2022-23 SGI CANADA Annual Report
Credit ratings for the bond and debenture investments are as follows:
Credit Rating
AAA
AA
A
BBB
Total
2023
2022
Fair value
(thousands of $)
Makeup of
portfolio (%)
Fair value
Makeup of
(thousands of $)
portfolio (%)
$
359,516
47.0
$
265,197
37.6
238,189
31.1
221,427
31.4
125,746
16.4
149,755
21.2
42,202
5.5
69,058
9.8
$
765,653
100.0
$
705,437
100.0
Within bonds and debentures, there are no holdings from one issuer, other than the Government of Canada or a
Canadian province, over 10% of the market value of the combined bond and short-term investment portfolios. No
one holding of a province is over 20% of the market value of the bond portfolio.
The unit value of the mortgage investment fund is impacted by the credit risk of the underlying mortgages. This risk
is limited by restrictions within its own investment policy, which include single loan limits, diversification by property
type and geographic regions within Canada. Each underlying mortgage is secured by real estate and related contracts.
Market risk
Market risk represents the potential for loss from changes in the value of financial instruments. Value can be
affected by changes in interest rates, foreign exchange rates and equity prices. Market risk primarily impacts the
value of investments.
Interest rate risk
The Corporation is exposed to changes in interest rates in its fixed income investments, including short-term
investments, bonds and debentures and the mortgage investment fund. Changes in interest rates also impact the
provision for unpaid claims and unpaid claims recoverable from reinsurers. The impact that a change in interest rates
has on investment income will be partially offset by the impact the change in interest rates has on discounting of
claims incurred.
It is estimated that a 100 basis point increase/decrease in interest rates would have the following impact:
Net investment earnings
Net claims incurred
(Loss) income before income taxes
70 2022-23 SGI CANADA Annual Report
(thousands of $)
100 basis point increase
2023
2022
100 basis point decrease
2023
2022
$
(25,809) $
(17,346)
(22,696) $
(17,315)
25,809 $
17,346
22,696
17,315
(8,463)
(5,381)
8,463
5,381View entire presentation