The Office of the Superintendent of Financial Institutions (OSFI) has issued the final Minimum Capital Test (MCT) Guideline (2026), updating the minimum and supervisory target capital standards for federally regulated property and casualty (P&C) insurers, including foreign P&C insurers operating in Canada as a branch. The revisions focus on simplifying and clarifying capital requirements and related processes. Key changes include a simplified unexpired coverage formula for insurance risk, and a clarified rule on how insurers hold capital for foreign branches so it applies only to “funds withheld” reinsurance arrangements and no longer requires OSFI’s prior review. The guideline also updates capital confirmation requirements for user fees to clarify timing and application, alongside minor technical adjustments and clarifications, and OSFI has updated the related MCT regulatory reporting form PC4 and instructions. The final guideline reflects feedback from a 90-day public consultation that ended in August 2025 and takes effect on 1 January 2026.
Office of the Superintendent of Financial Institutions 2025-11-20
Canada's Office of the Superintendent of Financial Institutions publishes final 2026 Minimum Capital Test Guideline for P&C insurers effective 1 January 2026
The Office of the Superintendent of Financial Institutions (OSFI) released the final Minimum Capital Test (MCT) Guideline (2026) for federally regulated property and casualty insurers, including foreign branches in Canada. Key updates include a simplified unexpired coverage formula for insurance risk and clarified capital holding rules for foreign branches, specifically for "funds withheld" reinsurance arrangements. Effective 1 January 2026, the guideline also updates capital confirmation requirements and the MCT regulatory reporting form PC4.