BNY capital reduction; PACICC seeks insurer charter

Summary#

• BNY Trust Company of Canada says it will ask the federal regulator for permission to reduce the stated capital of its common shares by up to $26.5 million and to pay that amount to its sole shareholder.
• Property and Casualty Insurance Compensation Corporation (PACICC) says it will apply to incorporate a new insurer called PACICC‑SIMA General Insurance Company / Compagnie d’Assurance Générale PACICC‑SIMA, with a head office in Toronto. Objections to that application must be sent to OSFI by October 22, 2024.

What it does#

• BNY Trust Company of Canada

  • Intends to apply to the Superintendent of Financial Institutions for approval, under section 78 of the Trust and Loan Companies Act (Canada), to reduce the stated capital account for its common shares by up to $26.5 million.
  • The amount reduced would be distributed to the company’s sole shareholder. The company’s chief financial officer would decide the exact amount within that limit.
  • The notice makes clear that publishing it does not mean approval has been or will be given.

• Property and Casualty Insurance Compensation Corporation (PACICC)

  • Intends to apply to the Minister of Finance for letters patent to form a property and casualty insurer named PACICC‑SIMA General Insurance Company / Compagnie d’Assurance Générale PACICC‑SIMA, under subsection 25(2) of the Insurance Companies Act (Canada).
  • The proposed insurer would be based in Toronto and would remain inactive unless the PACICC board decides it is needed in certain special circumstances.
  • Anyone who objects may send a written objection to the Office of the Superintendent of Financial Institutions (OSFI) by October 22, 2024 (mail or email). The notice says issuing letters patent is not guaranteed and depends on the usual review and the Minister’s decision.

Who's affected#

• BNY notice

  • The company’s sole shareholder is the immediate recipient if the reduction is approved.
  • The notice does not say whether clients, creditors, or others would be affected.

• PACICC notice

  • PACICC and the new proposed company PACICC‑SIMA General Insurance Company are the applicants.
  • The Minister of Finance and OSFI are the decision-makers and the office to receive objections.
  • Potentially, insurers, policyholders or claimants could be affected in the future if the new company is ever activated, but the notice says it will only operate in special circumstances determined by the PACICC board.

Why it matters#

• A capital reduction of up to $26.5 million is a financial move that transfers money from a bank-style trust company to its shareholder. If regulators approve it, that could change how much capital the company holds for safety or risk purposes. The notice is a step in a regulatory process — not final approval.
• Incorporating a standby property and casualty insurer gives PACICC an extra tool it could use in stress situations. That could matter if the Canadian insurance system faces large losses and needs extra capacity. The public has a chance to object to that incorporation by October 22, 2024.