The Autorité des marchés financiers has published on its website a new document from the Solvency Advisory Committee, 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.