---

Director's Report

Saskatchewan Municipal Hail Insurance Association Directors' Report as presented to the Annual General Meeting of the Association in Saskatoon, Saskatchewan, March 11, 2003

---

Ladies and Gentlemen:

The Directors have pleasure in presenting the Eighty-sixth Annual Report of the Association with the Auditors' Report for the year ended January 31, 2003. Also included are the details of the Seventy-ninth Annual Report covering the operations of Additional Municipal Hail Limited for the year ended December 31, 2002.

The winter of 2001-2002 resulted in below normal snowfall in most areas of the Saskatchewan grain belt. Overall fall and winter precipitation ranged from near normal in southern areas of the province to well below normal in remaining areas. North western and west central areas received less than 50% of normal precipitation. Spring runoff was well below average to non-existent in most areas of the province.

Although spring seeding operations started in the southwest during mid April, cool windy weather during the latter part of April and the first two weeks of May put overall seeding progress well behind the five year average. Improved weather conditions during the balance of May and early June allowed producers to complete the majority of their seeding intentions.

The 2002 growing season was dominated by severe to moderate drought conditions primarily in northern and west central areas of the province. While some southern and eastern areas experienced far better growing conditions, the overall results were below average crop yields and quality for 2002.

During the 2002 crop hail season, claims were received from storm activity on 89 days during the period May 15 through October 15. Fourteen major storms occurred on the following dates: June 29, July 5, 8, 14, 16, 17, 26, 28, 30, August 10, 25, 27, 30, September 1 and 21. The total number of claims received in 2002 numbered 6,528 compared to 7,809 the previous year.

Under the Municipal Hail program, payment of 2002 indemnity was carried out between August 30 and October 15 except where claimants requested payment be delayed until the following year.

A total of 4 fire claims were received during the season compared to 10 the previous year. Indemnity paid as a result of fire claims amounted to $6,195.00.

Total acres seeded to cereal crops, oil seeds and pulse crops amounted to 34,270,000 in 2002 compared to 35,385,000 the previous year. Municipal Hail insured 11,840,109 acres prior to cancellations compared to 12,043,446 in 2001, being 34.6% of the total compared to 34% in 2001.

Applications for cancellation of insurance due to losses of crop from causes other than hail numbered 826 and were received from 137 rural municipalities. A total of 216,732 acres of crop were cancelled which in turn reduced the 2002 hail taxes by $409,109.

Additional Municipal Hail Limited policies written in 2002 numbered 3,074 compared to 2,416 in 2001. The maximum coverage available was $120 per acre and $500,000 per township. For 2003, coverage and liability limits will remain at the 2002 levels.

Crops of anise, beans, borage, buckwheat, chick peas, dill, fenugreek, hemp, lentils, lupins, mint, mustard, field peas, peola, quinoa, radish seed, russian wild rye and as well grasses, clover, alfalfa, etc. grown for seed were rated at two times the regular rates and canola was rated at 1.75 times the regular rates for the Association and Additional Municipal Hail Limited.

The Association continued its long term policy of reinsuring a portion of its values at risk in view of the substantial amount of coverage being provided to its insureds. It remains the Board's position that this method of protection against potentially heavy losses has proven over time to be of great importance to the stability and strong financial position of the Association.

Hail taxes collected under the Municipal program equalled 96.7% of 2002 hail taxes levied compared to 99.1% in 2001.

Municipal Hail losses in 2002 reached $23,917,445 compared to $36,930,736 the previous year and represent 58% of hail taxes levied compared to 106.89% recorded in 2001. During the period 1917 through 2002, the Association has paid claims amounting to 86.4¢ of each hail tax dollar levied.

Additional Municipal Hail Limited losses in 2002 were $2,396,018 compared to 2001 when losses amounted to $2,888,577. The loss to premium ratio was 57.19% compared to 110.53% recorded in 2001.

Under the Municipal Hail program, 2002 rates of indemnity were $20, $40, $60, $80, $100 and $120 per acre. During 2002, 87.1% of the acres reported for coverage were insured under the full coverage option, while 12.9% were insured on a deductible coverage basis.

During 86 years of providing crop hail protection for Saskatchewan farmers and landowners, the Association has provided coverage on over $18.3 billion of risk and paid hail losses amounting to $683.8 million. In 2002, the Association provided coverage on $921.3 million of risk and paid losses amounting to $26.3 million.

Directors Arnold Boyko, Wayne Nargang and Murray Purcell were elected to a further three year term at the Annual Meeting held in March, 2002.

Kenneth E. Hanson, retired Secretary-Treasurer and Manager of the Association, passed away November 24, 2002. Mr. Hanson joined the staff of Municipal Hail in September, 1963, and retired in January, 1987.

The Directors wish to take this opportunity to extend their appreciation to Reeves, Councillors and Administrators for their willing assistance in providing sound crop hail protection for Saskatchewan farmers and landowners and to the management, office staff and field staff for their efficient and dedicated service during the 2002 season.