2004 Crown Investments Corporation of Saskatchewan Annual Report

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MANAGEMENT’S DISCUSSION AND ANALYSIS2004 ResultsEarnings were $41.7 million (2003 - $21.2 million), the highest in SGI CANADA’s history, primarily due tosubstantially better underwriting results in Saskatchewan. Also contributing to favourable results wasearnings from operations outside of Saskatchewan, which more than doubled from 2003.Revenues were $294.8 million (2003 - $260.6 million). The increase is primarily due to growth inSaskatchewan premiums and higher investment earnings resulting mainly from improved gains realized onthe sale of investments.Claims and expenses totaled $251.6 million (2003 - $238.5 million). The increase is primarily due to highercommission and premium tax expenses, which increase as the premium base grows. Claims costs alsoincreased, but at a slower pace than the growth in premium revenue.Capital spending was $0.9 million (2003 - $0.8 million).Net risk ratio 1 of 2.7 (2003 - 2.8).Return on equity of 42 per cent (2003 - 24 per cent).Dividend declared to CIC of $27.1 million (2003 - $13.8 million).1Net risk ratio, a performance indicator widely used in the insurance industry, measures premiums written in relation to statutorycapital and surplus.Earnings ($ millions)Capital Spending ($ millions)5040302010041.721.22004 20031.050.950.850.750.920040.820032005 OutlookSGI CANADA will continue to focus on rate adequacy in all jurisdictions in which it sells insurance.Out of province expansion to spread risk, grow revenue and create jobs will remain a priority.SGI CANADA expects to remain profitable.Key Factors Affecting PerformanceWeather conditions (i.e. storm activity).Geographic diversification and the purchase of reinsurance, which passes part of the risk to other insurers,mitigate the effect of adverse weather conditions in Saskatchewan.Capital markets have a significant impact on investment earnings and profitability.Competition and the regulatory environment.C I C56
MANAGEMENT’S DISCUSSION AND ANALYSIS2004 ResultsSaskatchewan Auto FundEarnings were $125.3 million (2003 - $11.5 million). The increase is mainly due to a reduction in the externalactuary’s estimate of prior year injury claims and higher investment earnings.Revenues were $597.1 million (2003 - $541.3 million). The increase is due to growth in premium revenue andhigher investment earnings. Premium revenue rose due to an increase in the number of insured vehiclesand from a newer vehicle population, which costs more to insure. Investment earnings improved due tohigher realized gains on the sale of investments.For the fourth consecutive year, the Auto Fund did not increase rates. The Safe Driver Recognition discountincreased from a maximum of eight to nine per cent, resulting in many vehicle owners paying lower rates in2004.Total claims and expenses were $471.8 million (2003 - $529.7 million). The decrease is primarily due to a$59.1 million decline in claim costs, mainly due to a reduction in the external actuary’s estimated cost ofprior year injury claims.Capital spending was $1.8 million (2003 - $1.0 million).The Rate Stabilization Reserve balance was $140.1 million (2003 - $14.4 million).Earnings ($ millions)Capital Spending ($ millions)150100500125.311.52004 20032.001.501.000.500.001.820041.020032005 OutlookAuto Fund customers are expected to continue to enjoy the lowest rates in the country. In 2005, themaximum Safe Driver Recognition discount more than doubled from 9 to 20 per cent for private vehicleowners and from 5 to 10 per cent for commercial vehicle owners.The Auto Fund will continue to focus on improving its products and services.Key Factors Affecting PerformanceWinter driving conditions and summer storm activity have a significant effect on the financial results of theAuto Fund.Property reinsurance protection is purchased to mitigate the effect of catastrophic events.Capital markets have a significant impact on investment earnings.Note:The Saskatchewan Auto Fund is a stand-alone, compulsory auto insurance program administered by SGI. The Auto Fund’s financial results arenot included in SGI Canada’s or CIC’s consolidated financial statements. The Auto Fund does not receive money from, or pay dividends to, theprovince.57 C I C
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2004 Financial HighlightsCrown Sect
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Table Of Contents2004 HighlightsLet
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Chair’s MessageSaskatchewan’s C
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Corporate ProfileCIC is the financi
Page 10 and 11: Corporate ProfileCIC ManagementThe
Page 12 and 13: Corporate ProfileFinancial and Publ
Page 14 and 15: Corporate ProfileCIC’s Holdings20
Page 16 and 17: Corporate ProfileSASKATCHEWAN GOVER
Page 18 and 19: Corporate ProfileSaskatchewan Telec
Page 21: Policy and ProgramsUtility Bundle C
Page 24 and 25: Policy and ProgramsCommitment to Gr
Page 26: Policy and ProgramsCommitment to Yo
Page 30: GovernanceFor the purposes of this
Page 33 and 34: Strategic Direction and Performance
Page 41 and 42: Management’s Discussion and Analy
Page 43 and 44: MANAGEMENT’S DISCUSSION AND ANALY
Page 59: MANAGEMENT’S DISCUSSION AND ANALY
Page 65: MANAGEMENT’S DISCUSSION AND ANALY
Page 68 and 69: Consolidated Statement of Financial
Page 70 and 71: Consolidated Statement of Cash Flow
Page 72 and 73: Notes to Consolidated Financial Sta
Page 96: Notes to Consolidated Financial Sta
Page 99 and 100: Non-Consolidated Statement of Finan
Page 101 and 102: Non-Consolidated Statement of Cash
Page 103 and 104: Notes to Non-Consolidated Financial
Page 105 and 106: Notes to Non-Consolidated Financial
Page 107: Notes to Non-Consolidated Financial
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Pat AtkinsonMinisterPrinted in Sask
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2004 Crown Investments Corporation of Saskatchewan Annual Report

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