Investor Presentation – Spring 2008
The leader in the Canadian P&C market ROE performance of insurance subsidiaries • 11% market share compared to Canadian P&C insurance industry • $4.1 billion direct premiums written 40% • 4.7 million written insured risks 30% • $7.1 billion investment portfolio 10-year avg. = 18.6% 20% • Market leader in Alberta, Nova Scotia and Quebec; 2 nd largest in Ontario Canadian industry 10-year avg. 10% = 11.0% • Industry consolidator: 11 acquisitions in 0% 19 years 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: MSA Research June 2007. Reinsurers are included, Lloyd’s and ICBC are excluded. Direct premiums written Top five ($ billions) Top five insurers Premium growth – direct premiums written for insurers represent $4.5 represent 10 years (indexed to 1997) 34% of 34% of $4.0 the $4.1 the 400% market $3.5 market 350% $3.0 $3.2 $2.5 300% 10-year CAGR = 14.1% $2.0 $2.2 250% $1.9 $1.8 $1.5 200% Canadian industry $1.0 150% 10-year CAGR $0.5 = 7.4% 100% $0.0 TD 50% Aviva Co-operators Economical Meloche Canada General Insurance Group 0% Monnex 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Market 10.5% 8.1% 5.7% 4.9% 4.8% share 2
Two key business goals driving our strategy Leveraging our competitive Return on equity 1 advantages to consistently outperform the Canadian P&C Exceed the Canadian P&C industry industry annually by 10-year superior 500 bps performance gap to industry Return on equity 760 bps Top-line growth 2 Premium growth 670 bps Exceed P&C industry growth rate over time by 300 bps 3
Scale drives superior performance in personal lines 2007 Automobile direct premiums written – Automobile – loss ratio personal and commercial ($ millions) Industry ING Canada $2,500 $2,364 74% 71.6% 71.7% 72% $2,000 68.9% 70% 68.7% $1,723 68% $1,457 $1,500 66% $1,144 $1,139 63.5% 64% $1,000 62% 60.7% 60% 58% $500 56% 54% $0 IN G C a n a d a A v iv a C a n a d a T D M e lo c h e Mo n n e x C o -o p e ra to rs S ta te F a rm TD 5 years 2006 2007 ING Aviva State Economical Meloche Canada Canada Farm Monnex 2007 Personal property DPW ($ millions) Personal property – loss ratio $1,000 $897 Industry ING Canada $900 74% $800 72% $700 70% $617 68.7% 67.9% $600 68% 67.0% 66.6% $472 65.4% $441 66% $500 $424 64.0% 64% $400 62% $300 60% $200 58% $100 56% $0 54% ING Aviva Co-operators Wawanesa 5 years 2006 2007 Canada Canada General Economical Source: P&C-1 forms 4
Long-term industry outperformance in commercial ING Canada commercial non-auto net loss ratio gap versus industry (bps) DPW and market share versus key competitors 2007 Commercial property and liability combined ($ millions) Industry ING Canada 65% 991 59.4% 1000 60% 56.5% 56.1% 54.6% 55% 52.6% 900 794 50% 776 46.5% 800 755 45% 720 700 40% 620 35% 600 535 534 30% 500 5 years 2006 2007 424 Source: MSA Research. Excludes Lloyd’s, ICBC and 400 unreported companies. 300 % of DPW by size of commercial account 199 200 Large 100 (>$50,000), 11% 0 9.5% 7.6% 7.5% 7.3% 6.9% 6.0% 5.1% 5.1% 4.1% 2.5% Lloyd’s AIG ING Aviva Lombard Zurich Co-op Axa Eco Royal Medium Source: MSA Research ($10,000- $50,000), ING is #1 in small to medium-sized accounts 28% Small (<$10,000), 61% 5
Benefits of scale advantage • Pricing and underwriting: • Sophisticated pricing segmentation • Large proprietary experience Superior loss ratio gap to the database industry (percentage points) • Disciplined and automated risk selection process Favourable gap • Identify and exploit profit pockets in (5-year average) the market Automobile* 8.1 • Claims and expense management: Personal property 1.4 • Strong in-house claims expertise Commercial non-auto 6.8 • 95% of claims in 2007 handled by internal claims personnel Commercial liability 13.9 • Preferred provider relationships (Rely Networks) to increase quality *Includes personal and commercial auto and speed of service • Leveraging buying power to reduce material costs 6
Diverse business model maximizes growth Personal lines – 2007 direct Our family of insurance brands premiums written by distribution channel ($ millions) Affiliated ING Insurance : provides distribution network, insurance products and $333.5, 11% services through a network of 1,800 independent Direct, brokerages $455.3, 15% Broker, $2,166.8, 74% belairdirect : offers insurance products and services directly to consumers via the Internet and call centres Strong growth in direct-to- consumer channel Affiliated Distribution Networks : includes brokerages in which we have belairdirect has grown at an an ownership interest – annual rate of 10% over the Equisure, Canada Brokerlink, last five years GreyPower 7
