OSFI.Concentration

Question 1

3 specific elements/requiments MUST be included in a P&C FRI’s Gross Underwriting Limit Policy (GUWP)?

Answer 1

1. Define: The definition of a Single Insurance Exposure by class of insurance.
2. Establish: Gross insurance risk limits by class relative to the maximum loss of a Single Insurance Exposure.
3. Least Annually: Be reviewed by Senior Management to ensure the policy remains aligned with the FRI’s current risk profile.

Question 2

3 Requirements when measuring the maximum loss on a Single Insurance Exposure?

Answer 2

1. Quality of Data: Use information that is relevant, reasonable, and supportable.
2. Forward-Looking: Cannot rely solely on historical data.
3. Probability Independence: Measure maximum loss without regard to the probability of the event occurring (severity focus, not likelihood).

Question 3

What Single Insurance Exposure definitions by class : Property,Credit,Surety and Title

Answer 3

• Property: Aggregated exposures on in-force policies at a single location , incl. any exposures subject to that location
• Credit: Exposures to one single buyer or group of connected buyers.
• Surety: Exposures to one single contractor or group of connected contractors.
• Title: Related to the legal title for a single location.

Question 4

For OSFI’s Large Insurance Exposure limit, the maximum limit applies to the sum of which two exposure metrics? and what is the limit for : Canadian and Foreign Branch

Answer 4

• Net Retention + Largest Net Counterparty Unregistered Reinsurance Exposure ≤ Limit

where Limit:
- Widely Held/Regulated: 100% of Total Capital Available (TCA). Applies if any entity in the control chain is widely held.
- Otherwise (Closely Held): 25% of Total Capital Available.
- Foreign Branches: 100% of Net Assets Available

Question 5

What is the OSFI B-2 limit for Investment Concentration?

Answer 5

Aggregate market value of investments in one entity/group must not exceed:
- Insurance Companies: 5% of company Assets.
- Foreign Branches: 5% of Assets in Canada.

Question 6

Which specific types of investments are explicitly excluded from the 5% Investment Concentration limit? (2/3)

Answer 6

• Government of Canada securities/guarantees.
• Canadian provincial government securities/guarantees.
• OECD member jurisdiction securities/guarantees.