Forward Looking Statement Disclaimer

Transcription

1 2 nd Annual

2 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 statements. The words "may", "will", "would", "should", "could", "expects", "plans", "intends", "anticipates", "believes", "estimates", "predicts", "likely" or "potential or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward looking statements. Forward looking statements are based on estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate in the circumstances. Many factors could cause our actual results, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward looking statements, including, without limitation, the following factors: our ability to implement our strategy or operate our business as we currently expect; our ability to accurately assess the risks associated with the insurance policies that we write; adverse capital market developments or other factors which may affect our investments; the cyclical nature of the P&C insurance industry; our ability to accurately predict future claims frequency; government regulations; litigation and regulatory actions; periodic negative publicity regarding the insurance industry; intense competition; our reliance on brokers and third parties to sell our products; our ability to successfully pursue our acquisition strategy; the substantial influence of ING Groep; our participation in the Facility Association (a mandatory pooling arrangement among all industry participants); terrorist attacks and ensuing events; the occurrence of catastrophic events; our ability to maintain our financial strength ratings; our ability to alleviate risk through reinsurance; our ability to successfully manage credit risk; our reliance on information technology and telecommunications systems; our dependence on key employees; general economic, financial and political conditions; our dependency on the results of operations of our subsidiaries; the limited trading history of our common shares; the volatility of the stock market and other factors affecting our share price; and future sales of a substantial number of our common shares. These factors should be considered carefully, and readers should not place undue reliance on our forward looking statements. We have no intention and undertake no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except as required by law.

3 Agenda 7:45 8:25 a.m. Registration/Buffet Breakfast 8:25 8:30 a.m. Welcome 8:30 9:00 a.m. Strategic Overview 9:00 9:45 a.m. Progress in Claims Management 9:45 10:00 a.m. Coffee Break 10:00 11:00 a.m. Product Development/ Marketing 11:00 11:30 a.m. Outperforming through the Cycle

4 Strategic Overview Claude Dussault, President and CEO

5 Our Goal To create a sustainable, superior performance gap, as measured by return on equity, relative to the Canadian property and casualty industry of not less than 500 basis points (5%). Continued superior profitability will be deployed in part to reinvest in strategies designed to expand the ROE gap and achieve superior organic premium growth. 5

6 A Track Record of ROE Outperformance ROE Performance of our Insurance Subsidiaries Compared to Canadian P&C Insurance Industry 40% 30% 20% 10% Our Our ROE ROE performance performance has has exceeded exceeded Canadian Canadian industry industry by by bps bps on on average average 11-year avg. = 17.4% Canadian Industry 11-year avg. =9.9% 0% Source: Insurance Bureau of Canada; Office of the Superintendent of Financial Institutions for 2005 industry ROE. Company reports for ING Canada ROEs. 6

7 Key Strategies: ING Canada Expand ROE gap with competition by leveraging scale Strengthen market position through organic growth Strengthen market position through value-creating acquisitions 7

8 Expand ROE Gap with Competition by Leveraging Scale Pricing and underwriting Sophisticated pricing strategy Large proprietary experience database Focus on economic value drivers and proprietary tools to exploit market inefficiencies (CVI, EVI) Disciplined risk selection process Strengthen underwriting knowledge through enhanced data access and training Leverage scale and improve expense management Improve expense management through supply chain management and increased use of technology in claims Improve efficiencies through common processes throughout operations Strong in-house claims expertise delivers efficiency and cost savings 97% of claims in 2005 handled by internal claims personnel Preferred provider networks 8

9 Expand ROE Gap with Competition: Investments ING Canada has Historically Outperformed the Competition 10.0% Annualized Returns 9.0% 8.0% 7.0% 6.0% 5.0% 1 year 2 years 3 years 4 years 5 years Annualized Periods Ending December 31, 2005 Median 75th Percentile ING Canada Source: CanadianMgrSearch.com P&C Diversified for Funds >$250 Million, December 31,

