OSBIE AUDIT COMMITTEE MEETING AGENDA Thursday February …

OSBIE AUDIT COMMITTEE MEETING AGENDA Thursday February 11, 2021 9:00am

Virtual

ITEM LEADER

1. Welcome & Attendance a) Confirmation of Agenda

b) Declaration of Pecuniary Interest

MOTION: To confirm the agenda

Chair

2. Approval of previous meeting minutes

MOTION: To approve the minutes of the December 11, 2020 Audit Committee meeting

Chair

3. Report from the Appointed Actuary

Report of the Appointed Actuary

MOTION: To recommend to the Board to receive the Appointed Actuary’s report for year end 2020.

Raul Martin, JSCP

4. Report of the Auditor

Audited Financial Statements

MOTION: To recommend to the Board to receive the Audit Findings report from KPMG for the audit of 2020 OSBIE financial statements.

MOTION: To recommend to the Board the approval of the audited financial statements for the Ontario School Boards’ Insurance Exchange, for the year ended December 31, 2020.

Kim Haley, KPMG

5. P&C-1

MOTION: To recommend approval of the 2020 annual P&C-1 form as presented.

CFO

6. Audit Services Contract Discussion

Contract renewal date July 01, 2021

Chair

7. In Camera Session

The Audit Committee will meet with KPMG and JSCP.

Chair

8. Future Meeting Dates

• June 25, 2021

• Dec 10, 2021

9. Adjournment

MOTION: To adjourn the Audit Committee meeting

Chair

Agenda 2

MOTION

TO: Audit Committee

FROM: CEO

RE: Previous Meeting Minutes

MOVED: SECONDED:

BE IT RESOLVED,

MOTION: To approve the minutes of the December 11, 2020 Audit Committee meeting.

OSBIE Audit Committee Meeting Minutes Virtual Meeting

Friday December 11, 2020

Present: Jeff Pratt Marc Cantin Isabel Grace Chris Arnew Amy Janssens Pearl Fong-West Craig Young Kirsti Alaksa Brian Coburn Cathy Modesto Chris Spina Peter Marshall Jaspal Gill

Regrets: Lynn Schaule

Resources: Jim Sami, CEO Sandra Taylor, CFO, Mark Anderson, Director of Claims Tammy Hicks, Director of Risk Management and Member Services Traci Decaro, Claims Manager Harjit Douglas, Recording Secretary

1. Call to Order

The Chair called the meeting to order at 9:02am. He called for any Declarations of PecuniaryInterest. There were none declared. He asked for a motion to confirm the agenda.

Motion: Moved by Marc Cantin, seconded by Peter Marshall to confirm the agenda. Carried.

2. Approval of previous meeting minutes

The Chair asked for a motion to approve the Audit Committee’s minutes of the June 26, 2020meeting.

Motion: Moved by Brian Coburn, seconded by Craig Young to approve the minutes of the June 26, 2020 Audit Committee meeting. Carried.

3. Electronic Business Between Meetings

Motion: Moved by Brian Coburn, seconded by Pearl Fong-West to confirm the motion torecommend the approval of the September 30, 2020 P&C1. Carried.

4. Report of the Auditor

The Chair invited Kim Haley and Dale Percival of KPMG to make their presentation.

MOTION: Moved by Brian Coburn, seconded by Isabel Grace to recommend the approval of the

audit plan for OSBIE’s 2020-year end as presented by KPMG. Carried.

5. In camera session

It was agreed amongst the directors that an In Camera session was not required for this meeting.

6. Future Meeting Dates

The Board Chair asked that the February 12,2021 date be amended as that date is tied to theFamily Day long weekend and some directors may want to use the February 12th date to extend the weekend. A suggestion was made to alter the date to Thursday February 11,2021 which was acceptable to the directors.

• February 11, 2021

• June 25, 2021

• December 10, 2021

MOTION: Moved by Brian Coburn, seconded by Pearl Fong-West to recommend the approval of the proposed meeting dates for 2021. Carried.

7. Adjournment

Motion: Moved by Brian Coburn, seconded by Jeff Pratt to adjourn the Audit Committeemeeting at 9:37am. Carried

Chair ____________________________________________________________

Secretary _________________________________________________________

MOTION: To approve the minutes of the December 11, 2020 Audit Committee meeting.

Agenda 3

MOTION

TO: Audit Committee

FROM: CEO

RE: Year end Report from the Appointed Actuary

MOVED: SECONDED:

BE IT RESOLVED,


Agenda 3a -Appointed Actuary’s Report

OSBIE’s Appointed Actuary, Raul Martin of JSCP will present his findings and opinion regarding

OSBIE’s year end IBNR and claims reserves valuation.

This opinion and report form part of our submission to FSRA, as well as our Annual Report to

Subscribers. The actuary’s role in performing this review is to certify to the regulator, as well

as the Members, that OSBIE is adequately reserved, by adjusting and re-setting our IBNR based

on the claims experience in 2020.

Asset/Liability Duration Matching

JSCP will comment on the Asset/Liability duration matching as per the requirements of the

OSBIE Governance policy ELP 7. This year he will talk about OSBIE’s short term cash

management review that he undertakes, along with the bond duration matching, in order to

confirm that OSBIE can meet our obligations. While our asset duration is increasing to

maximize the income opportunities, the liabilities are getting shorter, which means we are

settling claims faster.

IBNR valuation

To summarize:

• Case reserves have increased year over year from $45 Million to $60 Million -$13 million

is Property

• IBNR valuation is $39.7 million, virtually no change from $39.5 million at year end 2019.

• Liability case reserves and Liability IBNR form 92% of OSBIE’s total claim reserves.

The chart below summarizes Case Reserves and IBNR by Line and illustrates the significant

impact of Liability changes on our results.

Liab Cyber Prop Crime Boiler Auto Legal Expense Total

CASE Reserves

41,564,940

50,000

17,546,982 -

368,200

200,450

767,603

60,498,175

as a percent of Total case 68.70% 0.08% 29.00% 0.00% 0.61% 0.33% 1.27%

1.0

IBNR

38,158,000 -

495,000

141,000

15,000

706,000

215,000

39,730,000

as a percent of IBNR 96.04% 0.00% 1.25% 0.35% 0.04% 1.78% 0.54%

1

IBNR as a % of CASE 92% 3% 4% 352%

Large Loss Fund

JSCP will also speak to the treatment of the large loss fund for 2021 and beyond. Until we

experience a large loss, there are no offsetting claims liabilities, so the fund will continue to

build as a part of our surplus. The fund closed 2020 with a balance of $8,091,000.

Presentation slides from JSCP follow this summary.


To the Audit Committee of

Ontario School Boards’ Insurance Exchangeon

11 February 2021

PRESENTATION OF APPOINTED ACTUARY’S REPORT

1. Expression of Opinion2. Comparison of 2019 and 2020 Actuarial Present Value

(APV) Net Claims Liabilities3. List of important changes in 20204. Effect of Actuarial Present Value (APV) Calculation5. Duration Matching6. Loss Ratio by Segment7. Loss Ratio by Year 8. Claims Run-off by Segment9. Reinsurance/Retention

TABLE OF CONTENTS

OSBIE Presentation to Audit Committee February 2021 2

I have valued the policy liabilities and reinsurance recoverables of Ontario School Boards’Insurance Exchange for its statement of financial position at December 31, 2020 and their changesin the statement of income for the year then ended in accordance with the accepted actuarialpractice in Canada including selection of appropriate assumptions and methods.

In my opinion, the amount of policy liabilities net of reinsurance recoverables makes appropriateprovision for all policy obligations and the financial statements fairly present the results of thevaluation.

The results of my valuation together with the amounts carried in the Annual Return are thefollowing:

EXPRESSION OF OPINION


AppointedCarried in Actuary's

Annual Return Estimate($'000) ($'000)

(1) Direct unpaid claims and adjustment expenses: 108,857 108,857

(2) Assumed unpaid claims and adjustment expenses: 0 0

(3) Gross unpaid claims and adjustment expenses: 108,857 108,857

(4) Ceded unpaid claims and adjustment expenses: 2,943 2,943

(5) Other amounts to recover: 5,863 5,863

(6) Other net liabilities: 0 0

(7) Net unpaid claims and adjustment expenses(3)-(4)-(5)+(6): 100,051 100,051

Claim Liabilities

EXPRESSION OF OPINION (Cont’d)


AppointedPremium Liabilities Carried in Actuary's

Annual Return Estimate($'000) ($'000)(Col.1) (Col.2)

(1) Gross policy liabilities in connection with unearned premiums: 0 (2) Net policy liabilities in connection with unearned premiums: 0 (3) Gross unearned premiums: 0 (4) Net unearned premiums: 0 (5) Premium deficiency: 0 0 (6) Other net liabilities: 0 0 (7) Deferred policy acquisition expenses: 0 (8) Maximum policy acquisition expenses deferrable: [(4)+(5)+(9)]Col.1 - (2) Col.2

(9) Unearned Commissions + Ceded Deferred Premium Taxes + Ceded Deferred Insurance Operations Expenses:

0

0

COMPARISON OF 2019 & 2020 ACTUARIAL PRESENT VALUE NET CLAIMS LIABILITIES


2019 2020Net Net

Undiscounted 86,936 93,625Discounted claims 77,887 85,932PFAD - claims dev. 9,915 10,240PFAD - reinsurance 1 14PFAD - reinvestment 3,510 3,867Rounding 0 (2)APV 91,313 100,051

LIST OF IMPORTANT CHANGES IN 2020


1. Impact of COVID-19 on Liability losses

2. Impact of COVID-19 on the discount rate

3. Large Property Loss

EFFECT OF APV CALCULATION


Impact($000)

Net discount rate before MFAD 3.48% 2.93%Net discount rate after MFAD 2.03% 1.38%

MFAD for discount rate 1.45% 1.55%

Margin for claims development- SA/Environmental Liability 15.00% 15.00%

- Other Liability 12.50% 12.50%- Property, B&M, Crime 2.50% 2.50%- Automobile 10.00% 10.00%- Legal Expense 5.00% 5.00%- ILAE 15.00% 15.00%

2019 2020

(1,829)

0

DURATION MATCHING


As of December 31, 2020, the effective asset duration is 5.93 years and the effective liability duration is 2.97 years. This indicates assets and liability durations are matched within a reasonable range.

2020 2019 2018 2017 2016Liability Duration 2.97 3.14 3.26 3.22 3.3

CURRENT POLICY YEAR UNDISCOUNTED LOSS RATIO


(Before ILAE)

Gross Gross Gross GrossEarned Loss Earned Loss

Segment Premium Ratio Premium Ratio($000's) ($000's)

Liability 17,853 80.42% 19,732 54.18%Property 10,360 32.99% 10,914 164.35%Boiler & Machinery 354 97.74% 794 55.16%Crime 881 77.07% 905 15.47%Automobile 1,100 50.00% 1,040 49.90%Legal Expense 531 88.51% 1,013 67.62%

OSBIE Total 31,079 63.78% 34,398 88.41%

2019 Appointed Actuary Report

2020 Appointed Actuary Report

GROSS UNDISCOUNTED LOSS RATIO BY YEAR(Excluding ILAE)


0%

20%

40%

60%

80%

100%

120%

140%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Gross Loss Ratio: Policy Year 2000-2020

2019

2020

ONE-YEAR CLAIMS RUN-OFF BY SEGMENT(Undiscounted Basis Excluding ILAE)


Gross Basis Redundancy (Deficiency)($000's)

Liability (6,906)

Property 490

Boiler & Machinery (46)

Crime (347)

Automobile 330

Total OSBIE (6,528)

* Net Runoff (6,457)

Reinsurance Coverage

2019 2020

Liability $22M xs $5M No Reinsurance

Property $5M xs Board deductible

$5M xs Board deductible

Crime No Reinsurance No ReinsuranceBoiler & Machinery 50% co-insured No Reinsurance

Automobile $17M xs $3M No ReinsuranceLegalExpense No Reinsurance No Reinsurance

REINSURANCE / RETENTION


Agenda 4a

MOTION

TO: Audit Committee FROM: CEO RE: KPMG year end reports: Audit Findings Report

Presentation of Audited Financial Statements

MOVED: SECONDED:

BE IT RESOLVED, MOTION: To recommend to the Board to receive the Audit Findings report from KPMG for the audit of 2020 OSBIE financial statements. MOTION: To recommend to the Board the approval of the audited financial statements for the Ontario School Boards’ Insurance Exchange for the year ended December 31, 2020.

Ontario School Boards Insurance Exchange (OSBIE)

Audit Findings Report for the year ended December 31, 2020

Licensed Public Accountants

Prepared as of February 2, 2021 for

the Audi t Commit tee meet ing on

February 11, 2021

kpmg.ca/audi t

https://home.kpmg.com/ca/en/home/services/audit.html

Table of contents Changes from the audit plan 1

What’s new in 2020 2

Audit risks and results 5

Significant accounting policies and practices 11

Financial statement presentation and disclosure 12

Uncorrected differences and corrected adjustments 13

Appendices 14

Appendix 1: Other Required Communications 15

Appendix 2: Management Representation Letter 16

Appendix 3: Independence Letter 23

Appendix 4: Draft Auditors’ Report 25

Appendix 5: KPMG’s System of Quality Control 30

Appendix 6: Technology in the audit 31

Appendix 7: Audit and Assurance Insights 32

Audit Findings Report P a g e | 1

Executive summary Purpose of this report1

The purpose of this Audit Findings Report is to assist you, as a member of the Audit Committee, in your review of the results of our audit of the financial

statements as at and for the period ended December 31, 2020. This Audit Findings Report builds on the Audit Plan we presented to the Audit Committee.

What’s new in 2020

There have been significant changes in 2020 which impacted financial reporting,

the Entity’s internal control over financial reporting and our audit:

• COVID-19 pandemic – See pages 2 - 3

• New CAS auditing standards – See page 4

Changes from the audit plan

There have been no significant changes regarding our audit from the Audit

Planning Report previously presented to you.

Independence

We have included a copy of our annual independence letter dated as of the date of

this report, which notes that we are independent of the Entity in accordance with

the ethical requirements that are relevant to our audit of the financial statements in

Canada.

Uncorrected differences

We did not identify differences that remain uncorrected.

1 This Audit Findings Report is intended solely for the information and use of Management, the Audit Committee, and the Board of Directors and should not be used for any other purpose or any other

party. KPMG shall have no responsibility or liability for loss or damages or claims, if any, to or by any third party as this Audit Findings Report has not been prepared for, and is not intended for, and

should not be used by, any third party or for any other purpose.

Finalizing the audit

As of February 4, 2021, we have completed the audit of the financial statements,

with the exception of certain remaining procedures, which include amongst others:

– Receipt of the legal letter

– Completing our final tie in of the financial statement and note disclosures

– Review of the French translation and Annual Reports

– Obtaining the signed management representation letter

– Completing our discussions with the Audit Committee

– Obtaining evidence of the Board’s approval of the financial statements

We will update the Audit Committee, and not solely the Chair, on significant

matters, if any, arising from the completion of the audit, including the completion of

the above procedures.

Our auditors’ report, a draft of which is provided in Appendix 4, will be dated upon

the completion of any remaining procedures.

Control deficiencies

We did not identify any control deficiencies that we determined to be significant

deficiencies in internal control over financial reporting.


What’s new in 2020 COVID-19 pandemic

On December 11, 2020, our audit plan highlighted potential impacts of the COVID-19 pandemic. We adapted our audit to respond to the continued changes

in your business, including the impacts on financial reporting and internal control over financial reporting.

Area of Impact Key Observations

Company’s financial reporting impacts

- We considered impacts to financial reporting due to COVID-19 pandemic and the increased disclosures needed in the financial statements

as a result of the significant judgements.

- In areas of the financial statements where estimates involved significant judgements, we evaluated whether the method, assumptions and

data used by management to derive the accounting estimates, and their related financial statement disclosures were still appropriate per the

relevant financial reporting framework given the changed economic conditions and increased estimation uncertainty

- The areas of the financial statements most affected included:

o Disclosures – See Note 16 to the financial statements

Company’s internal control over financial reporting

- As part of our risk assessment we examined the financial reporting risks, including fraud risks, given possible new pressures on

management or new opportunities to commit fraud given changes in the Entity’s internal controls over financial reporting.

- As a result of the Entity’s remote working environment, it was necessary to assess the impact to the Entity’s internal controls.

o In areas of the audit where we are evaluating controls, we obtained an understanding of any changes to processes and controls during

the year to assess if there was a need to change the extent of testing. No changes were noted that had a significant impact on the

scope of audit work.

Materiality

- We considered impacts to financial reporting on both the determination and the re-assessment of materiality for the audit of the financial

statements.

- No adjustment to materiality was considered necessary.

Risk Assessment

- We performed a more thorough risk assessment specifically targeted at the impacts of the COVID-19 pandemic, including an assessment of

fraud risk factors (i.e., conditions or events that may be indicative of an incentive/pressure to commit fraud, opportunities to commit fraud,

rationalizations of committing fraud).


COVID-19 pandemic (continued)

Area of Impact Key Observations

Working remotely

- We used virtual work rooms, video conferencing, and internally shared team sites to collaborate in real-time, both amongst the audit team

as well as with management.

- We increased our professional skepticism when evaluating electronic evidence received and performed additional procedures to validate the

authenticity and reliability of electronic information used as audit evidence.

Direction and Supervision of the audit

- The manager and partner were actively involved in determining the impact that the COVID-19 pandemic had on the audit (as discussed

above), including the impact on the Entity’s financial reporting and changes in the Entity’s internal control over financial reporting.

- Managers and partners implemented new supervision processes to deal with working in a remote environment, and our audit approach

allowed us to manage the audit using meaningful milestones and frequent touch points.

Substantive Testing - Response

- Our evaluation of management’s assessment of going concern was enhanced to respond to the uncertainties relating to prospective

financial information and judgements about appropriate financial statement disclosures in the rapidly changing environment.


New auditing standards

The following new auditing standards that are effective for the current year had an impact on our audit.

Standard Key observations

CAS 540, Auditing

Accounting Estimates

and Related Disclosures

— The new standard was applied on all estimates within the financial statements that had a risk of material misstatement due to estimation

uncertainty and not just “key estimates”, “critical accounting estimates”, or “estimates with significant risk”.

— The granularity and complexity of the new standard along with our interpretation of the application of that standard necessitated more

planning and discussion and increased involvement of more senior members of the engagement team.

— We performed more granular risk assessments based on the elements making up each accounting estimate such as the method, the

assumptions used, the data used and the application of the method.

— We considered the potential for management bias.

— We assessed the degree of uncertainty, complexity, and subjectivity involved in making each accounting estimate to determine the level of

audit response; the higher the level of response, the more persuasive the audit evidence was needed.

— We involved professionals with appropriate skills and knowledge to assist us in auditing certain estimates as appropriate.

— See pages 5 and 7 under Audit Risk and Results for estimates that related to significant risk or other areas of focus, which are a subset of

all the estimates subject to the new standard.


Audit risks and results We highlight our significant findings in respect of significant financial reporting risks as identified in our discussion with you in the Audit Plan, as well as any

additional significant financial reporting risks identified.

Significant financial reporting risk New or changed? Estimate?

Valuation of unpaid claims and

adjustment expenses (including

reinsurance balances)

No Yes - The valuation of unpaid claims and adjustment expenses is a critical audit area due to the

magnitude of provisions for unpaid claims and adjustment expenses, significant use of judgements

and estimates, and sensitivity of the valuation to changes in key assumptions.

The revised auditing standard – CAS 540 Auditing Accounting Estimates and Related

Disclosures requires more granular risk assessment and audit responses to address estimate

uncertainty. It also enhances requirements to obtain and document audit evidence about

whether the disclosures are reasonable.

Our response

– Claims liabilities include the aggregate of specific estimates for open claims files at year end, plus provisions for expenses, reinsurance and other recoveries, and

provision for claims incurred but not reported.

– Overall, gross insurance claim liabilities increased by $14,865,000 in 2020. Note 7(d) of the financial statements includes summary information on the changes in the

claims liabilities during the year.

– Claims liabilities are established based on Canadian actuarial standards. The Exchange’s Appointed Actuary, Raul Martin, provides an opinion on the overall claims

liabilities including the IBNR reserve balance.

– As planned, our audit work on claims liabilities included the following:

– Testing the controls in the actuarial process and transactions

– Testing the data attributes, accounting information and transactions

– Testing the claims payments

– Review of actuarial methods and assumptions

– Testing the actuarial calculations in the valuations

– KPMG’s audit support actuaries reviewed the work of the Appointed Actuary and assisted with the above audit testing.

– As a result of our audit procedures, we have concluded that the recorded claims liabilities as of December 31, 2020 are within a reasonable range of actuarial

estimates.


Audit risks and results We highlight our significant findings in respect of areas of focus as identified in our discussion with you in the Audit Plan, as well as any additional areas of

focus identified.

Area of focus Why is it significant?

Fraud risk from management override of controls This is a presumed fraud risk under Canadian auditing standards.

We have not identified any specific additional risks of management override relating to this audit.

Our response and Significant findings

– Our procedures included:

- We tested the design and implementation of controls surrounding the recording of journal entries, and the business rationale for significant entries.

- We tested the process for critical accounting estimates, including performing a retrospective review of prior period estimates.

– No issues were noted in the performance of the above procedures.


Audit risks and results Area of focus Why are we focusing here?

Valuation of investments All of OSBIE’s invested assets continue to be carried on the statement of financial position at fair value

determined from publicly available sources of market data.

Available-for-sale (AFS) assets are carried at market value; unrealized gains and losses on AFS assets are

held in accumulated other comprehensive income until realized through sale or through recognition of

impairment losses. For these assets it is necessary to consider whether an impairment in value has occurred.


− Management has established valuation procedures for the majority of the portfolio based on the use of a third party pricing source. Fair values are categorized and

disclosed as Levels 1, 2 and 3, with Level 1 and Level 2 being based on market quotes and market-observable inputs, respectively, and Level 3 being based on other

valuation and appraisal techniques.

− As disclosed in note 4(c) of the financial statements, at December 31, 2020, management has categorized assets as $55.4 million in Level 1, $157.6 million in Level 2,

and $nil in Level 3. KPMG tested the allocation of investments between categories of the fair value hierarchy.

− Management has a process to review the valuation of investments and evaluates investment impairment on a regular basis. Management’s assessment as at

December 31, 2020 was that no provision was required for any impairment in value of AFS securities, which consist of $157.6 million of bonds and debentures and

$55.4 million of equities.

− KPMG tested management’s valuation of investments and performed an assessment of possible impairments in AFS securities. We identified an equity position in

Bank of Nova Scotia that has had a market value below book value for a prolonged period and proposed an adjustment to record an impairment write-down of

$287,000. Management has recorded this adjustment in the financial statements.

− In completing our review of service organization auditor’s reports over controls at investment custodians, we noted that there are no reports available for TD Direct

Investing or National Bank. We performed alternative procedures to gain comfort over the custodians.

− We performed Data & Analytics procedures on investments using KPMG proprietary software, iRADAR. We performed independent price testing of management’s

pricing for bonds and debentures, and equities:

− Bonds with a market value of $127.8 million, and equities with a market value of $51.3 million were tested by iRADAR.

− For bonds and debentures, KPMG’s iRADAR team analyzes the security’s market to determine whether there is an active market for the security.

− We independently priced the market value of the remaining bonds and equities excluded from iRADAR testing.

− Based on our testing, the aggregate difference where market values were out of the range amounted to $59,000.

− As a result of our audit procedures, no other issues were identified.


Data & Analytics: valuation of investments

The market value of all bonds and pooled funds tested amounts to $179.1 million. For bonds and debentures, KPMG’s iRADAR team analyses the security’s market to determine whether there is an active market for the security. For those investments that are determined to not have an active market, further pricing analysis is done to develop an internal valuation of the security to better reflect a true fair value as at December 31, 2020. After applying investment specific ranges of acceptable prices, the netted deviation out of range of acceptable prices for equites is $nil, and for bonds is $59,000, which is less than our audit misstatement posting threshold of $210,000. From this graph, one can observe that the higher pricing deviations have small monetary impact and that the positions with high notional value have deviations close to zero.

-400

-300

-200

-100

0

100

200

300

400

500

0 1 2 3 4 5 6 7

Price D

iffe

rence (

bps)

Notional (CAD) in millions

Price Dispersion

Corp

Govt / Municipals

Preferreds / Perpetuals

Structured Notes


Data & Analytics: benchmarking prices – fixed income securities For the fixed income securities held by OSBIE, we have summarized our findings to compare the Exchange’s portfolio to other KPMG client portfolios where there are prices

from at least two clients other than OSBIE. The average standard deviation per security measured for the various price contributions is also presented below.

Overall, the difference between OSBIE’s average price of 104.60 and the average price of its industry group of 104.58 falls within one standard deviation and is well within the

range we would find acceptable for any variations noted in the pricing of your portfolio

0

20

40

60

80

100

120

140

160

0 20 40 60 80 100 120 140 160

Clie

nt

Price

Industry Average Price

Industry Average Price vs. Client Price

Corp

Govt / Municipals

Client's AverageIndustry's Average

Industry +/-1 Standard Deviation

104.3 104.35 104.4 104.45 104.5 104.55 104.6 104.65 104.7 104.75 104.8 104.85

Industry Benchmarking Results


Audit risks and results Area of focus Why are we focusing here?

Claims expense (including related reinsurance) Claims payments require a degree of judgment in ascertaining whether coverage is adequate and the

payment is within authorized limits.


– We tested the controls over the approval of claim payments and the review of claims files by the claims manager. No control deficiencies were noted.

– We tested a sample of claim payments, tracing the pay out to the supporting source documentation.

– As a result of our audit procedures, no issues or audit misstatements were identified.

Area of focus Why are we focusing here?

Written premiums and premiums paid in advance

(including related reinsurance balances)

Written premiums represent the largest balance on the statement of comprehensive income.


– We substantively tested gross written premiums and premiums received in advance by agreeing a sample of premium amounts through to the general ledger and

receipt of payment.

– We tested the accuracy of the reinsurance ceded balance.

– As a result of our audit procedures, no issues or audit misstatements were identified.


Significant accounting policies and practices

Changes

There have been no changes to significant accounting policies and practices during the year.

Future Implementation

Accounting pronouncements issued but not yet effective are disclosed in Note 2(l) to the financial statements.

IFRS 17, Insurance Contracts

- On May 18, 2017 the IASB issued IFRS 17 Insurance Contracts. On June 25, 2020, the IASB issued amendments to IFRS 17 aimed at helping companies implement the Standard and to defer the effective date. The new standard is effective for annual periods beginning on or after January 1, 2023. IFRS 17 will replace IFRS 4 Insurance Contracts.

- The IASB has deferred the effective date of IFRS 17 to January 1, 2023. The fixed expiry date for the optional temporary exemption from applying IFRS 9 Financial Instruments, granted to insurers meeting certain criteria, would also be deferred to 2023. This means that all companies preparing financial statements under IFRS would be required to apply both IFRS 9 and IFRS 17 for annual periods beginning on or after January 1, 2023.

IFRS 9, Financial Instruments

- On July 24, 2014 the IASB issued the complete amended IFRS 9. The mandatory effective date of IFRS 9 is for annual periods beginning on or after January 1, 2018.

- As at January 1, 2018, the Entity has elected to apply the optional transitional relief under IFRS 4 that permits the deferral of the adoption of IFRS 9 for eligible insurers. The Entity will continue to apply IAS 39 until January 1, 2023.


Financial statement presentation and disclosure Misstatements, including omissions, if any, related to financial statement presentation and disclosure items are in the management representation letter.

We also highlight the following:

Form, arrangement, and

content of the financial

statements

Adequate

Significant accounting policies or practices are disclosed in note 2 to the financial statements. There are no changes in accounting policies

during the current year.

Significant qualitative

aspects of financial

statement presentation

and disclosure

COVID-19 pandemic disclosures

The COVID-19 pandemic has resulted in significant financial, market and societal impacts in Canada and around the world. Management has

added Note 16 to the financial statements to highlight this impact.


Uncorrected differences and corrected adjustments Differences and adjustments include disclosure and presentation differences and adjustments.

Professional standards require that we request of management and the Audit Committee that all identified differences be corrected. We have already made

this request of management.

Uncorrected differences

We did not identify differences that remain uncorrected.

Corrected adjustments

The management representation letter includes all adjustments identified as a result of the audit, communicated to management and subsequently corrected in the financial

statements.

As at and year ended December 31, 2020 Income effect Financial position

Description of differences greater than $210,000 individually

(Decrease) Increase Assets

(Decrease) Increase Liabilities

(Decrease) Increase Equity

(Decrease) Increase

To record the investment impairment provision on the Bank of

Nova Scotia equity holdings with prolonged decline in value.

