not always fully capture all sources of liquidity risks the companies may have.”

It added: “Consequently, the BMA continues to engage with the long-term sector on the outcomes of their tailored liquidity stress tests included in the [commercial insurer's solvency self-assessments].”

Liquidity stress tests were included in the annual mandatory filings for the first time for year-end 2023 reporting.

The BMA is considering further refinements to the stress tests based on lessons learnt from the year-end 2023 reporting and feedback received from the market.

Download PDF File

2024-08-30-12-52-25-Liquidity-Risk-in-the-Bermuda-Long-term-Insurance-Market.pdf

• To read the full report, see Related Media