Guidelines on Stress Testing for Life and General Insurers, October 2026

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Requirements for Stress Testing October 2026 for Life and General Insurers STRESS TESTING GUIDELINES Minimum Requirements for the Reporting of Stress Testing for Life and General Insurers FINANCIAL SERVICES COMMISSION October 2026

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Requirements for Stress Testing October 2026 for Life and General Insurers
Table of Contents
DEFINITIONS .......................................................................................................................................................3

1. INTRODUCTION ..........................................................................................................................................4
2. PURPOSE.....................................................................................................................................................5
3. REGULATORY REQUIREMENTS ...................................................................................................................5
4. EFFECTIVE DATE..........................................................................................................................................5
5. PROCESS .....................................................................................................................................................6
6. REPORTING.................................................................................................................................................7
   6.1 Executive Summary ............................................................................................................................8
   6.2 Stress Testing Opinion........................................................................................................................8
   6.3 Introduction........................................................................................................................................9
   6.4 Results ................................................................................................................................................9
   6.5 Capital Management and Adequacy Measurement ........................................................................10
   6.6 Background.......................................................................................................................................10
   6.7 Base Scenario....................................................................................................................................10
   6.8 Adverse Scenarios ............................................................................................................................11
   6.9 Conclusions and Recommendations ................................................................................................12
   6.10 Exhibits and Appendices...................................................................................................................12
   APPENDIX I – EXPRESSION OF OPINION...........................................................................................................13
   APPENDIX II – DECISION GRID ..........................................................................................................................14
   APPENDIX III - RISK CATEGORIES ......................................................................................................................15
   Appendix IV – KEY FINANCIAL RESULTS............................................................................................................16
   APPENDIX V - REFERENCES...............................................................................................................................18

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Requirements for Stress Testing October 2026 for Life and General Insurers DEFINITIONS “appointed actuary” means an actuary who has been appointed by a registered insurer pursuant to Section 44(1) of the Insurance Act, 2001; “base scenario” means a set of realistic assumptions that are consistent with the insurer’s business plan 1 . “corrective management action” means an action which requires escalation to senior management or the board of directors of an insurer, for example, unplanned capital injection, dividend distributions inconsistent with insurer’s capital management policy. “forecast period” means, for a general insurer, three years, and for a life insurer, five years. 2 “generally accepted actuarial practice” shall be

• Caribbean Actuarial Association (“CAA”) Actuarial Practice Standard 0: General Actuarial Practice
  (December 2019), and any other relevant standards, educational notes, guidance and technical papers issued by the CAA; and
• any other actuarial standards and documents that may be specified by the FSC in respect of
  actuarial work required under the Act.
  “minimum capital required” or “MCR” for a life insurer is 90% and for a general insurer is 125%. “plausible adverse scenario” is a set of credible assumptions that exposes potential threats to a registered insurer’s financial position and condition over the forecast period 3 ; “prescribed capital required” or “PCR” for a life insurer is 100% and for a general insurer is 150% “ripple effect” is an event or incident that occurs when an adverse scenario triggers a change in one or more interdependent assumptions or risk factors and includes policyholder actions, routine management actions, regulatory actions. 4 “routine management actions” are those that are routine both in nature and magnitude. They form a part of a registered insurer’s standard policies and procedures and remain within the range of accepted and historical achieved actions. To determine whether an action is routine, the appointed actuary (“AA”) must consider the effectiveness of a registered insurer’s management information systems and adjustment mechanisms, the registered insurer’s historical record of promptness and willingness to respond to adversity; policyholder actions; and the external environment assumed in the scenario. For example: for repricing to be considered a routine management action, the AA must consider the type of product, the degree of premium increase, market conditions etc. 1 Regulation 72A of the Insurance (Amendment) Regulations, 2022 2 Regulation 72H(2)(i) of the Insurance (Amendment) Regulations, 2022 3 Regulation 72A of the Insurance (Amendment) Regulations, 2022 4 Educational Note—Financial Condition Testing (cia-ica.ca)

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Requirements for Stress Testing October 2026 for Life and General Insurers A “scenario” is the intermediate or ultimate condition caused by a hypothetical or actual event(s); it can also be the result of the continuation of a trend or change in condition. 5

