1

A.M. Best Company's

Insurance Market Briefing Canadian Property & Casualty

Jackie Lentz Senior Financial Analyst

September 3, 2014

Joel Silverthorn Senior Financial Analyst

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Canadian P&C Industry Outlook Stable

n Risk-adjusted capitalization remains strong n Operating profitability recorded in 2013

despite: n Underwriting challenges n Investment pressures n Regulatory constraints

n Consolidation continues

3

Canadian P&C A.M. Best Rating Trends

n All ratings are “Secure” n No rating downgrades for the fourth

consecutive year n Movement among rating categories

continues due to consolidations / consistent operating performance

n Not anticipating significant number of rating changes

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Canadian P&C Interactive Ratings Distribution

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2010 2011 2012 2013 June 30,2014*

Vulnerable Good Excellent Superior

Source: A.M. Best data & research*Through June 30, 2014. All other years, as of year end.

Interactive Ratings Distribution(2008-2014*)

Canadian P&C Rating Changes (Excluding CABS) At 12/31/2013 & 6/30/2014 Ranked by Net Premium Written

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Rank Rating Change 1

Best’s Financial Strength Rating 2

Previous Rating

Rating Change Effective Date

Net Premiums Written

(C$ Millions)As of December 31, 2013 AMB# Company Name1 + 86618 Jevco Insurance Company A+ A 4/25/2013 367.92 + 86567 COSECO Insurance Company B++ B+ 5/31/2013** 211.23 + 85738 Northbridge Personal Ins Corp. A A- 3/28/2013 121.64 + 87091 Optimum Insurance Company Inc A- B++ 9/12/2013 83.35 + 87019 Optimum West Insurance Company A- B++ 9/12/2013 17.76 + 87724 Optimum Farm Insurance Inc A- B++ 9/12/2013 7.37 + 57080 Transportation Prop & Cas Co A A- 6/27/2013 2.5

As of June 30, 20141 + 86417 Travelers Insurance Company CA A++ A+ 5/23/2014 66.42 + 85760 ACE INA Insurance A++ A+ 4/11/2014 59.0

* Rating Changes-Canada Property/Casualty excludes Canadian branches.** Rating was withdrawn (NR-4) on 5/13/2013 following the upgrade.1 (+) Rating upgrades; (-) Rating downgrades2 For Best’s Rating criteria and definitions visit www.ambest.com

Source: A.M. Best data & research

Canadian P&C Market Share (all lines)

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Intact Insurance

Group17%

Aviva Canada Group

9%

Meloche Monnex /TD

7%

RSA Insurance Group plc

7%Wawanesa Mutual

6%

Rest of Industry

54%

2013

ING Canada Group

11%

Aviva Canada Group

9%

Co-operators Group

6%

Economical Group

5%

Meloche Monnex /TD

5%

Rest of Industry

64%

2007

Canadian P&C - Risk Adjusted Capitalization Best Capital Adequacy Ratio (BCAR)

Weighted Averages

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224.0 223.0216.9

228.6225.8

150

160

170

180

190

200

210

220

230

240

2009 2010 2011 2012 2013

Excludes Lloyd's CAB and ICBCSource: A.M. Best data & research

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Canadian P&C Combined Ratios

100.9 100.7

99.1

96.2

99.8

103.5

85.0

90.0

95.0

100.0

105.0

2009 2010 2011 2012 2013 Est.June 2014

(excluding ICBC & Lloyds CAB)

Source: A.M. Best data & research

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Canadian P&C Operating Ratios

91.8 91.6 91.8

88.6

95.293.6

75.0

80.0

85.0

90.0

95.0

100.0

2009 2010 2011 2012 2013 Est.June2014

(excluding ICBC & Lloyds CAB)

Source: A.M. Best data & research

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Canadian P&C Automobile Net Loss Ratio Trend

61.369.0

82.588.6

77.484.2

137.6143.3

74.3

50.4

67.0 71.6

0

20

40

60

80

100

120

140

2009 2010 2011 2012 2013 1Q 2014

Loss

Ratio

(%)

Auto - Liability

Auto - Personal Accident

*Excludes Lloyd's CAB & ICBCSource: A.M. Best data & research

Canadian P&C Catastrophe Losses

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Ranked by insured losses in current dollars

Year Date Location Event Loss + LAECurrent dollars

1999 February Quebec, Ontario, New Brunswick Ice storm 1,574 2,0812013 June Alberta Heavy rains/Flooding 1,740 1,7402013 July Toronto Heavy rains/Flooding 940 9402011 May 14-17 Slave Lake AB Fire 742 7602005 August Ontario Wind/Rainstorm 625 7172010 July 12-13 Calgary and Southern Alberta Wind/Thunderstorm 530 5592012 August Calgary Flooding/Hail/Wind 552 5571991 Sept. 7 Calgary Hail 343 5092009 July 24-28 Ontario Heavy rains 376 4042005 June 6-8 & June 17-19 Alberta Flooding 300 344

Source: A.M. Best research*Cat losses in Canada during the first half of 2014 fell 98% over last year, with only two cat events designated so far- one estimated at $34 million in insured losses, the other is not available yet.

Insured losses (C$ Million)

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Canadian P&C Personal Property Net Loss Ratios

75.9

63.9

68.0

59.9

71.7

57.2

55

60

65

70

75

80

2009 2010 2011 2012 2013 1Q 2014

*Excludes Lloyd's CAB & ICBCSource: A.M. Best data & research

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Canadian P&C Commercial Property

Net Loss Ratios

66.2

62.1

70.5

68.7

78.5

74.0

55

60

65

70

75

80

2009 2010 2011 2012 2013 1Q 2014

*Excludes Lloyd's CAB & ICBCSource: A.M. Best data & research

Canadian P/C Net Investment Income vs. Net Investment Yield

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2.0

2.5

3.0

3.5

4.0

4.5

5.0

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

2009 2010 2011 2012 2013

Net Investment Income ($C Billions)

Net Investment Yield

*Excludes Lloyds CAB & ICBCSource: A.M. Best data & research

Net I

nves

tmen

t Inc

ome

(C$

Billio

ns)

Net Investment Yield (%)

Canadian P&C Key Future Issues

n Risk Management & Underwriting n Leveraging “Big Data” n Use of technology

n Ontario Auto Rate Reductions n Demutualization n Consolidations

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nQuestions?