Thank you, Mr. Speaker. I have two returns to oral questions, one asked by Mr. Ootes on November 6, 1998, with respect to the WCB Transition Plan Status.

Background

Mr. Ootes was referring to a letter from the NWT Construction Association dated October 16th to the Chairperson of the WCB requesting, among other things, an update on the value of the accident fund and the reserves, given the downturn in financial markets.

At December 31, 1997, the total reserves of the Workers' Compensation Board were $50.7 million. The book value of investments on which the surplus is based was $206.8 million, and the market value was $248.9 million. These values are reported in the 1997 Annual Report.

Current Status

In the third quarter of 1998 (July - September) world markets went through the worst period for investments in many years. In Canadian dollars, the TSE 300 index lost 20.5 percent of its value, the S & P (US) index lost 6.1 percent, and the EAFE index (non-Canadian and US) lost 11.0 percent.

In spite of these losses, the market value of the accident fund investments, at September 30th, is actually higher than at last year-end, at approximately $255.2 million.

The first thing to note about the WCB's investment is the conservative nature of the board's investment policy. As only 40 percent of the funds are invested in equity markets, the exposure to the third quarter downturn was limited. The return on fixed income investments, which make up most of the board's portfolio, was positive for the third quarter.

The second thing to note is the limited impact on the surplus. The surplus is based on the book value of the investments, which is much lower than the market value and much less sensitive to market swings. Most of the impressive gains of the last four years on the board's funds are deferred to future years.

At present, the board is not expecting its total reserves for 1998 to decline from 1997 values due to investment returns. Thank you.