1. INTRODUCTION
   Stress testing is a risk management technique used to evaluate the potential effects on an institution’s financial condition, of a set of specified changes in risk factors, corresponding to exceptional but plausible events. Stress testing includes scenario testing and sensitivity testing. Scenario testing uses a hypothetical future state of the world to define changes in risk factors affecting an institution’s operations. This will normally involve changes in a number of risk factors, as well as ripple effects. Sensitivity testing involves an incremental change in a risk factor (or a limited number of risk factors). It is typically conducted over a shorter time horizon, for example an instantaneous shock. 6
   Figure 1
   graphically shows the difference between scenario and sensitivity testing and identifies the range of stress tests that are relevant for risk management and regulation. The principal aim of stress testing is to allow boards of directors and management of registered insurers to understand the impact of their business plan on capital and liquidity, to identify possible threats to the financial condition and financial performance of the registered insurer and to recommend appropriate risk management or corrective management actions to address those threats. Since stress testing is based on a range of forecasts rather than a single best-estimate projection, it can enhance the risk culture of a registered insurer by alerting decision makers to potential financial vulnerabilities and provide a structure for the development and refinement of corporate strategies and risk mitigation 5 *IAA Paper on Stress Testing and Scenario (actuaries.org) 6 Stress Testing – Guideline (2009) - Office of the Superintendent of Financial Institutions

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Requirements for Stress Testing October 2026 for Life and General Insurers activities. 7 Stress testing should, therefore, be a fundamental element of a registered insurer’s enterprise risk management framework and not be viewed as a regulatory burden or exercise.
2. PURPOSE
The main purpose of these Guidelines is to set out the FSC’s expectations of AAs who are performing a stress testing study in accordance with the Regulations. The Guidelines are based on the Educational Notes on Financial Condition Testing issued in 2023 by the Canadian Institute of Actuaries (CIA) and CIA Standard of Practice, January 2023, Section 2500. In the event of any inconsistency between these Guidelines and the provisions of the Insurance Regulations, the Insurance Regulations shall prevail to the extent of the inconsistency.
3. REGULATORY REQUIREMENTS
Regulation 72H(1) of The Insurance (Amendment) Regulations, 2022 (“the Regulations”), requires insurance companies as part of their Enterprise Risk Management Programme to conduct a stress testing study of its financial position and condition at the end of each financial year and in other circumstances required in the Regulations or by the Financial Services Commission (“FSC”). The investigation must be performed by an insurer’s AA and it must be conducted in accordance with the Regulations, generally accepted actuarial practice and such requirements as may be specified by the FSC 8 . After conducting a stress testing study, an AA is required under Regulation 72I of the Regulations to prepare a written stress testing report (“STR”) and present its findings to the board of directors of the registered insurer. The STR shall include the results of the stress tests and the conclusions and recommendations of the AA in relation to the registered insurer’s financial position and condition. By March 31, 9 or in the event of any of the circumstances specified in regulation 72C(3)(c), within three months or such shorter period as the Commission may specify 10 the STR must be submitted by the registered insurer to the FSC. This should be done along with confirmation by each member of the registered insurer’s board of directors that he/she reviewed the STR and understands the threats to maintaining a satisfactory financial condition and the possible mitigation actions for dealing with those threats 11 .
4. EFFECTIVE DATE
These Guidelines become effective for stress testing studies conducted on or after December 31, 2026. 7 IAA Stress Testing and Scenario Analysis – July 2013 https://actuaries.org/app/uploads/2025/04/StressTestingPaper.pdf 8 Regulation 72H(2)(f) of the Insurance (Amendment) Regulations, 2022 9 Regulation 72I(3)(b)(i) of the Insurance (Amendment) Regulations, 2022 10 Regulation 72I(3)(b)(ii) of the Insurance (Amendment) Regulations, 2022 11 Regulation 72I(2)

