OSFI is consulting on the 2019 Life Insurance Capital Adequacy Test (LICAT) guideline for federally regulated life insurance companies and fraternal benefit societies. Comments are requested by July 03, 2018 and the guideline will be effective from January 01, 2019.
LICAT guideline replaced Guideline A on the Minimum Continuing Capital and Surplus Requirements (MCCSR), with effect from January 01, 2018. As was the practice with the MCCSR guideline, OSFI will conduct periodic reviews of the LICAT guideline to monitor for, and respond to, emerging trends and issues raised by stakeholders and to ensure LICAT remains effective and reflective of life insurance industry developments. The proposed changes to the guideline include the following:
- Implementing changes resulting from the implementation of IFRS 16 on Leases, with effect from January 01, 2019
- Adding conditions for the recognition of funds' withheld reinsurance, as part of the OSFI initiative related to reinsurance review
- Specifying that mortality risk components apply to any group life insurance products
- Harmonizing the treatment between bonds and preferred shares and specifying the treatment for bonds and preferred shares that are both callable and puttable
- Clarifying the intended meaning of the expression "guarantee coverage period"
- Clarifying that for calculating the incidence rate shocks, termination rates should not change and are applied to the total termination rate, including terminations due to recovery and death combined
- Clarifying the definition of unregistered reinsurance
Comment Due Date: July 03, 2018
Effective Date: January 01, 2019
Keywords: Americas, Canada, Insurance, Reinsurance, LICAT, MCCSR, IFRS 16, Capital Adequacy, OSFI
Previous ArticleESRB Publishes Its Annual Report for 2017
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.
RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.
The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.
HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.
ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).