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 regulatory capital framework called the Life Insurance Capital Adequacy Test (LICAT) on January 1, 2018.
LICAT Ratios Public Disclosure Summary
(thousands of Canadian 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 Jun 2024 | 31 Mar 2024 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 479,331 | 487,625 | -2% |
| Tier 1 Capital | (AC1) | 479,331 | 487,625 | -2% | |
| Tier 2 Capital | (B) | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 70,778 | 65,720 | +8% | |
| Base Solvency Buffer | (BSB) | 386,038 | 371,803 | +4% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 143% | 149% | -6pp | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 137% | 144% | -7pp | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in LICAT Ratio in the Second Quarter of 2024:
The Company’s base solvency buffer increased by 4% in the second quarter while available capital decreased by 2% and surplus allowance and eligible deposits increased by 8%. Overall, the LICAT Total Ratio decreased by 6 percentage points (“pp”) at 30 June 2024.
| 31 Mar 2024 | 31 Dec 2023 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 487,625 | 461,063 | +6% |
| Tier 1 Capital | (AC1) | 487,625 | 461,063 | +6% | |
| Tier 2 Capital | (B) | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 65,720 | 94,361 | -30% | |
| Base Solvency Buffer | (BSB) | 371,803 | 393,772 | -6% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 149% | 141% | +8pp | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 144% | 134% | +10pp | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in LICAT Ratio in the First Quarter of 2024:
The Company’s base solvency buffer decreased by 6% in the first quarter due to the execution of a reinsurance arrangement that released insurance risk required capital and also decreased the level of surplus allowance and eligible deposits by 30%. With available capital increasing by 6% in the quarter, overall the LICAT Total Ratio increased by 8 percentage points (“pp”) at 31 March 2024.
| 31 Dec 2023 | 30 Sep 2023 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 461,063 | 466,820 | -1% |
| Tier 1 Capital | (AC1) | 461,063 | 466,820 | -1% | |
| Tier 2 Capital | (B) | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 94,361 | 76,124 | +24% | |
| Base Solvency Buffer | (BSB) | 393,772 | 372,563 | +6% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 141% | 146% | -5pp | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 134% | 140% | -6pp | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in LICAT Ratio in the Fourth Quarter of 2023:
The Company’s base solvency buffer increased by 6% in the fourth quarter while available capital decreased by 1% and surplus allowance and eligible deposits increased by 24%. Overall, the LICAT Total Ratio decreased by 5 percentage points (“pp”) at 31 December 2023.
| 30 Sep 2023 | 30 Jun 2023 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 466,820 | 448,095 | +4% |
| Tier 1 Capital | (AC1) | 466,820 | 448,095 | +4% | |
| Tier 2 Capital | (B) | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 76,124 | 82,331 | -8% | |
| Base Solvency Buffer | (BSB) | 372,563 | 362,816 | +3% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 146% | 146% | – | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 140% | 139% | +1pp | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in LICAT Ratio in the Third Quarter of 2023:
The Company’s base solvency buffer increased by 3% in the third quarter while available capital increased by 4% and surplus allowance and eligible deposits decreased by 8%. Overall, the LICAT Total Ratio remained unchanged at 30 September 2023.
| 30 Jun 2023 | 31 Mar 2023 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 448,095 | 431,821 | +4% |
| Tier 1 Capital | (AC1) | 448,095 | 431,821 | +4% | |
| Tier 2 Capital | (B) | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 82,331 | 78,957 | +4% | |
| Base Solvency Buffer | (BSB) | 362,816 | 325,097 | +12% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 146% | 157% | -11pp | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 139% | 150% | -11pp | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in LICAT Ratio in the Second Quarter of 2023:
The Company’s base solvency buffer increased by 12% in the second quarter due primarily to higher interest rate risk capital requirements while available capital increased by 4% in the second quarter, as did surplus allowance and eligible deposits. Overall, the LICAT Total Ratio decreased by 11 percentage points (“pp”) at 30 June 2023.
