ING Canada Reports 2008 Second Quarter Results



    Sound operating performance despite the impact of severe spring storms

    TORONTO, Aug. 13 /CNW/ - ING Canada Inc. (TSX: IIC) reported net
operating income of $109.5 million or $0.89 per share for the quarter ended
June 30, 2008 down from $132.5 million or $1.06 per share recorded in the same
quarter of last year as the severe June storms and the effects of an extended
winter impacted the underwriting results. Direct premiums written increased
marginally in the quarter to $1,216.7 million, excluding industry pools, as
the company remains committed to its disciplined approach to risk selection
and pricing.
    Net income declined to $112.0 million or $0.91 per share down from
$194.3 million or $1.56 per share last year due mainly to the equity markets
weakness over the last year, which resulted in a significant reduction in
investment gains.

    CEO's comments

    Charles Brindamour, President and CEO, commented:
    "Despite the impact of the weather conditions, our operating performance
during the quarter was sound with three of our four lines of business
achieving combined ratios below 90%. Excluding the effects of the severe
storms, operating profitability before taxes improved year-over-year.
    "The June 10th hail storm that hit the Montreal South Shore alone
resulted in $26 million in damages bringing total claims losses for the three
most severe storms during the quarter to more than $40 million. Our home
insurance operation incurred a significant loss in the quarter as it continued
to be seriously impacted by the severe weather conditions, including hail,
rain, heavier precipitation and more intense windstorms. We continue to adapt
our pricing strategy to these new realities and continue to improve our
capabilities to better respond to the needs of our clients.
    "Our investment activities continued to generate substantial interest and
dividend income but equity markets conditions resulted in minimal realized
investment gains. Our capital position remains strong and we are actively
proceeding with our share buyback program."

    Dividend and share buyback

    ING Canada declared a quarterly dividend of 31 cents per share on its
outstanding common shares. The dividend will be payable on September 30 to
shareholders of record on September 15. Since announcing its normal course
issuer bid earlier this year, the company has acquired for cancellation as of
July 31, 3.2 million shares for $120.0 million. These purchases are equivalent
to more than half of the planned buyback of 6.2 million shares.

    Recent event

    During the quarter, Moody's Investors Services initiated coverage of the
company and on July 16, it assigned a long-term issuer rating of A3 to
ING Canada and an insurance financial strength rating of Aa3 to its insurance
subsidiaries.

    Current Outlook

    Management's outlook for the industry for the next twelve months remains
unchanged.
    
    -   Both top-line growth and underwriting profitability of the property
and casualty insurance industry will move towards historical levels.

    -   The automobile insurance environment has been favourable for more
        than three years both from a consumer and a competitive point of
        view. The stable cost environment and the reforms adopted over the
        years have been effective in making auto insurance more affordable
        and available to consumers. However, accident benefit and bodily
        injury claims in Ontario have risen and the cap on pain and suffering
        awards for minor automobile accident injuries has been challenged in
        Alberta. These developments will likely lead to premium increases.

    -   Increases in water-related damages caused by weather conditions and
        construction costs inflation will likely drive increases in industry
        premiums in personal property insurance.

    -   Commercial insurance continues to be very competitive and increases
        in construction costs could put additional pressure on underwriting
        margins. We remain disciplined in pricing and underwriting and
        committed to superior service.


    Consolidated Highlights

    -------------------------------------------------------------------------
    In millions of        2008     2007    Change    2008     2007    Change
     dollars, except      ----     ----    ------    ----     ----    ------
     as otherwise noted    Q2       Q2                YTD      YTD
                           --       --                ---      ---
    Direct Premiums
     Written            1,216.7  1,209.8     0.6%  2,077.0  2,056.1     1.0%
    Underwriting
     Income(1)             43.4     53.2  (18.4)%     44.2     91.8  (51.9)%
    Net Operating
     Income(2)            109.5    132.5  (17.4)%    179.6    245.2  (26.8)%
    Net Income            112.0    194.3  (42.4)%    135.0    320.5  (57.9)%
    Earnings Per
     Share ($)
      Basic and Diluted    0.91     1.56  (41.7)%     1.09     2.49  (56.2)%
    Return on Equity -
     last 12 months       10.3%    18.3% (8.0)pts
    Combined Ratio
     (excluding MYA)      95.6%    94.6%   1.0 pt    97.8%    95.3%  2.5 pts
    -------------------------------------------------------------------------
    (1) Underwriting income is defined as underwriting income excluding
        market yield adjustment (MYA)
    (2) Net operating income is defined as the sum of underwriting income,
        interest and dividend income and corporate income after tax


    Operating Highlights

    -   Direct premiums written reached $1,216.7 million during the quarter,
        a 0.6% increase over the same quarter of last year. In home and auto
        insurance, higher average amounts insured and higher rates for home
        and auto insurance largely compensated the decline in the number of
        risks insured. Competitive pressures in commercial insurance resulted
        in a 1.5% decline in premiums despite a 3.0% increase in the number
        of risks insured.

        For the first six months of the year, direct premium written
        increased by 1.0% as a result of rate increases to reflect the
        increased cost of claims in auto and home insurance.

    -   Underwriting income, excluding MYA, for the quarter amounted to
        $43.4 million down from $53.2 million from the corresponding quarter
        of last year. The decline is the direct result of three severe storms
        that resulted in $40.9 million in claims. The weather conditions were
        also the major contributor to an underwriting loss of $45.7 million
        in personal property. Auto insurance results improved slightly during
        the quarter as well as those in commercial insurance with combined
        ratios below 90%. Overall the combined ratio increased by
        1.0 percentage point during the quarter to reach 95.6%.

        Underwriting income does not include a positive market yield
        adjustment of $31.5 million resulting from lower interest rates used
        to discount claims liabilities. This adjustment, which reflects the
        market yield during the quarter, was largely offset by losses on debt
        securities held for trading.

        For the first six months of the year, underwriting income declined to
        $44.2 million due to the major storms that took place both during the
        winter and spring months. Overall, there were five storms during the
        first six months that resulted in claims expenses of more than
        $5 million each for a total of $66.9 million compared to two storms
        during 2007 for a total of $14.9 million.

    -   Interest and dividend income, net of expenses decreased slightly to
        $81.7 million as a result of the share buyback program. For the first
        six months of the year, interest and dividend income amounted to
        $167.2 million compared to $173.6 million the year before.

    -   Net operating income, which is defined as the sum of underwriting
        income, interest and dividend income and corporate income after tax,
        decreased to $109.5 million during the quarter and to $179.6 for the
        first six months mainly as a result of the impact of the severe
        winter and spring storms.

    Investments

    -   Net gains on invested assets declined significantly during the
        quarter and the first six months of the year as a result of the
        equity market conditions. Net gains for the quarter, excluding
        held-for-trading debt securities, totalled to $0.6 million during the
        quarter, down from $95.1 million last year. For the year to date, we
        recorded a loss of $60.2 million compared to a gain of $123 million
        during the corresponding period of last year.
    

    Analyst Estimates

    The average estimate of earnings per share and operating earnings per
share for the second quarter among the analysts that follow the company were
$1.05 and $0.92 respectively.

    Conference Call

    ING Canada will host a conference call to review its earnings results
later this morning at 10:00 am ET. To listen to the call via live audio
webcast and to view the presentation slides and supplementary financial
information, visit our website at www.ingcanada.com and click on "Investor
Relations".
    The conference call is also available by dialling 416 644-3424 or
1-800-594-3615 (toll-free in North America). Please call ten minutes before
the start of the call.
    A replay of the call will be available at 12:30 p.m. ET today through
11:59 p.m. ET on August 20. To listen to the replay, call 416 640-1917 or
1-877-289-8525 (toll-free in North America). The passcode is 21279004 followed
by the number sign. A transcript of the call will also be available on
ING Canada's website.

    About ING Canada

    ING Canada is the largest provider of property and casualty insurance in
the country with more than $4 billion in direct written premiums. ING Canada
offers automobile, property and liability insurance to individuals and
businesses through its insurance subsidiaries. The company's investment
subsidiary manages a portfolio of more than $7 billion, comprised mainly of
high quality Canadian securities.



    
    ING

    Management's Discussion and Analysis
    For the second quarter ended June 30, 2008


    Table of contents

    Section 1 - ING Canada
    Section 2 - Canadian property and casualty insurance industry outlook
    Section 3 - Overview of consolidated performance
    Section 4 - Personal lines
    Section 5 - Commercial lines
    Section 6 - Corporate and distribution
    Section 7 - Financial condition
    Section 8 - Accounting and disclosure matters
    Section 9 - Risk management
    Section 10 - Other matters


    August 12, 2008
    

    The following Management's Discussion and Analysis ("MD&A"), which was
approved by the Board of Directors for the quarter ended June 30, 2008, is
intended to enable the reader to assess the company's results of operations
and financial conditions for the three- and six-month periods ended June 30,
2008, compared to the corresponding periods. It should be read in conjunction
with the company's Unaudited Interim Consolidated Financial Statements and
accompanying notes, as well as the MD&A and the Consolidated Financial
Statements in the company's 2007 Annual Report.
    The company uses both generally accepted accounting principles ("GAAP")
and certain non-GAAP measures to assess performance. Non-GAAP measures do not
have any standardized meaning prescribed by GAAP and are unlikely to be
comparable to any similar measures presented by other companies. ING Canada
analyzes performance based on underwriting ratios such as combined, general
expenses and claims ratios as well as other performance measures including and
excluding the market yield adjustment ("MYA") to claims liabilities. These
measures are defined in the company's glossary which is posted on the ING
Canada web site at www.ingcanada.com. Click on "Investor Relations" and
"Glossary" on the left navigation bar.

    Forward-looking statements

    This document contains forward-looking statements that involve risks and
uncertainties. The company's actual results could differ materially from these
forward-looking statements as a result of various factors, including those
discussed hereinafter or in the company's 2007 Annual Information Form. Please
read the cautionary note in section 10.2 of this document.
    Certain totals, subtotals and percentages may not agree due to rounding.
Additional information about ING Canada, including the Annual Information
Form, may be found online on SEDAR at www.sedar.com. A change column has been
provided for convenience showing the variation between the current period and
the prior period. Not applicable (n/a) is used to indicate that the current
and prior year figures are not comparable or if the percentage change exceeds
1,000%.

    
    Notes:

    -   All references to direct premiums written in this MD&A exclude pools,
        unless otherwise noted.
    -   "ING", "ING Canada" and "the company" are terms used throughout the
        document to refer to ING Canada Inc. and its subsidiaries.


    Section 1 - ING Canada

    1.1   Overview of the business
    

    ING Canada is the largest provider of property and casualty ("P&C")
insurance in Canada offering automobile, property and liability insurance to
approximately four million individuals and businesses across Canada. Overall,
the company has an approximate 11% market share and is the leading private
sector P&C insurer in Ontario, Quebec, Alberta and Nova Scotia. ING Canada
distributes insurance through brokers under the ING Insurance and Grey Power
brands, and direct-to-consumers through belairdirect. ING Canada's investment
management subsidiary manages the invested assets of the company and its
insurance subsidiaries.


    Section 2 - Canadian property and casualty insurance industry outlook

    Management expects that several key factors will affect the Canadian P&C
insurance industry over the coming 12 months.

    ING Canada, with its scale advantage, underwriting discipline and pricing
sophistication, is well positioned to capitalize on the above conditions and
continue to outperform the industry's return on equity for the foreseeable
future. Our distinct product and service proposition delivered through a
multi-channel distribution network will be a key driver in fuelling organic
growth.

    Industry growth and underwriting income

    We anticipate that industry underwriting profitability and premium growth
will move towards long-term historical averages.


    -------------------------------------------------------------------------
    Automobile insurance

    The automobile insurance environment has been favourable for more than
three years from both a consumer and a competitive point of view. The reforms
adopted over the years have been effective at helping to contain and stabilize
claims costs. As a result, auto insurance products have become more affordable
and available to consumers. However, certain developments, such as the
following, will likely lead to premium increases:

    Ontario

    Accident benefit and bodily injury ("AB/BI") claims have risen recently.
This issue will be addressed as part of the five-year review of the Insurance
Act, which is expected to conclude in late 2008.