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Requirements for Stress Testing October 2026 for Life and General Insurers
5. PROCESS
The key elements of stress testing are as follows:
a. Review of current and recent years’ operations and financial position of the insurer: An understanding of the regulatory capital adequacy and risk management requirements, the registered insurer’s enterprise risk management program in particular its capital management policy, internal target capital ratios and benchmarks is an important and necessary component of this exercise. The investigation must be current. The AA must, therefore, consider events and operating results between the calculation date and the date of the report. b. Establish standards of materiality: “which are no less stringent than the standards of materiality used in the annual valuation of net actuarial liabilities of the registered insurer. 12
c. Development and modelling of a base scenario 13: The projection shall start at the prior year-end,
use the data of the prior year’s statement of financial position as well as assumptions and methods that reflect up-to-date studies and analysis. The actuarial and other policy liabilities must be revalued throughout the forecast period. d. Assessment of risk categories: to identify those which are relevant to the insurer and those posing the most significant threat, including ripple effects (See Appendix III for lists of potential risk categories to be considered). Sensitivity testing may be used to determine the relevant risk categories. Risk concentration 14 should also be considered. e. Development, modelling and selection of material, plausible adverse scenarios: The scenarios should be applied across all product and business lines and activities of the registered insurer in￾and out-side of Jamaica 15 , and must come into effect in the first year of the forecast period. They should have a material and adverse impact on the registered insurer’s equity and regulatory capital ratios or other internal breakpoints/targets. They must also include the scenarios that the FSC may specify from time to time. The FSC expects that the adverse scenarios build on the assumptions and actual experience reflected in the base scenario, and that a wide range of risks, sensitivities and scenarios that take into account system-wide interactions and ripple effects will be investigated. 16 As in the base scenario, the actuarial and other policy liabilities must be revalued throughout the forecast period. Reverse stress testing may be used to determine how far risk factor(s) need to change to cause the registered insurer to fall below thresholds established by the registered insurer and/or FSC and to 12 Regulation 72H(2)(d) of the Insurance (Amendment) Regulations, 2022 13 Regulation 72H(2)(e) of the Insurance (Amendment) Regulations, 2022 14 A risk concentration refers to an exposure with the potential to produce losses large enough to threaten a financial institution’s health or ability to maintain its core operations. Risk concentrations can take many forms, including exposures to: (a) individual counterparties; (b) groups of individual counterparties or related entities; (c) counterparties in specific geographical locations; (d) industry sectors; (e) specific products; (f) service providers; e.g. back-office services, and (g) natural disasters or catastrophes. Basel Committee Publications - Risk Concentrations Principles - Jan 1999 15 Regulation 72H(2)(b) of the Insurance (Amendment) Regulations, 2022 16 Regulation 72H(2)(g) of the Insurance (Amendment) Regulations, 2022

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Requirements for Stress Testing October 2026 for Life and General Insurers evaluate if that degree of change is plausible. An AA may not use a comfortable surplus or liquidity level to justify doing little or no stress testing. 17 The AA is expected to examine in further detail, scenarios (including ripple effects) to which the insurer shows the greatest vulnerability. Any scenario that causes the registered insurer to fall below or come close to the insurer’s defined thresholds during the forecast period should be subject to further examination and reporting. f. Identification and analysis of corrective management actions to mitigate risks. For each adverse scenario that would result in a threat to satisfactory financial position and condition, the AA must identify plausible corrective management actions that would reduce the likelihood of or mitigate the threats. 18 Consideration should be given to the registered insurer’s ability to effectively take the proposed corrective actions in a volatile or stressed environment. g. Preparation of STR on the results of the analysis and provide recommendations to the board of directors including an opinion on the financial position and condition of the insurer. The requirements are set out in Section 5 of these Guidelines. h. Submission of STR and presentation of its results and recommendations to the board of directors of the registered insurer. If an adverse event occurs between the date of the report and the date of its presentation to the registered insurer’s board of directors, the insurer should notify the FSC of the adverse event and the AA should in the presentation to the registered insurer’s board of directors, address the event and its potential implications on the results of the investigation. 19 Within five days of the presentation by the AA to the insurer’s board of directors, the insurer should notify the FSC of the potential implications of the adverse event on the insurer. An addendum to the STR on the event, and implications should be prepared and submitted to the FSC within one month of presenting the report to the registered insurer’s board or the regulatory deadline whichever islater. If appropriate, the AA should redo the investigation. 20 It is essential that throughout the stress testing process the AA consults with the board of directors and senior management of the registered insurer to determine the applicable risk factors and scenarios and to identify the material threats to the registered insurer’s financial position and condition. 21
6. REPORTING
The purpose of the STR is to provide the board of directors of a registered insurer with the results of the stress tests, and the conclusions and recommendations of the AA in relation to the financial position and condition of the registered insurer. 22 In the report, the AA communicates the plausible threats to 17 Regulation 72H(2)(a) of the Insurance (Amendment) Regulations, 2022 18 Regulation 72H(2)(h) of the Insurance (Amendment) Regulations, 2022 19 SOP Part 2000: Insurance (Jan 1, 2023) (cia-ica.ca) 20 SOP Part 2000: Insurance (Jan 1, 2023) (cia-ica.ca) 21 Regulation 72H(2)(c) of the Insurance (Amendment) Regulations, 2022 22 Regulation 72I(a) of the Insurance (Amendment) Regulations, 2022

