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

Transcription

1 TO: ATTENTION: MEMBERS OF THE FACILITY ASSOCIATION CHIEF EXECUTIVE OFFICER NEW BRUNSWICK RISK SHARING POOL PROJECT MANAGER BULLETIN NO.: F DATE: MAY 29, 2013 SUBJECT: NEW BRUNSWICK RISK SHARING POOL APRIL 2013 OPERATIONAL REPORT A copy of this bulletin should be provided to your Chief Financial Officer and Appointed Actuary. Please be advised that the April 2013 New Brunswick Risk Sharing Pool Operational Report is now available on the Facility Association Portal at Summary of Financial Results The calendar yeartodate Net Result from Operations is roughly breakeven and the incurred loss ratio to the end of 4 months is 62.8%, as summarized below. April April Year to date Year to Date April 2013 April 2012 Written Premiums ,802 2,883 Earned Premiums ,655 2,997 Incurred Losses ,294 2,206 Underwriting Expenses and Others ,312 1,262 Net Result from Operations ($34) ($77) $49 ($471) Ratios: Loss ratio % Prior Accident Years 4.0% 12.0% 9.4% 4.3% Current Accident Year 70.7% 77.0% 72.2% 77.9% 66.7% 65.0% 62.8% 73.6% Underwriting & Admin Exp.% 37.1% 45.3% 35.9% 42.1% Combined Operating Ratio 103.8% 110.3% 98.7% 115.7% (Amounts in $000 s) Rounding differences may occur. Page 1 of 5

2 These results are discussed in some detail in the Current Month Results section below. For additional numeric detail, please refer to Exhibit 1 Summary of Operations for Calendar Year 2013 attached to this bulletin. Updated Projection to Yearend The estimated calendar year Net Result from Operations to December 2013 is $0.5 million and the estimated combined operating ratio to December 2013 is 104.4%. The outlook to the end of the year has no significant change from the outlook provided last month. Current Month Results In the month of April 2013, the New Brunswick Risk Sharing Pool s Net Result from Operations is roughly breakeven. This month s results moved the yeartodate combined operating ratio from 97.0% at the end of 3 month to 98.7% at the end of 4 months. The Prior Accident Years loss ratio increased by 1.8 percentage points and Current Accident year loss ratio declined by 0.5 percentage point. The expense ratio increased by 0.4 percentage point. Variances from Projections The table below provides a summary of key components of the operating results as compared to the estimates projected last month. April 2013 Actual Projection Difference Difference% Written Premiums $773 $1,035 ($262) 25.3% Earned Premiums (39) 4.1% Reported Losses Paid Losses % Loss Expenses Paid % Increase (decrease) in Outstanding Losses (580) (1,035) % Total Reported Losses 53 (462) % Increase (decrease) in IBNR * 549 1,098 (549) Increase (decrease) in Premium Deficiency * 29 (27) 56 (Amounts in $000 s) Rounding difference may occur * Detailed information is included in New Brunswick RSP April 2013 Operational Report Actuarial Highlights. Each month, management reviews the variance between reported premium activity and claims activity (actual reported claims payments and changes in case reserves) and the associated actuarial projections. The projection process involves many assumptions including claims reporting patterns. Actual reporting patterns vary from monthtomonth, sometimes considerably. Although variances from our projections are expected, management investigates variances above set thresholds and responds as appropriate. For this month the variances were within the threshold given the monthly reporting volatility. Page 2 of 5

3 For the month of April 2013, reported losses were $0.5 million greater than projected. Management investigated reported claims activity and is satisfied that the variance is appropriately accounted for in our current booking process. The majority of the variances are related to Prior Accident Years and no single Prior Accident Year had a 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, including the impact of earned premium variances (as IBNR is based on loss ratios). This is consistent with management s investigation into reported claims variances (other than those due to the emergence assumption issue previously discussed) concluding they were random and not necessarily indicative of a trend. IBNR is discussed in more detail in the New Brunswick RSP April 2013 Operational Report Actuarial Highlights. Effect of Quarterly Valuation The April 2013 New Brunswick Risk Sharing Pool Operational Report does not reflect the results of an updated valuation (the most recent valuation is as at September 30, 2012). The actuarial valuation will be updated next as at June 30, 2013 and we anticipate that the results will be reflected in the August 2013 Operational Report. Management Comments The chart on the left shows the yearonyear Yronyr Chg in Written Veh Count (by month) change in the vehicles transferred to the pool by change in count month, with April s decrease of 130 vehicles. 100 This is the first time the pool reported a decline on vehicle counts since February 2012 and it is 50 still too early to tell whether this will be the end of the continuing growth noted in Our (50) projection last month (in part based on projections provided by select member (100) company groups) was for an increase of 57 (150) vehicles, indicating a variance of 187 written vehicle counts. This variance was mainly due to two member companies who removed vehicles from the pool instead of transferring to the pool in April as projected. Eight member company groups transferred fewer vehicles to the pool this month compared with a year ago, while 6 transferred more. Of the 8 member company groups transferring fewer vehicles, 2 member company groups accounted for 74% of the total transfer decrease for the decliner members. Of the 6 member company groups transferring more vehicles, no single member company group stand out. Page 3 of 5

