Best Affirms ING Canada Ratings

June 19, 2006

A.M. Best Co. has affirmed the financial strength ratings (FSR) of “A+” (Superior) and the issuer credit ratings (ICR) of “aa-” of the Toronto-based ING Canada Group. The group includes Belair Insurance Company Inc. (Montreal, Quebec), ING Insurance Company of Canada (Ontario), ING Novex Insurance Company of Canada (Ontario), The Nordic Insurance Company of Canada (Ontario) and Trafalgar Insurance Company of Canada (Ontario).

Best also affirmed the ICR of “a-” of ING Canada Inc. (TSX: IIC), the principal holding company for ING Canada, and the indicative ratings of “a-” on senior unsecured debt securities, “bbb+” on subordinated unsecured debt securities and “bbb” on class A preferred shares of the holding company included in its C$1 billion (U.S.$ 890 million) preliminary short form base shelf prospectus. All ratings have a stable outlook.

Best said: “The FSR reflects ING Canada’s superior capitalization; above average profitability; leading market position within the Canadian property/casualty industry; strong internal investment and claims management; knowledgeable executive management team experienced in growth through acquisitions; strong brand name recognition; advantages to market access through multiple channels of distribution; excellent geographic and product line diversification; and sound catastrophe management backed by a comprehensive reinsurance program.”

The rating also considers the added financial flexibility of ING Canada Inc. as a publicly traded company. The ING Canada group operates under a Participation Agreement, effectively spreading the net underwriting risk of the group to each participating company, achieving a pooling effect through intercompany reinsurance.”

Best, however, cited “the current downturn in the industry underwriting cycle, primarily in commercial lines, and the uncertainty of the long-term impact on profitability due to regulatory actions to reform the automobile insurance product in most provinces,” as partially offsetting factors. In addition Best noted that “continued strong surplus growth due to operating profitability would be partially offset by dividend payments to ING Canada’s shareholders.”

ING Canada is the largest P/C insurer in the country, and Best said it is “growing steadily through profitable operating performance and numerous acquisitions. Capitalization is strongly supported by the group’s positive returns, especially over the last two years, and by the added financial flexibility of ING Canada Inc. as a publicly-traded company.

“The individual companies within the group provide localized expertise and flexible pricing in various geographic markets and allow ING Canada to deliver its products through multiple channels of distribution while maintaining strong relations with local brokers.

“Disciplined underwriting and pricing, conservative reserving and in-house claims handling have consistently resulted in better than average underwriting ratios. Geographic and product line diversification have mitigated volatility and lessened the effects of market cycle changes. Through a participation agreement, premiums and losses (including their runoffs) are spread to group members based upon fixed percentages determined by each company’s relative equity position.

“The group employs sophisticated investment management by a company under common control, which has resulted in better than average returns and realized gains.”

However, Best cautioned that “ING Canada will remain challenged to continue its strong profitability during the current soft market cycle. Premium revenues could be hindered by automobile premium rate freezes and roll backs initiated by regulatory changes in most provinces. In addition, claims frequency rates may increase to more historical levels. However, A.M. Best anticipates continued strong profitability in the near term.”

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