2018 - WCB

2018Annual Report

Workers’ Compensation Board – Alberta

1 Message from the Chair

3 Our Board of Directors

6 Our leaders

7 Our commitment to you

8 Our results

11 Story: When one door closes

14 A worker’s success is ours, too

16 Story: Out of the woods

19 A strong Alberta needs strong industries and

a healthy workforce

21 Story: Hands-on healing

24 Their patients, our clients

26 Story: One fur all

28 Legislation changes—a journey

we navigated together

Financials

33 Management Discussion and Analysis of Consolidated

Financial Statements and Operating Results

51 Consolidated Financial Statements and Notes

90 2018 summary of claims administered

91 2018 year at a glance

Table of contents

2018Annual ReportWorkers’ Compensation Board – Alberta

Grace Thostenson, Chair, Board of Directors

Throughout 2018, WCB-Alberta implemented a series of legislative changes that were developed as a result

of recommendations from the WCB Review Panel commissioned by the Minister of Labour, to find ways to

enhance the workers’ compensation system and the benefits workers receive. Beyond the legislation, we are

committed to making the recommendations and aspirations of the panel’s report, which reflected feedback

from our valued stakeholders, a reality.

In addition to the many changes in our business last year, the organization also experienced a significant

leadership change. After serving as President & CEO for over 16 years, Guy Kerr announced his retirement,

leaving behind a legacy that reflected his exemplary stewardship. During Guy’s tenure, WCB-Alberta

became one of the most financially stable and high-performing workers’ compensation boards in Canada.

Our new President & CEO is passionate and knowledgeable

Incoming President & CEO Trevor Alexander brings with him 32 years of experience with workers’

compensation, his most recent role as a senior vice president with WorkSafeBC. Trevor is recognized

across Canada as an expert in workers’ compensation matters, which comes from his deep passion to

make sure injured workers get the treatment, support and services they need to recover and return to a

meaningful life. With Trevor’s knowledge, vision and commitment, we are excited about the future.

We will partner with all stakeholders, keeping the best interests of workers

and employers a priority

Our new CEO’s arrival comes at a fortuitous time, as WCB-Alberta embarks on a journey to transform

the organization from being outcome-based to one that achieves great outcomes in full partnership and

collaboration with those we serve.

As a board, we continue to be committed to the strength and sustainability of the workers’ compensation

system in Alberta. The year ahead promises to be a busy one. With a full complement of board members—

a diverse group of individuals with a shared purpose—we feel prepared for the task at hand and any

challenges that lay ahead.

Message from the Chair

After proudly serving as a board member for seven years, it was a great honour to be appointed Chair in 2018, an exciting and busy year that brought with it a lot of change.

WCB-Alberta 2018 Annual Report 1

2 WCB-Alberta 2018 Annual Report

Albertans working—a safe, healthy and strong Alberta

This is our vision for Alberta, a vision that underpins our strategic priorities and the goals we set for our organization. It unites our employees and partners and has guided our system into its second century of existence in Alberta.

We can’t achieve this vision alone

As an organization, WCB-Alberta administers the workers’ compensation system, but an injured worker’s recovery and return to work is the result of many people coming together. Partnering with others is the only way we can fully serve Albertans recovering from a workplace injury.

The system thrives when meaningful partnerships are in place

Injured workers know what motivates them, employers understand the nuances of their workplaces, and doctors have long-standing relationships with their patients. We have the in-depth knowledge of the workers’ compensation system and how it can help the people who need it, but we need these partners alongside us to ensure it’s successful. This is Alberta’s workers’ compensation system, and we want our partners to be involved and proud of the role they play in helping injured workers recover and return successfully to their lives.

1,884,400 workers covered

162,981registered employers

1,802 WCB employees

isWCByou.

here for

For every Alberta worker, employer and health care provider, this is your workers’ compensation system.

When you need us, we’re here to serve you well.

Our Board of Directors

Agriculture. Energy. Steel work. The men and women of our Board of Directors come from different professional backgrounds, but they share a unified commitment—maintaining a healthy, stable and fair workers’ compensation system in Alberta.

Accountable to the Minister of Labour, together our Board of Directors is representative of the interests of workers, employers and general public of Alberta. They monitor the performance of WCB-Alberta to ensure we are true to our mandate and deliver on our commitments.

Board Chair

Representative of the interests of workers

Ivana Niblett Member since: 2017

Ivana has been involved with the labour movement for approximately 20 years, working with members, affiliates and labour councils across Canada. Ivana is currently a Business Agent and First Vice President for the United Steelworkers Local 1-207. Having sat on several boards, including the Alberta Federation of Labour Executive Council, Ivana is well versed in governance, decision making and accountability.

Jane Sustrik Member since: 2019

Jane is a registered nurse with a passion for advancing the rights of her co-workers and working people everywhere. As First Vice President of the United Nurses of Alberta (UNA), she has been recognized for her contributions to raising public awareness, lobbying governments and educating the public.

Mike Boyle Member since: 2019

Mike is the Director of Negotiations and Policy at Health Sciences Association of Alberta (HSAA), a union representing 26,000 paramedical professional and technical health care workers in Alberta. His 30 years of experience as a labour relations practitioner includes grievance handling, formal hearings and collective bargaining.

Grace Thostenson Member since: 2012

Grace has over 25 years of labour relations experience in the telecommunications and electrical power industries. Currently the Business Manager of the United Utility Workers’ Association (UUWA), she was appointed as our Board Chair in 2018.



Representative of the interests of employers

Representative of the interests of the public

Erna Ference Member since: 2012

Erna is a Chartered Professional Accountant with a diverse professional background in the agricultural, legal, and oil and gas sectors. Her experience serves her well in her current role on an agricultural safety board and in previous board roles with the Chicken Farmers of Canada, the Alberta Chicken Producers and the Canadian Federation of Agriculture Organizations.

Mary Phillips-Rickey Member since: 2017

With a background as a Chartered Professional Accountant, Mary held positions with the Edmonton Opera Association, Alberta Power Limited and Canadian Utilities Limited. Currently she serves as a board member for the Association of Professional Engineers and Geoscientists of Alberta (APEGA) and is the Director of Finance for CKUA Radio.

Philip Hughes Member since: 2012

Philip has over 25 years’ experience working in Canada’s energy sector. He has served as president and CEO of five Canadian energy companies, is currently the chair of Naikun Wind Energy Group Inc. and Kineticor Resources Inc. and is on the Board of Instream Energy Systems Corp.

Dr. William Hnydyk Member since: 2018

Bill has 28 years of family practice and 17 years of senior management experience. Prior to his recent retirement, Bill was the assistant executive director of professional affairs at the Alberta Medical Association (AMA), where he worked to resolve issues related to patient care.

Keith Serre Member since: 2019

Keith is a registered professional engineer and the Manager of Health, Safety, Environment and Assurance for an international oil and gas producer. His focus on health and safety influences his daily work; providing process safety engineering support, and also his extracurricular efforts with industry groups and committees.

Dave Rebbitt Member since: 2019

An independent consultant, Dave has over 30 years of public and private practice experience with workers’ compensation boards across the country. A veteran of the Canadian Forces, Dave holds a master’s degree in business administration and is the author of a book, articles and blogs on worker safety.

Standing committees

Our board members bring their expertise and insight to the standing committees on which they serve. Each committee has an area of focus and provides research, risk assessment and advice to

help WCB-Alberta’s executive team make strong, informed decisions.

Audit and finance

The audit and finance committees are responsible for the oversight of WCB-Alberta’s risk management framework and annual audited financial statements, which includes overseeing the valuation of the claim benefit liabilities (the actuarial present value of claim benefits that will be paid into the future). The committees also review and provide recommendations for our budget and oversee WCB-Alberta’s

investment management program.

Human resource and governance

The human resource and governance committee reviews and makes recommendations for human resource management, succession planning and corporate goals and objectives. The committee

also monitors our corporate governance policy and ensures it follows governance best practices.

Policy

The policy committee reviews and makes recommendations for benefit and premium policies and legislative changes. The committee also provides direction on engaging the appropriate level of

stakeholder involvement in policy research and development.



Our leaders

Our executive leaders set the tone for our organization. They are responsible for creating business objectives and strategies that align us to our vision of a safe, healthy and strong Alberta.

In 2018, our executive guided us through the implementation of new changes in legislation, while challenging us to think about new and better ways to improve the services we deliver. This team is passionate about supporting and empowering our 1,802 employees as we work together to create a stakeholder experience that is built upon compassionate and capable service.

Roxy Shulha-McKay Vice President, Employee and Corporate Services

Trevor Alexander President & CEO (effective March 2019)

Marcela Matthew Vice President, Worker Health and Wellness

Wendy King Chief Operating Officer

Ron Helmhold Chief Financial Officer

William Ostapek Secretary and General Counsel

“We are accountable for the administration of the workers’ compensation

system, but it is not ours alone. It belongs to all Albertans. In reflecting on 2018,

we are so grateful for the collaboration and support from our stakeholders

and provincial community that led to a number of enhancements for workers,

their families and employers. As an employer ourselves, we were impressed by

the dedication and resilience of our staff who worked tirelessly to support our

vision and committed themselves to delivering service that aims to reflect each

individual’s unique journey and needs.”

Our commitment to you

When the unexpected happens, we want our stakeholders to feel certain about what they can expect from us—that’s why we’ve created our Code of Rights and Conduct. Before a client picks up the phone to speak with us, we want them to feel confident that they’ll receive service that is caring, individualized and fair.

Your rights, our commitments

We will treat you with dignity and respect.

You have the right to honesty, courtesy and considerate treatment regardless of your individual needs, cultural differences or beliefs.

We will listen to you.

Your views will be fairly considered when decisions are made that affect you.

We will be open and honest when communicating with you.

Your questions and issues will be addressed in a timely manner.

We will provide you with complete and correct information.

You will be fully informed about services, entitlements and responsibilities.

We will ensure you have access to information.

You can examine all relevant documents when a decision is made.

We will ensure your information is held privately and confidentially.

You have the right to privacy. Information given to WCB-Alberta will only be used for purposes under the Workers’ Compensation Act and the Freedom of Information and Protection of Privacy Act.

Service issues and concerns

Partnering with injured workers and employers is a relationship we take seriously. We want Albertans to know that they can count on us and, if it ever feels like we didn’t get it quite right, they have the right to raise their concerns.

Similar to our process for claim and account decision issues, there are steps workers and employers can follow if they are concerned with the service they received.

Talk to us. A WCB staff member, supervisor or manager is here to listen and make things right.

Contact the Fair Practices Office. If the issue remains, workers and employers have the right to contact the independent Fair Practices Office for advocacy support.



Our results

In support of our strategic priorities, we set objectives each year to help ensure we deliver the best possible service to our stakeholders.

Customer outcomes

Customer satisfaction

Every year, we survey 1,600 workers and 1,600 employers to make sure we’re communicating effectively.

Target: Exceed North American benchmark of 83.9%.

Fairness

Our decisions impact people’s lives. We want to be fair and explain our decisions clearly, and we work hard to get them right the first time. Our audits include decisions made on return-to-work planning, fitness for work and benefit entitlement.

Target: 90%

Customized return to work

We want to understand our injured workers’ needs and give them choices. This is particularly important in complex cases (claims that last 29 days or more), where the road to recovery can be less clear. We ask injured workers we survey to respond to the following statement: “They (case manager) did a good job of involving me in planning my care and return to work.”

Target: 85%

Through timely, respectful and transparent interactions with workers and employers, we achieved an average customer satisfaction score of 88.1%.

We audit decisions throughout the life of a claim for accuracy and quality. We achieved an average score of 96.0% on those decisions.

Our success in engaging workers with complex claims is measured by feedback on whether they felt appropriately involved in planning their care and return to work. We achieved 87.8%.

Results

Key deliverables

Customer satisfaction

We know that one of the best ways to care for our customers is to make sure they are well informed and that accessing their claim owner is easy to do. We strive to provide proactive communication, but if questions arise, our customers can contact us any time for the answers they’re looking for.

Target: Maintain call-back request volume achieved in 2017.

Medical care

We measured satisfaction through this statement: “I was satisfied with the medical treatment I received through my claim with WCB.”

Target: Since this objective was new in 2018, no target was established. Instead, this result will be used to establish a benchmark for our performance going forward.

Proactive resolutionWhen workers and employers have concerns, we want to work together to resolve them as quickly as possible. One way we have been able to alleviate formal reviews to our Dispute Resolution and Decision Review Body is by providing customized support to teams in need of help, as well as increased supervisor coaching on decisions.

Target: 35%

Wage loss

We want to make sure injured workers are fairly compensated for lost wages, particularly when restrictions are preventing them from returning to their date-of-accident work. Developing a high-quality return-to-work plan with the worker keeps us accountable to making this happen.

Target: 90%

We exceeded our target by reducing call-back requests by 26% (for a total of 23,655 in 2018).

Successful worker-focused care requires making sure that our workers feel satisfied with the medical treatment they received through their claim. We started measuring this in 2018 and achieved a baseline of 86.5%.

We audit our overall plans for quality, which must include appropriate re-employment services and accurate wage-loss benefits. We achieved quality audit results of 97.2%.

Our Customer Service teams are proactive in finding opportunities to resolve claim issues with workers and employers, without the need for a formal review. We achieved 36.4% resolution.

Results



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Funded ratio target

Our funding level, 1988–2018

Innovations

Implement all required operational changes stemming from the Government of Alberta Review Panel recommendations and legislative amendments.

The legislative changes introduced in 2018 gave us an opportunity to evolve the way the workers’ compensation system works for Albertans. We started the year with the first wave of changes effective January 1, 2018. We undertook extensive training, communication and change management efforts to help our staff understand the intent of the legislation so they could support our stakeholders, ensuring they felt

prepared for the changes to the system and their businesses.

Modernize our systems to enhance service delivery to our partners.

Behind every client interaction is a robust network of systems and technology that supports the work we do. A number of multi-phase system projects successfully reached key milestones in 2018.

The final phase of our employer account system enhancement was completed on budget and ahead of schedule, while the heart of our claim/worker payment and financial system continues on its six-year modernization. As we continue to develop new systems, we understand the importance of maintaining a strong focus on the data we are collecting and on how our systems communicate with each other. This integration of claim, financial and employer-related information allows us to create comprehensive

reporting on the health of the overall compensation system.

Financial sustainability

While the Alberta economy showed improvement over 2018, the recovery remained fragile and fell short of budget expectations. WCB experienced a $191.9 million deficit in customer operations as a result of higher claim costs and lower premium revenues.

Despite these economic challenges, one way we work to safeguard worker benefits is through prudent asset-liability management practices, to ensure funds are available to provide for future costs of current- and prior-year claims by achieving a minimum year-end funded ratio target of 114%. We achieved a funded ratio of 118.3%.

Injured in his 50s, Rick Sokolowski wasn’t ready to stop working

Whenone

doorcloses



We intersect with some Albertans when they’re at their most vulnerable. Our injured workers steer their own treatment and recovery plans, which are as different and unique as they are.

Rick knew what he wanted in life, and what he needed from us

Rick Sokolowski reinvented himself in a new career at the age of 60, a daunting challenge made even more so by complications no one could have anticipated.

Repetitive heavy lifting in his role as an assistant foreman at a warehouse had damaged his left shoulder to the point where surgery was the only option. During physiotherapy after his surgery, he suffered a major setback when he injured his right shoulder and had to undergo yet another operation.

“Even after the first surgery, I knew I wasn’t going to be able to go back to the same kind of job,” says Rick, “but the second surgery prolonged everything. I ended up being off work for close to 2 ½ years. I’m an older guy, and sometimes you question yourself. You think: ‘Am I even going to be able to find a job?’

“But you know what? I sat around at home long enough. I wanted to get out and work.”

Compassion and empathy helped during a difficult time

Today, Rick has a job as a security guard at an Alberta hospital, a testament to his determination, hard work and unfailing resolve.

Rick is quick to credit those who travelled alongside him in his recovery and return to work—his WCB case manager, his re-employment team and his treatment provider.

“In a world where communication is becoming more and more impersonal,” says Rick, “it was so incredible to be on the receiving end of such compassion and empathy, especially at a difficult time in my life.”

“I felt that we were all working together toward a common goal.”

Rick says his case manager Lyndsey Turner was a constant source of support and encouragement and always answered his questions and concerns in a timely fashion.

“I always looked forward to our bi-weekly chats,” he says. “Lyndsey was outstanding; she showed compassion and care, and was always very professional.”

For her part, Lyndsey says Rick is what it means to be perseverant.

“Rick had a significant employment background; he had a lot of experience in different areas so he had lots to offer,” says Lyndsey. “And he had his ups and downs along the way, but he didn’t see his injury as a barrier to finding something new.

“This was just a new path he hadn’t been down yet.”

“In a world where communication is becoming more and more impersonal, it was so incredible to be on the receiving end of such compassion and empathy,

especially at a difficult time in my life.” Rick Sokolowski, injured worker

Supported in making his own decision for the career he wanted

The position of scale operator was identified as an option for Rick after he went through re-employment services—including career counselling, resumé-building, job search development and computer training—but it wasn’t one he really wanted to pursue.

“Ten years ago, I probably would’ve jumped into it, but it’s a dusty job and I have a touch of asthma now, so it wasn’t ideal,” he said.

“It was important for me to take control. You know, you have all these good people who help you, but ultimately the onus is on you to set your own path.”

Rick was using his job search to find an option he really wanted to pursue. Along the way, he applied on an online posting for a security guard.

“I had always been interested in some kind of enforcement role,” he says. “And being a security guard is mostly about helping people—it’s really about customer service—and I wanted to do something to give back to the community.”

Shortly after, he was contacted for an interview, and was eventually offered the job. He worked full-time at first, but has since settled into part-time hours.

“My shoulders still bother me from time to time,” Rick says, “so I’m happy with my three shifts a week. This job is the perfect fit for me at this point in my life.”

“It was important for me to take control. You know, you have all

these good people who help you, but ultimately the onus is on

you to set your own path.” Rick Sokolowski, injured worker

Today, Rick has a job as a security guard at an Alberta hospital.



A worker’s success is ours, too

A worker who’s been hurt on the job is often faced with thoughts that challenge them beyond their injury and recovery. What will happen to me? My career? My family? It can easily become a scary and upsetting time in their lives.

To ease these fears and to provide a positive experience to workers who are part of our system, we need to make their goals our goals. Workers are our partners and we want them to feel the same way about us.

We’re here to support workers and to be an ally during their recovery

Our purpose is to help workers get well and, whenever possible, return to their chosen career and employer. In some cases this is straight forward; in others it’s complex. In those complex cases, it means helping a worker get back to their life through rehabilitation, modified work, retraining or even discovering a new career, all while recognizing their individual needs.

Workplace injuries are as unique as those who experience them, and we need to provide a service that is flexible and well suited for each and every person. A worker’s involvement is critical. It’s their life, their injury, their recovery and their family. We need them to ask questions, share information and feel empowered to drive their own success, with our help.

There are so many opportunities for workers to lend their voice, particularly in their care plan. Building these plans together ensures that a worker’s recovery and return-to-work goals are accurately reflected. If modified work while recovering is an option, workers know best how to change their day-to-day tasks in a way that feels meaningful. If we’re helping someone transition to a new job, our goal is for it to always be one they can do and that will help maximize their potential. No one is better suited to tell us if we’re on the right track than the worker. It’s about getting to know each other and building a positive working relationship.

Workplace injuries are unexpected; but when we work as a team, workers can feel confident about

knowing what lies ahead, because they have been directly involved in building their own plan.

1,884,400 workers covered

new claims reported. of workers returned to work to the same employer.

of workers with complex claims felt they were appropriately involved in planning their care and return to work.

132,346 91.8% 87.8%

If resolution is needed, getting there together is our goal

It’s understandable that even when we’re working together, disagreements can happen. When this

happens, we’re here to do everything we can to reach resolution.

Workers have options

If we are unable to resolve issues through discussions at the supervisor or manager level, workers have access to additional resolution channels, including services that can offer support in the decision review process:

• The Office of the Appeals Advisor* (OAA) provided independent advice, assistance and advocacy for workers seeking to resolve issues on their claims. Appeals advisors work with our Customer Service teams to try to resolve issues directly with the decision maker. If they are unable to resolve an issue, they help workers prepare a request for review for the Dispute Resolution and Decision Review Body and/or bring an appeal forward to the Appeals Commission.

*This service moved to the Government of Alberta’s Fair Practices Office on December 1, 2018. The Fair Practices Office – Worker Appeals Advisor Branch provides independent advice, assistance and advocacy services for injured workers and their dependants. There is no charge for their services.

• The Dispute Resolution and Decision Review Body (DRDRB) helps workers and employers who request a formal review of a decision. Resolution specialists review the decision, discuss the issues raised and identify if there is new information that should be considered. If the decision is incorrect, resolution specialists work with Customer Service or Employer Account Services to correct it.

• The external Appeals Commission for Alberta workers’ compensation is available to workers and employers who disagree with a decision made by the DRDRB and would like to appeal it.

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1,884,405 of workers covered

Of those claims,

2,675 received a request

for review to Customer Service.*

1,538 went to DRDRB,

with 94.0% actioned within

40 days.

537 went to the

Appeals Commission.

196 decisions were overturned by

the Appeals Commission.

In 2018we administered

132,346 new claims.

* A claim may have more than one request for review


Strong partnership overcomes challenges of helping injured workers in rural Alberta sawmill

Outwoods

of the


Employer takes the lead in helping

injured workers return to work

Rob Irwin takes it personally when an employee gets hurt at work; Vanderwell Contractors is a family-owned business, and the people who work at the sawmill are considered as such.

“There’s no job worth an injury,” says Rob, the company’s health and safety coordinator. “So when someone gets hurt, I consider it a failure in one way or another of our safety management system.

“Unfortunately, failures happen. But we do whatever we can to support our people—and WCB is a big part of that.”

Rob takes the lead when it comes to supporting his workers’ recovery. He knows how important it is to be involved in every conversation. He knows his workplace and his community, and the resources at his disposal.

Coming up with creative

return-to-work solutions,

keeping the worker top of mind

And because the mill is three hours from the nearest urban centre, he knows how important it can be to come up with creative return-to-work solutions.

An example?

When one of his employees suffered a knee injury, the worker needed access to certain exercise equipment that would have required him to make a three-hour round-trip drive to see a physiotherapist in Athabasca three times a week.

Instead, Rob and the case manager at WCB put their heads together and came up with the idea of offering the help of Vanderwell’s on-site physiotherapist to instruct the worker on the proper use of equipment available at the local gym. The inventive solution came at the price of a gym membership, which the case manager happily approved.

Employers want to be there for their workers—not only to keep them safe on the job, but to be part of their support team should an injury occur.

“We have a great partnership (with WCB)—and that partnership

is something I will continue to nurture.” Rob Irwin, health and safety coordinator, Vanderwell Contractors


Rob Irwin (left) is a big believer in doing whatever he can to support staff in their safety at work and during recovery from an injury.


The worker got exactly what he needed and was able to stay close to home.

“The result was that the worker got back to work, whole, and sooner, than he would have otherwise. That’s just one example of how we work together with WCB to do the best we can to help our employees when they get injured.”

Rob says case managers are also very accommodating when it comes to referring Vanderwell’s injured workers for medical assessments at Millard Health in Edmonton, which can expedite specialized medical tests such as MRIs or CT scans. There are ongoing challenges with the level of readily accessible medical services in his local area. It’s a common refrain for a lot of rural centres, but particularly in Slave Lake, which continues to experience a shortage of doctors since a wildfire devastated the town in May of 2011 and many of them relocated.

Getting to know you: Site visits strengthen relationships and build trust

Rob says the people at WCB recognize the limitations the company faces and do whatever they can to mitigate them. They also see the challenges firsthand; he regularly issues invitations to claims teams, who travel from Edmonton to catch up with Rob and meet with claimants.

“Visits (by the claims teams) are really important,” says Rob. “It helps them visualize the workplace. They get to see the different environments that our people work in to get a better understanding of what modified work might look like.

“And it certainly helps from my end as well to build relationships, and build trust. We get to know each other. They see how I like to handle things, and the different programs we have in place here.

