The Office of the Superintendent of Financial Institutions (OSFI) has proposed changes to the Minimum Continuing Capital and Surplus Requirements (MCCSR) guidelines for life insurers.
On July 30, OSFI released its proposed amendments to the MCCSR guidelines. In a letter to federally regulated life insurance companies and fraternal benefit societies, deputy Superintendent Mark Zelmer indicated that the regulator intends to make the following changes:
- Requiring that retained earnings be adjusted for property that is re-classified (between investment and owner-occupied and vice-versa) so that it will be the same as if the property had originally been classified into its re-classified category from the outset;
- Requiring that the deduction of non-life, solvency-regulated financial corporations be floored at zero;
- Addressing the treatment of subsidiaries that write a mixed business consisting of life and property and casualty within the same legal entity;
- Requiring that a 0% credit risk factor for a foreign, public-sector entity be allowed only if the public-sector entity’s sovereign is eligible for a 0% factor based on its rating;
- Expanding the scope of guidelines A, Minimum Continuing Capital and Surplus Requirements (MCCSR), E-19, Own Risk and Solvency Assessment and A-4, Regulatory Capital and Internal Capital Targets to include holding companies and non-operating life insurance companies
The regulator is seeking feedback from the industry, and wishes to receive comments on the proposed changes on or before September 4, 2015.