The Canadian financial markets regulator, the Office of the Superintendent of Financial Institutions (OSFI), has now added natural catastrophe bonds to its rules on allowable forms of reinsurance that can reduce capital requirements for insurance risk.
It’s a move that could help to stimulate more catastrophe bond issuance from Canadian insurance carriers, with the instruments now able to provide the relevant capital credit to sponsors that create a more level playing field for insurance-linked securities (ILS) versus traditional reinsurance arrangements.
Recall that, in 2024 TD Insurance became the first Canadian company to sponsor catastrophe bonds, bringing the C$150 million MMIFS Re Ltd. (Series 2025-1) catastrophe bond deal to market, which became the first natural cat bond to solely cover perils in that country.
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