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Requirements for Stress Testing October 2026 for Life and General Insurers the satisfactory financial position and condition of the registered insurer, as well as actions that could be taken to lessen the likelihood of or mitigate the threats, if they were to materialise. The AA’s opinion on the financial position and condition of the registered insurer must also be disclosed. In the following sections, the format and order of the STR is specified. It must be followed to ensure consistency in reporting within the insurance industry. A table of content must be included at the beginning of the report showing the required sections and page numbers.
6.1 Executive Summary
The executive summary should provide a high-level overview of the results and recommendations of the stress testing study, including the following:
a. Summary of the results of the base and selected adverse scenarios. Results for the adverse scenarios must be presented before and after corrective management actions. b. Recommendations for management to mitigate or eliminate risk.
c. Conclusion of the financial position and financial condition of the registered insurer.
d. Assessment of both internal and external events (such as recent economic event changes, acquisition of a block of business, etc.) since the previous STR was submitted. e. Commentary on management’s action in response to the recommendations in the previous year’s STR, if appropriate. f. Material deviations from the Insurance Regulations or these Guidelines and explanations for those deviations. g. Material findings from the external peer review conducted, if any. h. Summary of key thresholds used to assess the financial position and condition of the registered insurer including the internal target capital ratios.
i. Other significant findings.
6.2 Stress Testing Opinion
The AA should include his/her signed opinion on the financial position and condition of the insurer in
Appendix I. The opinion must reflect the circumstances of the registered insurer. Bullet (v) of the
opinion is only required when corrective management actions are necessary to meet the applicable threshold. A registered insurer’s financial position and condition is satisfactory if, throughout the forecast period:
a. Under the scenarios specified by the FSC, if any, the registered insurer meets or exceeds the standard(s) set by the FSC; b. Under the solvency scenarios, the registered insurer meets or exceeds the MCR;
c. Under the going concern scenarios, the registered insurer meets or exceeds the PCR; and
d. Under the base scenario, the registered insurer meets its internal target capital ratio(s) set out in its capital adequacy management policies. A registered insurer’s financial position and condition is satisfactory subject to, under any of the following situations:

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1. The base scenario projected regulatory capital ratios are maintained or brought back above
   internal target capital ratios as a result of an existing plan which is consistent with regulatory expectations.
2. For the base scenario
   i. Regulatory capital ratios are projected to decrease below internal target capital ratio(s) at
   a period beyond the forecast period; and
   ii. The registered insurer has a plan which is consistent with regulatory expectations to bring
   the ratio(s) back above internal targets; and
   iii. The AA is satisfied that such a plan is realistic.
3. For going concern scenarios, the AA is satisfied that
   i. corrective management actions are under the control of the registered insurer and
   realistic, and
   ii. the corrective management actions can restore the registered insurer’s regulatory capital
   ratio(s) to above PCR in a manner and timeframe that are consistent with regulatory expectations.
4. For solvency scenarios, the AA is satisfied that
   i. corrective management actions are under the control of the registered insurer and
   realistic, and
   ii. the corrective management actions can restore the registered insurer’s regulatory capital
   ratio(s) to above MCR in a manner and timeframe that are consistent with regulatory expectations. A registered insurer’s financial position and condition is not satisfactory if it does not meet any of the above criteria.
   Appendix II contains a decision grid for determining the type of opinion.
   6.3 Introduction
   The Introduction shall outline the purpose and basis of the stress testing report. It should include a description of the role of the AA, the purpose and scope of the report, and an overview of the processes and methodologies used in stress and scenario testing.
   6.4 Results
   In this section the AA should provide a summary of the results of the base and selected adverse scenarios. The results for the adverse scenarios must be presented before and after corrective management actions. The report should set out any significant current events including but not limited to, an accounting basis change, regulatory capital basis change, or a pandemic. The report should describe the event/change and provide clarity on the implications to projections under the base and adverse scenarios. If the AA concludes there are no, or minimal, implications, that rationale should also be included in the report.

