A look back at the year that ended December 31, Superintendent of Insurance Annual. Business Report

Transcription

1 A look back at the year that ended December 31, Superintendent of Insurance 2013 Annual Business Report

2 Superintendent of Insurance Alberta Treasury Board and Finance Room 402, Street, NW Edmonton, AB T5K 2C3 Phone: Fax: NOVEMBER 2014 ISBN (Print) (Online PDF) ISSN (Print) (Online PDF) Copyright 2014 President of Treasury Board and Minister of Finance and its licensors. All rights reserved.

3 LETTER OF TRANSMITTAL TO THE MINISTER The Honourable Robin Campbell President of Treasury Board and Minister of Finance 323 Legislature Building Avenue Edmonton, AB T5K 2B6 Dear Minister Campbell: Pursuant to section 799(2) of The Insurance Act, I am pleased to send you the 101 st Annual Report of the Superintendent of Insurance, which shows the insurance business transacted in Alberta for the year ending December 31, The report includes: a) a summary of insurance companies licensed under The Insurance Act; and b) summaries of premiums written and claims incurred. Yours truly, [Original Signed] Mark Prefontaine Superintendent of Insurance cc: Ray Gilmour, Deputy Minister Treasury Board and Finance SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT i

4 MESSAGE FROM THE SUPERINTENDENT Many people will look back on the year 2013 as a year of change. That s certainly been the case in the insurance industry in Alberta as highlighted throughout this report. The province has experienced consecutive years of catastrophic losses, capped off with the most expensive natural disaster to ever strike Canada. This has changed the insurance landscape in the province and required the industry to take a look at their business operations and adapt. The 2013 Southern Alberta flood highlighted the opportunity to educate Albertans about what is and what isn t covered by their insurance policy. Looking ahead, consumer awareness will continue to be an important component for the insurance industry. As the industry responds to the flood aftermath with reduced coverage limits and increased deductibles, it will be important now more than ever, to ensure Albertans understand what their policies entail. Faced with the flooding catastrophe in the province in June of 2013, Mr. Brad Geddes, the Deputy Superintendent of Insurance was seconded to the Flood Recovery Taskforce to assist Albertans affected by the devastation. Ms. Laurie Balfour was appointed the Acting Deputy Superintendent of Insurance shortly thereafter and succeeded in leading the team throughout the remainder of 2013, and continuing to provide strong oversight for the provincially regulated entities. This past year also saw a change in the way Alberta s auto insurance regulations are set. The government passed the Enhancing Consumer Protection in Auto Insurance Act in the fall of The Act enables the Auto Insurance Rate Board to approve automobile insurance rates for both mandatory and optional coverage. It also eliminated the industry wide rate adjustment, allowing instead for insurance companies to apply for rate changes based on an as needed, file and approve system. The passage of this Act was the culmination of years of work and consultation with the insurance industry. We should all be proud of this accomplishment. In the coming year, the focus of the Superintendent s office will continue to be on compliance and ensuring the 254 licensed insurance companies continue to operate in a way that is effective, fair and in the interests of Albertans. We are also exploring options on the regulatory side to see if there are ways that we as a government can operate more efficiently and improve on our well functioning system. As we move forward, I look forward to continue working with the insurance industry as we serve Albertans together. [Original Signed] Mark Prefontaine Superintendent of Insurance ii 2013 ANNUAL BUSINESS REPORT SUPERINTENDENT OF INSURANCE

5 SUMMARY OF INSURANCE BUSINESS IN ALBERTA The mission of the Office of the Superintendent of Insurance (Superintendent) is to provide regulatory oversight for the insurance sector that is effective, fair and in the interests of Albertans. We achieve this by taking appropriate and balanced regulatory actions and effectively communicating with Albertans and the insurance industry. The Superintendent regulates two hundred fifty four (254) insurance companies, reciprocal insurance exchanges, fraternal benefit societies and exempt entities that are licensed to operate in Alberta as follows: Property and Casualty Insurers 153 Life Insurers 68 Reciprocal Insurance Exchanges 21 Fraternal Benefit Societies 11 Warranty Provider 1 Total Insurers Licensed in Alberta 254 The Superintendent recovers all the costs of regulation and policy development from industry on an annual basis. In 2013, we collected $2,095,144 from the insurance industry through the Recovery of Administration Costs Regulation. The following is a summary of the business transacted in Alberta during 2013: (in Thousands) Life 1 $5,702,567 General $8,319,301 Total $14,021,868 and Disbursements Life 2 $3,413,983 General $7,107,481 Total and Disbursements $10,521,464 Total Amount of Life Insurance in Force $554,876,118 1 Life premiums include annuities and accident and sickness. 2 Life claims and disbursements include annuities and accident and sickness. SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT iii

6 Superintendent of Insurance The Office of the Superintendent of Insurance (Superintendent) regulates the insurance market in the province to ensure that Albertans have affordable access to the insurance coverage they require, by monitoring the effectiveness of the market, and responding to the needs of the province and its citizens. The Superintendent supervises the solvency, risk management and governance of provincially incorporated insurance companies, reciprocal insurance exchanges and exempt entities. The Superintendent also licenses insurance entities and special brokers, and regulates the market conduct of the insurance industry. The Superintendent also monitors the regulation of insurance agents and adjusters, which is handled by the Alberta Insurance Council. The Superintendent maintains a list of all insurance companies operating in Alberta, which includes their head office information, Attorney for Service, and classes of insurance they hold a license to transact. It also includes companies that have withdrawn, amalgamated or changed names. Licences are issued on a calendar year basis (January 1 to December 31). Albertans can use this list to verify if their insurance company is licensed. The Superintendent s website ( includes quarterly financial data for Alberta Incorporated Insurance Companies and annual financial data for an exempt entity. This financial data includes the Assets, Liabilities and Equity, Statement of Income, Statement of Retained Earnings, Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) and the Minimum Capital Test or Minimum Continuing Capital Surplus Ratio as provided to the Superintendent by the Insurer. iv 2013 ANNUAL BUSINESS REPORT SUPERINTENDENT OF INSURANCE

