< Previous40Operating SurplusThe WCB experienced an operating surplus of $73 million offset by the surplus distribution of $36 million resulting in an increase in the accident fund reserve to $777 million. Other Comprehensive Loss and Total Comprehensive LossThe other comprehensive loss for 2020 was $46 million. This loss is the result of a decrease in the retirement plan's prescribed discount rate for accounting purposes (2.6 per cent at December 31, 2020, versus 3.15 per cent at December 31, 2019). The 2020 loss increased accumulated other comprehensive loss to $139 million as at December 31, 2020 ($93 million in 2019). The total comprehensive loss for the year was $9 million versus the budgeted loss of $40 million. Balance Sheet The 2020 funding ratio (ratio of total assets to total liabilities) was 143.7 per cent (146.8 per cent in 2019) 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 $777 million ($740 million in 2019), which exceeded the target balance of $577 million set by the WCB’s Funding Policy. Note, the 2021 – 2025 Five-Year Plan financials (page 95) incorporate a sustainable average premium rate and amounts for surplus distributions to employers in order to dispose of the excess reserves. COVID-19Due to its unpredictable impact on the economy, COVID-19 may impact future premiums and claim costs; however, the range of possible financial outcomes cannot be determined at this time. 2020 WCB ANNUAL REPORT41On 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 2020. The residual risk assessment considers the processes, controls and mitigation strategies in place to manage risk.Risk ManagementLow riskMedium riskMedium high riskHigh risk1. COVID-19 pandemic2. New leadership3. Return to work4. Organizational culture5. Prevention6. Technology capacity7. Changing labour market8. Benefit costs9. Fraud and program abuse10. Business resilience42Actuarial OpinionWith respect to Future Benefit Liabilities of the Workers Compensation Board of Manitobabased on an actuarial valuation as at December 31, 2020I have completed an actuarial valuation as at December 31, 2020, of the benefit liabilities for all employers insured 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 2020 consolidated financial statements which are prepared in accordance with International Financial Reporting Standards.My estimate of the liabilities as at December 31, 2020, is $1,153.4 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 105 per cent of the generational table created from the Manitoba Life Table 2015-2017 projected from 2016 using the CPM-B projection scale. The mortality assumption for life insurance benefits is based on 105 per cent of the Manitoba Life Table 2015-2017 projected to 2032. 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 Actuaries Chief Actuary, WCBMarch 3, 20212020 WCB ANNUAL REPORT43With respect to the Valuation of the Future Benefit Liabilities of the Workers Compensation Board of Manitoba as at December 31, 2020We have reviewed the actuarial valuation as at December 31, 2020, of the benefit liabilities for all employers insured 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 2020 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, 2020, to be$1,153.4 million. This includes provisions for claims arising from specific long latent occupational diseases and for the future cost of administering claims. In my opinion, this amount constitutes an appropriate provision for benefit liabilities as at December 31, 2020. 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 3, 2021Actuarial Review4 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, 2020, 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 a 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, 2020, 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 Grant Thornton LLP 94 Commerce Drive Winnipeg, Manitoba R3P 0Z3 T +1 204 944 0100 F +1 204 957 5442 445 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. 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. Obtaining 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. Grant Thornton LLP, Chartered Professional Accountants Winnipeg, Canada April 19, 2021 2020 WCB ANNUAL REPORT4546Consolidated Statement of Financial PositionDecember 31 (in thousands of dollars)Note20202019AssetsCash3$31,241 $ 23,554 Receivables and other420,742 7,794 Investment portfolio51,833,949 1,795,664 Deferred assessments7166,413 152,858 Property and equipment836,412 39,381 Intangible assets99,025 10,569 $2,097,782$ 2,029,820 Liabilities and funded positionPayables and accruals10$36,984 $ 27,630 Workers' retirement annuity fund11 40,979 38,353 Employee benefits12 213,482 154,526 Mortgages payable on investment properties5 15,126 26,423 Benefit liabilities13 1,153,409 1,136,067 Total liabilities1,459,980 1,382,999 Accident fund reserve776,757 739,673 Accumulated other comprehensive loss(138,955) (92,852)Funded position637,802 646,821 $2,097,782$ 2,029,820 Authorized for issue on April 19, 2021, 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.2020 WCB ANNUAL REPORT47Consolidated Statement of Operations and Comprehensive (Loss) Income Year Ended December 31 (in thousands of dollars)Note20202019RevenuePremium revenue15$217,399$ 214,099 Investment and real estate income5 145,722 199,952 Total revenue363,121 414,051 ExpensesClaim costs incurred13 185,718 192,616 Operating expenses16 104,035 101,106 Total expenses 289,753 293,722 Operating surplus73,368 120,329 Surplus distribution19(36,284) (72,605)Net funding surplus37,084 47,724 Other comprehensive lossDefined benefit plan remeasurements12(46,103) (33,018)Total comprehensive (loss) income$(9,019)$ 14,706 The accompanying notes are an integral part of the consolidated financial statements.48Consolidated Statement of Changes in Funded Position Year Ended December 31 (in thousands of dollars)Note20202019Funded positionAccident fund reserveBalance at beginning of year$ 739,673 $ 691,949 Operating surplus73,368 120,329 Surplus distribution(36,284) (72,605)776,757 739,673 Accumulated other comprehensive lossBalance at beginning of year$ (92,852)$ (59,834)Other comprehensive loss (46,103) (33,018)(138,955) (92,852)Funded position, end of year$637,802$ 646,821 The accompanying notes are an integral part of the consolidated financial statements.2020 WCB ANNUAL REPORT49Consolidated Statement of Cash Flows Year Ended December 31 (in thousands of dollars)Note20202019Operating cash flowsPremiums from employers$186,886$210,773 Investment income 57,213 57,932 Claim payments13(168,376)(176,512)Purchases of goods and services(75,342)(86,923)Net operating cash flows 381 5,270 Investing cash flowsPurchases of investments (830,777)(998,021)Proceeds on disposal of investments 877,175 1,056,217 Asset acquisitions (1,805)(7,640)Net investing cash flows 44,593 50,556 Financing cash flowsPayment of leases(1,003)(947)Surplus distributions(36,284)(72,605)Net financing cash flows (37,287) (73,552)Net increase (decrease) in cash7,687(17,726)Cash at beginning of year 23,554 41,280 Cash at end of year$ 31,241 $23,554 The accompanying notes are an integral part of the consolidated financial statements.Next >