Definition and Application

1 In these Regulations Act means the Insurance Companies Act.

2 These Regulations do not apply to associations.

Value of Assets in Canada

3 Subject to sections 6 and 7, every foreign life company shall, in relation to its insurance risks in Canada that fall within the classes of life insurance, accident and sickness insurance and loss of employment insurance, maintain assets in Canada the total value of which, when determined in accordance with the accounting principles referred to in subsection 331(4) of the Act or when determined on the basis of the market value of those assets, whichever way produces the greater total value, is at least equal to the aggregate of

• (a) the amount of the reserve for actuarial and other policy liabilities of the foreign life company in respect of those classes, determined on the same basis as the reserve included in the annual return of the foreign life company, minus the amount of all advances made by the foreign life company on the security or against the cash surrender value of its life policies in Canada,

• (b) the amount of the provision for claims incurred by the foreign life company in respect of those classes that are unpaid,

• (c) the total amount of the other liabilities of the foreign life company in respect of those classes, and

• (d) the margin of assets in Canada over liabilities in Canada that the foreign life company is required, pursuant to section 608 of the Act, to maintain in respect of the insuring of those risks.

4 Subject to sections 6 to 8, every foreign life company shall, in relation to its insurance risks in Canada that fall within a class of insurance other than life insurance, accident and sickness insurance and loss of employment insurance, maintain assets in Canada the total value of which, when determined in accordance with the accounting principles referred to in subsection 331(4) of the Act, is at least equal to the aggregate of

• (a) the amount of the reserve for actuarial and other policy liabilities of the foreign life company in respect of that class, determined on the same basis as the reserve included in the annual return of the foreign life company,

• (b) the total amount of the other liabilities of the foreign life company in respect of that class, and

• (c) the margin of assets in Canada over liabilities in Canada that the foreign life company is required, pursuant to section 608 of the Act, to maintain in respect of the insuring of those risks.

5 Subject to sections 6 to 8, a foreign property and casualty company, in respect of the insuring in Canada of risks that fall within a class of insurance, shall maintain assets in Canada the total value of which, when determined in accordance with the accounting principles referred to in subsection 331(4) of the Act, is at least equal to the aggregate of

• (a) the amount of the reserve for actuarial and other policy liabilities of the foreign property and casualty company in respect of that class, determined on the same basis as the reserve included in the annual return of the foreign property and casualty company,

• (b) the total amount of the other liabilities of the foreign property and casualty company in respect of that class, and

• (c) the margin of assets in Canada over liabilities in Canada that the foreign property and casualty company is required, pursuant to section 608 of the Act, to maintain in respect of the insuring of those risks.

Reduction where Amounts Receivable by Insurance Agents, Insurance Brokers and Policyholders

6 The total value of assets required under sections 3, 4 and 5 to be maintained may be reduced by any amounts that are receivable from insurance agents, insurance brokers and policyholders of the foreign company in respect of policies in force as may be determined by the Superintendent.

Reduction of Total Value where Foreign Company Reinsured

• 7 (1) Where a foreign company is reinsured in whole or in part against risks undertaken or claims payable in respect of a policy in Canada or group of policies in Canada, the aggregate of the amounts referred to in paragraphs 3(a) to (c) or 4(a) and (b) or 5(a) and (b) may be reduced by subtracting from that amount an amount not exceeding the aggregate of the portions of that amount that apply to the portion of the risks or claims that is reinsured.

• (2) Where a reinsurer is incorporated by or under an Act of the legislature of a province and is not a provincial company, a reduction under subsection (1) may only be made where the Superintendent has, by order, determined that the financial condition of the reinsurer is satisfactory and that its operations are conducted in accordance with sound business and financial practices.

• (3) Where a reinsurer is not authorized under the Act to insure risks and is incorporated elsewhere than in Canada, a reduction under subsection (1) may be made only to the extent that security is maintained in Canada, in respect of the potential liabilities of the reinsurer, in an amount, of a nature and under arrangements that are determined by the Superintendent to be satisfactory.

Letter of Credit in Lieu of Assets

8 The Superintendent may, by order, allow a foreign company to reduce the total value of assets required to be maintained pursuant to sections 4 and 5 by the amount of a letter of credit drawn on a bank, up to a maximum reduction of 15 per cent of the total value.

Repeal

9 [Repeal]

Coming into Force

10 These Regulations come into force on January 1, 2003.