7 TABLE OF CONTENTS i Letter of Transmittal to the Minister ii Message from the Superintendent iii Summary of Insurance Business in Alberta 2 CHANGING WEATHER 3 INSURER STATISTICS 4 INSURANCE SUPERVISION IN ALBERTA 5 INSURER STATISTICS 6 PREMIUM STATISTICS 7 CHANGING REGULATORY ENVIRONMENT 8 PROVINCIAL INSURER FINANCIAL RESULTS 10 ENFORCEMENT, CERTIFIED EXAMINER SELECTION AND APPEAL BOARDS 12 UNLICENSED INSURANCE 14 COMPARATIVE SUMMARY OF PREMIUMS AND CLAIMS 17 ABSTRACT OF RETURNS 19 Life Insurance Direct 21 Life Insurance Direct, Annuities and Dividends 23 Automobile and Property Insurance 26 Accident and Sickness Insurance 28 Liability and Fidelity Insurance 31 Surety and Boiler And Machinery Insurance 33 Aircraft and Marine Insurance 34 Hail and Title Insurance 35 Mortgage and Credit Insurance 36 Legal Expense and Credit Protection Insurance 36 Other Approved Products and Equipment Warranty LP GLOSSARY SEE LAST PAGE OF THIS REPORT SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT 1

8 CHANGING WEATHER Insured Losses in Alberta (in Millions) 2013 Southern Alberta Flood $1,700 Weather events in Alberta are increasing in both severity and frequency which is resulting in an increased number of large catastrophes. Alberta has experienced four consecutive years of substantial catastrophic losses. All with the exception of the Slave Lake fire in 2011 were weather related, as shown here Alberta Storms $ Slave Lake Fire $ Calgary/Southern Alberta Wind $ Alberta Flood $ Alberta Hail $ Calgary Hail $ Alberta Hail $128 $2,000 $1,750 $1,500 $1,250 $1, Calgary Hail $ Alberta Tornado, Flood and Hail $183 $ Edmonton Tornado $260 $500 $250 $0 During 2013 the Superintendent responded to inquires about the Southern Alberta flood in order to assist Albertans in understanding their policy, coverage and the claims process. We also actively collaborated and liaised with other Government of Alberta departments to deliver needed services through the Disaster Recovery Program. The floods highlighted the need for an increased awareness of what coverage is available, and what coverage Albertans have purchased to protect themselves and their assets. The increased losses from catastrophes have resulted in the insurance industry reviewing: Charged for Property Policies the 2013 Southern Alberta floods were the costliest natural disaster in Canadian history and will have a direct impact on both residential and commercial insurance premiums as insurance policies renew; Increased Deductibles insurers are evaluating their exposure to future losses and in many cases transferring the risk back to consumers by increasing deductibles payable; and Reduced Coverage Limits insurers are separating the coverage limits and deductibles for items such as sewer back up, wind and hail coverage. Each of these items now has sub limits ANNUAL BUSINESS REPORT SUPERINTENDENT OF INSURANCE

9 INSURERS LICENSED There were two hundred fifty four (254) insurance entities licensed at December 31, Business Type Alberta Extra Provincial Federal 3 Total Property and Casualty Insurance Companies Life Insurance Companies Fraternal Societies Reciprocal Insurance Exchanges Warranty Providers Total (a) The following two (2) insurance entities were licensed in Alberta in 2013, one (1) insurance company and one (1) reciprocal insurance exchange. Orion Travel Insurance Company Molecule Exchange Reciprocal (b) The following five (5) insurance companies withdrew from Alberta in CMFG Life Insurance Company Fidelity National Title Insurance Company Manulife Canada Ltd Massachusetts Mutual Life Insurance Company Utica Mutual Insurance Company (c) The following five (5) insurance companies changed their name in Former Name Current Name Chartis Insurance Company of Canada AIG Insurance Company of Canada Grain Insurance and Guarantee Company Wynward Insurance Group Household Life Insurance Company Pavonia Life Insurance Company of Michigan International Insurance Company of Hanover Ltd. International Insurance Company of Hanover Plc. LS Mutual Life Insurance Company Humania Assurance Inc. (d) The following insurance companies amalgamated in Northbridge Indemnity Insurance Corporation amalgamated with Northbridge General Insurance Corporation. Continuing company name is now Northbridge General Insurance Corporation. 3 Includes branch operations of foreign insurers. SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT 3

10 INSURANCE SUPERVISION IN ALBERTA Insurance entities operating in Alberta are subject to two forms of regulatory oversight: 1. Market Conduct Oversight of Insurance Entities The Superintendent oversees the market conduct of two hundred fifty four (254) insurance entities licensed to operate in Alberta. Taking a risk based approach, the Superintendent focuses its supervisory efforts on areas with the greatest potential to harm the interests of consumers, to damage public confidence in the insurance marketplace and instances of non compliance with legislation. A variety of mechanisms are employed in monitoring the market conduct of insurance entities. Depending on the aspect of market conduct under scrutiny oversight activities include, but are not limited to, inquiring into consumer concerns and complaints, identifying emerging trends and issues, evaluating complaint data, conducting investigations, surveying stakeholders, reviewing court decisions, performing desk and on site examinations, analyzing industry filings and monitoring the media. 2. Prudential Oversight of Insurance Entities The Superintendent monitors the solvency, risk management and governance of Alberta incorporated insurance companies, reciprocal insurance exchanges and exempt entities. It relies on regulators in the applicable provincial or federal jurisdiction for oversight of extra provincial or federal companies. Alberta s risk based supervision is focused on an assessment of the oversight functions: financial, compliance, senior management, board, operational management, risk management, actuarial and internal audit. It also considers the size, risk and complexity and structure of each individual entity. Prudential oversight ensures that insurance entity obligations to policyholders can be met 20 now and in the future Reciprocal Insurance Exchanges Property and Casualty Insurance Companies Life Insurance Companies Nearly seventy five (75) per cent of the insurance business conducted in the province is subject to federal prudential supervision, through the Office of the Superintendent of Financial Institutions (OSFI). The number of provincially supervised insurance entities has been increasing. Since 2010, the number of reciprocal insurance exchanges increased by forty five (45) per cent and has had a seventy seven (77) per cent increase as compared to 2006, as shown in the graph depicting results from ANNUAL BUSINESS REPORT SUPERINTENDENT OF INSURANCE

