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

Size: px

Start display at page:

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

Percival Maxwell
5 years ago
Views:

1 ` TO: ATTENTION: MEMBERS OF THE FACILITY ASSOCIATION CHIEF EXECUTIVE OFFICER BULLETIN NO.: F DATE: FEBRUARY 26, 2015 SUBJECT: FARM DECEMBER 2014 PARTICIPATION REPORT A copy of this bulletin should be provided to your Chief Financial Officer and Appointed Actuary. Please be advised that the December 2014 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 $5.6 million and the incurred loss ratio to the end of 12 months is 75.1%, as summarized in the table below. December December Year to date Year to Date Dec 2014 Dec 2013 Written Premiums $11,690 $13,090 $202,233 $216,527 Earned Premiums $17,064 $17,929 $206,922 $218,502 Incurred Losses $11,014 $12,462 $155,514 $129,929 Underwriting Expenses and Others $3,115 $3,507 $45,792 $36,403 Net Result from Operations $2,935 $1,960 $5,616 $52,170 Ratios: Loss ratio % - Prior Accident Years (7.8%) (2.0%) 2.3% (12.2%) - Current Accident Year 72.3% 71.5% 72.8% 71.7% 64.5% 69.5% 75.1% 59.5% Underwriting & Admin Exp.% 18.3% 19.8% 22.3% 16.9% Combined Operating Ratio 82.8% 89.3% 97.4% 76.4% (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 December 2014 Participation Report Updated Projection to Year-end An Outlook has been prepared to provide members with an estimate of Facility Association Residual Market operating results for calendar year 2015 based on the actuarial valuation at June 30, 2014, and reflecting actual experience to date as detailed in the August 2014 Participation Report. This Outlook was posted on December 10, 2014 (please refer to Bulletin F14-086), and projected a Net Result from Operations for 2015 of $17.5 million, and a combined operating ratio of 91.6%. The estimated calendar year Net Result from Operations to December 2015 is $17.2 million and the estimated combined operating ratio to December 2015 is 91.5%. This updated projection to the end of the year has not changed significantly from the projection provided in the Outlook ($17.5 million and 91.6%). Current month results The Net Result from Operations in the month of December 2014 is $2.9 million, up $1.0 million from the same month last year, driven by the reduction in incurred losses driven by the favourable change in the prior accident year contribution. This month s results moved the year-to-date combined operating ratio from 98.7% at the end of 11 months to 97.4% at the end of 12 months. The 1.3 percentage point improvement is composed of a 0.9 percentage point decrease in the Prior Accident Year loss ratio, coupled with a 0.1 percentage point decrease in the Current Accident Year loss ratio, and a 0.3 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. December 2014 Actual Projection Difference Difference % Written Premiums $11,690 $13,022 ($1,332) (10.2%) Earned Premiums $17,064 $16,437 $ % Reported Losses Paid Losses $22,913 $14,787 $8, % Increase (decrease) in Outstanding Losses ($12,023) ($1,078) ($10,945) 1,015.3% Total Reported Losses $10,890 $13,709 ($2,819) (20.6%) Increase (decrease) in IBNR * $438 ($1,880) $2,318 Decrease (increase) in DPAC * $381 $259 $122 Increase (decrease) in Retro Claims Expense * ($314) ($760) $446 (Amounts in $000 s) Rounding differences may occur. * Detailed information is included in FARM December 2014 Participation Report - Actuarial Highlights. Page 2 of 4

3 Bulletin F FARM December 2014 Participation Report For the month of December 2014, reported indemnity amounts were $2.6 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 -$2.8 million). The Current Accident Year had a $0.5 million favourable variance in reported indemnity, and the Prior Accident Years had a favourable variance of approximately $2.1 million. Of the Prior Accident Years, 1998 had the largest variance in reported losses at $1.0 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 December 2014 Participation Report does not reflect the results of an actuarial valuation update. The most recent valuation was as at September 30, 2014 for all jurisdictions and business segments. The actuarial valuation will be updated next as at December 31, 2014 for all jurisdictions and business segments, and the results of that valuation are anticipated to be reflected in the March 2015 Participation Report. Management Comments In December 2014, the private passenger exposure counts overall decreased by 3.7% as shown in the table on the next page. On a year-to-date basis, exposure counts are down by 7.0%, decreasing in all jurisdictions. Page 3 of 4

