BERMUDA MONETARY AUTHORITY

GUIDANCE NOTE

ACTUARY’S OPINION

on EBS Technical Provisions

December 2017

Table of Contents

INTRODUCTION .............................................................................................................. 3

I. Definitions ....................................................................................................................... 3

II. Background .................................................................................................................... 4

III. Interpretation ................................................................................................................. 5

FIT AND PROPER CRITERIA AND APPROVAL PROCESS FOR ACTUARIES ....... 6

IV. Appointment of an Actuary .......................................................................................... 6

V. Approval Process for an Actuary ................................................................................... 7

VI. Criteria for Approval .................................................................................................... 8

VII. Fitness and Propriety of an Actuary ............................................................................ 9

VIII. Acceptance of an Engagement ................................................................................. 10

IX. Notification of Approval............................................................................................. 11

X. Change in Actuary ....................................................................................................... 11

XI. Disqualifications ......................................................................................................... 11

ROLE OF ACTUARIES................................................................................................... 12

XII. Accepted Actuarial Practice ...................................................................................... 12

XIII. EBS valuation principles .......................................................................................... 12

XIV. Right to Information ................................................................................................ 14

XV. Communication of Opinion....................................................................................... 14

XVI. Appendix 1 ............................................................................................................... 25

XVII. Appendix 1A - Cover Letter Templates for Loss Reserve Specialist .................... 26

XVII. Appendix 1B - Cover Letter Templates for Appointed Actuary ............................ 28

XVIII. Appendix 1C - Letter of Undertaking and Acceptance Templates for Loss Reserve

Specialist ........................................................................................................................... 32

XIX. Appendix 1D - Letter of Undertaking and Acceptance Templates for Appointed

Actuary .............................................................................................................................. 34

INTRODUCTION

1. This Guidance Note (GN) sets out the Bermuda Monetary Authority’s (the Authority)

expectations for the provision of formal professional opinions that are required on the

insurance Technical Provision (TP) elements of the Economic Balance Sheet (EBS).

2. The scope of this GN includes the EBS actuarial opinion requirements for all

commercial legal entities and groups covered by the relevant legislation. This

comprises of all insurers in Class 3A, Class 3B, Class 4, Class C, Class D, Class E

and Insurance Groups. (Throughout this GN, the term ‘insurer’ refers to insurers,

reinsurers and insurance / reinsurance groups unless indicated otherwise.)

I. Definitions

3. The following definitions are used throughout this GN:

‘Act’ – refers to the “Insurance Act 1978 and Subsequent Amendments”

‘Insurance Prudential Standards Rules’ refers to:

• For Class 3A: Insurance (Prudential Standards) (Class 3A Solvency

Requirement) Rules 2011;

• For Classes 3B and 4: Insurance (Prudential Standards) (Class 4 and 3B

Solvency Requirement) Rules 2008;

• For Classes C, D and E: Insurance (Prudential Standards) (Class C, Class D

and Class E Solvency Requirement) Rules 2011; or

• For Insurance Groups: Insurance (Prudential Standards) (Insurance Group

Solvency Requirement) Rules 2011.

‘Actuary’ refers to an individual approved by the Authority, being:

• For Class 3A: the Loss Reserve Specialist (LRS) appointed by the insurer

under Section 8B(1A) of the Act;

• For Classes 3B and 4: the LRS appointed by the insurer under Section

8B(1B) of the Act;

• For Classes C, D and E: the Approved Actuary (AA) appointed by the insurer

under Section 26(1A) of the Act; or

• For Insurance Groups: the Group Actuary (GA) appointed by the group under

Section 27G(1) of the Act.

‘Schedule XIV’ refers to Schedule XIV of the relevant Insurance Prudential

Standards Rules, which sets out the detailed requirements for the EBS.

‘Schedule XV’ refers to Schedule XV of the relevant Insurance Prudential Standards

Rules, which sets out the requirements for the Actuary’s Opinion.

II. Background

4. Schedule XV of the Prudential Standards Rules stipulates that the Actuary’s Opinion

(AO) must state whether or not, in the opinion of the Actuary, the aggregate amount

of TPs shown in the EBS as at the end of the relevant financial year is reasonable.

5. A primary focus of this Guidance Note is to elaborate upon the Authority’s general

approach to the supervision of insurers in relation to their engagement of an Actuary

appointed to professionally opine upon the reasonableness of the insurers’ TPs. This

approach involves setting out prudent and robust fundamental requirements that an

insurer and their Actuary are expected to adhere to during the course of the

engagement.

6. The responsibility of professionally opining upon the reasonableness of TPs

contained in the EBS is integral to Bermuda’s insurance supervisory framework. As

the TPs included in the EBS are not subject to financial audit, the AO issued through

this process is especially critical as it is intended to give assurance to the Authority as

to whether the TPs have been professionally assessed to be reasonable.

7. The Actuary approval process is intended to ensure that the Authority can place

reliance on the professionalism of the Actuary and their credentialing actuarial

body(s) whose professional standards the Actuary will comply with during the course

of their engagement.

8. The Authority is of the view that once an Actuary has been approved, the focus of the

regulatory process should be upon the work product of the Actuary in the context of

the insurer.

9. This Guidance Note builds on previously released actuarial guidance, with specific

focus upon the EBS framework, the fit and proper criteria for the approval of an

Actuary and the roles and responsibilities of an Actuary once approved.

10. The Authority recognises the need for clarity as to the scope and implementation of

the provisions of the Act if the regulatory system is to command the confidence of

insurers and contract/policyholders as well as other regulatory bodies. The Authority

therefore seeks to ensure that those operating within the Bermuda market have a

sound understanding of the Authority’s approach to implementing the Act.

11. While the Authority aims to provide clarity as to its approach, this Guidance Note

cannot be exhaustive. In particular, the Guidance Note does not aim to provide

guidance on determining TPs for the EBS.

12. The Authority will endeavour, through this and other Guidance Notes, to set out

information about its regulatory approach and expectations regarding the activities

associated with an Actuary. Ultimately, it is the responsibility of the insurer to ensure

its compliance with the Act, and all queries associated with this GN should be

directed to the Authority.

13. The Authority’s guidance is of general application and seeks to take account of the

wide diversity of institutions that may be licensed under the Act. There may be a

need for revision of this Guidance Note from time to time. Material changes in the

Guidance will be published, generally through the issue of revised versions.

