General Guidance for Developing Differential Premium Systems

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October 31, 2011 shareholder that is not a CDIC member, their scores are determined separately. Transition and New Member Provisions To facilitate the adaptation of member institutions to the new system a transitional scoring mechanism was built into the system, to operate for the first two years. In the first year of the transition period, the total quantitative score of each member institution was adjusted upward by 20%. In the second year, the total quantitative score of each member institution was adjusted upward by 10%. In the third year and thereafter, there were no such adjustments. Any adjustment, however, could not result in the member institution’s total quantitative score exceeding 60. For example, if a member institution’s preadjusted quantitative score was 55 in the first year, its adjusted score would be 60, not 66. For members with a limited history, the differential premium system was designed so that member institutions which do not have sufficient operating history for those measures requiring numerous years of data, are given a score based on the average of their other quantitative scores. Review Purpose Given the significance of differential premium rates for member institutions, any institution not satisfied with its assigned premium category has the opportunity to request a review of its scoring by CDIC. Member institutions wishing to have their scores reviewed are required to submit requests in writing to CDIC. As part of the premium-setting process, CDIC will be involved in gathering or receiving information and making determinations and calculations as to each institution’s score. There is an annual cut-off date for the determination of relevant information, and if information obtained in advance of that date is revised between then and the cut-off date, the revised information will be used. Filing Requirements Members are required to file, by April 30 of each year, the requested quantitative information based on the latest available audited financial statements. If member institutions do not have audited financial statements 35
October 31, 2011 by April 30, they will have to file the quantitative information based on unaudited financial information with the proviso that the information filed would be subject to revision. If member institutions do not provide the required information, they will be assigned the maximum premium rate pending receipt of the information. All member institutions are required to provide quantitative information on a standardized basis using as much as possible (and where applicable) the type of information reported under the federal system. Quantitative scoring is based on consolidated financial information. CDIC uses the latest examiners’ ratings and other information as at April 30 of each year in determining the qualitative score for the coming premium year. Review, updating and fine-tuning of CDIC’s differential premium system CDIC annually reviews the system to ensure it remains up to date and every five to seven years undertakes a more comprehensive review. The scope of the 2004 review included: a quantitative analysis of data collected; review of environmental changes, such as Basel II and new accounting standards and their implications for the system; matters relating to process; analysis of individual criteria and benchmarks; and the allocation of scoring among criteria or factors. It was determined early on in the process that capturing the full impact of Basel II on the system would be left to the next comprehensive review when sufficient data would be available for analysis. Extensive consultation with members, their associations, supervisors, other agencies and interested parties took place throughout the review. Amendments were in place for the 2005 premium year. 36
Page 1 and 2: General Guidance for Developing Dif
Page 3 and 4: October 31, 2011 I. Executive Summa
Page 5 and 6: October 31, 2011 Transparency, dis
Page 7 and 8: October 31, 2011 III. Background So
Page 9 and 10: October 31, 2011 It is important to
Page 11 and 12: October 31, 2011 be difficult to ob
Page 13 and 14: October 31, 2011 Combined approache
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Page 17 and 18: October 31, 2011 and those receivin
Page 19 and 20: October 31, 2011 a premium increase
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Page 29 and 30: October 31, 2011 1) The rating is a
Page 31 and 32: October 31, 2011 and, where circums
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Page 39 and 40: October 31, 2011 CAMEL 22 Weight Ra
Page 41 and 42: October 31, 2011 The Autorité de C
Page 43 and 44: October 31, 2011 There is a Guarant
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Page 47 and 48: October 31, 2011 Methodology used f
Page 49 and 50: Q1 Q2 Violations of prudential and
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Page 55 and 56: October 31, 2011 Premium categories
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Page 59 and 60: October 31, 2011 S/N Appendix I Dif
Page 61 and 62: October 31, 2011 and was submitted
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Page 69 and 70: October 31, 2011 • Premium Rates
Page 71 and 72: October 31, 2011 The premium system
Page 73 and 74: October 31, 2011 Adoption of Risk-B
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October 31, 2011 Figure 2 - COPAB
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October 31, 2011 financial soundnes
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October 31, 2011 ANNEX II Deposit i
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General Guidance for Developing Differential Premium Systems

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