From our AM Best rating upgrade, to reinforced partnerships with our reinsurance providers, growth in all branches, and introducing new Vision, Mission and Values statements, Peace Hills Insurance had no shortage of things to celebrate in 2024. That said, there were numerous headwinds to navigate as well: shifting regulations, inflationary pressures, record-breaking catastrophic (CAT) events, and the delay of the launch for our new core system, PHINEX. But as I reflect on the last year on behalf of the executive team, I am filled with immense pride and gratitude for our company and the people behind it. Our employees’ dedication, responsiveness, creativity, and resilience have been the driving force behind our success. Whether we are facing challenges or embracing opportunities, what remains true is that we are doing it together and setting the stage for an expansively bright future at Peace Hills. THE 2024 LANDSCAPE The insurance industry continues to be shaped by a complex interplay of political, economic, and environmental factors. Together, these external forces form a landscape that requires careful strategy and adaptability. We came into 2024 with a government-imposed rate cap of 3.7% for “good drivers” in Alberta – a policy introduced with minimal industry consultation. Then, towards the end of the year came an announcement of complete auto insurance reform and the move towards a “Care First” model by 2027. The current market conditions, coupled with these attempts to address affordability concerns, resulted in two companies exiting the market, leaving remaining providers under extra pressure in an already strained environment. Implementing restrictions to protect our organization while being fair to both the consumer and our broker partners has been a careful balancing act. The auto market is then doubly hit by inflation. While the overall CPI (Consumer Price Index) has stabilized at 1.6% over the past 12 months, inflation on parts and maintenance currently sits at 2.4%. Vehicle replacement costs continue to be a growing concern, especially in Alberta, where we have the highest per capita vehicle theft rate in the country. Furthermore, the rising costs of accident benefits as well as the number and size of litigated claims is troubling. From 2018-2022 collision-related lawsuits surged by 48%, while the severity of those claims increased by 55.5%, and then from 2019-2023 there was a 44% increase in claims severity from accident benefits. Together, the pressures of rising costs and government regulation limit our ability to price our product effectively. The property and commercial markets have their own share of challenges, with 2024 being the largest insured catastrophe year in Canada – over $8B in losses. Alberta was hit with two of the top four weather events with the Jasper wildfire and an early August Calgary hailstorm. Simultaneously, residential construction costs are also hit by inflation and remain at a near all-time high, increasing 26.9% over the past 5 years driven by materials and labour cost, coupled with strong housing demand due to the province-wide population boom. Despite these adversities, our property book was resilient, demonstrating the strength in our underwriting teams and reinsurance program. At the very end of the year there was one final hurdle: the Canada Post strike. This created issues across our entire country, disrupting communications and administrative processes. While the strike ended before the holiday season, the impacts of this disruption carried over into 2025, underscoring the importance of digital solutions for customer engagement and document delivery. Recognizing the need for a forward-looking approach in this evolving landscape, our finance team completed our first Environment Scan Report to analyze economic, regulatory, and industry trends affecting Peace Hills Insurance. The findings helped inform our strategic planning and will guide us as we implement key initiatives, including the launch of PHINEX in 2025 – a significant investment that will enhance our digital capabilities and position us more competitively in the market. FINANCIAL SNAPSHOT In the face of several adversaries amid a tumultuous landscape as previously described, it makes it exciting to report that 2024 was a successful year for Peace Hills. Policies in Force grew from 188,608 in 2023 to 205,864 in 2024, and Gross Written Premiums increased from $423M in 2023 to $466M in 2024, with notable contributions from Personal Auto, Personal Property, and Commercial Auto. Our overall gross loss ratio ended the year at 102.6%, an increase from the prior year of 53.3% primarily due to the two major CAT events in Jasper and Calgary. Our net loss ratio was 64.4% (2023 – 55.6%) and investment income rose to $36.9M from $23.6M in 2023. We concluded the year with a total comprehensive income of $21.5M (2023 – $33.5M), and our capital base grew from $166.1M to $186.8M. The MCT (Minimum Capital Test) ratio was 207.3%, down from 232.4%, due to the capital implications of project PHINEX and the impact of the CAT losses which will take longer to resolve. The claims costs arising from these CATs also impacted insurance income, reducing our Return on Equity from 22.2% in 2023 to 12.2%. Our investment income remained strong with a 9.1% yield (2023: 6.6%). At the start of 2024 our finance team marked a major milestone with the first ever presentation of the 2023 statements under IFRS 17 and IFRS 9. This was the first time we had to do a full report under these new