Speaking to the environment more literally, 2022 was similar to 2021 with regards to extreme weather events and their impact on Peace Hills. While it was an active year for weather-related losses across Canada, Peace Hills continued to see losses less than our market share and we have managed to avoid any events that would have exceeded our internal CAT tracking threshold.

Our Gross Written Premiums (GWP) grew by 12.65%, from $332M in 2021 to $374M in 2022. Contributing to this was growth in Commercial Auto, Commercial Property and Personal Auto, at 13.4%, 13.8% and 8.7% respectively. Meanwhile, our overall Gross Loss Ratio ended up at a healthy 51.8% (up from 47.4% in 2021) and our Net Loss Ratio was 52.3% (up from 48.8%).

Interest rate hikes, designed to control inflation, reduced our investment income from $11.3M in 2021 to $4.3M in 2022. In addition, there was a smaller dividend and capital gains distributions from the pooled funds of $2.6M compared to $6.6M last year. On top of having less to invest, the significant increases in interest rates and the volatile market in Canada directly impacted our existing investments. Our bond portfolio saw unrealized losses of $7.7M and $3.8M in our equity portfolio. These, together with a market value write-down of investment land of $400K resulted in an Other Comprehensive Loss of $11.9M (up from a loss of $4.6M in 2021).

2022 came to a close with a total comprehensive income of $19.5M, our capital base growing from $114.8M to $133.3M, and a Minimum Capital Test ratio (MCT) of 249%.

PHINEX was a primary focus for the IT department as well as some select staff members who were seconded over to the project team. Our dedicated Project PHINEX team has been working closely with EY to design, develop and test our new Guidewire Cloud system. The project has been divided into 15 development sprints and 5 testing sprints, with an anticipated completion and launch in mid-2024.

Meanwhile, our Accounting and IT teams worked diligently towards making Peace Hills PCI Compliant. The PCI DSS (Payment Card Industry Data Security Standard) is a set of standards designed to ensure that all companies that access, process, store or transmit credit card information maintain a secure environment. Becoming fully PCI Compliant involved revising the way in which we collect payment information, resulting in the need for a new secure telephone system, updated payment processing technology to ensure safe data collection, as well as training all staff on the responsible handling of credit card information.

Lastly, as a part of our strategic initiative to reduce our reliance on reinsurance, we made two significant changes with respect to Quota Share in 2022. First, we reduced our ceding percentage from 31% to 20%, and second, we moved to Net Quote Share, which limits the Quota Share reinsurer’s participation on catastrophic losses to just sharing in Peace Hills’ retention. These changes are a positive step towards supporting our own future growth and growing our capital.

Bringing our staff back to the office came with the realization that we had outgrown our current workspaces. Our business didn’t just remain stable during the pandemic, but grew quite significantly, warranting the need for office renovations and new workstations. The new stations offer enhanced functionality and take up a smaller footprint, allowing us to maximize our existing office space. We also built new offices for our growing management team as well as new collaborative workspaces integrated with modern technological capabilities.

Our people are our most valuable asset, so the continuation of our regular anonymous surveys was vital in determining how to maintain the positive work environment that Peace Hills is revered for. This year, major topics included growth and development, inspirational leadership, engagement, and group benefits. Born from these surveys was a leadership and change workshop for managers and major changes to our group benefits program. Beginning on January 1st, our employees will have access to enhanced mental health offerings, paramedical benefits, and health and wellness spending.

Ensuring our staff feel well-supported at work has resulted in them delivering exceptional service to both our Brokers and insureds. We are incredibly proud to have some of the highest customer service standards in the industry, with a Net Promoter Score (NPS) of 86%. We even earned the honour of being named a ‘5-Star Carrier’ for our claims processing by Insurance Business Canada, who annually surveys the broker force to determine which carriers rise above the rest. Earlier in the year we carried out our own survey for the first time, which yielded similar results. Nearly 1,000 of our broker partners participated, with over 90% indicating that they are satisfied with their relationship with Peace Hills.

