Kennedys’ Q4 2025 Regulatory Round-up (Insurance Focus)

Welcome to Kennedys’ quarterly regulatory round-up. In this issue we will summarise the key regulatory updates from Q4 2025 which relate to insurers.

Welcome to Kennedys’ quarterly regulatory round-up.  In this issue we will summarise the key regulatory updates from Q4 2025 which relate to insurers.  

The update is broken down into the following sections:

  • Bermuda Monetary Authority  
  • Legislation
  • Beneficial Ownership
  • Corporate Income Tax
  • Anti-Money Laundering
1    BERMUDA MONETARY AUTHORITY (BMA)

1.1    Public Disclosure – Asset and Liability Statement

The BMA shared its final draft updated public disclosure template, now renamed “Asset and Liability Statement,” (Template) along with accompanying instructions to guide insurers in populating the Template in December 2025.  

The Asset and Liability Statement is a result of the BMA Consultation Paper, Proposed Enhancements to Public Disclosure Regime: Public Disclosure of Assets and Liabilities for Commercial Long-term Insurers (CP) which was published in In December 2024.  It applies to all Bermuda-regulated commercial long-term insurers, except for domestic insurers.

As a result of the CP, the BMA has enhanced the regulations for public disclosure of assets and liabilities for commercial long-term insurers. These enhancements aim to:

(a)    Improve the accessibility and detail of asset-related disclosures to ensure relevant information is available in a clear and comprehensive manner.

(b)    Strengthen transparency around insurers’ investment portfolios to support informed decision-making by policyholders.

The Template’s security features ensuring data integrity and consistency have been strengthened including the integration of automatic validation checks designed to flag potential errors during data entry.

Additionally, the Insurance (Prudential Standards) (Class C, Class D and Class E Solvency Requirement) Amendment Rules 2025 which into operation on 1 January 2026 inserted new paragraphs 7A and 7B which relate to the Asset and Liability Statement and a declaration regarding the Asset and Liability Statement.  

Further details regarding this CP can be found in Kennedys’ bulletin here.  

1.2    Lapse Liquidity and Scenario-Based Approach Return (LLSBA) Return

The 2025 LLSBA Template and 2025 Completion Instructions were published by the BMA on 23 December 2025.  Based on the feedback received on the 2024 LLSBA template, the BMA revisited the content and adjusted the 2025 version. The adjustments are aimed at clarifying certain relevant concepts and facilitating efficient completion by registrants.  The completion instructions detail how to complete the LLSBA template for the purposes of SBA model approval, asset approvals and year-end filings.  It is hoped that the new template in its current form, providing the BMA as it will with ready access to higher quality comprehensive data for offsite analysis, may result in fewer data requests and more targeted on-sites/deep dives.

1.3    Personal Declaration Form for Directors/Officers

On 26 November 2025, the BMA issued new enhanced Personal Declaration Forms for Directors/Officers appointed under the Insurance Act 1978 and the Investment Funds Act 2006.  The revised forms took effect immediately, and the BMA will no longer accept previous versions of the forms.  The amendments aim to further strengthen the fit and proper due diligence assessments related to director and officer appointments.  Please note that the Personal Declaration Form for Director/Officers was updated in January 2026 to add a field for surname in the Personal Information section.

1.4    Discount Rates

On 22 October 2025, the BMA published the Discount Rates for 30 September 2025 with no changes for Q3 2025.

1.5    How Financial Sanctions are Reported

The BMA released a Notice - Changes to the Publication of Financial Sanctions Information on 4 November 2025 outlining a change in process for how financial sanctions are reported.  Previously sanctions information and notifications were available on the BMA website.  This information is now available on the Financial Sanctions Implementation Unit website which delivers timely, reliable updates on the financial sanctions developments most relevant to the sector, helping individuals and entities stay informed and compliant with the evolving regulatory landscape. Users can sign up for this service which provides:

  • Real-time Alerts: Timely notifications on new sanctions, amendments and updates relevant to the Bermuda Sanctions Framework
  • Comprehensive Coverage: Detailed information on sanctions imposed by the United Nations (UN) and the United Kingdom (UK)
  • Customisable Preferences: Options to tailor the alert settings to focus on relevant topics

1.6    Global Financial Crisis

The BMA published a press release on 17 September 2025 stating it conducted a Global Financial Crisis (GFC) stress test for long-term commercial insurers in Bermuda. This was part of the BMA’s continued efforts to monitor worldwide economic developments and assess the resilience of Bermuda's insurance market through regular stress testing exercises.

The BMA stated that it will “…continue to engage with industry participants to address the findings of this exercise while maintaining a regulatory framework that appropriately balances financial stability with the sector's continued development.”

“Additionally”, the BMA stated, “the treaty-level recapture analysis provides unprecedented insight into potential cross-border transmission channels that will inform future supervisory cooperation with international regulatory counterparts.”

The results of the stress test are reported (among other things) in the Bermuda Long-Term Insurance Market Analysis and Stress Testing Report (22 December 2025), mentioned below, revealing that: most insurers maintain capital levels well above regulatory requirements under severe stress conditions; 56% of assets are in highly liquid instruments; a median liquidity coverage ratio of 471% under severe stress scenarios applies; there has been improvement in liability profiles (specifically declining lapse exposure and increasing surrender penalties).

