< PreviousClaim Costs Incurred Claim costs incurred are an estimate of the full costs for compensable injuries that occurred in 2018, 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 were unchanged at $186 million compared to 2017 as a result of claim trend improvements.Short-Term DisabilityLong-Term DisabilitySurvivor BenefitsHealthcare BenefitsRehabilitation ServicesTotal(in millions of dollars)2018$64.0$47.8$7.7$67.9$(1.1)$186.3201755.956.57.363.13.7186.5Increase (decrease)$8.1$(8.7)$0.4$4.8$(4.8)$(0.2)Benefit Liabilities The benefit liabilities increased by $5.6 million (0.5 per cent) in 2018. Short-Term DisabilityLong-Term DisabilitySurvivor BenefitsHealthcare BenefitsRehabilitation ServicesTotal(in millions of dollars)2018$166.8$503.7$117.7$326.3$5.5$1,120.02017158.8506.7123.3318.67.01,114.4Increase (decrease)$8.0$(3.0)$(5.6)$7.7$(1.5)$5.640 WCB 2018 ANNUAL REPORTOperating Expenses Operating expenses in 2018 were $5 million under budget at $100 million. Operating expenses were unchanged from 2017 as lower information technology expenses offset other inflationary increases. 70%Salaries, employee benefits and training2%Office supplies, services and projects3%Occupancy costs1%1%Information technology service fees1%Research and Workplace Innovation Program grantsCommunications1%Appeal Commission7%SAFE Work Manitoba8%Province of Manitoba Workplace Safety and Health Department funding6%Amortization of capital assetsComponents of 2018 Operating ExpensesOperating Loss The operating loss of $53 million decreased the accident fund reserve to $692 million. Other Comprehensive Income and Total Comprehensive LossThe other comprehensive income for 2018 was $27 million. This income is the result of an increase in the retirement plan’s prescribed discount rate for accounting purposes (4.0 per cent at December 31, 2018 versus 3.5 per cent at December 31, 2017). The 2018 gain decreased accumulated other comprehensive loss to $60 million as at December 31, 2018 ($87 million in 2017). The total comprehensive loss for the year was $26 million versus the budget of zero. Balance Sheet The 2018 funding ratio (ratio of total assets to total liabilities) was 148.2 per cent (148.8 per cent in 2017) 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 $692 million ($745 million in 2017), which exceeded the target balance of $453 million set by the WCB’s Funding Policy. Note: the 2019-2023 Five-Year Plan financials (page 89) incorporate a sustainable average premium rate and amounts for surplus distributions to employers in order to dispose of the excess reserves. WCB 2018 ANNUAL REPORT 41Risk 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 2018. The residual risk assessment considers the processes, controls and mitigation strategies in place to manage risk. Low riskMedium riskMedium high riskHigh risk1. External environment2. Stakeholder relations3. Prevention and Return to Work4. Organizational culture5. Technology capacity6. Fraud and program abuse7. Business resilience8. Benefit costs42 WCB 2018 ANNUAL REPORTACTUARIAL OPINIONWith respect to Future Benefit Liabilities of the Workers Compensation Board of Manitobabased on an actuarial valuation as at December 31, 2018I have completed an actuarial valuation as at December 31, 2018, 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 2018 consolidated financial statements which are prepared in accordance with International Financial Reporting Standards.My estimate of the liabilities as at December 31, 2018, is $1,120.0 million.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 are unchanged from the prior valuation. The discount rate used is 5.75 per cent. The inflation assumptions are 2.25 per cent for inflation linked benefits, 3.25 per cent for wage linked benefits and 5.25 per cent 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 consolidated 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 1, 2019WCB 2018 ANNUAL REPORT 43ACTUARIAL REVIEWwith respect to the Valuation of the Future Benefit Liabilities of the Workers Compensation Board of Manitoba as at December 31, 2018We have reviewed the actuarial valuation as at December 31, 2018, 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 2018 consolidated 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, 2018, to be $1,120.0 million. In my opinion, this amount constitutes an appropriate provision for benefit liabilities as at December 31, 2018. Our review has been conducted, and my opinion given, in accordance with accepted actuarial practice in