Enter the Total letters of credit on the Valuation Date. This amount will be added to the solvency assets as of the Valuation Date to determine the solvency deficiency.

Check the box to increase letters of credit if the letters of credit should be increased. If you check this box, you must select whether they will increase by the total amount of solvency payments or by amounts that vary by year. If you select amounts that vary by year, you must click on the Parameters button and enter the amounts. When amounts that vary by year has been selected, the amount entered will be compared to the total solvency payments for each year and ProVal will increase the letters of credit by the lesser of the two amounts.

The letters of credit may be limited to a maximum. You may select to apply a statutory limit which is defined in ProVal as a percentage of the sum of either solvency liability or market value of assets; and an additional dollar amount. The additional dollar amount may be used to represent defined contribution balances in Quebec. Note that the additional amount will be held constant in a forecast. You may also select to apply a plan sponsor limit, in which case, you must click on the Parameters button and enter the desired amounts.

If letters of credit will be increased and are limited to a statutory maximum, you may check the box that letters of credit are allowed to increase above maximum amount includable in assets. If this box is checked, letters of credit will be limited to the statutory maximum when added to the solvency assets, however there will be no statutory limit applied to the letters of credit allowed for covering new solvency payments.

Select whether Interest on letter of credit is <not applicable> or whether interest on letter of credit should be included in the letter of credit or paid in cash. If you selected included in letter of credit, the amount of the letter of credit will be increased for interest using the solvency interest rate. If you select paid in cash, the interest will be added to the minimum required contribution.