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1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111 1111111 1111111 1 111111111111111111111111111111111111 1111111111111111111111111111111111111111 1 1 111111111 1 1 111 1 1 1 111 1111 1111111111111111111111111111111111 1111111111111111111111111111111 1 1 1 1 1 1 1 1 1 1 1 1 111 1 1111 111 1 1 1 1 1 111 1 1 1 1 1 1 11111111111111111111111111111111 111111111111111111111111111111 111 1111 111 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 111 1 1 11111 111111111111111111111111111111111 11111111111111111111111111 1111 11111 1 1 1 111 1 111 1 1 111 1 111 1 1 1 1 1 1 1 1 1 1 1111 11111111111111111111111111111111 1111111111111111111111111111111111 1111 1 1 1 111111 1 1 111 1 1 1 1 1 1 1 1 1 1 1 11111 11111111111111111111111111111111 11111111111111111111111111 1 1 1 1 1 11111 1 1 1 111 1 1 1 1 1 111 1 1 1 1 1 1 1 1 1 1 1 111 1 1 1 111111111111111111111111111111111 111111111111111111111111111 1 1 1 1 1 1 1 1 1 1 1 1 111 1 1 1 111 1 1 1 111111 1 1 1 1 1 1 1 1 1 1 1 1 1 111111111111111111111111111111 11111111111111111111111 1 1 1 1 1 1 1 1 1 1 1 1111 1 1 1 1 1 1 111 111 1111111 1 111 1 1 1 1 1 1111 111111111111111111111111111111 11111111111111111111111 1 111 1 1 1 1 1 1 1 1 1 11111 1 1 1 111111 111 1 1 111 1 1 1 1 1 1 1 1 1111111111111111111111111111111111 1111111111111111111111 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 111111 1 1111111111 1 1 1 1 1 1 1 1111 1111111111111111111111111111111 1111111111111111111111111 1 1 1 1 1 1 1 1 1111111111111111111 1 11111 111 1 1 1 1 1 1111111111111111111111111111111111 1111111111111111111111111 1 1 1 1 1 1 1 1 1 111 1 111111111111 1111111 1 1 1111 1 1 1 1 1 11111111111111111111111111111111 11111111111111111111111 1 1 1 1 1 1 1 111 1 1 1 1111 111 1 11111 1 11111 1 1111 1 1 1 1 1 1 1111111111111111111111111111111111 1111111111111111111111 1 1 1 1 1 1 1 1 1 1 1111 1 1 1 1 1 1 111 1 1111111 1 1 1 1 1 1 1 1 1 1 1 1 1 1111 111111111111111111111111111111 11111111111111111111111111111 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1111111111 1 1 1 1 1 1 1 1 1 11111111111111111111111111111111111 1111111111111111111111111 1 1 1 1 1 1 111 1 1 1 1 1 1 1 1 1 1 1 1 1 1 11111 11111 111 1 1 1 1 1 1111111111111111111111111111111111 11111111111111111111111 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 111 1 1111111 111111 1 1 1 1 1 1 1 1111111111111111111111111111111 111111111111111111111111 1 1 1 1 1 1 1 1 1 111 1 1 1 1 111 1 1 1 1 111 1 1 1 1 1 1 1111 1 1 1 1 1 11111 111111111111111111111111111111 1111111111111111111111111 1111111111 111111 1 1 1 1 1 1 1 1 1 1 111111 1 1 1 1 1 1 1 1 1 111 1111111111111111111111111111111 1111111111111111111111111 1111 1 1 1111 1111 1 1 1 1 1 1 1 1111111 11111 1 1 1 1 1 1111111111111111111111111111111111111 111111111111111111111111111 111111111111 1 111 1 1 1 1 1 1 1 11111 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1111111111111111111111111111111 11111111111111111111111111111111111111111 1 1 1 1 11111111111 1111 1 1 1 1 1 1 1111111111111111111111111111111111 11111111111111111111111111111111111111111 1 1 1 1 1 1 111 1 1111111 1 1 1 1 1 1 1 111 11111111111111111111111111111111 111111111111111111111111111111111111111 1 1 1 1 1 1 1 1 1 1 1 1 1 11111 1 1 1 1 1 111111 11111111111111111111111111111111 111111111111111111111111111111111111111111 1 1 1 1 1 111 111 1 1 11111 1 1 1 1 1 1 1111 111111111111111111111111111111 1111111111111111111111111111111111111111 1 1 1 111 111 1 1 1111111 1 1 1 1 1 1 1 1 111 1111111111111111111111111111111 11111111111111111111111111111111111111111 1 1 1 1 1 1 111 111 111 1 1 111 1 1 1 1 1 1 1 11111111111111111111111111111111 111111111111111111111111111111111111111111 1 1 11111111111 1 1 1 1 1 1 1 1 1 111 1 11111111111111111111111111111111 11111111111111111111111111111111111111111 1 1 1 1 1 1111 111 1 1 111 111 1 1 1 1 11111111111111111111111111111111111 1111111111111111111111111111111111111111 111 1 1 1111 11111 1 11111 1 111 1 1 111 1111111111111111111111111111111 1111111111111111111111111111111111111THE POWER1 1 1 1 1 1 1 11111 1111111 111 1 1 1 1 1 1 1 111 1111111111111111111111111111111 111111111111111111111111111111111111111 1 1 1 1 11111 1 1 1 1 111111 111 1 1 1 1 1 1 1 11111111111111111111111111111111 11111111111111111111111111111111111111111 1 1 1 1 1 1111111111 111 1 1 1 1 1 111 1 11111111111111111111111111111111 