Customer driven. 2007 Saskatchewan Auto Fund annual report Vision We will be the best customer-driven and affordable automobile insurance plan in Canada. Values Integrity Conducting ourselves with honesty, trust and fairness Caring Acting with empathy, courtesy and respect Innovation Implementing creative solutions to achieve our vision Customer driven. 2007 Saskatchewan Auto Fund annual report 2007 Saskatchewan Auto Fund annual report Table of Contents 3 Table of Contents LetterofTransmittal......................................................................................4 President’sMessage.....................................................................................5 TrafficSafety............................................................................................8 InYourCommunity .....................................................................................15 Management’sDiscussionandAnalysis....................................................................16 ResponsibilityforFinancialStatements ....................................................................40 Actuary’sReport .......................................................................................41 Auditors’Report........................................................................................42 StatementofFinancialPosition...........................................................................43 StatementofOperations ................................................................................44 StatementofComprehensiveLoss........................................................................45 StatementofChangesinEquity ..........................................................................46 StatementofCashFlows................................................................................47 NotestotheFinancialStatements ........................................................................48 CorporateGovernance..................................................................................61 GlossaryofTerms......................................................................................69 BoardofDirectors......................................................................................70 CorporateOfficers......................................................................................71 4 2007 Saskatchewan Auto Fund annual report Letter of Transmittal Letter of Transmittal Regina, Saskatchewan March, 2008 To His Honour, The Honourable Dr. Gordon L. Barnhart Lieutenant Governor of the Province of Saskatchewan Your Honour, I have the honour to submit herewith the annual report of Saskatchewan Auto Fund for the year ended December 31, 2007, including the financial statements in the form required by the Treasury Board and in accordance with The Automobile Accident Insurance Act. I have the Honour to be, Sir, Your obedient Servant, Honourable Ken Cheveldayoff Minister of Crown Corporations 2007 Saskatchewan Auto Fund annual report President’s Message 5 President’s Message The Saskatchewan Auto Fund celebrated another For seven consecutive years customers have enjoyed successful year in 2007 as we remained committed to our stable automobile insurance rates without any general vision of providing the best customer-driven and affordable increase. As an added benefit in 2007, we once again automobile insurance plan in Canada. returned money to customers. Thanks to a surplus in the Auto Fund in 2006, we returned approximately The Auto Fund enjoyed a strong year financially, posting $100 million to over half a million vehicle owners in a $32 million surplus in 2007 before customer rebates. Saskatchewan through an almost 17% rebate on 2006 At year end, the balance in the Rate Stabilization Reserve insurance premiums. was a healthy $141 million. We also introduced a 7.1% rate reduction with rate The Fund achieved this financial result while continuing rebalancing, meaning about 448,000 Saskatchewan to offer quality products and services and maintaining the vehicle owners saw a reduction in their premiums. lowest insurance rates in the country. Even with rate reduction and rebalancing, the Rate To ensure we’re constantly progressing towards our Stabilization Reserve was still slightly above the target range, vision, corporate strategies have been developed with largely due to higher than expected investment earnings. supporting targeted goals that are measured throughout the year. Corporate strategies focused on our customers, The reserve is needed for two main reasons: to meet our business infrastructure and our employees in 2007 - policyholders’ obligations for policies sold that expire after with a large majority of targets either met or exceeded. year end; and to cushion customers from rate shock in the event of a downturn in financial results. That, in turn, allows us to provide customers with stability in coverage and rates. Our customers Implementing rate initiatives in 2007 helped the Auto Fund One of the Auto Fund’s primary goals is to anticipate and make great strides toward its goal of exceeding customer exceed customer expectations. SGI was established with expectations, as evidenced by the results of the Customer the customer in mind and it continues to build its business Value Index (CVI). on the belief that excellent customer service sets it apart in the insurance industry. The CVI is our most comprehensive measure of how customers view the Auto Fund. The index tracks what That approach appears to be working. customers think about seven key corporate values, such as having well-trained, experienced staff and listening to In 2007, we continued to offer the lowest average private the concerns of our customers, and calculates an overall automobile insurance rates in Canada according to a cross- score for SGI out of five. Our score of 3.78 for 2007 was Canada rate comparison that looked at the 34 vehicles an all-time high. most commonly registered in Saskatchewan and compared rates here to those available in other jurisdictions. Excellent claims service is another important element of our customer strategy. Our goal is to have 91% of claims 6 2007 Saskatchewan Auto Fund annual report President’s Message customers indicate they are satisfied with their experience. Our business infrastructure Our result on this measure was 90%. In 2005, SGI initiated a major project aimed at revitalizing While the results of these surveys are encouraging, we are the Auto Fund’s computer system in order to offer committed to continue exceeding customer’s expectations improved service and more options to our customers. in the years ahead. The Auto Fund System Redevelopment Project - which SGI has evolved into a leader in promoting road safety. is scheduled for completion in 2010 - is a major part of our Customers value that work and so road safety is another business infrastructure strategy and will make it easier for key component of our customer strategy. customers to do business with SGI by providing improved and more accessible information. The project is being Last year, SGI introduced a new long-term Traffic Safety implemented in phases to manage the change and to Strategy to help save lives, reduce injuries and lower bring value to the business during implementation. claim costs. The key areas of focus are impaired driving, occupant protection, intersection safety, roadway-based As part of the first phase of the project, new computer solutions, speed management and other human factors. applications were introduced last year. In April 2007, a new system for issuing commercial vehicle permits was The Auto Fund worked towards meeting these objectives introduced providing enhanced accuracy and greater in 2007 by introducing a number of innovative initiatives options when issuing permits. that are highlighted in the next section of this report. Building on the momentum of that initial release, a new Through these initiatives, SGI continued to make road motor licence issuer management system was introduced infrastructure and safety improvements and educate the in May 2007. The new system stores all information about public on the importance of road safety, which, in turn, an issuer in one database, which makes for a faster, more helped make safer communities. efficient way of doing business with our issuers. As we work towards achieving our vision, SGI recognizes Another huge milestone for the project was SGI’s first that as a corporate citizen we also have a responsibility online transaction, which was completed by a permit to give back to the communities in which we do business. customer in November. In the next few years, SGI customers will be able to conduct many different However, to be successful, it is extremely important that transactions with us online, such as renewing their a community investment program is aligned with business driver’s licence and vehicle registration and insurance. objectives. As these objectives change, so too should the execution of any community investment. Another part of our business infrastructure strategy centres around building renewal. Many of SGI’s buildings With that in mind, the Auto Fund developed a new were constructed close to 30 years ago and will soon Corporate Donations Policy in 2007. This policy provides need major maintenance or renovations. support to community interests directly related to traffic safety-related initiatives, youth excellence and diversity To address these issues, we have developed a building programs. renewal strategy that details