Mortgage Insurance Return – Section IV – Detailed Instructions

Detailed instructions are provided to assist insurers in clarifying filing requirements; they are not provided for every page or field in the MI Financial Quarterly and Annual Return filings (MI Core Financial Statement Return (MI3), MI Supervisory Quarterly Return (MI4), MI Supervisory Annual Supplement Return (MI5) and MI Provincial Return (MIPROV)).

Reference page numbers in the left hand column of certain pages of the MI Financial Quarterly and Annual Returns indicate the supporting exhibit pertaining to the particular statement item. For these items, the insurer should also refer to the instructions in this section for the page number of the supporting exhibit.

All references to "pages" refer to pages of the MI Financial Quarterly and Annual Returns.

Insurers are required to include the reference numbers to applicable note disclosures in the Financial Statement (FS) Notes Reference, in the second column on the left-hand side of certain pages of the MI Core Financial Statement Return.

Any reference to "section" refers to a part of these instructions. Statutory reference to a section of legislation will be presented as "sec."

Please refer to Section II for instructions on how to embed objects within the special Excel file.

Prior periods in MI3, MI4, MI5 and MIPROV

Quarterly reports shall include interim financial statements for periods as follows:

1. Statement of Financial Position as of the end of the current interim period and a comparative statement of financial position as of the end of the immediately preceding financial year (static).
2. Liability Roll Forward Statements as of the end of the current interim period and a comparative statement for the full year period of the immediately preceding financial year (static).
3. Statement of changes in equity cumulatively for the current financial year to date, with a comparative statement for the full year period of the immediately preceding financial year (static).
4. Statement of cash flows cumulative for the current financial year to date, with a comparative statement for the comparable year-to-date period of the immediately preceding financial year (static) is required for the Q4 period only.
5. Statement of profit or loss and other comprehensive income cumulatively for the current financial year to date, with comparative statement of profit or loss and other comprehensive income for the comparable year-to-date of the immediately preceding financial year (not static).

Page 10.10 – Annual supplement

Contact

The contact is the person primarily responsible for the preparation of the MI Financial Quarterly and Annual Returns who can answer questions from regulators.

Officers

The full name of the officer and the postal address of his/her residence (not business) must be sufficiently complete to serve as a mailing address.

A complete list of all officers is not required.

External auditor – Partner

The name of the partner in charge of the audit is requested in addition to the name of the accounting firm.

Page 10.20 – Shareholders

Line 40 – Change in ownership

"Substantial" means any share transfer involving 10% or more of the voting rights or any transfer of shares that result in a change of control of the insurer.

Lines 61 to 89 – Shareholders

When a registered shareholder who holds 10% or more of the shares of the insurer is controlled by another individual or corporation, the name of the individual or corporation that controls the shareholder must be shown in brackets after the name of the direct shareholder.

Similarly, where a substantial shareholder is identified by a nominee name or trust account number, the name of the actual controlling shareholder must be shown in brackets.

For stock insurers, the name of each director must appear in the list of shareholders. Any exceptions (directors without shares) must be explained in a footnote to the list of shareholders.

Some insurers may prefer to submit the requested information by means of a separate, confidential letter. In this case, they should contact their regulator.

Shareholders must be grouped by class of shares owned within each common or preferred share category. With the exception of directors, shareholders owning less than 5% of the shares in one class can be grouped together.

Column 04 "% of Voting Rights" must show the percentage of the total votes that each shareholder holds. This information is required to indicate the actual percentage when the number of shares does not equal the number of votes.

Page 10.30 – Corporate organization chart

The corporate organization chart should show the interrelationships between the insurer, its immediate and ultimate parent, and all other associated corporations (upstream and downstream) that are:

• publicly traded companies within the group;
• banks and trust companies within the group;
• other insurance companies within the group;
• insurance companies in which the insurer has a controlling interest (such as joint ventures);
• subsidiaries of the insurer; or
• insurance management companies within the group.

Page 10.40 – Other information

This page should be filled out on a consolidated basis.

Line 10 – Amendments

This question refers to articles of association and instruments of incorporation.

Page 10.41 – Other information

This page should be filled out on a consolidated basis as part of the quarterly filing.

Line 62 – Maximum policy limit and net retention

The maximum policy limit is the maximum amount of insurance coverage (actual policy limit, not probable or foreseeable maximum loss) that the insurer provided during the reporting period on any one risk in the particular class of insurance. This refers to all risks insured in Canada, including those that are written by the insurer in connection with global business and/or fronted.

Net retention (direct insurers) is the maximum amount of net insurance coverage that the insurer retained in the reporting period on any one risk or exposure in the particular class of insurance, after the application of all reinsurance applicable to the risk.

Net retention (reinsurers) The maximum amount of coverage that the reinsurer accepted in the reporting period on any one risk or exposure in the particular class of insurance, either on a given assumed treaty or on a group of treaties covering the same risk or exposure for the same ceding insurer, less all retrocession applicable to the risk.

Page 10.42 – Encumbered assets

For the purposes of these returns, an asset should be treated as encumbered if a security interest has been granted. A security interest may be created in many ways, including if an asset has been pledged or if it is subject to any form of arrangement to secure, collateralise or credit-enhance any on-balance sheet or off-balance sheet transaction that it cannot be freely withdrawn. Assets pledged that are subject to any restrictions on withdrawal, such as assets that require prior approval before withdrawal or replacement by other assets should be considered encumbered.

Examples of encumbered assets include: providing deposits against reinsurance obligations, mortgaging real estate or derivatives.

Assets used in securities lending activities should be recorded on lines 40 and 45 of this page.

