Best Affirms Rating for ING Canada Group

May 18, 2004

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

The group, which operates under a pooling arrangement, includes Belair Insurance Company Inc., ING Insurance Company of Canada, ING Novex Insurance Company of Canada, and The Nordic Insurance Company of Canada. The rating outlook is stable.

This rating reflects ING Canada’s superior level of capitalization, strong management team, sound business plans, consistently profitable operating performance and its leadership position in the Canadian property/casualty market.

These strengths are partially offset by the group’s exposure to adverse underwriting conditions, which exist on automobile lines, particularly in Ontario, the current low interest rate environment and the uncertainty surrounding the effects that regulatory changes to the automobile insurance product, particularly in Alberta and Ontario, will have on the group’s underwriting results.

ING Canada maintains a superior level of capital and surplus in relation to its reserving, underwriting, assets and business risks. Underwriting and investment results have consistently outperformed the Canadian property/casualty industry. ING Canada has a strong management team that relies upon disciplined underwriting and pricing, conservative reserving and efficient in-house claims handling. Its geographic diversification has allowed for consistency in underwriting performance with favorable results in Quebec, which offset rising loss costs experienced in Ontario, the Atlantic region and Alberta.

Additionally, ING Canada benefits from favorable investment results, as evidenced by the ability to produce above average returns despite difficult market conditions. Furthermore, the group’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 strengthens relationships with local brokers, securing its goal of remaining the leader in its geographic and product markets.

ING Canada remains challenged to produce strong investment returns and realized gains during the current low interest rate environment. A.M. Best anticipates continued underwriting improvement in the near term as premium rate increases taken in 2003 should continue to earn out through at least the first half of 2004.

However, uncertainty exists regarding the effects that regulatory changes to the automobile insurance product will have on the group’s underwriting profitability.

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