Captive Accounting Issues24th June 2009, Wednesday

Captive Accounting IssuesPanellists:

• Craig Swan, Director of Policy, Research and Risk Assessment Unit, Bermuda Monetary Authority

• Tony Grainger, Senior Vice President, Marsh Management Services (Bermuda) Ltd

• Gary Richardson, Senior Manager, Ernst & Young Ltd.

Moderator:

Philip Burrill, Partner, Ernst & Young Ltd.

Captive Management

InvestmentsIncome/Gains

Broker/ ClientPremium/DAC

Actuary Reserves

RegulatorsCompliance

AuditorGAAP/ Stats

Advisory Program

TPA - Claims

Cash Expenses

Captive Insurance Company

Board of Directors & Shareholders

Captive Management

Issues:

• Solvency/ Compliance

• Matching/ Timing

• Asset Management

• TPA/ Actuary

• Markets/ Programs

• Cash Flows

Captive Accounting IssuesSignificant Items we receive from captive managers include:

• Actuarial report

• Investment Custodian and/or Investment Manager statements

• (Re)/insurance Contracts

• Tax provision workings (if 953d elected)

• GAAP and Statutory Financial Statements and Return

• Access to underlying accounting records

Captive Accounting Issues

Hot current accounting issues that affect our audit and the preparation of the captive financial statements:

• FAS 115-2 – Other than temporary impairment (“OTTI”)

• FAS 157 – Fair Value Measurements

• FAS 159 – Fair Value Option

• FAS 163 – Accounting for Financial Guarantee Insurance Contracts an interpretation of FASB Statement No. 60

• Revenue Recognition – current FASB/IASB discussion paper

Statutory Financial Return Process

CaptiveBMA

Application: Other Fixed CapitalRelevant Assets, Solvency Relief

Regulatory Decision

SFR Filing

Additional Information RequestConfirmation Letter

Statutory Financial Return Review