HomeMy WebLinkAboutThe Citizen, 2001-03-07, Page 174. Capital Assets
2000 1999
Cost
Accumulated
Amortization
Net
Book Value
Net
Book Value
Land $ 43,260 $ $ 43,260 $ 43,260 7.
Building 415,450 352,013 63,437 86,044
Computer 151,588 148,437 3,151 4,727
Equipment 276,101 236,106 39,995 48,983
Automobile 49,657 37,494 12,163 21,701
$ 936,056 $ 774,050 $ 162,006 $ 204,715
5. Unpaid claims 8.
Scope
THE CITIZEN, WEDNESDAY, MARCH 7, 2001. PAGE 17.
Women Today hires executive director
Women Today of Huron is pleased
to announce that Pam Hanington has
been hired to fill the position of
executive director of Women Today
of Huron. A resident of Usbome
Twp. Hanington brings more than 12
years of violence prevention,
program development and research
experience to the organization. She
is also part-time faculty at the
University of Western Ontario where
she teaches third year honours, on-
line courses on women and work.
She has also taught sociology and
community development in the
social service worker program at
Fanshawe College for the past seven
years.
Hanington received her formal
education at the University of
Western Ontario and the Ontario
Institute for Studies in Education. As
a self-employed research and
education consultant since 1992, she
has designed and facilitated
programs and conducted research on
a variety of issues of interest and
concern to women for many
agencies and institutions including
women's shelters, sexual assault
centres, post-secondary schools,
hospitals, school boards, research
centres, community-based justice
agencies and with diverse groups in
both rural and urban communities.
Her areas of expertise and interest
include equity issues, the prevention
of sexual violence and the particular
barriers facing women with
Continued on page 18
Continued from page 16
NOWICK MUTUAL INSURANCE COMPANY
Financial Statement as of December 31, 2000
1. Summary of Significant Accounting Policies (continued)
5. Unpaid Claims (continued)
Financial Instruments The company's financial instruments consist of accounts
receivable, long-term investments, investments in related related
companies and accounts payable. Unless otherwise noted, it is
management's opinion that the company is not exposed to
significant interest, currency or credit risks arising from these
financial instruments. The fair values of these financial
instruments approximate their carrying values, unless otherwise
noted.
Reinsurance recoveries
Reinsurance premiums ceded and reinsurance recoveries on losses incurred are recorded as
reductions of the respective income and expense accounts. Estimates of the amounts
recoverable from the reinsurer on unpaid claims and adjustment expenses are recorded as
accounts receivable. A contingent liability exists with respect to reinsurance ceded which could
become a liability of the company in the event that the reinsurer might be unable to meet its
obligations under the reinsurance agreements.
2. Accounts Receivable
2000 1999
Interest $ 83,364 $ 101,439
Agents' balances 508,744 487,473
Due from policyholders 626,750 584,658
Due from reinsurers 24,364 51,708
Amounts recoverable on unpaid claims 2,088,502 45,090
Amounts receivable on paid claims 19,181 93,605
Other 60,992 45,965
$ 3,411,897 $ 1,409,938
3. Long-term Investments
2000 1999
Book
value
Estimated fair
market value
Book
value
Estimated fair
market value
Bonds and debentures $ 8,762,037 $ 8,935,762 $ 8,607,158 $ 8,506,598
Equities 1,780,992 2,175,552 1,363,562 1,986,814
Guarantee fund 23,354 23,354 23,406 23,406
$ 10,566,383 $ 11,134,668 $ 9,994,126 $ 10,516,818
Maturity profile at December 31, 2000:
Within Over 1 to Over Book
1 year 5 years 5 years Value
$ 1,580,737 $ 1,946,698 $ 5,234,602 $ 8,762,037
The effective interest rate at December 31, 2000 for these investments was 6.2%.
Investment in Related Companies
The company held a 25% interest in HGGC Financial Services Inc. During the year it
amalgamated with Farm and Town Financial Services Inc. and the company now holds a 1/7th
interest in the amalgamated company. Activity of this company is accounted for using the equity
method which resulted in a charge to investment income in the amount of $28,319 during 2000.
