R.R.O. 1990, Reg. 671: LIFE COMPANIES SPECIAL SHARES - INVESTMENT, Insurance Act, R.S.O. 1990, c. I.8
Insurance Act
Loi sur les assurances
R.R.O. 1990, REGULATION 671
LIFE COMPANIES SPECIAL SHARES — INVESTMENT
Note: This Regulation was revoked on May 5, 2008. See: O. Reg. 125/08, s. 1.
Last amendment: O. Reg. 125/08.
This Regulation is made in English only.
Definitions
1. In this Regulation,
“ancillary business corporation” means a corporation incorporated to carry on any business, other than a business activity referred to in clauses 433 (8) (a) to (f) of the Act, that is reasonably ancillary to the business of insurance;
“annual statement” means the statement required by section 102 of the Act;
“equity share” means a share of any class of shares of a corporation to which are attached voting rights exercisable in all circumstances and a share of any class of shares to which are attached voting rights by reason of the occurrence of any contingency that has occurred and is continuing;
“fire and casualty corporation” means a corporation incorporated under the laws of Canada or any province of Canada to undertake contracts of insurance other than contracts of life insurance;
“foreign life corporation” means a corporation incorporated outside Canada to undertake contracts of life insurance;
“life company” means an insurer incorporated and licensed under the laws of Ontario to transact the business of life insurance;
“mutual fund corporation” means a corporation incorporated to offer public participation in an investment portfolio through the issue of one or more classes of mutual fund shares;
“real estate corporation” means a corporation incorporated to acquire, hold, maintain, improve, lease or manage real estate or leaseholds or act as agent or broker in the sale or purchase of real estate or leaseholds;
“service corporation” means a corporation incorporated to provide,
(a) a life company or a foreign life corporation with advisory, management or sales distribution services in respect of life insurance contracts or annuities the reserves for which vary in amount depending on the market value of a specified group of assets maintained in a separate and distinct fund, or
(b) a mutual fund corporation with advisory, management or sales distribution services. R.R.O. 1990, Reg. 671, s. 1.
2. For the purpose of this Regulation,
(a) a life company shall be deemed to control a corporation if the life company owns shares of the corporation carrying more than 50 per cent of the votes for the election of directors, other than by way of security only or owns, directly or indirectly, more than 50 per cent of the total number of issued and outstanding equity shares of the corporation; and
(b) a life company and one or more other life companies shall be deemed to control a corporation if all the life companies together own shares of the corporation carrying more than 50 per cent of the votes for the election of directors, other than by way of security or own, directly or indirectly, more than 50 per cent of the total number of the issued and outstanding equity shares of the corporation. R.R.O. 1990, Reg. 671, s. 2.
Foreign Life Corporation Shares
3. (1) The terms and conditions under which a life company may, under clause 433 (8) (a) of the Act, invest its funds in the fully paid shares of a foreign life corporation are as follows,
(a) subject to clause (b), the life company shall not make or hold an investment in the shares of a foreign life corporation unless it has control, or as a result of the investment will acquire control, of the corporation;
(b) although it does not have control or would not as a result of the proposed investment acquire control of a foreign life corporation, a life company may, with the approval of the Superintendent, make or hold an investment in the shares of that corporation where,
(i) the life company and one or more other life companies have control, or as a result of the investment will acquire control, of a foreign life corporation, or
(ii) in the case of a life company that has transacted the business of insurance in the country or state in which the corporation was incorporated,
(A) the laws of that country or state do not permit the life company to acquire or retain control of the corporation, or
(B) the social or economic circumstances in that country or state or the conditions of transacting the business of insurance therein are such that, in the opinion of the Superintendent, investment is in the best interests of the policyholders of the life company;