11 INSURER STATISTICS Reported In Alberta During 2013 (in Thousands) 111 Property Liability 75 Automobile 72 Accident and Sickness 60 Life The number of insurers that reported premiums written in Alberta during 2013 is shown here by class of insurance. 44 Boiler and Machinery Fidelity 27 Marine 26 Surety Aircraft 8 Legal Expense 7 Credit 40 7 Equipment Warranty 5 Title 3 Credit Protection 20 3 Hail 2 Mortgage 0 SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT 5

12 PREMIUM STATISTICS Alberta supervised insurance entities reported total direct written premiums of $1.0 billion in The breakdown between property and casualty insurance and life insurance is shown below. 77% Property and Casualty Insurance 23% Life Insurance Insurance is a $14.0 billion business in Alberta. In 2013, of the total premium dollars paid by all two hundred fifty four (254) insurance entities licensed in Alberta, fifty nine (59) per cent went to property and casualty insurers and forty one (41) 4 per cent went to the life insurance industry: 59% Property and Casualty Insurers 41% Life Insurers Property and casualty insurers received $8.3 billion in premiums in The breakdown of premiums for the three largest classes, and total of all other classes of business are as shown: 34% Property Insurance 11% Liability Insurance 8% Other Insurance 47% Automobile Insurance Life insurers received $5.7 billion in premiums in The breakdown of premiums was split between life and accident and sickness insurance are as shown: 55% Accident and Sickness 45% Life 4 Life premiums include both life and accident and sickness ANNUAL BUSINESS REPORT SUPERINTENDENT OF INSURANCE

13 CHANGING REGULATORY ENVIRONMENT Alberta s regulatory framework continues to evolve and respond to changes in the market, and the environment that insurance entities operate in. One influence in our framework is the International Association of Insurance Supervisors Insurance Core Principles (ICPs). In June 2013 the International Monetary Fund conducted a review of Canada s insurance sector through its Financial Sector Assessment Program (FSAP). An FSAP is a comprehensive and in depth analysis of a country s financial sector. This time, the FSAP recognized that in Canada, the responsibilities of supervision in the Canadian insurance sector are shared by both the federal government and the provinces, and included a review of the market conduct activities in two provinces. Alberta worked with our provincial counterparts to prepare for the FSAP, while considering the ICP standards in the context of our own framework and operating environment. As the Superintendent reviews Alberta s observance of the ICP s, our framework, practices and procedures are being examined. As part of this review, the Superintendent issued two interpretation bulletins specific to provincially regulated insurance entities to increase the transparency of our practices, and notify all stakeholders of our regulatory expectations. 1. Bulletin Supervision of Provincially Regulated Reciprocal Insurance Exchanges was issued to notify all provincially regulated reciprocal insurance exchanges of the Superintendent s supervisory standard. The Superintendent confirmed that the supervision of provincially regulated reciprocal insurance exchanges would be generally consistent with the supervision of provincially incorporated property and casualty insurers with respect to solvency, risk management and governance. The Superintendent continues to consider the size, risk, complexity and structure of each provincially regulated reciprocal insurance exchange when determining the applicability of relevant legislation, regulations and guidelines. 2. Bulletin Adoption of OSFI Guidelines for Provincially Regulated Insurance Entities was issued to inform all provincially incorporated property and casualty insurers, life insurers and reciprocal insurance exchanges (collectively, provincially regulated insurance entities ) of the applicable solvency, governance and other supervisory guidelines currently in effect. The list of applicable Guidelines adopted by Alberta was added to our website, and continues to be reviewed as new regulatory guidance becomes available and is deemed to be applicable to provincially regulated insurance entities. In addition, Bill 39, Enhancing Consumer Protection in Auto Insurance Act passed third reading in the Legislative Assembly in November This legislation had three main objectives: 1. Establishing the foundation for changes to the automobile insurance rating setting process, including giving the Alberta Automobile Insurance Rate Board responsibility and authority for reviewing and approving rates for additional coverage. 2. Amending the new home warranty section in the Insurance Act to make it more consistent with existing wording elsewhere in the Insurance Act. 3. Amending miscellaneous provisions in the Act to reflect existing best practices and to enhance consumer protection. One example of enhanced consumer protection is requiring insurance entities to provide the Superintendent copies of compliance undertakings in other provinces so the Superintendent is kept informed on the overall market conduct of insurance entities. The Enhancing Consumer Protection in Auto Insurance Act came into force on July 1, SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT 7

