For the Operations Fund, as a delegated administrative authority, RECO’s principal objective is to manage these net assets in a manner that allows it to continue to meet the requirements of the administrative agreement with the Ministry of Government and Consumer Services, which includes a requirement to ensure it has adequate resources to comply with the agreement, REBBA and the Safety and Consumer Statutes Administration Act, 1996. In 2016, the Board approved the creation of an Internally Restricted Operating Reserve through an initial transfer of $2 million from the Unrestricted Accumulated Fund Balance. In 2017, the Board approved additional transfers of $4 million, bringing the balance to $6 million at December 31, 2017. The purpose of the Internally Restricted Operating Reserve Fund is to cover unforeseen operating shortfalls. Insurance Program OVERVIEW Insurance Program receipts are derived from the premiums, the contributions to the program stability fund, the contributions to the insurance administration fund plus the applicable taxes. They are required to be held in trust and segregated from general operating funds. Insurance receipts are amortized to income over the period of the insurance policy. PREMIUM FUND Recognized premium revenues increased by $2,217,168 or 8 per cent, from $26,782,344 in fiscal 2016 to $28,999,512 in fiscal 2017. Though there was a decrease in the premium charged for 2017, the total increase in the number of subscribers resulted in an overall increase for the year. Because all premiums collected are paid to the insurer, recognized premium expense equals revenues. PROGRAM STABILITY FUND Recognized contributions to the program stability fund increased by $155,582 or 17 per cent, from $912,905 in fiscal 2016 to $1,068,487 in fiscal 2017. This was due to an increase in the amount of the contribution and the number of subscribers. No expenses are charged to this fund. INSURANCE ADMINISTRATION FUND Recognized contributions to the insurance administration fund increased by $191,803 or 18 per cent, from $1,044,877 in fiscal 2016 to $1,236,680 in fiscal 2017. Miscellaneous income increased by $40,132. Insurance administration expenses increased overall by $33,151 or 3 per cent. Increases occurred in credit card discounts and processing costs due to the increase in the number of subscribers. NET CURRENT ASSETS Net current assets, excluding deferred revenues and prepaid premiums, were $23,831,236 at December 31, 2017, compared to $21,912,143 at December 31, 2016. NET INCOME AND ACCUMULATED FUND BALANCE All premiums collected under the program are payable to the insurer. As a result, net income for the premium fund is always nil. Net income for the program stability fund was $1,287,874 for fiscal 2017, compared to $1,113,968 for fiscal 2016. Net income in the insurance administration fund was $371,676 for fiscal 2017, compared to $163,451 for fiscal 2016. At December 31, 2017, the accumulated fund balances were: $54,369 in the premium fund; $20,273,488 in the program stability fund; and $1,035,841 in the insurance administration fund. For the Insurance Program Funds, RECO’s principal objective is to facilitate insurance coverage for consumer deposits (protection of consumers), for errors and omissions insurance (protection of consumers and registrants) and for commission protection insurance (protection of registrants) for the benefit of registrants. Net assets of the Insurance Program Funds are restricted for use in the Insurance Program. 50/ RECO 2017 ANNUAL REPORT/FINANCIALS