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6.5 Capital Management and Adequacy Measurement
The AA should explain the nature of the tests used to measure the financial condition of the insurer, including the following:
a. Definition of satisfactory financial condition used. b. Definition of the regulatory capital adequacy test, MCR and PCR.
c. Disclosure of the internal target capital ratios as determined by the insurer’s capital adequacy
management policies. d. Materiality standard.
6.6 Background
This section should provide an overview of the registered insurer and the economic environment during the forecast period, including such things as the following:
a. Summary of the nature of the registered insurer’s business, products, and target markets. b. Review of recent and current financial position.
c. Discussion of any key events or initiatives affecting the registered insurer in the recent past and any
associated expected future developments. d. Description of economic assumptions. e. Discussion of the current and expected market conditions. f. Discussion of prior year’s stress testing results, recommendations, and any corrective management actions. g. Discussion of major risks not tested in the current year’s study. The AA should comment on when the risks were last tested and the reasons for not testing them in the current exercise. h. Any deviations from generally accepted actuarial practice or these Guidelines and explanations for those deviations.
i. Any material findings from the external peer review, if any was conducted.
6.7 Base Scenario
A clear description of the base scenario used in the stress testing analysis which should include the following:
a. Description of the model or process used to project the base scenario. b. Description of main assumptions.
c. Description of the internal target capital ratios.
d. Description of capital plans and strategic initiatives. e. Discussion of consistency of the base scenario with the registered insurer’s business plan. f. Discussion of any, and all transfers assumed to occur between the registered insurer and other legal entities, including any risk-sharing agreements between legal entities or between a legal entity and a parent company, dividends to parent companies, capital infusions into legal entities including the registered insurer. The report should also include a discussion on the likelihood of such transfers being made. g. Discussion of key financial results, including statement of profit and loss and statement of financial position items and capital test results. Appendix IV contains a list of financial results that must be

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Requirements for Stress Testing October 2026 for Life and General Insurers presented. The results at the end of each year-end throughout the forecast period must be presented.
6.8 Adverse Scenarios
This section should provide detailed descriptions of the selected plausible adverse scenarios posing significant risk to the insurer, as well as any modelled scenario for which the insurer falls below, or comes close to, the defined thresholds. At a minimum, the STR must include, the scenarios specified by the FSC and three integrated scenarios comprising of one going concern and two solvency scenarios. An integrated scenario is an adverse scenario which is constructed by combining two or more risk factors. An integrated scenario must be internally consistent 23 and must have a higher percentile ranking than the ranking of scenarios that investigate the impact of the individual risk factors. A solvency scenario is a plausible integrated scenario which includes ripple effects, with a percentile ranking of at least 95 th percentile (99 th percentile or beyond is strongly recommended) over the scenario horizon. A going concern scenario is also a plausible integrated scenario which considers ripple effects but, the minimum percentile ranking over the scenario horizon is lower, at 90%. A going concern scenario is, therefore, more likely to occur and/or less severe than a solvency scenario. It may also examine risks not considered in the solvency scenarios. Deterministic methods may be used to develop scenarios and the percentile rank of a scenario may be benchmarked against historical experience that is representative of a certain percentile ranking If the AA is unable to ascertain the percentile ranking of a scenario, the AA must be satisfied the scenario is of sufficient adversity to appropriately test the registered insurer’s ability to meet or exceed the MCR, in the case of solvency scenario, or PCR, in the case of a going concern scenario. The AA must disclose in the STR the percentile ranking of each scenario or, when a ranking is not available, the reasons/rationale the scenario is sufficiently averse to meet the requirements (e.g. frequency, severity and duration of adverse conditions). For each adverse scenario, the following items should be included, where applicable:
a. Description of the risks being tested, why the risks are significant to the registered insurer, and how this was determined. b. Description of the key assumptions used, including valuation assumptions to be updated during the forecast period to reflect the adverse scenario.
c. Assessment of the nature of the adverse scenario as either going concern or solvency and rationale
for the assessment. If the AA is unable to ascertain the percentile ranking of the scenario, the AA meet disclose the reasons/rationale the scenario is sufficiently adverse to meet the requirements (e.g. frequency, severity and duration of adverse conditions). d. Comparison to prior year’s stress testing, and consistency of the adverse scenario with the prior year’s results, where applicable. e. Description of key financial results and the change from the base scenario. The results at the end of each year-end throughout the forecast period must be presented. 23 The AA may have to adjust other assumptions in the base scenario to reflect the interdependence of assumptions

