(c) Other Movements in Insurance Liabilities Other movements of $85 million in insurance liabilities (nil as at October 31, 2015) consist of changes in life and health insurance policy benefit liabilities and other insurance payables that were caused primarily by the aging of in-force business and changes in actuarial assumptions.


PROPERTY AND CASUALTY CLAIMS DEVELOPMENT The following table shows the estimates of cumulative incurred claims for the nine most recent accident years, with subsequent developments during the periods and together with cumulative payments to date. The original reserve estimates are evaluated monthly for redundancy or deficiency. The evaluation is based on actual payments in full or partial settlement of claims and current estimates of claims liabilities for claims still open or claims still unreported.


Incurred Claims by Accident Year (millions of Canadian dollars)


2008 and prior Net ultimate claims cost at end of accident year


Revised estimates One year later Two years later Three years later Four years later Five years later Six years later


Seven years later Eight years later


Current estimates of cumulative claims Cumulative payments to date


Net undiscounted provision for unpaid claims Effect of discounting


Provision for adverse deviation Net provision for unpaid claims


SENSITIVITY TO INSURANCE RISK


A variety of assumptions are made related to the future level of claims, policyholder behaviour, expenses and sales levels when products are designed and priced, as well as when actuarial liabilities are determined. Such assumptions require a significant amount of professional judgment. The insurance claims provision is sensitive to certain assumptions. It has not been possible to quantify the sensitivity of certain assumptions such as legislative changes or uncertainty in the estimation process. Actual experience may differ from the assumptions made by the Bank. For property and casualty insurance, the main assumption underlying the claims liability estimates is that past claims development experience can be used to project future claims development and hence ultimate claims costs. As such, these methods extrapolate the development of paid and incurred losses, average costs per claim and claim numbers based on the observed development of earlier years and expected loss


2009


3,359 3,423 3,527 3,631 3,612 3,646 3,623


3,623


(3,425) 198


1,627 1,663 1,720 1,763 1,753 1,756 1,740 –


2010


1,764 1,851 1,921 1,926 1,931 1,904 – –


2011


1,728 1,823 1,779 1,768 1,739 – – –


2012


1,930 1,922 1,884 1,860 – – – –


2013


2,227 2,191 2,158 – – – – –


2014


2,334 2,280 – – – – – –


2015


2,367 – – – – – – –


2016


$ 3,335 $ 1,598 $ 1,742 $ 1,724 $ 1,830 $ 2,245 $ 2,465 $ 2,409 $ 2,438 3,366


– – – – – – – –


1,740


(1,660) 80


1,904


(1,766) 138


1,739


(1,556) 183


1,860


(1,516) 344


2,158


(1,617) 541


2,280


(1,523) 757


2,367


(1,353) 1,014


2,438 (1,054)


1,384 $ 4,639 (250) 437


$ 4,826


ratios. Claims liabilities estimates are based on various quantitative and qualitative factors including the discount rate, the margin for adverse deviation, reinsurance, trends in claims severity and frequency, and other external drivers.


Qualitative and other unforeseen factors could negatively impact the Bank’s ability to accurately assess the risk of the insurance policies that the Bank underwrites. In addition, there may be significant lags between the occurrence of an insured event and the time it is actually reported to the Bank and additional lags between the time of reporting and final settlements of claims.


The following table outlines the sensitivity of the Bank’s property and casualty insurance claims liabilities to reasonably possible movements in the discount rate, the margin for adverse deviation, and the frequency and severity of claims, with all other assumptions held constant. Movements in the assumptions may be non-linear.


Sensitivity of Critical Assumptions – Property and Casualty Insurance Contract Liabilities (millions of Canadian dollars)


October 31, 2016


Impact on net income (loss) before


income taxes


Impact of an absolute change of 1% in key assumptions Discount rate assumption used Increase in assumption Decrease in assumption


Margin for adverse deviation assumption used Increase in assumption Decrease in assumption


Impact of an absolute change of 5% in key assumptions Frequency of claims Increase in assumption Decrease in assumption


Severity of claims Increase in assumption Decrease in assumption


$ 135 (145)


(47) 47


(32) 32


(240) 240


Impact on equity


$ 98 (106)


(35) 35


(23) 23


(175) 175


Impact on net income (loss) before


income taxes


$ 127 (136)


(45) 45


(32) 32


(219) 219


As at October 31, 2015


Impact on equity


$ 94 (100)


(33) 33


(24) 24


(161) 161


Total Accident year


TD BANK GROUP ANNUAL REPORT 2016 FINANCIAL RESULTS 177


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100  |  Page 101  |  Page 102  |  Page 103  |  Page 104  |  Page 105  |  Page 106  |  Page 107  |  Page 108  |  Page 109  |  Page 110  |  Page 111  |  Page 112  |  Page 113  |  Page 114  |  Page 115  |  Page 116  |  Page 117  |  Page 118  |  Page 119  |  Page 120  |  Page 121  |  Page 122  |  Page 123  |  Page 124  |  Page 125  |  Page 126  |  Page 127  |  Page 128  |  Page 129  |  Page 130  |  Page 131  |  Page 132  |  Page 133  |  Page 134  |  Page 135  |  Page 136  |  Page 137  |  Page 138  |  Page 139  |  Page 140  |  Page 141  |  Page 142  |  Page 143  |  Page 144  |  Page 145  |  Page 146  |  Page 147  |  Page 148  |  Page 149  |  Page 150  |  Page 151  |  Page 152  |  Page 153  |  Page 154  |  Page 155  |  Page 156  |  Page 157  |  Page 158  |  Page 159  |  Page 160  |  Page 161  |  Page 162  |  Page 163  |  Page 164  |  Page 165  |  Page 166  |  Page 167  |  Page 168  |  Page 169  |  Page 170  |  Page 171  |  Page 172  |  Page 173  |  Page 174  |  Page 175  |  Page 176  |  Page 177  |  Page 178  |  Page 179  |  Page 180  |  Page 181  |  Page 182  |  Page 183  |  Page 184  |  Page 185  |  Page 186  |  Page 187  |  Page 188  |  Page 189  |  Page 190  |  Page 191  |  Page 192  |  Page 193  |  Page 194  |  Page 195  |  Page 196  |  Page 197  |  Page 198  |  Page 199  |  Page 200  |  Page 201  |  Page 202  |  Page 203  |  Page 204  |  Page 205  |  Page 206  |  Page 207  |  Page 208  |  Page 209  |  Page 210  |  Page 211  |  Page 212