Slide 1: 2005 First Quarter Financial and Operating Results
ING Canada Inc. 2005 First Quarter Financial and Operating Results May 12, 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
Claude Dussault (President & CEO) Michael Cunningham (Senior Vice-President & CFO) Charles Brindamour (Executive Vice-President) 3
Slide 4: Q1/05 Highlights
Q1/05 Highlights Strong financial results Net income of $158.5 million (up 38% over Q1/04) Earnings per adjusted share (diluted pro forma) of $1.19 (vs $0.86 in Q1/04) Return on equity Last twelve months : 38.9% (vs 27.2% in Q1/04) Q1 annualized : 28.9% (vs 44.0% in Q1/04) Combined ratio
Slide 5: Earnings Reconciliation
Earnings Reconciliation ($ millions) Net income – Q1/04 115.1 Allianz underwriting income excl. transition expenses 9.7 Allianz transition expenses (2.9) Favorable prior year development excl. Allianz 21.7 Favorable development of class action suits 10.5 Current accident year improvement 7.9 46.8 Hi
Slide 6: Direct Written Premiums
Direct Written Premiums ($ millions) 4,000 $3,576 $3,444 $3,107 3,000 $2,192 2,000 + 13% 1,000 $728 $822 0 2001 2002 2003 Q1/04 2004 Q1/05 Increase in number of insured risks(1) of 4.7% partially offset auto insurance rate reduction of 9%. Allianz acquisition contributed $134.9 million of DWP (1) Ex
Slide 7: Net Premiums Earned
Net Premiums Earned ($ millions) 4,000 $3,365 3,000 $2,761 $2,337 $2,019 2,000 +18% $968 1,000 $818 0 2001 2002 2003 Q1/04 2004 Q1/05 Increase in NPE driven by Allianz acquisition 7
Slide 8: Combined Ratio
Combined Ratio 120% 102.7% 101.2% 100% 98.1% 94.7% 86.0% 88.1% 29.0% 27.4% 80% 30.0% 28.2% 29.4% 29.5% 60% 40% 73.7% 73.8% 68.1% 66.5% 56.6% 58.6% 20% 0% 2001 2002 2003 Q1/04 2004 Q1/05 Claims ratio Expense ratio Continued strong performance across all lines of business particularly auto, driven by
Slide 9: Investment Yields
(1) Investment Yields 10% 8% 6.5% 6.0% 5.9% 6% 5.3% 5.3% 5.0% 4% 2% 0% (2) 2001 2002 2003 Q1/04 2004 Q1/05 Reduced yield attributable primarily to the acquisition of Allianz and a resulting increase in fixed income holdings (1) : Pre-tax, at book value, excluding realized gains and losses (2) : Calc
Slide 10: Operating Earnings
Operating Earnings ($ millions) $600 $535.1 $500 $400 $300 $532.3 $200 $171.2 +71% $128.6 $100 $98.7 $75.1 $65.8 $144.0 $128.6 $65.8 $72.5 $37.7 $0 2001 2002 2003 Q1/04 2004 Q1/05 ING Canada standalone After-tax Zurich Related Charges (1) Operating earnings driven by strong underwriting results (1)
Slide 11: Realized Investment and Other Gains
(1) Realized Investment and Other Gains ($ millions) $150 $132.4 $100 $72.0 $50 $42.7 $34.2 $32.1 $2.5 $0 2001 2002 2003 Q1/04 2004 Q1/05 Reduction caused primarily by reduced gains on fixed income (1) Pre-tax 11
Slide 12: Net Income
Net Income ($ millions) $700 $624.2 $600 $500 $400 $300 + 38% $200 $150.5 $158.5 $115.1 $86.9 $100 $29.3 $0 2001 2002 2003 Q1/04 2004 Q1/05 Increased earnings driven by improved underwriting results and the favourable impact of the Allianz acquisition 12
Slide 13: Return On Equity
(1) Return On Equity 50% 40% 30% 20% 40.9% 38.9% 27.2% 10% 16.5% 7.9% 0% 3.0% 2001 2002 2003 Q1/04 2004 Q1/05 Strong earnings generated on an increased equity base following the IPO (1) Last twelve months 13
Slide 14: Debt to Total Capital Ratio
Debt to Total Capital Ratio 50% 40% 37.5% 32.8% 30.5% 30.4% 30% 20% 11.1% 10% 5.2% 0% 2001 2002 2003 Q1/04 2004 Q1/05 Over-allotment proceeds used to reduce debt during the quarter 14
Slide 15: Questions & Answers
ING Canada Inc. Questions & Answers www.ingcanada.com
Slide 16: Questions and Answers: Allianz integration
Questions and Answers Q1: What’s the status of the Allianz integration process? Any surprises? A1: No surprises to date. Commencing March 1st, Allianz customers in all provinces other than Alberta are being offered ING products as their Allianz policy expires. For regulatory reasons, Alberta persona
Slide 17: Questions and Answers: Alberta public insurers
Questions and Answers Q2: What is your view on Alberta’s plans to allow public, provincial insurers (e.g., Saskatchewan) to do business in that province? A2: Alberta is a very competitive, private market and we are certainly not against additional competition if all players operate under the same te
Slide 18: Questions and Answers: finite risk reinsurance
Questions and Answers Q3: Does ING Canada use “finite risk” reinsurance (i.e., the type of reinsurance that has caught the attention of US authorities)? A3: No, we don’t make use of such reinsurance. 18
Slide 19: Questions and Answers: New Brunswick hearing
Questions and Answers Q4: Can you comment on the upcoming New Brunswick public hearing? A4: The New Brunswick Insurance Board will be holding public hearings next month to consider several issues, including the “appropriate” return on equity for automobile insurance companies and whether the Facilit
Slide 20: Questions and Answers: Facility Association results
Questions and Answers Q5: Your share of the Facility Association’s (FA) results last quarter represented a large, positive contribution to earnings while FA apparently showed a small loss this quarter. What’s happening? A5: Much of the gain recorded last quarter of 2004 represented a change in estim
Slide 21: Questions and Answers: Nova Scotia rate order
Questions and Answers Q6: The Nova Scotia Insurance Review Board (NSIRB) decided that you have to reduce your rates by 12% instead of the 3% that you asked for. What’s your response? A6: We had filed for a 3% reduction effective in November 2004 and for an additional 5% effective in March 2005. The
Slide 22: Questions and Answers: auto rate impact on revenue
Questions and Answers Q7: Can you comment on the impact on the 2005 revenue of rate reductions in personal automobile? A7: As mentioned before, personal automobile rates are dropping in jurisdictions where reforms are taking place. To date, rates in Ontario have dropped by close to 17%, by close to
Slide 23: www.investor.ingcanada.com
ING Canada Inc. www.investor.ingcanada.com