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Western Financial Group2007 Year End Financial Results
Conference Call
March 28, 2008
Forward-Looking StatementsThis presentation contains certain forward-looking statements. Forward-looking statements include, without limitation, statements regarding the future financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, taxes and plans and objectives of or involving Western Financial Group Inc. (the “Company”) or its subsidiaries. Many of these statements can be identified by looking for words such as ‘‘believe’’, ‘‘expects’’, ‘‘expected’’, ‘‘will’’, ‘‘intends’’, ‘‘projects’’, ‘‘anticipates’’, ‘‘estimates’’, ‘‘continues’’ or similar words. The Company believes the expectations reflected in such forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties only some of which are described herein. Many factors could cause the Company’s actual results, performance or achievements to, or future events or developments to, differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the risk factors, which are discussed in greater detail in the ‘‘Risk Factors’’ section of the prospectus. Any forward-looking statements are made as of the date hereof and the Company does not assume any obligation to publicly update or revise such statements to reflect new information, subsequent events or otherwise.Non-GAAP MeasuresThroughout this presentation, the Company may use the term ‘‘operating income’’ to refer to earnings, including investment income, before interest expense, taxes, depreciation and amortization of intangible and capital assets, excluding gain (loss) from the sale of assets and income (loss) from equity investments. The Company uses ‘‘operating income’’ to assist it in measuring corporate performance before the costs of capital and amortization of capital and intangible assets. Operating income is not a measure recognized by GAAP and does not have a standardized meaning prescribed by GAAP. Therefore, this measure may not be comparable to similar measures presented by other issuers and investors are cautioned that it should not be used as an alternative to ‘‘net income’’ or other measures of financial performance calculated in accordance with GAAP.
TSX: WES3
Today’s Remarks• Operational Progress in 2007
• Top Three Achievements in 2007
• 2007 Financial Review
• Priorities for 2008
Operational Progress in 2007
TSX: WES5
WFG Agency Network
• Same store customer count 4.3%.
• Same store sales 7.7%.
• Soft pricing market continues.
• “Insurance to Value” initiatives helping build revenue.
• Acquisitions of Oncescu and Early in Q4 – 23 in 2007.
TSX: WES6
Western Life Assurance
• Sales and production in Creditor Life.
• Certificate count growth 15% in 2007.
• Bolt-on product for network is at 4,800+ policies. Target was 20,000 by Q2/08, will need to be extended through 2008 Y/E.
TSX: WES7
Bank West
• Loans:– $149.4 M in 2006– $286.8 M in 2007 including $90 M Ubiquity
• Decision on new banking platform – Wealthview.
• Capital capacity for $65 million of growth.
Top 3 Achievements in 2007
TSX: WES9
Top 3 Achievements in 2007
• Bank West in black.
• Dividend initiation.
• Network’s internal and external growth.
2007 Financial Review
TSX: WES11
Total Revenue
114
20
64
3342
2822
83
0
20
40
60
80
100
120
2000 2001 2002 2003 2004 2005 2006 2007
($ M
illi
on
s)
CAGR 28.2%
TSX: WES12
Earnings Per Share
0.24
0.08 0.08
0.18
0.11
0.17
0.03
0.22
0
0.05
0.1
0.15
0.2
0.25
0.3
2000
2001
2002
2003
2004
2005
2006
2007
CAGR 34.6%
TSX: WES13
Overall
2007 2006
Revenue ($) 114,126 82,643
Income from Equity Investments ($) 2,172 2,323
Net Income ($) 12,213 7,988
Earnings per share ($)
Basic
Diluted
0.24
0.22
0.22
0.20
TSX: WES14
The Network
2007 2006
Commission & other customer revenue ($) 66,408 46,674
Operating expenses ($) 46,613 32,366
Operating income ($) 19,795 14,308
TSX: WES15
Bank West
2007 2006
Interest & investment income ($) 13,803 8,214Net interest & investment income ($) 4,596 2,991
Operating & provision expenses ($) 3,506 2,773
Operating income/loss ($) 1,090 218
TSX: WES16
Western Life Assurance
2007 2006
Premium income ($) 27,282 22,785
Investment income ($) 2,814 2,901
Policyholder benefits ($) 13,934 13,595
Operating expenses ($) 12,102 9,510
Operating income ($) 4,060 2,581
TSX: WES17
Corporate & All Other
2007 2006
Other revenues ($) 3,817 2,069
Operating expenses ($) 9,130 7,526
Operating loss ($) (5,313) (5,457)
TSX: WES18
Western Financial GroupHistorical Consolidated ROE
1.9
9.4
5.6
7.28.3
7.5 8.18.4
0123456789
10
2000 2001 2002 2003 2004 2005 2006 2007
Per
cen
t
TSX: WES19
Western Financial GroupDebt to Equity Ratio
17
131
19
115
173
81
59
020406080
100120140160180200
2001 2002 2003 2004 2005 2006 2007
Per
cen
t
Priorities for 2008
TSX: WES21
2008 Priorities
• Agency acquisitions – pipeline.
• Ubiquity Bank integration/Bank West new operating system.
• Direct marketing initiative – Network/Life WFGO “bolt-on” acceleration.
• Increase leverage to 35% debt to equity.
Questions
…because we live here.