| 31 Mar 2023 | 31 Dec 2022 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 431,821 | 398,049 | +8% |
| Tier 1 Capital | (AC1) | 431,821 | 398,049 | +8% | |
| Tier 2 Capital | (B) | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 78,957 | 139,357 | -43% | |
| Base Solvency Buffer | (BSB) | 325,097 | 360,881 | -10% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 157% | 149% | +8pp | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 150% | 137% | +13pp | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in LICAT Ratio in the First Quarter of 2023:
The Company’s base solvency buffer decreased by 10% in the first quarter due primarily to the execution of a reinsurance arrangement that released insurance risk required capital. The level of the Company’s surplus allowance and eligible deposits decreased by 43% in the first quarter as a result of (i) the aforementioned reinsurance arrangement and (ii) the transition to IFRS 17, a new accounting standard, which came into effect on 1 January 2023 for all Canadian life insurers that introduces a methodological change for assessing the surplus allowance. Available capital increased by 8% in the first quarter reflecting an opening equity adjustment for the transition to IFRS 17 as well as a newly established liability under IFRS 17 called the contractual service margin. Overall, the LICAT Total Ratio increased by 8 percentage points (“pp”) at 31 March 2023.
| 31 Dec 2022 | 30 Sep 2022 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 398,049 | 380,141 | +5% |
| Tier 1 Capital | (AC1) | 398,049 | 380,141 | +5% | |
| Tier 2 Capital | (B) | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 139,357 | 131,697 | +6% | |
| Base Solvency Buffer | (BSB) | 360,881 | 350,220 | +3% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 149% | 146% | +3pp | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 137% | 135% | +2pp | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in LICAT Ratio in the Fourth Quarter of 2022:
As a result of modest new business volumes in the fourth quarter, the Company’s base solvency buffer increased by 3% while available capital increased by 5% and surplus allowance and eligible deposits increased by 6%. Overall, the LICAT Total Ratio increased by 3 percentage points (“pp”) at 31 December 2022.
| 30 Sep 2022 | 30 Jun 2022 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 380,141 | 359,013 | +6% |
| Tier 1 Capital | (AC1) | 380,141 | 359,013 | +6% | |
| Tier 2 Capital | (B) | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 131,697 | 123,073 | +7% | |
| Base Solvency Buffer | (BSB) | 350,220 | 298,445 | +17% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 146% | 162% | -10% | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 135% | 149% | -9% | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in LICAT Ratio in the Third Quarter of 2022:
As a result of new business volumes in the third quarter, the Company’s base solvency buffer increased by 17% while available capital increased by 6% and surplus allowance and eligible deposits increased by 7%. Overall, the LICAT Total Ratio decreased by 10% at 30 September 2022.
Brookfield Annuity exceeds all of OSFI’s minimum capital requirements. At June 30, 2022, we had a LICAT total ratio of 162%, as compared to OSFI’s regulatory minimum of 90%.
| 30 Jun 2022 | 31 Mar 2022 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 359,013 | 250,994 | +43% |
| Tier 1 Capital | (AC1) | 359,013 | 250,994 | +43% | |
| Tier 2 Capital | (B) | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 123,073 | 65,221 | +89% | |
| Base Solvency Buffer | (BSB) | 298,445 | 198,929 | +50% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 162% | 159% | +2% | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 149% | 149% | 0% | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in LICAT Ratio in the Second Quarter of 2022:
As a result of greater-than-usual volumes of new business in the second quarter, the Company’s base solvency buffer increased by 50% while available capital increased by 43% and surplus allowance and eligible deposits increased by 89%. Overall, the LICAT Total Ratio increased by 2% at 30 June 2022.
Brookfield Annuity exceeds all of OSFI’s minimum capital requirements. At March 31, 2022, we had a LICAT total ratio of 159%, as compared to OSFI’s regulatory minimum of 90%.
| 31 Mar 2022 | 31 Dec 2021 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 250,994 | 231,375 | +37% |
| Tier 1 Capital | (AC1) | 250,994 | 231,375 | +37% | |
| Tier 2 Capital | (B) | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 65,221 | 62,737 | +4% | |
| Base Solvency Buffer | (BSB) | 198,929 | 199,722 | ~0% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 159% | 147% | +8% | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 149% | 138% | +8% | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in LICAT Ratio in the First Quarter of 2022:
The Company’s base solvency buffer remained approximately unchanged in the first quarter while available capital increased by 37% and surplus allowance and eligible deposits increased by 4%. Overall, the LICAT Total Ratio increased by 8% at 31 March 2022.
