AMF publishes capital adequacy requirements guidelines for insurers

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Jul 21, 2022

On July 21, 2022, the Autorité des marchés financiers (AMF) published its capital adequacy requirements for insurers, which have been adapted in anticipation of the coming into effect of IFRS 17 Insurance Contracts (IFRS 17) on January 1, 2023.

The four guidelines, which, like IFRS 17, will come into effect on January 1, 2023, are as follows:

IFRS 17 represents a major accounting change for the insurance industry in Québec and elsewhere in Canada and the world. Its implementation will have an impact on insurers’ accounting, actuarial valuation and disclosure practices and on their systems supporting those practices. The guidelines published today reflect the improvements introduced by new standard IFRS 17 in terms of transparency and comparability of risks . The Québec insurance industry, in general, is well-capitalized under the current accounting rules and guidelines and will remain so upon the transition to IFRS 17.

The guidelines are the result of a process carried out with the Office of the Superintendent of Financial Institutions, as well as with insurers and other stakeholders whose input was obtained through numerous consultations, discussions and quantitative impact studies.

As IFRS 17 is a new standard, its impact will only be fully known once its implementation is completed in 2023. Given this, and the current context of higher interest rates and strong stock market volatility, the AMF expects insurers, in accordance with its risk management framework, to act prudently when making decisions that affect their level of capital.

Review the press release and guidelines on the AMF's website.

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