4 Bulletin F FARM December 2014 Participation Report FARM Private Passenger Written Car Years Jurisdiction # FARM Vehicles Written Month of December 2014 YTD as of December Chg % Chg Chg % Chg Ontario (21) (11.6%) 2,410 3,149 (739) (23.5%) Alberta (38) (12.5%) 4,250 4,844 (594) (12.3%) Newfoundland & Labrador % 11,559 12,163 (604) (5.0%) New Brunswick (104) (19.7%) 7,151 7,216 (65) (0.9%) Nova Scotia % 3,503 3,778 (275) (7.3%) Prince Edward Island (31) (30.1%) 1,536 1,591 (55) (3.5%) Yukon % (8) (1.6%) Northwest Territories % 2,858 3,033 (175) (5.8%) Nunavut (18) (46.2%) (86) (10.2%) All Jurisdictions 1,989 2,066 (77) (3.7%) 34,522 37,123 (2,601) (7.0%) 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 December 2014 Participation Report Actuarial Highlights Page 4 of 4

5 EXHIBIT 1 SUMMARY OF OPERATIONS - CALENDAR YEAR 2014 FACILITY ASSOCIATION RESIDUAL MARKET - ALL JURISDICTIONS BY MONTH Operating Results for the 12 months ended December 31, 2014 (Discounted Basis) Source: Monthly (Accident Year) Member Participation Report as at 12/2014 (thousands of dollars) CY Months CY2013 CY2014 Updated 12 Months January February March April May June July August September October November December YTD Projections Actual UNDERWRITING REVENUE: PREMIUMS WRITTEN $15,157 $13,100 $13,631 18,468 23,039 21,654 19,921 18,088 17,008 17,268 13,209 11,690 $202,233 $201,321 $216,527 CHANGE IN UNEARNED PREMIUMS 2,428 2,686 3,630-1,815-5,621-4,546-1, ,598 5,374 4, ,975 NET PREMIUMS EARNED $17,585 $15,786 $17,261 $16,653 $17,418 $17,108 $17,931 $17,924 $17,385 $18,000 $16,807 $17,064 $206,922 $201,917 $218,502 CLAIMS INCURRED PRIOR ACCIDENT YEARS UNDISCOUNTED , , , , , ,803 EFFECT OF DISCOUNTING , , , , ,019-17,873 DISCOUNTED , , , ,331 4,788-6,019-26,676 CURRENT ACCIDENT YEAR UNDISCOUNTED 11,803 10,684 12,574 11,522 13,293 12,093 12,646 9,493 11,878 14,350 11,699 11, , , ,592 EFFECT OF DISCOUNTING , ,825 6,581 6,013 DISCOUNTED 12,390 11,139 13,015 11,953 13,999 12,580 13,117 10,750 12,452 14,784 12,202 12, , , ,605 CLAIMS INCURRED $12,164 $10,916 $27,104 $11,474 $9,489 $12,224 $12,690 $11,395 $12,121 $13,201 $11,722 $11,014 $155,514 $139,568 $129,929 UNDERWRITING EXPENSES OPERATING & SERVICE FEES 1,590 1,354 1,416 1,917 2,379 2,223 2,058 1,872 1,740 1,797 1,379 1,211 20,936 20,511 22,616 AGENTS COMMISSIONS 1,197 1,082 1,212 1,519 1,908 1,828 1,675 1,523 1,461 1,509 1, ,070 16,976 17,886 DRIVER RECORD ABSTRACTS ,169 2,704 3,497 BAD DEBTS ,538 PREMIUM DEFICIENCY/(DPAC) UNDISCOUNTED EFFECT OF DISCOUNTING DISCOUNTED , UNDERWRITING EXPENSES $3,020 $2,864 $3,388 $3,678 $4,962 $4,058 $4,012 $2,270 $3,596 $3,931 $2,626 $2,726 $41,131 $40,775 $32,092 NET UNDERWRITING GAIN (LOSS) $2,401 $2,006 ($13,231) $1,501 $2,967 $826 $1,229 $4,259 $1,668 $868 $2,459 $3,324 $10,277 $21,574 $56,481 ADMINISTRATIVE EXPENSES ,923 4,516 4,885 PREMIUM FINANCE FEE INVESTMENT INCOME OPERATING RESULTS $2,049 $1,620 ($13,551) $1,146 $2,392 $518 $836 $3,885 $1,298 $447 $2,041 $2,935 $5,616 $17,242 $52,170 RATIOS: Claims & Adj Expenses Incurred (Earned) Prior Accident Year -1.3% -1.4% 81.6% -2.9% -25.9% -2.1% -2.4% 3.6% -1.9% -8.8% -2.9% -7.8% 2.3% -3.0% -12.2% Current Accident Years 70.5% 70.6% 75.4% 71.8% 80.4% 73.5% 73.2% 60.0% 71.6% 82.1% 72.6% 72.3% 72.8% 72.1% 71.7% All Accident Years Combined 69.2% 69.2% 157.0% 68.9% 54.5% 71.4% 70.8% 63.6% 69.7% 73.3% 69.7% 64.5% 75.1% 69.1% 59.5% Underwriting & Admin Exp.