Finally, it is not yet clear whether the RSA mechanism and OSFI`s FORM will be acceptable to all provincial insurance regulators that claim co-responsibility for capital and asset risks, support risks in their province, and have been drafted by crown-licensed insurers who are also licensed and do business in that province ( or vice versa, if the required provincial mechanism/Agreements will be satisfactory to OSFI). however, it goes without saying that discussions should take place in this context. OSFI expects IFRs to have a policy approved by the Board of Directors or a committee of the Board that requires management to confirm to the Board or Committee from time to time (but at least every two years) that a valid and enforceable security right that prevails over all other security rights in the pledged assets will continue to be created in favour of TO RFID. including cases where amendments have been made to applicable provincial or territorial personal property security laws or securities transfer laws. It appears that this reconfirmation obligation will require IFRs to obtain confirmation of existing notices every two years, which will impose a significant additional administrative burden and additional costs on IFRs. For IFRs that are branches, OSFI expects the senior agent to ensure that the branch has an approved policy. While OSFI has a clear interest in the quality of the guarantee pledged, it could address this issue directly rather than imposing restrictions on the form and jurisdiction of the lien. In general, security measures are more flexible and allow for the adoption of security in other jurisdictions. As with deposit-taking institutions, the IRF should reasonably have an obligation to ensure that it has taken all appropriate measures and obtained all necessary documents under applicable foreign law.
Recent developments under Canadian and foreign law have made it much easier to obtain valid and sophisticated security in some foreign jurisdictions. However, OSFI recognizes that there may be situations where a comprehensive contract is not performed by the parties until after the effective date and that, during the transition period, a note, liner note or other summary document is generally evidence of the agreement. In order to mitigate the associated risks during this transition period, in these circumstances, OSFI expects IFIs to receive (i) contractually binding summary documents prior to the effective date of reinsurance protection, including, but not limited to, electronic copies or original copies, signed documents relating to key provisions and any material issues that may arise; and (ii) ensure that all comprehensive reinsurance contracts, including any amendments thereto, bear the signature duly approved by both parties within a relatively short period of time, taking into account the complexity and materiality of the agreement (e.B. within 120 days of its execution). In addition, where it is necessary and appropriate for an IRF to conclude a cover letter or other arrangement constituting an agreement ancillary to and forming part of the main reinsurance contract, the IRF should be transparent with stakeholders about those arrangements and ensure that such changes are duly taken into account in its conclusion, and ensure that: that the amendments do not alter the terms of the original contract to the detriment of the insured. Where the reinsurance contract provides for an agreement on the funds withheld, the contract clearly provides that, in the event of the insolvency of the transferor or reinsurer, the funds withheld less any surplus due to the reinsurer must form part of the assets of the general estate of the transferor or the assets of a foreign insurance company in Canada within the meaning of WURA and the Act. The advice on which OSFI and the transferor may rely may be subject to the usual restrictions. It must be provided by a lawyer who has expertise in the area of personal property protection legislation in the province where the property is held or who reasonably relies on the legal advice of those who have such expertise.
With respect to a particular RSA in which the transferring entity approves a new type of asset that is not already covered by the attached legal notice, OSFI expects the Entity to seek additional legal advice alleging that a valid and enforceable security right has been or will be created in its favour in respect of that new type of asset. If the principal representative of the foreign company is the company`s legal advisor, the foreign company must obtain legal advice from external legal advisors. If the legal advice of a transferring company is prepared by in-house counsel, OSFI expects the notice to indicate that it will be provided by a lawyer in his or her professional capacity as counsel and not in any other capacity. In the meantime, the publication of the Guidelines followed the publication of a draft consultation (the draft Guideline) in August 2010, accompanied by a letter (the Letter) summarizing the reasons why OSFI terminated the previously used Standard Reinsurance Trust (RFA) mechanism and outlining OSFI`s new approach to RASS. The guidelines apply to all FRI related to reinsurance assignments (and retrocessions) with unlicensed reinsurers in Canada and also outline OSFI`s expectations of FRI as part of the rsA process. Once fully implemented, the Guidelines will significantly increase the administrative burden for FINANCIAL INSTITUTIONS seeking reinsurance with unauthorised reinsurers and could therefore significantly discourage the use of unauthorised reinsurance. Yes. ARSs are only a form of collateral that credits the capital for unregistered reinsurance, and LOC are also considered acceptable. .