1. 4/20/2017
The Future of Bancassurance Rebuilding Confidence International Insurance Society Annual Seminar June 07, 2010
Oscar Zimmerman
SVP & Managing Director, Corporate Insurance
The Bank of Nova Scotia

2. Agenda Bancassurance Scotiabank Strategy Key Success Factors
4/20/2017
Agenda
Bancassurance
Customer Needs
Opportunities
Challenges
Scotiabank Strategy
Key Success Factors
Operational Results
Closing

3. Definition Distribution of any insurance product through Bank channels
4/20/2017
Definition
BANCASSURANCE
Distribution of any insurance product through Bank channels
Products - Bank Owned Insurer
Products – Other Insurers
BANK
Branch Officers
Insurance Agents
External Sales Forces
Telemarketing
Internet
Mailing
BANK CLIENTS

4. Types of Products Risk Protection Wealth Accumulation
BANCASSURANCE
Risk Protection
Life and health insurance
Automobile and home insurance
Wealth Accumulation
Savings with an insurance component
Accumulation and payout annuities
Pensions
Creditor Insurance
Optional Insurance
Universal Life
Annuities

5. Retail Banking Products
CUSTOMER NEEDS
Choice
Simple, easy to understand and purchase
Convenience
Service
Trust the “promise to pay”
Price competitive
Bancassurers are uniquely positioned to offer an integrated value proposition to meet customer needs at various life stages.

6. Typical Changes in Life Stage
Life Stages
CUSTOMER NEEDS
Typical Changes in Life Stage
New Family
Established Family
Buy Home
Acquire Goods
Protect Income
Save for Education
Reduce Debt
Couple
Pre- Retirement
Buy Home
Start Saving
Acquire Goods
Plan to Retire
Accumulate
Plan Estate
Single
Retired
Independent
Buy Car
First Job
Start Saving
Disburse Savings
Plan Estate
Plan to retire
Buy home
Plan estate
It is easier to cross sell insurance to existing relationships

7. How Does Bancassurance Help Retail Banks?
RETAIL BANK OPPORTUNITY
Protects credit insurance
Improves loyalty and cost utilization
Additional fee income boosts shareholder ROE
Insurance risk taking is less correlated to the credit cycle
Approved borrowers tend to be better insurance risks

8. Cultural Differences Between Financial Sectors
BANCASSURANCE CHALLENGES
BANKING
INSURANCE
Closing the Cultural Gaps
Protect Bank Reputation
Focus on Retail
Understand and manage insurance risk volatility
Enhance ROE with stable recurring income
Consumer Brand
Distributor Brand
Transactions
Sales & Relationship-based
Fixed cost
Variable cost
Mortality, morbidity, property & financial risk management
Liquidity, credit
& financial risk management
Short Term
Focus
Long Term
Focus
Deconsolidated capital ratio test
Deconsolidated capital ratio test
Chief Risk Officer
(CRO)
Appointed Actuary
(AA)

9. BANCASSURANCE CHALLENGES
Regulatory Framework
BANCASSURANCE CHALLENGES
Bank and Insurance sectors separately regulated
Outdated regulations
Limits of regulatory restrictions
International insurance regulation vary

10. Relative bank share price performance
Strength of Canada & Canadian Financial System
SCOTIABANK STRATEGY
Strong Canadian Financial System
Sound Canadian Banking System
World Economic Forum
Relative bank share price performance
Data to May 3, 2010
* As of April 30, Source: Bloomberg; Scotia Capital.

11. Scotiabank Around The World
SCOTIABANK STRATEGY
14.6 million customer in some 50 countries
68,000 employees worldwide (32,000 in Canada)
Personal, Commercial, Corporate and Investment Banking
Branches and Offices, 5800 ABMs
Diversified Business Lines: Canadian Banking, International Banking, Scotia Capital
Market Cap. Circa $50 billion, USD (Top 25)
Tier 1 capital ratio 11.2%, S & P AA-
Net Income 2009 Full Year $C3.5 billion ROE 16.7%
2010 Half Year $C2.1 billion ROE 18.7%

