BMA is to consult on changes to public disclosure regime
The Bermuda Monetary Authority proposes to publicly disclose the assets and liabilities of the island’s long-term commercial insurers registered in Classes C, D and E.
The financial services regulator said this initiative forms part of the BMA’s commitment to enhancing the public disclosure regime and promoting transparency for the benefit of policyholders and other stakeholders.
The approach is revealed in a consultation paper titled “Proposed Enhancements to Public Disclosure Regime: Public Disclosure of Assets and Liabilities for Commercial Long-Term Insurers”.
The BMA wrote: “The primary objective of this proposal is to enhance the accessibility and granularity of asset-related disclosures. The detailed disclosure of long-term insurers’ assets will facilitate more informed decision-making by policyholders and other relevant stakeholders by providing insights into the composition and risk profile of insurers’ investment portfolios.”
It added: “A prudently managed long-term insurer is expected to align its investment strategy with its liability profile. Factors such as interest rates, which affect the value of investments, will also impact the value of liabilities.
“Therefore, it is important that disclosures cover both liabilities and assets. The Authority proposes that long-term insurers publicly disclose their liability profile in a way that allows interested stakeholders to assess the appropriateness of their investments in relation to their liabilities.”
The BMA said the proposed public disclosure of assets and liabilities “responds to the broader global trend and structural shifts in the life and annuity sector, which has seen an increased appetite for illiquid, hard-to-value assets that are non-publicly traded and can be more complex than liquid traded assets.
“The proposed disclosure will require long-term insurers to provide, and the BMA to disclose, a detailed breakdown of their investments and information about how their investments align with their policyholder liabilities.
“The disclosure is intended to enable the wider public, market participants and other stakeholders to gain better visibility and understanding of the types of investments, nature of assets, and asset liability management of each individual long-term insurer.”
The BMA said consultation on the draft rules governing the disclosure requirements will commence in the first quarter of 2025.
The organisation said it invites feedback from stakeholders on the proposed framework, particularly regarding the potential challenges and impacts of this public disclosure requirement.
The BMA said it intends the new requirements to become effective on December 31, 2025.
However, for registrants who choose to volunteer, the BMA will publicly disclose their assets and liabilities starting from December 31 this year.
• For the full consultation paper, see Related Media
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