Bermuda Monetary Authority launches 2025 Global Financial Crisis stress test for Class C, D and E commercial insurers and reinsurers

The Bermuda Monetary Authority has launched a market-wide 2025 Global Financial Crisis (GFC) stress testing exercise for Bermuda-regulated Class C, D and E commercial insurers and reinsurers, requiring firms to model the impact of a 2008-style crisis on their financial strength. The exercise is intended to complement insurers’ annual filing stress tests and to support the Authority’s assessment of market resilience, and it is not being used to set regulatory capital requirements. Reinsurers must calculate the impact of the specified GFC-style stress scenario(s) and consider treaty recapture dynamics, including appropriate recapture triggers and the range of contractually enforceable or otherwise highly plausible management actions that could mitigate recapture risk. Non-insurance-bearing entities, such as insurance groups, are excluded, while dual commercial insurers and reinsurers are expected to perform the stress test for both long-term and general insurance segments, noting that recapture triggers are related to entity-level ECR performance. Submissions using the Authority’s template are due by 16 June 2025 unless otherwise agreed. Reinsurers with no in-force reinsurance treaties at the valuation date may apply for an out-of-scope designation by 1 June 2025, and an extended deadline of 30 June 2025 may be permitted for firms that engage with the Authority ahead of the deadline with a draft of results and management actions.