2022-23 SGI CANADA Annual Report
Corporately, SGI has implemented cloud-based productivity technology which better supports collaboration and
provides efficiencies. This technology enables employees to work effectively and securely from the office, their
home or wherever else they may be, and it allows employees to virtually interact with customers, business partners
and each other with ease. These technologies have and will continue to afford the Corporation flexibility in how it
operates and how it responds to business challenges.
Financial Capital
Adequate capitalization is crucial for insurers competing in the P&C insurance market in Canada. Not only is it
important to ensure adequate funding is available to pay policyholder claims, but it allows a company to be flexible
in its product offerings in a competitive marketplace. In addition, regulators have certain capital requirements that
must be met in order to sell P&C insurance in each province. Without adequate capitalization, the Corporation would
not be capable of meeting its significant five-year growth targets.
The Corporation's main sources of capital are retained earnings and cash injections in the form of equity advances
from its parent, CIC. These advances form the Corporation's equity capitalization. There were no new equity
advances to the Corporation from its parent during the year.
In Canada, either the Office of the Superintendent of Financial Institutions (OSFI) or provincial regulators regulate
P&C insurers. Regulators require insurers to operate with a level of capital above their internal MCT target.
The Corporation's Board of Directors has approved capital management policies for the Corporation and each of its
subsidiaries, prepared in accordance with Guideline A-4, Regulatory Capital and Internal Capital Targets, which OSFI
issued in January 2014. The policies establish internal MCT targets that are used as minimum targets for regulatory
purposes. The internal targets require that capital available be significantly more than capital required. The cushion
provides the ability for insurers to cope with volatility in markets and economic conditions, innovations in the
industry, consolidation trends and international developments, and to provide for risks not explicitly addressed,
including those related to systems, data, fraud and legal matters. The policies also establish operating MCT targets
that provide for an operating cushion above the internal targets.
The Corporation and its subsidiaries maintain MCTs in excess of their internal targets as follows:
Company
March 31, 2023
March 31, 2022
Internal Target
Operating Target
SGI CANADA (consolidated)
233%
242%
213%
242%
SGI CANADA Insurance Services Ltd.
253%
312%
225%
268%
(consolidated)
Coachman Insurance Company
442%
480%
257%
305%
Financial liquidity represents the ability of the Corporation's companies to fund future operations, pay claims in a
timely manner and grow. A main indicator of liquidity is the cash flow generated from operating activities, as reported
on the Consolidated Statement of Cash Flows.
The Corporation generated consolidated operating cash flows of $107.4 million during the year. This cash flow is
invested so that it is available to pay claims as they come due and to meet dividend requirements to its parent, CIC.
For the cash flow the Corporation retains, its enabling legislation requires it to follow the same investment criterion
that federally regulated P&C companies must follow. This means the majority of the Corporation's investments
are in highly liquid securities that can be sold in a timely manner in order to satisfy financial commitments. As at
March 31, 2023, 45.0% (March 31, 2022 - 39.3%) of the investment portfolio was in treasury bills and highly liquid
bonds and debentures issued by the federal and provincial governments.
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