11111111111111111111111111111111111111111 1 1 1 1 1 1 111 111 1 1 11111 1 1 1 1 1 11111 111111111111111111111111111111 11111111111111111111111111111111111111111111 1 1 1 1 1 1111 111 1 1 1 1 111 1 1 1 1 1 11111111111111111111111111111111 1111111111111111111111111111111111111111111 1 1 1 1111111111 1 1 1 1 1 1 1 1 1 1 1 1 11111111111111111111111111111111 11111111111111111111111111111111111111111 1 1 1 1 1 1 111 1 1 1 11111 1 1 1 1 1 1 1 1 1 1 1 1111111111111111111111111111111 111111111111111111111111111111111 1111111111 1 1 11111 1 11111 111 1 1 1 1 1 1 1 1111 111111111111111111111111111111 1111111111111111111111111111111111 1 1111 1 1 1 1 1 1 1 1 11 1 11 1 1 1 OF111 1 1 1 1 1 1 1 1 1 11111112015 11ONE 1ANNUAL1 1111111111111111111111 REPORT 1111111111111111111111111 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 111111111 1 1 111 1 1 1 1 1 1 1 1 11111111 1 1 11111111111111111111 11111111111111111111111111 111 1 1 1 1 1 1 1 1 1 1 111 1 1 1 1 1 111 1 1 111111111 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1111111111111111111 11111111111111111111111 1 1 1 1 111 111111 111 111 1 1 1 11111111111 1111 1 1 1 1 1 111 1 1 1 1 1 1 1 1 1 1 1 1 111 1 1111111111111111 111111111111111111111111111 1 1 1 1 1 1 111 111 111 111 1 1 1 1 1 11111 1 11111 1 1 111 1 1 1 1 111 1 1 1 1 11111111111111111111111 1111111111111111111111111 1111 1 1 1 1 1 1 1 1 1 1 1111 1 11111111 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 11111111111111111 1111111111111111111111 1111 1 1 1 1 1 1 1 1 1111 1 1 11111 1 111111 11111 1 1 1111 1 1 1 1 111 1 1 1 1 1 1 111 1 11111111111111111111 1111111111111111111111 1 111 1 1 1 1 1 1 1 1 1 1 11111 111111 1 1 1111 111 1111111111 111 111 1 1 1 1 1 111 11111111111111111111 11111111111111111111111 1 1 1 1 1 1 1 1 1 111 11111111 111111 1111111 1111 1 1 111 111 1111 1 11111 1 1 11111 111111111111111 111111111111111111111111 1 1 1 1 1 1 1111 1 1 111 1 1111 111111111 11111111 1 1 111111 111111 1 1 1 1 1 1 1 111111111111111111 1111111111111111111111111111 1 1 1 1 1 1 1111 1 1 111111 111 1 1 111111 1 1 1111 1 1 1 1 1111 1 1 1 1 1 1 1 1 1 1 1111111111111111111 1111111111111111111111 1111 1 1 111 1 111 1 1 1 111 1 11111 111 111111 1111 1 1 1 1 1 111 1 111 1 1 1 1 1 1 1 1 1 1 111111111111111111 1111111111111111111111111 1 111 1 1 1 1 1 1111 111 1 1 1111 1 1 1 111 1111111 1 1 111 1 1 1 1 1 1 1 1 1 1 1 1 1 111111 1111111111111111 111111111111111111111111 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 11111 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 111111111111111111 1111111111111111111111111 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 111 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 11111 1111111111111111111 11111111111111111111111 1 1 1 111 11111 1 1 1 1 1 1 1 1 1 1 111 111 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 111 1 1 11111111111111111111 111111111111111111111111111111 1 1 111 1 1 1 1 1 1 1 1 1 1 1 1111 1 1 1 1 111 1 1 1 1 1 1 1 1 1 11111 1 1 111 1 1 111 1111111111111111111 11111111111111111111111111111 1 111 1 111 1 1 1 1 1 1 1 111 1 111 111 1 1 1 1 1111 1 1 1111111111 1 1 1 1 1 1 11111111111111111111 111111111111111111111111111 1 1 1 1 1 1 1 1 1 111 1 111 111 111 1111111 1111 1111 1 1 1 1 11111 1 1 1 111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 SUMMARY 02 2015 Financial Highlights 05 Chairman’s Message 14 CEO’s Message 26 Sustainable Development and Societal Responsibility Report 48 SSQ, Mutual Management Corporation – Consolidated Financial Statements as at December 31, 2015 49 Independent Auditor’s Report 50 Consolidated Statement of Net Surplus 50 Consolidated Statement of Comprehensive Income 51 Consolidated Statement of Financial Position 52 Consolidated Statement of Equity 53 Consolidated Statement of Cash Flows 54 Notes to the Financial Statements 62 SSQ, Life Insurance Company Inc. – Excerpt from the Consolidated Financial Statements as at December 31, 2015 63 Management’s Report 64 Consolidated Statement of Income 65 Consolidated Statement of Comprehensive Income 66 Consolidated Statement of Financial Position 67 Consolidated Statement of Changes in Equity 68 Consolidated Statement of Cash Flows 69 Excerpt from the Notes to the Consolidated Financial Statements 103 Structure 104 Boards of Directors, Senior Management and Vice-Presidents 108 Addresses 108 Contact Us 11111111111 111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111