    Alberta

    The Alberta government is appealing an Alberta Court decision in
February 2008 to lift the $4,000 cap on pain and suffering claims for minor
injuries (Minor Injury Regulation or "MIR"). The appeal hearing is scheduled
for September 2008. Industry participants need to assess the potential impact
on claims costs and premiums.

    -------------------------------------------------------------------------
    Personal property insurance

    Increases in water-related property damages caused by seasonal storm
activity as well as material and labour cost inflation have contributed to
higher claims ratios in the personal property segment. Construction cost
inflation and rate activity will likely drive increases in industry premiums
in personal property insurance.

    -------------------------------------------------------------------------
    Commercial insurance

    Commercial insurance continues to be highly competitive. Rates on large
commercial accounts are under more pressure than small and medium commercial
accounts. Higher material and labour costs could also put pressure on
underwriting margins in commercial property insurance.


    
    Section 3 - Overview of consolidated performance

    Second quarter highlights

    -   Sound underwriting performance despite severe seasonal storms in
        Central Canada
    -   Combined ratios below 90% in all lines of business except personal
        property
    -   Higher underwriting income excluding catastrophes, reflecting strong
        execution and continued pricing discipline
    -   Significantly lower equity gains compared to the second quarter of
        2007

    Consolidated financial results

    Table 1 - Components of net income

    (in millions of
     dollars, except as                                YTD      YTD
     otherwise noted)   Q2-2008  Q2-2007   Change     2008     2007   Change
    -------------------------------------------------------------------------

    Written insured
     risks (thousands)  1,380.6  1,399.7   (1.4)%  2,326.4  2,350.1   (1.0)%
    Direct premiums
     written
     (excluding pools)  1,216.7  1,209.8     0.6%  2,077.0  2,056.1     1.0%
    Underwriting income
     (excluding MYA)       43.4     53.2  (18.4)%     44.2     91.8  (51.9)%
    Combined ratio
     (excluding MYA)      95.6%    94.6%  1.0 pts    97.8%    95.3%  2.5 pts
    Interest and
     dividend income,
     net of expenses
     (table 7)             81.7     86.9   (6.0)%    167.2    173.6   (3.7)%
    (Losses) gains on
     invested assets
     and other gains
     (table 8)            (28.7)    53.6 (153.5)%    (54.5)    79.7 (168.4)%
    Income before
     income taxes         140.8    250.8  (43.9)%    163.0    422.2  (61.4)%
    Income tax expense     28.8     56.5  (49.0)%     28.0    101.7  (72.5)%
    Effective income
     tax rate             20.5%    22.5% (2.0)pts    17.1%    24.1% (7.0)pts
    Net income            112.0    194.3  (42.4)%    135.0    320.5  (57.9)%
    Net operating income
     (table 17)           109.5    132.5  (17.4)%    179.6    245.2  (26.8)%
    -------------------------------------------------------------------------
    Earnings per share
     ("EPS") - basic and
     diluted (dollars)     0.91     1.56  (41.7)%     1.09     2.49  (56.2)%
    Net operating income
     per share (dollars)   0.89     1.06  (16.0)%     1.45     1.90  (23.7)%
    -------------------------------------------------------------------------
    Return on equity
     ("ROE") for the
     last 12 months       10.3%    18.3% (8.0)pts
    Book value per
     share (dollars)      25.19    25.55    (0.36)
    -------------------------------------------------------------------------


    3.1   Explanation of consolidated financial results

    Table 2 - Changes in pre-tax operating income (year-over-year)

    (in millions of dollars,
     except as otherwise noted)                       Q2-2008       YTD 2008
    -------------------------------------------------------------------------

    Pre-tax operating income, as reported in 2007       158.0          301.6
      Higher favourable prior year claims
       development                                       35.7           24.3
      Current accident year:
        Lower current accident year
         underwriting income                            (22.7)         (17.4)
        Higher losses from catastrophes                 (26.0)         (52.0)
        Higher (lower) results from Facility
         Association                                      3.1           (2.5)
      Change in underwriting income excluding MYA        (9.9)         (47.6)
      Lower interest and dividend income,
       net of expenses                                   (5.2)          (6.4)
      Corporate and distribution                         (5.0)         (20.2)
    Pre-tax operating income, as reported in 2008       137.9          227.4
    -------------------------------------------------------------------------
    Pre-tax operating income is a non-GAAP measure.


    Table 3 - Changes in income before income taxes (year-over-year)

    (in millions of dollars, except as otherwise noted)  Q2-2008     YTD 2008
    -------------------------------------------------------------------------

    Income before income taxes, as reported in 2007        250.8       422.2
      Change in net gains on invested assets and
       other gains excluding held for trading ("HFT")
       debt securities (table 8)                           (94.5)     (183.2)
      Change in pre-tax operating income (table 2)         (20.1)      (74.2)
      Market yield effect (table 9)                          4.6        (1.8)
    Income before income taxes, as reported in 2008        140.8       163.0
    Income tax                                             (28.8)      (28.0)
    Net income as reported in 2008                         112.0       135.0
    -------------------------------------------------------------------------
    

    Second quarter 2008

    Continued pricing discipline across all lines of business is reflected in
direct premium written growth of 0.6%. In personal lines, unit growth slowed
as we raised premiums in response to cost inflation both in personal auto and
personal property, and an increase in water-related property claims in certain
geographic areas. In commercial lines, our portfolio has shifted toward small
and medium-sized commercial accounts that tend to be less price-sensitive in
the current, highly-competitive environment. In addition, we have been
adjusting our commercial premiums for building cost inflation which has risen
significantly in certain regions, affecting property reconstruction costs.
These actions demonstrate our commitment to sustaining appropriate margins in
our underwriting business, even if it results in a slower pace of growth in
the near-term.
    Second quarter underwriting performance was sound despite severe hail,
wind and rain storms in Central Canada and the late spring runoff of heavy
snow accumulated in the first quarter in the same region. These storms
resulted in significantly higher claims, including $40.9 million in
catastrophe claims alone. Combined ratios were below 90% in all lines of
business except personal property, notwithstanding the harsh weather
conditions. Excluding current year catastrophes, underwriting income increased
year-over-year by $16.2 million.
    Personal auto results remained stable with a combined ratio of 89.2%.
Underwriting income improved slightly over the same quarter last year as
favourable prior year claims development increased. Current accident year
results were unchanged year-over-year despite the severe seasonal storms.
Personal property results in the second quarter were most affected by the
melting of snow accumulated earlier in the year and severe seasonal storms in
the second quarter, contributing to the underwriting loss in the quarter.
    Commercial underwriting income increased year-over-year with a combined
ratio of 87.3%, demonstrating strong execution of our strategy and commitment
to maintaining a high quality portfolio. Though competition remains aggressive
in this segment, our commercial units have continued to grow. At the same
time, we have maintained our pricing discipline with only low single-digit
rate decreases over the last 18 months.
    On the investment side, interest and dividend income was $81.7 million,
slightly lower than in the second quarter of 2007. The decrease was due to a
decline in market yields as well as a lower asset base reflecting ongoing
capital management initiatives, including the normal course issuer bid
announced in February 2008. Continued weakness in Canadian equity markets over
the last year, specifically in the financial sector, resulted in lower equity
gains net of derivatives, compared to the same quarter last year. In total, we
had a minimal gain on invested assets including derivatives, of $0.6 million,
excluding losses on held-for-trading bonds which were more than offset by the
market yield adjustment to claims liabilities. Gains and losses on invested
assets are discussed in section 3.4.
    Overall, net operating income decreased year-over-year by $23.0 million
to $109.5 million, mainly due to a $26.0 million increase in catastrophe
claims. Net income decreased to $112.0 million in the second quarter, compared
to $194.3 million in the same quarter last year. The drop reflects lower
operating income and a decrease in recognized gains on invested assets, mainly
in the common stock portfolio.

    Year-to-date 2008

    Direct premiums written increased by 1.0% overall, driven mainly by
higher average premiums in personal insurance. As mentioned in the second
quarter discussion above, rates in personal lines are being adjusted to
reflect cost inflation and higher water-related property claims. The
commercial business has remained robust due to our pricing discipline and
portfolio shift toward smaller accounts that tend to be less price-sensitive
in the current market compared to larger commercial accounts.
    Year-to-date, underwriting income declined to $44.2 million compared to
$91.8 million in the first half of 2007 mainly due to seasonal storms in the
first and second quarters. The storms led to higher overall claims, including
$66.9 million in catastrophe claims compared to $14.9 million in catastrophe
claims over the same period in 2007. In Central Canada, we experienced
near-record snowfall in the first quarter and severe hail, rain and wind
storms in the second quarter.
    Current year results in personal auto were stable year-over-year despite
the storms. Prior year claims development was slightly more favourable in
personal auto in the first half of 2008 despite an increase in a provision for
Alberta auto claims in the first quarter. Personal property underwriting
results were most impacted by the seasonal storms, resulting in a loss of
$61.1 million year-to-date, a large portion of which was related to
catastrophe claims. In commercial lines, underwriting income increased
markedly year-over-year due to more favourable prior year claims development.
    Overall, net income decreased to $135.0 million, down from $320.5 million
in the first six months of last year. The drop reflects lower operating income
and recognized investment losses, mainly in the common stock portfolio.
Unfavourable financial market conditions over the last year, particularly in
the financial sector contributed to the losses in the equity portfolio,
compared to large gains in the same period of 2007. In addition, we had an
unrealized loss position in the available for sale ("AFS") common share
portfolio at the beginning of 2008 versus an unrealized gain position at the
start of 2007. Refer to table 10 for more information on unrealized gains and
losses on AFS securities.
    The company's cash flow and capital position remain strong, and
management remains confident that the investment strategy of managing for
total return provides superior long-term value.

    Return on equity

    ROE for the 12-month period ending June 30, 2008 was 10.3% compared to
18.3% at June 30, 2007, reflecting lower net income explained above.

    Book value

    Book value per share decreased to $25.19 in the second quarter from
$25.55 in the same quarter last year as shares were repurchased for
cancellation under the normal course issuer bid announced on February 20,
2008.

    Progress on normal course issuer bid ("NCIB")

    The NCIB was announced on February 20, 2008. As at July 31, 2008, the
company had acquired for cancellation 3,165,934 shares for $120.0 million,
which is equivalent to 50.9% of the planned buyback of 6.2 million shares. The
reduction in the number of outstanding shares positively impacts earnings per
share.
    ING Groep has participated proportionately in the share buyback to
maintain its ownership at 70%.

    Recent events

    On July 31, 2008, the Alberta Insurance Rate Board ("AIRB") approved a
5.0% rate increase on mandatory automobile insurance coverages as part of its
annual rate review. The increase will be effective on November 1, 2008.
    On July 16, 2008, Moody's Investors Services initiated coverage of
ING Canada, assigning a long-term issuer rating of A3 and an insurance
financial strength rating of Aa3 to its insurance subsidiaries.

