Contents
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 494a, 509 and 1021 of the Insurance Companies Act, hereby makes the annexed Investment Limits (Insurance Companies) Regulations.notenotenote
Interpretation
1Definitions#
The following definitions apply in these Regulations.
Act means the Insurance Companies Act. (Loi)
designated entity, in respect of a company, means an entity other than
(a)a joint venture;
(b)a financial institution;
(c)a bank holding company;
(d)an insurance holding company;
(e)a subsidiary of a financial institution, other than where the subsidiary is a subsidiary of a financial institution only because it is a subsidiary of the company; or
(f)a subsidiary of a bank holding company or insurance holding company. (entité désignée)
insurance company means an insurance company incorporated by or under the laws of Canada or a province. (société d’assurances)
joint venture means a real property entity
(a)that was formed by a company, or by a designated entity controlled by a company, and one or more other persons for the purpose of a specific business undertaking;
(b)in which the company or designated entity has a substantial investment; and
(c)in respect of which the persons who formed it have agreed on joint control, regardless of the distribution of their equity. (coentreprise)
minority interest means an equity interest, in an entity that is controlled by a company, that is held by a person other than
(a)the company; or
(b)an entity controlled by the company. (participation minoritaire)
real property entity means an entity that is primarily engaged in holding, managing or otherwise dealing with
(a)real property;
(b)shares of a body corporate that is primarily engaged in holding, managing or otherwise dealing with real property, including shares of a body corporate that is another real property entity; or
(c)ownership interests in an unincorporated entity that is primarily engaged in holding, managing or otherwise dealing with real property, including ownership interests in an unincorporated entity that is another real property entity. (entité immobilière)
securities dealer means an entity described in paragraph (g) of the definition financial institution in subsection 2(1) of the Act. (négociant en valeurs mobilières)
third party, in respect of a company, means a person other than
(a)the company;
(b)a designated entity controlled by the company; or
(c)a related real property entity of the company. (tierce partie)
total assets, in respect of a company, at a particular time, means the amount determined by the formula
2Book value of interest in real property#
For the purposes of sections 8 to 11, the book value of an asset that is an interest of a company in real property, at a particular time, is
(a)if the asset is real property, the gross book value of the real property, less any accumulated depreciation on the real property, that would be reported on a balance sheet of the company prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 331(4) of the Act; and
(b)if the asset is a security or loan, the book value of the security or loan that would be reported on a balance sheet of the company prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 331(4) of the Act.
Exemptions
3Exempt companies#
Sections 506 to 508 of the Act do not apply to
(a)a mutual company having an aggregate of surplus and minority interests of five billion dollars or more; or
(b)a company, other than a mutual company, if it
(i)is widely held and has equity of five billion dollars or more, or
(ii)has equity of five billion dollars or more and is controlled by
(A)a widely held bank holding company,
(B)a widely held insurance holding company,
Prescribed Subsidiary
4Prescribed subsidiary#
For the purposes of sections 506 to 508 of the Act, a prescribed subsidiary of a company is any subsidiary of the company, except where that subsidiary is
(a)a financial institution;
(b)a bank holding company;
(c)an insurance holding company;
(d)a subsidiary of a financial institution, other than where the subsidiary is a subsidiary of a financial institution only because it is a subsidiary of the company; or
(e)a subsidiary of a bank holding company or insurance holding company.
Amount Determined
5Amount determined — real property#
(1)For the purpose of section 506 of the Act, the amount determined in respect of a company referred to in that section is
(a)if the company is a life company, the total of
(i)70% of the amount determined under subsection (4),
(ii)15% of the liabilities of the company in respect of life insurance policies that are not participating policies,
(iii)25% of the liabilities of the company in respect of life insurance policies that are participating policies, and
(iv)5% of the liabilities of the company in respect of
(A)all life annuities, whether or not for a guaranteed term, in respect of which the company has contracted with the annuitant to make regular periodic payments of defined amounts,
(B)all annuities in respect of which the company has guaranteed a rate of interest for a term of more than 10 years after the date on which the contract is entered into,
(C)all group long-term disability annuities in respect of which the company has contracted with the annuitant to make regular periodic payments of defined amounts to retirement age, and
(D)all other disability annuities in respect of which the company has contracted with the annuitant to make regular periodic payments of defined amounts
(I)while the disability of the annuitant continues, to age 65, or
(II)for life; and
(b)if the company is a property and casualty company or a marine company, 10% of its total assets.
