OSFI issues final version of the 2018 Life Insurance Capital Adequacy Test Guideline

News Release

For Immediate Release

OTTAWA ─ November 24, 2017 ─ Office of the Superintendent of Financial Institutions Canada

Today the Office of the Superintendent of Financial Institutions (OSFI) released the final version of its 2018 Life Insurance Capital Adequacy Test Guideline (LICAT) for federally regulated life insurers.

The LICAT is an important evolution in OSFI’s regulatory capital expectations. It represents a more advanced and risk-sensitive approach to capital that reflects lessons learned from the financial crisis, significant changes in the nature and management of risk within the life insurance industry, and international advancements in solvency frameworks.

The LICAT was developed in consultation with life insurers and other industry stakeholders, and its release marks the culmination of over a decade of work.

Changes to the final LICAT from the draft used for the public consultation are modest. The LICAT implementation date is January 1, 2018.


"Capital requirements not only protect policyholders and creditors, they promote confidence in the financial condition of life insurers,” said Assistant Superintendent Carolyn Rogers. “The LICAT strikes the appropriate balance between protecting policyholders, while still allowing insurance companies to take risks and compete effectively."

Quick Facts

  • The LICAT replaces the current life insurance capital test, the Minimum Continuing Capital and Surplus Requirements Guideline (MCCSR), in place since 1992.
  • The LICAT is not expected to significantly change the overall amount of capital required to be held by the industry when compared to the current MCCSR.
  • OSFI will regularly review the effectiveness of the LICAT and take into consideration developments in the life insurance industry and evolving risk management practices.

Associated Links

About OSFI

The Office of the Superintendent of Financial Institutions (OSFI) is an independent agency of the Government of Canada, established in 1987, to protect depositors, policyholders, financial institution creditors and pension plan members, while allowing financial institutions to compete and take reasonable risks.

Media Contact:
Annik Faucher
OSFI −Public Affairs