Annual Report 2004 - Bermuda Monetary Authority

Transcription

REPORT
AND
A C C O U N T S
2 0 0 4
BERMUDA
M O N E TA R Y A U T H O R I T Y
OBJECTS OF
THE AUTHORITY
The principal objects of the Authority are set out in section 3
of the Bermuda Monetary Authority Act 1969.
The principal objects of the Authority shall be –
•
to issue and redeem notes and coins;
•
to supervise, regulate and inspect any financial institution
which operates in or from within Bermuda;
•
to promote the financial stability and soundness of financial institutions;
•
to supervise, regulate or approve the issue of financial
instruments by financial institutions or by residents;
•
to assist with the detection and prevention of financial
crime;
•
to foster close relations between financial institutions
themselves and between the financial institutions and
Government;
•
in accordance with any statutory provision in that behalf
to manage exchange control and regulate transactions in
foreign currency or gold on behalf of the Government;
•
to advise and assist the Government and public bodies on
banking and other financial and monetary matters; and
•
to perform such functions as may be necessary to fulfil
such principal objects.
COVER IMAGE: CITY HALL
This attractive large, whitewashed building was designed by well-known Bermudian
architect Wilfred Onions and opened in 1960. Its 91 foot tower is topped by a weathervane depicting the Sea Venture, which was shipwrecked during a hurricane en route to
Virginia in 1609 under the command of Sir George Somers. The Sea Venture brought
the first permanent settlers to the islands, joining the wild pigs and cahow birds.
Contents
Chairman’s Statement
Board of Directors
Executive Team
Overview
Organisation Chart
Financial Highlights
Board Committees
Corporate and Financial Services
Human Resources
Information Technology
Policy, Research and Communications
Legal, Enforcement and International Liaison
Banking, Trust & Investment
Insurance
Statistics & Balance of Payments
Financial Statements
4
6
7
9
10
12
14
15
18
21
22
24
27
46
54
58
BUILDING
UPON EXCELLENCE
As the regulator of Bermuda’s financial and insurance institutions the Bermuda
Monetary Authority (BMA) continues to build on a solid foundation of effectiveness.
For over 30 years the BMA has remained a stable, diligent organisation, while adapting to regulatory and other change. In the past year the organisation has evolved
further to meet the demands of ongoing international regulatory initiatives, as well
as continuing changes in the business environment and the wider economy.
This fast-evolving environment is a fact of business life today and will be for the
foreseeable future. The BMA recognises its pivotal role in ensuring that Bermuda
can continue to strike the right balance in applying effective systems of regulation
that promote and encourage high standards of behaviour but do not stifle sensible
market development.
This year’s Annual Report highlights the BMA’s stability and its critical relevance to
Bermuda’s financial well being now and for the future. The theme, “Building on
Excellence”, incorporates images of Bermuda’s unique architecture which embodies
the spirit and ingenuity of Bermuda’s builders as they worked to lay solid foundations
that would provide support for future generations.
This same spirit is reflected in the team of professionals at the BMA, whose dedication and hard work contribute significantly to the preservation, protection and
promotion of Bermuda’s financial reputation and the Bermuda financial community
as a whole.
Mission
STATEMENT
To protect and enhance Bermuda’s reputation
and its position as a leading international financial
centre, utilising a team of highly skilled
professionals working to promote financial stability
and provide effective supervision and regulation.
Vision
STATEMENT
Committed to integrity and excellence.
character
“WELCOMING ARMS” STEPS COMMONLY LEAD UP TO AN ENTRANCE ON
THE MAIN FLOOR. THOUGH CHARACTERISTIC OF THE 18TH CENTURY, THIS FEATURE
HAS TODAY BECOME SYNONYMOUS WITH BERMUDA’S UNIQUE BRAND OF HOSPITALITY.
04
B E R M U D A M O N E TA RY A U T H O R I T Y
CHAIRMAN’S
S TAT E M E N T
This year saw a continuing increase in the responsibil-
Striking the right balance and establishing a reputa-
ities and demands placed on the BMA. I am delighted
tion as an effective and proactive regulator, able to
to report that the Authority met these challenges
act firmly but always fairly, is not an easy task. But I
successfully. This success is very much to the credit of
believe that the Authority has continued to see its
our staff that have maintained a strong commitment
reputation for effectiveness and professionalism grow
to carrying out responsibilities efficiently and effec-
and develop. This was very much confirmed by the
tively while continuing to enhance and develop their
publication in early 2005 of the International
technical and professional expertise. The Board joins
Monetary Fund (IMF) report on our regulatory
me in paying full tribute to the dedication of the staff,
framework.
which has enabled the Authority to meet its objectives
and to continue to grow in status and reputation.
In particular, the IMF was very complimentary about
Over the past several years, the Authority has devoted
the legislative provisions put in place over the past sev-
a great deal of attention to the development of
eral years, the effectiveness of the regulatory regimes
Bermuda’s financial legislative framework. As the
that have been developed and implemented by the
Left to right:
Joan Smith
Maureen Simons
Cheryl-Ann Lister
report makes clear, this was again the case in 2004. In
Authority, and the degree of compliance that has
this regard we have had the continued support of
been achieved. It was particularly pleasing that this
Minister Paula Cox and her team in ensuring that the
positive outcome necessarily reflected a team effort,
appropriate legislative initiatives were taken through
showcasing directly the hard work and dedication of
the Parliamentary process. In parallel however, it is
the Authority’s staff.
important to highlight the ultimately even more
important task from a supervisory perspective of
I would express personal thanks to my Deputy
developing appropriate policy frameworks for super-
Chairman, Mr. Robert Steinhoff, as well as to the
vision in the different sectors and achieving effective
other members of the Authority’s Board. All members
implementation and high levels of compliance with
make an important contribution to the Authority’s
the relevant standards and requirements. In 2004,
success through their guidance and oversight and I
particularly positive progress was made in developing
am most grateful for their continued assistance and
the regulatory framework for the investment and
support. In that regard, too, I should record our par-
insurance sectors, with significant enhancements
ticular thanks and best wishes to Mr. Mark Smith who
made in the effectiveness and transparency of the
stepped down at the end of the year on the conclu-
supervisory regimes, in parallel with the introduction
sion of his term of office. Mr. Smith made a significant
of legislative changes.
contribution to the Board, particularly as a member
REPORT AND ACCOUNTS 2004
of the Audit Committee and his work was greatly
Overall, the Authority continues to play an important
appreciated. I am also pleased to welcome Mr.
part in protecting and enhancing Bermuda’s reputa-
Anthony Joaquin who returned to the Board in
tion as a high-quality international financial centre,
January 2005 to replace Mr. Smith. Mr. Joaquin, who
and I am confident that with the support of the Board
is a former director, has significant financial services
and staff, further progress will be made in the year
experience, having also spent many years in the audit-
ahead.
ing profession. I am confident that he will play an
effective part in the ongoing development and governance of the Authority.
Cheryl-Ann Lister, MBA, CFA CHAIRMAN & CEO
05
06
BOARD OF
DIRECTORS
NON-EXECUTIVE DIRECTORS COMMITTEE (“N”) CHAIR: MR. ROBERT STEINHOFF. SUB COMMITTEES: AUDIT COMMITTEE (“A”) COMPENSATION COMMITTEE (“C”)
INVESTMENT COMMITTEE (“I”) CHAIR: MS. AUDETTE EXEL. GOVERNANCE COMMITTEE (“G”) CHAIR: MR. DARREN JOHNSTON (MEMBERSHIP IN BOARD COMMITTEES IS AS NOTED IN BRACKETS)
Bala Nadarajah, MCL
SENIOR COUNSEL - CORPORATE & COMMERCIAL LAW,
HEAD OF CORPORATE INSURANCE,
ATTRIDE-STIRLING & WOLONIECKI (N, G)
Audette Exel, BA, LLB (Hons)
MANAGING DIRECTOR, ISIS LIMITED (N, I, G)
Jeremy Cox, BSc, CPA
SUPERVISOR OF INSURANCE (I)
Anthony D. Whaley, BA (Hons) (Law),
BCL (Oxon)PARTNER, CONYERS, DILL &
PEARMAN (N, C, G)
Robert D. Steinhoff, FCA
DEPUTY CHAIRMAN
SENIOR PARTNER, KPMG (RETIRED) (N, A, C, G)
D. Munro Sutherland, MA, DipFS
SUPERINTENDENT OF BANKING,
Darren Q. Johnston, CA
PARTNER, PRICEWATERHOUSECOOPERS (N, C, G)
TRUST & INVESTMENT (I)
Anthony Joaquin, FCA
Cheryl-Ann Lister, MBA, CFA
CHAIRMAN & CHIEF EXECUTIVE OFFICER (I, G)
A. Shaun Morris, MA (Econ), LLB
PARTNER, APPLEBY, SPURLING HUNTER (N, I)
MANAGING PARTNER, ERNST & YOUNG (N, A, G)
Charles G.R. Collis, BA (Hons), LLB
PARTNER, CONYERS, DILL & PEARMAN (N, A, I)
EXECUTIVE
TEAM
Jeremy Cox, BSc, CPA
SUPERVISOR OF INSURANCE
Cheryl-Ann Lister, MBA, CFA
CHAIRMAN & CHIEF EXECUTIVE OFFICER
D. Munro Sutherland, MA, DipFS
SUPERINTENDENT OF BANKING,
TRUST & INVESTMENT
Marcia Woolridge-Allwood, BBA, JP
DIRECTOR, CORPORATE & FINANCIAL SERVICES
Leila Madeiros, MA
DEPUTY DIRECTOR, POLICY RESEARCH &
COMMUNICATIONS
Shelby R. Weldon, CPA
DEPUTY DIRECTOR, COMPLIANCE (INSURANCE)
07
BERMUDA MONETARY AUTHORITY
31 REID STREET
Cheryl-Ann Lister, CFA, MBA
HAMILTON HM12
CHAIRMAN & CEO
BERMUDA
29 April, 2005
The Hon. Paula A. Cox, JP, MP
Minister of Finance
Ministry of Finance
Hamilton
Dear Minister,
In accordance with section 28(1) of the Bermuda Monetary Authority Act 1969 I have
the honour to submit to you a report of the operations of the Authority for the year 2004
together with the annual statement of accounts certified by the Auditor.
This document also contains the reports for the year 2004, which the Authority is
required to make to you pursuant to:
•
section 8(3) of the Banks & Deposit Companies Act 1999;
•
section 8(3) of the Investment Business Act 2003; and
•
section 5 of the Trusts (Regulation of Trust Business) Act 2001.
Yours sincerely,
Telephone: (441) 295-5278 Facsimile: (441) 292-7471 Web Site: www.bma.bm Email: info@bma.bm
OVERVIEW
FOR 2004
As in the past several years, a key priority for the
ulation of the mutual fund industry where consulta-
Authority during 2004 was the ongoing project for
tions on a new Collective Investment Schemes Act are
the enhancement and updating of Bermuda’s suite
now at an advanced stage; a second stage of amend-
of financial services legislation. The Authority contin-
ments to the Insurance Act intended to complete
ued to work closely with the Ministry of Finance on a
the enhancement of Bermuda’s insurance regulatory
range of legislative initiatives, and excellent progress
framework and ensure compliance with the new inter-
was made. Major milestones included:
national regulatory standards for that sector which
•
the enhancement of Bermuda’s investment busi-
have recently been agreed; and a set of detailed tech-
ness regulation following the implementation in
nical amendments to Bermuda’s Proceeds of Crime
early 2004 of the new Investment Business Act
Act, Regulations and Guidance Notes, designed to
2003, together with related secondary legislation
meet the amended international standards for con-
and regulatory material;
trols to prevent money laundering and terrorist
the first stage in the further enhancement of the
financing.
•
regulatory regime for insurance, involving the
•
•
enactment of the Insurance Amendment Act
Throughout the year, the Authority continued to dis-
2004 and the related development of extensive
cuss with the IMF the finalisation of their review of
guidance to industry on key elements of the reg-
the supervision and regulation of Bermuda’s financial
ulatory framework;
sector, following the on-site assessment work conduct-
the
Code
ed by a Fund mission during early 2003. The report,
Amendment Act 2004 which included new gen-
introduction
of
the
Criminal
which was finally completed, laid before Parliament
eral offences relating to insider dealing and price
and published in early 2005, provided a positive,
manipulation in securities markets; and
authoritative and independent review of the effective-
the introduction of the Anti-Terrorism (Financial
ness of Bermuda’s framework of financial sector
and other Measures) Act 2004.
supervision. Its recommendations for enhancements
in particular areas were in large part consistent with
At the same time, the Authority continued to carry
the authorities’ own previous assessment, and in the
forward work on a number of other major legislative
main reflected matters that had already been identi-
and regulatory initiatives, which are expected to
fied for action as part of the ongoing programme of
reach fruition during 2005. These included: the
legislative and regulatory enhancements described
development of an enhanced framework for the reg-
above.
09
10
O R G A N I S AT I O N
BANKING, TRUST
& INVESTMENT
Chairman & Chief Executive Officer *
Cheryl-Ann Lister
P O L I C Y,
RESEARCH &
C O M M U N I C AT I O N S
(PRC)
HUMAN
RESOURCES
C O R P O R AT E &
FINANCIAL SERVICES
Superintendent of Banking,
Trust & Investment **
D. Munro Sutherland
Director
Corporate & Financial
Services
Marcia WoolridgeAllwood
Director
Human Resources
(Vacant)
Deputy Director
PRC
Leila Madeiros
Assistant Director
Communications
Pat Phillip-Bassett
Assistant Director
Investment
Shanna Lespere
Principal
Investment
IBA
Ameeta Vijayvergiya
Principal
Investment
CIS
Chris Cassidy
Financial Controller Assistant Director
Charles Smith
Human Resources
Verna Hollis-Smith
Assistant Director
Banking & Trust
F. Ann Daniels
Principal
Banking
(Vacant)
* Controller of Foreign Exchange
** Secretary to the Board
Principal Trust
Tina Woods
Consultant
Banking
Simon Frew
Principal
Facilities
& Security
Keicia Place
Principal
Authorisation
& Compliance
(Vacant)
Senior HR Officer
Josie Richardson
BUTTERY
Before refrigeration and the advent of
imported or manufactured ice, most
Bermuda homes used an outbuilding
called a buttery to preserve and store
perishable items. Today the unique,
steep pyramidal roof, so characteristic
of the original “Buttery”, is still
incorporated into many Bermuda
residential and commercial buildings.
Executive & Management
As at May 2005
INSURANCE
I N F O R M AT I O N
TECHNOLOGY
(IT)
LEGAL &
ENFORCEMENT
SERVICES
Supervisor of Insurance
Jeremy Cox
Director
Legal & Enforcement
(Vacant)
Deputy Director
Licensing &
Authorisations
(Vacant)
Deputy Director
Compliance
Shelby Weldon
Consulting
Actuary
Dr. John Burville
Assistant Director
IT
James Stroeder
Assistant Director
Enforcement
(Vacant)
Enforcement
Coordinator
John Hill
Legal
Counsel
Neysan
Sobhani
Legal
Counsel
(Vacant)
Principal
Compliance
Michael Baker
Principal
Compliance
Susan Kovacs
Principal
Compliance
Suzanne Williams
Principal
Licensing &
Authorisations
Shonette Wilson
Principal
Licensing &
Authorisations
Afnik
Williams-Hyde
Principal
Licensing &
Authorisations
(Vacant)
11
12
FINANCIAL HIGHLIGHTS
FOR 2004
The net income of the Authority for the year totalled
Consistent with recent practice, 50% of the
$3.19 million, an increase of 33% on the figure of
Authority’s net income for 2004 ($1.59 million) was
$2.4 million recorded in 2003. Revenues for the year
allocated to the Consolidated Fund of the Govern-
under review increased by 26% primarily reflecting
ment of Bermuda.
re-allocation to the Authority of fees for the banking
sector that were previously collected by Government.