“We have a great partnership—and that partnership is something I will continue to nurture.”

“Visits (by the claims teams) really help them visualize the workplace. They get to see the different environments that our people work in, to get a better understanding of what modified work might look like.” Rob Irwin, health and

safety coordinator, Vanderwell Contractors

Vanderwell Contractors’ rural setting often leads Rob to come up with creative return-to-work solutions.

A strong Alberta needs strong industries and a healthy workforce

Behind the working Albertans that keep our province moving forward are vibrant industries and innovative employers.

These employers are our partners. Our province and workers’ compensation system would not be the same without their active involvement. When the system works at its best, employers from all industries commit themselves to health and safety—they drive the safety culture within their workplaces and hold themselves to high standards because they believe their workers deserve their best.

An integral part of a worker’s support team

When the unthinkable happens and a worker is injured on the job, our relationship with an employer kicks into action as we invite them to become a part of the support team in their worker’s recovery. Employers know their workplace and workforce best, and they understand the resources available to them. They have the ability to come up with creative modified work options and they invite us to their worksites to show our claims teams exactly how these options will be successful. If modified work is hard to come by, committed employers are there in person, to reconnect with their worker and to help develop customized plans that suit that worker’s unique circumstances. They are actively involved in case conference calls, supporting their workers and lending their voice to important discussions about their recovery. Success for an injured worker requires perseverance, and it requires dedication on the part of employers.

Together, we lessen the impact of workplace injury

Employers are vital to lessening the impact of workplace injury and illness in Alberta, and it starts with their investment in safety and having plans in place before injuries even occur.

Through solid health, safety and return-to-work plans, employers are able to decrease their workers’ time away from work, reduce additional hiring or training costs and reduce costs associated with claims. Being proactive instead of reactive when it comes to disability management gives employers the ability to focus on their worker and their recovery. With this in mind, many employers also partner with safety associations in their industries to solidify their commitment to accident prevention through learning, regular audits and certification.

The relationship between a worker trying to return to work after injury and their employer should be a true partnership. We’re proud to support employers to be the best partner they can be, not only to their workers, but to our workers’ compensation system.

162,981 registered employers

Employers arranged modified work in

79%

of cases where the accident resulted in a disabling injury.



Working together to reach resolution

The decisions we make are as important to our employers as they are to our workers.

Employers deserve to be heard and to understand each decision we make. Unfortunately, disagreements may still happen sometimes. When they do, we want to do everything we can to resolve employers’ concerns.

Support for employers

If we are unable to resolve issues through discussions at the supervisor or manager level, employers have access to other resolution channels, including services that can offer additional support in the decision

review process:

• The Employer Appeals Consulting (EAC) service helps employers understand the facts, policies and legislation used to make a decision, with a focus on resolution. Provided by WCB, this service offers assistance with submitting a review request and will help employers understand the impact of the decision(s) in question on their account. The EAC service provides information that can help resolve the issue or advice on how the employer can present their position.

On December 1, 2018, the Government of Alberta’s Fair Practices Office was established. The Fair Practices Office – Employer Appeals Advisor Branch is a new service that provides independent advice, assistance and advocacy services to eligible employers.

• The Dispute Resolution and Decision Review Body (DRDRB) assists workers and employers who request a formal review of a decision. Resolution specialists review the decision, discuss the issues raised and identify if there is new information that should be considered. If the decision is incorrect, resolution specialists work with Customer Service or Employer Account Services to correct it.

• The external Appeals Commission for Alberta workers’ compensation is available to workers and employers who disagree with a decision made by the DRDRB and would like to appeal it.

Over

12,100 employers are committed to safety through the Partnerships in Injury Reduction program.

Approximately

$66.4 million was earned by employers in 2018 for their strong safety performance.

Hands-on

Joining forces with the expertise of physiotherapists

healing



We rely on the expert knowledge of our partners in health care to provide the support and treatment required to help injured workers recover and return to full and healthy lives.

Physiotherapists play an integral role as one of our health care partners

The road to recovery isn’t travelled alone. There’s a team of specialized health care and treatment providers, in addition to treating physicians, all with an important role to play. As a physiotherapist, Kari Lambden considers herself the “quarterback” of an injured worker’s physical rehabilitation team.

“We are literally hands-on with our patients,” says Kari, “and it’s our job to make sure everyone else on the team sees what we see. A case manager at WCB may not always understand how a particular injury looks and feels, and it’s up to us to communicate that to them and to the employer if they need help coordinating modified duties that match the capabilities of our patient.”

Kari has been a physio for 25 years, which is when she opened her clinic in Calgary. Over the years, she has seen firsthand the relationship between community physiotherapists and WCB evolve and become more collaborative, with both parties recognizing the importance of forming a true partnership to maximize the success of an injured worker’s treatment and recovery. Employers can rely on great care for their employees and on help with getting them back on the job safely.

“Having a seat at the table, and being able to communicate openly has been very positive. I think WCB has gotten a better understanding of

our challenges.” Kari Lambden, physiotherapist

Kari Lambden works with her patients and injured workers at her clinic in Calgary.

Recognizing physios’ expertise means successful outcomes for injured workers

This partnership is helping to drive better conversations and processes that benefit everyone involved and translate into a better experience for injured workers and their employers. Physios are the subject matter experts. They know the needs of their injured workers. Understanding that, WCB has given physios more flexibility to customize a plan that fits the needs of each individual person. After all, getting the best treatment optimizes the chances for a successful return to work.

“That flexibility allows us to support our patients in their return to work,” says Kari. “We can follow them and make sure they’re going to be successful.”

Sharing best practices and learning from challenges

Kari also sits on WCB’s physiotherapy advisory committee, which meets to discuss issues and concerns from physios in the community, and to share best practices for treatment.

“Having a seat at the table and being able to communicate openly has been very positive,” says Kari. “I think WCB has gotten a better understanding of our challenges.”

“We are literally hands-on with our patients, and it’s our job to make sure everyone else on the team sees what we see. A case manager at WCB may not always understand how a particular injury looks and feels, and it’s up to us to

communicate that to them, and to the employer if they need help coordinating modified duties that match the capabilities of our patient.”

Kari Lambden, physiotherapist

Practicing physiotherapy for 25 years, Kari considers herself the “quarterback” of an injured worker’s physical rehabilitation team.



Their patients, our clients

A construction worker sees a doctor in the emergency room after falling from his scaffold.

A mechanic works with a physiotherapist to regain his strength while healing from a shoulder tear.

A home care nurse talks to a psychologist to help work through her feelings of anxiety and depression after being attacked by a patient.

Workplace injuries take many forms, but what they all have in common is that they require the right expertise and care to recover.

In a stressful time, workers can choose a provider they know and trust

When we’re sick or hurt, many of us are fortunate enough to have a trusted doctor we choose to visit—someone we’ve established a relationship with and who we trust with our care. When a worker is injured at work, they can see the health care provider of their choice. This may be someone new, or someone they have a longstanding relationship with. The doctor-patient relationship is important, and is why we’ve committed ourselves to strengthening our relationships with community physicians. Most people injured at work have never had a WCB claim before. They are new to our system, and they are hurt. A daunting recovery may seem less so with their family doctor, a familiar face on board.

We share the same purpose—great care

Health care providers have their patients’ best interests at heart. When treating patients with a workplace injury, they take the time to carefully and safely assess their injury, their recovery and their fitness for work as part of their care. They share information with their patient’s case manager to ensure everyone is on the same page. Whether it’s offering access to expedited services such as CT scans and MRIs or referrals for surgical consultations and procedures, we support them in doing this work.

We partner with

16 rehabilitation centres, getting injured workers the help they need, in their own communities.

9,476 specialists practising in

68 fields (e.g., audiology, psychology) help their patients recover from workplace injuries.

Our on-staff consulting physicians value open communication with treating physicians in the community. In 2018, they made over

5,000 case conference calls to discuss workers’ treatment and recovery.

With thousands of providers in Alberta, a well-understood and shared purpose is both the foundation for this partnership and also where we have the greatest opportunity to improve and grow. Health care providers are the drivers of recovery from injury and illness and are an invaluable part of the workers’ compensation system. Knowing this, we will focus on building a culture of trust, respect and meaningful engagement.

On board from injury to recovery

From the acute treatment required at the time of the accident to specialized care and rehabilitation that returns workers to a full and healthy life, we want to consult with providers and come to a shared understanding on best practices for treatment and identify opportunities for resolution. We want to work together to ensure reporting supports timely care and benefits for workers. We want to do whatever we can to help support the direct care of their patients, our clients.


Animal rescues are among charities our WCB family supports

One fur

all


We understand the importance of community and what it means to give back

Caring for people in need is at the very core of our business and values, and the people we hire to become part of our WCB family reflect that. They believe our communities are much more than places where we work and live; they’re also where we feel a sense of belonging. It’s this belonging and connectedness that drives our staff to find ways to give back.

Our philanthropic culture grew from our employees’ efforts to help others

It started with office bulletin boards blanketed by posters, put there by employees trying to raise awareness and donations for causes near and dear to their hearts.

Today, we support those efforts through programs that allow staff to donate to a host of recognized charitable causes. In 2018, WCB employees donated more than $28,000 to 14 charities, among them Second Chance Animal Rescue Society, or SCARS.

Employees understand what it means to make a difference

Recently, a meeting room at WCB was full of teeny-tiny lions rubbing noses with adoring humans, the very definition of a “roaring success” for SCARS. WCB-Alberta hosted SCARS’ first-ever kitten-cuddle fundraiser this year, with our employees raising more than $1,200 for the non-profit animal rescue group—while at the same time giving them a coffee break that cleared their minds and filled their hearts.

WCB claims investigator Jill St. Laurent has long been a supporter of SCARS, raising money by selling her handmade scarves to colleagues and even organizing a craft fair with 35 local vendors, with partial proceeds going to SCARS.

”SCARS does such great work,” says Jill. “But it’s one of many. There are a lot of other deserving charities my colleagues and I get to support. I love working for an employer that places such importance on giving back.”

It’s people like Jill and hundreds of others at WCB who understand what it means to make a difference in the lives of others.

Employees break from their work to donate to SCARS, with the added bonus of cuddling the kittens that will benefit from their charitable gifts.

In 2018, WCB employees donated more than $28,000

to 14 charities.



Legislation changes—a journey we navigated together

The WCB Review Panel asked many questions, consulted many stakeholders and examined our business for opportunities to improve the support our workers’ compensation system provides to Albertans. The results of their review helped inform legislation changes introduced throughout 2018 by Bill 30, An Act to Protect the Health and Well-Being of Working Albertans.

Incorporating these legislative changes wasn’t our journey alone; it was one we shared with all of our stakeholders. Through considerable communication, education and consultation efforts with our system partners, we were able to successfully implement each new piece of legislation and support the continued evolution of our workers’ compensation system.

Gathering input from our partners

Several of the changes that were introduced in 2018 provided the opportunity to consult with our stakeholders in order to get their feedback on how we could best implement the legislation. The feedback we received helped us explore all potential impacts and shaped our final policies and processes.

The pieces we consulted on included: Code of Rights and Conduct, process for estimating earning

capacity, interim relief during review or appeal and employers’ obligation to reinstate injured workers.

Highlights of the 2018 legislation changes

Enhanced benefits for injured workers and their families

• Improved compensation options for severely injured young workers so they can be compensated more closely to their earning potential

• Enhanced retirement benefits to account for the potential impact of a workplace injury on retirement savings

• Expanded fatality benefits for surviving spouses and dependent children

• Employment health benefits that now continue while a worker is off work due to a workplace injury

Expanded presumptive coverage

These additional occupations and conditions are now automatically presumed to be work-related under the new legislation:

• Heart attacks for paramedics,

• Post-traumatic stress disorder for correctional officers and emergency dispatchers, and

• Traumatic psychological injury claims for all workers who experience a traumatic event or series of

events at work.

We’ve always covered these conditions when they’ve been confirmed to be work-related; however, this legislation means that these conditions will be presumed to be work-related for these occupations, unless the contrary is proven.

More support during the appeals process

Changes were introduced to the appeals process to make it easier for workers and employers and to offer extra support to help navigate the system:

• The appeal window was extended to two years (from one), giving workers and employers more time to make an appeal to the Appeals Commission.

• For exceptional circumstances during the appeal process, interim relief was introduced to help workers and employers who demonstrate financial hardship.

• Our Office of the Appeals Advisor moved to become part of the newly established Fair Practices Office, which helps workers and employers navigate the workers’ compensation system and raise concerns about fairness, and provides advocacy services for people seeking an appeal.

New responsibilities for workers and employers

Employers are now obligated to reinstate their workers after a workplace injury, and workers and employers are expected to work together towards a return to the same workplace. To help with this transition, we are making sure workers get the support they need to recover and employers are involved and engaged in return-to-work planning, so they’re prepared when their worker is able to return to full or modified duties.

Although this obligation is new, it reflects the priorities of many Alberta employers, who helped 92.8% of injured workers return to their date-of-accident employer in 2017 and 91.8% in 2018.



We are embarking on a journey to transform the organization from being

outcome-based to one that achieves great outcomes in full partnership and

collaboration with those we serve.”

Grace Thostenson, Chair, Board of Directors

2018 Annual Report



Management Discussion and Analysis and Financial Statements

WCB-Alberta Management Discussion and Analysis of Consolidated Financial Statements and Operating Results

For the year ended December 31, 2018

Management Discussion and Analysis of 2018 Consolidated Financial Statements and Operating Results 33

35 Business Overview

36 2018 Financial Performance

36 Operating Highlights

38 Customer Operations

38 Premiums

39 Claim Benefit Expense

40 Corporate Administration

40 Asset Liability Management

40 Investments

41 Claim Benefit Liabilities

43 Funding

43 Funding Policy

43 Funding Level

44 Enterprise Risk Management

44 Oversight

44 Risk Assessment

44 Significant Risks

45 Implications of Accounting Policies and Estimates

46 Governance and Compliance

47 Emerging Standards

48 Looking Ahead


Management Discussion and Analysis of 2018 Consolidated Financial Statements and Operating Results

The Management Discussion and Analysis (MD&A) provides management’s perspective on key issues that affect current and

future performance of the Workers’ Compensation Board– Alberta (WCB). The MD&A, prepared as of April 30, 2019, should

be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended

December 31, 2018.

Forward-looking statements

This report contains forward-looking statements about certain matters that are by their nature subject to many risks and

uncertainties, which may cause actual results to differ materially from the statements made herein. Forward-looking

statements include, but are not limited to, WCB objectives, strategies, targeted and expected financial results. They also

include the outlook for WCB’s business and for the Alberta and global economies. Risks and uncertainties include, but are

not limited to, changing market, industry and general economic factors or conditions; changes in legislation affecting WCB

policies and practices; changes in accounting standards; the ability to retain and recruit qualified personnel; and other risks,

known or unknown. Some are predictable or within WCB control; many are not. The reader is hereby cautioned not to place

undue reliance on these forward-looking statements.

Unless otherwise indicated, all amounts shown are in millions of Canadian dollars.


Business Overview

Corporate profile

Founded in 1918, WCB is a statutory corporation with a legislative mandate under the Workers’ Compensation Act (the

Act) to administer the workers’ compensation system for the province of Alberta. While accountable to the Minister

of Labour, WCB is independently funded and operated. Through the payment of premiums, over 162,000 employers

fund the system, which covers more than 1.8 million workers.

WCB’s mandate

In Canada, workers’ compensation is a no-fault disability system that protects both employers and workers against

the economic impact of work-related injuries and occupational diseases. Based on the Meredith Principles, the

system covers injured workers for lost employment income and provides health care, rehabilitation and other services

required due to a work-related injury, while employers are shielded from litigation. This system brings economic

stability to the workplace through collective liability that minimizes the risks and expenses of injury. To achieve these

objectives, the Act established the Accident Fund and imposed a statutory obligation on WCB to ensure that it be

fully funded.

At the highest and simplest level, WCB is involved in two significant and complementary business activities: customer

operations and asset liability management (ALM).

Customer operations provide disability management for workplace injuries. Key business processes include rate

setting, assessment and collection of premiums from employers, payment of compensation benefits to injured

workers, return-to-work services and administration.

Asset liability management involves a risk-based approach to manage assets and liabilities so that sufficient assets are

available to pay for claim-related obligations. Key business processes include strategic financial planning, investment

management, claim benefit liability analysis and valuation, financial risk management and financial performance

reporting. Prudent asset liability management not only ensures security of benefits for workers and fair premiums for

employers, but also provides appropriate tools for evaluating how effectively WCB is meeting its financial obligations.

WCB’s vision and mission

The core principles set out in WCB’s vision and mission shape the corporate beliefs and values that guide the

organization’s operating philosophy.

Vision

Albertans working—a safe, healthy and strong Alberta.

Mission

WCB-Alberta, working together with our partners, will significantly and measurably reduce the impact of

workplace illness and injury on Albertans.

WCB’s strategic vision is to make a positive and lasting impact on the people, society and economy of Alberta through

what it does, while the mission statement describes the guidelines for how it intends to conduct business.


2018 Financial Performance

OPERATING HIGHLIGHTS

The funding model for WCB operates on the premise that in a given year, a link exists between current premiums and

the cost of current year injuries, and, asset liability management activities will generate investment returns sufficient to

cover the annual interest requirement on the claim benefit liability. Given the volatile performance of local and global

economies, forecasting these activities is subject to a great deal of uncertainty and risk. Consequently, actual results

will likely differ significantly from even the most rigorously developed plans. Surpluses or deficits can arise when actual

costs and returns are different from forecast expectations, which rely on economic and business assumptions based

on available information at a point in time. Surpluses and deficits accumulate and are reflected in the funded position.

In 2018, WCB experienced an overall operating deficit of $724.6 million. The factors contributing to the deficit are

better understood by reorganizing the Consolidated Statement of Comprehensive Income to represent WCB’s main

business activities, as follows:

Customer operations - $191.9 million deficit as a result of higher claim costs and lower premium revenues.

• While the Alberta economy showed improvement over 2017, the recovery remained fragile and fell short

of budget expectations. Despite these economic challenges, WCB maintained focus and commitment in

their care to help injured workers through the uncertainty caused by a work injury.

• Employer assessable earnings of $102.3 billion were $6.0 billion (5.5%) below budget, and $1.9 billion

(1.9%) above 2017. Premium revenue ended the year at $1,074.7 million, which was $30.0 million (2.7%)

under budget and $35.2 million (3.4%) above 2017. Claim benefit expense of $1,106.3 million was $44.4

million (4.2%) over budget, and $127.2 million (13.0%) above 2017, due to higher benefit costs driven by

higher claim volumes, characteristic of an economy continuing to struggle to emerge from a recession.

Overall, the premium rate collected was $1.05, compared to a required rate of $1.24.

• Disabling claim volume increased to 51,700 (4.2%) from 49,600 in 2017, and the resulting disabling injury

rate per 100 covered workers remained stable to 2017 at 2.7. Lost-time claim (LTC) volume increased to

28,600 (6.7%) from 26,800 in 2017, and the resulting LTC rate per 100 covered workers increased to 1.5

from 1.4 in 2017.

Asset liability management - $532.7 million deficit as a result of lower investment returns and actuarial losses.

• Investment returns were significantly lower in 2018, delivering net investment income of $104.4 million,

which was $389.1 million (78.8%) below budget, and $934.7 million (90.0%) below 2017. The portfolio

earned a rate of return of 1.4% for the year, short of the budget expectation of 4.9% but higher than the

benchmark return of -0.8%. The low portfolio return was primarily due to negative returns from foreign

and domestic equities.

• Actuarial remeasurement adjustments resulted in a loss of $267.6 million, which was driven primarily by

claim experience losses resulting from higher claim costs in almost all cost categories, although most

particularly in long-term disability.

The year-end Funded Position was $1,730.5 million and the funded ratio (total assets over total liabilities) was 118.3%.


The following tables represent the operating highlights for each of WCB’s key business activities:

Operating results by business activity

($ millions)2018

Budget2018

Actual2017

Actual

Customer operations

Premiums

Claim benefit expense

Corporate administration and injury reduction

Deficit from customer operations

Asset liability management

Investment income

Investment management

Net investment income

Interest expense on claim benefit liabilities

Remeasurement loss on claim benefit liabilities

Other expense items

Asset liability management expenses

Surplus (deficit) from asset liability management

OPERATING SURPLUS (DEFICIT)

$ 1,104.7

(1,061.9)

(161.0)

(118.2)

535.7

(42.2)

493.5

(360.8)

-

(4.3)

(365.1)

128.4

$ 10.2

$ 1,074.7

(1,106.3)

(160.3)

(191.9)

145.3

(40.9)

104.4

(365.3)

(267.6)

(4.2)

(637.1)

(532.7)

$ (724.6)

$ 1,039.5

(979.1)

(152.2)

(91.8)

1,078.0

(38.9)

1,039.1

(328.2)

(469.8)

(4.4)

(802.4)

236.7

$ 144.9

Sources of operating surplus (deficit)

($ millions)2018

Budget2018

Actual2017

Actual

Deficit from customer operations

Premiums

Premium revenue shortfall resulting from the actual premium rate

collected of $1.05 (2017 – $1.04) being lower than the required premium

rate of $1.24 (2017 – $1.13), based on assessable earnings

Other revenue (expense) items

Surplus (deficit) from asset liability management

Investments

Excess (shortfall) of net investment income over the interest expense on

claim benefit liabilities $365.3 million (2017 – $328.2 million)

Other expense items

Actuarial remeasurement

Changes in actuarial methods and assumptions

Changes to Act, Regulation, policies and administrative practices

Loss due to claims experience


$ (118.2)

-

(118.2)

132.7

(4.3)

128.4

-

-

-

-

128.4

$ 10.2

$ (195.7)

3.8

(191.9)

(260.9)

(4.2)

(265.1)

(45.9)

-

(221.7)

(267.6)

(532.7)

$ (724.6)

$ (88.3)

(3.5)

(91.8)

710.9

(4.4)

706.5

-

(297.7)

(172.1)

(469.8)

236.7

$ 144.9


Customer Operations

PREMIUMS

Assessable earnings

$6.0 billion (5.5%) under budget

$1.9 billion (1.9%) higher than prior year

The Alberta economy showed some improvement in 2018. Assessable

earnings were higher than the prior year but below budget expectations.

The increase over the prior year reflected a combination of a higher

hourly wage and more total hours worked in the province. The

construction sector represented the largest decline against budget.

Premium revenue

$30.0 million (2.7%) under budget

$35.2 million (3.4%) higher than prior year

Following the negative budget variance in assessable earnings,

premium revenue also fell short of budget by $30.0 million. The

construction sector represented the largest decline against budget.

Premium revenue increased by 3.4% to $1,074.7 million in 2018,

due in part to a year-over-year increase of 1.9% in employer

assessable earnings.

Premium rates and assessable earnings

The chart below presents assessable earnings versus average premium rate required and collected from 2014

through 2018. Since 2014, the rate required has been on a growth trajectory under a backdrop of declining

assessable earnings and rising claim expense. While assessable earnings in 2018 saw a moderate increase, claim

expense continued to grow at a faster pace, resulting in a 9.7% increase in the required rate.