III. Interpretation

14. Best Estimate A probability-weighted average of future cash flows, discounted using

the relevant adjusted risk-free interest rate term structure. By definition, EBS best

estimates allow for discounting of future cash flows, and reflect the full potential

range of possible outcomes. Traditional insurance valuation methodologies may not

be capable of adequately allowing for all possible scenarios; however, for EBS best

estimate valuations, it is expected that due regard be paid to events that may not be

adequately reflected in the data used for such traditional approaches. These events

have been referred to as ‘Binary Events’ or ‘ENIDs’ (Events Not In Data set). A “best

estimate” may or may not be the result of the use of a probability distribution or a

statistical analysis, and, in the Actuary’s professional judgement, is neither optimistic

nor pessimistic.

15. Reasonable In the context of an Actuary opining on Line 19 and/or Line 27C of the

Statutory Economic Balance Sheet

, “reasonable” means that, considering the nature,

scale and complexity of the insurer’s business and the requirements and standards of

the Act, the TPs held are deemed by the Actuary to fall within a range of best

estimate provisions that would be arrived at by two or more actuaries possessing the

appropriate integrity, competency, resources, qualifications and experience, and

where the subject actuaries exercised the level of care and diligence that, in the

Actuary’s professional judgment, would be necessary to complete the assignment in

an appropriate manner.

16. Adverse Deviation (General Business – Only) The potential variation in the actual

amount that will be needed to pay future obligations gives rise to uncertainty in the

estimates of TPs. In the context of this GN, an adverse deviation occurs when such a

The Statutory Economic Balance Sheet is found in Schedule XIV of the Prudential Standards Rules for

the relevant class of insurer

Actuarial Standards Board (ASB) – http://www.actuarialstandardsboard.org/glossary/reasonable/ - “In

many instances, the ASOPs call for the actuary to … produce a “reasonable” result when rendering

actuarial services. The intent is to call upon the actuary to exercise the level of care and diligence that, in

the actuary’s professional judgment, is necessary to complete the assignment in an appropriate manner.

Because actuarial practice commonly involves the estimation of uncertain events, there will often be a

range of reasonable methods and assumptions, and two actuaries could follow a particular ASOP, both

using reasonable methods and assumptions, and reach different but reasonable results. (ASOP No. 1)”

variation results in amounts higher than provided for in the TPs. The Actuary should

consider whether there are significant risks and uncertainties that could result in a

material adverse deviation.

17. Materiality (General Business – Only) In evaluating materiality within the context of

“adverse deviation”, the Actuary should consider the purposes and intended uses for

which he/she is preparing the statement of actuarial opinion. In discussing “material

adverse deviation” within Part 6 – Relevant Comment of the Opinion - (General

Business – Only) - the Actuary should arrive at a conclusion as to whether or not

significant risk factors and/or uncertainties exist that could result in a material adverse

deviation from the TPs held. The Actuary is expected to select a materiality standard

in the context of the company's (regulatory) EBS capital and surplus and/or held TPs.

Finally the Actuary should discuss the considerations underlying their conclusions.

FIT AND PROPER CRITERIA AND APPROVAL PROCESS FOR ACTUARIES

IV. Appointment of an Actuary

18. The Act stipulates that certain insurers must appoint an Actuary, being an actuarially

skilled individual, for the purposes of opining upon their TPs. This appointment is

subject to approval by the Authority. The AO is to be provided annually with the

Statutory Economic Balance Sheet (EBS).

19. Each insurer that is required to appoint an Actuary must apply in writing to the

Authority for approval of their candidate(s) for that position. Each Actuary approval

is specific to the subject insurer’s application, is uniquely determined and is

contingent upon the nature, scale and complexity of the insurer’s business and the

Actuary candidate’s suitability to serve as an appointed Actuary for that insurer based

upon the fit and proper criteria contained herein. The Authority will confirm in

writing its decision concerning the approval or otherwise of the insurer’s appointed

candidate(s) for Actuary.

20. Where there are any material changes in the information included in the Actuary’s

application subsequent to the Actuary’s approval, the insurer has the duty to forthwith

provide written notice of the changes to the Authority.

This definition is consistent with ASB - ASOP - No. 36 - 3.9.

The ASB - ASOP - No. 36 - 3.6, for example, states that “the actuary should evaluate materiality based on

the actuary’s professional judgment, any applicable materiality guidelines or standards, and the intended

purpose for which the actuary is preparing the statement of actuarial opinion. The actuary should

understand which financial values are usually important to the intended users of the statement of actuarial

opinion and how those financial values are likely to be affected by changes in the reserves and future

payments for losses and loss adjustment expenses.”

V. Approval Process for an Actuary

21. The process of approval generally requires that an insurer provide adequate

information to the Authority to demonstrate that its candidate for the post meets the

eligibility and fit and proper criteria discussed herein. This documentation is expected

to include, but is not limited to:

a. Cover Letter from the insurer making request for the named candidate to be

approved. If applicable, this letter should include a written explanation for any

change from the current Actuary. This letter should also confirm that the

appointed Actuary shall have the ability to communicate directly with the board

without the need for management review or approval; and that the board shall

have direct access to the Actuary. This requirement might be complied with by

ensuring that the Actuary is able to address the board or an appropriate committee

thereof, directly without management executives being present. Appendix 1A and

1B to this Guidance Note contain sample templates for the Cover Letter for Loss

Reserve Specialist and Appointed Actuary, respectively;

b. Letter of Resignation from the current Actuary;

c. Letter of Undertaking and Acceptance from the candidate stating that the Actuary:

i. Undertakes to perform their functions in accordance with Schedule XV of

the Prudential Standards Rules and the professional standards of their

credentialing actuarial body(s);

ii. Has the ability to fulfil the role of Actuary, laying out specific work

experience and skills relevant to the business underwritten by the insurer;

iii. Confirms their understanding that he/she shall have the ability to

communicate directly with the board without the need for management

review or approval; and that the board shall have direct access to the

Actuary;

iv. Meets the Continuing Professional Development requirements

promulgated by their credentialing actuarial body(s); and

v. Commits to providing a letter of resignation (as required in b. above) at

the time of their resignation from the Actuary role.

Appendix 1C and 1D to this Guidance Note contain sample templates for the

Letter of Undertaking and Acceptance from the candidate Actuary for Loss

Reserve Specialist and Appointed Actuary, respectively;

d. Résumé from the candidate with information about relevant qualifications,

including membership in professional associations, employment history and

related work experience; and

e. Copy of certificates and/or confirming evidence from credentialing actuarial

bodies attesting to the fact that the candidate is a qualified member in good

standing of the relevant associations.

