The Office of the Superintendant of Financial Institutions has released a remarks by Julie Dickson to the 2009 Life Insurance Forum.
Of greatest interest was the short section on consolidated capital. When the tenor the speech is taken together with the prior speech by Mark White (amusingly, Ms. Dickson’s remarks on this specific topic are almost word-for-word identical with those of Mr. White) and warnings in MFC’s 3Q09 results and SLF’s 3Q09 results … I suspect that this is going to happen, sooner rather than later:
Events such as those at AIG have shown that holding company strength is important to their regulated subsidiaries. This is particularly true where the holding company is the primary issuer of capital or is required to raise debt. As OSFI regulates non-operating insurers acting as holding companies, we are considering updating our current regulatory guidance for these entities to promote a more integrated and consistent approach to determining regulatory capital requirements. For example, OSFI’s MCCSR tests could be used to evaluate the group’s consolidated risk-based capital – and a test similar to the asset-to-capital multiple (ACM) test could be used to evaluate leverage.
Update, 2009-11-14: I just realized! She didn’t repeat the following assertion from Mr. White’s speech:
OSFI regulates both non-operating insurers acting as holding companies, and entities that are formed as holding companies under applicable financial institution legislation. Currently, this only affects the life insurance industry.
… which I believe to be incorrect. E-L Financial owns both Empire Life (a lifeco) and Dominion General (P&C).