General Manager's Report 2022
Member Service
In 2022, we encountered some significant milestones at PEI Mutual, including a change in leadership, a significant and extreme weather event, as well as a continued return to a post-pandemic reality and re-adjustment of our service delivery model.
Throughout all this, we have retained our commitment to providing exceptional service and doing our best to meet the expectations of our policyholders, keeping their needs at the forefront.
We are proud to be the insurance provider of choice on PEI, and will continue to work to improve and innovate for the future.
Thank you to all of our valued members across Prince Edward Island, as well as to our team who have worked hard to support each other in serving your insurance needs over the past 12 months.
2022 Financial Results
Even in the aftermath of Hurricane Fiona, PEI Mutual was able to achieve very good financial results in 2022. Premiums written were up by $2.0 million over the previous year and our Mutual membership continued to grow as we added 1,100 net-new policies during the year.
The impact of Hurricane Fiona on claims experience was very significant. Total losses incurred were up by $97.5 million over 2021, with Fiona being the cause of $95.0 million of this increase. The company is very fortunate to have a catastrophe reinsurance treaty in place with Farm Mutual Re which provides exceptional protection to the Members' Surplus in times of catastrophic events. With regard to Fiona, PEI Mutual will only be retaining approximately $2.0 million of this loss. This excellent protection will result in higher reinsurance rates and costs for PEI Mutual to the future, but as we witnessed first-hand this year, it is a critical factor in the protection of our Members' Surplus which has been built up over the past 137 years.
Investment income was quite good this year as well at $3.9 million. Although the financial markets generally did not perform well during 2022, PEI Mutual did achieve a positive return on both our equities (6.08%) and bonds (3.52%).
Together with an underwriting profit of $5.2 million and investment profit of $3.9 million, the company achieved a net income after tax of $6.7 million. These profits have been added to the Members' surplus which now sits at $79.9 million, an exceptionally strong position as at December 31, 2022.
Mutual Rebates
As a Mutual company, PEI Mutual looks to provides rebates to our Members based on the financial results of our current fiscal year. Following another strong year in 2022, our Board of Directors has declared that the current 18% mutual rebate will remain effective and be applied to policy renewal premiums through April 30, 2024.
Hurricane Fiona
2022 brought us the most significant weather event in our company's 137-year history, Hurricane Fiona. This storm devastated our Island and tested the resilience of our community as a whole. I was and continue to be inspired by the patience and understanding of Islanders, as well as the extreme commitment to service by our team.
Ranking 7th on the list of all-time catastrophe's in Canadian History, and the # 1 costliest extreme weather event ever in Atlantic Canada, it is said to be the largest ever incurred by a Canadian Mutual Insurer. To add some perspective, our claims activity climbed more than 10 times our annual average, in a single-event.
With this, we were forced as a company to look for support as well as to explore new and innovative ways to operate most efficiently. The demand on our team was significant, and I have been so proud of the way they have responded to go over and above the call of duty, in order to serve Islanders.
Coming together/Power of Mutuality
On a positive note, Hurricane Fiona allowed us to deepen our connection with partners in the mutual community, calling on our colleagues, sister companies, and other stakeholders for support. Our request for help was met with a resounding response, allowing us to supplement our workforce with a fully-functioning remote call-in center, as well as to significantly enhance our capacity for adjusting claims, both in-person and remotely.
All of this contributed significantly to our success in working through this trying time and showcased the strong bond between Canadian Mutuals and power of mutuality at it's best.
In addition, we had to look at new and innovative ways to do things as a company, including providing virtual training for those who would be joining our team from out-of-province, and the addition of SMS text message claim reporting. We also called on a number of retired employees to re-join us, which provided some welcome support in the form of experienced help. As well, we placed focus on cross-training our existing team members, allowing us to re-purpose some of our internal resources to priority areas. Finally, we added a number of temporary team members who were quick to learn and adapt to the ever-changing needs of the situation. This support proved to be invaluable.
Communication quickly became of paramount importance, as with so many players involved, it was increasingly clear that we would need to ensure clarity and consistency in messaging to all groups. Our team embraced the concept of daily huddles, which proved to be of significant value in keeping people informed and on the same page.
A lot of lessons were learned that will inform our processes going forward, as well as to serve as an example for others in the future.
Digital Transformation
In 2022, we embarked on the challenge of the build and customization of a new, cloud-based Enterprise IT System, a project that we will see through to completion with our organization-wide adoption in May of 2023.
This system will bring us many opportunities for enhancing and modernizing the way we serve our members into the future, as well as the potential for creating efficiency in our operations by leveraging the data and real-time access to information that this type of solution offers. This will also allow for us to evaluate many of the manual processes that exist in our current operations and create opportunities for us to enhance the speed of service to our policyholders.
One of the key areas of interest for our members will be the new customer portal, which will enable policyholders the opportunity for enhanced digital communications as well as some self-service options.
The Enterprise IT System will act as the cornerstone of a digital transformation that we will undergo in the coming years, with the goal of working toward becoming a paperless environment with consistent real-time access to information, and exploring other means of web-based connection.
CEO Appointment
2022 also saw the appointment of myself, as the CEO. My thanks go to the Board of Directors for their confidence in selecting me for this important and influential role. It is my pledge that I will always treat the opportunity with the duty and care it deserves, throughout what I intend to be a long-standing and successful tenure.
Since joining the company in June, I have been focused on getting to know our team, and working with our Board of Directors, gaining a thorough understanding our business and identifying opportunities for the future.
From the moment I arrived, I have been inspired by our team and their commitment to service as well as the incredible strength of the other leaders in our organization.
I feel we have established a strong foundation of trust and accountability in the company, and I am proud of the culture we are building at PEI Mutual. Our team enjoys an environment centered around positivity, transparency, and a strong emphasis on communication. We embrace diversity and look for opportunities to celebrate each other and our successes often.
I have also spent some time meeting and connecting with colleagues within the Mutual community across Canada and particularly within the Maritime region and have enjoyed learning about the uniqueness and shared values of the sector.
Having been faced with adversity from the hurricane, we are still making progress on several fronts outside of the instability and uncertainty of a catastrophic weather-event environment. Our company is in a strong financial position, and each day as we move forward, we are able to see a clear path toward our future success. We have taken steps to add the necessary tools and resources for continued progress. Our team is in good spirits and working exceptionally well together.
As a leader, my focus has been on providing the vision and support to empower our people to perform at their best, while strategically positioning our company for success. Some of the key areas of focus have been to build our capacity, adding some key positions to support our already exceptional team, to enhance our culture, by creating opportunities for collaboration, listening and recognition, as well as to manage through change.
Looking ahead, PEI Mutual is well positioned for the future, and I look forward to what 2023 and beyond may bring.
Thank you
In closing, I would like to offer my sincere thanks to our members for placing your trust in us, and for your support in making us the insurance provider of choice on PEI. Moreover, I appreciate the extension of your patience and understanding while working with us through one of the greatest challenges in our company's storied history.
A special thank you is extended our team who bonded together to “weather the storm” of the most significant weather event impacting the insurance industry in Atlantic Canada, and to have come out the other side stronger than ever.
We are looking forward to serving our policyholders in 2023 and providing exceptional experiences, with our focus remaining on putting people first in everything we do, striving to be the best place to work, the insurance provider of choice, and to make the most impact in our communities.
Sincerely,
Craig Noonan,
CEO