INVESTMENT AND LENDING ACTIVITIES - PROPERTY AND CASUALTY INSURERS AND FRATERNAL SOCIETIES

CONTENTS 1. Application 2. Definitions 3. Commercial loan, prescribed matters 4. Prescribed subsidiary Substantial Investments in Permitted Entities 5. Permitted entities 6. Continuation of exceptions Chief Executive Officer’s Approval 7. Criteria for Chief Executive Officer’s approval Other investments 8. Investments outside control of insurer Restrictions and Limits on Insurer’s Business Activities 9. Limit on loans secured by residential mortgages 10. Restriction on loans to certain entities 11. Restriction on guarantees 12. Prohibition on financial leasing 13. Holding own shares 14. Value of loans, investments and interests in property 15. Limit on commercial loans and loans to individuals 16. Limits on investments Interests in Real Property 17. Interests in real property Matters Prescribed for the Purposes of Section 435.14 of the Act 18. Total assets for purposes of s. 435.14 of the Act Application 1. (1) This Regulation applies to insurers and fraternal societies that are subject to Part XVII of the Act, but does not apply to insurers, other than fraternal societies, licensed under the Act to transact the business of life insurance. O. Reg. 122/08, s. 1 (1). (2) Unless otherwise provided, a reference in this Regulation to an insurer is a reference to an insurer or fraternal society to which this Regulation applies. O. Reg. 122/08, s. 1 (2). Definitions 2. (1) In this Regulation, “designated entity” means, in respect of an insurer, an entity that is not, (a) a joint venture, (b) a financial institution, or (c) a subsidiary of a financial institution that is not a subsidiary of the financial institution only because it is a subsidiary of the insurer; (“entité désignée”) “financial services entity” means an entity that is, (a) a financial institution, (b) an entity listed in any of paragraphs 1 to 8 of subsection 5 (1), or (c) any other entity whose primary business activity is the provision of financial services; (“entité s’occupant de services financiers”) “joint venture” means a real property entity, (a) that was formed by an insurer or a designated entity controlled by the insurer and one or more other persons for the purpose of a specific business undertaking, (b) in which the insurer or designated entity has made and holds a substantial investment, and (c) in respect of which the persons who formed it have agreed on joint control, regardless of the distribution of their equity; (“coentreprise”) “minority interest” means, in respect of an entity controlled by an insurer, an equity interest in the entity that is held by a person who is neither the insurer nor another entity controlled by the insurer; (“participation minoritaire”) “mutual fund dealer” means an entity whose principal activity is acting as a selling agent of units, shares or other interests in a mutual fund and acting as a collecting agent in the collection of payments for any such interests if, (a) the proceeds of the sales of any such interests, less any sales commissions and service fees, are paid to the mutual fund, and (b) the existence of a sales commission and service fee in respect of the sale of any such interest is disclosed to the purchaser of the interest before the purchase of the interest; (“courtier de fonds mutuels”) “real property entity” means, (a) an entity that is primarily engaged in the business of holding, managing or otherwise dealing with real property, or (b) an entity that is primarily engaged in holding or dealing in, (i) shares of, or ownership interests in, an entity described under clause (a), or (ii) shares of, or ownership interests in, another entity that is primarily engaged in holding or dealing in shares of, or ownership interests, in an entity described under clause (a); (“entité immobilière”) “related real property entity” means, in respect of an insurer, (a) a real property entity, other than a designated entity controlled by the insurer, in which the insurer or a designated entity controlled by the insurer beneficially owns sufficient shares or ownership interests to cause the insurer or designated entity to have a substantial investment in the real property entity, or (b) a real property entity that is controlled by a real property entity described in clause (a); (“entité immobilière apparentée”) “residential real property” means real property that includes one or more buildings in each of which at least one-half of the floor area is used, or is to be used, as residential premises; (“immeuble résidentiel”) “third party” means, in respect of an insurer, another person that is not, (a) a designated entity controlled by the insurer, or (b) a related real property entity of the insurer. (“tierce partie”) O. Reg. 122/08, s. 2 (1). (2) For the purposes of this Regulation and subject to subsection (3), the capital of an insurer at a particular time is the amount calculated using the formula, A – B in which, “A” is the sum of the following amounts that would be reported in the financial statements of the insurer prepared in accordance with section 104 of the Act as of the particular time: 1. The amount of minority interests. 2. The amount of subordinated indebtedness. 3. The amount by which assets exceed liabilities. “B” is the amount of goodwill that would be included in the financial statements referred to in the definition of “A”. O. Reg. 122/08, s. 2 (2). (3) In calculating the amount of an insurer’s capital under subsection (2), an amount may be included in respect of a security only if, (a) the security is, by its terms, subordinate in right of payment to the policy liabilities and other liabilities of the entity that issued the security, other than liabilities that by their terms rank equally with or are subordinate to the security; (b) the security is issued and fully paid up; and (c) if the security is subordinated indebtedness or a preferred share, the security, (i) has an initial minimum term of at least five years or has no stated term, and (ii) cannot be redeemed or purchased for cancellation in the first five years after it is issued. O. Reg. 122/08, s. 2 (3). Commercial loan, prescribed matters 3. (1) For the purposes of subclause (a) (i) of the definition of “commercial loan” in subsection 432 (1) of the Act, the prescribed amount is $250,000. O. Reg. 122/08, s. 3 (1). (2) The following international agencies are prescribed for the purposes of subclauses (a) (iii) and (b) (ii) of the definition of “commercial loan” in subsection 432 (1) of the Act: 1. The International Bank for Reconstruction and Development. 