November 7, 2008

The Autorité des marchés financiers has published on its website two documents related to the new standard approach to setting capital requirements for life and health insurers.

The first document is the final version of the paper which describes the framework for a new standard approach to determine how much capital a Canadian life insurance company should be required to have on hand in order to be able to meet its obligations. The described framework is consistent with the "Canadian Vision for Life Insurer Solvency Assessment". It uses a target asset requirement approach, meaning that insurance companies would be required to hold assets equal to the sum of the best estimate of their insurance obligations and a solvency buffer.

The second document is a discussion paper which proposes a new standard approach to determine the solvency buffer for market risk. The paper expands on the principles outlined in the earlier paper entitled "Framework for a New Standard Approach to Setting Capital Requirements". It was prepared by a joint committee of the Office of the Superintendent of Financial Institutions, the Autorité des marchés financiers, and Assuris. It is being distributed to the industry and to the Canadian Life and Health Insurance Association for discussion and feedback.