Throughout the year, we worked to develop comprehensive underwriting levels within roles to help illustrate the career progression opportunities in the underwriting field. This will also provide authority levels for each employee and meets the best practices for escalating approval of risk selection. Additionally, a number of staff were seconded to the PHINEX development team, meaning that we welcomed aboard some new faces as the positions those people left had to be backfilled.

To ease us into all these changes, we also brought in a Change Management Specialist who will work to facilitate the adoption of new processes, procedures, and technology. Other new positions to our company this year included: a Billing Manager to better support the growing size and needs of this department; an IT Business Analyst who will gather business requirements for large projects; two new supervisors, one in Admin and another in BC Commercial lines; a Corporate Culture and Content Coordinator, who will work in our Marketing team to ensure the Peace Hills brand is maintained internally and talked about externally; as well as a 6-person Quality Assurance Team who will work with the Software Development Team to ensure that project development is tested and meets the requirement. For now, this new QA Team will support the PHINEX project, but we look forward to integrating their expertise into other areas of the business once the system launches in 2024.

Perhaps most notable in terms of structural changes within the company, we created a standalone Farm underwriting department. Previously a part of each branch, we brought all our Farm employees under one umbrella and hired a dedicated Farm Underwriting Manager in order to focus on profitable growth and providing support to our Brokers in this line of business.

Finally, it goes without saying that ‘our people’ certainly extends to our ownership body, the Samson Cree Nation. Peace Hills has made a commitment to ensure that our culture and values are reflective of our unique ownership, and as such implemented several initiatives to help move us collectively forward towards truth and reconciliation in 2022. These initiatives include incorporating a way for members of the Samson Cree Nation to get in touch with us directly if they are interested in a career at Peace Hills, providing education for all staff on the history of Indigenous peoples in Canada, signing on as a major sponsor of the Ride to Reconciliation event, and the continuation of our Charity Partnership Program with Pathways to Education Canada, in which 100% of the enrolled students at the Edmonton and Saskatoon locations have self-identified as Indigenous. This charity program has truly begun to gain momentum; not only did we raise $4,500 internally – in addition to our own $10,000 corporate commitment – but Pathways also received more than $10,000 in extra donations from some of our most valued partners as gifts in celebration of Peace Hills’ 40th Anniversary.

The second initiative was one that involved our Broker partners and allowed us to help get projects of local value off the ground in some of the smaller, more remote areas of Western Canada where we do business. Armed with a campaign budget of $100K, we were able to help 10 organizations complete projects such as lighting replacement at a curling club in Selkirk, Manitoba and bringing a new-age medical device to the Grande Prairie Regional Hospital in Alberta. This initiative, called “Hometown Turnaround”, was a complete success and we are excited to bring it back for 2023.

Aside from these two new campaigns, a meaningful existing partnership we continued was with Medidas and their mobile gaming application called TrypScore. The app incentivizes safe driving and our sponsorship of it remains mutually beneficial through joint marketing efforts, driver data access, and the promotion of safer roads in our communities.

Our Staff Association was back in full-swing after a 2-year hiatus of large in-person events due to the pandemic. One of their leading initiatives is collecting donations from staff through a ‘Jeans Day’ fund, and this year those donations amounted to $8,184 in our Edmonton head office, which was split evenly between Boyle Street, Saving Grace Animal Society and Little Warriors. In our Calgary office, another $4,261 was raised and donated to the Women in Need Society.

Lastly, we had the privilege of joining our industry partners, the Insurance Brokers Association of Alberta (IBAA), in their efforts to raise money for the ongoing conflict in Ukraine. At their convention in Banff this year, the IBAA announced that they would match up to $10,000 donated by their members to the Canada-Ukraine Foundation, and we decided to double it with further matching of up to $20,000. In the end, between donations and our two matching schemes, $43,300 was raised and donated to the cause.