Scotia Capital Modestly Reduces EPS Estimates of Life Insurance Cos

Event

• We're doing a little housekeeping with respect to our EPS estimates, reflecting updated economic data as at the end of Q1/08, and slightly revised economic assumptions going forward.

What It Means

• We're reducing 2008 EPS estimates for GWO and MFC each by 1% in 2008, and reducing SLF by 2%. We're reducing 2009 EPS estimates for GWO, MFC and SLF each by 1%. We're leaving IAG unchanged.

• We've reduced our estimate for an average YOY change in the S&P500 from down 3% to down 4%. We're leaving our average expected YOY change in the S&P/TSX at down 1%. This implies the S&P/TSX is relatively flat throughout the remainder of 2008, and the S&P500 is up 8% by the end of 2008, consistent with our strategist. Should the S&P500 remain flat throughout the rest of 2008 we could reduce our EPS estimates by a further 3% for GWO, 5% for MFC and 2% for SLF.

• We've modified FX assumptions to reflect a weaker GBP (hurts GWO) and a stronger JPY (helps MFC).

• We've also reduced SLF EPS by $0.05 in 2008 to reflect the negative impact of widening credit spreads on BV guarantees on U.S. fixed annuity business.;