OSFI temporarily adjusts regulatory prudential limits related to investments, commercial lending and borrowing for certain insurance companies
News release - Ottawa -
This two-year transitional relief period will mean that from January 1, 2023, to December 31, 2024, statutory investment, lending and borrowing limits will increase by 25 per cent for Canadian P&C FRIs.
This two-year period will give the companies time to transition and comply with these prudential limits under IFRS 17. Without the two-year relief period, some P&C FRIs would have become non-compliant with one or more regulatory prudential limits related to investments, commercial lending or borrowing, due to the change in accounting.
OSFI establishes policies to promote sound practices and limit risk-taking and has set out statutory investment, lending and borrowing limits to oversee and supervise P&C FRIs investment, loans and debt activities and concentration risks.
The notification will appear in the Canada Gazette on January 7, 2023.
“We have consulted extensively with insurers and have heard the concerns of the property and casualty insurance companies about these new accounting standards, and put in place a two-year temporary relief period, starting at the beginning of the new year. This period will position companies to meet investment, lending and borrowing limit standards by December 31, 2024.”
- Peter Routledge, Superintendent, OSFI
Quick facts
- OSFI establishes certain investment, lending and borrowing limits to avoid allowing an overconcentration of risk in the property and casualty insurance industry.
- New accounting standards coming into effect in 2023 will mean that certain P&C FRIs will be non-compliant with those limits.
- OSFI is exercising its legislative authorities to increase these limits by 25 per cent for a two-year transition period.