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 NOVA SCOTIA RISK SHARING POOL PROJECT MANAGER BULLETIN NO.: F DATE: DECEMBER 20, 2013 SUBJECT: NOVA SCOTIA RISK SHARING POOL NOVEMBER 2013 OPERATIONAL REPORT A copy of this bulletin should be provided to your Chief Financial Officer and Appointed Actuary. Please be advised that the November 2013 Nova Scotia 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 $4.9 million and the incurred loss ratio to the end of 11 months is 97.7%, as summarized below. November November Year to date Year to Date November 2013 November 2012 Written Premiums $869 $1,134 $12,310 $14,060 Earned Premiums $1,057 $1,216 $12,652 $12,001 Incurred Losses $893 $923 $12,361 $7,354 Underwriting Expenses and Others $337 $424 $5,236 $4,786 Net Result from Operations ($173) ($131) ($4,945) ($139) Ratios: Loss ratio % Prior Accident Years (3.4%) (4.5%) 8.2% (20.4%) Current Accident Year 87.9% 80.4% 89.5% 81.7% 84.5% 75.9% 97.7% 61.3% Underwriting & Admin Exp.% 31.9% 34.9% 41.4% 39.9% Combined Operating Ratio 116.4% 110.8% 139.1% 101.2% (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 details, 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 $5.2 million and the estimated combined operating ratio to December 2013 is 137.5%. The updated projection to the end of the year has not changed significantly from the one provided last month. Current Month Results The Net Result from Operations in the month of November 2013 is $0.2 million, down from the same month last year. This deterioration is driven by the overall increase in the combined ratio (from 110.8% to 116.4%). This month s results moved the yeartodate combined operating ratio from 141.2% at the end of 10 months to 139.1% at the end of 11 months. The 2.1 percentage point improvement was mainly driven by a 1.2 percentage point decrease in loss ratio with a 1.1 percentage point decrease in the Prior Accident Years, and a 0.9 percentage point decrease in expense ratio. Variances from Projections The table immediately below provides a summary of key components of the operating results as compared to the estimates projected last month. November 2013 Actual Projection Difference Difference% Written Premiums $869 $1,079 ($210) (19.5%) Earned Premiums $1,057 $1,102 ($45) (4.1%) Reported Losses Paid Losses $743 $842 ($99) (11.8%) Loss Expenses Paid $24 $36 ($12) (33.3%) Increase (decrease) in Outstanding Losses ($139) $577 ($716) (124.1%) Total Reported Losses $628 $1,455 ($827) (56.8%) Increase (decrease) in IBNR * $265 ($535) $800 Decrease (increase) in DPAC * $16 ($17) $33 (Amounts in $000 s) Rounding differences may occur. * Detailed information is included at Nova Scotia RSP November 2013 Operational Report Actuarial Highlights. Page 2 of 5

3 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. For the month of November 2013, reported losses were $0.8 million lower than projected. The Current Accident Year had a $0.8 million favourable variance in reported losses while the Prior Accident Years had a neglible variance. No single Prior Accident Year had a reported loss 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 Nova Scotia RSP November 2013 Operational Report Actuarial Highlights. Effect of Quarterly Valuation The November 2013 Nova Scotia Risk Sharing Pool Operational Report does not reflect the results of an updated valuation (the most recent valuation is as at September 30, 2013). The actuarial valuation will be updated next as at June 30, 2014 and we anticipate that the results will be reflected in the August 2014 Operational Report. Management Comments Yronyr Chg in Written Veh Count (by month) change in count (100) (200) (300) (400) (500) (600) The chart on the left shows the yearonyear change in the vehicles transferred to the pool by month, with November showing a decrease of 176 vehicles. Our projection last month (in part based on projections provided by select member company groups) was for a decrease of 44 written vehicles, indicating a variance of 132 written vehicles. Eight member company groups transferred fewer vehicles to the pool this month compared with a year ago, while 1 Page 3 of 5

4 transferred more, and 1 remained the same. Of the 8 member company groups transferring fewer vehicles, 1 member company group accounted for nearly 88% of the total transfer decrease for these decliners members. One member company group accounted for 100% of the total transfer increase for these grower members. November s vehicle count transfers to the pool represent a 17.4% decrease from November 2012 (last month we projected a 4.3% decrease based on select member company group feedback), and vehicle counts are down 8.9% yeartodate. Average written premium was down 7.1% in November 2013 and down 3.9% yeartodate (see charts below). Written Vehicle Count (by month) Average Written Premium (by month) count AWP $ 1,800 1,600 1,400 1,200 1, ,200 1,150 1,100 1,050 1, Nov13 Nov12 Amt Chg % Chg Nov13 Nov12 Amt Chg % Chg W. Veh curr mth 836 1,012 (176) 17.4% AWP curr mth 1,040 1,120 (80) 7.1% Written Vehicle Count (YTD) count in thousands AWP $ 1,160 1,140 1,120 1,100 1,080 1,060 1,040 1,020 Avg Written Premium (YTD) Nov13 Nov12 Amt Chg % Chg Nov13 Nov12 Amt Chg % Chg W. Vehicles YTD 11,359 12,469 (1,110) 8.9% Avg W. Prem YTD 1,084 1,128 (44) 3.9% As a result of the movements in transfer vehicle counts and average written premium, the transferred premium was down 23.3% for the month, and is down 12.4% yeartodate (see charts at the top of the next page). Page 4 of 5