$0

$20

$40

$60

$80

$100

$120

20182017201620152014

0

10,000

20,000

30,000

40,000

50,000

60,000

20182017201620152014

2018 annual report

$979.1

$1,061.9 $1,106.3

Long-term disability

43%Rehabilitation services 2%

Short-term disability 7%

Claims management 7%

Survivor benefits 9%

Health care

32%

136.0% 134.3% 133.8%

127.3%

118.3%

010,00020,00030,00040,00050,00060,000

OtherBurn or Scald

Fracture, Dislocation or Nerve Damage

Occupational Illness

Other Traumatic Injuries

Open WoundSuperficial Wound

Sprain or Strain

# cl

aim

s

0

5,000

10,000

15,000

20,000

25,000

OtherMultiple Parts

Eye(s)Knee(s)Arm(s)HeadFoot (Feet), Toe(s) or Ankle(s)

Chest or Shoulder(s)

Hand(s) or Wrist(s)

Finger(s)Back

Premium Revenue

$ m

illio

ns

$0

$200

$400

$600

$800

$1,000

$1,200

2017 Actual

2018 Actual

2018 Budget

$1,104.7 $1,074.7 $1,039.5

Assessable Earnings

$ b

illio

ns

$0

$20

$40

$60

$80

$100

$120

2017 Actual

2018 Actual

2018 Budget

$108.3$102.3 $100.4

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$ m

illio

ns

$0

$20

$40

$60

$80

$100

2017 Actual

2018 Actual

2018 Budget

$82.2 $82.1 $85.0

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$493.5

$104.4

$1,039.1

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

20182017201620152014

$ m

illio

nsFunded Ratio

Assets Liabilities Funded Ratio

10,1

56

7,46

5

10,3

91

7,73

4

10,5

29

7,87

2

11,4

17

8,96

9

11,1

75

9,44

6

50%

75%

100%

125%

150%

Corporate Administration Claim Benefit Liabilities, December 31, 2018

New claims by part of body

New claims by nature of injury

Funding Level, 2014–2018

Claim Benefit Expense

Net Investment Income

Asse

ssab

le E

arni

ngs (

$ bi

llion

s)Prem

ium Rate

Assessable Earnings versus Average Premium Rate Required

$0.97 $0.97

$105.9

$0.98

$107.9$99.8

$1.06

$100.4

$1.13

$102.3

$1.24Claim Volume and Injury Rates

Clai

m V

olum

e Injury Rate

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

27,200

21,900

26,500

20,500

22,800

29,10024,800

26,800

2.7

1.4

2.4

1.3

2.4

1.3

2.7

1.4

23,100

28,600

2.7

1.5

Lost-Time Claims No-Lost-Time – Modified Work Claims Disabling RateLTC Rate

Average Premium Rate Required Average Premium Rate CollectedAssessable Earnings

Sprain or StrainSuperficial WoundOpen WoundOther Traumatic InjuriesOccupational IllnessFracture, Dislocation or Nerve DamageBurn or ScaldOther Total

Back Finger(s) Hand(s) or Wrist(s) Chest or Shoulder(s) Foot (Feet), Toe(s) or Ankle(s) Head Arm(s) Knee(s) Eye(s) Multiple Parts Other Total

2018

18,96716,15214,49213,55310,4279,4449,1757,8635,8885,62520,760

132,346

2017

18,55616,03613,80112,7119,7148,8698,3407,4716,0135,48718,434

125,432

2018

50,11318,86918,85317,12013,4036,0073,6704,311

132,346

2017

47,82518,08618,66215,57712,2675,8373,5493,629

125,432

Lorem ipsum

20182017201620152014

$0.90

$1.10

$1.30

$1.50

2018 2017

# cl

aim

s

18,967

16,152

14,49213,553

10,427

9,4449,175

7,863

5,8885,625

20,760

18,556

16,036

13,80112,711

9,7148,869

8,3407,471

6,0135,487

18,434

18,086

47,825

18,662

15,577

12,267

5,8373,549

3,62918,869

50,113

18,853

17,120

13,403

6,0073,670

4,311

2018 2017

2.102.03

1.89 1.86 1.88

Covered Workers (millions)

$1.03

$1.01$1.04 $1.05

$0

$20

$40

$60

$80

$100

$120

20182017201620152014

0

10,000

20,000

30,000

40,000

50,000

60,000

20182017201620152014

2018 annual report

$979.1

$1,061.9 $1,106.3






Health care

32%

136.0% 134.3% 133.8%

127.3%

118.3%

010,00020,00030,00040,00050,00060,000

OtherBurn or Scald





Sprain or Strain

# cl

aim

s

0

5,000

10,000

15,000

20,000

25,000

OtherMultiple Parts



Hand(s) or Wrist(s)

Finger(s)Back

Premium Revenue

$ m

illio

ns

$0

$200

$400

$600

$800

$1,000

$1,200

2017 Actual

2018 Actual

2018 Budget

$1,104.7 $1,074.7 $1,039.5

Assessable Earnings

$ b

illio

ns

$0

$20

$40

$60

$80

$100

$120

2017 Actual

2018 Actual

2018 Budget

$108.3$102.3 $100.4

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$ m

illio

ns

$0

$20

$40

$60

$80

$100

2017 Actual

2018 Actual

2018 Budget

$82.2 $82.1 $85.0

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$493.5

$104.4

$1,039.1

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

20182017201620152014

$ m

illio

ns

Funded Ratio


10,1

56

7,46

5

10,3

91

7,73

4

10,5

29

7,87

2

11,4

17

8,96

9

11,1

75

9,44

6

50%

75%

100%

125%

150%







Asse

ssab

le E

arni

ngs (

$ bi

llion

s)

Premium

Rate


$0.97 $0.97

$105.9

$0.98

$107.9$99.8

$1.06

$100.4

$1.13

$102.3


Clai

m V

olum

e Injury Rate

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

27,200

21,900

26,500

20,500

22,800

29,10024,800

26,800

2.7

1.4

2.4

1.3

2.4

1.3

2.7

1.4

23,100

28,600

2.7

1.5





2018

18,96716,15214,49213,55310,4279,4449,1757,8635,8885,62520,760

132,346

2017

18,55616,03613,80112,7119,7148,8698,3407,4716,0135,48718,434

125,432

2018

50,11318,86918,85317,12013,4036,0073,6704,311

132,346

2017

47,82518,08618,66215,57712,2675,8373,5493,629

125,432

Lorem ipsum

20182017201620152014

$0.90

$1.10

$1.30

$1.50

2018 2017

# cl

aim

s

18,967

16,152

14,49213,553

10,427

9,4449,175

7,863

5,8885,625

20,760

18,556

16,036

13,80112,711

9,7148,869

8,3407,471

6,0135,487

18,434

18,086

47,825

18,662

15,577

12,267

5,8373,549

3,62918,869

50,113

18,853

17,120

13,403

6,0073,670

4,311

2018 2017

2.102.03

1.89 1.86 1.88


$1.03

$1.01$1.04 $1.05

$0

$20

$40

$60

$80

$100

$120

20182017201620152014

0

10,000

20,000

30,000

40,000

50,000

60,000

20182017201620152014

2018 annual report

$979.1

$1,061.9 $1,106.3






Health care

32%

136.0% 134.3% 133.8%

127.3%

118.3%

010,00020,00030,00040,00050,00060,000

OtherBurn or Scald





Sprain or Strain

# cl

aim

s

0

5,000

10,000

15,000

20,000

25,000

OtherMultiple Parts



Hand(s) or Wrist(s)

Finger(s)Back

Premium Revenue

$ m

illio

ns$0

$200

$400

$600

$800

$1,000

$1,200

2017 Actual

2018 Actual

2018 Budget

$1,104.7 $1,074.7 $1,039.5

Assessable Earnings

$ b

illio

ns

$0

$20

$40

$60

$80

$100

$120

2017 Actual

2018 Actual

2018 Budget

$108.3$102.3 $100.4

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$ m

illio

ns

$0

$20

$40

$60

$80

$100

2017 Actual

2018 Actual

2018 Budget

$82.2 $82.1 $85.0

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$493.5

$104.4

$1,039.1

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

20182017201620152014

$ m

illio

ns

Funded Ratio


10,1

56

7,46

5

10,3

91

7,73

4

10,5

29

7,87

2

11,4

17

8,96

9

11,1

75

9,44

6

50%

75%

100%

125%

150%







Asse

ssab

le E

arni

ngs (

$ bi

llion

s)

Premium

Rate


$0.97 $0.97

$105.9

$0.98

$107.9$99.8

$1.06

$100.4

$1.13

$102.3


Clai

m V

olum

e Injury Rate

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

27,200

21,900

26,500

20,500

22,800

29,10024,800

26,800

2.7

1.4

2.4

1.3

2.4

1.3

2.7

1.4

23,100

28,600

2.7

1.5





2018

18,96716,15214,49213,55310,4279,4449,1757,8635,8885,62520,760

132,346

2017

18,55616,03613,80112,7119,7148,8698,3407,4716,0135,48718,434

125,432

2018

50,11318,86918,85317,12013,4036,0073,6704,311

132,346

2017

47,82518,08618,66215,57712,2675,8373,5493,629

125,432

Lorem ipsum

20182017201620152014

$0.90

$1.10

$1.30

$1.50

2018 2017

# cl

aim

s

18,967

16,152

14,49213,553

10,427

9,4449,175

7,863

5,8885,625

20,760

18,556

16,036

13,80112,711

9,7148,869

8,3407,471

6,0135,487

18,434

18,086

47,825

18,662

15,577

12,267

5,8373,549

3,62918,869

50,113

18,853

17,120

13,403

6,0073,670

4,311

2018 2017

2.102.03

1.89 1.86 1.88


$1.03

$1.01$1.04 $1.05


CLAIM BENEFIT EXPENSE

Claim expense is an estimate of current and future costs arising from compensable injuries and exposures to

occupational diseases occurring in 2018, as well as the current and future costs to administer these claims.

$44.4 million (4.2%) over budget

$127.2 million (13.0%) higher than prior year

Claim benefit expense was higher than budget and prior year

primarily due to higher disability costs resulting from higher claim

volumes and complexity of claims.

Claim volume and claim rates

Both components of disabling claim volume (claims resulting in lost time from work, and those resulting in no

lost time due to a return to modified duties) grew for a second year in 2018. The number of covered workers in

the province also increased, but at a slower rate than claim volume. The faster growth in LTC volume relative to

covered workers led to a small increase in the lost-time-claim injury rate; however, the growth rates of disabling

claims and covered workers were close enough that the disabling-claim injury rate remained flat. Overall, these

trends represent stability in the level of risk of workplace injuries in the province.

$0

$20

$40

$60

$80

$100

$120

20182017201620152014

0

10,000

20,000

30,000

40,000

50,000

60,000

20182017201620152014

2018 annual report

$979.1

$1,061.9 $1,106.3






Health care

32%

136.0% 134.3% 133.8%

127.3%

118.3%

010,00020,00030,00040,00050,00060,000

OtherBurn or Scald





Sprain or Strain

# cl

aim

s

0

5,000

10,000

15,000

20,000

25,000

OtherMultiple Parts



Hand(s) or Wrist(s)

Finger(s)Back

Premium Revenue $

mill

ions

$0

$200

$400

$600

$800

$1,000

$1,200

2017 Actual

2018 Actual

2018 Budget

$1,104.7 $1,074.7 $1,039.5

Assessable Earnings

$ b

illio

ns

$0

$20

$40

$60

$80

$100

$120

2017 Actual

2018 Actual

2018 Budget

$108.3$102.3 $100.4

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$ m

illio

ns

$0

$20

$40

$60

$80

$100

2017 Actual

2018 Actual

2018 Budget

$82.2 $82.1 $85.0

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$493.5

$104.4

$1,039.1

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

20182017201620152014

$ m

illio

ns

Funded Ratio


10,1

56

7,46

5

10,3

91

7,73

4

10,5

29

7,87

2

11,4

17

8,96

9

11,1

75

9,44

6

50%

75%

100%

125%

150%







Asse

ssab

le E

arni

ngs (

$ bi

llion

s)

Premium

Rate


$0.97 $0.97

$105.9

$0.98

$107.9$99.8

$1.06

$100.4

$1.13

$102.3


Clai

m V

olum

e Injury Rate

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

27,200

21,900

26,500

20,500

22,800

29,10024,800

26,800

2.7

1.4

2.4

1.3

2.4

1.3

2.7

1.4

23,100

28,600

2.7

1.5





2018

18,96716,15214,49213,55310,4279,4449,1757,8635,8885,62520,760

132,346

2017

18,55616,03613,80112,7119,7148,8698,3407,4716,0135,48718,434

125,432

2018

50,11318,86918,85317,12013,4036,0073,6704,311

132,346

2017

47,82518,08618,66215,57712,2675,8373,5493,629

125,432

Lorem ipsum

20182017201620152014

$0.90

$1.10

$1.30

$1.50

2018 2017

# cl

aim

s

18,967

16,152

14,49213,553

10,427

9,4449,175

7,863

5,8885,625

20,760

18,556

16,036

13,80112,711

9,7148,869

8,3407,471

6,0135,487

18,434

18,086

47,825

18,662

15,577

12,267

5,8373,549

3,62918,869

50,113

18,853

17,120

13,403

6,0073,670

4,311

2018 2017

2.102.03

1.89 1.86 1.88


$1.03

$1.01$1.04 $1.05

$0

$20

$40

$60

$80

$100

$120

20182017201620152014

0

10,000

20,000

30,000

40,000

50,000

60,000

20182017201620152014

2018 annual report

$979.1

$1,061.9 $1,106.3






Health care

32%

136.0% 134.3% 133.8%

127.3%

118.3%

010,00020,00030,00040,00050,00060,000

OtherBurn or Scald





Sprain or Strain

# cl

aim

s

0

5,000

10,000

15,000

20,000

25,000

OtherMultiple Parts



Hand(s) or Wrist(s)

Finger(s)Back

Premium Revenue

$ m

illio

ns

$0

$200

$400

$600

$800

$1,000

$1,200

2017 Actual

2018 Actual

2018 Budget

$1,104.7 $1,074.7 $1,039.5

Assessable Earnings

$ b

illio

ns

$0

$20

$40

$60

$80

$100

$120

2017 Actual

2018 Actual

2018 Budget

$108.3$102.3 $100.4

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$ m

illio

ns

$0

$20

$40

$60

$80

$100

2017 Actual

2018 Actual

2018 Budget

$82.2 $82.1 $85.0

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$493.5

$104.4

$1,039.1

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

20182017201620152014

$ m

illio

ns

Funded Ratio


10,1

56

7,46

5

10,3

91

7,73

4

10,5

29

7,87

2

11,4

17

8,96

9

11,1

75

9,44

6

50%

75%

100%

125%

150%







Asse

ssab

le E

arni

ngs (

$ bi

llion

s)

Premium

Rate


$0.97 $0.97

$105.9

$0.98

$107.9$99.8

$1.06

$100.4

$1.13

$102.3


Clai

m V

olum

e Injury Rate

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

27,200

21,900

26,500

20,500

22,800

29,10024,800

26,800

2.7

1.4

2.4

1.3

2.4

1.3

2.7

1.4

23,100

28,600

2.7

1.5





2018

18,96716,15214,49213,55310,4279,4449,1757,8635,8885,62520,760

132,346

2017

18,55616,03613,80112,7119,7148,8698,3407,4716,0135,48718,434

125,432

2018

50,11318,86918,85317,12013,4036,0073,6704,311

132,346

2017

47,82518,08618,66215,57712,2675,8373,5493,629

125,432

Lorem ipsum

20182017201620152014

$0.90

$1.10

$1.30

$1.50

2018 2017

# cl

aim

s

18,967

16,152

14,49213,553

10,427

9,4449,175

7,863

5,8885,625

20,760

18,556

16,036

13,80112,711

9,7148,869

8,3407,471

6,0135,487

18,434

18,086

47,825

18,662

15,577

12,267

5,8373,549

3,62918,869

50,113

18,853

17,120

13,403

6,0073,670

4,311

2018 2017

2.102.03

1.89 1.86 1.88


$1.03

$1.01$1.04 $1.05


CORPORATE ADMINISTRATION


$2.9 million (3.4%) lower than prior year

Corporate administration expenses exclude costs for administering

claims (2018 – $120.6 million, 2017 – $109.2 million) that are

included in claim benefit expense. Corporate administration was

flat to budget, while year-over-year cost decreases are attributable

to operational efficiencies.

Asset Liability Management

The Act requires that the Accident Fund remain fully funded such that sufficient assets are maintained to pay for the

liability obligations of the fund. It follows that the financial risks inherent in those assets and liabilities need to be fully

understood and carefully managed in order to ensure that fluctuations on either side do not cause the Accident Fund

to become unfunded. ALM helps determine an appropriate investment strategy to reduce funding risk.

The portfolio is prudently managed within a robust ALM framework, which involves an integrated risk-based

approach to managing the fund’s assets within the context of the claim benefit obligations they are expected to

safeguard. Financial risks are modeled and studied on a regular basis to confirm that the portfolio can deliver on its

requirement to pay for the obligations of the fund well into the future. Volatility in investment markets and the

economic environment makes this a complex and challenging exercise. However, strong risk management practices

supported by modeling software provide a systematic and consistent platform for monitoring the emerging risk

profile of the assets and liabilities. Throughout the year, risk metrics confirmed that the Accident Fund was operating

within an acceptable level of risk.

INVESTMENTS

Net Investment income


$934.7 million (90.0%) lower than prior year

Net investment income was lower than budget, primarily driven

by weak equity market returns.

The portfolio earned a total rate of return of 1.4% for 2018 (2.2% above the

policy benchmark) and 6.5% for the four-year period ending December

31, 2018 (2.3% above the policy benchmark). These returns are consistent

with the expected level of risk set in the Investment Policy and by the ALM

framework. The primary goal of the investment portfolio is to earn a long-

term rate of return that meets or exceeds the actuarial nominal rate of return

(referred to as the actuarial discount rate). On this basis, while the portfolio’s rate of return for 2018 of 1.4% did not

meet the actuarial nominal required rate of 4.6%, it has comfortably exceeded this objective over both four (6.5%)

and ten year (8.6%) periods.

Investment returns play a pivotal role in WCB’s financial results. The following provides an overview of the economic

and market forces that had a direct impact on WCB’s investment portfolio and returns.

$0

$20

$40

$60

$80

$100

$120

20182017201620152014

0

10,000

20,000

30,000

40,000

50,000

60,000

20182017201620152014

2018 annual report

$979.1

$1,061.9 $1,106.3






Health care

32%

136.0% 134.3% 133.8%

127.3%

118.3%

010,00020,00030,00040,00050,00060,000

OtherBurn or Scald





Sprain or Strain

# cl

aim

s

0

5,000

10,000

15,000

20,000

25,000

OtherMultiple Parts



Hand(s) or Wrist(s)

Finger(s)Back

Premium Revenue

$ m

illio

ns

$0

$200

$400

$600

$800

$1,000

$1,200

2017 Actual

2018 Actual

2018 Budget

$1,104.7 $1,074.7 $1,039.5

Assessable Earnings $

bill

ions

$0

$20

$40

$60

$80

$100

$120

2017 Actual

2018 Actual

2018 Budget

$108.3$102.3 $100.4

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$ m

illio

ns

$0

$20

$40

$60

$80

$100

2017 Actual

2018 Actual

2018 Budget

$82.2 $82.1 $85.0

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$493.5

$104.4

$1,039.1

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

20182017201620152014

$ m

illio

ns

Funded Ratio


10,1

56

7,46

5

10,3

91

7,73

4

10,5

29

7,87

2

11,4

17

8,96

9

11,1

75

9,44

6

50%

75%

100%

125%

150%







Asse

ssab

le E

arni

ngs (

$ bi

llion

s)

Premium

Rate


$0.97 $0.97

$105.9

$0.98

$107.9$99.8

$1.06

$100.4

$1.13

$102.3


Clai

m V

olum

e Injury Rate

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

27,200

21,900

26,500

20,500

22,800

29,10024,800

26,800

2.7

1.4

2.4

1.3

2.4

1.3

2.7

1.4

23,100

28,600

2.7

1.5





2018

18,96716,15214,49213,55310,4279,4449,1757,8635,8885,62520,760

132,346

2017

18,55616,03613,80112,7119,7148,8698,3407,4716,0135,48718,434

125,432

2018

50,11318,86918,85317,12013,4036,0073,6704,311

132,346

2017

47,82518,08618,66215,57712,2675,8373,5493,629

125,432

Lorem ipsum

20182017201620152014

$0.90

$1.10

$1.30

$1.50

2018 2017

# cl

aim

s

18,967

16,152

14,49213,553

10,427

9,4449,175

7,863

5,8885,625

20,760

18,556

16,036

13,80112,711

9,7148,869

8,3407,471

6,0135,487

18,434

18,086

47,825

18,662

15,577

12,267

5,8373,549

3,62918,869

50,113

18,853

17,120

13,403

6,0073,670

4,311

2018 2017

2.102.03

1.89 1.86 1.88


$1.03

$1.01$1.04 $1.05

$0

$20

$40

$60

$80

$100

$120

20182017201620152014

0

10,000

20,000

30,000

40,000

50,000

60,000

20182017201620152014

2018 annual report

$979.1

$1,061.9 $1,106.3






Health care

32%

136.0% 134.3% 133.8%

127.3%

118.3%

010,00020,00030,00040,00050,00060,000

OtherBurn or Scald





Sprain or Strain

# cl

aim

s

0

5,000

10,000

15,000

20,000

25,000

OtherMultiple Parts



Hand(s) or Wrist(s)

Finger(s)Back

Premium Revenue

$ m

illio

ns

$0

$200

$400

$600

$800

$1,000

$1,200

2017 Actual

2018 Actual

2018 Budget

$1,104.7 $1,074.7 $1,039.5

Assessable Earnings

$ b

illio

ns

$0

$20

$40

$60

$80

$100

$120

2017 Actual

2018 Actual

2018 Budget

$108.3$102.3 $100.4

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$ m

illio

ns

$0

$20

$40

$60

$80

$100

2017 Actual

2018 Actual

2018 Budget

$82.2 $82.1 $85.0

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$493.5

$104.4

$1,039.1

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

20182017201620152014

$ m

illio

ns

Funded Ratio


10,1

56

7,46

5

10,3

91

7,73

4

10,5

29

7,87

2

11,4

17

8,96

9

11,1

75

9,44

6

50%

75%

100%

125%

150%







Asse

ssab

le E

arni

ngs (

$ bi

llion

s)

Premium

Rate


$0.97 $0.97

$105.9

$0.98

$107.9$99.8

$1.06

$100.4

$1.13

$102.3


Clai

m V

olum

e Injury Rate

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

27,200

21,900

26,500

20,500

22,800

29,10024,800

26,800

2.7

1.4

2.4

1.3

2.4

1.3

2.7

1.4

23,100

28,600

2.7

1.5





2018

18,96716,15214,49213,55310,4279,4449,1757,8635,8885,62520,760

132,346

2017

18,55616,03613,80112,7119,7148,8698,3407,4716,0135,48718,434

125,432

2018

50,11318,86918,85317,12013,4036,0073,6704,311

132,346

2017

47,82518,08618,66215,57712,2675,8373,5493,629

125,432

Lorem ipsum

20182017201620152014

$0.90

$1.10

$1.30

$1.50

2018 2017

# cl

aim

s

18,967

16,152

14,49213,553

10,427

9,4449,175

7,863

5,8885,625

20,760

18,556

16,036

13,80112,711

9,7148,869

8,3407,471

6,0135,487

18,434

18,086

47,825

18,662

15,577

12,267

5,8373,549

3,62918,869

50,113

18,853

17,120

13,403

6,0073,670

4,311

2018 2017

2.102.03

1.89 1.86 1.88


$1.03

$1.01$1.04 $1.05


Capital markets overview

During 2018, markets transitioned away from the low-volatility environment that had generally been in place for

several years. Global equity markets’ double-digit decline in the final three months of the year led to their worst year

since 2008. Trade tensions, slowing global growth, and tighter financial conditions were the likely triggers shifting

investor sentiment and driving higher risk premiums and lower valuations across equity markets. Markets most

negatively impacted in local currencies were Germany’s DAX Index at -18.3% and Japan’s TOPIX Index at -16%. North

American markets fared better with the S&P 500 posting a -4.4% return while the Canadian equity S&P TSX composite

index returned -8.9%.

2018 proved to be another year of mixed fortunes for the oil industry, with prices firming up to levels that were more

common pre-2014, before declining sharply in the fourth quarter on fears of oversupply and slowing economic

growth. The price for U.S. oil (West Texas Intermediate - WTI) ended the year trading just over $45.00, down 41% from

its peak in early October. Unfortunately, as a result of ongoing pipeline-related issues, Canada’s crude oil benchmark

(Western Canada Select - WCS) experienced a much more challenging year, falling 77% from its peak in May of

approximately $58.00 to just over $13.00 at its low in November. Provincially mandated oil production curtailments

helped bolster prices into the end of the year with WCS closing at $29.66, 13.8% below the closing price of 2017.