B E R M U D A C U R R E N C Y O P E R AT I O N S
The Authority’s net investment income declined
The amount of Bermuda currency notes and coin in
from $5.3 million to $4.7 million, mainly as a result of
circulation increased during the year by $5.9 million
the continuing low levels of market interest rates as
to $99.9 million, a 6% increase over the amount
well as a $0.3 million loss relating to the sale of bonds.
recorded at the end of 2003. As in past years, season-
At the end of the year, investment income earning
al peaks in circulation figures were experienced dur-
assets were some 18% below end-2003 levels, reflect-
ing the main public holidays in July (Cup Match) and
ing the purchase by the Authority towards the end of
December (Christmas). Immediately ahead of the
2004 of a new Head Office building in the City of
Cup Match holiday, $101.3 million was in circulation,
Hamilton.
up 3% over the previous year. Over the Christmas
week, the total notes and coin in circulation was
The Authority’s expenses increased by 24% during
$100.8 million, some 7% above the figure recorded at
the year. This reflected the continued growth of
the end of the preceding year.
salary and related costs from engaging additional
staff to meet increasing regulatory responsibilities,
as well as higher costs for rented premises and for
professional/consultancy fees.
Currency Notes Issued and Redeemed 2004
Notes Issued
BD$
Net Issues During Month
Notes in Issue
at Month End
$
New
$
Re-issue
$
Total
$
Notes
Redeemed
$
January
2,600,153
7,170,000
9,770,153
18,099,700
73,150,246
(8,329,547)
February
1,872,252
10,780,000
12,652,252
11,165,000
74,637,498
1,487,252
March
301,718
14,130,000
14,431,718
15,188,700
73,880,516
April
957,136
15,798,000
16,755,136
13,961,700
76,673,952
2,793,436
3.78
May
2,280,709
8,878,000
11,158,709
10,097,900
77,734,761
1,060,809
1.38
June
1,144,192
11,122,000
12,266,192
12,703,600
77,297,353
July
4,853,417
16,785,000
21,638,417
10,569,500
88,366,270
11,068,917
14.32
55,136
10,122,000
10,177,136
22,781,500
75,761,906
(12,604,364)
-14.26
640,527
11,557,000
12,197,527
11,253,750
76,705,683
943,777
1.25
October
2,750,516
8,570,000
11,320,516
7,995,500
80,030,699
3,325,016
4.33
November
1,120,125
6,153,000
7,273,125
6,842,600
80,461,224
430,525
0.54
December
4,405,002
10,145,000
14,550,002
8,282,600
86,728,626
6,267,402
7.79
2004
22,980,883
131,210,000
154,190,883
148,942,050
86,728,626
5,248,833
6.1
2003
21,639,144
147,764,000
169,403,144
165,510,640
81,479,793
3,892,499
4.8
Month
August
September
Change
$
(756,982)
(437,408)
Change
%
-10.22
2.03
-1.01
-0.56
Year
Currency Coins Issued and Redeemed 2004
BD$
Net Issues During Month
Coins Issued
$
Coins Redeemed
$
Coins in Issue
& O/S at
Month End $
3,854
–
12,580,788
3,854
0.03
15
–
12,580,803
15
0.00
5,401
–
12,586,205
5,401
0.04
120,150
–
12,706,355
120,150
0.95
May
6,573
–
12,712,928
6,573
0.05
June
175,227
–
12,888,155
175,227
1.38
July
46,797
–
12,934,952
46,797
0.36
2,063
–
12,937,014
2,063
0.02
50,094
–
12,987,108
50,094
0.39
163,240
–
13,150,349
163,240
1.26
November
6,613
–
13,156,962
6,613
0.05
December
40,013
–
13,196,975
40,013
0.30
2004
620,041
0
13,196,975
620,041
4.7
2003
566,372
0
12,576,934
566,372
4.5
Month
January
February
March
April
August
September
October
Amount
Change
$
Change
%
Year
13
14
BOARD
COMMITTEES
NON-EXECUTIVE DIRECTORS’ COMMITTEE
major capital asset in 2004 and of renovation and
The Committee is comprised of all the non-executive
other expenses associated with currently leased prem-
members of the Board and is charged under section
ises; the planning of the 2004 audit; and key controls
4C of the BMA Act with responsibility for:
and risk related policies and procedures, in particular
a
Keeping under review the question whether the
Authority is discharging its functions in accordance
those associated with the collection of annual business fees.
with the policy objectives and strategy determined by
the Board;
INVESTMENT COMMITTEE
Keeping under review the question whether the
The Investment Committee is appointed by the Board
Authority’s internal financial controls secure the
of Directors to assist it in fulfilling its oversight respon-
proper conduct of its financial affairs; and
sibilities. The Committee’s primary responsibilities
b
Determining the remuneration and other terms
are to ensure that the investment and management
of service of the Executive Directors of the Authority.
of the Authority’s portfolio of assets is prudent and
c
meets the requirements of the Bermuda Monetary
During the year, the Committee met as required and
Authority Act 1969 (the BMA Act) and Investment
maintained under review the matters with which it is
Policy Guidelines established by the Board.
charged by the Act, drawing in particular on the work
of the Audit Committee. The Committee kept under
During 2004, the Investment Committee was chaired
close review the effectiveness of the Executive
by Ms. Audette Exel, BA, LLB. The other members of
Directors and other senior management. It also
the Committee were: Mr. Charles G. R. Collis, BA,
reviewed the compensation package of the Executive
LLB; Ms. Cheryl-Ann Lister, CFA, MBA; Mr. A. Shaun
Directors and approved proposals for remuneration
Morris, MA, LLB; Mr. Bala Nadarajah, MCL; and Mr.
of the Authority’s other senior management staff.
Darren Johnston, CA.
AUDIT COMMITTEE
During the year, the Committee met as required and
The Audit Committee comprises three non-Executive
reviewed a number of matters, including:
directors of the Board who are charged with ensuring
•
Recommendations on the general strategy and
that the financial affairs of the Authority are moni-
specific investments made by the Investment
tored and reported in accordance with generally
Manager, an officer in the Authority’s Investment
accepted accounting principles (GAAP) in Bermuda
Department;
and in Canada. During the year the Committee, com-
•
prising Mr. Robert D. Steinhoff, FCA, as Chairman,
Mr. Mark W. R. Smith, CA, and Mr. Anthony Whaley,
in US interest rates;
•
BA, BCL, met as required to review the recommendations made by the Auditor General in the management letter for the 2003 audit; any impact of the
changes in CICA accounting standards; the accounting treatment for the Authority’s acquisition of a
The impact on fixed income markets of changes
The risk profile and diversification of the portfolio;
•
•
The Investment Policy Guidelines; and
Compliance with the BMA Act and Investment
Policy Guidelines.
C O R P O R AT E &
15
FINANCIAL SERVICES
For most of 2004, the Authority’s Internal Adminis-
main ingredient used in the construction of the tradi-
trative and Support functions, together with its Legal,
tional and very distinctive Bermuda stone house. This
Authorisation and Compliance Group reported to
coin completed the five-coin Heritage set. Other
the General Manager, Corporate Services. Later in
coins depicted Cup Match Cricketers, a Gombey
the year, in a re-allocation of senior responsibilities, a
Dancer, the State House Building in St. George, and a
new position of Director of Corporate and Financial
Bermuda Fitted Dinghy. Sets remain available for sale
Services was created with responsibility for financial
at the Authority’s new mini-museum and retail sales
operations (including numismatics), facilities, and
premises located at 31 Reid Street, Hamilton.
authorisations for companies and partnerships.
During the year, the Authority also prepared and
F I N A N C I A L O P E R AT I O N S A N D N U M I S M AT I C S
obtained approval for the design of a new five-sided
The Authority continued to develop and enhance
coin, due to appear in mid-2005 commemorating the
Left to right:
Sarena Minors
Marcia WoolridgeAllwood
Lamont Grant
Keisha Pitt
Leanora StovellSmith
Marie Walker
Tamera Smith
Elaine Whitecross
Andrew Griffith
Gean-Anne Wolffe
Randolph Simons
Tawana Butterfield
aspects of its financial and management reporting
Quincentennial of the discovery of Bermuda by Juan
systems as well as its budgetary and sanctioning
Bermúdez. Coins will be available in gold and silver
processes, having regard to the increasing scale of its
proof.
operations.
A U T H O R I S AT I O N S
During the year the Group’s staff enhanced its knowl-
During 2004 the Authority received 1,538 applica-
edge of the Authority’s accounting software package
tions for the incorporation of new companies and
through attendance at a series of software courses pre-
partnerships, as well as permits for overseas compa-
sented by third party consultants. As a result of the
nies, an increase of 4.6% over the level seen in 2003.
additional knowledge gained, a number of enhancements were made to the management and depart-
A total of 1,461 applications were consented during
mental reports, thereby giving the Board and
the year, and 24 were refused. For exempted under-
Departments increased information to assist with the
takings 1,185 consents were given (i.e. exempted
management of their budgets.
companies, exempted partnerships, overseas companies, overseas partnerships and continuation compa-
In the summer of 2004 the Authority issued the final
nies). In addition, 222 local companies and 53 unit
coin in its very successful Heritage series. This depict-
trusts were consented. As in previous years corporate
ed a stonecutter in a Bermuda limestone quarry; the
and investment holding companies, mutual funds
limestone obtained in the quarrying process is the
and insurance undertaking businesses represented
the main components of the total.
16
Applications Approved: Statistical Report
Exempted Companies
1999
2000
2001
2002
2003
2004
1,222
1,656
1,236
1,045
971
1,047
57
111
95
63
72
76
3
11
11
3
3
3
38
67
58
55
32
32
4
7
52
31
68
53
18
27
19
32
43
27
2
5
3
2
5
1
165
206
204
194
202
222
1,509
2,090
1,678
1,425
1,396
1,461
(Bermuda companies exempted from
the 60% Bermudian ownership requirement)
Exempted Partnerships
(partnerships established in Bermuda to
carry on business in or from within Bermuda)
Overseas Partnerships
(overseas partnerships applying for permits to
Overseas Companies
(overseas companies applying for permits to
Unit Trusts
Continuation Companies
(companies from other jurisdictions continuing
into Bermuda as exempted companies)
Unlimited Liability Companies
Local Companies
Total Applications Approved
Statistics for earlier periods have been revised to reflect more recent data.
Detailed statistics may be accessed on the Authority’s website www.bma.bm
details
QUOINS, OR LARGE STONES SURROUND DOORFRAMES OR CORNERS
OF BUILDINGS AND PROVIDE INTERESTING ARCHITECTURAL DETAILS.
During the latter part of the year the Authority
initiated discussions with representatives of the
corporate services industry on options for further
streamlining the current procedures for dealing
with customer vetting and due diligence in connection with incorporation and share transfer requests.
In early 2005, a number of interim steps were
announced after industry consultation, intended to
improve the efficiency of the process while maintaining Bermuda’s tough requirements and high
standards. Further discussions with industry on
longer-term changes to the present arrangements
are ongoing, with a view to presenting proposals
for the consideration of the Minister of Finance.
FA C I L I T I E S
During the year the Group was tasked with identifying new long-term premises to enable the
Authority’s entire operations to be housed on a single site. Since 2001, part of the staff has had to be
located in rented premises, and the Authority has
viewed it as vital to its operational effectiveness to be
able to bring its entire staff together in one building.
In December 2004, after an exhaustive review of
available buildings and potential building sites, the
Authority was successful in purchasing a 45,000
square foot building in the City of Hamilton. Third
party tenants currently occupy the building
and it is anticipated that the Authority’s staff
will move to this new facility as space
becomes available in 2007 - 2008.
In
the
interim,
the
is operating from two
leased office premises.
Authority
18
HUMAN
RESOURCES
Following the restructuring of senior responsibilities
Susan Kovacs, Principal,
in August 2004 the Human Resources Group report-
Insurance
ed directly to the Authority’s Chairman and CEO.
Crystal Caesar, Senior Analyst,
This move highlighted the critical role of this area,
Insurance
particularly during a period of significant growth and
development in the organisation.
During 2004, the following staff received long service
awards from the Authority:
P E R M A N E N T S TA F F
Cheryl-Ann Lister
5 years
The following persons have joined the Authority’s
Giselle Outerbridge
5 years
permanent staff:
Karen Paynter
5 years
Dianne Ingham, Assistant,
Joann “Josie” Richardson
5 years
Corporate Services
Kim Simons
5 years
Keisha Pitt, Administrator,
Randolph Simons
5 years
Authorisation & Compliance
Joan Smith
5 years
Sarena Minors, Assistant,
D. Munro Sutherland
5 years
Left to right:
Josie Richardson
Maureen Edness-Eddy
Verna Hollis-Smith
Maureen Smith
Finance and Accounting
Ameeta Vijayvergiya
5 years
Tammy Clarke-Richardson, Senior Analyst,
Elaine Whitecross
5 years
Banking & Trust
Shonette Wilson
Claire Fox, Senior Analyst,
Deborah Bean
15 years
Banking & Trust
Pamela Pearman
15 years
Wendy Hnatiuk, Senior Analyst,
Marcia Woolridge-Allwood
20 years
Investment
Gean-Ann Wolffe
25 years
5 years
Jodie Rudo, Analyst,
Investment
TERMS AND CONDITIONS OF EMPLOYMENT
Shanna Lespere, Assistant Director,
Throughout the year, the Authority continued to
Investment
operate under the framework of revised job titles,
Mesheiah Crockwell, Senior Analyst,
job ranks and pay conditions, which was introduced
Insurance
in 2002 and fully implemented in January 2003.
TRAINING
In 2004 the Authority reaffirmed its commitment to
the training and development of all staff by commissioning an external agency to conduct a full audit of
all Human Resource functions. The primary objective
of the audit was the development of a strategic plan
that would not only support the current business of
the Authority, but also have the flexibility to meet the
future needs of the organisation. It is anticipated that
from this perspective the Authority will be positioned
in the coming years to not only develop the talents of
the staff but also to actively pursue a policy that will
enable the Authority to realise its objectives.
While awaiting the outcome of the audit the
Authority continued to provide sponsorship for local
and overseas training courses in areas of core competencies and continued professional development to
staff at all levels within the organization.
RECRUITMENT
During the year, the Authority took steps to develop a
more focused recruitment strategy, aimed at targeting
more effectively persons with the appropriate skill-sets
and experience needed for the Authority’s different
professional teams. At the same time, the Authority’s
induction procedures were further enhanced in
order to integrate staff more quickly and effectively, to
promote their development and enhance retention.
19
I N F O R M AT I O N
TECHNOLOGY
For much of 2004, the Information Technology (IT)
Authority’s staff to new rented premises in
Group reported to the General Manager, Corporate
December 2004 also represented a major undertak-
Services. Later in the year, following a restructuring
ing for the IT Group. Extensive upgrades to, and
of senior responsibilities, the Group’s reporting line
enhancement of, the physical computing environ-
changed to the Supervisor of Insurance, reflecting
ment have been undertaken. Good progress has
the importance of current projects geared to provid-
also been made on workflow automation capability,
ing enhanced IT support to the line supervisory
online document review and the development of a
departments.
Help Desk facility.
The Authority’s Information Technology Group con-
In addition, extensive work was completed during
tinued during the year to carry forward the various
the year on a new Authority web site, which was pop-
projects agreed in 2003 under the Managing the
ulated and went live early in 2005. With these projects
Left to right:
Terry Harvey
Jason Wilmot
Shannan Swan
Karla Ingemann
Organisation’s Network of Information (MONI) pro-
well under way, the key focus of the Group’s devel-
gramme. This involves a number of linked initiatives
opment work now shifts to the restructuring and
including major changes and enhancements to the
enhancement of the regulatory databases, together
Authority’s various regulatory databases, together
with the development of new applications designed
with development of a series of new IT facilities
to provide much higher levels of automation in sup-
designed to enhance the Authority’s operational
port of the Authority’s core regulatory services.
effectiveness. The relocation of many of the
initiative
WITH ANY NEW DEVELOPMENT COMES THE DRIVE AND
COMMITMENT TO MEETING HIGH STANDARDS AND BEST PRACTICE.
