Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 970a, 984a and 1021a of the Insurance Companies Actb, hereby makes the annexed Investment Limits (Insurance Holding Companies) Regulations.S.C. 2001, c. 9, s. 465S.C. 1991, c. 47InterpretationDefinitionsThe following definitions apply in these Regulations.Act means the Insurance Companies Act. (Loi)designated entity means an entity other thana joint venture;an insurance company;a securities dealer; ora subsidiary of an insurance company or securities dealer. (entité désignée)insurance company means an insurance company that is incorporated by or under the laws of Canada or a province. (société d’assurances)joint venture means a real property entitythat was formed by an insurance holding company, or by a designated entity controlled by an insurance holding company, and one or more other persons for the purpose of a specific business undertaking;in which the insurance holding company or designated entity has a substantial investment; andin respect of which the persons who formed it have agreed on joint control, regardless of the distribution of their equity. (coentreprise)minority interest means an equity interest, in an entity that is controlled by an insurance holding company, that is held by a person other thanthe insurance holding company; oran entity controlled by the insurance holding company. (participation minoritaire)real property entity means an entity that is primarily engaged in holding, managing or otherwise dealing withreal property;shares of a body corporate that is primarily engaged in holding, managing or otherwise dealing with real property, including shares of a body corporate that is another real property entity; orownership interests in an unincorporated entity that is primarily engaged in holding, managing or otherwise dealing with real property, including ownership interests in an unincorporated entity that is another real property entity. (entité immobilière)related real property entity, in respect of an insurance holding company, meansa real property entity, other than a designated entity controlled by the insurance holding company, in which the insurance holding company or a designated entity controlled by the insurance holding company beneficially owns sufficient shares or ownership interests to cause the insurance holding company or designated entity to have a substantial investment in the real property entity; ora real property entity that is controlled by a real property entity described in paragraph (a). (entité immobilière apparentée)securities dealer means an entity described in paragraph (g) of the definition financial institution in subsection 2(1) of the Act. (négociant en valeurs mobilières)third party, in respect of an insurance holding company, means a person other thanthe insurance holding company;a designated entity controlled by the insurance holding company; ora related real property entity of the insurance holding company. (tierce partie)SOR/2011-196, s. 24(E)Book value of interest in real propertyFor the purposes of sections 8 to 11, the book value of an asset that is an interest of an insurance holding company in real property, at a particular time, isif the asset 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 insurance holding company prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 887(4) of the Act; andif the asset is a security or loan, the book value of the security or loan that would be reported on a balance sheet of the insurance holding company prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 887(4) of the Act.ExemptionsExempt bank holding companiesSections 981 to 983 of the Act do not apply toa widely held insurance holding company with equity of five billion dollars or more; oran insurance holding company with equity of five billion dollars or more that is controlled bya widely held bank holding company,a widely held insurance holding company,an eligible financial institution, as defined in section 370 of the Bank Act, other than a foreign bank as defined in section 2 of that Act, ora foreign bank, as defined in section 2 of the Bank Act, that is widely held as defined in section 2.3 of that Act.Prescribed SubsidiaryPrescribed subsidiaryFor the purposes of sections 981 to 983 of the Act, a prescribed subsidiary of an insurance holding company is a subsidiary of the insurance holding company other thanan insurance company;a securities dealer; ora subsidiary of an insurance company or securities dealer.Amount DeterminedAmount determined — real property and equityFor the purposes of sections 981 and 982 of the Act, the amount determined in respect of an insurance holding company is 70% of the amount determined by the formulaA - BwhereAis the regulatory capital of the insurance holding company; andBis the sum ofall amounts each of which is an amount of shareholders’ equity or subordinated indebtedness of an insurance company or securities dealer controlled by the insurance holding company, or of an entity controlled by an insurance company or securities dealer controlled by the insurance holding company, that is included in the amount of regulatory capital of the insurance holding company,all amounts each of which is the amount of a minority interest in an insurance company or securities dealer controlled by the insurance holding company, or in an entity controlled by an insurance company or securities dealer controlled by the insurance holding company, that is included in the amount of regulatory capital of the insurance holding company,all amounts each of which is the amount of an investment, other than shareholders’ equity or subordinated indebtedness referred to in paragraph (a), of the insurance holding company or a designated entity controlled by the insurance holding company in an insurance company or securities dealer controlled by the insurance holding company, or in an entity controlled by an insurance company or securities dealer controlled by the insurance holding company, if the investment is part ofthe regulatory capital, within the meaning of the Regulatory Capital (Insurance Companies) Regulations, of an insurance company to which the Act applies, oran amount that would be treated as the capital of any other insurance company, or of a securities dealer, by a regulatory body that regulates the insurance company or securities dealer, andall amounts each of which is the amount of a loan, other than subordinated indebtedness referred to in paragraph (a), made by the insurance holding company or by a designated entity controlled by the insurance holding company to an insurance company or securities dealer controlled by the insurance holding company, or to an entity controlled by an insurance company or securities dealer controlled by the insurance holding company, if the loan is part ofthe regulatory capital, within the meaning of the Regulatory Capital (Insurance Companies) Regulations, of an insurance company to which the Act applies, oran amount that would be treated as the capital of any other insurance company, or of a securities dealer, by a regulatory body that regulates the insurance company or securities dealer.Amount determined — aggregate limitFor the purpose of section 983 of the Act, the amount determined in respect of an insurance holding company is 100% of the amount determined by the formula in subsection (1).Valuation of EquityValue equals book valueFor the purposes of sections 982 and 983 of the Act, the value of the participating shares and ownership interests referred to in those sections that are beneficially owned by an insurance holding company and its subsidiaries prescribed by section 4 is equal to their book value as reported on the consolidated balance sheet of the insurance holding company.Interests of an Insurance Holding Company in Real PropertyGeneralDefinition and value of interest in real propertyFor the purposes of Division 9 of Part XVII of the Act, other