(2)For the purpose of section 507 of the Act, the amount determined in respect of a company referred to in that section is
(a)if the company is a life company, the total of
(i)70% of the amount determined under subsection (4),
(ii)15% of the liabilities of the company in respect of life insurance policies that are not participating policies,
(iii)25% of the liabilities of the company in respect of life insurance policies that are participating policies, and
(iv)5% of the liabilities of the company in respect of
(A)all life annuities, whether or not for a guaranteed term, in respect of which the company has contracted with the annuitant to make regular periodic payments of defined amounts,
(B)all annuities in respect of which the company has guaranteed a rate of interest for a term of more than 10 years after the date on which the contract is entered into,
(C)all group long-term disability annuities in respect of which the company has contracted with the annuitant to make regular periodic payments of defined amounts to retirement age, and
(D)all other disability annuities in respect of which the company has contracted with the annuitant to make regular periodic payments of defined amounts
(I)while the disability of the annuitant continues, to age 65, or
(II)for life; and
(b)if the company is a property and casualty company or a marine company, 25% of its total assets.
(3)For the purpose of section 508 of the Act, the amount determined in respect of a company referred to in that section is
(a)if the company is a life company, the total of
(i)100% of the amount determined under subsection (4),
(ii)20% of the liabilities of the company in respect of life insurance policies that are not participating policies,
(iii)40% of the liabilities of the company in respect of life insurance policies that are participating policies, and
(iv)5% of the liabilities of the company in respect of
(A)all life annuities, whether or not for a guaranteed term, in respect of which the company has contracted with the annuitant to make regular periodic payments of defined amounts,
(B)all annuities in respect of which the company has guaranteed a rate of interest for a term of more than 10 years after the date on which the contract is entered into,
(C)all group long-term disability annuities in respect of which the company has contracted with the annuitant to make regular periodic payments of defined amounts to retirement age, and
(D)all other disability annuities in respect of which the company has contracted with the annuitant to make regular periodic payments of defined amounts
(I)while the disability of the annuitant continues, to age 65, or
(II)for life; and
(b)if the company is a property and casualty company or a marine company, 35% of its total assets.
(4)For the purposes of subparagraphs (1)(a)(i), (2)(a)(i) and (3)(a)(i), the amount determined under this subsection in respect of a company is the amount determined under the formula
note
Valuation of Equity
6Equity owned by company#
For the purposes of sections 507 and 508 of the Act, the value of the participating shares and ownership interests referred to in those sections that are beneficially owned by a company and its subsidiaries prescribed by subsection 4 is equal to their book value as reported on the consolidated balance sheet of the company.
Interests of a Company in Real Property
General
7Definition and value of interest in real property#
(2)For the purpose of subsection 502(3) of the Act, the interests of a company in real property means real property referred to in paragraph 11(1)(a) and shares and ownership interests referred to in paragraph 11(1)(b) that become beneficially owned by the company, or by a designated entity controlled by the company, as a result of the realization of a security interest on a loan or debt obligation referred to in subsection 11(1).
Direct Interests — Real Property and Debt Obligations
8Direct interests#
(1)The following are interests of a company in real property:
(a)real property beneficially owned by the company or by a designated entity controlled by the company; and
(b)a debt obligation, for which the company or a designated entity controlled by the company is liable, that was issued for the purpose of acquiring or improving real property referred to in paragraph (a).
(2)The value of the interests of a company in real property is
(a)in respect of real property referred to in paragraph (1)(a), the book value of the real property; and
(b)in respect of a debt obligation referred to in paragraph (1)(b), any amount by which the book value of the debt obligation exceeds the book value of the real property referred to in that paragraph.
Indirect Interests — Real Property, Shares and Ownership Interests
9Certain indirect interests#
(1)The following are interests of a company in real property:
(a)at a particular time, real property
(i)that is beneficially owned by
(A)a related real property entity of the company that is a joint venture, or
(B)an entity in which an entity described in clause (A) has a substantial investment, and
(ii)that would be reported on a balance sheet of the company prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 331(4) of the Act; and
(b)shares and ownership interests beneficially owned by the company, or by a designated entity controlled by the company, in any related real property entity of the company other than a related real property entity referred to in paragraph (a).
(2)The value of the interests of a company in real property is
(a)in respect of real property referred to in paragraph (1)(a), the book value of the real property; and
(b)in respect of shares and ownership interests referred to in paragraph (1)(b), the book value of the shares and ownership interests.