21
22
P O L I C Y, R E S E A R C H
& C O M M U N I C AT I O N S
The Policy, Research & Communications Department
During the year, the policy team devoted considerable
was established during the latter part of the year,
resources to the completion of the IMF report on
bringing together overall policy development respon-
Bermuda’s financial sector legislation, providing
sibilities and the corporate communications team
extensive detailed amendments and comments on
which was previously located within Corporate
successive drafts prepared by the assessors. Shortly
Services. The Department reports through the new
after the end of the year, the team also played a major
position of Deputy Director, Policy, Research &
role in preparations for the publication of the report.
Communications, to the Superintendent of Banking,
Trust & Investment.
In its initial phase, the policy team acted during the
latter part of the year largely in a coordinating role,
The Authority moved during the year to create a
liaising closely with the line supervisory areas over the
more unified framework for the development of reg-
wide range of policy initiatives described in the regu-
ulatory policy. This work had previously been the
latory sections of this report. At the same time, the
responsibility of the different line supervisory teams.
policy team took on a more active role in advising on
However, the increasing volume of such policy work,
and carrying forward various of the changes to the
in part at least deriving from initiatives of the inter-
supervisory arrangements for the insurance sector on
national standard-setting bodies in which the
which the Authority was particularly actively engaged
Authority is also closely involved, heightened the
during 2004. This included the publication early in
need for the Authority to devote more specialised
2005 of the first series of Insurance Guidance Notes
resources to this task. The value of a central unit was
adopted after consultation with the insurance indus-
further reinforced by the fact that the Authority is
try. The policy team was also closely involved in the
involved in developing and applying a range of dif-
preparation of the Authority’s input to the National
ferent regulatory regimes. It is fully committed to
Anti-Money Laundering Committee’s review of
ensuring that supervision remains in each case appro-
Bermuda’s Proceeds of Crime provisions.
Left to right:
Karen Paynter
Glen McKay
Leila Madeiros
priate and tailored to the risk characteristics and
counterparties involved in the different business sec-
The team is continuing to develop its central policy
tors. At the same time, it sees the central policy unit as
responsibilities and, going forward, is increasingly tak-
providing important efficiencies and facilitating the
ing the lead in policy development for the different
development of the most effective regulatory frame-
regulatory regimes, while in each case continuing to
works for the various industry sectors.
work closely with the relevant line supervisory areas.
As noted in last year’s report, the Authority had
already in 2003 increased its focus on corporate communications, reflecting the increasing demands for
written material and statistical information on its
operations and activities, as well as the growing numbers of speaking engagements having to be taken on
by its senior personnel. This trend continued in 2004.
A wide range of media articles and press releases were
prepared to publicise specific developments or initiatives undertaken. The Authority also expanded the
format of its regular series of quarterly Regulatory
Updates in order to provide more topical information
and generally to enhance the transparency of its activities as far as possible.
At the same time the year saw increased attention
given to the development of internal communications, reflecting the recent growth that the Authority
has undergone and the outcome of liaison with staff
in a series of focus group discussions. A more structured framework for internal communications was
agreed and put into place.
23
24
LEGAL, ENFORCEMENT &
I N T E R N AT I O N A L L I A I S O N
The Legal, Enforcement and International Liaison
in mid-2003. Shortly after the end of the year, a set
Group is responsible for providing legal and enforce-
of detailed amendments to the Proceeds of Crime
ment advice to management and the Board in rela-
Act 1997 and the Proceeds of Crime Regulations 1998
tion to all aspects of the Authority’s functions. In addi-
was drawn up for consideration by Government; and
tion, it undertakes initial assessment of all requests
detailed industry consultation on the changes, togeth-
received from overseas regulators for assistance
er with revised draft Guidance Notes, is currently
involving use of the Authority’s compulsory powers
under way.
under the BMA Act and the Insurance Act 1978 to
require information from licensed firms. For much of
COMMITTEES
2004 the Group reported to the General Manager,
During 2004 senior staff from the Group represented
Corporate Services. Following a restructuring of sen-
the Authority at meetings of a number of important
ior responsibilities later in 2004, the Group reported
external Committees, in order to provide advice and
to the Director of Legal Services.
views from a regulatory or financial perspective.
N E W L E G I S L AT I O N
J O I N T S E L E C T C O M M I T T E E O N P R I VAT E B I L L S
The Authority’s legal team continued to be closely
The Joint Select Committee on Private Bills met
involved during the year in discussions relating to new
throughout the year to consider applications submit-
or amended legislation and in the ensuing consulta-
ted by individuals and entities seeking to form com-
tive processes. They played an active part in the vari-
panies by way of a Private Act or seeking amendments
ous legislative initiatives detailed in the line supervi-
to, or the consolidation of, existing private legislation.
sory sections of this report. In addition, they were
The Committee, which comprises representatives of
extensively involved in the preparation of the
both Houses of the Bermuda legislature – the House
Bermuda Monetary Authority Amendment (No. 3)
of Assembly and the Senate – is traditionally chaired
Act 2004. This legislation was introduced by
by the Deputy Speaker of the House of Assembly,
Government early in 2004 and came into effect on 12
and receives technical advice from representatives
August 2004. It provided a minor amendment to sec-
of the Ministry of Finance, the Attorney General’s
tion 31 of the BMA Act designed to ensure full clarity
Chambers, the Registrar of Companies, and the
as to the scope of the Authority’s powers to assist over-
Authority.
seas regulators, following a legal challenge in a specific case. The Group was also fully involved during
B E R M U D A I N T E R N AT I O N A L B U S I N E S S
the year in the preparation of the Anti-Terrorism
A S S O C I AT I O N ( B I B A )
(Financial and Other Measures) Act 2004, and of the
L E G I S L AT I V E C H A N G E C O M M I T T E E
Criminal Code Amendment Act 2004.
The BIBA Legislative Change Committee met on a
regular basis throughout 2004 to continue to review a
Work relating to enhancements to Bermuda’s anti-
wide range of legislative initiatives, including propos-
money laundering arrangements continued to repre-
als made in the Committee’s 2003 report submitted
sent a particularly high priority for the Group. The
to the Minister of Finance. The 2003 Report covered
Authority had an important role in the review of the
a variety of topics including amendments to the
present provisions undertaken by the National Anti-
Companies Act 1981, the Segregated Accounts
Money Laundering Committee, aimed at identifying
Companies Act 2000, the Exempted Partnerships
and advising on technical amendments necessary to
Act 1992, the Partnership Act 1902, the Limited
ensure full compliance with the revised recommen-
Partnerships Act 1883, the Overseas Partnerships Act
dations adopted by the Financial Action Task Force
1995, the Trust Special Provisions Act 1999, as well as
the Trustee Act 1991. Much of this legislation was
improperly used in the promotion of investment
approved in 2004 but several proposals still remain
products on the Internet. The Enforcement Group
outstanding and are expected to be dealt with in 2005
continued to liaise closely with the Bermuda Police
in addition to any other proposals that will be submit-
and with regulators in other jurisdictions to try to
ted by BIBA in its 2005 Report.
limit the risks to the public. Details of suspect names
and entities are included in a public list, available on
ENFORCEMENT AND PERIMETER POLICING
the Authority’s website www.bma.bm, intended to
The Authority continued during the year to devote
warn the public to be on their guard.
increasing resources to enforcement and perimeter
policing matters, reflecting its growing responsibili-
The Authority liaises closely with relevant foreign reg-
ties in this regard under the different regulatory
ulatory authorities in the conduct of its supervisory
provisions. In particular, the Investment Business Act
responsibilities. Such cooperation and liaison is
Left to right:
John Hill
Dianne Ingham
Naysan Sobhani
2003, implemented early in 2004, introduced new
regular and routine, involving meetings or discus-
powers for the Authority to investigate and deal with
sions between the line supervisors concerned. In
concerns about unlicensed investment activity. The
addition, however, agreed international standards for
powers parallel those already available to the
regulator-to-regulator cooperation require supervi-
Authority under the Banks & Deposit Companies Act
sors to have available to them exceptional powers to
1999 and the Trusts (Regulation of Trust Business)
compel the production of relevant information in
Act 2001.
order to assist an overseas regulator who can demonstrate a legitimate need.
The Enforcement team was closely involved throughout the year in advising and assisting the Authority’s
These standards of cooperation are becoming
line supervisory departments with enforcement and
increasingly accepted and understood. During the
perimeter policing matters. They undertook a num-
year the IMF hosted in Washington a roundtable
ber of inquiries into possible breaches of Bermuda’s
forum on international cooperation, inviting a selec-
regulatory provisions, in many cases triggered by ini-
tion of onshore and offshore jurisdictions. The
tial information provided or requested by overseas
Authority’s Chairman was invited to make specific
regulatory bodies.
presentations on the legal position and practice in
Bermuda in the context of both investment and insur-
During the year, the Authority remained concerned
at the growing incidence of cases in which (generally
spurious) Bermuda company names are being
ance regulation.
25
stability
A BUTTRESS IS A STONE SUPPORT THAT ADDS ADDITIONAL STRENGTH TO
A WALL BY COUNTERACTING ITS OUTWARD THRUST.
In the case of Bermuda, these powers are contained
in the BMA Act, the Insurance Act 1978 and the
Companies Act 1981. The Authority reviews particularly carefully all requests made to it for assistance
involving the use of the compulsory powers. The
Enforcement team conducts an initial assessment
of each case and makes a recommendation to the
Authority’s Board.
A legal challenge to the Authority’s powers, initiated
in late 2003, briefly disrupted the handling of such
cooperation requests in the early part of 2004.
However, the matter was quickly clarified through
the introduction of an amendment to the BMA
Act, which enabled proper cooperation to resume.
While use of the compulsory powers remains
exceptional, requests received from overseas
regulators continued to increase, following the
pattern of recent years. There were requests for
assistance in 15 cases in 2004, against 11 in the
previous year. The requests were from eight
regulatory bodies in six different countries.
The majority of these cases continued to relate
to investment business matters, in particular
the investigation of suspected insider dealing
and/or market manipulation. Others related
to suspected unauthorised financial intermediation, trading by persons subject to a
prohibition order, and violation of antifraud statutes. In 11 of the cases the
Authority served notices on licensed institutions and subsequently passed information to the requesting authority. In one
case the Authority was able to obtain sufficient information informally from a
licensee without recourse to the powers of
compulsion. In two other cases the requesting
authority was directed to authorities in other jurisdictions. One case relating to a request from a foreign self-regulatory organisation remained under
consideration at the year-end.
BANKING, TRUST
& INVESTMENT
Responsibility for the Authority’s regulatory functions
DEVELOPMENTS IN THE BANKING SECTOR
under financial services legislation (other than insur-
As required by section 8(2) of the Act, the Authority
ance) lies with the Superintendent of Banking, Trust
continued to keep under review the operation of the
& Investment. These functions are conducted within
Act, as well as developments in the field of deposit-tak-
the Banking, Trust & Investment Department, which
ing which appeared relevant to the exercise of its pow-
reports to the Superintendent via the Assistant
ers and the discharge of its duties. This continued to
Director, Banking & Trust and the Assistant Director,
involve general monitoring of developments in the
Investment. The Banking & Trust Group is responsi-
local marketplace and in the wider group operations
ble for the supervision of Bermuda’s banks, deposit
of the Bermuda banks, together with international
companies and trust businesses, as well as of the
trends in the banking industry and changes in regu-
Credit Union; and the Investment Group regulates
latory standards and approaches in other jurisdic-
Bermuda’s investment businesses and collective
tions.
investment schemes, as well as the Bermuda Stock
The Authority remains the ‘lead supervisor’ for three
Exchange.
of Bermuda’s banks, responsible for reviewing their
operations and their capital adequacy, both solo and
BANKING AND TRUST GROUP
on a worldwide consolidated group basis. In the case
B A N K S & D E P O S I T C O M PA N I E S A C T 1 9 9 9
of Bank of Bermuda, while the Authority continues to
The following section (pages 27 to 33) comprises the
supervise the sub-group, it liaises closely with the UK
report required to be made annually by the Authority
Financial Services Authority which, following the pur-
to the Minister of Finance on its activities, pursuant to
chase of the Bank by HSBC Group, has ultimate lead
section 8(3) of the Banks & Deposit Companies Act
supervisory responsibility.
1999 (the Act).
Combined Banks’ and Deposit Companies’ Shareholders Funds (Consolidated)
$1,512
(BD$ Millions)
$1,327
$1,155
$1,015
$1,071
n Reserves &
Retained Earnings
n Share Capital
n Loan Stock
00
Reserves & Retained Earnings
Share Capital
Loan Stock
TOTAL
01
02
03
04
2000
2001
2002
2003
2004
877,968
62,236
934,965
61,851
1,020,631
59,812
1,139,549
61,573
1,311,034
65,022
75,000
75,000
75,000
126,340
136,093
$1,015,204
$1,071,816
$1,155,443
$1,327,462
$1,512,149
27
28
Bermuda’s banks had a positive year in 2004 as mar-
LICENSING
ket interest rates increased from recent historically
There was no change in the number of institutions
low levels, thereby reducing pressures on interest
licensed, which remained at four banks and one
margins while non-interest income continued to
deposit company.
expand. The aggregate balance sheet of the banking
sector declined somewhat from $22.5 billion at end-
As recorded in last year’s report, the Authority gave
2003 to $20.5 billion at end-2004. This reflected pri-
non-objection in February 2004 to the purchase of
marily the effect of the restructuring of some of the
all the outstanding shares of the Bank of Bermuda
international operations of the Bank of Bermuda
Limited by HSBC Holdings plc. No licence applica-
Group following its agreed sale to the HSBC Group,
tions were received during the year.
partly offset by asset growth at Bank of Butterfield,
which acquired a number of new overseas operations.
A P P L I C AT I O N O F T H E A C T
There were no changes in the Authority’s general
As a result of these developments, there was also some
supervisory approach under the Act. Supervision con-
change in the asset composition of the aggregate sec-
tinued to involve a programme of regular prudential
toral balance sheet, with loans and advances growing
and strategy discussions with senior management,
to account for some 26% of total assets while holdings
together with off-site analysis and review of prudential
of marketable securities declined to 32% of the total,
data and certain on-site work, conducted both in
from 34% in the previous year. In aggregate, banks’
Bermuda and in substantial group operations abroad.
regulatory capital increased by some 11% during the
The Authority also regularly holds bilateral meetings
year, providing a further strengthening in the capital
with members of institutions’ Audit Committees, as
adequacy position of the banking sector.
well as trilateral meetings involving their external
auditors.
Banks and Deposit Companies
Net Income (Consolidated)
The objective of on-site work is to gain a more complete understanding of the quality of management
and systems and of the internal control environment.
Compliance with anti-money laundering requireFees & Commission
45%
Net Interest Income
31%
Trading Profit
5%
Other Income
19%
ments and policies is routinely tested as part of such
reviews.
During the year, the Authority conducted a review of
aspects of its supervisory approach, having regard to
the assessment of compliance with the Basel core
principles conducted by the IMF, as detailed in the
Distribution of Total Assets
(Consolidated)
review that was subsequently published early in 2005.
The Fund assessment was extremely positive, concluding that the powers available to the Authority are
Deposits
35%
strong and that the supervisory process is effective,
Investments
33%
with Bermuda rated as compliant or largely compliant
Loans & Advances
27%
Cash
2%
Other Assets
3%
with all the core principles. At the same time, the assessors identified a small number of matters on which
they felt that some enhancements should be considered to aspects of on-site and off-site supervision.
