OSFI Releases Draft Guideline on Sound Reinsurance Practices and Procedures

On August 6, 2010, the Office of the Superintendent of Financial Institutions (Canada) (OSFI), the Canadian federal prudential insurance regulator, released for comment a draft of Guideline B-3 Sound Reinsurance Practices and Procedures (the Guideline). The Guideline, which is open for comment until October 1, 2010, follows the March 2010 release by OSFI of its long-awaited response paper on its regulatory and supervisory approach to reinsurance. The Guideline applies to all federally-regulated insurers and reinsurers (each, a FRI) in respect of reinsurance cessions, retrocessions and, where applicable, assumption reinsurance transactions. Once adopted, the Guideline will significantly enhance OSFI's oversight of reinsurance arrangements and impose significant new internal requirements on FRIs