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THE POWER OF ONE When we call ourselves a group, it’s more than just a name, more than the sense of solidarity we share. The power of a group—one group—allows us to combine our strengths to create one powerful customer experience. 111111111111111111111111111111111 This means that each of our customers enjoys an experience that is greater than1111111111111111111111111111111 111111111111111111111111111111111111111111111111 the sum of our parts, from start to finish. 11111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111The power of one is the ultimate expression of the values behind our name, brand, 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 and identity.1111111111111111111111111111111111111111111111111111111111111111111111111111111111 It’s why we stand for111111111111111111111111111111111111111111111111111111111111111111111111 the power of one group: SSQ Financial Group. It’s our vision for the future. 2015

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1111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111FINANCIAL 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111 11111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111HIGHLIGHTS 111111111111111111111111111111111111111 1111111111111111111111 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

2015 (in millions of dollars) 2015 2014 Variation $ $ % 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 CONSOLIDATED DATA 1111111111111111111111111111111111111111111111111111111111111111111111111111111111 Insurance premiums 2,204.9 2,084.4 5.8 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111 Assets under management and administration 11,183.3 10,622.3 5.3 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111FINANCIAL Equity attributable to shareholders 727.0 670.7 8.4 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 Net income attributable to shareholders 64.8 49.7 30.4 11111111111111111111111111111111111111111111111111 Net income attributable to non-controlling interest – 4.3 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111 Total net income 64.8 54.0 20.0 11111111111111111111111111111111111111111 Fair value of properties 289.6 244.9 18.3 11111111111111111111111111111111 Number of employees 2,108 2,052 11111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111HIGHLIGHTS SSQ, LIFE INSURANCE COMPANY INC. 111111111111111111111111111111111111111 Premiums and premium equivalents 1,814.9 1,710.4 6.1 1111111111111111111111 Assets under management − segregated funds 4,769.8 4,369.6 9.2 SSQ INSURANCE COMPANY INC. Premiums 206.0 183.0 12.6 SSQ GENERAL INSURANCE COMPANY INC. Written premiums 221.8 227.5 -2.5 Net combined ratio 99.0% 95.7% 3.4 7,970.8 7,970.8 10,871.5 11,421.8 10,622.3 11,183.3 306.1 315.5 363.8 670.7 727.0 1,565.2 1,809.0 2,008.6 2,084.4 2,204.9

