OSFI AA Flashcards
List duties of the AA
- Value policy liabs
- Report on expected future financial condition (DCAT)
- Identify and monitor threatening matters
- Report any matters having material adverse effect to CEO/CFO
- Report to BoD in writing on fairness
List CIA Rules of Professional Conduct
- Act honestly and perform professional services with integrity, competence, skill and care
- Perform professional services only when qualified to do so and meets applicable qualification standards
- Services must meet applicable standards of practice
List Expected qualifications of an AA and what supt. may do if he thinks not suitable
- Has appropriate Canadian practical experience. Work in Canada for at least 3 of the last 6 years, of which at least one year was performing valuation of Canadian actuarial liabs of an insurance cie
- Has experience with the CIA’s Standards of Practice, insurance legislation and regulation
- Is up to date with respect to the CIA’s Continuing Professional Dev requirement
- Has not been the subject of an adverse finding by a CIA Disciplinary Tribunal (nevertheless, Supt can conclude he is suitable person)
List objectives of OSFI in requiring review of AA work
• Assist OSFI in its assessment of the insurer’s safety and soundness
• Providing a source of indep consultation advice
• Providing an additional source of professional education
-Narrowing the range of practice by AA
-Improving the quality of their work
• Maintain and strengthen confidence in the work of AA
List Expectation of what the AA reviewer should do
- Make sure work is in compliance with AAP
- Review material changes affecting the valuation
- Review adequacy of precedures and systems
- Discuss with AA the appropriateness of assumptions and methods used in the valuation
- Determine whether AAR sufficiently describe the valuation assumptions and methodology employed in valuation of policy liabs
- Review MCT and DCAT
- Write a report documenting findings of peer review
Provide Examples of material changes affecting valuation of policy liabs
- Key assumptions
- Methodology used
- Company operations
- Use of a revised valuation model
- Material events
List Features a full peer review report should include
- Description of the work done by the reviewer
- Moment it has been done
- Materiality level
- Reviewer’s statement of opinion with respect to AA’s work
- Reviewer’s observations with respect to changes to methodology and assumptions
- Reviewer’s acknowledgement that no additional material changes should have been made
- List of recommendations for further reviews
- Brief description of the relationship with the AA
List Criteria for an objective peer reviewer
- May not be an employee of the cie or affiliated cies
- May not have been employed by the cie or served as AA of the cie during the 3 years prior to the date of the work being reviewed
- Must not be a shareholder of, or have a direct financial investment in the cie
- May have an indirect interest in the cie
- May not be a member of the same consulting firm as AA
- May be a member of a consulting firm involved in any actuarial work related to the FS or financial condition, only if he is not involved in this work for the cie
- Should only provide advice with respect to these changes as part of the peer review work
- May be an actuary working in the external audit firm, but encouraged to not use a member of the audit team
Why Changing a reviewer?
Regular change or rotation of reviewers is expected
• To enhance the peer reviewer’s objectivity and increase the educational value of the review process
• OSFI expects that a reviewer will be changed at least once every 2cycle (each 6 years)