Investment Income

Other comprehensive income

($286,574)

$286,574

– –

($286,574)

$286,574

Total differences – – – –

Appendices Content

Appendix 1: Other Required communications

Appendix 2: Management Representation Letter

Appendix 3: Independence Letter

Appendix 4: Draft Auditors’ Report

Appendix 5: KPMG’s System of Quality Control

Appendix 6: Technology in the Audit

Appendix 7: Audit and Assurance Insights


Appendix 1: Other Required Communications Report Engagement terms

The conclusion of our audit is set out in our draft auditors’ reports as included in

Appendix 4.

Unless you inform us otherwise, we understand that you acknowledge and agree to the

terms of the engagement set out in the engagement letter and any subsequent

amendments as provided by management.

Reports to the Audit Committee Representations of management

At the completion of the audit, we will provide our findings report to the Audit

Committee.

A copy of the management representation letter is attached. See Appendix 2.

Audit Quality in Canada Matters pertaining to independence

The reports available through the following links were published by the Canadian

Public Accountability Board to inform Audit Committees and other stakeholders

about the results of quality inspections conducted over the past year:

• CPAB Audit Quality Insights Report: 2020 Interim Inspection Results

• CPAB Audit Quality Insights Report: 2019 Annual Inspections Results

Visit our Audit Quality Resources page for more information including access to our Transparency report

We have attached our annual independence letter dated as of the date of this report in

Appendix 3.

https://www.cpab-ccrc.ca/docs/default-source/inspections-reports/2020-interim-inspections-report-en.pdf?sfvrsn=f5ae8854_18

https://www.cpab-ccrc.ca/docs/default-source/inspections-reports/2020-interim-inspections-report-en.pdf?sfvrsn=f5ae8854_18

https://cpab-ccrc.ca/docs/default-source/inspections-reports/2019-annual-inspections-results-en.pdf

https://home.kpmg.com/ca/en/home/services/audit/audit-quality-resources.html

https://home.kpmg/content/dam/kpmg/ca/pdf/2020/12/2020-audit-quality-and-transparency-report.pdf


Appendix 2: Management Representation Letter KPMG LLP Chartered Professional Accountants 115 King Street South 2nd Floor Waterloo, ON N2J 5A3

February 11, 2021

Ladies and Gentlemen:

We are writing at your request to confirm our understanding that your audit was for the purpose of expressing an opinion on the financial statements (hereinafter referred to as “financial statements”) of Ontario School Boards’ Insurance Exchange (“the Entity”) as at and for the period ended December 31, 2020.

General:

We confirm that the representations we make in this letter are in accordance with the definitions as set out in Attachment I to this letter.

We also confirm that, to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves:

Responsibilities:

1) We have fulfilled our responsibilities, as set out in the terms of the engagement letter dated December 11, 2020, including for:

a) the preparation and fair presentation of the financial statements and believe that these financial statements have been prepared and present fairly in accordance with the relevant financial reporting framework.

b) providing you with all information of which we are aware that is relevant to the preparation of the financial statements (“relevant information”), such as financial records, documentation and other matters, including:

— the names of all related parties and information regarding all relationships and transactions with related parties;

— the complete minutes of meetings, or summaries of actions of recent meetings for which minutes have not yet been prepared, of shareholders, board of directors and committees of the board of directors that may affect the financial statements. All significant actions are included in such summaries.

c) providing you with unrestricted access to such relevant information.

d) providing you with complete responses to all enquiries made by you during the engagement.

e) providing you with additional information that you may request from us for the purpose of the engagement.


f) providing you with unrestricted access to persons within the Entity from whom you determined it necessary to obtain audit evidence.

g) such internal control as we determined is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. We also acknowledge and understand that we are responsible for the design, implementation and maintenance of internal control to prevent and detect fraud.

h) ensuring that all transactions have been recorded in the accounting records and are reflected in the financial statements.

i) ensuring that internal auditors providing direct assistance to you, if any, were instructed to follow your instructions and that we, and others within the entity, did not intervene in the work the internal auditors performed for you.

Internal control over financial reporting:

2) We have communicated to you all deficiencies in the design and implementation or maintenance of internal control over financial reporting of which we are aware.

Fraud & non-compliance with laws and regulations:

3) We have disclosed to you:

a) the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud.

b) all information in relation to fraud or suspected fraud that we are aware of that involves:

— management;

— employees who have significant roles in internal control over financial reporting; or

— others

where such fraud or suspected fraud could have a material effect on the financial statements.

c) all information in relation to allegations of fraud, or suspected fraud, affecting the financial statements, communicated by employees, former employees, analysts, regulators, or others.

d) all known instances of non-compliance or suspected non-compliance with laws and regulations, including all aspects of contractual agreements, whose effects should be considered when preparing financial statements.

e) all known actual or possible litigation and claims whose effects should be considered when preparing the financial statements.

Subsequent events:

4) All events subsequent to the date of the financial statements and for which the relevant financial reporting framework requires adjustment or disclosure in the financial statements have been adjusted or disclosed.

Related parties:

5) We have disclosed to you the identity of the Entity’s related parties.

6) We have disclosed to you all the related party relationships and transactions/balances of which we are aware.


7) All related party relationships and transactions/balances have been appropriately accounted for and disclosed in accordance with the relevant financial reporting framework.

Estimates:

8) The methods, the data and the significant assumptions used in making accounting estimates, and their related disclosures are appropriate to achieve recognition, measurement or disclosure that is reasonable in the context of the applicable financial reporting framework

Going concern:

9) We have provided you with all information relevant to the use of the going concern assumption in the financial statements.

10) We confirm that we are not aware of material uncertainties related to events or conditions that may cast significant doubt upon the Entity’s ability to continue as a going concern.

Misstatements:

11) We approve the corrected misstatements identified by you during the audit described in Attachment II.

Other information:

12) We confirm that the final version of Annual Report and French Annual Report will be provided to you when available, and prior to issuance by the Entity, to enable you to complete your audit procedures in accordance with professional standards.

Non-SEC registrants or non-reporting issuers:

13) We confirm that the Entity is not a Canadian reporting issuer (as defined under any applicable Canadian securities act) and is not a United States Securities and Exchange Commission (“SEC”) Issuer (as defined by the Sarbanes-Oxley Act of 2002).

14) We also confirm that the financial statements of the Entity will not be included in the group financial statements of a Canadian reporting issuer audited by KPMG or an SEC Issuer audited by any member of the KPMG organization.

Accounting Policies:

15) There have been no changes in, or newly adopted, accounting policies that have not been disclosed to you and appropriately reflected in the financial statements.

Assets & Liabilities – General:

16) There are no formal or informal compensating balance arrangements with any of our cash accounts.

17) The Entity has satisfactory title to all assets.

18) We have no knowledge of arrangements with financial institutions involving restrictions on cash balances and lines of credit or similar arrangements and not disclosed to you.

19) We confirm that during the period we complied with the externally imposed capital requirements.

Comparative Figures/Financial Statements:

20) We have no knowledge of any significant matters that may have arisen that would require a restatement of the comparative financial statements.


Representations Regarding Management Intent and Plans, and Other Information that is Known Only to Management:

21) We confirm that we have disclosed to you all information in relation to the following matters:

onerous contracts, i.e. those contracts under which the unavoidable costs of meeting the obligation exceed the economic benefits to be received under it, including losses arising from sale and purchase commitments that are onerous contracts under IAS 37 Provisions, Contingent Liabilities and Contingent Assets;

losses from transactions not recognised in the statement of financial position;

assets pledged as collateral;

arrangements with financial institutions involving restrictions on cash balances and lines of credit or similar arrangements;

22) The Entity has complied with all aspects of contractual agreements that could have a material effect on the financial statements in the event of non-compliance, for example debt covenants.

23) We have no plans or intentions that may affect the carrying amount or classification of assets and liabilities.

Representations Regarding Title to Assets, Classification and Carrying Amount of Assets, and Impairment of Assets:

24) The Entity has satisfactory title to all assets.

Financial Assets:

25) We have assessed all financial assets, except those measured at fair value through profit or loss, to determine whether there is any objective evidence of impairment as a result of one or more loss events that occurred subsequent to their initial recognition, and any impairments identified have been recognised in the financial statements, as appropriate. In respect of investments in equity instruments, we have recognised an impairment loss when there has been a significant or prolonged decline in the fair value of the instrument below cost, or other objective evidence of impairment. We have determined whether a decline in fair value below cost is ‘significant’ or ‘prolonged’ in accordance with criteria as represented to you.

Representations regarding the Entity’s appointed actuary:

26) We agree with the findings of the Appointed Actuary as the Entity’s specialist in evaluating the policy liabilities. In connection with the specialist’s valuation, we provided the specialist with all significant and relevant information of which we are aware. We did not give or cause any instructions to be given to the specialist with respect to the values or amounts derived in an attempt to bias their work, and we are not otherwise aware of any matters that have had an impact on the independence or objectivity of the specialists.

Representation Regarding Compliance with Externally Imposed Capital Requirements:

27) The Entity has complied with all externally imposed capital requirements.

Representations Regarding Exposures to Risks Arising from Financial Instruments:

28) We confirm that we have disclosed information relating to the Entity’s exposures to risks arising from financial instruments that is adequate to enable users to evaluate the nature and extent of those risks to which the Entity is exposed at the end of the reporting period, in accordance with IFRS 7, including the exposures to risks and how they arise, our objectives, policies and procedures for managing the risks, the methods used to measure risks, and a summary of quantitative data about our exposure to risks.


Representations Regarding Fair Values of Financial Assets and Financial Liabilities:

29) We believe the assumptions and techniques used by us are appropriate and that all fair value measurements are determined in accordance with IFRS 13.

30) We have appropriately disclosed fair values of financial assets and financial liabilities in the financial statements in accordance with IFRS 13. We believe the disclosures appropriately categorise those fair value measurements in the fair value hierarchy.

31) We have disclosed the methods and assumptions applied in determining the fair values of each class of financial instrument.

Other:

32) All reinsurance transactions entered into by the Entity are final and there are no side agreements with re-insurers, or other terms in effect, which allow for the modification of terms under existing reinsurance arrangements. Furthermore, the Entity’s reinsurance arrangements meet the risk transfer provisions under IFRS or are accounted for as deposits.

33) We have complied with OSFI guidelines in preparing the P&C Annual Return, specifically those financial statements contained on pages 20.010 to 20.060 of the P&C Annual Return.

34) We have complied with the provisions of the Insurance Companies Act, Canada.

Communications between actuaries involved in the preparation of financial statements and auditors:

35) We acknowledge that, in addition to your report on the financial statements of the Entity, you will also communicate on procedures and findings on data used in making accounting estimates relating to the valuation of actuarial liabilities as a result of the Joint Policy Statement Concerning Communications between Actuaries Involved in the Preparation of Financial Statements and Auditors (the “Joint Policy Statement”), at the request of the Appointed Actuary.

36) We consent to you providing the information resulting from your work as required by the Joint Policy Statement to the Chief Financial Officer and the Appointed Actuary.

37) We confirm that, to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purposes of appropriately informing ourselves and understand that we are responsible for, and have fulfilled such responsibilities that the data used in making accounting estimates relating to the valuation of actuarial liabilities, and their related disclosures is complete and accurate to achieve recognition, measurement or disclosure that is reasonable in the context of the applicable financial reporting framework.

38) We acknowledge that the communication does not constitute an audit or review of data used in making accounting estimates relating to the valuation of actuarial liabilities and their related disclosures and therefore, you are not expressing an opinion on the completeness or accuracy of the data. Rather, the matters addressed in the communication with the Appointed Actuary are a by-product of your audit process in respect of the Entity’s financial statements.

39) We acknowledge that the communication is intended solely for the Chief Financial Officer and the Appointed Actuary and should not be used by, or distributed to, other parties.


Yours very truly,

______________________________________ Jim Sami, Chief Executive Officer and Attorney in Fact

_______________________________________ Sandra Taylor, Chief Financial Officer I have the recognized authority to take, and assert that I have taken, responsibility for the financial statements

cc: Audit Committee


Attachment I – Definitions

Materiality

Certain representations in this letter are described as being limited to matters that are material. Misstatements, including omissions, are considered to be material if they, individually or in the aggregate, could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Judgments about materiality are made in light of surrounding circumstances, and are affected by the size or nature of a misstatement, or a combination of both.

Fraud & error

Fraudulent financial reporting involves intentional misstatements including omissions of amounts or disclosures in financial statements to deceive financial statement users.

Misappropriation of assets involves the theft of an entity’s assets. It is often accompanied by false or misleading records or documents in order to conceal the fact that the assets are missing or have been pledged without proper authorization.

An error is an unintentional misstatement in financial statements, including the omission of an amount or a disclosure.

Attachment II – Summary of Audit Misstatements Schedule

Corrected Audit Misstatements

Income effect Financial position

Description F/J/P (Decrease) Increase

Assets (Decrease) Increase

Liabilities (Decrease) Increase

Equity (Decrease) Increase

To record the investment impairment provision on the Bank of Nova Scotia equity holdings with prolonged decline in value.

F ($286,574)

$286,574 $ - $ -

($286,574)

$286,574

Total misstatements $ - $ - $ - $ -


Appendix 3: Independence Letter

KPMG LLP 115 King Street South 2nd Floor Waterloo ON N2J 5A3 Tel 519-747-8800 Fax 519-747-8830 The Audit Committee of the Board of Directors Ontario School Boards’ Insurance Exchange 91 Westmount Road Guelph, ON N1H 5J2

February 2, 2020

Ladies and Gentlemen:

We have been engaged to express an opinion on the financial statements of Ontario School Boards’ Insurance Exchange (“the Exchange”) as at and for the year ended December 31, 2020.

In determining which relationships to report, we consider relevant rules and related interpretations prescribed by the relevant professional bodies and any applicable legislation or regulation, covering such matters as:

a) provision of services in addition to the audit engagement

b) other relationships such as:

- holding a financial interest, either directly or indirectly, in a client

- holding a position, either directly or indirectly, that gives the right or responsibility to exert significant influence over the financial or accounting policies

of a client

- personal or business relationships of immediate family, close relatives, partners or retired partners, either directly or indirectly, with a client

- economic dependence on a client


Provision of services

Except for pre-approved audit services, there are no other professional services rendered by us to the Companies from January 1, 2020, up to the date of this letter.

Professional standards require that we communicate the related safeguards that have been applied to eliminate identified threats to independence or to reduce them to an acceptable level. We have not provided any prohibited services. We have applied the following safeguards regarding threats to independence created by the services listed above:

- We instituted policies and procedures to prohibit us from making management decisions or assuming responsibility for such decisions.

- We obtained pre-approval of non-audit services and during this pre-approval process we discussed the nature of the engagement and other

independence issues related to the services.

- We obtained management’s acknowledgement of responsibility for the results of the work performed by us regarding non-audit services and we have

not made any management decisions or assumed responsibility for such decisions.

Other relationships

We are not aware of any other relationships between our firm and the Exchange that, in our professional judgement, may reasonably be thought to bear on our independence.

Confirmation of independence

We confirm that, as of the date of this letter, we are independent of the Exchange in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada.

Other matters

This letter is confidential and intended solely for use by those charged with governance in carrying out and discharging their responsibilities and should not be used for any other purposes.

KPMG shall have no responsibility for loss or damages or claims, if any, to or by any third party as this letter has not been prepared for, and is not intended for, and should not be used by, any third party or for any other purpose.

Yours very truly,

Licensed Public Accountants


Appendix 4: Draft Auditors’ Report INDEPENDENT AUDITORS’ REPORT (financial statements)

To the Subscribers of Ontario School Boards’ Insurance Exchange

Opinion

We have audited the financial statements of Ontario School Boards’ Insurance Exchange (the "Entity"), which comprise:

• the statement of financial position as at December 31, 2020

• the statement of income and comprehensive income for the year then ended

• the statement of changes in guarantee fund for the year then ended

• the statement of cash flows for the year then ended

• and notes to the financial statements, including a summary of significant accounting policies

(Hereinafter referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Entity as at December 31, 2020, and

its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described

in the "Auditors' Responsibilities for the Audit of the Financial Statements" section of our auditors' report.

We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have

fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

Management is responsible for the other information. Other information comprises information, other than the financial statements and the auditors’ report

thereon, included in the Annual Report.

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether

the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially

misstated.


We obtained the Information, other than the financial statements and the auditors’ report thereon, included in Annual Report at the date of this auditors’ report.

If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required

to report that fact in the auditors’ report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as

management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Entity's ability to continue as a going concern, disclosing as applicable,

matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease

operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity's financial reporting process.

Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to

fraud or error, and to issue an auditors' report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing

standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional

skepticism throughout the audit.

We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures

responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,

intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the

purpose of expressing an opinion on the effectiveness of the Entity's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a

material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude

that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such

disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However,

future events or conditions may cause the Entity to cease to continue as a going concern.


• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent

the underlying transactions and events in a manner that achieves fair presentation.

• Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings,

including any significant deficiencies in internal control that we identify during our audit.


INDEPENDENT AUDITORS’ REPORT (OSFI regulatory format financial statements)

To the Provincial Superintendents of Financial Institutions/Insurance

Opinion

We have audited the financial statements of Ontario School Boards’ Insurance Exchange (the "Entity"), which comprise:

• the statement of assets as at December 31, 2020

• the statement of liabilities, equity, head office account, reserves and AOCI as at December 31, 2020

• the statement of income for the year then ended

• the statement of comprehensive income (loss) and accumulated other comprehensive income (loss) for the year then ended

• the statement of reserves for the year then ended


• the statement of changes in equity for the year then ended

on pages 20.10 through 20.54 of the Entity’s P&C Quarterly Return and pages 20.52 and 20.60 of the Entity’s P&C Annual Supplement which includes the notes

to the financial statements, including a summary of significant accounting policies (collectively referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Entity as at December 31, 2020, and

its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described

in the "Auditors' Responsibilities for the Audit of the Financial Statements" section of our auditors' report.

We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have

fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Matter – Unaudited Information

We have not audited or reviewed the schedules and exhibits except for those on pages 20.10 through 20.54 of the Entity’s P&C Quarterly Return and those on

pages 20.52 and 20.60 of the Entity’s P&C Annual Supplement. Accordingly, this auditors’ report and our opinion do not cover the schedules and exhibits on

other pages of the Entity’s P&C Quarterly Return and P&C Annual Supplement.


Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as

management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Entity's ability to continue as a going concern, disclosing as applicable,

matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease

operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity's financial reporting process.

Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to

fraud or error, and to issue an auditors' report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing

standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional

skepticism throughout the audit.

We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures

responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,

intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the

purpose of expressing an opinion on the effectiveness of the Entity's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a

material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude

that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such

disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However,

future events or conditions may cause the Entity to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent

the underlying transactions and events in a manner that achieves fair presentation.

Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings,

including any significant deficiencies in internal control that we identify during our audit.


Appendix 5: KPMG’s System of Quality Control Quality control is fundamental to our business and is the responsibility of every partner and employee. To help all audit professionals concentrate on the

fundamental skills and behaviors required to deliver a quality audit, KPMG has developed the Audit Quality Framework shown below. These are the

cornerstones of how we execute our responsibilities

What do we mean by audit quality?

Audit Quality (AQ) is at the core of everything we do at KPMG.

We believe that it is not just about reaching the right opinion,

but how we reach that opinion.

We define ‘audit quality’ as being the outcome when audits are

executed consistently, in line with the requirements and intent

of applicable professional standards within a strong system of

quality controls.

All of our related activities are undertaken in an environment of

the utmost level of objectivity, independence, ethics, and

integrity.

Visit our Audit Quality Resources page for more information

including access to our Transparency report.

https://home.kpmg.com/ca/en/home/services/audit/audit-quality-resources.html

https://home.kpmg/content/dam/kpmg/ca/pdf/2020/12/2020-audit-quality-and-transparency-report.pdf


Appendix 6: Technology in the audit As previously communicated in our Audit Planning Report, we have utilized technology to enhance the quality and effectiveness of the audit.

Technology Our results and insights

KPMG iRADAR Our derivatives and securities valuation tool brings advanced valuation capability to independently re-price 100% of

your level 1, 2 investment securities and derivative instruments. Our detailed reporting provides you greater insight,

revealing instances where your pricing vendors may value sub-asset classes more conservatively or aggressively

than others.

Journal Entry Analysis Our journal entry tool assists in the performance of detailed journal entry testing based on engagement-specific risk

identification and circumstances. Our tool provides auto-generated journal entry population statistics and focusses

our audit effort on journal entries that are riskier in nature.

We use KPMG’s application software (IDEA) to evaluate the completeness of the journal entry population through a

roll-forward of all accounts.

We use computer-assisted audit techniques (CAATs) to assess journal entries and apply certain criteria to identify

potential high-risk journal entries for further testing.


Appendix 7: Audit and Assurance Insights Our latest thinking on the issues that matter most to audit committees, Boards and Management.

Featured insight Summary Reference

Audit & Assurance Insights Curated thought leadership, research and insights from subject matter experts across KPMG in Canada Learn more

The business implications of

coronavirus (COVID 19)

Resources to help you understand your exposure to COVID-19, and more importantly, position your

business to be resilient in the face of this and the next global threat. Learn more

Financial reporting and audit considerations: The impact of COVID-19 on financial reporting and audit

processes. Learn more

KPMG Global IFRS Institute - COVID-19 financial reporting resource center Learn more

Accelerate 2020 Perspective on the key issues driving the audit committee agenda Learn more

IFRS Breaking News A monthly Canadian newsletter that provides the latest insights on international financial reporting standards and IASB activities.

Learn more

Momentum

A quarterly Canadian newsletter which provides a snapshot of KPMG's latest thought leadership, audit

and assurance insights and information on upcoming and past audit events – keeping management and

board members abreast on current issues and emerging challenges within audit. Sign-up now

Current Developments Series of quarterly publications for Canadian businesses including Spotlight on IFRS, Canadian

Securities & Auditing Matters and US Learn more

Board Leadership Centre Leading insights to help board members maximize boardroom opportunities. Learn more

https://home.kpmg/ca/en/home/insights/2019/05/audit-assurance-insights.html

https://home.kpmg/ca/en/home/insights/2020/03/the-business-implications-of-coronavirus.html

https://home.kpmg/ca/en/home/insights/2020/03/financial-reporting-and-audit-considerations.html

https://home.kpmg/xx/en/home/insights/2020/03/covid-19-financial-reporting-resource-centre.html

https://home.kpmg/ca/en/home/insights/2020/11/new-world-new-reality.html

https://home.kpmg/ca/en/home/insights/2010/03/international-financial-reporting-standards-ifrs.html

http://pages.kpmgemail.com/page.aspx?QS=2e4c31a3756cb940af903f205e1f1e041bdb8334b58bad706ad9d7762eb124d4

https://home.kpmg/ca/en/home/insights/2020/11/current-developments.html

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Financial Statements of

ONTARIO SCHOOL BOARDS' INSURANCE EXCHANGE

And Independent Auditors’ Report thereon

Year ended December 31, 2020

INDEPENDENT AUDITORS' REPORT

To the Subscribers of Ontario School Boards' Insurance Exchange

Opinion

We have audited the financial statements of Ontario School Boards’ Insurance

Exchange (the “Entity”), which comprise:

• the statement of financial position as at December 31, 2020

• the statement of comprehensive income for the year then ended

• the statement of changes in guarantee fund for the year then ended


• and notes to the financial statements, including a summary of significant

accounting policies

(Hereinafter referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material

respects, the financial position of Ontario School Boards’ Insurance Exchange as at

December 31, 2020, and its financial performance, and its cash flows for the year then

ended in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing

standards. Our responsibilities under those standards are further described in the

“Auditors’ Responsibilities for the Audit of the Financial Statements” section of our

auditors’ report.

We are independent of the Entity in accordance with the ethical requirements that are

relevant to our audit of the financial statements in Canada and we have fulfilled our

other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our opinion.

Other Information

Management is responsible for the other information. Other information comprises

information, other than the financial statements and the auditors’ report thereon, included in

the Annual Report.

Our opinion on the financial statements does not cover the other information and we do not

and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other

information identified above and, in doing so, consider whether the other information is

materially inconsistent with the financial statements or our knowledge obtained in the audit,

or otherwise appears to be materially misstated.

We obtained the Information, other than the financial statements and the auditors’ report

thereon, included in Annual Report at the date of this auditors’ report. If, based on the work

we have performed on this other information, we conclude that there is a material

misstatement of this other information, we are required to report that fact in the auditors’

report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the

Financial Statements

Management is responsible for the preparation and fair presentation of the financial

statements in accordance with International Financial Reporting Standards, and for such

internal control as management determines is necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Entity’s

ability to continue as a going concern, disclosing as applicable, matters related to going

concern and using the going concern basis of accounting unless management either intends

to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity‘s financial

reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements

as a whole are free from material misstatement, whether due to fraud or error, and to issue

an auditors’ report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit

conducted in accordance with Canadian generally accepted auditing standards will always

detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in

the aggregate, they could reasonably be expected to influence the economic decisions of

users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we

exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

• Identify and assess the risks of material misstatement of the financial statements,

whether due to fraud or error, design and perform audit procedures responsive to those

risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for

our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for

one resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the Entity's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty

exists related to events or conditions that may cast significant doubt on the Entity's

ability to continue as a going concern. If we conclude that a material uncertainty exists,

we are required to draw attention in our auditors’ report to the related disclosures in the

financial statements or, if such disclosures are inadequate, to modify our opinion. Our

conclusions are based on the audit evidence obtained up to the date of our auditors’

report. However, future events or conditions may cause the Entity to cease to continue

as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements,

including the disclosures, and whether the financial statements represent the underlying

transactions and events in a manner that achieves fair presentation.

• Communicate with those charged with governance regarding, among other matters, the

planned scope and timing of the audit and significant audit findings, including any

significant deficiencies in internal control that we identify during our audit.

Chartered Professional Accountants, Licensed Public Accountants

Waterloo, Canada February 11, 2021

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ONTARIO SCHOOL BOARDS' INSURANCE EXCHANGE Statement of Financial Position December 31, 2020, with comparative information for 2019

2020 2019

Assets Cash and cash equivalents $ 41,635,446 $ 38,135,098 Investments (note 4) 212,984,881 200,215,323 Accrued investment income 1,052,975 1,242,250 Premiums and accounts receivable 50,452 624,662 Due from reinsurers 138,471 230,839 Prepaid reinsurance ceded – 504,943 Prepaid expenses 129,234 131,936 Reinsurance recoverable (note 7) 2,943,482 153,500 Salvage and subrogation recoverable 5,863,125 2,525,687 Loan receivable 469,119 481,664 Property and equipment (note 5) 847,811 855,671

$ 266,114,996 $ 245,101,573

Liabilities and Guarantee Fund Liabilities:

Accounts payable and accrued liabilities $ 2,385,682 $ 4,562,174 Premiums received in advance 25,221,207 18,783,109 Sales tax payable 1,300,032 765,648 Claims liabilities (note 7) 108,857,206 93,991,941 Premiums in trust 3,414 1,647

137,767,541 118,104,519 Guarantee Fund: (note 11)

Reserves required by the Financial Services Regulatory Authority of Ontario 50,000 50,000

Additional guarantee funds 117,955,127 121,749,756 Accumulated other comprehensive income 10,342,328 5,197,298

128,347,455 126,997,054

$ 266,114,996 $ 245,101,573

See accompanying notes to financial statements.