2. The International Finance Corporation. 3. The Inter-American Development Bank. 4. The Asian Development Bank. 5. The African Development Bank. 6. The European Investment Bank. 7. The Caribbean Development Bank. 8. The Nordic Investment Bank. 9. The European Bank for Reconstruction and Development. 10. The Council of Europe Development Bank. O. Reg. 122/08, s. 3 (2). (3) For the purposes of subclauses (b) (iv) and (c) (i) of the definition of “commercial loan” in subsection 432 (1) of the Act, securities that are debt obligations, shares or ownership interests are widely distributed if the following conditions are satisfied: 1. In the case of debt obligations the distribution of which is exempt from the requirement to file a prospectus under the laws of Ontario, Canada, another province of Canada or a jurisdiction outside Canada, i. at least 90 per cent of the maximum authorized principal of the debt obligations is held by one or more persons other than the insurer and its subsidiaries and, A. the debt obligations were issued to at least 25 persons other than the insurer and its subsidiaries within six months after the day on which the first of the debt obligations was issued, or B. if the debt obligations are issued on a continuous basis, there are on average at least 25 holders other than the insurer and its subsidiaries, or ii. at the time of their initial distribution, the debt obligations satisfied at least three of the following conditions: A. their initial term was less than one year, B. they were rated by a rating agency, C. they were distributed through a person authorized to trade in securities, and D. they were distributed in accordance with an offering circular or memorandum or a similar document relating to the distribution of securities. 2. In the case of securities other than debt obligations described in paragraph 1, i. the securities are listed and posted for trading on a recognized stock exchange, or ii. a prospectus relating to the issuance of the securities was filed under the laws of Ontario, Canada, another province in Canada or a jurisdiction outside Canada. O. Reg. 122/08, s. 3 (3). Prescribed subsidiary 4. For the purposes of the definition of “prescribed subsidiary” in subsection 432 (1) of the Act, a prescribed subsidiary of an insurer is a subsidiary of the insurer that is not, (a) a financial institution; or (b) an entity that is a subsidiary of a financial institution for a reason other than because it is a subsidiary of the insurer. O. Reg. 122/08, s. 4. Substantial Investments in Permitted Entities Permitted entities 5. (1) For the purposes of the definition of “permitted entity” in subsection 432 (1) of the Act, each of the following entities is a permitted entity in relation to an insurer: 1. An investment counsel. 2. A portfolio manager. 3. An insurance broker or agent, if the entity is licensed under the Act or registered under the Registered Insurance Brokers Act or is registered or licensed under comparable legislation in another jurisdiction in Canada. 4. A mortgage broker or agent, if the entity is registered or licensed under the Mortgage Brokers Act, the Mortgage Brokerages, Lenders and Administrators Act, 2006 or comparable legislation in another jurisdiction in Canada. 5. A mutual fund dealer. 6. A mutual fund within the meaning of subsection 1 (1) of the Securities Act whose activities are limited to the investment of the funds of the mutual fund for the purposes of providing investment diversification and professional investment management services to the holders of its securities. 7. A non-redeemable investment fund within the meaning of subsection 1 (1) of the Securities Act whose activities are limited to the investment of the funds of the fund for the purposes of providing investment diversification and professional investment management services to the holders of its securities, and whose securities are, i. fixed in number and distributed to the public in an offering under a preliminary prospectus, prospectus, short form prospectus or similar document in accordance with the laws of a Province of Canada or a foreign jurisdiction, ii. traded on a recognized and regulated market, and iii. liquidated on a fixed future termination date, with the proceeds allocated to the holders of the securities in accordance with their holdings. 8. A receiver, sequestrator or liquidator. 9. An entity, other than a financial institution, whose business activities are limited to one or more of the business activities prescribed by subsection (2) and who satisfies the conditions, if any, set out in that subsection relating to that business activity. O. Reg. 122/08, s. 5 (1). (2) The following business activities are prescribed for the purposes of paragraph 9 of subsection (1): 1. Providing financial services. 2. Holding, managing or otherwise dealing with real property. 3. The business of a real estate broker or otherwise acting as an agent for vendors, purchasers, lessors or lessees of real property or providing consulting or appraisal services in respect of real property. 4. Promoting merchandise and services to the holders of any payment, credit or charge card issued by the insurer. 5. Providing in Canada data processing or other information processing services relating to financial institutions if, i. the insurer has developed the processing systems for its own use and the processing systems are an integral part of the insurer’s operations, and ii. the services are provided to entities in which the insurer has a substantial investment and that do not provide information processing services to other entities. 6. Collecting, manipulating and transmitting information, i. that is primarily financial or economic in nature, or ii. that relates to the business of an entity that is a permitted entity with respect to insurers to which this Regulation applies. 7. Providing advisory or other services in the design, development and implementation of information management services. 8. Designing, developing or marketing computer software. 