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Do the Member: ot Economical M05001 human“ Company It is a rare experience and a signal honor to present the One Hundredth Directors' Report and Financial Statement for the year ending December 31. 1971. Our centennial was marked by commemora- tive celebrations in all branch office locations and by special advertising and production incentives. Our Company history and reputation is better known across Canada now than ever before. In June, WI]. I requested the Board ot Directors to relieve me ot the office oi President of the Company which I had occupied since 1965. The Board acceded to this request and appointed Mr. J. A. Vila, BA., to succeed me as President and to continue as General Manager of the Com. pany from July 1, I971. Up to that time he had also occupied the omce ot Secretary of the Company. and he was succeed- ed in that position by Mr. John' H. Argue, F.l.l.C., who is also Deputy General Manager. The Board honored me by appoint- merit to the olfice 0t Chairman of the Board of Directors follow- ing my retirement as President, and I wish to publicly thank them for this honor and recogni. tion of my service to the Com- pany through the years. At the same meeting the) Board appointed Mr. Carl ii) Weber as Deputy Chairman oh the Board of Directors, a newly- created otfiee made necessary by the Company's continued growth. Mr. Weber was first elected a Director of the Com- pany in 1946 and has contributed a great deal to our progress throughout these twenty-six years. It is of more than passing interest that Mr. Weber be- comes the first Deputy Chair- man in the Company's long his tory. 1971 saw all previous records and measurement standards shattered. The audited state ment before you shows the bal- ance sheet as at the yearend compared with that of the pre- vious year and also the state- meat ot income and surplus on a comparative basis, Admitted assets increased by $7,040,211 to reach "9,759,763, resulting (mm growth in premiums written of $7,355,297 - 2h7'r, above 1970. Invested assets totalled $39,736,534 and can be classified as follows: Boods, Canadian corporotior" ”.317 Puhuui Stocks, (anodion _ . t, 22t , SC Mm 'tpogo, Canadian YI"! 339.736‘534 lot-ell, Canadian Gover nmqnil . Common Moi, Canadian _ Chairman of the Board Bonds and debentures are valued at amortized cost and stocks are valued at cost These amounts do not exceed the values allowed by the Canadian and Brosh Insurance Com panics Act insurance companws First mortgages on real estate Book value of real estate owned Income taxes raven able Other assets companies. at cost Cash on hand and m banks Interest and dludends due and accrued Agents' balances wotten on or after October 1 Amounts due from other ASSETS Bonds and debentures Preferred and common stocks Investment in subsidiary ECONOMICAL MUTUAL INSURANCE COMPANY ”1640.9“ " as 36 396 6.206,M10 l56 tro 317.511 " 5 " 6 One Hundredth Annual Financial Statement ECONOMICAL MUTUM INSURANCE COMPANY HEAD OFFICE ESTABLISHED 1871 KITCHENER, ONTARIO Branch Offices: VANCOUVER . EDMONTON o WINNIPEG q LONDON o HAMILTON . TORONTO o OTTAWA . MONTREAL o MONCTON o HALIFAX I I o, t00M, "”96 I," "" to, AS AT DECEMBER 31, I971 ”ABILITIES $24.978,471 Provision for unpaid claims SIJ.6IH.142 ks 12,I71.800 Reserve for unearned premiums 16.70.1407 Amounts due to other msuranco it is seen that 63% ot invest. ments' are in Canadian bonds and debentures; there are no foreign investments. The average yield earned on bonds and debentures was 673%; on common stocks, 5.0292; and on preferred stocks, 431% Two preferred stocks and three com- mon stocks passed dividends in 1971. Management of the Com- pany's investments demands and receives much attention from the Directors. Common stock prices experienced a sharp decline in the {all of 1971, quickly followed by a spectacu- lar recovery which has carried on into m2. Bond prices have improved since a year ago. In the aggregate, the market value of securities is well in excess of book value. No change in the in- lvestment reserve of $1,750,000 le'.', deemed necessary or expe- ldient. The retiring Directors are Messrs. R. A. Lang, W. W. Foot, and D. W. Brown. Messrs. Foot and Brown are eligible for re- election, but a recent amend- ment to the Canadian and Brit- (ish Insurance Companies Act (r',iieiiiil,' age qualifications ol directors regrettably makes Mr. "I. A. Lang ineligible for re-elety mom. Recognition of Mr. Lang's (outstanding contribution to this (Company as a Director for (ii,i'ii'i'iiii'f, years and as Vice, President for the past twenty- two years will be made later in the proceedings ot this meeting. _ Liabilities. The increase in, provision for unpaid claims and ‘in the reserve tor unearned one miums is partly caused by the heavy increase in business writ- ten. There was the usual surge in automobile accidents