The Citizen, 2000-02-23, Page 7THE CITIZEN, WEDNESDAY, FEBRUARY 23, 2000. PAGE 7.
Group waits for judicial hearing, March 6
Continued from page 1
area will also be expanded to
include McKillop Twp. Lots 7-12,
Cone. 14 north, previously part of
Grey Central’s area.
High school students from Grey
Twp. Lots 1-25, Cone. 15-18, attend
ing SDHS will be moved to CHSS as
will those in Morris Twp. Lots 18-
30, Cone. 8 south and Lots 18-30,
Cone. 9-10, McKillop Twp. and
Hullett Twp. Lots 1-5, Cone. 1-14.
Students in portions of Tuckersmith
will also move to CHSS.
Residents of Grey Twp. Lots 1-25,
Cone. 14 and Lots 1-15, Cone. 12-13
will be transferred to F.E. Madill
Secondary School.
Some Tuckersmith Twp. residents
will go to South Huron District High
School while Hibbert Twp. pupils
will go to Mitchell District High
School. Similar dispersements and
realigning of boundaries would also
take place with the other schools list
ed for possible closure.
In a related matter, Charlie Smith,
the force behind court action against
the school board to stop closures said
in a phone interview Monday that a
judge will hold a judicial review
March 6 regarding an injunction.
Though a judicial review normally
includes three judges, due to the
urgency of the matter a single judge
will make a decision.
Though the school board voted on
closures Feb. 22, they agreed not to
proceed with implementation until
after the decision is announced
March 8. “They said they will not go
forward with the staffing process or
force students to choose a school or
courses at another facility,” said
Smith.
Smith said his group has also com
promised by agreeing to an earlier
court date.
An original date for May would
have allowed more time for fact
gathering.
“This has been hanging over com
munities for two years. It is hard on
the students and the teachers.”
Continued from Page 6
HOWICK MUTUAL INSURANCE COMPANY
Financial Statement as of December 31, 1999
2.Accounts Receivable
1999 1998
Interest $ 101,439 $ 110,399
Agents' balances 487,473 515,007
Due from policyholders 584,658 604,574
Due from reinsurers 51,708 60,980
Income taxes ■-217,859
Amounts recoverable on unpaid claims 45,090 776,226
Amounts receivable on paid claims 93,605 151,834
Other 45,965 6,758
$ 1,409,938 $ 2,443,637
3.Long-term Investments
1999 1998
Book Estimated fair Book Estimated fair
value market value value market value
Bonds and debentures $ 8,607,158 $ 8,506,598 $ 8,973,239 $ 9,419,750
Equities 1,363,562 1,986,814 642,594 990,493
Guarantee fund $ 23,406 $ 23,406 $ 22,648 $ 22,648
$ 9,994,126 $ 10,516,818 $ 9,638,481 $ 10,432,891
Maturity profile at December 31, 1999:
Within
1 year
Over 1 to
5 years
Over
5 years
Book
Value
$ 265,763 $4,472,069 $3,869,324 $8,607,156
The effective interest rate at December 31, 1999 for these investments is 6.0%.
Investment in Related Companies
The company holds a 25% interest in HGGC Financial Services Inc. Activity of this company
is accounted for using the equity method which resulted in a charge to investment income in the
amount of $21,541 during 1999.
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.
4. Capital Assets
1999 1998
Accumulated Net Net
Cost Amortization Book Value Book Value
Land $43,260 $$43,260 $ 43,260
Building 415,450 329,406 86,044 114,637
Computer 151,588 146,861 4,727 4,040
Equipment 265,288 216,305 48,983 26,096
Automobile 49,657 27,956 21,701 31,633
$925,243 $ 720,528 $204,715 $ 219,666
5. Unpaid claims
Scope
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.
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.
5. Unpaid Claims (continued)
Future investment income
The Company does not have a policy of specifically 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
1999 1998
Gross Ceded Gross Ceded
General Liability $ 724,776 $22,500 $ 1,004,229 $391,050
Automobile 217,093 -559,578 289,455
Property 631,364 22,590 848,047 95,721
Assumed businesses 14,451 -7,598 -
Facility and residual pools 57,023 -67,379 -
Total $ 1,644,707 $45,090 $ 2,486,831 $776,226
6. Underwriting Policy
The company follows the policy of underwriting and reinsuring contracts of insurance 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
certain catastrophic losses. Its retention of lower level losses under such treaties was $300,000
for 1998.
7. 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.
8. Income Taxes
1999 1998
Current income taxes
Deferred income taxes
$219,196
(35,000)
$92,061
45,029
$184,196 $137,090
9. Pension Plan
The company participates in a multi-employer pension plan through the Ontario Mutual
Insurance Association. The plan is a contributory defined benefit pension plan which covers
substantially all of its employees. The plan provides pensions based on length of service and
final average earnings.
10. Commitment
The company has leased computer equipment under an operating lease which expires in 2000
and 2001. Minimum payments under this lease are as follows:
2000 $40,746
2001 $22,136
$62,882