2007 Annual Meeting ● Assemblée annuelle 2007 Vancouver 2007 Annual Meeting ● Assemblée annuelle 2007 Vancouver Canadian Institute of Actuaries Canadian Institute of Actuaries L’Institut canadien des actuaires L’Institut canadien des actuaires

IP12: Living Benefits - Hot Topics Moderator Martin Fortier Speakers Alethea A. Lyn Nathalie Tremblay Frédéric Jacques 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

Agenda Critical Illness Insurance (CII) Long Term Care Insurance (LTCI) Disability Income Insurance (DII) 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

CII sales trend 2007 Annual Meeting Assemblée annuelle 2007 Source: Canadian Individual Critical Illness Insurance Survey, LIMRA International

CII – hot topics experience study group standardized definitions guaranteed rates underwriting time and high proportion of declines lack of consumer awareness (CII & LTCI) 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

CII – hot topics experience study group standardized definitions guaranteed rates underwriting time and high proportion of declines lack of consumer awareness (CII & LTCI) 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

CII – hot topics experience study group standardized definitions guaranteed rates underwriting time and high proportion of declines lack of consumer awareness (CII & LTCI) 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

Definitions Project- Three Main Objectives 1.Update the definitions for the covered CI conditions which no longer accurately describe the covered condition or reflect current practices or diagnosis process 2.When the intent of a condition is to cover the same risk, a “benchmark” definition which is clear, concise and objective and as similar as possible across the industry should be used by insurers and reinsurers 3.It is appropriate for a definition to differ from the benchmark definition only when a definition offers additional material coverage

CII – hot topics experience study group standardized definitions guaranteed rates underwriting time and high proportion of declines lack of consumer awareness (CII & LTCI) 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

CII – hot topics experience study group standardized definitions guaranteed rates underwriting time and high proportion of declines lack of consumer awareness (CII & LTCI) 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

New Business Placement Source: Munich Re 2006 Pricing Survey * % placed standard includes 4% placed with exclusions Life CI

Life: App Date to Placement Date – % Source: Munich Re 2006 Pricing Survey

CI: App Date to Placement Date – 2005 Source: Munich Re 2006 CI Survey 44%

CII – hot topics experience study group standardized definitions guaranteed rates underwriting time and high proportion of declines lack of consumer awareness (CII & LTCI) 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

Perceived coverage 2007 Annual Meeting Assemblée annuelle 2007 Source: Desjardins Financial Security Survey on Health, October 2003 Are you covered by… on a personal basis, that is by an insurance that you acquired on your own and that is not part of a group plan? 6% 8% 9% 30% 63% Complementary health care insurance Long Term Care insurance Critical Illness insurance Disability insurance Life insurance (42%) (7%) (11%) (12%) (74%)

CII – Market penetration January 1st, 2006 Canada: 6 % United Kingdom: 23 % Assumptions: Based on population 65% of the segment is insurable Only TD bank numbers were included but substantial 400,000! 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 Source: MunichRe

LTC – Market penetration Canada: less than 1% France: 15% Assumptions: Based on population Canada figures are from StatCan population estimates and projections as of July 1st 2006 and from LIMRA at the end of Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 Source: Scor Vie, LIMRA, Statcan

Agenda Critical Illness Insurance (CII) Long Term Care Insurance (LTCI) Disability Income Insurance (DII) 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

LTCI sales trend 2007 Annual Meeting Assemblée annuelle 2007 At the end of 2006, approximately 56,000 Canadians had LTCI Source: LIMRA International

LTCI – hot topics experience and learning from a recent market entry underwriting and high proportion of declines 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

LTCI – hot topics experience and learning from a recent market entry underwriting and high proportion of declines 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

LTCI – Desjardins experience Typical sale: Annual premium:1 353 $ Monthly benefit:2 401$ Average age:55 ans Waiting period:55% chosed 90 days Benefit period:66% Lifetime, 36% 5 years, 9% 2 years Premium duration: 94% lifetime and 6% 20 years Spousal reduction:31% of the cases 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

LTCI – Desjardins experience 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 Underwriting decisions % 24% 8% 52% Accepted Modified Declined Posponed Withdrawn Accepted or modified cases account for 60 % of submitted cases but only 50 % of in- force. 50% In forceDeclined

LTCI – Desjardins experience 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 Underwriting decisions % 24% 8% 52% Accepted Modified Declined Posponed Withdrawn Accepted or modified cases account for 60 % of submitted cases but only 50 % of in- force. 50% In forceDeclined

LTCI – Desjardins experience 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 Independent Living Sales by age group % % % % % % More than 90% are between 41 and 70 Concentration between 51 and 60

LTCI – hot topics experience and learning from a recent market entry underwriting and high proportion of declines 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

LTCI – placement ratios 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 AgePlacement ratio % % % %

2006 US LTC Wastage Rate by Age 15 companies reporting 2006 total wastage = 35% Source : LifePlans Inc, 2007 US survey

2006 US LTC - Average Issue Times from Date of Receipt 17 companies reporting Source : LifePlans Inc, 2007 US survey

Agenda Critical Illness Insurance (CII) Long Term Care Insurance (LTCI) Disability Income Insurance (DII) 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

DII sales trend 2007 Annual Meeting Assemblée annuelle 2007 Source: Canadian Individual Disability Income Insurance Sales, U.S. Individual Disability Income Insurance Sales, LIMRA International

DII – hot topic Flat sales experienced in recent years 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007

DI – Market penetration Canada (2005) Around 64 % of workers, salaried or self-employed are covered by DI Assumptions: Part time employees could be covered by DI Unemployed are unlikely to be covered 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 Source: ACCAP 2005, StatCan

Workers numbers VS disability coverages 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18, In thousand Disabilty insured persons (group or individual) Workers numbers Average increase of 5.2% Average increase of 2%

Long term care Retirement Long term disability Critical illnesses 85 Assets protection Life insurance Income protection Financial security planning

IP12: Living Benefits - Hot Topics Questions? 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007