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Requirements for Stress Testing October 2026 for Life and General Insurers f. Description of any ripple effects (including policy owner actions, routine management actions and regulatory actions) reflected in the scenario. The AA should report management’s routine action and provide supporting information to enable the readers of the STR to assess its practicality and adequacy. This should include a discussion of the potential repercussions of these routine management actions and a quantification of their financial impact. g. Categorization of management actions as either routine or corrective h. Description of any change in transfers between the registered insurer and other legal entities, including any risk-sharing agreements between legal entities or between a legal entity and a parent company, dividends to the insurer’s parent companies, capital infusions into legal entities including the registered insurer. The likelihood of these changes should also be discussed. The report should also include a discussion on the likelihood of such infusions being made. Results with and without these changes must be disclosed. h. Reporting of financial results with and without the impact of corrective management actions, for each scenario where these actions are required to meet the threshold for a satisfactory opinion. The AA should include disclosure regarding the corrective management actions to aid the readers of the STR in considering its practicality and adequacy.
i. Discussion of any management actions (either routine or corrective) required to restore the
registered insurer’s regulatory capital ratios to their internal target capital ratios. The AA should include disclosures regarding these management actions to aid the readers of the STR in understanding their practicality and adequacy. j. Discussion of possible regulatory actions and repercussions if the scenario results fall below the supervisory target capital ratio(s), in the absence of any change in the base scenario capital injections, capital distributions, or other corrective management actions.
6.9 Conclusions and Recommendations
Overall conclusions from the stress testing analysis should be presented, including a brief description and summary of the results of the base and selected adverse scenarios and highlights of the most significant risks to capital adequacy and threats to satisfactory financial condition. Any findings leading to follow-up actions should be discussed. Recommendations with respect to corrective management actions that are intended to better manage or mitigate risk exposures, if any, should be disclosed.
6.10 Exhibits and Appendices
The AA should disclose the key financial results from the application of the stress testing model. This must include the items in Appendix IV for the base scenario and adverse scenarios for the forecast period, which allows users to review the stress testing results in more detail.

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APPENDIX I – EXPRESSION OF OPINION
The wording of the opinion should be as follows: [insert appropriate wording where indicated by square brackets only] OPINION OF THE APPOINTED ACTUARY I certify that:
i. I am a member in good standing with my governing actuarial body, [Name of Organization] and
comply with its [Code/Rules of Professional Conduct],
ii. I meet the qualification standards of Financial Services Commission to conduct a stress testing study
for [Name of insurance company],
iii. I have completed my investigation of the financial position and condition of [insurer name] as at
[date] in accordance with the regulations, generally accepted actuarial practice in Jamaica and guidelines issued by the Financial Services Commission,
iv. I have analysed its forecasted financial positions over a forecast period of [number of years] under a
series of scenarios; and
v. [My report includes the identification of corrective management actions that could be taken to
mitigate the effect of adverse scenarios threatening [[insurer name] [solvency] or/and [its] [ability to operate on a going concern basis]]. In my opinion, the financial position and condition of the insurer [is satisfactory] or [is satisfactory subject to…] or [is not satisfactory for the following reason(s)...]. __________________________ __________________________ ____________ Name of Appointed Actuary Signature of Appointed Actuary Date [Name, Title, Qualification]

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APPENDIX II – DECISION GRID
Scenario Threshold Is the threshold test under the scenario passed?
Base Insurer’s regulatory capital ratio(s) >= Internal target ratio(s) in capital adequacy management policies Yes (with/without ripple effects)