After rising throughout the first three quarters of the year, interest rates declined during Q4 amid the equity market

sell-off and concerns over global growth. Some of the worry on global growth was fueled by speculation that the

flattening of both the U.S. and Canadian government yield curve through 2018 was a harbinger that the U.S. economy

would slow or even fall into recession. While the shape of the yield curve (that is the difference between long- and

short-term interest rates) is constantly evolving in response to a myriad of factors, when long-term interest rates are

below short-term rates, the yield curve becomes “inverted.” This, historically, has been a good predictor of a recession

with a typical lag of around 18 months. While yield curves in both the U.S. and Canada had not yet reached this

stage, without a dialing back in the pace of rate hikes by the U.S. Federal Reserve and the Bank of Canada, the risks of

inversion were considerably high, negatively impacting investor sentiment towards risky assets.

Real assets such as real estate and infrastructure demonstrated their stabilizing diversification benefits relative

to publicly traded equities through the fourth quarter resulting in good performance in 2018. Within real estate,

core income generating assets, particularly in British Columbia and Ontario, provided stable income and capital

appreciation. In addition, strategically located opportunity assets in urban centres experienced appraisal gains due

to sound market fundamentals. Infrastructure demand from global investors remained robust and the asset class

continued to produce strong returns.

CLAIM BENEFIT LIABILITIES

At the end of each fiscal year, WCB determines its claim benefit liabilities for all injuries that have occurred on or prior to

that date, as well as for past exposures that may result in future occupational disease claims. These liabilities represent

the actuarial present value of all future benefits and related administration costs, excluding costs attributable to self-

insured employers. As at December 31, 2018, those future payments totaled $20.1 billion and, when discounted using

a nominal rate of return assumption of 4.6% per annum, resulted in claim benefit liabilities of $9.0 billion—an increase

of $0.7 billion over 2017.

Effect of discounting

The difference between the future payments and the present value highlights the significant effect of discounting, as

shown in the table below.

($ billions) Years 1 to 5 Years 6 to 15 Years 16 & beyond Total

Timing of future payments


Claim benefit liabilities

$ 2.9

(0.3)

$ 4.6

(1.6)

$ 12.6

(9.2)

$ 20.1

(11.1)

$ 9.0

Benefit obligations extend well into the future. The table above illustrates that over 85% of future payments are

expected to occur in year 6 and beyond.


Significant changes in liabilities

The overall $663.1 million increase in claim benefit liabilities was attributable to the following:

($ millions) 2018 changes

Customer Operations related

Provision for future costs of current-year injuries and exposures*

Benefit payments for prior years’ injuries

Asset Liability Management related

Interest expense on the liability

Changes in actuarial methods and assumptions

Claim experience loss

$ 808.8

(778.6)

30.2

365.3

45.9

221.7

632.9

$ 663.1

* Provision for future costs of current-year injuries and exposures are included as part of claim benefit expense on page 39.

Actuarial methods and assumptions

The following actuarial methods and assumptions changes resulted in an increase to claim benefit liabilities of

$45.9 million:

• Updates to the assumptions relating to the valuation of economic loss payments ($202.1 million increase).

• Updates to other methods and assumptions, including those used for valuing health care benefits

($156.2 million decrease).

Claim experience

Differences between actual experience and what was expected in the prior valuation result in experience gains (which

decrease the liability) or losses (which increase the liability). These differences resulted in an overall experience loss of

$221.7 million. Claim costs were higher than expected in almost all cost categories in 2018, but most notably economic

loss payments (increased the liability by $148.6 million), and temporary wage loss and rehabilitation benefits

(increased the liability by $53.5 million). In addition, cost-of-living and inflation were slightly higher than expected

(increased the liability by $8.2 million).

The following chart shows the breakdown of the claim benefit liabilities as at December 31, 2018, by benefit type:

$0

$20

$40

$60

$80

$100

$120

20182017201620152014

0

10,000

20,000

30,000

40,000

50,000

60,000

20182017201620152014

2018 annual report

$979.1

$1,061.9 $1,106.3






Health care

32%

136.0% 134.3% 133.8%

127.3%

118.3%

010,00020,00030,00040,00050,00060,000

OtherBurn or Scald





Sprain or Strain

# cl

aim

s

0

5,000

10,000

15,000

20,000

25,000

OtherMultiple Parts



Hand(s) or Wrist(s)

Finger(s)Back

Premium Revenue

$ m

illio

ns

$0

$200

$400

$600

$800

$1,000

$1,200

2017 Actual

2018 Actual

2018 Budget

$1,104.7 $1,074.7 $1,039.5

Assessable Earnings

$ b

illio

ns

$0

$20

$40

$60

$80

$100

$120

2017 Actual

2018 Actual

2018 Budget

$108.3$102.3 $100.4

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$ m

illio

ns

$0

$20

$40

$60

$80

$100

2017 Actual

2018 Actual

2018 Budget

$82.2 $82.1 $85.0

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$493.5

$104.4

$1,039.1

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

20182017201620152014

$ m

illio

nsFunded Ratio


10,1

56

7,46

5

10,3

91

7,73

4

10,5

29

7,87

2

11,4

17

8,96

9

11,1

75

9,44

6

50%

75%

100%

125%

150%







Asse

ssab

le E

arni

ngs (

$ bi

llion

s)Prem

ium Rate


$0.97 $0.97

$105.9

$0.98

$107.9$99.8

$1.06

$100.4

$1.13

$102.3


Clai

m V

olum

e Injury Rate

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

27,200

21,900

26,500

20,500

22,800

29,10024,800

26,800

2.7

1.4

2.4

1.3

2.4

1.3

2.7

1.4

23,100

28,600

2.7

1.5





2018

18,96716,15214,49213,55310,4279,4449,1757,8635,8885,62520,760

132,346

2017

18,55616,03613,80112,7119,7148,8698,3407,4716,0135,48718,434

125,432

2018

50,11318,86918,85317,12013,4036,0073,6704,311

132,346

2017

47,82518,08618,66215,57712,2675,8373,5493,629

125,432

Lorem ipsum

20182017201620152014

$0.90

$1.10

$1.30

$1.50

2018 2017

# cl

aim

s

18,967

16,152

14,49213,553

10,427

9,4449,175

7,863

5,8885,625

20,760

18,556

16,036

13,80112,711

9,7148,869

8,3407,471

6,0135,487

18,434

18,086

47,825

18,662

15,577

12,267

5,8373,549

3,62918,869

50,113

18,853

17,120

13,403

6,0073,670

4,311

2018 2017

2.102.03

1.89 1.86 1.88


$1.03

$1.01$1.04 $1.05


Funding

FUNDING POLICY

The Funding Policy is the primary instrument through which WCB manages its capital or fund structure and provides

direction for setting premium rates and optimum funding level. Details of the Funding Policy may be found in the

Policy and Legislation section of WCB’s website. Discussion is also included in Note 4 Funding, in the accompanying

consolidated financial statements and notes.

Funding principles and objectives

The strategic aim of funding and investment policies is to strive for balance between financial risk (i.e., volatility),

investment returns and funding sustainability. Specifically, the Funding Policy embodies these financial objectives:

• Minimize the risk of becoming unfunded.

• Minimize cost volatility to employers.

• Ensure a link exists between current premiums and the cost of current year injuries.

The funding mechanisms that evolve from these objectives address those risks that may affect the financial

sustainability of WCB—primarily investment volatility. Funding Policy rules are in place to minimize these risks, with

ongoing monitoring and evaluation to ensure they continue to respond effectively to changing economic conditions.

FUNDING LEVEL

The Funded Ratio (total assets to total liabilities), as at December 31, 2018, is 118.3%, (2017 - 127.3%). Viewed from

another perspective, WCB has total assets of $11.2 billion to cover the discounted present value of its total estimated

liabilities of $9.4 billion. The Funded Ratio is within the target range recommended in the Funding Policy.

The chart below presents the funding level from 2014 through 2018.

$0

$20

$40

$60

$80

$100

$120

20182017201620152014

0

10,000

20,000

30,000

40,000

50,000

60,000

20182017201620152014

2018 annual report

$979.1

$1,061.9 $1,106.3






Health care

32%

136.0% 134.3% 133.8%

127.3%

118.3%

010,00020,00030,00040,00050,00060,000

OtherBurn or Scald





Sprain or Strain

# cl

aim

s

0

5,000

10,000

15,000

20,000

25,000

OtherMultiple Parts



Hand(s) or Wrist(s)

Finger(s)Back

Premium Revenue

$ m

illio

ns

$0

$200

$400

$600

$800

$1,000

$1,200

2017 Actual

2018 Actual

2018 Budget

$1,104.7 $1,074.7 $1,039.5

Assessable Earnings

$ b

illio

ns

$0

$20

$40

$60

$80

$100

$120

2017 Actual

2018 Actual

2018 Budget

$108.3$102.3 $100.4

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$ m

illio

ns

$0

$20

$40

$60

$80

$100

2017 Actual

2018 Actual

2018 Budget

$82.2 $82.1 $85.0

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$493.5

$104.4

$1,039.1

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

20182017201620152014

$ m

illio

nsFunded Ratio


10,1

56

7,46

5

10,3

91

7,73

4

10,5

29

7,87

2

11,4

17

8,96

9

11,1

75

9,44

6

50%

75%

100%

125%

150%







Asse

ssab

le E

arni

ngs (

$ bi

llion

s)

Premium

Rate


$0.97 $0.97

$105.9

$0.98

$107.9$99.8

$1.06

$100.4

$1.13

$102.3


Clai

m V

olum

e Injury Rate

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

27,200

21,900

26,500

20,500

22,800

29,10024,800

26,800

2.7

1.4

2.4

1.3

2.4

1.3

2.7

1.4

23,100

28,600

2.7

1.5





2018

18,96716,15214,49213,55310,4279,4449,1757,8635,8885,62520,760

132,346

2017

18,55616,03613,80112,7119,7148,8698,3407,4716,0135,48718,434

125,432

2018

50,11318,86918,85317,12013,4036,0073,6704,311

132,346

2017

47,82518,08618,66215,57712,2675,8373,5493,629

125,432

Lorem ipsum

20182017201620152014

$0.90

$1.10

$1.30

$1.50

2018 2017

# cl

aim

s

18,967

16,152

14,49213,553

10,427

9,4449,175

7,863

5,8885,625

20,760

18,556

16,036

13,80112,711

9,7148,869

8,3407,471

6,0135,487

18,434

18,086

47,825

18,662

15,577

12,267

5,8373,549

3,62918,869

50,113

18,853

17,120

13,403

6,0073,670

4,311

2018 2017

2.102.03

1.89 1.86 1.88


$1.03

$1.01$1.04 $1.05


Enterprise Risk Management

OVERSIGHT

Under WCB’s corporate governance structure, the Board of Directors is responsible for overall risk management.

The executive team, which has a mandate to identify and manage enterprise-level risk, is assisted by the Planning &

Priorities Committee, composed of a group of senior managers with responsibility for risk identification, assessment

and mitigation at the operating level.

RISK ASSESSMENT

WCB has three primary processes for managing risk. First, risk management is integral to the day-to-day business.

Major projects and changes to business processes must go through a documented risk analysis to assess risk and

identify mitigation plans and controls to lessen the likelihood or impact of these risks. The second process is to

complete a systematic and comprehensive risk assessment of emerging corporate risks as they develop throughout

the year. Finally, WCB also completes an annual corporate risk assessment that engages departmental management

teams and senior managers to develop a comprehensive organizational risk register. The executive team prioritizes

those risks with the highest potential residual impact to WCB and selects some for comprehensive risk assessment

and mitigation.

SIGNIFICANT RISKS

WCB has identified the following risk exposures that could have significant impact on the organization and its

operations.

Benefit cost risk

Many of WCB’s claim-related benefits are subject to external factors that have potentially significant impacts on the

amount and duration of related benefit costs. These risks and uncertainties are driven largely by economic conditions

such as health care inflation and utilization, as well as employment and wage growth. Other factors may also arise

through administrative precedents established through the appeals process, legislative changes or from new medical

findings for occupational disease. All of these factors add significant uncertainty to WCB’s cost structure and may

impose, over time, pressures on the funding level.

Fraud-related risk

Every year, WCB collects approximately one billion dollars in premium revenue to cover current and future costs

arising from compensable injuries and exposures to occupational diseases occurring in the year, as well as the future

costs to administer these claims. The magnitude of these costs and the number of individuals and companies involved

in these processes—over 162,000 employers, 178,000 injured workers and thousands of service providers—creates

inherent risk for fraud. WCB employs an extensive audit program to monitor the organization’s ability to protect

against fraud and implements additional controls, as required, to strengthen WCB’s management of fraud risk.

Funding risk

Managing the components of WCB’s overall funding level is a complex process that involves forecasting, liability

projection, investment management and operational performance. Although processes are within management’s

influence or control, many of the assumptions used in forecasting involve significant uncertainty regarding the future.

Asset liability management continues to be enhanced to provide better systems, tools, processes and information to

enhance forecasting, financial planning and decision-making processes within WCB.

Investment risk

In its investment portfolio, WCB is exposed to financial risk, which includes market and portfolio risk, among others.

Market risk is the risk that the fair value of investments and/or associated cash flows may change because of changing

general economic conditions or events that broadly affect capital markets. Portfolio risk relates to specific composition

and management of WCB’s portfolio. Details of financial risks related to investments are discussed in Note 7

Investment Risk Management, in the accompanying consolidated financial statements and notes.


Premium risk

WCB has exposure to premium risk, which is the risk that premiums set for the coming fiscal period will not be

sufficient to cover the operating costs in that year. This risk is largely driven by provincial economic conditions such as

employment growth and wage escalation. To manage premium risk, WCB has instituted a comprehensive forecasting

program that leverages widely accepted economic-forecasting sources such as the Conference Board of Canada.

Technology risk

To support its core business processes, WCB uses a number of information systems for processing transactions and

maintaining injured worker and employer information. If these systems were to fail or were compromised, significant

disruption to business processes and customer service could result. To mitigate technology risk, WCB maintains a

business continuity plan, system controls and backup systems to address processing failures and provides extensive

training to develop internal system expertise.

Implications of Accounting Policies and Estimates

Preparation of consolidated financial statements in accordance with International Financial Reporting Standards

(IFRS) requires management to make judgments, assumptions, and estimates that could materially affect the results

of operations and financial condition of WCB. The following discusses those significant accounting policies that

entail significant use of judgment and estimates. For further discussion of accounting impacts, please refer to the

accompanying consolidated financial statements and notes.

Investments

WCB must apply judgment to determine whether it has control or significant influence with respect to the activities

of its investees, which will affect whether consolidation or equity accounting for an investee is required. Additional

details are found in Note 5 Investments, in the section Interests in unconsolidated structured entities.

WCB’s investment assets are financial instruments measured at fair value at each reporting date. Fair value

measurement, which reflects realizable market value, could lead to significant volatility in the statement of financial

position during periods of economic and market instability. For those investments whose fair value is not based

on observable market inputs, judgment must be applied in selecting and/or developing appropriate valuation

techniques, assumptions, risk factors and input data. Due to the nature of the market for such assets, their estimated

fair value may differ from their realized value depending on prevailing market conditions.

The fair value of a derivative contract is its change in value with respect to the change in the underlying security or

reference index to which the contract is linked. In addition, the fair value of derivative contracts must reflect potential

counterparty default risk, which is mitigated by transacting only with those counterparties whose credit risk is

insignificant. Because such fair value changes are recognized in income in the periods in which they arise, investment

income for those periods may be volatile. When the closing positions of derivative contracts represent material gains

and losses, their settlement may result in large unanticipated cash inflows and/or outflows, respectively.

Details of investment assets and their inherent risks are in Note 5 Investments and Note 7 Investment Risk Management

in the accompanying consolidated financial statements and notes.

Valuation of employee benefit liabilities

WCB has applied defined benefit accounting for employee post-employment plans, which requires an actuarial

determination of employee benefit obligations extending well into the future. The actuarial valuation process projects

benefit cost streams into the future and discounts them to present value using a discount rate linked to market

yields on high quality corporate bonds with similar risk and cash flow characteristics as the liabilities. Measurement

uncertainty is high because judgments and assumptions regarding the estimated amount, timing and duration of

benefit commitments many years in the future are inherently difficult to predict reliably and also subject to external

factors outside management’s control. Since these judgments and assumptions may change in response to current

and future economic conditions, liability remeasurement arising from changes in judgments and assumptions in any

given period, may also result in material changes to the related liabilities.

Details of WCB’s multi-employer and sponsored defined benefit plans are in Note 11 Employee Benefits in the

accompanying consolidated financial statements and notes.


Valuation of claim benefit liabilities

WCB has significant obligations for benefits to injured workers extending well into the future. In order to estimate

these future obligations, WCB applies the actuarial present-value methodology for its claim benefit liabilities. The

actuarial process projects benefit payment streams into the future and discounts them to present value using a

discount rate linked to the long-term return on investment assets funding those liabilities. Measurement uncertainty

is high because the assumptions regarding the amount, timing and duration of the benefit commitments and

future return on assets are difficult to forecast and are influenced by risk factors that are inherently unpredictable.

Consequently, the selection of one valuation assumption or technique over another in estimating claim benefit

liabilities could have a material impact on the liability valuation.

Details of the valuation, along with sensitivity of the associated risks are in Note 12 Claim Benefit Liabilities and Note 14

Claim Benefit Risks in the accompanying consolidated financial statements and notes.

Premiums

The reported premium revenue at year end includes an estimate of premium adjustments, as well as an estimate for

safety rebates earned by participating employers that have met performance criteria for workplace safety. Generation

of these estimates requires use of judgment in developing the methodology as well as the relevant economic

assumptions. As such, actual premiums and safety rebates may differ in periods of economic uncertainty.

Details of these estimates are in Note 15 Premium Revenue in the accompanying consolidated financial statements

and notes.

Governance and Compliance

Legislative authority

Under the authority of the Act, WCB is a provincial board-governed organization that operates independently while

reporting to the Minister of Labour.

Internal control over financial reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting

(ICOFR) to provide reasonable assurance regarding the reliability of the entity’s financial reporting and the preparation

of its consolidated financial statements in accordance with IFRS. WCB has developed a framework and plan for the

overall ICOFR program, which is based on best practices under the COSOi and COBITii frameworks. The ICOFR

program is assisted by WCB’s Management Audit Services group and program results are shared with the Office of

the Auditor General.

Business planning

An important aspect of financial planning and budgeting is linkage to WCB’s strategic plan and the resulting corporate

objectives developed each year in support of the strategic plan. These objectives and the related performance

indicators set the direction for the organization and identify the significant areas of focus for the coming year. The

annual budget establishes the foundation for appropriate resource allocation for achieving the corporate objectives.

i Committee of Sponsoring Organizations of the Treadway Commission (COSO 2013 Framework), which developed a governance

framework for internal control.

ii Control Objectives for Information and Related Technology, a collection of best practices for IT governance, control and assurance.


Emerging Standards

WCB conducts continuous environmental scanning of the financial reporting and actuarial standard-setting landscape. Important developments in recognition and measurement of critical financial statement items may have significant implications for funded position and financial performance in the current and future reporting periods. Once the standards are officially issued, WCB analyzes their key requirements to ensure that any major impacts on the organization are well understood, thus facilitating timely planning and effective implementation of accounting processes and systems that will result in high-quality financial reporting.

The following are the major developments in professional standards that WCB is closely monitoring:

IFRS 16 LEASES

IFRS 16, issued January 2016, will require a lessee to recognize all leases (both finance and operating) in the statement of financial position as assets and corresponding liabilities, with limited exceptions. The guidance remains largely unchanged for finance leases, but recognition of operating leases could materially increase both assets and liabilities. In addition, IFRS 16 requires a supply arrangement for services to be accounted for as an in-substance lease if the customer has control over the use of the asset or assets that are critical to fulfilment of the contractual obligations. For all leases, adoption of IFRS 16 will require recognition of a right-of-use asset measured at the present value of future lease obligations, which will be amortized over the expected lease term in accordance with the depreciation requirements of IAS 16 Property, Plant and Equipment.

IFRS 16 is effective for annual reporting periods beginning on or after January 1, 2019, with early adoption permitted. Implementation activities have been defined, and rollout is proceeding as planned. For further discussion on the application of IFRS 16, see the section in Note 3 Accounting Policy Changes for standards issued but not yet effective, in the accompanying consolidated financial statements and notes.

IFRS 17 INSURANCE CONTRACTS

IFRS 17, which replaces IFRS 4 Insurance Contracts in its entirety, was released in May 2017. The general measurement model for insurance contracts will introduce important new concepts, definitions, recognition and measurement approaches for insurance liabilities and revenue, which will also drive notable revisions in financial statement presentation and disclosure. Additionally, valuation methodologies, data requirements and actuarial reporting will be impacted.

Some important changes for WCB arising from adoption of IFRS 17 include:

Discount rateThe interest rate used to discount future cash flows arising from its claim obligations could change materially. The prescribed approach involves the development of a yield curve using observable market data for an actual or a reference portfolio of fixed income assets with similar cash flow characteristics as the comparable liability portfolios. This new methodology could potentially introduce material increases or decreases in claim benefit liabilities, as well as volatility in subsequent measurements.

Risk adjustmentIFRS 17 prescribes inclusion of an explicit risk adjustment for measuring the compensation an entity requires for bearing the uncertainty about the timing of the cash flows that arises from non-financial risk as the entity fulfils insurance contracts. This approach represents a major departure from current practice, where uncertainties and risks are reflected through an implicit margin in the discount rate. IFRS 17 does not prescribe a particular technique for quantifying the risk adjustment, but allows judgment in how it is developed and applied.

IFRS 17 is mandatorily effective for annual reporting periods beginning on or after January 1, 2021, with early adoption permitted. In November 2018, the IASB decided to defer the effective date by one year to January 1, 2022, although this change has not been formalized to the standard yet.

Implementation activities are well under way as outlined in a multi-year implementation strategy and plan. WCB has completed the technical analysis and impact assessment phases, and is currently working towards finalization of the accounting and actuarial positions on the key elements of the IFRS 17 general measurement model. For further discussion on the application of IFRS 17, see the section in Note 3 Accounting Policy Changes for standards issued but not yet effective, in the accompanying consolidated financial statements and notes.


Looking Ahead

BUSINESS OUTLOOK

Customer operations

In planning for 2019, WCB has put transparency and stakeholder engagement at the core of its objectives in order to

continue to deliver positive customer outcomes that uphold the organization’s unconditional commitment to fairness.

The workers’ compensation landscape is changing. WCB is ready to learn and adapt to ensure its support strategies

achieve positive health and return-to-work outcomes for workers and create practical, cost-effective solutions for

employers.

Client-service journey

WCB wants to lead the way in providing a client-service journey that provides the necessary services, supports

and programs to ensure workers recover and return to work appropriately. WCB aims to build the best workers’

compensation system in the country—with stakeholders, not for them. Workers will own their care plan and will help

define return-to work plans that fit their recovery needs and keep them securely job attached. Employers are a critical

partner in this process and WCB will support them in their efforts to return their workers to employment safely.

The changing nature of claims

WCB claims are becoming more multifactorial in nature. The volume of claims with a mental health component is

impacting care strategies and return to work. Primary psychological injuries have increased 25% per year for the past

five years, and secondary psychological issues have increased at a rate of 16% per year. As an effective and supportive

system, WCB will engage to understand this challenge and develop tools and supports for workers and employers to

achieve recovery and return-to-work success.

The changing nature of work

The future is here when it comes to changes in technology and economic markets and their impact on work and

workplaces in Alberta. The majority (two-thirds) of the workers supported are hurt while performing routine work

(which requires primarily procedural skills), yet the Alberta labour market has less and less routine work within it,

as the province moves toward more automation and new technological solutions. Re-integrating workers into the

labour market means WCB will need to create successful industry and labour partnerships to improve return-to-work

opportunities as the re-employment market evolves.


OUTLOOK FOR FINANCIAL CONDITION

The 2019 financial outlook for WCB requires caution in the rate setting approach as the economy in Alberta remains

fragile. While moderate growth in the volume of lost-time claims is expected, the fully-funded cost of those claims

is expected to grow at a faster rate given both the changing nature of claims and the changing nature of work.