For the purposes of insurance groups, all references to “board” in this Guidance Note are intended to refer

to the Group’s “parent board”.

VI. Criteria for Approval

22. Prior to approving a person as an Actuary, the Authority will assess whether the

proposed Actuary is fit and proper to fulfil the role required. Fit and proper criteria

would include whether, commensurate with the nature, scale and complexity of the

insurer’s business and the requirements and standards of the Act, the person possesses

the appropriate integrity, competency, resources, qualifications and experience

including being appropriately conversant with the Authority’s established EBS

valuation requirements and guidance material.

23. A person will generally be considered fit and proper to serve as an Actuary if the

person:

a. Is a qualified member in good standing of the Institute and Faculty of Actuaries

(in the UK), the Canadian Institute of Actuaries, the Casualty Actuarial Society

(in the US), the Society of Actuaries (in the US), the Institute of Actuaries of

Australia or a Full Member Association of the Actuarial Association of Europe (in

the EU);

b. Meets the education, examination and experience requirements to be considered

qualified to sign statutory statements of actuarial reserve opinions by their

credentialing actuarial body(s) as listed in 23a;

c. Meets the continuing professional development requirements promulgated by

their credentialing actuarial body(s);

d. Has experience in evaluating TPs for the business as written by the insurer,

including being appropriately conversant with the Authority’s established EBS

valuation requirements; and

e. Is not subject to any actual, potential or perceived conflicts that may prevent the

Actuary from objectively fulfilling their role.

24. The Authority will generally approve no more than:

a. One person to opine upon Line 19 of the EBS where that person meets the criteria

set out in paragraph 23 for the General Business of the insurer; and

b. One person to opine upon Line 27C of the EBS where that person meets the

criteria set out in paragraph 23 for the Long-Term Business of the insurer; or

c. One person to opine upon both Line 19 and 27C of the EBS (as applicable) where

that person either meets the criteria set out in paragraph 23 for both the General

and Long-Term Business of the insurer or the circumstances are such that

paragraph 25 applies.

25. In the event that an insurer wishes to propose the same candidate to opine upon both

Line 19 and Line 27C, pursuant to paragraph 24c., but where the proposed Actuary

meets the criteria set out in paragraph 23 to opine upon either Line 19 or Line 27C,

but not both, then the Authority may use its discretion to approve the appointment of

the person, giving due regard to the particular circumstances, such as the materiality

of the business, as written by the insurer, to be opined upon. However, the Actuary

will still be subject to the Professional Standards of their credentialing actuarial

body(s).

26. The principle of objectivity imposes an obligation on all Actuaries not to compromise

their professional or business judgment because of bias, conflict of interest or the

undue influence of others. As such, the Authority will generally expect specific

disclosures to be made if the Actuary is not financially, organisationally, or otherwise

independent in relation to the provision of the AO.

27. While the proposed Actuary may be an employee of, or consultant to, the insurer, a

person will generally not be approved as an Actuary if the person is:

a. A chief executive officer, a chief operating officer, a chief financial officer, a

chief risk officer, a chief underwriting officer (or a person performing like

functions within the insurer);

b. A director of the insurer. Where the proposed Actuary holds directorships at the

subsidiary level within the insurer, the Authority may exercise its discretion in

granting approval in such circumstances provided, generally, that the combined

net TPs of the entities for which he/she is a director amount to no more than 30%

of the total of line 19 and no more than 30% of the total of line 27C for the

insurer;

c. A person with operational underwriting, pricing, or claims authority for the

insurer; or

d. A person who has any personal financial ties with one or more key personnel of

the insurer as identified in a., b. and/or c. herein, where, in the view of the

Authority, there is an actual or perceived conflict of interest or lack of

independence that could affect the Actuary’s ability to objectively fulfil their role.

28. Where the insurer elects to appoint an employee as their Actuary, the insurer is

expected to ensure that once the Actuary is appointed, the insurer’s compensation

package does not compromise the independence of either the proposed Actuary or

any persons whose work is being relied upon.

VII. Fitness and Propriety of an Actuary

29. Prior to selecting a candidate for the role of Actuary, the insurer is expected to

consider whether its candidate meets the eligibility criteria of the Authority and

whether the candidate is fit and proper to fulfil their role. This requires considering

whether, commensurate with the nature, scale and complexity of the insurer’s

business and the requirements and standards of the Act, the person possesses the

appropriate integrity, competency, resources, qualifications and experience including

These guidelines are consistent with the ASB - ASOP - No. 41 - Actuarial Communications - 3.4.2 -

Conflict of Interest.

being appropriately conversant with the Authority’s established EBS valuation

requirements. Wherever appropriate, the insurer should seek confirmation of this, in

advance, from the candidate.

30. If an insurer becomes aware at any time that its Actuary is no longer fit and proper,

the insurer has the duty to forthwith inform the Authority and replace the Actuary

with a person who meets the eligibility and fit and proper criteria.

31. An insurer is expected to provide information, when requested by the Authority, to

demonstrate that its candidate for Actuary meets, or in the case of an incumbent

Actuary, continues to meet the eligibility and fit and proper criteria.

32. Where an insurer can establish a valid argument that it underwrites one or more

specialist segments of business, where the segment(s) must be reported jointly either

as General Business or Long-Term Business, e.g. Health and General P&C and/or

Health and General Long-Term, then the Authority may use its discretion to consider

an application made by the insurer for an additional Actuary to be appointed for the

specialist segment.

33. In the event that an insurer wishes to propose an Actuary who does not appear to meet

the criteria of paragraph 23, the insurer should seek preliminary discussions with the

Authority in order to identify any issues that would need to be addressed prior to such

an appointment being made.

34. When making an approval, the Authority may use its discretion to place appropriate

limitations within the notification of approval, giving due regard to the particular

circumstances, such as the business as written by the insurer to be opined upon.

VIII. Acceptance of an Engagement

35. Prior to accepting an appointment as an Actuary, and on an ongoing basis, the

candidate is expected to be satisfied, given the nature, scale and complexity of the

business as written by the insurer, and their level of familiarity with the Authority’s

established EBS valuation requirements, that the estimation of the TPs of the insurer

(pursuant to the Act) is within their professional expertise and proficiency.

