2006 Seminar for the Appointed Actuary

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Canadian Institute of Actuaries
LInstitut canadien des actuaires

• 2006 Seminar for the Appointed Actuary
• Colloque pour lactuaire désigné 2006

2
PS-8Allan Brender

• Capital requirements
• Changes for 2006
• Changes for 2007
• Introduction of advanced approaches
• Practice certificates and the role of the
  Appointed Actuary

3
Changes for 2006

• MCCSR
• No changes to requirements
• AAs opinion and report now required by CIA
• MCT
• No changes

4
Changes for 2007

• MCCSR
• Adjustment for move to asset fair values
• Change w.r.t. FX for branches (TAAM)
• MCT
• Adjustment for move to asset fair values
• Beginning in 2007, all capital changes will be
  effective as of January 1

5
Introduction of Advanced Approaches

• Initially, a project for MCCSR
• PC industry is expressing interest w.r.t. MCT
• Applies to larger and more technically
  sophisticated companies

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Introduction of Advanced Approaches

• Advanced approaches involve the use of
  company-specific risk measurements
• Make greater use of company data and perhaps
  internal models
• Also considering two fundamental changes
• Move to total balance sheet approach
• Consider diversification effects

7
Introduction of Advanced Approaches

• Also have to modify MCCSR and MCT for expected
  accounting changes emerging from the introduction
  of IFRS4
• Therefore, the project will also involve changes
  to the current standard approaches

8
Introduction of Advanced Approaches

• Have formed the MCCSR Advisory Committee (MAC) to
  guide the process
• Includes representation from
• OSFI and AMF
• CIA
• CLHIA
• Assuris (formerly CompCorp)

9
Practice Certificates and the AA

• Likely that practice certificates will not be
  required by the CIA in 2006
• OSFI will state in its memorandum that it expects
  AAs to satisfy all proposed requirements for the
  certificates

10
Practice Certificates and the AA

• Concern, based on the tone of comments on the
  general list, that there is misunderstanding
  about the history and evolution of the role of
  the AA, OSFIs responsibilities and its
  relationship to the CIA

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Practice Certificates and the AA

• Introduction of the AA is a devolution of
  authority from the regulator to the profession
• The regulator retains ultimate responsibility
• The regulator relies on the AA

12
Practice Certificates and the AA

• The framework includes delegation of policing to
  the CIA
• CIA has generally been pleased to accept this
  role
• Difficult to imagine why a profession would not
  want the ability to police itself rather than
  having others do it

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Canadian Institute of Actuaries
LInstitut canadien des actuaires

• 2006 Seminar for the Appointed Actuary
• Colloque pour lactuaire désigné 2006