On behalf of the Board of Directors:

Chair

Vice-Chair

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ONTARIO SCHOOL BOARDS' INSURANCE EXCHANGE Statement of Comprehensive Income Year ended December 31, 2020, with comparative information for 2019

2020 2019

Revenue:

Gross premiums earned $ 34,397,322 $ 31,079,013 Less reinsurance premiums ceded 1,873,076 2,387,348

Net premiums earned 32,524,246 28,691,665 Investment income (note 4(b)) 14,238,656 9,349,137 Other income 91,046 333,007

Total income 46,853,948 38,373,809 Expenses:

Claims incurred and loss adjustment expenses (note 7) 40,039,367 30,956,343 Claims and loss adjustments expenses incurred by reinsurers (2,915,228) (7,661,230)

Net claims and insurance benefits 37,124,139 23,295,113

Investment expenses 260,971 279,846 Underwriting, general and administration 3,014,567 2,780,528 Premium taxes 785,898 663,377

Total expenses 41,185,575 27,018,864

Net income 5,668,373 11,354,945 Other comprehensive income (loss):

Unrealized gains on available-for-sale assets 11,486,619 12,570,140 Recognition of realized losses on

available-for-sale assets (6,341,589) (1,610,403)

Other comprehensive income 5,145,030 10,959,737

Total comprehensive income $ 10,813,403 $ 22,314,682


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ONTARIO SCHOOL BOARDS' INSURANCE EXCHANGE Statement of Changes in Guarantee Fund Year ended December 31, 2020, with comparative information for 2019

Reserve Additional required by guarantee FSRA funds AOCI Total

Balance, December 31, 2018 $ 50,000 $ 120,206,811 $ (5,762,439) $ 114,494,372 Net income - 11,354,945 - 11,354,945 Other comprehensive income:

Net change in fair value of available-for-sale financial assets - - 10,959,737 10,959,737

Total other comprehensive income - - 10,959,737 10,959,737

Total comprehensive income - 11,354,945 10,959,737 22,314,682 Refunds to subscribers (note 11) - (9,812,000) - (9,812,000)

Balance, December 31, 2019 50,000 121,749,756 5,197,298 126,997,054 Net income - 5,668,373 - 5,668,373 Other comprehensive income:

Net change in fair value of available-for-sale financial assets - - 5,145,030 5,145,030

Total other comprehensive income - - 5,145,030 5,145,030

Total comprehensive income - 5,668,373 5,145,030 10,813,403 Refunds to subscribers (note 11) - (9,463,000) - (9,463,000)

Balance, December 31, 2020 $ 50,000 $117,955,129 $ 10,342,328 $ 128,347,457


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ONTARIO SCHOOL BOARDS' INSURANCE EXCHANGE Statement of Cash Flows Year ended December 31, 2020, with comparative information for 2019

2020 2019

Cash provided by (used in): Operations:

Net income $ 5,668,373 $ 11,354,945 Items not involving cash:

Accrued investment income 189,275 (183,124) Gain on sale of investments (5,041,948) (669,946) Loss on disposal of property and equipment – – Unrealized foreign exchange (gain) loss (6,672) 40,900 Amortization of property and equipment 138,740 136,676 Bond amortization 155,347 21

Change in non-cash operating items (453,573) 1,615,881 Claims liabilities, net 8,737,845 1,466,518 Premiums received in advance 6,438,098 (3,067,444)

15,825,485 10,694,427 Financing:

Refund to subscribers (9,463,000) (9,812,000) Investments:

Bonds purchased (46,275,991) (101,198,772) Equities purchased (7,877,818) (11,000,000) Money market purchased (23,167,790) (6,000,000) Proceeds from investment disposals:

Bonds 49,078,920 112,290,179 Equities 4,511,422 7,321,044 Money market 21,000,000 13,828,000

Additions to property and equipment (130,880) (201,130)

(2,862,137) 15,039,321

Increase in cash and cash equivalents 3,500,348 15,921,748 Cash and cash equivalents, beginning of year 38,135,098 22,213,350

Cash and cash equivalents, end of year $ 41,635,446 $ 38,135,098


ONTARIO SCHOOL BOARDS' INSURANCE EXCHANGE Notes to Financial Statements (continued) Year ended December 31, 2020

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Ontario School Boards' Insurance Exchange (the "Exchange") was formed under the Reciprocal

Insurance Exchange Agreement for School Boards in the Province of Ontario (the "Agreement") dated

August 15, 1986 and amended on January 1, 2002, and January 1, 2017 among various school boards

subscribing to the Agreement. The Exchange is licensed by the Financial Services Regulatory Authority

of Ontario (“FSRA”), formerly the Financial Services Commission of Ontario (“FSCO”), to provide aircraft,

non-owned automobile, owned automobile, fidelity, legal expense, liability, marine, property and boiler

and machinery insurance to its subscribers in accordance with Part XIII of the Insurance Act, Ontario,

R.S.O. 1990. The Exchange’s registered office is located at 91 Westmount Road, Guelph, Ontario,

Canada. The Exchange commenced operations on January 1, 1987 and has 79 (2019 - 78) subscribers.

Subscriptions to the Exchange come up for renewal at the end of a five-year subscription period. The

next date for the renewal of policies is January 1, 2022.

1. Basis of presentation:

(a) Statement of compliance:

The financial statements have been prepared in accordance with International Financial

Reporting Standards (“IFRS”) and its interpretations adopted by the International Accounting

Standards Board (“IASB”).

The financial statements were authorized for issue by the Board of Directors on February 11,

2021.

(b) Basis of measurement:

The financial statements have been prepared on a historical cost basis, except for available-

for-sale financial assets which are measured at fair value and insurance contract assets and

liabilities which are measured using acceptable actuarial practices.

(c) Functional and presentation currency:

These financial statements are presented in Canadian dollars, which is the Exchange’s

functional currency. All financial information presented in Canadian dollars.

(d) Use of estimates and judgments:

The preparation of the financial statements in conformity with IFRS requires management to

make judgments, estimates and assumptions that affect the application of accounting policies

and the reported amounts of assets, liabilities, income and expenses. Actual results may differ

from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognized in the period in which the estimates are revised and in

any future periods affected. Information about critical judgments in applying accounting

policies that have the most significant effect on the amounts recognized in the financial

statements is discussed in note 3.


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1. Basis of presentation (continued):

(e) Statement of financial position:

The Exchange presents its statement of financial position in order of liquidity. Assets and

liabilities that are expected to be recovered or settled in more than 12 months after the

reporting date are summarized in note 14.

2. Significant accounting policies:

(a) Premiums:

Premiums are earned over the term of the related policy period. As the Exchange's policy

year ends December 31, there are no unearned premiums at December 31. Premiums

received in advance relate to premiums received in the current year for the policy period

commencing January 1 of the following year.

Premiums on reinsurance assumed are included in gross written premiums and accounted for

as if the reinsurance was considered direct business, taking into account the product

classification of the reinsured business. Outward reinsurance premiums are accounted for in

the same accounting period as the premiums for the related direct insurance or reinsurance

business assumed.

(b) Financial instruments:

Financial assets are classified as fair value through profit or loss (“FVTPL”), available for sale

(“AFS”), held to maturity (“HTM”), or loans and receivables based on their characteristics and

purpose of their acquisition. Financial liabilities are required to be classified as FVTPL or other

liabilities.

(i) Financial assets:

Financial assets at fair value through profit or loss:

A financial asset is classified at fair value through profit or loss (“FVTPL”) if it was classified

as held-for-trading or is designated as such upon initial recognition. Upon initial

recognition, attributable transactions costs are recognized in profit or loss when incurred.

Financial assets at FVTPL are measured at fair value, and changes therein are

recognized in profit or loss.


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2. Significant accounting policies (continued):

(b) Financial instruments (continued):

(i) Financial assets (continued):

Available-for-sale financial assets:

Financial assets classified as available-for-sale (“AFS”) are carried at fair value whereby

the unrealized gains and losses are included in accumulated other comprehensive income

("AOCI") until sale or an impairment loss is recognized, at which point cumulative

unrealized gains or losses are included in investment income. When an investment is

derecognized, the cumulative gain or loss in other comprehensive income is transferred

to profit or loss.

The Exchange accounts for all financial instruments using trade date accounting.

Transaction costs related to the purchase of financial instruments are recorded as part of

the carrying value.

Cash and cash equivalents include cash on account and investments in money market

instruments.

Loans and receivables, and other financial liabilities (liabilities other than insurance policy

liabilities) are accounted for at amortized cost.

(ii) Financial liabilities:

Financial liabilities are recognized initially on the trade date at which the Exchange

becomes a party to the contractual provisions of the instrument. The Exchange

derecognizes a financial liability when its contractual obligations are discharged or

cancelled or expire. The Exchange has the following non-derivative financial liabilities:

accounts payable and accrued liabilities and sales tax payable.

(iii) Investment income:

Dividends and interest income from these securities are included in investment income

and are recorded as they accrue. Income distributions from Canadian income trusts are

recorded as income when received. Dividend income on equity investments is recorded

on the ex-dividend date.

(iv) General investment expenses:

General investment expenses are recognized as incurred.


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(c) Property and equipment:

Items of property and equipment are measured at cost less accumulated depreciation and

accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset.

Gains and losses on disposal of an item of property and equipment are determined by

comparing the proceeds from disposal with the carrying amount of property and equipment,

and are recognized net within other income in profit or loss.

Amortization is provided using the straight-line basis at the following annual rates:

Building 3.33% Equipment and furnishings 20% Computer equipment 33% Building improvements 20% Automobile 25%

(d) Claims liabilities:

Provision has been made for the estimated liability for all reported and outstanding claims

using a case-basis evaluation plus an amount for adverse development and for claims

incurred to December 31, which have not yet been reported to the Exchange. Expected

reinsurance recoveries on claims liabilities are recognized as assets on the same basis. The

computation of these provisions takes into account the time value of money using discount

rates based on projected investment income from the assets supporting these provisions.

Since the amounts are necessarily based on estimates of future trends in claim severity and

other factors which could vary as the claims are settled, the ultimate liability may be more or

less than the estimated amounts. Although it is not possible to measure the degree of

variability inherent in such estimates, management believes that the unpaid claims amounts

and related adjustment expenses are adequate. The estimates are periodically reviewed by

an actuary and, as adjustments to these liabilities become necessary, they are reflected in

current operations.

(e) Reinsurance:

The Exchange records reinsurance balances on the statement of financial position on a gross

basis to indicate the extent of credit related to reinsurance, and records its obligations to

subscribers on a net basis in the statement of comprehensive income to indicate the results

of its retention of premiums written. Amounts recoverable from reinsurers are estimated in a

manner consistent with the related claims liabilities.


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(f) Salvage and subrogation recoverable:

In certain circumstances, the Exchange acquires the right to pursue third parties for losses

paid to policyholders under insurance contracts or to dispose of the damaged goods. The

Exchange has recognized and disclosed all identifiable and measurable amounts it expects

to recover in the future, from past loss events, as a separate asset on the statement of financial

position.

(g) Insurance contracts:

Insurance contracts are those contracts that have significant insurance risk at the inception of

the contract. Insurance risk arises when the Exchange agrees to compensate a policyholder

if a specified uncertain future event adversely affects the policyholder. It is defined as the

possibility of paying significantly more in a scenario where the insured event occurs than when

it does not occur.

(h) Leases:

At inception of a contract, the Exchange assesses whether a contract is, or contains, a lease.

A contract is, or contains, a lease if the contract conveys the right to control the use of an

identified asset for a period of time in exchange for consideration. To assess whether a

contract conveys the right to control the use of an identified asset, the Exchange assesses

whether:

i. The contract involves the use of an identified asset;

ii. The Exchange has the right to obtain substantially all of the economic benefits from use

of the asset throughout the period of use; and

iii. The Exchange has the right to direct the use of the asset. The Exchange has this right

when it has the decision-making rights that are most relevant to changing how and for

what purpose the asset is used is predetermined, the Exchange has the right to direct the

use of the asset if either:

a) The Exchange has the right to operate the asset; or

b) The Exchange designed the asset in a way that predetermines how and for what

purposes it will be used.


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(h) Leases (continued):

This policy is applied to contracts entered into, or changed, on or after January 1, 2019.

Short-term leases and low value assets

The Exchange has elected not to recognize right-of-use assets and lease liabilities for short-

term leases that have a lease term of 12 months or less and leases of low-value assets. The

Exchange recognizes the lease payments associated with these leases as an expense on a

straight-line basis over the lease term.

(i) Income taxes:

As an exchange under the Insurance Act of Ontario, the Exchange is not subject to income

taxes and, accordingly, no provision for income taxes has been made in these financial

statements.

(j) Impairment:

(i) Financial assets:

A financial asset not carried at fair value through profit or loss is assessed at each

reporting date to determine whether there is objective evidence that it is impaired. A

financial asset is impaired if objective evidence indicates that a loss event has occurred

after the initial recognition of the asset, and that the loss event had a negative effect on

the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets are impaired can include default or delinquency

by a debtor, restructuring of an amount due to the Exchange on terms that the Exchange

would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, or

the disappearance of an active market for a security. In addition, for an investment in an

equity security, a significant or prolonged decline in its fair value below its cost is objective

evidence of impairment.


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(i) Impairment (continued):

(i) Financial assets (continued):

Impairment losses on AFS investment securities are recognized by transferring the

cumulative loss that has been recognized in other comprehensive income, and presented

in unrealized gains/losses on AFS financial assets in the guarantee fund, to profit or loss.

The cumulative loss that is removed from other comprehensive income and recognized in

profit or loss is the difference between the acquisition cost, net of any principal repayment

and amortization, and the current fair value, less any impairment loss previously

recognized in profit or loss. Changes in impairment provisions attributable to time value

are reflected as a component of interest income.

If, in a subsequent period, the fair value of an impaired AFS debt security increases and

the increase can be related objectively to an event occurring after the impairment loss

was recognized in profit or loss, then the impairment loss is reversed, with the amount of

the reversal recognized in profit or loss. However, any subsequent recovery in the fair

value of an impaired AFS equity security is recognized in other comprehensive income.

(ii) Non-financial assets:

The carrying amounts of the Exchange’s non-financial assets are reviewed at each

reporting date to determine whether there is any indication of impairment. If any such

indication exists, then the asset’s recoverable amount is estimated. An impairment loss is

recognized if the carrying amount of an asset exceeds its estimated recoverable amount.

The recoverable amount of an asset is the greater of its value in use and its fair value less

expected selling costs. In assessing value in use, the estimated future cash flows are

discounted to their present value using a discount rate that reflects current market

assessments of the time value of money and the risks specific to the asset. Impairment

losses are recognized in income in the period in which the impairment is determined.

(k) Foreign currency translation:

The Canadian dollar is the functional and presentation currency of the Exchange.

Transactions in foreign currencies are translated into Canadian dollars at rates of exchange

at the time of such transactions. Monetary assets and liabilities are translated at current rates

of exchange. Translation differences on AFS investments are classified as other changes in

the carrying value of the investment and are recognized in other comprehensive income.


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(l) Accounting standards issued but not yet applied:

(i) IFRS 17, Insurance Contracts:

On May 18, 2017 the IASB issued IFRS 17, Insurance Contracts (“IFRS 17”). On June

25, 2020, the IASB issued amendments to IFRS 17 aimed at helping companies

implement the Standard and to defer the effective date. The new standard is effective for

annual periods beginning on or after January 1, 2023. IFRS 17 will replace IFRS 4,

Insurance Contracts. This standard introduces consistent accounting for all insurance

contracts. The standard requires a company to measure insurance contracts using

updated estimates and assumptions that reflect the timing of cash flows and any

uncertainty relating to insurance contracts. Additionally, IFRS 17 requires a company to

recognize profits as it delivers insurance services, rather than when it receives premiums.

The Exchange intends to adopt IFRS 17 in its financial statements for the annual period

beginning on January 1, 2023. The extent of the impact of adoption of the standard has

not yet been determined.

(ii) IFRS 9, Financial Instruments:

In July 2014, the IASB issued the complete amended IFRS 9, Financial Instruments

(“IFRS 9”). The mandatory effective date of IFRS 9 is for annual periods beginning on or

after January 1, 2018 and must be applied retrospectively with some exemptions. The

restatement of prior periods is not required and is only permitted if information is available

without the use of hindsight.

IFRS 9 introduces new requirements for the classification and measurement of financial

assets based on the business model in which they are held and the characteristics of their

contractual cash flows. It also amends the impairment model by introducing a new

‘expected credit loss’ model for calculating impairment.

The standard also introduces additional changes relating to financial liabilities.

IFRS 9 also includes a new general hedge accounting standard which aligns hedge

accounting more closely with risk management. This new standard does not

fundamentally change the types of hedging relationships or the requirement to measure

and recognize ineffectiveness, however it will provide more hedging strategies that are

used for risk management to qualify for hedge accounting and introduce more judgment

to assess the effectiveness of a hedging relationship. Special transitional requirements

have been set for the application of the new general hedging model.


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(l) Accounting standards issued but not yet applied (continued):

(ii) IFRS 9, Financial Instruments (continued):

In September 2016, the IASB issued amendments to IFRS 4, Insurance Contracts to

address accounting mismatches and volatility that may arise in profit or loss in the period

between the effective date of IFRS 9 and the new insurance contracts standard, IFRS 17

issued in May 2017.

The amendments introduce two approaches that may be adopted by insurers in the period

between the effective date of IFRS 9, January 1, 2019, and IFRS 17, effective January 1,

2023:

• overlay approach – an option for all issuers of insurance contracts to reclassify

amounts between profit or loss and other comprehensive income for eligible financial

assets by removing any additional accounting volatility that may arise from applying

IFRS 9; and

• temporary exemption – an optional temporary exemption from IFRS 9 for companies

whose activities are predominately connected with insurance. This exemption allows

an entity to continue to apply existing financial instrument requirements in IAS 39 to

all financial assets until the earlier of the application of IFRS 17 or January 1, 2023.

The Exchange evaluated its liabilities at December 31, 2015, the prescribed date of

assessment under the temporary exemption provisions and concluded that all of the

liabilities were predominantly connected with insurance. Approximately 99% of the

Exchange’s liabilities at December 31, 2015 are liabilities that arise from contracts within

the scope of IFRS 17 and approximately 99% of the Exchange’s liabilities at December

31, 2015 are liabilities that arise because the Company issues insurance contracts and

fulfils obligations arising from insurance contracts. Additionally, the Exchange has not

previously applied any version of IFRS 9. Therefore, the Exchange is an eligible insurer

that qualifies for optional relief from the application of IFRS 9.

As at January 1, 2018, the Exchange has elected to apply the optional transitional relief

under IFRS 4 that permits the deferral of the adoption of IFRS 9 for eligible insurers. The

Exchange will continue to evaluate the impact of IFRS 9. See note 4(d) for additional

disclosures which enable comparison between the Exchange and entities that applied

IFRS 9 at January 1, 2019.


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3. Significant judgments and estimates:

The Exchange makes estimates and assumptions that affect the reported amounts of assets and

liabilities within the next financial year. Estimates and judgments are continually evaluated and

based on historical experience and other factors, including expectations of future events that are

believed to be reasonable under the circumstances.

(a) Significant judgments:

Significant judgments made in applying accounting policies relate to impairments on AFS

financial assets. As of each reporting date, the Exchange evaluates AFS financial assets in

an unrealized loss position for impairment on the basis described in note 2.

For investments in bonds and debentures, evaluation of whether impairment has occurred is

based on the Exchange's best estimate of the cash flows expected to be collected at the

individual investment level. The Exchange considers all available information relevant to the

collectability of the investment, including information about past events, current conditions,

and reasonable and supportable forecasts. Estimating such cash flows is a quantitative and

qualitative process that incorporates information received from third party sources along with

certain internal assumptions and judgments. Where possible, this data is benchmarked

against third party sources. Impairments for bonds and debentures in an unrealized loss

position are deemed to exist when the Exchange does not expect full recovery of the

amortized cost of the investment based on the estimate of cash flows expected to be collected

or when the Exchange intends to sell the investment prior to recovery from its unrealized loss

position.

For equity investments, the Exchange recognizes an impairment loss in the period in which it

is determined that an investment has experienced significant or prolonged declines in value.

(b) Estimates:

Information about assumptions and estimation uncertainties that have a risk of resulting in

material adjustment within the next twelve months relate to claims liabilities.

Provisions for claims liabilities are valued based on Canadian accepted actuarial practice,

which are designed to ensure the Exchange establishes an appropriate reserve on the

statement of financial position to cover insured losses with respect to the reported and

unreported claims incurred as of the end of each accounting period and claims expenses. The

policy liabilities include a provision for unpaid claims and adjustment expenses on the expired

portion of policies and of future obligations on the unexpired portion of policies. In performing

the valuation of the liabilities for these contingent future events, the Appointed Actuary makes

assumptions as to future loss ratios, trends, reinsurance recoveries, investment rates of

return, expenses and other contingencies, taking into consideration the circumstances of the

Exchange and the nature of the insurance policies. The assumptions underlying the valuation

of provisions for unpaid claims and adjustment expenses are reviewed and updated by the

Exchange on an ongoing basis to reflect recent and emerging trends in experience and

changes in risk profile of the business.


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4. Investments:

2020 2019

Fixed income:

Structured notes $ 41,236,440 $ 29,462,850 Government bonds 11,112,653 12,619,400 Corporate bonds 105,272,987 107,365,242

Equities: Preferred shares 40,038,702 38,572,338 Common shares 8,610,474 12,195,493 Exchange Traded Funds 6,713,625 -

$ 212,984,881 $ 200,215,323

The fair values of securities are based on quoted market values.

Fair values of cash and cash equivalents and accrued investment income approximate their

carrying values due to the short-term maturity of these items.

On an on-going basis, the Exchange assesses the value of its equity and fixed income portfolios

to determine if there is objective evidence of impairment. During the year, the Exchange wrote

down $286,574 (2019 - $nil) investments that were deemed to be impaired.

(a) Liquidity:

Maturity profile of fixed income investments as at December 31, 2020:

Within Over 1 year 1 - 3 years 3 - 5 years 5 - 10 years 10 years

$ – $ 26,444,867 $ 49,276,055 $ 54,237,783 $ 27,663,375

Maturity profile of fixed income investments as at December 31, 2019:

Within Over 1 year 1 - 3 years 3 - 5 years 5 - 10 years 10 years

$ 24,639,790 $ 4,173,200 $ 36,247,267 $ 50,265,057 $ 34,122,178

The weighted average yield for debt securities based on market value at December 31, 2020

is 3.05% (2019 – 3.59%).


16

4. Investments (continued):

(b) Investment and other income:

2020 2019

Interest $ 7,071,769 $ 5,832,932 Dividends 3,049,696 2,846,259 Gain on sale of investments 4,117,191 669,946

$ 14,238,656 $ 9,349,137

(c) Fair values:

The Exchange uses a fair value hierarchy to categorize the inputs used in valuation

techniques to measure fair value. The extent of the Exchange’s use of quoted market prices

(Level 1), internal models using observable market information as inputs (Level 2) and internal

models without observable market information as inputs (Level 3) in the valuation of bond and

equity investments, as well as derivatives were as follows:

2020

Level 1 Level 2 Level 3 Total

Equities and exchange traded funds $ 55,362,801 $ – $ – $ 55,362,801 Bonds – 116,385,640 – 116,385,640 Structured notes – 41,236,440 – 41,236,440

Total $ 55,362,801 $ 157,622,080 $ – $ 212,984,881

2019

Level 1 Level 2 Level 3 Total

Equities $ 50,767,831 $ – $ – $ 50,767,831 Bonds – 119,984,642 – 119,984,642 Structured notes – 29,462,850 – 29,462,850

Total $ 50,767,831 $ 149,447,492 $ – $ 200,215,323

The Exchange did not have any significant transfers between Level 1 and Level 2 included in

the fair value hierarchy. The Exchange has no holdings in the Level 3 category.


17

4. Investments (continued):

(d) Additional disclosures:

The following additional disclosure, required by IFRS 9 for eligible insurers, presents the fair

value and the amount of change in the fair value of the Exchange’s financial assets as at and

for the year ending December 31, 2020, showing separately the fair value of financial assets

with contractual terms that give rise to cash flows that are solely payments of principal and

interest on the principal amount outstanding (“SPPI”) and the fair value of financial assets that

do not give rise to cash flows that are solely payments of principal and interest on the principal

amount outstanding (“Non-SPPI”):

SPPI Non-SPPI

Fair Change in Fair Change in Value fair value value fair value

Structured notes $ – $ – $ 41,236,440 $ 11,773,590 Bonds 116,385,640 (3,599,002) – – Preferred shares – – 40,038,702 1,466,364 Common shares – – 8,610,474 (3,584,669) Exchange traded funds – – 6,713,625 6,713,625

$ 116,385,640 $ (3,599,002) $ 96,599,241 $ 16,368,910

The following additional disclosure, required by IFRS 9 for eligible insurers, presents the credit

risk ratings of SPPI financial assets at December 31, 2020:

Carrying amount Credit rating Credit risk (fair value) % of total

AAA Low $ 2,182,000 2 AA Low 10,096,003 9 A Low 17,002,703 15 BBB Low 82,026,834 70 BB Other 5,078,100 4

$ 116,385,640 100


18

5. Property and equipment:

Equipment Land and and buildings furnishings Automobile Total

Cost: Balance, December 31, 2019 $ 817,834 $ 1,238,057 $ 101,317 $ 2,157,208 Additions – 130,880 – 130,880 Disposals – (14,123) – (14,123)

Balance, December 31, 2020 817,834 1,354,814 101,317 2,273,965 Accumulated depreciation: Balance, December 31, 2019 230,604 1,068,822 2,111 1,301,537 Depreciation for the year 20,428 92,983 25,329 138,740 Disposals – (14,123) – (14,123)

Balance, December 31, 2020 251,032 1,147,341 27,440 1,425,813 Carrying amounts: Balance, December 31, 2019 587,230 169,235 99,206 855,671

Balance, December 31, 2020 $ 566,802 $ 207,130 $ 73,879 $ 847,811

6. Limits of liability:

(a) Liability insurance:

The limit of liability for liability insurance is a maximum amount on any one loss of $27,000,000

(2019 - $27,000,000) in the event of a liability claim and to a maximum amount of $27,000,000

(2019 - $27,000,000) in the event of a series of claims arising out of a single occurrence. In

July 2020, the Exchange ceased to purchase reinsurance on this policy and instead

established a Large Loss Fund as described in note 6(e). In 2019, the Exchange obtained

reinsurance protection on these policies to an amount not exceeding $22,000,000 on each

and every occurrence or a series of claims arising out of a single occurrence in excess of

$5,000,000, and an annual aggregate of $44,000,000.

(b) Property insurance:

The property insurance policy provides for payment in the event of any one loss or a series of

losses arising out of a single occurrence in excess of the individual subscriber's deductible

without limit. The Exchange has obtained reinsurance protection on these policies to a limit

of $250,000,000 subject to a retention of $5,000,000 (2019 - $5,000,000) on each claim on

property damages and $500,000 (2019 - $500,000) per claim for extra expenses, subject to

an annual aggregate retention in the amount of $15,000,000 (2019 - $15,000,000) beyond

which the retention reduces to the subscriber's deductible.


19

6. Limits of liability (continued):

(b) Property insurance (continued):

The Exchange has obtained reinsurance, whereby they share in the losses at a rate of 25%

for losses between $6,000,000 and $11,000,000 and at 75% for losses between $11,000,000

and $21,000,000.

(c) Boiler and machinery insurance:

The boiler and machinery insurance policy provides for payment in the event of any one loss

or a series of losses arising out a single occurrence in excess of the individual subscriber’s

deductible. From 1992 to 2008 the Exchange boiler and machinery program was 100%

reinsured. From 2008 to 2019, the Exchange insured this program through a subscription

policy with another boiler insurer and shared in the losses at a rate of 25% from 2008 to 2011

and 50% share from 2011 to 2019. In 2020, the Exchange ceased this arrangement and now

insures the program 100%, with a policy limit of $5,000,000.

(d) Owned automobile insurance:

The insurance policy for subscriber-owned automobiles provides for payment in the event of

any one loss or series of losses arising out of a single occurrence to a maximum for liability

claims of $20,000,000 (2019 - $20,000,000) subject to recoverability of the individual

subscriber's deductible. In July 2020, the Exchange ceased to purchase reinsurance for this

line of business and established a Large Loss Fund to build capacity to insure these losses

see note 6(e). In 2019, the Exchange obtained reinsurance coverage for third party liability

claims on these policies to an amount not exceeding $17,000,000 subject to retention of

$3,000,000 per claim, and an annual aggregate of $34,000,000.

(e) Large Loss Fund for liability and automobile insurance losses

In 2020, OSBIE established the Large Loss Fund for liability and automobile insurance losses

to replicate the retention levels of reinsurance available in the marketplace and to ensure

OSBIE will have funds available to pay large losses into the future (those losses exceeding

$10 million). Through the collection of premiums, the Fund will grow over the next several

years to achieve a target of $34 million, which replicates the aggregate reinsurance policy

limits.


20

7. Claims liabilities:

(a) Nature of claims liabilities:

Claims liabilities and related reinsurance recoverable are estimates subject to variability and

the variability could be material in the near term. The variability arises because all events

affecting the ultimate settlement of claims have not taken place and may not take place for

some time. Variability can be caused by receipt of additional claim information, or significant

change in severity or frequency of claims from historical trends. The estimates are principally

based on the Exchange's historical experience. Methods of estimation have been used which

the Exchange believes produce reasonable results given current information.

The Exchange strives to establish adequate claim liabilities at the original valuation date.

However, as time passes, the ultimate cost of claims becomes more certain. During 2020,

the Exchange experienced unfavourable claims development of $6,528,000 (2019 -

unfavourable claims development of $8,194,000).

The table below details the claim liabilities by risk categories:

2020 2019

Gross Ceded Gross Ceded

General liability $ 87,531,582 $ – $ 86,766,973 $ – Property, boiler and

machinery and crime 19,376,997 2,943,482 5,745,356 153,500 Automobile 944,024 – 1,002,019 – Legal Expense 1,004,603 – 477,593 –

$ 108,857,206 $ 2,943,482 $ 93,991,941 $ 153,500

Management has concluded that the best estimate of the fair value of claims liabilities currently

available is the amount calculated by the Appointed Actuary. The Actuary's calculated value

as at December 31, 2020 amounted to $108,857,206 (2019 - $93,991,941) and is gross of

estimated reinsurance recoverable of $2,943,482 (2019 - $153,500).

The reinsurance recoveries and reinsurance reserve changes included in claims incurred

were $3,112,595 (2019 - $7,430,392).

