< Previous30 | 2015 WCB ANNUAL REPORTClaim Costs IncurredClaim costs incurred are an estimate of the full costs for compensable injuries that occurred in 2015, together with adjustments to prior years’ estimates. The estimates take into account claims that are in pay, reported but as yet unpaid claims, and unreported claims.Claim costs incurred decreased $11 million (5 per cent) to $212 million in 2015 with the increased or decreased costs arising due to actuarial adjustments.Short Term DisabilityLong Term DisabilitySurvivor BenefitsHealthcare BenefitsRehabilitation ServicesTotal(in millions of dollars)2015$35.3$111.2$7.0$60.5$(2.4)$211.6201460.569.720.371.20.5222.1(Decrease) increase$(25.2)$41.5$(13.3)$(10.7)$(2.8)$(10.6)Benefit LiabilitiesThe benefit liabilities increased $40 million (4 per cent) in 2015, due to actuarial adjustments.Short Term DisabilityLong Term DisabilitySurvivor BenefitsHealthcare BenefitsRehabilitation ServicesTotal(in millions of dollars)2015$146.3$536.9$133.2$298.2$6.0$1,120.52014164.4478.4139.4289.98.61,080.7(Decrease) increase$(18.0)$58.5$(6.2)$8.3$(2.6)$39.82015 WCB ANNUAL REPORT | 31Operating ExpensesOperating expenses in 2015 were $2 million under budget at $91 million. Operating expenses increased $9 million from 2014 due to the WCB’s work to modernize the compensation system. Additional investments were made in Compliance, Information Technology, Compensation Services and SAFE Work Manitoba.2%Information technology service fees69%Salaries, employee benefits and training10%Province of Manitoba Workplace Safety and Health Department funding5%SAFE Work Manitoba3%Amortization of capital assetsOccupancy costs3%4%Office supplies, services and projects2%Communications1%Research and Workplace Innovation Program grants1%Appeal CommissionComponents of 2015 Operating ExpensesOperating IncomeThe operating income of $95 million increased the accident fund reserve to $621 million.Other Comprehensive Income and Total Comprehensive IncomeThe other comprehensive income for 2015 was $13 million. This income is the result of an increase in the pension plan’s prescribed discount rate for accounting purposes (4.25 per cent at December 31, 2015 versus four per cent at December 31, 2014). The 2015 income reduced accumulated other comprehensive loss to $56 million as at December 31, 2015 ($69 million in 2014).The total comprehensive income for the year was $108 million versus the budget of $16 million.Balance SheetThe 2015 funding ratio (ratio of total assets to total liabilities) was 143.3 per cent (136.0 per cent in 2014) which exceeded the target ratio of 130.0 per cent. This ratio is one measure of the financial strength of the WCB, as any amount over 100 per cent indicates the WCB is fully funded.The accident fund reserve was $621 million ($527 million in 2014), which exceeded the target balance of $448 million set by the WCB’s Funding Policy. The 2016 – 2020 Five Year Plan financials incorporate a reduction to the average premium rate in order to dispose of the excess reserves.32 | 2015 WCB ANNUAL REPORTRisk ManagementOn an annual basis, the WCB identifies and assesses key corporate risks, and implements mitigation strategies to manage these risks, which are embedded in the strategic planning and budgeting cycles.Corporate risks are monitored and updated on a regular basis to reflect changes in the organization’s risk profile. The corporate risk profile below shows the WCB’s most significant risks and residual risk ratings for 2015. The residual risk assessment considers the processes, controls and mitigation strategies in place to manage risk.Low riskMedium riskMedium high riskHigh risk1. Organizational capability2. Technology3. Corporate renewal4. System integrity5. Fraud and program abuse6. Workplace injury and illness prevention7. Stakeholder confidence8. Security and business continuity9. Benefit costs10. Funding2015 WCB ANNUAL REPORT | 33Actuarial Opinionwith respect to Future Benefit Liabilities of the Workers Compensation Board of Manitoba based on an actuarial valuation as at December 31, 2015I have completed an actuarial valuation as at December 31, 2015 of the benefit liabilities for insured and self insured employers under The Workers Compensation Act of Manitoba as amended to the valuation date. The purpose of this valuation was to estimate the liabilities of the WCB with respect to injuries that occurred on or before the valuation date for inclusion in the 2015 financial statements which are prepared in accordance with International Financial Reporting Standards.My estimate of the liabilities as at December 31, 2015 is $1,120.5 million. This includes provisions for claims arising from specific long latent occupational diseases including Post-Traumatic Stress Disorder.I reviewed the data and have performed tests to confirm their reasonableness and consistency with that used in the prior valuation.The economic assumptions used have changed since the prior valuation. The discount rate used is 5.75 per cent (6.0 per cent in prior valuation). The inflation assumptions are 2.75 per cent (3.0 per cent in prior valuation) for inflation linked benefits, 3.75 per cent (4.0 per cent in prior valuation) for wage linked benefits and 5.25 per cent (6.5 per cent in prior valuation) for healthcare benefits.The mortality assumption for disability and survivor benefits is the generational table created from the Manitoba Life Table 2009-2011 projected from 2010 using the CPM-B projection scale. The mortality assumption for life insurance benefits is the static table created from the Manitoba Life Table 2009-2011 projected to 2015 using the CPM-B projection scale. The mortality assumptions are unchanged from the prior valuation.The assumptions and methods used in the valuation, as described in my report, are based on the current practices and administrative procedures of the WCB and on historical claims experience.In my opinion, the data on which the valuation is based are sufficient and reliable for the purpose of the