2007 Annual Meeting ● Assemblée annuelle 2007 Vancouver

Canadian Institute of Actuaries L’Institut canadien des actuaires 2007 Annual Meeting ●Assemblée annuelle 2007 Vancouver

Moderator Martin Fortier Speakers Alethea A. Lyn Nathalie Tremblay Frédéric Jacques 2007 Annual Meeting Assemblée annuelle 2007 IP12: Living Benefits - Hot Topics

Critical Illness Insurance (CII) Long Term Care Insurance (LTCI) Disability Income Insurance (DII) 2007 Annual Meeting Assemblée annuelle 2007 Agenda

2007 Annual Meeting Assemblée annuelle 2007 CII sales trend Source: Canadian Individual Critical Illness Insurance Survey, LIMRA International

experience study group standardized definitions guaranteed rates underwriting time and high proportion of declines lack of consumer awareness (CII & LTCI) 2007 Annual Meeting Assemblée annuelle 2007 CII – hot topics

Update the definitions for the covered CI conditions which no longer accurately describe the covered condition or reflect current practices or diagnosis process When the intent of a condition is to cover the same risk, a “benchmark” definition which is clear, concise and objective and as similar as possible across the industryshould be used by insurers and reinsurers It is appropriate for a definition to differ from the benchmark definition only when a definition offers additional material coverage Definitions Project- Three Main Objectives

New Business Placement - 2005 CI Life * % placed standard includes 4% placed with exclusions Source: Munich Re 2006 Pricing Survey

58% Life: App Date to Placement Date – 2005 Source: Munich Re 2006 Pricing Survey

CI: App Date to Placement Date – 2005 44% Source: Munich Re 2006 CI Survey

2007 Annual Meeting Assemblée annuelle 2007 (74%) Life insurance 63% (42%) Disability insurance 30% (12%) Critical Illness insurance 9% (11%) Long Term Care insurance 8% (7%) Complementary health care insurance 6% Perceived coverage Are you covered by… on a personal basis, that is by an insurance that you acquired on your own and that is not part of a group plan? Source: Desjardins Financial Security Survey on Health, October 2003

Canada: 6 % United Kingdom: 23 % Assumptions: Based on 18-65 population 65% of the segment is insurable Only TD bank numbers were included but substantial 400,000! 2007 Annual Meeting Assemblée annuelle 2007 CII – Market penetrationJanuary 1st, 2006 Source: MunichRe

Canada: less than 1% France: 15% Assumptions: Based on 50-70 population Canada figures are from StatCan population estimates and projections as of July 1st 2006 and from LIMRA at the end of 2006. 2007 Annual Meeting Assemblée annuelle 2007 LTC – Market penetration Source: Scor Vie, LIMRA, Statcan

2007 Annual Meeting Assemblée annuelle 2007 LTCI sales trend At the end of 2006, approximately 56,000 Canadians had LTCI Source: LIMRA International

experience and learning from a recent market entry underwriting and high proportion of declines 2007 Annual Meeting Assemblée annuelle 2007 LTCI – hot topics

Typical sale: Annual premium: 1 353 $ Monthly benefit: 2 401$ Average age: 55 ans Waiting period: 55% chosed 90 days Benefit period: 66% Lifetime, 36% 5 years, 9% 2 years Premium duration: 94% lifetime and 6% 20 years Spousal reduction: 31% of the cases 2007 Annual Meeting Assemblée annuelle 2007 LTCI – Desjardins experience

Accepted or modified cases account for 60 % of submitted cases but only 50 % of in-force. 2007 Annual Meeting Assemblée annuelle 2007 50% 50% In force Declined LTCI – Desjardins experience Underwriting decisions 2006 52% 8% 8% Accepted Modified Declined Posponed 24% Withdrawn 8%

2007 Annual Meeting Assemblée annuelle 2007 LTCI – Desjardins experience Independent Living Sales by age group 0 - 30 71 - 80 31 - 40 2% 3% 5% 0 - 30 61 - 70 41 - 50 31 - 40 27% 20% 41 - 50 51 - 60 61 - 70 71 - 80 51 - 60 43% • More than 90% are between 41 and 70 • Concentration between 51 and 60

experience and learning from a recent market entry underwriting and high proportion of declines 2007 Annual Meeting Assemblée annuelle 2007 LTCI – hot topics

2007 Annual Meeting Assemblée annuelle 2007 LTCI – placement ratios

2006 US LTC Wastage Rate by Age 2006 total wastage = 35% Source : LifePlans Inc, 2007 US survey 15 companies reporting

2006 US LTC - Average Issue Times from Date of Receipt Source : LifePlans Inc, 2007 US survey 17 companies reporting

2007 Annual Meeting Assemblée annuelle 2007 DII sales trend Source: Canadian Individual Disability Income Insurance Sales, U.S. Individual Disability Income Insurance Sales, LIMRA International

Flat sales experienced in recent years 2007 Annual Meeting Assemblée annuelle 2007 DII – hot topic

Around 64 % of workers, salaried or self-employed are covered by DI Assumptions: Part time employees could be covered by DI Unemployed are unlikely to be covered 2007 Annual Meeting Assemblée annuelle 2007 DI – Market penetrationCanada (2005) Source: ACCAP 2005, StatCan

Workers numbers VS disability coverages 18,000 Average increase of 2% 16,000 14,000 12,000 Average increase of 5.2% 10,000 In thousand 8,000 6,000 4,000 2,000 0 2001 2004 1995 1998 Disabilty insured persons (group or individual) Workers numbers

Financial security planning Retirement Life insurance Long term disability Long term care Critical illnesses Income protection Assets protection 30 40 55 65 75 85

Questions? 2007 Annual Meeting Assemblée annuelle 2007 IP12: Living Benefits - Hot Topics

2007 Annual Meeting ● Assemblée annuelle 2007 Vancouver