The company also holds 1 share in a related investment sales corporation, known as Farm
Mutual Financial Services Inc. (FMFS). FMFS is jointly owned by a majority of the farm mutuals
in Ontario.
The determination of the provision for unpaid claims and adjustment expenses and the related
reinsurers' share requires the estimation of two major variables or quanta being development of
claims and reinsurance recoveries.
The provision for unpaid claims and adjustment expenses and related reinsurers' share 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, changes in judicial interpretation of contracts, or significant changes in
severity or frequency of claims from historical trends. The estimates are principally based on the
Company's historical experience. Methods of estimation have been used which the Company
believes produce reasonable results given the current information.
Assumptions
Claim development
Uncertainty exists on reported claims in that all information may not be available at the reporting
date, therefore, the claim cost may rise or fall at some date in the future when the information is
obtained. In addition, claims may not be reported to the Company immediately, therefore,
estimates are made as to the value of claims incurred but not yet reported, a value which may
take some months to finally determine. In order to determine the liability, assumptions are
developed considering the characteristics of the class of business, the historical pattern of
payments, the amount of data available and any other pertinent factors.
Future Investment Income
The Company does not have a policy of spectfically matching its investment cash flows to
claims payment patterns.
Comments and assumptions for specific claims categories
The ultimate cost of long settlement general liability claims is difficult to predict for several
reasons. Claims may not be reported until many years after a policy expires. Changes in the
legal environment have created further complications Court decisions and federal and
provincial legislation may dramatically increase the liability between the time a policy is written
and associated claims are ultimately resolved. For example, liability for exposure to toxic
substances and environmental impairment, which did not appear likely or even exist when the
policies were written, has been imposed by legislators and judicial interpretation. Tort liability
has been expanded by some jurisdictions to cover defective workmanship. Provisions for such
difficult-to-estimate liabilities are established by examining the facts of tendered claims and
adjusted in the aggregate for ultimate loss expectations based upon historical experience
patterns and current socio-economic trends.
The Company assumes business from other insurers pursuant to quota share, facultative and
excess of loss reinsurance agreements and there can be extended lags between the date of
occurrence and the date the Company is notified of the claim. Further, the claims handling
procedures of this book of business are not under direct control of the Company, thus the
estimates of claims liabilities may fluctuate more than the average of the Company's own
business.
Line of Business Segmentation
2000 1999
Gross Ceded Gross Ceded
General Liability $ 642,373 $ - $ 724,776 $ 22,500
Automobile 2,592,432 1,898,755 217,093
Property 967,045 189,747 631,364 22,590
Assumed businesses 99,705 -- 14,451 -
Facility and residual pools 83,995 - 57,023
Total $ 4,285,550 $ 2,088,502 $ 1,644,707 $ 45,09u
6. Underwriting Policy
The company follows the policy of underwriting and reinsuring contracts of insura, ce which, in
the main, limit the liability of the company to the first $200,000 plus 10% of any excess and in
the event of a property claim, and the first $125,000 plus 10% of any excess on any one claim in
the event of a liability claim, and $110,000 plus 10% of any excess in the event of an
automobile claim. In addition, the company has obtained reinsurance to protect itself against
certa.n catastrophic losses. Its retention of lower level losses under such treaties was $300,000
for 1998.
Requirements Under the Ontario insurance Act
The Act in its measurement of the company's solvency position requires appropriation of
members' surplus in respect of assets not admitted investment valuation reserve and other
statuatory requirements. These appropriations are not considered part of surplus by the
Financial Services Commission of Ontario.
Income Taxes
2000 1999
Current income taxes $ (105,228) $ 219,196
Deferred income taxes 40,000 (35,000)
(65,228) $ 184,196
9. Pension Plan
The company participates in a multi-employer pension plan through the Ontarir Mutual
Insurance Association. The plan is a contributory defined benefit pension plan whi,h covers
substantially all of its employees. The plan provides pensions based on length of service and
fi lal average earnings
10. Commitment
The company has leased computer equipment under an operating lease which expires in 2001.
Minimum payments under this lease are as follows:
2001
$ 22,136