Investor Presentation Spring 2008 The leader in the Canadian - - PDF document

Investor Presentation – Spring 2008

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• 11% market share
• $4.1 billion direct premiums written
• 4.7 million written insured risks
• $7.1 billion investment portfolio
• Market leader in Alberta, Nova Scotia and

Quebec; 2nd largest in Ontario

• Industry consolidator: 11 acquisitions in

19 years

The leader in the Canadian P&C market

0% 10% 20% 30% 40% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

ROE performance of insurance subsidiaries compared to Canadian P&C insurance industry

Canadian industry 10-year avg. = 11.0%

Source: MSA Research June 2007. Reinsurers are included, Lloyd’s and ICBC are excluded. 0% 50% 100% 150% 200% 250% 300% 350% 400% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Premium growth – direct premiums written for 10 years (indexed to 1997)

Canadian industry 10-year CAGR = 7.4% 10-year CAGR = 14.1% 10-year avg. = 18.6%

$4.1 $3.2 $2.2 $1.9 $1.8

$0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5

10.5% 8.1% 5.7% 4.9% 4.8% Market share Direct premiums written ($ billions)

Aviva Canada Co-operators General Economical Insurance Group

Top five insurers represent 34% of the market Top five insurers represent 34% of the market

TD Meloche Monnex

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Two key business goals driving our strategy

Return on equity Exceed the Canadian P&C industry annually by

500 bps

Top-line growth Exceed P&C industry growth rate over time by

300 bps

Leveraging our competitive advantages to consistently

• utperform the Canadian P&C

industry Return on equity Premium growth 760 bps 670 bps 10-year superior performance gap to industry 1 2

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$441 $472 $617 $897 $424 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000

Scale drives superior performance in personal lines

$1,144 $1,457 $1,723 $2,364 $1,139 $0 $500 $1,000 $1,500 $2,000 $2,500

2007 Personal property DPW ($ millions) 2007 Automobile direct premiums written – personal and commercial ($ millions)

ING Canada Aviva Canada TD Meloche Monnex Economical State Farm Wawanesa ING Canada Aviva Canada Economical Co-operators General 71.6% 68.9% 71.7% 60.7% 68.7% 63.5%

54% 56% 58% 60% 62% 64% 66% 68% 70% 72% 74%

5 years 2006 2007

Industry ING Canada

Automobile – loss ratio

65.4% 66.6% 67.0% 68.7% 67.9% 64.0%

54% 56% 58% 60% 62% 64% 66% 68% 70% 72% 74% 5 years 2006 2007

Industry ING Canada

Personal property – loss ratio

Source: P&C-1 forms

5 991 794 776 755 720 620 535 534 424 199 100 200 300 400 500 600 700 800 900 1000

Long-term industry outperformance in commercial

Small (<$10,000), 61% Medium ($10,000- $50,000), 28% Large (>$50,000), 11%

DPW and market share versus key competitors 2007 Commercial property and liability combined ($ millions)

9.5% Lloyd’s 7.6% AIG 7.5% ING 6.9% Lombard 7.3% Aviva 6.0% Zurich 5.1% Co-op 5.1% Axa 4.1% Eco 2.5% Royal

% of DPW by size of commercial account

ING is #1 in small to medium-sized accounts

ING Canada commercial non-auto net loss ratio gap versus industry (bps)

59.4% 56.5% 56.1% 46.5% 52.6% 54.6%

30% 35% 40% 45% 50% 55% 60% 65% 5 years 2006 2007

Industry ING Canada

Source: MSA Research Source: MSA Research. Excludes Lloyd’s, ICBC and unreported companies.