9. Designing, developing, manufacturing or selling computer equipment integral to the provision of information services related to the business of financial institutions or to the provision of financial services, if it is an ancillary activity to any business referred to in paragraph 6, 7 or 8 in which the insurer is engaged. 10. Designing, developing, holding, managing, manufacturing, selling or otherwise dealing with data transmission systems, information sites, communication devices or information platforms or portals that are used, i. to provide information that is primarily financial or economic in nature, ii. to provide information that relates to the business of an entity that is a permitted entity in respect of an insurer to which this Regulation applies, or iii. for a purpose or in a circumstance that is materially related to the provision of financial products or services by the insurer, a subsidiary of the insurer or an entity in which the insurer has a substantial investment. 11. Designing, developing, holding, managing, manufacturing, selling or otherwise dealing with data transmission systems, information sites, communication devices or information platforms or portals that are used to provide information services. 12. Acting as a custodian of property. 13. Selling any of the following: i. tickets, including lottery tickets, on a non-profit public service basis, in connection with special, temporary and infrequent non-commercial celebrations or projects that are of local, municipal, provincial or national interest, ii. urban transit tickets, iii. tickets for a lottery sponsored by the federal government, a provincial or municipal government or an agency of any of those governments. 14. Providing services that are reasonably ancillary to the business of the insurer, including one or more of the following: i. providing safety and risk prevention services and services respecting risk management and claims adjustment, ii. providing and operating rehabilitation and training and development centres, iii. providing computer systems to insurance brokers and agents, iv. providing support to insurance brokers and agents, and v. operating repair and appraisal centres. 15. Providing services exclusively to, i. the insurer, a subsidiary of the insurer or an entity in which the insurer has a substantial investment that is permitted under the Act or this Regulation, or ii. one or more of the entities listed in subparagraph i and, A. a financial services entity, or B. an entity that is a permitted entity in respect of the insurer and in which a financial services entity has a substantial investment. 16. Any other business activity not described in paragraphs 1 to 15 that relates to, i. the promotion, sale, delivery or distribution of a financial product or financial service that is provided by the insurer, a subsidiary of the insurer or an entity in which the insurer has a substantial investment that is permitted under the Act or this Regulation, or ii. if a significant portion of the business activity of the entity involves an activity described in subparagraph i, the promotion, sale, delivery or distribution of a financial product or service that is provided by a financial services entity. 17. Acquiring or holding shares of, or ownership interests in, entities in respect of which an insurer is permitted under the Act or this Regulation to hold a substantial investment. O. Reg. 122/08, s. 5 (2). (3) Despite subsection (1), an entity that is a permitted entity under any of paragraphs 1 to 8 of subsection (1) does not cease to be a permitted entity by reason only that it carries on one or more business activities carried out by another entity listed in any of those paragraphs or one or more business activities prescribed by subsection (2), as long as it satisfies the conditions, if any, relating to the other entity or the business activity. O. Reg. 122/08, s. 5 (3). (4) Despite subsections (1) and (2), the following entities are not permitted entities in respect of an insurer: 1. An entity whose activities are limited to acting as a factor in respect of accounts receivable, including the raising of money for the purposes of acting as a factor and lending money while acting as a factor. 2. An entity that carries on the business activities in Canada of financial leasing of personal property, including, i. the entering into and acceptance of assignments of conditional sales agreements in respect of personal property, ii. the administration of financial lease agreements and conditional sales agreements on behalf of any person, and iii. the raising of money for the purposes of financing the activities of the entity and the investment of that money pending its use for those activities. 3. An entity, other than a financial institution or an entity described in paragraph 1 or 2, that engages in a business that includes, i. issuing payment, credit or charge cards and, in co-operation with others, including financial institutions, operating a payment, credit or charge card plan, or ii. making or refinancing loans or entering into any other similar arrangements for advancing funds or credit. 4. An entity that is a specialized financing entity prescribed for the purposes of section 435.5 of the Act. 5. An entity in the business of providing specialized business management and advisory services. 6. An entity listed in subsection (1) whose business activities include the acceptance of deposit liabilities. O. Reg. 122/08, s. 5 (4). (5) For the purposes of subsection 435.1 (1) of the Act and subject to subsections (6), (7) and (9) of this section, an insurer may, subject to section 435.7 of the Act, acquire, hold or increase a substantial investment in a permitted entity only if all of the applicable following conditions are satisfied: 1. The insurer may acquire, hold or increase a substantial investment in any of the following permitted entities only with the approval of the Chief Executive Officer: i. A financial institution. ii. An entity that is a permitted entity under paragraph 1, 2 or 5 of subsection (1) and, A. that is not registered under the Securities Act or comparable legislation of another jurisdiction in Canada, or B. that is exempt from registration requirements. iii. A permitted entity engaged in a business described in paragraph 1, 6, 7, 8, 9, 10, 11, 14 or 16 of subsection (2). iv. An entity that is a permitted entity under paragraph 6 or 7 of subsection (1) if it is not subject to regulation under the Securities Act or comparable legislation of another jurisdiction in Canada. v. A permitted entity engaged in a business described in paragraph 17 of subsection (2) unless, at the time of the investment or as a result of the investment, the permitted entity is a subsidiary of the insurer and does not hold an interest in any entity in which the insurer is not permitted to make a substantial investment without the consent of the Chief Executive Officer. 