Canada�s Trusted Insurance Company
Canadian owned and operated since 1887, today The Dominion is one of the country�s largest property and casualty insurers.
The Dominion looks to insure Canadian individuals, families and businesses who want ongoing confidence that the cars, homes and businesses they care about are protected. Outstanding claims service is standard, and �doing the right thing� is the test we judge ourselves against. Long-term relationships are part of our success, and we work to earn and maintain the trust and loyalty of policyholders, employees and brokers.
At The Dominion, we know that it�s all about relationships and that our relationship with you comes first. Our commitment to you comes with a track record: we are active in making sure the insurance system works best for consumers; we constantly work to improve the availability of information that you need to make informed insurance choices; and we strongly believe consumers should have access to independent, professional advisors, who provide advocacy and choice, which is why we distribute our products exclusively through independent brokers.
The Dominion promises integrity and fairness in meeting our commitments, and conducts business in a manner that makes decisions and actions transparent to all stakeholders.
No one works harder to look out for you.
Canadian Heritage
The history of The Dominion parallels that of Canada itself. Founded in 1887 with Sir John A. Macdonald as our first president, The Dominion established its headquarters in Toronto when the city�s population was just 181,000. Expanding across Canada over the decades to come, the company has withstood more than a century of economic change to earn a reputation for stability, integrity and strength.
Today The Dominion remains proudly Canadian owned and operated, and is one of the country�s largest property and casualty insurers. We continue to base our Head Office in Toronto � built by the company at the corner of Adelaide Street and University Avenue in 1962 � with regional offices in Vancouver, BC, Edmonton and Calgary, AB, London, Oakville, Markham and Ottawa, ON, Charlottetown, PEI, and Halifax, NS.
Financial Strength
Insuring Canadians since 1887, The Dominion of Canada General Insurance Company (The Dominion) has withstood more than a century of economic change to earn a reputation for stability, integrity and strength. The Dominion is 100% owned by E-L Financial Corporation Limited, a company whose shares are publicly traded on the Toronto Stock Exchange.1
Four important factors that underlie our financial strength are: Canada�s strong financial services regulatory environment, our prudent investment policies, our excess capital and backing by high quality global reinsurers.
Regulatory Environment
The Dominion operates under Canada�s world-class financial services regime. As a result of strong regulatory oversight and a sound financial services sector, Canada�s financial institutions fare relatively well in times of global financial crisis. The Dominion is a federal financial institution, subject to the financial and other requirements of The Insurance Companies Act (Canada) (the �Act�). The solvency of The Dominion and other federal financial institutions is regulated by the Office of the Superintendent of Financial Institutions (OSFI), as well as provincial insurance regulators.
Investment Policies
The Dominion�s insurance liabilities are backed by a conservative investment portfolio. We invest in high-quality fixed income securities in order to fund ongoing claims payments. These investments consist mainly of government securities and investment-grade corporate bonds, debentures and preferred shares. In addition to the investments held to pay claims, The Dominion has investments supporting shareholder capital, which serve as a buffer for large unusual losses or unexpected increases in existing claims liabilities. Investments supporting The Dominion�s shareholder capital are comprised of high quality common stocks from Canadian and foreign �blue chip� corporations, government securities, and corporate bonds and debentures. As a result of the investment in common stocks, The Dominion�s shareholder capital fluctuates with changes in global equity market values. The Dominion addresses this volatility by carrying capital in excess of regulatory requirements.
For a property and casualty insurer, maintaining adequate liquidity means earning sufficient premiums and investment income to fund underwriting expenses and policy liabilities as they come due. The Dominion maintains liquidity by generating positive cash flow from operations; by managing the maturity profile of bonds to provide a relatively steady cash flow from maturities to fund policy liabilities; by holding high quality marketable investments that may easily be sold prior to maturity, if necessary; and by maintaining a portion of investments in cash and short-term investments. In addition to the liquidity provided by cash and short-term investments, at least 10% of The Dominion�s bonds have a maturity date within one year.
Capital Adequacy
The Act requires The Dominion to maintain adequate levels of capital to fulfill its obligations to policyholders. Capital adequacy is predominantly determined by the Minimum Capital Test (�MCT�), a calculation defined by OSFI2. OSFI�s established supervisory target MCT result of 150% provides a buffer above the legally required minimum MCT result of 100%. The Dominion�s Board of Directors has approved an internal capital target MCT ratio of 190%. The internal capital target is based on actuarial analysis of material risks. The internal capital target is reviewed annually, or more frequently if material changes in risks are identified, and may be changed accordingly. The Dominion�s decisions regarding investments and declaration of dividends will continue to be made with the intention of maintaining sufficient regulatory capital.
The Dominion�s MCT results, from the time the MCT was first implemented in 2003, are as follows:
2003 2004 2005 2006 2007 2008 2009 2010 2011
194% 206% 238% 257% 227% 182% 201% 220% 216%
March 2012
232%
The Dominion�s MCT decreased in 2008 as a result of declines in common stock market values. The MCT increased in 2009 as a result of improved market values of bonds and common stocks, as well as The Dominion�s decision to reduce its holdings of common stocks and make a corresponding increase in its investment in bonds, which generate lower capital required than common stocks. The MCT increased again in 2010 due to the improvement in earnings and a further reduction in common stocks with the proceeds being reinvested in corporate and government bonds. The decrease in the MCT in 2011 is due to a decline in the fair value of common share investments and an increase in capital required for growth in unpaid claims liabilities that exceeded the impact of an increase in capital available from 2011 net income. The increase in the 2012 MCT is mostly due to an increase in capital available from first quarter net income and due to changes made by OSFI in the MCT guidelines effective January 1, 2012, which resulted in an increase of approximately 6 points to The Dominion�s MCT ratio. The Dominion�s March 31, 2012 MCT result of 232% represents over $154 million in excess capital above the internal capital target MCT of 190% and over $299 million in excess capital above OSFI�s supervisory target MCT of 150%.
Management regularly monitors the sensitivity of The Dominion�s capital to potential threats from negative claims development, declines in investment values and increases in operating leverage (ratio of premiums to capital). To demonstrate The Dominion�s sensitivity to its most significant risk, investment portfolio risk, a 20% decline in the fair value of the common stock portfolio as at March 31, 2012 would decrease shareholder�s equity by $60.2 million (7%) and decrease the MCT by 9 points to 223%.
Quality Global Reinsurers
The Dominion enters into reinsurance agreements with other insurers in order to limit its exposure to significant losses. The Dominion�s reinsurance treaties are renewed annually. As part of the annual renewal process, management reviews the financial performance and condition of reinsurers and only those that have at least an �A� credit rating at the time of renewal are accepted on our reinsurance program for the year.
The Dominion�s commitment to you comes backed by a strong and stable financial history. When you insure with The Dominion, you have the ongoing confidence that the things you care about are protected.
