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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.