1.7    Reports

The BMA published the following reports during Q4 2025:

1.8    LOOKING FORWARD TO 2026

1.8.1    Prudent Person Principle

The BMA published a Consultation Paper on Proposed Instructions and Guidance on the Application of the Prudent Person Principle (PPP) in December 2025.  The PPP applies to commercial insurers and insurance groups and is an integral part of their risk management framework with regard to investment risk.  The compliance date for the BMA’s more granular expectations for compliance with the PPP module of the Insurance Code of Conduct for commercial insurers with an allocation to illiquid, hard-to-value assets that are non-publicly traded (NPTA) has been deferred until Q1 2026.  Final Proposed Instructions and Guidance are expected during Q1 of 2026.  In short, insurers with an allocation to NPTA will need to demonstrate: infrastructure, resources and expertise to appropriately identify, measure, monitor, respond to, control and report on risks and complexities unique to NPTA; due diligence on private rating providers; identification and mitigation of conflicts in the valuation process; awareness of conflicts and risks in asset management process (eg fee structures).

The PPP requires that an individual entrusted with the management of a client’s funds may only invest in instruments that any reasonable individual with objectives of capital preservation and return of investment would own.  As applied to an insurer (or insurance group), the PPP requires that the insurer (or insurance group), in determining the appropriate investment strategy and policy, may only assume investment risks that it can properly identify, measure, respond to, monitor, control and report while taking into consideration its capital requirements, short-term and long-term liquidity requirements and policyholder obligations.  Further, investment decisions are to be executed in the best interest of policyholders.

Further details regarding this CP can be found in Kennedys’, bulletin here.  

1.8.2    Artificial Intelligence (AI)

The BMA published Discussion Paper - The Responsible Use of Artificial Intelligence in Bermuda’s Financial Services Sector (DP) on 30 July 2025.  In the DP the BMA proposed an outcomes-based risk management framework for the governance and oversight of AI, balancing innovation with risk management, with ultimate accountability resting with an entity’s board (AI Framework).

The AI Framework addresses critical components, including AI identification and inventory management, alongside comprehensive risk assessment across five key dimensions:

  • Impact severity
  • Autonomy and human oversight
  • Complexity and explainability
  • Data sensitivity
  • Deployment context and scale

Follow-up consultations and workshops regarding the AI Framework are scheduled for Q1-2026 and a final proposal regarding the AI Framework is expected in Q3-2026.

1.8.3    Operational Resilience and Outsourcing Code (Code)

The Bermuda Monetary Authority released a consultation paper, Operational Resilience and Outsourcing Code (CP), in January 2025 which outlined standards that the BMA designed to bolster the financial service sector's ability to pre-empt, adapt, manage, recover from, and learn from operational disruptions.

The Code will apply to BMA regulated financial institutions which the BMA refers to as Relevant Entities (REs). The BMA determined which REs to include based on two key factors. First, the systemic importance of their industries to the local financial market. Second, the nature of their customer-facing operations within their respective sectors.  The Code will come into effect for REs licenced under the Banks and Deposit Companies Act 1999 on 1 January 2027 and for all other REs on 31 March 2028.  

After consultation with the industry both the Operational Resilience and Outsourcing – Code and the Operational Resilience and Outsourcing - Guidance Notes were amended in September 2025.   The track changes version of each can be found here and here respectively.  

Further details regarding this CP can be found in Kennedys’ bulletin here.  

2    LEGISLATION

2.1    Insurance Amendment (No. 2) Act 2025

The Insurance Amendment (No. 2) Act 2025 became operative on 7 January 2026.  It amended the Insurance Act 1978 to implement the more nuanced group supervision regime consulted on by the BMA in the course of 2024 and 2025.  The amendments implement the changes to the oversight and regulation by the BMA of insurance groups by:

  • expanding the criteria for group supervision
  • creating a regime for regulating designated insurance holding companies for the purposes of group supervision
  • confirming the circumstances in which the BMA shall act as group supervisor
  • requiring notification and no-objection of certain material changes with respect to an insurance holding company; and for purposes connected with and incidental to those matters.

The amendments implement the final iteration of the BMA’s “Proposed Enhancements to the Insurance Group Supervision Framework” (CP), as consulted on in December 2024.   Further details regarding this CP can be found in Kennedys’ bulletin here.  It should be noted that the BMA released a stakeholder letter in May 2025.  In this stakeholder letter the BMA accepted industry feedback and removed the words “or registered’ from the definition of holding company so as to not include permit companies in the definition.  The BMA also noted that it will revert to the current designated insurer framework relating to material changes rather than implementing the proposed changes from the CP.

2.2    Bermuda Monetary Authority Amendment Act 2025

The Bermuda Monetary Authority Amendment Act 2025 became operative on 1 January 2026.  It amended the Bermuda Monetary Authority Act 1969 (BMA Act) to enable the sharing of confidential information between the Bermuda Monetary Authority and the Bermuda Deposit Insurance Corporation.  It also revised fees payable under the Fifth Schedule of the BMA Act.  

