2022 Bermuda Monetary Authority Annual Report
Premier and Minister of Finance David Burt tabled the Bermuda Monetary Authority Annual Report 2022 in the House of Assembly on Friday [June 2].
The Premier said, “The Authority’s mission is to contribute to Bermuda’s financial stability, protect customers of financial services and protect Bermuda’s currency through: maintaining effective and proactive regulatory frameworks through its highly skilled and engaged workforce; delivering efficient operations and sustainable business practices; and supporting responsible innovation locally and in global markets.
The Premier’s full statement follows below:
Mr. Speaker, in accordance with section 28 of the Bermuda Monetary Authority Act 1969, I am pleased to table the Bermuda Monetary Authority Annual Report 2022 [the “Report”].
Mr. Speaker, Bermuda’s financial services sector is subject to the regulation and supervision of the Bermuda Monetary Authority [the “Authority”].The Authority operates pursuant to the Bermuda Monetary Authority Act 1969 [the “Act”] which provides it with a number of principal objects, including the supervision, regulation and inspection of financial institutions operating in or from within Bermuda together with the promotion of financial stability and the soundness of financial institutions.
Mr. Speaker, the House would be aware that the Authority has specific licensing and supervisory responsibilities under the following regulatory statutes: the Banks and Deposit Companies Act 1999; the Digital Asset Business Act 2018; the Insurance Act 1978; the Investment Business Act 2003; the Investment Funds Act 2006; the Fund Administration Provider Business Act 2019; the Trusts [Regulation of Trust Business] Act 2001, together with other statutes. The Authority also regulates the Bermuda Stock Exchange.
Mission
Mr. Speaker, the Authority’s mission is to contribute to Bermuda’s financial stability, protect customers of financial services and protect Bermuda’s currency through: maintaining effective and proactive regulatory frameworks through its highly skilled and engaged workforce; delivering efficient operations and sustainable business practices; and supporting responsible innovation locally and in global markets.
International Recognition
Mr. Speaker, the Authority has received international recognition of its work. The House would be aware that Bermuda is one [1] of only seven [7] total jurisdictions worldwide that has received the US National Association of Insurance Commissioners’ [“NAIC”] “qualified jurisdiction” status. Additionally, Bermuda is one of three jurisdictions to have received the NAIC elevated status of reciprocal jurisdiction.
Bermuda has also been granted equivalence status under the EU Solvency II Directive for its commercial insurer sectors.
Mr. Speaker, the Authority is recognised as a constructive participant in a number of international organisations. Meetings with such organisations offer opportunities for the Authority to strengthen its relationships with other supervisors. Currently, the Managing Director, Supervision of the Authority serves as a member of the International Association of Insurance Supervisors [the “IAIS”] Executive Committee. The Authority’s staff are also heavily involved as Chair, Vice Chair or Member of a variety of IAIS committees and subcommittees, such as the Macroprudential Committee, the Policy Development Committee, the Resolution Working Group and the Financial Crime Forum.
Mr Speaker, in addition to the above, the Authority is an active member of the Financial Stability Board Regional Consultative Group for the Americas, and participates in and contributes to the Bank for International Settlements and the Organisation for Economic Co-operation and Development’s Insurance and Private Pensions Committee. The Authority also is a member of the Global Financial Innovation Network [“GFIN”]. The GFIN is a group of regulators committed to advancing financial integrity, consumer well-being, financial inclusion and financial stability.
Legislation
Mr. Speaker, the Authority is authorised to act as adviser to the Minister of Finance on policy matters relating to any financial institution. Accordingly, it may propose laws where it can do so appropriately and consistently with its functions under the Bermuda Monetary Act 1969 [the “Act”]. The regulatory proposals covered during the relevant period included but were not limited to: the conduct of business, fees, banks, investment business, insurance, and amendments to the Act.
Supervision and Licensing
Mr. Speaker, Members attention is drawn to the following key highlights:
Banking Sector
Mr. Speaker, the number of banks increased from four [4] to five [5] in 2022. The consolidated assets of the banking sector decreased by 2.9% or $0.8 billion to $26 billion in 2022. This change was in line with a decrease in deposit liabilities and is evidenced primarily by cash and deposit liabilities decreasing by 16.4% to $4.2 billion [2021:$5.0 billion].
Mr. Speaker, investments retained the largest share of total assets at 46% [46.2%:2021], followed by loans at 34.7% [32.6%:2021], and cash and deposits at 16.2% [18.8%:2021].
Mr. Speaker, net interest income continues to be the largest component of the banking sector’s income at $620 million [$484 million: 2021].