2. The insurer may acquire, hold or increase a substantial investment in any of the following permitted entities only if the insurer will control the permitted entity after the acquisition or the acquisition and holding of the substantial investment is permitted under paragraph 3 or 4: i. A financial institution. ii. A permitted entity engaged in the business described in paragraph 17 of subsection (2) if that business includes the acquisition of a substantial investment in one or more financial institutions. 3. The insurer may acquire, hold or increase a substantial investment in a permitted entity listed in subparagraph 2 i or ii, without controlling the permitted entity after the acquisition, only if, after the acquisition, the total value of the following investments and loans does not exceed 50 per cent of the insurer’s capital: i. All shares in corporations and ownership interests in unincorporated entities beneficially owned by the insurer or by permitted entities listed in subparagraph 2 i or ii in which the insurer has a substantial investment but which the insurer does not control. ii. All loans, each of which is held by the insurer or by permitted entities referred to in subparagraph i. iii. All outstanding guarantees by a permitted entity referred to in subparagraph i or on behalf of permitted entities referred to in subparagraph i. 4. If the insurer is a mutual insurance corporation that participates in the Fire Mutuals Guarantee Fund, the insurer may acquire, hold or increase a substantial investment in a permitted entity listed in subparagraph 2 i or ii, without itself controlling the permitted entity after the acquisition if, after the acquisition, two or more of the mutual insurance corporations that participate in the Fund control or, as a result of the acquisition, will acquire control of the permitted entity. 5. The insurer may acquire, hold or increase a substantial investment in an entity whose business is described in paragraph 11 of subsection (2) only if the sum of the following amounts does not exceed five per cent of the insurer’s capital: i. The total book value of the shares and ownership interests that the insurer and its subsidiaries, whether individually or jointly, would acquire in the permitted entity. ii. The total book value of the shares and ownership interests already held by the insurer and its subsidiaries, whether individually or jointly, in other entities engaged in a business described in paragraph 11 of subsection (2) in which the insurer has a substantial investment. iii. The total value of outstanding loans made by the insurer and its subsidiaries, whether individually or jointly, to entities engaged in a business described in paragraph 11 of subsection (2) in which the insurer has a substantial investment. O. Reg. 122/08, s. 5 (5); O. Reg. 132/19, s. 3. (6) The insurer may acquire, hold or increase a substantial investment in a permitted entity whose activities include acquiring and holding substantial investments in other entities if, i. the permitted entity is a permitted entity by reason of subsection (1), and ii. the insurer would, but for paragraph 1, 2 or 3 of subsection (5), be permitted under section 435.1, 435.2, 435.3, 435.4, 435.5 or 435.6 of the Act to acquire a substantial investment in the other entity. O. Reg. 122/08, s. 5 (6). (7) Paragraph 3 of subsection (5) does not apply if the permitted entity is incorporated or organized under the laws of a jurisdiction outside Canada and those laws or the customary business practices of the jurisdiction do not permit the insurer to control the entity. O. Reg. 122/08, s. 5 (7). (8) If the insurer controls a permitted entity listed in subparagraph 2 i or ii of subsection (5), the insurer may, with the Chief Executive Officer’s approval, give up control while retaining a substantial investment in the permitted entity only if the total value of the insurer’s investments and loans listed in subparagraphs 3 i to iii of that subsection does not exceed 50 per cent of the insurer’s capital after the insurer gives up control. O. Reg. 122/08, s. 5 (8); O. Reg. 132/19, s. 3. (9) The following rules apply for the purposes of determining the total value of investments and loans for the purposes of paragraphs 3 and 5 of subsection (5): 1. No amount shall be included in respect of shares or ownership interests acquired under circumstances in which subsection 435.3 (1), 435.4 (1) or 435.6 (1) of the Act applies. 2. The value of an ownership interest or loan held by an insurer at a particular time is the book value of the ownership interest or loan that would be reported on the balance sheet of the insurer prepared in accordance with section 104 of the Act as of that time. 3. The value of a guarantee is its face value. O. Reg. 122/08, s. 5 (9). Continuation of exceptions 6. (1) Subject to subsection (3), the rules in subsection (2) apply in respect of a substantial investment held by an insurer in the following circumstances: 1. The insurer was permitted under a particular provision of the Act or the regulations to acquire and did acquire a substantial investment in a particular entity. 2. The insurer is no longer permitted under the particular provision to hold the substantial investment. 