Federal financial regulators have issued the final version of updated capital guideline for life insurers, which takes effect Jan. 1, 2013.
The Office of the Superintendent of Financial Institutions (OSFI) published the final version of its Minimum Continuing Capital and Surplus Requirements (MCCSR) guideline for life insurers Thursday.
OSFI reports that changes were required to the MCCSR in light of recent changes in accounting rules for defined benefit pension plans and the introduction of an accounting rule for joint arrangements.
Also, OSFI says that it received comments from the industry pointing out that the existing MCCSR provisions do not adequately consider group policies where there is a sharing of risk between the insurer and the policyholder. Finally, other updates to the MCCSR were required as a result of company inquiries, requests for clarification or other developments.
The regulator reports that the revisions reflect a new treatment of net defined benefit pension plan liabilities (assets), and related other comprehensive income amounts for MCCSR regulatory capital purposes is being established. It also includes changes to various other aspects of the capital rules, including: joint arrangements, group policies that share some of the risk between the insurer and the policyholder, and lapse risk, among other things, OSFI reports.