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Loss Portfolio Transfer Agreement Template for Canada

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Loss Portfolio Transfer Agreement

"I need a Loss Portfolio Transfer Agreement to transfer our Canadian property insurance portfolio, valued at approximately CAD 50 million, with an effective date of March 1, 2025, including provisions for a 6-month transition period where we'll continue handling claims administration."

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What is a Loss Portfolio Transfer Agreement?

A Loss Portfolio Transfer Agreement is utilized when an insurance company wishes to transfer a portfolio of insurance policies and their associated liabilities to another insurer in Canada. This complex transaction requires careful consideration of federal and provincial regulatory requirements, particularly those established by OSFI. The agreement is commonly used in business restructuring, exit strategies, or capital management scenarios. It must include specific provisions for risk transfer, financial considerations, claims handling procedures, and regulatory compliance. The document typically contains detailed schedules covering portfolio specifics, pricing methodology, and actuarial assessments. Given the complexity and regulatory scrutiny of such transactions in Canada, the agreement requires input from various stakeholders including actuaries, legal counsel, and regulatory specialists.

What sections should be included in a Loss Portfolio Transfer Agreement?

1. Parties: Identifies the transferring insurer (cedent) and accepting insurer (reinsurer)

2. Background: Explains the context and purpose of the portfolio transfer

3. Definitions: Defines key terms used throughout the agreement

4. Scope of Transfer: Describes the insurance portfolio being transferred and any exclusions

5. Consideration and Payment Terms: Details the transfer price, payment schedule, and any adjustments

6. Effective Date and Duration: Specifies when the transfer becomes effective and its duration

7. Claims Administration: Outlines responsibilities and procedures for handling claims

8. Representations and Warranties: Standard and specific warranties regarding the portfolio and parties' authority

9. Regulatory Compliance: Addresses compliance with applicable insurance regulations and required approvals

10. Data Protection and Confidentiality: Provisions for handling confidential information and personal data

11. Dispute Resolution: Procedures for resolving disputes between parties

12. Governing Law and Jurisdiction: Specifies applicable law and courts

13. General Provisions: Standard boilerplate clauses including notices, amendments, etc.

14. Execution: Signature blocks and execution formalities

What sections are optional to include in a Loss Portfolio Transfer Agreement?

1. Transition Services: Required if the cedent will provide operational support during a transition period

2. Security Arrangements: Include if collateral or other security is required

3. Broker Provisions: Required if reinsurance brokers are involved in the transaction

4. Sanctions Compliance: Include for international portfolios or parties

5. Tax Provisions: Required if specific tax arrangements or implications need to be addressed

6. Retrocession Arrangements: Include if the reinsurer will retrocede portions of the portfolio

7. Service Level Requirements: Include if specific performance standards for claims handling are required

What schedules should be included in a Loss Portfolio Transfer Agreement?

1. Schedule A - Portfolio Description: Detailed description of policies being transferred including limits, retention levels, and exclusions

2. Schedule B - Transfer Price Calculation: Methodology and calculations for determining the transfer price

3. Schedule C - Claims Handling Procedures: Detailed procedures for claims administration and reporting

4. Schedule D - Required Regulatory Approvals: List of regulatory approvals needed and status

5. Schedule E - Actuarial Report: Summary of actuarial analysis and assumptions

6. Schedule F - Data Transfer Specifications: Technical requirements for transfer of policy and claims data

7. Schedule G - Forms of Notices: Templates for required notices to policyholders or regulators

8. Appendix 1 - Historical Loss Development: Analysis of historical loss development for the portfolio

9. Appendix 2 - Risk Transfer Analysis: Documentation demonstrating risk transfer requirements are met

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions












































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Relevant Industries

Insurance

Reinsurance

Financial Services

Risk Management

Professional Services

Healthcare Insurance

Property Insurance

Casualty Insurance

Marine Insurance

Aviation Insurance

Workers Compensation Insurance

Environmental Insurance

Relevant Teams

Legal

Risk Management

Finance

Actuarial

Compliance

Claims

Underwriting

Operations

Regulatory Affairs

Treasury

Portfolio Management

Due Diligence

Relevant Roles

Chief Risk Officer

Chief Financial Officer

Chief Actuary

Reinsurance Manager

Claims Director

Compliance Officer

Legal Counsel

Portfolio Manager

Underwriting Director

Insurance Operations Manager

Risk Analyst

Actuarial Manager

Regulatory Affairs Director

Treasury Manager

Due Diligence Specialist

Industries








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