Assessable earnings are expected to grow at a slower rate than the fully-funded cost of injuries. A similarly challenging

environment in 2018 resulted in a rate setting gap of $0.19, with continued expectations for a rate setting gap in 2019

(see below). With this in mind, WCB will continue to manage its business with a solid focus on financial sustainability

in the face of global and provincial economic uncertainty. WCB’s business priorities are focused on building on

operational and financial strengths that have contributed to its organizational success and efficient customer service.

2019 premium rate

For 2019, the average collected premium rate is set at $1.08 per $100.00 of assessable earnings. Assessable earnings

are expected to grow by 5.2% to $107.6 billion. At this level of earnings, in order to collect premiums sufficient to

cover the fully-funded cost of claims a rate of $1.29 would be required. The lower collected rate that was set for 2019

recognizes the fragile Alberta economic recovery that continues to unfold. The gap between the required and collected

rates of $0.21 (2018 gap was $0.19), will be absorbed by the Accident Fund (see Note 4 Funding), which represents

a short-term strategy to support economic recovery. Lost-time-claim volume in 2019 is expected to grow by 4.9% to

30,000, while fully-funded costs (i.e., the full cost of injuries that take place in the rate setting year, which includes a

provision for the future costs that are expected to be incurred for those injuries) are expected to grow by 9.7%. Barring

some combination of a significant increase in the growth rate of assessable earnings or an improved outlook regarding

claims cost growth, there will be upward pressure on premium rates until the gap is closed.

Asset liability management

WCB’s asset liability management activities are a critical component of the organization’s long-term financial health

and the sustainability of future payments to injured workers. WCB’s independent actuaries have estimated that

WCB’s total obligation for injured worker benefits that will be paid in the future, related to past accidents, will total

approximately $20.1 billion. WCB’s asset liability management activities are focused on ensuring that WCB’s $10.7

billion investment portfolio earns sufficient investment income in order to fully pay these obligations for decades into

the future.

The total investment portfolio return for 2019 is budgeted at 5.0% which is slightly above the 4.6% actuarial return

required to pay for the expected 2019 escalation of the claim benefit liability. The budgeted investment return is based

on rigorously developed capital market and economic forecasts that are inherently susceptible to a significant level of

volatility which may create investment surpluses or deficits.

The valuation of WCB’s $9.0 billion claim benefit liabilities is an activity that involves significant assumptions,

methodologies and claim data. Annually, a rigorous process is followed in order to determine the present value of all

future claim payments related to past injuries that have occurred. Due to the significant uncertainty regarding claim

experience from year to year, it is not possible to budget for gains or losses on claim experience in advance of the

valuation. Any actuarial experience gains or losses arising from claim experience, changes to policies during 2019 or

changes to assumptions/methods during the 2019 valuation process, will be recorded in the financial statements as

they arise.

The combination of investment surpluses/deficits and actuarial experience gains/losses arising during 2019 may have

a material effect on WCB’s funded ratio.

Funding level

2018 brought significant economic challenges. WCB’s broad-based risk management framework includes a targeted

funded ratio between 114-128%. At the end of 2018, WCB’s funded ratio was 118.3% (assets over liabilities). While

budget expectations for 2019 are for the funded ratio to remain within the targeted funded ratio zone, given the

uncertainty surrounding what continues to be a fragile recovery of the provincial economy, coupled with the volatility

of investment returns, it is difficult to determine, with any certainty, WCB’s funding position into the future. Despite

these uncertainties, WCB’s broad-based risk management framework, of which a long-term view is essential, is

designed to mitigate, where possible, this economic and capital market volatility.


FACING THE FUTURE

2019 is a year of engagement. Collaboration and communication are the keys to delivering continued success for

WCB’s stakeholders. The collective focus is to act fairly, consistently, thoughtfully and respectfully and to ensure:

• Workers feel engaged, supported and heard to achieve a sense of ownership in their recovery and return

to work;

• Employers continue to support creative return-to-work solutions, enhance performance and increase

accountability;

• Health care providers continue to support the recovery process for all workers; and

• WCB employees maintain their strong commitment to compassionate, efficient and proactive care planning.

WCB believes its efforts will strengthen the system and give Albertans more confidence in it. WCB is an organization

whose purpose is to help workers return to meaningful lives, through a process that recognizes both their uniqueness

and what is held in common.

WCB recognizes that the client experience is as important as the outcome. Every worker, employer and health care

provider will know that WCB is willing to listen. WCB will listen first, and then aim to help and deliver support through

avenues that educate, engage, inform and demonstrate it cares.

The financial sustainability of the workers’ compensation system will be protected. The organization will ensure that

injured workers will receive the benefits they deserve, while employers who fund the system will be mitigated from the

risk of cost volatility and will benefit from pricing programs that promote safety and disability management.

2018 Consolidated Financial Statements and Notes 51

WCB-Alberta

Consolidated Financial Statements and Notes

For the year ended December 31, 2018

53 Responsibility for Financial Reporting

54 Independent Auditor’s Report

56 Actuarial Statement of Opinion

Consolidated Financial Statements

57 Statement of Financial Position

58 Statement of Comprehensive Income

59 Statement of Changes In Funded Position

60 Statement of Cash Flows

Notes to the Consolidated Financial Statements

61 1. Reporting Entity

61 2. Significant Accounting Policies

63 3. Accounting Policy Changes

64 4. Funding

65 5. Investments

69 6. Investment Income and Expense

70 7. Investment Risk Management

73 8. Property, Plant and Equipment

74 9. Intangible Assets

75 10. Lease and Other Commitments

76 11. Employee Benefits

79 12. Claim Benefit Liabilities

83 13. Claim Benefit Expense

84 14. Claim Benefit Risks

84 15. Premium Revenue

85 16. Administration Expense

86 17. Related Party Transactions

87 18. Contingencies and Indemnification

88 19. Supplemental Information


Responsibility for Financial Reporting

The consolidated financial statements of the Workers' Compensation Board - Alberta were prepared by management,

which is responsible for the integrity and fairness of the data presented, including significant accounting judgements

and estimates. This responsibility includes selecting appropriate accounting principles consistent with International

Financial Reporting Standards.

In discharging its responsibility for the integrity and fairness of the consolidated financial statements, management

maintains the necessary internal controls designed to provide reasonable assurance that relevant and reliable

financial information is produced and that assets are properly safeguarded. The effectiveness of controls over financial

reporting was assessed and found to provide reasonable assurance that internal controls at December 31, 2018

operated effectively with no material weaknesses in the design or operation of the controls.

The Board of Directors is responsible for overseeing management in the performance of financial reporting

responsibilities and has approved the consolidated financial statements included in the annual report.

The Board of Directors is assisted in its responsibilities by its Audit Committee. This committee reviews and

recommends approval of the consolidated financial statements and meets periodically with management, internal and

external auditors, and actuaries concerning internal controls and all other matters relating to financial reporting.

Eckler Ltd. has been appointed as the independent consulting actuary to the WCB. Their role is to complete an

independent actuarial valuation of the claim benefit liabilities included in the consolidated financial statements of the

WCB and to report thereon in accordance with generally accepted actuarial practice.

The Office of the Auditor General, the independent auditor of the WCB, has performed an independent audit of the

consolidated financial statements of the WCB in accordance with Canadian generally accepted auditing standards.

The Independent Auditor’s Report outlines the scope of this independent audit and the opinion expressed.

Grace Thostenson Chair, Board of DirectorsWorkers’ Compensation Board – Alberta

Trevor AlexanderPresident & Chief Executive OfficerWorkers’ Compensation Board – Alberta

Ron J. Helmhold, FCPA, FCA

Chief Financial Officer



Independent Auditor’s Report

To the Board of Directors of the Workers’ Compensation Board – Alberta

Report on the Consolidated Financial Statements

Opinion

I have audited the consolidated financial statements of Workers' Compensation Board – Alberta (the Board) which

comprise the consolidated statement of financial position as at December 31, 2018, and the consolidated statements

of comprehensive income, changes in funded position and cash flows for the year then ended, and notes to the

consolidated financial statements, including a summary of significant accounting policies.

In my opinion, the accompanying consolidated financial statements present fairly, in all material respects, the

consolidated financial position of Workers' Compensation Board – Alberta as at December 31, 2018, and its financial

performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Basis for opinion

I conducted my audit in accordance with Canadian generally accepted auditing standards. My responsibilities

under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial

Statements section of my report. I am independent of Workers' Compensation Board – Alberta in accordance with

the ethical requirements that are relevant to my audit of the consolidated financial statements in Canada, and I have

fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have

obtained is sufficient and appropriate to provide a basis for my opinion.

Other information

Management is responsible for the other information. The other information comprises the information included in the

2018 Annual Report Workers' Compensation Board – Alberta, but does not include the consolidated financial statements

and my auditor’s report thereon.

My opinion on the consolidated financial statements does not cover the other information and I do not express any

form of assurance conclusion thereon.

In connection with my audit of the consolidated financial statements, my responsibility is to read the other information

and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial

statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am

required to report that fact. I have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements

in accordance with International Financial Reporting Standards, and for such internal control as management

determines is necessary to enable the preparation of the consolidated financial statements that are free from material

misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing Workers' Compensation

Board – Alberta’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern

and using the going concern basis of accounting unless an intention exists to liquidate or to cease operations, or there

is no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Workers' Compensation Board – Alberta financial

reporting process.


Auditor's responsibilities for the audit of the consolidated financial statements

My objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole

are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes

my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it

exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they

could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated

financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, I exercise professional

judgment and maintain professional skepticism throughout the audit. I also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether

due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit

evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting

a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may

involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of Workers' Compensation Board – Alberta’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates

and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to events or

conditions that may cast significant doubt on Workers' Compensation Board – Alberta’s ability to continue

as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my

auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures

are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to

the date of my auditor’s report. However, future events or conditions may cause Workers' Compensation

Board – Alberta to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements,

including the disclosures, and whether the consolidated financial statements represent the underlying

transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the entities to express an opinion on the consolidated financial statements. I am

responsible for the direction, supervision and performance of the group audit. I remain solely responsible

for my audit opinion.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing

of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during

my audit.

[Original signed by W. Doug Wylie, FCPA, FCMA, ICD.D]Auditor General

April 30, 2019

Edmonton, Alberta


Actuarial Statement of Opinion on the valuation of the claim benefit liabilities of the Workers’ Compensation Board – Alberta as at December 31, 2018

I have completed the actuarial valuation of the claim benefit liabilities of the Workers’ Compensation Board – Alberta

(WCB) for the consolidated financial statements of the WCB as at December 31, 2018 (the “valuation date”).

In my opinion, the actuarial liabilities of $9,044.8 million make reasonable provision for future payments for short-term

disability, vocational rehabilitation, long-term disability, survivor and health care benefits with respect to claims which

occurred on or before the valuation date, and for all occupational disease claims expected to arise after the valuation

date as a result of exposures incurred in the workplace on or before the valuation date in respect of occupational

diseases with a long latency period that are recognized by the WCB. This amount provides for future claim

administration costs, but does not include a provision for benefits and payments that are on a self-insured basis.

The valuation was based on the provisions of the Workers’ Compensation Act of Alberta and on the WCB's policies and

administrative practices in effect at the time of the valuation. Benefit changes resulting from amendments included in

An Act to Protect the Health & Well-Being of Working Albertans have been considered.

The data on which the valuation is based were provided by the WCB; I applied such checks of reasonableness of

the data as I considered appropriate, and have concluded that the data are sufficiently reliable to permit a realistic

valuation of the liabilities and that the data are consistent with WCB’s consolidated financial statements. In my opinion,

the data on which the valuation is based are sufficient and reliable for the purpose of the valuation.

The economic assumptions adopted for purposes of computing the liabilities are consistent with the WCB’s funding

and investment policies. For this valuation, a real rate of return of 2.50% per annum was used to discount expected

payments subject to inflation. Other economic assumptions underlying the calculations include annual changes in

the Consumer Price Index (CPI) of 2.00%, as well as health care costs and vocational rehabilitation benefits assumed

to grow at annual rates of 2.00% (previously 2.50%) and 1.00% respectively in excess of CPI. The assumed annual

increase for benefits subject to the cost of living adjustments (COLA) remained at CPI plus 0.02%. In my opinion, the

assumptions are appropriate for the purpose of the valuation.

The assumptions and methods employed in the valuation were consistent with those used in the previous valuation,

after taking account of changes in claim patterns. Projections of future claim payments and awards have been made

using factors developed from the WCB’s claims experience, mortality and other assumptions. In my opinion, the

methods employed in the valuation are appropriate for the purpose of the valuation.

Changes to the actuarial basis (i.e. actuarial methods and assumptions) caused liabilities to increase by $45.9 million.

The revision of the assumptions for economic loss payments represented an increase of $202.1 million, while other

changes, mainly to the methods and assumptions used for the valuation of health care benefits, represented a

decrease of $156.2 million. Details of the data, actuarial assumptions, valuation methods and analysis of results are

set out in my actuarial report as at the valuation date, of which this statement of opinion forms part.

In my opinion, the amount of the claim benefit liabilities makes appropriate provision for all personal injury

compensation obligations and the consolidated financial statements fairly represent the results of the valuation.

This report has been prepared, and my opinions given, in accordance with accepted actuarial practice in Canada.

Richard Larouche, FSA, FCIA

Actuary

Eckler Ltd.

April 29, 2019



Consolidated Statement of Financial PositionAs at December 31

($ thousands) Notes 2018 2017

ASSETS

Cash and cash equivalents

Trade and other receivables

Investments

Property, plant and equipment

Intangible assets

LIABILITIES

Trade and other liabilities

Investment liabilities

Employer liabilities

Safety rebates

Employee benefits

Claim benefits

FUNDED POSITION

Fund Balance

Occupational Disease Reserve

19(a)

19(b)

5

8

9

19(c)

5

19(d)

19(e)

11

12

4

4

$ 280,668

72,626

10,712,199

67,434

43,405

$ 11,176,332

$ 50,430

99,686

52,838

71,190

126,824

9,044,800

9,445,768

1,187,864

542,700

1,730,564

$ 11,176,332

$ 495,210

33,038

10,781,370

70,027

37,472

$ 11,417,117

$ 64,349

14,104

303,979

79,228

125,202

8,381,700

8,968,562

1,945,655

502,900

2,448,555

$ 11,417,117

LEASE AND OTHER COMMITMENTS

CONTINGENCIES AND INDEMNIFICATION

10

18

Approved by the Board of Directors on April 30, 2019

Grace Thostenson Chair, Board of DirectorsWorkers’ Compensation Board – Alberta

Trevor AlexanderPresident and Chief Executive OfficerWorkers’ Compensation Board – Alberta

The accompanying notes are an integral part of these consolidated financial statements.



Consolidated Statement of Comprehensive IncomeYear ended December 31

2018 2017

($ thousands) Notes Budget Actual Actual

REVENUE

Premium revenue

Investment income

EXPENSES

Claim benefit expense

Interest expense on claim benefit liabilities

Remeasurement of claim benefit liabilities

Corporate administration

Injury reduction

Investment management expense

Interest on employee benefit liabilities


Funding policy distributions

NET FUNDING SURPLUS (DEFICIT)

OTHER COMPREHENSIVE INCOME

Remeasurement of employee benefit liabilities

TOTAL COMPREHENSIVE INCOME

15

6(a)

13

12

12

16

19(f)

6(b)

11

4

11

$ 1,104,660

535,723

1,640,383

1,061,893

360,800

-

82,197

78,848

42,221

4,267

1,630,226

10,157

-

10,157

-

$ 10,157

$ 1,074,761

145,305

1,220,066

1,106,349

365,300

267,627

82,114

78,231

40,891

4,135

1,944,647

(724,581)

(412)

(724,993)

7,002

$ (717,991)

$ 1,039,544

1,077,966

2,117,510

979,102

328,200

469,758

85,018

67,246

38,858

4,393

1,972,575

144,935

(356,047)

(211,112)

1,870

$ (209,242)




Consolidated Statement of Changes in Funded PositionYear ended December 31

($ thousands) Notes 2018 2017

FUND BALANCE

Accumulated surplus

Balance, beginning of year

Net funding deficit

Transfer to Occupational Disease Reserve

Accumulated other comprehensive income


Other comprehensive gain

Fund Balance, end of year

OCCUPATIONAL DISEASE RESERVE


Transfer from Fund Balance

Occupational Disease Reserve, end of year

4

$ 1,972,084

(724,993)

(39,800)

1,207,291

(26,429)

7,002

(19,427)

1,187,864

502,900

39,800

542,700

$ 1,730,564

$ 2,232,896

(211,112)

(49,700)

1,972,084

(28,299)

1,870

(26,429)

1,945,655

453,200

49,700

502,900

$ 2,448,555




Consolidated Statement of Cash FlowsYear ended December 31

($ thousands) 2018 2017

OPERATING ACTIVITIES

Cash inflows (outflows) related to business operations

Employer premiums

Benefits to claimants and/or third parties on their behalf

Administrative and other goods and services

Injury reduction program

Net cash used for operating activities

INVESTING ACTIVITIES

Cash inflows (outflows) related to investment assets

Interest income received

Dividend income received

Fund distributions received

Settlement of derivatives

Investment management expenses

Proceeds from sale of investments, net of cash purchases

Purchase of investments through reinvestment of income received

Cash outflows related to operating assets

Purchase of property, plant and equipment

Purchase of computer software

Net cash from investing activities

FUNDING ACTIVITIES

Cash outflows related to funding activities

Funding policy distributions

Net cash used for funding activities

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

Cash and cash equivalents, beginning of year

CASH AND CASH EQUIVALENTS, END OF YEAR

$ 799,162

(937,484)

(239,780)

(78,231)

(456,333)

82,993

56,619

245,026

(19,588)

(41,169)

210,937

(272,892)

(4,944)

(15,191)

241,791

-

-

(214,542)

495,210

$ 280,668

$ 998,409

(817,574)

(228,891)

(67,246)

(115,302)

77,121

53,260

215,754

66,410

(38,697)

205,643

(262,036)

(5,207)

(12,418)

299,830

(11,310)

(11,310)

173,218

321,992

$ 495,210



Notes to the Consolidated Financial StatementsFor the year ended December 31, 2018 with comparatives for the year ended December 31, 2017 (thousands of dollars unless stated otherwise).

1. REPORTING ENTITY

The Workers’ Compensation Board – Alberta (WCB) is a provincial board created by legislation in 1918. As a

statutory corporation, WCB administers the workers’ compensation system for the province of Alberta under

the authority of the Workers’ Compensation Act (the Act). WCB’s corporate head office is located in Edmonton,

Alberta, with operations exclusively within the province of Alberta. WCB’s legislated mandate is to provide

disability benefits to workers who sustain injuries in the course of employment.

2. SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies have been applied in the preparation of the consolidated financial statements

for all years presented, unless otherwise indicated.

GENERAL ACCOUNTING POLICIES

Basis of preparation

These consolidated financial statements have been prepared in accordance with International Financial

Reporting Standards (IFRS). They comply, in all material respects, with IFRS as issued by the International

Accounting Standards Board (IASB) as set out in Part I of the Chartered Professional Accountants of Canada

Handbook as at and applicable on December 31, 2018.

These consolidated financial statements have been prepared on a historic cost basis except for investments

reported at fair value. The principal accounting policies applied in the preparation of the consolidated financial

statements on an IFRS basis are set out below.

Basis of consolidation

The consolidated financial statements include the assets, liabilities, and results of operations of WCB and its

wholly owned subsidiaries, both of which are Alberta registered corporations:

• WCB Real Assets Ltd. – holds portfolio investments in infrastructure and timberlands.

• WCB Global Real Assets Ltd. – holds portfolio investments in commercial real estate.

All intercompany transactions and balances have been eliminated on consolidation.

Financial statement presentation

WCB presents its consolidated statement of financial position in order of liquidity.

A financial asset and financial liability may be offset only when an entity currently has a legally enforceable

and unconditional right of set-off and intends either to settle the asset and liability on a net basis, or to realize

the asset and settle the liability simultaneously. Because WCB receivables with credit balances and derivative

contracts in a payable position do not satisfy the critical condition of a legally enforceable right of set-off, they

are reclassified and presented as employer liabilities and investment liabilities respectively.

The consolidated statement of comprehensive income reports operating results arising from WCB’s primary

activities: core business operations including risk underwriting, premium assessment and collection, benefit

processing, injury treatment and vocational rehabilitation, and financial management including investment

portfolio management and claim benefit liability valuation. Administration expense is presented in the

consolidated statement of comprehensive income by function. Other comprehensive income consists of net

changes in remeasurement of post-employment defined benefit plan liabilities, which is an item that will not be

subsequently reclassified to income or expense.

In addition to performance reporting, the consolidated statement of comprehensive income also reports

funding actions arising from the application of the Funding Policy as established by the Board of Directors. Such

actions may include appropriations of excess surplus for distribution back to employers, or collection of special

levies required to replenish funding deficits.


Critical judgements and accounting estimates

Management incorporates critical judgements and accounting estimates in developing and applying accounting

policies for recognition and measurement. Such judgements and estimates, which reflect best information at a point

in time, affect the carrying amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the

reported amounts of revenues and expenses during the reporting periods presented. Actual results in subsequent

periods could differ from the judgements and estimates used by management in these consolidated financial

statements. These differences, which may be material, could require adjustment in those subsequent periods.

Some accounting measurements require management’s best estimates for those transactions for which sufficient

information may not be available to record a precise amount. Investments (Note 5), Employee benefit liabilities (Note

11), Claim benefit liabilities (Note 12), Premium revenue and the Partnerships in Injury Reduction rebates accrual

(Note 15) are the most significant items that are based on accounting estimates.

The areas where judgements affect the consolidated financial statements are described below.

Control over an investee

In preparing consolidated financial statements, WCB must apply judgement to determine whether it has control

or significant influence with respect to the activities of its investees. Control arises from WCB holding voting or

contractual rights to direct the activities of the investees affecting returns, and the ability to exercise its voting and/

or contractual rights to affect those returns materially. Substantive voting power with respect to relevant activities

confers control and results in consolidation of an investee.

For structured entities, such as limited partnerships and similar entities where control stems from contractual

or other rights rather than voting power, significant use of judgement is required to evaluate the determinants

of control. From its analysis, WCB has concluded that it does not control or have significant influence over its

structured entities. As passive portfolio investments, such interests would apply financial instruments accounting.

For further details, see the section Interests in unconsolidated structured entities at the end of Note 5.

Fair value measurement

Certain externally managed investments are measured at fair value using valuation models based on discounted

future cash flows, rather than directly from observable market prices. Judgement is required to design and build

the valuation model(s) using appropriate quantitative methodologies and to select and/or customize the key input

assumptions from observable inputs. This includes such factors as the expected yield (i.e., discount rate), revenue

and expense growth rates, effect of future inflation, terminal value of assets, income taxes and estimates of the

timing and amount of the relevant cash flows.

For further details, see the section Valuation of financial instruments in Note 5.

Foreign currency translation

WCB’s consolidated financial statements are presented in Canadian dollars, which is also the functional currency.

All financial information presented is rounded to the nearest thousand, unless otherwise stated. Monetary assets

and liabilities denominated in foreign currency are translated into Canadian dollars at the exchange rate in effect

at the date of the consolidated statement of financial position. Exchange differences arising from settlement

of monetary items are included in income in the period in which they arise. Non-monetary assets and liabilities

denominated in foreign currency are translated at the exchange rate in effect when those transactions occurred.

Cash equivalents

Cash equivalents include short-term, liquid investments that are readily convertible to known amounts of cash and

are subject to an insignificant risk of change in value. Cash and short-term investments held by custodians are not

available for general use, and are accordingly included in investments.

Finance expense

Finance expense comprises primarily recognition of interest (i.e., time value of money) inherent in discounted liabilities.

Significant discounted liabilities include claim benefit liabilities, employee benefit plans and lease obligations.


