2012 Financial Statements - Workers' Compensation Board

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(d) Surplus distributions ($ thousands) Change in Comprehensive Income Surplus Distributions Payable 2012 2011 2012 2011 Surplus distributions, beginning of year Payment of prior years’ surplus distributions Adjustment of prior years’ accruals Outstanding balance from prior years Surplus distributions authorized for the year Surplus distributions, end of year $ (649) 85,490 $ 84,841 $ (1,431) - $ (1,431) $ 850 - 850 (607) 243 85,490 $ 85,733 $ 230,128 (227,847) 2,281 (1,431) 850 - $ 850 Substantially all surplus distributions are paid within one year. (e) Safety rebates ($ thousands) 2012 2011 Safety rebates payable, beginning of year Payment of prior years’ rebates Adjustment of prior years’ accruals Outstanding balance from prior years Rebates for the year Safety rebates payable, end of year $ 73,327 (72,182) 1,145 2,051 3,196 87,143 $ 90,339 $ 81,204 (75,576) 5,628 (4,549) 1,079 72,248 $ 73,327 Safety rebates represent amounts recognized under the PIR program. See Note 13 Premium Revenue for further discussion of the PIR program. (f) Injury reduction ($ thousands) 2012 2011 Occupational Health and Safety Industry safety associations $ 28,968 17,800 $46,768 $ 27,694 17,934 $45,628 Injury reduction is composed of statutory funding of Occupational Health and Safety and voluntary premium levies to fund industry-sponsored safety associations. 2012 FINANCIAL STATEMENTS and notes 77
Appendix: Glossary Asset-liability management A risk management approach that ensures sufficiency of resources to discharge specified obligations by managing the risk characteristics of invested assets relative to liabilities for such factors as yields, duration, volatility and default. Asset-liability study A financial model for determining the appropriate amount and mix of investment assets, given a specified level of risk, to generate a return that is sufficient to fund the interest requirement of claim benefit liabilities. Average premium rate Calculated as total revenue requirements divided by the projected insurable earnings for the premium year. Currency overlay A foreign-currency risk management strategy used in international investment portfolios to separate the management of currency risk from the asset allocation and security selection decisions of the fund managers. Derivative A financial instrument whose characteristics and value depend on the characteristics and value of an underlying security, typically a commodity, bond, equity or currency. Examples of derivatives include futures and options. Derivatives are used to manage risk associated with the underlying security, to protect against fluctuations in value or to profit from periods of inactivity or decline. Fair value The amount of the consideration that would be agreed to in an arm’s-length transaction between knowledgeable, willing parties who are under no compulsion to act. In the context of investments, fair value is generally synonymous with market value. Financial instrument Any contract that gives rise to a financial asset (e.g., cash equivalent, accounts or note receivable, share security) of one party and a financial liability (e.g., accounts or note payable, bond) or equity instrument (e.g., stock option, warrant) of another party. Financial risk The possibility or chance that an investment’s return will be other than expected, resulting in a negative outcome. The negative outcome would be associated with the possibility of losing some or all of the original investment, or adverse changes in its cash flows. For a specific investment, risk is usually measured by calculating the standard deviation of its historical or average returns. Hedging A portfolio management activity designed to modify an entity’s exposure to one or more financial risks by creating an offset between changes in the fair value of or the cash flows attributable to the hedged item and the hedging item (or the changes resulting from a particular risk exposure relating to those items). Margin for adverse deviation A risk margin that addresses the uncertainty arising from statistical fluctuations and data anomalies that are inherent in long term actuarial assumptions. 78 WCB-Alberta 2012 Annual Report
Page 1 and 2: WCB-Alberta 2012 Financial Statemen
Page 3 and 4: Independent Auditor’s Report To t
Page 5 and 6: Workers’ Compensation Board - Alb
Page 7 and 8: Workers’ Compensation Board - Alb
Page 9 and 10: Notes to the Financial Statements F
Page 11 and 12: 3. ACCOUNTING POLICY CHANGES Standa
Page 13 and 14: 5. INVESTMENTS ACCOUNTING POLICY WC
Page 15 and 16: Reconciliation of Level 3 activity
Page 17 and 18: Interest rate risk Interest rate ri
Page 19 and 20: Securities lending risk WCB partici
Page 21 and 22: 8. INTANGIBLE ASSETS ACCOUNTING POL
Page 23 and 24: 10. EMPLOYEE BENEFITS ACCOUNTING PO
Page 25 and 26: Defined benefit plan liabilities ($
Page 27 and 28: Actuarial methodology and basis of
Page 29 and 30: Claims development The table that f
Page 31 and 32: 14. CLAIMS AND CLAIMS MANAGEMENT EX
Page 33 and 34: 16. INVESTMENT INCOME AND EXPENSE A
Page 35 and 36: Key management compensation The tab
Page 37: 19. SUPPLEMENTAL INFORMATION (a) Ca

2012 Financial Statements - Workers' Compensation Board

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