The Autorité des marchés financiers has published on its website the final version of the Solvency Advisory Committee's document, Canadian Vision for Life Insurer Solvency Assessment. This document outlines the new structure for principle-based solvency financial requirements for Canadian life insurers.
The paper calls for regulatory asset requirements to be calculated on two bases - a Target Asset Requirement (TAR) and at a minimum level (Minimum Asset Requirement or MAR). All insurers would use the Standard Approach, a factor based approach, to calculate the MAR. The most sophisticated method of calculating TAR would be the Advanced Approach which uses models integrated with the insurer's risk management system.