2022-04-30

Accounting for Structured Settlements

The Canadian Council of Insurance Regulators directs property and casualty insurers to apply specific accounting treatments for annuities purchased to fund structured settlement contracts. The guideline distinguishes Type 1 settlements, which require derecognition of insurance liabilities and exclusion of annuity assets, from Type 2 arrangements that mandate continued liability recognition and separate asset classification. Aligned with IFRS standards, the framework clarifies financial guarantee obligations, contingent assets, and corresponding disclosure and capital testing requirements for both settlement types.

Canada

Office of the Superintendent of Financial Institutions

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