Feb., 2012 – This article examines the impact of the upcoming regulations proposed by OSFI for the 2012 reporting period. The recent paper titled: Discussion Paper on OSFI’s Proposed 2012 Changes to the Minimum Capital Test / Branch Adequacy of Assets Test For Federally Regulated Property and Casualty Insurance Companies deals with a number of upcoming changes. The article focuses primarily on the Margin for Interest Rate Risk section which addresses asset liability mismatch. Of the new changes, this section has the potential to have the largest impact on a firm’s MCT score.
In the article we discuss the changes to the Asset Liability Test, the impact on the MCT and the portfolio’s rate of return. We also look at solutions that enable firms to make a return on their investment while eliminating mismatch risk.
Contributors to the article include: Doug MacDonald, President of Aviva Investors Canada and Cosimo Pantaleo, Senior Manager with the Ernst &Young, Property & Casualty Actuarial Practice.
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