Mr. Speaker, in accordance with section 28 of the Bermuda Monetary  Authority  Act 1969, I am pleased to table the Bermuda Monetary Authority  Annual  Report 2021 (the “Report”).

Mr. Speaker, established more than 50 years ago, the Bermuda Monetary Authority (“the Authority”) is the independent regulator of the financial services sector in Bermuda. The Authority operates pursuant to the Bermuda Monetary Authority Act, 1969 (the “Act”) which provides it with a number of principal objects, including the supervision, regulation and inspection of financial institutions operating in or from within Bermuda together with the promotion of financial  stability  and  the soundness of financial institutions.

Mr. Speaker, the House would be aware that the Authority has  specific  licensing and supervisory responsibilities under the following regulatory statutes: the Banks and Deposit Companies Act 1999; the Digital Asset Business Act 2018; the Insurance Act 1978; the Investment Business Act 2003; the Investment Funds Act, 2006; the Fund Administration Provider Business  Act 2019;  the Trusts (Regulation of Trust Business) Act 2001, together with other statutes.

Mission

Mr. Speaker, the Authority’s mission is to protect and enhance  Bermuda’s reputation and position as a leading international financial centre, utilising a team of highly skilled professionals  acting in the public  interest  to  promote  financial stability, safeguard our currency and to provide effective  and efficient  supervision  and regulation.

Mr. Speaker, the tasks the Authority must address are significant and varied, and critical  to the country. In carrying  out its  responsibilities,  the Authority  works with  a range of entities, supervisors, industry stakeholder groups, international standard setting bodies, as well as a number  of government  Ministries.  The Authority  works in  close cooperation with  the Ministry  of Finance and  the  Financial  Policy Council.

Mr. Speaker, the Authority has received international recognition of its work. The House would be aware that Bermuda is one of only seven total jurisdictions worldwide that has received the US National Association of Insurance Commissioners’ (“NAIC”) “qualified jurisdiction” status. Additionally, Bermuda  is one of three  jurisdictions  to  have  received  the  NAIC  elevated   status  of reciprocal jurisdiction. Bermuda has also been granted equivalence status under the EU Solvency II Directive for its commercial insurer sectors.

Mr. Speaker, at year end 31st December 2021, the Authority was comprised of 219 full-time permanent employees as compared with 217 in 2020.

Legislation

Mr. Speaker, the Authority is authorised to act as adviser to the Minister of Finance on policy matters relating to any financial institution. Accordingly, it  may  propose laws where it can do so appropriately and consistently with its  functions  under the Act. The regulatory proposals covered during the relevant period included but were not limited to: insurance, investment business, anti-money laundering and anti- terrorism fighting, fees, and digital asset business.

Supervision and Licensing

Mr. Speaker, Members attention is drawn to the following key highlights:

• Banking Sector

Mr. Speaker, while the number of Banks remained unchanged at (4),  the consolidated assets of the banking sector increased by 4.8% or $1.2 billion to $26.8 billion in 2021. This change was in line  with  an increase in deposit liabilities and is evidenced primarily by cash and deposit liabilities increasing by 26.3% to $5.0 billion (2020:$4.0 billion).

Mr. Speaker, investments retained the largest share of total assets at 46.1% (48%:2020), followed by loans at 32.6% (33.7%:2020), and cash and deposits at 18.8% (15.6%:2020).

Mr. Speaker, the loan to deposit ratio decreased from 87% to 81% at the end of 2021. Conversely, the industry recorded a 1.1% increase in gross loans during 2021, increasing from $8.8 billion at the end of 2020 to $8.9 billion at the end of 2021.

• Insurance sector

Mr. Speaker, 1,158 insurance companies were registered as at 31st December, 2021 as compared to 1,193 in 2020. 64 insurers registered in 2021 (67:2020).

Mr. Speaker, total capital and surplus was $350 billion in 2020 ($314bn:2019). Gross premiums written were $295 billion in 2020 ($198bn:2019).

• Investment Sector

Mr. Speaker, there were 49 (2020: 48) licensed investment business providers operating in Bermuda in 2021. The aggregate total assets under management (AUM)  was $253.2 billion compared to $232.7 billion in 2020. 73% pertains to European clients while 18% pertain to Bermuda based clients. Total assets under administration (AUA) was US$31.5 billion, compared to US$30.6 billion reported for 2020.