10 Optimize Capital and Investment Management ING Canada has a strong capital position as at June 30, 2006 Excess capital at insurance companies of $264 million (at 175% MCT) $806 million in liquid investments at holding company $1 billion shelf filing remains untapped We remain focused on utilizing excess capital Acquisitions Alternatively, return of capital 10

11 Strengthen Market Position ING Canada Premium Growth vs. Industry Premium Growth 1) 400% 300% 200% 100% ING ING Canada s Canada s YOY YOY premium premium growth growth is is 1.4% 1.4% YTD YTD in in despite despite rate rate declines declines 10-year CAGR = 13.5% Industry 2) 10-year CAGR = 7.0% 0% ) Based on direct premiums written 2) Source: Canadian Underwriter; OSFI website for 2005 data 11

12 Strengthen Market Position: Organic Growth Strengthen relationship with brokers Ease of doing business for distributors and customers (Accel, Savers) Services to help brokers grow their business (e.g. marketing programs, Quest) A customer-centric culture Support broker partners in acquisition mode Offer increased value to customers Product innovation and differentiation (e.g. Responsible Driver Guarantee, Aeroplan, Zero Deductible) Renewed customer-centric focus (Client Service Guarantee) Expansion of multi-channel distribution Independent brokers Affiliated Distribution Network Direct Channel (Ontario and Quebec) 12

13 Our Goal To exceed the annual organic growth rate in direct premiums written of the Canadian property and casualty industry by at least 300 basis points (3%). 13

14 Strenthen Market Position: Acquisitions Proven integration capabilities Successfully integrated eleven acquisitions over eighteen years Potential for future acquisitions given fragmented nature of industry Capital strength Acquisition Allianz Canada (Personal and Small to Medium Commercial Lines) Year of Acquisition Approximate Size of Acquisition (DPW) 1) ($ millions) Zurich (Personal and Small Commercial Lines) Pafco (Niche Products) Guardian Canadian Surety (Personal Lines, Selected Provinces) Wellington St. Maurice Constitution Metropolitan General Commerce Group/BELAIR Western Union Source: Company data and Canadian Underwriter 1) Approximate direct premiums written related to the applicable acquired business for the calendar year prior to the acquisition except for Allianz which is the year of acquisition 14

15 Fragmented Industry Provides Growth Opportunities $5.0 Direct Premiums Written ($ Billions) $4.0 $3.0 $2.0 $ largest largest firms firms = = 36% 36% of of the the market market Top Top = = 55% 55% $0.0 Aviva Canada Co-operators General The Economical Insurance Group Northbridge Market share 11.3% 8.9% 5.7% 5.1% 5.1% Source: Final version of The SCOR Report 2005 for DPW data for individual companies; MSA Research Preliminary 2005 Canadian P&C Industry Statistics as of March 13, 2006 for DPW 2005 data for total industry 15

16 Questions and Discussion 16

17 Progress in Claims Management Louis Héroux, Sr. Vice President, Claims 17

18 Our Mission Our mission is to help ING Canada maintain a competitive advantage by leveraging our scale of operations through: Client service/satisfaction customer centricity Preferred provider networks Indemnity control and expense management Technology 18

19 ING Claims Department 1700 employees located in 8 provinces We assist clients with approximately 328,000 claims per year Financial responsibility for managing $2.2 billion in expenditures annually 19

20 Claims settlement is really the main product an insurance company provides to its customers. 20

21 Customer Centricity Our goal is to provide customers with a highly satisfactory, differentiated claims experience through: Product innovation DUO Line (Tell your story once to the broker and to your adjuster) We believe in you (Establishing fault based on customer s statement) Rely Programs (Preferred provider networks) Truck/Rental car project in Quebec Assistance in time of need 24-7 Service and Claim Service Guarantee (30 minutes) ING Call Centres Catastrophe response teams Claims letters (Customized explanations of claims process by type of loss) 21