(c) before an investment is made in the shares of a foreign life corporation, the life company shall furnish the Superintendent with such information as he or she may require relating to the proposed investment and, where that investment is in the shares of an existing corporation, the life company shall file with the Superintendent a certified copy of the instrument of incorporation, by-laws and most recent financial statement of that corporation;
(d) the life company shall deposit with the Superintendent within two weeks after making an investment in the shares of a foreign life corporation, an undertaking by the corporation that, while the life company holds an investment in the shares of the foreign life corporation, the corporation will,
(i) provide the Superintendent with copies of its financial statements and such other information concerning its financial condition and affairs as he or she may from time to time request,
(ii) limit its activities to the transaction of the business of life insurance and accident and sickness insurance, together with such other activities as may be necessarily incidental to the transaction of such business,
(iii) not make any investment that the life company is prohibited from making by section 436 of the Act,
(iv) not acquire or hold shares of any corporation incorporated to undertake contracts of life insurance, and
(v) not acquire or hold, except with the approval of the Superintendent, more than 30 per cent of the common shares of any corporation except a real estate corporation;
(e) the life company shall from time to time at the request of the Superintendent submit such information as the Superintendent may require as evidence that the foreign corporation is complying with the undertaking referred to under clause (d);
(f) the life company shall not, except with the approval of the Superintendent, solicit applications for insurance in any jurisdiction where the foreign life corporation is soliciting applications for insurance;
(g) the common shares of the foreign life corporation owned by the life company shall be taken into account in the annual statement of the life company at a value not greater than the amount obtained by multiplying,
(i) an amount equal to the excess of the assets of the corporation over the sum of its liabilities and its issued and paid in preferred capital shares,
by,
(ii) the proportion that the number of common shares of the corporation owned by the life company bears to the total number of the issued and outstanding common shares of the corporation; and
(h) where the life company has made an investment in the shares of one or more foreign life corporations the aggregate of,
(i) the amounts invested by the life company in the shares of the foreign life corporations,
(ii) the amounts advanced, lent or in any way contributed by the life company to the foreign life corporations, and
(iii) the amounts, other than the amounts referred to in subclause (ii), owing to the life company by the foreign life corporations,
shall not at any time, except with the approval of the Superintendent, exceed 2 per cent of the book value of the total assets of the life company. R.R.O. 1990, Reg. 671, s. 3 (1); O. Reg. 306/98, s. 1; O. Reg. 66/07, s. 1.
(2) For the purposes of clause (1) (g),
(a) the assets of the foreign life corporation shall not include any asset, other than an investment or loan, that if owned by the life company would not be admitted as an asset in the annual statement of the life company;
(b) the total value of the securities included in the assets of the foreign life corporation shall not exceed the values established by the Superintendent; and
(c) the liabilities of the foreign life corporation shall be such amount, not less than the liabilities shown on its books and including the actuarial reserves for policies in force as may be certified by an actuary, to adequately provide for the financial obligations of the company. R.R.O. 1990, Reg. 671, s. 3 (2).
(3) For the purposes of subclauses (1) (h) (i) and (ii), the amounts referred shall be converted to Canadian dollars at the rates of exchange in effect at the time the investment, advance, loan or contribution was made. R.R.O. 1990, Reg. 671, s. 3 (3).
(4) For the purposes of subclause (1) (h) (iii), the amounts referred shall be converted to Canadian dollars at the current rate of exchange. R.R.O. 1990, Reg. 671, s. 3 (4).