Please refer to "Section V - Jurisdictional Requirements" before creating and reporting a security interest.

Column 01 – Counterparty legal name

Identify the counterparty to an encumbered asset.

Column 02 – Counterparty domicile

The name of the jurisdiction in which the counterparty is incorporated, legally registered or the contract identifies as the jurisdiction of governing law.

Column 03 – Pledged/lodged as collateral

Record the type of collateral being provided by the insurer, e.g. cash, government securities, subordinated debt, listed equity instruments.

Column 04 – Asset type

Record the type of asset that the collateral is securing (e.g. reinsurance contract, derivative, mortgage.)

Column 07 – Brief description of the encumbrance

Narrative describing the purpose of the security interest being created and any other information relevant for the assessment of the asset encumbrance.

Line 20 – Significant dependencies

If the answer to the question on line 20 is "yes," please indicate on line 21 provided, the name(s) of the organization(s) and the nature of each dependency. Significant dependencies are not restricted to related-party transactions.

Page 10.43 – Outsourcing and service agreements

This page should be filled out on a consolidated basis.

Numerical values for Row 09 should be included for Columns 05 and 06. Additional details on outsourcing agreements may be included in the embedded special Excel file.

Column 01 – Service outsourced

Services to be reported include those provided under contract to a party outside of the reporting entity authorized under the relevant insurance legislation in Canada, as described below. For greater clarity, this includes outsourcing contracts/agreements and for branch insurers, management service agreements with home office.

List all outsourced services that are critical to the business of providing insurance, including services outsourced to an affiliated party or head office, and services provided by non-affiliate vendors. Critical services may include, but are not limited to: underwriting, claims management and valuation, investment counselling, administration and accounting services. Data and IT services are considered critical to the business of providing insurance if the insurer uses electronic platforms for claims or underwriting.

List all financially material non-critical outsourced services. Where applicable, these services may be grouped together by functional category (e.g. maintenance, landscaping, cleaning, etc). The financial materiality of the total cost should be assessed and reported if deemed material.

All services provided from affiliated parties should be disclosed.

Column 02 – Provider name

The full legal name of the service provider should be reported. Where services are grouped by function, the function should be clearly described. Column 07 can be used to clarify or elaborate on the function description if necessary.

Column 03 – Provider head office address

The city, subnational jurisdiction (e.g. state or province) and national jurisdiction of the head office of the service provider should be reported.

Column 04 – Location where services provided

The address(es) of the location where the services are provided should be reported.

Columns 05 and 06 – Annual fee/Cost of services

The annual fee/cost of services reported should be the total annual contractual obligation, regardless of the start/end date of the contract.

Page 10.60 – Summary of selected financial data for five years

Canadian insurers are requested to provide data on a consolidated basis for appropriate years where consolidated results and comparatives have been filed.

Note: In the year of IFRS 17 adoption OSFI expects current and prior year comparative data to be reported and the rest of the prior year data can be left blank. In the subsequent years going forward prior years data beyond the IFRS 17 comparative data available can be left blank and reported in the year when it becomes available until the five years of comparative data are generated.

Line 04 – Adjusted equity

"Adjusted equity" is defined as:

Total Equity (page 20.11, line 699)

Minus

Non-controlling interests (page 20.11, line 620)

Minus

Capital required for catastrophe reserves as calculated in the Capital return

Minus

Capital required for reinsurance held with unregistered insurers as calculated in the Capital return

Line 46 – Investment yield

Investment yield is to be calculated according to the following formula:

$\mathrm{Yield}=\frac{2(I+PI)}{(V_b+V_e-I-PI)}x100$

where

I = investment return (page 20.22, line 300)

PI = share of net income (loss) of equity accounted investees (page 20.22, line 415)

V = cash and cash equivalents, accrued investment income, and investments (page 20.10, lines 01, 11, 14, columns 01 and 03) at the beginning and end of the year

Line 48 – Return on equity

Return on equity is to be calculated according to the formula:

$\mathrm{Return}=\frac{2NI}{(E_b+E_e)}x100$

where

NI = net income (loss) for the year (page 20.22, line 999, column 01)

E = total equity at the beginning and end of the year (page 20.11, line 699, columns 01 and 03).

Line 66 – Agents and brokers balances and amounts due from subsidiaries and associates as a percentage of adjusted equity

Agents and brokers balances and amounts due from subsidiaries and associates

Equals

Receivables-unaffiliated agents and brokers

Plus

Receivables-subsidiaries, associates and joint ventures

Divided by

Adjusted equity (page 10.60, line 04)

Line 68 – Claims development as a percentage of adjusted equity

Claims development as a percentage of adjusted equity

Equals

Amount excess or (deficiency) (page 60.35, line 099, column 29)

Divided by

Adjusted equity (page 10.60, line 04)

Pages 20.10 to 20.60 – Consolidated financial statements

The MI Core Financial Statement Return should be reported on a consolidated basis and completed in accordance with IFRS.

Page 20.10 – Assets

Opening Prior Period restated: To be completed by insurers that make a retrospective restatement or reclassification of items in accordance with International Accounting Standard (IAS) 1, paragraph 10(f).

IFRS requires many items be presented separately within the financial statements or shown within the notes to the financial statements. If the P&C return does not accommodate the separate line reporting of certain items, insurers are expected to disclose such information within the notes to the financial statements.

Line 01 – Cash and cash equivalents

Insurers must not offset credit balances in one depository institution against debit balances in another depository institution. Netting is allowed only between branches of the same depository institution.

