Welcome

YOUR BOARD OF DIRECTORS

• John H. Bowey

• A. Scott Carson

• Richard M. Freeborough

• David A. MacIntosh

• Charles M.W. Ormston

• Michael P. Stramaglia

• W. David Wilson

• Karen L. Gavan

14 YEARS OF SERVICE

YOUR SENIOR MANAGEMENT TEAM

• Jorge Arruda, SVP, Strategic Business Unit

• Dean Bulloch, SVP and Chief Human Resources

Officer

• David Crozier, SVP Operations

• Innes Dey, General Counsel and Corporate

Secretary

• Louis Doiron, SVP Chief Risk Officer

• Michael Gagnier, SVP and Chief Information Officer

• Linda Goss, SVP and Chief Actuary

• Philip Mather, SVP and Chief Financial Officer

BUSINESS OF THE MEETING

FINANCIAL STATEMENTS

APPOINTMENT OF AUDITORS

ELECTION OF DIRECTORS

PRESENTATIONS

Gerald HooperCha i rman o f the Board o f D i rec to r s

Economica l I n su rance

Mutual policyholder’s equity1

99

0

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

0

200

400

600

800

1,000

1,200

1,400

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

2008 – 2011 combined ratio

2008 2009 2010 20110%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

78.5% 75.4% 69.1% 63.6%

30.0% 30.7% 33.8%34.5%

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

* Presented on an undiscounted basis

*

* Represents loss ratio and expense ratio

108.5% 106.1% 102.9%98.1%

Karen GavanPres iden t and ch ie f execu t i ve offi cer

Economica l I n su rance

Transformation

Ownershiptransformation

Business transformation

Creating value

Vision

To be the leading property and casualty insurance provider through the delivery of high quality insurance products and superior service, built on a foundation of innovation and financial strength.

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

WHAT WE WANT TO ACCOMPLISH

Mission

To provide security and support for our customers and distribution partners; to be there when our customers need us most.

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

WHY WE EXIST

Damage from the Goderich tornadoDamage from the Slave Lake fires

Values:

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

Customer focus

Integrity

Achievement

Learning

Collaboration

WHAT WE STAND FOR

Guide our

Behaviour

Achieving our vision:

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

Superior customer experience

Preferred business partner

Industry leading skills: pricing, U/W, claims,risk management

Being a great place to work

Maintain stakeholder trust and confidence

KEY STRATEGIC INITIATIVES

Strategic importance of demutualization

• Level the playing field; reduce barriers to capital

access

• Consolidation of the Canadian P&C insurance

industry

• Size and scale matter

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

2011 key accomplishments

• Executive leadership• Refreshed brand• Predictive analytics• Energie™ auto• Corporate responsibility

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

2011 key accomplishments

• Executive leadership• Refreshed brand• Predictive analytics• Energie™ auto• Corporate responsibility

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

2011 results

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

2011 2010

Net income ($ million) $91.0 $81.3

Gross Written Premiums ($ million) $1,723.2 $1,722.0

Underwriting income ($ million) $32.4 ($48.5)

2011 results

2011 2010

Claims ratio 63.6% 69.1%

Expense ratio 34.5% 33.8%

Combined ratio 98.1% 102.9%

Minimum capital test 269.4% 234.2%

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

2011 combined ratio: Top competitors

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

Best Worst

2011 Claims ratios: Top competitors

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

Best Worst

Top competitors: relative sizeRank Group Market share1 Intact + AXA + Jevco 16.9%

2 Aviva 8.2%

3 RSA + L’Union Canadienne 6.9%

4 TD Meloche 6.1%

5 Wawanesa 5.7%

6 Co-operators 5.1%

7 State Farm 4.7%

8 Desjardins 4.4%

9 Economical 4.1%

10 Northbridge 3.1%

65.2%

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

Q1 2012 results1st Quarter 2012 1st Quarter 2011

Gross Written Premiums ($ millions)

$381.0 $360.6

Combined ratio 96.5% 98.0%

Claims ratio 61.6% 64.0%

Expense ratio 34.9% 34.0%

Net income ($ millions) $40.9 $29.0

Mutual Policyholder’s Equity $1,340.9 $1,300.1

Minimum Capital Test 287.9% 256.9%

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

2012 outlook

• Sustained profitable growth

• Demutualization readiness

• Risk management and disciplined underwriting

• Productivity improvement

• Top quartile performance

2 0 1 2 A N N U A L G E N E RA L M E E T I N G

John BoweyCha i r o f the Spec ia l Commi t tee

Why is the Board pursuing demutualization?