during the month of December, and this also had the effect of in- (creasing the reserve for out- tfr"" claims over the year- ‘en . Real estate owned by the Company which is carried on the books at $831,810 consists of the Head Office building at 10 Duke Street West, Kitchener. and the Company's office build- ing at 460 Main Street East, Hamilton, The statement of income and surplus shows that the Company has fully maintained its finan- cial strength for the protection ot policyholders. and its liquid qua by e ventionnl with of rement to m cat and emer- gencies that a ally taken GG' account by prudent man- agement. Ward Directors held twd " meetings during the ye the Special Committee on Organisation consisting of six Directors held six additional meetings. The thanks and appreciation of the Board are due the Com. pany's officers. staff, and agents for the Company's un- paralleled growth and progress in the year 1971, and appropri- ate mention wilt be made con- cerning their contribution in the remarks of the President and of the Deputy General Manager which will follow. Respectfully submitted on be. half of the Board, $49 ECOlNlOMllCAUS 100th ANNUAL MEETING REPORTS RECORD GROWTH 2.258940 2,795,520 4.995.707 327.32I RHINO 273,MG 128,170 759,753 414.2]? SURPLUS FOR PRt yTF.CTIt )N HF POI.lCYHoI.r9F'.Rs unregistered reinsurance 22.91] Income and other taxes payable 320,800 Investment reserve 1.750.000 Other liabilities 578,576 companies Reserve and unpaid claims under W, W, FOOT Report of Prudent (in port) to the Members of Economical Minimal Insurance Company It is a pleasure and indeed a rare privilege for me to report to you on the Company's operations in its Centennial Year. i From the beginning at 1971) right through to the end, It, * W proved to be a very exciting 1:32:23” year, a very busy year. and a ikty, \c successful year. This historic s?' _ occasion was observed by many ’ J. events and activities, Recep ' Il tions and luncheons were held =, I ' at each of the cities from coast) B, ., = to coast where we have branch a . " offices. These were well attend- » 2l's' ‘ed by our agents in each case. ' M i" '% amd it was most gratifying that ' ”V "rc/sh'" many agents' travelled consider-' p, ‘ . l labie distances to be with us on “I t6 lthese occasions which were r"'. ,graced by the presence of Su, perintendents of Insurance,) Mayors, Officers of insurance Agents' Associations, and ct;) R! dignitaries. The interesting his- tory of the Company - ONE: H U N D R E D ECONOMICAL' YEARS - written by the (mam J. A. VILA man of the Board, Mr. W. 'ii) President (t and the reproduction or A.', and General Manager Y. Jackson's painting - Vital ' Amy OF THE GOUFFRE surplus increased by $1,457,269 RIVER - were distributed to‘to teach $15J546,597, the largest each of our agents numbering? the Company‘s history. The about one thousand and to the‘Company continue to be in a members of on; staff; from the strxpg.financial positions A gen many letters we have received era] Insurance Tmeny re. both were greatly appreciated. /ttt.t: 000511533519 (minim I A Centennial Awards Pro- gram was launched at the be- ginning of the year to enable our agents from coast to coast ‘to participate in the celebrations ot the Company's One Hun- dredth Anniversary. The Deputy ‘General Manager, Mr. J. H. Argue, will deal more fully with this later in the meeting, but I ahould just like to say that the response exceeded all expecta- tions. many events that took place in this memorable year was the presentation of a bronze plaque by the staff of the Company to the Board of Directors Gm/ memorating our One iiiuai/ Anniversary. It was fitting that it should be presented on bettalr of the staff by one of our long. jservice employees, Mr. R. W. Hackney, Assistant Claims Matt, 'ager, who was responsible for i/his splendid gesture which was so deeply appreciated by the Board of Directors. By a happy coincidence the pmntation to the Board of Directors took place on June M, lim, a regular imeeting day of the Board and one hundred years to the day in 1871 when the first meeting was held to consider the formation of the Company. Our One Hundredth Year was marked by exceptional, unprec- edented growth. Written pre- miums reached $33,886,187, an increase of $7355.29? over the year before; this represents an increase in premiums written of 27.7";. Never before in the Corn. pany's history have we written additional premiums of this magnitude. The amount of our increase exceeds the total pre- miums written by many smaller companies As must be expect- ed with such substantial growth, our claims also reached a new high. The total number of claims rose from 35,790 to 46,068 - 10,278 more claims than the year before. Our concern about claims must not be over the 'number we handle tor this is the business we are in, but rather our attention must always be focussed on the frequency and severity of claims and their re- lation to our growth in premium volume and to the premium level, Our admitted assets reached nearly $50,000,000 - to be exact $49,759,763, an increase of 37,000,211 from 1970 -- and our One of the highlights of the A CANADIAN SUCCESS STORY $49 .759 V 763 T3,913.166 15345.59? 