Skip Links

Why Work with Us

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.

  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.