Line 50 – Assets held for sale

Report all assets that are in disposal groups under IFRS 5. This does not include investments in the portfolio designated available for sale.

Line 14 – Investments

See instructions for page 40.08.

Line 15 – Equity accounted investees

See instructions for page 40.84.

Line 17 – Investment properties

Include right-of-use assets that are considered investment properties.

Line 41 – Property and equipment

Include right-of-use assets that are considered Property and Equipment.

Line 58 – Defined benefit pension plan

Report defined benefit pension plan net surpluses on this line.

Line 60 – Segregated funds net assets

This line applies to Life insurers only.

Line 88 – Other assets

Include prepaid expenses, receivables, deferred charges and deferred acquisition costs not related to insurance contract liabilities.

Page 20.11 – Liabilities and equity

Opening prior year restated: To be completed by insurers that make a retrospective restatement or reclassification of items in accordance with IAS 1, paragraph 10(f).

Line 030 – Provisions, accruals and other liabilities

Include lease liabilities and payables not related to insurance contracts.

Line 040 – Liabilities held for sale

Report all liabilities that are in disposal groups under IFRS 5. This does not include liabilities designated available for sale.

Line 080 – Trust and banking deposits

Include deposits relating to the mortgage insurer's banking and trust subsidiary operations.

Quebec Mortgage insurers: Include deposits relating to the mortgage insurer's banking and trust operations.

Line 110 – Defined benefit pension plan

Report defined benefit pension plan net deficits on this line.

Line 130 – Subordinated debt

Refer to "Section III - Definitions" for further guidance.

Line 150 – Insurance contract liabilities – Excluding segregated funds

This line applies to all Insurance contracts liabilities excluding segregated fund contracts.

Line 155 – Insurance contract liabilities – Segregated fund guarantees

This line applies to Life insurers only.

Line 160 – Insurance contract liabilities – Segregated funds net liabilities

This line applies to Life insurers only.

Line 170 – Reinsurance contract held liabilities – Excluding segregated funds

This line applies to all reinsurance contracts held liabilities excluding segregated fund contracts.

Line 175 – Reinsurance contract held liabilities – Segregated fund guarantees

This line applies to Life insurers only.

Line 180 – Reinsurance contract held liabilities – Segregated funds net liabilities

This line applies to Life insurers only.

Line 190 – Investment contract liabilities – Excluding segregated funds net liabilities

Line applies to Investment Contract Liabilities excluding those for account of segregated fund holders.

Line 195 – Investment contract liabilities – Segregated funds net liabilities

This line applies to Life insurers only.

Policyholders' liabilities

Line 310 – Residual interest (non-stock)

This line mainly applies to mutual entities and fraternals.

Record insurance contracts under which the most residual interest of the entity is due to a policyholder and not a shareholder.

Line 320 – Participating account

This line applies to Life insurers only.

Line 330 – Non-participating account (non-stock)

This line applies to Life insurers only.

Line 410 – Residual interest (non-stock)

Line mainly applies to mutual entities and fraternals.

Line to record insurance contracts under which the most residual interest of the entity is not due to a policyholder.

Lines 420-450

These lines apply to Life insurers only.

Line 550 – Retained earnings

For use by stock companies only.

Lines 810-899 – Head office account, reserves & AOCI

These lines apply to foreign insurers only.

Page 20.12 – Liability roll forward (analysis by measurement component (insurance contracts not measured under the PAA – excluding segregated funds))

This schedule is to be completed in accordance with IFRS 17 disclosure requirements for the Insurance Contracts Liability roll forward.

The schedule applies to Insurance Contracts not measured under the Premium Allocation Approach (PAA).

Columns 18 and 48 – Other

These columns will be used to record insurance contracts that will be transitioned to IFRS on a full retrospective basis and all other insurance contracts on a go-forward basis.

Page 20.14 – Liability roll forward (analysis by remaining coverage and incurred claims (all insurance contracts – excluding segregated funds))

This schedule is to be completed in accordance with IFRS 17 disclosure requirements for the Insurance Contract Liability roll forward.

The schedule applies to all Insurance Contracts.

Line 130 – Other

This line will be used to record insurance contracts that will be transitioned to IFRS on a full retrospective basis and all other insurance contracts on a go-forward basis.

Page 20.16 – Liability roll forward (reinsurance contracts held analysis by measurement component (contracts not measured under the PAA – excluding segregated funds))

This schedule is to be completed in accordance with IFRS 17 disclosure requirements for the Reinsurance Contract Held Liability roll forward.

The schedule applies to Reinsurance contracts held not measured under the Premium Allocation Approach (PAA).

Line 530 - Reinsurance acquisition cash flows

This line could be used to report the premiums allowances (ceding commissions).

Page 20.18 – Liability roll forward (reinsurance contracts held analysis by remaining coverage and incurred claims (all contracts – excluding segregated funds))

This schedule is to be completed in accordance with IFRS 17 disclosure requirements for the Reinsurance Contract Held Liability roll forward.

The schedule applies to all reinsurance contracts.

Line 330 - Reinsurance acquisition cash flows

This line could be used to report the premiums allowances (ceding commissions).

Page 20.22 – Statement of profit or loss

Line 010 – Revenue from PAA contracts

Revenue from insurance contracts measured using the Premium Allocation Approach (PAA).

Line 020 – Revenue from GMM contracts (excluding VFA contracts)

Revenue from insurance contracts measured using the General Measurement Method (GMM) excluding insurance contracts that meet the eligibility criteria for Variable Fee Approach (VFA).

Line 030 – Revenue from VFA contracts

Revenue from insurance contracts that meet the eligibility criteria for Variable Fee Approach (VFA).

