Specialized Financing (Life Companies) Regulations

The regulations aim to regulate specialized financing activities undertaken by life companies under the Insurance Companies Act. The main objective is to ensure that life companies do not engage in excessive or high-risk investments through specialized financing activities.

Key provisions include limits on investments, such as restrictions on acquiring control of certain entities and holding a substantial investment in an entity for more than 13 consecutive years. Additionally, there are restrictions on the aggregate balance sheet value of shares and ownership interests held by a life company and its subsidiaries in an entity, which cannot exceed $250 million.

The regulations also impose limits on the percentage of regulatory capital that can be invested in specialized financing entities or other entities controlled by the life company, which cannot exceed 25% of the life company's regulatory capital. Furthermore, there are restrictions on the acquisition of control of a specialized financing entity and holding a non-controlling interest.

The regulations come into force on October 4, 2001, and apply to specialized financing activities under subsection 493(4) of the Act and to the ownership by a life company of shares or ownership interests in a specialized financing entity under paragraph 495(2)(b) of the Act.