2.3    Companies (Prohibition of Bearer Shares and Nominee Directors) Amendment Act 2025

The Companies (Prohibition of Bearer Shares and Nominee Directors) Amendment Act 2025 became operative on 10 December 2025.  It amended the Companies Act 1981 and the Limited Liability Company Act 2016 to require, among other things, that existing bearer shares be converted to registered shares in companies and limited liability companies and to require that exempted companies and exempted LLCs discontinuing to another jurisdiction appoint a local agent to retain the company’s and limited liability company’s beneficial ownership register and records of account for a minimum of five years. The Companies Act 1981 was further amended to prohibit the appointment of nominee directors and to require additional particulars to be disclosed with respect to alternate directors.

3    BENEFICIAL OWNERSHIP

3.1    Beneficial Ownership Act 2025

The Beneficial Ownership Act 2025 (BO Act) which became operative on 3 November 2025 consolidates the beneficial ownership requirements into one Act. Previously, beneficial ownership requirements were spread out amongst a number of piece’s of legislation and the central register was operated by the BMA.  The Registrar of Companies (ROC) now has the authority to collect, verify and maintain the beneficial ownership information on that register.  The ROC has stated, however, that it will not be enforcing beneficial ownership filing requirements until 1 June 2026.

A significant change to the prior regime is that regulated financial institutions (including insurers), which were previously exempt from requirements to gather beneficial ownership information and maintain a register, are now within scope of the regime (unless they benefit from the listed status exemption referred to above).  

Further information regarding the beneficial ownership regime can be found in Kennedys’ bulletin here.  

4    CORPORATE INCOME TAX

4.1    Corporate Income Tax Amendment (No. 2) Act 2025

The Corporate Income Tax Amendment (No. 2) Act 2025 came into operation on 11 December 2025.  It amended the Corporate Income Tax Act 2023 to make certain technical amendments required to ensure that the law is consistent with the OECD’s Pillar 2 model rules as well as to incorporated substantive concepts from those rules and related guidance which is needed to enhance Bermuda’s corporate income tax regime.

4.2    Tax Credits Act 2025

The Tax Credits Act 2025 also came into operation on 11 December 2025.  The purpose of tax credits are as follows:

  • to incentivise industries that are instrumental in the growth and development of the Bermuda economy to invest in their on-island operations
  • to encourage such investment where it results in increased employment in Bermuda and increased job opportunities for Bermudians
  • to further encourage such investment where it results in increased expenditure on domestic goods and services and thereby benefits the wider local Bermuda economy
  • to recognise and encourage charitable contributions where such charitable contributions represent a meaningful contribution to the community.

Information regarding the specific tax credits can be found in Kennedys’ bulletin here.  

4.3    Corporate Income Tax (Administrative) Amendment Regulations 2025

The Corporate Income Tax (Administrative) Amendment Regulations 2025 which amend the Corporate Income Tax (Administrative) Regulations 2025 became operative on 12 December 2025.

4.4    Corporate Income Tax (Tax Refund Reserve Fund) Amendment Regulations 2025

The Corporate Income Tax (Tax Refund Reserve Fund) Amendment Regulations 2025 which amend the Corporate Income Tax (Tax Refund Reserve Fund) Regulations 2025 came into operative on 12 December 2025.  

5    ANTI-MONEY LAUDERING

5.1    2024 National Risk Assessment

The 2024 National Risk Assessment (NRA) was published by the Bermuda National Anti-Money Laundering Committee (NAMLC) in November 2025.  The NRA systematically reviews national risk Bermuda faces as a financial jurisdiction.

5.2    Proceeds of Crime (Miscellaneous) Act 2025

The Proceeds of Crime (Miscellaneous) Act 2025 (POCA Amendments) became operative on 20 October 2025. The POCA Amendments were proposed by NAMLC in preparation for Bermuda’s fifth round mutual evaluation which commences October 2026. Since Bermuda’s last mutual evaluation in 2020, the Financial Task Force (FATF) standards have been revised. The POCA Amendments ensure Bermuda remains compliant with FATF standards by adding proliferation financing risks within the scope of Bermuda’s national risk assessment parameters.  

A summary of amendments can be found in Kennedys’ bulletin here.

5.3    Sanctions (Miscellaneous Amendments) (Overseas Territories) Order 2025

The Sanctions (Miscellaneous Amendments) (Overseas Territories) Order 2025 (Order) came into force on 11 December 2025.  While this Order is not directly applicable to Bermuda, UK Orders are extended to Bermuda under the International Sanctions Regulations 2013.

The Order made technical amendments to numerous existing sanctions Orders applicable to listed British overseas territories (BOT).  The Order aligns BOT sanctions with UK law, primarily updating financial roles (shifting power from Treasury to Governor), broadening the scope of ‘relevant firms’ subject to reporting to include entities dealing with crypto assets, high-value goods transactions, and insolvency proceedings. It also amended various sanctions regimes (Russia, North Korea, global) to improve consistency, close loopholes, and clarify responsibilities for compliance.

Services

Sectors

Locations