14 PROVINCIAL INSURER FINANCIAL RESULTS Alberta is the primary regulator for ten (10) provincially incorporated insurers and one (1) warranty provider. There are nine entities offering property and casualty insurance and two offering life insurance. A summary of the 2013 results for these entities is shown in the table below: 2013 Financial Results of Provincial Property and Casualty Insurers Name of Property and Casualty Insurers Assets Capital Direct Net Income Minimum Capital Test Alberta Motor Association Insurance Company 592, , ,805 3, % Alberta New Home Warranty Program 56,378 32,346 8,484 (192) 618% Canadian Farm Insurance Corp. 12,733 8,122 10,346 1, % Fortress Insurance Company 12,093 3, (1,420) 249% Mennonite Mutual Insurance Company 11,615 5,193 7,524 (399) 371% Millennium Insurance Corporation 420, , ,469 27, % Orion Travel Insurance Company 23,060 16,111 4,625 (8,733) 715% Peace Hills General Insurance Company 325,276 74, ,740 (711) 277% Trans Global Insurance Company 9,396 5,773 11, % Total Property and Casualty Insurers 1,463, , ,026 21, Financial Results of Provincial Life Insurers Name of Life Insurers Assets Capital Direct Net Income Minimum Continuing Capital and Surplus Requirements First Canadian Insurance Corporation 491, , ,154 25, % Trans Global Life Insurance Company 8,997 6,577 9, % Total Life Insurers 500, , ,479 25,860 Total Alberta Incorporated Insurers 1,963, , ,505 47, ANNUAL BUSINESS REPORT SUPERINTENDENT OF INSURANCE

15 PROVINCIAL INSURER FINANCIAL RESULTS, CONTINUED... Alberta is the primary regulator for sixteen (16) provincial reciprocal insurance exchanges; fourteen (14) are active, one (1) 5 did not commence operations prior to December 31, 2013 and one (1) 6 is in run off. A summary of the 2013 results for the active reciprocals is shown in the table below: 2013 Financial Results of Reciprocal Insurance Exchanges Name of Reciprocal Insurance Exchanges Assets Capital Direct Net Income Alberta Municipal Insurance Exchange Alberta Roofing Contractors Reciprocal Insurance Exchange Alberta School Boards Insurance Exchange Canadian Airports Reciprocal Insurance Exchange Canadian Egg Industry Reciprocal Alliance Canadian Lawyers Insurance Association Canadian Lawyers Liability Assurance Society Energy Insurance Reciprocal FedGas Insurance Reciprocal Exchange Genesis Reciprocal Insurance Exchange Jubilee Reciprocal Insurance Exchange Provincial Health Authorities of Alberta Liability and Property Insurance Plan Real Estate Insurance Exchange Urban Schools Insurance Consortium 39,706 13,383 13,987 1,068 1,784 1, ,399 3,214 3, ,742 3,387 2,810 (78) 10,345 8,433 2,403 1,648 97,319 24,673 12,443 1,859 95,037 13,185 13,770 1,401 34,401 2,905 23,596 (3,600) 2,455 1, ,836 11,219 4,453 1,027 15,520 5,011 7,658 (125) 141,340 19,012 19,846 (2,078) 16,805 6,897 4,043 2,138 16,203 5,037 5,728 1,213 Total Reciprocal Insurance Exchanges 518, , ,959 5,894 5 Molecule Exchange Reciprocal was licensed in 2013 and did not commence operations, therefore there is no financial information to report. 6 Alberta Local Authorities Reciprocal Insurance Exchange is in run off. SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT 9

16 ENFORCEMENT, CERTIFIED EXAMINER SELECTION AND APPEAL BOARDS Enforcement Activities As part of a risk-based approach to the supervision of the insurance industry in Alberta, the Superintendent investigates consumer complaints, allegations of misconduct on the part of insurers, unfair acts or practices taken against consumers and occurrences of non compliance with the Insurance Act (Act) and its attendant regulations. Upon the completion of an investigation the Superintendent, pursuant to the provisions of the Act and the Enforcement and Administration Regulation, determines if further regulatory action is warranted. Regulatory action includes but is not limited to the assessment of administrative penalties. During 2013 the Superintendent of Insurance assessed an administrative penalty for non compliance with section 555 of the Act. The penalty was issued because the insurer refused to issue, renew or cancel private passenger automobile insurance policies contrary to the provisions of the legislation, further details can be found on our website at Certified Examiner Selection As a result of a comprehensive review of automobile insurance that had been undertaken and extensive reforms that were being made to automobile insurance legislation the Minor Injury Regulation (MIR) was passed in Minor injuries are defined in the MIR as Whiplash Associated Disorders level I or II, strains and sprains. The general damages portion of automobile accident claims awards for minor injuries is capped under the MIR. General damages are commonly referred to as pain and suffering damages. awards for all other damages arising out of automobile accidents are not capped by the MIR. In accordance with the MIR the cap is reviewed annually. The cap is currently $4,777. In the event of a disagreement between a claimant and an insurance company as to whether or not an injury arising from a motor vehicle accident is a minor injury or if a minor injury has caused a serious impairment, the Certified Examiner process is mandated under the MIR to resolve the dispute. Under the Certified Examiner process, either party may apply to the Superintendent to appoint a physician from the Certified Examiner Register to assess the claimant and determine the nature of the injury or if a minor injury has resulted in a serious impairment. The appointment of Certified Examiners began in 2005 and has averaged 135 appointments annually. The number of Certified Examination applications processed by the Superintendent each year since 2005 is presented below ANNUAL BUSINESS REPORT SUPERINTENDENT OF INSURANCE

17 ENFORCEMENT, CERTIFIED EXAMINER SELECTION AND APPEAL BOARDS, CONTINUED... For more information about the Certified Examiner process, the Certified Examiner Register or application forms for the appointment of a Certified Examiner please refer to our website, at Appeal Boards In 2013, two (2) appeal board panels were established by the Superintendent. The decisions were as follows: Number of Appeals Decision 1 Abandoned 1 Dismissed NOTE: For more information about the appeal board decisions, please refer to the Alberta Insurance Council. This information was extracted from Appendix H of the Alberta Insurance Council Annual Report, which is available on their website: media/files/upload/annual%20report%202013%20v1.pdf SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT 11

