Investor Presentation November/December 2008
Forward-looking statement disclaimer Certain of the statements contained in this presentation about our current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward looking statements. The words "may", "will", "would", "should", "could", "expects", "plans", "intends", "anticipates", "believes", "estimates", "predicts", "likely" or "potential“ or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward looking statements. Forward looking statements are based on estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate in the circumstances. Many factors could cause our actual results, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward looking statements, including, without limitation, the following factors: our ability to implement our strategy or operate our business as we currently expect; our ability to accurately assess the risks associated with the insurance policies that we write; adverse capital market developments or other factors which may affect our investments; the cyclical nature of the P&C insurance industry; our ability to accurately predict future claims frequency; government regulations; litigation and regulatory actions; periodic negative publicity regarding the insurance industry; intense competition; our reliance on brokers and third parties to sell our products; our ability to successfully pursue our acquisition strategy; the substantial influence of ING Groep; our participation in the Facility Association (a mandatory pooling arrangement among all industry participants); terrorist attacks and ensuing events; the occurrence of catastrophic events; our ability to maintain our financial strength ratings; our ability to alleviate risk through reinsurance; our ability to successfully manage credit risk; our reliance on information technology and telecommunications systems; our dependence on key employees; general economic, financial and political conditions; our dependency on the results of operations of our subsidiaries; the limited trading history of our common shares; the volatility of the stock market and other factors affecting our share price; and future sales of a substantial number of our common shares. These factors should be considered carefully, and readers should not place undue reliance on our forward looking statements. We have no intention and undertake no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except as required by law. 2
Leader in the property & casualty insurance market in Canada Who we are Broad distribution • $4.1 billion in direct premiums written in 2007 • #1 in Ontario, Québec, Alberta, Nova Scotia • Substantial size and scale advantage • Industry outperformer and consolidator • Strong financial position and significant excess capital Scale advantage Superior return on equity Direct premiums written ($ billions) 40% Top five insurers $4.5 represent 34% of $4.0 $4.1 30% $3.5 the market $3.0 $3.2 $2.5 20% 10-year avg. $2.0 $2.1 = 18.6% $1.9 $1.5 $1.8 10% $1.0 $0.5 Canadian industry $0.0 10-year avg. 0% Aviva Co-operators Economical TD 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Canada Meloche = 11.0% General Insurance Group Market 5.0% 10.9% 8.4% 5.6% 5.0% share 3
Operational strengths and competitive advantages Five-year average loss ratios Industry ING Canada 75% 71.6% 65.4% 70% 64.9% 64.0% 63.5% 65% 59.4% 60% 52.6% 55% 51.0% Size and scale Sophisticated In-house claims 50% advantage drives benefits pricing and expertise , innovation, 45% that are difficult to emulate underwriting using supplier relationships and speed- by new entrants or existing 40% of-response reduces cost and players key indicators like stability of increases customer satisfaction 35% residence and financial stability that are strongly Auto Pers. Comm. Liability correlated with loss experience Prop. Non-auto Superior loss ratio gap to the industry (percentage points) Favourable gap (five-year average) Investment Proven acquisition Diverse business Automobile* 8.1 expertise and prudent track record with 11 model that maximizes Personal property 1.4 philosophy that is focused on acquisitions over 19 years. growth by leveraging the capital preservation and Successful 18-24 month strength of our 1,900 broker Commercial non-auto 6.8 income generation integration model that improves partners and direct-to-consumer loss ratio of the acquired book by channels Commercial liability 13.9 re-pricing business through our pricing models *Includes personal and commercial auto 4
Combined ratio* versus P&C insurance industry ING Canada versus the industry – 2008 YTD 106% ING Canada 104.0% 104% 98.3% 102.6% 101.8% Industry AVG 102% 100.5% 100% 98.3% 98% 96% 94% Top 5 Top 10 Top 15 ING Canada (average) (average) (average) Source: MSA Research; Industry excludes Lloyd’s and ICBC; ratios include MYA. Combined ratio is claims ratio + expenses ratio. Below 100% indicates a profitable underwriting result, over 100% indicates an unprofitable result. Averages above are simple averages. 5
Performance goals that drive our strategy Return on equity Operating earnings Grow at least 10% Beat Canadian P&C industry ROE by 5 points per year over time every year Customer satisfaction Employee engagement Employee engagement index Customer satisfaction index in the top 10 percentile score of >9.0 over time in Canada 6
Well-positioned to capitalize on major trends Premises Impact Strategy Strengths • New entrants are likely Customers embrace • People’s Invest in people technology rapidly commitment and • Brokers will consolidate as • Attract and develop top talent scale is increasingly important expertise • Build our own pipeline of expertise • Strong local • Customers have evolving Canadian population is presence Focus on the customer needs ageing and immigration is • Deliver “easier” promise • Proven brokerage driving growth • Looming talent shortage • Leverage claims and technology relationships • Establish belair as the web insurer • Accelerate growth of Grey Power • Shift away from manufacturing • Solid web-platform Profound economic/ • Dominate small and mid-market and technology • Shift towards West industrial shifts taking place delivery in Canada Excel at the fundamentals • Scale advantage • Take advantage of market inefficiencies in pricing • Protect long-term solidity Climate change might have • Outperformance of • Leverage size in claims and supply material effect on weather • Protect our customers auto and chain management patterns • Regulatory intervention commercial P&C Strong distribution • Strong balance Canadian P&C industry is • Future consolidation is bound • Be first choice partner for brokers sheet highly fragmented to happen • Support brokers in consolidation • Optimize CBL • Integration capabilities 7
Financial strength and flexibility Financial flexibility Financial strength ratings (FSR) • Significant excess capital of $502 • Moody’s Investor Services: million* and MCT of 199.9% • Long-term issuer rating – A3 • No debt with capacity for 20% debt-to- • P&C subsidiaries – Aa3 total-capital • A.M. Best – A+ (Superior) • $100 million untapped credit revolver • DBRS – Senior unsecured debt rated A • $1.2 billion total capacity for (low) acquisitions at 170% MCT Cash from operations FSRs of top insurers Source: A.M. Best $700 $637 Strong cash A+ $620 $600 generation A- B++ A- $500 $431 from $400 operations $300 (in $ millions) $200 $100 $0 2005 2006 2007 ING Canada Aviva Co-operators Economical *As at September 30, 2008. Based on MCT of 170%. 8
M&A environment more conducive to consolidation M&A environment Acquisition capacity $1.2 billion • P&C insurance industry is highly fragmented Excess $502 • Industry ROEs are down from recent capital 1 record highs Debt $724 • Foreign parent companies are capacity 2 generally in less favourable capital position compared to one year ago Total capacity for acquisitions and other capital initiatives 1 Includes cash and receivables from subsidiaries at holding company level. Assumes MCT of 170%. 2 Assumes 20% debt-to-total-capital. Top Canadian P&C Insurers Acquisition criteria Foreign-owned private 35.8% • Pursue acquisitions in areas where we Non-top 20 19.4% Top 20 = have expertise Canadian private 12.2% 80.6% of the ING Canada 10.9% Canadian P&C • Large acquisitions or regional bolt-ons Canadian M utuals 9.2% market Bank-owned 6.6% • Acquisition target IRR of 15% Canadian public (excl. ING) 5.9% Source: Scotia Capital, April 2008 report, measured by DPW in 2007 9
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