The Co-operators and Addenda Capital Inc. Announce Agreement

GUELPH, ON and MONTREAL, Feb. 25 2008 – The Co-operators Group Ltd. (“The Co-operators”) and Montreal-based institutional investment management firm Addenda Capital Inc. (“Addenda”) (TSX: ADV) today announced that they have entered into an agreement. Under the terms of the agreement, Addenda will amalgamate with a subsidiary of The Co-operators (“Newco”) and the shareholders of Addenda will receive upon completion of the amalgamation $26.50 in cash for each Addenda share, representing a premium of 23.8% to the closing price of $21.40 for Addenda common shares on Friday February 22, 2008 and a premium of 25.7% to the 20-day volume weighted average price of $21.09 for Addenda common shares. The transaction, which values Addenda’s equity at approximately $306.5 million, will be implemented by way of a statutory amalgamation under the Companies Act (Quebec) and is subject to customary conditions precedent including approval of the amalgamation by shareholders of Addenda and obtaining any required regulatory approvals.

Certain senior management shareholders of Addenda (the “Senior Management Shareholders”) will exchange, immediately prior to the amalgamation, in the aggregate approximately 50% of their common shares of Addenda for shares of Newco. Solidarity Fund QFL (“the Fund”), a current shareholder of Addenda, will exchange, immediately prior to the Amalgamation, 100% of its common shares of Addenda for shares of Newco and will subscribe to additional common shares of Newco. Certain other employees of Addenda (“the Employee Shareholders”) will be offered an opportunity to exchange, immediately prior to amalgamation, part of their common shares of Addenda for shares of Newco.

The Senior Management Shareholders and the Fund, representing approximately 25% of the issued and outstanding common shares of Addenda, have each entered into a voting support agreement pursuant to which they have agreed, subject to certain conditions, to vote their common shares in favour of the amalgamation.

The proposed amalgamation has been approved unanimously by the Board of Directors of Addenda (with interested directors abstaining) following the report and favourable, unanimous recommendation of a Transaction Committee comprised of three independent directors, namely Marie Giguere (Chair), Richard Drouin and Pierre Martin. In doing so, the Addenda Board determined that the amalgamation is fair to the Addenda shareholders other than the Senior Management Shareholders, the Employee Shareholders who will acquire shares of Newco and the Fund (the “Public Shareholders”) and in the best interests of Addenda and authorized the submission of the amalgamation to shareholders of Addenda for their approval at a special meeting of shareholders. The Board of Addenda also has determined unanimously (with interested directors abstaining) to recommend to the Public Shareholders that they vote in favour of the amalgamation.

The Transaction Committee received an opinion from its financial advisor, CIBC World Markets Inc. that the consideration to be received under the transaction is fair from a financial point of view to the Public Shareholders. In addition, the Transaction Committee received a report on the value of the Addenda shares from PricewaterhouseCoopers LLP.acting as independent valuator. Copies of the fairness opinion and the formal valuation report, factors considered by the Transaction Committee and the Board and other relevant background information will be included in the management information circular that will be sent to Addenda shareholders in connection with the special meeting to consider the amalgamation.

Addenda has agreed not to solicit competing acquisition proposals for Addenda but has retained the ability to consider a competing acquisition proposal not solicited by it which the Addenda Board believes may lead to a superior proposal and to terminate the agreement in the event of a superior proposal, subject to The Co-operators right to match and payment of a break-up fee of $8.0 million. The agreement also allows Addenda to continue to declare and pay quarterly dividends to shareholders in the ordinary course of business.

A meeting of shareholders to consider the amalgamation is anticipated to take place in April. To be implemented, the amalgamation will require approval by two-thirds of the votes cast by holders of common shares. The amalgamation will also require approval by a simple majority of the votes cast by Public Shareholders.

Soon after the completion of the amalgamation, the business of Co-operators Investment Counselling Limited, a wholly-owned subsidiary of The Co-operators, will be combined with that of Addenda.

With assets under management of approximately $29 billion, Addenda is a leader in the institutional fixed income market. Based in Guelph, Ontario, The Co-operators is the leading Canadian-owned multi-product insurance company. The new entity, which will operate under the Addenda brand, will have offices in Montreal, Toronto, Guelph and Regina, will manage approximately $40 billion in assets and have significant potential for future growth.

The combined entity will be known as Addenda Capital Inc. Addenda will be headed by Michael White who will become President and CEO. Most of Addenda’s management will continue to serve in their current capacity within the new entity. Myriam Larcher will remain Chief Operating Officer and Chief Financial Officer while Yvan Fontaine will act as Senior Vice President and Co-Chief Investment Officer. Benoit Durocher will become Executive Vice President, Client Service and Marketing. Joe DiMassimo, Senior Vice President Sales and Service will continue to work out of Addenda’s current Toronto office. The senior management team has agreed to invest in the new entity given the strong similarities between the respective corporate cultures of Addenda and The Co-operators. Jim MacDonald, currently Chief Investment Officer of Co-operators Investment Counselling, will become Senior Vice president and Co-Chief Investment Officer of the new company.

“This transaction creates a national investment manager of significant scale and offers existing clients of Addenda and Co-operators Investment Counselling Limited excellent choice in diversification of asset classes, management styles and capabilities,” commented Kathy Bardswick, president and CEO of The Co-operators. “The two companies complement each other well, and this acquisition supports The Co-operators strategic goal of significantly growing our presence in Quebec.”

“We are very excited about this transaction which will allow Addenda to team up with an insurance industry leader and its investment management subsidiary. This combination will further enhance Addenda’s ability to meet our clients’ needs in terms of specialty products such as liability driven investing” said Carmand Normand, Executive Chairman of the Board of Addenda.

“For its part, the Solidarity Fund QFL, is pleased to align itself with a major strategic partner such as The Co-operators, whose values and vision are perfectly attuned to its own. By increasing its assets under management and having access to an already well established network, Addenda Capital will be able to spur its growth across Canada. We are all the more pleased to see the new entity will be headquartered in Montreal, raising further the city’s profile as a major player in the asset management industry,” said Gaeten Morin, Executive Vice President, Investments, at the Solidarity Fund QFL.

Scotia Capital Inc. is acting as financial advisor and Borden Ladner Gervais LLP is acting as legal counsel to The Co-operators. Pricewaterhouse Coopers LLP acted as independent valuator and CIBC World Markets Inc. is acting as financial advisor to Addenda and the Transaction Committee. Fasken Martineau DuMoulin LLP is acting as legal counsel to the Transaction Committee of Addenda and McCarthy Tetrault LLP is acting as legal counsel to the Senior Management Shareholders. The Fund is supported by its in-house legal and acquisition teams.

Subject to receiving the required Addenda shareholder and regulatory approvals and the satisfaction of the other customary conditions, it is anticipated that this transaction would close in approximately two to three months.

About The Co-operators

Based in Guelph, Ontario, The Co-operators is a group of Canadian companies offering home, auto, life, group, travel, commercial and farm insurance, as well as investment products. With assets of $7 billion, The Co-operators is a co-operative owned by 40 Canadian co-operatives, credit unions and like-minded organizations. It is well known for its community involvement, and is listed among the 50 Best Employers in Canada.

About Addenda

Addenda is an investment management firm specializing in the active management of fixed-income portfolios, primarily for institutional clients. Copies of the Merger Agreement and certain related documents will be filed with Canadian securities regulators and will be available at the Canadian SEDAR website at The management information circular in connection with the special meeting of shareholders to consider the Amalgamation is expected to be mailed to shareholders over the coming weeks. The circular also will be available as part of Addenda public filings at

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