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Statement of Corporate Intent MAC Business 1 July 2006 to 30 June 2009



Statement of Corporate Intent MAC Business 1 July 2006 to 30 June 2009

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Tabled paper 822


Tabled papers for 10th Assembly 2005 - 2008; Tabled papers; ParliamentNT






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3.7 MAC Business Financials A summary of the major financial matters for MAC over the period of this Statement of Corporate Intent are as follows: MAC 2 0 0 6 (A) 2006/07 2007/08 2008/09 Industry* Pre-tax Surplus $32.1 M $8.5M $10.0M $10.4M N/A Return on GWP% 67.2% 17.1% 19.4% 19.6% 56.8%# Expense/NEP% 13.0 14.3 14.8 15.2 14.6 Expense/GWP% 10.8 11.6 12.1 12.5 14.5 Combined Ratio % 83.2 124.3 126.4 129.6 111.7 Gross Investment Return % 11.5 7.5 7.5 7.5 11.8 Net Investment Return % 11.0 7.0 7.0 7.0 N/A Return on Equity % 53.2 10.6 11.2 10.4 47.0 Return on Assets % 10.3 2.5 2.7 2.6 N/A Premium Growth % 3.9 4.5 3.6 2.2 6.5 Solvency % 36.9 38.2 40.0 41.7 25.1 'Government CTP Scheme 2005 Annual Reports # Exceptional investment returns have inflated this industry standard for 2005 Commentary: MAC Business improving solvency levels exceeding target levels of 20% with no planned premium increases over the period which will require continual re assessment and monitoring to ensure protection of the long term nature of the MAC Business. However, actuarial projections show solvency decreasing over the longer term. MAC 2006-07 year profit will decrease due to lower investment returns and higher claims and reinsurance expenses. As there will be no premium increase, a flow on effect is increasing underwriting losses and a deteriorating expense ratio is expected in 2007/08 and 2008/09. MAC premiums will not increase over 2006-09 placing pressure on underwriting profitability. Investment income is based on TIO Group's investment strategy of growth with an acceptable level of risk. The forecast returns during the period are expected to be lower than the returns in 2005-06 due to the returns from the share market not being as favourable. Statement of Corporate Intent - MAC 25

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