Insurance ceded under reinsurance arrangements does not relieve the Exchange of its

primary liability to the subscriber. No information has come to the Exchange's attention

indicating that any of its current reinsurers will not be able to honour their liabilities under these

reinsurance contracts.


21

7. Claims liabilities (continued):

(b) Discounting of the claims liabilities and related reinsurance recoveries:

The provision for claims liabilities and related reinsurance recoveries is discounted using rates

based on the projected investment income from the assets supporting the provisions, and

reflecting the estimated timing of payments and recoveries. The discount rate used in the

valuation was 2.93% (2019 - 3.48%).

The gross provision and reinsurance recoverable estimates are as follows:

2020 2019

Discounted Undiscounted Discounted Undiscounted

Gross provision $ 108,857,206 $ 94,273,000 $ 93,991,941 $ 89,612,941 Reinsurance ceded 2,943,482 2,990,482 153,500 151,500

(c) Insurance contract provision and reinsurance assets:

2020

Gross Reinsurance Net

Notified claims $ 66,670,206 $ 2,885,482 $ 63,784,724 Claims incurred but not reported 42,187,000 58,000 42,129,000

$ 108,857,206 $ 2,943,482 $ 105,913,724

2019

Gross Reinsurance Net

Notified claims $ 50,132,941 $ 146,500 $ 49,986,441 Claims incurred but not reported 43,859,000 7,000 43,852,000

$ 93,991,941 $ 153,500 $ 93,838,441

(d) Analysis of movements in insurance contract provisions

2020 2019

Balance, beginning of year $ 93,991,941 $ 92,110,326 Current year claims 32,418,470 20,845,638 Prior year unfavourable (favourable) claims development 6,528,000 8,194,000

Total claims incurred 132,938,411 121,149,964 Decrease due to changes in discount rate 1,502,000 1,917,000 Increase due to changes in salvage and subrogation recovery 3,337,438 353,597 Claims paid (28,920,643) (29,428,620)

Balance, end of year $ 108,857,206 $ 93,991,941


22


(e) Change in reinsurance ceded reserves:

2020 2019

Balance, beginning of year $ 153,500 $ 92,000 Reinsurers’ share in total claims incurred 3,007,595 7,430,392 Reinsurers’ share in total claims payments (217,613) (7,368,892)

Balance, end of year $ 2,943,482 $ 153,500

(f) Methodologies and assumptions:

The provision for claims liabilities is an estimate that is determined using a range of accepted

actuarial claims projection techniques determined based on the line of business. The reported

amount is based on studies of past experience. The key assumption of the incurred loss/paid

loss claims development method is that claims recorded to date will continue to develop in a

similar manner in the future. These techniques use the Exchange’s historical claims

development patterns to predict future claims development. In situations where there has

been a significant change in the environment or underlying risks, the historical data is adjusted

to account for expected differences. The historical studies are regularly compared to current

emerging experience so that adjustments may be made as necessary.

In order to calculate the carrying value of the unpaid claims, the Exchange uses an actuarial

approach recognizing the time value of money which incorporates assumptions concerning

projected cash flows and appropriate provisions for adverse deviations. The actuarially

determined carrying value of claims liabilities is considered an indicator of fair value, as there

is no ready market for the trading of insurance policy liabilities.

(g) Changes in assumptions:

Consideration is given to the characteristics of the risks, historical trends, the amount of data

available on individual claims, inflation and any other pertinent factors. Some assumptions

require a significant amount of judgment such as the expected future impacts of future judicial

decisions and government legislation. The diversity of these considerations result in it not

being practicable to identify and quantify all individual assumptions that are more likely than

others to have a significant impact on the measurement of the Exchange’s insurance

contracts. There were no assumptions identified in the year or the preceding year as having

a potential or identifiable material impact on the overall claims estimate.


23


(h) Sensitivity analysis:

There is uncertainty inherent in the estimation process. The actual amount of ultimate claims

can only be ascertained once all claims are closed. Among all the lines of business, general

liability line of business has the largest unpaid claims liabilities. Given the nature of this line of

business and the fact that it has a very long tail, this line's estimate is the most critical to the

assumptions used. If the tail factor selection on this line of business was 5% higher, the

undiscounted net claims liabilities would be $15,381,000 (2019 - $15,129,000) higher. The

effect on net income would be a reduction of $15,847,000 (2019 - $15,994,000). If the

expected loss ratios used were 5% higher in all loss years, the undiscounted net claims

liabilities would be $1,146,000 (2019 - $1,424,000) higher, generating a reduction of

$1,121,000 (2019 - $1,489,000) in net income. Changes in assumptions on other lines of

business are considered to be less material.

(i) Claims development tables:

The following table shows the estimates of cumulative incurred claims, including both claims

notified and IBNR for each successive loss year at each reporting date, together with

cumulative payments to date.


24


(i) Claims development tables (continued):

Gross basis:

Total all Insurance risks Year of loss 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Estimate of ultimate claims costs: at end of the year of loss 25,708 39,261 40,102 32,206 33,320 31,327 25,609 20,381 19,821 30,410 one year later 23,225 34,789 35,413 26,502 24,816 25,467 24,074 18,814 19,466 two years later 20,515 31,386 30,998 23,642 23,228 22,647 25,457 17,397 three years later 19,554 31,639 28,861 23,553 23,729 21,598 28,275 - four years later 20,287 31,084 29,309 22,659 22,976 22,433 - - five years later 20,095 30,665 28,759 22,204 22,380 - - - six years later 19,723 31,264 28,630 23,342 - - - - seven years later 19,943 29,531 30,024 - - - - - eight years later 19,950 29,944 - - - - - - nine years later 20,932 - - - - - - -

Current estimate of cumulative claims 20,392 29,944 30,024 23,342 22,380 22,433 28,275 17,397 19,466 30,410

Cumulative payments to date 19,617 26,783 27,290 19,377 16,673 15,270 14,151 8,338 7,488 6,059


25


(i) Claims development tables (continued):

Net basis:

Total all Insurance risks Year of loss 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Estimate of ultimate claims costs: at end of the year of loss 25,609 35,386 39,420 32,152 33,052 31,194 25,461 20,498 19,660 30,413 one year later 23,150 33,909 35,256 26,445 24,619 25,279 23,924 18,595 19,739 two years later 20,439 31,214 30,548 23,585 23,029 22,129 25,307 17,255 three years later 19,478 30,752 28,385 23,554 23,531 21,410 28,126 - four years later 20,209 30,198 28,774 22,661 22,778 21,892 - - five years later 20,017 29,780 28,224 22,205 22,180 - - - six years later 19,646 30,378 28,096 23,344 - - - - seven years later 19,865 28,645 29,940 - - - - eight years later 19,872 29,055 - - - - - - nine years later 20,314 - - - - - - -

Current estimate of cumulative claims 20,314 29,055 29,490 23,344 22,180 21,892 28,126 17,255 19,739 30,413

Cumulative payments to date 19,539 25,902 26,817 19,330 16,474 15,082 14,001 8,147 7,432 6,059


26

8. Financial risk management:

The primary goals of the Exchange’s financial risk management policies are to ensure that the

outcomes of activities involving elements of risk are consistent with the Exchange’s objectives

and risk tolerance, and to maintain an appropriate risk/reward balance while protecting the

Exchange’s statement of financial position from events that have the potential to materially impair

its financial strength. Balancing risk and reward is achieved through aligning risk appetite with

business strategy, diversifying risk, pricing appropriately for risk, mitigating risk through

preventive controls and transferring risk to third parties.

The Exchange’s exposure to potential loss from financial risks is primarily due to underwriting

risk along with various market risks, including interest rate risk and equity market fluctuation risk,

foreign currency risk, liquidity risk, as well as credit risk.

(a) Underwriting risk:

Underwriting risk is the risk that the total cost of claims and acquisition expenses will exceed

premiums received and can arise from numerous factors, including pricing risk, reserving

risk, catastrophic loss risk and reinsurance coverage risk.

Our underwriting objective is to develop business within our target market on a prudent and

diversified basis and to achieve underwriting results of up to a 112.9% combined ratio.

(i) Pricing risk:

Pricing risk arises when actual claims experience differs from the assumptions included

in pricing calculations. Historically, the underwriting results of the property and casualty

industry have fluctuated significantly due to the cyclicality of the insurance market. The

market cycle is affected by the frequency and severity of losses, levels of capacity and

demand, general economic conditions and price competition. We price our products

taking into account numerous factors including claims frequency and severity trends,

product line expense ratios, special risk factors, the capital required to support the

product line, and the investment income earned on that capital. These factors are set in

conjunction with our actuary, and are reviewed and adjusted periodically to ensure they

reflect the current environment.

(ii) Reserving risk:

Reserving risk arises due to the length of time between the occurrence of a loss, the

reporting of the loss to the insurer and ultimate resolution of the claim. Claim provisions

are expectations of the ultimate cost of resolution and administration of claims based on

an assessment of facts and circumstances then known, a review of historical settlement

patterns, estimates of trends in claims severity and frequency, legal theories of liability

and other factors.


27

8. Financial risk management (continued):

(a) Underwriting risk (continued):

(ii) Reserving risk (continued):

Variables in the reserve estimation process can be affected by receipt of additional claim

information and other internal and external factors, such as changes in claims handling

procedures, economic inflation, legal and judicial trends, legislative changes, inclusion

of exposures not contemplated at the time of policy inception and significant changes in

severity or frequency of claims relative to historical trends. Due to the amount of time

between the occurrence of a loss, the actual reporting of the loss and the ultimate

payment, provisions may ultimately develop differently from the actuarial assumptions

made when initially estimating the provision for claims. The Exchange’s provision for

claims are reviewed separately by, and must be acceptable to, the independent

appointed actuary, and an external valuation actuary.

(iii) Catastrophic loss risk:

Catastrophic loss risk is the exposure to losses resulting from multiple claims arising out

of a single catastrophic event. Property and casualty insurance companies experience

large losses arising from manmade or natural catastrophes that can result in significant

underwriting losses. Catastrophes can cause losses in a variety of property and casualty

lines and may have continuing effects which could delay or hamper efforts to timely and

accurately assess the full extent of the damage they cause. The incidence and severity

of catastrophes are inherently unpredictable. The Exchange’s exposure to insured risks

is managed through the use of reinsurance. The Exchange reinsures claims from a

single catastrophe over $5,000,000 to a maximum of $250,000,000. The net retained

amount of $5,000,000 represents less than 10% of the Exchange’s Guarantee Fund.

Reinsurance coverage risk arises because reinsurance terms, conditions and/or pricing

may change on renewal, particularly following catastrophes.

(iv) Reinsurance risk:

The Exchange relies on reinsurance to manage the underwriting risk, however,

reinsurance does not release the Exchange from its primary commitments to its

policyholders. Therefore, the Exchange is exposed to the credit risk associated with the

amounts ceded to reinsurers. The Exchange assesses the financial soundness of the

reinsurers before signing any reinsurance treaties and monitors their situation on a

regular basis. In addition, the Exchange has minimum rating requirements for its

reinsurers. The Exchange tenders reinsurance requirements on a regular basis to

ensure that the best price possible is obtained. The Exchange works with well

established reinsurers that have expertise in their field as well as an understanding of

the business. Management reviews reinsurance programs to manage cost-efficiency

and reduce the likelihood of coverage gaps.


28


(b) Credit risk:

(i) Invested assets:

The Exchange’s risk management strategy is to invest primarily in debt instruments of

high credit quality issuers and to limit the amount of credit exposure with respect to any

one issuer. The Exchange attempts to limit credit exposure by imposing portfolio limits

on individual corporate issuers as well as limits based on credit quality. The breakdown

of the Exchange’s fixed income portfolio, by Standard and Poor’s or Moody’s rating is

presented below:

2020 2019

Fair value % of total Fair value % of total

AAA $ 2,182,200 1 $ 2,122,420 1 AA 51,332,443 33 39,959,830 27 A 17,002,703 11 26,243,038 18 BBB 82,026,634 52 80,110,064 53 BB 5,078,100 3 1,012,140 1

$ 157,622,080 100 $ 149,447,492 100

(ii) Reinsurance recoverable and receivable:

Credit exposure on the Exchange’s reinsurance recoverable and receivable balances

exists at December 31, 2020 to the extent that any reinsurer may not be able or willing

to reimburse the Exchange under the terms of the relevant reinsurance arrangements.

The Exchange has policies which limit its exposure to individual reinsurers and a regular

review process to assess the creditworthiness of reinsurers with whom it transacts

business. Internal guidelines generally require reinsurers to have A ratings. Any

exceptions are subject to CEO approval.

In 2020, the Exchange has reinsurance recoverable balances of $2,943,482 (2019 -

$153,500). The receivable balance at December 31, 2020 is $ 138,471 (2019 -

$230,839).


29


(b) Credit risk (continued):

(iii) Aggregated credit risk:

The Exchange’s aggregate exposure to credit risk is as follows:

2020 2019

Investments in bonds 116,385,640 $ 119,984,642 Investments in structured notes 41,236,440 29,462,850 Accrued investment income 1,052,975 1,242,250 Loan receivable 469,119 481,664 Premiums and accounts receivable 50,452 855,501 Reinsurance receivable 138,471 230,839 Reinsurance recoverable 2,943,482 153,500 Salvage and subrogation 5,863,125 2,525,687 Structured settlements (note 10) 20,695,329 19,293,584

188,835,033 $ 174,230,517

(c) Liquidity risk:

Liquidity risk is the risk of having insufficient cash resources to meet financial commitments

and policy obligations as they fall due, without raising funds at unfavourable rates or selling

assets on a forced basis.

Liquidity risk arises from the general business activities and in the course of managing the

assets and liabilities. The liquidity requirements of the Exchange’s business have been met

primarily by funds generated from operations, asset maturities and income and other returns

received on securities. Cash provided from these sources is used primarily for claims and claim

adjustment expense payments and operating expenses. The timing and amount of catastrophe

claims are inherently unpredictable and may create increased liquidity requirements.

To meet these cash requirements, the Exchange has policies to limit and monitor its

exposure to individual issuers or related groups and to ensure that assets and liabilities are

broadly matched in terms of their duration and currency. The Exchange also holds a portion

of invested assets in liquid securities. At December 31, 2020, the Exchange has $41,635,446

(2019 - $38,135,098) of cash and cash equivalents. In addition, the Exchange has a line of

credit available in the amount of $500,000 (2019 - $500,000).

Along with the expected maturity profile of The Exchange’s investment portfolio in note 4(a),

the following table shows the expected payout pattern of the unpaid claim liabilities.


30


(c) Liquidity risk (continued):

Expected payout pattern of unpaid claims as at December 31, 2020:

Within 1 year 1 - 5 years 5 - 10 years Over 10 years Total

$ 29,373,000 $ 46,237,000 $ 13,409,000 $ 4,608,000 $ 93,627,000

Expected payout pattern of unpaid claims as at December 31, 2019:

Within 1 year 1 - 5 years 5 - 10 years Over 10 years Total

$ 21,000,000 $ 46,976,000 $ 14,827,000 $ 4,133,000 $ 86,936,000

(d) Market risk:

Market risk is the risk of loss arising from adverse changes in market rates and prices, such

as interest rates, equity market fluctuations, foreign currency exchange rates, and other

relevant market rate or price changes. Market risk is directly influenced by the volatility and

liquidity in the markets in which the related underlying assets are traded. Below is a

discussion of the Exchange’s primary market risk exposures and how those exposures are

currently managed.

(i) Interest rate risk:

Fluctuations in interest rates have a direct impact on the market valuation of the

Exchange’s fixed income securities portfolio and liability values. Historical data and

current information is used to profile the ultimate claims settlement pattern by class of

insurance, which is then used in a broad sense to develop an investment policy and

strategy. Generally, our investment income will move with interest rates over the long-

term. Short-term interest rate fluctuations will generally create unrealized gains or losses.

Generally, the Exchange’s interest and dividend investment income will be reduced

during sustained periods of lower interest rates as higher yielding fixed income securities

are called, mature, or are sold and the proceeds are reinvested at lower rates, and will

likely result in unrealized gains in the value of fixed income securities the Exchange

continues to hold, as well as realized gains to the extent the relevant securities are sold.

During periods of rising interest rates, the market value of the Exchange’s existing fixed

income securities will generally decrease and gains on fixed income securities will likely

be reduced or result in realized losses.


31


(d) Market risk (continued):

(i) Interest rate risk (continued):

As at December 31, 2020, management estimates that an immediate hypothetical 100

basis point, or 1%, parallel increase in interest rates would decrease the market value of

the fixed income securities by $8,815,896 (2019 - $7,351,661), representing 5.6% (2019

- 4.9%) of the $157,622,408 (2019 - $149,447,492) fair value fixed income securities

portfolio and T-bills, and decrease the value of unpaid claims reserves by $2,836,000

(2019 - $2,752,000), thus partially offsetting the change in market value of bonds.

Conversely, a 100 basis point decrease in interest rates would increase the market value

of the fixed income securities by $9,576,962 and value of unpaid claims reserves by

$3,0156,000 (2019 - $2,948,000) If it was necessary for us to complete an unexpected

quick liquidation of assets to meet our policy obligations, interest rate fluctuations could

result in realized gains or losses greater than the change in reserve values.

Computations of the prospective effects of hypothetical interest rate changes are based

on numerous assumptions, including the maintenance of the existing level and

composition of fixed income security assets at the indicated date, and should not be

relied on as indicative of future results. The analysis in this section is based on the

following assumptions: 1) the securities in the Exchange’s portfolio are not impaired; 2)

interest rates and equity prices move independently; 3) shifts in the yield curve are

parallel; and, 4) credit and liquidity risks have not been considered. In addition, it is

important to note that AFS securities in an unrealized loss position, as reflected in OCI,

may at some point in the future be realized either through a sale or impairment.

(ii) Equity market fluctuation risk:

Fluctuations in the value of equity securities affects the level and timing of recognition of

gains and losses on securities held, and causes changes in realized and unrealized gains

and losses. General economic conditions, political conditions and many other factors

can also adversely affect the stock markets and, consequently, the value of the equity

securities the Exchange owns.

To mitigate these risks, the Exchange establishes an investment policy which is

approved by the Board of Directors. The policy sets forth limits for each type of

investment and compliance with the policy is closely monitored. The Exchange manages

market risk through asset class diversification, policies to limit and monitor its individual

issuers and aggregate equity exposure.


32


(d) Market risk (continued):

(ii) Equity market fluctuation risk (continued):

As at December 31, 2020, management estimates that a 10% increase in equity markets,

with all other variables held constant, would impact OCI by approximately $5,536,280

(2019 - $5,076,783). A 10% decrease in equity prices would have the corresponding

opposite effect, impacting OCI by the same amounts. Equities comprise 25% (2019 -

25%) of the fair value of the Exchange’s total investments.

(iii) Foreign exchange risk:

Foreign exchange risk is the possibility that changes in exchange rates produce an

unintended effect on earnings and equity when measured in domestic currency. This

risk is larger when assets backing liabilities are payable in one currency and are invested

in financial instruments of another currency. The Exchange monitors the exposure of

invested assets to foreign exchange and limits these amounts when deemed necessary

and mitigates foreign exchange rate risk. The Exchange may nevertheless, from time to

time, experience losses resulting from fluctuations in the values of these foreign

currencies, which could adversely affect operating results.

At December 31, 2020, the Exchange held $995,664 in US bonds (2019 - $1,255,810).

As at December 31, 2020, management estimates that a 10% increase in the value of

the Canadian dollar compared to the US dollar with all other variables held constant,

would impact OCI by $99,566 (2019 - $125,581). A 10% decrease in the value of

Canadian dollar compared to US dollars would have the corresponding opposite effect,

impacting OCI by the same amounts.

9. Pension plan:

All employees of the Exchange are eligible to be members of the Ontario Municipal Employees

Retirement System ("OMERS"), a multi-employer pension plan. The plan provides defined

pension benefits to employees based on their length of service and rates of pay. From the

inception date of September 1, 2004 to December 31, 2020, eligible employees contributed at

rates between 9% and 14% of earnings. The Exchange contributions equal the employee

contributions to the plan. During the year ended December 31, 2020, the Exchange contributed

$263,812 (2019 - $263,969) to the plan. As this is a multi-employer pension plan, these

contributions are the Exchange's pension benefit expenses. No pension liability for this type of

plan is included in the Exchange's financial statements. The Exchange has a letter of guarantee

with an OMERS member as per the requirements of membership.


33

10. Structured settlements:

The Exchange, in the normal course of settling certain insurance claims, purchases annuities

from unrelated life insurance companies who are licensed in Canada and regulated by the

Superintendent of Financial Institutions Canada. These life insurance companies then make

periodic payments to the Exchange's claimants. The Exchange is exposed to credit risk to the

extent that any of the life insurance companies are unable to continue making these annuity

claims payments. The Exchange's maximum exposure to credit risk for these types of

arrangements is approximately $20,695,329 as at December 31, 2020 (2019 - $19,293,584).

This exposure is reduced to the extent of coverage provided by the life insurance industry Assuris

insurance plan. The Exchange has determined that no credit risk provision is required at

December 31, 2020.

11. Guarantee Fund:

(a) In accordance with the Agreement, subscribers were not obliged to contribute any amounts

to the Exchange in the form of a capital contribution in 2020. The Guarantee Fund, therefore,

represents the cumulative excess of income over expenses, including investment income,

and may be used to cover potential future catastrophe claims or reduce future premiums as

appropriate. The Agreement provides that additional assessments may be made to the

subscribers to the extent that premiums collected are insufficient to cover the claims and

expenses experienced by the Exchange. Similarly, where accumulated funds are in excess

of funds required to meet the obligations in respect of claims arising, the Agreement provides

for the issue of premium credits.

The Board of Directors approved the refund of $5,718,000 (2019 - $5,149,000) to liability

subscribers, $3,340,000 (2019 - $4,235,000) to property subscribers and $405,000 (2019 -

$428,000) to automobile subscribers.

The Insurance Act of Ontario requires the Exchange to maintain a Guarantee Fund of at least

$50,000.

(b) The additional guarantee funds relate to the following underwriting groups:

2020 2019

General liability $ 53,847,466 $ 58,518,112 Property, boiler and machinery and crime 42,582,433 49,710,137 Automobile 13,746,686 13,501,752 Legal expense 252,469 19,755 Large Loss Fund 7,526,075 -

$ 117,955,129 $ 121,749,756


34

12. Capital management:

Capital is comprised of the Exchange’s Guarantee Fund. As at December 31, 2020, the

Exchange’s Guarantee Fund was $117,955,129 (2019 - $121,749,756). The Exchange’s

objectives when managing the capital are to maintain financial strength and protect its claims

paying abilities. Senior executive management works with the actuary to develop the capital

strategy and targets for each line of business. The liability target is 55% of annual written

premium. Property and auto targets are set based on the self-retention of the related reinsurance

policy. Distribution of excess capital back to members is evaluated by the actuary and senior

executive management on an annual basis, and any distributions are made based on the

determinations of the Actuary and in accordance with OSBIE’s capital management policy. The

Exchange can build its capital through member contributions directly to the surplus account of

the Exchange.

The minimum capital levels for the Exchange are monitored by their regulator FSRA.

13. Personnel expenses:

2020 2019

Salaries and statutory contributions $ 2,694,341 $ 2,735,754 Benefits 490,969 482,783

$ 3,185,310 $ 3,218,537

14. Financial assets and liabilities:

The following table presents financial assets and liabilities that the Exchange expects to recover

or settle in 12 months or more:

2020 2019

Investments $ 157,622,080 $ 175,575,533 Reinsurance recoverable 105,000 - Salvage and subrogation recoverable 2,931,562 2,025,687 Loan receivable 444,398 469,488

Total assets $ 161,143,040 $ 178,070,708

Claims liabilities 79,905,206 72,991,941

Total liabilities $ 79,905,206 $ 72,991,941


35

15. Related parties:

Key management personnel are those persons having authority and responsibility for planning,

directing and controlling the activities of the Exchange, directly or indirectly, including the Board

of Directors of the Exchange. The Board of Directors are not paid for their work with the

Exchange.

Compensation expenses related to key management personnel consisted of $1,394,365 (2019 -

$1,460,895) related to salaries and other short-term employee benefits. No other benefits were

paid.

16. Impact of COVID-19 pandemic:

On March 11, 2020, the World Health Organization declared the Coronavirus (COVID-19)

outbreak a pandemic. This has resulted in significant financial, market and societal impacts in

Canada and around the world.

During the year, the Entity has experienced the following in relation to the pandemic:

• Volatility in equity markets resulting in temporary declines in the fair value of investments

and investment income

• Declines in interest rates which have impacted the value of investment holdings and the

valuation of actuarial liabilities

• Mandatory working from home requirements for those able to do so

The ultimate duration and magnitude of the COVID-19 pandemic's impact on the Entity’s

operations and financial position is not known at this time and can cause additional uncertainty

around estimates and judgements used in preparing these financial statements.

If applicable, financial statements are required to be adjusted for events occurring between the

date of the financial statements and the date of the auditors’ report to provide additional evidence

relating to conditions that existed as at year end. No adjustments were necessary.

Agenda 5

MOTION

TO: Audit Committee FROM: CEO RE: P&C1 review MOVED: SECONDED:

BE IT RESOLVED, MOTION: To recommend to the Board the approval of the 2020 annual P&C-1 form as presented.

Agenda 5 i) P&C-1 Annual Submission The Property & Casualty -1 form (P&C-1) is submitted to the regulator on a quarterly basis. The annual form has several more exhibits and provides greater detail pertaining to claims expenses, equity investment holdings and reinsurance carriers. The auditors have reviewed pages 20.10, 20.20 and 20.30, to ensure they reflect the Assets, Liabilities, Surplus, and Comprehensive Income of OSBIE as reported in our Audited financial statements. The actuary has reviewed pages 10.60, 20.10, 20.20, 20.30, 30.61, 30.62, 30.64, 30.66 and 60.30 which are all pages pertaining to our claims liabilities and MCT calculations. MCT Results As shown on page 30.61 in the PC1, our MCT result at December 31st is 429.9% which is down from the year end 2019 score of 472.85%. Our underwriting results, which have impacted the available capital are the main contributing factor to the decrease. OSBIE continues to exceed our capital requirements as outlined in the Capital Management Guidelines:

• Internal minimum MCT score 180%

• Optimal MCT score target: 300%

General Statement Comments Pages 10.15 and 10.17 – the list of current directors, Chair of the Board, members of the Governance committee (will be updated following the meeting). Page 10.60 provides a good 5 year summary of key financial data. The annual P&C-1 is split into the following sections

▪ 10.10 – 10.60 – General information ▪ 20.10 to 20.80 - Financial statements ▪ 30.61 to 30.79 – Statutory Compliance (MCT calculations and supporting exhibits) ▪ 40.07 to 40.80 –Investments ▪ 50.20 to 50.40 - Misc. Assets and Liabilities ▪ 60.10 to 60.50 – Claims and Adjustment expenses ▪ 67.10 to 67.31 – Claims and premiums by line of business ▪ 70.10 to 70.60 –Reinsurance Ceded and related claims ▪ 80.10 & 80.20 – Commissions and Expenses

Not all exhibits pertain to OSBIE operations, but all exhibits have been included in your document. Below is a shortened table, linking our balance sheet numbers and Operating statement to the relevant PC1 pages.

P&C-1 PAGES

Values as reported on P&C-1 and internal OSBIE

statements

OSBIE Supporting Documentation

Page 20.10 Assets From OSBIE Balance Sheet

Line 19 -Total Investments + Line 27

213,454 Investments

Line 89 Total Assets 266,115 Total Assets

Page 20.20 Liabilities and Equity

Line 13 Unpaid Claims and Adjustment Expenses

108,857 Total Claims Liabilities

Line 89 Total Liabilities & Equity

266,115 Total Liabilities and Guarantee Fund

Page 20.30 Statement of Income

From OSBIE Operating Statement

Line 9 Total Underwriting Revenue

32,524 Total Premium Income

Line 10 Net Claims & Adjustment Expenses

37,124 Total Claims Expenses

Line 12 Taxes + Line 16 General Expenses

3,800 Total Operating Expenses

Line 39 Net Investment Income

13,977 Total Investment Income

Line 89 Net Income 5,668 Net Income

Ontario School Boards' Insurance Exchange 31/12/2020

Canadian/Foreign Insurer Date

01

(03)

02 Insurer Ontario School Boards' Insurance Exchange

03 Head Office Address 91 Westmount Rd.

04 GUELPH, ON N1H 5J2

05 Business Mailing Address (if different)/

06 (Chief Agency in Canada Address)

07 Telephone 519 767-2182

08 Fax 519 767 -0281

09 Website www.osbie.on.ca

10 Email Address [email protected]

20 Contact/Contact in Canada JIM H. SAMI

(other than Chief Agent)

21 Title CEO

22 Telephone 519-767-2182

23 Fax 519-767-0281


30 Officers as at (date of filing return) 2021-02-16

31 Chief Agent in Canada (branches only)

32 Citizenship

33 Address

34

36 President/Chief Executive Officer JIM H. SAMI

37 Citizenship CANADIAN

38 Address 50 Arkendo Dr.

39 OAKVILLE, ON L6J 5T9

41 Chief Financial Officer SANDRA TAYLOR


43 Address 136 TREMAINE RD

44 MILTON, ON L9T 2X3

51 Secretary

52 Citizenship

53 Address

54

61 External Auditor* KPMG LLP

62 Partner KIM HALEY

63 Address 115 KING ST. SOUTH, 2ND FLOOR

64 WATERLOO, ON N2J 5A3

65 Telephone 519-747-8856

66 Fax 519-747-8268


72 Actuary** RAUL MARTIN

77 Firm JSCP

73 Address 1500 DON MILLS RD

74 DON MILLS, ON M3B 3K4

75 Telephone 416-510-8360

76 Fax


** An Actuary's Report is required to be filed with the Annual Return.

10.10

*The Auditor Reports are required to be filed with the Annual Return. For Foreign Branches, the Auditor Reports are to be filed no later than May 31.