Fire and Casualty Corporation Shares
4. (1) The terms and conditions under which a life company may, under clause 433 (8) (c) of the Act, invest its funds in the fully paid shares of a fire and casualty corporation are as follows,
(a) the life company shall not make an investment in the shares of a fire and casualty corporation unless it has control, or as a result of the investment will acquire control of the corporation;
(b) the life company shall deposit with the Superintendent within two weeks after making an investment in the shares of a fire and casualty corporation an undertaking by that corporation that, while it is controlled by the life company, the corporation will not,
(i) make an investment that the life company is prohibited from making by section 436 of the Act, or
(ii) except for a fire and casualty corporation, acquire or hold shares of any corporation incorporated to undertake contracts of insurance;
(c) the life company shall not at any time hold an investment in the shares of a fire and casualty corporation under clause 433(8) (c) of the Act unless it controls the corporation;
(d) the common shares of the fire and casualty corporation owned by the life company shall be taken into account in the annual statement of the life company at a value not greater than the amount obtained by multiplying,
(i) an amount equal to the excess of the assets of the corporation over the sum of its liabilities and its issued and paid in preferred capital shares,
by,
(ii) the proportion that the number of common shares of the corporation owned by the life company bears to the total number of the issued and outstanding common shares of the corporation; and
(e) where the life company has made an investment in the shares of one or more fire and casualty corporations under clause 433 (8) (c) of the Act, the aggregate of,
(i) the amounts invested by the life company in the shares of the corporations,
(ii) the amounts advanced, lent or in any way contributed by the life company to the corporations, and
(iii) the amounts, other than the amounts referred to in subclause (ii), owing to the life company by the corporations,
shall not at any time, except with the approval of the Superintendent, exceed 2 per cent of the book value of the total assets of the life company. R.R.O. 1990, Reg. 671, s. 4 (1); O. Reg. 306/98, s. 2.
(2) For the purposes of clause (1) (d), the values of the assets and the amounts of the liabilities and preferred capital shares of the fire and casualty corporation shall be those shown in its most recent annual statement, but the total value of the securities included in the assets shall not exceed the total of the market values shown for those securities in that annual statement. R.R.O. 1990, Reg. 671, s. 4 (2).
Real Estate Corporation Shares
5. (1) The terms and conditions under which a life company may, under clause 433 (8) (d) of the Act, invest its funds in the fully paid shares of a real estate corporation are as follows,
(a) before an investment is made in the shares of a real estate corporation, a life company shall furnish the Superintendent with such information as he or she may require relating to the proposed investment and where that investment is in the shares of an existing corporation, the life company shall file with the Superintendent a certified copy of the instrument of incorporation, by-laws and most recent financial statement of that corporation;
(b) the life company shall deposit with the Superintendent, within two weeks after making an investment in the shares of a real estate corporation, an undertaking by the corporation that, while the life company holds an investment in the shares of the corporation, the corporation will,
(i) provide the Superintendent with copies of its financial statements and such other information concerning its financial condition and affairs as he or she may from time to time request and permit the Superintendent or an authorized member of his or her staff to visit its head office and other offices at any time and examine its books, vouchers, securities and documents,
(ii) limit its activities to acquiring, holding, maintaining, improving, leasing or managing real estate or leaseholds, or to acting as agent or broker in the sale or purchase of real estate or leaseholds,
(iii) not carry on, except with the approval of the Superintendent, the activities referred to in subclause (ii) in respect of any real estate or leaseholds other than real estate or leaseholds owned by or mortgaged to,
(A) the life company,
(B) the real estate corporation,
(C) any other real estate corporation in which the life company has made an investment under clause 433 (8) (d) of the Act, or
(D) any other real estate corporation of which more than 30 per cent of the common shares are owned by the corporation or by a real estate corporation referred to in sub-subclause (C),
