Investment Limits (Insurance Holding Companies) Regulations (SOR/2001-397)
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Regulations are current to 2024-10-30 and last amended on 2011-09-22. Previous Versions
Interests of an Insurance Holding Company in Real Property (continued)
Indirect Interests — Loans and Debt Obligations
Marginal note:Certain indirect interests
10 (1) The following are interests of an insurance holding company in real property:
(a) a debt obligation issued by a related real property entity of the insurance holding company and beneficially owned by the insurance holding company or by a designated entity controlled by the insurance holding company;
(b) a loan made by the insurance holding company, or by a designated entity controlled by the insurance holding company, to a related real property entity of the insurance holding company;
(c) a loan made by the insurance holding company, or by a designated entity controlled by the insurance holding company, to
(i) a real property entity in which a financial institution controlled by the insurance holding company has a substantial investment, or
(ii) a real property entity that is controlled by a real property entity described in subparagraph (i);
(d) a debt obligation issued by a real property entity described in subparagraph (c)(i) or (ii) and beneficially owned by the insurance holding company or by a designated entity controlled by the insurance holding company;
(e) a debt obligation that is
(i) issued by a related real property entity of the insurance holding company,
(ii) beneficially owned by a third party, and
(iii) guaranteed by the insurance holding company or by a designated entity controlled by the insurance holding company; and
(f) a loan made by a third party to a related real property entity of the insurance holding company and guaranteed by the insurance holding company or by a designated entity controlled by the insurance holding company.
Marginal note:Value of those interests
(2) The value of the interests of an insurance holding company in real property is
(a) in respect of a debt obligation referred to in paragraph (1)(a) or (d), the book value of the debt obligation;
(b) in respect of a loan referred to in paragraph (1)(b) or (c), the book value of the loan; and
(c) in respect of a guaranteed debt obligation referred to in paragraph (1)(e) or a guaranteed loan referred to in paragraph (1)(f),
(i) if the debt obligation is issued by, or the loan is made to, an entity that is a related real property entity of the insurance holding company and the entity beneficially owns real property that is an interest of the insurance holding company in real property under paragraph 9(1)(a), any amount by which the face value of the guarantee exceeds the value of the real property determined in accordance with paragraph 9(2)(a), and
(ii) in any other case, the face value of the guarantee.
Indirect Interests — Secured Loans and Debt Obligations
Marginal note:Certain indirect interests
11 (1) If an insurance holding company or a designated entity controlled by an insurance holding company makes a loan to, or beneficially owns or guarantees the debt obligation of, a third party, the loan or debt obligation is an interest of the insurance holding company in real property if it is secured by
(a) real property beneficially owned by a third party in conjunction with
(i) the insurance holding company,
(ii) the designated entity,
(iii) a related real property entity of the insurance holding company,
(iv) a securities dealer or insurance company controlled by the insurance holding company,
(v) an entity controlled by a securities dealer or insurance company referred to in subparagraph (iv), or
(vi) a real property entity described in subparagraph 10(1)(c)(i) or (ii); or
(b) shares or ownership interests beneficially owned by a third party in
(i) an entity that beneficially owns real property in conjunction with the insurance holding company, a related real property entity of the insurance holding company or a designated entity controlled by the insurance holding company, or
(ii) a related real property entity of the insurance holding company.
Marginal note:Value of those interests
(2) The value of the interests of an insurance holding company in real property is
(a) in respect of a loan or debt obligation that is secured by real property referred to in paragraph (1)(a), the lesser of
(i) the net realizable value of the third party’s interest in the real property at the time that the security interest was given, and
(ii) the amount determined by the formula
A - B
where
- A
- is
(A) if the loan was made by the insurance holding company or a designated entity controlled by the insurance holding company or the debt obligation is beneficially owned by the insurance holding company or a designated entity controlled by the insurance holding company, the book value of the loan or debt obligation, or
(B) if the debt obligation is guaranteed by the insurance holding company or a designated entity controlled by the insurance holding company, the face value of the guarantee, and
- B
- is the total net realizable value of any other security interests that were given for the loan or debt obligation;
(b) in respect of a loan or debt obligation that is secured by shares or ownership interests beneficially owned by a third party in an entity referred to in subparagraph (1)(b)(i), the lesser of
(i) the net realizable value of the third party’s interest in those shares or ownership interests at the time that the security interest was given, and
(ii) the amount determined by the formula
A - (B - (C × D/E))
where
- A
- is
(A) if the loan was made by the insurance holding company or a designated entity controlled by the insurance holding company or the debt obligation is beneficially owned by the insurance holding company or a designated entity controlled by the insurance holding company, the book value of the loan or debt obligation, or
(B) if the debt obligation is guaranteed by the insurance holding company or a designated entity controlled by the insurance holding company, the face value of the guarantee,
- B
- is the total net realizable value of all security interests that were given for the loan or debt obligation,
- C
- is the net realizable value of the entity’s interest in the real property referred to in subparagraph (1)(b)(i),
- D
- is the value of the shares or ownership interests that are given as the security interest, and
- E
- is the total value of the outstanding shares or ownership interests in the entity; and
(c) in respect of a loan or debt obligation that is secured by shares or ownership interests beneficially owned by a third party in a related real property entity referred to in subparagraph (1)(b)(ii), the lesser of
(i) the net realizable value of the third party’s interest in those shares or ownership interests at the time that the security interest was given, and
(ii) the amount determined by the formula
A - B
where
- A
- is
(A) if the loan was made by the insurance holding company or a designated entity controlled by the insurance holding company or the debt obligation is beneficially owned by the insurance holding company or a designated entity controlled by the insurance holding company, the book value of the loan or debt obligation, or
(B) if the debt obligation is guaranteed by the insurance holding company or a designated entity controlled by the insurance holding company, the face value of the guarantee, and
- B
- is the total net realizable value of any other security interests that were given for the loan or debt obligation.
Other Interests
Marginal note:Other interests
12 (1) The following are interests of an insurance holding company in real property:
(a) a guarantee given by the insurance holding company, or by a designated entity controlled by the insurance holding company, to an entity other than the insurance holding company or designated entity for the purpose of completing the development of real property that is beneficially owned by
(i) the insurance holding company,
(ii) a designated entity controlled by the insurance holding company, or
(iii) a related real property entity of the insurance holding company; and
(b) an agreement made by the insurance holding company, or by a designated entity controlled by the insurance holding company, to support a third party’s cost of operating or financing real property that is beneficially owned by
(i) the insurance holding company,
(ii) a designated entity controlled by the insurance holding company, or
(iii) a related real property entity of the insurance holding company.
Marginal note:Value of those interests
(2) The value of the interests of an insurance holding company in real property is
(a) in respect of a guarantee referred to in paragraph (1)(a), the estimated cost of completing the development of the real property; and
(b) in respect of an agreement referred to in paragraph (1)(b), the amount of any funds advanced by the insurance holding company, or by a designated entity controlled by the insurance holding company, under the agreement.
Coming into Force
Marginal note:Coming into force
Footnote *13 These Regulations come into force on the day on which sections 970 and 984 of the Insurance Companies Act, as enacted by section 465 of the Financial Consumer Agency of Canada Act, chapter 9 of the Statutes of Canada, 2001, come into force.
Return to footnote *[Note: Regulations in force October 24, 2001, see SI/2001-102.]
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