Full report - SGI Canada

More documents

Recommendations

Info

Term to maturity (years) The Corporation’s investment policy limits its holdings for any one issuer, other than the Government of <strong>Canada</strong> or a Canadian province, to 10% of the market value of the combined bond and short-term investment portfolios. The holdings for any one province are limited to 20% of the market value of the bond portfolio. Foreign currency exposure is limited to 5% of the market value of the bond portfolio, and no more than 10% of the market value of the bond portfolio shall be invested in securities of foreign issuers. The carrying value and average effective interest rates are shown in the following chart by contractual maturity. Actual maturity may differ from contractual maturity because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Carrying Value 2010 2009 Average Effective Rates (thousands of $) Carrying Value Average Effective Rates Government of <strong>Canada</strong>: One or less $ 8,882 1.4% $ — — After one through five 170,998 2.2% 143,765 2.3% After five — — 22,347 2.9% Canadian provincial and municipal: One or less 206 1.8% — — After one through five 40,886 2.3% 31,235 2.8% After five — — 36,795 4.5% Canadian corporate: One or less 3,815 2.0% 10,181 1.8% After one through five 108,956 2.7% 99,851 3.0% After five 33,242 4.1% 48,954 4.6% Total bonds and debentures $ 366,985 $ 393,128 Common shares Common shares have no fixed maturity dates and are generally not exposed to interest rate risk. The average effective dividend rate is 1.8% (2009 – 2.2%). The Corporation’s investment policy limits its investment concentration in any one investee or related group of investees to 10% of the market value of the Corporation’s common shares portfolio. As well, no single holding may represent more than 10% of the voting shares of any corporation. Pooled funds The Corporation owns units in Canadian, United States and non-North American pooled equity funds and a pooled mortgage fund. These pooled funds have no fixed distribution rate. Fund returns are based on the success of the fund managers. Preferred shares The preferred share investment provides for a 6.75% annual dividend payable semi-annually for the first five years. The rights of these shares will allow the holder to convert the preferred shares into that entity’s common shares or allow the entity to redeem the preferred shares. The effective dividend rate is 6.8% (2009 – 6.8%). The Corporation’s investment policy limits its investment concentration in any one investee or related group of investees to 10% of the market value of the Corporation’s portfolio. As well, no single holding may represent more than 10% of the voting shares of any corporation. Investments accounted for on the equity basis During the year, the Corporation disposed of its 21.25% ownership interest in Charlie Cooke Insurance Agency Ltd. (CCIA) and its 25% interest in Maritime Finance and Acceptance Corporation (MFAC) and Atlantic Adjusting and Appraisals Ltd. (AAA) for total proceeds of $1,489,000. After recording income of $205,000 and receiving $35,000 of dividends during the year, the net book value of these companies was $1,507,000, resulting in a net loss on sale of $18,000. The purchasers are affiliated with the minority shareholder of ICPEI, who is a member of ICPEI’s senior management. The transactions were in the normal course of operations. Unrealized loss positions The following table presents available for sale investments with unrealized losses where the decline is considered temporary. The unrealized losses are recorded as a component of accumulated other comprehensive income (loss). 2010 2009 (thousands of $) Carrying Value Unrealized Losses Carrying Value Unrealized Losses Bonds and debentures: Federal $ 8,882 $ (3) $ 87,165 $ (491) Provincial and municipal 5,458 (33) 20,956 (247) Corporate 20,953 (106) 29,046 (365) Canadian common shares 9,972 (543) 7,694 (465) U.S. common shares 3,760 (301) 7,176 (498) Pooled funds: Canadian equity — — 17,287 (1,807) United States equity — — 7,529 (195) Non-North American equity — — 26,747 (296) $ 49,025 $ (986) $ 203,600 $ (4,364) 72 | 2010 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2010 | 73
As at December 31, 2010, the cost of 33 (2009 – 131) available for sale investments exceeded their fair value by $986,000 (2009 – $4,364,000). The unrealized losses on the bonds and debentures arose primarily from changes in interest rates. For Canadian and U.S. common shares and pooled funds, the unrealized losses are primarily the result of investment-specific business environment factors associated with the underlying equity investments. The Corporation conducts a quarterly review to identify and evaluate investments that show indications of impairment. An investment is considered impaired if its fair value falls below its cost, and a write-down is recorded in investment earnings when the decline is considered other than temporary. Factors considered in determining whether a loss is temporary include the length of time and extent to which fair value has been below cost, financial condition and near-term prospects of the