ALBERTA MUNICIPAL INSURANCE EXCHANGE

Notes to the Financial Statements

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

7. Financial risk management (continued):

Liquidity Risk Management (continued):

The following table in (000's) details the Exchange’s expected maturity for its assets. The tables below have been drawn up based on the contractual maturities of the assets including interest that will be earned on those assets except where the Exchange anticipates that the cash flow will occur in a different period.

The Exchange expects to meet its obligations from operating cash flows and proceeds of maturing financial assets.

Capital risk management:

The Exchange's objectives when managing capital consist of maintaining sufficient capital to support claims liabilities and ensure the confidence of policyholders, support competitive pricing strategies and meet regulatory capital requirements. The Exchange is subject to the regulatory capital requirements defined by the Alberta Superintendent of Insurance and the Alberta Insurance Act. The Exchange has developed a capital strategy and monitors its capital management status. The Alberta Superintendent of Insurance has established a Minimum Capital Test guideline ("MCT"), which sets out 100% as the minimum and 210% as the supervisory target for the Exchange. The Exchange's internal target ratio which was approved by the Board of Directors was 240% for 2022 (2021 - 240%). As at December 31, 2022, the Exchange's MCT ratio was 461% (December 31, 2021 - 465%). As at December 31, 2022, the Exchange was in compliance with the Alberta Superintendent of Insurance regulations.

Capital is defined as subscribers’ surplus. Subscribers’ surplus represents contributions made by subscribers and the excess of revenues over expenses, and may be used to cover potential future catastrophic claims, reduce future premiums, or be paid out to subscribers.