Brookfield Annuity exceeds all of OSFI’s minimum capital requirements. At December 31, 2021, we had a LICAT total ratio of 147%, as compared to OSFI’s regulatory minimum of 90%.
| 31 Dec 2021 | 30 Sep 2021 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 231,375 | 183,202 | +26% |
| Tier 1 Capital | (AC1) | 231,375 | 183,202 | +26% | |
| Tier 2 Capital | (B) | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 62,737 | 77,371 | -19% | |
| Base Solvency Buffer | (BSB) | 199,722 | 165,888 | +20% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 147% | 157% | -6% | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 138% | 143% | -3% | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in LICAT Ratio in the Fourth Quarter of 2021:
The Company’s base solvency buffer increased by 20% as a result of new business acquired in the fourth quarter while surplus allowance and eligible deposits decreased by 19% and available capital increased by 26%. Overall, the LICAT Total Ratio decreased by 6% at 31 December 2021.
Brookfield Annuity exceeds all of OSFI’s minimum capital requirements. At September 30, 2021, we had a LICAT total ratio of 157%, as compared to OSFI’s regulatory minimum of 90%.
| 30 Sep 2021 | 30 June 2021 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 183,202 | 114,896 | +59% |
| Tier 1 Capital | (AC1) | 183,202 | 114,896 | ||
| Tier 2 Capital | (B) | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 77,371 | 57,614 | +34% | |
| Base Solvency Buffer | (BSB) | 165,888 | 114,862 | +44% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 157% | 150% | +5% | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 143% | 135% | +6% | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in LICAT Ratio in the Third Quarter of 2021:
The Company’s base solvency buffer increased by 44% as a result of new business acquired in the third quarter while surplus allowance and eligible deposits increased by 34% and available capital increased by 59%. Overall, the LICAT Total Ratio increased by 5% at 30 September 2021.
Brookfield Annuity exceeds all of OSFI’s minimum capital requirements. At June 30, 2021, we had a LICAT total ratio of 150%, as compared to OSFI’s regulatory minimum of 90%.
| 30 June 2021 | 31 Mar 2021 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 114,896 | 111,746 | +3% |
| Tier 1 Capital | (AC1) | 114,896 | 111,746 | ||
| Tier 2 Capital | (B) | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 57,614 | 45,329 | +27% | |
| Base Solvency Buffer | (BSB) | 114,862 | 107,721 | +7% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 150% | 146% | +3% | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 135% | 133% | +2% | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in LICAT Ratio in the Second Quarter of 2021:
The Company’s base solvency buffer increased by 7% as a result of new business acquired in the second quarter while surplus allowance and eligible deposits increased by 27% and available capital increased by 3%. Overall, the LICAT Total Ratio increased by 3% at 30 June 2021.
Brookfield Annuity exceeds all of OSFI’s minimum capital requirements. At March 31, 2021, we had a LICAT total ratio of 146%, as compared to OSFI’s regulatory minimum of 90%.
| 31 Mar 2021 | 31 Dec 2020 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 111,746 | 105,519 | +6% |
| Tier 1 Capital | (AC1) | 111,746 | 105,519 | ||
| Tier 2 Capital | B | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 45,329 | 40,087 | +13% | |
| Base Solvency Buffer | BSB | 107,721 | 106,394 | +1% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 146% | 137% | +7% | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 133% | 126% | +6% | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in LICAT Ratio in the First Quarter of 2021:
The Company’s base solvency buffer increased modestly while surplus allowance and eligible deposits increased by 13% and available capital increased by 6% over the quarter. Overall, the LICAT Total Ratio increased by 7% at 31 March 2021.
Brookfield Annuity exceeds all of OSFI’s minimum capital requirements. At December 31, 2020, we had a LICAT total ratio of 137%, as compared to OSFI’s regulatory minimum of 90%.
| 31 Dec 2020 | 30 Sep 2020 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 105,519 | 86,210 | +22% |
| Tier 1 Capital | (AC1) | 105,519 | 86,210 | ||
| Tier 2 Capital | B | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 40,087 | 37,303 | +7% | |
| Base Solvency Buffer | BSB | 106,394 | 90,452 | +18% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 137% | 137% | – | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 126% | 124% | +2% | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in Solvency Ratio in the Fourth Quarter of 2020:
The Company’s base solvency buffer increased by 18% as a result of new business acquired in the fourth quarter while surplus allowance and eligible deposits increased by 7%; with the drawdown of additional shareholder capital to support the new business, the LICAT Total Ratio remained unchanged at the end of 2020.
