Laggardly MPI reporting blamed on strike, Tories

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This article was published 08/12/2023 (666 days ago), so information in it may no longer be current.

Manitoba’s publicly owned auto insurer is blaming a prolonged strike for missing two financial reporting deadlines as it stares down a massive drop in forecast revenue.

Revenue at Manitoba Public Insurance is projected to be $35 million below budget, according to the provincial government’s second-quarter fiscal update released on Tuesday.

The former Progressive Conservative government had budgeted a $30-million profit for the Crown corporation in March.

To date, MPI has not released any financial updates for the 2023-24 fiscal year and declined to answer specific questions about the forecast revenue drop on Thursday. Under legislation, MPI was required to prepare its first- and second-quarter reports by Aug. 14 and Nov. 14.

“Due to compounding factors including the restatement of MPI’s financials to meet new accounting standards… and the recent labour interruption, the corporation has not been able to provide these reports as required per legislation to the responsible minister, nor make them available to the public,” MPI communications manager Kristy Rydz said in a prepared statement.

“It is the corporation’s full intention to ensure compliance to this requirement going forward.”

MPI did not make any of its executive officers available for an interview.

According to Rydz, the $35-million downward revision in revenue mainly reflects “inflationary effects on claims costs” and underwriting profit from MPI’s special risk extension business line. No other information was provided.

The revenue drop comes in a turbulent year for MPI marked by government intervention in its business, loss of two board chairs and chief executive officer, criticism of its $289-million technology modernization program Project Nova, and a prolonged strike by its 1,700 unionized employees.

Workers walked off the job Aug. 28, two weeks after MPI’s first-quarter report was due.

The labour dispute ended Oct. 31 when workers ratified a new collective agreement which included wage increases of at least 13 per cent over four years, retroactive to Sept. 2022.

It also included one-time, $1,800 signing bonuses for full-time employees and two weeks of recognition pay for a period of the strike when negotiations weren’t possible owing to the change in government.

The Manitoba Government and General Employees’ Union said the retroactive pay owed to MPI workers is estimated to be about $6 million.

MPI would not comment on the impact of the wage settlement on its bottom line.

The public’s last look at MPI’s financial situation was delivered by former board chair Ward Keith in July when the Crown corporation published its 2022 annual report and a modest $4.2-million profit (but also a $43-million revenue drop compared to its budget).

Keith was appointed MPI board chair on May 10 after Michael Sullivan resigned amid a government-ordered third-party organizational review.

The resignation also followed a Free Press report that former MPI chief executive officer Eric Herbelin had received a three per cent pay bump in 2022 and spent 38 business days travelling even as the Public Utilities Board ordered increased financial oversight of Nova.

The former PC government, which was defeated by the NDP on Oct. 3, issued two directives to MPI to address PUB concerns including untendered contracts, executive staff turnover, financial projections and hiring plans.

Herbelin was fired with cause in mid-May following an internal investigation.

MPI has yet to hire a new CEO; former CEO Marni Kacher has the role in the interim.

In June, MPI vice-president Siddhartha Parti also resigned as chief information and technology officer. At the time, Keith disclosed that customers were on the hook for as much $19,000 for Parti’s travel to Winnipeg from his Ontario home.

Keith was also the MPI spokesperson during the strike that put a stranglehold on services before he was dismissed by the NDP as part of an overhaul of the board in mid-October.

In a statement, Attorney General Matt Wiebe, minister responsible for MPI, pinned the laggard reporting on the PCs. “The previous government let the strike go on for 10 weeks, which has created serious headaches for Manitobans and has also caused delays in financial reporting at the Crown corporation,” Wiebe said. “We are working hard every day to fix the previous government’s mismanagement at (MPI).”

A spokesman for the minister’s office said Wiebe could not comment on MPI’s fiscal forecast as he has not yet received the reports.

The auto-insurer is expected to publish its financial statements for the first six months of the current fiscal year in January.

In the meantime, the PUB is expected to deliver its decision on rates for 2024-25 fiscal year this month. MPI had requested no changes to rates.

A report from consulting firm Ernst and Young, which was hired to conduct the organizational review, is also due by the end of the month.

For their part, the Tories issued a statement late Thursday: “Thanks to strong PC governance, MPI is in good financial shape. But Manitobans will have to watch carefully what the NDP does next with MPI.”

danielle.dasilva@freepress.mb.ca