Income Tax Regulations — (a)
Canadian reserve liabilities of an insurer as at the end of a taxation year means the amount determined by the formula A − A.1 + A.2 + A.3 − (0.9 × B) − (C − (0.9 × D)) where A is the total of the insurer’s liabilities and reserves including liabilities for segregated fund guarantees (other than policyholders’ liabilities or a liability for an obligation to pay a benefit under a segregated fund policy in respect of which subparagraphs 1406(b)(i) and (ii) apply) reported as at the end of the year in respect of (a) life insurance policies in Canada, (b) fire insurance policies issued or effected in respect of property situated in Canada, and (c) insurance policies of any other class covering risks ordinarily within Canada at the time the policy was issued or effected; A.1 is the total of all amounts each of which is the amount of an item reported by the insurer as an insurance contract asset as at the end of the year in respect of insurance policies described in any of paragraphs (a) to (c) of the description of A; A.2 is the total of all amounts each of which is an amount of funds withheld as at the end of the year by the insurer in respect of the reinsurance of a risk under an insurance policy described in any of paragraphs (a) to (c) of the description of A; A.3 is the total of all amounts each which is an amount recoverable as at the end of the year by the insurer under a funds withheld arrangement in respect of the reinsurance of a risk by the insurer under an insurance policy described in any of paragraphs (a) to (c) of the description of A; B is the total of all amounts each of which is, in respect of a group of insurance contracts of the insurer at the end of the year, (a) the contractual service margin for the group, if no portion of the contractual service margin is in respect of a policy other than a policy that (i) is described in any of paragraphs (a) to (c) of the description of A, (ii) is (A) a life insurance policy in Canada, (B) a policy that insures risk in respect of a financial loss of a lender on a loan made on the security of real property, (C) a non-cancellable or guaranteed renewable accident and sickness policy in respect of accident and sickness insurance (as defined in subsection 1408(1)), or (D) a policy in respect of title insurance (as defined in subsection 1408(1)), and (iii) is not a segregated fund policy, and (b) in any other case, the amount that would be the contractual service margin for the group if the amount excluded the portion that is in respect of policies other than policies that meet the conditions in subparagraphs (a)(i) to (iii); C is the total of all amounts each of which is an amount, in respect of a group of reinsurance contracts held by the insurer at the end of the year, that is (a) the reinsurance contract held amount for the group, if no portion of the reinsurance contract held amount is in respect of the reinsurance of (i) a risk under a policy other than a policy that meets the condition in subparagraph (a)(i) of the description of B, or (ii) an obligation to pay a benefit under a segregated fund policy in respect of which subparagraphs 1406(b)(i) and (ii) apply, and (b) in any other case, the amount that would be the reinsurance contract held amount for the group if the amount were determined excluding any portion that is in respect of the reinsurance of either (i) a risk under a policy other than a policy that meets the condition under subparagraph (a)(i) of the description of B, or (ii) an obligation to pay a benefit under a segregated fund policy in respect of which subparagraphs 1406(b)(i) and (ii) apply; and D is the total of all amounts each of which is the amount, in respect of a group of reinsurance contracts held by the insurer at the end of the year, that is (a) if no portion of the contractual service margin for the group is in respect of a risk under a policy other than a policy that meets the conditions in subparagraphs (a)(i) to (iii) of the description of B,