Strong capital position and borrowing capacity (in $ millions) 1 Excess capital $ 614 Strategic capital priorities: Debt capacity 2 $ 781 • Acquisitions Total capacity for • Share buybacks acquisitions, share buybacks • Continued dividend and dividends $ 1,395 increases 1 Includes cash at holding company level. Assumes MCT of 170%. 2 Assumes 20% debt to total capital We’re focused on capital management initiatives that create value for shareholders while retaining financial flexibility for potential acquisition opportunities. 8
Capital management initiatives Share buyback up to April 30, 2008 (in millions) • $1.4 billion in excess capital and debt 7.0 capacity at the end of Q1-2008 6.224 6.0 5.0 • Strong capital base allows us to 4.0 pursue our growth objectives while 3.0 returning capital to shareholders 2.0 1.065 1.0 • Normal course issuer bid to buy back - up to 6.2 million shares in 2008, or Total Up to April 30, 2008 over $200 million at the current Quarterly dividend market price 14.8% 0.4 8.0% • ING Group participating $0.310 0.3 $0.270 proportionately in the share buyback 53.8% $0.250 0.3 0.2 • Track record of dividend increases $0.1625 0.2 0.1 0.1 - 2005 2006 2007 2008 9
Future consolidation in a fragmented industry Top 20 P&C insurers Market share (by DPW in 2007) � P&C industry in Canada is highly Total = 80.6% fragmented compared to other financial services ING Canada Canadian public 10.9% (excl. ING) � Current environment more likely to 5.9% Canadian private create opportunity as: 12.2% Non-top 20 19.4% � Industry ROEs are down from Canadian Mutuals recent record highs 9.2% Bank-owned � Foreign parent companies are 6.6% generally in less favourable capital position compared to one year ago Foreign-owned private 35.8% Source: Scotia Capital, April 2008 report 10
$7.1B portfolio managed on after-tax return basis � Investment philosophy: ING Canada invested assets � Preservation of capital by asset class � Income generation � Manage for economic value, not accounting income Other 3% � Portfolio quality: � More than 95% of our fixed Fixed income 53% income portfolio is rated ‘A’ or better Common shares 24% � No U.S. sub-prime exposure � No asset-backed commercial paper � No collateralized debt Preferred shares obligations 20% � Only $8.8 million of structured investment vehicles 11
Leveraging our strengths to outperform the industry Canadian P&C industry Unique advantages that outlook enable us to outperform the industry • Underwriting profitability and industry • Scale premium growth will trend toward • Underwriting discipline historical averages • Pricing sophistication • Stable cost environment and reforms • Claims expertise have been effective in making auto insurance affordable and available to • Innovative product and service offering consumers • Multi-channel distribution strategy • Accident benefit/bodily injury trends in Ontario and Alberta will likely lead to auto premium increases • Water-related damages and construction costs inflation could drive personal property premium increases • Commercial insurance remains competitive and construction costs have increased 12
Appendices 13
Premiums by business line and province 2007 Direct premiums written by business line 2007 Direct premiums written by geographic region ($ millions) ($ millions) Maritimes, Other, 68.9, 2% 189.6, 5% Commercial British non-auto, Columbia, $825.3, 20% $234.7, 6% Ontario, Alberta, $826.0, Commercial $1,744.9, 42% 20% auto, $321.2, Personal auto, 8% $2,057.7, 50% Personal property, Quebec, $904.4, 22% $1,037.2, 25% 14
Personal lines – premiums by province 2007 Auto premiums by province 2007 Personal property premiums by ($ millions) province ($ millions) British Columbia, Other, $37.4, $26.6, 1% Other, $42.8, 5% 2% Nova Scotia, Nova Scotia, $80.0, 3% $36.6, 4% Alberta, $120.4, Ontario, $303.9, 13% Alberta, $542.5, 34% 23% Ontario, $1,123.1, 48% British Columbia, $125.3, 14% Quebec, $267.7, Quebec, $554.7, 30% 23% Source: MSA 15
Q1-08 Results 16
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