News release
For immediate release
OTTAWA ─ December 21, 2022, Office of the Superintendent of Financial Institutions
The Superintendent of Financial Institutions is using authorities outlined in the
Insurance Companies Act to temporarily adjust regulatory prudential limits related to investments, commercial lending and borrowing for Property and Casualty (P&C) Federally Regulated Insurers (FRI). This specification is being issued in advance of the transition to International Financial Reporting Standard (IFRS) 17 Insurance Contracts from IFRS 4 Insurance Contracts, on January 1, 2023. The Superintendent considers that certain amounts under regulations made under the Act are not appropriate given relevant prudential considerations.
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.
Media contact
OSFI – Media Relations
Media-Medias@osfi-bsif.gc.ca
343-550-9373
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. OSFI supervises more than 400 federally regulated financial institutions and 1,200 pension plans to determine whether they are in sound financial condition and meeting their prudential requirements.
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