than subsection 978(3) of the Act, sections 8 to 12 define the interests of an insurance holding company in real property and set out how those interests are to be valued.ExceptionFor the purpose of subsection 978(3) of the Act, the interests of an insurance holding company in real property means real property referred to in paragraph 11(1)(a) and shares and ownership interests referred to in paragraph 11(1)(b) that become beneficially owned by the insurance holding company, or by a designated entity controlled by the insurance holding company, as a result of the realization of a security interest on a loan or debt obligation referred to in subsection 11(1).Direct Interests — Real Property and Debt ObligationsDirect interestsThe following are interests of an insurance holding company in real property:real property beneficially owned by the insurance holding company or by a designated entity controlled by the insurance holding company; anda debt obligation, for which the insurance holding company or a designated entity controlled by the insurance holding company is liable, that was issued for the purpose of acquiring or improving real property referred to in paragraph (a).Value of direct interestsThe value of the interests of an insurance holding company in real property isin respect of real property referred to in paragraph (1)(a), the book value of the real property; andin respect of a debt obligation referred to in paragraph (1)(b), any amount by which the book value of the debt obligation exceeds the book value of the real property referred to in that paragraph.Indirect Interests — Real Property, Shares and Ownership InterestsCertain indirect interestsThe following are interests of an insurance holding company in real property:at a particular time, real propertythat is beneficially owned bya related real property entity of the insurance holding company that is a joint venture, oran entity in which an entity described in clause (A) has a substantial investment, andthat would be reported on a balance sheet of the insurance holding company prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 887(4) of the Act; andshares and ownership interests beneficially owned by the insurance holding company, or by a designated entity controlled by the insurance holding company, in any related real property entity of the insurance holding company other than a related real property entity referred to in clause (a)(i)(A).Value of those interestsThe value of the interests of an insurance holding company in real property isin respect of real property referred to in paragraph (1)(a), the book value of the real property; andin respect of shares and ownership interests referred to in paragraph (1)(b), the book value of the shares and ownership interests.Indirect Interests — Loans and Debt ObligationsCertain indirect interestsThe following are interests of an insurance holding company in real property: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;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;a loan made by the insurance holding company, or by a designated entity controlled by the insurance holding company, toa real property entity in which a financial institution controlled by the insurance holding company has a substantial investment, ora real property entity that is controlled by a real property entity described in subparagraph (i);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;a debt obligation that isissued by a related real property entity of the insurance holding company,beneficially owned by a third party, andguaranteed by the insurance holding company or by a designated entity controlled by the insurance holding company; anda 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.Value of those interestsThe value of the interests of an insurance holding company in real property isin respect of a debt obligation referred to in paragraph (1)(a) or (d), the book value of the debt obligation;in respect of a loan referred to in paragraph (1)(b) or (c), the book value of the loan; andin respect of a guaranteed debt obligation referred to in paragraph (1)(e) or a guaranteed loan referred to in paragraph (1)(f),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), andin any other case, the face value of the guarantee.Indirect Interests — Secured Loans and Debt ObligationsCertain indirect interestsIf 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 byreal property beneficially owned by a third party in conjunction withthe insurance holding company,the designated entity,a related real property entity of the insurance holding company,a securities dealer or insurance company controlled by the insurance holding company,an entity controlled by a securities dealer or insurance company referred to in subparagraph (iv), ora real property entity described in subparagraph 10(1)(c)(i) or (ii); orshares or ownership interests beneficially owned by a third party inan 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, ora related real property entity of the insurance holding company.Value of those interestsThe value of the interests of an insurance holding company in real property isin respect of a loan or debt obligation that is secured by real property referred to in paragraph (1)(a), the lesser ofthe net realizable value of the third party’s interest in the real property at the time that the security interest was given, andthe amount determined by the formulaA - BwhereAisif 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, orif 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, andBis the total net realizable value of any other security interests that were given for the loan or debt obligation;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 ofthe net realizable value of the third party’s interest in those shares or ownership interests at the time that the security interest was given, andthe amount determined by the formulaA - (B - (C × D/E))whereAisif 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, orif 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,Bis the total net realizable value of all security interests that were given for the loan or debt obligation,Cis the net realizable value of the entity’s interest in the real property referred to in subparagraph (1)(b)(i),Dis the value of the shares or ownership interests that are given as the security interest, andEis the total value of the outstanding shares or ownership interests in the entity; andin 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 ofthe net realizable value of the third party’s interest in those shares or ownership interests at the time that the security interest was given, andthe amount determined by the formulaA - BwhereAisif 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, orif 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, andBis the total net realizable value of any other security interests that were given for the loan or debt obligation.Other InterestsOther interestsThe following are interests of an insurance holding company in real property: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 bythe insurance holding company,a designated entity controlled by the insurance holding company, ora related real property entity of the insurance holding company; andan 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 bythe insurance holding company,a designated entity controlled by the insurance holding company, ora related real property entity of the insurance holding company.Value of those interestsThe value of the interests of an insurance holding company in real property isin respect of a guarantee referred to in paragraph (1)(a), the estimated cost of completing the development of the real property; andin 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 ForceComing into forceThese 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.[Note: Regulations in force October 24, 2001, see SI/2001-102.]