9l9.228 i In Manitoba the any. Gov- ed up to 35.00000 per person;) iernment introduced its version this coverage protects ttot only‘ of government automobile insur the insured but all occupants of ance known as AUTOPAC on his automobile. WP they be ‘November l,'197|. As a result members of h.is family or not, give were deprived of approir and pedestrians who. are imately $650,000 of premiums by stmek and i!tPed by the 1nsur- lg o v e r n m e nt decree. Many led's automobile. (promises were made by the gov- This coverage IS being written eminent and its supporters, this year with no increase over iamong them savings up to 25C'. the small premium in effect tor and taster claims service. A re the last three years; our Com- ‘cent advertisement in the WIN. pany has provided these addi- NIPEG FREE PRESS by a tional beoerits to every policy- leading Manitoba automobile in- rudder without charging any ‘surance company says “Unless premium until the first renewal you are a young driver l;')';',,")'],';']', at his policy, have a bad accident record it is) This is "nofault" bodily inju- lery unlikely you have seen any ry insurance. It is designed to isavings under AUTOPAC. 1iiijgrriiiiiiiiiri more people more fact is, good drivers are now;quicltly and more adequately (subsidizing the not-sogood‘" regardless of fault and without (The advertisement questions it the necessity of seeking recov- "he claims service is faster and‘ery from the wmngdoer, up to ,states "People stand around for the limits provided tor these ac- "tours and hours simply to reqcident benefits. All parties in lport an accident ', Another arti- valved retain their fundamental ‘cle appearing in a news column‘common law right to seek re- ‘ol THE WINNIPEG TRIBUNE covery from the tort-feasor in 1t,'tl,,r,i,t,'f, in graphic detail howiexcess of the mrtautt benefits ,bureaucratic red tape can corCreceived. ‘plicatc the life of a consumer = This coverage was developed _ a motorist in an automobile ac- after much research and study C I d e n t SAVINGS' EF, by a Minister's Committee comv ‘Flt'lENCY" FAST SERVICE? posed of officials ol the Depart- surplus increased by $1,457,269 to teach ti5,846,597, the largest in the Company‘s history, The Company continues to be in a strong financial position. A gen- eral insurance company re- quires considerable finatteiat strength such as we are fortu- nate to enjoy to enable it to digest the increase in bushiessl which we had last year. he; miums earned for all classes at business were $27gi07,M5 and‘ losses amounted to llhffHi1) resulting in an underwriting loss of 3556.728. One difficulty that l general insurance company; faces is the fact that provincial‘ premium taxes are paid on writ- ten premiums whether or not an underwriting profit is achieved.; On last year's operations these amounted to $653,849 which was considerably in excess of our underwriting loss. AUTOMOBILE INSURANCE Automobile insurance pre- miums written totalled 4ar,172,444, an increase of £3,804,527 over I970 or 23.2%. Automobile losses showed an in- ‘crease tram 39,9042” to $12,353,237, more than 24.7%. There were 4.55 more automcr bile claims than the year be- "ore, an increase of 23%. Much has been happening on the automobile scene in the past year both in Canada and the United States; most of it has been politically inspired or the result of government action. Not-uh insurance continues to be much in the new: both in Cand- Ind loud! at the hamlet Compensation regardless at fault is manna new Accident nonuu msunuce ”in j: more complex than than: the economy during the past his misdeeds and the innocent! victim suffers. No-fault insurance does mean dealing with one's own insur. ‘ance company on a first party basis, regardless of fault, but it; does not require the abolition of the tort remedy or erasure ot ‘the fault doctrine. A marriage bstween the two systems is the one that I believe - and I sin- Arerely hope - will prevail in (Canada, so that up to the limits in the policy the policyholder will deal with his own company and beyond these limits he has a right to seek recovery from the wrongdoer. Last July in Ontario the gova eroment enacted legislation to place automobile accident bene- fits on a mandatory basis. Since January I, 1m, every automrr bile liability policy now includes these benefits which were con- siderably enriched from those that had been available on an optional basis since 1969. Dis- ability income benefits for a wage earlier of 80% of wages. subject to a maximum of $70.00 per week, are payable from the rust day and may