Federal financial regulators have decided that mortgage insurers will have to follow the latest capital rules for property and casualty (P&C) insurers while specific rules for mortgage insurers are being developed.
The Office of the Superintendent of Financial Institutions (OSFI) announced today that it will apply P&C industry capital rules to mortgage insurers starting next year. “OSFI has decided that a modified version of the [ 2015 Minimum Capital Test (MCT)] will apply to mortgage insurers until the new capital guideline for mortgage insurance companies is completed,” it says.
The regulator notes that 2015 capital rules for federally regulated P&C insurers will be published in September. At the same time, it expects to release details of a modified version of those rules for mortgage insurers, which are based on the P&C rules and adjusted to reflect the specific characteristics of the mortgage insurance business.
OSFI says that mortgage insurers are to begin using the modified P&C rules starting with the first reporting period in 2015. It is planning to prepare specific instructions to assist mortgage insurers in completing their returns.