SPECIFIC ACCOUNTING POLICIES

To facilitate a better understanding of WCB’s consolidated financial statements, specific accounting policies are

disclosed in the related notes:

Note Topic Page

5

6

8

9

10

11

12

15

Investments

Investment income and expense

Property, plant and equipment

Intangible assets

Lease and other commitments

Employee benefits


Premium revenue

65

69

73

74

75

76

79

84

3. ACCOUNTING POLICY CHANGES

STANDARDS, AMENDMENTS, AND INTERPRETATIONS ISSUED AS OF YEAR END BUT NOT YET EFFECTIVE

IFRS 16 Leases

IFRS 16 Leases, issued in January 2016, will require lessees to apply a single ‘on-balance sheet’ model, similar

to finance leases, for all qualifying contractual arrangements, except short-term leases of 12 months or less

and leases of low-value assets. In addition to the single accounting model, a key principle of IFRS 16 is whether

the lessee acquires control over the use of an underlying asset. Where such control exists, the requirements of

the standard would apply. Absent such control, the arrangement is not a lease (i.e., the right to use the asset),

but a contract for services only (i.e., delivered using an asset controlled by the vendor). If an in-scope leasing

relationship has been established, at the lease commencement date, a lessee will recognize a liability to make

lease payments and an asset representing the right to use the underlying asset during the lease term. Lessees

will be required to recognize interest expense on the lease liability and depreciation expense on the right-of-use

asset separately.

IFRS is mandatorily effective for annual reporting periods beginning on or after January 1, 2019 on a retrospective

or a modified retrospective basis. Although implementation activities are underway, WCB has not yet determined

the impact of applying IFRS 16 on its financial results.

IFRS 17 Insurance Contracts

In May 2017, the IASB released the new insurance contracts standard, which prescribes a new measurement

model for contracts that involve the transfer of insurance risk from an insured to an insurer for consideration,

which would include statutory workplace injury compensation systems such as WCB.

Key features of the measurement model

For WCB, the proposed approach for valuation of insurance liabilities is expected to be based on the general

measurement model (also called the building block approach) prescribed in IFRS 17:

• Expected present value of future fulfilment cash flows.

• A current discount rate (i.e., updated at the end of each reporting period), which reflects the cash flows

and risk characteristics of the insurance contract liability.

• A risk adjustment (explicit risk margin) to measure the uncertainty from non-financial risks in fulfilment

cash flows.

Changes to current actuarial practices are also expected in order to align with IFRS 17 requirements.


Financial reporting impacts

Insurance revenue will be reported using a new presentation format in the statement of comprehensive income,

with separate subtotals for results from insurance underwriting and asset liability management activities (i.e.,

investment returns and interest on the claim benefit liabilities). Enhanced disclosure must be provided on

insurance risks, actuarial judgments, methods and assumptions, and sensitivity of key valuation inputs.

As WCB is still in the early stages of assessing the requirements and expected impacts of IFRS 17, no determination

can be made of its effects on WCB’s financial position and operating results.

Transition and effective date

IFRS 17 is mandatorily effective for annual reporting periods beginning on or after January 1, 2021, with early

adoption permitted. In November 2018, the IASB decided to defer the effective date by one year to January 1,

2022, although this change has not been formalized to the standard yet. The new standard must be applied on a

retrospective basis subject to certain transitional relief.

4. FUNDING

Accident Fund

The Act stipulates the creation of an Accident Fund (the Fund) to support a sustainable workers’ compensation

system for the benefit of workers and employers. Sufficient funds must be available in the Accident Fund for the

payment of present and future compensation. WCB must therefore maintain a minimum 100% Funded Ratio at all

times. This Funded Ratio represents the current funding status of the Fund.

The Funded Position is maintained through two reserves within the Accident Fund: the Fund Balance and the

Occupational Disease Reserve (ODR). The Fund Balance represents accumulated net operating surpluses retained

against financial uncertainty. The ODR was established through an appropriation from the Fund Balance to

provide for costs arising from latent occupational injury or disease where a causal link to the workplace has not

been established, but may be established in the future. The ODR is maintained at 6% of claim benefit liabilities in

each year through a transfer from or to the Fund Balance. As a result of the changes made to the funding policy

effective January 1, 2019 the ODR will no longer be a separate reserve as it will be consolidated within the

Fund Balance.

FUNDING POLICY AND CAPITAL MANAGEMENT

Since the Act does not provide for an ownership-based capital structure, WCB views its available capital resources

as synonymous with its Funded Position. The primary objective in managing the Funded Position is to mitigate the

risk of being unfunded, while a secondary objective is to minimize premium rate volatility caused by investment

and claim benefit liability risk. WCB manages the financial status of the Accident Fund by monitoring the Funded

Position and making funding decisions in accordance with the Funding Policy.

The Funding Policy sets a target zone of 114–128% for the Funded Ratio (total assets divided by total liabilities) to

guide funding decisions. When the Funded Ratio falls below the target zone, special funding requirements are

included in premium rates. When the Funded Ratio is above the target zone, funding policy distributions may be

paid. There were no changes to the described Funding Policy or capital management practices during the year.

($ thousands) 2018 2017

Accident Fund

Total assets

Less:

Total liabilities

Funded Position

Funded Ratio

$ 11,176,332

9,445,768

$ 1,730,564

118.3%

$ 11,417,117

8,968,562

$ 2,448,555

127.3%


5. INVESTMENTS

ACCOUNTING POLICY

WCB’s portfolio investments are classified at fair value through income and are managed in accordance

with portfolio management objectives and the Investment Policy. WCB utilizes trade-date accounting (date

when transactions are entered into, rather than when they are settled) for purchases and sales of financial

instruments.

Upon initial recognition, debt and equity securities, which include unit interests in pooled investments, are

recognized at their fair value plus costs relating to trade settlement, if applicable. Changes in the carrying

value of all portfolio investments arising from subsequent remeasurement are recognized in investment

income in the period in which they occur, including the immediate expensing of transaction costs.

Derivatives are recognized at inception, and subsequently remeasured as at the reporting date, at their fair

value. Gains and losses resulting from remeasurement are recognized in investment income in the respective

periods in which they arise. Derivatives are not used for trading, but to manage economic and asset risk

exposures. WCB does not apply hedge accounting with respect to such use of derivatives.

Cash, net receivables and payables held within the investment portfolio are carried at amortized cost.

Valuation of financial instruments

The fair value of financial instruments as at the reporting date is determined as follows:

Debt and equity securities

• Publicly traded equity securities are based on their closing prices. Debt securities traded over-the-

counter are based on the average of the latest bid/ask prices provided by independent third-party

securities valuation companies.

• Non-publicly traded pooled funds are valued at the net asset value of the funds, which reflect the fair

values of fund assets less fund liabilities.

• The fair value of the underlying loans in the commercial mortgage fund is based on the market interest

rate spread over Bank of Canada bonds with a similar term to maturity.

• Structured entities such as limited partnerships and similar private equity funds are also valued at the

net asset value of the funds.

• The fair value of the underlying real assets in real estate, infrastructure, and timberlands funds are

based on independent annual appraisals in accordance with generally accepted valuation standards,

net of any financing liabilities against specific fund assets.

Further discussion of the valuation of structured entities is provided in the Level 3 fair value hierarchy disclosure

in the following section.


Derivative contracts

• Foreign-exchange forward contracts are valued based on the change in the foreign-exchange forward rate

of the underlying currency pairing specified in the forward contract.

• Equity index futures are valued based on their closing prices on the exchange in which they trade. These

prices reflect changes in the equity market index specified in the futures contract.

• Currency futures are valued based on quoted prices on the exchange in which they trade. These prices

reflect changes in the foreign-exchange forward rate of the underlying currency pairing specified in the

futures contract.

• Bond futures are valued based on settlement prices on the exchange in which they trade. These prices

reflect changes in the bid/ask prices of the underlying bonds in dealer markets.

INVESTMENT PORTFOLIO HOLDINGS

WCB’s portfolio investments are all classified at fair value through income. The table in this section presents the fair

value of WCB’s investments as at December 31, together with their classifications under the fair value measurement

hierarchy. Note 6 Investment Income and Expense provides a breakdown of investment income by type.

Fair value classification hierarchy

The fair value of WCB’s investments recorded on the consolidated statement of financial position was determined

using one of the following valuation techniques:

Level 1 The fair value is based on quoted prices in active markets for identical assets or liabilities. This level

includes equity securities and derivative contracts that are traded in an active exchange market.

Level 2 The fair value is based on inputs, other than Level 1 prices, such as quoted prices for similar assets or

liabilities, quoted prices in markets that are not active, or other inputs based on observable market

data. It includes pooled funds invested in traded securities, as well as derivative contracts whose value

is determined using a pricing model with inputs that are observable in the market or can be derived

principally from or corroborated by observable market data.

Level 3 The fair value is based on unobservable inputs that are significant to the fair value of the assets or

liabilities and have little or no market activity. This level includes financial instruments whose value is

determined using pricing models, discounted cash flow methodologies or similar techniques, as well

as instruments for which the determination of fair value requires significant management judgement

or estimation. The most significant inputs affecting the fair value calculations include the projected

operating and capital-related cash flows and the associated discount rate. The discount rate is responsive

to changes in macroeconomic factors affecting the risk profile of invested assets such as demand, market

conditions, financial risks, future inflation, and so on. This level includes pooled funds invested in debt

securities, private equity, real estate, infrastructure and timberlands.


The table below summarizes the basis of fair value measurements for financial assets held in WCB’s investment

portfolio:

Fair value through income Amortized

($ thousands)

Fixed income

Nominal bonds

Mortgages 1

Equities

Domestic

Foreign 2

Inflation-sensitive

Real estate 3

Infrastructure 4

Timberlands

Real-return bonds

Derivative assets

Derivative liabilities 6

Investments (net of derivatives)

Presented as:

Investments

Derivative liabilities 6

Investments (net of derivatives)

Level 1

$ 1,751

-

1,751

524,789

1,755,935

2,280,724

211,492

479,525

-

-

691,017

2,973,492

2,923

(716)

$ 2,975,699

$ 2,976,415

(716)

$ 2,975,699

Level 2

$ 2,133,313

-

2,133,313

459,869

982,924

1,442,793

-

-

-

736,604

736,604

4,312,710

-

(98,970)

$ 4,213,740

$ 4,312,710

(98,970)

$ 4,213,740

Level 3

$ 331,115

465,129

796,244

-

-

-

1,289,160

1,151,430

91,252

-

2,531,842

3,328,086

-

-

$ 3,328,086

$ 3,328,086

-

$ 3,328,086

Fair Value

$ 2,466,179

465,129

2,931,308

984,658

2,738,859

3,723,517

1,500,652

1,630,955

91,252

736,604

3,959,463

10,614,288

2,923

(99,686)

$ 10,517,525

$ 10,617,211

(99,686)

$ 10,517,525

Cost5

$ 20,620

-

20,620

18,704

29,919

48,623

(1,398)

10,073

-

2,451

11,126

80,369

14,619

-

$ 94,988

$ 94,988

-

$ 94,988

2018

$ 2,486,799

465,129

2,951,928

1,003,362

2,768,778

3,772,140

1,499,254

1,641,028

91,252

739,055

3,970,589

10,694,657

17,542

(99,686)

$ 10,612,513

$ 10,712,199

(99,686)

$ 10,612,513

2017

$ 2,396,300

442,894

2,839,194

1,104,993

3,059,743

4,164,736

1,433,880

1,497,298

99,267

739,127

3,769,572

10,773,502

7,868

(14,104)

$ 10,767,266

$ 10,781,370

(14,104)

$ 10,767,266

1 Mortgages include commercial mortgages and multi-unit mortgages, excluding single-dwelling residential mortgages.2 Foreign equities comprise U.S., EAFE (Europe, Australasia, and Far East), and Emerging Markets mandates.3 Real estate investments consist of pooled funds invested in commercial properties.4 Infrastructure consists of pooled funds invested in infrastructure projects.5 Includes portfolio cash, receivables, and payables whose cost approximates fair value.6 Derivative liabilities are presented as investment liabilities in the consolidated statement of financial position.

Transfers between levels

There were no material transfers between levels during 2018 or 2017.

Reconciliation of Level 3 activity 2018 2017

($ thousands) Fixed Income Real Estate Infrastructure Timberlands Total Total


Income distributions

Fair value change

Purchases (capital returns) of Level 3 investments

Sale/settlement of Level 3 investments

Balance, end of year

$ 862,369

19,828

456

5,737

(92,146)

$ 796,244

$ 1,190,939

-

80,794

19,627

(2,200)

$ 1,289,160

$ 976,292

-

107,658

83,856

(16,376)

$ 1,151,430

$ 99,267

-

(8,015)

-

-

$ 91,252

$ 3,128,867

19,828

180,893

109,220

(110,722)

$ 3,328,086

$ 3,013,834

17,552

95,871

67,619

(66,009)

$ 3,128,867


INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES

Through its investment program, WCB is involved with structured entities which comprise structured vehicles

(i.e., limited partnerships and structured equity) invested in operating property assets, as well as pooled funds

invested in financial instruments of property-based issuers. The following discusses some unique characteristics

of such entities and the nature of the risks attached to them.

Relevant activities of the structured entities that affect returns include identification, selection and/or

development and operation of established properties with stable cash flows and strong capital appreciation

potential. Development and execution of an exit strategy is another important activity.

Significant constraints are imposed on funds invested in structured entities, by virtue of their legal agreements,

regulatory environment and the nature and economics of the underlying assets. Once committed, an investor is

expected to fund the entire subscribed amount over the term of the agreement (typically over the next five to ten

years), unless the investment agreement provides otherwise. Once invested, funds are no longer available to the

investor, and withdrawal through sale or transfer of interests is permitted only after a certain period as stipulated

in the agreement.

The primary risk to WCB, relating to these structured entities, is lack of liquidity due to the size of the positions

and the limited number of qualifying investors; and, these entities are invested in specialized or long-term assets

that are difficult to liquidate due to the nature of their markets. WCB is also exposed to market and operating risks

based on the underlying assets held by these entities.

WCB’s financial exposure is limited to the net carrying amount of the investment.

The following table provides information about WCB’s interests in unconsolidated structured entities:

($ thousands) 2018 2017

Structured Entity Type by MandateCarrying

Value

Undrawn Funding

Commitments

Carrying Value

Undrawn Funding

Commitments

Limited partnerships

Nominal bonds

Real estate

Infrastructure

Timberlands

Structured equity

Real estate

$ 7,854

181,209

1,151,430

91,252

1,431,745

655,679

$ 2,087,424

$ -

31,244

167,176

43,960

242,380

-

$ 242,380

$ 11,391

180,983

976,292

99,267

1,267,933

603,418

$ 1,871,351

$ -

26,030

194,717

40,327

261,074

-

$ 261,074


6. INVESTMENT INCOME AND EXPENSE

ACCOUNTING POLICY

The primary components of investment income include:

(a) Gains and losses from investments classified at fair value through income (including gains and losses from

remeasurement and from disposition of assets) recognized in income in the period in which they arise;

(b) Interest revenue accrued using the effective interest method, net of amortization of any premium or

discount recognized at date of purchase;

(c) Dividend income when a right to payment has been established based on the ex-dividend date for quoted

securities; and

(d) Pooled fund distributions (i.e., fund income received as cash or reinvested in the fund) when a right to

distributable income has been established. Fund distributions do not attribute underlying income by nature.

Investment expense is composed primarily of investment management expenses, for both external and internal

portfolio managers. Fund management expenses of pooled investments, excluding investment management fees,

are netted against the revenues of those respective funds.

(a) Investment Income

($ thousands) 2018 2017

Interest

Dividends

Fund Distributions1

Gains (Losses) on

Investments2

Gains (Losses) on

Derivatives3

Total

Total

Fixed income

Bonds

Mortgages

Short-term investments

Equities

Domestic equities

Foreign equities

Inflation-sensitive

Real estate

Infrastructure

Timberlands

$ 78,152

-

6,062

84,214

-

-

-

-

-

-

-

$ 84,214

$ -

-

-

-

16,479

41,008

57,487

-

-

-

-

$ 57,487

$ 1,332

19,828

-

21,160

40,174

49,398

89,572

19,957

97,450

11,663

129,070

$ 239,802

$ (35,132)

2,407

-

(32,725)

(148,283)

(96,371)

(244,654)

87,878

68,418

(8,015)

148,281

$ (129,098)

$ (4,690)

-

-

(4,690)

-

(43,505)

(43,505)

-

(58,480)

(425)

(58,905)

$ (107,100)

$ 39,662

22,235

6,062

67,959

(91,630)

(49,470)

(141,100)

107,835

107,388

3,223

218,446

$ 145,305

$ 78,445

17,301

4,616

100,362

80,051

584,769

664,820

84,737

219,790

8,257

312,784

$ 1,077,966

(b) Investment Management Expense

($ thousands) 2018 2017

Fund management fees

Custody fees

Investment administration 4

$ 36,760

456

3,675

$ 40,891

$ 35,255

432

3,171

$ 38,858

1 Fund Distributions include distributions received from fund managers, irrespective of the type of underlying income within the fund.2 Gains (Losses) on Investments include realized amounts from disposition and fair value remeasurement.3 Gains (Losses) on Derivatives include fair value measurement and settlement gains and losses, as well as adjustments for counterparty default risk, if any.4 Investment administration represents internal investment management expenses, see Note 16 Administration Expense.


7. INVESTMENT RISK MANAGEMENT

INVESTMENT GOVERNANCE

The Board of Directors is ultimately responsible for overall strategic direction and governance of the investment

portfolio through its review and approval of the Investment Policy and ongoing monitoring of investment risks,

performance, and compliance.

WCB management is responsible for monitoring investment performance, recommending changes to the

Investment Policy, and selecting fund managers. WCB retains independent consultants to benchmark the

performance of its fund managers, and to advise on the appropriateness and effectiveness of its Investment Policy

and practices.

KEY FINANCIAL RISKS

The primary financial risk for WCB is the risk that, in the long term, returns from its investments will not be sufficient

to discharge all obligations arising from its claim benefit liabilities. In order to manage this funding risk, risk

management for investments has been integrated with risk management of liabilities. WCB’s primary risk mitigation

strategy is effective execution of its Investment Policy. The Investment Policy target asset mix, and associated risk

and return characteristics, have been established to provide guidelines for a broad investment strategy, as well as

specific approaches to portfolio management. The Investment Policy also calls for maintaining a well-diversified

portfolio, both across and within asset classes, as well as engaging fund managers who represent a broad range of

investment philosophies and styles, operating within a rigorous compliance framework.

WCB has identified key areas of investment risk that directly affect the sufficiency of its investments to fund current

and future claim obligations:

Market risks • These risks include movements in equity market prices, interest rates, credit spreads, and

foreign currency exchange rates.

Portfolio risks • These risks relate to specific composition and management of WCB’s portfolio and include

liquidity risk, securities lending risk, counterparty default risk and derivatives risk.

The following sections describe these risks, WCB’s exposures, and their respective mitigation strategies.

MARKET RISKS

Equity market risk

WCB is exposed to equity market risk, which is the risk that the fair value of its investments in publicly traded shares

will fluctuate in the future because of price changes. WCB’s mitigation strategy for equity market risk is to apply

disciplined oversight of investment activities within a formal investment control framework that has been reviewed

and validated by independent experts to ensure continuous compliance with approved policies and practices.

The table below presents the effect on WCB’s equity mandates of a significant adverse change1 in the key risk

variable - the amount of portfolio volatility:

($ thousands) 2018 2017

Equities

% change in portfolio

Canadian


Global


Emerging markets

1 std dev

(8.7%)

$ (87,092)

(9.9%)

$ (225,160)

(14.3%)

$ (69,081)

2 std dev

(17.4%)

$ (174,184)

(19.7%)

$ (450,321)

(28.6%)

$ (138,163)

1 std dev

(8.0%)

$ (88,893)

(9.6%)

$ (234,551)

(13.5%)

$ (82,638)

2 std dev

(16.1%)

$ (177,787)

(19.2%)

$ (469,103)

(26.9%)

$ (165,276)

1 A change is considered to be material when it exceeds the standard deviation (std dev), which measures the variance in a normal probability distribution. One standard deviation covers 68% of all probable outcomes; two standard deviations include 95% of outcomes. The benchmark deviations are based on 2018 data.


Fixed income pricing risk

Fixed income pricing risk related to financial securities arises from changes in general financial market or

economic conditions that may change the pricing of the entire non-government bond market, specific sectors,

or individual issuers. This risk is generally manifested through changes in the security’s credit spread. WCB’s

investment portfolio is exposed to fixed income pricing risk through participation in a Canadian mortgage pool

and through direct holdings of Canadian and foreign fixed income securities.

The table below presents the effects of a change in the credit spreads of 50 and 100 bps1 on the mortgage

portfolio and non-government portion of the bond portfolio:

($ thousands) 2018 2017

Change in credit spreads

Nominal bonds

Mortgages

+50 bps

$ (23,609)

$ (6,279)

+100 bps

$ (47,218)

$ (12,558)

+50 bps

$ (22,878)

$ (5,758)

+100 bps

$ (45,756)

$ (11,515)

Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest

rates. The table below presents the effects of a nominal interest rate change of 50 and 100 bps on the respective

bond and mortgage portfolios:

($ thousands) 2018 2017

Change in nominal interest rate

Nominal bonds

Real return bonds

Mortgages

+50 bps

$ (81,366)

$ (55,746)

$ (6,279)

+100 bps

$ (162,732)

$ (111,492)

$ (12,558)

+50 bps

$ (74,800)

$ (57,024)

$ (5,758)

+100 bps

$ (149,600)

$ (114,047)

$ (11,515)

Foreign currency risk

Currency risk is the risk that the value of financial assets and liabilities denominated in foreign currencies will

fluctuate due to changes in their respective exchange rates.

WCB is exposed to currency risk through foreign investments in fixed income, equities, infrastructure and

timberlands. The exposures are economically hedged to the Canadian dollar by utilizing futures and forward

contracts. The target hedge ratio (i.e., percentage of the exposure hedged to Canadian dollars) varies by asset

class and currency. The target for fixed income, infrastructure and timberlands is 100%. For foreign equities, the

target is 25% for the U.S. dollar and 50% for other major currencies.

WCB’s largest foreign currency exposure is to the U.S. dollar, with unhedged holdings of $1,619,931 (2017 –

$1,690,113); euro exposure is next, with unhedged holdings of $159,707 (2017 – $209,570); all other currencies

have unhedged holdings of $287,050 (2017 – $364,250). For the current reporting period, the net loss from the

currency overlay was $116,224 (2017 – net gain $34,917).

The table below presents the effects of a material change in the Canadian/U.S. dollar and Canadian/Euro

exchange rate on the unhedged investments denominated in foreign currencies:

($ thousands) 2018 2017

December 31 spot rate

10% appreciation in the Canadian dollar

Global

CAD/USD

0.7322

0.8054

$ (147,266)

CAD/EUR

0.6405

0.7045

$ (14,519)

CAD/USD

0.7981

0.8779

$ (153,647)

CAD/EUR

0.6647

0.7312

$ (19,052)

1 One basis point (bp) equals 1/100 of 1%; 50 bps = 50/100 of 1% or 0.5%.


PORTFOLIO RISKS

Derivatives risk

Derivatives represent an important component of WCB’s risk management strategy and the portfolio does not

contain any derivatives intended for speculative or trading purposes. An example of derivatives used for risk

mitigation is the currency overlay described in the currency risk section, which is a partial economic hedge of

the currency exposure. From time to time, derivatives are also utilized as a portfolio management technique to

replicate a target asset mix or achieve certain asset exposures when it is not possible or cost effective to hold or

sell securities directly.

The notional value of a derivative contract used in an economic hedging arrangement, represents the exposure

that is being hedged, and is the amount to which a rate or price is applied in order to calculate the exchange of

cash flows. Notional amounts are not indicative of the credit risk associated with such derivative contracts. WCB’s

credit exposure is represented by the replacement cost of all outstanding contracts in a receivable (positive fair

value) position.

The table below summarizes the fair value of WCB’s derivative portfolio of open contract positions in segregated

funds as at December 31. Derivative contracts in a gain position (financial assets) have been presented separately

from contracts in a loss position (financial liabilities) and are presented with their remaining terms to maturity.

