Return to flip book view

CONTENTSMESSAGE FROM THE CHAIR 4MESSAGE FROM THE CEO 6FINANCIAL HIGHLIGHTS 8A LOOK BACK AT 2022 9CONSOLIDATED FINANCIAL STATEMENTS 12

MESSAGE FROM THE CHAIROn behalf of the Board of Directors, I am pleased to present the Nova Mutual In-surance Company’s Annual Report for the year ended 2022.It has been my pleasure to serve as Chair of the Board of Directors for 2022. Through collaboration and productive Committee work, the Board currently consisting of 9 Directors, has made great strides in its commitment to good governance, and by working closely with management, has recently approved Nova Mutual’s 2023-25 Strategic Plan.2022 was a year of transition for Nova Mutual, both internally, with the appoint-ment of a new CEO, and externally, as we all adjust to changes associated with a post pandemic world. The Board is condent that our new CEO, Glenn Pick, who had previously served as Nova Mutual’s Chief Financial Ofcer, is well positioned to lead Nova Mutual toward our goals of mutuality, member-centricity, and prudential man-agement. As part of our mutual heritage, Nova Mutual continues to actively support and engage with our local communities.During 2022, the Board continued to operate in compliance with its statutory role and responsibilities, as dened in the Insurance Act and the Corporations Act, as well as in a manner consistent with best corporate governance practice. Its revised Standing Committee structure has served the Board well during 2022 in providing effective risk management oversight and developing policy direction, allowing the Board to focus at a more strategic level. These Committees play an important role in protecting member assets and ensuring prudential management, and include:• Audit, Finance & Conduct Review Committee;• Investment & Risk Committee;• Human Resources Committee; and• Governance Committee.Over 2022, the Board has continued to build on its strong governance foundation, including establishing appropriate gover-nance policies and practices designed to ensure that we fulll our responsibilities on your behalf, and actively engage with the larger mutual community. These efforts have been spearheaded by the Chair of our Governance Committee, Barbara Bethune.The Audit Committee, chaired by Mark Matson, has worked with our CEO,our CFO, Liane Varga, and their teams to ensure that the nancial statements pre-

sented to you at this year’s AGM fairly and adequately represent the nancial position of the Corporation. The Committee has also worked closely with the external au-ditors to oversee and prepare the audited nancial statements. The Investment & Risk Committee, chaired by Eric Harrop maintains oversight over the performance of the investment portfolio and has undertaken the lead in developing Nova Mutual’s Risk Management frame-work. Great strides have been made by the Committee in putting in place an appropri-ate risk management framework for Nova Mutual.Our Human Resources Committee, led by Lindsay Markle, has also been hard at work to ensure that Nova Mutual is appropriate-ly resourced, has compensation strategies in place that align with strategic objectives while remaining exible enough to accom-modate the evolving realities of work and work/life balance as we emerge from the pandemic.Our Board is committed to providing its Board members with educational op-portunities, including individual director certication programs provided by OMIA. Directors also actively participate in mutual sector Conferences and education op-portunities. In particular, Barbara Bethune and Catherine Akins participate in OMIA’s Legislative Affairs Committee; and Eric Harrop, is a member of OMIA’s Group B Committee.The Board nominations process is an im-portant part of looking ahead, recognizing our changing environment, and maximizing our strength in our governance role. As we continue to rene our process, we strive to draw expertise from the wide spectrum of our membership to continue to build a diverse and competent Board of Directors, ensuring the Board has the appropriate skills, knowledge, and experience to per-form its role. In this regard, the Nominating Committee, chaired by Catherine Akins, and composed of two other Directors and one external individual, followed a process to assess the skills and expertise needed to continuously strengthen and refresh board composition. Interested individuals were subsequently invited to seek nomination for a position on the Board, and following an interview process, the Committee rec-ommended the best qualied individuals as nominees for election at Nova Mutual’s 4th Annual General Meeting. These nomi-nees will be presented to the Members for election by acclamation, each for a 3-year term. Last, but certainly not least, the success of Nova Mutual would not be possible with-out the hard work and dedication of our staff, and the Board wishes to express its appreciation to them for their continuing commitment and achievements.The Board of Directors welcomes your attendance at the Annual General Meeting to be held on Thursday March 9th, 2023.Regards,Michelle Spoelstra Board Chair5

