Office of the Superintendent of Financial Institutions
The Office of the Superintendent of Financial Institutions (“OSFI”) has revised the standard form trust agreement (STA) used by foreign companies in respect of vested assets in Canada. These changes were required due to the enactment of Bill C-8, the implementation of the Branch Adequacy of Assets Test (“BAAT”) on January 1, 2003 and the coming into force of the amendments to regulations made under section 610 of the Insurance Companies Act.
Certain clauses of the current STA are not compatible with the BAAT. Clause 18 of the current STA provides that the company and the trustee shall make those amendments to the STA that the Superintendent reasonably requires. As a result of the changes to the STA it would be appropriate for foreign property and casualty insurance companies to enter into a new trust agreement using the revised standard form.
It should be noted that the structure of the agreement was modified to isolate the company specific clauses found in the current STA from the standard terms and conditions. The new shorter STA, (OSFI Form No. 541), will assist us in processing the high volume of new agreements expected prior to year-end. For information on how to establish a trust agreement please see the enclosed detailed procedures.
To ensure that all the new agreements are processed prior to December 31, 2002, we require that new agreements be submitted to our office on or before December 1st, 2002. The standard $500 user fee will be waived for all property and casualty companies required to enter into a new trust agreement because their existing agreement is not compatible with the BAAT.
If you have any questions, please contact Mr. Andrew Peterson at (613) 990-6282 or by fax at (613) 990-2464.