• Maintained or brought back
  (with existing plan consistent with regulatory expectations)
• Projected to decrease beyond forecast
  period
  (with plan consistent with regulatory expectations and AA satisfied plan is realistic) No Going Concern Insurer’s regulatory capital ratio(s) >= PCR Yes (the AA is satisfied
• corrective management actions are
  under the control of the insurer and realistic, and
• actions can restore the insurer’s
  regulatory capital ratio(s) to above PCR in a manner and timeframe that are consistent with regulatory expectations) No Or Yes (with corrective action but AA not satisfied) Solvency Insurer’s regulatory capital ratio(s) >= MCR Yes (the AA is satisfied
• corrective management actions are
  under the control of the insurer and realistic, and
• actions can restore the insurer’s
  regulatory capital ratio(s) to above MCR in a manner and timeframe that are consistent with regulatory expectations) No Or Yes (with corrective action but AA not satisfied) ↓ ↓ ↓ Opinion Satisfactory Opinion Satisfactory Opinion subject to: Not Satisfactory

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APPENDIX III - RISK CATEGORIES
LIFE INSURERS

1. Mortality risk
2. Morbidity risk
3. Persistency and lapse risk
4. Inflation risk
5. Reinsurance held risk
6. Business volume and mix of business risk
7. Market and credit risk
8. Expense risk
9. Government and political issues risk
10. Off-balance-sheet items risk
11. Related companies risk
12. Climate-related risks
13. Technology and cyber risk
14. Liquidity risk
15. Operational risk
    GENERAL INSURERS
16. Claim frequency and severity risk
17. Liability for incurred claims risk
18. Inflation risk
19. Reinsurance held risk
20. Business volume and mix of business risk
21. Market and credit risk
22. Expense risk
23. Government and political risk
24. Off-balance-sheet items risk
25. Related companies risk
26. Climate-related risks
27. Technology and cyber risk
28. Liquidity risk
29. Operational risk
    The International Association of Actuaries paper on Stress Testing and Scenario Analysis (https://actuaries.org/app/uploads/2025/04/StressTestingPaper.pdf) and the Canadian Institute of Actuaries, Financial Condition Testing Educational Note (Appendices A and B) (Educational Note—Financial Condition Testing (cia-ica.ca) are possible supplemental references on risk categories, possible ripple effects and management actions.

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Requirements for Stress Testing October 2026 for Life and General Insurers
Appendix IV – KEY FINANCIAL RESULTS
Statement of Financial Position (J’000)

• Assets
  o Cash, o Short term investments, o Other investments, o Insurance contract assets, o Reinsurance contract held assets, o Investment property, o Investment in associates & subsidiaries, o Other assets, o Total assets
• Liabilities
  o Insurance contract liabilities, o Reinsurance contract held liabilities, o Investment contract liabilities, o Other liabilities, o Total liabilities
• Total Shareholders’ equity.
  o Share capital, o Retained earnings, o Reserves (incl. OCI)
• Contractual Service Margin
  Statement of Profit or Loss (J’000)
• Total insurance revenue
• Insurance service expenses
• Net expenses from reinsurance contracts held
• Insurance service result
• Investment income
• Insurance finance income (expenses)
• Net investment result
• Other income
• Other expenses
• Profit (Loss) before tax
• Total income taxes
• Profit (Loss) after tax
  Shareholder Dividends (J’000)

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Requirements for Stress Testing October 2026 for Life and General Insurers Capital Test Results (J’000)

• Net Capital Required,
• Net Tier 1 Capital Available
• Total Capital Available
• Surplus Allowance, if applicable
• Capital Ratio

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Requirements for Stress Testing October 2026 for Life and General Insurers
APPENDIX V - REFERENCES
CANADIAN INSTITUTE OF ACTUARIES, EDUCATIONAL NOTE - FINANCIAL CONDITION TESTING, JANUARY 2023 Educational Note—Financial Condition Testing (cia-ica.ca) CANADIAN INSTITUTE OF ACTUARIES, STANDARDS OF PRACTICE, PART 2500: INSURANCE, JANUARY 2023 SOP Part 2000: Insurance (Jan 1, 2023) (cia-ica.ca) INTERNATIONAL ACTUAIRAL ASSOCIATION/ASSOCIATION ACTUARIELLE INTERNATIONALE - STRESS TESTING AND SCENARIO ANALYSIS, JULY 2013 IAA Paper on Stress Testing and Scenario (actuaries.org)