22 Customer Centricity Customer satisfaction survey 94% of our claimants in 2005 were satisfied with the claims process and the payments they received We rigorously survey claimants monthly and use the information to continuously improve our service 22

23 Customer Centricity ISO Certification In 2006, ING Canada s Quebec Claims Service earned the distinction of becoming the first claims service in the world certified ISO 9001:

24 Customer Centricity Common Processes Common processes and new service model: Deployment across Canada underway Strive to more effectively increase the level of penetration of our preferred provider networks Customer value proposition designed to make optimal use of our people, technology and best practices Claimant is dealing with a team and has access to help and answers at any time Next Steps To go further in our offer to the customer, partnering with the broker to do so To increase cost effectiveness To support new initiatives in supply chain management 24

25 Preferred Provider Networks Auto Rely Network National program comprising: More than 300 repair shops selected on the basis of work quality, customer centricity and compliance with ING values Penetration level increased by roughly 10% since last year to approximately 55% currently Distinctive value proposition including: ING guarantee of repairs, granted authorization to immediately start repairs, waiver of depreciation, speed of service etc. Important contributor to cost control 25

26 Preferred Provider Networks Property Rely Network Rolled out in Q4/05 to serve residential property clients National network of more than 150 high quality property restoration contractors including specialty repairers (water damage) ING guarantee of repairs 5 years on workmanship Increases retention, reduces costs Usage level approaching 50% Over the next two months deployment of a new property building appraisal tool: standardisation, enriched proprietary data base 26

27 Preferred Provider Networks Health Rely Network Newest Rely program, currently underway in Alberta and Ontario Physicians, occupational therapists, chiropractors etc. Aligned with ING s commitment to superior quality service Adapts our value proposition to provincial accident benefits legislation Initial experience points to better cost control together with apparent cost savings compared to non-rely claims 27

28 Preferred Provider Networks Next Steps: Supply Chain Management Goal is to: 1. Integrate the various services provided by our preferred providers 2. Move up the chain to leverage purchasing power to reduce procurement costs while maintaining preferred provider margins Pilot underway (used auto parts) 28

29 Indemnity Control and Expense Management Property Focus ING has launched a number of Property initiatives in 2006: Property Rely Program Property and contents specialist roles Property building appraisal tool: standardisation, enriched proprietary data base 6 Sigma initiative focusing on property contents 29

30 Technology OPUS System Deployed in 2006 for personal lines Supports claims initiatives, especially call centres, new service model and preferred provider programs Paper-free environment Next steps: commercial lines, fraud detection assistance, workflow management, tools to support our adjusters in the field Data Warehouse Provides daily access to updated data for all our actuaries and claims staff Enhancement of proprietary database facilitating development of new initiatives Close monitoring Better identification of claims trends 30

31 Questions & Discussion 31

32 2 nd Annual

33 Product Development/Marketing Alister Campbell, Sr. Vice President, Marketing, Communications & Government Relations Martin Beaulieu, Sr. Vice President, Personal Lines Pete Weightman, Sr. Vice President, Commercial Lines 33

34 Marketing Alister Campbell, Sr. Vice President, Marketing, Communications & Government Relations 34

35 The Environment in Which We Work to Develop ING Canada Brands Not without its challenges P & C industry cycles Consumer cynicism / industry image issues Some regulatory obstacles to innovation Commodity products defined by others: Government Industry standard Price driven competition Strategic alignment with intermediated distribution 35

36 Evolving Our Value Propositions: A structured approach Comprehensive quantitative market research program to track: Customer satisfaction Claims satisfaction Brand awareness Perception of brand attributes Qualitative and quantitative research to test options for product and/or service improvement opportunities 36

