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  1. Appointment of the Actuary
    • each company must appoint an actuary
    • notify the Superintendent in writing of the appointment
    • AA must be a fellow of the CIA
    • CEO, CFO, COO may not be appointed, unless authorized in writing by Superintendent
  2. Revocation of the appointment
    • directors of a company may revoke the appointment of the AA
    • must notify the Superintendent in writing
    • AA who resigns or is revoked shall submit to the Superintendent and to the directors a written statement that includes the circumstances and reasons for the resignation or why, in his opinion, the appointment was revoked
    • no person shall accept an appointment before requesting and receiving this written statement, unless no reply is received within 15 days after a request was made
  3. Role and duties of the AA
    • value the actuarial and other policy liabilities as at the end of a financial year, and any other matters specified by the Superintendent
    • opine that the policy liabilities are valued in accordance with accepted actuarial practice
    • make the AA’s Report (AAR) on the policy liabilities as specified by OSFI’s Memorandum
    • 21 days before date of annual meeting, report to shareholders and policyholders, stating whether in his opinion the annual statement fairly presents the results of the valuation
    • meet with and report to the directors or chief agent on the company’s financial position
    • report in writing to CEO and CFO any matters that in his opinion have material adverse effects on the financial condition of the company and that require rectification
    • copy of report must be supplied to the BoD
    • if suitable action is not being taken to rectify, send a copy of report to the Superintendent and advise the directors or chief agent that this has been done
  4. Qualifications required
    • FCIA, and therefore subject to CIA’s Rules of Professional Conduct
    •    act honestly, perform professional services with integrity, competence, skill and care
    •    perform professional services only when member is qualified to do so and meets applicable qualification standards
    •    professional services must meet applicable standards of practice
    • has appropriate Canadian experience, defined as work in Canada for at least three of the last six years, of which at least one year was performing valuation of Canadian actuarial liabilities of an insurance company
    • has experience with the CIA’s SoP and relevant insurance legislation and regulation
    • up to date with respect to the CIA’s Continuing Professional Development requirement
    • has not been subject of adverse finding by CIA Disciplinary Tribunal, unless Superintendent concludes otherwise based on circumstances of the case
  5. Objective of peer review of the work of the Actuary
    • assist OSFI in its assessment of the insurer’s safety and soundness
    • be of benefit to the AA by providing:
    •    a source of independent consultation advice
    •    and additional source of professional education
    • maintain and strengthen confidence in the work of the AA by the public, by insurance company management and directors and by supervisory authorities
  6. Work to be reviewed
    • valuation of policy liabilities and ceded reinsurance assets 
    • appropriateness and extent of internal and external material changes
    • adequacy of procedures, systems and the work of others relied on by the AA, to the extend that these are not reviewed by the external auditor
    • discuss with AA the appropriateness of each of the assumptions and methods used
    • determine whether the AAR sufficiently describes the valuation assumptions
    • review and discuss methodology, assumptions, and scenarios used for future financial condition reporting as required by the Superintendent
  7. Materiality considerations
    • materiality level is set by external auditor based on company size (as a whole)
    • OSFI expects the materiality level for peer review to be appropriate at the LOB level
    • materiality should be more rigorous as company approaches any internal capital targets or regulatory capital thresholds
  8. Peer review report
    • description of the work done by the reviewer and timing during the year
    • materiality level used for the review
    • reviewer’s statement of opinion with respect to the AA’s compliance with accepted actuarial practice and any objectives or requirements established by OSFI
    • reviewer’s observations with respect to changes made in methodology and assumptions
    • reviewer’s acknowledgement that no additional material changes should have been made
    • list of recommendation for further review or work by the AA in the coming year
    • brief description of the relationship with the AA to support objectives of providing consultation aid, professional education and improving the quality of the AA’s work
  9. Peer review cycle
    • financial statement related items should be reviewed at least once every three years
    • if any material changes affect the valuation of policy liabilities or ceded reinsurance assets, review and report annually; still brief report if no change
    • review of full financial condition is expected to be prepared every three years; limited annual review is only required to address appropriateness of scenarios employed
  10. Selection of a reviewer
    • OSFI expects each company to hire a single peer reviewer for the company as a whole
    • peer reviewer is expected to meet the same standards of qualifications as the AA
    • it's essential to the integrity of peer review process that a reviewer be objective:
    •    may not be employee of company or any affiliated company (neither in last 3 years)
    •    must not be a shareholder or have direct financial investment (except policyholder)
    •    if a member of a consulting firm is the AA, reviewer can’t be from same firm
    • regular change or rotation of reviewers is expected (at least 3 years cycle)
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