LOOKING BACK…focused on the future CIA Annual Meeting LOOKING BACK…focused on the future

Agenda SOE - why? – Gary Walters Insured Life & LTD - Jonathan Ferron Refund, ASO, stop Loss, etc – Ron McKellar Wrap up – Outstanding issues for Group – Gary Walters & YOU!

Required by OSFI for 31 Dec 2004 and annually thereafter Disclosure of few sources Aggregate results for all parts of company Calculation will have to be done at more detailed level CIA - Draft Educational Note Broadly profit released on New Business and movements in levels of PADs Limited guidance for Group

Drivers of Group profit varies: By product (Life, LTD, Med/Den behave differently) By funding method (Insured, refund, ASO behave differently) By type (employer/employee, creditor, affinity)

In addition can be calculated by: Market segment e.g. size Region/province Sources required Expected profits Profit from New business Profit from experience Changes in assumptions Interest on surplus Taxes

Breakdown of sources Expected Experience Premium loads Pad releases Mortality/morbidity Interest Experience Expenses (Reinsurance) Unusual items & error corrections

Uses Statutory reporting annually Explanation to Management current quarter Financial Non-Group Non-Financial Strategic Expense management Claims payment effectiveness Sustainability Planning/DCAT/EV

Unresolved Group Issues Definition of New Business Where do you put PADs on new LTD claims? Would you split PADs on expected claims from those on claims which are not expected? Are profit loads in premiums part of renewal profits? How do you decide what % of premium is for profit and what for claims? If you negotiate a renewal rate would such adjustment apply equally to premium load as to portion of premiums for claims & expenses? Do ASO & refund cases only generate expense gains or is there a portion for profit? Pricing or valuation bases?