Insurance sector
Mr. Speaker, 1,196 insurance companies were registered as at
31st December, 2022 as compared to 1,158 in 2021. 80 insurers registered in 2022 [64:2021].
Mr. Speaker, Companies and Groups are required to submit their statutory financial returns either four months, five months or six months after their financial year-end depending on their licence class. While the majority of companies have a December 31 year-end, some companies have financial year-ends outside of the calendar year-end. Occasionally, companies also apply and are granted filing extensions. The underwriting statistics in the report incorporate aggregation of all data from the 2021 year-end filings received in 2022. The 2022 year-end statutory filing’s initial filing was due at the end of April 2023 and, therefore, 2021 year-end information is the most recent complete set of information.
Mr. Speaker, according to 2021 year-end information, total capital and surplus was $370.7 billion in 2021 [$349bn:2020]. Gross premiums written were $268 billion in 2021 [$294bn:2020].
The movement between 2021 and 2022 gross premiums written is explained by the lumpy nature of long-term business where insurers write significantly large blocks of business in a particular year and then run them off through the life of the contract. The numbers were largely driven by a few large insurers.
Total assets were $1.6 trillion in 2021 [$1.4 trillion: 2020]. The main increase of $175 billion is due to new insurers entering the market and increased business from a select group of companies.
Investment Sector
Mr. Speaker, there were 48 [2021: 51] licensed investment business providers operating in Bermuda in 2022. The aggregate total assets under management [AUM] was $216.2 billion compared to $253.2 billion in 2021. 67% pertains to European clients while 24% pertain to Bermuda based clients. Total assets under administration [AUA] was US$26.8 billion, compared to US$31.5 billion reported for 2021.
Mr. Speaker, there were 804 [799:2021] investment funds on the Investment Funds Act register operating in or from within Bermuda in 2022 with a net asset value of $292.71 billion [$219.60 billion: 2021].
Mr. Speaker, there were 24 [24:2021] fund administrator licences in issue at the end of 2022 with $242.4 billion assets under administration.
Digital Asset Business Sector
There were 16 [10:2021] digital asset business providers operating in Bermuda at year-end 2022. Licensing fees increased from $369,000 in 2021 up to $845,000 in 2022.
Bermuda Stock Exchange
Mr. Speaker, total equity market capitalisation of the Bermuda Stock Exchange stood at $166 billion at the end of 2022 as compared with $334 billion at the end of 2021.
Mr. Speaker, a total of 142 [2021:281] new insurance linked securities were added to the BSX in 2022 increasing the total nominal value up to $52 billion [$50.8 billion:2021].
Mr. Speaker, domestic trading volume totaled 1.42 million shares in 2022 3 million: 2021] and was valued at 13.13 million [$23.4 million: 2021].
Employees
Mr. Speaker, at year end 31st December 2022, the Authority was comprised of 235 full-time permanent employees as compared with 219 in 2021.
Financials
Mr. Speaker, Members attention is drawn to the following highlights set out in the Statement of Accounts Report:
Mr. Speaker, net comprehensive income was $5.45 million down from a $13.3 million in the previous year.
Mr. Speaker, total revenue increased by 8.98% up to $79.65 million, up from $73.09 million. The increase is mainly due to a $2.47 million increase in revenue from supervisory and licensing fees.
Mr. Speaker, expenses increased by 24.12% to $74.2 million. The increase was mainly due to the $8.75 million in increased salaries and benefits.
Mr. Speaker, licensing fees were $71,049 million at year-end as compared with $68,672 million of which $60,900 million was paid by the insurance sector.
Mr. Speaker, Board Members are paid an annual fee of $26,000 [$20,000: 2021]; Board Sub Committee Chairs are paid an annual fee of $33,000 [25,000: 2021]. The Chairman of the Board receives an annual fee of $96,000 [$75,000: 2021].
Mr. Speaker, the CEOs salary is set at $500,000 [no change] and he is eligible for a performance based-bonus of up to 50% of base salary. Salaries of the other 14 members of the executive team range from $253,000 to $450,000 in 2022 with a performance bonus of up to 37% [2021-35%] of salary.
Fines, penalties and other income
Mr. Speaker, revenue from fines, penalties and other income also grew by $1.69 million due to increased anti-money laundering fines, insurance fines, and trust and corporate service provider fines.
Mr. Speaker, in reviewing the Authority’s financial statements, the Auditor General has issued a clean opinion.
Mr. Speaker, I wish to express my sincere thanks to the Board of the Authority who served and continue to serve this complex sector. A special thank you the staff of the Authority for their contribution to the maintenance and growth of the financial services sector.
Thank you, Mr. Speaker.
Read More About
Category: All