36. The candidate is expected to confirm in their Letter of Undertaking and Acceptance

that they are not subject to any actual, potential or perceived conflicts that may

prevent them from objectively fulfilling their role. An Actuary may be an employee

of the insurer. In this instance, and any other similar circumstances (whether or not

identified in paragraph 27 above) where there could be a perceived conflict of

interest, the candidate is expected to disclose such a relationship to the Authority

prior to making formal application for approval.

In such circumstances the Authority

Where a conflict of interest creates a threat to the Actuary’s objectivity, confidentiality, or professional

behaviour that, in the opinion of the Authority, cannot be eliminated or reduced to an acceptable level

will ascertain whether the perceived conflict disqualifies the candidate from being

considered for approval.

IX. Notification of Approval

37. The Authority shall, upon its approval of the candidate for the subject insurer, issue a

written notification to the insurer of such approval. Such notification may include

specified conditions and may restrict the approval to specific components of General

Business and/or Long-Term Business.

X. Change in Actuary

38. Where there is a proposed change to an Actuary, the insurer has the duty to forthwith

provide written notice to the Authority of the proposed change and, if applicable, the

reasons for the change.

39. Where an Actuary’s appointment is terminated or where the Actuary resigns and

where there are circumstances connected to the ending of the appointment which, in

the Actuary’s professional judgment, should be brought to the attention of the

Authority, then, in addition to the letter of resignation discussed in paragraph 21b, the

Actuary has the duty to forthwith provide written notice to the Authority. This written

notice should be issued directly to the Authority without the need for insurer

management review or approval and should include details of the reasons for the

cessation of appointment.

XI. Disqualifications

40. The Authority may require that an insurer remove a person occupying the role of

Actuary where the Authority considers the person to be no longer fit and proper for

the role. Criteria for disqualification could include, but are not limited to, where the

person:

a. Has failed to perform the functions and duties of such appointment satisfactorily

in the view of the Authority; or

b. No longer meets the fit and proper criteria for such an appointment; or

c. Fails to meet the Continuing Professional Development requirements promulgated

by the Actuary’s credentialing actuarial body(s).

41. The Authority shall not revoke its approval unless it has first notified the Actuary and

the insurer of its intention to do so.

through the application of safeguards, the Actuary shall not accept the engagement or shall resign from one

or more conflicting roles or engagements.

When approval notification restrictions arise, they shall be dependent upon the insurer’s explicit request

and the extent to which the Actuary meets the subject fit and proper criteria.

ROLE OF ACTUARIES

XII. Accepted Actuarial Practice

42. It is the responsibility of the Actuary to be conversant with the requirements of the

Act (including the Rules) and their implications with respect to the issuance of their

opinion.

43. The Actuary’s estimate of TPs and any other matters specified by the Authority are

expected to be prepared in accordance with accepted actuarial practice and all

applicable standards of practice of their credentialing actuarial body(s), the

Authority’s established EBS valuation requirements and the Rules. Where actuarial

practice standards of the credentialing actuarial body(s) have geographical

limitations, these limitations should generally be interpreted to include Bermuda for

the purposes of providing an AO. However, where any provisions of the Rules differ

from the standards of practice, then the Rules shall prevail.

XIII. EBS valuation principles

44. Schedule XIV of the Rules (Statutory Economic Balance Sheet) - Economic Balance

Sheet valuation principles – technical provisions – stipulates that EBS valuation

principles must be adhered to for the purposes of assessing TPs. TPs shall be valued

at an economic value using the best estimate of cash flows, with an additional risk

margin. Some characteristics associated with the valuation of TPs under EBS

principles set out in the Rules and associated guidance, are as follows:

a. Best Estimates:

i. The best estimate represents a probability-weighted average of future cash

flows, discounted using a relevant adjusted risk-free interest rate term

structure. By definition EBS best estimates represent the net present value

of future cash flows, and reflect the full potential range of possible

outcomes.

ii. Uncertainty associated with the Best Estimates is reflected in the risk

margins found on EBS Lines 18 and 27A; and as such, this uncertainty

should not be double counted by including allowances for prudence in the

Best Estimates on Lines 17 and 27. The best estimate should, however,

reflect events that may not be adequately reflected in the data, including

such events known as ‘Binary Events’ or ‘ENIDs’ (Events Not In Data

set)).

b. Discounting:

i. The valuation of TPs shall reflect the time value of money, using a risk

free discount rate curve which has been adjusted to reflect certain risk

characteristics of the liability. The Authority will supply risk free discount

curves and discount curves for the ‘standard approach’ for a number of

major currencies. Insurers may use alternative discount curves (e.g. those

approved for use in Solvency II) provided they meet the same overall

objectives as the rates supplied by the Authority. In this situation the

Actuary would be expected to explain how the rates were derived and the

justification for their use as part of the ‘Summary of Methodology’ section

of the Opinion – see paragraph 54.

ii. The ‘scenario-based approach’ may be used for some or all of an insurer’s

business and is designed to capture both the sensitivity to interest rates and

the degree to which assets and liabilities are cash flow matched. The

‘scenario-based approach’ consists of a base scenario using the actual

portfolio of assets supporting the relevant block of business (adjusted for

expected default costs) and a range of interest rate stresses to determine

the amount by which the market yield should be reduced to reflect interest

rate risk and asset-liability mismatching.

c. Risk Margin Calculations:

i. The risk margin shall be calculated using the cost of capital method, which

reflects the cost of holding an Enhanced Capital Requirement (ECR) level

of capital in respect of insurance risk, credit risk, and operational risk. The

cost of capital rate supplied by the Authority shall be used.

ii. The assessment of the risk margin shall cover the full period needed to

run-off the insurance liabilities, and may make allowance for the effects of

the diversification of regulatory capital requirements within the insurer

iii. The cost of capital for each year shall be discounted using the risk free

discount curve based on the EBS reporting currency.

iv. The risk margin shall be calculated separately for General business and

Long-Term business

v. The Actuary’s opinion in relation to the risk margin should provide

confirmation that the amounts included in the EBS have been calculated in

accordance with the Rules and discuss the methodology and assumptions

used to estimate the risk margin.

vi. Where simplifications have been made within the risk margin calculations

(e.g. where templates produced by the Authority or other parties have been

utilised), the Actuary will need to consider whether the assumptions

underlying those simplifications are appropriate and proportionate.

d. Use of 16 year transitional arrangements for Long-Term business:

Where a Long-Term insurer has applied to, and been approved by, the Authority

to use the 16 year transitional arrangements for the determination of some or all of

its TPs included on Line 27, then a positive opinion can be given if:

i. The amount of the best estimate of TPs using the unadjusted EBS rules is

reasonable; and

ii. The amount of the reserves for the remaining business that was in force on

31 December 2015 calculated in accordance with the valuation bases in

force at 31 December 2015 (adjusted as appropriate to reflect current

assumptions) has been properly determined; and

iii. The interpolation between i. and ii. has been correctly calculated.

e. Consolidation:

It should be noted that the EBS is prepared on a consolidated basis in line with the

GAAP principles adopted by the insurer.