Indirect Interests — Loans and Debt Obligations
10Certain indirect interests#
(1)The following are interests of a company in real property:
(a)a debt obligation issued by a related real property entity of the company and beneficially owned by the company or by a designated entity controlled by the company;
(b)a loan made by the company, or by a designated entity controlled by the company, to a related real property entity of the company;
(c)a loan made by the company, or by a designated entity controlled by the company, to
(i)a real property entity in which a financial institution, bank holding company or insurance holding company controlled by the company has a substantial investment, or
(ii)a real property entity that is controlled by a real property entity described in subparagraph (i);
(d)a debt obligation issued by a real property entity described in subparagraph (c)(i) or (ii) and beneficially owned by the company or by a designated entity controlled by the company;
(e)a debt obligation that is
(i)issued by a related real property entity of the company,
(ii)beneficially owned by a third party, and
(iii)guaranteed by the company or by a designated entity controlled by the company; and
(f)a loan made by a third party to a related real property entity of the company and guaranteed by the company or by a designated entity controlled by the company.
(2)The value of the interests of a company in real property is
(a)in respect of a debt obligation referred to in paragraph (1)(a) or (d), the book value of the debt obligation;
(b)in respect of a loan referred to in paragraph (1)(b) or (c), the book value of the loan; and
(c)in respect of a guaranteed debt obligation referred to in paragraph (1)(e) or a guaranteed loan referred to in paragraph (1)(f),
(i)if the debt obligation is issued by, or the loan is made to, an entity that is a related real property entity of the company and the entity beneficially owns real property that is an interest of the company in real property under paragraph 9(1)(a), any amount by which the face value of the guarantee exceeds the value of the real property determined in accordance with paragraph 9(2)(a), and
(ii)in any other case, the face value of the guarantee.
Indirect Interests — Secured Loans and Debt Obligations
11Certain indirect interests#
(1)If a company or a designated entity controlled by a company makes a loan to, or beneficially owns or guarantees the debt obligation of, a third party, the loan or debt obligation is an interest of the company in real property if it is secured by
(a)real property beneficially owned by a third party in conjunction with
(i)the company,
(ii)the designated entity,
(iii)a related real property entity of the company,
(iv)a financial institution, bank holding company or insurance holding company controlled by the company,
(v)an entity controlled by a financial institution, bank holding company or insurance holding company referred to in subparagraph (iv), or
(vi)a real property entity described in subparagraph 10(1)(c)(i) or (ii); or
(b)shares or ownership interests beneficially owned by a third party in
(i)an entity that beneficially owns real property in conjunction with the company, a related real property entity of the company or a designated entity controlled by the company, or
(ii)a related real property entity of the company.
(2)The value of the interests of a company in real property is
(a)in respect of a loan or debt obligation that is secured by real property referred to in paragraph (1)(a), the lesser of
(i)the net realizable value of the third party’s interest in the real property at the time that the security interest was given, and
(ii)the amount determined by the formula
(b)in respect of a loan or debt obligation that is secured by shares or ownership interests beneficially owned by a third party in an entity referred to in subparagraph (1)(b)(i), the lesser of
(i)the net realizable value of the third party’s interest in those shares or ownership interests at the time that the security interest was given, and
(ii)the amount determined by the formula
(c)in respect of a loan or debt obligation that is secured by shares or ownership interests beneficially owned by a third party in a related real property entity referred to in subparagraph (1)(b)(ii), the lesser of
(i)the net realizable value of the third party’s interest in those shares or ownership interests at the time that the security interest was given, and
(ii)the amount determined by the formula
Other Interests
12Other interests#
(1)The following are interests of a company in real property:
(a)a guarantee given by the company, or by a designated entity controlled by the company, to an entity other than the company or designated entity for the purpose of completing the development of real property that is beneficially owned by
(i)the company,
(ii)a designated entity controlled by the company, or
(iii)a related real property entity of the company; and
(b)an agreement made by the company, or by a designated entity controlled by the company, to support a third party’s cost of operating or financing real property that is beneficially owned by
(i)the company,
(ii)a designated entity controlled by the company, or
(iii)a related real property entity of the company.
(2)The value of the interests of a company in real property is
(a)in respect of a guarantee referred to in paragraph (1)(a), the estimated cost of completing the development of the real property; and
(b)in respect of an agreement referred to in paragraph (1)(b), the amount of any funds advanced by the company, or by a designated entity controlled by the company, under the agreement.
Repeals
Coming into Force
*15Coming into force#
These Regulations come into force on the day on which sections 494 and 509 of the Insurance Companies Act, as enacted by section 426 of the Financial Consumer Agency of Canada Act, chapter 9 of the Statutes of Canada, 2001, come into force.
Federal laws of Canada reproduced under the Reproduction of Federal Law Order (SI/97-5); not the official version. Source: Justice Laws Website.