3. The insurer could qualify to hold the substantial investment under another provision of the Act or this Regulation. O. Reg. 122/08, s. 6 (1). (2) In the circumstances described in subsection (1), the insurer is entitled to continue to hold the substantial investment under the provision referred to in paragraph 3 of subsection (1) if any conditions that must be satisfied in order for the insurer to be entitled to hold the substantial investment under that provision are satisfied. O. Reg. 122/08, s. 6 (2). (3) Subsection (1) does not apply in respect of a substantial investment if clause 435.3 (4) (b), 435.4 (4) (b) or 435.6 (4) (b) of the Act applies. O. Reg. 122/08, s. 6 (3). Chief Executive Officer’s Approval Criteria for Chief Executive Officer’s approval 7. In determining whether to give an approval referred to in clause 435.3 (4) (b), 435.4 (4) (b) or 435.6 (1) (a), (b), (c) or (d) of the Act, the Chief Executive Officer shall consider, (a) whether the investment can reasonably be expected to expose the insurer to an undue risk; and (b) whether the investment can reasonably be expected to hinder the supervision and regulation of the insurer. O. Reg. 122/08, s. 7; O. Reg. 132/19, s. 3. Other investments Investments outside control of insurer 8. For the purposes of clause 435.6 (1) (f) of the Act, an insurer may acquire or increase a substantial investment in an entity, irrespective of whether it is a permitted entity or the investment is otherwise permitted under the Act or the regulations, if the acquisition or increase is the result of one or more events that are outside the control of the insurer. O. Reg. 122/08, s. 8. Restrictions and Limits on Insurer’s Business Activities Limit on loans secured by residential mortgages 9. (1) For the purposes of section 435.7 of the Act, an insurer shall not make a loan in Canada or acquire, hold or increase a substantial investment in a permitted entity described in subsection 5 (1) that makes a loan in Canada if, (a) the loan is made on the security of residential real property for the purpose of purchasing, renovating or improving the real property or refinancing a loan made for that purpose; and (b) the amount of the loan plus the amount then outstanding of all other liabilities secured by mortgages having equal or prior claims against the real property would exceed 80 per cent of the value of the real property at the time the insurer makes the loan or acquires the substantial investment. O. Reg. 122/08, s. 9 (1). (2) Subsection (1) does not apply in respect of, (a) a loan made or guaranteed under the National Housing Act (Canada) or any other Act of Parliament or of Ontario under which a different limit is established on the value of property on the security of which the insurer may make a loan; (b) a loan that would otherwise be prohibited by reason of clause (1) (b) if repayment of the portion of the loan that exceeds the maximum value set out in that clause is guaranteed or insured by a government agency or by an insurance company approved by the Chief Executive Officer; (c) the acquisition by the insurer from an entity of securities issued or guaranteed by the entity that are secured on any residential real property, whether in favour of a trustee or otherwise, or the making of a loan by the insurer to the entity against the issue of the securities; or (d) a loan secured by a mortgage taken back by the insurer on the disposition of property by the insurer, including a disposition for the purpose of realization of a security interest, if the mortgage secures payment of an amount payable to the insurer for the property. O. Reg. 122/08, s. 9 (2); O. Reg. 132/19, s. 3. Restriction on loans to certain entities 10. (1) This section applies if an insurer holds a substantial investment in a permitted entity listed in subparagraph 2 i or ii of subsection 5 (5) and the insurer is entitled to hold the substantial investment by reason of paragraph 3 of subsection 5 (5) or subsection 5 (8). O. Reg. 122/08, s. 10 (1). (2) The insurer shall not make a loan to the permitted entity, and shall not permit any subsidiary of the insurer to do so, if, after making the loan, the total value of the investments and loans described in subparagraphs 3 i to iii of subsection 5 (5) would exceed 50 per cent of the insurer’s capital. O. Reg. 122/08, s. 10 (2). (3) Paragraphs 1, 2 and 3 of subsection 5 (9) apply for the purposes of determining the total value of investments and loans for the purposes of subsection (2). O. Reg. 122/08, s. 10 (3). Restriction on guarantees 11. (1) For the purposes of section 435.7 of the Act, an insurer shall not guarantee on behalf of any person the payment or re-payment of money unless the person on whose behalf the insurer has undertaken to guarantee the payment or repayment is a subsidiary of the insurer and has an unqualified obligation to reimburse the insurer for the full amount of the payment or repayment to be guaranteed. O. Reg. 122/08, s. 11 (1). (2) Subsection (1) does not prevent an insurer from insuring a risk that comes within a class of insurance in respect of which the insurer is licensed under the Act. O. Reg. 122/08, s. 11 (2). Prohibition on financial leasing 12. An insurer shall not engage in Canada in financial leasing of personal property. O. Reg. 122/08, s. 12. Holding own shares 13. (1) For the purposes of section 435.7 of the Act and subject to subsection (2), an insurer shall not do any of the following: 1. Hold any of its issued shares or any shares issued by a corporation that controls the insurer. 2. Hold an ownership interest in an unincorporated entity that controls the insurer. 3. Permit any of its subsidiaries to hold shares issued by the insurer or by a corporation that controls the insurer. 4. Permit any of its subsidiaries to hold an ownership interest in an unincorporated entity that controls the insurer. O. Reg. 122/08, s. 13 (1). (2) Subsection (1) does not apply in respect of, (a) the redemption of preference shares in accordance with section 28 of the Corporations Act; (b) the purchase by an insurer of its own preference shares in accordance with section 28 or 38 of the Corporations Act; (c) the holding of shares by the insurer or by a subsidiary of the insurer as an executor, administrator, guardian or trustee in accordance with subsection 111 (2) of the Corporations Act or the holding of an ownership interest in the same capacity in similar circumstances; or (d) subject to the Corporations Act, the holding of shares or an ownership interest for a period of not more than 180 days if the shares or ownership interest are acquired on the realization of a security interest. O. Reg. 122/08, s. 13 (2). Value of loans, investments and interests in property 14. (1) For the purposes of subsection 435.8 (1) of the Act, if an