under certain circumstances be payable for life. A death beoefit of $s,000.00 isprovidedtltrtheheadofa household and lesser amounts for a spouse and dependent children killed in an automobile ac-, cldent. The death beoettt of $s,000.00 for the head of a household is increased by 31.00000 for each survivor in excess of one. Medical and re- habilitation benefits are includ- ed up to $5,000.00 per person; this coverage protects not only lhe insured but all occupants of his automobile, whether they be members of his family or not, and pedestrians who are \chk and injured by the insur- ed's automobile. naively studied in Ontario by year before, withing $1,163.50; the same commune At first in 1971 Its running mate -'" the glance it geems simple enough tenants package policy -- aha lo put property damage - at increased by more than low; least vehirleivehicle dam Our business insurance policy This coverage IS being written this year with no increase over the small premium in effect tor the last three years; our Com- pany has provided these addi- tional beoertts to every policy- nolder without charging any premium until the first renewal date at his policy, This is "mr-fault" bodily inju- ry insurance, It is designed to compensate more people more quickly and more adequately regardless ot fault and without “{problem. One difficulty is ttkyear, The Ontario Fire m‘lbout m of our motorists doorattal's Report states tht w marry this coverage for I vari~ total Ftre insunnce lo: 'iitt,1 ot mm - their cu- is loo‘cmued by ”2333.589 ow at old; it is ot little value; they wrench 868,615,270in 1971 “do“ have the money; or don't? While the loss experiel “PM to pay the premium; or fire insurance was sum: m- believe they won't be involved infution continues to ha :Fill In accident. Are these paople effect on claims, Too man who be forced to any collision‘cyholders are not ad. ficulty, To provide physical damlge coverage without a de (Mamie mien the cost prohibi- live. Leave it in, a you must/ anditmustthenbehandledon ‘some basis that recognizes that there is fault in every accident. The completely innocent party would pay no deductible; the jttr easily recognized as being new; responsible would pay his 4ductibte in full. Some means 1of establishing fault in each ac- cident or agreeing on a division of liability in each type of ac- cident in advance must be found to properly and equitably appor- ltiozi the payment or recovery at the deductible. insurance? Not a very' palatable Two years ago Bullish Colum- bia brought in legislation whereby damage caused by an automobile to another vehicle on" any other type of property] would be settled on a nodault basis over $250.00; in JiiTii) ‘words the innocent victim could {collect only up to $250.00 trmnl the wrxmgdoer. There was such; u hue and cry there that the legislative committee recom- mended against implementation of this legislation as not being in' the public interest, and the mat- ter remains there at the mo ment. Somewhat in reverse is the} plan introduced in the State E Florida on January 1, 1972. I'l that State up to 8550.00 as the) ‘result ot vehicle - to - vehicle damage is not collectible trom‘ “he wrongdoer; over that it is = '50 we have "no-fault" up to that amount and the tort liability Isystem beyond. In Mas- vehicle damage assed by an- other automobile has been abo. choice of purchasing collision coverage or going without and assuming his own loss. This sys- tem scraps tort liability and pluses no deterrent whatever on the reckless driver, and in the) suffer. 1 It seems clear that in the not-l too-distam future in Ontario - and likely in time across Cana- da - we will have a system of mfault physical damage caver- age that will be limited to vehi- ‘cle-to-vehicle damage, that will 'retain a deductible with some method of determining a divi- Mort of fault with regard to the deductible, and that policy- holders will deal directly with their own company. How far the extension of this on a compulso- , or mandatory basis will go is anybody's guess, , The no-tault physical damage system will not in itself reduce the total cost of losses, Loss cost ‘is determined by the frequency of accidents 1 post per claim ‘ever, result in I run the innocent victims each average of total nre' insunnce loos in, creased by ”2.63.569 over mo to reach ”8,615,270 in [WI While the loss experience on fire insurance was satisfactory. inntttion continues to have its effect on claims, Too many poli- cyholders are not adjusting their inmrnnce to keep pace with rising replacement costs. Toootteninthecttseottotal losses they find themselves under-insured and having to bear part of the loan them- selves; so long as we are in an inflationary economy it is of ut- most importance for policy‘ holders to increase their protec- tion. It costs more dollars to replace or repair than it did in previous years. [ Crime insurance