5 Written Premium (by month) WP in $thousands 2,000 1,800 1,600 1,400 1,200 1, Written Premium (YTD) WP in $millions Nov13 Nov12 Amt Chg % Chg WP ($000s) curr mth 869 1,134 (265) 23.3% Nov13 Nov12 Amt Chg % Chg WP ($000s) YTD 12,311 14,059 (1,749) 12.4% 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: Nova Scotia RSP November 2013 Operational Report Actuarial Highlights Page 5 of 5

6 SUMMARY OF OPERATIONS CALENDAR YEAR 2013 Risk Sharing Pool Nova Scotia EXHIBIT 1 Operating Results for 11 Months ended November 30, 2013 (Discounted basis) Source: Monthly Operational Report (thousands of dollars) January February March April May June July August September October November CY2013 YTD CY MONTHS Updated Projection CY MONTHS Actual Underwriting Revenue: Net Premiums Written $908 $543 $1,235 $1,007 $1,174 $1,245 $1,289 $1,516 $1,358 $1,166 $869 $12,310 $13,437 $14,961 Decrease (Increase) in Unearned Premiums (15) (114) (142) (368) (253) (56) (1,687) Net Premiums Earned $1,244 $1,112 $1,220 $1,188 $1,190 $1,131 $1,147 $1,148 $1,105 $1,110 $1,057 $12,652 $13,783 $13,274 Claims Incurred: Prior Accident Years: Undiscounted ($25) ($12) ($18) ($6) ($5) ($6) ($3) $1,702 ($2) $16 $0 $1,641 $1,641 ($2,003) Effect of Discounting (179) (76) (20) (39) (35) (40) (31) (4) (56) (82) (36) (598) (649) (609) Discounted ($204) ($88) ($38) ($45) ($40) ($46) ($34) $1,698 ($58) ($66) ($36) $1,043 $992 ($2,612) Current Accident Year: Undiscounted $955 $844 $932 $894 $893 $852 $863 $1,382 $887 $1,281 $885 $10,668 $11,612 $10,136 Effect of Discounting Discounted $1,044 $895 $1,006 $956 $969 $898 $918 $1,420 $939 $1,344 $929 $11,318 $12,310 $10,832 Claims Incurred $840 $807 $968 $911 $929 $852 $884 $3,118 $881 $1,278 $893 $12,361 $13,302 $8,220 Underwriting Expenses: Expense Allowance $303 $181 $412 $336 $392 $416 $431 $506 $454 $389 $290 $4,110 $4,487 $5,089 Change in UPDR/DPAC: Undiscounted (5) 36 (3) (37) (47) 259 (68) (574) Effect of Discounting (26) (42) (1) (11) (4) 6 12 (19) (13) (37) (58) 148 Discounted $52 $85 ($6) $25 ($7) ($31) ($35) $240 ($53) $396 $ $665 ($426) Underwriting Expenses $355 $266 $406 $361 $385 $385 $396 $746 $401 $785 $306 $4,792 $5,152 $4,663 Net Underwriting Gain (Loss) $49 $39 ($154) ($84) ($124) ($106) ($133) ($2,716) ($177) ($953) ($142) ($4,501) ($4,671) $391 Administrative Expenses $39 $43 $45 $49 $40 $40 $42 $39 $31 $45 $31 $444 $502 $510 Net Result from Operations $10 ($4) ($199) ($133) ($164) ($146) ($175) ($2,755) ($208) ($998) ($173) ($4,945) ($5,173) ($119) Ratios: Claims & Expenses Incurred (Earned) Prior Accident Years 16.4% 7.9% 3.1% 3.8% 3.4% 4.1% 3.0% 147.9% 5.2% 5.9% 3.4% 8.2% 7.2% 19.7% Current Accident Year 83.9% 80.5% 82.5% 80.5% 81.4% 79.4% 80.0% 123.7% 85.0% 121.1% 87.9% 89.5% 89.3% 81.6% All Accident Years Combined 67.5% 72.6% 79.4% 76.7% 78.0% 75.3% 77.0% 271.6% 79.8% 115.2% 84.5% 97.7% 96.5% 61.9% Underwriting & Administrative Expenses (Earned) 31.7% 27.8% 37.0% 34.5% 35.7% 37.6% 38.2% 68.4% 39.1% 74.8% 31.9% 41.4% 41.0% 39.0% Combined Operating Ratio 99.2% 100.4% 116.4% 111.2% 113.7% 112.9% 115.2% 340.0% 118.9% 190.0% 116.4% 139.1% 137.5% 100.9% 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