Canada. Respectfully submitted, Eckler Ltd.Andrew Kulyk Fellow, Canadian Institute of ActuariesMarch 1, 201944 WCB 2018 ANNUAL REPORT Audit | Tax | Advisory© Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd Grant Thornton LLP 94 Commerce Drive Winnipeg, MB R3P 0Z3 T +1 204 944 0100 F +1 204 957 5442 www.GrantThornton.ca Independent Auditor's Report To the Board of Directors of the Workers Compensation Board of Manitoba Opinion We 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, 2018, 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, including summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the WCB as at December 31, 2018, and the results of operations and cash flows for the year then ended in accordance with International Financial Reporting Standards. Basis for opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the WCB in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Information other than the consolidated financial statements and auditor's report thereon Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the consolidated financial statements and our auditor's report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of management and those charged with governance for the consolidated financial statements Management 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. In preparing the consolidated financial statements, management is responsible for assessing the WCB's ability to continue as a going concern, disclosing, as applicable, matters related to a going concern and using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative to do so. Those charged with governance are responsible for overseeing the WCB's financial reporting process. WCB 2018 ANNUAL REPORT 45 Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risks of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relative to the audit 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 WCB's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the WCB's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the WCB to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the WCB to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Winnipeg, Canada April 16, 2019 Chartered Professional Accountants 46 WCB 2018 ANNUAL REPORTCONSOLIDATED STATEMENT OF FINANCIAL POSITIONDecember 31(in thousands of dollars)Note20182017AssetsCash3$41,280$ 26,668 Receivables and other48,041 11,773 Investment portfolio51,704,312 1,789,980 Deferred assessments7 145,544 141,527 Property and equipment8 32,766 28,093 Intangible assets9 10,438 9,387 $ 1,942,381 $ 2,007,428 Liabilities and funded positionPayables and accruals10$ 14,756 $ 18,494 Workers' retirement annuity fund11 34,187 33,701 Employee benefits12 114,091 130,454 Mortgages payable on investment properties5 27,269 52,096 Benefit liabilities13 1,119,963 1,114,364 Total liabilities 1,310,266 1,349,109 Accident fund reserve 691,949 745,173 Accumulated other comprehensive loss (59,834) (86,854)Funded position 632,115 658,319 $ 1,942,381 $ 2,007,428 Authorized for issue on April 16, 2019, on behalf of the Board of Directors,Michael D. Werier Chairperson, Board of DirectorsPeter Dyck Chairperson, Audit Committee of the Board of DirectorsThe accompanying notes are an integral part of the consolidated financial statements.WCB 2018 ANNUAL REPORT 47CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOMEYear Ended December 31(in thousands of dollars)Note20182017RevenuePremium revenue15$ 210,846 $ 239,008 Investment and real estate income5 21,757 129,769 Total revenue 232,603 368,777 ExpensesClaim costs incurred13 186,285 186,483 Operating expenses16 99,542 100,259 Total expenses 285,827 286,742 Operating (loss) surplus (53,224) 82,035 Other comprehensive income (loss)Defined benefit plan remeasurements12 27,020 (25,017)Total comprehensive (loss) income$ (26,204)$ 57,018 The accompanying notes are an integral part of the consolidated financial statements.48 WCB 2018 ANNUAL REPORTCONSOLIDATED STATEMENT OF CHANGES IN FUNDED POSITIONYear Ended December 31(in thousands of dollars)Note20182017Funded positionAccident fund reserveBalance at beginning of year$ 745,173 $ 663,138 Operating (loss) surplus (53,224) 82,035 691,949 745,173 Accumulated other comprehensive lossBalance at beginning of year$ (86,854)$ (61,837)Other comprehensive income (loss) 27,020 (25,017) (59,834) (86,854)Funded position, end of year$ 632,115 $ 658,319 The accompanying notes are an integral part of the consolidated financial statements.WCB 2018 ANNUAL REPORT 49Next >