MESSAGE FROM THE CEOOver the past year Nova Mutual has had the chance to reect and ask some funda-mental questions. Why does Nova Mutual exist? What value does Nova Mutual bring to the table – for its members, its com-munities, and its mutual partners? 2022 has brought on some signicant changes designed to strengthen the company’s resolve as a Mutual insurer and prudent nancial services company. Mutual insurers have been around for centuries, strength-ening and supporting local communities, providing excellent products, and superior member services. What differentiates Nova Mutual from other insurers?Our People, Our Service. The concept of Mutuality is not for everyone. It’s not for companies who strive for prots over service and people. Nova Mutual is part of a larger group of Mutuals who make up one of the strongest nancial networks in the world. Nova Mutual works with our members, agents and brokers to ensure Nova Mutual will be in a position to fulll its promise to be there when you, our member need us the most.As Nova Mutual begins a new chapter, it is the investment in our people that will take us to new heights moving forward. This investment will take the form of on-campus recruiting, career development opportuni-ties such as continuous learning and skills training, stretch assignments, and the au-tonomy to make decisions. Each employee here at Nova Mutual has a purpose and as a team we come together to challenge the status quo, learn, and support our com-munities to enhance the lives of members today and for the future.

Our value proposition is strong. 2022 brought on several challenges beyond our control, the volatile nancial markets and the increases in interest rates have sig-nicantly impacted surplus. However, our underwriting integrity and service stan-dards have not and will not waver ensuring that Nova’s nancial strength and business fundamentals will remain strong. This in turn ensures the company can withstand turbulent nancial markets and unpredict-able weather and still be there for you, the member, in your time of need.Working in close partnership with the Board, the Leadership team and Nova Mu-tual are charting a renewed path forward. Our 2023 -2025 Strategic plan sets in mo-tion objectives and initiatives to strengthen our position as a Mutual insurer, a member centric rural Mutual insurer. We’ll do this by operationalizing our core values of Integri-ty, Respect and Courage,Nova Mutual will be an active, responsible, and accountable leader in the Mutual space. I am very pleased at where 2022 ended and look forward to the excitement and challenges 2023 will bring. Our people are what make the difference, their pro-fessional dedication to servicing you the member is what makes Nova Mutual.I would like to share with you this video highlighting some of the community work Nova Mutual has done in 2022.Glenn Pick President & CEO7

FINANCIAL HIGHLIGHTS

A LOOK BACK AT 2022THANK YOU TO OUR MEMBERSAt Nova, our members matter! This year, we got to meet so many members, doing amazing and unique things. We are proud to share their incredible stories through our Member Spotlights.• We explored right in our own backyard, discovering the bright and cheerful Firey and Fox Books, ring up the grill with our new pal Chad from Norfolk BBQ, getting energized with Altitude Coffee Roasters, learning how Custom Print Shop helps small businesses to grow, and going off the beaten path to nd ourselves at the beautiful Hideaway Hills.• We took a trip to London to learn more about the area and people we serve, checking out Os & Oakes, tasting the delicious offerings of Blackfriars Bistro and learning about the beautiful blooms, and inspiring backstory, of Regency Florists.• In Niagara Falls we found two members doing incredible things to support and uplift their communities. Third Space Café and Grow Food Market are both making a difference, and a positive impact through accessible and affordable food and connection.9

THANK YOU TO OUR COMMUNITYNova Mutual strives to put our community rst. We are proud to support the communities in which we live and do business. Through sponsorships, highlights, and attending events, we made community a priority throughout the year!• We have a lot of inspiring young people, working hard to do amazing things in our community. This year, we got to uplift and recognize Ryder Mandryk who has been advocating for a rainbow crosswalk in Simcoe – raising funds to make our community brighter, more colourful and more inclusive.• When we found out that our friends at Spectrum Gymnastics Club were facing a barrier to making their space even more accessible to all, we jumped in to help. We Uplifted their Lift the Limits fundraiser with a sponsorship, purchasing tickets, and some video footage to help Teagan spread the word about what she needed.• We wanted to help ensure that everyone had a great start this September by donating school snacks to several local food banks. We partnered up with Helping Hand Tillsonburg, Hagersville Food Bank, and Simcoe Caring Cupboard to wish those heading back to school a wonderful year ahead.• We were proud sponsors (and attendees!) of Eat & Drink Norfolk, Downtown Simcoe Friday Night Market, Norfolk County Fair & Horse Show, Hometown for the Holidays, Murray Johnson Annual Local League Tournament in Hagersville, Waterford Minor Hockey and the Jarvis Light Up. Our team loves local and supporting these amazing community events throughout the year.

