2022-23 SGI CANADA Annual Report

The Corporation's estimated sensitivity of its provision for unpaid claims to changes in best estimate assumptions in the unpaid claims liabilities is as follows: Assumption Discount rate Discount rate (thousands of $) Change to net provision for unpaid claims Sensitivity 2023 2022 +100 bps $ (17,346) $ (17,315) - 100 bps 17,346 17,315 The net provision for unpaid claims refers to the provision for unpaid claims net of unpaid claims recoverable from reinsurers. The method used for deriving this sensitivity information did not change from the prior period. Financial risk The nature of the Corporation's operations result in a Consolidated Statement of Financial Position that consists primarily of financial instruments. The risks that arise are credit risk, market risk and liquidity risk. Significant financial risks are related to the Corporation's investments. These financial risks are managed by having a Statement of Investment Policies and Goals (SIP&G), which is approved annually by the Corporation's Board of Directors. The SIP&G provides guidelines to the investment managers for the asset mix of the portfolio regarding quality and quantity of debt and equity investments using a prudent person approach. The asset mix helps to reduce the impact of market value fluctuations by requiring investments in different asset classes and in domestic and foreign markets. The Corporation receives regular reporting from the investment managers and custodian regarding compliance with the SIP&G. The investment managers' performance is evaluated based on return objectives, including realized and unrealized capital gains and losses plus income from all sources, and goals stated in the SIP&G. Credit risk The Corporation's credit risk arises primarily from two distinct sources: accounts receivable (from customers, brokers and reinsurers) and certain investments. The maximum credit risk to which the Corporation is exposed is limited to the carrying value of the financial assets summarized as follows: Cash and cash equivalents Accounts receivable Fixed income investments 1 Unpaid claims recoverable from reinsurers 1 Includes short-term investments, bonds and debentures and the mortgage investment fund (thousands of $) 2023 2022 $ 43,066 $ 324,399 53,492 301,055 1,092,834 27,432 1,014,258 53,519 In addition, the Corporation is exposed to credit risk associated with its structured settlements as described separately in the notes to the consolidated financial statements. Cash and cash equivalents include money market investments of $25.8 million (2022 - $23.9 million). The money market investments mature within 90 days from the date of acquisition and have a credit rating of R-1. 68 2022-23 SGI CANADA Annual Report

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