Contents:

1. Introduction 1.1 Industry Definition 1.2 Industry Segments The Canadian Life Insurance Industry includes the following three sectors: Direct individual life, health and medical insurance Direct general property and casualty insurance Direct private automobile insurance 2. Market Dynamics 2.1 Market Overview The consolidation in the Canadian life insurance market, due to the demutualization of life insurers in 1999, has led to a near-oligopoly with the top three players holding 90% of the market share (in terms of assets) in 2005. 2.2 Trend Rising Life Insurance Claims Low New Application Activity 2.3 Key Drivers Higher Life Expectancy Increase in Distribution Channels 2.4 Major Issues and Implications Shortage of Insurance Distributors Declining Savings Rate 3. PEST Analysis 3.1. Political Factors Bancassurance Ban Hurting Consumer Interest Amended Bank Act Facilitating Strategic Alliances OSFI Regulates Capital Adequacy Proposal to Increase Transparency in Disclosing Incomes 3.2. Economic Factors Growing Economy Increases Insurance Investments 3.3. Social Factors Lower-Income Citizens Under Served Increasing Dependency Ratio Driving Premiums 3.4. Technological Factors Improving Web Solutions to Attract Brokers CSIO-driven Automation Standards for Broker Distribution Channel 4. Michael Porters Five Forces Analysis 4.1 Buyers’/Customers’ Power Consolidation among Insurance Brokers Restrictions on Bancassurance Reduces Information Availability 4.2 Suppliers Power Reinsurers Losing Business Actuaries Being Poached by Consulting Firms 4.3 Rivalry among Competitors Few Players Ruling the Market Mergers Changing the Face of Competition 4.4 Threat of New Entrants Regulations Might Allow Entry of Banks 4.5 Threat of Substitutes Products such as Annuities and Retirement Plans 5. Competitive Landscape The section provides detailed profiles on Manulife Financial Corp, Sun Life Financial Inc (SLF) and Great-West Lifeco Inc 5.1 Competitive Positioning Comparison of the companies has been done on the basis of key business segments, product range, geographical presence and distribution channels 5.2 Competition Strategies It lists the strategies followed by Manulife Financial, SLF and Great-West Lifeco 5.3 Financial Analysis 5.3.1 Income Statement Analysis An income statement analysis is based on revenues, operating margins, net premiums earned and net income 5.3.2 Balance sheet Analysis Comparative analysis of liquidity ratios and performance ratios of the three competing companies 5.4Stock Performance Comparison of stock market performance of Manulife Financial, SLF, Great-West Lifeco and S&P TSX Financials Index 6. Industry Outlook The proposal of opening up of insurance distribution services through banks is expected to increase the competition in the life insurance business and provide a boost to merger and acquisition activities between banks and insurers Appendix I: Conferences and Annual Meetings 86th Annual IBAO Conference Insurance Brokers Association of Ontario Insurance Claims Technology Forum: Transforming Claims Processing KPMGs 15th Annual Insurance Issues Conference "Risky Business" Atlantic Conference of Insurance Brokers Appendix II: Industry Associations and Organizations The Canadian Life and Health Insurance Association (CLHIA) The Insurance Brokers Association of Ontario (IBAO) Canadian Insurance Accountants Association Tables Tab 4.1 Acquisitions (1996-2004) Tab 5.1 Top Ten Life insurance Companies by Revenue (2005) Tab 5.2 Top Ten Life Insurance Companies by Total Assets (2005) Tab 5.3 Competitive Positioning Tab 5.5 QBE Objectives Figures Fig 2.1 Direct Life Premiums Written (2004-2005) Fig 2.2 Life Insurance benefit Payments (2001-2005) Fig 2.3 Canadian Life Insurance Application Activity (Jun2005-Jun2006) Fig 2.4 Canadian Life Expectancy (2000-2005) Fig 2.5 Households Savings rate (2000-2005) Fig 4.1 Market Share of Top Three Firms (2005) Fig 5.1 Revenue (2003-2005) Fig 5.2 Operating Margin (2003-2005) Fig 5.3 Net Premiums Earned (2004-2005) Fig 5.4 Net income (2004-2005) Fig 5.5 Return on Assets (2004-2005) Fig 5.6 Return on Capital (2004-2005) Fig 5.7 Return on Common Equity (2004-2005) Fig 5.8 Stock Performance (Aug2005-Jul2006)

Summary:

The Canadian life insurance industry has undergone significant structural change over the last five years, driven by mergers and acquisitions among the big players. While in 2001, the top five players accounted for 57% of the domestic general assets, in 2006, the top three players - Manulife, Sun Life and Great-West Lifeco - controlled 90%. Demutualization of the life insurance industry, which allows conversion of a mutual company owned by policyholders to a stock company owned by shareholders, has facilitated mergers and acquisitions. Another key development has been the emergence of savings and investment instruments, such as annuities and retirement plans, as substitutes for life insurance products. This has compelled the life insurance players to alter their products portfolio.

Companies Mentioned

Manulife, Sun Life, Great-West Lifeco, London Life, Standard Life, Transamerica Life, RBC life, Allstate, Empire Life, Swiss Re