A.M. Best Affirms Rating of ING Canada

June 27, 2003

A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of ING Canada (Toronto).

The group, which operates under a pooling arrangement, consists of Belair Insurance Company Inc., ING Insurance Company of Canada, ING Novex Insurance Company of Canada, ING Western Union Insurance Company and The Nordic Insurance Company of Canada. A.M. Best has assigned a stable outlook to the group’s rating.

This rating reflects ING Canada’s excellent operating performance, strong capitalization, and its leading position in the Canadian property/casualty market. The group’s underwriting and investment results have consistently outperformed the Canadian property/casualty industry. ING Canada has a strong management team that relies on disciplined underwriting and pricing, conservative reserving and efficient in-house claims handling. The group’s geographic diversification has allowed for consistency in underwriting performance with favorable results in Quebec, which offset rising loss costs experienced in Ontario, the Atlantic provinces and Alberta.

Additionally, the group benefits from favorable investment results, as evidenced by the ability to produce above average returns despite difficult market conditions. A.M. Best views favorably the financial flexibility that the group receives as a strategic subsidiary of ING Group NV, a global organization that provides integrated financial products and services in 60 countries.

Furthermore, ING Canada’s multiple distribution channels enable it to effectively distribute its personal auto and property, commercial and specialty products. The separation of channels through different operating subsidiaries allows greater flexibility in pricing various products. ING Canada’s strong regional presence and expertise strengthen its relationship with local brokers, securing its goal to remain a leader in its geographic and product markets.

These strengths are partially offset by the adverse underwriting conditions that exist in automobile lines, particularly in Ontario. Higher rates and enactment of legislation passed in late 2002 should help mitigate this concern; however, A.M. Best does not anticipate significant improvement in the near term.

ING Canada is also being challenged to maintain strong investment returns and realized gains while investment markets remain weak. Capital is highly leveraged as a result of rapid premium growth and prior accident year reserve strengthening. Capital growth could be limited in the near term if ING Canada is asked to make dividend payments to its parent. In addition, price increases have begun to level off while claims costs continue to increase, particularly in automobile lines in Ontario.

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