Full report - SGI Canada

Five-year review
ManaGEMenT’S disCUssion and analysis
SGI CANADA Consolidated
Millions of dollars except pre-tax
return on equity and ratios.
2006 2007 2008 2009 2010
Net premiums written 301.2 320.7 353.4 393.9 430.6
Net income 52.1 35.1 40.4 52.4 48.4
Total assets 662.5 707.2 717.3 827.4 872.8
Province of Saskatchewan's equity 161.6 189.0 177.8 226.3 238.3
Pre-tax return on equity 35% 22% 23% 27% 25%
Loss ratio 54% 61% 55% 51% 59%
Expense ratio 37% 38% 40% 40% 38%
Combined ratio 91% 99% 95% 91% 97%
The following management’s discussion and analysis (MD&A) is the responsibility of management
and reflects events known to management to February 23, 2011. The Board of Directors carries out its
responsibility for review of this disclosure principally through its Audit and Finance Committee, comprised
exclusively of independent directors. The Audit and Finance Committee’s mandate can be found on the
Corporation’s website at www.sgi.sk.ca under About SGI. The Board of Directors approved this MD&A at its
meeting on February 24, 2011, after a recommendation to approve was put forth by the Audit and Finance
Committee.
Overview
The MD&A is structured to provide users of SGI CANADA’s financial statements with insight into
SGI CANADA (denoted as the Corporation) and the industry in which it operates. This section contains
discussion on its strategies and its capability to execute the strategies, key performance drivers, financial
capital, 2010 financial results, risk management and an outlook for 2011. Information contained in the
MD&A should be read in conjunction with the consolidated financial statements and the notes to the
consolidated financial statements, along with other sections in this annual report. All dollar amounts are in
Canadian dollars.
Net Premiums Written
2010 Net Premiums Written
by product
Caution Regarding Forward-Looking Statements
Forward-looking statements include, among others, statements regarding SGI CANADA’s objectives,
strategies and capabilities to achieve them. Forward-looking statements are based on estimations and
assumptions made by the Corporation in light of its experience and perception of historical trends, current
conditions and expected future developments, as well as other factors it believes are appropriate in
the circumstances. SGI CANADA deems the assumptions built into the forward-looking statements are
plausible, however, all factors should be considered carefully when making decisions with respect to the
Corporation. Undue reliance should not be placed on the Corporation’s forward-looking statements, which
only apply as of the date of this MD&A document. The Corporation does not undertake to update any
forward-looking statements that may be made from time to time by or on its behalf.
Net Income
(millions)
Contents
Where SGI CANADA Came From . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
The Property and Casualty Insurance Business Environment . . . . . . . . . . . . . 21
Strategic Direction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Corporate Strategies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Capability to Execute Strategies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2010 Financial Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Impact of New Accounting Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Off-Balance Sheet Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Critical Accounting Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Outlook for 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Total Assets
(millions)
Province of Saskatchewan’s Equity
(millions)
(millions)
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