31/12/2020

ANNUAL SUPPLEMENT

for the year ended

(01)

P&C (2020)

Next page is 10.15


Canadian Insurer Date

(01)

01 DIRECTORS as at 16/02/2021

(Date of filing return)

(03)

Chairperson of the Board

10 Name

11 Citizenship

12 Address

13

Chairperson of the Audit Committee

15 Name

16 Citizenship

17 Address

18

Chairperson of the Conduct Review Committee

20 Name

21 Citizenship

22 Address

23

25 Name Brian M. Coburn


27 Address 175 Woodbine Pl. Unit 104

28 OTTAWA, ON K1S 5M8

30 Name Cathy Modesto


32 Address 5111 Tilton Lake Rd.

33 SUDBURY, ON P3G 1P1

35 Name Craig Allan Young


37 Address 464 Aragon Rd.

38 Glenburnie, ON K0H 1S0

40 Name Amy Elizabeth Ann Janssens

41 Citizenship Canadian

42 Address 29300 Uncle Toms Rd

43 Dresden, ON N0P 1M0

45 Name James Peter Marshall


47 Address 22 Sandy Beach Mews

48 Dryden ON P8N 3J6

50 Name Lynn Schaule


52 Address 4087 Conc. 5, Adjala

53 Loretto, Ontario L0G 1L0

55 Name Isabel Teresa Grace


57 Address 1517 Westbrook Drive

58 Peterborough ON K9J 6R5

60 Name Jaspal Singh Gill


62 Address 58 Grouse Lane

63 Brampton, Ontario L6Y 5K9

64 Name

65 Citizenship

66 Address

67

10.15

* INSURERS PROVINCIALLY INCORPORATED

* Insurers incorporated in a provincial jurisdiction must file this page on a quarterly basis. Federally regulated insurers are required to

file this page with their 4th quarter filing.

10.15 Directors

(continued).docx

P&C (2020)

Next page is 10.17



RETURN AS AT:

01 31/12/2020

(Day, Month, Year)

List of different committees and of their members:

Please embed the most recent list of the various committees and their members and identify the person

acting as President (Chair) of each committee.

Committee Members Members Members

02 Audit Chris Arnew Lynn Schaule Jeff Pratt

Peter Marshall Cathy Modesto Brian Coburn

03 Marc Cantin Pearl Fong West Isabel Grace

Jaspal Gill Amy Janssens Craig Young

04 Kirsti Alaksa Peter Marshall

05 Governance

* Insurers incorporated in a provincial jurisdiction must file this page.

10.17

CORPORATE INFORMATION

* INSURERS PROVINCIALLY INCORPORATED

For professional orders, please provide information regarding directors and officers of the insurance fund, not of the professional order.

P&C (2020)

Next page is 10.20

10.20


Canadian Insurer Year

Have there been any substantial changes in ownership since the date of (01)

filing the last Annual Return? 40 N Y/N

If yes, provide details:

Location Number of % of Voting Amount

(City) Shares Held Rights Paid

(02) (03) (04) (05)

61 0 0.00% 0

62 0 0.00% 0

63 0 0.00% 0

64 0 0.00% 0

65 0 0.00% 0

66 0 0.00% 0

67 0 0.00% 0

68 0 0.00% 0

69 0 0.00% 0

70 0 0.00% 0

71 0 0.00% 0

72 0 0.00% 0

73 0 0.00% 0

74 0 0.00% 0

75 0 0.00% 0

76 0 0.00% 0

77 0 0.00% 0

Total 89 0 0.00% 0

($'000)

Name

(01)

CONSOLIDATED

SHAREHOLDERS

Shareholders

10.20.docx

P&C (2020)

Next page is 10.30

10.30



CORPORATE ORGANIZATION CHART*

* Insurers must embed their corporate organization chart on this tab.

Embed a chart showing the interrelationships between the insurer, its immediate and ultimate parent, and all other affiliated corporations (upstream

and downstream), identifying the percentage of beneficial ownership of each (see Section VI of the Annual Return Instructions).

Org. chart Dec

2020.pdf

P&C (2020)

Next page is 10.40

10.40



OTHER INFORMATION

(01)

07 In which jurisdiction is your ultimate parent (companies) or Home Office (branches) domiciled? CA

10 Have there been any amendments to the instrument of incorporation/by-laws (04)

since the date of filing the last Annual Return? 10 N Y / N

If yes, please summarize: (01)

11

30 Indicate the name and percentage of ownership of each corporation in which the insurer held 10%

or more of the voting rights as at year-end.

If necessary, embed details on an additional page.

Percentage

(02) (03)

31 N Y / N

32 N Y / N

33 N Y / N

(04)

36 Are any of the insurer's licences / orders subject to any limitation? Y Y / N

If yes, please embed details.

Consolidated

NON CONSOLIDATED

(01)

Name

P&C (2020)

Next page is 10.41



Net retention

Class of Insurance Policy limit Current Year Prior Year

(05) (01) (02) (03)

Property - Personal excluding Home and Product Warranty 03 0

- Home Warranty 04 0

- Product Warranty 05 0

- Commercial 07 53,960,000 200,000 5,000 5,000

Aircraft 10 0

Automobile:

Private Passenger - Liability 11 0

- Personal Accident 12 0

- Other 13 0

Other than Private Passenger - Liability 15 20,000 0 3,000


- Other 17 0 3,000

Boiler and Machinery excluding Equipment Warranty 32 5,000 5,000 0

- Equipment Warranty 33 0

Credit 34 0

Credit Protection 35 0

Fidelity 36 1,000 0

Hail 38 0

Legal Expense 40 500 50 50

Liability

- Comprehensive General Liability (with products) 50 27,000 0 5,000

- Comprehensive General Liability (without products) 51 0

- Cyber Liability 52 10,000 1,000 1,000

- Directors and Officers Liability 53 0

- Excess Liability 54 0

- Professional Liability 55 0

- Umbrella Liability 56 0

- Pollution Liability 57 0

- All other 58 0

Mortgage 62 0

Other Approved Products 63 0

Surety

- Contract Surety 60 0

- All Other Surety 61 0

Title 66 0

Marine 68 0

Accident and Sickness 70 0

Does the reporting on the liability class of insurance include information from other lines?

(01)

88 Property N Y / N

89 Auto Insurance N Y / N

Current Year

(02) (03)

What is the average rate used for discounting policyholder liabilities (%)? 90 2.9% 3.5%

What is the average duration of interest rate sensitive assets? 91 5.9 5.6

What is the average duration of policy liabilities 92 3.0 3.1

Number of automobiles insured under automobile insurance policies, as at year end: 79 1,948 1,791

Assessable Income information ($'000):

Accident and Sickness net premiums written in Ontario 85 0

Prior Year

CONSOLIDATED

10.41

OTHER INFORMATION (continued)

Total Insured Value

P&C (2020)

Next page is 10.42



Counterparty Domicile Pledged/Lodged

as Collateral

Asset Type To Affiliates To

Unaffiliated

Entities

Brief Description of

the Encumbrance

(02) (03) (04) (05) (06)

Total 19 0 0

Market value of securities on loan 40

Market value of total collateral of securities on loan 45

20 Does the insurer have any significant dependencies not already disclosed in answer(s) (04)

to previous questions or in the Notes to Financial Statements? N Y / N

If yes, provide details (see Section VI of the Annual Return Instructions).

21

Counterparty Legal

Name

(01)

($'000)

10.42

CONSOLIDATED

ENCUMBERED ASSETS

Market Value ($'000)

($'000)

(03)

Current Period Prior Period

(02)

0

0

P&C (2020)

Next page is 10.43

10.43



Provider Name Provider Head Office

Address

Location Where Services

Provided

Affiliated Providers Unaffiliated Provider Brief description of the

Service

(02) (03) (04) (05) (06) (07)

Total 09 0 0

(01)

CONSOLIDATED

OUTSOURCING AND SERVICE AGREEMENTS

Annual Fee/Cost of Service

Service Outsourced

P&C (2020)

Next page is 10.60

10.60



SUMMARY OF SELECTED FINANCIAL DATA FOR FIVE YEARS

($'000)

2016 2017 2018 2019 2020

(Current)

(01) (02) (03) (04) (05)

OPERATIONS

Assets/Assets Vested in Trust 01 255,605 239,972 231,225 245,101 266,115

Liabilities 02 138,317 116,903 116,730 118,104 137,768

Adjusted Equity 04 117,288 123,069 114,495 126,997 128,347

Gross premiums written 05 42,837 31,585 30,911 31,079 34,397

Net premiums written 06 39,624 28,566 27,892 28,187 32,524

Net premiums earned 07 40,093 29,021 28,347 28,692 32,524

Gross claims incurred 08 29,302 14,727 21,439 30,956 40,039

PROFITABILITY

Claims ratio

- by year of account 30 51.65% 52.71% 74.87% 81.99% 114.14%

- by year of accident 31 56.49% 95.20% 67.65% 72.60% 88.63%

Expense ratio 33 9.32% 11.66% 12.16% 12.00% 11.68%

Underwriting income (loss) 35 15,647 10,340 3,678 1,953 -8,400

- as a % of net premiums earned 36 39.03% 35.63% 12.97% 6.81% -25.83%

Net investment income 42 13,078 6,438 8,482 9,069 13,977

43 0 0

45 32.62% 22.18% 29.92% 31.61% 42.97%

Investment yield 46 5.52% 2.74% 3.73% 3.96% 5.81%

Net income (loss) 47 29,076 16,990 12,413 11,355 5,668

Return on equity 48 26.88% 14.14% 10.45% 9.40% 4.44%

70 94,380 96,701 86,613 100,017 98,374

72 514.11% 468.88% 412.36% 472.85% 429.93%

74 300.00% 300.00% 300.00% 300.00%

CANADIAN INSURERS ONLY:

EQUITY

Dividends to shareholders 50 12,459 12,063 8,828 9,812 9,463

52 0 0 0 0

54 0 0 0 0

OTHER RATIOS

Adjusted Equity as a % of liabilities 60 84.80% 105.27% 98.09% 107.53% 93.16%

Gross risk ratio (line 05/line 04) 62 36.52% 25.66% 27.00% 24.47% 26.80%

Net risk ratio (line 06/line 04) 64 33.78% 23.21% 24.36% 22.20% 25.34%

66 0.00% 0.00% 0.00% 0.00% 0.00%

68 15.81% 11.18% 3.99% 1.22% -2.57%

FOREIGN INSURERS ONLY:

TOTAL WORLDWIDE BUSINESS

Currency: 19

Assets 20

Liabilities 21

Capital and surplus 22

Gross premiums written 23

Net premiums written 24

Underwriting income 25

Investment income (including realized capital gains) 26

Net Income after tax 27

(in the currency of the home jurisdiction, rounded to the nearest

thousand)

Share Capital and Contributed Surplus paid in during the year

Share Capital and Contributed Surplus redeemed during the year

Agents and brokers balances and amounts due from subsidiaries

and associates as a % of Adjusted Equity

Claims development as a % of Adjusted Equity

Net investment income (total) as a % of net premiums earned

[(line 42)/07] x 100

CONSOLIDATED

MINIMUM CAPITAL TEST/BRANCH ASSET ADEQUACY TESTExcess of Capital/Margin Available over Capital/Margin

Required

What is the company's/branch's internal target capital ratio (%)?

Capital/Margin Available as % of Capital/Margin Required

Overlay approach adjustment for financial instruments (Reclass

from P&L to OCI)

P&C (2020)

Next page is 20.10

20.10



Reference

Page

FS Notes

Reference

Total Vested in

Trust*

Total Vested in

Trust*

Total Vested in

Trust*

(01) (02) (03) (04) (05) (06)

Cash and Cash Equivalents 01 41,635 38,135

Investment Income due and accrued 02 1,053 1,242

Assets held for sale 50 0

Investments:

40.12 Short Term Investments 04 11,000

40.22 Bonds and Debentures 05 157,622 138,448

40.32 Mortgage Loans 06 0

40.42 Preferred Shares 07 40,039 38,572

40.52 Common Shares 08 15,324 12,195

40.70 Investment Properties 09 0

40.80 Other Loans and Invested Assets 10 0

40.07 Total Investments (lines 04 to 10) 19 212,985 200,215 0

Receivables:

50.20 Unaffiliated Agents and Brokers 20 0 0

Policyholders 21 50 625

Instalment Premiums 22 0

Other Insurers 23 139 231

Facility Association and the "P.R.R." 24 0

50.40 Subsidiaries, Associates & Joint Ventures 25 0 0

50.20 Other Receivables 27 469 482

Recoverable from Reinsurers:

60.10 Unearned Premiums 30 0 505

60.30 Unpaid Claims and Adjustment Expenses 31 2,943 153

Other Recoverables on Unpaid Claims 37 5,863 2,526

Investments Accounted for Using the Equity Method:

50.32 40 0 0

Pooled Funds 45 0

40.70 Property and Equipment 41 567 587

Deferred Policy Acquisition Expenses 43 0

Current Tax Assets ` 52 0

Deferred Tax Assets 44 0

Goodwill 54 0

Intangible Assets 56 156 155

Defined Benefit Pension Plan 58 0

Other Assets 88 255 245

TOTAL ASSETS 89 266,115 245,101 0

* Foreign insurers: Excludes deposits of reinsurers held in special trust accounts.

Interests in Subsidiaries, Associates & Joint Ventures

CONSOLIDATED FINANCIAL STATEMENTS

ASSETS

($'000)

Opening Prior Period RestatedPrior PeriodCurrent Period

P&C (2020)

Next page is 20.20

20.20



($'000)

(01) (03) (05)

LIABILITIES

Overdrafts 01 0

Borrowed Money and Accrued Interest 02 0

Payables:

50.20 Agents and Brokers 03 0 0

Policyholders 04 0

50.30 Other Insurers 05 3 2

50.40 Subsidiaries, Associates & Joint Ventures/Affiliates 06 0 0

Expenses due and accrued 07 1,600 3,899

Other Taxes due and accrued 09 2,086 1,429

Policyholder Dividends and Rating Adjustments 10 0

40.70 Encumbrances on Real Estate 11 0 0

60.10 Unearned Premiums 12 0 0

60.30 Unpaid Claims and Adjustment Expenses 13 108,857 93,992

80.10 Unearned Commissions 14 0 0

Ceded Deferred Premium Taxes 20 0

Ceded Deferred Insurance Operations Expenses 34 0

Premium Deficiency 15 0 0

Liabilities held for sale 17 0

Current Tax Liabilities 18 0

Deferred Tax Liabilities 21 0

Self-Insured Retention (SIR) portion of unpaid claims 22 0

Defined Benefit Pension Plan 23 0

Employment Benefits (not including amounts on line 23 above) 24 0

Subordinated Debt 25 0

Preferred Shares - Debt 26 0

Provisions and Other Liabilities 28 25,222 18,782

Total Liabilities 29 137,768 118,104 0

CANADIAN INSURERS ONLY:

EQUITY

Shares issued and paid

Common 41 0

Preferred 33 0

Contributed Surplus 42 50 50

(Specify) 43 0

20.54 Retained Earnings 44 117,955 121,750

20.45 Reserves 45 0 0

20.42 Accumulated Other Comprehensive Income (Loss) 47 10,342 5,197

Total Policyholders/Shareholders' Equity 59 128,347 126,997 0

Non-controlling Interests 48 0 0

Total Equity 49 128,347 126,997 0

TOTAL LIABILITIES AND EQUITY 89 266,115 245,101 0

FOREIGN INSURERS ONLY:

HEAD OFFICE ACCOUNT, RESERVES & AOCI

20.45 Head Office Account 51

(Specify) 53

20.45 Reserves 55

20.42 Accumulated Other Comprehensive Income (Loss) 56

69

79 TOTAL LIABILITIES, HEAD OFFICE ACCOUNT, RESERVES & AOCI

Reference

Page

LIABILITIES, EQUITY, HEAD OFFICE ACCOUNT, RESERVES & AOCI


FS Notes

Reference

Opening Prior

Period Restated


(55)

Total Head Office Account, Reserves & AOCI

P&C (2020)

Next page is 20.30

20.30



STATEMENT OF INCOME

($'000)

Reference Page FS Notes

Reference

(01) (03)

UNDERWRITING OPERATIONS

Premiums Written

Direct 01 34,397 31,079

70.21 Reinsurance Assumed 02 0 0

70.21 Reinsurance Ceded 03 1,873 2,892

60.20 Net Premiums Written 04 32,524 28,187

Decrease (increase) in Net Unearned Premiums 05 0 505

60.20 Net Premiums Earned 06 32,524 28,692

Service Charges 07 0

Other 08 0

Total Underwriting Revenue 09 32,524 28,692

Gross Claims and Adjustment Expenses 62 40,039 30,956

Reinsurers' share of claims and adjustment expenses 64 2,915 7,661

60.20 Net Claims and Adjustment Expenses 10 37,124 23,295

Acquisition Expenses

80.10 Gross Commissions 66 0 0

80.10 Ceded Commissions 68 0 0

Taxes 12 786 663

80.20 Other 14 0 0

80.20 General Expenses 16 3,014 2,781

Total Claims and Expenses 19 40,924 26,739

Premium Deficiency Adjustments 20 0

Underwriting Income (Loss) 29 -8,400 1,953

40.07 INVESTMENT OPERATIONS

Income 32 10,121 8,679

35 0 0

Realized Gains (Losses) 33 4,117 670

Expenses 34 261 280

Net Investment Income 39 13,977 9,069

OTHER REVENUE AND EXPENSES (04)

Income (Loss) from Ancillary Operations

(net of Expenses of $'000 ) 40 0

41 0

48 0

47 0

42 0

Other Revenues 44 91 333

Finance costs 45 0

Other Expenses 46 0

Net Income (Loss) before Income Taxes 49 5,668 11,355

INCOME TAXES

Current 50 0

Deferred 51 0

Total Income Taxes 59 0 0

NET INCOME (LOSS) FOR THE YEAR 89 5,668 11,355

ATTRIBUTABLE TO:

Non-controlling Interests 80 0

Equity Holders 82 5,668 11,355

Gain (Losses) from fluctuations in Foreign Exchange Rates



Gains (Losses) from FVO or FVTPL

Share of Net Income (Loss) of Pooled Funds using Equity Method

Share of Net Income (Loss) of Subsidiaries, Associates & Joint Ventures

Overlay approach adjustment for financial instruments (Reclass from P&L to OCI)

P&C (2020)

Next page is 20.42

20.42



COMPREHENSIVE INCOME (LOSS)

and

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

($'000)

(01) (03)

Comprehensive Income (Loss)

20.30 Net Income 01 5,668 11,355

Other Comprehensive Income (Loss):

Items that may be reclassified subsequently to Net Income:

FVOCI:

Change in Unrealized Gains and Losses:

- Loans 02 0

- Bonds and Debentures 03 9,714 10,009

- Equities (IAS 39) 04 1,773 2,561

Reclassification of (Gains) Losses to Net Income 05 -6,342 -1,610

Overlay approach

Unrealized Gains and Losses 15 0

Reclassification of (Gains) Losses from Net Income 16 0

Change in Unrealized Gains and Losses 06 0

Reclassification of (Gains) Losses to Net Income 07 0

Foreign Currency Translation

Change in Unrealized Gains and Losses 08 0

Impact of Hedging 09 0

14 0

18 0

Subtotal of items that may be reclassified subsequently to Net Income 19 5,145 10,960

Items that will not be reclassified subsequently to Net Income:

FVOCI:

Change in Unrealized Gains and Losses:

- Equities (IFRS 9) 25 0

31 0

Share of Other Comprehensive Income of Subsidiaries,

Associates & Joint Ventures 11 0

Remeasurements of Defined Benefit Plans 34 0

Other 12 0

Subtotal of items that will not be reclassified subsequently to Net Income 29 0 0

Total Other Comprehensive Income (Loss) 21 5,145 10,960

Total Comprehensive Income (Loss) 39 10,813 22,315

Attributable to:

Non-controlling Interests 60 0

Equity Holders 62 10,813 22,315

(01) (03)

Accumulated Other Comprehensive Income (Loss)

Accumulated Gains (Losses) on:

Items that may be reclassified subsequently to Net Income:

FVOCI:

- Loans 42 0

- Bonds and Debentures 43 11,257 8,171

- Equities (IAS 39) 44 -915 -2,974

Overlay approach 55 0

45 0

Foreign Currency (net of hedging activities) 46 0

52 0

Other 68 0

Subtotal of items that may be reclassified subsequently to Net Income 69 10,342 5,197

Items that will not be reclassified subsequently to Net Income:

FVOCI:

- Equities (IFRS 9) 65 0

Revaluation Surplus 71 0

Share of Other Comprehensive Income of Subsidiaries,

Associates & Joint Ventures 51 0

Remeasurements of Defined Benefit Plans 74 0

Other 49 0

79 0 0

20.20 Balance at end of Year 59 10,342 5,197

Subtotal of items that will not be reclassified subsequently to Net Income


Revaluation Surplus

FS Notes

Reference

Reference

Page



Share of Other Comprehensive Income of Subsidiaries, Associates & Joint

Ventures (may be reclassified)

Share of Other Comprehensive Income of Subsidiaries, Associates & Joint

Ventures (may be reclassified)

Other

Change in Unrealized Gains and Losses related to overlay approach for financial

instruments

Derivatives Designated as Cash Flow Hedges

Derivatives Designated as Cash Flow Hedges

P&C (2020)

Next page is 20.45



(01) (02)

Balance at beginning of year 01

Prior period adjustments: 02

(Specify) 04

Adjusted balance at beginning of year 09

20.30 Net income (loss) for the year 10

Transfers from (to) Head Office

Advances (Returns) 20

Expenses 21

Premiums/Claims 22

Other 23

Subtotal 11

Decrease (increase) in Reserves 12

Net increase (decrease) in Head Office Account 15

Balance at end of Year 89

(01) (02)

Earthquake Reserves

Reserve Complement 90 0

Premium Reserve 91 0

Mortgage Reserve 95 0

Nuclear Reserve 96 0

General and Contingency Reserves 98 0

Total Reserves 99 0 0

20.45

HEAD OFFICE ACCOUNT (Foreign Insurers)

FS Notes

Reference

Reference Page

Reference Page FS Notes

Reference


RESERVES

($'000)



($'000)

P&C (2020)

Next page is 20.52



STATEMENT OF CASH FLOWS *

($'000)

* Insurers must embed a Statement of Cash Flows as prepared for the insurer's Annual Return

financial statements on this tab.

20.52


P&C (2020)

Next page is 20.54



Share Capital Other Capital Contributed

Surplus

Retained

Earnings

Reserves Revaluation Surplus Total Equity

(01) (13) (21) (03) (23) (07) (09) (05) (11) (25) (27) (31) (15) (17) (19)

Balance at Beginning of Prior Year 01 0 0 50 120,207 0 -5,762 0 0 0 0 0 0 114,495 0 114,495

Total Comprehensive Income for the year 09 0 0 0 11,355 0 10,959 0 0 0 0 0 0 22,314 0 22,314

Issue of Share Capital 02 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

15 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Decrease/increase in Reserves 13 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Dividends

Preferred 17 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Common 18 0 0 0 9,812 0 0 0 0 0 0 0 0 9,812 0 9,812

Other 16 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Balance at End of Prior Year 19 0 0 50 121,750 0 5,197 0 0 0 0 0 0 126,997 0 126,997

Changes in Equity for Current Year

Total Comprehensive Income for the year 29 5,668 5,145 10,813 10,813

Issue of Share Capital 22 0 0

35 0 0

Decrease/increase in Reserves 33 0 0

Dividends

Preferred 37 0 0

Common 38 9,463 9,463 9,463

Other 36 0 0

Balance at End of Current Year 39 0 0 50 117,955 0 10,342 0 0 0 0 0 0 128,347 0 128,347

FVOCI Financial

Assets

Transfer from/to Retained Earnings

Transfer from/to Retained Earnings

Other AOCI

20.54


STATEMENT OF CHANGES IN EQUITY

($'000)

Accumulated Other Comprehensive Income (Loss)

Share of OCI of

Associates & Joint

Ventures

Remeasurements

of Defined Benefit

Plans

Total

Policyholders/

Shareholder's

Equity

Translation of

Foreign Operations

Non-controlling

Interests

Cash Flow

Hedges

P&C (2020)

Next page is 20.60

20.60



NOTES TO FINANCIAL STATEMENTS

See Section VI of the Annual Return Instructions

Insurers must embed their notes to the financial statements on this tab.

CONSOLIDATED

P&C (2020)

Next page is 20.70

20.70



CONSOLIDATED

All provincially incorporated insurers and insurers licensed in a provincial jurisdiction requiring a copy of

the Auditor's Report must embed the Auditor's Report on this tab.

For OSFI purposes, federally regulated insurers must file their Auditor Reports as a separate documents as

defined in the Regulatory Reporting System (RRS) User Guide.

AUDITOR'S REPORT

P&C (2020)

Next page is 20.80

20.80



APPOINTED ACTUARY'S REPORT

CONSOLIDATED

For the exact wording for the Expression of Opinion, please refer to the Memorandum to the

Appointed Actuary (P&C Insurance).

All provincially incorporated insurers and insurers licensed in a provincial jurisdiction requiring a copy of

the Appointed Actuary's Report must embed the Appointed Actuary's Report on this tab.

For OSFI purposes, federally regulated insurers are required to file the Appointed Actuary's Report as a

separate document as defined in the Regulatory Reporting System (RRS) User Guide.

P&C (2020)

Next page is 30.61


Canadian/Foreign Insurer Date1

(01)

Capital Available:

Capital available (from page 30.62 - capital available) 01 128,191

(Specify) 08

Total Capital Available 09 128,191

Assets Available:

Net Assets Available (from page 30.92 - net assets available) 11

(Specify) 18

Total Net Assets Available 19

Capital (Margin) Required at Target:

Insurance Risk:

Premium liabilities 20 2,557

Unpaid claims 22 19,844

Catastrophes 24 0

Margin required for reinsurance ceded to unregistered insurers 26 0

Subtotal: Insurance risk margin 29 22,401

Market Risk:

Interest rate risk 30 9,339

Foreign exchange risk 32 100

Equity risk 34 4,597

Real estate risk 36 82

Other market risk exposures 38 0

Subtotal: Market risk margin 39 14,118

Credit Risk:

Counterparty default risk for balance sheet assets 40 9,550

Counterparty default risk for off-balance sheet exposures 42 0

Counterparty default risk for unregistered reinsurance collateral and SIRs 44 0

Subtotal: Credit risk margin 49 9,550

Operational risk margin 50 4,823

Less: Diversification credit 52 6,167

Total Capital (Margin) Required at Target 59 44,725

Minimum Capital (Margin) Required (line 59 / 1.5) 60 29,817

(Specify) 68

Total Minimum Capital (Margin) Required 69 29,817

Excess Capital (Net Assets Available) over Minimum Capital (Margin) Required 79 98,374

MCT (BAAT) Ratio (Line 09 or line 19 as a % of line 69) 90 429.93%

Note: See Section VI of the P&C instructions and the MCT Guideline.

