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

Pardon the Interruption Disclaimer: The views you are about to hear do not necessarily reflect the views of any company, and may just be put forth for the sake of generating discussion 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 RUNDOWN Panel Level COI Ltd Pay UL Term Prices T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Life Pricing Hot Topics

Mark Edwards, FSA, FCIA AVP and Pricing Actuary Individual Insurance – Life and Living Benefits Manulife Financial Robert Bhatia, FSA, FCIA AVP Life Pricing Transmerica Life Canada Steve Bocking, FSA, FCIA Associate Manager, Individual Life Great West Life 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 RUNDOWN Panel Level COI Ltd Pay UL Term Prices T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! The Panel

Opinion about own Company’s profitability! 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 RUNDOWN Panel Level COI Ltd Pay UL Term Prices T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! LCOI Profitability Source: 2006 Munich Re Pricing Survey

Coincidence? 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 RUNDOWN Panel Level COI Ltd Pay UL Term Prices T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Interest Rates Source: 2006 Munich Re Pricing Survey

2007 LCOI Composite Rates 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 RUNDOWN Panel Level COI Ltd Pay UL Term Prices T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Lapse Rates Source: 2007 CIA Lapse Study

2003 vs LCOI Lapses 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 RUNDOWN Panel Level COI Ltd Pay UL Term Prices T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Lapse Rates Source: 2007 CIA Lapse Study

How big is the market? Will it just replace existing sales? Is it profitable? Do we have accurate experience? 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 RUNDOWN Panel Level COI Ltd Pay UL Term Prices T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Limited Pay UL

MNS Age 40, $300,000, Term Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 RUNDOWN Panel Level COI Ltd Pay UL Term Prices T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Term Prices Source: Transamerica Life Canada

R= ratio of renewal premium to initial premium S= ratio of renewal premium to newly underwritten attained age initial premium 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 RUNDOWN Panel Level COI Ltd Pay UL Term Prices T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Term Prices Source: Transamerica Life Canada

What’s the real answer? 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses Source: 2006 Munich Re Pricing Survey T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye

2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Is Term 20 Better? MNS Age 40, $300,000 Source: Transamerica Life Canada

2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Quick Pay

Significant portion of 2006 new business sales: – Over 20% of UL Level COI sales – Nearly 15% overall UL sales Are we encouraging through compensation? 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Conversions

2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Reinsurance Ceded Source: Various Where are we going next?

2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Consolidation

A lot money out there What capacity is available, and is it enough? Should prices move up or down? Market conduct 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Large Case Pricing

YRT to Level COI Switches Single to JLTD JFTD to JLTD T10 to T20 Anything for my top advisors 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Conserving Business

Odds Makers 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye

Odds that banks will have no restrictions in selling insurance within 5 years? Within 10 years? 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Banks in Insurance

2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Time to Place Odds that the industry average time to place will be less than 20 days by 2010? 2015? Source: 2006 Munich Re Pricing Survey

Odds that in 2007: – Term grows by 6% – UL grows by 15% – Other Products grow by 3% – Overall grows by 10% 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye New Business Growth

Odds that we may see a movement to levelized commissions in the next 5 years? 10 years? 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Advisors

Odds that the SOA will change the exam system within the next five years (AGAIN!) 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Exam System

Odds of a major acquisition in the Canadian market within 5 years 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Acquisition

Toss Up! 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye

2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Preferred Products OR New Designs on their way No Changes Preferred?

2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Foreign Travel OR Risky Proposition Much Ado About Nothing

2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Combo Products OR Industry’s next product innovation All talk no action

2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Audience Toss Up? OR Will they participate? Won’t they?

2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye Admin Systems OR Gateway to Information for Pricing Barrier to Information for Pricing

Final Thoughts??? 2007 Annual Meeting Assemblée annuelle Annual Meeting Assemblée annuelle 2007 T10 Lapses T20? Quick Pay Conversions Reinsurance Large Cases Conservation Odds Makers Bancassurance UW Time NB Growth Advisors Exams Acquisition Toss Up! Preferred For. Travel Combo Audience Systems Goodbye