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Capital Adequacy

Brookfield Annuity Company is a Canadian life insurance company regulated by the Office of the Superintendent of Financial Institutions (OSFI), which introduced a regulatory capital framework called the Life Insurance Capital Adequacy Test (LICAT) on January 1, 2018.

Brookfield Annuity exceeds all of OSFI’s minimum capital requirements. At March 31, 2021, we had a LICAT total ratio of 146%, as compared to OSFI’s regulatory minimum of 90%.

See our white paper, LICAT – An Evolution in Risk Assessment and Risk Management, to learn more about the standards Brookfield Annuity has to meet and the steps we take to fulfill our obligations to our clients and annuity members.

LICAT Ratios Public Disclosure Summary

(thousands of dollars, except percentages)

Companies are required, at minimum, to maintain a Core Ratio of 55%1 and a Total Ratio of 90%. OSFI has established supervisory target levels of 70% for Core and 100% for Total Capital.

  31 Mar 2021 31 Dec 2020 % Change
Available Capital (AC1 + B) (AC) 111,746 105,519 +6%
Tier 1 Capital (AC1) 111,746 105,519  
Tier 2 Capital (B)      
Surplus Allowance and Eligible Deposits (SA + ED) 45,329 40,087 +13%
Base Solvency Buffer (BSB) 107,721 106,394 +1%
Total Ratio ([AC + SA + ED]/BSB) x 100 146% 137% +7%
Core Ratio ([AC1 + 70% SA + 70% ED]/BSB) x 100 133% 126% +6%

1) Regulated insurance holding companies and non-operating insurance companies

Explanation of Changes in LICAT Ratio in the First Quarter of 2021:

The Company’s base solvency buffer increased modestly while surplus allowance and eligible deposits increased by 13% and available capital increased by 6% over the quarter. Overall, the LICAT Total Ratio increased by 7% at 31 March 2021.