Results of Operations

Current Year and Last Year

CORPORATE

Total earned revenues increased by 3.8 per cent to $869.7 million in 2007/08 fuelled by an expanding economy, which helped boost the number and value of vehicles insured in Manitoba and contributed to increased investment income. Overall, net income from annual operations of $97.4 million was $29.1 million higher than the previous year.

The corporation’s fi nancial performance was also enhanced as overall claims costs dropped $3.0 million as the average Autopac (Basic and Extension) cost per claim decreased by $127 to $2,087 although the total number of claims fi led increased by 4.2 per cent to 280,319. Meanwhile, customer service improvement initiatives contributed to an increase in expenses of $11.0 million.

Earned revenues increased by $32.0 million, which is mainly attributable to increases in the number and value of vehicles insured. Investment income increased 4.3 per cent ($5.1 million) to $125.5 million. Income from the corporation’s equity portfolio increased to $53.5 million as the gains on the sale of equities increased $13.6 million. Income from the bond portfolio fell by $15.3 million to $72.0 million as the gains on the sale of bonds declined by $20.1 million.

Claims costs decreased by $3.0 million or less than one per cent from the previous year. While the number of Personal Injury Protection Plan (PIPP) claims remained constant in 2007/08, the average cost of these claims fell by 8.7 per cent and the total bodily injury claims incurred decreased by 10.2 per cent. Physical damage claims incurred increased by 2.8 per cent as the decline in the number and cost of auto theft claims was offset by increased damage caused by severe weather-related claims.

WHERE YOUR PREMIUM DOLLAR HAS GONE

The corporation’s current year financial results were also impacted by a 10 per cent rebate on 2006/07 Basic Autopac premiums totalling $62.7 million ordered by the Public Utilities Board (PUB).

The corporation’s financial mandate is to break even over the long term. During the reporting period, for every dollar of revenue earned, the corporation provided Manitobans with 84 cents in claims benefi ts. Broker commissions and premium taxes accounted for nine cents of every dollar of revenue earned, while other operating expenses including regulatory and appeal expenses cost 10 cents. These expenses were offset by investment income equal to about 14 cents per dollar of revenue. After the premium rebate, the corporation’s net income was about four cents for every dollar of revenue earned during the year.

Total earned revenues of $869.7 million included a $21.0 million recovery from the Province of Manitoba for funding driver and vehicle operations during the current year. This transfer is $0.5 million higher than last year when the Province held back funds to defray its costs associated with aligning the renewal of driver’s licences with motor vehicle registrations.

Development on prior years’ claims was better than expected. As a result, claims incurred decreased by $62.5 million for the year. In 2006/07 development on prior years claims was also better than expected, decreasing claims incurred by $60.6 million.

While the average Autopac (Basic and Extension) claims costs declined in 2007/08, the number of claims filed increased by 4.2 per cent to 280,319.

Total corporate expenses increased by $11.0 million to $169.1 million as the corporation continued to integrate driver and vehicle licensing operations and invest in customer service improvements made possible by the October 2004 merger.