37 Evolving Our Value Propositions: With specific objectives Determination of Canadian consumer s preferred positioning of the ideal insurance company Determination of key brand attributes Determination of key loyalty drivers of high value segment customers Identification of dis-satisfiers and opportunities to mitigate (short and medium term) Defining our best touch point opportunities 37

38 The ING Insurance Brand Key attributes: We deliver on promises (#1) We make it easy to do business We treat you fairly Supporting attributes: We act in your best interests We provide unique and different offers 38

39 Guarantee-Backed Promises Claims Service Guarantee money back refund if we fail to meet our claims service commitments Responsible Driver Guarantee guaranteeing premium stability even in the case of an at-fault accident 39

40 Guarantee-Backed Promises belairdirect s Two-year and Crash Proof Policies guaranteeing premium stability (even in the case of an at-fault accident) Rely Network lifetime repair guarantee if our recommended vendor (mechanic, contractor) is used 40

41 We ll Make it Easy to Do Business Re-engineering customer policy documents starting with dramatically improved billing statement My Home & Auto Integrated Policy for auto and residential Streamlined claims processes Simpler, more relevant communications phone, web, and print 41

42 We ll Treat You Fairly why do I have to pay twice when I ve had an accident? the Zero deductible option what happens when I have a claim? Claims Promise Letters (clear communication regarding the steps in the claims process) I pay for 20 years, never have a claim and get nothing - Responsible Driver Guarantee loyalty benefit (5 years and it s free) And just launched last week 42

43 The ING-AEROPLAN Loyalty Program Aeroplan Protect and Collect Loyalty Program get something from your insurance even when you don t claim Exclusive access to 4.1 million members with attractive demographics (inc. 1.8 million addresses) 43

44 AEROPLAN Loyalty Program Multi-channel marketing strategy (Belairdirect and ING Insurance) New INGInsurance.ca site provides quote and access to select group of brokers who have signed service level agreements regarding response time, etc. 44

45 Personal Lines Martin Beaulieu, Sr. Vice President, Personal Lines 45

46 Product Development Checklist Generate new business Sell more to existing clients Increase loyalty Price with adequate margins 46

47 Key Indicators # of clients with new product % penetration Loss ratios Retention Distribution of our target customers 47

48 My Home & Auto Combine your automobile and home insurance and save 48

49 2-Year Policy Guaranteed premium stability for the next 2 years 49

50 Responsible Driver Guarantee / Crash Proof Policy Protect your clean driving record and get premium stability even in the case of an at-fault accident 50

51 Zero Deductible Why pay twice? 51

52 Water Damages Better protection in case of water damages 52

53 Commercial Lines Pete Weightman, Sr. Vice President, Commercial Lines 53

54 Defining Customer Value Emotional (brand, trust, image) Functional (product features, service, workflow) Economic (price) The gap between benefits and price determines the value to the customer the greater the gap the greater the value (either real or perceived) Customer = Benefits (functional + emotional) Value Price (economic) 54

55 Commercial Lines Customer Value Proposition Positioning Emphasis on functional benefits tied to our three brand attributes: Treats me fairly Delivers on promises Easy to do business with 55

56 The Product Development Process Commercial Lines Idea Generation Product Service Process Filter First Mover Sustainability Core Skills Local Pilots Test Modify Monitor Phased Refinements 56

57 Key Deliverables AcceL AcceLerate your small business 57

58 Key Deliverables 58

59 Questions & Discussion 59

60 Outperforming through the Cycle Charles Brindamour, Executive Vice President 60

61 Agenda Why is the P&C industry cyclical? Understanding the industry results beyond the cycle Outperforming the industry The rewards of outperformance Current outlook 61

62 Why is the P&C Industry Cyclical? 62

63 P&C Industry Mature, Stable in the Long Term ROE over past 30 years has averaged 10.1% In each 10 year period, ROE has averaged 9.5% to 10.5% Premium growth has typically tracked GDP plus inflation 63