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Benefits of scale advantage

• Pricing and underwriting:
• Sophisticated pricing segmentation
• Large proprietary experience

database

• Disciplined and automated risk

selection process

• Identify and exploit profit pockets in

the market

• Claims and expense management:
• Strong in-house claims expertise
• 95% of claims in 2007 handled by

internal claims personnel

• Preferred provider relationships

(Rely Networks) to increase quality and speed of service

• Leveraging buying power to reduce

material costs

Automobile* Personal property Commercial non-auto Commercial liability Superior loss ratio gap to the industry (percentage points) 8.1 1.4 6.8 13.9 Favourable gap

(5-year average)

*Includes personal and commercial auto

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belairdirect has grown at an annual rate of 10% over the last five years

Diverse business model maximizes growth

Direct, $455.3, 15% Affiliated distribution network, $333.5, 11% Broker, $2,166.8, 74%

Affiliated Distribution Networks: includes brokerages in which we have an ownership interest – Equisure, Canada Brokerlink, GreyPower belairdirect: offers insurance products and services directly to consumers via the Internet and call centres ING Insurance: provides insurance products and services through a network of 1,800 independent brokerages

Our family of insurance brands

Personal lines – 2007 direct premiums written by distribution channel ($ millions)

Strong growth in direct-to- consumer channel

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Strong capital position and borrowing capacity

Excess capital

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$ 614 Debt capacity2 $ 781 Total capacity for acquisitions, share buybacks and dividends $ 1,395

(in $ millions)

1 Includes cash at holding company level. Assumes MCT of 170%. 2 Assumes 20% debt to total capital

Strategic capital priorities:

• Acquisitions
• Share buybacks
• Continued dividend

increases We’re focused on capital management initiatives that create value for shareholders while retaining financial flexibility for potential acquisition

• pportunities.

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Capital management initiatives

• $1.4 billion in excess capital and debt

capacity at the end of Q1-2008

• Strong capital base allows us to

pursue our growth objectives while returning capital to shareholders

• Normal course issuer bid to buy back

up to 6.2 million shares in 2008, or

• ver $200 million at the current

market price

• ING Group participating

proportionately in the share buyback

• Track record of dividend increases

1.065 6.224

• 1.0

2.0 3.0 4.0 5.0 6.0 7.0

Total Up to April 30, 2008

Share buyback up to April 30, 2008

(in millions)

$0.270 $0.250 $0.1625 $0.310

• 0.1

0.1 0.2 0.2 0.3 0.3 0.4 2005 2006 2007 2008

Quarterly dividend

53.8% 8.0% 14.8%

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Future consolidation in a fragmented industry

Top 20 P&C insurers

Market share (by DPW in 2007)

Total = 80.6%

P&C industry in Canada is highly fragmented compared to other financial services Current environment more likely to create opportunity as: Industry ROEs are down from recent record highs Foreign parent companies are generally in less favourable capital position compared to one year ago

Non-top 20 19.4% Canadian private 12.2% Foreign-owned private 35.8% Canadian Mutuals 9.2% Bank-owned 6.6% ING Canada 10.9% Canadian public (excl. ING) 5.9%

Source: Scotia Capital, April 2008 report

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$7.1B portfolio managed on after-tax return basis

Investment philosophy: Preservation of capital Income generation Manage for economic value, not accounting income Portfolio quality: More than 95% of our fixed income portfolio is rated ‘A’ or better No U.S. sub-prime exposure No asset-backed commercial paper No collateralized debt

• bligations

Only $8.8 million of structured investment vehicles

ING Canada invested assets

by asset class

Common shares 24% Other 3% Fixed income 53% Preferred shares 20%

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• Underwriting profitability and industry

premium growth will trend toward historical averages

• Stable cost environment and reforms

have been effective in making auto insurance affordable and available to consumers

• Accident benefit/bodily injury trends in

Ontario and Alberta will likely lead to auto premium increases

• Water-related damages and construction

costs inflation could drive personal property premium increases

• Commercial insurance remains

competitive and construction costs have increased

Leveraging our strengths to outperform the industry

Canadian P&C industry

• utlook
• Scale
• Underwriting discipline
• Pricing sophistication
• Claims expertise
• Innovative product and service offering
• Multi-channel distribution strategy

Unique advantages that enable us to outperform the industry

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Appendices

14 Personal auto, $2,057.7, 50% Commercial auto, $321.2, 8% Commercial non-auto, $825.3, 20% Personal property, $904.4, 22%

2007 Direct premiums written by business line ($ millions) 2007 Direct premiums written by geographic region ($ millions)

Alberta, $826.0, 20% Other, 68.9, 2% Maritimes, 189.6, 5% Ontario, $1,744.9, 42% British Columbia, $234.7, 6% Quebec, $1,037.2, 25%