2011 12 13 14 15 2011 12 13 14 15 2011 12 13 14 15 CONSOLIDATED CONSOLIDATED ASSETS EQUITY ATTRIBUTABLE INSURANCE PREMIUMS UNDER MANAGEMENT TO SHAREHOLDERS (in millions of dollars) AND ADMINISTRATION (in millions of dollars) (in millions of dollars)

3 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

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Pierre Genest, Chairman of THE POWER OF ONE GROUP AT THE SERVICE the Board, and Jean-François Chalifoux, Chief Executive OF OUR CUSTOMERS Officer of SSQ Financial Group. It’s my pleasure to present to you Jean-François Chalifoux,111111111111111111111111111111111 the new Chief ­Executive 1111111111111111111111111111111 Officer of SSQ Financial Group.111111111111111111111111111111111111111111111111 On duty as SSQ’s CEO since last September, he was quick to discover to what extent SSQ’s11111111111111111111111111111111111111111 values are well entrenched in the Com- 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111pany’s DNA. Jean-François has made a firm pledge: to maximize the tremendous 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111potential for synergies within the Company and improve customer experience. 1111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111This commitment is at the heart of the Group’s actions and there is no doubt in my mind that Jean-François will exceed far beyond our highest expectations.

4 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

CHAIRMAN’S MESSAGE 2015—A big year for change at SSQ Financial Group Many people have figured in SSQ’s 70-year-long history. One prominent figure, René Hamel—a man of vision, courage, convictions and values—has left behind him a rich legacy and paved the way to a bright future. At the beginning of 2015, he expressed his wish to leave us at year-end and embark on a well-deserved ­retirement. René is a born leader and his track record is impressive. In 1986 when he joined us, he co-founded our flourishing general insurance subsidiary. He then applied his skills and abilities to Investment and Retirement, where one of his many accomplishments was launching the Astra segregated fund family, subse- quently moving on to take the helm of the group insurance sector. In 2008, he became SSQ’s CEO and held that position until September 20, 2015. To ensure a smooth transition, he acted as a special advisor to the new CEO until his depar- ture at the end of the year. Throughout his many years with us, René Hamel has had a remarkable career and served as an inspiration to us all. He was both a tireless advocate of our mutualist values and a bold and efficient manager. I was sad to see René leave us—he was a valued colleague and collaborator right from the start. I am deeply grateful to him for his inspired work and vision that made the Group what it is today. On behalf of our board members, partners, ­customers, insureds and, above all, employees, who were so important to him, I would like to thank him warmly for his invaluable contribution to SSQ’s advance- ment and for laying the groundwork for a strong financial group. All the best for your retirement, René! After a thorough recruitment process by the Executive and Human Resources Committee, the Board of Directors appointed Jean-François Chalifoux to succeed René Hamel as Chief Executive Officer. In so doing, SSQ Financial Group chose an experienced, imaginative and dynamic new CEO to confront the challenges ­currently facing the insurance and financial services sectors.

5 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT 111111111111111 1 1 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111 1 1 111 1 111 111 1 1 1 1 1111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111 1111111 1111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111 111 1 1 1 11111111111111111111111111111 111111111111111111111111111111111111111111111111111 1111 11111111 1 1 1 1 11111 1 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111 1 1 1 111111111111111111111111111111111111 111 11111 111111111111111111 111 11111111111111111111111111111111111111 11111111111 111111 1 11111111111111111111111 1111111 1 111 1 1 1 1 1 1 111111111111111111111 11111111111111111111111111111111111111111111 1111111111111 11111 1 11111111111111111111111 1 1 111111 11111111111111111111111111111 1 1 1 1111111111111111111111111111111111 1111111111111 11111 111111111111111111111 1 1 1 1111111 11111111111111111111111111111111 1 11111111111111111111111111111111 1111 1 11111111 111111111111111111 11111111111111111111 1 1 11111111 111111111111111111111111111 1 1 1 1 1 1 1 11111111111111111111111111111111111111 1111 11111111111111 1111 11111111111111111111111111111111111111111111111111111111111 1 1 1 1 1 1 111111111111111111111111111111111111111 111111111111111 1111111111111111111111111111111111111111111111111111111111 1 111 1 1 1 1111111111111111111111111111111111111111 111 1111111111111111 1 111111111111111111111111111 1111111111111111111111111111 1111111 111 1 1 1 11111 1 1 1 1 111111111111111111 1 11111 1 111 11111 111111111111111111111111111111111111111111111111 1111111111111111111111111111 111 1 111 1 1 11111 111 111111111111111111 11111111111 1 1111111111111 111111111111111111111111111111111111111111111 11111111111111111111111111111111 1 111 1 111 11111111111111111111111111111 1111 1 1 111 111111 111 1 1 111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111 1 11111111111111111111111111 1 1 1 1 1 1 111 1 111111111111111111111111111111111111 1 1 1 111 1 1 1 11111 1111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111 1 11111 1 1 1 111 1 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1 1 1 1 1 1 111 1 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1111111111111111111111111111111111111 111111111111111111 111111111111111111111111111111111111111111111111111111111111 1 111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111

