Slide 1: 2005 Second Quarter Financial and Operating Results
ING Canada Inc. 2005 Second Quarter Financial and Operating Results August 11, 2005 PRELIMINARY DRAFT www.ingcanada.com
Slide 2: Forward-Looking Statement Disclaimer
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 stateme
Slide 3: Presenters: Dussault, Cunningham, Brindamour
Claude Dussault (President & CEO) Michael Cunningham (Senior Vice-President & CFO) Charles Brindamour (Executive Vice-President) 3
Slide 4: Q2/05 Highlights
Q2/05 Highlights Strong financial results Net income of $223.6 million (up 29.7% over Q2/04) Earnings per adjusted share (diluted pro forma) of $1.67 (vs $1.29 in Q2/04) Return on equity Last twelve months: 37.8% (vs 34.3% in Q2/04) Q2 annualized: 36.8% (vs 57.9% in Q2/04) Combined ratio
Slide 5: Earnings Reconciliation
Earnings Reconciliation Summary ($ millions) Q2 2004 Net Income $172.3 Allianz 21.9 Increase in underwriting income of industry pools 8.5 Alberta Storms (28.2) Higher Investment income 19.8 Increase in realized and other gains 24.0 Other 5.3 51.3 Q2 2005 Net Income $223.6 5
Slide 6: Direct Premiums Written
Direct Premiums Written ($ millions) $4,000 $3,576 $3,444 $3,107 $3,000 $2,192 $2,000 + 12.3% $1,171 $1,043 $1,000 $0 2001 2002 2003 Q2/04 2004 Q2/05 Increase in number of insured risks(1) of 15.7% partially offset auto insurance rate reduction of 7%. Allianz acquisition contributed $260 million of
Slide 7: Net Premiums Earned
Net Premiums Earned ($ millions) $4,000 $3,365 $3,000 $2,761 $2,337 $2,019 $2,000 +15.4% $956 $1,000 $828 $0 2001 2002 2003 Q2/04 2004 Q2/05 Increase in NPE driven by Allianz acquisition 7
Slide 8: Combined Ratio
Combined Ratio 120% 102.7% 101.2% 100% 98.1% 29.0% 86.0% 81.2% 27.4% 78.9% 80% 30.0% 29.4% 29.2% 29.6% 60% 40% 73.7% 73.8% 68.1% 49.7% 56.6% 51.6% 20% 0% 2001 2002 2003 Q2/04 2004 Q2/05 Claims ratio Expense ratio Continued strong performance particularly in auto, driven by low claim frequencies and
Slide 9: Investment Yields
(1) Investment Yields 10% 8% 6.5% 6.0% 5.9% 6% 5.2% 5.3% 5.1% 4% 2% 0% (2) 2001 2002 2003 Q2/04 2004 Q2/05 Yields reflect low interest rate environment (1) Pre-tax, at book value, excluding realized gains and losses (2) Calculation based on adjusted book value reflecting January 2004 quota share com
Slide 10: Realized Investment and Other Gains
(1) Realized Investment and Other Gains ($ millions) $150 $132.4 $100 $46.7 $50 $34.2 $32.1 $2.5 $6.0 $0 2001 2002 2003 Q2/04 2004 Q2/05 Increase driven by strong equity and fixed income gains (1) Pre-tax 10
Slide 11: Net Income
Net Income ($ millions) $700 $624.2 $600 $500 $400 % $300 + 29.7 $223.6 $200 $172.3 $150.5 $86.9 $100 $29.3 $0 2001 2002 2003 Q2/04 2004 Q2/05 Earnings driven by the continued strength of the underwriting results and higher investment income and realized investment gains 11
Slide 12: Return On Equity
(1) Return On Equity 50% 40% 30% 20% 40.9% 37.8% 34.3% 10% 16.5% 7.9% 0% 3.0% 2001 2002 2003 Q2/04 2004 Q2/05 Strong earnings generated on an increasing equity base (1) Last twelve months 12
Slide 13: Debt to Total Capital Ratio
Debt to Total Capital Ratio 50% 40% 37.5% 32.8% 30.5% 30% 26.5% 20% 11.1% 10% 4.8% 0% 2001 2002 2003 Q2/04 2004 Q2/05 Growth in retained earnings results in declining leverage 13
Slide 14: Questions and Answers
Questions and Answers www.ingcanada.com
Slide 15: Questions and Answers: Alberta storm reserves
Questions and Answers Q1: Were your existing reserves sufficient to cover losses from the Alberta storms? A1: The Alberta storms necessitated an increase in our reserves. Recall that we are not permitted to set aside reserves for events that haven’t yet occurred. Reserves, including IBNR amounts and
Slide 16: Questions and Answers: Non-core divestments
Questions and Answers Q2: You’ve recently gotten out of proprietary mutual funds and the commercial marine business – can we expect ongoing “non-core” divestments? A2: We focus on lines of business where we have scale, where we can outperform the industry on a sustainable basis and where we can crea
Slide 17: Questions and Answers: Allianz integration
Questions and Answers Q3: How is the Allianz integration going – are retention levels in accordance with expectations? A3: No issues of note. Earnings to date exceed our expectations and the integration is progressing as planned. Retention levels are in keeping with our purchase assumptions. 17
Slide 18: Questions and Answers: 2001 Portfolio Purchase interest
Questions and Answers Q4: Can you explain the nature of the $14.5 million interest payment received relative to the 2001 Portfolio Purchase? A4: Related to the 2001 Portfolio Purchase, a receivable of approximately $100 million was subject to an interim settlement. This receivable accrued interest o
Slide 19: Questions and Answers: Facility Association impact
Questions and Answers Q5: What impact did the Facility Association (FA) and other pools have on earnings this quarter? What’s behind the transfer of $123.9 million in investment assets from FA to you? A5: Industry pools contributed $8.7 million in underwriting income in Q2/05 vs. an underwriting los
Slide 20: Questions and Answers: Goodwill increase
Questions and Answers Q6: Why did Goodwill increase by almost $14 million? A6: During the quarter, we acquired the remaining outstanding shares of companies previously accounted as long term investments under the equity method and now these entities are consolidated, resulting in an increase of and
Slide 21: www.investor.ingcanada.com
www.investor.ingcanada.com