17383_RBCI 05 Corporate profile ENG - RBC Insurance

2 2005 CORPORATE PROFILERBC INSURANCE 3Global Insurance2005 highlightsFinancial highlightsRBC Insurance total revenues for 2005 were $3.3 billion, representinga 15 per cent increase over the previous year. Insurance premiums,investment and fee income were also strong, reflecting growth acrossall areas of its business.($ billions)4.03.02.01.00.02003 2004 2005Over the past year, RBC Insurance † focused on six strategicpriorities: revenue growth, efficient distribution, businessintegration, North American leadership in key markets, riskmanagement and delivering a superior client experience.In 2005, we made significant progress in all of these areas.Business highlightsWe launched several new products in 2005 to better meet theneeds of clients. The new Term 10 and Term 20 plans provideCanadians with affordable life insurance choices that may berenewed to provide coverage through to age 80, or may beconverted to a permanent life insurance plan at any time priorto age 70. RBC Insurance, in partnership with The EdgeBenefits Inc., also launched The Edge TM1 Critical Illness Plan,which provides simplified and enhanced coverage alternativesto protect Canadians against financial hardships should theybe diagnosed with a critical illness. From a travel insuranceperspective, RBC Insurance enhanced its travel insuranceoptions for seniors. These enhancements, which include animproved medical questionnaire, special underwriting andimproved case management, will enable RBC Insurance toprovide travel insurance to a wider range of travellers.In the U.S., we introduced a new version of RBC ExpressTERM TM ,our fully-automated term life insurance product, for in-branchsale through licensed agents in U.S. financial institutions.products. Requests for more complex insurance products,such as universal life insurance, are referred to specializedsales representatives. RBC Insurance plans to open severalmore offices near RBC Royal Bank branches over the next year.Over the past year, we made significant strides to complete theintegration of the business acquired through UnumProvidentinto our life and health insurance operations. Key achievementsincluded bringing together the management teams, brokeragenetworks, group products and systems. We also continued to buildand maintain our leading positions in key insurance markets.We improved our risk management processes and maintainedseveral important financial-strength ratings. RBC Life InsuranceCompany, our Canadian life insurance operating entity, andLiberty Life Insurance Company and Business Men’s AssuranceCompany of America, our U.S. life insurance entities, renewedtheir “A” (Excellent) financial strength ratings from A.M. Best.Royal Bank of Canada Insurance Company Ltd., a primaryRBC reinsurance subsidiary located in Barbados, alsomaintained its “A” (Excellent) financial strength rating fromA.M. Best and its AA– counterparty credit and financialstrength rating from Standard & Poor’s in 2005.† RBC Insurance operates through a number of legal entities.Please refer to page 5 for a listing.We continued to enhance our distribution network in responseto clients who said they wanted to meet face to face with aninsurance advisor for home, auto, travel and life insuranceproducts. In June 2005, RBC Insurance marked a significantmilestone with the opening of its first retail insurance branch.The new branch provides a convenient retail option forcustomers who are looking to meet face to face with aninsurance advisor for home, auto, travel and life insurance

4 2005 CORPORATE PROFILERBC INSURANCE 5CorporateCanadianoperationsRBC InsuranceServices Inc.RBC LifeInsuranceCompany 1RBC TravelInsuranceCompanyRBC GeneralInsuranceCompanyAssuredAssistance Inc.organizationRBC InsuranceU.S.operationsInternationaloperationsLiberty LifeInsuranceCompany 1RBC Reinsurance(Ireland) LimitedThe LibertyMarketingCorporationRoyal Bankof CanadaInsuranceCompany Ltd. 2BusinessMen’s AssuranceCompany ofAmerica 1RBC Insurance offers a wide range of life, health, creditor, travel,home and auto insurance products and services to individualand business clients in Canada and the U.S., as well as reinsurancefor clients around the world.RBC Insurance, which operates as part of the CanadianPersonal and Business segment of RBC Financial Group, isthe largest Canadian bank-owned insurer, one of the top10 Canadian life insurance producers and