Office of the Superintendent of Financial Institutions
OSFI’s Guideline A, Minimum Capital Test for Property & Casualty Insurance Companies (P&C companies) was originally implemented in 2003. Each year, OSFI considers whether changes are required to improve the risk measures, address emerging issues and encourage improved risk management.
The guideline provides the framework within which the Superintendent assesses whether a P&C company maintains adequate capital and whether a company operating in Canada on a branch basis maintains an adequate margin. The guideline describes the capital required using measures based on risks, and defines the capital that is available to meet the minimum standard.
This Guideline Impact Analysis Statement discusses whether and how the current guideline should be updated.
Since the last revision to the guideline, OSFI has received a number of inquiries and requests for clarification from P&C companies. Our review of these inquiries indicated that the guideline would benefit from appropriate revisions to ensure all P&C companies benefit from the clarifications. The Guideline also contains some outdated transitional arrangements that have expired. Furthermore, in its effort to gather more information on the business of accident and sickness insurance, OSFI has determined that the related worksheet should be removed from the guideline and relocated to the quarterly statutory returns as a separate exhibit.
The revisions to the guideline are intended to ensure OSFI’s capital guidance for P&C companies:
On June 15th, 2017, OSFI published on its website a draft version of the 2018 guideline for consultation. Subsequently, OSFI received comments on the revisions introduced in the draft guideline. OSFI considered the comments received during the public consultation period and determined that no substantive changes were needed for the final version of 2018 guideline. However, a few minor amendments were made to further improve the overall consistency and clarity.
It is recommended that a final version of the 2018 guideline be published on OSFI’s website.
The 2018 guideline will be effective as of January 1, 2018.