12. Top Tier ROE Versus Global Peer Group 2009 Return on Equity (Reported)
SCOTIABANK STRATEGY
2009 Return on Equity (Reported)
Canada
U.S.
International
Scotia
16.7%
Wells Fargo
9.9%
Credit Suisse
18.3%
Royal
11.9
US Bancorp
8.2
BBVA
16.0
BMO
9.9
JPMorgan
6.0
Commonwealth Bank
of Australia
15.8
CIBC
9.4
Bank of America
n/m
Deutsche
14.6 TD
8.4
Citibank
HSBC
5.1

13. Global Priorities Sustainable revenue growth Capital management
SCOTIABANK STRATEGY
Sustainable revenue growth
Capital management
Leadership
Prudent risk management and appetite
Efficiency and expense management

14. Four Cornerstone Strategy
Scotiabank Mission
SCOTIABANK STRATEGY
To be the best at helping customers become financially better off by finding relevant solutions to meet their unique needs.
Four Cornerstone Strategy

15. Bancassurance Strategy
SCOTIABANK STRATEGY
Focus on helping customers protect their assets
Leverage Bank distribution and servicing capabilities, financial strength and brand awareness
Assume retail insurance risks
Assume 3rd party reinsurance risks that are less correlated with traditional bank risk

16. Insurance Footprint Direct Writing Subsidiaries Canada (L & H)
SCOTIABANK STRATEGY
Direct Writing Subsidiaries
Canada (L & H)
Dominican Republic (L & H)
El Salvador (L & H / P & C)
Jamaica (L & H)
Trinidad (L & H)
Reinsurance Subsidiary
Barbados (L & H / P & C)
Joint Venture
El Salvador (Auto)
Insurance Brokerages
Canada
Chile
Costa Rica
Dominican Republic
Puerto Rico
Insurance Fee Income
Caribbean
Central America
Mexico
Peru

17. Key Success Factors in Bancassurance
Identify profit zone in retail value chain
Integrated sales processes
Sales Management
Optimize corporate structure and risk taking business model
Manage adverse earnings volatility
Teamwork is critical to strategy execution

18. Identify Profit Zone in the Retail Value Chain
4/20/2017
Identify Profit Zone in the Retail Value Chain
KEY SUCCESS FACTORS
Retail Consumers
Protection Needs
Retail Banking
Products
Retail Banking Sales &
Service Platforms
Picture of the savings/retirement market that products are being proposed for
Cover off accumulation and payout products in turn, talking about key considerations for each, a high level description of the proposed products and then the product details where we’ll talk about feature trade-offs that were considered along the way
Have a placeholder for questions/comments but we’ll answer questions as they come up or ask to defer them if they’re going to be covered off later in the presentation
Value Proposition Differs By Customer Segment

19. Integrated Sales Processes
KEY SUCCESS FACTORS
Simple product portfolio
Streamlined sales process
Systematic sales management
Low product complexity
Comprehensive sales support
Leverage Information Technology Systems and Customer Data
Integrated Sales Management
Attractive packaging
Bundled sales
Simplified underwriting
Systematic sales guidance
Rigorous Market conduct compliance

20. Sales Management Measurable bank channel sales targets
KEY SUCCESS FACTORS
Measurable bank channel sales targets
Appropriate incentives impacting bonus compensation
Fully automated and simple sales process
Provide continuous product and sales training

21. Optimize Business Model
KEY SUCCESS FACTORS
Decision Criteria:
Local Market Structure
Insurer Financial Strength
Regulatory Environment
Retained Risk Appetite
Management Capacity
Speed to Market
Choices:
Underwriting Subsidiary
Pure Distribution
Distribution/Reinsurance
Joint Venture

22. Manage Adverse Earnings Volatility
KEY SUCCESS FACTORS
Insurance Oversight Committee
External Appointed Actuaries for Subsidiaries
Follow Canadian Insurance Prudential Standards
Pre-Approval of limits for catastrophic events

23. Operational Results Protect Bank Reputation Focus on Retail
Understand and manage insurance risk
Enhanced ROE, Stable Recurring Income

24. Closing Observations
Insurance profits held firm during financial crisis
Bank colleagues were very appreciative

25. Thank You