SGI shows ‘stable’ year in 2023-24 annual report

With a combination of good investment returns and lower costs from storms, SGI reported a successful year in its 2023-24 annual report.

The report, out Monday, showed $1.096 billion in claims flowing out from the Saskatchewan branch of the company, the auto fund, and $1.078 billion in gross premiums paid to the company last year.

Overall claim costs were down because of a milder storm season in Saskatchewan.

Investment earnings were way up last year compared to the year before, with $183.5 million. At the end of the fiscal year, the rate stabilization reserve was at $924.9 million, a loss of $70.3 million mostly due to inflation.

The report said newer vehicles are more expensive to repair than old ones and repairs are more complex, while the company also says timelines and cost of repairs are up in general because of inflation.

The company won’t be giving a rebate for customers’ vehicle registration this year as it has in the past.

As for SGI Canada, the company’s national insurance arm had a net income of $78.1 million, only $53.6 million in catastrophe claims – much of which was from the B.C. wildfires – and $114.8 million in investment earnings for 2023-24.

For both companies, a big part of their financials was lower catastrophe claims and higher investment income.

However, SGI Canada didn’t have a good enough year to pay anything back to the province.

“The past fiscal year was, again, profitable for SGI Canada however earnings were not high enough to generate a dividend,” said Minister responsible for SGI Dustin Duncan.

Corporate transformation

Part of the reason SGI Canada didn’t have enough in its coffers to pay a dividend, was the cost of its corporate modernization and overhaul.

It’s getting a new policy administration system, a new claims management system, and SGI in Saskatchewan is getting a new system for vehicle registration and licensing.

For both companies together, the project is expected to cost $232 million.

Jeff Stepan, SGI’s chief financial officer and Executive Vice President, said on Monday that the systems for both companies are old and antiquated and while they’ve worked to make sure customers have a good experience with that, to keep going the companies will have to get on a more modern platform.

“The program itself is multi-year and involves both modernizing the technology platforms, but it also changes the way we communicate with customers, the way we communicate with brokers and issuers, how we collect information and how we make sure that all the information that we collect is secure,” said Stepan.

The annual report talks about things like cloud-based technology and being a digital insurer. However, as SGI looks to that future there’s news about different companies falling to cyber-attacks and customers’ data getting breached on an almost weekly basis.

Stepan said there’s no guarantee something like that wouldn’t happen to the company’s new system, but a big part of the process is ensuring the likelihood of that is significantly reduced.

If SGI didn’t make this change, Stepan said the companies wouldn’t be able to do their business.

“We wouldn’t be able to compete – SGI Canada – with other insurers. The systems that we have just implemented, the new systems, will allow us to be much more flexible in terms of introducing new products and being able to respond to changes in the marketplace,” explained Stepan.

SGI is two years into the three-year modernization plan.

SaskTel net income just shy of target

SaskTel also released its 2023-24 annual report on Monday, showing revenue that just exceeded its target for the year, and a net income that just fell short of the target.

Revenue for the Crown Corporation hit $1.351 billion, which was $21.3 million over the year before, while net income came in at $95.4 million.

Net income was down slightly but SaskTel Chief Financial Officer Scott Smith explained that was due to increased costs associated with hitting that larger revenue number and inflationary pressures. He said there are significant direct expenses on things like wireless devices, for example.

SaskTel declared 40 per cent of its net income as a dividend and paid $38.2 million to the Crown Investments Corporation. Duncan said it’s down from previous years but said the Crown has significant capital expenses coming down the line.

In 2023-24, SaskTel spent $368.5 million on capital, a big chunk of which was expanding its fiber and 5G networks.

For the year, SaskTel saw a 2.1 per cent increase in subscriber growth for broadband internet, with a 7.7 per cent increase in fiber subscribers underneath that.

Wireless phone service subscribers grew by 1.7 per cent, while landline phone service declined by 5.9 per cent. and maxTV service stayed flat, which has been attributed, in part, to people taking up SaskTel’s maxTV streaming service.

*Editor Note: This story was updated to include information about Sasktel.