The Office of the Superintendent of Financial Institutions reports that revisions have been made to the Minimum Continuing Capital and Surplus Requirements for life insurance companies.

The major changes included in the revised guideline include: the appointed actuary will be required to provide an opinion on the accuracy of the MCCSR return; it includes a new section detailing the capital treatment for unregistered reinsurance; and, companies operating in Canada on a branch basis will be required to maintain a margin equal to 8% of the absolute mismatch between liabilities and admitted assets denominated in any foreign currency.

Also, new accounting standards will be coming into effect after fiscal year-end 2006, and will affect the measurement of certain components in the MCCSR. The impact of the accounting change on these components will be phased in over a period of two years. “In particular, foreign companies will be required to value liabilities based on the reported values of the supporting assets in the same manner as Canadian companies. The affected branches will have two years to phase in the impact on liability valuation,” it explains.

All of these changes, with the exception of the requirement for the opinion of the actuary, will come into effect at the beginning of the first fiscal quarter of 2007. The requirement for the opinion is effective for fiscal year-end 2006.