A copy of this bulletin should be provided to your Chief Financial Officer and Appointed Actuary.

Size: px

Start display at page:

Download "A copy of this bulletin should be provided to your Chief Financial Officer and Appointed Actuary."

Arline Watkins
5 years ago
Views:

1 ` TO: ATTENTION: MEMBERS OF THE FACILITY ASSOCIATION CHIEF EXECUTIVE OFFICER BULLETIN NO.: F DATE: NOVEMBER 26, 2015 SUBJECT: FARM SEPTEMBER 2015 PARTICIPATION REPORT A copy of this bulletin should be provided to your Chief Financial Officer and Appointed Actuary. Please be advised that the September 2015 FARM Participation Report is now available on the Facility Association Portal at Summary of Financial Results The calendar year-to-date Net Result from Operations is $19.6 million and the incurred loss ratio to the end of 9 months is 63.3%, as summarized in the table immediately below. September September Year to date Year to Date Sep 2015 Sep 2014 Written Premiums $16,085 $17,008 $152,141 $160,066 Earned Premiums $16,261 $17,385 $147,533 $155,051 Incurred Losses $11,864 $12,121 $93,428 $119,577 Underwriting Expenses and Others $3,608 $3,966 $34,534 $35,281 Net Result from Operations $789 $1,298 $19,571 $193 Ratios: Loss ratio % - Prior Accident Years (1.9%) (1.9%) (12.0%) 5.3% - Current Accident Year 74.8% 71.6% 75.3% 71.8% 72.9% 69.7% 63.3% 77.1% Underwriting & Admin Exp.% 22.3% 23.0% 23.5% 22.9% Combined Operating Ratio 95.2% 92.7% 86.8% 100.0% (Amounts in $000 s) Rounding differences may occur. For details on the financial results, please refer to Exhibit 1 Summary of Operations for Calendar Year All jurisdictions by month. A comparable summary by jurisdiction is included in Exhibit 2. Detailed exhibits by jurisdiction are included in a separate folder on our website called Summary of Operations. Page 1 of 4

2 Bulletin F FARM September 2015 Participation Report Updated Projection to Year-end The estimated calendar year Net Result from Operations to December 2015 is $24.0 million and the estimated combined operating ratio to December 2015 is 87.8%. This updated projection to the end of the year has not changed significantly from the projection provided last month ($24.5 million and 87.6%). Current month results The Net Result from Operations in the month of September 2015 is $0.8 million, down $0.5 million from the same month last year. This deterioration included a $0.1 million unfavourable impact due to the $1.1 million decrease in earned premium (at a combined ratio of 92.7%), with the remaining $0.4 million unfavourable impact from the increase in the combined ratio (from 92.7% last year to 95.2% this year, applied to this month s $16.3 million earned premium). This month s results moved the year-to-date combined operating ratio from 85.8% at the end of 8 months to 86.8% at the end of 9 months. The 1.0 percentage point deterioration is composed of a 1.2 percentage point increase in the Prior Accident Year loss ratio, offset by a 0.1 percentage point decrease in the Current Accident Year loss ratio, and further offset by a 0.1 percentage point decrease in the expense ratio. Variances from Projections The table below provides a summary of key components of the operating results as compared to the estimates projected last month. September 2015 Actual Projection Difference Difference % Written Premiums $16,085 $16,946 ($861) (5.1%) Earned Premiums $16,261 $16,446 ($185) (1.1%) Reported Losses Paid Losses $9,825 $12,093 ($2,268) (18.8%) Increase (decrease) in Outstanding Losses ($632) ($547) ($85) (15.5%) Total Reported Losses $9,193 $11,546 ($2,353) (20.4%) Increase (decrease) in IBNR * $2,951 $894 $2,057 Decrease (increase) in DPAC * $0 ($109) $109 Increase (decrease) in Retro Claims Expense ($280) ($729) $449 (Amounts in $000 s) Rounding differences may occur. * Detailed information is included in FARM September 2015 Participation Report - Actuarial Highlights. For the month of September 2015, reported indemnity amounts were $2.0 million lower than projected (allowed claims expenses are included in table above as part of reported losses, explaining why the variance in Total Reported Losses in the table shows -$2.4 million). The Current Accident Year had a $0.1 million unfavourable variance in reported indemnity, while the Page 2 of 4

