Regulatory Alerts2025-01-01
Life Insurance Capital Adequacy Test (2025)
The Office of the Superintendent of Financial Institutions (OSFI) issued this guideline to establish risk-based capital adequacy standards for federally regulated life insurers, holding companies, and foreign branches operating in Canada. Effective January 1, 2025, the framework mandates that insurers calculate and maintain minimum Total and Core Ratios of 90% and 55%, respectively, by measuring specific financial risks against qualifying regulatory available capital. Insurers must apply standardized risk aggregation methods, secure Appointed Actuary certifications, and report results annually to ensure adequate capital buffers support policyholder protection during financial stress.
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