(55)

30.61

CONSOLIDATED

MINIMUM CAPITAL TEST/BRANCH ADEQUACY OF ASSETS TEST: CAPITAL (MARGIN) REQUIRED AND MCT (BAAT) RATIO

($'000)

Current Period

P&C (2020)

Next page is 30.62


Canadian Insurer Date1

MINIMUM CAPITAL TEST: CAPITAL AVAILABLE

($'000)

(01)

Capital Available

Qualifying category A common shares 01 0

Contributed surplus 02 50

Retained earnings 03 117,955

Less:

Accumulated net after-tax fair value gains (losses) due to changes in the company's own credit risk 04

Unrealized net after-tax fair value gains (losses) on owner-occupied properties at conversion to IFRS - cost model 05

Add:

Accumulated net after-tax revaluation losses in excess of gains on owner-occupied properties - revaluation model 06

Subtotal: Retained earnings net of adjustments 09 117,955

Earthquake reserves 10 0

Less: Earthquake EPR not used as part of financial resources to cover exposure 11

Nuclear reserves 12 0

General and contingency reserves 13 0

Accumulated other comprehensive income (loss) 14 10,342

Less:

Accumulated net after-tax fair value gains (losses) on of cash flow hedges that are not fair valued on the balance sheet 15

Accumulated net after-tax fair value gains (losses) due to changes in the company's own credit risk 16

Accumulated net after-tax unrealized gains on owner-occupied properties - revaluation surplus 17

Accumulated net after-tax impact of shadow accounting 18

Subtotal: AOCI net of adjustments 19 10,342

Qualifying category B instruments - Non-cumulative perpetual preferred shares 20 0

Qualifying category B instruments - Other 21

Qualifying category C instruments - Preferred shares 22 0

Qualifying category C instruments - Subordinated debt 23 0

Less: Accumulated amortization of category C instruments for capital adequacy purposes 24

Net qualifying category C instruments 25 0

Non-controlling interests 26 0

(Specify) 27

Subtotal: capital available gross of deductions 29 128,347

Deductions:

Interests in non-qualifying subsidiaries 30 0

Interests in associates 31 0

Interests in joint ventures and limited partnerships with more than 10% ownership 32 0

Loans considered as capital to non-qualifying subsidiaries 33 0

Loans considered as capital to associates 34 0

Loans considered as capital to joint ventures and limited partnerships with more than 10% ownership 35 0

36 0

Self-insured retentions, where the regulator requires collateral and no collateral has been received 37 0

DPAE other for A&S business 38 0

Goodwill (net of eligible deferred tax liability) 40 0

Intangible assets, including computer software (net of eligible deferred tax liability) 41 156

Deferred tax assets excluding those arising from temporary differences (net of eligible deferred tax liability) 42 0

43 0

Investments in own capital instruments not derecognized for accounting purposes 44

Reciprocal cross holdings in the capital of financial entities 45

(Specify) 46

Subtotal: total deductions from capital available 49 156

Total Capital Available 59 128,191

Validation test: 40% limit for category B and C capital instruments 60 0.00%

Validation test: 7% limit for category C capital instruments 61 0.00%

Memo Items

Deferred tax liabilities related to (used to offset the associated gross amounts):

Goodwill 70

Intangible assets, including computer software 71

Deferred tax assets excluding those arising from temporary differences 72

Defined benefit pension plan assets 73

74

Non-qualifying capital instruments:

Common shares not meeting category A qualifying criteria 75

Non-cumulative perpetual preferred shares not meeting category B qualifying criteria 76

Preferred shares (other) not meeting category C qualifying criteria 77

Subordinated debt not meeting category C qualifying criteria 78


Net defined benefit pension plan surplus asset, net of available refunds (net of eligible deferred tax liability)

Deferred tax assets arising from temporary differences, excluding those realizable through loss carryback

30.62

CONSOLIDATED

Current Period

(55)

Receivables and recoverables from unregistered insurers not covered by acceptable collateral

P&C (2020)

Next page is 30.64



1

(02) (04) (06) (08) (10) (12) (14) (16) (18) (20) (22) (29)

Personal Property, excluding Home and Product Warranty 03 0 0 15.00% 0 0 0 0 20.00% 0

- Home Warranty 04 0 0 15.00% 0 0 0 0 20.00% 0

- Product Warranty 05 0 0 15.00% 0 0 0 0 20.00% 0

Subtotal - Personal 06 0 0 0 0 0 0 0 0 0 0

Commercial Property 07 10,447 382 10,065 10.00% 1,007 0 9,901 2,970 20.00% 594

Aircraft 10 0 0 20.00% 0 0 0 0 25.00% 0

Automobile - Liability 19 921 111 810 10.00% 81 0 404 121 15.00% 18

Automobile - Personal Accident 20 0 0 10.00% 0 0 149 45 15.00% 7

Automobile - Other 21 23 23 15.00% 3 0 396 119 20.00% 24

32 -18 3 -21 15.00% -3 0 793 238 20.00% 48

- Equipment Warranty 33 0 0 15.00% 0 0 0 0 20.00% 0

Credit 34 0 0 20.00% 0 0 0 0 25.00% 0

Credit Protection 35 0 0 20.00% 0 0 0 0 25.00% 0

Fidelity 36 145 5 140 20.00% 28 0 905 272 25.00% 68

Hail 38 0 0 20.00% 0 0 0 0 25.00% 0

Legal Expense 40 1,004 75 929 25.00% 232 0 1,013 304 30.00% 91

Liability

- Comprehensive General Liability (with products) 50 87,479 13,546 73,933 25.00% 18,483 0 18,695 5,609 30.00% 1,683

- Comprehensive General Liability (without products) 51 0 0 25.00% 0 0 0 0 30.00% 0

- Cyber Liability 52 50 50 25.00% 13 0 268 80 30.00% 24

- Directors and Officers Liability 53 0 0 25.00% 0 0 0 0 30.00% 0

- Excess Liability 54 0 0 25.00% 0 0 0 0 30.00% 0

- Professional Liability 55 0 0 25.00% 0 0 0 0 30.00% 0

- Umbrella Liability 56 0 0 25.00% 0 0 0 0 30.00% 0

- Pollution Liability 57 0 0 25.00% 0 0 0 0 30.00% 0

- All other 58 0 0 25.00% 0 0 0 0 30.00% 0

Liability - total 59 87,529 13,546 73,983 18,496 0 0 0 18,963 5,689 1,707

Other Approved Products 63 0 0 20.00% 0 0 0 0 25.00% 0

Surety

- Contract Surety 60 0 0 20.00% 0 0 0 0 25.00% 0

- All Other Surety 61 0 0 20.00% 0 0 0 0 25.00% 0

Surety - total 64 0 0 0 0 0 0 0 0 0 0

Title 66 0 0 15.00% 0 0 0 0 20.00% 0

Marine 68 0 0 20.00% 0 0 0 0 25.00% 0

Accident and Sickness 70 0 0

Total 89 100,051 14,122 85,929 19,844 0 0 0 32,524 2,557


30.64

CONSOLIDATED

MCT (BAAT) INSURANCE RISK: CAPITAL (MARGIN) REQUIRED FOR UNPAID CLAIMS AND PREMIUM LIABILITIES

($'000)

Class of insurance

Unpaid Claims Margin Premium Liabilities Margin

Capital (margin)

required for

premium liabilities

Greater of net premium

liabilities net of PfADs

and 30% net written

premiums

Net written

premiums

(past 12 m)

Risk

factor

Net premium

liabilities net of

PfADs

PfADs

(premium

liabilities)

Net premium

liabilities

Capital (margin)

required for

unpaid claims

Boiler & Machinery, excluding Equipment Warranty

Risk

factor

Net unpaid claims

discounted, net of

PfADs

PfADs (claims)Net unpaid claims

discounted

P&C (2020)

Next page is 30.65

30.65



CONSOLIDATED

MCT (BAAT) INSURANCE RISK: CAPITAL (MARGIN) REQUIRED FOR ACCIDENT AND SICKNESS BUSINESS

($000)

Annual Earned

premiums

Risk factor Capital

(margin)

required for

premiums

PfADs

(premium

liabilities)

Expected

Claims Loss

Ratio

(%)

(01) (03) (05) (07) (09)

Disability Income Insurance

- Individually underwritten - length of premium guarantee remaining:

< 1 year 01 15.00% 0

1 - 5 years 02 25.00% 0

> 5 years 03 37.50% 0

- Other - length of premium guarantee remaining:

< 1 year 04 15.00% 0

1 - 5 years 05 31.25% 0

> 5 years 06 50.00% 0

Accidental Death and Dismemberment

- Participating 10 Note

- Non-Participating - Individual 11 Note

- Non-Participating - Group 12 Note

Other Accident and Sickness Benefits

- Individual travel insurance 20 15.00% 0

- Group travel insurance 21 15.00% 0

- Group medical 22 15.00% 0

- Group dental 23 15.00% 0

- Long-term care insurance 24 15.00% 0

- Critical illness insurance 25 15.00% 0

- Waiver of premium 26 15.00% 0

- Credit insurance 27 15.00% 0

- Other A&S 28 15.00% 0

Deferred Policy Acquisition Expenses Commissions (balance sheet value) 29 45.00% 0

Total Premiums Margin 39 0

Unpaid Claims

Relating to

Prior Years Risk factor

Capital

(Margin)

Required for

unpaid claims PfADs (claims)

(21) (23) (25) (27)

Disability Income Insurance

- Duration of Disability < 2 years - Length of benefit period remaining:

< 1 year 50 5.000% 0

1 - 2 years 51 7.500% 0

> 2 years 52 10.000% 0

- Duration of Disability 2 - 5 years - Length of benefit period remaining:

< 1 year 53 3.750% 0

1 - 2 years 54 5.625% 0

> 2 years 55 7.500% 0

- Duration of Disability > 5 years - Length of benefit period remaining:

< 1 year 56 2.500% 0

1 - 2 years 57 3.750% 0

> 2 years 58 5.000% 0

Accidental Death and Dismemberment

- Participating 60 Note

- Non-Participating - Individual 61 Note

- Non-Participating - Group 62 Note

Other Accident and Sickness Benefits

- Individual travel insurance 70 12.500% 0

- Group travel insurance 71 12.500% 0

- Group medical 72 12.500% 0

- Group dental 73 12.500% 0

- Long-term care insurance 74 12.500% 0

- Critical illness insurance 75 12.500% 0

- Waiver of premium 76 12.500% 0

- Credit insurance 77 12.500% 0

- Other A&S 78 12.500% 0

Other adjustments 79

Total Unpaid Claims Margin 89 0


Unpaid Claims Margin

Premiums Margin

P&C (2020)

Next page is 30.66



1

Fair value

(55) (01) (02) (03) (04)

Interest rate sensitive assets:

Term deposits 01 0 0

Bonds and debentures 02 156,457 5.93 11,597 -11,597

Commercial paper 03 0 0

Loans 04 0 0

Mortgages 05 0 0

MBS and ABS 06 0 0

Preferred shares 07 40,039 2.91 1,456 -1,456

Other (specify) 08 0 0

Total interest rate sensitive assets 09 196,496 13,053 -13,053

Interest rate sensitive liabilities:

Net unpaid claims and adjustment expenses 10 100,051 2.97 3,714 -3,714

Net premium liabilities 11 0 0

Other as approved by the regulator 12 0 0

Total interest rate sensitive liabilities 19 100,051 3,714 -3,714

Notional value Dollar fair value Δy Dollar fair value -Δy

Allowable interest rate derivatives: (05) (06) (07)

Long positions 20

Short positions 21

Total allowable interest rate derivatives 29 0 0

Capital required for Δy shock increase 30 9,339

Capital required for Δy shock decrease 31 0

Total interest rate risk margin 39 9,339

Note: Δy = 1.25%

(55) (10) (12) (14) (16)

U.S. Dollar 40 995 995

Euro 41 0

U.K. Pound 42 0

Swiss Franc 43 0

Danish Krone 44 0

Swedish Krona 45 0

Australian Dollar 46 0

Hong Kong Dollar 47 0

Singapore Dollar 48 0

Japanese Yen 50 0

China Yuan Renminbi 51 0

Chilian Peso 52 0

Indian Rupee 53 0

Other (specify) 54 0

Total net position 59 995 0 995 0

Net exposure = MAX (Total net open long positions, Absolute value of total net open short positions) 60 995

Total foreign exchange risk margin 69 100

Notes:

1 Enter long positions as positive.

2 A carve-out short position of 25% of liabilities denominated in each currency, converted in CAD.

3 Enter short positions as negative (no carve-out on short positions).

Exposure amount

Instruments NOT used as part of an equity hedging strategy: (21) (22) (29)

Long common shares 70 15,324 30.00% 4,597

Long equity derivatives 72 0 30.00% 0

Joint ventures and limited partnerships with less than or equal to 10%

ownership interest 71 0 30.00% 0

Short common shares and equity derivatives 73 30.00% 0

Total of instruments NOT used as part of an equity hedging strategy 74 4,597

Exposure amount Exposure amount of

the portfolio of

hedging instruments

Net exposure amount:

Absolute value of ((21)-

(23))

Risk factor Correlation

factor

Capital (Margin) Required

(22)×(25) + MIN((21), (23))

× (1-(27)) × 1.5

Instruments used as part of an equity hedging strategy: (21) (23) (25) (22) (27) (29)Portfolio of instruments being hedged - active management and hedging

strategy #1 75 0 30.00% 0

Portfolio of instruments being hedged - active management and hedging

strategy #2 76 0 30.00% 0

Portfolio of instruments being hedged - active management and hedging

strategy #3 77 0 30.00% 0

Total of instruments used as part of an equity hedging strategy 78 0

Total equity risk margin 79 4,597

Balance Sheet Value Risk factor

(20) (22) (29)

Investment properties 80 0 20.00% 0

Owner-occupied properties (valued using cost model) 81 818 10.00% 82

Total real estate risk margin 89 818 82

Balance Sheet Value Risk factor

(20) (22) (29)

Equipment 90 0 10.00% 0

Other (specify) 91 0 10.00% 0

Total other market risk exposures margin 99 0 0


30.66

CONSOLIDATED

MCT (BAAT) MARKET RISK CAPITAL (MARGIN) REQUIREMENTS

($'000)

Net open long position in

CAD, less carve-out

Net open short position ³

in CAD

Net open long position ¹ in

CAD, before carve-out

Carve-out ² in CAD

Capital (Margin) Required for Foreign Exchange Risk

Modified or effective

duration

Dollar fair value change

(01)x(02)xΔy

Dollar fair value change

(01)x(02)x(-Δy)

Capital (Margin) Required for Interest Rate Risk

(55)

Capital (Margin) Required for Equity Risk

Capital (Margin) Required

(21)x(22)

Risk factor

Capital (Margin)

Required

(21)x(22)

Capital (Margin)

Required

(21)x(22)

Capital (Margin) Required for Real Estate

Capital (Margin) Required for Other Market Risk Exposures

P&C (2020)

Next page is 30.71


Canadian Insurer

1

(01) (02) (04) (05) (03)

Cash held on premises 01 0.00% 0 0

Cash other 08 0.25% 41,635 41,635 104

Investment Income Due and Accrued 02 2.50% 1,053 1,053 26

Investments:

06 157,622 0 157,622 5,016

Short-Term Obligations including Commercial Paper 07 0 0 0 0

Asset-Backed Securities 09 0 0 0 0

Loans (at amortized cost):

First mortgages on one- to four-unit residential dwellings 14 4.00% 0 0 0

15 10.00% 0 0 0

Mortgages secured by undeveloped land 16 15.00% 0 0 0

23 45.00% 0 0 0

Other Loans 17 0

19 0 0

Preferred Shares 25 40,039 0 40,039 3,104

Other Investments 35 10.00% 0 0 0

Receivables:

Government Grade 50 0.00% 0 0

Facility Association and the "P.R.R." 51 0.70% 0 0 0

- Instalment Premiums (not yet due) 54 0.00% 0 0

- Outstanding less than 60 days 55 5.00% 519 519 26

- Outstanding 60 days or more 56 10.00% 0 0 0

Insurers

43 0.00% 0 0

44 0.70% 0 0 0

- Registered Non-associated 57 0.70% 139 139 1

- Unregistered 58 0 0

Recoverable from Reinsurers:

- Registered Associated

- Unearned Premiums under Intra-group pooling

arrangements approved by OSFI 71 0.00% 0 0

- Unearned Premiums excluding Intra-group pooling

arrangements approved by OSFI 72 2.50% 0 0 0

- Unpaid Claims under Intra-group pooling

arrangements approved by OSFI 73 0.00% 0 0

- Unpaid Claims excluding Intra-group pooling

arrangements approved by OSFI 74 2.50% 0 0 0

- Registered Non-associated - Unearned Premiums 60 2.50% 0 0 0

- Unpaid Claims 61 2.50% 2,943 2,943 74

- Unregistered 63 0 0

65 20.00% 5,863 5,863 1,173

66 10.00% 0 0 0

Assets held for sale 67 20.00% 0 0 0

Other Assets 86 10.00% 255 255 26

(Specify) 87 0 0

TOTAL 89 250,068 0 250,068 9,550


Adjustment to reflect difference between amortized cost and Balance Sheet value of loans

Agents, Brokers, Policyholders, Associates, Joint Ventures, Limited Partnerships, Non-qualifying

Subsidiaries and Other Receivables:

Other Recoverables on Unpaid Claims including SIRs not deducted from capital

(55)

Deferred Tax Assets arising from temporary differences, that can be applied to recoverable income taxes

paid in the preceding 3 years

Long-term obligations including term deposits, bonds, debentures and loans

Subsidiaries, Associates & Joint Ventures (not considered capital)

Commercial mortgages and residental mortgages that are not first mortgages on one- to four-

unit residential dwellings

- Registered Associated under Intra-group pooling arrangements approved by OSFI

- Registered Associated excluding Intra-group pooling arrangements approved by OSFI

30.71

Date

CONSOLIDATED

MCT CREDIT RISK: CAPITAL REQUIRED FOR BALANCE SHEET ASSETS

($'000)

Risk Factor

(%)

Balance

Sheet Value

Redistribution of

Exposure for

Collateral/

Guarantees

Net

Exposure

Capital

Required

(01)x(05)

P&C (2020)

Next page is 30.73



Net Exposure Net Exposure Net Exposure

(01) (10) (11) (02) (03) (12) (13) (04) (05) (14) (15) (06) (09)

Government Grade 01 0 0.00% 9,919 9,919 0.00% 1,193 1,193 0.00% 0

AAA 02 0 0.25% 0 0.50% 0 1.25% 0

AA+ to AA- 03 0 0.25% 32,564 32,564 1.00% 8,673 8,673 1.75% 477

A+ to A- 04 0 0.75% 5,647 5,647 1.75% 12,521 12,521 3.00% 474

BBB+ to BBB- 05 0 1.50% 22,513 22,513 3.75% 59,514 59,514 4.75% 3,671

BB+ to BB- 06 0 3.75% 5,078 5,078 7.75% 0 8.00% 394

B+ to B- 07 0 7.50% 0 10.50% 0 10.50% 0

Unrated 10 0 6.00% 0 8.00% 0 10.00% 0

Other 08 0 15.50% 0 18.00% 0 18.00% 0

Sub-total 09 0 0 0 75,721 0 75,721 81,901 0 81,901 5,016

Government Grade 18 0 0.00% 0

A-1, F1, P-1, R-1 or equivalent 20 0 0.25% 0



Unrated 11 0 6.00% 0

All other ratings, including non-prime and B or C ratings 23 0 8.00% 0

Sub-total 29 0 0 0 0

AAA, AA+ to AA-, Pfd-1, P-1 or equivalent 40 0 3.00% 0

A+ to A-, Pfd-2, P-2 or equivalent 41 17,988 17,988 5.00% 899

BBB+ to BBB-, Pfd-3, P-3 or equivalent 42 22,051 22,051 10.00% 2,205

BB+ to BB-, Pfd-4, P-4 or equivalent 43 0 20.00% 0

B+ or lower, Pfd-5, P-5 or equivalent or unrated 44 0 30.00% 0

Sub-total 49 40,039 0 40,039 3,104

Total 89 8,120


Redistribution of

Exposure for

Collateral/

Guarantees

Balance Sheet

Value

1 year or less, or perpetual Greater than 5 years

Risk

Factor

Balance Sheet

Value

Redistribution of

Exposure for

Collateral/

Guarantees

Risk

Factor

Redistribution of

Exposure for

Collateral/

Guarantees

Preferred shares

Long-term

obligations

including term

deposits, bonds,

debentures and

loans

Short-term

obligations

including

commercial paper

30.73

CONSOLIDATED

MCT (BAAT) CREDIT RISK: CAPITAL (MARGIN) REQUIRED FOR BALANCE SHEET (VESTED) ASSETS BASED ON EXTERNAL CREDIT RATINGS

($'000)

Category Rating

Remaining Term to Maturity/ Other Maturity

Capital (Margin)

Required

(11x02)+(13x04)+

(15x06)

Greater than 1 year,

up to and including 5 years

Risk

Factor

Balance Sheet

Value

P&C (2020)

Next page is 30.75



Exposure Amonts for OTC Derivatives

Interest Rate

Contracts

Foreign Exchange

and Gold

Contracts

Equity-linked

Contracts

Precious Metals

(Other than Gold

Contracts)

Other

Instruments

Total Contracts

(01) (02) (03) (04) (05) (09)

Notional principal amount 01 0

Replacement Cost (Market Value)

Gross positive replacement cost 02 0

Gross negative replacement cost 03 0

Add-on for Potential Future Exposure 04 0

Credit Equivalent Amount 09 0 0 0 0 0 0

Net Exposure Risk Factor Net Exposure Net Exposure

(10) (11) (12) (13) (14) (20) (21) (22) (23) (24) (30) (31) (32) (33) (34) (39)

Government Grade 10 0 0.00% 0 0.00% 0 0.00% 0

AAA 11 0 0.25% 0 0.50% 0 1.25% 0

AA+ to AA- 12 0 0.25% 0 1.00% 0 1.75% 0

A+ to A- 13 0 0.75% 0 1.75% 0 3.00% 0

BBB+ to BBB- 14 0 1.50% 0 3.75% 0 4.75% 0

BB+ to BB- 15 0 3.75% 0 7.75% 0 8.00% 0

B+ to B- 16 0 7.50% 0 10.50% 0 10.50% 0

Unrated 17 0 6.00% 0 8.00% 0 10.00% 0

Other 18 0 15.50% 0 18.00% 0 18.00% 0

Sub-total 19 0 0 0 0 0 0 0 0 0 0

Rated A- and higher 20 0 50% 2.00% 0

Rated BBB+ and lower 21 0 50% 8.00% 0

Unrated 22 0 50% 10.00% 0

Other (excluding unrated) 23 0 50% 18.00% 0


Government Grade 30 0 0.00% 0 0.00% 0 0.00% 0

AAA 31 0 0.25% 0 0.50% 0 1.25% 0

AA+ to AA- 32 0 0.25% 0 1.00% 0 1.75% 0

A+ to A- 33 0 0.75% 0 1.75% 0 3.00% 0

BBB+ to BBB- 34 0 1.50% 0 3.75% 0 4.75% 0

BB+ to BB- 35 0 3.75% 0 7.75% 0 8.00% 0

B+ to B- 36 0 7.50% 0 10.50% 0 10.50% 0

Unrated 37 0 6.00% 0 8.00% 0 10.00% 0

Other 38 0 15.50% 0 18.00% 0 18.00% 0

Sub-total 39 0 0 0 0 0 0 0 0 0 0

Total 89 0 0 0 0 0 0 0 0 0 0


OTC derivatives

Type 1 structured

settlements

Other off-balance sheet

exposures

Risk

Factor

Credit

Conversion

Factor

Credit

Equivalent

Amount

Redistribution of

Exposure for

Collateral/

Guarantees

Credit Conversion

FactorRating of the counterparty

Redistribution of

Exposure for

Collateral/

Guarantees

30.75

CONSOLIDATED

MCT (BAAT) CREDIT RISK: CAPITAL (MARGIN) REQUIRED FOR OFF-BALANCE SHEET EXPOSURES

($'000)

Category


Capital (Margin)

Required

(12x13x14)+(22x23

x24)+(32x33x34)

1 year or less, or indeterminate Greater than 1 year, up to and including 5 years Greater than 5 years

Credit Equivalent

Amount

Risk FactorCredit Equivalent

Amount

Credit

Conversion

Factor

Redistribution of

Exposure for

Collateral/

Guarantees

P&C (2020)

Next page is 30.77



1

Total Capital (Margin) Required for Non-Owned Deposits and Letters of Credit

(01)

Total capital (margin) required for acceptable non-owned deposits 01 0

Total capital (margin) required for letters of credit 02 0

Ratio for proportional allocation of excess collateral 03 0.00%

Capital (margin) required for excess collateral portion 04 0

05 0

(02) (04) (06) (08) (10) (12) (19)

Government grade 10 0.00% 0.00% 0.00% 0

AAA 11 0.25% 0.50% 1.25% 0

AA+ to AA- 12 0.25% 1.00% 1.75% 0

A+ to A- 13 0.75% 1.75% 3.00% 0

BBB+ to BBB- 14 1.50% 3.75% 4.75% 0

BB+ to BB- 15 3.75% 7.75% 8.00% 0

B+ to B- 16 7.50% 10.50% 10.50% 0

Unrated 17 6.00% 8.00% 10.00% 0

Other 18 15.50% 18.00% 18.00% 0


Government grade 20 0.00% 0

A-1, F1, P-1, R-1 or equivalent 21 0.25% 0



Unrated 24 6.00% 0

All other ratings, including non-prime and B or C ratings 25 8.00% 0

Sub-total 29 0 0

AAA, AA+ to AA-, Pfd-1, P-1 or equivalent 30 3.00% 0

A+ to A-, Pfd-2, P-2 or equivalent 31 5.00% 0

BBB+ to BBB-, Pfd-3, P-3 or equivalent 32 10.00% 0

BB+ to BB-, Pfd-4, P-4 or equivalent 33 20.00% 0

B+ or lower, Pfd-5, P-5 or equivalent or unrated or common shares 34 30.00% 0

Sub-total 39 0 0

Cash held on premises 40 0.00% 0

Cash other 41 0.25% 0

Investment income due and accrued 42 2.50% 0

Sub-total 49 0 0

Government grade 50 0.00% 0.00% 0.00% 0

AAA 51 0.25% 0.50% 1.25% 0

AA+ to AA- 52 0.25% 1.00% 1.75% 0

A+ to A- 53 0.75% 1.75% 3.00% 0

BBB+ to BBB- 54 1.50% 3.75% 4.75% 0

BB+ to BB- 55 3.75% 7.75% 8.00% 0

B+ to B- 56 7.50% 10.50% 10.50% 0


Total 89 0 0 0 0

¹ For letters of credit, use rating of the issuing/confirming bank and term of ceded liabilities


Capital (margin) required for acceptable non-owned deposits and letters of credit less excess

Other deposits

Letters of credit ¹

Long-term obligations

including term deposits,

bonds, debentures and

loans

Short-term obligations

including commercial

paper

Preferred shares

Risk factor

Capital (margin) required

(02x04)+(06x08)+(10x12)

30.77

MCT (BAAT) CREDIT RISK: CAPITAL (MARGIN) REQUIRED FOR COLLATERAL HELD FOR UNREGISTERED REINSURANCE EXPOSURES

AND SELF-INSURED RETENTION

($'000)

Category Rating


1 year or less, or perpetual Greater than 5 years

CONSOLIDATED

Greater than 1 year, up to and including

5 years

Exposure amount Risk factor Exposure amount Risk factor Exposure amount

P&C (2020)

Next page is 30.79



1

(01) (02) (03) (09)

Direct premiums written in the past 12 m 01 31,079 34,397 2.50% 860

Reinsurance assumed in the past 12 m - Not Intra Pool 02 0 1.75% 0

Reinsurance assumed in the past 12 m - Intra Pool (MCT

only) 03 0 0.75% 0

Subtotal: Gross premiums 09 31,079 34,397

Reinsurance ceded in the past 12 m - Not Intra Pool 10 1,873 2.50% 47

Reinsurance ceded in the past 12 m - Intra Pool (MCT only) 11 0.75% 0

Greater of 0.75% on ceded and 0.75% on assumed - Intra Pool

(MCT only) 12 0

Premium growth above 20% threshold 13 0 2.50% 0

Subtotal: premium operational risk requirement component 19 907

Capital/margin required component ¹ (balance sheet value) 30 46,069 8.50% 3,916

Total operational risk uncapped 39 4,823

Cap 50 30% 13,821

Total operational risk margin 89 4,823

Notes:

¹ Capital (margin) required component equals to total capital (margin) required excluding operational risk and diversification credit.

See Section VI of the P&C instructions and the MCT Guideline.