• Collection of farmers in Kitchener banding together to help neighbours in times of hardship

• National group offering comprehensive personal and commercial insurance coverage

• 1.1 million policies in force and over $4.5 billion in assets

• Competes directly against large national and global corporations who have easy access to capital

Economical in 1871 Economical Now

Optimal Structure: Mutual Optimal Structure: Stock Company

Benefits of demutualization to Economical

• Improves stability through access to additional capital

• Supports organic growth – allows the Company to seek a “Financial Strength Rating” without retaining excess capital

• Access to share capital will position Economical for meaningful participation in industry consolidation

Strategic actions

Sponsored Demutualizati

on

IPO Process

Allocation of Value

Communication

with Mutual Policyholders

Implementation of Strategic Plan

RegulatoryThe Board of Directors their advisors and management

have created a comprehensive plan to demutualize and maintain

profitable operations

Drafting of regulationsThe Special Committee, Board and Management have each played a role in extensive, ongoing discussions with Government representatives

• Submitted supplemental commentaries to Government

• Continued to pursue framework for fair and equitable regulations through meetings with all levels of Government

• Appeared before the House of Commons Finance Committee to further the position of the Company in the required regulations

• Continued discussions with all levels of Government

• Meetings with Finance and various government officials

• Response to Consultation Paper, extensive meetings and discussions with Finance

Spring / Fall 2011 Winter 2011 / 2012 Spring 2012

Regulatory process

Choose optimal path:

IPO or Sponsored Demutualization

Dual track process

Indicative Market Pricing

Sponsored Demutualization

Drafting of Regulations(Department of Finance)

Initial Public Offering

Bids

Preferred Transaction

Chosen

Reg

ula

tion

s C

om

ple

te

Mutual Policyholder Vote on Demutualizationand Approval

OSFI Approval

Dem

utu

aliza

tion

Sponsored Demutualization process

Strategic

In-market

Institutional

Execute CA and Receive

CIM

First Round Proposals

Field is Narrowed

Formal Due

Diligence

Formal / Binding

Proposals

The Board of Directors, with their advisors Blair Franklin, have created a robust auction

The majority of the parties that signed the Confidentiality Agreement have made proposals - formal due diligence is now being undertaken by select parties

IPO process

Prepare for Public Company Reporting

Requirements

Draft Prospectus, Form Syndicate, Complete

Roadshow

Engage Accounting

Firm

Engage Underwriters

Engage Accounting

Firm

Convert,Distribute Shares,List on

Exchange

Management and the Board have engaged and worked with advisorsto prepare Economical for public company reporting requirements

The Board has engaged BMO Capital Markets and RBC Capital Markets as lead underwriters for the IPO

0.0x

0.5x

1.0x

1.5x

2.0x

2.5xUS Companies - Price / Book Value CDN Companies - Price / Book Value

Average Price / Book Value = 1.2x

Reference points for valuation of EconomicalSelect North American Comparables

Allocation of valueThe Department of Finance will likely look to the LifeCo demutualizations as a precedent for determining the allocation of value to mutual policyholders

20%

10%

25%

25%

15%

80%

90%

75%

75%

85%

0% 20% 40% 60% 80% 100%

FixedAllocation

VariableAllocation

Variable allocationVariable allocations will be different from the Lifeco allocations due to the difference in the underlying policies

“Duration of the policy” will likely be a key criteria in the case of Economical’s demutualization

Engage Accounting Firm

Lifeco Variable Allocation Factors Recommended

• Policy premium

• Contribution to Surplus

• Policy reserves

• Cash values

• Amounts of coverage

• Duration of the Policy

Engage Accounting Firm

Likely P&C Variable Allocation Factors Recommended

• Policy premium

• Amounts and type of coverage

• Duration of the policy

• Premium Notes

Strategic actions

Sponsored Demutualizati

on

IPO Process

Allocation of Value

Communication

with Mutual Policyholders

Implementation of Strategic Plan

Regulatory

Strategic actions

Sponsored Demutualizati

on

IPO Process

Allocation of Value

Communication

with Mutual Policyholders

Implementation of Strategic Plan

Regulatory

Strategic actions

Sponsored Demutualizati

on

IPO Process

Allocation of Value

Communication

with Mutual Policyholders

Implementation of Strategic Plan

Regulatory

Strategic actions

Sponsored Demutualizati

on

IPO Process

Allocation of Value

Communication

with Mutual Policyholders

Implementation of Strategic Plan

Regulatory

Strategic actions

Sponsored Demutualizati

on

IPO Process

Allocation of Value

Communication

with Mutual Policyholders

Implementation of Strategic Plan

Regulatory

Strategic actions

Sponsored Demutualizati

on

IPO Process

Allocation of Value

Communication

with Mutual Policyholders

Implementation of Strategic Plan

Regulatory