market bulletin

Ref: Y4915

Title

Canadian Regulatory Reporting

PurposeTo set out the detailed timetable and procedures for the submission of the Quarter 22015 Canadian Reporting packs to the Canadian Regulators (OSFI)

Type

Scheduled

From

Leslie Redmond, Manager, Overseas Reporting, Market FinanceDirect Tel No: +44(0) 7327 5490 E-mail: leslie.redmond@lloyds.com

Date

24 July 2015

Deadline

For immediate attention

Related links

None

Please copy this letter to those within your organisation who are responsible for reviewingand completing the Canadian packs.
1.

Electronic preliminary Canadian reporting packs for the quarter ended 30 June 2015 will beavailable to your agency on the Overseas Reporting System (ORS) on 24 July. The
appendices to this bulletin and detailed instructions on how to use the electronic system canbe found in the packs by clicking on the ‘Document Links’ menu option. Please note that thisreturn is now subject to Lloyd’s Overseas Returns Fining Policy (see Market Bulletin
Y4843 dated 1 December 2014).

2.

Whilst the reporting packs have been prepared centrally, the ultimate responsibility forsubmission of correct data rests with the managing agent of each syndicate and, as such, youmust satisfy yourself that you have reviewed the whole return. Packs should be locked byclose of business on 31 July 2015 as set out in the timetable at Appendix 1. This date is
critical, as our Canadian office has to review the filing (the P&C-2) before it is submitted to theOffice of the Superintendent of Financial Institutions (OSFI), the Canadian regulator and thetime for finalising the return is very short. A hard copy return is not required. If the managing
agent is making any adjustment to the pack in respect of Canadian regulated outstanding
claims which are not reported through Xchanging or through Lloyd’s Direct Reporting then they
will need to contact Ben Thomas in MRC via email (Ben.Thomas@Lloyds.com) so that an
IBNR requirement can be calculated.

3.

You are advised that the Margin Fund included within the packs reflects the basic margin of15%. The additional margin is included on the S1, funded in the main LCTF, and theapproximate percentages for each year of account are set out in Appendix 4 to this bulletin
which is available via “Document Links” in the packs. The additional margin is required to uplift
the funding requirement from a Lloyd’s basis to a Canadian basis (including the Canadian
capital (BAAT) requirement). For quarters 1-3, the Lloyd’s basis is relatively high because thecurrent year funding is on the basis of signed premiums.

4.

Agents should note that the additional margin on Form S1 is now allocated to syndicates
based on liabilities gross of receivables and recoverables rather than net of receivables andrecoverables. This change enhances the syndicate allocation of the additional margin only andPage 1 of 3
Lloyd’s is authorised under the Financial Services and Markets Act 2000

MARKET BULLETIN

is a better reflection of the underlying exposure. The total Lloyd’s S1 funding requirement will
be unchanged. The 15% margin for the S2 continues to be applied to the final S1 fundingrequirement.
5.

Managing agents should advise Lloyd’s (Ben Thomas, Market Reserving & Capital,(ben.thomas@lloyds.com) if they consider that a syndicate has incurred significant Canadianpost close movements or if they are holding significant earmarked IBNR for any Canadianevents, other than those already reported through the QMA. Significant is defined as greaterthan C$10m on a gross of reinsurance basis at the individual syndicate level or greater than
C$50m on a gross of reinsurance basis at the total Lloyd’s level.

6.

Data in the syndicate level P&C-2 packs is aggregated and forms Lloyd’s regulatory return to
the Canadian federal regulator OSFI. This return is a publicly available document which isreviewed and compared by provincial regulators to returns submitted by Lloyd’s detailingprovincial business. It is essential that these returns reconcile as Lloyd’s may be subject tofines and penalties if regulators note discrepancies between the federal and provincial returns.
Therefore managing agents must no longer use the ZZ province code when making
underwriting adjustments to the syndicate packs. Items with the ZZ province code areallocated across all provinces; this is not consistent with provincial reporting where the data iscompiled by individual province. Therefore, managing agents must ensure that adjustments
made within the packs reflect the correct province code.

7.

The assets on form S1 have been allocated using the same proportions as the ‘assets
required’ on the S1 for the previous period, taking into account the year-end closures. This isbecause in the past it has been apparent to the Canadian regulator that many syndicates havenot attempted to allocate assets reasonably, i.e. to those years of account where they havealready advised the regulator that there are liabilities and that funding has been made. To
mitigate any concerns the regulator may have, you should ensure that the split by year ofaccount is reasonable.

8.

Agents should note that Ontario commercial liability business is subject to specific provincial
reporting requirements which are closely monitored. Open market risks must be reported orsettled via Central Accounting, or by arrangement with Lloyd’s in order that the data required
to meet the regulatory requirements is captured. Please direct any questions toLITA@lloyds.com, extension 6677.

9.

OSFI requires that Canadian home warranty and equipment warranty business is reported
quarterly for all provinces, and managing agents must contact Lloyd’s if they commence writing
this business in order that the reporting requirements can be met. For further details, pleasecontact LITA@lloyds.com, extension 6677.

10.

Upon completion and finalisation of the pack you must lock it to enable Market Finance (MF) toincorporate the data into the global return. Once you have locked the pack, you will not beable to unlock it to make further amendments without contacting MF. Prior to locking the pack,a summary of your agency’s contact details will appear on the screen, and the pack should not
be locked unless these are correct.

11.

Managing agents are reminded that it is their responsibility to ensure that the electronic packs
they return to MF include all transactions for regulated Canadian business. This applies totransactions which have not been processed through XIS/XCS or LDR; you must ensure thatadjustments are made to add in these items. Where the associated cash movements have notbeen transacted through the regulated bank account, please advise MF (Stella Farrar)
separately by E-mail (stella.farrar@lloyds.com) at the same time as you submit your filing.

12.

If any systems issues arise in the reporting period, a link will be provided in the electronicpacks setting out the nature of the problems and their status.

iii

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13.

If you have any queries on the contents of the packs, or on how to complete them, pleasecontact me, on the above number, or Stella Farrar on extension 6734. Any questions on thereserves should be raised via E-mail with Ben Thomas (ben.thomas@lloyds.com).

Leslie RedmondManager - Overseas Reporting
Market FinanceiHome warranty refers to a contract of insurance issued by a warranty provider covering defects inthe construction of a new home and consequential losses or costs incurred by the owner.
ii
Equipment warranty insurance comprises insurance against loss of or damage to a motor vehicle orto equipment arising from its mechanical failure, but does not include automobile insurance orinsurance incidental to automobile insurance.

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