Line 099 – Total insurance revenue

Sum of lines 010, 020, and 030.

Line 110 – Insurance service expenses

An entity shall present in profit or loss insurance service expenses arising from a group of insurance contracts issued.

Line 120 – Net expenses from reinsurance contracts held

This line represents amounts recovered from the reinsurer and an allocation of the premiums paid.

Line 199 – Insurance service result

Line 199 is equal to the sum of line 099 and line 120, less line 110.

Line 220 – Interest revenue on financial assets not measured at FVTPL

This line is to record interest earned on cash and short-term investment, bonds, mortgage loans, derivative activities and any other interest-bearing investments.

Line 230 – Other net investment income excluding segregated funds

This line is to record investment income (includes realised gains, fair value gains, dividends, rental income, etc.) less related expenses excluding net investment income from segregated funds. Net investment income from segregated funds guarantees (related to the general account) should also be reported on this line.

Line 240 – Net investment income – segregated funds

This line applies to Life insurers only.

This line is to record investment income (includes realised gains, fair value gains, dividends, rental income, etc.) less related expenses from segregated funds, excluding any investment income from the general fund.

Line 250 – Provision for credit losses

Line to record impairment losses in accordance with IFRS 9.

Line 300 – Investment return

Sum of lines 220, 230, 240, and 250.

Line 310 – Net finance income (expenses) from insurance contracts excluding segregated funds

Line to record change in carrying amount of group of insurance contracts arising from the effect of the time value of money, changes in time value of money, effect of financial risk and changes in financial risk.

Line 320 – Net finance income (expenses) from reinsurance contracts held

Line to record change in carrying amount of group of reinsurance contracts held arising from the effect of the time value of money, changes in time value of money, effect of financial risk and changes in financial risk.

Line 330 – Movement in investment contract liabilities

Line to record the movement in investment contract liabilities which consists of claims incurred in the year less the corresponding elimination of the policyholder liability originally recognized in the balance sheet and the investment return credited to policyholders.

Line 399 – Net investment result

Sum of lines 300, 310, 315, 320 and 330.

Line 410 – Other income

See instructions for page 80.35.

Line 415 – Share of net income (loss) of equity accounted investees

Insurers must report it's pro rata share of the net income (loss) using the equity method of accounting for subsidiaries and associates and, where applicable, joint ventures. Insurers should also report share of Net Income (Loss) from investment pooled arrangements between affiliated companies accounted using the Equity Method.

Line 420 – General and operating expenses

See instructions for page 80.25.

Line 520 – Discontinued operations (net of income taxes of $____)

There are three datapoints to be completed on this line: Current period (column 01), prior period (column 03), and an inside datapoint (column 04). The inside data point is labelled "net of Income Taxes on Discontinued Operations", and is located at the bottom of the form.

Line 610 – Participating policyholders/certificateholders

This line applies to Life insurers only.

Line 620 – Other fund account

This line applies to Life insurers only.

Line 630 – Residual interest policyholders

For a Mutual Entity or a Fraternal organization, this line reflects the allocation of net income (line 999) arising from residual interest that is attributable to policyholders.

Page 20.41 – Statement of residual interest – Policyholders' equity

This table should be used by mutual entities and fraternals which have a feature that states that the most residual interest does not belong to a policyholder.

Lines 030-040 – Adjustments

The portions of:

1. prior period adjustments; and
2. accounting policy changes which have been applied retroactively and which have been allocated to opening retained earnings are to be reported on this line. Such changes would normally be fully explained in the Notes to the Financial Statements.

Line 050 – Share of net income (loss)

The sum of this line and line 150 from "Statement of Residual Interest - Liabilities" is equal to line 630 on page 20.22.

Page 20.41 – Statement of residual interest – Liabilities

This table should be used by mutual entities and fraternals which have a feature that states that the most residual interest belongs to a policyholder and not a shareholder.

Lines 130-140 – Adjustments

The portions of:

1. prior period adjustments; and
2. accounting policy changes which have been applied retroactively and which have been allocated to opening retained earnings are to be reported on this line. Such changes would normally be fully explained in the Notes to the Financial Statements.

Line 150 – Share of net income (loss)

The sum of this line and line 050 from "Statement of Residual Interest - Policyholders' Equity" is equal to line 630 on page 20.22.

Page 20.42 – Comprehensive income (loss) and accumulated other comprehensive income (loss)

General instructions

All amounts should be reported on an after-tax basis.

Lines 80 and 82

These lines apply to Life insurers only.

Page 20.45 – Head office account

This table applies to foreign insurers only.

Page 20.54 – Statement of changes in equity

This page applies to Canadian insurers only.

Report changes in equity items per Equity section of Consolidated Financial Statements on page 20.11 and AOCI on page 20.42.

Lines 60 and 62

These line items will be used to summarize the impact of transitioning to IFRS 17 and 9.

Page 20.60 – Notes to the financial statements

In addition to the notes normally required under the applicable accounting standards, these notes should include the following items, where relevant:

• the existence of financing reinsurance arrangements and their financial impact; and
• the percentage of the insurer's participation in a pool, and disclosure of its share of the amount of direct premiums written, reinsurance assumed and reinsurance ceded in the pool.

Page 40.08 – Summary of investments

For each investment category listed in the summary the balance sheet value of the investments should be reported in the columns based on their classification under the applicable accounting standards.

Line 010 – Short-term investments

Investments other than Cash Equivalents having an original term to maturity of one year or less; includes term deposit, GICs, commercial paper, treasury bills, etc.

