OSFI.AA Flashcards
What are the 8 legal requirements for the appointment of an AA?
- Insurer must appoint an AA
- Insurer must notify OSFI of the appointment
- Insurer must notify OSFI if Board of Directors revokes AA’s appointment
- AA must be a FCIA
- AA can’t be CEO, COO or similar without authorization from OSFI
- AA can’t be CFO without audit committee permission: audit committee must certify AA and CFO duties can be performed competently & independently
- Outgoing AA must write report to BoD and OSFI on circumstances & reasons for leaving
- Incoming AA must review outgoing AA’s report within 15 days: if incoming AA does not receive report within 15 days, they may accept appointment regardless
What are the 7 roles & responsibilities of an AA?
- Valuation of reserves
5 reports (AFFMP):
2. Appointed Actuary report
3. Financial Position report
4. Financial Condition report
5. Material Adverse Event report
6. Policy Holder Fairness report
- Final (opinion, memo)
What is the main responsibility of the appointed actuary? ( 1/7)
The AA must perform a VALUATION of the policy liabilities at year-end using AAP (Accepted Actuarial Practice)/IFRS17.
Briefly describe the AA report.
Must be completed at least 21 days before AGM (Annual General Meeting)
Must state whether Annual Report fairly represents results of valuation
When & Where is the AA’s report on financial position sent?
Completed annually
Send to Board of Directors
When & how is the AA’s report on financial condition done & where is it sent?
Must complete when directed by OSFI
Involves a 3-year projection possibly using FCT methodology
Sent to Board of Directors and OSFI
When is the AA’s MAE (Material Adverse Event) report done & where is it sent?
Report on MAE (Material Adverse Events) requiring rectification
Sent to Board of Directors, CEO and CFO
What is another report the AA must complete that relates to policy holders?
Policy Holder Report:
Completed annually
Assesses fairness with which policy holders are treated regarding dividends, bonus, and other benefits
What does the AA’s final opinion contain?
Parts of financial statements requiring discretion or significant calculations and judgments
Identify the main qualification an AA must posses.
Main qualification: FCIA - in good standing
What are the 3 rules that must be followed by the AA in carrying out their work?
RULE 1: Perform professional services WITH integrity, competence, skill and Care
RULE 2: Perform professional services only when qualified to do so
RULE 3: meet all applicable SOPs (Standards of Practice)
What are OSFI’s expectations regarding the background of an AA? (Experience (2) and professionalism (2))
Experience:
• 3 years of Canadian experience from past 6 years (including 1 year of valuation)
• experience with CIA’s SOPs (also insurance legislation & regulation)
Professionalism
• must maintain professional designation requirements
• no adverse findings with CIA disciplinary tribunal
What are the 3 objectives of a peer review? (Hint: AAR)
Assist OSFI in assessing insurer safety & soundness
Assist AA independent advice & professional development
Raise confidence in AA with regulator, management and public
Identify 4 items reviewed by the peer reviewer.
- Assumptions & methods
- Did the AA use accepted actuarial practice
- Did the AA document assumptions & methods
- Examine internal/external changes (if material)
- Examine MCT/BAAT (assumptions & methods)
- Examine adequacy of procedures, systems and work of others
- Examine FCT scenarios, assumptions and methods
What is the reviewer expecting from AA and management?
Full cooperation: respond to reviewer in a timely manner with all relevant docs and info