Deduction from Capital Available (Unregistered Reinsurance)

binbin
in OSFI.MCT

Hi, I have a question about the calculation of deduction for CapAv of Unreg Reinsurance. The problem on section 4.3.3.2
.
I don't understand why component "A" need to exclude A7. the MCT guideline 2024 (https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/minimum-capital-test-guideline-2024) has definition for A if using GMM (assuming net cost of purchasing reinsurance) as:
Expected cash inflow from reinsurer + risk adjustment (RA) + CSM + unamortized reinsurance commission

anyone can help? thanks.

Comments

  • binbin

    Ok, I know the reason. the A* include ARC for both PAA and GMM

  • Staff-T1Staff-T1

    okay :)

  • fedwal12fedwal12

    I'm kind of confused by this, how do we know that ARC includes both PAA and GMA? I thought insurer used either PAA or GMA to determine A

  • grahamgraham

    Hello @fedwal12

    Our staff member @Staff-T1 is currently on vacation and although they will still be logging in, there may be a delay in responding to your question. Apologies. Everything should be back to normal shortly after the new year.

    -Graham

  • Staff-T1Staff-T1
    Different groups of contracts are measured differently. For example, warranty contracts could be measured under the GMA while personal property contracts are measured using the PAA approach. In the table above, they are aggregating all PAA and GMA ARC together for all groups of contracts written by the insurer. This is the insurer's total ARC, not broken down by measurement method. You can see that the AIC is broken down by measurement approach in the next column but not the ARC.
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