These recommendations were helpful to the review
compliance teams as well as with members of the
of the current approach on which the Authority has
banks’ Audit Committees. At the same time, the
been engaged as part of its preparations for the
Authority carried out specific on-site review work in
implementation in Bermuda of the new capital ade-
overseas operations of Bermuda banks in Cayman
quacy framework, known as Basel II. The Authority is
and the Bahamas.
29
continuing its consultations with the banking industry
on a small number of interim reporting and other
The Authority has also established two further work-
changes to the present framework, notably to provide
ing groups involving representatives of the banking
for a fuller treatment of market risk. It is also working
sector, and reporting to the Monetary Advisory
with the banks on an enhanced programme of on-site
Committee, a body established by the Authority and
work designed to provide the Authority with an up-
the Ministry of Finance as a forum for the discussion
to-date understanding of the frameworks that banks
of current economic, monetary and financial issues.
Left to right:
Tammy Clarke-Richardson
Simon Frew
Hana Riley
Ann Daniels
Claire Fox
now have in place for the identification, monitoring
The first group continued during the year to review
and management of the different risks inherent in
Bermuda’s local currency clearing and settlement
their business. This forms part of the Authority’s plan
arrangements with a view to determining the changes
for developing a more formalised risk assessment
that may be appropriate, going forward. The second
framework, which will be used in future to direct and
group, which commenced its work only in 2005, is
target the annual supervisory programmes that are set
reviewing the application of risk-based customer due
for each bank. The process will assist with the prepa-
diligence requirements in the context of the detailed
rations for, and eventual transitioning to, Basel II.
new Anti-Money Laundering Guidance Notes currently being developed with the industry.
The Authority also continued during the year to have
bilateral and collective discussions with the banks on
C A P I TA L A D E Q U A C Y
their views and likely intentions with regard to Basel II
The Authority requires institutions to meet risk asset
approaches and options.
ratios of 8% solo and 10% on a group consolidated
basis. It continued to monitor capital adequacy care-
In addition to the above work programmes, the
fully on the basis of detailed quarterly prudential
Authority maintained during the year its regular
information reports and discussed with banks any
schedule of on-site work, focusing in particular on
instances where potential strains or risks of breaches
compliance issues and progress in addressing recom-
appeared to arise. No changes to the Authority’s cap-
mendations made in previous review visits. These
ital requirements were introduced during the year.
included meetings with banks’ internal audit and
30
Bermuda Money Supply
(BD$ Millions)
Notes & Coins in Circulation*
2003
Q3
2003
Q4
2004
Q1
2004
Q2
2004
Q3
2004
Q4
88
94
86
90
90
100
3,156
3,232
3,387
3,491
3,544
3,558
3,244
3,326
3,473
3,581
3,634
3,658
23
28
21
24
23
27
Deposit Liabilities:
Banks and Deposit Companies (unconsolidated)
Less: Cash at Banks and Deposit Companies
Bermuda Money Supply
3,221
3,298
3,452
3,557
3,611
3,630
% Growth on Previous Period
3.04%
2.39%
4.68%
3.06%
1.52%
0.51%
% Growth Year-on-Year
8.82%
10.49%
12.42%
13.79%
12.11%
10.09%
2004
Q3
2004
Q4
* This table includes the supply of Bermuda dollars only. United States currency is also in circulation in Bermuda
but the amount has not been quantified.
BD$ Deposit Profile – Combined Banks and Deposit Companies (Unconsolidated)
(BD$ Millions)
2003
2003
Q3
Q4
Bank Deposit Liabilities
Less: Bank Loans, Advances & Mortgages
Surplus Deposits
2004
Q1
2004
Q2
3,156
3,232
3,387
3,491
3,544
3,558
(2,535)
(2,567)
(2,566)
(2,667)
(2,752)
(2,865)
621
665
821
824
792
693
80.3%
79.4%
75.8%
76.4%
77.6%
80.5%
Combined Banks’ and Deposit Companies Foreign Currency Position (Consolidated)
(BD$ Millions)
2003
2003
2004
Q3
Q4
Q1
2004
Q2
2004
Q3
2004
Q4
Percentage of Deposit Liabilities Lent
Total Foreign Currency Assets
17,284
19,504
20,386
20,948
19,252
17,221
Less: Other Assets
219
189
289
323
241
284
Less: Foreign Currency Loans to Residents
728
743
779
854
753
850
Net Foreign Currency Assets
16,337
18,571
19,318
19,772
18,257
16,087
Total Foreign Currency Liabilities
15,553
17,695
18,546
18,926
17,324
15,278
Add: BD$ Deposits of Non-Residents
Net Foreign Currency Liabilities
Net Foreign Currency Position (consolidated)
Totals may not add due to rounding.
115
174
156
176
161
142
15,668
17,869
18,702
19,101
17,485
15,420
669
702
616
670
772
667
Combined Balance Sheet of Bermuda Banks and Deposit Companies (Consolidated)
(BD$ Millions)
ASSETS
Cash
Total
2003 - Q3
BD$
Other
Total
2003 - Q4
BD$
Other
Total
2004 - Q1
BD$
Other
500
88
412
277
31
246
168
23
145
Deposits
7,271
48
7,223
9,066
86
8,980
9,174
115
9,059
Investments
7,209
14
7,195
7,718
14
7,704
8,297
18
8,279
Loans & Advances
4,666
2,492
2,174
4,845
2,524
2,321
5,104
2,540
2,563
Premises & Equipment
261
200
61
266
204
62
325
273
52
Other Assets
268
49
219
232
43
189
332
43
289
20,175
2,891
17,284
22,404
2,901
19,504
23,398
3,012
20,386
TOTAL ASSETS
LIABILITIES
Demand Deposits
9,275
877
8,398
10,685
903
9,782
11,665
755
10,909
Savings
1,349
939
410
1,450
951
499
1,862
1,266
596
7,507
1,360
6,148
7,981
1,368
6,613
7,442
1,371
6,072
18,131
3,175
14,956
20,116
3,222
16,894
20,969
3,392
17,577
Time Deposits
Sub Total - Deposits
Other Liabilities
Sub Total - Liabilities
Capital
708
111
597
897
97
800
1,134
165
969
18,839
3,286
15,553
21,012
3,319
17,694
22,103
3,557
18,546
1,336
508
828
1,391
567
824
1,295
619
676
20,175
3,795
16,381
22,404
3,886
18,517
23,398
4,176
19,223
Total
2004 - Q2
BD$
Other
Total
2004 - Q3
BD$
Other
Total
2004 - Q4
BD$
Other
405
35
370
486
84
403
387
100
288
TOTAL LIABILITIES
AND CAPITAL
ASSETS
Cash
Deposits
9,109
99
9,010
7,598
98
7,500
7,224
34
7,190
Investments
8,347
17
8,330
8,456
18
8,438
6,731
13
6,717
Loans & Advances
5,487
2,629
2,858
5,326
2,714
2,613
5,497
2,810
2,688
Premises & Equipment
335
279
57
332
274
58
335
281
55
Other Assets
353
31
323
263
23
241
313
29
284
24,037
3,089
20,948
22,461
3,209
19,252
20,487
3,266
17,221
12,282
817
11,465
10,943
823
10,120
8,437
830
7,608
Savings
2,033
1,325
708
2,165
1,348
817
2,239
1,389
850
Time Deposits
7,128
1,329
5,798
7,016
1,321
5,695
7,600
1,337
6,262
21,443
3,471
17,972
20,123
3,491
16,632
18,276
3,556
14,720
1,166
212
954
919
227
692
663
106
557
22,608
3,683
18,926
21,042
3,718
17,324
18,940
3,662
15,278
1,428
606
822
1,420
587
833
1,549
533
1,016
24,037
4,289
19,748
22,462
4,305
18,157
20,489
4,195
16,294
TOTAL ASSETS
LIABILITIES
Demand Deposits
Sub Total - Deposits
Other Liabilities
Sub Total - Liabilities
Capital
TOTAL LIABILITIES
AND CAPITAL
31
32
overview
BALCONIES ARE INTRINSIC TO THE BERMUDA LIFESTYLE. THESE GRACE-
FUL PROJECTING PLATFORMS OFFER SUPERB VIEWS AND WARM OCEAN BREEZES.
LIQUIDITY
Section 36 provides that a person who becomes a
The Authority’s approach to the monitoring of liq-
significant shareholder in relation to a licensed insti-
uidity, as described in previous Reports, was not
tution must give written notice of that fact to the
changed during the year. The Authority continued to
Authority. This is triggered when a person, alone or
monitor institutions’ liquidity against the framework
with associates, controls 5% or more of an institution
in its 1999 paper, “The Measurement of Liquidity”,
or of another company of which the institution is a
and against the mismatch guidelines established for
subsidiary. The Authority received no such notifica-
individual institutions.
tions during the year.
LARGE EXPOSURES
Section 39 provides for the Authority to require the
Section 38 of the Act requires licensed institutions to
commissioning of reports from auditors, accountants
report all exposures to a single counterparty or group
or other persons with relevant professional skill on
of connected counterparties where they face a risk of
matters relating to the Authority’s responsibilities.
incurring a loss in excess of 10% of capital. In the case
The Authority did not find it necessary to utilise this
of proposed exposures where the risk of loss may
power to deal with particular systems or internal con-
exceed 25% of capital, the institution must seek prior
trol matters. However, as previously, the power was
consent from the Authority. The Authority has stipu-
used routinely during the year for the commissioning
lated that, other than in the case of standard inter-
of reports to check the accuracy, on a sample basis, of
bank exposures of less than one-year’s maturity, it is
prudential data previously provided to the Authority.
prepared to grant consent only in very exceptional
circumstances, notably those cases where the expo-
The Authority had no need to make use of its powers
sure can clearly be seen as extremely low risk.
under sections 40, 41 and 42 of the Act to require the
production of documents, to obtain entry to premises
FORMAL USE OF POWERS
or to appoint persons to investigate an institution.
Sections 17 and 18 of the Act enable the Authority to
restrict or revoke a licence where that is judged nec-
In addition, the Authority did not need to make use
essary for the protection of depositors or potential
of its formal enforcement powers under sections 43
depositors. The provisions were not used in 2004.
and 44 of the Act to investigate suspicions of illegal
deposit taking.
Sections 25 and 26 of the Act provide for the
Authority to review the fitness of all proposed new
There were no appeals against decisions of the
controllers of licensed institutions. As noted earlier,
Authority under the Act during 2004.
non-objection was given early in 2004 to a proposal
received in 2003 for a change of controller in relation
I N T E R N AT I O N A L S U P E R V I S O RY C O O P E R AT I O N
to the acquisition of Bank of Bermuda by HSBC
The Authority continued to liaise as necessary with
Group. Section 27 enables the Authority to object
overseas agencies in relation to the supervision of
when it concludes that an existing controller is no
individual licensed institutions.
longer fit and proper. No such case occurred in 2004.
Section 35 provides, among other things, that
As in past years, the Authority was also closely involved
licensed institutions must give written notice to the
in wider discussions and liaison on matters of banking
Authority when a person becomes a director or senior
supervisory policy and practice, notably through its
executive. As in the past, the Authority was notified of
membership of bodies such as the Offshore Group of
all such new appointments and conducted the appro-
Banking Supervisors (OGBS) and the Cross Border
priate vetting.
Banking Group. The OGBS continued to be
particularly active in representing the interests
of quality offshore financial centres. It has
taken a close interest in aspects of the development of banks’ ‘know your customer’ arrangements, and integrated risk management in banks’
international operations, as well as in standards for
trust and company service providers.
T R U S T S ( R E G U L AT I O N O F T R U S T B U S I N E S S )
ACT 2001
The following section (pages 33 to 35) comprises
the report required to be made annually by the
Authority to the Minister of Finance on the carrying
out of its functions under the Trusts (Regulation of
Trust Business) Act 2001 (the Act), pursuant to section 5 of the Act.
DEVELOPMENTS IN THE TRUST SECTOR
The Authority kept under review developments in the trust sector. This was achieved
through its supervision of each licensed
undertaking and through routine liaison with
industry bodies, such as STEP (Bermuda
Branch) and the Bermuda Association of
Licensed Trustees. Overall, the sector had
another successful year, continuing to see
good business growth in terms of number of
trusts under trusteeship and total assets under
administration. In aggregate, licensed undertakings generated increases in revenues and
in net income. Staff employed on a full-time
basis in the licensed sector declined from the
level recorded at the end of 2003 – at least
in part reflecting strong competition for staff
from other areas of the financial services sector.
As a result a number of licensed undertakings
increased their recruitment efforts in order to help
maintain service levels.
34
The Ministry of Finance and the Authority liaised
the purposes of the Exemption Order. The Ministry
with the industry over the preparation and finalisa-
and the Authority will be discussing further with the
tion of detailed provisions governing the handling of
Bar Council the limited licence provisions and their
appeals under section 29 of the Act against decisions
application to small law firms and sole practitioners.
by the Authority. The Trust Business Appeal Tribunal
Regulations 2004 came into effect on 5 November
ONGOING SUPERVISION
2004.
The Authority’s supervisory approach with regard to
licensed undertakings remained as described in last
The Authority also reviewed and monitored certain
year’s Report. The main development during the year
wider legislative changes affecting the sector – notably
was the full implementation of the Authority’s on-site
the Trustee Amendment Act 2004 and the Trust
compliance programme in licensed undertakings,
(Special Provisions) Amendment Act 2004, both of
following completion of detailed consultations with
which came into effect towards the end of the year.
industry on the approach that is to be taken. Thanks
to the comprehensive discussions effected at industry
In addition, the Authority provided guidance on the
level, the rollout of the visits programme proceeded
Act and the supervisory approach under it, cooperat-
smoothly and successfully.
ing with industry bodies in a number of seminars and
presentations on the new regulatory framework and
Overall, the Authority conducted nine prudential
its detailed implications for compliance and trust
meetings and five on-site review visits during 2004. As
officers.
agreed with industry, the focus of the standard on-site
work conducted in 2004 and in the continuing first
LICENSING
round of visits through 2005/6 is on high level con-
No applications for unlimited trust licences were
trols, together with new business take-on procedures
received during the year. One application for a limit-
and anti-money laundering controls. In each case, the
ed trust licence was received. However, this applica-
Authority provided written feedback reports to under-
tion was subsequently withdrawn. A small number of
takings, identifying any specific concerns or weak-
other applications for limited trust licences, submit-
nesses and making recommendations as to remedial
ted during 2003, have also since been withdrawn.
action or areas in which their policies or practices may
Most such applications had been essentially precau-
need enhancement.
tionary, as applicants sought to establish with the
Authority their eligibility for one or other of the
P R I VAT E T R U S T C O M PA N I E S
exemptions available under the Trusts (Regulation
During the year, the Authority approved for incorpo-
of Trust Business) Exemption Order 2002 (the
ration 23 private trust companies. In each case, the
Exemption Order). One trust licence was surren-
Authority conducted the relevant checks to satisfy
dered in 2004, bringing the number of unlimited
itself that the business to be conducted was strictly
licences at the end of the year to 31.
limited and suitable to be permitted to benefit from
the exemption from licensing available under the Act
Shortly after the end of the year, the Authority was
to private trust companies. The Authority continued
also informed that the Bar Council had concluded
to monitor the timely receipt of the required trust
that it no longer saw a need to seek recognition from
exemption certifications from newly incorporated
the Minister of Finance as a professional body for
private trust companies.
for consideration by the Minister, a set of recommen-
Sections 15, 16, 17, 20 and 23 of the Act provide pow-
dations for changes to the 1982 Act and related super-
ers to restrict a licence, to revoke a licence, to petition
visory arrangements.
the Court to wind up a company, to give directions to
protect the interests of clients and to petition the
INVESTMENT GROUP
Court to transfer trusts to a new trustee. There was no
need to make use of any of these provisions during
INVESTMENT BUSINESS ACT 2003
the year.