Line 199 – Bonds and debentures

Fixed-term investments having a fixed maturity date or dates for the repayment of principal (includes convertible bonds, stripped bonds, asset backed securities and GICs with original terms to maturity of more than one year).

Government Securities are securities issued or guaranteed by OECD Central Governments and Canadian Provinces and Territories. If bonds issued by crown corporations are guaranteed by OECD governments, they should be reported under "Government".

Corporate Public bonds and debentures are securities that are registered and traded to the public. They usually have CUSIP numbers.

Corporate Private bonds and debentures are securities which are not registered and traded to the public. They are normally offered to a single or select group of investors.

Investment grade corporate public bonds and debentures are defined as securities that are rated as BBB or higher by a recognized rating agency.

Investment grade for corporate private bonds and debentures is defined as securities that would be rated as BBB or higher according to the criteria used by recognized rating agencies.

Line 210 – Mortgage loans

Amounts reported should be after the deduction of collective and individual provisions, if any, which were established to reflect non-collectability of loan balances. Includes sale agreements, power of sales, mortgage pools, and mortgages in process of foreclosure, where title has not yet passed to the insurer/society.

Line 259 – Preferred shares

Include convertible preferred shares.

Line 279 – Common shares

Include options, warrants and rights in respect of common shares.

Line 310 and 320 – Other loans and invested assets

Include leases, seed money provided for Segregated Funds operations and other recognized financial assets not reported on line items above.

Column 05 – Fair value through profit or loss (FVTPL)

Report the balance sheet value of investments included in the category at fair value through profit or loss classified as held for trading.

Column 10 – Available for sale (FV) (the heading is FVOCI)

Report items that are classified as Available for Sale, but are measured at amortized cost in this column.

Column 15 – Hedges

Report the balance sheet value of derivative instruments that are part of designated cash flow or fair value (FV) hedging relationships. For a fair value hedge, also report the balance sheet value of the hedged item. For a cash flow hedge, the balance sheet value of the hedged item should be reported in column 20.

Column 25 – FV option/Investment properties fair value

Report the balance sheet value of investments designated as at fair value through profit or loss and investment property valued using the fair value method.

Column 30 – Amortized cost

Report the balance sheet value of financial instrument investments measured using amortized cost including investments classified as held to maturity, loans and receivables and cash flow hedges.

Include investment properties valued using the cost method.

Columns 40, 45 and 50 – Expected credit loss (ECL) – Stage I, II and III

Report the expected credit losses amount for each stages 1, 2 and 3 as described in IFRS 9, Financial Instruments.

Column 70 – Balance sheet value of assets used to back index linked product

Report balance sheet value of investments that are in the general fund and where the investment risks are passed through to policyholder/certificateholder as the investments are used to back index-linked products.

Pages 40.12 to 40.52 – Consolidated investments

Insurers must:

• populate all subtotals and totals for each of these pages; and
• provide investment details to support subtotals either by inserting additional lines or embedding a file. Please refer to Section II for instructions on how to embed objects within the special Excel file.

For each investment category, the statement of financial position value of the total investments should be reported in the columns based on their classification.

The "Where/By whom kept" in column 01 is the name of the trustee or the servicer.

The due dates for interest are the next payment date from the date of the statement.

Page 40.12 – Investments: Short-term investments (excluding bonds and debentures)

Include items such as but not limited to Treasury bills, commercial paper, short-term unsecured promissory notes issued by financial institutions and industrial corporations, interest-bearing deposits with a deposit-taking institution, bank deposit certificates, trust company guaranteed investment certificates.

The detailed holdings for non-government, short-term investments are listed within the applicable rating categories.

Short term investments that mature in one year or less are included on this page.

Page 40.22 – Investments: Bonds and debentures

This represents holdings of Canadian government or government guaranteed bonds shown in total only on lines 09, 19 and 29.

The detailed holdings of foreign government bonds are to be listed on line 35. The country of the foreign bond should be clearly displayed within the description in column 02.

The detailed holdings for non-government bonds and debentures are listed within rating grades. Bonds and debentures that mature or can be repurchased by the issuing company in one year or less must be included in line 39 or 69. All others (including perpetual bonds) that mature in more than one year and less than five years must be included in line 49 or 79, and those that mature in more than five years in line 59 or 89.

The date of issue in column 06 should be the original issue date of the bond. It is not the date of acquisition.

Investments are split by maturity term into three categories: less than one year, greater than one year and less than or equal to five years, and greater than five years. As an investment nears its maturity date, it moves through the three categories.

Page 40.32 – Investments: Mortgage loans

The amounts in columns 07 and 09 reflect the original amounts, not the latest values at renewal. The amount in column 08 reflects the current market value of the property.

Page 40.70 – Investment properties

Line 49 – Total investment properties

The split between investment properties and own-use properties as shown on this page reflects the balance sheet treatment under the applicable accounting standards.

Insurers should indicate in the description of the property which of the real estate items have been allocated between the two categories.

Properties should be listed in accordance with the province or country of location, with subtotals where applicable. The list should follow the alphabetical order of provinces and territories first, followed by countries other than Canada, where applicable.

Amounts shown in columns 04, 05 and 06 are gross (i.e. including encumbrances, which are shown separately on page 20.11, line 060).

Page 40.72 - Interest Revenue on Financial Assets not Measured at FVTPL

Report the interest income on financial assets not measured at FVTPL. For instance, interest earned on cash and short-term investment, investment assets measured at amortized cost and assets measured by FVOCI and any other interest-bearing investments, etc.