investment is acquired by an insurer or a prescribed subsidiary under section 435.6 of the Act, the value of the investment shall not be included in calculating the value of loans, investments and interests in property acquired by the insurer or prescribed subsidiary for the purposes of sections 435.9 to 435.12. O. Reg. 122/08, s. 14 (1). (2) Subsection (1) and subsection 435.8 (1) of the Act do not apply to an investment or an interest in real property if the insurer or prescribed subsidiary acquired the investment or interest in real property, (a) as a result of the realization of a security interest in real property that is a loan, debt obligation or guarantee described in any of items 11 to 19 in the Table in subsection 17 (1); or (b) as a result of a default referred to in subsection 435.3 (1) of the Act under the terms of the agreement governing an interest in real property that is a loan, debt obligation or guarantee referred to in any of the Items mentioned in clause (a). O. Reg. 122/08, s. 14 (2). Limit on commercial loans and loans to individuals 15. (1) For the purposes of subsection 435.9 (2) of the Act, the amount determined under the regulations is five per cent of the total assets of the insurer. O. Reg. 122/08, s. 15 (1). (2) For the purposes of subsection (1), the total assets of the insurer is the amount that would be calculated under section 18 as the total assets of the insurer for the purposes of section 435.14 of the Act if the insurer’s last balance sheet prepared before the time of the calculation is deemed to be the balance sheet that would be prepared as of the time the determination is made under subsection 435.9 (2) of the Act. O. Reg. 122/08, s. 15 (2). Limits on investments 16. (1) For the purposes of subsection 435.10 (1) of the Act, the amount determined under the regulations is 10 per cent of the total assets of the insurer. O. Reg. 122/08, s. 16 (1). (2) In determining whether to give an approval under clause 435.10 (2) (c) of the Act, the Chief Executive Officer shall consider the following: 1. The reasons for the acquisition or improvement that would cause the insurer to exceed the limit set out in subsection (1). 2. The extent to which the acquisition or improvement would cause the insurer to exceed the limit set out in subsection (1). 3. Whether the investment can reasonably be expected to expose the insurer to an undue risk. 4. Whether the investment can reasonably be expected to hinder the supervision and regulation of the insurer. O. Reg. 122/08, s. 16 (2); O. Reg. 132/19, s. 3. (3) For the purposes of subsection 435.11 (2) of the Act, the amount determined under the regulations is 25 per cent of the total assets of the insurer. O. Reg. 122/08, s. 16 (3). (4) For the purposes of subsection 435.12 (2) of the Act, the amount determined under the regulations is 35 per cent of the total assets of the insurer. O. Reg. 122/08, s. 16 (4). (5) For the purposes of this section, the total assets of the insurer is the amount that would be calculated under section 15 as the total assets of the insurer for the purposes of section 435.14 of the Act if the insurer’s last balance sheet prepared before the time of the calculation is deemed to be the balance sheet that would be prepared as of the time the determination is made under subsection 435.9 (2) of the Act. O. Reg. 122/08, s. 16 (5). (6) For the purposes of subsection 435.14 (1) of the Act, the value of participating shares and ownership interests referred to in sections 435.11 and 435.12 of the Act that are beneficially owned by an insurer or by those of its subsidiaries that are prescribed subsidiaries for the purposes of section 435.14 of the Act is the book value of the shares and ownership interests that would be reported on the insurer’s consolidated balance sheet as of the time the determination is made. O. Reg. 122/08, s. 16 (6). Interests in Real Property Interests in real property 17. (1) For the purposes of Part XVII of the Act, the interest of an insurer or a prescribed subsidiary of an insurer in each of the types of property listed in Column 2 in the following Table is an interest in real property for the purposes of Part XVII of the Act and the value of the interest is the amount determined under the provisions set out opposite the type of property in Column 3 of the Table: Table of Real Property Interests Column 1 Item Column 2 Description of Real Property Interest Column 3 Value of the Real Property Interest 1. Real property beneficially owned by the insurer or by a designated entity controlled by the insurer. The book value of the real property. 2. A debt obligation for which the insurer or a designated entity controlled by the insurer is liable that was issued for the purpose of acquiring or improving real property described in Item 1. The amount, if any, by which the book value of the debt obligation exceeds the book value of the real property. 3. Real property, (a) that is beneficially owned by, (i) a related real property entity of the insurer that is a joint venture, or (ii) an entity in which an entity described in subclause (i) has a substantial investment; and (b) that would be reported on a balance sheet of the insurer prepared in accordance with section 104 of the Act. The book value of the real property. 4. Shares and ownership interests beneficially owned by the insurer, or by a designated entity controlled by the insurer, in any related real property entity of the insurer, other than a related real property entity referred to in Item 3. The book value of the shares and ownership interests. 5. A debt obligation that was issued by a related real property entity of the insurer and that is beneficially owned by the insurer or by a designated entity controlled by the insurer. The book value of the debt obligation. 6. A loan made by the insurer or a designated entity controlled by the insurer to a related real property entity of the insurer. The book value of the loan. 7. A loan made by the insurer or a designated entity controlled by the insurer to, (a) a real property entity in which a financial institution controlled by the insurer has a substantial investment; or (b) a real property entity that is controlled by a real property entity described in clause (a). The book value of the loan. 8. A debt obligation that was issued by a real property entity described in clause (a) or (b) of Item 7 and that is beneficially owned by the insurer or a designated entity controlled by the insurer. The book value of the debt obligation. 