< Previous• More Manitoba employers took steps to become SAFE Work Certified in 2018. By the end of the year (the second for the program), 1,241 employers had received safety certification and another 113 were in the process of becoming certified. It’s been proven that organizations with safety certification have a lower risk of workplace injury and illness.• 2018 was the first year that SAFE Work Manitoba issued prevention rebates. SAFE Work Certified employers qualified to receive a percentage of their WCB premium back as a rebate. In 2018, 882 employers were eligible for rebates worth a total of $5.6 million.• Our Put SAFE Work into Action Every Day campaign in February encouraged audiences to view safety as integral to every aspect of the workplace. We can all take actions that may seem small, but that add up to a safer and healthier workplace.• Seeing all workers arrive home safely at the end of the work day is our ultimate goal. Our Everyone Benefits from SAFE Work summer campaign stressed that all Manitobans have something to gain by making safety a priority. Employers receive a significant return on investment from safety programs. Effective safety and health programs reduce costs and have a positive effect on Manitoba’s economy.• Our fifth annual Committee Leadership Conference in September had a record attendance of 438 people, a 50 per cent increase from the previous year. The conference had speakers and workshops designed for workplace safety and health committee co-chairs (representing workers and management). INCREASING THE PERCENTAGE OF WCB-COVERED PAYROLL THAT IS SAFE WORK CERTIFIED2017 9% 2018 10%KEY ACCOMPLISHMENTS IN 201830 WCB 2018 ANNUAL REPORT• SAFE Work Manitoba took part in the second year of The Safetys in September. We were one of eight organizations at the gala event giving out awards to celebrate Manitobans for their efforts to make workplaces safe and healthy.• Our strategy to reduce injuries among young workers continued in October 2018, with the Level Up campaign. This campaign used virtual reality to place young people in typical workplace situations and teach them how to identify and fix common hazards. It was a very successful campaign – reaching almost half a million Manitobans on social media alone.• SAFE Work Manitoba created resources and educational opportunities in advance of the legalization of cannabis in Canada. Included was an October awareness campaign meant to address concerns about managing the legalization of cannabis from a workplace safety and health perspective. The social media campaign focused on impairment of all kinds and encouraged employers to review or update their policies.DAYS LOST TO WORKPLACE INJURY OR ILLNESS RATEPER FULL TIME WORKER* Estimated, to be confirmed mid-20192014 1.782015 1.682016 1.672017 1.652018 1.59*WCB 2018 ANNUAL REPORT 31• Another fall campaign raised awareness of how to prevent musculoskeletal injuries. These injuries, typically known as sprains and strains, are the most common type of workplace injury in Manitoba.• We held educational sessions on eye safety in May and prevention of slips, trips and falls in November. Both sessions were well-attended.• SAFE Work Manitoba hosted a one-day knowledge exchange event in November in collaboration with the Manitoba Teachers’ Society. This event was focused on the issue of violence in schools and attracted nearly 70 educators.• The final campaign of 2018 was called Safety is a Language We Can All Speak. Recognizing that safety information may not fully reach everyone in the workplace, it promoted SAFE Work Manitoba’s multi-language resources. Several communication pieces are available online in 19 languages, providing assistance to new Canadians who may face language and cultural barriers that make it difficult to understand their rights and responsibilities when it comes to safety on the job.KEY ACCOMPLISHMENTS IN 2018NUMBER OF PEOPLE ATTENDING TRAINING (IBSP & SWMB)16,52632 WCB 2018 ANNUAL REPORTYear ended December 31 (in thousands of dollars)20182017Salaries, employee benefits and training$3,869 $3,438Office supplies, services and projects228 181Communications2,274 2,372Professional fees147 71SAFE Work Manitoba Total Operating Expenses$6,518$6,062SAFE WORK MANITOBA OPERATING EXPENSESWCB 2018 ANNUAL REPORT 33FINANCIAL REPORT34 WCB 2018 ANNUAL REPORTWCB 2018 ANNUAL REPORT 35MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL INFORMATIONThe consolidated financial statements of the WCB were prepared by management, who are responsible for