1111111111111111111111111111111111111111111111 111111111111116 11111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT 111111111111111 1 1 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111 1 1 111 1 111 111 1 1 1 1 1111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111 1111111 1111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111 111 1 1 1 11111111111111111111111111111 111111111111111111111111111111111111111111111111111 1111 11111111 1 1 1 1 11111 1 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111 1 1 1 111111111111111111111111111111111111 111 11111 111111111111111111 111 11111111111111111111111111111111111111 11111111111 111111 1 11111111111111111111111 1111111 1 111 1 1 1 1 1 1 111111111111111111111 11111111111111111111111111111111111111111111 1111111111111 11111 1 11111111111111111111111 1 1 111111 11111111111111111111111111111 1 1 1 1111111111111111111111111111111111 1111111111111 11111 111111111111111111111 1 1 1 1111111 11111111111111111111111111111111 1 11111111111111111111111111111111 1111 1 11111111 111111111111111111 11111111111111111111 1 1 11111111 111111111111111111111111111 1 1 1 1 1 1 1 11111111111111111111111111111111111111 1111 11111111111111 1111 11111111111111111111111111111111111111111111111111111111111 1 1 1 1 1 1 111111111111111111111111111111111111111 111111111111111 1111111111111111111111111111111111111111111111111111111111 1 111 1 1 1 1111111111111111111111111111111111111111 111 1111111111111111 1 111111111111111111111111111 1111111111111111111111111111 1111111 111 1 1 1 11111 1 1 1 1 111111111111111111 1 11111 1 111 11111 111111111111111111111111111111111111111111111111 1111111111111111111111111111 111 1 111 1 1 11111 111 111111111111111111 11111111111 1 1111111111111 111111111111111111111111111111111111111111111 11111111111111111111111111111111 1 111 1 111 11111111111111111111111111111 1111 1 1 111 111111 111 1 1 111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111 1 11111111111111111111111111 1 1 1 1 1 1 111 1 111111111111111111111111111111111111 1 1 1 111 1 1 1 11111 1111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111 1 11111 1 1 1 111 1 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1 1 1 1 1 1 111 1 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 111 1 1 1 1 1 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111 Jean-François, who has been in office since last September 21, previously held a 1111111111111REFOCUSING11111111111111111111111111111111111111111111111111111111111111111111111111 111111111111 1 11111 1 number of executive positions with major pan-Canadian insurers, both in general 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1 1 1 1111111 insurance and life and health insurance. Until very recently, he was responsible for 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1 1 11111 111 1 1111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1 1 1 1 111111 1 1 1 1 1 1 the overall strategic direction of a major life and health insurer and oversaw its 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111 1111111111 business development activities across Canada. He has served on several boards 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 111 and committees associated with the insurance and financial services industry, 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1 1111 and has supported numerous projects addressing the well-being and develop- 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111OUR1111111111111111111111111111 1111111111111111111111 111111111111111111111111111 1 111111111 ment of individuals and communities. Jean-François has a bachelor’s degree in 1111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111 1111 actuarial science from Université Laval, is a Fellow of both the Canadian Institute 1111111111111111111111111111111111111111 1 11111111111111111111111111111111111111111111111111111111111 of Actuaries and the Casualty Actuarial Society, and is a graduate of the Queen’s 1111111111111111111111111111111111111111111111111111111111111111111 11111 1111111111111111111111111111 Executive Development Program. 1111111111111111111111111111111111111111111111111111111111111111111111 1 1 1 111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111 1 1 1 11111111111111111111111111 Jean-François’ first order of business was to meet with SSQ’s managers and staff 11111111111111111111111111111111111111111111111111111111111111111111111 11111111111 111111111111111111 to get the lay of the land. From the outset, he was pleased to note the impressive 11111111111111111111111111111111111111111111111111111111111111111111111 1 111111 1111111111111111111111 11111111111111111111111EFFORTS111111111111111111111111 1 111111111111111111111 1 1 1 1111 1 11111111111111111111111 quality and competence of management and employees alike. He observed what 111111111111111111111111111111111111111111111111111111111111111111111 111 111 1111111111111111111111111 a vital part of its DNA SSQ’s values are. In view of the Group transition initiated in 11111111111111111111111111111111111111111111111111111111111111111 11111 111111111111111111111111111111 2011 by his predecessor, Jean-François was quick to note the great potential 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 for synergies between different entities and sectors of activity. He also consid- 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 ered SSQ in an excellent position to gear its efforts and priorities to enhancing 1111111111111111111111111111111111111111111111111111 1 1 1111111111111111111111111111111111111111111111 customer experience. 111111111111111111111111111111111111111111111 1 1 1 1 1 1 1 111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111 1111 1 1 1 11111111111111111111111111111111111 1111111111111111111111111111111111111111 1 11111 1 1 1111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111 1 1 1 1 1 1111111 111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111 1 1111 1111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 In view of the Group transition initiated in 111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 2011 by his predecessor, Jean-François 111111111111111 11111 1 111 1 1 111111111111111111111111111111111111111111111111111111 111111111111 1 111 1 1 1 1 11111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111 1 1 1 1111 111 1 11111111111111111111111111111111111111111111111111111111111111111111111111111111 was quick to note the great potential for 11111111 1111111111 1 1 1 1111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111 1111 1 111111111111111111111111111111111111111111111111111111111111111111111111 synergies between the different entities 11111111111 1 1 111111111 1 11111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111 11111 1111111111111111111111111111111111111111111111 11111111111111 1111 1111111111111111111111111111111111111 and sectors of activity. 111111111111111111 111111111111111111111111111111111111111111111111111111111111 1 111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111

