1. Investment Analyst Views CIA General Meeting Chicago, Illinois October 19, 2006

2. Veritas Investment Research Independent Unbiased Research Rooted in Forensic Accounting Based on Business Fundamentals Long-term Investment Horizon

3. What do investors want to do? Measure earnings Evaluate risk Value the company Evaluate how well management is investing the company’s capital

4. What tools do investors have? GAAP F/S Source of Earnings disclosures Embedded Value disclosures Notes to the F/S and MD&A, e.g.: CALM disclosures Reserve movements Fair values

5. What the Street does Forecasting earnings by segment Key drivers appear to be: Premium growth Net Income margin Forecasts are then used to plug into: Forward P:E analysis Forward P:BV analysis

6. Relative Price : Earnings Source: BMO Nesbitt Burns

7. Price : Book Regression

8. Why we don’t use these techniques The market doesn’t need a 15th EPS estimate Target P:E multiples are difficult to justify theoretically ROE regressions should be a means, not an end Short term forecasts are inherently fraught with danger Cause & effect (Dis)connect between market events and GAAP earnings

9. Veritas approach to life insurance Profitability is driven by two key components: Did the Lifeco sell profitable new business? Existing book of business – did the LifeCo manage better or worse than model ?

10. SOE: Earnings Quality Concerns? Source of Earnings, Common Size Q1-F06 Source: Company reports and Veritas calculations.

11. SOE - Returns on Surplus Return on Assets Backing Surplus*, 2001-2005 Source: Company reports and Veritas calculations * Simple average of opening and closing balances

12. SOE - “Core earnings”

13. How is shareholders’ money invested? Assets Backing Capital Asset Mix Supporting Capital (and Other Liabilities) – Dec. 31, 2005 Source: Company reports, Veritas calculations Includes non-policy liabilities and shareholders' equity ** Includes shareholders' equity, long-term debt, liabilities for preferred shares and capital instruments and non- controlling interest in subsidiaries

14. Allowances for future credit losses Key takeaways Dollar amounts are much more significant than impaired loans MFC has been reducing its reserve GWO carries a lower reserve Source: Company reports and Veritas calculations. IAG does not disclose this figure. Note: Amounts in millions of Canadian dollars

15. The Whole Portfolio Invested Asset Composition, Q4-F04 vs. Q1-F06

16. Bonds Only Bond Portfolio Composition, Q4-F04 vs. Q1-F06

17. Policy Liabilities - the Rollforward Difficult to glean useful information Source: MFC 2005 annual report MFC Policy Liability Rollforward, 2005 (Amounts in millions of Canadian dollars)

18. Assumption changes – MFC 2005

19. EV Valuation MFC share price, EV/share, BV/share

20. P:EV Multiples

21. VNB Multiples (Implied)

22. Implied VNB Growth Discount RateMFCSLF Price$36.06$44.75 8.50%0.96%0.99% 9.00%1.46%1.49% 9.50%1.96%1.99%

23. VNB / Share Growth

24. SLF EV Growth Analysis VNB growth rates are not all that affect EV growth The market discounts for EV adjustments – the risk inherent in managing the existing book of business

25. EV Adjustments Note: circles are annual summary; squares are individual components MFC - black SLF - white

26. Investment Thesis

27. VNB / Share Growth V-LIST BUY Target: $43.50

28. Directly Forecasting EV Supplement with high level EV forecast: Opening EV + EV Accretion + Value of New Business -Capital Returned to Shareholders Closing EV

29. 3855: What’s My Number? Vanishing earnings Balance sheet volatility Gains / losses on assets backing surplus

30. 3855: Vanishing Earnings Forecasted EPS is affected Therefore, forecasted valuation is affected for those using P:E approach BV will increase – how does this affect those using P:BV regression? Does the change adversely affect management decisions?

31. 3855: Balance Sheet Volatility Assets backing surplus will be marked to market – GOOD! Assets backing liabilities will be marked to market – Not so good. Analysts taking a wait and see approach

32. 3855: Gains on Assets Backing Surplus What is the “right” level? Accounting is similar to banks’ for Investment Securities Operating earnings / Core earnings Analysts taking a wait and see approach

33. 3855: New Disclosures, Please! Fair value of assets backing surplus, by asset class Gains recognized in earnings & OCI separately, by asset class Liability rollforward by quarter, separately showing effect of asset valuation

34. Other Requested Disclosures PfADs, reserve details VNB / segment SOE / segment Experience gains or losses by type Sensitivity to interest rates / equity markets

35. Questions and Answers

36. LifeCo Fair Values - Example Fair Value of Assets Backing Equity, as at December 31, 2005 (Amounts in billions of Canadian dollars) Source: Company reports and Veritas calculations. * Includes goodwill and intangibles.