Insurance Companies Act - Ch. 47

Question 1

Duties of audit committee (REVIEWS)? (3)

Answer 1

REVIEW annual statements before BoD (Board of Directors) approval
REVIEW such company returns as Superintendent may specify
REVIEW investments/transactions with material adverse events brought to audit committee

Question 2

Duties of audit committee (REQUIRE)?

Answer 2

REQUIRE management to implement and/or maintain internal controls.

Question 3

Duties of audit committee (MEETINGS)? (3)

Answer 3

MEET with AUDITOR: discuss Annual Report
MEET with ACTUARY: discuss parts of Annual Report prepared by the Actuary
MEET with CHIEF INTERNAL AUDITOR: discuss effectiveness of internal controls

Question 4

Items BoDs (Board of Directors) must present to shareholders/policyholders at AGM? (5)

Answer 4

• Financial Statement for the most recent 2 years
• auditor’s report
• Actuary’s report
• description of roles for auditor and actuary
• anything else required by the by-laws of the company

Question 5

CEO, COO can’t be AA unless … (3)

Answer 5

• authorized by OSFI
• time limit is 6 months
• see legal requirements of AA

Question 6

Can a CFO also be an AA?

Answer 6

Yes, if audit committee provides written statement to OSFI that the requirements of both positions can be adequately and independently performed.
- OSFI also authorizes the appointment

Question 7

CFO can’t be AA unless … (4)

Answer 7

• audit committee provides written statement to OSFI that the requirements of both positions can be adequately and independently performed
• OSFI authorizes the appointment
• LEGAL REQUIREMENTS #4 to be an AA
• OSFI’s expectations for the AA

Question 8

Ways an actuary may cease to be the AA. (4)

Answer 8

• appointment revoked by the BoD
• resignation
• death
• the person ceases to be an actuary (eg.: FCIA designation revoked due to disciplinary action)

Question 9

What must the BoD (Board of Directors) do upon an AA vacancy?

Answer 9

Notify OSFI and fill the vacancy as quickly as possible.

Question 10

What must the AA do upon revocation/resignation? (2)

Answer 10

• write a report outlining the circumstances/reasons and send to the BoD and OSFI
• see legal requirements of AA #7

Question 11

What must prospective replacement AA do?

Answer 11

REQUEST written report on circumstances and reasons for prior AA leaving
- if not RECEIVED in 15 days, new AA may simply be accepted

Question 12

What are the AA’s right to info and protection from liability?

Answer 12

AA may request records/explanations from BoD, officers, employees, representatives
- AA can’t be held liable for such good faith requests

Question 13

Reporting requirements of the AA to the BoD. (2)

Answer 13

• Financial Positions (annually)

- Financial Condition (when directed by the superintendent)

Question 14

Reporting requirements of the AA to the CEO.

Answer 14

Report Material Adverse Effects to the CEO, CFO, and must CC the BoD.

Question 15

If no suitable action is taken on Material Adverse Effects, then what should the AA do?

Answer 15

Send original report on Material Adverse Effects to OSFI and CC the BoD.

Question 16

What is qualified privilege?

Answer 16

If AA makes good faith report under (363, 369), then AA won’t be liable in civil action seeking indemnification
- where (363, 369) = report from outgoing AA, report MAE

Question 17

Requirements for foreign companies (before issuing insurance). (5)

Answer 17

• must have ASSETS > $5M vested in trust (or as per super)
• must APPOINT actuary, auditor
• must ESTABLISH chief agency
• must have min MCT/BAAT ratio
• any other conditions that the Superintendent deems appropriate