The following section (pages 35 to 40) comprises the
report required to be made annually by the Authority
Sections 25 and 26 provide powers for the Authority
to the Minister of Finance on the carrying out of its
to object to a new or existing controller or to
functions under the Investment Business Act 2003
increased control by an existing controller. During
(the Act), pursuant to section 8(3) of the Act.
2004, the Authority received proposals for new shareholder controllers in respect of five licensed under-
DEVELOPMENTS IN THE INVESTMENT SECTOR
takings. In each case, the Authority was able to give
The improving tone in international securities mar-
non-objection after a detailed review of the proposals.
kets resulted in somewhat improved trading condi-
Licensed undertakings continued to notify the
tions for many investment firms. However, transaction
Authority, in accordance with section 34 of the Act, of
volumes generally remained rather depressed and
all changes in controllers, directors and officers.
net income continued to be weak in many cases. A
few firms were obliged to inject new capital to cover
In accordance with the new arrangements agreed
trading losses previously incurred and restore capital
with the industry for the conduct of the Authority’s
adequacy to required levels.
on-site review programme, routine use was made during the year of the powers in sections 36 and 37 of the
Overall, the aggregate total assets of licensed invest-
Act to obtain information and reports and to obtain
ment providers (excluding banks and overseas enti-
production of documents. No use was made of the
ties) amounted to some $2.7 billion at the end of
powers in sections 38 and 39, providing right of entry
2004, compared to a figure of $3.4 billion at the end
to premises and for the appointment of inspectors.
of 2003. The aggregate capital of the licensed sector
grew to exceed $800 million for 2004 and licensed
No matters were submitted under section 29 of the
investment providers also had more than $30 billion
Act for appeal to the relevant tribunal during 2004.
of assets under management at the end of the year.
THE BIU MEMBERS’ CREDIT UNION CO-OP
I M P L E M E N TAT I O N O F T H E A C T
SOCIETY (THE CREDIT UNION)
The main provisions of the Act came into effect on
The Authority undertakes certain supervisory func-
30 January 2004 when the Investment Business Act
tions delegated to it by the Minister of Finance under
1998 (the 1998 Act) was repealed. At that date the
the Credit Unions Act 1982 (the 1982 Act). As is
Authority issued investment business licences to
usual, the Authority held regular meetings with the
investment providers licensed under the 1998 Act.
Board and Management of the Credit Union and also
Investment Business Regulations and an Exemptions
with its auditors. In addition, the Authority initiated
Order came into effect shortly after that date, follow-
a review of the continuing appropriateness of the
ing extensive industry consultation. In the run-up to
present regulatory framework, which has been
the introduction of the Act, the Authority, again after
unchanged for a number of years. It is formulating,
extensive consultation with industry, finalised and
35
36
strength
BERMUDA’S UBIQUITOUS SLATE ROOFS ARE A TRUE TESTAMENT TO STRENGTH.
FASHION IN SUCCESSIVE ROWS, THESE STURDY ROOFS WITHSTAND BERMUDA’S ELEMENTS.
published early in 2004 a Statement of Principles
of remaining pieces of secondary legislation under
under section 9 of the Act, and new Codes of Conduct
the Act. The Investment Business Appeal Tribunal
under section 10 of the Act, together with updated
Regulations 2004 came into effect on 5 November
Guidance Notes and related material.
2004, following consultation with industry. Similarly,
Client Money Regulations were the subject of consul-
During the course of the year, the remaining sections
tations during the year; they were finalised early in
of the Act were introduced – specifically section 27
2005 and brought into effect on 1 March 2005.
dealing with cold calling and Part IV covering the reg-
Consultations on Unsolicited Calls Regulations and
ulation of investment exchanges and clearing houses.
on a draft Order defining circumstances in which per-
Section 27 was commenced on 30 April, and Part IV
sons not otherwise caught by the prohibition in the
on 15 September, when the Authority made a recog-
Act may be deemed to be carrying on investment busi-
nition order in respect of the Bermuda Stock
ness in Bermuda remained under way at the end of
Exchange.
the year. It is hoped to finalise and introduce both
items shortly.
Copies of the published material relating to the new
regulatory framework are available on the Authority’s
In completing its implementation of the Act, the
website www.bma.bm. While the provisions of the Act
Authority also had regard to the conclusions of
differ in many respects from those of the 1998 Act,
the International Monetary Fund in their review
the Authority’s general supervisory approach under-
of Bermuda’s financial sector regulation. The Fund
went relatively little change. Details of the various
assessors very much
changes involved had previously been drawn to the
endorsed
attention of firms and extensive discussions had taken
approach taken
place and guidance had been given on a range of
by the
matters pertaining to the transition to the new Act.
As a result, the change-over went smoothly, with very
few issues arising.
During the year, the Authority, working closely
with the Ministry of Finance, consulted
industry on a number
the
SAWN FROM THE BEST QUALITY LOCAL STONE AND PLACED IN AN OVERLAPPING
THE UNIQUE STEPPED EFFECT COMES FROM THE THICKNESS OF THE SLATE.
Authority in developing and implementing regula-
licences were therefore issued to existing holders in
tion of the investment sector, and they confirmed that
early 2004 on implementation of the Act. During the
the arrangements were working effectively. They also
course of the year, the Authority received a further
noted that full implementation of the new Act,
four applications for licences, three of which
together with the planned Collective Investment
remained outstanding as at the end of 2004. A total of
Schemes Act, should ensure a high level of compli-
three existing licences were surrendered during the
ance with the relevant international standards.
year. As a result, a total of 52 licences were in issue
as at the end of 2004.
However, a small number of recommendations for
additional consideration were included in the Fund’s
report; and these are being reviewed. Perhaps the
Under section 17(4) of the Act,
most significant matter relates to the suggested need
the Authority may, on an appli-
for new provisions with regard to issuer regulation
cation made by an investment
and shareholder protection. The Authority is
provider, vary or remove any limita-
discussing this recommendation and possible future
tion imposed on the scope of a
provisions with the Ministry of Finance.
licence. In one case, the Authority
agreed to vary limitations on an
LICENSING
There were 54 licences in issue as at
the end of 2003. One application,
which remained outstanding
at that date, was subsequently withdrawn. Fifty-four new
application made to it, following examination of
the request.
37
38
Under sections 20, 21 and 23, the Authority may
power in section 51 to obtain a warrant to enter and
restrict or revoke a licence. These powers were not
search premises.
used during 2004. Similarly, it was not necessary to
give directions under section 24 in the case of any
No use was made in 2004 of the powers in Chapter 6
licences, which were surrendered.
of the Act to publish a statement of public censure or
in Chapter 7 to take protective measures.
Under section 28, persons intending to become
shareholder controllers of licensed providers are
As noted earlier in this report, Part IV of the Act relat-
required to serve notice on the Authority, which has a
ing to investment exchanges and clearing houses
power to object to the proposal. Notice was given to
came into effect during the course of the year, when
the Authority in one case during the year. Following
the Authority made a recognition order in respect of
review of the proposal, the Authority gave its non-
the Bermuda Stock Exchange, pursuant to section
objection. There was no need to use the power in
87(5) of the Act. There was no use of the various pow-
section 30 to object to an existing controller or the
ers contained in Part IV of the Act during the year.
power in section 32 to restrict shares or seek an order
for their sale.
ONGOING SUPERVISION
As noted previously, the Authority’s general approach
During the year, investment providers gave notice to
to the supervision of licensed investment providers
the Authority of changes in controllers and officers,
did not undergo material change with the implemen-
as required by section 43 of the Act; and the Authority
tation of the Act, and remains as described in last
conducted appropriate vetting of such persons.
year’s report. During the year, the Authority conducted 12 prudential meetings with institutions, as well as
The Authority continued to receive from investment
a larger number of ad hoc meetings to discuss specif-
providers on a voluntary basis the regular information
ic issues or concerns. In addition, it completed on-site
and reports necessary for the conduct of its supervi-
reviews of seven licensed providers. As in the previous
sion. Consequently, no use was made of the formal
year, all such review visits included specific testing of
powers in sections 45, 46 and 47 of the Act to obtain
compliance with anti-money laundering obligations
information and reports, to require the production of
and policies. In each case, the Authority provided a
documents, and to gain entry to premises. Similarly,
detailed report on its findings, including any specific
there was no need to have recourse to the powers in
recommendations for remedial action.
section 49 to investigate an investment provider.
However, as recorded in last year’s report, an investi-
BERMUDA STOCK EXCHANGE (BSX)
gation under section 19 of the 1998 Act was initiated
The mixed market conditions seen during the year
during 2003; this investigation remained ongoing
left trading volumes at the BSX fairly flat. However,
during 2004.
new listings business remained steady, with 36 new
securities listed during 2004. The BSX now lists in
With regard to perimeter policing, the Authority
excess of 385 securities, including more than 275
undertook inquiries into a number of suspected con-
offshore investment funds. At the end of 2004, total
traventions of the Act during 2004. In relation to one
market capitalisation (excluding mutual funds)
case, the Authority made use of the formal investiga-
exceeded $100 billion.
tory powers in section 50 of the Act, on two occasions
serving notices requiring persons to provide records
During the year, domestic equity securities with an
and documents. No use was made of the related
aggregate value of some $64 million changed hands,
advancement
STAIRCASES SERVE AS AN ARCHITECTURAL FOCAL POINT FOR MANY
BUILDINGS AND HOMES, AS WELL AS A MEANS OF MOVING FROM ONE LEVEL TO THE NEXT.
an increase of around 25% from the very depressed
level seen in 2003. In addition, international crossings
business recorded transactions in almost 3.3 billion
shares with an aggregate value of $119.5 billion, well
below the levels seen in recent years.
The Authority continued to supervise the BSX and to
oversee its activities. As noted earlier, the introduction
of Part IV of the Act during the course of 2004 resulted in the designation of the BSX as a recognised
investment exchange under the Act. This established
the BSX more formally in the investment business
regulatory framework as a Self Regulating Body,
responsible for regulating its members and its marketplace, subject to the Authority’s overall supervision. In large part, however, the effect was
to formalise the regulatory arrangements
for the BSX that were already in place.
Regular prudential meetings continued
to be held with the senior management
of the BSX, focusing on operational,
performance and strategic issues, as well
as matters relating to the surveillance of trading activity.
At the same time, as noted earlier,
discussions were initiated during
2004 on detailed Regulations to
be introduced under section 67
of the Act whereby the Minister of
Finance, acting on the advice of
the Authority, would set out the
specific requirements and standards to be satisfied by an investment exchange qualifying for a
recognition order under the Act.
A set of draft Regulations, prepared by the Authority, was
discussed with the Ministry
of Finance and the BSX.
40
Bermuda Stock Exchange
2004 Bermuda Dollar Trading Volume Summary
SHARE VOLUME
TOTAL $ VOLUME
January
232,048
8,047,723
February
237,430
5,669,440
March
241,072
8,160,915
April
227,546
4,304,296
May
169,528
4,016,912
June
173,176
4,522,444
July
121,197
2,809,768
August
260,722
6,319,819
September
168,451
4,258,643
October
236,380
6,283,197
November
314,359
4,775,176
December
182,922
4,798,340
2,564,831
63,966,674
2004
TOTAL
Source: Bermuda Stock Exchange
Consultations remained under way at the end of the
The Authority also continued to monitor closely and
year, but it is expected that these will be completed,
discuss relevant developments in international stan-
and Regulations introduced, during 2005.
dards for investment business regulation, in particular, through its membership of the International
At the same time, the Authority commenced, in the
Organisation of Securities Commissions (IOSCO)
context of the new Act, a review of the current super-
and its related regional body, the Council of
visory framework that is applied to the BSX. The
Securities Regulators of the Americas (COSRA). A
Authority is developing proposals for some changes in
major focus of IOSCO interest over the period has
the present approach, which will be the subject of
related to the enhancement of effective regulator-to-
discussion with the BSX and the Ministry of Finance
regulator assistance and the removal of obstacles to
during 2005.
proper cooperation. As part of this effort, IOSCO
developed a Multilateral Memorandum of Under-
I N T E R N AT I O N A L R E G U L AT O RY C O O P E R AT I O N
standing (MMOU), based on work initially undertaken by a small working group of members on which
The Authority liaised as necessary with overseas
Bermuda was represented. During the year, IOSCO
agencies in relation to the supervision of individual
was actively engaged in encouraging all its members
licensed institutions.
to achieve full compliance with the agreed principles
for cooperation and information sharing, enabling
them to apply to be signatories to the MMOU. Shortly
after the end of the year, the Authority submitted an
application to IOSCO to become a signatory.
COLLECTIVE INVESTMENT SCHEMES
During 2004, the Authority dealt with in excess of
The steady growth in Bermuda’s collective investment
750 requests for amendments to approved service
scheme (CIS) sector that has been seen in recent
providers or for material changes to scheme offering
years continued in 2004. In excess of 260 new
documents.
41
schemes were classified during the year, overwhelmingly targeted towards institutional/sophisticated
In a very small number of cases in 2004, the Authority
investors. Overall, at the end of the year, there were
conducted specific reviews and inquiries in response
2,011 different investment portfolios operating within
to concerns identified with regard to the operation of
Bermuda’s 1,149 classified schemes, increases of some
individual classified schemes. In most such cases the
30% and 10% respectively from 2003 year-end levels.
Authority was able to resolve matters satisfactorily
without resorting to formal regulatory action. In two
The aggregate net asset value of Bermuda’s classified
instances the Authority revoked schemes’ classifica-
Left to right:
Wendy Hnatiuk
Jennifer Smith
Chris Cassidy
Karimah Swan
Earl Campbell
Shanna Lespere
Martin McHugh
Ameeta Vijayvergiya
schemes also showed extremely strong growth, reach-
tions when it was satisfied that they could no longer
ing in excess of $158 billion at the end of 2004, some
operate effectively and there were satisfactory alterna-
37% above the end-2003 level. Growth during the
tive arrangements in place to safeguard the interests
year continued to reflect primarily new flows into
of remaining investors.
hedge fund related products.
A number of further initiatives were launched during
A full list of schemes classified under Bermuda’s CIS
the year (in collaboration with the Ministry of
Regulations can be found on the Authority’s website
Finance) aimed at streamlining the incorporations
www.bma.bm.
process for schemes. The Authority issued a guidance
note on the processing of scheme incorporation and
An important factor in the increasing numbers of
classification applications. This clarified the arrange-
individual investment portfolios has been the grow-
ments and in particular confirmed that schemes can
ing popularity with scheme promoters of the use of
be incorporated on a fast-track process prior to com-
Bermuda Segregated Accounts Companies (SACs).
pletion of the detailed prospectus review and classifi-
By the end of 2004, 29 Bermuda SAC vehicles were
cation approval that is required in order to operate as
classified as collective investment schemes with 159
a scheme. The effect is to permit the promoters to
individual segregated accounts, as compared to nine
complete preparations for the scheme to begin oper-
SAC vehicles and 43 individual segregated accounts at
ations by opening bank accounts and making other
the end of 2003.
administrative arrangements that are necessary
teamwork
MORTARED TOGETHER WITH CEMENT BY TEAMS
OF SKILLED WORKERS, BERMUDA CONCRETE BLOCK PROVIDES
SOLID AND DURABLE FOUNDATIONS AND WALLS.
