June 15, 2017

OSFI published the updated Minimum Capital Test (MCT) guideline for property and casualty (P&C) insurance companies in Canada. The MCT guideline outlines the capital framework, using a risk-based formula, for target and minimum capital or margin required and defines the capital and assets that are available to meet the minimum standard. The guideline determines the minimum capital or margin required, not the level of capital or margin required at which P&C insurers must operate.

The guideline applies to Canadian and foreign P&C insurance companies operating in Canada on a branch basis, collectively referred to as P&C insurers. The minimum and supervisory target capital standards set out in this guideline provide the framework within which the Superintendent assesses whether a P&C company maintains adequate capital pursuant to subsection 515(1) and whether a foreign P&C company maintains an adequate margin pursuant to subsection 608(1) of the Insurance Companies Act. Notwithstanding that a P&C company may meet these standards, the Superintendent may direct the P&C company to increase its capital under subsection 515(3) or the foreign P&C company to increase the margin of assets in Canada over liabilities in Canada under subsection 608(4) of this Act. However, the MCT is only one element in the determination of the required assets that must be maintained in Canada by foreign P&C companies. Foreign P&C companies must vest assets in accordance with the Adequacy of Assets in Canada test, as prescribed in the Assets (Foreign Companies) Regulations.

Related Link: Guideline

Keywords: Americas, Canada, Insurance, OSFI, Capital Requirements, MCT, P&C Insurers

 


Related Articles
News

APRA Releases Minor Changes to Reporting Standards on SA-CCR for Banks

APRA released minor changes to the three reporting standards for the standardized approach for measuring counterparty credit risk exposures (SA-CCR).

May 22, 2019 WebPage Regulatory News
News

APRA Proposes to Amend Guidance on Residential Mortgage Lending

APRA is consulting on revisions to the prudential practice guide APG 223 on residential mortgage lending in Australia.

May 21, 2019 WebPage Regulatory News
News

ESAs Amend Technical Standards on Mapping of ECAIs Under CRR

ESAs published a second amendment to the implementing technical standards on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs) for credit risk under the Capital Requirements Regulation (CRR).

May 20, 2019 WebPage Regulatory News
News

OCC Consults on Information Collection for Home Mortgage Disclosures

OCC is soliciting comment on the revision of the information collection titled “Regulation C—Home Mortgage Disclosure.” OCC also notes that it has sent the collection to OMB for review.

May 20, 2019 WebPage Regulatory News
News

EIOPA Updates Q&A on Regulations in May 2019

EIOPA published additional questions and answers (Q&A) on guidelines, directives, and regulations applicable to insurers in Europe.

May 17, 2019 WebPage Regulatory News
News

FSB Publishes Update on Meeting of RCG for Americas

FSB published a summary of the meeting of its Regional Consultative Group (RCG) in Americas.

May 17, 2019 WebPage Regulatory News
News

ESRB Paper on Impact of Business Model Similarities on Risk Capture

ESRB published a working paper on whether information contagion and business model similarities explain bank credit risk commonalities.

May 17, 2019 WebPage Regulatory News
News

CBM Notifies ESRB and ECB on Imposing Borrower-Based Measures in Malta

CBM notified ESRB and ECB regarding its decision to impose borrower-based measures on lenders in Malta.

May 17, 2019 WebPage Regulatory News
News

IASB Issues Work Plan and Meeting Updates for May 2019

IASB published an updated work plan, along with the update of its meeting in May 2019.

May 17, 2019 WebPage Regulatory News
News

FCA Publishes Its Business Plan for the Coming Year

FCA published its Business Plan, which sets out the main areas of focus and priorities for 2019/20.

May 17, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3103