accounting standards, and I am proud of the monumental effort of our Finance team in preparing for this change. We finished the year with excellent news from AM Best, who upgraded Peace Hills to A- for both Financial Strength and Issuer Credit, a significant achievement that we have been working towards for years. For a more detailed look at our financial performance for 2024, click here. OPERATING HIGHLIGHTS At times it felt that 2024 was fully consumed by the work being done on our new Guidewire system, PHINEX. The project team has been working diligently to ensure that when we launch, we have fully tested and have confidence in the system that our brokers and employees will rely on. It was for that reason that we ultimately decided to delay the launch from October 2024 to May 2025. With all the resources required to make this a success, other operational activities slowed. What extra capacity we did have was spent on implementing rate changes, handling the claims that arose from two CAT events, managing our growth in key areas, introducing new tools, and of course continuing our various meaningful community-engaging initiatives. There were two rate changes to our book in 2024. First, an auto rate change that came into effect in April, which was more complicated than usual as we were also faced with the introduction of the “Good Driver” rate cap. This created extra nuances to our process and made it challenging to land on a rate increase that worked strategically for our organization. Later in the year we also implemented a personal property rate change that will come into full effect in February 2025. From a claims perspective, there was one other major CAT event that hit just mere days after the Jasper wildfire: the Calgary hailstorm. While this did not carry the same devastating weight to the company as Jasper, it has come in as our second largest claim volume event in Peace Hills’ history (the first being the 2016 Fort McMurray wildfire). This storm caused $21M in losses across 1,229 claims, and those files moved slowly but steadily throughout the remainder of 2024. The biggest challenge facing our team is that due to the sheer number of claims – over 100,000 across the industry – there was a resulting above-average demand on body shops and auto appraisers. Our adjusters have had to work hard at setting reasonable expectations for policyholders who, in some instances, are having to wait months to have their damages assessed and repairs completed. Since these two events took place, we have begun to look at ways we can adapt how we utilize scientific models and improving the granularity with which we assess risks in vulnerable locations. We are now utilizing the FUS Wildfire tool, which provides our underwriters with up-to-the-minute notice of current wildfire events, as well as wildfire scoring based on location. Our work on addressing our concentration and risk accumulation management will ensure we are able to continue providing long-term, reliable, and sustainable support to all the communities we serve. Of course, our branch underwriting performance was significantly impacted by these two major CATs. However, once excluded, our loss ratio came in 3% higher than 2023 at 62.8%. Additionally, we saw an overall PIF increase of 9.1% and a 10.1% in Gross Written Premium (GWP). These numbers were partially achieved by two of our branches reaching major milestones: our Rest of Canada (ROC) branch surpassed $50M in GWP and our Southern Alberta (SAB) branch surpassed $100M. As for our corporate underwriting team, they played a key role in our implementing IBC’s new Driver and Auto Search History (DASH) tool and Applied’s Commercial Rater. DASH replaces Autoplus, which gives us a cost-effective way to assess driver and vehicle history quickly and accurately. Meanwhile, the Applied Comm Rater improves efficiency in quoting and binding specific commercial property business by integrating real-time market data and automation. Both tools contribute to faster decision-making for our branches and broker partners. Our BDAs (Business Development Advisors) and marketing team continued to collaborate with our broker partners for the third year of our Hometown Turnaround campaign. In 2024 we were able to help or fully fund 12 incredible projects throughout all the areas where we do business. Additionally, marketing also launched and managed a new charity partnership with CPAWS (Canadian Parks and Wilderness Society), for which we were to raise $5,681 from within the company. Members of our Human Resources (HR) team were also out in the community regularly, attending career events both online and in person to increase awareness about a career in insurance and promote the benefits of working at Peace Hills specifically. In an increasingly competitive hiring market, they are more committed than ever to attract and retain top talent, ensuring we continue to build a strong and skilled workforce. OUR PEOPLE As discussed, staff across the entire company have dedicated countless hours to project PHINEX. Every single department has provided resources, whether for implementation, testing, document building, training and more. Our HR team has been diligent in supporting the increasing staffing demand both directly on the project as well as filling positions of those who have been temporarily seconded to the project. The department most impacted of course has been IT. Most of our digital team is supporting project PHINEX with only a small portion left to continue providing support for