Life Memorandum to the Appointed Actuary (2018)

Document Properties

  • Type of Publication: Letter
  • Date: September 14, 2018
  • To: Federally Regulated Life Insurance Companies, including Fraternal Benefit Societies and Canadian Branches of Foreign Insurance Companies, including Foreign Fraternal Benefit Societies
  • From: Chris Townsend, Senior Director, Actuarial Division, Insurance Supervision Sector
  • Copy: Appointed Actuaries of Federally Regulated Life Insurance Companies, including Fraternal Benefit Societies and Canadian Branches of Foreign Insurance Companies, including Foreign Fraternal Benefit Societies

Every year, OSFI updates the Life Memorandum to the Appointed Actuary (the Memorandum), which is issued pursuant to subsection 667(2) of the Insurance Companies Act.

The Memorandum can be found on OSFI’s website in English and French respectively at:

http://www.osfi-bsif.gc.ca/Eng/fi-if/rtn-rlv/fr-rf/ic-sa/lic-sav/Pages/AA_Memo_2018.aspx

http://www.osfi-bsif.gc.ca/fra/fi-if/rtn-rlv/fr-rf/ic-sa/lic-sav/Pages/AA_Memo_2018.aspx

The Memorandum specifies the content of the annual Appointed Actuary’s Report to OSFI. Significant changes to the Memorandum include:

  1. Added a new supplementary peer review table in Section A.2.3. A separate excel spreadsheet will be provided to the insurers.
  2. Revised Section B.3.2.6 “Economic Assumptions”, including:
    • Removal of two scenario tests for low interest environment (0.5% and 1.5%).
    • Addition of new geographic specific flat interest rate tests (in order to be consistent with LICAT), including:
      1. 5.3% for Canada, the United States and the United Kingdom,
      2. 3.6% for Europe other than the United Kingdom,
      3. 1.8% for Japan, and
      4. 5.3% for other locations
  3. Changed the 15% or higher equity market correction test for segregated funds (B.4.5.18) to an immediate downward 15% shock on total fund value.
  4. Added a new section on the mortality/morbidity improvement diversification (B.4.14).
  5. Added a new section on the PfADs included in the LICAT surplus allowance (including a new table B.8.8).
  6. Replaced references to the MCCSR with references to the LICAT.

OSFI will distribute separately a supplemental quantitative and qualitative request on IFRS 17 related items. The separate distribution will avoid duplication of the planned capital questionnaire. Recognizing that IFRS 17 is a work in progress, OSFI will request that submissions be made on a best efforts basis. The due date will be after February 28, 2019.

Should you have any questions, please do not hesitate to contact Joanne Kurys at 416-954-3019 or at Joanne.Kurys@osfi-bsif.gc.ca.

Chris Townsend
Senior Director
Actuarial Division
Insurance Supervision Sector