18 UNLICENSED INSURANCE Special Brokers The Superintendent licenses special brokers. Special brokers are individuals who are permitted to negotiate insurance with unlicensed insurers in respect of any person or property in Alberta that is unavailable in the current regulated insurance market. In 2013 Alberta licensed forty five (45) special brokers. Special brokers are required to pay taxes on premiums that would be payable if the premiums had been received by a licensed insurer. Special brokers report their activity on a monthly basis to the Superintendent. In 2013, special brokers reported and paid $10.0 million in taxes on $335.0 million in premiums. The amount of tax collected from special brokers for the period is shown below. The amount of unlicensed insurance purchased through special brokers continued to rise in 2013, signaling that the capacity requirements for some sectors outpaced the domestic markets risk appetite. $11,000 $10,000 $9,382 $10,050 $9,000 $7,757 $8,044 $8,000 $7,093 $7,175 $7,000 $6, !"#$%& ANNUAL BUSINESS REPORT SUPERINTENDENT OF INSURANCE

19 UNLICENSED INSURANCE, CONTINUED... Unlicensed Insurance The Superintendent also collects a charge from individuals and companies who choose to purchase their insurance from an unlicensed insurer without utilizing a special broker. The charge for unlicensed insurance is fifty (50) per cent of the premium paid. Alberta collected $793,000 in charges on unlicensed insurance in A comparison of the amounts collected from is shown below. The volatility in the amount collected is due in part to the voluntary disclosure by the purchasers of insurance. $12,000 $9,729 $10,000 $8,000 $6,000 $4,000 $2,000 $1,223 $712 $1,893 $425 $793 $ NOTE: The 2010 charge includes a $9.1 million disclosure related to a prior period. Changing Technology 2013 was a year of review, preparation and development with respect to the technology needed to assist in the fulfilling of regulatory compliance work. As our regulatory expectations and requirements evolve and change with the market, so too must technology. In 2013 the Superintendent initiated a business process mapping and review to identify opportunities to improve efficiency, meet changing regulatory needs and lay the groundwork for the development of a new licensing system. During the year significant progress was made on the development of a web-based filing system for Special Brokers. This new system is expected to automate the manual filing of monthly reporting returns and improve the user experience for the licensed special brokers. The new system will be launched during SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT 13

20 COMPARATIVE SUMMARY OF PREMIUMS AND CLAIMS and by Class of Insurance in Alberta Class Including Adjustment Expenses Ratio (%) Accident & Sickness 2,566,734 1,416, Aircraft 37,752 14, Automobile 3,943,246 2,982, Boiler & Machinery 72,502 12, Credit 7,160 1, Credit Protection 22, Fidelity 11,426 (10,914) (95.5) Hail 38,109 24, Legal Expense 2,014 1, Liability 919, , Marine 71,029 46, (30.6) Mortgage 167,830 24, Property 2,828,949 3,430, Surety 76,555 55, Title 19,807 3, Equipment Warranty 7 96,658 17, and Including Dividends in Alberta Year LIFE INSURANCE* All and Other Disbursements Direct Ratio OTHER THAN LIFE Including Direct Adjustment Ratio Expenses ,630,364 1,421, ,152,045 3,229, ,644,212 1,322, ,887,821 3,217, ,715,900 1,328, ,598,330 3,595, ,857,306 1,475, ,875,568 3,444, ,960,712 1,512, ,186,206 4,584, ,947,587 1,568, ,918,386 3,420, ,117,698 1,557, ,506,155 4,271, ,324,825 1,555, ,035,095 4,927, ,574,897 1,628, ,175,568 4,660, ,608,230 1,663, ,496,755 4,993, ,611,396 1,677, ,062,907 6,555, ,716,455 1,769, ,081,440 6,617, ,135,833 1,997, ,886,035 8,523, * Includes individual and group insurance and individual and group annuities. 7 In prior years Equipment Warranty was included with Boiler & Machinery ANNUAL BUSINESS REPORT SUPERINTENDENT OF INSURANCE

21 COMPARATIVE SUMMARY OF PREMIUMS AND CLAIMS, CONTINUED... Comparative Analysis of Life Insurance in Force (Alberta 2013 Businesses Only) Year* Amount of Insurance in Force INDIVIDUAL Amount of Collected Average Annual Premium Per $1,000 Insurance in Force Amount of Insurance in Force GROUP Amount of Collected Average Annual Premium Per $1,000 Insurance in Force ,254, , ,036, , ,518, , ,762, , ,987, , ,616, , ,375, , ,179, , ,293,107 1,011, ,405, , ,761,064 1,085, ,884, , ,096,739 1,184, ,299, , ,217,446 1,251, ,695, , ** 226,862,561 1,313, ,484, , ,833,324 1,382, ,535, , ,003,318 1,486, ,904, , ,378,255 1,545, ,823, , ,690,964 1,637, ,185, , * Data for the period excludes Fraternal Societies. Beginning in 2011 data includes Fraternal Societies. ** Adjusted NOTE: The figures above do not include annuities. SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT 15

22 INSURANCE COMPANIES OPERATING IN ALBERTA The Superintendent maintains a list of Insurance Companies operating in Alberta. This list can be found at: The list includes the insurance entities head office address, Attorney for Service, and the classes of insurance they are licensed to transact. The Superintendent also maintains a listing of insurance companies that no longer operate in Alberta. The list can be found at: Operating-in-Alberta.pdf. The list includes the insurance entity and the historical information on why they no longer operate in Alberta ANNUAL BUSINESS REPORT SUPERINTENDENT OF INSURANCE