30.79

CONSOLIDATED

MCT (BAAT) OPERATIONAL RISK CAPITAL (MARGIN) REQUIRED

($'000)

Income Statement

Value 12 m (previous

year)

Income Statement

Value 12 m

(current year)

Risk

Factor

Capital (Margin)

Required

(02)x(03)

P&C (2020)

Next page is 40.07



Balance Pooled Funds Realized Income Gain/(Loss)

Hedges FV Option/ Sheet Gains(Losses) From

Investment (01+03+05+ FV Option

Properties 07+09)

Fair Value

(01) (03) (05) (07) (09) (12) (13) (15) (16) (19)

Aggregate Holdings:

Short Term Investments (1 year or less) 01 0

Bonds and Debentures (1 year or less) 06 0

Bonds and Debentures > 1 year and ≤ 5 years 02 75,721 75,721 2,818 3,397

Bonds and Debentures > 5 years 05 81,901 81,901 3,048 3,674

Mortgage Loans - ≤ 80% Loan to Value Ratio 03 0

- Other 04 0

Preferred Shares - Debt 10 0

- Equity 11 40,039 40,039 -1,265 2,206

Common Shares 15 0 15,324 0 0 15,324 -272 474

Investment Properties 20 0

Other Loans and Invested Assets 30 0

Pooled Funds - items not captured in above rows 32 0 6,714 -212 370

Deduct: Pooled Funds accounted using the Equity Method 34 0

Total Investments 39 0 212,985 0 0 0 212,985 6,714 4,117 10,121 0

Out of Canada 40

Foreign Pay Securities 41

Individual Holdings:

Largest Exposure to an Entity or Connected Group 50 15,959

2nd Largest Exposure to an Entity or Connected Group 51 13,551

Largest Pooled Holding 60 3,490

2nd Largest Pooled Holding 61 1,925

** Investments are vested in trust for foreign insurers.

40.07

Fair Value

CONSOLIDATED

SUMMARY OF INVESTMENTS

($'000)

Amortized Cost

Fair Value

Through Other

Comprehensive

Income (FVOCI)

Fair Value

Through Profit or

Loss (FVTPL)

(Vested in Trust**)

P&C (2020)

Next page is 40.12

40.12



CONSOLIDATED

SHORT TERM INVESTMENTS (excluding bonds and debentures)

Interest

Rate Due Dates Date of Date of Par Value Hedges Fair Value

Where/By whom kept Description % Issue Maturity Option

(10+12+14+

16+18)

(01) (02) (03) (04) (05) (06) (07) (10) (12) (14) (16) (18) (29)00

Total Short Term Investments Foreign Government 35 000

Total Short Term Investments - Rating of A 1, R 1 40 0000



Total Short Term Investments - Rating of B, R 4 60 0000

Total Short Term Investments - Rating of B 1, R 5 65 000

Total Short Term Investments - Rating of B 2, D 69 000

Total Short Term Investments - Other 89 0Total Short Term Investments 99 0 0 0 0 0 0 0

Fair Value

Balance Sheet

Value

($'000)

Amortized CostFair Value

Through Profit

or Loss

(FVTPL)

Fair Value

Through Other

Comprehensive

Income

(FVOCI)

P&C (2020)

Next page is 40.22

40.22



CONSOLIDATED

Interest

Where/By whom kept Description Rating Rate Due Dates Date of Date of Par Value Hedges Fair Value

% Issue Maturity Option

(10+12+14+

16+18)

(01) (02) (03) (04) (05) (06) (07) (08) (10) (12) (14) (16) (18) (29)

Total Bonds Government - Federal 09 0

Total Bonds Government - Provincial 19 7,134 7,737 7,737

29 3,103 3,376 3,376

0

0

Total Bonds Foreign Government 35 0

0

0

39 0

0

0

49 36,770 38,210 38,210

0

0

59 18,938 21,194 21,194

0

0

0

69 0

0

0

0

79 26,135 27,591 27,591

0

0

0

89 54,484 59,514 59,514

Total Bonds and Debentures 99 146,564 0 157,622 0 0 0 157,622

BONDS AND DEBENTURES

Fair Value

($'000)

Total Bonds rated A- or higher - Expiring or redeeming in one year or less

Total Bonds Government - Municipal, Public Authority, School

Balance Sheet

Value

Amortized CostFair Value

Through Profit

or Loss

(FVTPL)

Fair Value

Through Other

Comprehensive

Income

(FVOCI)

Total Bonds rated BBB+ and lower - > 5 years

Total Bonds rated A- or higher - > 5 years

Total Bonds rated A- or higher - > 1 year and ≤ 5 years

Total Bonds rated BBB+ and lower - Expiring or redeeming in one year or less

Total Bonds rated BBB+ and lower - > 1 year and ≤ 5 years

P&C (2020)

Next page is 40.32

40.32



CONSOLIDATED

MORTGAGE LOANS

Where/By whom kept Description Identification Interest Rate Original Original

Loan Value of

Amount Property

(01) (02) (03) (04) (05) (06) (07) (08) (09)

29 0 0 0 0

39 0 0 0 0

Total Commercial Mortgage Loans 49 0 0 0 0

Total Other Mortgages 59 0 0 0 0

Total Mortgage Loans 89 0 0 0 0

Total Government Grade Guarantor Mortgage Loans

Total Residential Mortgages

Balance Sheet Value

($'000)

Number

Date of Issue Current Market

Value of Property

P&C (2020)

Next page is 40.42

40.42



Where/By whom kept Description Number of Hedges Fair Value Original Cost

Shares Option

(10+12+14+

16+18)

(01) (02) (03) (10) (12) (14) (16) (18) (29) (39)

0

0

0

0

0

Total AAA, AA, Pfd-1, P-1 29 0 0 0 0 0 0 0

OSBIE-National Bank Financial BANK OF MONTREAL 40 975 975 1,000.00

OSBIE-National Bank Financial GREAT-WEST LIFECO INC 20 508 508 500.00

OSBIE-National Bank Financial INTACT FINANCIAL CORP 50 1,270 1,270 1,250.00

OSBIE-National Bank Financial INTACT FINANCIAL CORP 9 228 228 225.00

OSBIE-National Bank Financial BANK OF MONTREAL 10 248 248 250.00

OSBIE-National Bank Financial BANK OF MONTREAL 80 1,792 1,792 2,000.00

OSBIE-National Bank Financial CANADIAN IMPERIAL BANK OF COMMERCE 60 1,497 1,497 1,500.00

OSBIE-National Bank Financial TORONTO-DOMINION BANK 80 2,011 2,011 2,000.00

OSBIE-National Bank Financial CANADIAN IMPERIAL BANK OF COMMERCE 80 2,031 2,031 2,000.00

OSBIE-National Bank Financial INTACT Financial Corp 155 4,036 4,036 3,875.00

OSBIE-National Bank Financial EMERA INC 40 1,027 1,027 1,000.00

OSBIE-TD Waterhouse TORONTO-DOMINION BANK 55 1,338 1,338 1,375.00

OSBIE-TD Waterhouse EMERA INC 40 1,027 1,027 1,000.00

Total A, Pfd-2, P-2 39 0 17,988 0 0 0 17,988 17,975

OSBIE-National Bank Financial ENBRIDGE INC 80.00 1,834 1,834 2,000

OSBIE-National Bank Financial ECN CAPITAL CORP 40.00 890 890 1,000

OSBIE-National Bank Financial PEMBINA PIPELINE CORP 50.00 1,140 1,140 1,250

OSBIE-National Bank Financial ALTAGAS LTD 60.00 1,468 1,468 1,500

OSBIE-National Bank Financial MANULIFE FINANCIAL CORP 120.00 2,508 2,508 3,000

OSBIE-National Bank Financial CANADIAN BANC CORP 123.00 1,282 1,282 1,232

OSBIE-National Bank Financial CANADIAN WESTERN BANK 120.00 3,062 3,062 3,000

OSBIE-National Bank Financial BROOKFIELD RENEWABLE POWER PREFERRED EQUITY INC 80.00 2,024 2,024 2,000

OSBIE-National Bank Financial BROOKFIELD INFRASTRUCTURE PARTNERS LP 120.00 2,862 2,862 3,000

OSBIE-National Bank Financial BROMPTON SPLIT BANC CORP. 200.00 2,070 2,070 2,016

OSBIE-TD Waterhouse ENBRIDGE INC 54.00 1,238 1,238 1,350

OSBIE-TD Waterhouse MANULIFE FINANCIAL CORP 80.00 1,673 1,673 2,000

CONSOLIDATED

Fair Value

Balance Sheet Value

($'000)

PREFERRED SHARES

Amortized CostFair Value Through

Profit or Loss

(FVTPL)

Fair Value Through

Other Comprehensive

Income (FVOCI)

P&C (2020)

Next page is 40.52

40.42



CONSOLIDATED

Fair Value

($'000)

PREFERRED SHARES

Total BBB, Pfd-3, P-3 49 0 22,051 0 0 0 22,051 23,348

0

0

0

0

0

Total BB, Pfd-4, P-4 59 0 0 0 0 0 0 0

0

0

0

0

0

Total B, Pfd-5, P-5 or unrated 79 0 0 0 0 0 0 0

Total Preferred Shares 89 0 40,039 0 0 0 40,039 41,323

P&C (2020)

Next page is 40.52

40.52



Where/By whom kept Description Number of Hedges Fair Value Original Cost

Shares Option

(10+12+14+16)

(01) (02) (03) (10) (12) (14) (16) (29) (39)

OSBIE-RBCDS TIMBERCREEK FINANCIAL ORD 156 1,352 1,352 1,446OSBIE-RBCDS TIMBERCREEK FINANCIAL ORD 20 173 173 185OSBIE-RBCDS TIMBERCREEK FINANCIAL ORD 21 184 184 196OSBIE-RBCDS TIMBERCREEK FINANCIAL ORD 20 173 173 185OSBIE-RBCDS TIMBERCREEK FINANCIAL ORD 2 12 12 13OSBIE-TD Waterhouse CANADIAN TIRE CL A ORD 6 1,004 1,004 986OSBIE-TD Waterhouse BANK NOVA SCOTIA ORD 26 1,789 1,789 1,988OSBIE-TD Waterhouse BANK NOVA SCOTIA ORD 13 915 915 1,002OSBIE-TD Waterhouse POWER CORPORATION OF CANADA ORD 61 1,789 1,789 1,998OSBIE-TD Waterhouse BANK OF MONTREAL ORD 13 1,219 1,219 1,220OSBIE-National Bank FinancialISHARES S&P/TSX CAPPED ENERGY INDEX ETF 221 1,299 1,299 1,000OSBIE-National Bank FinancialBMO EW OIL & GAS IDX ETF 38 1,127 1,127 1,000OSBIE-National Bank FinancialBMO LAD PREF SHARE IDX ETF 241 2,363 2,363 2,002OSBIE-RBCDS RBC QUANT EAFE DIV LDS HGD ETF 88 1,925 1,925 2,020

000000000000000

Total common shares 89 0 15,324 0 0 15,324 15,241

CONSOLIDATED

Fair Value

Balance Sheet Value

($'000)

COMMON SHARES

Fair Value Through

Profit or Loss

(FVTPL)

Fair Value Through

Other Comprehensive

Income (FVOCI)

P&C (2020)

Next page is 40.70A



Description of Property Year Amount of

Acquired Encumbrances

(01) (02) (03) (04) (05) (06) (07)

Investment Properties

Total Investment Properties 49 0 0 0 0

40.70 A

TotalMarket Value

CONSOLIDATED

INVESTMENT PROPERTIES

($'000)

Value Using

Cost Model

Balance Sheet Value

Vested in Trust

P&C (2020)

Next page is 40.70B

40.70 B



OWN USE PROPERTY AND EQUIPMENT

($'000)

Description of Property Year Amount of

Acquired Encumbrances

(01) (02) (03) (04) (05) (06) (07)

Own use property

Head Office building 91 Westmount Road, Guelph, ON 2000 205 1,023 63

Head Office land 91 Westmount Road, Guelph, ON 2000 205 205 205

Toronto Office 120 Carlton St., Suite 309, Toronto,ON 2012 408 723 299

Total Own Use Properties 79 0 818 1,951 567

Equipment 80

Total Own Use Property and Equipment 69 567

Total

CONSOLIDATED

Market ValueValue Using

Cost Model

Balance Sheet Value

Vested in Trust

P&C (2020)

Next page is 40.80



Where/By whom kept Description Fair Value Total

(01) (02) (03) (04) (05)

Total Loans not considered as capital

(5032.2920 + 5032.3920)

Refer to page 50.32 for a detailed listing

0

Loans considered as capital and

included as part of page 5032.2916 and

5032.3916

Total Other Loans and Invested Assets 89 0 0

Basket clause items 99

40.80

* Entities whose primary regulator is Alberta are required to submit this page on a quarterly basis; Canadian insurers licensed

in Quebec are required to submit this page with their 2nd and 4th quarter filings. All other insurers are only required to submit

this page with their 4th quarter filing.

Balance Sheet Value

Vested in Trust

CONSOLIDATED

OTHER LOANS AND INVESTED ASSETS*

($'000)

P&C (2020)

Next page is 50.20A

50.20 A



RECEIVABLE FROM/PAYABLE TO NON-ASSOCIATED AGENTS & BROKERS

($'000)

Receivable Payable

Name of Agent or Broker In Arrears Total Total

(02) (03) (04)


All others

Sub-Total 39 0 0 0

Less: Allowance for Doubtful Accounts 40

Total 49 0 0 0

Number of Agents and Brokers 59

(01)

CONSOLIDATED

P&C (2020)

Next page is 50.20B

50.20 B



OTHER RECEIVABLES

($'000)

Description

(02)


Loan on 13 Brock St. E, Uxbridge 469

All others

Total 89 469

CONSOLIDATED

(01)

P&C (2020)

Next page is 50.32



SECTION I: INTEREST IN REGULATED SUBSIDIARY ENTITIES OF THE INSURANCE GROUP CONSOLIDATED IN MCT - CANADAName of Entity

Number of % % of Voting Acquisition

Shares Owned Rights Cost

(01) (02) (04) (06) (08) (10) (12) (14)

Total 09 0 0

SECTION II: INTEREST IN REGULATED SUBSIDIARY ENTITIES OF THE INSURANCE GROUP CONSOLIDATED IN MCT - INTERNATIONAL

Name of EntityNumber of % % of Voting Acquisition


(01) (02) (04) (06) (08) (10) (12) (14)

Total 19 0 0

SECTION III: INTEREST IN NON-CONSOLIDATED CONTROLLED ENTITIES OF THE CORPORATE GROUP

Name of EntityLoans not considered

as capital

Number of % % of Voting Acquisition


(01) (02) (04) (06) (08) (10) (12) (14) (16) (18) (20)

Total 29 0 0 0 0 0

Balance Sheet Value

Name of Canadian

Regulatory Authority

Description of Shares Interests/Loans considered as capital

Name of Canadian



Balance Sheet

Value

Increase

(Decrease) in

Balance Sheet

Value

Market Value

Market Value

CONSOLIDATED

50.32

INTRA-GROUP TRANSACTIONS

Name of Canadian



Market Value

P&C (2020)

Next page is 50.40A



CONSOLIDATED

50.32

INTRA-GROUP TRANSACTIONS

SECTION IV: INTERESTS IN ASSOCIATES & JOINT VENTURES

Loans not

considered as

capital

Name of Entity and Description of Shares Number of % % of Voting Acquisition


(01) (06) (08) (10) (12) (14) (16) (18) (20)

Total 39 0 0 0 0 0

SECTION V: INTRA-GROUP REINSURANCE TRANSACTIONS (see pages 70.50, 70.60/70.61 for transaction details)

Total Collateral

(23) (25) (27) (29) (31) (33)Registered 42 0 0 0 0 0Unregistered 44 0 0 0 0 0

SECTION VI: INTRA-GROUP OUTSOURCING (see page 10.43 for transaction details)

(35)Year to Date Fee/Cost of Service 52

SECTION VII: OTHER INTRA-GROUP TRANSACTIONS RESULTING IN ASSET ENCUMBRANCE (see page 10.42 for transaction details)

Asset Type

(40) (42)

Total 69 0

Market Value of

Encumbered Asset

Interests/Loans considered as capital

Balance Sheet

Value

Increase

(Decrease) in

Balance Sheet

Value

Balance Sheet

Value

Premiums Ceded Reinsurance

Recoverable

Reinsurance

Receivable

Reinsurance

Payable

Net Receivable

Market Value

P&C (2020)

Next page is 50.40A



Receivable

Name of Entity In Arrears Total Payable

(01) (09) (10) (11)

($000) ($000) ($000)

Registered

Total Registered 49 0 0 0

50.40 A

RECEIVABLE FROM/PAYABLE TO SUBSIDIARIES, ASSOCIATES & JOINT VENTURES

($'000)

P&C (2020)

Next page is 50.40B



Receivable

Name of Entity In Arrears Total Payable

(01) (09) (10) (11)

($000) ($000) ($000)

Unregistered

Total Unregistered 79 0 0 0

Total 89 0 0 0

50.40 B

RECEIVABLE FROM/PAYABLE TO SUBSIDIARIES, ASSOCIATES & JOINT VENTURES

($'000)

P&C (2020)

Next page is 60.10

60.10



Unearned Premiums

Direct Reinsurance Reinsurance Net

assumed ceded (01+02-03)

(01) (02) (03) (04)




Subtotal - Personal 06 0 0 0 0

- Commercial 07 0

Property - total 09 0 0 0 0

Aircraft 10 0

Automobile:



- Other 13 0

Subtotal - Private Passenger 14 0 0 0 0

Other than Private Passenger - Liability 15 0


- Other 17 0

Subtotal - Other than Private Passenger 18 0 0 0 0

Facility Assoc. Residual Market - Liability 22 0


- Other 24 0

Subtotal - Facility Assoc. Residual Market 25 0 0 0 0

Automobile - Subtotal - Liability 19 0 0 0 0

- Personal Accident 20 0 0 0 0

- Other 21 0 0 0 0

Automobile - total 29 0 0 0 0

Boiler and Machinery excluding Equipment Warranty 32 0


Credit 34 0


Fidelity 36 0

Hail 38 0

Legal Expense 40 0

Liability

- Comprehensive General Liability (with products) 50 0


- Cyber Liability 52 0






- All other 58 0

Liability - total 59 0 0 0 0

Mortgage 62 0


Surety



Surety - total 64 0 0 0 0

Title 66 0

Marine 68 0


TOTAL 89 0 0 0 0

Out of Canada Liabilities 80 0

CONSOLIDATED

UNEARNED PREMIUMS

($'000)

Class of Insurance

INSURERS LICENSED IN QUEBEC OR ALBERTA

P&C (2020)

Next page is 60.20



PREMIUMS AND CLAIMS

Premiums written less return premiums Net unearned Net unearned Net

Claims incurred including adjustment expensesClaims

Number of Direct Reinsurance Reinsurance Net written premiums at premiums at premiums Direct Reinsurance Reinsurance Net incurred ratio

Policies assumed ceded (01+02-03) beginning of period end earned assumed ceded (08+09-10) (11/07)

in force year (04+05+25-06) %

(21) (23) (01) (02) (03) (04) (05) (25) (06) (07) (08) (09) (10) (11) (12)

Property - Personal excluding Home and Product Warranty 03 0 0 0 0 0 0 0 0.00%

- Home Warranty 04 0 0 0 0 0 0 0 0.00%

- Product Warranty 05 0 0 0 0 0 0 0 0.00%

Subtotal - Personal 06 0 0 0 0 0 0 0 0 0 0 0 0 0.00%

- Commercial 07 108 72 10,914 1,013 9,901 0 0 9,901 17,939 2,941 14,998 151.48%

Property - total 09 10,914 0 1,013 9,901 0 0 0 9,901 17,939 0 2,941 14,998 151.48%

Aircraft 10 0 0 0 0 0 0 0 0.00%

Automobile:

Private Passenger - Liability 11 0 0 0 0 0 0 0 0.00%

- Personal Accident 12 0 0 0 0 0 0 0 0.00%

- Other 13 0 0 0 0 0 0 0 0.00%

Subtotal - Private Passenger 14 0 0 0 0 0 0 0 0 0 0 0 0 0.00%

Other than Private Passenger - Liability 15 66 28 450 46 404 0 0 404 213 213 52.72%


- Other 17 441 45 396 0 0 396 30 30 7.58%

Subtotal - Other than Private Passenger 18 1,040 0 91 949 0 0 0 949 243 0 0 243 25.61%

Facility Assoc. Residual Market - Liability 22 0 0 0 0 0 0 0 0.00%


- Other 24 0 0 0 0 0 0 0 0.00%

Subtotal - Facility Assoc. Residual Market 25 0 0 0 0 0 0 0 0 0 0 0 0 0.00%

Automobile - Subtotal - Liability 19 450 0 46 404 0 0 0 404 213 0 0 213 52.72%

- Personal Accident 20 149 0 0 149 0 0 0 149 0 0 0 0 0.00%

- Other 21 441 0 45 396 0 0 0 396 30 0 0 30 7.58%

Automobile - total 29 1,040 0 91 949 0 0 0 949 243 0 0 243 25.61%

Boiler and Machinery excluding Equipment Warranty 32 84 15 793 793 0 0 793 471 -26 497 62.67%

- Equipment Warranty 33 0 0 0 0 0 0 0 0.00%

Credit 34 0 0 0 0 0 0 0 0.00%

Credit Protection 35 0 0 0 0 0 0 0 0.00%

Fidelity 36 108 905 905 0 0 905 472 472 52.15%

Hail 38 0 0 0 0 0 0 0 0.00%

Legal Expense 40 50 25 1,013 1,013 0 0 1,013 750 750 74.04%

Liability

- Comprehensive General Liability (with products) 50 118 185 19,195 500 18,695 0 0 18,695 19,981 0 19,981 106.88%

- Comprehensive General Liability (without products) 51 0 0 0 0 0 0 0 0.00%

- Cyber Liability 52 87 2 537 269 268 0 0 268 183 183 68.28%

- Directors and Officers Liability 53 0 0 0 0 0 0 0 0.00%

- Excess Liability 54 0 0 0 0 0 0 0 0.00%

- Professional Liability 55 0 0 0 0 0 0 0 0.00%

- Umbrella Liability 56 0 0 0 0 0 0 0 0.00%

- Pollution Liability 57 0 0 0 0 0 0 0 0.00%

- All other 58 0 0 0 0 0 0 0 0.00%

Liability - total 59 19,732 0 769 18,963 0 0 0 18,963 20,164 0 0 20,164 106.33%

Mortgage 62 0 0 0 0 0 0 0 0.00%

Other Approved Products 63 0 0 0 0 0 0 0 0.00%

Surety

- Contract Surety 60 0 0 0 0 0 0 0 0.00%

- All Other Surety 61 0 0 0 0 0 0 0 0.00%

Surety - total 64 0 0 0 0 0 0 0 0 0 0 0 0 0.00%

Title 66 0 0 0 0 0 0 0 0.00%

Marine 68 0 0 0 0 0 0 0 0.00%

Accident and Sickness 70 0 0 0 0 0 0 0 0.00%

TOTAL 89 621 327 34,397 0 1,873 32,524 0 0 0 32,524 40,039 0 2,915 37,124 114.14%

60.20

Number of Direct

Claims

CONSOLIDATED

Class of Insurance

($'000)

Net unearned

premiums resulting

from a portfolio

acquisition/

disposition

P&C (2020)

Next page is 60.21

60.21



CLAIMS INCURRED - UNDISCOUNTED

Claims incurred undiscounted

Class of Insurance Direct Reinsurance Reinsurance Net incurred

assumed ceded (08+09-10)

(08) (09) (10) (11)

Property - Personal excluding Home and Product Warranty 03 0 0

- Home Warranty 04 0 0

- Product Warranty 05 0 0

Subtotal - Personal 06 0 0 0 0

- Commercial 07 0 0


Aircraft 10 0 0

Automobile:

Private Passenger - Liability 11 0 0

- Personal Accident 12 0 0

- Other 13 0 0

Subtotal - Private Passenger 14 0 0 0 0

Other than Private Passenger - Liability 15 0 0


- Other 17 0 0

Subtotal - Other than Private Passenger 18 0 0 0 0

Facility Assoc. Residual Market - Liability 22 0 0


- Other 24 0 0

Subtotal - Facility Assoc. Residual Market 25 0 0 0 0

Automobile - Subtotal - Liability 19 0 0 0 0

- Personal Accident 20 0 0 0 0

- Other 21 0 0 0 0


Boiler and Machinery excluding Equipment Warranty 32 0 0

- Equipment Warranty 33 0 0

Credit 34 0 0

Credit Protection 35 0 0

Fidelity 36 0 0

Hail 38 0 0

Legal Expense 40 0 0

Liability

- Comprehensive General Liability (with products) 50 0 0

- Comprehensive General Liability (without products) 51 0 0

- Cyber Liability 52 0 0

- Directors and Officers Liability 53 0 0

- Excess Liability 54 0 0

- Professional Liability 55 0 0

- Umbrella Liability 56 0 0

- Pollution Liability 57 0 0

- All other 58 0 0

Liability - total 59 0 0 0 0

Mortgage 62 0 0

Other Approved Products 63 0 0

Surety

- Contract Surety 60 0 0

- All Other Surety 61 0 0

Surety - total 64 0 0 0 0

Title 66 0 0

Marine 68 0 0

Accident and Sickness 70 0 0

TOTAL 89 0 0 0 0

DISCOUNTED AMOUNTS AND FOREIGN EXCHANGE

Performance Analysis (01) (03)

Underwriting Income (Loss) 90 -8,400 1,953

Impact of Change in Claims Net Discount Rate 91 0

Impact of Unrealized Foreign Exchange Gains/ Losses 92 0

Underwriting Income (Loss) Before Changes 93 -8,400 1,953

Gains and Losses on Investments (01) (03)

Realized Gains (Losses) on FVTPL Financial Instruments 94 0

Realized Gains (Losses) on Other Financials Instruments 95 0

Unrealized Gains (Losses) on FVTPL Financial Instruments 96 0

Total Gains and Losses on Investments 99 0 0

Current Year Prior Year

GAINS AND LOSSES ON INVESTMENTS

CONSOLIDATED

($'000)

($'000)

($'000)

Current Year Prior Year

P&C (2020)

Next page is 60.30

60.30



CLAIMS AND ADJUSTMENT EXPENSES - PAID, CURRENT YEAR AND UNPAID, CURRENT AND PRIOR YEAR

Claims and adjustment expenses paid - current year Provision for unpaid claims (including unreported) Margin or deficiency for unpaid claims at prior year

and adjustment expenses - current year 3.9600%

Class of Insurance Direct Reinsurance Reinsurance Net Direct Reinsurance Reinsurance Net Net provision Net amount Investment Net provision Margin or

assumed ceded (01+02-03) assumed ceded (05+06-07) at prior paid during income on for claims of (Deficiency)

year end the year for unpaid claims prior years

claims of of prior years

prior years

(01) (02) (03) (04) (05) (06) (07) (08) (09) (11) (10) (13) (15) (19)

Property - Personal excluding Home and Product Warranty 03 0 0 0 0 0

- Home Warranty 04 0 0 0 0 0

- Product Warranty 05 0 0 0 0 0

Subtotal - Personal 06 0 0 0 0 0 0 0 0 0 0 0 0 0 0

- Commercial 07 7,461 7,461 13,388 2,941 10,447 2,910 2,730 73 -386 639

Property - total 09 7,461 0 0 7,461 13,388 0 2,941 10,447 2,910 0 2,730 73 -386 639

Aircraft 10 0 0 0 0 0

Automobile:

Private Passenger - Liability 11 0 0 0 0 0

- Personal Accident 12 0 0 0 0 0

- Other 13 0 0 0 0 0

Subtotal - Private Passenger 14 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Other than Private Passenger - Liability 15 301 301 921 921 919 157 41 493 310


- Other 17 0 23 23 83 15 2 70

Subtotal - Other than Private Passenger 18 301 0 0 301 944 0 0 944 1,002 0 172 43 493 380

Facility Assoc. Residual Market - Liability 22 0 0 0 0 0


- Other 24 0 0 0 0 0

Subtotal - Facility Assoc. Residual Market 25 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Automobile - Subtotal - Liability 19 301 0 0 301 921 0 0 921 919 0 157 41 493 310

- Personal Accident 20 0 0 0 0 0 0 0 0 0 0 0 0 0 0

- Other 21 0 0 0 0 23 0 0 23 83 0 15 2 0 70

Automobile - total 29 301 0 0 301 944 0 0 944 1,002 0 172 43 493 380

Boiler and Machinery excluding Equipment Warranty 32 280 20 260 -16 2 -18 -452 126 -25 -409 -194

- Equipment Warranty 33 0 0 0 0 0

Credit 34 0 0 0 0 0

Credit Protection 35 0 0 0 0 0

Fidelity 36 996 996 145 145 670 997 19 -1 -307

Hail 38 0 0 0 0 0

Legal Expense 40 223 223 1,004 1,004 469 119 25 400 -25

Liability

- Comprehensive General Liability (with products) 50 18,549 197 18,352 87,479 87,479 86,154 17,506 4,740 77,021 -3,633

- Comprehensive General Liability (without products) 51 0 0 0 0 0

- Cyber Liability 52 793 793 50 50 660 793 21 50 -162

- Directors and Officers Liability 53 0 0 0 0 0

- Excess Liability 54 0 0 0 0 0

- Professional Liability 55 0 0 0 0 0

- Umbrella Liability 56 0 0 0 0 0

- Pollution Liability 57 0 0 0 0 0

- All other 58 0 0 0 0 0

Liability - total 59 19,342 0 197 19,145 87,529 0 0 87,529 86,814 0 18,299 4,761 77,071 -3,795

Mortgage 62 0 0 0 0 0

Other Approved Products 63 0 0 0 0 0

Surety

- Contract Surety 60 0 0 0 0 0

- All Other Surety 61 0 0 0 0 0

Surety - total 64 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Title 66 0 0 0 0 0

Marine 68 0 0 0 0 0

Accident and Sickness 70 0 0 0 0 0

TOTAL 89 28,603 0 217 28,386 102,994 0 2,943 100,051 91,413 0 22,443 4,896 77,168 -3,302

Out of Canada Liabilities 80 0 0 0 0 0

CONSOLIDATED

($'000)

Net provision for

portfolio acquisition/

disposition at

transaction date (09+11-10+13-15)

P&C (2020)

Next page is 60.40


Canadian/Foreign Insurer 2,020 Date

2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020

and and prior and prior and prior and prior and prior

prior years (02)+(03) (04)+(05) (06)+(07) (08)+(09) (10)+(11)

(02) (03) (04) (05) (06) (07) (08) (09) (10) (11) (12)

2015 * UCAE, end of year 01 0

IBNR, end of year 02 0

2016 Portfolio Acquisition/Disposition 05 0 0 0

Paid during year 10 0 0 0

UCAE, end of year 11 0 0 0

IBNR, end of year 12 0 0 0

Ratio: excess (deficiency) 19 0.00%

2017 Portfolio Acquisition/Disposition 15 0 0 0 0 0

Paid during year 20 0 0 0 0 0

UCAE, end of year 21 0 0 0 0 0

IBNR, end of year 22 0 0 0 0 0

Ratio: excess (deficiency) 29 0.00% 0.00%

2018 Portfolio Acquisition/Disposition 25 0 0 0 0 0 0 0

Paid during year 30 0 0 0 0 0 0 0

UCAE, end of year 31 0 0 0 0 0 0 0

IBNR, end of year 32 0 0 0 0 0 0 0

Ratio: excess (deficiency) 39 0.00% 0.00% 0.00%

2019 Portfolio Acquisition/Disposition 35 0 0 0 0 0 0 0 0 0

Paid during year 40 0 0 0 0 0 0 0 0 0

UCAE, end of year 41 0 0 0 0 0 0 0 0 0

IBNR, end of year 42 0 0 0 0 0 0 0 0 0

Ratio: excess (deficiency) 49 0.00% 0.00% 0.00% 0.00%


Paid during year 50 0 0 0 0 0

UCAE, end of year 51 0 0 0 0 0

IBNR, end of year 52 0 0 0 0 0

Ratio: excess (deficiency) 59 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

*UCAE = Unpaid Claims and Adjustment Expenses (excluding IBNR).

