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

2. CIA Annual Meeting Session 3105 LOOKING BACK…focused on the future Market Growth in individual life insurance in-force premium Source: Canadian Annual Return of Federally regulated Companies.

3. CIA Annual Meeting Session 3105 LOOKING BACK…focused on the future Market growth alone not sufficient to meet demands for profit growth from shareholders/corporate Stealing share a top priority, but from industry perspective… Need a loser for every winner Creates intense competition impacting prices/guarantees M&A has helped fill the gap… Many expense synergies One example - 500,000 policies with $20 reduction in admin costs creates $100mm of value to be shared by buyer/seller One time bump in sales growth Market growth alone not sufficient to meet demands for profit growth from shareholders/corporate Stealing share a top priority, but from industry perspective… Need a loser for every winner Creates intense competition impacting prices/guarantees M&A has helped fill the gap… Many expense synergies One example - 500,000 policies with $20 reduction in admin costs creates $100mm of value to be shared by buyer/seller One time bump in sales growth

4. CIA Annual Meeting Session 3105 LOOKING BACK…focused on the future Many have exited/merged… Clarica MetLife Prudential Assurance Seaboard National London Commercial Union Maritime Royal Sun Alliance Aetna Financial Life Canada Crown CNA NN Life Norwich Union Prudential Insurance

5. CIA Annual Meeting Session 3105 LOOKING BACK…focused on the future All this consolidation, and the market remains hyper-competitive… Top 8 are multi billion dollar market cap firms Market too small for these players to be niche…so competing head to head on most sales Majority of distribution is independent with an implicit obligation to ensure best product/price for the customer => First to raise prices can count on significant reduction in sales. All this consolidation, and the market remains hyper-competitive… Top 8 are multi billion dollar market cap firms Market too small for these players to be niche…so competing head to head on most sales Majority of distribution is independent with an implicit obligation to ensure best product/price for the customer => First to raise prices can count on significant reduction in sales.

6. CIA Annual Meeting Session 3105 LOOKING BACK…focused on the future Companies That Say Competitors Are Willing to Raise Rates Source: Munich Re’s 2005 Pricing Survey

7. CIA Annual Meeting Session 3105 LOOKING BACK…focused on the future Environmental Factors Interest rates decreasing…price increases required to maintain profit Price changes infrequent and costly to implement relative to other industries => can’t reverse action quickly/easily if others don’t follow => increases risk of being first to increase Environmental Factors Interest rates decreasing…price increases required to maintain profit Price changes infrequent and costly to implement relative to other industries => can’t reverse action quickly/easily if others don’t follow => increases risk of being first to increase

8. CIA Annual Meeting Session 3105 LOOKING BACK…focused on the future Pricing Adequacy - % Priced Profitably 0 10 20 30 40 50 60 70 80 90 100 TermUL Level COI Single UL Level COI Joint UL YRT/Other Single UL YRT/Other Joint Par Whole Life % of Companies Own CompanyCompetitors Source: Munich Re’s 2005 Pricing Survey

9. CIA Annual Meeting Session 3105 LOOKING BACK…focused on the future Conclusions… A tough market Little pricing power falling yields impacting new business profitability Earnings growth must exceed market growth Success possible Distribution development New market development (eg health insurance) Continued cost reduction – M&A, process improvement, outsourcing… Conclusions… A tough market Little pricing power falling yields impacting new business profitability Earnings growth must exceed market growth Success possible Distribution development New market development (eg health insurance) Continued cost reduction – M&A, process improvement, outsourcing…