a leader in travelinsurance, creditor products and individual disabilityinsurance. We also have a fast growing home and autoinsurance business and a leading reinsurance operation.This chart does not represent the organization’s actual legal or divisional structure.1 “A” (Excellent) financial strength rating from A.M. Best.2 Royal Bank of Canada Insurance Company Ltd. has an “A” (Excellent) financial strength rating from A.M. Best and an AA– counterparty credit and financial strength rating from Standard & Poor’s.RBC Insurance executive committee(L to R): Diane Churilla, Head, Finance; Karen Leggett, Head, Insurance Operations; Grant Hardy, Head, Actuarial & Insurance Risk Management;Neil Skelding, President & CEO, RBC Insurance; Stan Seggie, Head, Property & Casualty Insurance; Louise Mitchell, Head, Bank DistributedProducts; John Young, Head, Life & Health Insurance; Kathy Pryden, Head, Reinsurance & International Markets; Tom Dalinda, Head, Investments;David Black, Head, U.S. Insurance

6 2005 CORPORATE PROFILE RBC INSURANCE 7Life and healthRBC Insurance offers life and health insurance, as well aswealth accumulation solutions to individual and groupclients in Canada and the U.S. This includes term anduniversal life, critical illness, disability and long term careinsurance, as well as group benefits. We also offer variable lifeinsurance, and fixed and variable annuities in the U.S. InCanada, these products are distributed through more than17,000 independent brokers affiliated with producer groups,financial planning companies and stock brokerage firms, aswell as through direct sales and a network of more than 350career sales representatives. Distribution in the U.S. is throughregional and independent broker-dealers, national marketingorganizations, RBC banking and investment channels, theInternet, other direct marketing channels and a field force ofapproximately 300 sales agents, operating primarily in thesoutheastern United States.In 2005, we launched a number of initiatives to further growand expand our life and health insurance business, includingintroducing new products, further integrating our distributionnetwork and improving the overall efficiency of our operations.From a product perspective, the new Term 10 and Term 20plans provide Canadians with affordable term life insurancechoices. These plans may be renewed to provide coveragethrough to age 80, or converted to a permanent life insuranceplan at any time prior to age 70. They also allow for simplified,preferred underwriting classes, criteria and requirementsand provide the option for tele-application completion onterm plans of $100,000 or more.RBC Insurance, in partnership with The Edge Benefits Inc.,also launched The Edge Critical Illness Plan, which providessimplified and enhanced coverage alternatives to protectCanadians from financial hardships should they be diagnosedwith a critical illness.We also completed the integration of our group insuranceproducts with those of the former UnumProvident Canada tooffer the most comprehensive and competitive group insuranceoptions to distributors and their clients. By bringing togetherthe management teams, brokerage networks, group productsand systems of both companies, we delivered outstandingresults in 2005 and continue to build and maintain our marketleading positions in key insurance markets.As part of our ongoing effort to create operational efficiencies,we announced the consolidation of our facilities in Calgaryand made changes to our western region organizationalstructure. We appointed new regional vice-presidents forthe western and prairie regions and going forward, we willcontinue to seek opportunities to align our third-partydistribution field resources more directly with our customers.In addition, we introduced a number of initiatives to helpour distributors better meet their clients’ insurance needs.In June, we relaunched the Sales Resource Centre for insurancerepresentatives. The newly redesigned site, which is accessiblethrough the RBC Insurance website, provides more efficientand user-friendly access to valuable life and health insurancesales, marketing and product information.Our life and health business provides a wide range of individual and group life andhealth insurance solutions to individual and business clients in Canada and the U.S.We are one of the top 10 Canadian life insurance producers and a leader inindividual disability insurance.