(Earned) 19.4% 20.8% 21.7% 24.3% 31.8% 25.6% 24.7% 14.9% 23.0% 24.3% 18.3% 18.3% 22.3% 22.4% 16.9% COMBINED OPERATING RATIO 88.6% 90.0% 178.7% 93.2% 86.3% 97.0% 95.5% 78.5% 92.7% 97.6% 88.0% 82.8% 97.4% 91.5% 76.4% 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 SUMMARY OF OPERATIONS - CALENDAR YEAR 2014 FACILITY ASSOCIATION RESIDUAL MARKET - ALL JURISDICTIONS Operating Results for the 12 months ended December 31, 2014 (Discounted Basis) Source: Monthly (Accident Year) Member Participation Report as at 12/2014 (thousands of dollars) CY Months CY2013 NFLD & Updated 12 Months Alberta Ontario NS PEI NB LAB Yukon NWT Nunavut Total Projections Actual UNDERWRITING REVENUE: PREMIUMS WRITTEN $75,506 $46,651 $16,858 $4,484 $20,253 $29,325 $2,280 $5,214 $1,662 $202,233 $201,321 $216,527 CHANGE IN UNEARNED PREMIUMS , , , ,975 NET PREMIUMS EARNED $74,905 $49,738 $17,187 $4,542 $21,307 $30,038 $2,250 $5,279 $1,676 $206,922 $201,917 $218,502 CLAIMS INCURRED PRIOR ACCIDENT YEARS UNDISCOUNTED 9,685-10, ,381 2,928 1, , ,803 EFFECT OF DISCOUNTING 1,690-2, ,019-17,873 DISCOUNTED 11,375-12, ,448 3,028 1, ,788-6,019-26,676 CURRENT ACCIDENT YEAR UNDISCOUNTED 45,982 36,630 12,033 2,758 13,411 27,038 1,464 3, , , ,592 EFFECT OF DISCOUNTING 1,707 2, , ,825 6,581 6,013 DISCOUNTED 47,689 39,121 12,508 2,849 13,942 28,262 1,538 3, , , ,605 CLAIMS INCURRED $59,064 $26,999 $12,158 $4,297 $16,970 $29,486 $1,802 $4,175 $563 $155,514 $139,568 $129,929 UNDERWRITING EXPENSES OPERATING & SERVICE FEES 7,597 5,139 1, ,041 3, ,936 20,511 22,616 AGENTS COMMISSIONS 6,616 2,930 1, ,923 2, ,070 16,976 17,886 DRIVER RECORD ABSTRACTS ,169 2,704 3,497 BAD DEBTS -1,078 1, ,453-1, ,538 PREMIUM DEFICIENCY/(DPAC) UNDISCOUNTED EFFECT OF DISCOUNTING DISCOUNTED UNDERWRITING EXPENSES $14,049 $9,744 $3,961 $2,541 $2,837 $6,087 $354 $992 $566 $41,131 $40,775 $32,092 NET UNDERWRITING GAIN (LOSS) $1,792 $12,995 $1,068 ($2,296) $1,500 ($5,535) $94 $112 $547 $10,277 $21,574 $56,481 ADMINISTRATIVE EXPENSES 1,699 1, ,923 4,516 4,885 PREMIUM FINANCE FEE INVESTMENT INCOME OPERATING RESULTS $148 $11,888 $685 ($2,421) $1,042 ($6,176) $9 ($32) $473 $5,616 $17,242 $52,170 RATIOS: Claims & Adj Expenses Incurred (Earned) Prior Accident Year 15.2% -24.4% -2.0% 31.9% 14.2% 4.1% 11.7% 3.9% -16.9% 2.3% -3.0% -12.2% Current Accident Years 63.7% 78.7% 72.8% 62.7% 65.4% 94.1% 68.4% 75.2% 50.5% 72.8% 72.1% 71.7% All Accident Years Combined 78.9% 54.3% 70.8% 94.6% 79.6% 98.2% 80.1% 79.1% 33.6% 75.1% 69.1% 59.5% Underwriting & Admin Exp.(Earned) 21.0% 22.0% 25.4% 58.9% 15.6% 22.5% 19.5% 21.6% 38.2% 22.3% 22.4% 16.9% COMBINED OPERATING RATIO 99.9% 76.3% 96.2% 153.5% 95.2% 120.7% 99.6% 100.7% 71.8% 97.4% 91.5% 76.4% 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 EXHIBIT 2

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

` TO: ATTENTION: MEMBERS OF THE FACILITY ASSOCIATION CHIEF EXECUTIVE OFFICER BULLETIN NO.: F15 083 DATE: NOVEMBER 26, 2015 SUBJECT: FARM SEPTEMBER 2015 PARTICIPATION REPORT A copy of this bulletin should