Office of the Superintendent of Financial Institutions
Each Memorandum to the Appointed Actuary describes the requirements of the Office of the Superintendent of Financial Institutions (OSFI or Superintendent) with respect to the Appointed Actuary's Report (AAR) specified in subsection 667(2) of the
Insurance Companies Act (ICA). It sets out the minimum standards used in determining the acceptability of the AAR and provides guidance for the Appointed Actuary preparing reports in matters relating to presentation, level of detail and nature of the discussions to be included.
The AAR comprehensively documents the work done by the Appointed Actuary (AA) to calculate actuarial and other policy liabilities such as (re-)insurance contracts liabilities/assets, reinsurance contracts held assets/liabilities and investment contracts liabilities with discretionary participation features (DPFs). The AAR also documents the work with respect to the administration of Participating Accounts and provides a summary of asset/liability management practices along with the opinions of the Appointed Actuary. OSFI views the AAR as a key component of its review of the insurer’s financial position and profile.
The completed AAR, including numerical data collected through the supplementary tables in excel format, is prescribed supervisory information when filed with OSFI.
Subsections 365(2) and 629(2) of the Insurance Companies Act (ICA) require that: “The actuary's valuation shall be in accordance with generally accepted actuarial practice with such changes as may be determined by the Superintendent and any additional directions that may be made by the Superintendent.”
OSFI's Guideline E-15
Appointed Actuary: Legal Requirements, Qualifications and Peer Review describes the role of the Appointed Actuary and sets out some of OSFI's expectations with respect to that role. The guideline also outlines the Actuary's qualification required to carry out the Appointed Actuary's role.
For purposes of the Appointed Actuary's valuation of (re-)insurance contracts liabilities/assets, reinsurance contracts held assets/liabilities and investment contracts liabilities with DPFs and the associated opinion, OSFI currently accepts that work performed in accordance with “accepted actuarial practice” in Canada (as defined by the Canadian Institute of Actuaries) is sufficient to satisfy the “generally accepted actuarial practice” requirement referred to in the ICA sections identified above. “Accepted actuarial practice” is defined by the professional actuarial standards of practice promulgated by the Actuarial Standards Board (ASB), together with the additional requirements and directions of the Memoranda.
IFRS 17 Insurance Contracts (IFRS 17) replaces IFRS 4, the current insurance accounting standard. IFRS 17 is effective for annual periods beginning on or after January 1, 2023. Given the change in reporting standard, the Memoranda have been extensively updated.
OSFI is seeking views on a confidential basis through a 49-day public consultation, on the draft IFRS 17 Memoranda to the Appointed Actuary for Life and Property and Casualty insurers. The public consultation will run from today through to April 29, 2022 on the following regulatory instructions:
The Memoranda can be viewed on OSFI’s Web site at
www.osfi-bsif.gc.ca under Memorandum to the Appointed Actuary (Life Insurance /
Property & Casualty).
Please provide feedback/comments via the comments template (included as an Appendix to this letter) no later than April 29, 2022.
Questions and comments should be sent to Arthur Yuen, Senior Actuary at
AARinquirylife@osfi-bsif.gc.ca for the Life AA Memorandum. For the Property and Casualty/Mortgage Insurers AA Memorandum, questions and comments should be sent to James Yang, Senior Actuary at
Chris Townsend Senior Director, Actuarial Division Insurance Supervision Sector