OSFI amends P&C-1 and P&C-2 reporting forms to reflect Part XIII changes

Changes to the federal solvency regulator’s financial reporting forms now reflect amendments to Part XIII of the Insurance Companies Act, and have been posted on the Web site of the Office of the Superintendent of Financial Institutions (OSFI).
The amended forms include a section defining the difference between “registered” and “unregistered” insurers. They also include changes related to marine business and letters of credit (LOCs).
These amended forms are effective with the 2010 Q1 filings.
In the amendments, the definition of an “unregistered” reinsurer includes a reinsurer that is “incorporated or formed outside Canada and has reinsured outside Canada the risks of the ceding company.”
To this, OSFI notes the following: “With respect to reinsurance of out-of-Canada business only, reinsurers regulated in an OECD country may be recognized as ‘registered’ on the basis of financial soundness, provided that the reinsurance agreements are recognized by the regulatory agencies of the countries in question.
“The primary regulator (in Canada) retains the authority to disqualify such reinsurance if not satisfied with the financial condition of the reinsuring company.”
The changes also set out instructions for LOCs held as security from the assuming insurer.
“LOCs may be used to reduce capital otherwise required up to 30% of unearned premiums ceded to, and outstanding losses recoverable from unregistered assuming insurers,” OSFI says in its amendments to its P&C-1 and P&C-2 returns. “The limit is applied in the aggregate and not against individual reinsurance exposures.”
The 30% limit has been bumped up from the previous limit of 15%.
The complete amendments can be found at:
http://www.osfi-bsif.gc.ca/osfi/index_e.aspx?ArticleID=3484