Premiums by business line and province

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Personal lines – premiums by province

Ontario, $1,123.1, 48% Quebec, $554.7, 23% Alberta, $542.5, 23% Other, $37.4, 2% Nova Scotia, $80.0, 3% British Columbia, $26.6, 1%

Ontario, $303.9, 34% British Columbia, $125.3, 14% Alberta, $120.4, 13% Quebec, $267.7, 30% Other, $42.8, 5% Nova Scotia, $36.6, 4%

2007 Auto premiums by province ($ millions)

Source: MSA

2007 Personal property premiums by province ($ millions)

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Q1-08 Results

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$532.3 $612.3 $530.5 $457.1 $112.8 $91.9 $169.5 $127.6 $38.3 $70.2 $12.4

$0 $200 $400 $600 $800

2004 2005 2006 2007 Q1-07 Q1-08

Net gains on invested assets and other gains Net operating income

Solid operating results in Q1-08

(in millions)

$860 $846 $3,501 $3,906 $3,994 $4,109

$0 $1,000 $2,000 $3,000 $4,000 2004 2005 2006 2007 Q1-07 Q1-08 5.1% 4.8% 4.7% 4.9% 5.0% 5.1% 0% 2% 4% 6% 2004 2005 2006 2007 Q1-07 Q1-08 Market-based yield

Increase in DPW driven by higher premiums in personal lines and modest unit growth. Severe winter storms in Central Canada overshadowed

• therwise solid operating results.

Direct premiums written (excl. pools) Market yield increased by 10 bps to 5.1%. ROE of 13.0% remained well above industry long-term averages.

31.6% 40.9% 19.4% 15.4% 13.0% 20.8% 14.40% 16.9% 17.6% 18.5%

0% 10% 20% 30% 40% 50% 2004 2005 2006 2007 Q1-07 Q1-08

ING Canada (holding company) Canadian P&C Industry

Sources of earnings ($ millions) Return on equity (rolling 12-month) Market-based yield

• $18.9

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Industry cyclicality, seasonality and regulation

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Seasonality of the P&C insurance industry

0.86 0.88 0.90 0.92 0.94 0.96 0.98 1.00 1.02 1.04 1.06 First Quarter Second Quarter Third Quarter Fourth Quarter

Seasonal indicator

Combined ratio typically highest in the first quarter of each year

Note: Seasonal indicator is the ratio of the combined ratio in each quarter relative to the full year combined ratio.

• Combined ratios are typically

highest in the first and fourth quarters due to winter weather conditions

• Snow, ice, hail, wind and rain

can affect both property and auto insurance results

• Properties in areas with

inadequate sewer systems are particularly vulnerable to water losses

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What causes P&C cyclicality?

Inefficient industry capital management

• Supply-driven industry
• Excess capital influences aggressive pricing,

particularly in commercial lines

Time lag

• Time lag between pricing, historical data, final

confirmation of costs

• Rate adjustments are made after trends develop
• Premiums recognized over the term of the policy

Regulatory/ political process

• Increases cycle amplitude
• Reduces pricing flexibility and delays price

adjustments (in certain provinces)

Decentralized decision- making

• Price negotiations on large accounts

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Historical average industry return on equity

• Over the past 30 years,

returns in the P&C insurance industry have fluctuated substantially with average ROE of roughly 10% over that period

• We are able to manage

the cycle pattern to our advantage by identifying unexploited profit pockets in the market

0% 5% 10% 15% 20% 25% 1 9 7 5 1 9 7 6 1 9 7 7 1 9 7 8 1 9 7 9 1 9 8 1 9 8 1 1 9 8 2 1 9 8 3 1 9 8 4 1 9 8 5 1 9 8 6 1 9 8 7 1 9 8 8 1 9 8 9 1 9 9 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 2 1 2 2 2 3 2 4 2 5 2 6 2 7

Sources: IBC and MSA

30-year average –

• Approx. 10%*

* Based on most recent industry data (up to 2007)

Canadian P&C Industry – Return on equity 1975-2007

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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

• n 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

• perations of our subsidiaries; the limited trading history of our common shares; the volatility of the stock market and
• ther 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

• f new information, future events or otherwise, except as required by law.