CIA Annual Meeting Assemblée annuelle de l’ICA June 29 & 30, 2006  Les 29 et 30 juin 2006 Ottawa, Ontario Session 2603

CIA Risk and Capital Committee MCCSR / TAAM certification by Denis Ricard

Background information MCCSR/TAAM has evolved => more interpretation or technical calculations OSFI –Looking for increased certification –Has asked the CIA to look at a formal certification Support by: –CIA Board –AA committee –Committee on Risk Management and Capital Lead to increase in role of AA

Committee on Risk Management and Capital The committee has developed a new MCCSR certification standard and an accompanying educational note The new standard and the educational note have been approved by the Committee on Risk Management and Capital Exposure draft sent to members in Nov 2005 Few comments by CIA members Revised document approved by PSC May 17th 2006 Effective for fiscal year 2006

Opinion Actual opinion: "I confirm that I have read the relevant guideline and annual return reporting instructions issued by the Office of the Superintendent of Financial Institutions and that this form is completed in accordance with them" Annual opinion: must be signed by the AA and one officer Quarterly: requires signature of a company officer

Opinion New additional annual opinion by the actuary: 2480Certification of regulatory capital filing.06 I have reviewed the calculation of the Minimum Continuing Capital and Surplus Requirement ratios of [Company name] as at [Date]. In my opinion, the calculation of the components of the required and available capital has been determined in accordance with the regulatory guidelines, and the components of the calculation requiring discretion were determined using methodologies and judgment appropriate to the circumstances of the company.

Opinion New additional annual opinion by the actuary: 2480Certification of regulatory capital filing.06 For Test of Adequacy of Assets in Canada and Margin Requirements form filings “Minimum Continuing Capital and Surplus Requirement ratios”, and “required and available capital” are replaced by “Test of adequacy of margin”, and “required and available margin”. For filings for provincially regulated companies, the ratio definition and definitions of required and available resources should be amended to reflect the appropriate definitions in the provincial requirements.

Opinion New additional annual opinion by the actuary: 2480Certification of regulatory capital filing.01 This subsection applies to the AA of a life insurer when giving an opinion on the appropriateness of capital requirement calculations pursuant to law..02 The certification should contain an opinion signed by the actuary.

Opinion New additional annual opinion by the actuary: 2480Certification of regulatory capital filing.03 The actuary should prepare a memorandum to support the opinion that outlines the areas where the calculation required discretion or significant technical calculations, and the methodologies and judgments that were applied.

Opinion New additional annual opinion by the actuary: 2480Certification of regulatory capital filing.05 the actuary is not opining on whether the underlying factors or specified methods to be followed are appropriate but rather on the appropriateness of any interpretation and discretionary technical calculations and methods with respect to such guidelines.

Educational note Provide guidance: Appropriate practice Documentation in memorandum How to interpret the guidelines

Educational note - Memorandum Support of the Opinion Areas where the AA has applied material judgement or performed technical calculations Outline specific issues, explain the interpretation and the underlying rationale Not intended to be long and detailed (high level) Prepared as a note to file from the appointed actuary

Educational note Examples of areas of interpretation: risk pass-through –participating insurance –index-linked products seg fund guarantees new mortality risk formula reinsurance

Questions ?