the integrity and fairness of the data presented, including significant accounting judgments and estimates. This responsibility includes selecting appropriate accounting principles consistent with International Financial Reporting Standards. Financial information contained elsewhere in this annual report conforms to these financial statements.Management believes the system of internal controls, review procedures and established policies provide reasonable assurance that relevant and reliable financial information is produced and that assets are properly safeguarded. Management also believes that the WCB’s operations are conducted in conformity with the law and with a high standard of business conduct. The internal auditor performs periodic audits designed to test the adequacy and consistency of the WCB’s internal controls.The Board of Directors is responsible for overseeing management in the performance of its financial reporting responsibilities and approved the consolidated financial statements and other financial information included in this annual report on April 16, 2019.The Audit Committee assists the Board of Directors in its responsibilities. This Committee reviews and recommends approval of the consolidated financial statements and annual report. Internal and external auditors and actuaries have unlimited access to the Audit Committee. The Committee reviews the consolidated financial statements and other content of the annual report with management and the external auditors and reports to the Board of Directors prior to their approval for publication. The Chief Actuary of the WCB completed an actuarial valuation of the benefit liabilities included in the consolidated financial statements of the WCB and reported thereon in accordance with accepted actuarial practices. The firm of Eckler Ltd. has been appointed as a peer reviewer to the WCB. The Chief Actuary’s opinion on the valuation of the benefit liabilities is provided on page 43. Eckler Ltd.’s actuarial review is provided on page 44.Grant Thornton LLP, independent auditors appointed as a sub-agent to the Provincial Auditor General, has performed an independent audit of the consolidated financial statements of the WCB in accordance with Canadian generally accepted auditing standards (GAAS). Their Auditor’s Report on page 45 outlines the scope of this independent audit and includes their opinion expressed on the 2018 consolidated financial statements.Winston Maharaj Andria McCaughan, CPA, CMAPresident and CEO Chief Financial OfficerApril 16, 201936 WCB 2018 ANNUAL REPORT2018 MANAGEMENT DISCUSSION AND ANALYSISAs an integral part of the annual report, the management discussion and analysis provides further insights into the operations and financial position of the WCB and should be read in conjunction with the consolidated financial statements and supporting notes.2018 ResultsIn 2018, the WCB saw positive results for claim costs incurred offset by weak investment returns and produced an operating loss of $53 million (budget, zero). After recording unbudgeted gains on the WCB retirement plan, total comprehensive loss was $26 million. Investment returns were 1.5 per cent, resulting in $22 million of income ($74 million below budget). Premium revenues of $211 million were essentially on budget.The 2018 cost of claims of $186 million was $15 million under budget. Claim trend improvements and lower administrative future costs led to positive outcomes for the benefit liability valuation.Other comprehensive income of $27 million was experienced, an outcome of recording a gain on the WCB retirement plan.The WCB’s accident fund reserve decreased from $745 million to $692 million, exceeding the accident fund reserve target level (calculated at $453 million for 2018). The WCB is fully funded with a funding ratio of 148.2 per cent versus the target of 130.0 per cent. Revenue The WCB’s revenue is derived from two sources: premium revenue and investment income.Premium RevenuePremium revenue is the largest revenue stream for the WCB. Premium revenue was $211 million in 2018 ($239 million in 2017), versus the budget of $210 million. The final average assessment rate per $100 of assessable payroll was $0.93 (budget, $0.95). Premiums are derived from Class E and self-insured employers:• 2018 Class E employers’ net premiums were $179 million, down a total of 14 per cent from 2017. Class E premiums decreased by 11 per cent as a result of a drop in the average assessment rate (2018, $0.95 budgeted versus 2017, $1.10) combined with a further reduction of three per cent for prevention rebates issued for the first time in 2018 to eligible safety certified employers.