    
    3.2   Underwriting income

    Table 4 - Net premiums earned, claims and general expenses

    (in millions of
     dollars, except as                                YTD      YTD
     otherwise noted)   Q2-2008  Q2-2007   Change     2008     2007   Change
    -------------------------------------------------------------------------

    Net premiums earned   996.1    976.7     2.0%  1,987.9  1,933.3     2.8%
    Net claims:
      Current year claims
       (excluding MYA)    668.5    630.7     6.0%  1,334.7  1,268.7     5.2%
      Current year
       catastrophes        40.9     14.9     26.0     66.9     14.9     52.0
      (Favourable) prior
       year claims
       development
       (excluding MYA)    (41.2)    (5.2)   (36.0)   (40.3)   (15.9)   (24.4)
    Total net claims
     (excluding MYA)      668.2    640.4     4.3%  1,361.3  1,267.7     7.4%
    Commissions, net      135.9    147.6   (7.9)%    284.5    301.2   (5.5)%
    Premium taxes, net     34.6     34.0     1.8%     69.3     67.6     2.5%
    General expenses,
     net                  114.0    101.5    12.3%    228.6    205.0    11.5%
    Total underwriting
     expenses             284.5    283.1     0.5%    582.4    573.8     1.5%
    Total underwriting
     income (excluding
     MYA)                  43.4     53.2    18.4%     44.2     91.8  (51.8)%
    -------------------------------------------------------------------------


    Table 5 - Underwriting ratios (excluding MYA)

                                                       YTD      YTD
                        Q2-2008  Q2-2007   Change     2008     2007   Change
    -------------------------------------------------------------------------

    Claims ratio          67.1%    65.6%  1.5 pts    68.5%    65.6%  2.9 pts
    Expense ratio         28.5%    29.0% (0.5)pts    29.3%    29.7% (0.4)pts
    Combined ratio        95.6%    94.6%  1.0 pts    97.8%    95.3%  2.5 pts
    -------------------------------------------------------------------------


    Table 6 - Annualized rate of favourable prior year claims development

                                                       YTD      YTD      YTD
    (annualized rate, excluding MYA)      Q2-2008     2008     2007     2006
    -------------------------------------------------------------------------

    (Favourable) unfavourable prior
     year claims development as a %
     of opening reserves                   (4.4)%   (2.2)%   (2.9)%   (4.9)%
    -------------------------------------------------------------------------
    

    Second quarter and year-to-date 2008

    Current year claims (excluding MYA) were negatively impacted by severe
seasonal storms in the second quarter, including $40.9 million in catastrophe
claims. Year-to-date, total catastrophe claims were $66.9 million which
includes $26.0 million related to harsh winter storms in the first quarter. A
catastrophe is defined as a single event resulting in $5.0 million or more in
aggregate claims.
    Underwriting results fluctuate due to the normal seasonality of the
business and therefore combined ratios are typically highest in the first and
fourth quarters of each year. However, winter and spring seasonal storms in
the first half of the year were worse than normal with near-record snowfall in
Central Canada in the first quarter and severe hail storms and rain in the
second quarter. A very severe hail storm on the south shore of Montreal
accounted for more than half of the catastrophe claims recorded in the
quarter. Overall, in the first half of 2008, precipitation levels increased
from 20%-70% in major cities across Central Canada compared to the same period
in 2007. The winter storms primarily affected property insurance results and
the hail storms impacted both personal property and personal auto results. We
are continuously monitoring changes in weather trends and claims experience
and enhancing our pricing strategies and claims management capabilities to
adapt to climate change.
    Favourable prior year claims development (excluding MYA) was
$41.2 million in the second quarter, 4.4% of opening reserves on an annualized
basis, and $40.3 million year-to-date, or 2.2% of opening reserves,
annualized. Prior year claims development can fluctuate from quarter to
quarter and therefore should be evaluated over longer periods of time. The
historical rate of favourable prior year claims development as a percentage of
opening claims has been approximately 3%-4% per year, but has varied from year
to year.
    Variable commissions were down in the second quarter as a result of lower
underwriting income.
    The expense ratio improved year-over-year reflecting a decrease in
variable commissions and increased general expenses as our direct channel
experienced relatively higher growth.

    Industry pools

    Industry pools consist of the "residual market" as well as risk-sharing
pools ("RSP") in Alberta, Ontario, Quebec, New Brunswick and Nova Scotia.
These pools are managed by the Facility Association except the Quebec RSP. In
the second quarter, the net effect of transfers in and out of these pools,
including the Facility Association, lowered year-over-year personal auto
underwriting income by $13.2 million, excluding the market yield adjustment.

    
    3.3   Interest and dividend income, net of expenses

    Table 7

    (in millions of
     dollars, except as                                YTD      YTD
     otherwise noted)   Q2-2008  Q2-2007   Change     2008     2007   Change
    -------------------------------------------------------------------------

    Interest income        45.4     47.3   (4.0)%     93.9     97.9   (4.1)%
    Dividend income        40.5     44.6   (9.2)%     81.7     85.5   (4.4)%
    Interest and
     dividend income,
     before expenses       85.9     91.9   (6.5)%    175.6    183.4   (4.3)%
    Expenses               (4.2)    (5.0)     0.8     (8.4)    (9.8)     1.4
    Interest and
     dividend income,
     net of expenses       81.7     86.9   (6.0)%    167.2    173.6   (3.7)%
    -------------------------------------------------------------------------
    Market-based yield     4.9%     5.1% (0.2)pts
    -------------------------------------------------------------------------
    

    The decline in interest and dividend income (before expenses) in the
second quarter of 2008 and year-to-date reflects a lower invested asset base
as ongoing capital management initiatives are executed, including the ongoing
share buyback program (NCIB) announced in February 2008.
    The market-based yield is a non-GAAP measure defined as total pre-tax
dividend and interest income (before expenses) divided by the average fair
values of equity and debt securities held during the reporting period. The
market-based yield was 4.9% in the second quarter, down from 5.1% in the same
quarter of last year. This measure may not be comparable to other companies
since it is a non-GAAP measure.

    
    3.4   Gains and losses on invested assets and other gains

    Table 8

    (in millions of
     dollars, except as                                YTD      YTD
     otherwise noted)   Q2-2008  Q2-2007   Change     2008     2007   Change
    -------------------------------------------------------------------------

    Debt securities
      Gains (losses) on
       AFS securities       0.8     (5.8)     6.6      3.2     (1.2)     4.4
      Gains on derivatives  1.7     15.1    (13.4)     1.0     14.8    (13.8)
      Impairments          (1.0)    (1.3)     0.3    (12.0)    (1.3)   (10.7)
      Gains (losses) on
       debt securities and
       related derivatives  1.5      8.0     (6.5)    (7.8)    12.3    (20.1)
    -------------------------------------------------------------------------
    Equity securities
      Gains (losses), net
       of derivatives      13.1     87.1    (74.0)    (8.8)   123.3   (132.1)
      Impairments         (11.8)       -    (11.8)   (53.6)   (12.6)   (41.0)
      (Losses) gains
       on embedded
       derivatives         (2.2)       -     (2.2)    10.0        -     10.0
      (Losses) gains on
       equity securities
       and related
       derivatives         (0.9)    87.1    (88.0)   (52.4)   110.7   (163.1)
    -------------------------------------------------------------------------
    Total gains (losses)
     excluding HFT debt
     securities             0.6     95.1    (94.5)   (60.2)   123.0   (183.2)
    (Losses) gains on HFT
     debt securities(1)   (29.3)   (41.5)    12.2      5.7    (43.3)    49.0
    Total (losses) gains,
     before income taxes  (28.7)    53.6    (82.3)   (54.5)    79.7   (134.2)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) The (losses) gains on HFT debt securities are offset by a MYA to
        claims liabilities, with an objective of a minimal impact to net
        income. The difference between the MYA and the gains and losses on
        HFT debt securities is referred to as the "market yield effect" in
        this MD&A. See table 9.
    


    Second quarter and year-to-date 2008

    In the second quarter, we recorded a pre-tax gain of $0.6 million on
invested assets net of derivatives, excluding held for trading debt
securities, a decrease of $94.5 million compared to the same quarter last
year. Year-to-date, we had a loss of $60.2 million versus a gain of
$123.0 million in the comparable period in 2007. The declines were largely due
to generally weak equity market conditions, mainly in the financial sector,
that have persisted over the last year. These factors are described in more
detail below.

    
        Debt securities

        In the second quarter, we recorded $1.5 million in gains on AFS debt
        securities compared to $8.0 million in the same quarter last year.
        The decrease reflects significantly lower trading activity in the
        fixed income portfolio and higher interest rates. Year-to-date, we
        incurred total losses of $7.8 million on AFS debt securities,
        reflecting $12.0 million in impairments on structured investment
        vehicles ("SIV") as a result of unfavourable credit market
        conditions. As of June 30, 2008, we had a remaining total exposure to
        SIVs of $7.8 million.

        Equity securities

        We recorded a loss on equity securities of $0.9 million compared to
        gains of $87.1 million in the same quarter last year. On a
        year-to-date basis, we recorded losses of $52.4 million in the equity
        portfolio, compared to a gain of $110.7 million in the same period of
        2007. The declines reflect equity market weakness over the last year,
        particularly in the financial sector where we have higher exposure.
        The AFS common share portfolio also had a significant unrealized loss
        position at the beginning of 2008 versus a large unrealized gain
position at the start of 2007.


    Held-for-trading debt securities and market yield adjustment

    Table 9 - Market yield effect

    (in millions of
     dollars, except as                                YTD      YTD
     otherwise noted)   Q2-2008  Q2-2007   Change     2008     2007   Change
    -------------------------------------------------------------------------

    Positive (negative)
     impact of MYA         31.5     39.1     (7.6)   (10.0)    40.8    (50.8)
    Net (losses) gains on
     HFT debt securities  (29.3)   (41.5)    12.2      5.7    (43.3)    49.0
    Market yield effect     2.2     (2.4)     4.6     (4.3)    (2.5)    (1.8)
    -------------------------------------------------------------------------
    

    The MYA to claims liabilities is offset by gains and losses on HFT debt
securities with the objective that these items offset each other with a
minimal overall impact to income. The difference between the MYA and the gains
and losses on HFT debt securities is referred to as the "market yield effect"
in this MD&A. Claims liabilities are discounted at market interest rates which
are determined monthly, following the adoption of accounting standards
introduced in January 2007.
    We recorded a $29.3 million loss on HFT debt securities caused by a
decline in the bond market in the second quarter. Year-to-date, we had a small
net gain on HFT debt securities, as the declines in the second quarter were
offset by gains on HFT debt securities in the first quarter, associated with
lower average yields in that period.

    
    Unrealized gains and losses on available for sale securities

    Table 10
                                                 As at
                         ----------------------------------------------------
    (in millions of        June   March  December     June   March  December
     dollars, except         30,     31,       31,      30,     31,       31,
     as otherwise noted)   2008    2008      2007     2007    2007      2006
    -------------------------------------------------------------------------

    Debt securities         3.2     40.7      2.6    (24.3)    14.6     22.9
    Common shares         (46.7)   (73.7)   (37.8)    81.9    107.7    121.4
    Preferred shares     (215.5)  (175.8)  (141.0)   (49.3)    47.4     57.0
    Total net unrealized
     (loss) gain position
     at June 30          (259.0)  (208.8)  (176.2)     8.3    169.7    201.3
    -------------------------------------------------------------------------
    

    As of the end of June 2008, the company had $259.0 million in unrealized
losses on invested assets, an increase of $50.2 million from the first quarter
of 2008 and $82.8 million year-to-date. The higher unrealized loss position
reflects widening of credit spreads and interest rate increases which
adversely impacted preferred share market values. Since the preferred shares
are typically held long term, the unrealized gains and losses would generally
not be realized. Gains and losses in the common share portfolio are likely to
be realized on an ongoing basis reflecting the trading strategy in the
high-dividend yield common share portfolio.

    Recognition of an unrealized loss

    Common shares are impaired if the current market value drops
significantly below the book value, and if management believes that the value
is unlikely to recover in the near- to mid-term. This is determined by an
assessment of information available at the time. Preferred shares are
generally only impaired if the issuer stops paying dividends, declares
bankruptcy or shows other signs of significant deterioration in the financial
health of the underlying business.

    Other comprehensive income

    Unrealized losses on AFS securities and dispositions of AFS securities
resulted in negative other comprehensive income ("OCI") of $30.9 million in
the second quarter. Lower market values of our common and preferred shares,
which are classified as AFS, reflect less favourable market conditions in
2008.