3 Bulletin F FARM September 2015 Participation Report Prior Accident Years had a favourable variance of $2.1 million. Of the Prior Accident Years, 2014 had the largest variance in reported losses at $1.2 million favourable. No other single Prior Accident Year had a reported indemnity variance in excess of $1.0 million. Booking IBNR The IBNR booking process this month allowed the nominal IBNR (i.e. before the impact of discounting and changes in provisions for adverse deviation) to vary from projected in order to offset the Prior Accident Years and Current Accident Year variances from projected for the most recent accident years back to 1994 (for accident years 1993 and earlier, IBNR is held at $0). This is consistent with management s investigation into reported claims variances, concluding they were random and not necessarily indicative of a trend. Effect of Quarterly Valuation The September 2015 Participation Report does not reflect the results of an actuarial valuation update. The most recent valuation was as at June 30, 2015 for all jurisdictions and business segments. The actuarial valuation will be updated next as at September 30, 2015 for all jurisdictions and business segments, and the results of that valuation are anticipated to be reflected in the October 2015 Participation Report. Management Comments As shown in the table at the top of the next page, the private passenger annualized vehicle counts decreased by 9.9% overall in September 2015 relative to September On a year-to-date basis, exposure counts are down by 7.1%, decreasing in all jurisdictions except New Brunswick, Nova Scotia and Prince Edward Island. Page 3 of 4

4 Bulletin F FARM September 2015 Participation Report FARM Private Passenger Written Car Years Jurisdiction # FARM Vehicles Written Month of September 2015 Calendar YTD as of September Chg % Chg Chg % Chg Ontario (13) (7.4%) 1,642 1,973 (331) (16.8%) Alberta (123) (38.1%) 2,414 3,289 (875) (26.6%) Newfoundland & Labrador % 8,510 9,314 (804) (8.6%) New Brunswick (67) (9.8%) 5,989 5, % Nova Scotia % 2,865 2, % Prince Edward Island (6) (4.0%) 1,287 1, % Yukon % (46) (10.7%) Northwest Territories (62) (24.8%) 2,031 2,165 (134) (6.2%) Nunavut (22) (37.9%) (108) (16.7%) All Jurisdictions 2,580 2,864 (284) (9.9%) 25,661 27,618 (1,957) (7.1%) Should you require any further information, please call Norm Seeney, Vice President, Finance and Member Services at (416) David J. Simpson, M.B.A., FCIP, C. Dir. President & CEO Related link: FARM September 2015 Participation Report Actuarial Highlights Page 4 of 4