XIV. Right to Information

45. The insurer is expected to make any reasonable arrangements that are necessary to

enable the Actuary to complete their assigned responsibilities. This includes promptly

complying with any and all reasonable requests for information. Where any such

arrangement is denied by the insurer, the Actuary has the duty to forthwith notify the

Authority.

XV. Communication of Opinion

46. The Actuary shall provide an opinion as to the reasonableness of the TPs and shall

disclose any instructions in the Rules relating to the valuation or presentation of the

TPs which have not been complied with.

47. The following sets out minimum standards for the presentation, and the level of detail

expected to be included in the communication of the AO. The Opinion should

normally be comprised of nine parts each for General Business and Long-Term

Business, as described below. Where an insurance group or dual licensed insurer

carries on both General Business and Long-Term business, then the Opinion will

normally consist of up to 18 parts produced by the LRS and AA (for the dual license)

and Group Actuary respectively.

Part 1 – Identification

48. This section should:

a. Identify the name of the Actuary; their full address; and the professional

qualifications under which the Opinion is being rendered;

b. Include confirmation that the Actuary continues to be a qualified member in good

standing of all credentialing actuarial bodies included in the application to the

Authority for their approval and that the Actuary has met the Continuing

Professional Development requirements promulgated by their credentialing

actuarial body(s) for the period ending [day/month/year], where the signing date

of the Opinion falls within one year of that date;

c. Confirm whether or not the Actuary has ties to the insurer that could be perceived

to render the Actuary as not being financially, organisationally, or otherwise

independent relative to the communications disclosed within the AO

;

d. Where the Actuary holds a directorship in one or more subsidiaries of the insurer,

state any directorships held, and include a statement that “the combined net TPs

of the subsidiary(s) where I hold a directorship(s) is x% of the total net TPs

included in Line 19 and y% of the total net TPs included in Line 27C” as

applicable; and

e. Include confirmation that the Actuary satisfies the fit and proper criteria, with due

consideration of the nature, scale and complexity of the insurer’s business and the

Authority’s established EBS valuation requirements.

Part 2 – Scope

49. This section should identify the insurer involved, as well as refer to the main

insurance subsidiaries contributing to the Technical Provisions. This section should

state the valuation date of the AO, it should provide details defining the business that

is the subject of the AO and make reference to any material changes affecting the

overall business over the past year. This section should clearly identify the sections of

the Insurance Act and/or Prudential Standards Rules under which the provision is

being provided, the relevant lines of the financial statement (or the portion thereof)

for which the Opinion is being given, and the date of the Statutory Economic Balance

Sheet of which these lines form a part thereof.

Part 3 – Conditions and Limitations

50. In this section the Actuary should provide details concerning all reasonably

foreseeable conditions and limitations relevant to the determination of TPs specific to

the insurer’s business and circumstances. It is not necessary that the Actuary state

general broad statements about risks and uncertainties.

Part 4 – Expression of Opinion

51. The Opinion should be clearly stated, without restriction where appropriate, and must

show the Actuary’s quantified best estimate (and/or ranges for the best estimates) of

TPs, and other information as required by Schedule XV.

a. The Actuary should show the best estimate and/or lower and upper bound of their

range of reasonable best estimates, as appropriate where these have been

calculated. For the purpose of the EBS, the best estimate and any range shown is

expected to give due regard to events that may not be adequately reflected in the

Where this statement does not confirm independence, as discussed in paragraphs 26 and 27, the Actuary

should disclose any pertinent information that is not apparent.

data used in traditional provisioning approaches. These events have been referred

to as ‘Binary Events’ or ‘ENIDs’ (Events Not In Data set);

b. Where the Actuary issues a qualified Opinion in circumstances where the TPs for

certain item(s) are in question because they cannot be reasonably estimated or the

actuary is unable to issue an opinion on the reserves for those items, the Actuary

should disclose in the opinion the item or items to which the qualification relates,

the reasons for the qualification, and the amount of TPs held for such items if this

detail is disclosed by the insurer. If the amounts for such items are not separately

disclosed by the insurer, then the Actuary should disclose whether the insurer’s

held TPs include un-quantified values for such qualified items. The Actuary

should also disclose whether the held TPs make a reasonable provision for the

aggregate liabilities for all business written except for the item or items to which

the qualification relates.

52. (General Business only) The opinion paragraph for insurers writing general business

should include the relevant sentences which cover the points listed in the following

illustration:

A. “In my opinion, the amount of $x carried as the Total General Business

Insurance technical provisions on line 19 of the Statutory Economic Balance

Sheet, which is comprised of:

i. the amounts for Best Estimate - General Business Insurance - Premium

Provisions of:

• $a for Line 16(a), gross of reinsurance;

• $b for Line 16(d), net of reinsurance;

ii. the amounts for Best Estimate - General Business Insurance - Loss and

Loss Expenses Provisions of:

• $c for Line 17(a), gross of reinsurance;

• $d for Line 17(d), net of reinsurance;

iii. and the Risk Margin – General Insurance Business - of $e for Line 18

a. [meets; does not meet] the requirements of the Insurance Act 1978 and related

rules and regulations;

b. [makes; does not make] a reasonable provision for the total insurance technical

provisions of the [insurer; group] under the terms of its insurance contracts and

agreements.”

B. Where the Actuary reports a best estimate, a statement reflecting the following

should be included:

“My actuarial best estimates of the corresponding liabilities are:

• $g for Line 16(a), gross of reinsurance;

• $h for Line 16(d), net of reinsurance;

• $i for Line 17(a), gross of reinsurance;

• $j for Line 17(d), net of reinsurance.”

