Regulation Amending Information Disclosure Requirements for Segregated Fund Insurance Contracts

1 REGULATION TO AMEND THE REGULATION RESPECTING INFORMATION TO BE PROVIDED TO HOLDERS OF INDIVIDUAL VARIABLE INSURANCE CONTRACTS RELATING TO SEGREGATED FUNDS Insurers Act (chapter A-32.1, s. 485 par. (1)).

1. Section 4 of the Regulation respecting information to be provided to holders of individual variable insurance contracts relating to segregated funds, approved by Order number 2025-01 of the Minister of Finance (2025, G.O. II, 718), is replaced with the following: “4. Despite section 2, an insurer is not required to provide in the annual statement information described in Schedule 1 with respect to the whole of the segregated fund units allocated to the contract for time periods prior to January 1, 2026, if the insurer: (1) does not possess and cannot, with reasonable efforts, obtain the information; (2) provides the information for any period for which the insurer possesses or can reasonably obtain the information; (3) notifies the contract holder that the statement does not include certain information and specifies which information; and (4) prior to the date the insurer is required to provide contract holders with the statement described in section 2: (a) makes reasonable efforts, if any are available, to obtain all the information listed in Schedule 1 for the entire period since the issue date of the contract; and (b) files a document with the Authority which contains at a minimum the following information for each such contract: i) the name of the contract; ii) the number of such contracts for which the insurer is unable to provide the information; iii) the information which the insurer does not possess and cannot, with reasonable efforts, obtain; iv) the identity of any person who does possess any such information; v) the efforts the insurer made to obtain the information from such person(s), if the insurer has made any effort; vi) if the insurer has not made any effort to obtain the information from one or more of these persons, why the insurer does not consider it reasonable to do so; and vii) an attestation signed by two duly authorized signing officers of the insurer stating the information in paragraphs 1 through 6 is true and complete.” “4.1. Despite section 2, if a contract experienced an event change before January 1, 2026, an insurer may instead provide the following information in the annual statement as if the contract was issued on the date of the most recent event change: (1) when the contract was issued; and

2 (2) for the whole of the segregated fund units allocated to the contract: (a) as of the statement date, the total investments and withdrawals by the contract holder, and the change in value of investments for reasons other than investments or withdrawals by the contract holder, since the contract was issued; and (b) the personal rate of return, as a percentage, calculated on the dollar-weighted method, since the contract was issued and, where the contract has been in effect for the relevant time, for the 10 years, the 5 years, the 3 years and the year ending on the statement date. Despite section 2, if an individual variable insurance contract experiences an event change after January 1, 2026, an insurer may: (1) provide a contract holder with statements, within four months of the end of the fiscal year in which the event change occurred, in the manner described in the third or fourth paragraph, as applicable; and (2) provide the information listed in subparagraphs 1 and 2 of the first paragraph as if the contract was issued on the date of the most recent event change for: (a) the year after the insurer is permitted to send the statements referred to in subparagraph 1; and (b) every year subsequent to the year referred to in subparagraph a. Despite section 2, if a contract experiences one event change during a fiscal year, then an insurer may provide to a contract holder, within four months of the end of the fiscal year in which the event change occurred: (1) a first statement showing the information described in Schedule 1, where the statement date is the date the contract experienced the event change; and (2) a second statement showing the information described in Schedule 1 as of the date after the first statement’s statement date, where the statement date is the date of the fiscal year end of the segregated funds within the contract. Despite section 2, if a contract experiences more than one event change during a fiscal year, then an insurer may provide to a contract holder, within four months of the end of the fiscal year in which the event changes occurred: (1) a first statement showing the information described in Schedule 1, where the statement date is the date the contract experienced the first event change; (2) as many statements as are necessary to correspond with any event change subsequent to the first event change, where in each case: (a) the statement shows the information described in Schedule 1 as of the date after the preceding statement’s statement date; and (b) the statement date is the date the contract experienced a subsequent event change; and (3) a final statement, showing the information described in Schedule 1 as of the date after the last event change, where the statement date is the fiscal year end of the segregated funds within the contract. If applicable, an insurer must include a prominent and plain language disclaimer explaining why a contract holder is receiving more than one statement during a fiscal year.

3 For the purposes of this section, an “event change” means a change in account, plan or fund registered under the Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)), an ownership structure change or a dealer account change.” “4.2. Despite section 2, an insurer is not required to provide information from Schedule 1 in the statement, to the extent that such information cannot reasonably be provided by the system without the system being upgraded or the system cannot be upgraded, if: (1) the contract is no longer issued or offered for sale on or after January 1, 2026; (2) the insurer makes reasonable efforts to determine the expected costs to upgrade the system and produces for the Authority a written estimate of such costs which has been reviewed and confirmed as reasonably accurate in a report by an auditor, in a form approved by the Authority; (3) a reasonable person would conclude that, based on the estimate referred to in subparagraph 2 of paragraph 1 of the first paragraph, the costs to be allocated to each contract holder to facilitate the system upgrade to provide all or some of the information described in Schedule 1 are unreasonable; (4) the insurer notifies the contract holder that the statement does not include certain information from Schedule 1 and identifies to the contract holder which information is not included in the statement; and (5) prior to the date the insurer is required to provide contract holders with the statement described in section 2, the insurer files a document with the Authority which contains the following information: (a) the information in Schedule 1 which can reasonably be provided to the contract holder by the system and an explanation of why the system cannot reasonably be upgraded to provide the contract holder with information from Schedule 1 not included in the statement; (b) the information from Schedule 1 not included in the statement that, if requested by the contract holder, can be provided by the insurer to the contract holder without the system being upgraded; (c) the date the contract became no longer issued or offered for sale; (d) the name of the system; (e) the estimate prepared pursuant to subparagraph 2 of paragraph 1 of the first paragraph; (f) an opinion from a qualified third party with respect to whether a reasonable person would conclude that the costs passed onto each contract holder to upgrade the system are unreasonable based on the estimate prepared pursuant to subparagraph 2 of paragraph 1 of the first paragraph; (g) for each contract: i) the name of the contract; ii) the number of contracts issued; iii) the total assets under management with respect to the contract; and

4 (h) an attestation signed by two duly authorized signing officers of the insurer stating the information in subparagraphs a through g of subparagraph 5 of the first paragraph is true and complete. For the purposes of this section, “system” means, individually and collectively, each of the insurer’s systems administering a contract that a contract holder holds. The estimate must, also for the purposes of this section, estimate the cost to upgrade the system so that the system is able to provide the contract holder with: (1) all the information described in Schedule 1; and (2) various combinations of some, but not all of the information described in Schedule 1. The estimate must include or be accompanied by all other relevant information used by the insurer and auditor to support the accuracy of the prepared estimate.” 2. Schedule 1 of the Regulation is amended by deleting the references to performance information in the following paragraphs: “Where the contract is an account, plan or fund registered under the Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)) and there is a change in registered account, plan or fund, the issue date of the contract may be the date of the change; in such a case, the insurer must provide to the contract holder another annual statement that ends on the date immediately preceding the date of the change;”; “Where there is a change in contract holder, the issue date of the contract may be the same date as the date of the change in contract holder; in such a case, the insurer must provide to the initial contract holder an annual statement that ends on the date immediately preceding the date of the change in contract holder.”. 3. This Regulation comes into force on January 1, 2026.