$158.18
Collective Investment Schemes: Net Asset Value
($ Billions)
$115.84
$68.10
$55.09
$46.03
$33.93
99
00
01
02
03
04
Collective Investment Schemes: Statistics
2002 Year-end
2003 Year-end
2004 - Q1
2004 - Q2
2004 - Q3
2004 - Q4
Mutual Funds
763
817
849
834
855
879
Umbrella Funds
Sub-Funds
50
481
57
395
62
422
69
441
72
409
70
500
0
0
9
43
13
46
20
87
26
137
29
159
1,294
1,321
1,392
1,451
1,499
1,637
77
22
72
67
93
67
65
72
74
72
96
75
Sub-Trusts
33
82
115
195
119
203
Total Unit Trusts
132
221
275
332
265
374
1,426
1,542
1,667
1,783
1,764
2,011
TOTAL NET ASSET VALUE (in Billions) $68.10
$115.84
$129.60
$133.02
$141.25
$158.18
Segregated Account Companies
Segregated Accounts
Total Mutual Funds
Unit Trusts
Umbrella Trusts
TOTAL
43
44
Collective Investment Schemes: Number of Portfolios within Bermuda Classified Schemes
2011
1542
1245
1262
99
00
1421
1426
01
02
03
04
before a scheme opens to investors. No scheme
and enforcement powers. Shortly after the end of
can begin accepting subscriptions or operating as a
the year, a draft bill was circulated to the Bermuda
scheme until it obtains either classification under the
International Business Association for market consul-
CIS Regulations or exemption from them.
tation. It is hoped to place the new legislation before
Parliament later in the year. In the meantime, exten-
In a further important streamlining initiative, the
sive discussions continue with industry on the new
Minister of Finance also agreed, after detailed consul-
regulatory arrangements and requirements intended
tations with industry and the Authority, that collective
to be introduced, as well as on transitioning issues.
investment schemes should be designated as unrestricted companies under the Companies Act. The
INVESTMENT SERVICE ENTITIES
effect is to permit delegation to the Authority of the
During 2004, the Investment Department reviewed
Ministerial consent to incorporation that is required.
a total of 995 applications in respect of investment or
The necessary changes to the Companies Act are
related financial service business. This was slightly
being introduced in 2005. This policy change is
higher than on the level seen in 2003. A breakdown
intended to make the incorporation process more
of these applications is shown below:
efficient without in any way diluting Bermuda’s rigorous vetting and approval standards for schemes.
Investment Services Applications Reviewed 2004
The year also saw continued preparatory work for the
proposed new Collective Investment Schemes Act.
The new legislation is intended to expand the definition of collective investment schemes beyond mutual
funds and unit trusts to include certain other corporate vehicles and limited partnerships used for investing funds on a pooled basis; to introduce a licensing
regime for fund administrators; and to provide the
Authority with enhanced information, intervention
Mutual Fund
Holding Co.
Unit Trust
Invt. Advisory/ Mgmt.
Mgmt. of Mutual Funds
Other
81%
5%
7%
2%
2%
3%
preservation
BERMUDA CEDAR IS KNOWN TO PREVENT MILDEW
AND ROT. FOR THIS REASON IT WAS OFTEN USED TO CONSTRUCT HOUSE
DOORS AND WINDOWS, CEILING BEAMS, FLOORS, AND SHUTTERS.
45
46
INSURANCE
The Insurance Department is responsible for the
Insurance Supervisors (IAIS) in October 2003 of
supervision, regulation and inspection of Bermuda’s
extensively revised Insurance Core Principles (ICPs)
insurance companies and for the licensing of all
as well as an agreed standard for the supervision of
insurance brokers, agents, managers and salesmen
reinsurers. In addition, however, Bermuda has had
under the Insurance Act 1978 (the Act) and related
the benefit of two detailed external reviews of its cur-
provisions. The Department reports to the Supervisor
rent legislative and policy framework for insurance
of Insurance via the Deputy Director, Insurance.
supervision. The first was undertaken by KPMG in a
report published in 2000; more recently, the results of
DEVELOPMENTS IN THE INSURANCE SECTOR
the authoritative review conducted by an IMF team
The year saw continued growth of Bermuda’s insur-
during 2003, were published in early 2005.
ance sector. At the end of 2003, aggregate total assets
were $235.9 billion compared to a figure of $204
The IMF report recognised the dynamism and pro-
billion at the end of the previous year, an increase of
fessionalism of Bermuda’s insurance sector and the
almost 16%. (Underwriting results are compiled from
high quality of the counterparties involved. The
Statutory Financial Returns filed with the Authority.)
Authority was pleased at their acknowledgment of the
demonstrated effectiveness of the Authority’s supervi-
Captive business continues to comprise a substantial
sory approach and the robust legal provisions avail-
proportion of the international insurance entities
able to underpin it. Equally, the assessors identified a
licensed in Bermuda, writing more than US$15.2
number of areas where legislation and practice now
billion in gross premiums, an increase of almost 11%.
required enhancement in order to promote compli-
However, the predominant portion of premium writ-
ance with the new ICPs. In large part this reflected the
ings is through Bermuda’s commercial reinsurance
major changes in standards agreed internationally in
market, which also writes some direct business on
late 2003. As a result, Bermuda, in common with the
behalf of large U.S. corporations. This business
position in most other major jurisdictions, has had
accounts for $79.5 billion or 84% of the total gross
to prepare and implement a series of changes and
premium writings of $94.7 billion for the 2003 year.
enhancements in its supervisory framework.
There was continued interest in insurance company
In Bermuda’s case, it was determined that few
incorporations in 2004 with the formation of 77 new
changes in the basic supervisory approach were
insurers compared to 89 in the previous year. Of the
required for insurance, given the fact that its pre-
new insurers, more than half were captive formations;
existing supervisory legislation already had a broad
only one new Class 4 company was incorporated.
scope, including subjecting reinsurance business to
Incorporation of long-term insurers (life) also saw
equivalent supervision to that applied to direct insur-
strengthened interest with 11 new companies as com-
ance business. However, it was recognised that a num-
pared to seven in 2003.
ber of changes to the legislative framework were
required, along with some development in the policy
APPROACH TO INSURANCE SUPERVISION
framework, notably designed to enhance transparen-
Over the past two years, the Authority has been con-
cy as to certain elements of the Authority’s require-
ducting a detailed review of the insurance regulatory
ments. At the same time, the Authority identified a
framework, involving both the existing legislative
need to develop a more systematic risk assessment
provisions and aspects of the current supervisory
framework as an internal tool to help it target its
approach. The review reflected a number of signifi-
supervisory resources appropriately and enhance its
cant developments internationally, most notably
ability to identify emerging problems and concerns
the adoption by the International Association of
in individual companies at an early stage.
It was also determined that a two-stage approach to
under discussion with industry. Copies of all the
the development of the framework should be adopt-
published Guidance Notes are available from the
ed, in order to enable attention to be focussed in the
Authority’s website www.bma.bm.
47
initial phase on some particularly key aspects of the
changes. Accordingly, during 2004, detailed consulta-
The Amendment Act, which formally commenced on
tions were conducted with the insurance sector on a
10 December 2004, also included a number of other
first set of related amendments to the supervisory
important changes. In many respects, these changes
arrangements. These included the enactment of the
served to provide statutory backing for a number of
Insurance Amendment Act 2004 (the Amendment
requirements and standards that the Authority had
Act), the preparation of a series of detailed policy
already applied to the licensed sector. In particular, it
Guidance Notes and the development of a formal
required:
supervisory model to be applied by the Authority.
•
Notification of any change in particulars of an
Left to right:
Dianne Burgess
Thomas Webbe
Olivette Armstrong
Mesheiah Crockwell
Shonette Wilson
Michael Baker
Christi Tucker
Pamela Pearman
By the end of the year, preparatory work on much of
approved principal representative, insurance
this first phase was complete, enabling the first round
manager or approved auditor or change of loca-
of amendments to be implemented early in 2005.
tion of the principal office;
•
Requirement for a principal representative to
One of the key provisions of the Amendment Act was
notify the Authority immediately in certain cir-
to create a mechanism for the Authority to develop
cumstances – for example, if he reaches the view
and publish guidance notes on different aspects of
there is a likelihood of the insurer for which he
acts becoming insolvent;
the standards and requirements of the Insurance Act.
Alongside the preparation of the Amendment Act
•
Clarification of the approval process of the loss
itself, the Authority embarked on in-depth consulta-
reserve specialist by the Authority and of the
tions with industry partners and the accountancy and
Authority’s power to revoke an approval;
legal professions on the drafting of detailed Guidance
•
Clarification of the approval and appointment
Notes on aspects of the supervisory framework under
process for auditors on the basis of fit and prop-
the Insurance Act. These covered key matters such as
er criteria as well as a provision enabling the
the role of auditors, insurance managers and princi-
Authority to appoint an auditor where one has
pal representatives. A first series comprising 15 spe-
not been appointed, and to set the remunera-
cific Guidance Notes was finalised and published
tion;
shortly after the end of the year, when detailed time-
•
Modification of the auditor independence stan-
tables for their progressive implementation during
dard in the Insurance Act to make it consistent
2005 were also published. This process remains on-
with the standards in Bermuda’s other financial
going, with a series of further guidance papers still
services statutes; and
48
•
Introduction of an obligation for an auditor to
remaining elements of the ICPs where it is evident
notify the Authority in the event of his resigna-
that some further development will be needed to the
tion or removal, or if he makes a material modi-
policy framework and approach that is currently
fication to a report on an insurer’s statutory
applied. This parallels the position in other major
financial statements.
jurisdictions where the implications of certain of the
ICPs also have to be assessed and appropriate
At the same time, the Authority prepared and
enhancements developed. Areas for particular con-
advanced a new risk-based framework for its routine
sideration include such matters as the approach to
supervision of firms. This new Supervisory Model,
consolidated supervision, the treatment of alternative
developed with the help of outside consultants, was
risk transfer mechanisms, and the extent of direct
designed to provide a more consistent framework for
supervisory review of credit and other key risks.
the Authority’s assessment of supervisory risks in indi-
Depending on precise outcomes there will be a need
vidual firms, enabling it to identify higher risk firms
in due course for specific enhancements to areas of
more consistently, to focus at an early stage on areas
standard reporting in regular prudential returns, to
of developing concern and to bring supervisory
support further development of the off-site analysis
resources to bear accordingly. Application of the
and review process conducted by the Authority.
Supervisory Model, to be undertaken progressively
during 2005, will occur alongside the roll-out of a
As with the earlier phase of amendments to the legis-
more substantive on-site work programme in higher
lation and regulatory regime, the changes will not
risk institutions, assisting the Authority with the devel-
involve any material alteration in Bermuda’s basic
opment of a more complete understanding of insur-
supervisory approach for insurance. The model will
ers’ business and a fuller assessment of the effective-
remain very much risk-based, with the Authority con-
ness of the systems and controls by means of which
tinuing to seek to ensure that supervision remains
management seeks to monitor and control the risks
fully appropriate to the nature of Bermuda’s insur-
to which their business is exposed.
ance industry and, in particular, that it retains proper
regard to the professional, business-to-business
With this first phase of changes already well in hand,
nature of the predominant part of the market and the
the Authority turned its attention towards the end of
very small proportion of retail business involved.
2004 to the second phase of the necessary enhance-
However, the changes will have the effect of enhanc-
ments. This process was assisted by an in depth self-
ing the Authority’s powers to intervene in exception-
assessment of the Bermuda insurance regime against
al cases, generally consistent with the intervention
the new IAIS ICPs which Bermuda, in common with
provisions available under the other statutes for
other IAIS members, was invited to complete and pro-
supervision of the financial services sector.
vide to IAIS early in 2005. The key component of this
second phase is a set of further detailed technical
amendments to the Insurance Act, necessary to deal
Breakdown by Company Type of the Actively Writing
International Insurers 2004
with certain aspects where the legal powers currently
available are insufficient to enable full compliance
with elements of the new ICPs.
These proposed changes to the legislation will be the
subject of detailed consultation with industry during
the first part of 2005. At the same time, the Authority
will be consulting insurers on a small number of
Affiliated Reinsurer
Association Captive
Captive Writing 3rd Party
Group Captive
Health Care Captive
Professional Ins./Reinsurer
Rent-A-Captive
Single-Parent Captive
6%
10%
13%
10%
5%
26%
5%
25%
Market Statistics by Company Type for the Year Ended 31 December, 2003
Company Type
No. of Co.’s
Gross Premiums
Net Premiums
Total Assets
Cap. and Surplus
Association Captive
Captive writing 3rd party
Group Captive
Health Care Captive
Rent-A-Captive
Single-Parent Captive
121
171
127
62
64
312
2,470,446,789
5,872,380,100
1,732,948,910
546,837,114
1,467,359,037
3,081,848,844
2,050,253,625
4,621,895,768
1,276,356,019
451,813,054
682,082,960
2,547,028,744
13,196,509,998
19,065,261,863
3,733,709,585
2,008,544,298
2,075,121,931
11,519,928,377
4,457,846,375
9,738,485,554
1,307,812,189
505,989,143
251,986,225
5,810,406,171
Sub-Totals:
857
15,171,820,794
11,629,430,170
51,599,076,052
22,072,525,657
Affiliated Reinsurer
Class 4 Ins./Reinsurer
Professional Ins./Reinsurer
74
30
306
7,652,181,599
24,600,736,376
47,292,634,055
6,484,175,474
22,531,957,735
43,440,651,162
25,310,216,352
72,735,344,176
86,307,347,053
9,559,495,611
30,018,743,001
25,600,079,913
Sub-Totals:
410
79,545,552,030
72,456,784,371
184,352,907,581
65,178,318,525
1,267
94,717,372,824
84,086,214,541
235,951,983,633
87,250,844,182
Captives
Professional Ins./Reinsurers
Totals:
Company Type Definitions
Affiliated Reinsurer – Captive owned by a professional insurer and/or reinsurer.
Association Captive – Owned by members of a common industry or trade association in order to share the risks of that industry among its members.
Captive writing 3rd party business – Captive writing a portion of its net premiums from risks which are unrelated to the business of its owners and/or affiliates.
Captive writing connected business – Class 2 insurer writing the risks related to or arising out of the business or operations
of its owners and/or affiliates.
Class 4 Ins./Reinsurer – Insurers and reinsurers capitalised at a minimum of $100 million underwriting direct excess liability and/or property catastrophe reinsurance risk.
Group Captive – Multi-owned insurers or reinsurers writing the risks of its owners and/or affiliates.
Health-Care Captive – Owned by a hospital or health maintenance organisation and writing the risks of its owners and/or
affiliates.
Professional Insurer and/or Reinsurer – Insurance company writing unrelated risks as a direct writer and/or reinsurer.
Pure Captive – Single-parent captive writing only the risks of its owners and/or affiliates.
Rent-a-Captive – Owned by unrelated persons and providing captive facilities to others for a fee.
49
50
Market Statistics by Domicile of Beneficial Owner/s for the Year Ended 31 December, 2003
Domicile of Owners
No. of Co.’s
Gross Premiums
Net Premiums
Total Assets
Cap. and Sur.
Africa/Middle East
Asia
Australia/New Zealand
Bermuda
Caribbean/Latin America
Europe
North America
4
23
5
47
21
129
628
233,298,089
182,393,408
28,243,869
446,309,472
264,245,978
2,562,745,330
11,454,584,648
83,368,420
124,319,846
22,414,438
370,389,075
114,105,709
2,251,862,100
8,662,970,582
212,573,776
495,617,297
51,705,600
935,764,635
544,905,600
10,158,168,779
39,200,340,365
58,431,640
310,187,096
17,573,363
322,973,731
273,877,212
5,117,767,246
15,971,715,369
Sub-Totals:
857
15,171,820,794
11,629,430,170
51,599,076,052
22,072,525,657
Africa/Middle East
Asia
Australia/New Zealand
Bermuda
Caribbean/Latin America
Europe
North America
5
14
2
72
14
71
232
208,809,199
237,048,700
170,708,574
21,859,656,664
368,077,435
4,523,907,641
52,177,343,817
188,105,942
219,827,392
162,477,474
20,278,235,045
299,374,199
3,341,914,121
47,966,850,198
460,242,284
1,068,396,404
270,596,942
68,187,319,381
4,665,215,181
20,343,617,103
89,357,520,286
20,337,769
625,656,892
60,057,880
26,783,042,533
919,355,579
5,911,091,682
30,858,776,190
Sub-Totals:
410
79,545,552,030
72,456,784,371
184,352,907,581
65,178,318,525
1,267
94,717,372,824
84,086,214,541
235,951,983,633
87,250,844,182
Captives
Professional Ins./Reinsurers
Totals:
Bermuda Insurance Market Statistics
$94.7
Gross Premium Written
(BD$ Billions)
$63.3
$49.0
$38.2
$30.4
$26.6
98
99
00
01
02
03
LICENSING
A P P L I C AT I O N O F T H E A C T
The Insurance Department regulates 1,267 actively
a
writing international insurers. Details of the break-
An important element of companies’ statutory
down of those insurers by company type follow.
responsibility relates to their obligation to file an
51
Timeliness of Reporting
annual audited financial return with the Authority.