5 EXHIBIT 1 SUMMARY OF OPERATIONS - CALENDAR YEAR 2015 FACILITY ASSOCIATION RESIDUAL MARKET - ALL JURISDICTIONS BY MONTH Operating Results for the 9 months ended September 30, 2015 (Discounted Basis) Source: Monthly (Accident Year) Member Participation Report as at 09/2015 (thousands of dollars) CY Months CY2014 CY2015 Updated 12 Months January February March April May June July August September YTD Projections Actual UNDERWRITING REVENUE: PREMIUMS WRITTEN $15,841 $11,370 $14,071 $17,124 $22,159 $21,730 $17,720 16,041 16,085 $152,141 $194,079 $202,233 CHANGE IN UNEARNED PREMIUMS 1,189 3,748 2,463-1,318-5,619-5, ,608 1,460 4,689 NET PREMIUMS EARNED $17,030 $15,118 $16,534 $15,806 $16,540 $16,333 $16,954 $16,957 $16,261 $147,533 $195,539 $206,922 CLAIMS INCURRED PRIOR ACCIDENT YEARS UNDISCOUNTED , , ,587-13,587 5,139 EFFECT OF DISCOUNTING , , , ,088-5, DISCOUNTED -23-1,445 1, , , ,675-19,107 4,788 CURRENT ACCIDENT YEAR UNDISCOUNTED 11,581 10,468 10,958 10,775 12,720 11,458 11,837 13,597 11, , , ,901 EFFECT OF DISCOUNTING , ,112 7,801 6,825 DISCOUNTED 12,298 11,049 11,612 11,226 13,975 12,102 12,602 14,072 12, , , ,726 CLAIMS INCURRED $12,275 $9,604 $13,296 $10,283 $10,903 $11,356 $12,119 $1,728 $11,864 $93,428 $127,778 $155,514 UNDERWRITING EXPENSES OPERATING & SERVICE FEES 1,669 1,170 1,434 1,749 2,611 2,257 1,838 1,639 1,640 16,007 20,271 20,936 AGENTS COMMISSIONS 1, ,193 1,425 1,827 1,783 1,522 1,374 1,360 12,362 15,921 17,070 DRIVER RECORD ABSTRACTS ,563 3,115 3,169 BAD DEBTS PREMIUM DEFICIENCY/(DPAC) UNDISCOUNTED EFFECT OF DISCOUNTING DISCOUNTED UNDERWRITING EXPENSES $3,155 $2,294 $2,669 $3,399 $5,043 $4,087 $3,658 $3,299 $3,213 $30,817 $39,153 $41,131 NET UNDERWRITING GAIN (LOSS) $1,600 $3,220 $569 $2,124 $594 $890 $1,177 $11,930 $1,184 $23,288 $28,608 $10,277 ADMINISTRATIVE EXPENSES ,826 4,770 4,923 PREMIUM FINANCE FEE INVESTMENT INCOME OPERATING RESULTS $1,200 $2,854 $88 $1,717 $195 $371 $819 $11,538 $789 $19,571 $24,033 $5,616 RATIOS: Claims & Adj Expenses Incurred (Earned) Prior Accident Year -0.1% -9.6% 10.2% -6.0% -18.6% -4.6% -2.8% -72.8% -1.9% -12.0% -9.8% 2.3% Current Accident Years 72.2% 73.1% 70.2% 71.0% 84.5% 74.1% 74.3% 83.0% 74.8% 75.3% 75.1% 72.8% All Accident Years Combined 72.1% 63.5% 80.4% 65.0% 65.9% 69.5% 71.5% 10.2% 72.9% 63.3% 65.3% 75.1% Underwriting & Admin Exp.(Earned) 20.9% 17.6% 19.1% 24.1% 33.0% 28.3% 23.8% 21.9% 22.3% 23.5% 22.5% 22.3% COMBINED OPERATING RATIO 93.0% 81.1% 99.5% 89.1% 98.9% 97.8% 95.3% 32.1% 95.2% 86.8% 87.8% 97.4% Note: Amounts shown above do not reflect costs incurred directly by member companies e.g. income and premium taxes, health levies, association dues, cost of capital as a result of their compulsory participation in Facility Association and investment income earned on Facilty Association premium dollars invested directly by members. Rounding Difference may apply