C. Where the Actuary reports a range of reasonable estimates, a statement

reflecting the following should be included:

i. “My selected ranges of actuarial best estimates of the corresponding

liabilities have an upper bound value of:

• $m for Line 16(a), gross of reinsurance;

• $n for Line 16(d), net of reinsurance;

• $o for Line 17(a), gross of reinsurance;

• $p for Line 17(d), net of reinsurance.”

ii. “My selected ranges of actuarial best estimates of the corresponding

liabilities have a lower bound value of:

• $mb for Line 16(a), gross of reinsurance;

• $nb for Line 16(d), net of reinsurance;

• $ob for Line 17(a), gross of reinsurance;

• $pb for Line 17(d), net of reinsurance.”

D. “My actuarial best estimates of the corresponding liabilities [have; have not]

been calculated in accordance with the requirements of Schedule XIV, and

[have; have not] been computed in accordance with accepted actuarial

practice.”

E. “My actuarial best estimates of liabilities have been discounted reflecting

rate(s) of interest that [have; have not] been supplied by the Authority.”

F. “In my opinion, the amount carried as the Risk Margin – General Insurance

Business - in the Statutory Economic Balance Sheet of $e for Line 18, [has;

has not] been calculated in accordance with the requirements of Schedule

XIV. Where simplifications have been made in the calculation of the risk

margin, the assumptions underlying those simplifications are appropriate and

proportionate.”

53. (Long-Term Business only) The opinion paragraph for insurers writing Long-Term

business should include the relevant sentences which cover the points listed in the

following illustration:

A. “In my opinion, the amount of $y carried as the Total Long-Term Business

Insurance technical provisions on line 27C of the Statutory Economic Balance

Sheet, which is comprised of:

i. the amounts for Total Best Estimate - Long-Term Business Insurance

Provisions of:

• $aa for Line 27(a), gross of reinsurance;

• $ab for Line 27(d), net of reinsurance;

ii. the amounts for Best Estimate - Long-Term Technical provisions

calculated as a whole of:

• $ac for Line 27B(a), gross of reinsurance;

• $ad for Line 27B(d), net of reinsurance;

iii. and the amount for the Risk Margin – Long-Term Insurance Business - of

$ae for Line 27A,

a. [meets; does not meet] the requirements of the Insurance Act 1978 and related

rules and regulations;

b. [makes; does not make] a reasonable provision for the total insurance technical

provisions of the [insurer; group] under the terms of its insurance contracts and

agreements.”

B. Where the Actuary reports a best estimate, a statement reflecting the following

should be included:

“My actuarial best estimates of the corresponding liabilities are:

• $ag for Line 27(a), gross of reinsurance;

• $ah for Line 27(d), net of reinsurance;

• $ai for Line 27B(a), gross of reinsurance;

• $aj for Line 27B (d), net of reinsurance.”

C. Where the Actuary reports a range of reasonable estimates, a statement

reflecting the following should be included:

i. “My selected ranges of actuarial best estimates of the corresponding

liabilities have an upper bound value of:

• $ak for Line 27(a), gross of reinsurance;

• $al for Line 27(d), net of reinsurance;

• $am for Line 27B(a), gross of reinsurance;

• $an for Line 27B(d), net of reinsurance.”

ii. “My selected ranges of actuarial best estimates of the corresponding

liabilities have a lower bound value of:

• $ao for Line 27(a), gross of reinsurance;

• $ap for Line 27(d), net of reinsurance;

• $aq for Line 27B(a), gross of reinsurance;

• $ar for Line 27B(d), net of reinsurance.”

D. In instances where the best estimate provisions shown on Line 27 (d) have

been calculated making use of the 16 year transitional arrangements, a

statement reflecting the following should be included:

“My actuarial estimate of $ah for Line 27(d) has been calculated making use of

the 16 year transitional arrangements and is based upon an interpolation of:

a) a best estimate amount of $ak contributing $al to Line 27 (d) and

b) an amount of $am for the business that was in force on 31 December

2015 calculated under the valuation approach used as of 31 December

2015 and contributing $an to Line 27 (d).”

E. “My actuarial best estimates of the corresponding liabilities [have; have not]

been calculated in accordance with the requirements of Schedule XIV, and

[have; have not] been computed in accordance with accepted actuarial

practice.

F. In accordance with the requirements of Schedule XIV, my actuarial estimates

of best estimate technical provisions have been discounted reflecting rate(s)

of interest that [have; have not] been supplied by the Authority.”

G. “In my opinion, the amount carried as the Risk Margin – Long-Term

Insurance Business - in the Statutory Economic Balance Sheet of $ae for Line

27A, [has; has not] been calculated in accordance with the requirements of

Schedule XIV Where simplifications have been made, the assumptions

underlying those simplifications are appropriate and proportionate.”

Part 5 – Summary of Methodology

54. In this section the Actuary should provide an executive summary of methodologies

used in arriving at their Opinion including the following:

a. Confirmation whether the starting point for determining the EBS TPs is the

audited financial statement reserves and their corresponding basis (GAAP/IFRS).

Brief discussion around the reasoning and the process when a starting point other

than the audited financial statements is used.

b. Brief commentary on the extent to which the data underlying the EBS TPs is the

same as the data underlying the calculation of insurance reserves as reported in

the audited GAAP financial statements for the insurer. Where the data underlying

the EBS TPs cannot be reconciled to the data underlying the audited GAAP

financial statements, the reasons should be clearly documented. For the purposes

of data integrity, this section should include a brief description of the main

sources of data, the main data processing steps and segmentation as well as

disclosure of the senior official(s) of the regulated entity(s) upon whom the

Actuary relied for preparation of the data. The commentary should cover whether

additional data checks have been performed by the Actuary if any.

c. Brief discussion of the main methods and assumptions the Actuary used in

arriving at their best estimates, including discussion of

i. the reserving thought process, controls and validation performed or relied

upon by the actuary;

ii. the main types of EBS reserves including a brief overview of their

characteristics;

iii. how business/reserves are segmented in the reserving process;

iv. (P&C Business – Only) the main reserving methods used including

reference to the more bespoke methods used for specific segments where

traditional reserving methods are less applicable (e.g. treatment of large

losses, ceded reinsurance, etc.) and the method used for calculating

allocated loss adjustment expenses.

v. (Long-Term Business – Only) the main assumptions used for the major

product lines along with a description of how they have been derived and

validated (e.g. comparing mortality, withdrawal and expense assumptions

against recent experience);

vi. the discussion of the main methods and assumptions needs to cover the

whole of the derivation of the EBS TPs, including a summary of how the

GAAP reserves were derived if these are the starting point for the

calculation of the EBS TPs.

vii. any ranges of reasonable estimates produced (where applicable).

