AMF published the revised guideline on capital adequacy requirements (CAR) for property and casualty (P&C) insurance companies. This updated guideline has been effective as of January 01, 2018. The guideline outlines the capital framework, using a risk-based formula for target capital requirements and minimum capital requirements, and defines the capital that is available to meet the minimum standard.
The Minimum Capital Test (MCT) determines the minimum capital required and not the optimum capital required, at which an insurer must operate. The guideline applies to all P&C insurers that are licensed to transact insurance business in Québec and hold a charter issued by the province of Québec or by another Canadian jurisdiction. It applies on a consolidated basis, in accordance with Canadian generally accepted accounting principles. Accordingly, each component of capital available and capital required is calculated to include all of an insurer’s operations as well as any financial activity by its subsidiaries. The guideline is intended to increase the transparency and predictability of the criteria used by AMF in assessing the quality and prudence of management practices of the financial institutions for which these criteria are intended.
Effective Date: January 01, 2018
Keywords: Americas, Canada, Insurance, CAR, Property and Casualty Insurers, MCT, AMF
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