OSFI releases draft guideline on insurance company internal capital targets

On May 21, 2010, the Office of the Superintendent of Financial Institutions (Canada) (OSFI), Canada's federal financial institutions regulator, released a draft Guideline on the development of internal capital targets by the insurance companies it regulates.  Noting that "recent volatile market conditions have put pressure on financial institutions' capital positions" and "emphasizing the need for appropriate and supportable capital targets", the draft Guideline, which applies to all domestic Canadian life and property & casualty companies and licensed foreign branches, is intended to foster a common view of how insurer-specific capital targets are to be set and address how assessment of capital adequacy fits within OSFI's supervisory framework.  The draft Guideline is open for comments until August 31, 2010.