8 2005 CORPORATE PROFILERBC INSURANCE 9For career sales representatives, we enhanced the BusinessIntelligence Centre web portal that provides contractedrepresentatives with quick access to a variety of sales supporttools, such as job aids, and production bulletins, as well astraining and development information. It also provides accessto other commonly used applications such as FASATWebfor online personalized commission information andRBC Insurance University, the career sales learning managementsystem. A system was also created to enable informationsharing and document collaboration internally betweencareer sales head office staff, branch managers and branchadministrators and to support key administration, recruitment,and in-field training functions. Going forward, we willcontinue to look for opportunities to leverage RBC Insurancesystems that support a more productive sales force, allowingus to remain a leader in the distribution of insurancesolutions to Canadians.Our U.S. life insurance operations enjoyed a successful yearin 2005, consistent with our strategic focus on differentiatedinsurance protection and wealth accumulation solutions,efficient delivery and a superior client experience. Sales ofRBC LevelTERM ® life insurance, which offers highly competitivepricing for tobacco users, increased 67 per cent over the prioryear through continued expansion of our sales distribution.RBC LevelTERM life insurance is offered through online andoff-line term insurance marketers, financial institutions, andmarketing organizations supporting independent agents, as wellas an RBC U.S. field sales force of approximately 300 agents.We also introduced a new version of RBC ExpressTERM lifeinsurance, our fully-automated term product for in-branchsales through licensed agents in U.S. financial institutions.Offered in face amounts up to $250,000, this product enablescustomers to complete an application, be approved forcoverage and receive a policy in as little as 15 minutes.Average agent productivity increased more than 25 per centfollowing the successful reorganization of our agency salesoperation in the U.S. Annuity sales through RBC Insuranceagents increased 50 per cent over the prior year and wecontinued to increase the number of agents and managersholding securities licenses.Over the past year, our U.S. wealth management businessintroduced a number of value-added services intended toenhance relationships with key selling partners, includingregional and independent broker-dealers and nationalmarketing organizations. In June, we addressed the growingneed for effective retirement income strategies with aninnovative structured asset allocation model. The Incomefor Life Model 2 is a turnkey solution that enables financialprofessionals to transform accumulated client wealth into alifetime retirement income stream. We also introduced aclient seminar on the Clarity Duo 2 product, an innovativewealth management solution that facilitates tax-efficientwealth accumulation, access and transfer.In 2005, we also enhanced our variable product portfoliowith 23 new investment options, featuring a combinationof low-cost index funds and actively-managed funds fromrespected brand names. When structured with indexinvestment options, RBC Insurance variable annuities areamong the lowest in cost on the market.We also took steps to differentiate ourselves among keyselling partners by offering RBC LevelTERM insurance tobroker-dealers and national marketing organizations.Over the next year, our focus will be on further expandingour North American life and health insurance operationsby integrating and leveraging our systems and technologyinfrastructure, enhancing our product portfolio andincreasing cross-enterprise activities. To sustain our strongmarket position, we will also seek opportunities to strengthenour independent and proprietary distribution channels.Property andcasualtyOur property and casualty products include home, auto and www.rbcinsurance.com for an online, no-obligation quotetravel insurance for individual and business clients in Canada, for their home or auto insurance are eligible to receive athe U.S. and select international markets.discount. The online discount applies to private passengerautomobiles, homes, condominiums and tenant properties.Home and auto insuranceOnce clients have completed their online quote, they willRBC Insurance offers Canadians a comprehensive range receive a reference number as well as the RBC Insuranceof personal home and auto insurance products, including toll-free number, which they can call to speak with a licensedcoverage for houses, condominium units, apartments,insurance advisor and finalize their coverage. RBC Insurancecottages, automobiles, motorcycles, recreational vehicles also expanded its online quoting and underwritingand snowmobiles. RBC Insurance home and auto insurance capabilities for home and auto insurance. In June, we addedproducts are offered to clients through direct sales channels, several new features, including the ability for customers toincluding over the phone and the Internet, as well as through view their policy and billing status, change billing information,group insurance plans.view policy documents and access our policy wordings library.Additional functionality is currently being developed and isOur group insurance program is designed to give employers expected to be launched in early 2006.and affinity groups the opportunity to offer employees andmembers value-added insurance options without the cost of The August flooding in the Greater Toronto Area gavemaintaining an additional benefit program. Over the past RBC Insurance an opportunity to truly demonstrate toyear, we added 14 new organizations to this rapidly growing customers that we are “First For You.” More than 400 propertyprogram. We now provide group home and auto insurance and auto claims were reported and inspected within days ofbenefits to more than 50 groups across Canada.the flood event. In the vast majority of cases, claims adjusterswere on the scene of the loss within 24 hours of receiving aOver the past year we made several changes to enhance client call from our clients.experience and convenience by making greater use of onlinetools and services.Going forward, we will continue to focus on opportunitiesfor revenue growth and improve our position in key marketsIn May, RBC Insurance launched online discounts on some by leveraging distribution economics and processes to createof its home and auto insurance products. Through this a superior insurance experience for customers and distributors.program, residents of Ontario and Quebec who visit

