LICAT
Capital Adequacy
Brookfield Annuity Company is a Canadian life insurance company regulated by the Office of the Superintendent of Financial Institutions (OSFI), which introduced a new regulatory capital framework, the Life Insurance Capital Adequacy Test (LICAT), on January 1, 2018.
Brookfield Annuity exceeds all of OSFI’s minimum capital requirements. At September 30, 2019, we had a LICAT total ratio of 168%, as compared to OSFI’s regulatory minimum of 90%.
See our white paper, LICAT – An Evolution in Risk Assessment and Risk Management, to learn more about the standards Brookfield Annuity has to meet and the steps we take to fulfill our obligations to our clients and annuity members.
LICAT Ratios Public Disclosure Summary
(thousands of dollars, except percentages)
Companies are required, at minimum, to maintain a Core Ratio of 55%1 and a Total Ratio of 90%. OSFI has established supervisory target levels of 70% for Core and 100% for Total Capital.
| 30 Sep 2019 | 30 Jun 2019 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 82,168 | 82,906 | -1% |
| Tier 1 Capital | (AC1) | 82,168 | 82,906 | ||
| Tier 2 Capital | B | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 29,617 | 31,301 | -5% | |
| Base Solvency Buffer | (BSB) | 66,597 | 63,956 | +4% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 168% | 179% | -6% | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 155% | 164% | -5% | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in Solvency Ratio in the Third Quarter of 2019
The LICAT Total Ratio decreased by 6% in the third quarter of 2019 due largely to an increase in the base solvency buffer of 4% and a decrease of 5% in the Company’s surplus allowance and eligible deposits over this period.