Page 40.74 – Investment return

Report the investment return excluding the interest revenue captured on page 40.72. The total of the interest revenue on page 40.72, line 099 and the investment return on page 40.74, line 499 should correspond to the Statement of Profit or Loss (page 20.22, line 300).

Page 40.80 – Other loans and invested assets

Other loans and invested assets include, where permitted, broker loans, investments in non-financial investments including, but not limited to, precious metals, coins and art as well as positive marked-to-market derivative instruments and other recognized financial investments not included in other investment categories, such as letters of credit. Total Other Loans on line 159 should tie to page 40.08, line 310. Total Other Invested Assets on line 259 should tie to page 40.08, line 320.

When reporting broker loans, a detailed listing is required, either directly on the form or embedded within the special Excel file.

For all recognized financial instruments listed in other investments, additional information should be attached to the insurer's Annual Return on each type and class of instrument held during the year and outstanding at year end, including the following:

• notional amount and remaining term to maturity;
• underlying assets;
• whether it is an over-the-counter or exchange traded instrument;
• whether the instrument is held for
  1. trading purposes;
  2. hedging purposes; or
  3. other purposes; and
• the maximum credit risk exposure for each type of instrument.

The notional principal amount is:

• the stated notional amount, except where the stated notional amount is leveraged or enhanced by the structure of the transaction. In these cases, insurers must use the actual or effective notional amount when determining potential future exposure;
• nil, where the credit exposure on single currency floating/floating interest rate swaps would be evaluated solely on the basis of their marked-to-market value; or
• for contracts with multiple exchanges of principal, the sum of the remaining payments.

Page 40.88 – Summary of provisions

Report short-term investments, preferred and common shares under line 050 "Other Loans and Invested Assets."

Columns 05 to 25

Amounts for columns 05 to 25 are to only be reported on the 4th quarter filing.

Column 05 – Provisions prior period end

Report Prior Period End Provisions (collective & individual) under IFRS 9.

Column 10 – Movement current period – Increase

Report increase of provisions (collective & individual) under IFRS 9 during current period.

Column 15 – Movement current period – Decrease

Report decrease of provisions (collective & individual) under IFRS 9 during current period.

Columns 30, 35 and 40 – Provisions current period end (including ECL – Stage I, II and III)

Report the expected credit losses amount for each of the stages I, II and III as described in IFRS 9, Financial Instruments.

Page 40.92 – Provisions, accruals, and other liabilities

Line 090 – Other

Include provision for employee benefits or any other items not included on lines 010 to 080.

Page 50.32 – Intra-group transactions

Columns 40 to 69 – Intra-group reinsurance transactions

Columns 40 to 69, lines 42-44 should correspond to the respective columns in page 70.50 for line "Total Associated and Non-qualifying subsidiary".

Column 35 – Intra-group outsourcing

Report YTD Fee/Cost for intra-group outsourced services incurred/provided at the end of the reporting period.

Columns 40 and 42 – Intra-group transactions resulting in asset encumbrance

Enter the total of line 19 from column 05 on page 10.42 from the MI Supervisory Annual Supplement Return. If there is a change of greater than 10 per cent during the period, this change should be reflected in the total of the quarterly filing.

In addition, any securities lending to related parties included in the amounts on page 10.42, lines 40 and 45 should be included.

Page 50.40 – Receivable from/Payable to

Refer to the definition of the term "associate" in "Section III - Definitions."

Amounts receivable from/payable to non-qualifying subsidiaries, all associates and joint ventures (regardless of ownership level) arising out of insurance, reinsurance and any other activities must be shown for each company, reporting the total on lines 29 and 39 respectively.

Page 60.25 – Insurance service result

This page is designed to collect information on Insurance service result by line of business where the following components comprising Insurance service result must equal as follows:

• Column 19, line 599 Insurance Revenue should equal the amount reported on page 20.22, column 01, line 099
• Column 29, line 599 Insurance Service Expenses should equal the amount reported on page 20.22, column 01, line 110
• Column 39, line 599 Net Expenses from Reinsurance Contracts Held should equal the amount reported on page 20.22. column 01, line 120
• Column 45, line 599 Insurance Service Result should equal to the amount reported on page 20.22, column 01, line 199

Column 02 – Number of policies in force

Each class (or sub-class) requires the number of policies, where coverage is provided, at year‑end. Number of policies in force refers to direct policies issued by the insurer.

Column 04 – Number of Direct Claims

Number of direct claims reported during the current fiscal year

Equals

Number of direct claims incurred and reported during the current fiscal year

Plus

Number of direct claims incurred in previous years and reported during the current fiscal year

 

Page 60.35 – Claims and adjustment expenses paid, current year, liabilities for incurred claims, current year and prior year claims development

Line 099, Column 19

Liabilities for incurred claims - Current year, reported on line 099 column 19 should equal the sum of the amounts reported on page 20.14, line 799, columns 10, 12 and 16, less the sum of amounts reported on page 20.18, line 599, columns 10, 12 and 16.

Line 099, Column 29

Excess or (Deficiency)

Equals

Undiscounted Liabilities for incurred claims – Prior year end

minus

Net amount paid during the year for claims and adjustment expenses of prior years

minus

Undiscounted Liabilities for Incurred Claims for Prior Years

 

Excess or (deficiency) should also correspond to the amount reported on page 60.45 line 199 column 40 "Prior year development excess of (deficiency)".

Line 199 – Out of Canada liabilities

This line applies to Canadian insurers only.

This line must include the out-of-Canada portion of unpaid claims and adjustment expenses, which are included in line 199.