In order to maintain the high quality of Bermuda’s
The Insurance Department has enhanced its moni-
register of insurers, the Authority’s “gate-keeping”
toring of the timeliness of the filing of statutory finan-
processes are intensive, including very detailed assess-
cial returns (SFRs).
ments to determine that applicants, corporate and
individual, are fit and proper to perform the roles
b
applied for. During the year there were a total of 83
The Authority requires insurers to maintain strict
new insurer applications for incorporation. Of these,
minimum solvency margins, which vary according to
Solvency Margin Maintenance
Left to right:
Andrea Wade
Shelby Weldon
Suzanne Williams
Mark Trott
Akilah Wilson
Vanieke VanPutten
Kristal Bartram
77 applications were approved and three applications
the class of the insurer, (which, in turn, is determined
were declined. In these cases the problem was gener-
by the nature and risk of the business to be conduct-
ally attributable to concerns about the adequacy of
ed). For example, for Class 4 companies, represent-
financial resources and/or the viability of the insur-
ing entities writing property/catastrophe and excess
ance programme. It is most unusual for concerns to
liability coverages, a minimum capital and surplus of
arise on proposed beneficial ownership per se. One
$100 million is required.
application was withdrawn during the course of the
year and two applications still required further review
It is noteworthy that, despite the scale of Bermuda’s
at the year-end. In addition, there were 12 applica-
insurance sector, the incidence of insolvency remains
tions for licences from insurance brokers, insurance
very low. This reflects the very cautious approach
agents and insurance managers. One of these appli-
taken to new incorporations and the willingness of
cations was declined.
the authorities to intervene at an early stage when
potential solvency problems appear.
As required by the Act, the Authority maintains a
register giving details of each licensed insurer. This
ONGOING SUPERVISION
is available for inspection by members of the public
In 2004 the Authority began a formal project to
at the Authority’s offices.
enhance its on-site programme for higher risk insurers. After consultations with industry and the completion of test-runs with a small number of firms,
52
Analysis of all International Insurers Incorporated
Class of Insurer
2004
%
2003
%
Class 1
Class 2
Class 3
Class 4
Long-Term
Composites
All Others
374
415
422
21
76
102
0
27
29
30
2
5
7
0
388
428
456
20
106
83
201
23
25
27
1
6
5
12
1,410
100
1,682
100
Grand Total:
* Explanatory Note:
Previously prepared statistics represented an analysis of all international companies incorporated for the purpose of conducting insurance business and included those insurers that had not yet made application to the Bermuda Monetary
Authority (“Authority”) to be registered under the Insurance Act 1978 (“Act”). In contrast, the preceding list represents only
those international companies registered by the Authority to conduct insurance business.
Class of Insurers Incorporated
Class of Insurer
2004
%
2003
%
Class 1
28
36
33
37
Class 2
Class 3
12
24
16
32
11
33
12
37
Class 3 & Long-Term
1
1
0
0
Class 4
Class 4 & Long-Term
Long-Term
1
0
11
1
0
14
3
2
7
3
2
8
Grand Total:
77
100
89
100
the development work was largely completed during
used to discuss particular issues and developments, as
the year and is scheduled for full implementation
well as to enable the Authority to update its under-
during 2005. As noted earlier, the programme is
standing or explore wider generic questions. In a
designed to assist the Authority in developing a fuller
small number of cases, the Authority found it neces-
understanding of the various risks inherent in an
sary to seek additional information from firms per-
insurer’s operations, and the effectiveness of the con-
taining to particular issues or concerns. Where specif-
trols and risk mitigation techniques used by manage-
ic problems were identified either through off-site
ment to control those risks. When fully implemented,
assessment or as a result of other information reach-
the programme will be an additional tool to help the
ing the Authority, additional review work was under-
Authority allocate its resources to higher risk areas
taken, including in a small number of cases ongoing
and developing concerns. The outcome of such on-
assessments of liquidity, in-house actuarial reviews of
site work will represent an important input into the
loss reserves in order to assess capital adequacy, and
regular review of firms within the risk assessment
actuarial and financial assessments to determine
model.
whether dividends could prudently be paid. In all
such cases, firms provided the Authority with volun-
During the year, the Authority did not need to have
tary cooperation and there was no need to use statu-
recourse to the use of formal intervention powers
tory powers to obtain the requisite information,
under the Act. Prudential meetings were routinely
documents and explanations.
Where the Authority encounters suspicions of regu-
and the Reinsurance Mutual Recognition working
lated business being conducted in Bermuda without
group. In addition, Bermuda was asked to participate
appropriate authorisation, it acts quickly to protect
in the IAIS Captive Issues Working Group, which has
the jurisdiction and prospective policyholders, under-
been tasked with drafting a paper on captives to
taking such inquiries as are necessary. A small num-
enhance the IAIS members’ understanding of the
ber of suspect names have been included in the warn-
captive industry and issues relating to the regulation
ing list that appears on the Authority’s website
of this sector. Within the United States, the Authority
www.bma.bm.
continued to attend the National Association of
Insurance Commissioners (NAIC) meetings and
I N T E R N AT I O N A L D E V E L O P M E N T S
taken steps to further enhance its relationship with
Throughout the course of 2004, the Authority was
US State insurance commissioners, identifying and
heavily engaged with the development work within
discussing issues and seeking solutions to shared
the IAIS with regard to the updating and refinement
regulatory challenges. The Authority views it as most
of the international standards for the supervision
important for Bermuda to be closely involved in the
of insurers and reinsurers. In particular, Bermuda
development of international standards and policies
remained a member of the IAIS Reinsurance Sub-
that are to be applied to the insurance industry.
Committee, the Reinsurance Transparency Group
Market Statistics by Class of Insurer for the Year Ended 31 December, 2003
Class of Insurer
No. of Co.’s
Gross Premiums
Net Premiums
Total Assets
Class 1
329
2,960,990,419
2,392,070,950
11,549,730,236
5,840,136,601
Class 2
389
5,933,820,272
4,789,309,823
26,422,801,316
11,914,357,823
Class 3
Class 4
Long-Term
452
30
67
32,853,726,991
24,600,736,376
28,368,098,766
26,004,777,267
22,531,957,735
28,368,098,766
103,918,960,111
72,735,344,176
21,325,147,794
34,827,907,390
30,018,743,001
4,649,699,367
1,267*
94,717,372,824
84,086,214,541
235,951,983,633
87,250,844,182
Totals:
Cap. and Surplus
* Represents companies which actively wrote business during 2003.
Class of Insurers Definitions
Class 1
Single-parent captive insuring only the risks of its owners or affiliates of the owners.
Class 2
(a) a multi-owner captive insuring the risks of its owners or affiliates of the owners; (b) a single parent
and multi-owner captive: (i) insuring the risks related to or arising out of the business or operations of
the owners and affiliates, and/or (ii) deriving up to 20% of its net premiums from unrelated risks.
Class 3
Class 4
Insurers and reinsurers not included in Class 1, 2 or 4, such as:
Reinsurers writing third party business;
Insurers writing direct policies with third party individuals;
Single parent, group, association, or joint venture captives where more than 20% of their net premiums written arises from risks which are unrelated to the business of the owners; and
Finite reinsurers and rent-a-captives.
Insurers and reinsurers capitalised at a minimum of $100 million underwriting direct excess liability
and/or property catastrophe reinsurance risk.
Long-Term Insurers Insurers writing long-term (or life) business.
Composites
Insurers writing a combination of long-term (or life) business and Class 1, 2, 3, or 4 business.
53
54
S TAT I S T I C S &
B A L A N C E O F PAY M E N T S
The Authority continues to be responsible for organising Bermuda’s participation in the IMF’s annual
Coordinated Portfolio Investment Survey (CPIS),
which measures investment by participating jurisdictions in equities and in debt securities. The Authority
collects and collates data received from Government
and banks and from a sample of other large financial
institutions (specifically insurance companies and
collective investment schemes); the latter information
is extrapolated over the entire population of each
such category in line with aggregates taken from regulatory returns. In accordance with the directions of
the Ministry of Finance the information is collected
on a “voluntary, best efforts” basis. During the 2003
exercise the Authority was pleased to receive returns
from all of the banks and insurance companies surveyed; the cooperation by collective investment
schemes was less complete. The Bermuda data were
forwarded to the IMF in October 2004 for inclusion
in the 2003 CPIS, the results of which are now posted
on the IMF website. Total cross-border assets held by
Bermuda entities at end-2003 were reported at $253.9
billion, up 35% from the figure of $187.6 billion for
the previous year.
protection
IN EARLY BERMUDA CONSTRUCTION, WOODEN BEAMS WERE OFTEN
PLACED ON TOP OF THE WALLS TO SUPPORT THE RAFTERS. THIS LOCAL INNOVATION
MAKES FOR A STRONGER ROOF AND IMPROVES PROTECTION DURING HURRICANE SEASON.
Each year the IMF holds CPIS workshops for SEIFiCs
(Small Economies with International Financial
Centres), which are designed as forums for an
exchange of views and experiences, as well as methodologies adopted by the participating jurisdictions.
The 2004 workshop, at which the Authority was
represented, was held in Guernsey during May.
(Bermuda was the only SEIFiC to take part in the
original 1997 CPIS.)
56
The Authority continues to collate and to report
C A P I TA L A N D F I N A N C I A L A C C O U N T
quarterly locational banking data to the Bank for
The capital and financial account comprises capital
International Settlements (BIS). At year-end 2004,
transfers, and long-term and short-term investment.
Bermuda reported that its banks had aggregate cross-
In 2004, the account recorded an estimated net out-
border claims of US$10.4 billion and total cross-bor-
flow of $99 million. There was a return to net long-
der liabilities of US$9.1 billion (down from US$10.8
term investment outflows during the year, after
billion and US$9.5 billion respectively a year earlier).
recording net disinvestment flows during the previ-
The BIS statistics provide a useful incidental check on
ous two years. Net long-term investment is estimated
the debt securities portion of the banks’ CPIS returns.
at $148 million, notwithstanding the exceptional
inward investment resulting from that portion of
During the period, in a new initiative, the IMF also
residents’ holdings of Bank of Bermuda shares
sought the cooperation of offshore financial centres
acquired by HSBC Group, and not reinvested abroad.
in providing data on their financial services industries
There was an estimated net short-term investment
in a standard format. Shortly after the end of the year,
inflow of $49 million, comprising decreases in the
the Ministry of Finance agreed that Bermuda would
external holdings of authorized dealers and the
participate in this initiative, which is intended to
Bermuda Monetary Authority of $25 million and
begin during 2005.
$24 million respectively.
B A L A N C E O F PAY M E N T S C O M M E N TA RY
NOTE:
The balance of payments figures are, to a large
Where Bermudian exempted companies do not carry
extent, based on estimated and extrapolated data. As
on business in Bermuda, their financial flows (other
a result, they should be interpreted with a suitable
than direct purchases of goods and service from, and
degree of caution. Travel account receipts for 2003
their capital account transactions with, Bermuda resi-
have been revised by the Government Statistics
dents) are excluded from these estimates.
Department from $342 million to $348 million.
CURRENT ACCOUNT
Provisional estimates for 2004 show a surplus of $172
million, significantly higher than in 2003. As in the
previous year, there was a marked improvement in the
net balance on investment income account and continuing growth in the contribution of the professional services sector. At the same time, the visible trade
position deteriorated further, with significantly higher levels of merchandise imports. Overall, current
account receipts increased by over 11% while payments were 9% higher.
Balance of Payments Estimates
(BD$ Millions)
2001
2002
2003
2004
2003
2003
2003
2003
2004
2004
2004
2004
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
CURRENT ACCOUNT
PAYMENTS
Merchandise (Imports)
Shipping & Other Transportation
Travel
Investment Income
Profess. Man. & Tech. Service
Other Goods Services & Income
Transfers
RECEIPTS
Merchandise (Exports)
Shipping & Other Transportation
Travel
Investment Income
Other Goods Services & Income
Transfers
720
113
216
69
106
284
203
747
107
221
67
115
305
214
833
112
226
71
118
315
218
965
123
232
75
127
302
245
192
27
34
17
29
78
53
235
27
50
19
29
84
54
202
30
84
16
30
76
55
204
28
58
19
30
77
56
223
29
35
17
31
74
58
236
34
51
20
31
81
60
258
31
87
17
32
75
63
248
29
59
21
33
72
64
1711
1776
1893
2069
430
498
493
472
467
513
563
526
36
29
350
315
986
124
16
57
21
379
172
1055
142
19
52
20
348
279
1160
140
20
31
19
354
348
1300
169
5
17
7
38
45
268
31
5
16
4
143
60
273
34
5
6
4
112
83
312
36
5
13
5
55
91
307
39
5
7
6
38
92
301
41
5
5
4
116
91
306
41
5
13
4
132
79
349
41
5
6
5
68
86
344
46
5
1856
1845
2019
2241
411
535
558
515
490
568
623
560
NET BALANCE
Merchandise (Trade)
(684) (690) (781)
Shipping & Other Transportation (84) (86) (92)
Travel
134
158
122
208
105
246
Investment Income
880
940 1042
Other Goods Services & Income (160) (163) (175)
Transfers
Current A/C Surplus /Deficit
(934) (175)
(104) (20)
122
4
273
28
(219) (196) (191) (216) (231) (245) (242)
(23) (26) (23) (23) (30) (27) (24)
93
28
(3)
3
65
45
9
41
67
72
75
71
62
65
1173
(133)
239
(47)
244
(50)
282
(40)
277
(38)
270
(33)
275
(40)
317
(34)
311
(26)
(187) (195) (198) (225)
(48)
(49)
(50)
(51)
(53)
(55)
(58)
(59)
(19)
37
65
43
23
55
60
34
0
0
0
0
0
0
0
0
(148)
5
117
(53)
(37)
(24)
(43)
(13)
(68)
49
25
24
39
29
10
(130)
(127)
(3)
38
45
(7)
(67)
(60)
(7)
24
16
8
(10)
(2)
(8)
(9)
(9)
0
44
20
24
145
69
126
172
1
0
0
34
32
CAPITAL & FINANCIAL ACCOUNT
CAPITAL ACCOUNT
FINANCIAL ACCOUNT
Net Long Term Investment
Net Short Term Investment
of which : Authorised Dealers
: BMA
0
(107)
(48)
(51)
3
Capital & Financial A/C Balance (155)
BALANCING ITEM
10
(83) (120)
(79) (113)
(4)
(7)
(48)
(88)
(99)
44
(13)
(15)
(104)
0
(53)
(22)
(24)
(21)
(38)
(73)
(25)
(24)
(50)
61
(23)
(2)
(38)
(10)
57
58
B ERMUDA M ONETARY A UTHORITY
31 REID STREET
HAMILTON HM12
BERMUDA
The accompanying financial statements of the Bermuda Monetary Authority have been prepared
by management in accordance with accounting principles generally accepted in Bermuda and
Canada. Management is responsible for ensuring the integrity and objectivity of the data contained in these financial statements and that all information in the annual report is consistent
with the financial statements.
In support of its responsibility, management maintains financial and management control systems and practices to provide reasonable assurance that the financial information is reliable, that
the assets are safeguarded, and that the operations are carried out effectively.
The Board of Directors is responsible for ensuring that management fulfils its responsibilities for
financial reporting and internal controls. The Board approves the Authority’s financial statements. The Audit Committee of the Board reviews the annual financial statements and recommends their approval to the Board of Directors. In conducting its review, the Audit Committee
meets with management and the Authority’s external auditor, the Auditor General.
