Actuarial Notes

P&C Supervisory Annual Return (PC3)

By Office of the Superintendent of Financial Institutions · 2023 · PC3

Study guide: Exam 6C

The uniform annual return, approved by the Canadian Council of Insurance Regulators, in which P&C insurers file their supervisory annual supplement. This is the 2023 form (PC3) for Canadian and foreign property and casualty insurers. Its table of contents groups the pages into general information; consolidated exhibits on investments, miscellaneous assets and liabilities, claims and insurance contracts, reinsurance ceded and out-of-Canada operations; non-consolidated claims exhibits; and the affidavits verifying the annual supplement return, and marks which pages a Canadian insurer files and which a foreign insurer files.

On the syllabus

  • Exam 6C — objectives C1–C4; pp. 10.60 and 60.45 of the 2023 return, using the 2023 Return archived on the CAS website.

10.10 Annual Supplement

10.20 Shareholders

10.30 Corporate Organization Chart

10.40 Other Information

10.42 Encumbered Assets

10.43 Outsourcing and Service Agreements

10.60 Summary of Selected Financial Data for five years

  • Five years of consolidated data: operations (assets or assets vested in trust, liabilities, adjusted equity, premiums received for insurance contracts, insurance revenue, insurance service expenses) and profitability (insurance service result, investment return, investment yield, net income (loss), return on equity).
  • The Minimum Capital Test / Branch Adequacy of Assets Test section reports the excess of capital (margin) available over capital (margin) required and the MCT/BAAT ratio.
  • Canadian insurers also report dividends, share capital and contributed surplus paid in and redeemed, and other ratios: adjusted equity as a % of liabilities, and agents and brokers balances and amounts due from subsidiaries and associates, and claims development, each as a % of adjusted equity.
  • Foreign insurers report their home office results in the currency of the home jurisdiction.
  • Further lines ask for the average discount rate for liabilities for incurred claims, the average durations of bonds and of liabilities for remaining coverage and for incurred claims, and the number of automobiles insured at year-end.
  • In the year of IFRS 17 adoption OSFI expects current and prior year comparative data, and the rest of the prior year data can be left blank.

40.12 Short Term Investments

40.22 Bonds and Debentures

40.32 Mortgage Loans

40.42 Preferred Shares

40.52 Common Shares

40.70 Investment Properties and Own Use Property and Equipment

  • Investment Properties
  • Own Use Property and Equipment

50.20 Receivable from/payable to Non-Associated Agents & Brokers

60.35 Claims and Adjustment Expenses Paid, Current Year, Liabilities for Incurred Claims, Current Year and Prior Year Claims Development

60.45 Net Ultimate Claims and Adjustment Expenses - Claims Development

  • A consolidated development triangle: for all prior accident years and each accident year to the current one, the end-of-year ultimate claims and adjustment expenses, net of reinsurance and undiscounted, as estimated at each year-end.
  • Further columns give cumulative net claims and adjustment expenses paid, net claim liabilities and adjustment expenses, and the prior year development excess or (deficiency), column (09) less column (10).
  • Below the total, the effect of discounting and the effect of the risk adjustment for non-financial risk lead to net liabilities for incurred claims, which are then shown excluding ULAE, "Facility Association" and "Plan", and other provisions.

60.60 Remaining CSM from Insurance Contracts Estimated at the End of the Year

60.70 Effect of GMM Contracts Initially Recognized in the Year

60.90 Discount Rates (LIC)

60.95 Discount Rates (LRC)

70.10 Net Expenses from Reinsurance Contracts Held

70.21 Summary of Intragroup Reinsurance Contracts Issued and Held

70.90 Reinsurance Interrogatories

  • Reinsurance Interrogatories
  • Summary of non-traditional methods of risk mitigation issued or purchased by insurer or parent/home office for in Canada risk

90.15 Out of Canada Operations

93.35 Claims and Adjustment Expenses Paid, Current Year, Liabilities for Incurred Claims, Current Year and Prior Year Claims Development

  • The non-consolidated counterpart of page 60.35, filed by Canadian insurers.

93.65 Net Ultimate Claims and Adjustment Expenses - Claims Development

  • The non-consolidated counterpart of page 60.45, filed by Canadian insurers.

99.10 Canadian - President/Chief Executive Officer

  • An affidavit verifying the annual supplement return.

99.11 Foreign - Chief Agent

  • An affidavit verifying the annual supplement return.

99.15 Foreign - President/Chief Executive Officer

  • An affidavit verifying the annual supplement return.

Related readings

  • CCIR Instructions — the instructions the content outline assigns for these pages
  • OSFI Core Return — the core financial statement return (PC1), whose page 20.10 cites this return's page 40.70 as a supporting exhibit
  • OSFI Memorandum — its §4.9.2 asks the appointed actuary to discuss differences between the loss development on page 60.45 and the comparison of actual and expected experience

Sources