valuation.In my opinion, the assumptions are appropriate for the purpose of the valuation.In my opinion, the methods employed in the valuation are appropriate for the purpose of the valuation.In my opinion, the amount of the benefit liabilities makes appropriate provision for all personal injury compensation obligations and the financial statements fairly present the results of the valuation.This report has been prepared, and my opinions given, in accordance with accepted actuarial practice in Canada.Respectfully submitted,Michael Williams, Fellow, Canadian Institute of ActuariesChief Actuary, WCBMarch 2, 201634 | 2015 WCB ANNUAL REPORTActuarial Reviewwith respect to the Valuation of the Future Benefit Liabilities of the Workers Compensation Board of Manitoba as at December 31, 2015We have reviewed the actuarial valuation as at December 31, 2015 of the benefit liabilities for insured and self insured employers under The Workers Compensation Act of Manitoba as amended to the valuation date. The valuation was performed by the Chief Actuary of the Workers Compensation Board of Manitoba. The purpose of the valuation was to estimate the liabilities of the WCB with respect to injuries that occurred on or before the valuation date for inclusion in the 2015 financial statements.We have performed such tests of the data used, the assumptions made and the calculation models underlying the valuation as we considered necessary.The valuation determined benefit liabilities as at December 31, 2015 to be $1,120.5 million. This includes provisions for claims arising from specific long latent occupational diseases and for the future cost of administering claims. In our opinion, this amount constitutes an appropriate provision for benefit liabilities as at December 31, 2015.Our review has been conducted, and our opinions given, in accordance with accepted actuarial practice in Canada.Respectfully submitted, Eckler Ltd.Andrew Kulyk Fellow, Canadian Institute of ActuariesRichard Border Fellow, Canadian Institute of ActuariesMarch 2, 2016March 2, 20162015 WCB ANNUAL REPORT | 35Independent Auditor’s ReportTo the Workers Compensation Board of ManitobaWe have audited the accompanying consolidated financial statements of the Workers Compensation Board of Manitoba (WCB), which comprise the consolidated statement of financial position as at December 31, 2015, and the consolidated statement of operations and comprehensive income, consolidated statement of changes in funded position and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.Management’s responsibility for the financial statementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.Auditor’s responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our audit opinion.OpinionIn our opinion the consolidated financial statements present fairly, in all material respects, the consolidated financial position of WCB as at December 31, 2015, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards.Grant Thornton LLP, Chartered Professional Accountants Winnipeg, Manitoba April 19, 201636 | 2015 WCB ANNUAL REPORTConsolidated Statement of Financial PositionDecember 31(in thousands of dollars)Note20152014AssetsCash3$13,837 $11,275 Receivables and other46,947 5,982 Investment portfolio51,681,181 1,572,732 Deferred assessments7137,335 106,273 Property, plant and equipment826,864 25,913 Intangible assets94,111 3,504 $1,870,275$1,725,679 Liabilities and funded positionPayables and accruals10$12,460 $11,776 Workers' retirement annuity fund1129,814 27,514 Employee benefits1284,789 89,271 Mortgages payable on investment properties557,492 59,306 Benefit liabilities131,120,525 1,080,682 Total liabilities1,305,0801,268,549 Accident fund reserve621,402 526,644 Accumulated other comprehensive loss(56,207)(69,514)Funded position565,195457,130 $1,870,275$1,725,679 Authorized for issue on April 19, 2016 on behalf of the Board of Directors,Michael D. Werier Chairperson, Board of DirectorsJane MacKay Audit Committee of the Board of DirectorsThe accompanying notes are an integral part of the consolidated financial statements.2015 WCB ANNUAL REPORT | 37Consolidated Statement of Operations and Comprehensive IncomeYear Ended December 31(in thousands of dollars)Note20152014RevenuePremium revenue15$285,400 $286,400 Investment and real estate income5111,520 127,286 Total revenue396,920413,686ExpensesClaim costs incurred13211,550 222,100 Operating expenses1690,612 81,323 Total expenses302,162303,423Operating surplus94,758110,263Other comprehensive income (loss)Defined benefit plan remeasurements1213,307(34,807)Total comprehensive income$108,065$75,456The accompanying notes are an integral part of the consolidated financial statements.38 | 2015 WCB ANNUAL REPORTConsolidated Statement of Changes in Funded PositionYear Ended December 31(in thousands of dollars)Note20152014Funded positionAccident fund reserveBalance at beginning of year$526,644 $416,381 Operating surplus94,758 110,263 621,402526,644Accumulated other comprehensive lossBalance at beginning of year$(69,514)$(34,707)Other comprehensive income (loss)13,307 (34,807)(56,207)(69,514)Funded position, end of year$565,195$457,130The accompanying notes are an integral part of the consolidated financial statements.2015 WCB ANNUAL REPORT | 39Consolidated Statement of Cash FlowsYear Ended December 31(in thousands of dollars)Note20152014Operating cash flowsPremiums from employers$253,761 $307,575 Receipt (refund) of prior years pension losses (gains)7949 (29,632)Investment income59,576 44,586 Claim payments13(171,707)(178,383)Purchases of goods and services(85,194)(78,111)Net operating cash flows57,38566,035 Investing cash flowsPurchases of investments(1,169,250)(726,499)Proceeds on disposal of investments1,118,842 667,383 Asset acquisitions(4,415)(3,644)Net investing cash flows(54,823)(62,760)Net increase in cash2,5623,275 Cash at beginning of year11,2758,000Cash at end of year$13,837$11,275The accompanying notes are an integral part of the consolidated financial statements.Next >