non-project-related activities. Early in the year they welcomed a new Software Development Manager, who has filled some of those gaps and brought continuity to ongoing system maintenance while also strengthening the group’s long-term development capabilities. Another significant staffing change was the departure of our VP of HR and Administration, Ginette Martin. After 9.5 years of dedicated leadership and strategic guidance, it was with mixed emotions that we set out to find her successor. However, in September, we were thrilled to welcome Lyle Toop to the role. Since his arrival, he has illustrated a strong commitment to fostering the inimitable workplace culture here at Peace Hills, bringing fresh perspectives to our people strategy. He has fit seamlessly into our executive team, and we are confident that he is the right person to lead our HR and administration team into the future, supporting our evolving human resource needs. With nearly 30 new faces across all three of our offices, plus the contract staff in place to support PHINEX, it is increasingly important to continue perpetuating a positive and fun workplace culture. We made improvements to the delivery of our Health Care and Wellness Spending accounts, provided two pension education sessions, and held several events, including our mainstays like the summer pancake breakfast, chili cookoff and end-of-year stocking party. Most notably though, we had what is likely to be our final gathering of all offices in the mountains. Booked two years in advance, our holiday party took place in Jasper, which for a time was shrouded in uncertainty about whether our venue could still accommodate us. Thankfully, it went ahead but marked the bittersweet realization that there is officially no longer a venue in the mountains that can fit all our staff and their guests going forward. While it’s sad to end this revered tradition at our company, it happened organically, and it is difficult to not be excited and impressed by the rate at which we are growing. To accommodate that growth, we are enacting changes to our physical environments. In 2024 our Vancouver office moved locations to address the needs of our growing BC Branch, and 2025 will begin with a major investment in our Edmonton head office building with the absorption and renovation of the 6th floor. As our team expands, so must the spaces that foster collaboration and connection. At Peace Hills, relationships – Wahkôtowin – are everything. Our strongest business relationships are with our broker partners, so we often do consider them ‘our people,’ too. With all the aforementioned work on our new system and the current industry landscape, we were very selective on appointing new brokers in 2024, with only 6 new contracts approved. Instead, we focused on spending considerable time on enhancing existing partnerships through events such as our 3 convention parties, a trip to the northern territories, another successful Broker Council event in Calgary, and involving our brokers for the first time in our Orange Shirt Day campaign. We take pride in the meaningful broker partnerships we have built, and we greatly value those connections. SETTING THE STAGE FOR 2025 As we enter 2025, we do so with a clear vision: that, through Wahkôtowin, we can be a respected national insurer that provides creative and responsive solutions. This reflects our commitment to continuous improvement and maintaining strong relationships. 2024 was a year of transformation – not just in the work we do, but in how we define our future. Looking ahead, we see both opportunities and challenges. Industry-wide, there is an increased focus on improving risk management and building resilience to natural catastrophes – an urgent priority as we prepare for a future where these events are more frequent. The recently announced auto reform and transition to a “Care-First” model in 2027 will also be a major shift in our industry. Our claims department will need to fundamentally rethink how we manage injury claims, and 2025 will be a critical year for mapping out the changes required. Meanwhile, Cybersecurity risks also continue to evolve, and we have taken meaningful steps to enhance our defenses, including upgrading key processes and selecting a more robust firewall to better secure both our on-premise and remote systems. The most significant task ahead is the launch of PHINEX, the largest undertaking in our company’s history. Our employees have designed a system that will drive efficiencies and make doing business with us easier than ever, addressing the need for achieving real-time information exchange between our offices and brokers while continuing to prioritize human interaction. This will be a defining moment for Peace Hills Insurance, and our teams are working diligently to deliver a system that meets the collective needs of our customers, brokers, and employees. Financially, we remain strong and well-positioned for continued success. Thanks to our dedicated workforce, robust broker relationships, and underwriting discipline, we anticipate sustained underwriting profitability in 2025. We expect GWP – inclusive of the auto facility and risk share pool – to exceed $500M, a major milestone in our company’s history, representing healthy growth from 2024. With a secure financial foundation, a clear strategy, and a culture rooted in adaptability, kinship, and interconnectedness, we are well-prepared for 2025. It is sure to be another transformative year, setting the stage for the next chapter of Peace Hills Insurance.