The Alberta Workers Compensation Board is poised to give back more than half a billion dollars in employer contributions thanks to an unexpectedly good year for its asset-liability management activities.
Leastways, so says a slide prepared for a meeting the month before last of the Industry Task Force Association, made up of a score of large industry employers who are responsible for more than half the premiums paid to the Alberta WCB and who employ close to half the workers covered by the organization that administers injured workers’ compensation in the province.
According to the slide, the WCB generated an asset-liability management surplus of $778.6 million in 2013, putting the organization $632.3 million over its budget for the year.
As a consequence of “favourable investment results from very strong global equity markets,” the WCB’s preliminary results indicated, the Board “had year-end investment income of $890.4 million, $478.5 million above its budget.”
So WCB operations have a funded ratio of 132.8 per cent, the slide also noted, which reflects “the strong results from both Operations and Asset-Liability Management and includes a surplus distribution of $512.8 million” — in other words, the give-back to WCB employers.
For those of you who like me don’t know much about this kind of stuff, asset-liability management, known to accountants as ALM, is the practice of managing risks caused by mismatches between assets and liabilities, as the always helpful Wikipedia explains it. Hedged bets, anyone?
Regardless, my guess is that Labour Minister Thomas Lukaszuk — whose portfolio includes the WCB, in whose mysterious ways he once counselled injured workers through a company he had set up — would be just as happy if this information didn’t surface until after the Legislature had stopped sitting.
Or, perhaps not. Maybe it will be a point of pride to him that the WCB’s investors did so well on his watch — an estimated return of almost 11 per cent is nothing to sneeze at by anyone’s standard — notwithstanding the apparent deficiencies of its investment prognosticators.
For all I know, that might be a good thing with Lukaszuk poised to enter the contest to become the replacement for fired premier Alison Redford.
The Tory leadership process became a real race yesterday, by the way, when former infrastructure minister Ric McIver as predicted joined former municipal affairs minister Ken Hughes as an officially declared candidate. Finance Minister Doug Horner has said he will let us all know by the end of the week, although he could as easily endorse party favourite Jim Prentice, a banker who most certainly would understand the value of sound ALM.
Regardless, readers are entitled to wonder what’s wrong with giving employers back a portion of their contributions when the WCB’s investment specialists have done so unexpectedly well.
Of course, most of us don’t expect as much with the payments we make to either governments or corporations when their investments pay off or, say, their Bitumen Bubbles suddenly disappear. But that’s not really the point. There are many who find fault with the operations of the WCB, complaining it fails to ensure injured workers who should be covered and that some of its programs fall short.
Without question, a substantial give-back like this will mean many companies and other employers that have failed, for example, to achieve their Certificate of Recognition safety certification will nevertheless receive what some might call a substantial hidden subsidy.
The COR program, run by Lukaszuk’s ministry, recognizes employers who develop health and safety programs that meet the government’s standards.
Among the large employers who have not quite yet completed the COR process is Alberta Health Services, which as was reported by media yesterday is about to be brought even more tightly under the control of the provincial government by Health Minister Fred Horne.
“Let’s have no more pretense that AHS is an independent arm’s-length agency that makes apolitical decisions about health care delivery,” observed Edmonton Journal columnist Paula Simons of this development. This is just the latest step, she argued, in Horne’s “wholesale emasculation” of AHS.
But it does mean the government itself, or at least a de facto branch like AHS, will be in a position to benefit from the WCB’s largesse, despite failure to quite come up to snuff on safety certification. Some might characterize this is robbing Peter to pay Paul.
Regardless, the success of the WCB’s ALM efforts do raise an interesting additional question: if a government-mandated disability insurance system can run so efficiently, imagine how well a government-mandated auto insurance corporation would work!
Just think, in a good year for investments, good drivers could all get a rebate from the Insurance Corporation of Alberta!
This post also appears on David Climenhaga’s blog, Alberta Diary.