(iv) procure, at the request of the Superintendent and at its own expense, an appraisal by one or more competent valuators of any parcel of real estate or any leasehold owned by it,
(v) not make any investment that the life company is prohibited from making by section 436 of the Act,
(vi) restrict its investments and loans, other than,
(A) investments in real estate or leaseholds, and
(B) investments in the shares of other real estate corporations,
to those it could make if it were a life company, and
(vii) not make or hold an investment in more than 30 per cent of the common shares of any real estate corporation unless the life company deposits with the Superintendent an undertaking by that other real estate corporation to the same effect as the undertaking referred to hereunder except that that other real estate corporation shall further undertake not to make or hold an investment in the shares of any other real estate corporation;
(c) the life company shall from time to time at the request of the Superintendent submit such information as the Superintendent may require as evidence that the real estate corporation is complying with the undertaking referred to in clause (b) and, where applicable, that any other real estate corporation described in subclause (b) (vii) is complying with the undertaking referred to in that clause;
(d) the common shares of the real estate corporation owned by the life company shall be taken into account in the annual statement of the life company at a value not greater than the amount obtained by multiplying,
(i) an amount equal to the excess of the assets of the corporation over the sum of its liabilities and its issued and paid in preferred capital shares,
by,
(ii) the proportion that the number of common shares of the corporation owned by the life company bears to the total number of the issued and outstanding common shares of the corporation;
(e) in respect of any one parcel of real estate or any one leasehold owned by the real estate corporation or by any other real estate corporation of which more than 30 per cent of the common shares are owned by the corporation, the aggregate of the book values of,
(i) the investments of the life company in mortgages or hypothecs, bonds, debentures or other evidences of indebtedness specifically secured by that parcel of real estate or leasehold,
(ii) the loans by the life company specifically secured by that parcel of real estate or leasehold, and
(iii) all other investments or loans that in the opinion of the Superintendent may reasonably be taken to represent an interest of the life company in that parcel of real estate or leasehold,
shall not at any time exceed 2 per cent of the book value of the total assets of the life company;
(f) where a life company has made an investment in the shares of a real estate corporation under clause 433 (8) (d) of the Act, the aggregate of the book values of investments made by the life company in the mortgages or hypothecs, bonds, debentures or other evidences of indebtedness or shares of, or by way of loans to,
(i) real estate corporations in the shares of which the life company has made an investment under clause 433(8) (d) of the Act, and
(ii) other real estate corporations described in subclause (b)(vii) of which more than 30 per cent of the common shares are owned by a real estate corporation referred to in subclause (i),
shall not at any time exceed 10 per cent of the book value of the total assets of the life company; and
(g) despite clause (e), the life company may make an investment in or a loan on the security of a parcel of real estate or leasehold referred to in clause (e) that causes the aggregate of the book values of the investments and loans described in subclauses (e) (i), (ii) and (iii) to exceed 2 per cent of the book value of the total assets of the life company where,
(i) the Superintendent is satisfied that the repayment schedules relating to the mortgage loans, bonds or debentures secured by that parcel of real estate or leasehold are such that the said aggregate will be reduced to 2 per cent or less of the book value of the total assets of the life company not later than the end of the fourth calendar year following the calendar year in which that investment or loan is made, and
(ii) that aggregate does not exceed 2¾ per cent of the book value of the total assets of the life company. R.R.O. 1990, Reg. 671, s. 5 (1).
(2) For the purposes of clause (1) (d),
(a) the assets of the real estate corporation shall not include any asset, other than an investment referred to in sub-subclause (1) (b) (vi) (A) or (B), that if owned by a life company would not be admitted as an asset in its annual statement; and
(b) the total value of any securities included in the assets of the real estate corporation shall not exceed the total of the market values of the assets of the real estate corporation. R.R.O. 1990, Reg. 671, s. 5 (2).
