ALBERTA MUNICIPAL INSURANCE EXCHANGE

Notes to the Financial Statements

Year ended December 31, 2022, with comparative information for 2021

7. Financial risk management (continued):

Insurance risk (continued):

Concentration risk (continued):

The table below provides a breakdown of net premiums by coverage type:

There has been no changes to concentration risk from the prior year.

Due from reinsurers:

Credit exposure related to the Exchange's due from reinsurers balances exists at December 31, 2022 to the extent that any reinsurer may not be able or willing to reimburse the Exchange under the terms of the relevant reinsurance arrangements. The Exchange has policies which limit its exposure to individual reinsurers and a regular review process to assess the creditworthiness of reinsurers with whom it transacts business.

The Exchange makes specific provisions against balances due from reinsurers considered to be in financial difficulty or with whom the Exchange is in dispute. The Exchange has mitigated the risk by including a non-dispute clause within its reinsurance contracts and monitors its reinsurers for credit risk.

Assumptions and sensitivities:

The risks associated with insurance contracts are complex and subject to a number of variables which complicate quantitative sensitivity analysis. The Exchange uses several statistical and actuarial techniques based on past claims development experience. This includes indications such as average claims cost, ultimate claims numbers and expected loss ratios.

The Exchange considers that the liability for insurance claims recognized in the statement of financial position is adequate. However, actual experience will differ from the expected outcome.

For the year ended December 31, 2022, changes in actuarial assumptions have had no material effect on the claims liabilities from the prior year end.