Page 60.45 – Net ultimate claims and adjustment expenses – Claims development

Report actual claims compared with previous estimates of the undiscounted amount of the claims. Claims development disclosure should start with the period when the earliest material claim(s) arose but not required to start more than 10 years before the end of the reporting period. The impact of discounting and risk adjustment for non-financial risk is reported separately on line 210 and 220.

In the year of IFRS 17 adoption OSFI expects current and prior year comparative data to be reported and the rest of the prior year data can be left blank. In the subsequent years going forward prior years data beyond the IFRS 17 comparative data available can be left blank and reported in the year when it becomes available until the ten years of comparative data are generated.

If the amounts on line 010 columns 01 to 20 are unavailable, those cells may be left blank. If cells are blank, the Prior Year Development Excess or Deficiency reported on line 010 column 40 can be calculated using relevant information from the Appointed Actuary’s Report.

Amounts reported in this schedule should include Portfolio Acquisition/Disposition on insurance contracts (i.e. these amounts are not reported separately).

Column 20 – Cumulative net claims & Adjustment expenses paid

Cumulative Net Claims & Adjustment Expenses Paid are paid claims and paid adjustment expenses on a net basis.

Line 299, Column 30 – Net liabilities for incurred claims

Net Liabilities for Incurred Claims reported should equal the sum of the amounts reported on page 20.14, line 799, columns 10, 12 and 16, less the sum of amounts reported on page 20.18, line 599, columns 10, 12 and 16.

Line 310, Column 30 – Unpaid loss and adjustment expenses (ULAE)

The discounted unpaid ULAE, including a provision for risk adjustment is reported on line 310.

Line 320, Column 30 – Facility and plan

The discounted unpaid claims of all automobile pools, including a provision for risk adjustment (e.g. Facility Association, Ontario Risk Sharing Pool and Plan de Répartition des Risques) are reported on line 320.

Line 330, Column 30 – Other provisions

The discounted unpaid claims for all other provisions, including a provision for risk adjustment (e.g. non-material lines of business, nonautomobile industry pools and inter-company reinsurance) are reported on line 330.

Page 60.60 – Remaining CSM from insurance contracts estimated at the end of the year

For insurance contracts other than those to which the premium allocation approach has been applied.

Page 60.70 – Effect of GMM contracts initially recognized in the year

For insurance contracts other than those to which the premium allocation approach has been applied.

Pages 60.90 and 60.95 – Discount rates

The rate for year "Current >7yr" is a weighted discount rate of the future discount rates for year +8 and beyond.

Cells are to be left blank (i.e. do not enter zero or any value) in the following instances: for classes of insurance that are not written by the insurer; where liabilities have not been discounted; or if the duration of the liabilities is less than the projection years shown in the exhibit.

For each class of insurance, the insurer should provide the current yield curve/discount rate or the equivalent weighted current rate used to present value its fulfilment cash flows The rates should be expressed as a percentage, limited to one decimal point. The discount rates should be identical to rates used in the Appointed Actuary's Report. If an equivalent weighted current rate is used by the insurer, then the same rate would be entered for each projection year.

Insurers are also permitted to use blended rates for each duration and relevant line of business.

Pages 67.40 to 67.70 – Provincial and territorial exhibits

Distribution of insurance revenue, net expenses from reinsurance contracts held and insurance service expenses by province and out of Canada is based on location of risks.

Classes of insurance

For additional information on the classes of insurance, refer to "Section III - Definitions."

Page 67.40 – Provincial and territorial exhibits of insurance revenue

Line 001 – Licensed (Y/N)

Insurers must answer "Yes" or "No" in each of columns 01-14, based on whether or not the insurer was licensed in the applicable jurisdiction as at the end of the year of the Annual Return.

Page 70.10 – Net expenses from reinsurance contracts held

Report Allocation of reinsurance premiums and Amounts recoverable from reinsurers for incurred claims by type of reinsurance arrangement pertaining to the mortgage line of business.

Page 70.21 ‑ Summary of intragroup reinsurance contracts issued and held

This page is designed to collect information related to business that is pooled among related entities who are a party to a pooling business. Institutions are to include registered insurers with whom they have reinsurance pooling or participation arrangements.

Page 70.50 – Reinsurance contracts held summary

Identify amounts only at the reinsurer counterparty level, not at a contract level; therefore for each reinsurer, total the amounts of all contracts held with that reinsurer and group them into one total for each row.

Column 1 – Name of assuming insurer

The complete legal name of the reinsurer to which the insurer has a counterparty exposure. The counterparty name should be reported exactly as per the signed contract.

For business ceded to Facility Association Risk Sharing Pool (RSP) insurers should report the name of the assuming insurance company as "Facility RSP".

Column 02, 04, 06, 08 – Rating agency identifier code

The unique rating agency identifier used by AM Best, S&P or other rating agencies.

Enter for all rating agencies that rate the assuming insurer.

If unrated enter "1" in column 08.

Column 10 – Reinsurer domicile

The domicile where the reinsurer counterparty is legally incorporated.

Use the 2 letter International Standard country codes defined in ISO 3166 (International Organization for Standardization).

Column 12 – Reinsurer group domiciliary jurisdiction

The domicile where the ultimate incorporated insurance group owning the reinsurer counterparty is legally incorporated. If the counterparty does not belong to a group, leave this column blank.

Use the 2 letter International Standard country codes defined in ISO 3166 (International Organization for Standardization).

Column 14 – Business covered

Underlying class of insurance risk reinsured (i.e. mortgage insurance)

For reinsurers completing this column, Out of Canada business should be classified as Out of Canada.

