2022-23 SGI CANADA Annual Report

17. Capital Management The Corporation's primary objectives when managing capital are to ensure adequate funding is available to pay policyholder claims, be flexible in its product offerings and support its growth strategies, while providing an adequate return to its shareholder. Its main sources of capital are retained earnings and cash injections in the form of equity advances from its parent, CIC. There were no changes to the Corporation's capital structure during the year. The Corporation is not a regulated insurer; however, its subsidiaries, SCISL and Coachman, are subject to rate regulation related to their automobile premiums and solvency regulation from the provincial regulators in Saskatchewan and Ontario respectively. Although not federally regulated, the Corporation has chosen to follow the guidance provided by the Office of the Superintendent of Financial Institutions (OSFI) in determining and monitoring capital targets. The Corporation uses a common industry measurement, the Minimum Capital Test (MCT), to monitor capital adequacy. The MCT is a risk-based capital adequacy formula that assesses risks to assets, policy liabilities and off balance sheet exposures by applying various factors to determine a ratio of capital available over capital required. The Board of Directors 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, in excess of 150%, which are used by the regulators as minimum targets for supervisory purposes. The policies also establish operating MCT targets that provide for an operating cushion above the internal targets. The Corporation and its subsidiaries strive to maintain MCTs in excess of their internal targets. The Corporation's MCT as at March 31, 2023 was 233% relative to its internal target MCT of 213%. 18. Change in Non-Cash Operating Items The change in non-cash operating items is comprised of the following: (thousands of $) 2023 2022 Accounts receivable Unpaid claims recoverable from reinsurers Reinsurers' share of unearned premiums Deferred policy acquisition costs Prepaid expenses Accounts payable and accrued liabilities Premium taxes payable Amounts due to reinsurers Unearned reinsurance commissions Unearned premiums Accrued pension liabilities $ (21,877) $ (19,307) 26,087 (31,476) (14,896) (3,200) (9,940) (9,690) (2,007) (727) 11,989 10,511 1,113 450 5,106 11,778 996 228 52,942 36,839 (1,570) (1,684) Provision for unpaid claims 51,437 93,826 Total change in non-cash operating items $ 99,380 $ 87,548 74 2022-23 SGI CANADA Annual Report

View entire presentation