viii. Finally, reference should be made to the date(s) through which data or

other information has been considered in developing the findings included

in the report.

d. Brief discussion of the main areas where expert judgement is being used and

identification of the most material and subjective judgements.

e. Confirmation that any element of prudence in the starting (financial statement)

reserves has been removed and a description of how this was achieved.

f. Discussion of the method used to calculate ENIDs including the models or typical

scenarios considered in the calculation. If the calculation for ENIDs is performed

at a more granular level (e.g. by claim type or line of business) this should also be

identified.

g. Brief commentary on the methodology used to identify and value the Bound But

Not Incepted business (BBNI business). The commentary should include the

amount of premium included as BBNI business along with the amount of best

estimate provision.

h. Brief commentary on the methodology used to arrive at the adjustment included

in the best estimate of reinsurance recoveries that was made to reflect expected

losses due to counterparty default (for whatever reason, including reinsurer

insolvency or contractual disputes) in relation to reinsurance recoveries held on

Lines 16(c), 17(c), 27(c) and 27B(c). The commentary should include a short

description of how the different components of the calculation (e.g.

default/dispute rates, loss given default/dispute, etc.) were derived.

i. Brief commentary on the methodology used to estimate the ULAE (“Unallocated

Loss Adjustment Expenses”) including identification of the type of expenses

under ULAE.

j. Discussion of the methodology used to estimate the Risk Margin and specifically

a description of how the future Enhanced Capital Requirements (ECR) were

projected to the full period needed to run-off the insurance liabilities with

reference to any material simplifications.

k. Brief discussion of the methodology used to allow for unwinding any discount

already present in the starting reserves and then applying the risk free discount

rates supplied by the Authority. Where the Actuary has not selected discount

rate(s) that have been supplied by the Authority when using the standard approach

then the Actuary should indicate the rates selected, how they have been derived,

and explain whether or not the rates are consistent with the rates supplied by the

Authority.

l. (Long-Term Business – Only) Brief discussion of the amount of best estimate

provisions calculated making use of the 16 year transitional arrangements

including the amount of best estimate provisions which would have resulted had

the transitional arrangements not been applied. These amounts shall be separately

split between the lines of business in relation to amount held on Line 27(d).

m. Where the ‘Scenario-based approach’ has been used, the Actuary shall disclose

the amount of best estimate TPs along with details of the business it was applied

to. The insurer shall also disclose the amount of TPs according to the ‘base

scenario’, the various required interest rate stress scenarios, and also the ‘standard

approach’.

n. (Long-Term Business – Only) Where the insurer has chosen to calculate some or

all of its TPs ‘as a whole’, the Actuary shall briefly discuss the method used to

determine the best estimate technical provision and whether or not the approach

adopted by the insurer is reasonable and in accordance with the requirements of

Schedule XIV.

o. The name of each legal entity, business unit and/or reserving group along with

their respective contributions to the held TPs. This detail is only required for legal

entities, business units and/or reserving groups where TPs comprise of 5% or

more of the insurer’s TPs, with the remainder shown as balancing amounts.

Part 6 - Relevant Comment

55. In this section the Actuary should include comment on matters that create additional

uncertainty in the TPs or where the amount of liability is subject to an unusual

amount of uncertainty, such as:

a. Where there has been a material change in the actuarial assumptions or methods

employed, the Actuary should describe the nature of the change and the impact of

these changes on the Actuary’s valuation;

b. Material changes to the insurer reserve risk profile due to, but not limited to,

material changes to the insurer including processes and procedures, material

Mergers & Acquisitions activity, material changes to policy conditions (coverage,

deductible, exclusions), material change to reinsurance arrangements, material

change to the (case) reserving policy and material legal changes with an impact

on the level and uncertainty surrounding the TPs.

c. Where the information provided by the insurer is incomplete or inadequate so as

to prevent completion of the evaluation in accordance with accepted actuarial

standards, the Authority’s established EBS valuation requirements and other

professional standards in general, the Actuary should state this and describe the

impact on their evaluation;

d. Where the Actuary has had to select a key assumption with limited analytical

support, the Actuary should state this and describe the risks and uncertainties

associated with these selections;

e. (General Business – Only) Whether the Actuary reasonably believes there are

significant risks that could result in material adverse deviation, the Actuary should

identify the materiality standard selected and include an explanatory paragraph to

describe the major risk factors. Where the Actuary reasonably believes there are

no apparent significant risks that could result in material adverse deviation, the

Actuary should include a statement attesting to this observation in this section,

including identification of the materiality standard adopted. At a minimum, the

Actuary should include in the opinion the following statements, as appropriate:

ix. "I conclude that there are [no reasonably foreseeable] significant risk

factors and/or uncertainties that could result in a material adverse

deviation from the held insurance technical provisions.

x. My determination is based upon a materiality standard of x% of the

insurer's [economic capital and surplus, held insurance technical

provisions, etc.] or $y."

Where an affirmative risk of material adverse deviation comment is indicated, the

Actuary should include in the opinion a statement similar to the following as

appropriate:

“I conclude that the major risk factors associated with the uncertainty in insurance

technical provisions are z [lines of business, specified risks and/or events, etc.].”

Part 7 – Reliance on Opinions of Other Actuaries or Professionals

56. It is anticipated that there will be circumstances where an Actuary is called upon to

rely on the opinion of another actuary or professional

, including one or more

actuaries affiliated with the insurer, in order to render an opinion on an insurer’s TPs.

57. In this section the Actuary should:

a. Claim reliance on the opinion of another actuary only if the Actuary ascertains

that reliance on the other actuary’s opinion is consistent with the other actuary’s

intended use. The reliance on the opinion of another actuary should be disclosed

within this section of the Opinion including discussion relating to any

modifications made to the relevant TPs or subject matter to which the reliance

applies;

b. Disclose where reliance on another actuary’s opinion precludes or limits the

Actuary’s recognition of significant risks and uncertainties concerning material

adverse deviation relating to the subject TPs;

c. Discuss their evaluation of the appropriateness of their reliance; provide a

description of the work performed in arriving to that evaluation, and whether such

portions of the subject TPs relied upon are likely to have a material impact on the

AO regarding the total subject TPs. If the impact is likely to be material, the

Actuary should decide whether or not, within their professional judgment, it is

appropriate to claim reliance on such opinions;

d. Discuss the use of their professional judgment:

i. in self-assessing their ability to evaluate the quality of the work product

relied upon, and

ii. in evaluating the fitness and propriety of all persons upon whose opinion

he/she is relying. (In making this latter assessment, it is not necessary for

the Actuary to restrict consideration of professional memberships only to

those bodies referred to in paragraph 23.);

e. Disclose the person(s) upon whose opinion is being relied including their name(s),

the relevant professional designation(s), appointment status (i.e. officer

designation, or consultant), and the associated firm(s); and

f. Acknowledge awareness of their ultimate professional responsibility for the

results signed off in the Opinion.