64 P&C Results Can Vary Significantly in the Short Term 20% Property & Casualty Industry Return on Equity ( ) Average ROE 11.2% Average ROE 9.9% Average ROE 10.6% Average ROE 8.3% 10% 0% Source: IBC Fact Book 64

65 Many Industries Are Cyclical to Some Extent All Industries, Canadian Industry Earnings Cycle Return on Equity 15% Length of cycle: 5 years 5% -5% Source: Statistics Canada 65

66 What Drives P&C Cyclicality? Supply-driven industry with inefficient capital management Decentralized decision making Time lag between pricing, product design and confirmation of final costs is long and not well understood by all players in the system Regulatory and political process tends to increase cycle amplitude 66

67 Understanding the Industry Results Beyond the Cycle 67

68 Adding to the Complexity 5% Net catastrophe losses as a % of NPE Net realized gains as a % of annual revenue 4% 3% 2% 6% 5% 4% 3% 2% 1% 1% 0% % -1% Note: Pro forma, pre-tax, net of reinsurance per 2006 program Note: Pre-tax, net realized gains on fixed income and equity holdings 120% Combined Ratio Seasonality 110% 100% 90% 80% 70% 98/Q1 98/Q3 99/Q1 99/Q3 00/Q1 00/Q3 01/Q1 01/Q3 02/Q1 02/Q3 03/Q1 03/Q3 04/Q1 04/Q3 05/Q1 05/Q3 Source: Company data Quarter 68 Annual

69 Outperforming the Industry 69

70 A Track Record of ROE Outperformance ROE Performance of our Insurance Subsidiaries Compared to Canadian P&C Insurance Industry 40% 30% 20% 10% Our Our ROE ROE performance performance has has exceeded exceeded Canadian Canadian industry industry by by bps bps on on average average 11-year avg. = 17.4% Canadian Industry 11-year avg. =9.9% 0% Source: Insurance Bureau of Canada; Office of the Superintendent of Financial Institutions for 2005 industry ROE. Company reports for ING Canada ROEs. 70

71 Key Strategies to Outperform Expand ROE gap with competition by leveraging scale: Pricing and underwriting Claims and efficiency Capital and investment management Strategies are geared towards sustainability of the advantage At the end of June 2006, our P&C subsidiaries outperformed by 14% and 8% (including holding) 71

72 The Rewards of Outperformance 72

73 The Importance of Outperforming Building a sustainable advantage over the industry from an ROE point of view is essential: Continuously providing return in excess of cost of capital Ensures sound financial position to capitalize on opportunities throughout the cycles Delivering our organic growth strategies Leading the industry s consolidation Best performers from a profitability point of view have historically outperformed on growth 73

74 Outperformers Grow Faster DPW growth by combined ratio performance quartile, largest P&C (1) insurers Fourth quartile 5.10% Third quartile 4.24% Second quartile 6.37% Top-performing quartile 12.85% (1) Refers to Canadian companies Source: Scor Report 7.75 points 74

75 (1) P&C Leaders Tend to Remain Leaders The best underwriting companies A winner Above average Below average 3 Those underwriting Acquired 11 companies below average 2 (1) Refers to US companies Source: AM Best; McKinsey analysis Out of business 75

76 Current Outlook 76

77 Current Outlook Industry returns likely to exceed historical levels over the next year Industry top-line growth rate likely to be below historical levels over the next twelve months Automobile: Sustainability of regulatory reforms, claims frequency levels and potential rate reductions are key short term drivers in 2006 Commercial Lines: Increase in competition as well as higher reconstruction costs will put pressure on profitability in 2006 ING s ING s scale, scale, underwriting underwriting discipline, discipline, pricing pricing sophistication sophistication and and diversified diversified distribution distribution channels channels position position the the Company Company to to deliver deliver industry industry leading leading performance performance throughout throughout the the cycle cycle 77

78 Questions & Discussion 78

79 Thanks for Coming Today 79