    
    3.5   Selected quarterly information

    Table 11

    (in millions of dollars,
     except as otherwise noted)    Q2-08    Q1-08    Q4-07    Q3-07    Q2-07
    -------------------------------------------------------------------------

    Written insured risks
     (thousands)                 1,380.6    945.8  1,056.7  1,273.1  1,399.7
    Direct premiums written
     (excluding pools)           1,216.7    860.3    961.3  1,091.2  1,209.8
    Total revenues               1,065.4  1,064.5  1,096.8  1,091.3  1,152.2
    Net premiums earned            996.1    991.8  1,004.7    994.0    976.7
    (Favourable) unfavourable
     prior year claims
     development                   (70.3)    38.4    (45.4)   (20.7)   (37.6)
    (Favourable) unfavourable
     prior year claims
     development (excluding MYA)   (41.2)     0.9    (62.4)   (24.0)    (5.2)
    Net underwriting income
     (loss) (including MYA)         74.9    (40.7)    47.5     28.7     92.3
    Net underwriting income
     (excluding MYA)                43.4      0.7     68.2     29.1     53.1
    Combined ratio (%)
     (including MYA)               92.5%   104.1%    95.3%    97.1%    90.6%
    Combined ratio (%)
     (excluding MYA)               95.6%    99.9%    93.2%    97.1%    94.6%
    Net operating income
     (excluding MYA)               109.5     70.2    116.4     95.5    132.5
    Net income                     112.0     23.0     95.8     92.0    194.3

    EPS-basic/diluted (dollars)     0.91     0.19     0.77     0.74     1.56
    Net operating income per share
     (dollars) (excluding MYA)      0.89     0.56     0.93     0.77     1.06
    -------------------------------------------------------------------------


    (in millions of dollars,
     except as otherwise noted)    Q1-07    Q4-06    Q3-06    Q2-06
    ----------------------------------------------------------------

    Written insured risks
     (thousands)                   950.4  1,051.1  1,242.9  1,356.1
    Direct premiums written
     (excluding pools)             846.3    955.6  1,059.1  1,166.4
    Total revenues               1,099.6  1,095.8  1,080.2  1,096.7
    Net premiums earned            956.7    979.6    954.5    955.7
    (Favourable) unfavourable
     prior year claims
     development                   (12.2)   (24.3)   (69.1)   (39.5)
    (Favourable) unfavourable
     prior year claims
     development (excluding MYA)   (10.7)   (24.3)   (69.1)   (39.5)
    Net underwriting income
     (loss) (including MYA)         40.3     62.3     95.9    165.6
    Net underwriting income
     (excluding MYA)                38.7     62.3     95.9    165.6
    Combined ratio (%)
     (including MYA)               95.8%    93.6%    89.9%    82.7%
    Combined ratio (%)
     (excluding MYA)               96.0%    93.6%    89.9%    82.7%
    Net operating income
     (excluding MYA)               112.8    101.8    132.3    182.6
    Net income                     126.2    109.4    156.8    205.9

    EPS-basic/diluted (dollars)     0.95     0.82     1.17     1.54
    Net operating income per share
     (dollars) (excluding MYA)      0.84     0.76     0.99     1.37
    ----------------------------------------------------------------

    ING Canada has two segments: 1) Underwriting and, 2) Corporate and
distribution. P&C insurance is divided into two lines of business, personal
and commercial lines. Corporate and distribution includes income from the
company's affiliated distribution network, as well as other corporate items.


    Section 4 - Personal lines

    4.1   Financial results

    Table 12

    (in millions of
     dollars, except as                                YTD      YTD
     otherwise noted)   Q2-2008  Q2-2007   Change     2008     2007   Change
    -------------------------------------------------------------------------

    Written insured
     risks (thousands)
      Automobile          751.8    771.2   (2.5)%  1,261.6  1,291.8   (2.3)%
      Property            478.8    482.7   (0.8)%    804.2    804.8   (0.1)%
      Total             1,230.6  1,253.9   (1.9)%  2,065.8  2,096.6   (1.5)%
    Direct premiums
     written (excluding
     pools)
      Automobile          615.1    617.1   (0.3)%  1,040.1  1,039.0     0.1%
      Property            276.1    262.2     5.3%    455.6    430.4     5.9%
      Total               891.2    879.3     1.4%  1,495.7  1,469.4     1.8%
    Net premiums earned
      Automobile          509.2    500.6     1.7%  1,015.7    986.8     2.9%
      Property            218.9    205.7     6.4%    436.5    405.9     7.5%
      Total               728.1    706.3     3.1%  1,452.2  1,392.7     4.3%
    Net underwriting
     income (loss)
     (excluding MYA)
      Automobile           55.1     50.6     8.9%     50.5     63.5  (20.5)%
      Property            (45.7)   (25.6)   78.5%    (61.1)    (2.5)     n/a
    Total (excluding MYA)   9.4     25.0  (62.4)%    (10.6)    61.0 (117.4)%
      Market yield
       adjustment          20.1     24.9     (4.8)    (6.3)    25.9    (32.2)
      Net underwriting
       income (loss)
       (including MYA)     29.5     49.9    (20.4)   (16.9)    86.9   (103.8)
    -------------------------------------------------------------------------


    Table 13 - Underwriting ratios

    (in millions of
     dollars, except as                                YTD     YTD
     otherwise noted)   Q2-2008  Q2-2007   Change     2008    2007    Change
    -------------------------------------------------------------------------

    Personal auto
      Claims ratio
       (excluding MYA)    64.4%   64.8%  (0.4)pts    69.8%   68.1%   1.7 pts
      Expense ratio       24.8%   25.1%  (0.3)pts    25.2%   25.5%  (0.3)pts
      Combined ratio
       (excluding MYA)    89.2%   89.9%  (0.7)pts    95.0%   93.6%   1.4 pts
    Personal property
      Claims ratio
       (excluding MYA)    87.4%   78.4%   9.0 pts    80.1%   66.1%  14.0 pts
      Expense ratio       33.5%   34.0%  (0.5)pts    33.9%   34.5%  (0.6)pts
      Combined ratio
       (excluding MYA)   120.9%  112.4%   8.5 pts   114.0%  100.6%  13.4 pts
    Personal lines -
     total
      Claims ratio
       (excluding MYA)    71.4%   68.8%   2.6 pts    72.9%   67.6%   5.3 pts
      Expense ratio       27.3%   27.7%  (0.4)pts    27.8%   28.0%  (0.2)pts
      Combined ratio
       (excluding MYA)    98.7%   96.5%   2.2 pts   100.7%   95.6%   5.1 pts
    -------------------------------------------------------------------------


    4.2   Explanation of financial results
    

    Second quarter 2008

    In the second quarter, direct premiums written grew by 1.4% driven by
higher average amounts insured and increases in rates in both personal auto
and personal property.
    In personal auto, direct premiums written were flat in the second quarter
as rate increases were offset by a decline in written insured risks. We have
been raising personal auto rates in Ontario to reflect higher accident benefit
and bodily injury claims which has had a negative impact on unit growth in the
near term. Overall, current accident year results in personal auto were stable
year-over-year despite an increase in frequency largely associated with the
hail, rain and wind storms in Central Canada. More favourable prior year
claims development offset the storm-related claims in personal auto for a
total net increase in underwriting income of $4.5 million year-over-year.
    In personal property, direct premiums written were up 5.3%, due to
increases in insured amounts and higher rates. We have been raising direct
written rates and enhancing our pricing segmentation to reflect an increase in
water-related property claims, particularly in Western Canada. In addition, we
are adjusting insured values to ensure that higher material costs and labour
rates are factored into our premiums and that our customers retain adequate
coverage. Overall, personal property sustained an underwriting loss of
$45.7 million reflecting higher property claims associated with the April
runoff of winter storms and severe hail, rain and wind storms in late spring.

    Year-to-date 2008

    Year-to-date, direct premiums written grew by 1.8% driven by higher
average amounts insured and increases in rates in both personal auto and
personal property.
    In personal auto, written insured risks decreased 2.3% reflecting the
near-term impact of higher premiums on unit growth in this segment as well as
the run-off of a large group agreement. The group agreement was large in terms
of the number of policies but had a low average premium and margin. In the
first half of the year, current accident year results in personal auto were
stable, despite severe winter storms that hit Central Canada. Personal auto
generated underwriting income of $50.5 million year-to-date versus
$63.5 million in the same period in 2007, mainly reflecting higher claims
associated with harsh seasonal storms in the first and second quarters.
    In personal property, higher average insured amounts and higher rates
resulted in a 5.9% increase in direct premiums written. Written insured risks
were flat versus the first half of 2007. Overall, personal property sustained
an underwriting loss of $61.1 million reflecting higher claims caused by
severe snow, hail, rain and wind storms in Central Canada over the first six
months of 2008, compared to significantly lower levels of precipitation in the
first half of 2007 in the same region.


    
    Section 5 - Commercial lines

    5.1   Financial results

    Table 14

    (in millions of
     dollars, except as                                YTD      YTD
     otherwise noted)   Q2-2008  Q2-2007   Change     2008     2007   Change
    -------------------------------------------------------------------------

    Written insured
     risks (thousands)
      Automobile           83.0     79.2     4.8%    140.3    134.2     4.5%
      Non-auto             67.1     66.5     0.9%    120.3    119.3     0.8%
      Total               150.1    145.7     3.0%    260.6    253.5     2.8%
    Direct premiums
     written (excluding
     pools)
      Automobile           97.8     98.3   (0.5)%    167.9    166.9     0.6%
      Non-auto            227.7    232.2   (1.9)%    413.4    419.8   (1.5)%
      Total               325.5    330.5   (1.5)%    581.3    586.7   (0.9)%
    Net premiums earned
      Automobile           79.3     79.9   (0.8)%    158.0    159.1   (0.7)%
      Non-auto            188.7    190.5   (0.9)%    377.6    381.5   (1.0)%
      Total               268.0    270.4   (0.9)%    535.6    540.6   (0.9)%
    Net underwriting
     income
      Automobile           10.4      6.7    55.2%     16.2     10.6    52.8%
      Non-auto             23.7     21.4    10.7%     38.6     20.1    92.0%
    Total (excluding MYA)  34.1     28.1    21.4%     54.8     30.7    78.5%
      Market yield
       adjustment          11.4     14.2     (2.8)    (3.7)    14.9    (18.6)
      Net underwriting
       income
       (including MYA)     45.5     42.3      3.2     51.1     45.6      5.5
    -------------------------------------------------------------------------


    Table 15 - Underwriting ratios

    (in millions of
     dollars, except as                                YTD     YTD
     otherwise noted)   Q2-2008  Q2-2007   Change     2008    2007    Change
    -------------------------------------------------------------------------

    Commercial auto
      Claims ratio
       (excluding MYA)    60.2%   63.9%  (3.7)pts    62.2%   64.7%  (2.5)pts
      Expense ratio       26.7%   27.7%  (1.0)pts    27.6%   28.6%  (1.0)pts
      Combined ratio
       (excluding MYA)    86.9%   91.6%  (4.7)pts    89.8%   93.3%  (3.5)pts
    Commercial non-auto
      Claims ratio
       (excluding MYA)    53.5%   54.3%  (0.8)pts    54.1%   58.7%  (4.6)pts
      Expense ratio       34.0%   34.5%  (0.5)pts    35.7%   36.0%  (0.3)pts
      Combined ratio
       (excluding MYA)    87.5%   88.8%  (1.3)pts    89.8%   94.7%  (4.9)pts
    Commercial lines -
     total
      Claims ratio
       (excluding MYA)    55.5%   57.2%  (1.7)pts    56.5%   60.5%  (4.0)pts
      Expense ratio       31.8%   32.4%  (0.6)pts    33.3%   33.8%  (0.5)pts
      Combined ratio
       (excluding MYA)    87.3%   89.6%  (2.3)pts    89.8%   94.3%  (4.5)pts
    -------------------------------------------------------------------------


    5.2   Explanation of financial results
    

    Second quarter 2008

    Direct premiums written in commercial lines were down by 1.5% reflecting
good unit growth offset by lower average premiums. The decrease in the average
premium reflects the shift in our portfolio toward small- and medium-sized
commercial segments which are generally more profitable in an aggressive
pricing environment. Though the market remains highly competitive, our
commercial units have continued to grow. At the same time, we have maintained
our pricing discipline with only low single-digit rate decreases over the last
18 months.
    Commercial underwriting income increased year-over-year with combined
ratios below 90% in both segments, demonstrating strong execution of our
targeted strategy and commitment to maintaining a high quality portfolio.
Current year results improved slightly year-over-year despite seasonal storms
in the second quarter. Prior year claims development increased compared to the
same quarter last year.

    Year-to-date 2008

    Direct premiums written in commercial lines were down slightly reflecting
the dynamics discussed above. In all lines of business, our priority is to
price policies appropriately to maintain an adequate margin, despite
aggressive price competition.
    Underwriting income in commercial lines improved markedly year-to-date
notwithstanding $11.4 million in catastrophe claims associated with seasonal
storms in the first half of the year. Despite the catastrophe claims,
commercial underwriting income improved by $24.1 million primarily due to more
favourable prior year claims development.


