Federal financial regulators have released the final version of minimum capital requirements for property & casualty (P&C) insurers.
The Office of the Superintendent of Financial Institutions (OSFI) Monday published the final version of the Minimum Capital Test guideline, which takes effect on Jan. 1, 2013.
The guideline outlines the minimum capital adequacy framework for P&C insurers, using a risk-based formula for capital and margin requirements, and defines the capital and assets that are available to meet the minimum standard.
In June, OSFI issued a draft of the guideline for a seven-week consultation period. The final version of the guideline takes into consideration the comments received from the P&C insurance industry and others during the public consultation period, the regulator notes.
OSFI says that the majority of the revisions in the MCT guideline are housekeeping in nature and reflect comments received over the past year. “Some of the more significant changes are the adjustments to capital available and required due to changes in the accounting treatment of defined benefit pension plans as a result of amendments to [accounting rules], and the increase in the interest rate risk shock factor from 50 [basis points] to 75 bps,” it reports.