issuer, and the ability to hold the investment for a period of time sufficient to allow for any anticipated recovery. During the year, investment write-downs of $464,000 (note 11) were recorded related to impairments of Canadian common shares and non-North American pooled equity funds that were considered other than temporary (2009 – $3,965,000, Canadian and U.S. common shares and U.S. and non-North American pooled equity funds). Determination of fair value Fair value is best evidenced by an independent quoted market price for the same instrument in an active market. An active market is one where quoted prices are readily available, representing regularly occurring transactions. The determination of fair value requires judgment and is based on market information where available and appropriate. Fair value measurements are categorized into levels within a fair value hierarchy based on the nature of the inputs used in the valuation. Level 1 – Where quoted prices are readily available from an active market. Level 2 – Valuation model not using quoted prices, but still using predominantly observable market inputs, such as market interest rates. Level 3 – Models using inputs that are not based on observable market data. 2010 2009 Level 1 Level 2 Total Level 1 Level 2 Total Short-term investments $ 43,011 $ — $ 43,011 $ 18,933 $ — $ 18,933 Bonds and debentures 366,985 — 366,985 393,128 — 393,128 Canadian common shares 74,658 — 74,658 68,330 — 68,330 U.S. common shares 23,094 — 23,094 22,637 — 22,637 Pooled funds: Canadian equity 18,007 — 18,007 17,287 — 17,287 United States equity 7,413 — 7,413 7,529 — 7,529 Non-North American equity 32,162 — 32,162 26,747 — 26,747 Mortgage — 25,154 25,154 — 23,067 23,067 $ 565,330 $ 25,154 $ 590,484 $ 554,591 $ 23,067 $ 577,658 Preferred shares and investments accounted for on an equity basis are not included in the above fair value hierarchy table as preferred shares are carried at cost and the investments accounted for on the equity basis are recorded using the equity method. 6. Property, Plant and Equipment The components of the Corporation’s investment in property, plant and equipment, as well as the related accumulated amortization, are as follows: Cost Amortization for the year is $1,029,000 (2009 – $604,000) and is included in administrative expenses on the Consolidated Statement of Operations. 7. Other Assets Other assets are comprised of the following: 2010 2009 Accumulated Amortization (thousands of $) Net Book Value Net Book Value Land $ 972 $ — $ 972 $ 972 Building 23,136 16,437 6,699 7,487 Computer hardware and other equipment 19,515 16,065 3,450 287 Total $ 43,623 $ 32,502 $ 11,121 $ 8,746 2010 2009 (thousands of $) Accrued pension asset (note 16) $ 1,387 $ 1,464 Prepaid expenses 1,224 1,157 Goodwill 481 481 Net investment in capital lease 142 681 Total $ 3,234 $ 3,783 Net investment in capital lease The Corporation, as lessor, has a 37% interest in a lease agreement with the Ministry of Government Services, a related party, for a term of 30 years (expiring April 2011) on property in Prince Albert, Saskatchewan. The lease transfers substantially all benefits and risks associated with the ownership of the property to the lessee. The total minimum lease payments receivable under the lease agreement are $144,000 (2009 – $727,000), payable by April 2011. Unearned income at December 31, 2010, is $2,000 (2009 – $46,000). The fair value of the net investment in the capital lease is $144,000 (2009 – $744,000). The fair value is calculated by discounting scheduled cash flows through to the estimated expiration of the lease using current interest rates. 74 | 2010 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2010 | 75
Page 1 and 2: SGI CANADAANNUAL REPORT
Page 3 and 4: LeTTer of transmittal Regina, Saska
Page 5 and 6: President’s message In the insura
Page 7 and 8: We’re here for brokers SGI CANADA
Page 9 and 10: We’re here to be good corporate c
Page 11 and 12: Five-year review ManaGEMenT’S dis
Page 13 and 14: Recent disasters around the world h
Page 15 and 16: The following table summarizes the
Page 17 and 18: 2010 2009 Source: SGI CANADA and MS
Page 19 and 20: All jurisdictions were profitable i
Page 21 and 22: Due to the strength of the capital
Page 23 and 24: The asset mix strategy is formally
Page 25 and 26: Impact of New Accounting Standards
Page 27 and 28: Off-Balance Sheet Arrangements SGI
Page 29 and 30: Distribution channel - broker partn
Page 31 and 32: ANNUal STATEMenT of management resp
Page 33 and 34: Consolidated sTatement of operation
Page 35 and 36: Notes to the consolidated financial
Page 37: Property, plant and equipment Prope
Page 41 and 42: Gross Type of unpaid claims The pro
Page 43 and 44: 13. Financial Risk Management The n
Page 45 and 46: Carrying amount The Corporation’s
Page 47 and 48: The asset allocation of the defined
Page 49 and 50: 19. Facility Association Participat
Page 51 and 52: National Policy 58-201 Corporate Go
Page 53 and 54: National Policy 58-201 Corporate Go
Page 55 and 56: oard of directors Vice- presidents
Page 57: SGI CANADA head office 2260 - 11th

Full report - SGI Canada

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?