    
    Section 6 - Corporate and distribution

    6.1   Financial results

    Our corporate and distribution segment primarily includes the results of
the company's affiliated distribution network (Canada Brokerlink, Grey Power
and Equisure), and other activities.

    Table 16 - Corporate and distribution income

    (in millions of
     dollars, except as                                YTD      YTD
     otherwise noted)   Q2-2008  Q2-2007   Change     2008     2007   Change
    -------------------------------------------------------------------------

    Distribution income    26.7     32.6  (18.1)%     48.3     56.4  (14.4)%
    Distribution expenses  20.4     21.3   (4.2)%     39.3     42.6   (7.7)%
      Distribution
       earnings             6.3     11.3  (44.2)%      9.0     13.8  (34.8)%
    Corporate income, net   6.7      6.7        -      7.1     22.4  (68.3)%
    Corporate and
     distribution income
     before income taxes   13.0     18.0  (27.8)%     16.1     36.3  (55.6)%
    -------------------------------------------------------------------------


    6.2   Explanation of financial results

    In the second quarter, corporate and distribution income decreased due to
higher-than-usual distribution earnings in the comparable period in 2007
reflecting the impact of certain corporate allocations. Year-to-date corporate
and distribution income decreased to $16.1 million from $36.3 million in the
comparable period in 2007 mainly due to the release of a $28.0 million
provision in that year. The provision was related to a prior year divestiture
that became redundant.

    6.3   Net operating income

    Table 17 - Components of net operating income

    (in millions of
     dollars, except as                                YTD      YTD
     otherwise noted)   Q2-2008  Q2-2007   Change     2008     2007   Change
    -------------------------------------------------------------------------

    Net underwriting
     income
     (excluding MYA)       43.4     53.2  (18.4)%     44.2     91.8  (51.8)%
    Interest and
     dividend income       81.7     86.9   (6.0)%    167.2    173.6   (3.7)%
    Corporate and
     distribution income   13.0     18.0  (27.8)%     16.1     36.3  (55.6)%
    Tax impact            (28.6)   (25.6)   11.7%    (47.9)   (56.5) (15.2)%
    Net operating income
     (excluding MYA)      109.5    132.5  (17.4)%    179.6    245.2  (26.8)%
    -------------------------------------------------------------------------

    Net operating income decreased by $23.0 million and $65.6 million
year-to-date mainly due to catastrophe claims and other claims associated with
severe seasonal storms in the first half of the year.

    Table 18 - Reconciliation to net income

    (in millions of
     dollars, except as                                YTD      YTD
     otherwise noted)   Q2-2008  Q2-2007   Change     2008     2007   Change
    -------------------------------------------------------------------------

    Net income            112.0    194.3  (42.4)%    135.0    320.5  (57.9)%
    (Deduct gains) add
     losses before HFT
     debt securities
     (table 8)             (0.6)   (95.1)    94.5     60.2   (123.0)   183.2
    Add market yield
     effect (table 9)      (2.2)     2.4     (4.6)     4.3      2.5      1.8
    Tax impact              0.3     30.9    (30.6)   (19.9)    45.2    (65.1)
    Net operating income
     (excluding MYA)      109.5    132.5  (17.4)%    179.6    245.2  (26.8)%
    Average outstanding
     shares (millions)    122.8    124.5     (1.7)   123.6    129.0     (5.4)
    Net operating income
     per share (dollars)   0.89     1.06    (0.17)    1.45     1.90    (0.45)
    -------------------------------------------------------------------------
    

    Operating income (net and pre-tax) and net operating income per share are
non-GAAP measures. Net operating income is defined as net income excluding the
MYA and net gains on invested assets and other gains, after tax. Pre-tax
operating income is defined as net operating income before income taxes. Net
operating income per share is equal to net operating income for the period
divided by the average outstanding number of shares for the same period. These
measures are used by management and financial analysts to assess the company's
performance; however, they may not be comparable to similar metrics published
by other companies.

    
    Changes in the definition of net operating income and underwriting
    measures
    

    Since the first quarter of 2008, the MYA to claims liabilities is
excluded from net operating income and underwriting measures discussed in this
MD&A. The MYA reflects the impact of changes in the discount rate applied to
the company's claims liabilities based on the market-based yield of the
underlying assets. The MYA can fluctuate substantially from quarter to quarter
as market yields vary, therefore, it has been excluded from net operating
income and underwriting measures which focus on core operating performance.
The MYA is matched with gains and losses on HFT debt securities, which are
also excluded from net operating income. The objective is that these two items
offset each other with a minimal overall impact to income (see table 9). The
difference between the MYA and the gains and losses on HFT debt securities is
referred to as the "market yield effect" in this MD&A.


    
    Section 7 - Financial condition

    7.1   Balance sheet highlights

    The table below shows the significant balance sheet items as reported on
December 31, 2007 and June 30, 2008.

    Table 19

                                                              As at
                                                    -------------------------
    (in millions of dollars,                          June 30,   December 31,
     except as otherwise noted)                          2008           2007
    -------------------------------------------------------------------------

    Invested assets, accrued investment
     income and cash                                  7,133.6        7,292.1
    Premiums receivable                               1,500.6        1,440.8
    Deferred acquisition costs and
     reinsurance assets                                 643.7          653.1
    Other assets                                        979.5        1,003.7
    Total assets                                     10,257.4       10,389.7
    Claims liabilities                                4,033.7        3,989.0
    Unearned premiums                                 2,377.6        2,333.5
    Other liabilities                                   773.3          895.1
    Total liabilities                                 7,184.6        7,217.6
    Shareholders' equity                              3,072.8        3,172.1
    Book value per share (dollars)                      25.19          25.48
    -------------------------------------------------------------------------
    

    Invested assets, accrued investment income and cash, decreased by
$158.5 million mainly due to distributions to shareholders through dividend
payments and the normal course share buyback. Also, the company's unrealized
losses on invested assets increased by $82.8 million in June 2008 compared to
December 2007 due to a decline in equity market values, mainly in the
preferred share portfolio.
    Premiums receivable and unearned premiums are higher due to an increase
in direct premiums written in the first half of 2008.
    Deferred acquisition costs and reinsurance assets were lower, consistent
with seasonality of the business.
    Claims liabilities were higher when compared to last year due to a
greater number of policies in force, an increase in claims severity, the MYA
and a number of catastrophes that occurred during the first half of 2008.
    The following table shows the development of claims liabilities for the
10 most recent accident years, with subsequent developments during the
periods. The original reserve estimates are evaluated quarterly for redundancy
or deficiency. The evaluation is based on actual payments in full or partial
settlement of claims as well as on current estimates of claims liabilities for
claims still open or claims still unreported.

    
    Table 20

                                            Accident year
    (in millions of      ----------------------------------------------------
     dollars, except as   Total     2007     2006     2005     2004     2003
     otherwise noted)
    -------------------------------------------------------------------------

    Original reserve             1,282.2  1,178.0  1,118.8  1,117.7    973.2
    (Favourable)
     unfavourable
     development
     during Q2 2008
     including MYA        (70.3)    (9.0)   (13.8)   (20.7)   (12.1)     0.2
    Excluding MYA         (41.2)    (0.2)    (7.9)   (16.3)    (9.0)     2.7
    (Favourable)
     unfavourable
     development
     during YTD 2008
     including MYA        (31.9)    32.1    (16.8)   (15.5)   (14.3)     0.9
    Excluding MYA         (40.3)    29.6    (18.6)   (16.7)   (15.2)     0.1
    Cumulative development
     (including MYA)                32.1    (26.1)  (108.6)  (241.6)  (178.5)
    As a % of original
     reserve                        2.5%   (2.2)%   (9.7)%  (21.6)%  (18.3)%
    -------------------------------------------------------------------------


                                        Accident year
    (in millions of      -------------------------------------------
     dollars, except as    2002     2001     2000     1999   1998 &
     otherwise noted)                                       earlier
    ----------------------------------------------------------------

    Original reserve      838.6    729.0    655.5    587.0  1,400.3
    (Favourable)
     unfavourable
     development
     during Q2 2008
     including MYA         (5.8)    (4.8)    (2.6)    (0.4)    (1.3)
    Excluding MYA          (4.3)    (3.8)    (2.0)     0.0     (0.3)
    (Favourable)
     unfavourable
     development
     during YTD 2008
     including MYA         (3.9)    (7.0)    (5.1)    (0.4)    (1.9)
    Excluding MYA          (4.3)    (7.3)    (5.3)    (0.5)    (2.2)
    Cumulative development
     (including MYA)      (22.3)    33.2     29.7     36.6   (101.5)
    As a % of original
     reserve             (2.7)%     4.6%     4.5%     6.2%   (7.2)%
    ----------------------------------------------------------------


    7.2   Shareholders' equity
    

    As of July 31, 2008, the share capital was composed of 121,306,827 common
shares and one Special Share issued and outstanding. The Special Share is
convertible into one common share. ING Groep holds 70% of the issued and
outstanding common shares and the Special Share. Refer to ING Canada's Annual
Information Form for more detailed information on the rights of common
shareholders and the owner of the Special Share.
    Under the company's long-term incentive plan ("LTIP"), certain employees
were awarded performance units as part of their compensation. At the end of
the performance cycle, the performance units will ultimately be converted to a
certain number of restricted common shares determined by the company's
three-year average return on equity compared to the Canadian P&C industry
average. In May 2008, the company completed the award of 322,221 pre-tax
shares, as required under the Plan for the three year performance cycle of
2005-2007. For the current ongoing cycles, the total estimate is 355,130 as at
June 30, 2008.
    Shareholders' equity was reduced as a result of the normal course issuer
bid share buyback during the quarter. The total consideration paid for the
repurchase was $94.7 million including fees. An amount of $21.8 million was
deducted from share capital and the remainder of $72.9 million from retained
earnings. The statements of changes in shareholders' equity provide a complete
reconciliation of the changes that occurred during the quarter. There were
122,006,960 outstanding common shares on June 30, 2008.
    Accumulated other comprehensive income (loss) ("AOCI") is a component of
shareholders' equity. It reflects the unrealized gains or losses related to
AFS assets, net of income taxes.

    
    Table 21

                                                         June 30, 2008
                                                  ---------------------------
    (in millions of dollars,                                           After-
     except as otherwise noted)                    Pre-tax    Taxes      tax
    -------------------------------------------------------------------------

    Opening AOCI balance on January 1, 2008         (176.3)    58.0   (118.3)
    Changes in fair values during the period        (149.9)    56.9    (93.0)
    Realized losses (gains) reclassified
     to income during the period                      67.2    (22.8)    44.4
    AOCI as at June 30, 2008                        (259.0)    92.1   (166.9)
    -------------------------------------------------------------------------

    During the first six months, the company sold AFS assets resulting in
realized net losses of $67.2 million. These were transferred to net gains on
invested assets and other gains in the income statement. AFS assets lost value
during the first six months due to unfavourable capital market conditions,
representing a reduction of $149.9 million in AOCI.

    7.3   Liquidity and capital resources

    Table 22 - Cash flow and liquidity

    (in millions of
     dollars, except as                                YTD      YTD
     otherwise noted)   Q2-2008  Q2-2007   Change     2008     2007   Change
    -------------------------------------------------------------------------

    Selected inflows
     and (outflows)
    Operating activities:
      Cash provided
       by operating
       activities         240.5    202.2    18.9%    198.2    104.6    89.5%
    Investing activities:
      Proceeds from the
       sale of invested
       assets, net of
       (purchases)        (41.8)  (249.1) (83.2)%     44.2    358.7  (87.7)%
    Financing activities:
      Dividends paid      (37.9)   (33.6)   12.8%    (76.5)   (69.7)    9.8%
      Common shares
       repurchased for
       cancellation       (82.0)       -        -    (98.7)  (501.2) (80.3)%

    Net cash at the end
     of the period         42.3      5.6   655.4%     42.3      5.6   655.4%
    -------------------------------------------------------------------------
    

    Cash provided by operating activities was used in investing and financing
activities such as the payment of dividends and the repurchase of common
shares. As well, the overall excess funding status of the company's pension
plans allows it to only use a limited amount of cash compared to pension
actuarial cost.

