Bermuda's financial regulators' compliance with International Monetary Fund regulatory oversight standards, especially in supervising large commercial insurance and reinsurance companies, has drawn IMF praise in a report.
The IMF assessment was issued to evaluate Bermuda's progress in updating its oversight of financial companies since its last review in 2003.
"Bermuda's insurance supervision, especially for the large commercial (re)insurance companies, is highly observant of the core principles established by the International Association of Insurance Supervisors," the report said.
The report added, "The BMA has instituted a strongly risk-focused supervisory approach in line with the diversified range of insurers in Bermuda, and the Bermudian insurance regulatory system is based on hands-on, risk-sensitive supervision."
The report also noted that the Bermuda regulatory authority "has taken a proactive approach to the subprime [mortgage] crisis."
Responding to that comment, Matthew Elderfield, the Bermuda Monetary Authority's executive officer, explained that the IMF was talking about the periodic market surveys the BMA has conducted to maintain active monitoring and analysis for evaluating exposure of the banking, insurance and securities to subprime [mortgage problems]."
In his statement, Mr. Elderfield said he "welcomed" the IMF's new assessment. He said he was pleased Bermuda made "impressive progress in developing, and implementing, a risk-focused approach to supervision across the range of markets that form Bermuda's financial services sector."
Brad Kading, vice president and corporate secretary of the Association of Bermuda Insurers and Reinsurers, issued a statement saying Bermuda's government generally and the Bermuda Monetary Authority "specifically should be commended for their excellent work in demonstrating to the IMF Bermuda's market-leading efficient and effective system of wholesale insurance solvency regulation."
He added that the BMA "performs extremely well when compared with its peers in jurisdictions with much longer track records in regulating market leading insurers."
This is important, Mr. Kading said, because in the coming years, Bermuda's large global insurers, as represented by ABIR, "will face critical market access issues in key U.S. and European markets tied to findings of regulatory equivalency."
Mr. Kading added, "The excellent IMF assessment means that Bermuda has reached one milestone along the path to regulatory equivalence and eventual mutual recognition."
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