10 2005 CORPORATE PROFILE RBC INSURANCE 11Travel insuranceRBC Insurance is the leading provider of travel insurancein Canada and the 2005 Travel Agents’ Choice for favouritetravel insurance provider in Canada. Our travel insurancebusiness provides a wide range of products and services,including trip cancellation, interruption and emergencyassistance services, to clients in Canada and the U.S. Theseproducts are distributed through a network of travel agencies,as well as over the Internet and in Canada, through bankchannels and insurance brokers.Over the past year, we continued to grow our Canadianbusiness and develop our U.S. operation by enhancingproduct and service options to better meet the needs oftravellers, launching new technology solutions and expandingour distribution capabilities.From a product perspective, we introduced enhancementsto our line of TravelCare ® products, which improve thecoverage we can provide to senior and snowbird clients.These changes, which took effect in August 2005, allow moreindividuals to protect themselves with affordable travelinsurance. New features of our TravelCare line of productsinclude: an enhanced medical questionnaire that providesmore travellers with increased protection through less restrictiveexclusions and conditions; a special underwriting process forclients with pre-existing conditions; and enhanced casemanagement allowing us to extend coverage to more clients.We will also increase our bank branch focus on TravelHealthProtector ® , a comprehensive health insuranceoffering, by delivering branch sales tools and activelypromoting our new online application to clients. We willalso be promoting and supporting the launch of new travelsolutions for bank business clients.Building our U.S. market presence was also a focus for 2005.Early in the year, we signed preferred supplier agreementswith TRAVELSAVERS ®1 and Vacation.com ®2 . As part of ourcommitment to ensuring agents have the knowledge andinformation they need to make insurance a key revenue source,member agencies enjoy numerous benefits, including enhancedtechnology processes and superior training and support.Going forward, educating consumers and distributors aboutthe value of travel insurance coverage for a range of situationswill continue to be a priority. We also plan to continue togrow our travel insurance business by exploring additionaldistribution channels, growing and retaining existing accounts,acquiring new strategic business and building our marketshare in the U.S.ReinsuranceRBC Insurance reinsures risks to other insurance and reinsurance The past year of devastating hurricanes have had a significantcompanies in order to provide greater diversification, limit loss impact on the industry. Going forward, we plan to reduceexposure to large risks and provide additional capacity for future our overall exposures to a level within our reduced risk limits.growth. Our reinsurance business includes life retrocession, aswell as property, title, credit and financial products reinsurance. Credit and financial products reinsuranceOur credit and financial products business underwrites nontraditionalcredit, surety, and financial-based risk, primarilyLife retrocessionRBC Insurance continues to grow its life retrocession business. in the European credit markets.We participate in the quota-share reinsurance deals andexcess reinsurance pools of most major North American and In 2005, RBC Insurance developed a title reinsurance portfolioEuropean reinsurers by accepting a portion of reinsurance based on reinsured risks for title insurance policies issued inrisk on life insurance policies.the U.S. and U.K.In 2005, our life retrocession business experienced significantpremium income growth as a result of our participation in largequota-share deals. In addition, we improved our infrastructureto better manage our operations and monitor the businesswe assumed from our customers. These enhancements resultedin improved accuracy of the assumed business and moreaccurate retention management.Going forward, we plan to expand our business by beingmore proactive at sourcing life retrocession opportunities inthe European market. We will also continue researching newproduct lines and identifying new growth opportunities inother international markets.Property reinsuranceRBC Insurance has a diverse property reinsurance portfolio,which is based on reinsured risks for property policies issuedby insurers around the world. Our portfolio covers losses arisingfrom events such as earthquakes, hurricanes and industrialfires, and is generated through brokers and reinsurers in theU.K., Bermuda, Europe and the U.S.We will continue to research new product lines based onconveyancing from title to real estate and other property.We will also enhance our risk analysis models andinfrastructure in order to identify, grow and developopportunities internationally.Over the past year, we have also spent considerable timereviewing some of the key risk parameters in our business.On the infrastructure side, in 2005, we added two staff membersin Ireland to better serve our European clients. In addition,we continued to enhance our risk analysis models and weare developing major enhancements to our capital modelthat will significantly reduce its run time.Looking ahead, we plan to take on selective business that fitswithin our credit limits and return on capital requirements.