Column 16 – Type of contract

Type of reinsurance contract using the following two letter codes:

• FA - Facultative
• XS - Excess of loss
• QS - Quota share
• SU - Surplus
• SL - Stop loss

Columns 50, 52, 59, 62, 72, 74 and 79

Net expenses from reinsurance contracts held reported on pages 70.50 and 70.60 in column 59 should correspond to the amount reported on page 20.22, line 120, column 01.

Total Liabilities for remaining coverage and for incurred claims reported on pages 70.50 and 70.60 in column 79 should correspond to the amount reported in the Liability Roll Forward (page 20.18) line 599, column 19.

Column 24 – Reinsurance receivable

Include all receivables, net of allowance for doubtful accounts, on paid losses and paid loss adjustment expenses.

Column 26 – Reinsurance payable

Include funds, other than those for collateral purposes held in the insurer's bank account.

Page 70.90 ‑ Summary of non-traditional methods of risk mitigation issued or purchased by insurer or parent for in Canada risk

All amounts should be reported in $'000 Canadian Dollars.

Columns 03 and 05 – Insurer

This would consider all non-traditional reinsurance (ILS) contracts specific to the Canadian company or branch for in Canada risk.

Columns 07 and 09 – Parent/home office

This would consider all non-traditional reinsurance (ILS) contracts specific to the parent or home office covering in Canada risk.

Page 80.25 – Insurance service and other operating expenses

This exhibit should be completed on an incurred basis for all expenses, reporting by type of expense from line 010 to 340 with the total amount presented by insurance service expenses and other operating expenses on lines 420 and 440 respectively.

Insurance service expense reported on page 80.25 line 420 should equal the amount reported on page 20.22 line 110 and Other operating expenses reported on page 80.25 line 440 should equal the amount reported on page 20.22 line 420.

Line 010 – Claims and benefits

Includes:

• Incurred claims and other insurance service expenses as reported on page 20.14 column 19 line 210, and Adjustments to liabilities for incurred claims as reported on page 20.14 column 19 line 240.

Line 050 – Agency (excluding commission)

Includes:

• payments for agents' licences and signs;
• expense of training agents;
• cost of promotional material, souvenirs, etc., in agent's name only;
• expense of seminars, conventions and meetings for agents;
• allowances, reimbursements and payments for expenses to agents, brokers and producers other than company personnel and not computed as a percentage of premiums.

Line 060 – Management fees

Includes:

• services provided by outside related or non-related management corporations or agencies.

Line 090 – Commissions

Report commissions as part of insurance acquisitions cash flows as well as commissions that do not fall under insurance acquisition cash flows within the boundary of an insurance contract, for example commissions applicable to the asset management business or any other non insurance related commissions.

Line 095 – Contingent commissions

Report contingent commission as defined in Section III - Definitions.

Line 100 – Losses on onerous contracts

Includes:

• Losses and reversal of losses on onerous contracts as reported on page 20.14 column 19 line 230.

Line 150 – Occupancy expenses (including rent, leasing and maintenance)

Includes:

• furniture and equipment;
• insurance, occupancy;
• postage/courier;
• printing and stationery;
• telephone and other communication costs.

Line 180 – Home office overhead

Includes:

• overhead charges levied by the head office of the parent corporation.

Line 190 – Allowance

Includes:

• allowance for doubtful accounts.

Line 200 – Experienced rate refund

Refer to the definition of the term "Experienced Rate Refund" in "Section III - Definitions.

Line 212 – Interest on debt

This line includes interest paid on debt.

Line 214 – Other interest expense

This line includes other interest-related expenses.

Line 216 – Other finance costs

This line includes other finance costs that does not include interest expense.

Line 220 – Other general expenses

Includes:

• any expenses not included above.

Page 80.35 – Other income

Line 010 – Service charges

Report only service charges to policyholders. Insurers that do not identify service charges separately or are not permitted to do so should continue to include these service charges as part of Insurance revenue through cash flows premiums received for insurance contracts providing that those service charges are identified as non-distinct services to the insurance contract.

Line 020 – Income (loss) from ancillary operations

There are three datapoints to be completed on this line: current (column 01), prior (column 03) and expenses on income(loss) from ancillary operations (column 04).

Line 060 – Gains (losses) from fluctuations in foreign exchange rates

Gains or losses should be shown on line 060 unless gains or losses are included with the actual revenue or expense items to which they relate, for example, the payment of certain claims.

Line 100 to 130 – Other Income

Includes any expenses not included above.

Pages 92.10 to 95.20 – Non-consolidated financial statements and schedules

Insurers are required to fill out these schedules on a non-consolidated basis in accordance with applicable accounting standards and return instructions, with the exception of life insurance subsidiaries, which should be accounted for using the equity method.

The table below references the applicable instructions for the following return pages:

Page 93.30 – Provincial and territorial exhibit of premiums written

Distribution of premiums written by province and out of Canada is based on location of risks. These pages continue to be required by the provinces in order to calculate premium taxes. Amounts reported on these pages should be based on the legacy Canadian IFRS 4 accounting standard.

Classes of insurance

For additional information on the classes of insurance, refer to "Section III - Definitions."

Page 99.10 – Canadian affidavit verifying annual supplement return

Insurers should refer to "Section V - Jurisdictional Requirements."

Each filed copy of page 99.10 must bear the original signature of everyone who is required to sign and kept within company records. Please refer to Section II for instructions on how to embed objects within the special Excel file.

Page 99.16 – Certification

Each filed copy of the affidavit must bear the original signature of everyone who is required to sign and kept within company records.