Mr. Speaker, there were 799 (829:2020) licensed investment funds operating in Bermuda with a net asset value of $219.60 billion ($205.81 billion: 2020) in 2021.

Mr. Speaker, there were 23 (22:2020) fund administrator licences in issue at the end of 2021 with $195.5bn assets under administration.

• Bermuda Stock Exchange

Mr. Speaker, total market capitalisation of the Bermuda Stock Exchange stood at $334 billion at the end of 2021 as compared with $255 billion at the end of 2020.

Mr. Speaker, a total of 281 (2020:253) new insurance linked securities were added to the BSX in 2021 increasing the total nominal value up to $50.8 billion ($43.01billion:2021).

Mr. Speaker, domestic trading volume totaled 3 million shares in 2021 (2020:4.9 million) and was valued at $23.4 million ($25.3 million: 2020).

Mr. Speaker, the Authority currently serves in various leadership positions at the International Association of Insurance Supervisors (the “IAIS”). Presently, the Authority serves as a member of the IAIS Executive Committee, the Macroprudential Committee, as well as the Policy Development Committee. In April 2021, the Authority was appointed to the chair of the IAIS Financial Crime Taskforce.

In addition, the Authority maintained its  active  participation  in  and contribution  to the Financial Stability Board and the Bank for International Settlements. The Authority also is a member of the Global Financial Innovation Network (“GFIN”).

Financials

Mr. Speaker, Members attention is drawn to the following highlights set out in the Statement of Accounts Report:

• Mr. Speaker, net comprehensive income was $13.3 million up from $727 thousand in the previous year.
• Mr. Speaker, total revenue increased by 20.19% to $73.09 million, up from

$60.81 million. The increase is mainly due to an $11.42 million increase in revenue from supervisory and licensing fees, largely as a result  of licensing  fees in the insurance sectors as we saw an increase in insurance licensing  fees of $10.6 million dollars.

• Mr. Speaker, expenses decreased by 0.5% to $59.79 million, down from $60.09 million in 2020. The decrease was mainly due to the $1.27 million decreased amortisation of certain intangible assets.
• Mr. Speaker, licensing fees were $68,672 million at year-end  as  compared with $57,243 million of which $59,002 million was paid by  the  insurance sector. This increase is in line with the rise in the number of registered entities, more specifically of the 64 insurance entities  licensed in 2021, 19 were commercial insurers added to BMA’s register as well as the growth in the size of existing classes, coupled with increased supervisory activities.

Furthermore, 2021 marked the final  year  for the  three-year  rate increase  for all sectors.

• Mr. Speaker, Board Members are paid an annual fee of $20,000; Board Sub Committee Chairs are paid an annual fee of $25,000. The Chairman of the Board receives an annual fee of $75,000.
• Mr. Speaker, the CEOs salary is set at $500,000 (no change) and he is eligible for a performance based-bonus of up to 50% of base salary. Salaries of the other 12 members of the executive team range from $250,000 to $425,000 in 2021 with a performance bonus of up to 35% (2020-35%) of salary.

Fines

Mr. Speaker, revenue from fines, penalties and other income also grew by $1.32 million due to increased AML fines, insurance fines and late penalty fees.

General Reserve of the Authority

Mr. Speaker, in accordance with section 8 of the Act, with the agreement of the Minister of Finance, the Authority added $7.6 million of its net earnings to  the  general reserve of the Authority. This agreement recognized the significant ongoing investment required to maintain and enhance the strong, robust, and internationally recognized regulatory program that the Authority has  developed and implemented. The remainder of the net revenue of $5.7 million dollars was repaid to the Consolidated Fund. The House is advised that the sum paid to the Consolidated Fund represents 50% of the Authority’s income (net of total fines).

Mr. Speaker, in reviewing the Authority’s performance, the Auditor General has issued a clean opinion.

Mr. Speaker, I wish to express my sincere thanks to the Board and staff of the Authority for helping to bring so much success to Bermuda. Their performance deserves all our appreciation.

Thank you, Mr. Speaker.