4 April s vehicle count transfers to the pool represent a 15.3% decrease from April 2012 (last month we projected a 6.7% increase based on select member company group feedback), and counts are now down 1.0% yeartodate. Average written premium was down 6.2% in April 2013 and down 2.0% yeartodate (see charts below). Written Vehicle Count (by month) Average Written Premium (by month) count AWP $ 1,400 1,200 1, ,180 1,160 1,140 1,120 1,100 1,080 1,060 1,040 1,020 Apr13 Apr12 Amt Chg % Chg Apr13 Apr12 Amt Chg % Chg W. Veh curr mth (130) 15.3% AWP curr mth 1,076 1,147 (71) 6.2% Written Vehicle Count (YTD) count in thousands AWP $ 1,150 1,140 1,130 1,120 1,110 1,100 1,090 1,080 1,070 1,060 1,050 Avg Written Premium (YTD) Apr13 Apr12 Amt Chg % Chg Apr13 Apr12 Amt Chg % Chg W. Vehicles YTD 2,532 2,557 (25) 1.0% Avg W. Prem YTD 1,106 1,128 (22) 2.0% As a result of the movements in transfer vehicle counts and average written premium, the transferred premium was down 20.5% for the month (last month, we projected premium for the month to increase by 6.4% on count increases), and is down 2.8% yeartodate (see charts on the next page). Page 4 of 5

5 Written Premium (by month) WP in $tthousands 1,600 1,400 1,200 1, Written Premium (YTD) WP in $millions Apr13 Apr12 Amt Chg % Chg WP ($000s) curr mth (199) 20.5% Apr13 Apr12 Amt Chg % Chg WP ($000s) YTD 2,801 2,884 (82) 2.8% 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: New Brunswick RSP April 2013 Operational Report Actuarial Highlights Page 5 of 5

6 SUMMARY OF OPERATIONS CALENDAR YEAR 2013 Risk Sharing Pool New Brunswick EXHIBIT 1 Operating Results for 4 Months ended April 30, 2013 (Discounted basis) Source: Monthly Operational Report (thousands of dollars) January February March April CY2013 YTD CY MONTHS Updated Projection CY MONTHS Actual Underwriting Revenue: Net Premiums Written $519 $563 $947 $773 $2,802 $10,792 $11,338 Change in Unearned Premiums (1,248) Net Premiums Earned $944 $859 $949 $903 $3,655 $10,927 $10,090 Claims Incurred: Prior Accident Years: Undiscounted ($26) ($14) ($8) ($3) ($51) ($51) ($1,047) Effect of Discounting (138) (12) (110) (33) (293) (565) (326) Discounted ($164) ($26) ($118) ($36) ($344) ($616) ($1,373) Current Accident Year: Undiscounted $661 $586 $643 $609 $2,499 $7,365 $6,301 Effect of Discounting Discounted $703 $618 $679 $638 $2,638 $7,763 $6,612 Claims Incurred $539 $592 $561 $602 $2,294 $7,147 $5,239 Underwriting Expenses: Expense Allowance $172 $187 $315 $257 $931 $3,591 $3,916 Change in UPDR/DPAC: Undiscounted (2) (16) (613) Effect of Discounting (23) (14) (1) (8) (46) (12) 60 Discounted (3) (28) ($553) Underwriting Expenses $277 $260 $312 $286 $1,135 $3,563 $3,363 Net Underwriting Gain (Loss) $128 $7 $76 $15 $226 $217 $1,488 Administrative Expenses $39 $44 $45 $49 $177 $697 $574 Net Result from Operations $89 ($37) $31 ($34) $49 ($480) $914 Ratios: Claims & Expenses Incurred (Earned) Prior Accident Years 17.4% 3.0% 12.4% 4.0% 9.4% 5.6% 13.6% Current Accident Year 74.5% 71.9% 71.5% 70.7% 72.2% 71.0% 65.5% All Accident Years Combined 57.1% 68.9% 59.1% 66.7% 62.8% 65.4% 51.9% Underwriting & Administrative Expenses (Earned) 33.5% 35.4% 37.6% 37.1% 35.9% 39.0% 39.0% Combined Operating Ratio 90.6% 104.3% 96.7% 103.8% 98.7% 104.4% 90.9% 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