The Auditor General has audited these financial statements and his report is presented herein.
Cheryl-Ann Lister,
Chairman & CEO
CFA, MBA
Telephone:
295-5278
(441)
Robert D. Steinhoff,
Deputy Chairman
Facsimile:
(441)
292-7471
Web
Site:
FCA
www.bma.bm
Email:
info@bma.bm
Office of the Auditor General
Victoria Hall
11 Victoria Street
Hamilton HM 11, Bermuda
Tel: (441) 296-3148
Fax: (441) 295-3849
Email: auditbda@gov.bm
AUDITOR’S REPORT
To the Board of Directors
I have audited the balance sheet of the Bermuda Monetary Authority as at December 31, 2004
and the statements of earnings, general reserve and cash flows for the year then ended. These
financial statements are the responsibility of management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with auditing standards generally accepted in Bermuda and
Canada. Those standards require that I plan and perform an audit to obtain reasonable assurance
whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In my opinion, these financial statements present fairly, in all material respects, the financial
position of the Bermuda Monetary Authority as at December 31, 2004 and the results of its
operations and its cash flows for the year then ended in accordance with accounting principles
generally accepted in Bermuda and Canada.
Hamilton, Bermuda
Larry T. Dennis, C.A.
March 5, 2005
AUDITOR GENERAL
59
60
BALANCE
SHEET
As at December 31, 2004
2004
2003
Cash and cash equivalents
20,219
27,329
Term deposits (Note 4)
25,000
25,000
50,079
63,965
95,298
116,294
Accounts receivable and accrued interest
1,483
1,004
Stock of notes and coins for circulation
1,034
1,275
Stock of numismatic items
402
309
Prepaid expenses
252
91
32,937
4,206
36,108
6,885
131,406
123,179
99,927
94,057
Accounts payable and accrued liabilities
1,228
934
Due to the Consolidated Fund of the Government of Bermuda (Note 7)
1,594
1,125
102,749
96,116
10,600
10,600
18,057
16,463
28,657
27,063
131,406
123,179
In thousands of dollars
Assets
Investment Income Earning Assets
Investments (Note 5)
Other Assets
Capital assets (Note 6)
Liabilities, Capital and Reserve
Liabilities
Notes and coins in circulation
Capital and Reserve
Capital
Authorised: $30,000,000
Subscribed and fully paid (Note 8)
General Reserve (Note 9)
Cheryl-Ann Lister,
Chairman & CEO
CFA, MBA
Robert D. Steinhoff,
Deputy Chairman
The accompanying notes are an integral part of these financial statements.
FCA
S TAT E M E N T
OF EARNINGS
For the year ended December 31, 2004
2004
2003
Supervisory and licensing fees (Note 10)
9,997
6,407
Investment income (Note 11)
4,705
5,324
652
500
60
6
15,414
12,237
Salaries and employee benefits
7,714
6,713
General expenses (Note 12)
2,416
1,918
Amortisation of capital assets
881
491
Professional fees
842
283
Circulation note and coin expenses
373
432
12,226
9,837
3,188
2,400
Revenues
Incorporation fees, vault commission and other income
Net sales of special coins
Expenses
Net Earnings for the Year
S TAT E M E N T O F G E N E R A L R E S E RV E
Balance, Beginning of Year
Net earnings for the year
2004
2003
16,463
15,263
3,188
2,400
Distribution payable to the Consolidated Fund (Note 7)
(1,594)
(1,200)
Balance, End of Year
18,057
16,463
61
62
S TAT E M E N T
OF CASH FLOWS
2004
2003
3,188
2,400
Amortisation of capital assets
881
491
Amortisation of discounts on investments
(17)
(7)
Adjustment to building purchase price for rent not received
(85)
–
13
–
252
(10)
Cash Flows from Operating Activities
Net earnings for the year
Adjustment to convert earnings to a cash basis:
Loss on disposal of capital assets
Loss (Gain) on sale of investments
4,232
2,874
Changes in non-cash working capital:
(479)
(40)
Stock of notes and coins for circulation
241
(127)
Stock of numismatic items
(93)
85
(161)
(23)
Accounts receivable and accrued interest
Prepaid expenses
Notes and coins in circulation
Accounts payable and accrued liabilities
Funds Provided by Operating Activities
5,870
4,459
294
269
9,904
7,497
Cash Flows from Investing Activities
Purchase of capital assets
(29,540)
(317)
Purchase of investments and term deposits
(32,407)
(49,969)
46,058
49,000
(15,889)
(1,286)
(1,125)
(958)
Proceeds from sale and maturity of investments
Funds Used in Investing Activities
Cash Flows from Financing Activities
Distribution to the Consolidated Fund
(Decrease) Increase in Cash and Cash Equivalents
(7,110)
5,253
Cash and Cash Equivalents, Beginning of Year
27,329
22,076
Cash and Cash Equivalents, End of Year
20,219
27,329
NOTES TO THE
F I N A N C I A L S TAT E M E N T S
1
The Bermuda Monetary Authority Act 1969
The Bermuda Monetary Authority (the Authority) was established by an Act of the Legislature, its objects and
powers being set out in the Bermuda Monetary Authority Act 1969, as amended.
The primary responsibilities of the Authority are:
•
Acting as issuing authority for Bermuda dollar notes and coins;
•
The supervision, regulation and inspection of all financial institutions operating in or from within
Bermuda;
•
The promotion of the financial stability and soundness of financial institutions;
•
The supervision, regulation and approval of the issue of financial instruments by financial institutions or by
residents;
•
The fostering of close relations between financial institutions, and between the financial institutions and
the Government;
•
Assisting with the detection and prevention of financial crime;
•
The management of exchange control and the regulation of transactions in foreign currency or gold on
behalf of the Government; and
•
The provision of advice and assistance to the Government and public bodies on banking and other financial and monetary matters.
2
Significant Accounting Policies
The financial statements are prepared in accordance with generally accepted accounting principles in
Bermuda and Canada. The preparation of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses
during the year. Actual results could differ from these estimates.
(a) Translation of foreign currencies
Assets and liabilities denominated in foreign currencies are translated into Bermuda dollars at the year-end
exchange rates. Realised and unrealised exchange gains and losses are included in investment income.
Revenues and expenses are translated at the exchange rates in effect at the transaction dates.
(b) Investments
Investments comprise long term investments in fixed income securities. The Authority’s intention is to hold
the securities until maturity. The securities are carried at cost or amortised cost.
(c) Cash and cash equivalents
Cash and deposits, including repurchase agreements and demand deposits with maturity of 90 days or less,
are considered equivalent to cash.
63
64
(d) Stock of notes and coins for circulation
The stock of notes and coins for circulation is stated at cost on a “first in, first out” basis.
(e) Stock of numismatic items
Numismatic items consist of commemorative coins and circulation notes and coins for resale. The stock of
numismatic items is stated at the lower of cost on a “first in, first out” basis and net realisable value.
(f) Capital assets and amortisation
Capital assets are stated at cost less accumulated amortisation. Amortisation is charged using the straight-line
method at an annual rate of 2.5% for building and 25% for all other assets excluding land. In the year of acquisition, a half-year amortisation is taken.
Renovations that occurred in Jardine House and 31 Reid Street during the current year are being amortised
over the remaining lease terms of these premises.
(g) Notes and coins in circulation
The balance of notes and coins in circulation does not include the face value of commemorative coins sold, as
the Authority does not expect any significant redemption of these coins.
(h) Museum items
Museum items have been capitalised at a nominal amount of $1,000 and are included in the stock of numismatic items. All new additions to museum items are expensed during the year of purchase.
(i) Revenue Recognition
The Authority recognises revenue as it is earned.
3
Employee benefits
(a) Pension plan
The Authority has a defined contribution plan administered by BF&M Life for the majority of its employees.
Employee contributions to the plan are 5% of gross salary, matched by the Authority. These contributions
represent the total liability of the Authority and are recognised on a current basis. The Authority’s contributions to the Plan during the year were $237,763 (2003 – $208,457).
The Public Service Superannuation Fund administered by the Government of Bermuda covers the remainder
of the Authority’s employees. Contributions of 5% of gross salary are required from both the employee and the
Authority. These contributions represent the total liability of the Authority and have been included in salaries
and employee benefits. The Authority’s contributions to the Plan during the year were $40,891 (2003 –
$43,797).
(b) Other Benefits
Other employee benefits include maternity leave, sick leave, vacation days and pre-retirement leave. All of these
benefits are unfunded.
Vacation days accumulate and vest and therefore a liability is accrued each year. The accrued vacation liability
as of 31 December 2004 is $81,639 (2003 – $85,584) and is included in accounts payable and accrued liabilities.
Employees under the Public Service Superannuation Fund are entitled to pre-retirement leave based upon their
years of service at the time of retirement. The pre-retirement leave accumulates and vests and a liability is accrued
each year. During the year, pre-retirement leave benefits of $3,917 (2003 – $12,662) were paid. The liability as at
31 December 2004 has been actuarially determined to be $100,000 (2003 – $100,000) and is included within
accounts payable and accrued liabilities.
4
Term deposits
Maturities and effective yields of term deposits are as follows:
2004
2003
Less Than 1 Year
1 to 5 Years
Total
Total
Bermuda Dollar Term Deposits
10,000
15,000
25,000
25,000
Average effective yield
7.40%
4.08%
5.41%
6.91%
Average effective yield is based on book values and contractual interest rates.
5
Investments
The investment portfolio includes fixed income securities denominated in US dollars. The market value of the
portfolio of fixed income securities is $50.4 million (2003 – $61.5 million).
An analysis of the investment portfolio by maturity and average effective yields is as follows:
2004
2003
1 to 5 Years
5 to 10 Years
Total
Total
US Government and US Government Agencies
–
50,079
50,079
60,966
Supranational bank
–
–
–
2,999
Total investments
–
50,079
50,079
63,965
N/A
4.64%
4.64%
4.57%
Weighted average effective yield
Weighted average effective yields are based on book values adjusted for amortisation of premiums and
discounts.
Certain US Government Agencies have the right to call their debt issues without penalty. As a result, the actual
maturity dates for these issues may differ from the contractual maturity dates.
The Authority is exposed to a concentration of credit risk as 70.3% (2003 – 75.6%) of its income earning assets
are in US Government and US Government Agency securities.
65
66
6
Capital assets
2004
Cost
Land
Building
Computer equipment & software
Furniture & fixtures
7
Accumulated
Amortisation
2003
Net Book Value
Net Book Value
5,000
–
5,000
1,000
28,160
1,274
26,886
2,374
938
462
476
454
1,525
950
575
378
35,623
2,686
32,937
4,206
Due to the Consolidated Fund
In accordance with Section 8 (3) of the Bermuda Monetary Authority Act 1969, earnings in the amount of
$1,594,000 (2003 – $1,200,000) will be payable to the Consolidated Fund of the Government of Bermuda. This
amount is non-interest bearing and payable by 31 May, 2005.
8
Subscribed and fully paid capital
The Authority’s authorised capital of $30,000,000 can be subscribed at such times and in such amounts as the
Board, with the approval of the Minister of Finance, may require.
9
General Reserve
A general reserve of $18,057,000 (2003 – $16,463,000) has been established in accordance with Section 8 of
the Bermuda Monetary Authority Act 1969.
The Minister of Finance granted approval for $1,594,000 (2003 – $1,200,000) of net earnings to be transferred
to the general reserve account.
10
Supervisory and licensing fees
2004
2003
Insurance fees
5,541
5,530
Bank and deposit company fees
3,983
472
Trust company fees
310
329
Investment business licence fees
163
76
9,997
6,407
On 17 March, 2004, the Banks and Deposit Companies (Fees) Amendment Act 2004 was approved by
Parliament. The effect of this legislation is that licensing fees formerly payable to the Accountant General by
banks and deposit companies under the Banks and Deposit Companies (Fees) 1975 Act are payable to the
Authority. Licensing fees for the year ended 31 December, 2004 were paid to the Accountant General prior to
the amendment of the Act. Under an agreement reached between the Authority and the Ministry of Finance,
fees in the amount of $3.51 million were transferred to the Authority.
11
Investment income
2004
2003
Interest on investments
3,196
3,385
Interest on term deposits
1,533
1,764
243
159
(252)
10
(15)
6
Interest on cash and cash equivalents
(Loss)/Gain on sale of investments
Realised foreign exchange gain
4,705
5,324
2004
2003
1,537
1,236
Communication and computer expenses
476
335
Conferences, seminars, education and training
403
347
2,416
1,918
12
General expenses
Premises and general office expenses
13
Lease commitments
The Authority has entered into operating leases for its office premises which expire on the 29 September 2005
and 31 December 2006. The minimum annual lease payments pursuant to these leases are $768,460 in 2005
and $503,549 in 2006. In addition, the lease provides for payment by the Authority of its share of general occupancy costs of $119,801 in 2005 and $30,847 in 2006.
During the current year, the Authority purchased a building that is currently occupied by third party tenants
that were in place from the date of the building’s acquisition. The Authority assumed the operating leases of
these three tenants and they will expire either on 31 December, 2006 or 31 December, 2007. The minimum
annual lease payments and maintenance fees pursuant to these leases are as follows:
Lease payment
Maintenance fee
2005
2006
2007
Total
2,277
2,277
1,789
6,343
321
321
239
881
2,598
2,598
2,028
7,224
67
68
14
Contingent liability
The Authority has not recognised a liability of $207,503 for outstanding fees due to a professional firm engaged
to perform an inspection under Section 19 of the Investment Business Act 1998. While the expenses of the
investigation are to be borne by the company under inspection, the level of these costs is in dispute. At the date
of the Auditors’ Report, the matter remains under discussion.
15
Comparative figures
Certain comparative figures have been restated to conform with the current year’s presentation.
C O N TA C T I N G T H E B M A
Bermuda Monetary Authority
31 Reid Street
PHONE:
Hamilton HM 12
FA X :
Bermuda
EMAIL:
(441) 295-5278
(441) 292-7471
info@bma.bm
WEBSITE:
www.bma.bm
For general information regarding:
Incorporation of companies, establishment of partnerships or the
Marcia Woolridge-Allwood, Director,
issue of permits to overseas companies and overseas partnerships,
Corporate and Financial Services
transfer of ownership and confidential enquiries, contact:
EMAIL:
Banks and deposit companies, contact:
F. Ann Daniels, Assistant Director,
mwa@bma.bm
Banking & Trust
EMAIL:
Trust companies, contact:
Tina Woods, Principal, Trust
EMAIL:
Insurance business, contact:
adaniels@bma.bm
twoods@bma.bm
Shelby Weldon,
Deputy Director, Compliance
EMAIL:
Investment services and the Bermuda Stock Exchange, contact:
sweldon@bma.bm
Shanna Lespere,
Assistant Director, Investment
EMAIL:
Collective investment schemes, contact:
slespere@bma.bm
Chris Cassidy, Principal,
Collective Investment Scheme
EMAIL:
ccassidy@bma.bm
Media requests, general information, copies of BMA reports
Pat Phillip-Bassett,
and other documents, contact:
Assistant Director, Communications
EMAIL:
Information on Bermuda notes and coins, contact:
Marcia Woolridge-Allwood
EMAIL:
Legal enquiries, contact:
pbassett@bma.bm
mwa@bma.bm
Neysan Sobhani, Legal Counsel
EMAIL:
nsobhani@bma.bm
BERMUDA MONETARY AUTHORITY
31 REID STREET
H A M I LT O N H M 1 2
BERMUDA
DESIGN:
PORTRAITS:
ARCHITECTURAL PHOTOS:
PRINTER:
AdVantage Ltd.
Stephen V. Raynor
Ian Macdonald-Smith
The Island Press Limited

Annual Report 2004 - Bermuda Monetary Authority

Transcription

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