12 2005 CORPORATE PROFILE RBC INSURANCE 13Fee and relatedactivitiesCreditorRBC Insurance supports the creditor insurance products andservices for individual and business clients of RBC Royal Bank.This includes life and disability insurance for mortgages,loans and Visa* cards.In 2005, we strengthened our leadership position in thismarket. Key initiatives included enhancing existing creditorinsurance products to meet the needs of our home equityfinancing clients, and improving distribution processesthrough the expansion of our call centre staff. In 2006, wewill focus on increasing creditor awareness and salespenetration through the addition of new performancemeasurements and reporting, the introduction of productinnovations and enhancements, and simplifying processesthat make it easier for both customers and sales forces.Travel assistance servicesRBC Insurance, through Assured Assistance Inc. (AAI), is oneof North America’s leading providers of emergency travel andmedical assistance services. AAI provides 24/7 multilingualtravel assistance, medical case management, cost containmentand access to contracted medical providers around the worldfor more than three million travellers annually.In 2005, we continued to expand our medical case managementteam as well as worldwide medical and transportationprovider network. We also refined and redesigned advancedquality tracking and client outcome measurement tools,and expanded our expertise and resources in claims costcontainment focusing on our U.S. and Caribbean claims.Going forward, we will continue to grow our worldwidemedical provider and travel resource network, as well as ourmedical case management tools and resources. We also planto enhance our claims applications to achieve and exceedour claims cost management objectives and to facilitate ourclients’ access to quality medical providers.RBC Insurance is involved in a number of key insurance and related activitiesthat generate fee income for the organization, including creditor and travelassistance services.

14 2005 CORPORATE PROFILERBC INSURANCE 15RBC overviewWe employ approximately 60,000 people who serve more than 14 million personal,business and public sector clients through offices in North America and some30 countries around the world.Royal Bank of Canada (TSX, NYSE: RY) uses the initials RBCas a prefix for its businesses and operating subsidiaries, whichoperate under the master brand name of RBC Financial Group.We are Canada’s largest bank as measured by assets † andmarket capitalization † , and one of North America’s leadingdiversified financial services companies. We provide personaland commercial banking, wealth management services,insurance, corporate and investment banking and transactionprocessing services on a global basis. Our corporate supportteam enables business growth with expert professionaladvice and state-of-the-art processes.In Canada, we have strong market positions in all of ourbusinesses. In personal and business banking, we rank firstor second in most retail products. In wealth management,we have the leading full-service brokerage operation (byassets), the top mutual fund provider among Canadian banksand the second-largest self-directed broker (by assets). Weare the largest Canadian bank-owned insurer, one of the top10 Canadian life insurance producers, and a leader in travelinsurance, creditor products and individual disability insurance.In corporate and investment banking, we continue to be thetop-ranked securities underwriter and the leading mergers andacquisitions advisor. We also have by far the largest Canadiancustody operations (by assets under administration). Ourdomestic delivery network includes 1,104 branches and3,906 banking machines, 437 investment retirement planners,1,063 financial planners, 371 insurance agents and 975mortgage specialists. Currently, we have 3.5 million onlineand 2.5 million telephone clients.In the U.S., we provide personal and commercial banking,insurance, full-service brokerage, and corporate and investmentbanking services to about 1.5 million clients throughRBC Centura, RBC Builder Finance, RBC Insurance, RBC LibertyInsurance, RBC Dain Rauscher and RBC Capital Markets.Outside North America, we have a banking network in theCaribbean and a presence in niche markets. In Europe, SouthAmerica and the Middle East, we provide private banking,international estate planning and wealth management servicestailored for high-net-worth individuals, sophisticated investors,and corporate and institutional clients. We also offer investmentbanking, trading, capital markets, reinsurance, securitiescustody and trade finance to corporate, institutional andbusiness clients.In the Asia-Pacific region and Australia, we provide corporateand investment banking, trade finance, correspondent banking,treasury and securities custody services to corporate clients,reinsurance to institutional and business clients, and privatebanking services to individual clients.† Measured as at October 31, 2005

www.rbcinsurance.comFor more information, contact RBC Insurance toll-free at 1-888-526-2056.RBC INSURANCE6880 FINANCIAL DRIVE, TOWER 1MISSISSAUGA, ONTARIOL5N 7Y5CANADA82040 (04/2006)