($ thousands) 2018 2017

Term to Maturity

Notional Principal

Derivative Contract

Assets

Derivative Contract Liabilities

Notional Principal

Derivative Contract

Assets

Derivative Contract Liabilities

Asset replication contracts

Foreign-exchange contracts

Within 1 year

Within 1 year

$ 108,138

2,204,170

$ 2,312,308

$ 2,923

-

$ 2,923

$ -

(99,686)

$ (99,686)

$ 147,384

1,976,626

$ 2,124,010

$ -

1,301

$ 1,301

$ (1,335)

(13,024)

$ (14,359)

The table above presents gross derivative exposures by type of contract, whereas the derivative liabilities

presented in the statement of financial position represent net obligations by counterparty. WCB also has indirect

exposure to derivatives risk through its pooled investments.

Liquidity risk

Liquidity risk is the risk that WCB will encounter difficulty in meeting obligations associated with its liabilities,

particularly claim benefit liabilities, which are funded from cash and cash equivalents, as well as investments

where necessary. This risk stems from the lack of marketability of a security that cannot be bought or sold quickly

enough to prevent or minimize a loss.

Through a proactive cash management process that entails continuous forecasting of expected cash flows, WCB

mitigates liquidity risk by minimizing the need for forced liquidations of portfolio assets in volatile markets and

by holding a number of investments in readily marketable instruments (publicly traded equity and fixed income

securities). Some investments, particularly those in structured entities, are not readily marketable or liquid, as

discussed in the section Interests in unconsolidated structured entities in Note 5.

To cover unanticipated cash requirements when market conditions are unfavourable, WCB also has an available

standby line of credit of up to $20 million, which has not been drawn down as at December 31, 2018.

Counterparty default risk

Counterparty default risk arises from the possibility that the issuer of a debt security, or the counterparty to a

derivatives contract, fails to discharge its contractual obligations to WCB.

To mitigate counterparty default risk, WCB requires that credit ratings for counterparties not fall below an

acceptable threshold. The Investment Policy permits bond issuers to have lower than a BBB- (or equivalent)

score from a recognized credit-rating agency, but such holdings may not exceed 10% of total fixed income

assets in the portfolio. Counterparties for derivative contracts will have at least an A- credit rating or equivalent

from a recognized credit-rating agency. Each fund is closely monitored for compliance to ensure that aggregate

exposures do not exceed those specified investment constraints.


As at December 31, 2018, the aggregate amount of fixed income securities in segregated funds with counterparty

ratings below BBB- was $44,345 (2017 – $62,651). WCB also has indirect exposure to counterparty default risk

through its pooled investments.

Securities lending risk

WCB participates in a securities-lending program sponsored by its custodian. Under IFRS 9, securities lending

arrangements are considered transfers of assets that are not derecognized because the transferor retains

substantively the risks and rewards of ownership, notwithstanding the transferee’s right to sell or pledge those

assets. WCB is protected against loss of the transferred securities by requiring the borrower to provide collateral

in the form of marketable securities having a minimum fair value of 102% of the loan. Such collateral is not

recognized because it is available to the transferor only upon failure of the transferee to fulfil its commitments.

In any event, the custodian is also contractually obligated to indemnify WCB for any losses resulting from

inadequate collateral.

At December 31, 2018, securities on loan through the custodian totalled $1,859,128 (2017 – $2,061,199), secured

by $2,020,013 (2017 – $2,242,225) of posted collateral. During 2018, the securities-lending program generated

income of $3,972 (2017 – $3,607).

8. PROPERTY, PLANT AND EQUIPMENT

ACCOUNTING POLICY

Property, plant and equipment (PPE) are recognized as an asset if it is probable that WCB will realize future

economic benefits. Items are initially measured at acquisition cost, and subsequently at amortized cost.

After initial recognition, property, plant and equipment is stated at historical cost less accumulated depreciation

and impairment (if applicable) with the exception of land, which is not depreciated. Leased assets and leasehold

improvements are depreciated over their lease term. All other items are depreciated over their expected useful

life. Depreciation expense is recognized when an asset is ready for use.

Residual values, useful lives, and depreciation methods are reviewed at each financial year end and adjusted

if appropriate. Depreciation expense is included in claim benefit expense and corporate administration in the

consolidated statement of comprehensive income (see Note 16 Administration Expense).

WCB applies the following annual depreciation rates and methods:

Buildings ........................................... 2.5% straight-line

Leasehold improvements .................. Straight-line over the expected lease term

Equipment:

• Computer (owned) ........................ 35% declining balance

• Computer (leased) ........................ Straight-line over the lease term

Furniture and other ........................... 15% declining balance

Vehicles ............................................. 20% straight-line

WCB evaluates its property, plant and equipment for indicators of impairment such as obsolescence,

redundancy, deterioration, loss or reduction in future service potential, or when there is a change in intended

use. When the carrying value exceeds the amount of future economic benefit through utilization, the item of

property, plant and equipment is written down to the recoverable amount and the amount recognized as an

impairment loss.


($ thousands) 2018 2017

Land/ Buildings

Leasehold Improvements

Computer Equipment

Office Furniture/ Equipment

Vehicles/ Other

Total Total

Cost


Current period activity:

Capitalized expenditure

Transfer from PPE under construction

Disposals

PPE under construction


$ 65,277

1,545

(143)

-

1,443

$ 68,122

$ 2,042

57

-

(265)

-

$ 1,834

$ 34,123

4,575

(766)

(4,356)

1,066

$ 34,642

$ 21,558

1,163

(667)

(35)

277

$ 22,296

$ 770

99

-

(74)

-

$ 795

$ 123,770

7,439

(1,576)

(4,730)

2,786

$ 127,689

$ 106,792

21,211

(3,864)

(1,945)

1,576

$ 123,770

Accumulated depreciation and impairment


Current period activity:

Depreciation

Disposals


Carrying value, beginning of year

Carrying value, end of year

$ 25,255

1,370

-

$ 26,625

$ 40,022

$ 41,497

$ 1,533

177

(265)

$ 1,445

$ 509

$ 389

$ 12,058

8,532

(4,356)

$ 16,234

$ 22,065

$ 18,408

$ 14,299

1,106

(35)

$ 15,370

$ 7,259

$ 6,926

$ 598

57

(74)

$ 581

$ 172

$ 214

$ 53,743

11,242

(4,730)

$ 60,255

$ 70,027

$ 67,434

$ 48,128

7,560

(1,945)

$ 53,743

$ 58,664

$ 70,027

Property, plant and equipment under finance leases

Included in property, plant and equipment is computer equipment acquired through finance leases at cost of

$5,770 (2017 – $6,500), accumulated depreciation of $2,437 (2017 – $4,421), and carrying value of $3,333

(2017 – $2,079).

See Note 10 Lease and Other Commitments for accounting policy and further details on leased property, plant and

equipment.

9. INTANGIBLE ASSETS

ACCOUNTING POLICY

WCB’s intangible assets are composed of computer software developed internally or acquired through

third-party vendors and customized as necessary. Development expenditure is capitalized only if the directly

related costs (both internal and external) can be measured reliably, the product or process is technically

feasible, future economic benefits are probable, and WCB has the intention and sufficient resources to

complete development and to use the asset in the manner intended.

Computer software is measured at cost upon initial recognition. After initial recognition, computer software is

measured at cost less accumulated amortization and impairment (if applicable). Computer software is amortized

on a straight-line basis at 20% per year commencing from the date that the software is available for use.

Residual value, useful lives and amortization methods are reviewed at each financial year end and adjusted if

appropriate. Amortization expense is included in claim benefit expense and corporate administration in the

consolidated statement of comprehensive income (see Note 16 Administration Expense).

WCB evaluates its intangible assets for indicators of impairment. When the carrying value exceeds the amount

of future economic benefit through utilization, the item is written down to the recoverable amount and the

amount recognized as an impairment loss.


($ thousands) 2018 2017

In UseUnder

DevelopmentTotal Total

Cost


Capitalized expenditure

Transfers from development

Disposals


Accumulated amortization and impairment


Amortization

Disposals


Carrying value, beginning of year

Carrying value, end of year

$ 126,005

-

12,421

(20,167)

$ 118,259

$ 107,108

8,000

(20,167)

$ 94,941

$ 18,897

$ 23,318

$ 18,575

13,933

(12,421)

-

$ 20,087

$ -

-

-

$ -

$ 18,575

$ 20,087

$ 144,580

13,933

-

(20,167)

$ 138,346

$ 107,108

8,000

(20,167)

$ 94,941

$ 37,472

$ 43,405

$ 134,144

13,572

-

(3,136)

$ 144,580

$ 103,065

7,179

(3,136)

$ 107,108

$ 31,079

$ 37,472

10. LEASE AND OTHER COMMITMENTS

ACCOUNTING POLICY

Leases of property, plant and equipment where WCB acquires substantially all the risks and rewards of

ownership are classified as finance leases. At lease commencement, finance leases are recognized in the

consolidated statement of financial position as assets and corresponding obligations at the lower of the fair

value of the leased property and the present value of future minimum lease payments.

Lease payments are allocated between the liability and finance charges using the effective interest method to

achieve a constant rate of interest on the remaining balance of the lease. The interest portion of the payment is

charged to income over the lease period, while the principal portion is applied against the lease obligation.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are

classified as operating leases. Operating lease payments are charged to income over the lease term.

Lease obligations

WCB has obligations under long-term non-cancellable finance lease agreements for desktop computer

equipment and copiers. The land for WCB’s rehabilitation centre and office space in Edmonton and Calgary are

held under operating leases. WCB’s leases have remaining terms of between one and 13 years.

Undiscounted future minimum lease payments under finance leases are $3,719 (2017 – $2,187), with a carrying

value of $3,639 (2017 – $2,130), the difference of $80 (2017 – $57) being the effect of discounting.

See Note 8 Property, Plant and Equipment for carrying values of computer equipment held under finance leases

and Note 19(c) Trade and Other Liabilities for presentation of the current finance lease obligation.


Commitments

WCB enters into contractual commitments for purchases of goods and services as part of its regular business

activities. Future undiscounted expenditure commitments are listed in the table below.

($ thousands) 2018 2017

Leases

Finance OperatingOther

CommitmentsTotal Total

2018

2019

2020

2021

2022

2023 and beyond

$ -

1,812

1,311

419

131

46

$ 3,719

$ -

1,385

1,384

1,322

1,252

7,403

$ 12,746

$ -

23,361

9,405

3,079

20

-

$ 35,865

$ -

26,558

12,100

4,820

1,403

7,449

$ 52,330

$ 23,502

13,301

7,976

2,103

1,442

7,427

$ 55,751

WCB also has undrawn investment commitments for certain limited partnerships. See the section Interests in

Unconsolidated Structured Entities in Note 5 Investments.

11. EMPLOYEE BENEFITS

ACCOUNTING POLICY

WCB provides active service and defined post-employment benefits to its employees. WCB also participates

in certain multi-employer pension plans sponsored by the province of Alberta. An expense and a liability for

benefits earned are recognized in the period that employee service has been rendered.

For defined post-employment benefit plans, current service cost represents the actuarial present value of

the benefits earned in the current period. Such cost is actuarially determined using the projected unit credit

actuarial method, a market interest rate and management’s best estimate of projected benefit costs. The net

plan liability as at the reporting date is the present value of the defined benefit obligation, which is determined

by discounting the estimated future cash outflows using a discount rate based on market yields of high-quality

corporate bonds having terms to maturity that approximate the duration of the related benefit liability less

the fair value of plan assets. Current service cost and interest expense of pension and other post-employment

benefits are estimated using different discount rates derived from the same yields, reflecting the different

timing of benefit payments for past service (the defined benefit obligation) and future service (the current

service cost). Current service cost, interest expense and interest income comprise the amount required in

each year to build up the liability over the projected benefit period to its future value.

Remeasurement changes in plan assets and benefit liabilities, arising from actuarial changes in assumptions

and experience gains and losses, are recognized in other comprehensive income.


ACTIVE SERVICE BENEFITS

WCB’s short-term benefits for active employees include salary, compensated absence (sick leave, statutory

holidays, and annual vacation), group life insurance, dental and medical coverage, employee family assistance

program, education support and health and wellness benefits.

Termination benefits are provided for through employment contracts, statutory requirements or constructive

obligations. As at December 31, 2018 and 2017, there were no material expenditures or provisions relating to

termination benefits.

POST-EMPLOYMENT BENEFITS

Pension plans

Employee post-retirement benefits are provided through contributory multi-employer defined benefit pension

plans sponsored by the province of Alberta, namely the Public Service Pension Plan (PSPP) and the Management

Employees Pension Plan (MEPP). Under defined benefit plan accounting, WCB must recognize its proportionate

share, determined on an actuarial basis, of plan assets, obligations, remeasurement amounts, service cost,

interest expense and interest income prorated on WCB’s share of total contributions.

Both plans have funding deficiencies that have statutory funding requirements by employers and employees

to eliminate any plan deficiencies over a specific time horizon. The information in this note reflects the annual

actuarial valuation of WCB’s share of the plans’ assets, benefit obligations, remeasurement amounts, service cost,

interest expense and interest income.

Supplemental executive retirement plan

WCB sponsors a non-contributory supplemental executive retirement plan (SERP). Earnings of senior

management generally exceed the threshold earnings for the maximum pension benefit permitted under the

federal Income Tax Act. Under the terms of the SERP, senior management is entitled to receive supplemental

retirement payments that bring their total pension benefits to a level consistent with their total earnings for

service since the inception of the SERP or appointment to a senior management position, whichever is later.

Future pension benefits are based on the participants’ years of service and earnings.

See Note 17 Related Party Transactions for a breakdown of SERP costs by executive position.

Post-retirement benefit plan

WCB provides a contributory benefit plan that provides dental and health care benefits to retirees on pensions

between the ages of 55 to 65. As plan participants pay part of the benefit cost, the benefit obligation represents

the difference between actual costs and contributions subsidized by WCB.

OTHER BENEFIT PLANS

Long-term disability plan

WCB administers a self-insured non-contributory long-term disability (LTD) income continuance plan for its

employees. The LTD liability represents the present value of all future obligations arising from disability claims

incurred up to and including the reporting date.


EMPLOYEE BENEFIT PLAN ASSUMPTIONS

The table below presents key assumptions applicable to WCB’s employee future benefit plans.

2018 2017

PSPP MEPP SERP Post Retirement LTD PSPP MEPP SERP Post

Retirement LTD

Date of most recent actuarial valuation 12/31/2018 12/31/2018 12/31/2018 12/31/2018 12/31/2018 12/31/2017 12/31/2017 12/31/2017 12/31/2017 12/31/2017

Economic assumptions

Discount rate (nominal) for benefit obligation

Alberta inflation rate (long-term)

Salary escalation rate 1

Multi-employer plan funding assumptions

WCB share of plan contributory payroll

Current service cost rate on contributory payroll

WCB’s contributions for the current period ($ thousands)

WCB’s expected contributions for the following period ($ thousands)

3.8%

2.0%

0.0% for 2 yrs starting

4/1/18; 3.2% thereafter

4.5%

19.2%

$ 14,529

$ 14,497

3.8%

2.0%

2.8%

1.2%

24.6%

$ 1,246

$ 1,264

3.9%

2.0%

0.0%

3.7%

n/a

n/a

3.6%

n/a

2.0%

3.6%

2.0%

1.1% for 2 yrs starting

4/1/17; 3.3% thereafter

4.4%

18.3%

$ 15,510

$ 14,190

3.6%

2.0%

0% for 1 yr; 2.8%

thereafter

1.2%

24.0%

$ 1,282

$ 1,140

3.6%

2.0%

0.0%

3.4%

n/a

n/a

3.2%

n/a

2.0%

1 The salary escalation rate assumptions for the PSPP and the MEPP (both multi-employer plans) are not specific to WCB but rather to all participating employers in aggregate.

DEFINED BENEFIT PLAN LIABILITIES

($ thousands)Pension

Liabilities 1

Other Retirement Liabilities 2 LTD 2018 2017

Change in defined benefit obligation

Defined benefit obligation, beginning of year

Current service cost 3

Interest expense 4

Remeasurement (gains) losses 5

Benefit payments

Defined benefit obligation, end of year

Change in fair value of plan assets

Fair value of plan assets, beginning of year

Employer contributions

Interest income 4

Remeasurement gains (losses) 5

Benefit payments

Fair value of plan assets, end of year

Net plan liability

Defined benefit obligation

Fair value of plan assets

$ 421,845

17,397

14,969

(15,015)

(13,805)

$ 425,391

$ 325,135

15,775

11,765

(8,506)

(13,805)

$ 330,364

$ 425,391

330,364

$ 95,027

$ 13,345

825

476

(931)

(170)

$ 13,545

$ -

170

-

-

(170)

$ -

$ 13,545

-

$ 13,545

$ 15,147

4,778

455

438

(2,566)

$ 18,252

$ -

2,566

-

-

(2,566)

$ -

$ 18,252

-

$ 18,252

$ 450,337

23,000

15,900

(15,508)

(16,541)

$ 457,188

$ 325,135

18,511

11,765

(8,506)

(16,541)

$ 330,364

$ 457,188

330,364

$ 126,824

$ 393,588

20,376

15,349

34,598

(13,574)

$ 450,337

$ 272,263

19,022

10,956

36,468

(13,574)

$ 325,135

$ 450,337

325,135

$ 125,202

1 Pension liabilities include WCB’s proportionate share of the PSPP and MEPP net unfunded liabilities.2 Other retirement liabilities include SERP and the post-retirement benefit plan.3 Current service costs are presented within corporate administration and claim benefit expense in the consolidated statement of comprehensive income.4 Interest expense is presented net of interest income in the consolidated statement of comprehensive income.5 Remeasurement gains and losses on plan obligations due to discount rate changes and experience are presented net of gains and losses on plan assets in

the consolidated statement of comprehensive income.


RISKS ARISING FROM DEFINED BENEFIT PLANS

Economic risks

Defined benefit plans are directly exposed to economic risks from plan assets invested in capital markets and

indirectly with respect to measurement risk from assumptions based on economic factors, such as discount rates

affected by volatile bond markets. Benefit obligations are exposed to uncertainty of future economic conditions,

primarily inflation risk due to the extremely long tails of post-employment benefits and health care escalation due

to increasingly higher costs of treatment and prescription drugs.

Demographic risks

Demographic factors affect current and future benefit costs with respect to the amount and time horizon of

expected payments due to such factors as workforce average age and earnings levels, attrition and retirement

rates, mortality and morbidity rates, etc.

Multi-employer plan funding risk

In addition to economic and demographic risk factors, WCB is exposed to funding risk in the multi-employer plans

arising from:

• Legislative changes affecting eligibility for and amount of pension and related benefits; and

• Performance of plan assets affected by investment policies set by the pension boards or changes in the

assumptions used to value liabilities.

Because these plans are governed by legislation rather than contract, there is little flexibility for participants with

respect to withdrawal from the plan, plan wind-up or amendments and mandatory funding requirements.

Sensitivity analysis

The following table shows the effect of a 25 basis point change in the assumed discount rate, inflation rate and

wage inflation rate on WCB’s proportionate share of the accrued benefit obligations of PSPP and MEPP. The

impacts of the assumption changes on WCB’s other employee benefit plans, individually and in aggregate,

are immaterial.

($ thousands) 2018 2017

+/- % change on assumed rates +0.25% -0.25% +0.25% -0.25%

Discount rate based on market yields on high-quality corporate bonds

General inflation rate

Wage inflation rate

$ (16,204)

$ 7,750

$ 1,875

$ 16,204

$ (7,750)

$ (1,875)

$ (15,022)

$ 8,019

$ 2,276

$ 15,022

$ (8,019)

$ (2,276)

12. CLAIM BENEFIT LIABILITIES

ACCOUNTING POLICY

The claim benefit liability represents the actuarial present value of all expected future benefit payments

for claims and for workplace exposures that have occurred before the valuation date that may result in

recognized occupational disease claims after the valuation date. The liability includes a provision for

future costs of managing claims but does not include claims and payments that are on a self-insured basis.

Valuation of claim benefit liabilities complies with Standards of Practice issued by the Actuarial Standards

Board of the Canadian Institute of Actuaries.

Gains and losses resulting from the valuation of the liability arise from differences between actual claims

experience and that expected based on the previous valuation, changes to actuarial methods and

assumptions as well as changes in legislation, policies and administrative practices. Such gains and losses

are recognized in income in the period that they occur.


ACTUARIAL METHODOLOGY AND BASIS OF VALUATION

Claim benefit liabilities are independently valued annually at year end by WCB’s external actuary. Claim benefit

liabilities include a provision for all covered benefits and for the future expenses of administering those benefits,

including funding obligations to the Appeals Commission, the Medical Panel Office and the Fair Practices Office.

Estimated future expenditures are expressed in constant dollars increased to consider expected future escalation,

and then discounted at the assumed long-term rate of return on investments.

The valuation is based on WCB legislation, policies and administrative practices in effect as at the valuation date.

Estimation of the liability requires the use of actuarial methods and assumptions that are periodically assessed

and adjusted based on frequent monitoring of actual claim experience, the economy and other relevant factors

throughout the year.

Since the claim benefit liabilities are of a long-term nature, the actuarial assumptions and methods used to

calculate the reported claim benefit liabilities are based on considerations of future expenditures over the long

term. As the determination of these liabilities requires assumptions about economic and other events that may

occur many years in the future, but which are based on best information as at the valuation date, a significant

degree of professional judgement must be exercised in developing these assumptions. Accordingly, changes

in conditions within one year of the consolidated financial statement date could require material change in

recognized amounts in a subsequent period or periods.

See Note 14 Claim Benefit Risks for further discussion of measurement uncertainty with respect to valuation of

WCB’s claim benefit liabilities.

ACTUARIAL ASSUMPTIONS

The most significant economic assumptions for the determination of claim benefit liabilities are the assumed rate

of return on invested assets used for discounting expected future benefit payments and the escalation rates for

benefit costs into the future. All actuarial assumptions are determined on a ‘best estimate’ basis, except for the

real rate of return on investments (i.e., the difference between the expected long-term investment return and the

expected long-term general inflation rate). The expected long-term investment return assumption is targeted at

about 70% probability level, which provides a margin for adverse deviation in the liability.

Long-term economic assumptions for general inflation and wage escalation are developed by using historical

statistics and other economic indicators. Health care escalation is developed from analysis of WCB health care

cost experience, taking into consideration the results of external studies. This escalation rate represents general

inflation plus excess inflation of 2.0%, covering both the increases in the costs per treatment and in utilization.

The table below presents key long-term economic assumptions used to determine the claim benefit liabilities:

2018 2017

Nominal rate of return

General inflation rate

Real rate of return

Cost-of-living adjustment

Wage escalation

Health care escalation

4.55%

2.00%

2.50%

2.02%

3.00%

4.00%

4.55%

2.00%

2.50%

2.02%

3.00%

4.50%


RECONCILIATION OF CLAIM BENEFIT LIABILITIES

The table below is a reconciliation of the movement in claim benefit liabilities, highlighting the significant

changes for each major benefit category.