Part 8 – Work Papers

58. This section should include a statement describing all actuarial reports, analyses and

work products that have been completed, indicating a statement that these same

documents will be made available in Bermuda upon request by the Authority. If

requested, such documents should be sufficient in and of themselves to enable the

completion of an independent review of the AO by another unrelated but qualified

actuary and should at a minimum typically include:

Where the Actuary relies on the opinion of professionals, other than actuaries, similar disclosures should

be made. For the remaining of Part 7 the term ‘actuary’ and ‘professional’ are used interchangeably.

a. Descriptions of each legal entity, business unit and/or reserving group

consolidated into the insurer’s EBS along with their respective contributions to

the held TPs;

b. Reconciliations from all applicable actuarial reports to the TPs recorded in the

Statutory Economic Balance Sheet; and

c. Discussions of how the Actuary arrived at their actuarial estimate and actuarial

range of best estimates (as applicable) of the insurer’s aggregate TPs, including

(where relevant to TPs) how intragroup transactions have been addressed.

d. (General Business – Only) Exhibits that reconcile to the following BSCR

schedules:

i. Form 1EBS:

1. This exhibit should include a comparison between the held provisions

on Lines 16(a), 16(b), 17(a), 17(b) and 19 and the actuary’s estimates

showing any redundancy (deficiency).

2. Schedule III (Schedule of Net Loss and Loss Expense Provisions by

Line of Business)

ii. These exhibits should:

1. Map the segmentation of exposure or liability groupings used in the

actuarial analysis to the BSCR Lines of Business as per Schedule III

2. By Line of Business and selected evaluation period (i.e. underwriting

year, accident year, treaty year, etc.):

a. Show the Actuary’s conclusions including the actuary’s point

estimates(s) and range(s) of reasonable estimates;

b. Compare the two most recent prior years vs the current year

estimated ultimate losses on a gross and net basis showing adverse

vs. favourable one year and two year development including

extended discussion of factors underlying any material changes.

Part 9 - Signature

59. This section should include the Actuary’s signature, their relevant professional

designations, appointment status (i.e. officer designation, consultant, etc. including

name of firm), and contact information including telephone number and e-mail

address.

XVI. Appendix 1

60. EBS Opining Actuaries – Application Sample Templates

a. The following sample templates are intended to provide guidance for insurers

in Classes 3A, 3B, 4, C, D, E and Insurance Groups in relation to the

Authority’s expectations for the content to be included in the application

Cover Letter, Letter of Undertaking and Acceptance, and Letter of

Resignation from appointed EBS opining actuaries, legal entities and groups

where they seek approval for Loss Reserve Specialists, Approved Actuaries

and Group Actuaries to opine upon EBS Technical Provisions.

b. It should be noted that these sample templates are intended to serve only as

guides; and the Authority recognises that there are likely to be circumstances

that may require stakeholders to make modifications to the contents of the

sample letters to more accurately depict their individual conditions.

c. The Authority encourages review of the subject Guidance Note Actuary’s

Opinion on EBS Technical Provisions for clarity regarding the Fit and Proper

Criteria and Approval Process for Actuaries and the Role of Actuaries prior to

submitting application for approval of actuaries to opine upon EBS Technical

Provisions.

XVII. Appendix 1A - Cover Letter Templates for Loss Reserve Specialist

[LOSS RESERVE SPECIALIST - COVER LETTER TEMPLATE]

Date………………

Addressee………………..

Re: Loss Reserve Specialist Appointment for [Legal Entity]

Dear [Name of BMA official]

We write to request approval of [Applicant Name] as Loss Reserve Specialist for [Legal

Entity], to opine upon Line 19 pursuant to the Insurance Act 1978, effective [Effective

Date].

Once approved, [Applicant Name] shall have the ability to communicate directly with the

parent board of [Legal Entity] without the need for [Legal Entity’s] management review

or approval; and the parent board shall have direct access to [Applicant Name].

We have evaluated the professional expertise and proficiency of [Applicant Name] and

have concluded that, commensurate with the nature, scale and complexity of [Legal

Entity’s] business and the requirements and standards of the Act, [Applicant Name]

possesses the appropriate integrity, competency, resources, qualifications and experience

and is appropriately conversant with the Authority’s established Economic Balance Sheet

(EBS) valuation requirements and guidance material.

We confirm that [Applicant Name] is [Title, etc.] of [Company/Consulting firm name,

etc.] and is not subject to any actual, potential or perceived conflicts that may prevent

him[her] from fulfilling the Loss Reserve Specialist role for [Legal Entity] with

objectivity, confidentiality, and/or professionalism, where such conflicts may or may not

be identified in §27 of the Guidance Note Actuary’s Opinion on EBS Technical

Provisions.

Please find enclosed copies of:

1) Letter of resignation from [Name of Resigning Loss Reserve Specialist] as Loss

Reserve Specialist for [Legal Entity] (as applicable);

2) Letter of undertaking and acceptance from [Applicant Name] accepting his[her]]

appointment as Loss Reserve Specialist, subject to the Authority’s approval; and

3) Resume, copies of certificate(s) and good-standing letter(s) from [credentialing

actuarial body(s)]

We trust this is sufficient information for your consideration and respectfully request a

certificate of designation for [Applicant Name] as Loss Reserve Specialist for [Legal

Entity].

If you require further information, do not hesitate to contact the undersigned.

Sincerely,

[Legal Entity]

A printout of the applicant’s current membership details from the website of the applicant’s official

actuarial body is acceptable in lieu of good-standing letters.

XVII. Appendix 1B - Cover Letter Templates for Appointed Actuary

[APPROVED ACTUARY - COVER LETTER TEMPLATE]

Date………………

Addressee………………..

Re: Approved Actuary Appointment for [Legal Entity]

Dear [Name of BMA official]

We write to request approval of [Applicant Name] as Approved Actuary for [Legal

Entity], to opine upon Line 27C pursuant to the Insurance Act 1978, effective [Effective