6 EXHIBIT 2 SUMMARY OF OPERATIONS - CALENDAR YEAR 2015 FACILITY ASSOCIATION RESIDUAL MARKET - ALL JURISDICTIONS Operating Results for the 9 months ended September 30, 2015 (Discounted Basis) Source: Monthly (Accident Year) Member Participation Report as at 09/2015 (thousands of dollars) CY Months CY2014 NFLD & Updated 12 Months Alberta Ontario NS PEI NB LAB Yukon NWT Nunavut Total Projections Actual UNDERWRITING REVENUE: PREMIUMS WRITTEN $53,660 $36,138 $13,166 $3,632 $16,436 $22,228 $1,754 $3,888 $1,239 $152,141 $194,079 $202,233 CHANGE IN UNEARNED PREMIUMS 814-1, , ,608 1,460 4,689 NET PREMIUMS EARNED $54,474 $34,208 $12,299 $3,357 $15,209 $21,318 $1,626 $3,857 $1,185 $147,533 $195,539 $206,922 CLAIMS INCURRED PRIOR ACCIDENT YEARS UNDISCOUNTED ,998-1, , ,587-13,587 5,139 EFFECT OF DISCOUNTING , ,088-5, DISCOUNTED -1,303-11,537-2, , ,675-19,107 4,788 CURRENT ACCIDENT YEAR UNDISCOUNTED 35,364 24,851 8,110 2,326 10,410 20,085 1,463 1, , , ,901 EFFECT OF DISCOUNTING 1,918 1, , ,112 7,801 6,825 DISCOUNTED 37,282 26,752 8,495 2,451 10,940 21,102 1,558 1, , , ,726 CLAIMS INCURRED $35,979 $15,215 $6,279 $1,657 $11,401 $20,278 $1,242 $696 $681 $93,428 $127,778 $155,514 UNDERWRITING EXPENSES OPERATING & SERVICE FEES 5,400 3,978 1, ,651 2, ,007 20,271 20,936 AGENTS COMMISSIONS 4,643 1,868 1, ,568 2, ,362 15,921 17,070 DRIVER RECORD ABSTRACTS ,563 3,115 3,169 BAD DEBTS PREMIUM DEFICIENCY/(DPAC) UNDISCOUNTED EFFECT OF DISCOUNTING DISCOUNTED UNDERWRITING EXPENSES $10,882 $5,936 $3,013 $867 $3,529 $5,120 $355 $854 $261 $30,817 $39,153 $41,131 NET UNDERWRITING GAIN (LOSS) $7,613 $13,057 $3,007 $833 $279 ($4,080) $29 $2,307 $243 $23,288 $28,608 $10,277 ADMINISTRATIVE EXPENSES 1, ,826 4,770 4,923 PREMIUM FINANCE FEE INVESTMENT INCOME OPERATING RESULTS $6,440 $12,210 $2,682 $711 ($123) ($4,657) ($50) $2,183 $175 $19,571 $24,033 $5,616 RATIOS: Claims & Adj Expenses Incurred (Earned) Prior Accident Year -2.4% -33.7% -18.0% -23.7% 3.0% -3.9% -19.4% -31.6% 6.0% -12.0% -9.8% 2.3% Current Accident Years 68.4% 78.2% 69.1% 73.0% 71.9% 99.0% 95.8% 49.6% 51.5% 75.3% 75.1% 72.8% All Accident Years Combined 66.0% 44.5% 51.1% 49.3% 74.9% 95.1% 76.4% 18.0% 57.5% 63.3% 65.3% 75.1% Underwriting & Admin Exp.(Earned) 22.2% 20.0% 27.2% 29.5% 25.9% 26.8% 26.7% 25.5% 27.8% 23.5% 22.5% 22.3% COMBINED OPERATING RATIO 88.2% 64.5% 78.3% 78.8% 100.8% 121.9% 103.1% 43.5% 85.3% 86.8% 87.8% 97.4% Note: Amounts shown above do not reflect costs incurred directly by member companies e.g. income and premium taxes, health levies, association dues, cost of capital as a result of their compulsory participation in Facility Association and investment income earned on Facilty Association premium dollars invested directly by members. Rounding Difference may apply

ATTENTION: BULLETIN NO.: F DATE: FEBRUARY 26, 2015

ATTENTION: BULLETIN NO.: F DATE: FEBRUARY 26, 2015 ` TO: ATTENTION: MEMBERS OF THE FACILITY ASSOCIATION CHIEF EXECUTIVE OFFICER BULLETIN NO.: F15 012 DATE: FEBRUARY 26, 2015 SUBJECT: FARM DECEMBER 2014 PARTICIPATION REPORT A copy of this bulletin should