($ thousands)Short-term Disability

Long-term Disability

Survivor Benefits

Health Care RehabilitationClaims

Management2018 2017

Claim benefit liabilities, beginning of year

Claim costs recognized during the year

Provision for future costs of current year injuries

and exposures

Claim benefits processed in the year

Total claim costs recognized during the year

Claim payments processed during the year

Payments for current year injuries

Payments for prior years’ injuries

Interest expense on the liability

Commutation of Deposit Account

Remeasurement of the liability

Changes in valuation methods and assumptions

Economic loss payments

Health care escalation

Personal care allowances

Other changes

Changes to Act, Regulation, policies and

administrative practices

COLA indexation

Enhancements to fatality and survivor benefits

Changes in claims experience

Inflation and wage growth different than expected

Economic loss payments higher than expected

Short-term wage loss and VR benefits higher than expected

Other experience (gains) losses

Claim benefit liabilities, end of year

$ 551,700

128,400

91,778

220,178

(91,778)

(140,825)

(232,603)

22,300

-

-

-

-

-

-

-

(1,500)

-

32,900

125

31,525

$ 593,100

$ 3,371,000

283,200

3,534

286,734

(3,534)

(235,313)

(238,847)

148,500

-

191,100

-

-

-

-

-

(2,100)

148,600

-

9,113

346,713

$ 3,914,100

$ 748,800

33,000

6,020

39,020

(6,020)

(46,933)

(52,953)

33,100

-

-

-

-

(1,400)

-

-

600

-

-

2,633

1,833

$ 769,800

$ 2,923,000

229,200

136,280

365,480

(136,280)

(209,260)

(345,540)

128,200

-

-

(145,300)

34,600

(42,200)

-

-

12,800

-

-

(4,140)

(144,240)

$ 2,926,900

$ 202,900

56,500

4,954

61,454

(4,954)

(68,011)

(72,965)

8,200

-

-

-

-

-

-

-

(1,600)

-

20,600

311

19,311

$ 218,900

$ 584,300

78,500

54,983

133,483

(54,983)

(78,285)

(133,268)

25,000

-

11,000

-

3,000

(4,900)

-

-

-

-

-

3,385

12,485

$ 622,000

$ 8,381,700

808,800

297,549

1,106,349

(297,549)

(778,627)

(1,076,176)

365,300

-

202,100

(145,300)

37,600

(48,500)

-

-

8,200

148,600

53,500

11,427

267,627

$ 9,044,800

$ 7,553,000

713,700

265,402

979,102

(265,402)

(688,487)

(953,889)

328,200

5,529

-

-

-

-

186,700

111,000

(56,300)

201,400

-

26,958

469,758

$ 8,381,700

See Note 13 Claim Benefit Expense for details of the amounts recognized in income for the reporting period.


CLAIMS DEVELOPMENT

The table that follows presents the development of the estimated ultimate cost of claims and claim payments for

accident years 2009–2018. The top part of the table illustrates how the estimate of total claim benefits for each

accident year has changed with more experience over succeeding year ends. The shaded claims triangle shows the

estimated cost of claims for an accident year in the year of the accident, one year after the year of the accident, two

years after the year of the accident and so on and compares the total estimated cost to the actual cumulative payments

over the development period. Due to the extremely long duration of many WCB benefit types, significant amounts

may be paid out in the distant future beyond the valuation date. The bottom part of the table reconciles the total

outstanding benefits amount to the discounted amount reported in the consolidated statement of financial position.

Accident Year

($ millions) Prior Years 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total

Estimate of cumulative

claims benefits

At end of accident year One year later Two years later Three years later Four years later Five years later Six years later Seven years later Eight years later Nine years later

Current estimate of

cumulative claim benefits

Cumulative payments

Outstanding benefits

Undiscounted


Claims management

Undiscounted


Latent occupational diseases

Undiscounted


Total claim benefits

Undiscounted



$ 6,737.9

(3,458.6)

3,279.3

1,301.8

1,250.4

1,239.5

1,095.7

1,074.7

1,048.4

1,031.8

991.9

1,020.6

1,041.5

1,041.5

(466.6)

$ 574.9

(331.9)

243.0

1,333.5

1,299.4

1,118.5

1,080.8

1,047.6

1,042.8

999.3

1,027.5

1,030.0

1,030.0

(452.9)

$ 577.1

(328.2)

248.9

1,444.3

1,250.4

1,220.9

1,175.3

1,160.0

1,119.5

1,156.9

1,146.7

1,146.7

(497.3)

$ 649.4

(368.4)

281.0

1,320.8

1,305.7

1,256.9

1,258.0

1,212.5

1,270.1

1,326.7

1,326.7

(496.5)

$ 830.2

(491.0)

339.2

1,423.6

1,383.6

1,394.3

1,343.6

1,444.5

1,530.2

1,530.2

(540.1)

$ 990.1

(570.8)

419.3

1,438.2

1,414.3

1,407.1

1,538.0

1,663.0

1,663.0

(536.8)

$ 1,126.2

(647.2)

479.0

1,421.3

1,353.1

1,516.5

1,648.0

1,648.0

(487.3)

$ 1,160.7

(655.6)

505.1

1,323.9

1,427.1

1,550.3

1,550.3

(416.5)

$ 1,133.8

(622.4)

511.4

1,471.6

1,644.2

1,644.2

(402.7)

$ 1,241.5

(671.4)

570.1

1,714.5

1,714.5

(242.6)

$ 1,471.9

(730.5)

741.4

$ 16,493.7

(8,876.0)

7,617.7

1,273.7

(651.7)

622.0

2,318.0

(1,512.9)

805.1

20,085.4

(11,040.6)

$ 9,044.8


LIQUIDITY OF CLAIM BENEFIT LIABILITIES

The following table presents the expected timing of future payments of the claim benefit liability as at December

31. As these payments extend well out into the future, any such estimates involve considerable uncertainty.

2018 2017

Expected timing of future payments

Up to 1 year

Over 1 year and up to 5 years

Over 5 years and up to 10 years

Over 10 years and up to 15 years

Over 15 years

Total

4%

11%

12%

11%

62%

100%

4%

12%

13%

12%

59%

100%

13. CLAIM BENEFIT EXPENSE

The table below presents details of claim benefit expense reported in the consolidated statement of

comprehensive income.

($ thousands) 2018 2017

Current Year Injuries Prior Years' Injuries Total Total

Claims expense

Provision for future costs of current year injuries

and exposures 1

Claim payments processed in the year

Short-term disability


Survivor benefits

Health care

Rehabilitation

Claim payments related to prior years 2

Claims management 3

Claims-related administration

Appeals Commission

Medical Panel Office

Fair Practices Office

$ 808,800

91,778

3,534

6,020

136,280

4,954

242,566

-

242,566

$ 1,051,366

54,669

26

1

287

$ 54,983

$ 1,106,349

$ -

140,825

235,313

46,933

209,260

68,011

700,342

(778,627)

(78,285)

$ (78,285)

64,177

13,182

590

336

$ 78,285

$ -

$ 808,800

232,603

238,847

52,953

345,540

72,965

942,908

(778,627)

164,281

$ 973,081

118,846

13,208

591

623

$ 133,268

$ 1,106,349

$ 713,700

200,159

215,437

46,609

302,096

68,099

832,400

(688,487)

143,913

$ 857,613

109,201

11,954

334

-

$ 121,489

$ 979,102

1 Provision for future costs of current year injuries represents the present value of all future obligations for benefit payments arising from current year injuries and occupational disease exposures.

2 Although claim payments relating to prior years injuries are processed in the reporting period, they are not expensed in the current year but are charged to the liabilities established for prior accident years.

3 Claims management represents WCB’s internal functional costs related to claims processing as well as funding of the external decision review bodies. Claims management expenses are included in claim benefit liabilities for valuation purposes, see Note 16 Administration Expense, for Claims-related administration.


14. CLAIM BENEFIT RISKS

Because there is no statutory limit on the benefit amount payable or the duration of the risk exposure related to

work-related injuries, WCB bears risk with respect to its future claim costs, which could have material implications

for liability estimation. In determining WCB’s claim benefit liabilities, a primary risk is that the actual benefit

payments may exceed the amount estimated in determining the liabilities. This may occur due to changes in claim

reporting patterns, frequency and/or size of claim payments or duration of claims. Compensable injuries and

benefits payable may also change due to legislation or policy changes. With potentially long claim run-off periods,

inflation is also a factor because future costs could escalate at a faster rate than expected.

The uncertainties associated with WCB claim benefit liabilities are complex and subject to a number of variables

that complicate quantitative sensitivity analysis. The most significant assumption in the determination of the

claim benefit liabilities is the real rate of return. A reduction in the assumed real rate of return would increase the

actuarial present value of the claim benefit liabilities. Wage inflation affects the liabilities through benefits such as

vocational rehabilitation and home maintenance allowances. An increase in assumed wage growth would increase

the respective liabilities. Health care benefits represent approximately 32% of the claim benefit liabilities. An

increase in the assumed health care escalation rate would result in an increase in the liability for health care.

EFFECT OF ASSUMPTION CHANGES ON CLAIM BENEFIT LIABILITIES

The table below shows the sensitivity of the claim benefit liabilities to an immediate 0.25% increase or decrease in

the assumed rates:

($ thousands) 2018 2017

+/- % change on assumed rates +0.25% -0.25% +0.25% -0.25%

Real rate of return

Wage inflation rate

Health care escalation rate

$ (297,900)

$ 111,800

$ 58,600

$ 317,100

$ (105,900)

$ (55,200)

$ (263,100)

$ 56,400

$ 92,400

$ 279,000

$ (54,000)

$ (87,500)

As part of the update to the valuation methods and assumptions for personal care allowances, a change was made

to use the wage inflation rate rather than the health care escalation rate to value these allowances. This resulted

in the significant change in the year-over-year comparison on sensitivity results for the wage inflation rate and the

health care escalation rate.

15. PREMIUM REVENUE

ACCOUNTING POLICY

Premiums are assessed and due when employers report their assessable earnings for the current year. For

employers who have not reported, premiums are estimated and included in the amount receivable. Premium

revenue includes estimates for Partnerships in Injury Reduction (PIR) rebates and other items.

Premium revenue is fully earned and recognized over the annual coverage period. Any difference between

actual and estimated premiums and rebates is adjusted in the following year.

($ thousands) 2018 2017

Premiums

Assessed premium revenue for current year

Other premium-related revenue

Deduct: Partnerships in Injury Reduction rebates

$ 1,132,647

8,543

1,141,190

66,429

$ 1,074,761

$ 1,104,048

7,779

1,111,827

72,283

$ 1,039,544


Assessed premium revenue includes an accrual of $19,424 payable (2017 – $16,379 payable) for amounts related to

yet to be reported assessable earnings for the current period. The accrual has been determined using an internally

developed statistical model to estimate the amount of unreported earnings based on actual returns processed to

date and historical patterns of processed to unprocessed returns at a specified point in time.

PIR is a voluntary program that pays rebates to registered employers that have met the eligibility requirements

in achieving certain workplace safety targets as specified under the program. Earned rebates are payable in the

following year. The estimated rebate amount is based on several factors, including premiums paid, year-over-year

improvement in claims experience and safety performance relative to industry benchmarks, among others. See

Note 19(e) Safety rebates for supplemental information on the Partnerships in Injury Reduction rebates.

16. ADMINISTRATION EXPENSE

WCB’s primary administrative functions include:

• Claims-related administration – responsible for adjudicating claims, processing benefit payments and

the provision of return-to-work services to injured workers.

• Corporate administration – provides general management and administrative support.

The table below presents administration expenses broken down by nature of expense and by function:

($ thousands) Corporate Claims-related 2018 2017

Administration expenses

Salaries and employee benefits

Technology

Office

Occupancy

Professional fees

Travel

Other

Depreciation and amortization

Less:

Cost recoveries

Reclassifications to:

Claims expense – rehabilitation services

Investment management expense 1

$ 57,273

10,138

4,164

2,332

1,732

579

1,310

77,528

8,520

86,048

259

-

3,675

3,934

$ 82,114

$ 133,340

5,621

1,300

6,883

2,680

489

929

151,242

10,710

161,952

10,110

32,996

-

43,106

$ 118,846

$ 190,613

15,759

5,464

9,215

4,412

1,068

2,239

228,770

19,230

248,000

10,369

32,996

3,675

47,040

$ 200,960

$ 182,673

18,585

5,949

9,192

3,872

956

1,798

223,025

14,725

237,750

9,239

31,121

3,171

43,531

$ 194,219

1 Investment management expense represents internal expenses, see Note 6 Investment Income and Expense.


17. RELATED PARTY TRANSACTIONS

GOVERNMENT OF ALBERTA AND RELATED ENTITIES

WCB has transactions with various Alberta Crown corporations, departments, agencies, boards, educational

institutions and commissions in the ordinary course of operations. Such transactions include premiums from

the organizations and certain funding obligations relating to Occupational Health and Safety, the Appeals

Commission, the Medical Panel Office and the Fair Practices Office that are in accordance with the applicable

legislation and/or regulations. WCB is related to these entities by virtue of common influence by the Government

of Alberta. WCB is considered a government-related entity and as such, is not required to disclose these

transactions under IAS 24 Related Party Disclosures.

KEY MANAGEMENT COMPENSATION

Key management personnel of WCB, comprising the Board of Directors and the executive and their close

family members, are also related parties in accordance with IAS 24. As at the reporting date, there were no

business relationships, outstanding amounts or transactions other than compensation, between WCB and its

key management personnel. President and Chief Executive Officer total compensation was earned within the

notice period as set out in the regulation framework under the Reform of Agencies, Boards and Commissions

Compensation Act.

The tables below present total compensation of the board members and executive of WCB.

($ thousands) 2018

Base Salary 1 Other Cash Benefits 2

Non-Cash Benefits 3 SERP 4 Total

Chair, Board of Directors 5

Board Members 5

President & Chief Executive Officer

Chief Operating Officer 6


Vice-President, Employee & Corporate Services

Vice-President, Operations 7

Vice-President, Worker Health & Wellness 8

Secretary & General Counsel

$ -

-

475

367

347

285

82

141

211

$ 50

108

250

96

98

66

62

4

50

$ 3

10

66

39

41

42

15

23

44

$ -

-

149

81

75

57

39

-

23

$ 53

118

940

583

561

450

198

168

328

2017

Chair, Board of Directors

Board Members


Vice-President, Operations & Chief Information Officer



Vice-President, Operations


$ -

-

475

367

347

285

245

211

$ 40

92

250

109

103

75

75

57

$ 2

7

46

38

41

40

40

44

$ -

-

133

69

65

51

33

19

$ 42

99

904

583

556

451

393

331

1 Base salary is pensionable base pay.2 Other cash benefits for CEO and Vice Presidents include a transition payment due to the elimination of the long standing pay at risk program.

Other cash benefits for Board Members comprise honoraria pay for meetings attended.3 Non-cash benefits include employer's share of all employee benefits and payments made to, or on behalf of, employees including statutory

contributions, pension plans, extended health care benefits, group life insurance and professional memberships.4 SERP represents employer's current service cost for benefits accrued under a supplemental executive retirement plan. See Note 11 Employee

Benefits for details of the plan, and the following table for the costs and obligations related to each named key management position.5 The Chair of the Board of Directors and the Board members are part-time positions. 6 Vice President, Operations and Chief Information Officer title changed to Chief Operating Officer effective May 1, 2018.7 Incumbent left the position April 30, 2018.8 Position effective May 1, 2018.


SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

($ thousands) 2018 2017

Current Service Cost 1

Other Costs 2 Net Cost

Accrued Obligation

Net CostAccrued

Obligation


Chief Operating Officer 3



Vice-President, Operations 4

Vice-President, Worker Health & Wellness 5


$ 149

81

75

57

39

-

23

$ (98)

(30)

(17)

-

(53)

15

-

$ 51

51

58

57

(14)

15

23

$ 2,357

1,188

955

858

61

15

58

$ 351

216

169

128

44

-

25

$ 2,306

1,137

897

801

75

-

35

1 Current service cost represents the actuarial present value of future benefit obligations arising from employee service in the current period.2 Other costs include interest on the liability and actuarial gains and losses arising from assumption changes and/or experience: less any

benefit payments.3 Vice President, Operations and Chief Information Officer title changed to Chief Operating Officer effective May 1, 2018.4 Incumbent left the position April 30, 2018.5 Position effective May 1, 2018.

18. CONTINGENCIES AND INDEMNIFICATION

LEGAL PROCEEDINGS

WCB is party to various claims and lawsuits, related to the normal course of business, that are currently being

contested. In the opinion of management, the outcome of such claims and lawsuits are not determinable. Based

on the total amount of all such actions, WCB has concluded that the outcomes will not have a material effect on

the results of operations or financial position.

INDEMNIFICATION AGREEMENTS

In the normal course of operations, WCB enters into contractual agreements that contain standard contract

terms that indemnify certain parties against loss. The terms of these indemnification clauses will vary based

upon the contract, and/or the occurrence of contingent or future events, the nature of which prevents WCB

from making a reasonable estimate of the potential amount that may be payable to those contractual parties.

Such indemnifications are not significant, nor has WCB made any payments or accrued any amounts in the

consolidated financial statements in respect of these indemnifications.


19. SUPPLEMENTAL INFORMATION

(a) Cash and cash equivalents

($ thousands) 2018 2017

Cash in transit and in banks

Cash equivalents

$ 27,751

252,917

$ 280,668

$ 20,817

474,393

$ 495,210

Cash equivalents are invested in a portfolio of high-quality, short- to mid-term, highly liquid fixed-income

securities that generated an average annual return of 1.7% (2017 – 1.0%).

(b) Trade and other receivables

($ thousands) 2018 2017

Premium receivable

Reclassified to employer liabilities - Note 19(d)

Employer accounts receivable

Other

$ 22,721

33,414

56,135

16,491

$ 72,626

$ (272,807)

287,600

14,793

18,245

$ 33,038

Included in the employer accounts receivable total above is an allowance for expected credit losses of $3,000

(2017 – $3,000). Substantially all receivables are collected within one year.

(c) Trade and other liabilities

($ thousands) Trade Other 2018 2017

Trade payables

Lease obligations

Other liabilities

Current portion

Non-current portion

$ 32,423

-

-

$ 32,423

$ 32,423

-

$ 32,423

$ -

3,537

14,470

$ 18,007

$ 6,561

11,446

$ 18,007

$ 32,423

3,537

14,470

$ 50,430

$ 38,984

11,446

$ 50,430

$ 42,782

2,130

19,437

$ 64,349

$ 48,555

15,794

$ 64,349

See Note 10 Lease and Other Commitments for details of the lease obligations.

(d) Employer liabilities

($ thousands) 2018 2017

Reclassified from premium receivable - Note 19(b)

Accrued premiums payable

$ 33,414

19,424

$ 52,838

$ 287,600

16,379

$ 303,979

The amount in employer liabilities represents the reclassification from trade receivables of all outstanding

employer accounts with credit balances. In 2017, these arose primarily from funding distributions exceeding

premiums due.


(e) Safety rebates

($ thousands) 2018 2017

Safety rebates payable, beginning of year

Payment of prior years’ rebates

Adjustment of prior years’ accruals

Outstanding balance from prior years

Rebates for the year

Safety rebates payable, end of year

$ 79,228

(72,360)

6,868

(2,107)

4,761

66,429

$ 71,190

$ 78,628

(68,892)

9,736

(2,791)

6,945

72,283

$ 79,228

Safety rebates represent amounts recognized under the PIR program. See Note 15 Premium Revenue for further

details of the PIR program.

(f) Injury reduction

($ thousands) 2018 2017

Occupational Health and Safety

Industry safety associations

$ 55,182

23,049

$ 78,231

$ 48,000

19,246

$ 67,246

Injury reduction is composed of statutory funding of Occupational Health and Safety and voluntary premium

levies to fund industry-sponsored safety associations.


2018 summary of claims administered

2018 2017

Active claims as of January 1

New lost-time claims

New medical-aid-only claims

Total new claims reported

Recurrent claims1

Total claims administered

27,599

104,747

132,346

15,142

147,488

30,889

147,488

178,377

25,858

99,574

125,432

14,369

139,801

29,047

139,801

168,848

1 Previously inactive claims that required further adjudication or case management. Claims may reopen for a number of reasons, such as payments for medical aid or requests for further compensation benefits.

Ineligible claims 2018 2017

LOST-TIME CLAIMS

Insufficient information available to process claim

Not covered under Workers’ Compensation Act

Injury or illness not arising out of/in course of employment (Policy 02-01)

MEDICAL-AID-ONLY CLAIMS

Insufficient information available to process claim

Not covered under Workers’ Compensation Act

Injury or illness not arising out of/in course of employment (Policy 02-01)

120

363

1,997

3,668

3,084

5,504

147

294

1,956

4,023

2,694

4,908

$0

$20

$40

$60

$80

$100

$120

20182017201620152014

0

10,000

20,000

30,000

40,000

50,000

60,000

20182017201620152014

2018 annual report

$979.1

$1,061.9 $1,106.3






Health care

32%

136.0% 134.3% 133.8%

127.3%

118.3%

010,00020,00030,00040,00050,00060,000

OtherBurn or Scald





Sprain or Strain

# cl

aim

s

0

5,000

10,000

15,000

20,000

25,000

OtherMultiple Parts



Hand(s) or Wrist(s)

Finger(s)Back

Premium Revenue

$ m

illio

ns

$0

$200

$400

$600

$800

$1,000

$1,200

2017 Actual

2018 Actual

2018 Budget

$1,104.7 $1,074.7 $1,039.5

Assessable Earnings

$ b

illio

ns

$0

$20

$40

$60

$80

$100

$120

2017 Actual

2018 Actual

2018 Budget

$108.3$102.3 $100.4

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$ m

illio

ns

$0

$20

$40

$60

$80

$100

2017 Actual

2018 Actual

2018 Budget

$82.2 $82.1 $85.0

$ m

illio

ns

$0

$250

$500

$750

$1,000

2017 Actual

2018 Actual

2018 Budget

$493.5

$104.4

$1,039.1

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

20182017201620152014

$ m

illio

ns

Funded Ratio


10,1

56

7,46

5

10,3

91

7,73

4

10,5

29

7,87

2

11,4

17

8,96

9

11,1

75

9,44

6

50%

75%

100%

125%

150%







Asse

ssab

le E

arni

ngs (

$ bi

llion

s)

Premium

Rate


$0.97 $0.97

$105.9

$0.98

$107.9$99.8

$1.06

$100.4

$1.13

$102.3


Clai

m V

olum

e Injury Rate

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

27,200

21,900

26,500

20,500

22,800

29,10024,800

26,800

2.7

1.4

2.4

1.3

2.4

1.3

2.7

1.4

23,100

28,600

2.7

1.5





2018

18,96716,15214,49213,55310,4279,4449,1757,8635,8885,62520,760

132,346

2017

18,55616,03613,80112,7119,7148,8698,3407,4716,0135,48718,434

125,432

2018

50,11318,86918,85317,12013,4036,0073,6704,311

132,346

2017

47,82518,08618,66215,57712,2675,8373,5493,629

125,432

Lorem ipsum

20182017201620152014

$0.90

$1.10

$1.30

$1.50

2018 2017

# cl

aim

s

18,967

16,152

14,49213,553

10,427

9,4449,175

7,863

5,8885,625

20,760

18,556

16,036

13,80112,711

9,7148,869

8,3407,471

6,0135,487

18,434

18,086

47,825

18,662

15,577

12,267

5,8373,549

3,62918,869

50,113

18,853

17,120

13,403

6,0073,670

4,311

2018 2017

2.102.03

1.89 1.86 1.88


$1.03

$1.01$1.04 $1.05

20182018 2017

Workers covered

Registered employers

Lost-time claim rate (per 100 workers) 1

Disabling-injury rate (per 100 workers) 1

New claims reported

Lost-time claims 1

Fatality claims accepted

Ineligible lost-time claims (% of all lost-time claims)

New requests for review to the DRDRB

Return to work with accident employer

Return to work with new employer

Return to work overall

Estimated average claim duration (TTD days)

Cost-of-living adjustment on long-term benefits

Claim benefit expense (thousands)

New non-economic loss and permanent disability awards

New economic loss awards

Maximum assessable earnings

Premium revenue (thousands)

Average collected premium rate (per $100 of assessable earnings)

Investment income (thousands)

Funded ratio (per cent funded)

1,884,400

162,981

1.5

2.7

132,346

28,600

162

9.0%

2,142

91.8%

2.1%

93.9%

44.1

1.20%

$1,106,349

3,855

911

$98,700

$1,074,761

$1.05

$145,305

118.3%

1,862,169

162,531

1.4

2.7

125,432

26,800

166

9.3%

2,343

92.8%

1.6%

94.4%

40.6

0.84%

$979,102

3,468

979

$98,700

$1,039,544

$1.04

$1,077,966

127.3%

1 Lost-time claims and the lost-time claim and disabling-injury rates are projected. This approach is taken to ensure claims for accidents occurring in 2018 but not reported by year-end are considered.

year at a glance


Workers’ Compensation Board – Alberta • P.O. Box 2415, Edmonton, AB T5J 2S5 • www.wcb.ab.ca • 1-866-922-9221

ISSN: 1489-4084

“In a world where communication is becoming more and more

impersonal, it was so incredible to be on the receiving end of

such compassion and empathy, especially at a difficult time

in my life.”

Rick Sokolowski, injured worker

2018 - WCB

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