    Capital and cash management

    As at June 30, 2008 and based on the 150% Minimum Capital Test ("MCT"),
the company had approximately $564.5 million in excess capital in its
insurance subsidiaries. In addition, the company had no long-term debt and
$233.7 million available at the holding company level at the end of June 2008.
The company has a prudent capital management program in place to ensure that
its capital is employed effectively.
    The company's significant excess capital could be used to: 1) support
growth through acquisitions as part of ING Canada's market consolidation
strategy; 2) buy back shares in the future; or, 3) increase dividends.
    The following table presents the MCT of the company's insurance
subsidiaries with a total for all companies.

    
    Table 23

    MCT - P&C Companies

    (in millions
     of
     dollars,
     except
     as other-
     wise         ING     Belair     Nordic  ING Novex  Trafalgar
     noted) Insurance  Insurance  Insurance  Insurance  Insurance      Total
    -------------------------------------------------------------------------

    At June 30,
     2008
      Total
       capital
       avail-
       able     974.8      203.0      805.9      187.5      164.2    2,335.4
      Total
       capital
       required 527.4       98.2      428.4       67.7       58.9    1,180.6
      Excess
       capital  447.4      104.8      377.5      119.8      105.3    1,154.8
      MCT %    184.8%     206.8%     188.1%     277.0%     278.6%     197.8%
      Excess
       at 150%  183.7       55.7      163.3       86.0       75.8      564.5

    At December
     31, 2007
      Total
       capital
       avail-
       able     940.4      196.0      814.1      159.2      140.7    2,250.4
      Total
       capital
       required 525.0       96.7      439.9       72.4       63.7    1,197.7
      Excess
       capital  415.4       99.3      374.2       86.8       77.0    1,052.7
      MCT %    179.1%     202.8%     185.0%     219.8%     220.9%     187.9%
      Excess
       at 150%  152.8       51.0      154.1       50.6       45.2      453.7
    -------------------------------------------------------------------------
    

    On February 19, 2008, the Board of Directors increased the company's
quarterly dividend by $0.04 to $0.31, a 14.8% increase. A quarterly cash
dividend of $0.31 per common share was paid on March 30, 2008 and June 30,
2008.

    Rating agencies

    ING Canada Inc.'s long-term issuer rating with Moody's Investors Services
is A3 and the company's five principal operating insurance subsidiaries are
rated Aa3 for insurance financial strength (IFS). ING Canada Inc.'s primary
insurance subsidiaries are rated A+ by Standard & Poor's, and the company's
senior unsecured debt is rated A (low) by DBRS. ING Canada Group has an A+
(Superior) rating from A.M. Best.


    
    Section 8 - Accounting and disclosure matters

    8.1   Internal controls over financial reporting
    

    Management has designed and is responsible for maintaining adequate
internal control over financial reporting to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with Canadian GAAP.
    No changes were made to the company's internal controls over financial
reporting during the period ended June 30, 2008 that have materially affected,
or is reasonably likely to materially affect the company's internal controls
over financial reporting.

    
    8.2   Critical accounting estimates and assumptions

    There are no new critical accounting estimates or assumptions compared to
the information provided in the annual MD&A.

    8.3   New accounting standards
    

    The company's unaudited interim financial statements have been prepared
in accordance with GAAP. The principal accounting policies are described in
the company's 2007 annual report. There have been no significant changes in
those accounting policies except as follows.

    Financial instruments and capital

    Effective January 1, 2008, the company applied the new Canadian Institute
of Chartered Accountants' ("CICA") Handbook Sections 3862, Financial
Instruments - Disclosure, 3863, Financial Instruments - Presentation and 1535,
Capital Disclosures revising and enhancing disclosure requirements. These new
sections place increased emphasis on disclosures about the nature and extent
of risks arising from financial instruments and how the company manages those
risks and require the disclosure of both qualitative and quantitative
information that enables users of financial statements to evaluate the
company's objectives, policies and processes for managing capital. The risk
management policies and procedures of the company as well as certain
disclosures required by Sections 3862 and 1535 were provided in the 2007
annual Management Discussion & Analysis under Section 9 and in notes 3, 4, 5
and 13 of the 2007 annual consolidated financial statements. The impact of
changes in risk variables such as market prices and interest rates are
described in the Risk Management section of this MD&A.
    Effective March 15, 2008, the company also applied the new Emerging
Issues Committee ("EIC") abstract 169, Determining Whether a Contract is
Routinely Denominated in a Single Currency, which deals with multicurrency
contracts and provides further guidance for Section 3855, Financial
Instruments - Recognition and Measurement. The adoption of this new CICA
abstract has not had any significant impact on the company's results or
financial condition.

    Goodwill and intangible assets

    Effective January 1, 2009, the company will apply the recommendations of
the CICA of Section 3064, Goodwill and Intangible Assets. This Section will
replace Section 3062, Goodwill and Other Intangible Assets, and Section 3450,
Research and Development Costs, which establish standards for the recognition,
measurement and disclosure of goodwill and intangible assets. The provisions
relating to the definition and initial recognition of intangible assets,
including internally generated intangible assets, are equivalent to the
corresponding provisions of International Financial Reporting Standard
("IFRS") IAS 38, Intangible Assets.

    International financial reporting standards

    The Accounting Standards Board has issued an exposure draft proposing to
incorporate IFRS into the CICA Handbook over the period ending December 31,
2010. After this transitional period, the company will cease to use Canadian
GAAP and will adopt IFRS on January 1, 2011. The company monitors this
transition to IFRS and is analyzing the impact that the adoption of the IFRS
will have on its consolidated financial statements.


    Section 9 - Risk management

    The company has not significantly changed its risk management strategy as
compared to the information presented in the annual MD&A.

    
    9.1   Estimated impact of changes in interest rates and equity prices
    

    Impact of changes in interest rates

    As at June 30, 2008, management estimates that a 100 basis point increase
in interest rates would increase income before income taxes by approximately
$17.6 million and decrease OCI by approximately $192.1 million. Conversely, a
100 basis point decrease in interest rates would lower income before income
taxes and increase OCI by the same amounts, respectively. The estimated impact
on income before income taxes excludes gains and losses on HFT debt securities
which are marked-to-market and offset by the MYA.

    Impact of changes in equity prices

    As at June 30, 2008, management estimates that a 10.0% increase in equity
markets would increase income before income taxes by approximately
$1.0 million and increase OCI by $93.0 million. A 10.0% decrease in equity
prices would have the corresponding opposite effect, lowering income before
income taxes and OCI by the same amounts.

    Key assumptions

    The analysis in this section is based on the following assumptions:
1) the securities in the company's portfolio are not impaired; 2) interest
rates and equity prices move independently; 3) shifts in the yield curve are
parallel; and, 4) credit and liquidity risks have not been considered. In
addition, it is important to note that AFS securities in an unrealized loss
position, as reflected in OCI, may at some point in the future be realized
either through a sale or impairment. See section 3.4, "Gains and losses on
invested assets and other gains".


    
    Section 10 - Other matters

    10.1  Related-party transactions

    The company has ongoing transactions with related parties consisting
mostly of:

    1.  management and advisory services with ING Groep and affiliated
        companies; and,
    2.  reinsurance by an affiliated company

    These transactions are carried out in the normal course of operations and
are measured at the amount of consideration paid or received as established
and agreed by the related parties. Management believes that such exchange
amounts approximate fair value.
    In addition, the company has related-party transactions with investees
accounted for as long-term investments. These transactions consist primarily
of loans and commission expenses.

    10.2  Cautionary note regarding forward-looking statements
    

    Certain statements in this report about the company's current and future
plans, expectations and intentions, results, levels of activity, performance,
goals or achievements or any other future events or developments are
forward-looking statements. The words "may", "will", "would", "should",
"could", "expects", "plans", "intends", "anticipates", "believes",
"estimates", "predicts", "likely" or "potential" or the negative or other
variations of these words or other similar words or phrases identify such
forward-looking statements.
    Forward-looking statements are based on estimates and assumptions made by
management based on management's experience and view of historical trends,
current conditions and expected future developments, as well as other factors
that management believes are appropriate in the circumstances. Many factors
could cause the company's actual results, performance or achievements or
future events or developments to differ materially from the forward-looking
statements. These factors include, without limitation, the following: the
company's ability to implement its strategy or operate its business as
management expects; its ability to accurately assess the risks associated with
the insurance policies that the company writes; unfavourable capital market
developments or other factors which could affect the company's invested
assets; the cyclical nature of the P&C insurance industry; its ability to
accurately predict future claims frequency; government regulations; litigation
and regulatory actions; periodic negative publicity regarding the insurance
industry; intense competition; the company's reliance on brokers and third
parties to sell its products; the company's ability to successfully pursue its
acquisition strategy; the significant influence of ING Groep; the company's
participation in the Facility Association (a mandatory pooling arrangement
among all industry participants); terrorist attacks and ensuing events; the
occurrence of catastrophic events; the company's ability to maintain its
financial strength ratings; the company's ability to alleviate risk through
reinsurance; the company's ability to successfully manage credit risk; the
company's reliance on information technology and telecommunications systems;
the company's dependence on key employees; general economic, financial and
political conditions; the company's dependence on the results of operations of
its subsidiaries; the accuracy of analyst earnings estimates or the consensus
figure based upon such estimates; the volatility of the stock market and other
factors affecting the company's share price; and future sales of a substantial
number of its common shares. These factors should be considered carefully, and
readers should not place undue reliance on the company's forward-looking
statements. Management has no intention and accept no responsibility to update
or revise any forward-looking statements as a result of new information,
future events or otherwise, except as required by law.


    
    Unaudited interim consolidated financial statements
    For the second quarter ended June 30, 2008


    Unaudited interim consolidated balance sheets
    (in millions of Canadian dollars)
    -------------------------------------------------------------------------
                                                          As at        As at
                                                        June 30, December 31,
                                                           2008         2007
    -------------------------------------------------------------------------

    Assets
    Cash and cash equivalents                       $      42.3  $       8.1
    Invested assets (note 3)
      Debt securities                                   3,548.4      3,886.7
      Equity securities                                 3,269.7      3,140.3
      Loans and equity investments                        232.0        210.8
                                                    -------------------------
                                                        7,050.1      7,237.8

    Premium receivables                                 1,500.6      1,440.8
    Accrued interest and dividend income                   41.2         46.2
    Other receivables                                     273.3        264.8
    Deferred acquisition costs                            383.1        379.6
    Reinsurance assets                                    260.6        273.5
    Other assets                                          298.2        280.1
    Income taxes receivable                               127.0        168.4
    Future income tax asset                                62.6         68.7
    Intangible assets                                      58.0         61.8
    Goodwill                                              160.4        159.9
    -------------------------------------------------------------------------

                                                    $  10,257.4  $  10,389.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Claims liabilities (note 4)                     $   4,033.7  $   3,989.0
    Unearned premiums                                   2,377.6      2,333.5
    Other liabilities                                     769.2        862.6
    Income taxes payable                                    4.1         32.5
                                                    -------------------------
                                                        7,184.6      7,217.6
    Shareholders' equity
    Share capital (note 5)                              1,080.1      1,101.9
    Contributed surplus                                    86.7         97.2
    Retained earnings                                   2,072.9      2,091.3
    Accumulated other comprehensive loss                 (166.9)      (118.3)
                                                    -------------------------
                                                        3,072.8      3,172.1
    -------------------------------------------------------------------------

                                                    $  10,257.4  $  10,389.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ING Canada Inc.
    Unaudited interim consolidated statements of income
    For the periods ended June 30
    (in millions of Canadian dollars, except as otherwise noted)
    -------------------------------------------------------------------------

