The Co-operators Astounded by Newfoundland Minister’s Allegations

GUELPH, ON, Aug. 30, 2002 – After having responded in writing to inquiries from the Department
of Government Services and Lands on its efforts to stay in business in Newfoundland, The Co-operators was
shocked today when it learned that Minister Walter Noel issued a release condemning a new business practice.

At issue is The Co-operators decision not to renew approximately 1,300 clients in the St. John’s
region. The clients, who represent 5% of The Co-operators total client base in Newfoundland, are not being offered
renewal on The Co-operators preferred rates based on the loss experience of their group. The Co-operators data
indicates that clients with only auto insurance in this region have substantially higher losses than multi-product
clients or even auto-only clients in other parts of the province.

“In St. John’s, we currently pay out $2.05 in claims for every $1.00 we collect in premium
to people who have only their auto insurance with us. That tells us that in that region, drivers in the auto-only
category need to pay far more for their auto insurance or that our 28,000 other drivers in the province have to
subsidize these higher risk drivers,” said Kathy Bardswick, The Co-operators President and CEO. “We
will sell auto-only but at a more appropriate rate in a higher risk market.”

Having lost $9 million in Newfoundland last year, almost $5 million on auto insurance alone, The
Co-operators is focusing its strategy on clients with whom they have multi-product relationships and ensuring that
drivers are paying appropriate rates.

“The steps we have taken are perfectly legal. They are somewhat drastic but we are trying
to stay in business in the province,” Bardswick said. She also called on the government to take immediate
and decisive action. “The government cannot simply make these allegations and then do nothing to reform an
auto insurance system that is fundamentally flawed,” she said. “The Minister should encourage insurance
companies to do business in Newfoundland and part of that is letting us match the right rate to the risk. We look
forward to decisive action from this government.”

The Co-operators encourages consumers to watch this debate closely given that maintaining
competition in the auto insurance market is in their best interest. It allows them the opportunity to shop for
the best coverage at a fair price with the type of company that suits them best.