Mutual Fund Corporation Shares
6. (1) The terms and conditions under which a life company may, under clause 433 (8) (e) of the Act, invest its funds in the fully paid shares of a mutual fund corporation, the investment portfolio of which is restricted to investments and loans made and held subject to the same limitations and conditions as are applicable to investments and loans made by the life company by virtue of section 433 of the Act, other than subsection (8) thereof, are as follows,
(a) a life company shall not make an investment in the shares of a mutual fund corporation unless the investment portfolio in which the mutual fund corporation offers participation is managed by the life company or a corporation controlled by the life company;
(b) before an investment is made in the shares of a mutual fund corporation, the life company shall furnish the Superintendent with such information as he or she may require relating to the proposed investment and, where that investment is in the shares of an existing corporation, the life company shall file with the Superintendent a certified copy of the instrument of incorporation, by-laws and most recent financial statement of that corporation;
(c) the life company shall deposit with the Superintendent, within two weeks after making an investment in the shares of a mutual fund corporation, an undertaking by the company or the corporation managing the investment portfolio of the mutual fund corporation that, while the life company holds an investment in the shares of the mutual fund corporation, the company or corporation managing the investment portfolio will,
(i) provide the Superintendent with copies of the financial statements of the mutual fund corporation and such other information concerning the affairs of that corporation as the Superintendent may from time to time request, and
(ii) not invest the funds of the mutual fund corporation,
(A) in any investment that the life company is prohibited from making by section 436 of the Act, or
(B) in more than 10 per cent of the common shares of any corporation except with the approval of the Superintendent; and
(d) the life company shall from time to time at the request of the Superintendent submit such information as he or she may require as evidence that the company or corporation managing the investment portfolio is complying with the undertaking referred to in clause (c). R.R.O. 1990, Reg. 671, s. 6 (1).
(2) The terms and conditions under which a life company may, under clause 433 (8) (e) of the Act, invest its funds in the fully paid shares of a mutual fund corporation other than a mutual fund corporation referred to in subsection (1) are as follows,
(a) the terms and conditions set out in clauses (1) (a), (b), (c) and (d); and
(b) the total market value of the investments held by a life company in the shares of a mutual fund corporation other than a mutual fund corporation referred to in subsection (1), under clause 433 (8) (e) of the Act, shall not at any time exceed one-third of 1 per cent of the book value of the total assets of the life company. R.R.O. 1990, Reg. 671, s. 6 (2).
Service Corporation Shares
7. (1) The terms and conditions under which a life company may, under clause 433 (8) (b) or (f) of the Act, invest its funds in the fully paid shares of a service corporation are as follows,
(a) the life company shall not make an investment in the shares of a service corporation unless it has control, or as a result of the investment will acquire control, of that corporation;
(b) before an investment is made in the shares of a service corporation, the life company shall furnish the Superintendent with such information as he or she may require relating to the proposed investment and, where that investment is in the shares of an existing corporation, the life company shall file with the Superintendent a certified copy of the instrument of incorporation, by-laws and most recent financial statement of that corporation;
(c) the life company shall deposit with the Superintendent, within two weeks after making an investment in the shares of a service corporation, an undertaking by that corporation that, while it is controlled by the life company, the corporation will,
(i) provide the Superintendent with copies of its financial statements and such other information concerning its affairs as he or she may from time to time request,
(ii) not make any investment that the life company is prohibited from making by section 436 of the Act,
(iii) not acquire or hold, except with the approval of the Superintendent, more than 30 per cent of the common shares of any corporation,
(iv) not provide any services other than services referred to in clause 433 (8) (f) of the Act,
(v) provide the services referred to in clause 433 (8) (b) of the Act and such other services as may be necessarily incidental thereto only,
(A) to the life company and to a foreign life corporation in the shares of which the life company has made an investment, or
(B) with the approval of the Superintendent, to another life company or foreign life corporation for such period of time as the Superintendent may determine, and
(vi) provide the services referred to in clause 433 (8) (f) of the Act and such other services as may be necessarily incidental thereto to one or more mutual fund corporations only where,
(A) the investment portfolio of at least one of the mutual fund corporations is managed by a corporation controlled by the life company, or
(B) the life company provides evidence satisfactory to the Superintendent that a corporation controlled by the life company will, within a period of time determined by the Superintendent, assume the management of a mutual fund corporation to which the service corporation provides its services;
(d) the life company shall from time to time at the request of the Superintendent submit such information as he or she may require as evidence that the service corporation is complying with the undertaking referred to in clause (c);
(e) the life company shall not at any time hold an investment in the shares of a service corporation under clause 433 (8) (b) or (f) of the Act unless at that time it controls the corporation;
(f) the common shares of the service corporation owned by the life company shall be taken into account in the annual statement of the life company at a value not greater than the amount obtained by multiplying,
(i) an amount equal to the excess of the assets of the corporation over the sum of its liabilities and its issued and paid in preferred capital shares,
by,
(ii) the proportion that the number of common shares of the corporation owned by the life company bears to the total number of the issued and outstanding common shares of the corporation; and
(g) the total book value of the investments held by a life company in the shares of service corporations under clause 433 (8) (b) or (g) of the Act shall not at any time exceed one-third of 1 per cent of the book value of the total assets of the life company. R.R.O. 1990, Reg. 671, s. 7 (1).