                                   Three months               Six months
                          ------------------------- -------------------------
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
    Revenues
    Premiums written
      Direct              $   1,217.9  $   1,205.1  $   2,080.2  $   2,059.2
      Ceded                      26.8         25.4         49.3         48.6
                          ---------------------------------------------------
      Net                     1,191.1      1,179.7      2,030.9      2,010.6
    Changes in net
     unearned premiums         (195.0)      (203.0)       (43.0)       (77.3)
                          ---------------------------------------------------
    Net premiums earned         996.1        976.7      1,987.9      1,933.3
    Interest and
     dividend income             85.9         92.0        175.7        183.4
    Net (losses) gains
     on invested assets
     and other gains            (28.7)        53.6        (54.5)        79.7
    Distribution and other       12.1         30.1         20.8         55.5
    -------------------------------------------------------------------------
                              1,065.4      1,152.3      2,129.9      2,251.9
    Expenses
      Underwriting
      Claims                    636.7        601.3      1,371.3      1,226.9
      Commissions, premium
       taxes and general
       expenses                 284.5        283.1        582.4        573.8
                          ---------------------------------------------------
                                921.2        884.4      1,953.7      1,800.7
    Distribution and other        3.4         17.1         13.2         29.0
                          ---------------------------------------------------
                                924.6        901.5      1,966.9      1,829.7
    -------------------------------------------------------------------------
    Income before
     income taxes               140.8        250.8        163.0        422.2
    Income tax expense           28.8         56.5         28.0        101.7
    -------------------------------------------------------------------------

    Net income            $     112.0  $     194.3  $     135.0  $     320.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share,
     basic and diluted
     (dollars)            $      0.91  $      1.56  $      1.09  $      2.49
    Dividends per
     share (dollars)      $      0.31  $      0.27  $      0.62  $      0.54
    Basic and diluted
     average number of
     common shares
     (in thousands)           122,836      124,473      123,642      128,974
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Unaudited interim consolidated statements of comprehensive income
    For the periods ended June 30
    (in millions of Canadian dollars)
    -------------------------------------------------------------------------

                                   Three months               Six months
                          ------------------------- -------------------------
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
    Net income            $     112.0  $     194.3  $     135.0     $  320.5

    Unrealized losses on
     available for
     sale securities
      Change during
       the period               (48.1)       (73.0)      (149.9)       (54.0)
      Income taxes               23.0         28.2         56.9         22.6
                          ---------------------------------------------------
                                (25.1)       (44.8)       (93.0)       (31.4)
    Reclassified to income
      From available
       for sale securities       (2.0)       (83.3)        67.2       (108.1)
      Income taxes               (3.8)        27.6        (22.8)        41.0
                          ---------------------------------------------------
                                 (5.8)       (55.7)        44.4        (67.1)
    -------------------------------------------------------------------------
    Other comprehensive loss    (30.9)      (100.5)       (48.6)       (98.5)

    Comprehensive income  $      81.1  $      93.8  $      86.4  $     222.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Unaudited interim consolidated statements of changes in shareholders'
    equity
    For the six-month periods ended June 30
    (in millions of Canadian dollars)
    -------------------------------------------------------------------------
                                                      Accumulated
                                                            other
                                                          compre-
                                   Contrib-               hensive
                           Share       uted   Retained     (loss)
                         capital    surplus   earnings     income      Total
    -------------------------------------------------------------------------
    Balance as at
     December 31,
     2007              $ 1,101.9  $    97.2  $ 2,091.3  $  (118.3) $ 3,172.1
    Comprehensive
     income                    -          -      135.0      (48.6)      86.4
    Common shares
     repurchased for
     cancellation
     (note 5)              (21.8)         -      (72.9)         -      (94.7)
    Dividends paid             -          -      (76.5)         -      (76.5)
    Stock-based
     compensation              -      (10.5)      (4.0)         -      (14.5)
    -------------------------------------------------------------------------
    Balance as at
     June 30, 2008     $ 1,080.1  $    86.7  $ 2,072.9  $  (166.9) $ 3,072.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Balance as at
     December 31,
     2006              $ 1,183.9  $    93.5  $ 2,143.4  $       -  $ 3,420.8
    Transition
     adjustments               -          -       (4.3)     109.1      104.8
    Comprehensive
     income                    -          -      320.5      (98.5)     222.0
    Common shares
     repurchased for
     cancellation
     (note 5)              (82.0)         -     (419.2)         -     (501.2)
    Dividends paid             -          -      (69.7)         -      (69.7)
    Stock-based
     compensation              -        3.2          -          -        3.2
    -------------------------------------------------------------------------
    Balance as at
     June 30, 2007     $ 1,101.9  $    96.7  $ 1,970.7  $    10.6  $ 3,179.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Unaudited interim consolidated statements of cash flows
    For the periods ended June 30
    (in millions of Canadian dollars)
    -------------------------------------------------------------------------

                                   Three months               Six months
                          ------------------------- -------------------------
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
    Cash flows
     from (used in)
     operating activities
    Net income            $     112.0  $     194.3  $     135.0  $     320.5
    Adjustments for
     non-cash items             209.4        165.0        140.1         50.4
    Changes in net
     claims liabilities         (35.2)        18.2         58.8         61.0
    Changes in other
     operating assets
     and liabilities            (45.7)      (175.3)      (135.7)      (327.3)
                          ---------------------------------------------------
    Cash provided
     by operating
     activities (note 7)        240.5        202.2        198.2        104.6

    Cash flows
     from (used in)
     investing activities
    Proceeds from sale
     of invested assets       1,208.7      3,492.6      2,609.9      7,754.2
    Purchase of
     invested assets         (1,250.5)    (3,741.7)    (2,565.7)    (7,395.5)
    Purchase of
     property and
     equipment and other        (18.2)        (4.8)       (33.0)       (12.8)
                          ---------------------------------------------------
    Cash (used in)
     provided by
     investing activities       (60.0)      (253.9)        11.2        345.9

    Cash flows
     from (used in)
     financing activities
    Common shares
     repurchased for
     cancellation               (82.0)           -        (98.7)      (501.2)
    Dividends paid              (37.9)       (33.6)       (76.5)       (69.7)
                          ---------------------------------------------------
    Cash used in
     financing activities      (119.9)       (33.6)      (175.2)      (570.9)
    -------------------------------------------------------------------------
    Net increase
     (decrease) in cash
     and cash equivalents        60.6        (85.3)        34.2       (120.4)
    Cash and cash
     equivalents,
     beginning of period        (18.3)        90.9          8.1        126.0
    -------------------------------------------------------------------------

    Cash and cash
     equivalents,
     end of period        $      42.3  $       5.6  $      42.3  $       5.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ING Canada Inc.
    Notes to unaudited interim consolidated financial statements
    (in millions of Canadian dollars, except as otherwise noted)
    -------------------------------------------------------------------------

    1)  Basis of presentation

        These unaudited interim consolidated financial statements of ING
        Canada Inc. ("ING" or the "Company") have been prepared in accordance
        with Canadian generally accepted accounting principles ("GAAP") for
        interim financial statements and do not include all the information
        required for annual financial statements. Except as described below,
        these interim unaudited consolidated financial statements use the
        same accounting policies as were used for the Company's audited
        consolidated financial statements for the fiscal year ended December
        31, 2007 and should be read in conjunction with the Company's annual
        consolidated financial statements for the year then ended. Certain
        comparative figures have been reclassified to conform to the
        presentation adopted in the current period.

    2)  Accounting policy changes

        a) Applied during the period

        Financial instruments and capital

        Effective January 1, 2008, the Company applied the new Canadian
        Institute of Chartered Accountants' ("CICA") Handbook Sections 3862,
        Financial Instruments - Disclosure, 3863 Financial Instruments -
        Presentation and 1535 Capital Disclosures revising and enhancing
        disclosure requirements. These new sections place increased emphasis
        on disclosures about the nature and extent of risks arising from
        financial instruments and how the Company manages those risks and
        require the disclosure of both qualitative and quantitative
        information that enables users of financial statements to evaluate
        the Company's objectives, policies and processes for managing
        capital. The risk management policies and procedures of the Company
        as well as certain disclosures required by Sections 3862 and 1535
        were provided in the 2007 annual Management Discussion & Analysis
        under Section 9 and in notes 3, 4, 5 and 13 of the 2007 annual
        consolidated financial statements. The impact of changes in risk
        variables such as market prices and interest rates are described in
        the Risk Management section of the quarterly Management Discussion &
        Analysis related to these financial statements.

        Effective March 15, 2008, the Company also applied the new Emerging
        Issues Committee ("EIC") abstract 169 Determining Whether a Contract
        is Routinely Denominated in a Single Currency, which deals with
        multicurrency contracts and provides further guidance for Section
        3855 Financial Instruments - Recognition and Measurement. The
        adoption of this new CICA abstract has not had any significant impact
        on the Company's results or financial condition.

        b) Future accounting changes

        Goodwill and intangible assets

        Effective January 1, 2009, the Company will apply the recommendations
        of the CICA of Section 3064, Goodwill and Intangible Assets. This
        Section will replace Section 3062, Goodwill and Other Intangible
        Assets, and Section 3450, Research and Development Costs, which
        establish standards for the recognition, measurement and disclosure
        of goodwill and intangible assets. The provisions relating to the
        definition and initial recognition of intangible assets, including
        internally generated intangible assets, are equivalent to the
        corresponding provisions of International Financial Reporting
        Standard ("IFRS") IAS 38, Intangible Assets.

        International financial reporting standards

        The Accounting Standards Board ("AcSB") has issued an exposure draft
        proposing to incorporate IFRS into the CICA Handbook over the period
        ending December 31, 2010. After this transitional period, the Company
        will cease to use Canadian GAAP and will adopt IFRS on January 1,
        2011. The Company monitors this transition to IFRS and is analyzing
        the impact that the adoption of the IFRS will have on its
        consolidated financial statements.

    3)  Invested assets and other financial instruments

        a) Invested assets

        The Company's invested assets are separated into three categories:
        available for sale ("AFS"), held-for-trading ("HFT") and loans.

                                           Class-   Desig-
                                            ified    nated
                                     AFS   as HFT   as HFT    Loans    Total
        ---------------------------------------------------------------------

        As at June 30, 2008

        Debt securities
          Short-term notes          21.3        -        -        -     21.3
          Fixed income
           securities            1,863.0        -  1,664.1        -  3,527.1
        Equity securities
          Preferred shares       1,532.4        -        -        -  1,532.4
          Common shares          1,392.2     62.2    282.9        -  1,737.3
        Loans and
         equity investments         19.9        -        -    212.1    232.0
        ---------------------------------------------------------------------
                                 4,828.8     62.2  1,947.0    212.1  7,050.1
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        As at December 31, 2007

        Debt securities
          Short-term notes          18.9        -        -        -     18.9
          Fixed income
           securities            2,162.8        -  1,705.0        -  3,867.8
        Equity securities
          Preferred shares       1,430.8        -        -        -  1,430.8
          Common shares          1,427.6     72.9    209.0        -  1,709.5
        Loans and
         equity investments         22.6        -        -    188.2    210.8
        ---------------------------------------------------------------------
                                 5,062.7     72.9  1,914.0    188.2  7,237.8
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        b) Unrecognized gains and losses

                                     HFT                               Total
                                invested                            invested
                                  assets    Other invested assets     assets
                              -----------------------------------------------
                                      At  Unamor-  Unreal-  Unreal-       At
                                    fair    tized     ized     ized carrying
                                   value     cost    gains   losses    value
        ---------------------------------------------------------------------

        As at June 30, 2008

        Debt securities
          Short-term notes             -     21.3        -        -     21.3
          Fixed income
           securities            1,664.1  1,859.8     19.2    (16.0) 3,527.1
        Equity securities
          Preferred shares             -  1,747.9     12.1   (227.6) 1,532.4
          Common shares            345.1  1,435.3     76.3   (119.4) 1,737.3
        Loans and
         equity investments            -    235.6        -     (3.6)   232.0
        ---------------------------------------------------------------------

                                 2,009.2  5,299.9    107.6   (366.6)
        Net unrealized losses                           (259.0)      7,050.1
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        As at December 31, 2007

        Debt securities
          Short-term notes             -     18.9        -        -     18.9
          Fixed income
           securities            1,705.0  2,160.2     21.2    (18.6) 3,867.8
        Equity securities
          Preferred shares             -  1,571.8      8.8   (149.8) 1,430.8
          Common shares            281.9  1,464.5     74.3   (111.2) 1,709.5
        Loans and
         equity investments            -    211.7        -     (0.9)   210.8
        ---------------------------------------------------------------------