Brookfield Annuity exceeds all of OSFI’s minimum capital requirements. At September 30, 2020, we had a LICAT total ratio of 137%, as compared to OSFI’s regulatory minimum of 90%.
| 30 Sep 2020 | 30 Jun 2020 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 86,210 | 83,701 | +3% |
| Tier 1 Capital | (AC1) | 86,210 | 83,701 | ||
| Tier 2 Capital | B | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 37,303 | 39,844 | -6% | |
| Base Solvency Buffer | BSB | 90,452 | 73,659 | +23% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 137% | 168% | -18% | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 124% | 152% | -18% | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in Solvency Ratio in the Third Quarter of 2020:
The Company’s base solvency buffer increased by 23% as a result of new business acquired in the third quarter while surplus allowance and eligible deposits decreased by 6%, which resulted in the LICAT Total Ratio decreasing by 18% in relative terms over this period.
Brookfield Annuity exceeds all of OSFI’s minimum capital requirements. At June 30, 2020, we had a LICAT total ratio of 168%, as compared to OSFI’s regulatory minimum of 90%.
| 30 June 2020 | 31 Mar 2020 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 83,701 | 83,576 | ~0% |
| Tier 1 Capital | (AC1) | 83,701 | 83,576 | ||
| Tier 2 Capital | B | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 39,844 | 33,840 | +18% | |
| Base Solvency Buffer | BSB | 73,659 | 72,427 | +2% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 168% | 162% | +4% | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 152% | 148% | +3% | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in Solvency Ratio in the Second Quarter of 2020:
In the second quarter of 2020, the Company’s base solvency buffer increased by 2% while surplus allowance and eligible deposits increased by 18%, which resulted in the LICAT Total Ratio increasing by 4% in relative terms over this period.
Brookfield Annuity exceeds all of OSFI’s minimum capital requirements. At March 31, 2020, we had a LICAT total ratio of 162%, as compared to OSFI’s regulatory minimum of 90%.
| 31 Mar 2020 | 31 Dec 2019 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 83,576 | 84,013 | -1% |
| Tier 1 Capital | (AC1) | 83,576 | 84,013 | ||
| Tier 2 Capital | B | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 33,840 | 36,781 | -8% | |
| Base Solvency Buffer | BSB | 72,427 | 73,586 | -2% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 162% | 164% | -1% | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 148% | 149% | -1% | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in Solvency Ratio in the First Quarter of 2020:
In the first quarter of 2020, the Company’s base solvency buffer decreased by 2% while surplus allowance and eligible deposits decreased by 8%, which resulted in the LICAT Total Ratio decreasing by 1% in relative terms over this period.
Brookfield Annuity exceeds all of OSFI’s minimum capital requirements. At December 31, 2019, we had a LICAT total ratio of 164%, as compared to OSFI’s regulatory minimum of 90%.
| 31 Dec 2019 | 30 Sep 2019 | % Change | |||
|---|---|---|---|---|---|
| Available Capital | (AC1 + B) | (AC) | 84,013 | 82,168 | +2% |
| Tier 1 Capital | (AC1) | 84,013 | 82,168 | ||
| Tier 2 Capital | B | ||||
| Surplus Allowance and Eligible Deposits | (SA + ED) | 36,781 | 29,617 | +24% | |
| Base Solvency Buffer | BSB | 73,586 | 66,597 | +10% | |
| Total Ratio | ([AC + SA + ED]/BSB) x 100 | 164% | 168% | -2% | |
| Core Ratio | ([AC1 + 70% SA + 70% ED]/BSB) x 100 | 149% | 155% | -4% | |
1) Regulated insurance holding companies and non-operating insurance companies
Explanation of Changes in Solvency Ratio in the Fourth Quarter of 2019:
In the fourth quarter of 2019, the Company’s base solvency buffer increased by 10% while surplus allowance and eligible deposits increased by 24%, which resulted in the LICAT Total Ratio decreasing by 2% in relative terms over this period.