9. A debt obligation that is, (a) issued by a related real property entity of the insurer; (b) beneficially owned by a third party; and (c) guaranteed by the insurer or a designated entity controlled by the insurer. If the debt obligation is issued by a related real property entity and the entity beneficially owns real property that is an interest of the insurer in real property described in Item 3, the amount, if any, by which the face value of the guarantee exceeds the value of that real property. In any other case, the face value of the guarantee. 10. A loan made by a third party to a related real property entity of the insurer and guaranteed by the insurer or a designated entity controlled by the insurer. If the loan is made to a related real property entity and the entity beneficially owns real property that is an interest of the insurer in real property described in Item 3, the amount, if any, by which the face value of the guarantee exceeds the value of that real property. In any other case, the face value of the guarantee. 11. A loan made by the insurer or a designated entity controlled by the insurer to a third party that is secured by real property beneficially owned by the third party in conjunction with, (a) the insurer; (b) the designated entity; (c) a related real property entity of the insurer; (d) a financial institution controlled by the insurer; (e) an entity controlled by a financial institution controlled by the insurer; or (f) a real property entity described in Item 7. The lesser of, (a) the net realizable value of the third party’s interest in the real property at the time that the security interest was given; and (b) the amount by which the book value of the loan exceeds the total net realizable value of any other security interests that were given for the loan. 12. A debt obligation of a third party beneficially owned by the insurer or a designated entity controlled by the insurer that is secured by real property beneficially owned by the third party in conjunction with, (a) the insurer; (b) the designated entity; (c) a related real property entity of the insurer; (d) a financial institution controlled by the insurer; (e) an entity controlled by a financial institution controlled by the insurer; or (f) a real property entity described in Item 7. The lesser of, (a) the net realizable value of the third party’s interest in the real property at the time that the security interest was given; and (b) the amount by which the book value of the debt obligation exceeds the total net realizable value of any other security interests that were given for the debt obligation. 13. A debt obligation of a third party guaranteed by the insurer or a designated entity controlled by the insurer that is secured by real property beneficially owned by the third party in conjunction with, (a) the insurer; (b) the designated entity; (c) a related real property entity of the insurer; (d) a financial institution controlled by the insurer; (e) an entity controlled by a financial institution controlled by the insurer; or (f) a real property entity described in Item 7. The lesser of, (a) the net realizable value of the third party’s interest in the real property at the time that the security interest was given; and (b) the amount by which the face value of the guarantee exceeds the total net realizable value of any other security interests that were given for the debt obligation. 14. A loan made by the insurer or a designated entity controlled by the insurer to a third party that is secured by shares or ownership interests beneficially owned by a third party in an entity that beneficially owns real property in conjunction with the insurer, a related real property entity of the insurer or a designated entity controlled by the insurer. The lesser of, (a) the net realizable value of the third party’s interest in the shares or ownership interests at the time that the security interest was given; and (b) the amount by which the book value of the loan exceeds the amount determined by subtracting from “A” the amount determined by multiplying “B” by “C”, where, “A” is the total net realizable value of all security interests that were given for the loan, “B” is the net realizable value of the entity’s interest in the real property, and “C” is the ratio of the value of the shares or ownership interests that are given as the security interest to the total value of all outstanding shares or ownership interests in the entity. 15. A debt obligation of a third party beneficially owned by the insurer or a designated entity controlled by the insurer that is secured by shares or ownership interests beneficially owned by a third party in an entity that beneficially owns real property in conjunction with the insurer, a related real property entity of the insurer or a designated entity controlled by the insurer. The lesser of, (a) the net realizable value of the third party’s interest in the shares or ownership interests at the time that the security interest was given; and (b) the amount by which the book value of the debt obligation exceeds the amount determined by subtracting from “A” the amount determined by multiplying “B” by “C”, where, “A” is the total net realizable value of all security interests that were given for the debt obligation, “B” is the net realizable value of the entity’s interest in the real property, and “C” is the ratio of the value of the shares or ownership interests that are given as the security interest to the total value of all outstanding shares or ownership interests in the entity. 16. A debt obligation of a third party guaranteed by the insurer or a designated entity controlled by the insurer that is secured by shares or ownership interests beneficially owned by a third party in an entity that beneficially owns real property in conjunction with the insurer, a related real property entity of the insurer or a designated entity controlled by the insurer. The lesser of, (a) 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 (b) the amount by which the face value of the guarantee exceeds the amount determined by subtracting from “A” the amount determined by multiplying “B” by “C”, where, “A” is the total net realizable value of all security interests that were given for the loan or debt obligation, “B” is the net realizable value of the entity’s interest in the real property, and “C” is the ratio of the value of the shares or ownership interests that are given as the security interest to the total value of all outstanding shares or ownership interests in the entity. 