has been de- cidedly unsatisfactory. The in-' cidence of crimes such as arson, robberies. burglaries, theft. ma~ mucus damage, and all the crimes of violence. continues to ‘increase in the metropolitan centres and all the other heavily ‘populated areas and is a cause for much concern. It has been difficult to maintain a premium level that is sufficient to pm vide for these losses. Canada was almost entirely free of catastrophes in 15m other than the tragic landslide at St. Jean Vianney in Quebec and a fire on board a passenger liner at Vancouver; both mull- ed in heavy loss of life, but we were spared the hurricanes, nooths, earthquakes, and conflu- grations which were visited upon many parts of the world, leaving in their wake millions of dollars of property loss. l Our writings ot boiler and ma- }chiuery insurance. while mod- (est, continue to grow. and writ. ing this class appears to be a ‘good service for our agents. ln Ontario in 1971 a special Claims Committee was appoint- ed by the Minister at Financial and Commercial Affairs and held hearings throughout the province to provide an oppodu nity for individuals and 1'l'lp/14 than: to present briefs concern- ing complaint: or criticisms ot) claims treatment. The results of this have not yet been an- nounced. Perhaps spurred ia this - with agents leading the way, but being assisted by com- pany men and adjusters - in formal consumer information bureaus are springing up in major centres in Ontario; so tar one in Windsor and one in Lon- Guarantee Insurance. WU witnessed a very small increase in premiums for this class of business, brought about in the main by slack conditions in the eonstrttetion industry. l!!, il i, 7 cek A. At the One Hundredth Annual Meeting of Economical Mutual Insurance Company on March 17, 1972, Mr Reinhold A. Lang retired after serving the Company for thirty-six years as a Director and as Vice-President since 1950, Mr, Lang was presented with an engraved tray by his fellow directors and elected an Honorary Director in recognition of his long and outstanding service He is President of The Lang Tanning Company Limited of Kitchener Mr, Peter H, Sims was elected a Director to fill the vacancy created by Mr Lang's retirement He is a graduate of McGill University and Osgoode Hall Law School and is senior partner of Sims, Gillen & McKinnon, Barristers and Solicitors, Kitchener. Ontario Mr Sims is General Counsel of Economical Mutual Insurance Company. THE BOARD OF DIREUORS Economical Mutual Insurance Company REINHOLD A C N WEBER -- Deputy Chairman of the Board President __ C, N Weher Ltd J A VILA, MHE President and General Manager of the Company " W BROWN Chairman -- General Spring Products Limited J E FRUWDE SEAGRAM President -- Canada Barrels and Regs, Limited N C SCHNEIDER. LI.D Director -- J M Schneider Limited w A BEAN, CRE Deputy Chairman and Vice President Canada Trust - Huron & Erie W W FOOT - Chairman of the Board R A HARRIS, ORE -- Consultant P " SIMS _ Barrister and Solicitor LANG Mar dostareinoperatimt.andiuu- dersland one is being organised here in Kitchener. Agent: de. serve full credit tor this grassroots venture to provide I means for hearing consumerl’ complaints and to render advice at the local level. Quite indepen- dently of this, I believe, agents and company personnel are de- veloping a similar project in Nova Scan. If this idea spreads --asithinhartdhopeitwi0-- it should greatly improve com- munications between the con. sumer and the industry and im- prove public relations. STAFF During the year our sun igF creased to 438 people A special tribute should be made to them for the way they coped with the additional business that re- quired processing so that our service to our agents and the public was maintained in our Centennial Year. This extra et- fort has been recognized before and in a more tangible way, but I think it is only fitting that our members fully understand the ‘role they played in making Eco. nomical's Centennial Year such ‘an outstanding one. _ While the Deputy General Manager, Mr. J. H. Argue, will propose a Resolution of thanks to them, I do wish to acknowl- edge the Company's apprecia- tion ot the tremendous support lour agents gave us last year and to%ank Diem for the alum- siastic way in which they took pan in our centennial activities. More concluding my re- marks I do want to express my sincere thanks to the Chairman ttf the Board and all the men. bers of the Board of Directors for their wise counsel and the generous support that I have received since my appointment as President of the Company. _ Asaresultofourgrowtttin um we have reached a plateau in our operations where we oc- cupy a larger place in the gem eral insurance industry in Cana- da and where we are recognized as being an important (ador in the marketplace. The experts predict a generally buoyant economy in Canada in 1972, tti- PETER H SIMS