(2) For the purposes of clause (1) (f), the assets of the service corporation shall not include any asset that if owned by a life company would not be admitted as an asset in its annual statement and the total value of any securities included in the assets shall not exceed the total of their market value. R.R.O. 1990, Reg. 671, s. 7 (2).
Ancillary Business Corporation Shares
8. (1) The terms and conditions under which a life company may, with the prior approval of the Superintendent, invest its funds in the fully paid shares of an ancillary business corporation under clause 433 (8) (g) of the Act are as follows,
(a) the life company shall not make an investment in the shares of an ancillary business corporation unless it has control, or as a result of the investment will acquire control, of that corporation;
(b) before an investment is made in the shares of an ancillary business corporation, or before a life company makes application for the incorporation of an ancillary business corporation, the life company shall furnish the Superintendent with such information as he or she may require relating to the proposed investment and, where that investment is in the shares of an existing corporation, the life company shall file with the Superintendent a certified copy of the instrument of incorporation, by-laws and most recent financial statement of that corporation;
(c) the life company shall deposit with the Superintendent, within two weeks after making an investment in the shares of an ancillary business corporation, an undertaking by that corporation that, while it is controlled by the life company, the corporation will,
(i) provide the Superintendent with copies of its financial statements and such other information concerning its affairs as he or she may from time to time request, and permit the Superintendent or an authorized representative of his or her staff to visit its head office and other offices at any time and examine its books, brochures, securities and documents,
(ii) not carry on any business,
(A) referred to in clauses 433 (8) (a) to (f) of the Act, or
(B) that is not reasonably ancillary to the business of insurance,
(iii) not make any investment that the life company is prohibited from making by section 436 of the Act,
(iv) not acquire or hold, except with the approval of the Superintendent, more than 30 per cent of the common shares of any corporation, and
(v) where it was incorporated to provide services of a kind ordinarily required by the life company, not provide, except with the approval of the Superintendent, those services to any other person unless it also provides them to the life company;
(d) the life company shall from time to time at the request of the Superintendent submit such information as he or she may require as evidence that the ancillary business corporation is complying with the undertaking referred to in clause (c);
(e) a life company shall not at any time hold an investment in the shares of an ancillary business corporation under clause 433 (8) (g) of the Act unless it controls the corporation at that time;
(f) the common shares of the ancillary business corporation owned by the life company shall be taken into account in the annual statement of the life company at a value not greater than the amount obtained by multiplying,
(i) an amount equal to the excess of the assets of the corporation over the sum of its liabilities and its issued and paid in preferred capital shares,
by,
(ii) the proportion that the number of common shares of the corporation owned by the life company bears to the total number of the issued and outstanding common shares of the corporation; and
(g) the total book value of the investments held by a life company in the shares of ancillary business corporations under clause 433 (8) (g) of the Act shall not at any time exceed 1 per cent of the book value of the total assets of the life company. R.R.O. 1990, Reg. 671, s. 8 (1); O. Reg. 306/98, s. 3.
(2) For the purposes of clause (1) (f), the assets of the ancillary business corporation shall not include any asset that if owned by a life company would not be admitted as an asset in its annual statement and the total value of any securities included in the assets shall not exceed the total of their market values. R.R.O. 1990, Reg. 671, s. 8 (2).