17. A loan made by the insurer or a designated entity controlled by the insurer to a third party that is secured by shares or ownership interests beneficially owned by a third party in a related real property entity of the insurer. The lesser of, (a) the net realizable value of the third party’s interest in the shares or ownership interests at the time that the security interest was given; and (b) the amount by which the book value of the loan exceeds the total net realizable value of all other security interests given for the loan. 18. A debt obligation of a third party beneficially owned by the insurer or a designated entity controlled by the insurer that is secured by shares or ownership interests beneficially owned by a third party in a related real property entity of the insurer. The lesser of, (a) the net realizable value of the third party’s interest in the shares or ownership interests at the time that the security interest was given; and (b) the amount by which the book value of the debt obligation exceeds the total net realizable value of all other security interests given for the debt obligation. 19. A debt obligation of a third party guaranteed by the insurer or a designated entity controlled by the insurer that is secured by shares or ownership interests beneficially owned by a third party in a related real property entity of the insurer. The lesser of, (a) the net realizable value of the third party’s interest in the shares or ownership interests at the time that the security interest was given; and (b) the amount by which the face value of the guarantee exceeds the total net realizable value of all other security interests given for the debt obligation. 20. A guarantee given by the insurer or a designated entity controlled by the insurer to an entity other than the insurer or the designated entity for the purpose of completing the development of real property that is beneficially owned by, (a) the insurer; (b) the designated entity controlled by the insurer; or (c) a related real property entity of the insurer. The estimated cost of completing the development of the real property. 21. An agreement made by the insurer or a designated entity controlled by the insurer to support a third party’s cost of operating or financing real property that is beneficially owned by, (a) the insurer; (b) the designated entity controlled by the insurer; or (c) a related real property entity of the insurer. The amount of any funds advanced pursuant to the agreement by the insurer or the designated entity controlled by the insurer. O. Reg. 122/08, s. 17 (1). (2) The book value at a particular time of property that is an interest in real property for the purposes of Part XVII of the Act is, (a) if the property is real property, the gross book value of the real property, less any accumulated depreciation on the real property, that would be reported on a balance sheet of the insurer prepared as of the particular time in accordance with section 104 of the Act;

or (b) if the property consists of shares of or an ownership interest in another entity or a debt obligation or loan, the book value of the shares, ownership interest, debt obligation or loan that would be reported on a balance sheet of the insurer prepared as of the particular time in accordance with section 104 of the Act. O. Reg. 122/08, s. 17 (2). Matters Prescribed for the Purposes of Section 435.14 of the Act Total assets for purposes of s. 435.14 of the Act 18. (1) For the purposes of section 435.14 of the Act, the total assets of an insurer at a particular time is the amount calculated using the formula, A – B in which, “A” is the total amount of the assets reported on the insurer’s last balance sheet prepared in accordance with section 104 of the Act before that time, and “B” is the total amount of the assets included in the value of “A” that are assets of a subsidiary of the insurer that is, (a) a financial institution, or (b) a subsidiary of a financial institution that is not a subsidiary of the financial institution only because it is a subsidiary of the insurer. O. Reg. 122/08, s. 18 (1). (2) For the purposes of section 435.14 of the Act, the following rules apply for the purposes of determining the value of assets that are acquired or transferred: 1. The value of assets that are acquired is, i. the fair market value of the assets if the assets are shares of or ownership interests in an entity and the value of the assets of that entity will be included in the annual statement of the insurer after the acquisition, or ii. the purchase price of the assets in any other case. 2. The value of assets that are transferred is, i. the value of the assets as stated in the insurer’s last annual statement if the assets are shares of or ownership interests in an entity and the value of the entity’s assets was included in the insurer’s last annual statement before the transfer, or ii. the book value of the assets as stated in the insurer’s last annual statement prepared before the transfer, in any other case. O. Reg. 122/08, s. 18 (2). (3) For the purposes of clause 435.14 (3) (c) of the Act, subsection 435.14 (1) of the Act does not apply, (a) to the acquisition by an insurer or its subsidiary of shares of or ownership interests in an entity in circumstances in which the approval of the Chief Executive Officer is required under section 435.1 of the Act; (b) to a transfer or acquisition that is a transaction or part of a series of transactions between the insurer and a financial institution as a result of the insurer’s participation in one or more syndicated loans with that financial institution; and (c) to an acquisition or transfer that has been approved by the Chief Executive Officer under a provision of the Act or this Regulation. O. Reg. 122/08, s. 18 (3); O. Reg. 132/19, s. 3. 19. Omitted (provides for coming into force of provisions of this Regulation). O. Reg. 122/08, s. 19.