                                 1,986.9  5,427.1    104.3   (280.5) 7,237.8
        Net unrealized losses                           (176.2)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The Company's exposure to leveraged capital notes in structured
        investment vehicles, directly and through the use of total return
        swap derivatives, amounts to $7.8 million (December 2007 -
        $19.8 million).

        c) Positive and negative fair values of derivative financial
           instruments

                                                              Fair values
                                                          -------------------
                                                          Positive  Negative
        ---------------------------------------------------------------------

        As at June 30, 2008

        Designated as fair value hedge                         2.2         -
        Not designated in a hedging relationship              19.2      13.2
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        As at December 31, 2007

        Designated as fair value hedge                         2.4         -
        Not designated in a hedging relationship               4.7      18.4
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        d) Equities sold short
                                             As at                     As at
                                     June 30, 2008         December 31, 2007
                              ----------------------   ----------------------
                                             Fixed                     Fixed
                                            income                    income
                                        securities                securities
                                 Fair   pledged as         Fair   pledged as
                                value   collateral        value   collateral
        ---------------------------------------------------------------------
        Long positions           51.9            -         62.1            -
        Short positions          51.9         51.7         62.0         63.7
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        4) Net claims liabilities

                                     Direct claims   Reinsurers'  Net claims
                                       liabilities        share  liabilities
        ---------------------------------------------------------------------

        For the six months
         ended June 30, 2008

        Balance, as at December 31, 2007   3,989.0        256.9      3,732.1
        Transition adjustment                    -            -            -
        Claims incurred                    1,414.4         12.8      1,401.6
        Prior year (favourable)
         claims development                  (41.4)        (1.1)       (40.3)
        Increase (decrease) due to
         changes in discount rate             10.8          0.8         10.0
        Claims paid                       (1,339.1)       (26.6)    (1,312.5)
        ---------------------------------------------------------------------

        Balance, as at June 30, 2008       4,033.7        242.8      3,790.9
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        For the six months ended
         June 30, 2007

        Balance, as at December 31, 2006   3,823.5        270.4      3,553.1
        Transition adjustment                 18.0          2.0         16.0
        Claims incurred                    1,286.5          3.0      1,283.5
        Prior year (favourable)
         claims development                  (19.8)        (4.0)       (15.8)
        Increase (decrease) due to
         changes in discount rate            (45.5)        (4.6)       (40.9)
        Claims paid                       (1,184.0)       (18.1)    (1,165.9)
        ---------------------------------------------------------------------

        Balance, as at June 30, 2007       3,878.7        248.7      3,630.0
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    5)  Share capital

        a) Normal course issuer bid

        On February 22, 2008, the Company commenced its normal course issuer
        bid to purchase for cancellation during the ensuing 12-month period
        ending February 21, 2009, up to 6,223,638 common shares. The actual
        number of common shares which may be purchased and the timing of any
        such purchases will be determined by the Company. Under the terms of
        the normal course issuer bid, ING Canada's majority shareholder, ING
        Groep, is permitted to participate to maintain its proportionate
        share ownership at 70%. As at June 30, 2008, 2,465,801 common shares
        have been repurchased under the issuer bid at an average price of
        $38.40 per share for a total consideration of $94.7 million and ING
        Groep participated proportionately. Total cost paid, including fees,
        was first charged to share capital to the extent of the average
        carrying value of the common shares purchased for cancellation and
        the excess of $72.9 million was charged to retained earnings.

        b) Substantial issuer bid

        On March 30, 2007, the Company completed a substantial issuer bid
        under which it purchased for cancellation 9,259,239 of its common
        shares at $54.00 per share for a total consideration of
        $500.0 million plus fees of $1.2 million, net of income taxes. Total
        cost paid, including fees, was first charged to share capital to the
        extent of the average carrying value of the common shares purchased
        for cancellation and the excess of $419.2 million was charged to
        retained earnings.

        c) Issued and outstanding

                                              As at June 30, 2008
                                 --------------------------------------------
                                                  Issued and
                                  Authorized     outstanding
                                     (shares)        (shares)         Amount
        ---------------------------------------------------------------------

        Common                     Unlimited     122,006,960      $  1,080.1
        Class A                    Unlimited               -               -
        Special                          One               1               -
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

                                             As at December 31, 2007
                                 --------------------------------------------
                                                  Issued and
                                  Authorized     outstanding
                                     (shares)        (shares)         Amount
        ---------------------------------------------------------------------

        Common                     Unlimited     124,472,761      $  1,101.9
        Class A                    Unlimited               -               -
        Special                          One               1               -
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        d) Stock-based compensation

        The following table reconciles the beginning and ending balances of
        the share units outstanding for both the Company's long-term
        incentive plan ("LTIP") and employee share purchase plan ("ESPP").

                                         Three months           Six months
                                      ------------------- -------------------
        For the periods ended June 30     2008      2007      2008      2007
        ---------------------------------------------------------------------
        LTIP (share equivalents)
          Outstanding,
           beginning of period         407,263   746,519   616,115   545,274
          Net change in estimate
           during the period           (52,133)  (39,119) (260,985)  162,126
          Outstanding, end of period   355,130   707,400   355,130   707,400
        ---------------------------------------------------------------------

        LTIP (restricted common shares)
          Outstanding, end of period   289,236         -   289,236         -
        ---------------------------------------------------------------------

        ESPP (restricted common shares)
          Outstanding,
           beginning of period          73,027    37,182    66,228    22,892
          Awarded during the period     18,987    14,514    40,163    28,804
          Vested or forfeited
           during the period           (14,643)        -   (29,020)        -
          Outstanding, end of period    77,371    51,696    77,371    51,696
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    6)  Related-party transactions

        a) Revenues and expenses
                                         Three months           Six months
                                      ------------------- -------------------
        For the periods ended June 30     2008      2007      2008      2007
        ---------------------------------------------------------------------
        Reinsurance ceded
         to related entities
          Ceded premiums earned            3.9       5.3       7.4      10.3
          Ceded claims                    (0.5)     (0.5)      0.1       0.8
        Expenses
          Commissions                      9.7       9.2      19.3      17.6
          Other expenses                   4.6       4.5       9.2       9.0
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        b) Balance sheet amounts

                                                       June 30,  December 31,
        As at                                             2008          2007
        ---------------------------------------------------------------------
        Reinsurance (payable) receivable                  (0.7)          2.4
        Loans                                            117.5          90.4
        ---------------------------------------------------------------------

    7)  Additional information

        a) Consolidated statements of income

                                         Three months           Six months
                                      ------------------- -------------------
        For the periods ended June 30     2008      2007      2008      2007
        ---------------------------------------------------------------------

        Amounts included in net (losses)
         gains on invested assets:
        Related to HFT
         financial instruments
          Realized (losses) gains         (3.4)      0.3      (5.6)      1.8
          Unrealized losses              (31.8)    (34.8)    (15.8)    (34.0)
          Derivative financial
           instruments gains               3.3       8.4      30.4       6.5
        Impairment of AFS
         invested assets                 (12.6)     (1.3)    (60.5)    (13.9)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        b) Consolidated statements of cash flows

                                         Three months           Six months
                                      ------------------- -------------------
        For the periods ended June 30     2008      2007      2008      2007
        ---------------------------------------------------------------------
        Amounts included
         in non-cash items:
          Amortization                    10.5       4.5      19.4       4.6
          Stock-based compensation       (11.9)      1.4     (10.6)      3.2
          Employee future benefits         3.0       3.3       5.9       3.6
        Income taxes recovered (paid)     43.8     (43.1)     25.1    (139.6)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    8)  Segmented information

        The Company has two reportable segments, the underwriting segment and
        the corporate and distribution segment.

        The Company's core business activity is property and casualty ("P&C")
        insurance underwriting. Underwriting segment includes two lines of
        business: personal lines and commercial lines. Classes in personal
        lines include automobile and property. Classes in commercial lines
        encompass primarily automobile and other, primarily property and
        liability.

        Corporate and distribution segment includes the results of the
        Company's broker operations and the results of other operations.

        a) Results of the company's reportable segments

                                                          Inter-
                                           Corporate     segment
                                           and dist-     elimin-
                            Underwriting    ribution      ations       Total
        ---------------------------------------------------------------------
        For the three months
         ended June 30, 2008

        Revenues                   996.1        29.6       (17.5)    1,008.2
        Expenses                   921.2        14.2       (15.0)      920.4
        ---------------------------------------------------------------------
        Subtotal                    74.9        15.4        (2.5)       87.8
        Interest and dividend
         income, net of expenses                                        81.7
        Net gains (losses)
         on invested assets
         and other gains                                               (28.7)
        ---------------------------------------------------------------------
        Total income before
         income taxes                                                  140.8
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        For the three months
         ended June 30, 2007

        Revenues                   976.7        50.9       (20.9)    1,006.7
        Expenses                   884.4        23.5       (11.4)      896.5
        ---------------------------------------------------------------------
        Subtotal                    92.3        27.4        (9.5)      110.2
        Interest and dividend
         income, net of expenses                                        87.0
        Net gains (losses)
         on invested assets
         and other gains                                                53.6
        ---------------------------------------------------------------------
        Total income before
         income taxes                                                  250.8
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

                                                          Inter-
                                           Corporate     segment
                                           and dist-     elimin-
                            Underwriting    ribution      ations       Total
        ---------------------------------------------------------------------
        For the six months
         ended June 30, 2008

        Revenues                 1,987.9        50.6       (29.8)    2,008.7
        Expenses                 1,953.7        33.1       (28.3)    1,958.5
        ---------------------------------------------------------------------
        Subtotal                    34.2        17.5        (1.5)       50.2
        Interest and dividend
         income, net of expenses                                       167.3
        Net gains (losses) on
         invested assets and
         other gains                                                   (54.5)
        ---------------------------------------------------------------------
        Total income before
         income taxes                                                  163.0
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        For the six months
         ended June 30, 2007

        Revenues                 1,933.3        89.7       (34.2)    1,988.8
        Expenses                 1,800.7        43.9       (24.7)    1,819.9
        ---------------------------------------------------------------------
        Subtotal                   132.6        45.8        (9.5)      168.9
        Interest and dividend
         income, net of expenses                                       173.6
        Net gains (losses) on
         invested assets and
         other gains                                                    79.7
        ---------------------------------------------------------------------
        Total income before
         income taxes                                                  422.2
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        b) Assets of the company's reportable segments

                                                          Inter-
                                           Corporate     segment
                                           and dist-     elimin-
                            Underwriting    ribution      ations       Total
        ---------------------------------------------------------------------

        As at June 30, 2008

        Goodwill                    74.4        86.0           -       160.4
        Invested assets          6,796.8       253.3           -     7,050.1
        Other                    2,751.3       301.3        (5.7)    3,046.9
        ---------------------------------------------------------------------
        Total assets             9,622.5       640.6        (5.7)   10,257.4
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        As at June 30, 2007

        Goodwill                    74.4        86.4           -       160.8
        Invested assets          6,538.6       532.9       (12.0)    7,059.5
        Other                    2,852.5       255.2        (9.8)    3,097.9
        ---------------------------------------------------------------------
        Total assets             9,465.5       874.5       (21.8)   10,318.2
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        c) Results by line of business

                                         Three months           Six months
                                      ------------------- -------------------
        For the periods ended June 30     2008      2007      2008      2007
        ---------------------------------------------------------------------

        Direct premiums written
          Personal                       892.3     874.8   1,498.7   1,472.0
          Commercial                     325.6     330.3     581.5     587.2
        Underwriting income
          Personal                        29.5      50.0     (16.9)     87.0
          Commercial                      45.4      42.3      51.1      45.6
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
    





For further information:

For further information: Media Enquiries: Gilles Gratton, Vice President
- Corporate Communications, (416) 217-7206, Email:
gilles.gratton@ingcanada.com; Investor Enquiries: Michelle Dodokin, Vice
President - Investor Relations, (416) 344-8044, Email:
michelle.dodokin@ingcanada.com


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