23 ABSTRACT OF RETURNS DISCLAIMER The following information was obtained from the 2013 annual filings filed with Alberta for provincial and extra provincial insurance entities and information filed with the Office of the Superintendent of Financial Institutions for federal insurance entities. While every effort has been made to ensure the accuracy of this report, decisions should not be made solely on the information contained in it. SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT 17

24 ANNUAL BUSINESS REPORT SUPERINTENDENT OF INSURANCE

25 ABSTRACT OF THE RETURNS OF COMPANIES TRANSACTING LIFE INSURANCE DIRECT PREMIUMS WRITTEN IN THE PROVINCE OF ALBERTA FOR 2013 Name of Licensed Insurance Company Individual INSURANCE PREMIUMS Group Total CONSIDERATION FOR ANNUITIES Individual Group Total Actra Fraternal Benefit Society Aetna Life Insurance Company Allianz Life Insurance Company of North America American Bankers Life Assurance Company of Florida 71 41,643 41,714 41,714 American Health and Life Insurance Company 1 2,229 2,230 2,230 American Income Life Insurance Company 13,630 13,630 13,630 Assumption Mutual Life Insurance Company 2, , ,814 Assurant Life of Canada 451 5,755 6,206 1,522 10,477 11,999 18,205 Blue Cross Life Insurance Company of Canada ,437 10,545 10,545 BMO Life Assurance Company 33, , ,368 31,988 66,155 BMO Life Insurance Company 1,782 1,782 1,782 Canada Life Assurance Company (The) 197, , ,103 5,882 6,481 12, ,466 Canadian Premier Life Insurance Company 16,715 16,715 16,715 CIBC Life Insurance Company Limited CMFG Life Insurance Company Combined Insurance Company of America Connecticut General Life Insurance Company Croatian Fraternal Union of America CT Financial Assurance Company Cumis Life Insurance Company 2,121 20,037 22,158 22,158 Desjardins Financial Security Life Assurance Company 18,032 18,674 36,706 8, ,277 45,983 Empire Life Insurance Company (The) 26,828 3,204 30,032 11, ,378 42,410 Equitable Life Insurance Company of Canada (The) 53,936 6,292 60,228 9, ,796 70,024 FaithLife Financial 3,646 3, ,442 First Canadian Insurance Corporation 44,324 44,324 44,324 Foresters Life Insurance Company 6,215 2,237 8,452 7,325 7,325 15,777 Gerber Life Insurance Company Grand Orange Lodge of British America Benefit Fund (The) Great-West Life Assurance Company (The) 71, , ,231 14,572 1,399 15, ,202 Humania Assurance Inc Industrial Alliance Insurance and Financial Services Inc. 138,642 21, , ,310 13, , ,629 Knights of Columbus 22,784 22, ,810 Grand Total SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT 19

26 LIFE INSURANCE DIRECT PREMIUMS WRITTEN, CONTINUED... Name of Licensed Insurance Company Individual INSURANCE PREMIUMS Group Total CONSIDERATION FOR ANNUITIES Individual Group Total La Capitale Financial Security Insurance Company 1, , ,444 La Capitale Insurance and Financial Services Inc. 1,257 1,013 2,270 1,407 1,407 3,677 Life Insurance Company of North America London Life Insurance Company 187, ,575 4,249 62,343 66, ,167 Manufacturers Life Insurance Company (The) 260, , ,760 24,371 25,264 49, ,395 National Bank Life Insurance Company New York Life Insurance Company Order of United Commercial Travelers of America (The) Pavonia Life Insurance Company of Michigan 26 2,193 2,219 2,219 Primerica Life Insurance Company of Canada 39,841 39, ,842 RBC Life Insurance Company 112,958 2, , ,415 Reliable Life Insurance Company Scotia Life Insurance Company 150 1,757 1,907 1,907 Sons of Scotland Benevolent Association SSQ Insurance Company Inc ,073 9,987 9,987 SSQ Life Insurance Company Inc. 10,316 10, ,327 Standard Life Assurance Company of Canada (The) 19,128 11,570 30,698 3, ,437 34,135 State Farm International Life Insurance Company Ltd. 11, , ,730 Sun Life Assurance Company of Canada 273, , ,040 71, , , ,968 TD Life Insurance Company 1, ,730 1,730 The Excellence Life Insurance Company The Union Life Mutual Assurance Company Trans Global Life Insurance Company Transamerica Life Canada 110, ,021 (10) (10) 110,011 Ukrainian Fraternal Society of Canada United American Insurance Company Wawanesa Life Insurance Company (The) 14,593 1,010 15,603 10,591 10,591 26,194 Western Life Assurance Company 7,603 7,150 14,753 14,753 Totals and Average Claim Ratios 1,637, ,475 2,507, , , ,218 3,135,833 Grand Total ANNUAL BUSINESS REPORT SUPERINTENDENT OF INSURANCE

27 ABSTRACT OF THE RETURNS OF COMPANIES TRANSACTING LIFE INSURANCE DIRECT CLAIMS, ANNUITIES AND DIVIDENDS IN THE PROVINCE OF ALBERTA FOR 2013 Name of Licensed Insurance Company Individual Group Total Aetna Life Insurance Company Allianz Life Insurance Company of North America American Bankers Life Assurance Company of Florida 3,211 3,211 American Health and Life Insurance Company American Income Life Insurance Company 2,484 2,484 Assumption Mutual Life Insurance Company 2, ,446 3,862 Assurant Life of Canada 3,308 3,794 7,102 AXA Equitable Life Insurance Company Blue Cross Life Insurance Company of Canada 5,490 5,490 BMO Life Assurance Company 19, ,365 25,210 BMO Life Insurance Company Canada Life Assurance Company (The) 81,826 27,551 39, ,995 Canadian Premier Life Insurance Company 3,279 3,279 CIBC Life Insurance Company Limited CMFG Life Insurance Company Combined Insurance Company of America Connecticut General Life Insurance Company Croatian Fraternal Union of America CT Financial Assurance Company Cumis Life Insurance Company 4,035 4, ,640 Desjardins Financial Security Life Assurance Company 27,338 1,106 15,409 43,853 Empire Life Insurance Company (The) 14,006 1,434 14,760 30,200 Equitable Life Insurance Company of Canada (The) 19,445 1,975 6,325 27,745 FaithLife Financial 3, ,737 First Canadian Insurance Corporation 2,688 2,688 Foresters Life Insurance Company 2, ,435 8,346 Gerber Life Insurance Company Grand Orange Lodge of British America Benefit Fund (The) 7 7 Great-West Life Assurance Company (The) 125,492 17,583 28, ,348 Grand Total SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT 21