THANK YOU TO OUR TEAMAs we’ve expanded and evolved, we have always embraced up-lifting Team Nova, and allowing opportunities for learning, devel-opment, and growth from within. We congratulate many of our team who worked hard on professional (and personal) milestones – completing courses and reaching for new heights. We couldn’t be prouder of their determination and drive and happy to celebrate a year of hard work paid off! Thank you to all of Team Nova for your incredible work this year!THANK YOU TO OUR AGENTSOur agency is growing and we’re happy to uniquely support each of our agents in the communities that they live and serve. Insur-ance can be sponsoring little league hockey, a local newsletter, and a Santa Claus parade.THANK YOU TO OUR BROKERSWe’re appreciative of our wonderful broker partnerships. Thank you for the support that you have shown us once again this year. Without it, we wouldn’t be able to continue to uplift our members and community the way we do.From Random Acts of Kindness to our Uplift Podcast, Member Spotlights and Community Highlights, team celebrations, agent support, and broker appreciation – we have packed so many amaz-ing projects and people into the last year. Thank you all for a truly remarkable year of supporting our community, spotlighting our members, and showing us that Insurance Can Be Uplifting, Inclu-sive, Local, Upbeat, Your Story… Spectacular!11

CONSOLIDATED FINANCIAL STATEMENTS

Nova Mutual Insurance CompanyConsolidated Statement of Financial PositionAs at December 3120222021AssetsCash$5,983,365$3,884,756Investments (Note 4)40,662,12540,986,750Investment income accrued79,30854,371Income taxes recoverable365,592928,622Due from policyholders11,183,88410,719,483Reinsurer's share of provision for unpaid claims (Note 3)8,460,33714,333,182Due from reinsurer (Note 3)716,534220,975Due from facility association72,22470,625Deferred policy acquisition expenses (Note 3)3,481,8293,302,849Prepaid expenses 27,6961,110,197Assets held for disposal-569,533Property, plant & equipment (Note 12)810,869810,437Deferred income taxes249,100253,900$72,092,863$77,245,680Liabilities Accounts payable and accrued liabilities$2,042,816$2,152,335Unearned premiums (Note 3)17,681,95416,824,309Provision for unpaid claims and adjustment expenses (Note 3)25,869,18231,500,23745,593,95250,476,881Members' SurplusUnappropriated members' surplus26,498,91126,768,799$72,092,863$77,245,680Signed on behalf of the Board by:, Director, DirectorThe accompanying notes are an integral part of these consolidated financial statements.4DocuSign Envelope ID: E5215BFB-3446-4A64-A87C-8BD2E8A3A960

Nova Mutual Insurance CompanyNotes to the Consolidated Financial StatementsDecember 31, 20223. INSURANCE CONTRACTS (CONTINUED)Gross claims20152016201720182019202020212022TotalGross estimate of cumulative claims costAt the end year of claim$2,627,160$2,951,101$4,440,948$9,488,978$10,543,858$9,035,202$20,084,274$19,255,269One year later2,895,6853,804,6914,191,50214,718,78712,988,9049,464,23519,975,134Two years later2,983,7534,687,5739,949,47014,337,27713,806,5669,223,742Three years later3,597,7199,615,9118,089,63714,884,02415,767,062Four years later7,091,2109,191,4028,074,80314,861,213Five years later7,157,5489,185,2717,984,476Six years later7,165,1448,868,665Seven years later6,910,047Current estimate of cumulative claims cost6,910,0478,868,6657,984,47614,861,21315,767,0629,223,74219,975,13419,255,269$102,845,608Cumulative payments6,827,4118,125,5297,549,43513,348,73413,675,6338,166,02017,253,77410,109,38585,055,921Outstanding claims$82,636$743,136$435,041$1,512,479$2,091,429$1,057,722$2,721,360$9,145,88417,789,687Outstanding claims2014 and prior150,324Facility association and other residual pools289,396IBNR and ILAE7,639,775Total gross outstanding claims including claims handling expense$25,869,182Net of Reinsurance20152016201720182019202020212022TotalNet estimate of cumulative claims costAt the end year of claim$2,563,877$2,742,962$4,440,948$7,789,974$10,023,903$9,023,627$14,253,276$15,904,883One year later2,511,5853,480,5194,191,50211,324,49110,447,2668,969,58014,356,706Two years later2,533,9933,853,4526,360,15911,385,48311,055,0429,079,129Three years later2,509,3466,612,8006,668,41211,489,15211,523,993Four years later4,658,7826,523,1096,754,49411,390,798Five years later4,729,9516,705,3806,667,753Six years later4,729,9516,387,136Seven years later4,696,838Current estimate of cumulative claims cost4,696,8386,387,1366,667,75311,390,79811,523,9939,079,12914,356,70615,904,883$80,007,236Cumulative payments4,614,2025,943,4336,382,89510,797,0999,458,9358,111,31912,687,2579,300,83967,295,979Outstanding claims$82,636$443,703$284,858$593,699$2,065,058$967,810$1,669,449$6,604,04412,711,257Outstanding claims2014 and prior136,856Facility association and other residual pools289,396IBNR and ILAE4,271,336Total net outstanding claims including claims handling expense$17,408,84515