CONSOLIDATED

($'000)

NET CLAIMS AND ADJUSTMENT EXPENSES RUN-OFF

60.40

P&C (2020)

Next page is 60.41


Canadian/Foreign Insurer 2,020 Date

2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020

and and prior and prior and prior and prior and prior

prior years (02)+(03) (04)+(05) (06)+(07) (08)+(09) (10)+(11)

(02) (03) (04) (05) (06) (07) (08) (09) (10) (11) (12)

2015 * UCAE, end of year 01 55,182

IBNR, end of year 02 54,470

2016 Portfolio Acquisition/Disposition 05 0 0 0

Paid during year 10 27,061 8,260 35,321

UCAE, end of year 11 35,932 8,029 43,961

IBNR, end of year 12 33,042 18,038 51,080

Investment Income from UCAE & IBNR 13 4,931

Ratio: excess (deficiency) 19 16.92%


Paid during year 20 12,548 4,280 16,828 4,746 21,574

UCAE, end of year 21 30,436 5,361 35,797 9,385 45,182

IBNR, end of year 22 20,799 10,073 30,872 12,709 43,581

Investment Income from UCAE & IBNR 23 1,647 568 2,215

Ratio: excess (deficiency) 29 23.15% 14.48%

2018 Portfolio Acquisition/Disposition 25 0 0 0 0 0 0 0

Paid during year 30 9,923 382 10,305 4,767 15,072 5,067 20,139

UCAE, end of year 31 29,971 5,260 35,231 7,067 42,298 8,043 50,341

IBNR, end of year 32 15,510 6,409 21,919 7,904 29,823 9,682 39,505

Investment Income from UCAE & IBNR 33 1,804 505 2,309 691 3,000

Ratio: excess (deficiency) 39 20.99% 16.08% 5.15%

2019 Portfolio Acquisition/Disposition 35 0 0 0 0 0 0 0 0 0

Paid during year 40 11,917 1,868 13,785 2,496 16,281 2,646 18,927 3,132 22,059

UCAE, end of year 41 21,808 4,143 25,951 8,266 34,217 6,457 40,674 9,092 49,766

IBNR, end of year 42 13,839 4,648 18,487 6,065 24,552 7,364 31,916 9,631 41,547

Investment Income from UCAE & IBNR 43 1,606 405 2,011 580 2,591 625 3,216

Ratio: excess (deficiency) 49 20.56% 17.07% 4.77% 1.72%


Paid during year 50 10,049 2,326 12,375 2,110 14,485 2,670 17,155 5,288 22,443 5,943 28,386

UCAE, end of year 51 19,146 3,789 22,935 10,728 33,663 5,174 38,837 6,251 45,088 15,233 60,321

IBNR, end of year 52 11,368 3,705 15,073 4,942 20,015 4,955 24,970 7,110 32,080 7,650 39,730

Investment Income from UCAE & IBNR 53 1,962 483 2,445 890 3,335 710 4,045 951 4,996

Amount: excess (deficiency) 54 19,590 11,678 12,720 -788 -1,827 3,615 -2,782 1,025 -3,302

Ratio: excess (deficiency) 59 17.87% 44.80% 13.38% -3.57% -2.06% 20.39% -3.10% 5.47% -3.62%

*UCAE = Unpaid Claims and Adjustment Expenses (excluding IBNR).

CONSOLIDATED

NET CLAIMS AND ADJUSTMENT EXPENSES RUN-OFF - DISCOUNTED

60.41

($'000)

P&C (2020)

Next page is 60.50



(01)

Paid Adjustment Expenses

Internal adjustment expenses 01 1,659

External adjustment expenses

a. Adjusters and Appraisers 10 1,385

b. Legal 11 2,645

c. Other 12

Total (lines 10+11+12) 19 4,030

Total Paid Adjustment Expenses (lines 01+19) 39 5,689

Unpaid Adjustment Expenses

Provision for internal adjustment expenses - end of year 40 2,457

Provision for external adjustment expenses - end of year 41 753

42 2,312

43 852

Total (lines 40+41-42-43) 49 46

TOTAL ADJUSTMENT EXPENSES INCURRED (Line 39+49) 59 5,735

Internal adjustment expenses incurred (lines 01+40-42) 69 1,804

External adjustment expenses incurred (lines 19+41-43) 79 3,931

60.50

CONSOLIDATED

Provision for internal adjustment expenses - beginning of year

Provision for external adjustment expenses - beginning of year

DIRECT ADJUSTMENT EXPENSES

($'000)

P&C (2020)

Next page is 67.10

67.10



PROVINCIAL AND TERRITORIAL EXHIBIT OF PREMIUMS WRITTEN

Ontario Manitoba Saskatchewan Alberta Yukon Nunavut Total

Class of Insurance

(01) (02) (03) (04) (05) (06) (07) (08) (09) (10) (11) (12) (14) (18) (19)

LICENSED (Y/N) 01 N N N N N Y N N N N N N N N





- Commercial 07 10,914 10,914

Property - total 09 0 0 0 0 0 10,914 0 0 0 0 0 0 0 0 10,914

Aircraft 10 0

Automobile:



- Other 13 0

Subtotal - Private Passenger 14 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0



- Other 17 441 441

Subtotal - Other than Private Passenger 18 0 0 0 0 0 1,040 0 0 0 0 0 0 0 0 1,040



- Other 24 0

Subtotal - Facility Assoc. Residual Market 25 0 0 0 0 0 0 0 0 0 0 0 0 0

Automobile - Subtotal - Liability 19 0 0 0 0 0 450 0 0 0 0 0 0 0 0 450

- Personal Accident 20 0 0 0 0 0 149 0 0 0 0 0 0 0 0 149

- Other 21 0 0 0 0 0 441 0 0 0 0 0 0 0 0 441

Automobile - total 29 0 0 0 0 0 1,040 0 0 0 0 0 0 0 0 1,040



Credit 34 0


Fidelity 36 905 905

Hail 38 0

Legal Expense 40 1,013 1,013

Liability

- Comprehensive General Liability (with products) 50 19,195 19,195








- All other 58 0

Liability - total 59 0 0 0 0 0 19,732 0 0 0 0 0 0 0 0 19,732

Mortgage 62 0


Surety



Surety - total 64 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Title 66 0

Marine 68 0


Total - direct 79 0 0 0 0 0 34,397 0 0 0 0 0 0 0 0 34,397

Reinsurance assumed 87 0

Reinsurance ceded 88 1,873 1,873

TOTAL - NET 89 0 0 0 0 0 32,524 0 0 0 0 0 0 0 0 32,524

Dividends - direct 99 0

CONSOLIDATED

($'000)

Newfoundland &

Labrador

Prince Edward Island Nova Scotia New Brunswick Quebec British Columbia Northwest Territories Out of Canada

P&C (2020)

Next page is 67.20

67.20



PROVINCIAL AND TERRITORIAL EXHIBIT OF PREMIUMS EARNED


Class of Insurance

(01) (02) (03) (04) (05) (06) (07) (08) (09) (10) (11) (12) (14) (18) (19)





- Commercial 07 10,914 10,914

Property - total 09 0 0 0 0 0 10,914 0 0 0 0 0 0 0 0 10,914

Aircraft 10 0

Automobile:



- Other 13 0




- Other 17 441 441

Subtotal - Other than Private Passenger 18 0 0 0 0 0 1,040 0 0 0 0 0 0 0 0 1,040



- Other 24 0




- Other 21 0 0 0 0 0 441 0 0 0 0 0 0 0 0 441

Automobile - total 29 0 0 0 0 0 1,040 0 0 0 0 0 0 0 0 1,040



Credit 34 0


Fidelity 36 905 905

Hail 38 0

Legal Expense 40 1,013 1,013

Liability









- All other 58 0

Liability - total 59 0 0 0 0 0 19,732 0 0 0 0 0 0 0 0 19,732

Mortgage 62 0


Surety



Surety - total 64 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Title 66 0

Marine 68 0


Total - direct 79 0 0 0 0 0 34,397 0 0 0 0 0 0 0 0 34,397



TOTAL - NET 89 0 0 0 0 0 32,524 0 0 0 0 0 0 0 0 32,524

CONSOLIDATED

($'000)

Newfoundland & Labrador Prince Edward Island Nova Scotia New Brunswick Quebec British Columbia Northwest Territories Out of Canada

P&C (2020)

Next page is 67.30

67.30



PROVINCIAL AND TERRITORIAL EXHIBIT OF CLAIMS INCURRED INCLUDING ADJUSTMENT EXPENSES


(01) (02) (03) (04) (05) (06) (07) (08) (09) (10) (11) (12) (14) (18) (19)





- Commercial 07 17,939 17,939

Property - total 09 0 0 0 0 0 17,939 0 0 0 0 0 0 0 0 17,939

Aircraft 10 0

Automobile:



- Other 13 0




- Other 17 30 30

Subtotal - Other than Private Passenger 18 0 0 0 0 0 243 0 0 0 0 0 0 0 0 243



- Other 24 0




- Other 21 0 0 0 0 0 30 0 0 0 0 0 0 0 0 30

Automobile - total 29 0 0 0 0 0 243 0 0 0 0 0 0 0 0 243



Credit 34 0


Fidelity 36 472 472

Hail 38 0

Legal Expense 40 750 750

Liability









- All other 58 0

Liability - total 59 0 0 0 0 0 20,164 0 0 0 0 0 0 0 0 20,164

Mortgage 62 0


Surety



Surety - total 64 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Title 66 0

Marine 68 0


Total - direct 79 0 0 0 0 0 40,039 0 0 0 0 0 0 0 0 40,039



TOTAL - NET 89 0 0 0 0 0 37,124 0 0 0 0 0 0 0 0 37,124

CONSOLIDATED

($'000)


Class of Insurance

P&C (2020)

Next page is 67.31




(01) (02) (03) (04) (05) (06) (07) (08) (09) (10) (11) (12) (14) (18) (19)





- Commercial 07 0

Property - total 09 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Aircraft 10 0

Automobile:



- Other 13 0


Other than Private Passenger - Liability 15 0


- Other 17 0

Subtotal - Other than Private Passenger 18 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0



- Other 24 0




- Other 21 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Automobile - total 29 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Boiler and Machinery excluding Equipment Warranty 32 0


Credit 34 0


Fidelity 36 0

Hail 38 0

Legal Expense 40 0

Liability

- Comprehensive General Liability (with products) 50 0


- Cyber Liability 52 0






- All other 58 0

Liability - total 59 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Mortgage 62 0


Surety



Surety - total 64 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Title 66 0

Marine 68 0


Total - direct 79 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0


Reinsurance ceded 88 0

TOTAL - NET 89 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

67.31

CONSOLIDATED

($'000)


PROVINCIAL AND TERRITORIAL EXHIBIT OF CLAIMS INCURRED INCLUDING ADJUSTMENT EXPENSES - UNDISCOUNTED

Class of Insurance

P&C (2020)

Next page is 70.10

70.10



PREMIUMS AND CLAIMS - REINSURANCE CEDED

($'000)

Premiums earned Claims incurred

Line of Business Quota Share Surplus Excess of Facultative Total Quota Share Surplus Excess of Facultative Total

(01) (02) (03) (04) (05) (06) (07) (08) (09) (10) (11)

0 0

Property 1,013 1,013 2,941 2,941

Cyber 269 269 0

Boiler 0 -26 -26

Liability 500 500 0 0

Auto 91 91 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

TOTAL 89 269 0 1,604 0 1,873 -26 0 2,941 0 2,915

CONSOLIDATED

P&C (2020)

Next page is 70.21A

70.21 A



SUMMARY OF INTRAGROUP REINSURANCE

($'000)

Premiums Claims Unearned Outstanding Premiums Claims Unearned Outstanding

ceded to incurred by premiums losses assumed incurred by premiums losses

assuming assuming ceded to recoverable from other by ceding assumed payable

insurer insurer assuming from assuming insurer insurer from other to ceding

insurer insurer insurer insurer

(20) (21) (22) (23) (02) (03) (04) (05) (06) (07) (08) (09)

Registered

Total Registered 29 0 0 0 0 0 0 0 0

(01)

Reinsurance Ceded Reinsurance Assumed

CONSOLIDATED

Rating Agency Identifier Code

A.M.

Best

Code

S&P

Code

Other

Code

UnratedName of insurer

P&C (2020)

Next page is 70.21B

70.21 B



SUMMARY OF INTRAGROUP REINSURANCE

($'000)

Name of insurer Premiums Claims Unearned Outstanding Premiums Claims Unearned Outstanding

ceded to incurred by premiums losses assumed incurred by premiums losses

assuming assuming ceded to recoverable from other by ceding assumed payable

insurer insurer assuming from assuming insurer insurer from other to ceding

insurer insurer insurer insurer

(01) (20) (21) (22) (23) (02) (03) (04) (05) (06) (07) (08) (09)

Unregistered

Total Unregistered 39 0 0 0 0 0 0 0 0

Total 79 0 0 0 0 0 0 0 0

Reinsurance Ceded Reinsurance Assumed

CONSOLIDATED

Rating Agency Identifier Code

A.M.

Best

Code

S&P

Code

Other

Code

Unrated

P&C (2020)

Next page is 70.50A



Name of Assuming Insurer A.M.

Best

Code

S&P

Code

Other

Code

Unrated Reinsurer

Domiciliary

Jurisdiction

Reinsurer

Group

Domiciliary

Jurisdiction

Business

Covered

Type of

contract

Reinsurance

Premiums

Ceded

Unearned

Premiums

ceded to

assuming

insurer

Outstanding

losses

recoverable

from assuming

insurer

Reinsurance

Receivable

Reinsurance

Payable

Net

Receivable

Aging of

Reinsurance

Asset

(01) (02) (04) (06) (08) (10) (12) (14) (16) (18) (20) (22) (24) (26) (28) (30)

Associated and Non-qualifying subsidiary

Total Associated and Non-qualifying subsidiary 09 0 0 0 0 0 0 0

70.50 A

REINSURANCE CEDED SUMMARY

REGISTERED REINSURANCE

Rating Agency Identifier Code Receivables

P&C (2020)

Next page is 70.50B



Name of Assuming Insurer A.M.

Best

Code

S&P

Code

Other

Code

Unrated Reinsurer

Domiciliary

Jurisdiction

Reinsurer

Group

Domiciliary

Jurisdiction

Business

Covered

Type of

contract

Reinsurance

Premiums

Ceded

Unearned

Premiums

ceded to

assuming

insurer

Outstanding

losses

recoverable

from assuming

insurer

Reinsurance

Receivable

Reinsurance

Payable

Net

Receivable

Aging of

Reinsurance

Asset

(01) (02) (04) (06) (08) (10) (12) (14) (16) (18) (20) (22) (24) (26) (28) (30)

Non-associated and Non-subsidiary

RSA A CA UK PROPERTY EXCESS 1,013 2,941

AIG A CA US CYBER QS 269

AVIVA A CA UK BOILER QS 2 105 105

Catlin A+ CA UK LIAB/AUTO EXCESS 12

RSA A CA UK LIAB/AUTO EXCESS 30

CV Starr (LIoyd's) A CA UK LIAB/AUTO EXCESS 89

AXIS A+ CA UK AUTO EXCESS 16

QBE (LIoyd's) A CA UK LIAB/AUTO EXCESS 179

Amlin (LIoyd's) A CA UK LIAB/AUTO EXCESS 107

XL Catlin A+ CA UK LIAB/AUTO EXCESS 62

Aegis (Lloyd's) A- CA UK LIAB/AUTO EXCESS 96

Lioyds A CA UK LIAB EXCESS 0

Everest Re A+ CA BERMUDA LIAB EXCESS 33 33

Scor Re A CA UK LIAB EXCESS 0

GCAN A CA UK LIAB EXCESS 0

Berkley A+ CA UK LIAB EXCESS 0

Swiss Re A+ CA UK LIAB EXCESS 0

Transatlantic A+ CA UK LIAB EXCESS 0

Total Non-associated and Non-subsidiary 19 1,873 0 2,943 138 0 138 0

Total Business 29 1,873 0 2,943 138 0 138 0

70.50 B


REGISTERED REINSURANCE


P&C (2020)

Next page is 70.60A



Name of Assuming Insurer

(01) (02) (04) (06) (08) (10) (12) (14) (16) (18) (20) (22) (24) (26) (28) (30) (32) (34) (36) (38) (39) (40) (42) (44) (46) (48)


0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

Total Associated and Non-qualifying

subsidiary 09 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

($'000)

Reinsurance

Payable

Net

Receivable

Aging of

Reinsurance

Asset

Non-owned

deposits -

RSA

Other

acceptable non-

owned

deposits

Reinsurance

Collateral -

Funds Held

A.M.

Best

Code

S&P

Code

Other

Code

Unrated Reinsurer

Domiciliary

Jurisdiction

Reinsurer

Group

Domiciliary

Jurisdiction

Letters of

Credit

Total

(32)+(34)+

(36)+(38)

Business

Covered

Type of

contract

Rating Agency Identifier Code Receivables Reinsurance Collateral

Margin

Required

(40-44) where

positive

Excess

Collateral

(44-40) where

positive

70.60A


UNREGISTERED REINSURANCE (CANADIAN INSURERS)

Calculations for MCT purposes

CONSOLIDATED

20% Margin on

unearned

premiums and

outstanding

losses

recoverable

Recoverables in

excess of

acceptable

collateral

(20+22+24-26-

39) where

positive

Acceptable

collateral in

excess of

recoverables (39-

20-22-24+26)

where positive

Reinsurance

Premiums

Ceded

Unearned

Premiums

ceded to

assuming

insurer

Outstanding

losses

recoverable

from assuming

insurer

Reinsurance

Receivable

P&C (2020)

Next page is 70.60B




(01) (02) (04) (06) (08) (10) (12) (14) (16) (18) (20) (22) (24) (26) (28) (30) (32) (34) (36) (38) (39) (40) (42) (44) (46) (48)


0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

Total Non-associated and Non-subsidiary 19 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

TOTAL BUSINESS 29 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

($'000)


70.60B

CONSOLIDATED



Reinsurer

Group

Domiciliary

Jurisdiction

Business

Covered

Type of

contract


Reinsurance

Premiums

Ceded

Unearned

Premiums

ceded to

assuming

insurer

Outstanding

losses

recoverable

from assuming

insurer

Reinsurance

Receivable

A.M.

Best

Code

S&P

Code

Other

Code

Unrated Reinsurer

Domiciliary

Jurisdiction

Excess

Collateral

(44-40) where

positive

Letters of

Credit

Total

(32)+(34)+

(36)+(38)

Acceptable

collateral in

excess of

recoverables (39-

20-22-24+26)

where positive

Reinsurance

Payable

Net

Receivable

Aging of

Reinsurance

Asset

Non-owned

deposits -

RSA

Other

acceptable

non-owned

deposits

Reinsurance

Collateral -

Funds Held

Reinsurance Collateral

20% Margin on

unearned

premiums and

outstanding

losses

recoverable

Recoverables in

excess of

acceptable

collateral

(20+22+24-26-

39) where

positive

Margin

Required

(40-44) where

positive

P&C (2020)

Next page is 70.62A




(01) (02) (04) (06) (08) (10) (12) (14) (16) (18) (20) (22) (24) (26) (28) (30) (32) (34) (36) (38) (39) (40) (42) (44) (46) (48)


0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

Total Associated and Non-qualifying

subsidiary 09 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total

(32)+(34)+

(36)+(38)

Reinsurance

Payable

Net

Receivable

Aging of

Reinsurance

Asset

Non-owned

deposits -

RSA

Other

acceptable

non-owned

deposits

Reinsurance

Collateral -

Funds Held

Business

Covered

Type of

contract

Reinsurance

Premiums

Ceded

Unearned

Premiums

ceded to

assuming

insurer

Outstanding

losses

recoverable

from assuming

insurer

Reinsurance

Receivable

A.M.

Best

Code


Rating Agency Identifier Code Receivables Reinsurance Collateral15% Margin on

unearned

premiums and

outstanding

losses

recoverable

Recoverables in

excess of

acceptable

collateral

(20+22+24-26-

39) where

positive

Acceptable

collateral in

excess of

recoverables (39-

20-22-24+26)

where positive

Margin

Required

(40-44) where

positive

Excess

Collateral

(44-40) where

positive

S&P

Code

Other

Code

Unrated Reinsurer

Domiciliary

Jurisdiction

Reinsurer

Group

Domiciliary

Jurisdiction

Letters of

Credit

($'000)

70.62A



TRANSITION PERIOD UNTIL DECEMBER 31, 2022 FOR POLICY LIABILTIES CEDED ON OR BEFORE DECEMBER 31, 2019

P&C (2020)

Next page is 70.62B




(01) (02) (04) (06) (08) (10) (12) (14) (16) (18) (20) (22) (24) (26) (28) (30) (32) (34) (36) (38) (39) (40) (42) (44) (46) (48)


0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

Total Non-associated and Non-subsidiary 19 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

TOTAL BUSINESS 29 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Outstanding

losses

recoverable

from assuming

insurer

Letters of

Credit

Total

(32)+(34)+

(36)+(38)

Reinsurance

Payable

Net

Receivable

Aging of

Reinsurance

Asset

Non-owned

deposits -

RSA

Other

acceptable

non-owned

deposits

Reinsurance

Collateral -

Funds Held

Reinsurer

Group

Domiciliary

Jurisdiction

Business

Covered

Type of

contract

Reinsurance

Premiums

Ceded

Unearned

Premiums

ceded to

assuming

insurer


Rating Agency Identifier Code Receivables Reinsurance Collateral15% Margin on

unearned

premiums and

outstanding

losses

recoverable

Recoverables in

excess of

acceptable

collateral

(20+22+24-26-

39) where

positive

Acceptable

collateral in

excess of

recoverables (39-

20-22-24+26)

where positive

Margin

Required

(40-44) where

positive

Excess

Collateral

(44-40) where

positive

Reinsurance

Receivable

A.M.

Best

Code

S&P

Code

Other

Code

Unrated Reinsurer

Domiciliary

Jurisdiction

($'000)

70.62B



TRANSITION PERIOD UNTIL DECEMBER 31, 2022 FOR POLICY LIABILTIES CEDED ON OR BEFORE DECEMBER 31, 2019

P&C (2020)

Next page is 70.90



(01)

01Y / N Y

02

Y / N N

03 200,000

04 5,000

05

06

075,000

08

09 Y / N Y

Premium Aggregate Limit

Provided

Premium Aggregate Limit

Provided

($'000) ($'000) ($'000) ($'000)

(03) (05) (07) (09)

Catastrophic Bonds 20

Industry loss warranty contracts 21

Catastrophe swaps 22

23

Total 29 0 0 0 0

Is the catastrophe program specific to the Canadian operations only?

Summary of non-traditional methods of risk mitigation issued or purchased by insurer or parent/home office for in Canada risk

Insurer Parent/Home Office

Other contracts and non-traditional methods of risk

mitigation/assumption

70.90

REINSURANCE INTERROGATORIES

Has the insurer made any significant changes regarding reinsurance arrangements during

the year?

Has the insurer made any portfolio transfer, and/or commutation of reinsurance treaties

during the year?

Based on the gross estimated catastrophe exposure above, what would be the net retained

loss (after all reinsurance)? ($'000)

Based on the gross estimated catastrophe exposure above, what would be the catastrophe

coverage(s) reinstatement cost for a full period? ($'000)

If yes, embed details (see Section VI of the Annual Return Instructions).

If yes, embed details (see Section VI of the Annual Return Instructions).

What is the upper limit of the catastrophe program? ($'000)

What is the attachment point for catastrophe coverage? ($'000)

What is the amount of retention (if any) within the catastrophe coverage layers? ($'000)

What is the gross estimated catastrophe exposure? ($'000)

P&C (2020)

Next page is 80.10

80.10



COMMISSIONS

Commissions in respect of premiums written Net

Deferred Unearned Deferred Unearned Commissions

Class of Insurance Commissions Commissions Direct Reinsurance Reinsurance Net Commissions Commissions attributable

at beginning at beginning assumed ceded end of year end of year to the period

of year of year (02+07+09)

-(03+08)

(01) (02) (03) (04) (05) (06) (07) (08) (09) (10)



Liability 59 0 0 0 0

Marine 68 0 0 0 0

Other 75 0 0 0 0

TOTAL 79 0 0 0 0 0 0 0 0 0

Summary of Commissions

Gross:

Commission Expense (line 79, column 02+04+05-08) 30 0

Contingent Commissions 33

Other Non-Deferrable Commissions 35

Total Gross (line 30+33+35) 39 0

Ceded:

Commission Income (line 79, column 03+06-09) 40 0

Contingent Commissions 43

Other Non-Deferrable Commissions 45

Total Ceded (line 40+43+45) 49 0

TOTAL NET COMMISSIONS (line 39-49) 89 0

CONSOLIDATED

($'000)

P&C (2020)

Next page is 80.20

80.20



EXPENSES - INSURANCE OPERATIONS

($'000)

Expense Classification Deferred at Attributable General Internal

End of Year to the Year Expenses Adjustment

Expenses

(01) (02) (04) (06)

Salaries and employee benefits 50 1,839 1,347

Defined Benefit Pension Plan Expense 56

Directors remuneration 52

Agency (excluding commissions) 54

Management fees 60

Professional fees 62 301 58

Occupancy 70 118 53

Information technology 72 182 49

Inspections and Investigations 74 303

Bureaus and Associations 76 66 7

Home Office overhead 78 90 20

Allowance 80

Regulatory assessments 82

Other expenses 88 115 4

TOTAL 89 0 0 3,014 1,538

CONSOLIDATED

Acquisition Expenses

P&C (2020)

Next page is 90.15

Agenda Item 6 RFP for Audit Services

The current five-year service contract with KPMG expires on July 1, 2021.

Process:

Management will approach 3-4 service providers, including the current service provider with a

request for proposals due by mid May.

We will evaluate the proposals against our criteria and bring a recommendation to the Audit

Committee at their June 2021 meeting.

The new engagement will start July 1, 2021 for a five-year period ending July 1, 2026.

Evaluation Criteria:

1. Experience auditing other Canadian reciprocals

2. Depth of insurance knowledge and experience of managing partner

3. Reciprocal/Industry knowledge of team

4. Fees

Agenda 7 In Camera Session The Audit Committee will meet in camera with KPMG & JSCP. Agenda 8 Future Meeting Dates The next Audit Committee meeting is June 25, 2021. Location TBA Agenda 9 Adjournment MOTION: To adjourn the Audit Committee meeting.

OSBIE AUDIT COMMITTEE MEETING AGENDA Thursday February …

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