28 LIFE INSURANCE DIRECT CLAIMS, ANNUITIES AND DIVIDENDS, CONTINUED... Name of Licensed Insurance Company Individual Group Total Humania Assurance Inc. 1 1 Industrial Alliance Insurance and Financial Services Inc. 50, , ,391 Jackson National Life Insurance Company 4 4 Knights of Columbus 4,096 3, ,394 La Capitale Financial Security Insurance Company 1, ,129 La Capitale Insurance and Financial Services Inc ,002 Life Insurance Company of North America London Life Insurance Company 84,212 61,167 74, ,493 Manufacturers Life Insurance Company (The) 202,263 27, , ,906 National Bank Life Insurance Company New York Life Insurance Company Order of United Commercial Travelers of America (The) Pavonia Life Insurance Company of Michigan 1,394 1,394 Primerica Life Insurance Company of Canada 17, ,073 Principal Life Insurance Company RBC Life Insurance Company 55, ,955 Reliable Life Insurance Company Scotia Life Insurance Company Sons of Scotland Benevolent Association SSQ Insurance Company Inc. 5,190 5,190 SSQ Life Insurance Company Inc. 6, ,240 Standard Life Assurance Company of Canada (The) 19,605 2,387 32,812 54,804 Standard Life Assurance Limited 1,406 1,406 State Farm International Life Insurance Company Ltd. 3, ,273 5,208 Sun Life Assurance Company of Canada 218,595 62, , ,976 TD Life Insurance Company Trans Global Life Insurance Company Transamerica Life Canada 56, ,609 58,952 Ukrainian Fraternal Society of Canada 1 1 Ukrainian National Association Inc. 1 1 United American Insurance Company 7 7 Wawanesa Life Insurance Company (The) 6, ,991 15,015 Western Life Assurance Company 2, ,839 Totals and Average Claim Ratios 1,058, , ,524 1,997,942 Grand Total ANNUAL BUSINESS REPORT SUPERINTENDENT OF INSURANCE

29 ABSTRACT OF THE RETURNS OF COMPANIES TRANSACTING AUTOMOBILE AND PROPERTY INSURANCE IN THE PROVINCE OF ALBERTA FOR 2013 Name of Licensed Insurance Company AUTOMOBILE PROPERTY ACE INA Insurance 12,274 6, % 22,561 68, % Affiliated F.M. Insurance Company 6,795 10, % AIG Insurance Company of Canada 9,316 5, % 161, , % Alberta Motor Association Insurance Company 221, , % 64,220 68, % Alberta Municipal Insurance Exchange % 7,383 4, % Alberta New Home Warranty Program 8,483 4, % Alberta School Boards Insurance Exchange 1,460 1, % Allianz Global Risk US Insurance Company 161 (2,277) -1,414.3% 30,139 45, % Allstate Insurance Company of Canada 75,487 50, % 30,949 21, % American Bankers Insurance Company of Florida 25,771 6, % American Road Insurance Company 1,849 3, % Ascentus Insurance Ltd. (78) Aspen Insurance U.K. Limited 270 (52) -19.3% Asset Protection Insurance Exchange % Associated Electric & Gas Insurance Services Limited 3,405 7, % Aviva Insurance Company of Canada 217, , % 128, , % AXA Assurances Inc. (3,627) (9,532) 262.8% (18) 2,803-15,572.2% AXA Insurance (Canada) (5) 19 (106) % AXA Pacific Insurance Company (3,627) (9,528) 262.7% (36) 2,909-8,080.6% AXIS Reinsurance Company (Canadian Branch) ,882 1,588.3% Berkley Insurance Company 134 1,744 1,301.5% Boiler Inspection and Insurance Company of Canada 22 (100) % Canadian Airports Reciprocal Insurance Exchange (CARIE) % Canadian Direct Insurance Incorporated 51,383 35, % 12,903 16, % Canadian Egg Industry Reciprocal Alliance (CEIRA) 505 (126) -25.0% Canadian Farm Insurance Corp. 4,173 1, % 3,383 2, % Canadian Northern Shield Insurance Company % Canadian Universities Reciprocal Insurance Exchange 2,382 5, % Canassurance Insurance Company % Certas Direct Insurance Company 12,823 12, % 1, % Chubb Insurance Company of Canada 8,159 4, % 33, , % Continental Casualty Company 10,034 7, % 22,858 9, % Co-operators General Insurance Company 292, , % 236, , % CorePointe Insurance Company (594) Coseco Insurance Company 13,903 14, % 5,913 8, % Cumis General Insurance Company 2,884 1, % 3,277 2, % Dominion of Canada General Insurance Company (The) 77,150 52, % 49,007 59, % Ecclesiastical Insurance Office Public Limited Company 9,472 20, % Echelon General Insurance Company 2, % 4, % Economical Mutual Insurance Company 144, , % 80,019 95, % Electric Insurance Company % SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT 23

