September 14, 2018

OSFI proposed amendments to the guideline (Guideline B-5) specifying the regulatory framework for asset securitization transactions of insurers. The amendments reflect events that have affected securitizations since 2004, including the financial crisis and changes to the Basel framework. The guideline also incorporates relevant content from the OSFI Advisory, which was issued in November 2008, on expected practices in asset securitization. OSFI plans to repeal the Advisory when the revised guideline becomes effective, the planned date for which is January 01, 2019.

The guideline sets out the general expectations of OSFI with respect to asset securitization transactions. The guideline supplements the Life Insurance Capital Adequacy Test (LICAT), the Minimum Capital Test (MCT), and the Mortgage Insurer Capital Adequacy Test (MICAT). It specifies the capital treatment for securitization exposures, in addition to those arising from investing in securitizations as a third party. Insurers should apply the capital treatment in this guideline to traditional securitizations, synthetic securitizations, and other securitization structures that contain features common to both. The guideline applies to all insurers on an enterprise-wide basis. The term insurers refers to all federally regulated insurers, including Canadian branches of foreign life and property and casualty companies, fraternal benefit societies, regulated insurance holding and non-operating insurance companies, and mortgage insurers.

 

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Comment Due Date: October 12, 2018

Effective Date: January 01, 2019

Keywords: Americas, Canada, Insurance, Securities, Securitization, Guideline B-5, OSFI

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