• 2018 self-insured employers’ premiums, which are calculated based on claim costs incurred, were $32 million ($31 million in 2017). WCB 2018 ANNUAL REPORT 37The chart below shows the components of the 2018 premium revenue:Premium Revenues20182017031.8179.0208.430.6Class E EmployersSelf-insured EmployersInvestment IncomeIn 2018, the WCB experienced investment income of $22 million from its investment portfolio ($130 million in 2018). Investment income was budgeted at $96 million for 2018. The investment portfolio is comprised of a variety of asset classes as set by policy. At December 31, 2018, the portfolio had a market value of $1.7 billion ($1.7 billion at the end of 2017) and an asset mix of 43 per cent fixed income, 41 per cent equities and 16 per cent real assets (41 per cent fixed income, 44 per cent equities and 15 per cent real assets in 2017).The WCB has engaged a number of professional investment managers. Each of these managers has a mandate as well as a benchmark rate of return to achieve. The gross returns before expenses by manager mandate and a comparison of this result to the benchmark returns are displayed in the following chart.-6.0%-8.9%3.4%4.2%-8.1%-6.5%-2.7%-8.8%1.5%1.4%4.3%1.8%20.8%6.8%1.5%0.7%CanadianEquitiesU.S.EquitiesGlobalEquitiesEmergingMarkets EquitiesFixedIncomeMortgagesRealEstateTotalInfrastructure6.5%8.5%2018 Returns by Manager Mandate% Return (Gross)Benchmark Index38 WCB 2018 ANNUAL REPORTThe investment portfolio’s gross rate of return was 1.5 per cent in 2018 (benchmark 0.7 per cent) and 8.3 per cent in 2017 (benchmark 7.6 per cent). The 2018 investment portfolio returns reflected weak equity markets and limited fixed income results offset by strong returns on real assets. Equity markets corrected sharply at the end of the year which erased gains and caused indices to finish 2018 with negative returns. Canadian dollar returns from the U.S. market were positive as a result of a strengthening U.S. dollar, while all other equity markets posted one-year declines of between -5 per cent to -10 per cent. Energy was the weakest sector which further impacted the Canadian market. The correction was largely attributed to the extended growth in equity prices, making them vulnerable to emerging concerns on the pace of interest rate increases and slowing global growth. Fixed income returns were limited with rising interest rates causing negative capital returns, partially eroding the year’s income. Over the course of 2018, the U.S. Federal Reserve (the Fed) raised rates four times and the Canadian Central Bank three, at increments of 0.25 per cent. Increases across longer bond maturities were more muted and declined at the end of the year with the correction in equity markets. The net result was the yield on the Dex Universe Bond index ended the year at 2.7 per cent, 0.25 per cent higher from where it started. Credit spreads widened which resulted in government bonds outperforming corporate bonds.Outlook: While economic indicators reflect a slowdown in Europe and Asia, those economies remain expansionary and conditions in the U.S. remain strong. Forecasts for recessionary risk in North America are low, suggesting that any further declines in the equity markets would be short-term and not the start of an extended downturn.At the end of 2018, there were heightened concerns on the pace of U.S. rate increases, which have since subsided with Fed comments on flexibility. Despite the pause in concern, as noted last year and likely on to 2020, continued volatility should be expected as central banks transition away from accommodative policies. While the outlook is for interest rate increases to be gradual, these are expected to result in limited returns from fixed income. While high valuations were corrected at the end of 2018, recent trends have been for prices to bounce back, only to be followed by further declines, indicating the potential for continued back and forth movements with no clear trend as we start the year. With the benefits of U.S. tax cuts behind them and slower economic growth ahead, the corporate earnings growth outlook remains uncertain, resulting in muted equity return expectations without upside earnings surprises. A range of outcomes across sectors and companies can be expected in this environment, making active stock selection key to returns for the year.WCB 2018 ANNUAL REPORT 39Next >