30 AUTOMOBILE AND PROPERTY INSURANCE, CONTINUED... Name of Licensed Insurance Company AUTOMOBILE PROPERTY Elite Insurance Company 19,722 7, % 39,663 26, % Energy Insurance Group 11,633 4, % Everest Insurance Company of Canada % % Factory Mutual Insurance Company 31,891 13, % Federal Insurance Company 11 (2) -18.2% 10 Federated Insurance Company of Canada 21,313 14, % 15,954 9, % Federation Insurance Company of Canada 197 (530) % 3,467 2, % FedGas Insurance Reciprocal Exchange % First North American Insurance Company 2, % Fortress Insurance Company 921 5, % GMS Insurance Inc. 19 Gore Mutual Insurance Company 2,152 8, % Great American Insurance Company 13,918 1, % Guarantee Company of North America (The) 1, % 3,822 13, % Hartford Fire Insurance Company % 3,784 1, % Healthcare Insurance Reciprocal of Canada % Industrial Alliance Pacific General Insurance Corporation 1, % Intact Insurance Company 674, , % 324, , % Jevco Insurance Company 4,122 6, % ,270.4% Jewelers Mutual Insurance Company % Jubilee Reciprocal Insurance Exchange 7,658 La Capitale General Insurance Inc. (79) 13 Legacy General Insurance Company 18 Liberty Mutual Insurance Company 11,391 4, % 16,041 38, % Lloyd's Underwriters 4,941 12, % 141, , % MAX Canada Insurance Company % Mennonite Mutual Insurance Co. (Alberta) Ltd. 19 6,825 4, % Millennium Insurance Corporation 19,873 14, % 4,076 2, % Missisquoi Insurance Company (The) 2 Motors Insurance Corporation 1,918 4, % National Liability & Fire Insurance Company (588) Nipponkoa Insurance Company, Limited 14 (11) -78.6% % Nordic Insurance Company of Canada (The) 477 (616) Northbridge Commercial Insurance Corporation 36,205 47,887 1,32.3% 3,257 1, % Northbridge General Insurance Corporation 27,664 13, % 28,585 44, % Northbridge Indemnity Insurance Corporation 12, , % Northbridge Personal Insurance Corporation % % Novex Insurance Company 68,420 51, % 31,218 42, % Old Republic Insurance Company of Canada 7,810 4, % % Omega General Insurance Company 8,541 5, % Optimum West Insurance Company 3,086 1, % 2,930 1, % Pafco Insurance Company 1 Peace Hills General Insurance Company 64,142 42, % 63,104 52, % Pembridge Insurance Company 8,822 6, % 4,826 2, % Perth Insurance Company (56) ANNUAL BUSINESS REPORT SUPERINTENDENT OF INSURANCE

31 AUTOMOBILE AND PROPERTY INSURANCE, CONTINUED... Name of Licensed Insurance Company AUTOMOBILE PROPERTY Portage La Prairie Mutual Insurance Company (The) 22,774 15, % 17,005 20, % Primmum Insurance Company 131, , % 50,990 24, % Protective Insurance Company % Provincial Health Authorities of Alberta Liability and Property Insurance Plan % RBC General Insurance Company 41,103 27, % 13,645 14, % RBC Insurance Company of Canada 10,020 8, % 4,992 7, % Royal & Sun Alliance Insurance Company of Canada 72,446 45, % 102, , % Saskatchewan Mutual Insurance Company 11,201 7, % Scottish & York Insurance Co. Limited (80) % (86) Security National Insurance Company 489, , % 228, , % Sentry Insurance A Mutual Company % SGI CANADA Insurance Services Ltd. 39,467 30, % 17,089 19, % Sompo Japan Insurance Inc % Sovereign General Insurance Company (The) 18,277 10, % 28,563 52, % St. Paul Fire and Marine Insurance Company 13,142 (1,210) -9.2% 10,893 55, % State Farm Fire and Casualty Company (The) 44,644 36, % State Farm Mutual Automobile Insurance Company 126, , % Sumitomo Marine and Fire Insurance Company Limited (The) % 1, % T.H.E. Insurance Company 2 TD Home and Auto Insurance Company 19,335 12, % 13,918 4, % Temple Insurance Company 6,861 26, % The Mutual Fire Insurance Company of British Columbia 5,912 7, % The Personal Insurance Company 51,838 26, % 15,900 15, % Tokio Marine & Nichido Fire Insurance Co., Ltd % 2, % Traders General Insurance Company 34,634 26, % 13,258 13, % Trafalgar Insurance Company of Canada 16,248 14, % 6,747 8, % Trans Global Insurance Company 3, % Travelers Insurance Company of Canada 2,489 1, % 2,350 2, % Trisura Guarantee Insurance Company % Triton Insurance Company 2, % Unica Insurance Inc. (79) % 13 Unifund Assurance Company 159, , % 58,565 63, % Urban School Insurance Consortium Reciprocal (USIC) 4,251 3, % Utica Mutual Insurance Company 1 Waterloo Insurance Company 8,836 6, % 3,084 2, % Wawanesa Mutual Insurance Company (The) 510, , % 299, , % Western Financial Insurance Company 8,019 3, % Westport Insurance Corporation 15,217 18, % Wynward Insurance Group 9,613 8, % Zenith Insurance Company % % Zurich Insurance Company Ltd 44,657 21, % 74,369 80, % Totals and Average Claim Ratios 3,943,246 2,982, % 2,828,949 3,430, % *RATIO A ratio of total direct claims and adjustment expense incurred to total direct premiums written in Alberta. This ratio does not take into consideration changes in unearned premiums and reinsurance as these amounts are not allocated by Province. SUPERINTENDENT OF INSURANCE 2013 ANNUAL BUSINESS REPORT 25