High-Level Overview Of Bermuda Monetary Authority's Three-Tiered Capital System

Insurers and reinsurers are faced with uncertainties relating to the timing and scale of future losses and the risk that the premiums charged and reserves held will be insufficient to cover such losses.

One way that the Bermuda Monetary Authority (BMA), as the island's financial regulator, addresses these uncertainties is by requiring insurers and reinsurers to have sufficient capital of appropriate quality to allow them to meet their obligations to policyholders should such losses occur.

The BMA has a three-tiered capital system, the purpose of which is to assess the quality of capital resources that an insurer or reinsurer has available to meet its regulatory capital requirements.