1111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 7 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

Sound governance The boards of SSQ, Life Insurance Company Inc. (SSQ Life), SSQ Insurance Com- pany Inc. (SSQ Insurance) and SSQ General Insurance Company Inc. (SSQauto) carried out an annual review of their governance programs to ensure that best practices were being upheld. In conjunction with this review, the boards tasked the Audit and Risk Management Committee with receiving the actuary’s report on the Company’s financial position. To promote informal communication between the boards and the head of SSQ, every board meeting included closed-door discus- sions with the Company’s Chief Executive Officer. On the recommendation of the Audit and Risk Management Committee, the boards adopted the capital management policy; the policy to manage the internal model for calculating the capital required for segregated fund capital guarantees; and the capital guarantee management policy. In cooperation with the SSQ Life’s Investments Division, the members of the ­Investment Committee initiated an in-depth examination of investment portfolio asset allocation in the Group’s insurance companies, with the objective of maxi- mizing performance while ensuring that these companies’ investments and ­commitments are closely matched. In 2015, the directors of the Group’s enterprises were brought together on a num- ber of occasions: in June, for instance, with the review of the half-way results of the 2013-2017 Strategic Plan, and in September with a training session covering ­upcoming changes to Quebec’s legislation on insurers and the Report on the Ap- plication of the Act respecting the distribution of financial products and services published in May 2015 by the Ministre des Finances. Relevant training activities In-house training enhances a board’s expertise and competence. SSQ makes a point of placing the information and training directors need at their disposal. ­Several training sessions were offered on topics ranging from upcoming changes to legislation on insurance to derivatives, financial risk exposure, and the automo- bile insurance Risk Sharing Plan. A specialized analyst presented an overview of the Canadian insurance and financial services market, discussing both the general insurance and life and health insurance sectors with them. In addition, International Financial Reporting Standards (IFRS) specialists met with members of the Audit and Risk Management Committee to make them aware of the ­significant impacts that IFRS 4—Insurance Contracts, and IFRS 9—­Financial Instruments­ standards will have on SSQ when they come into effect. High attendance The directors of SSQ’s boards care deeply about their roles and responsibilities, and this is borne out by their attendance record and the quality of their meeting-­ related preparations. In 2015, the attendance rate for meetings of the various ­bodies was over 97%, as shown in the following tables:

8 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

ATTENDANCE RECORD FOR DIRECTORS OF SSQ, MUTUAL MANAGEMENT CORPORATION, SSQ LIFE AND SSQ INSURANCE for the year ended December 31, 2015 Executive and Audit and Risk Board of Human Resources Investment Management Ethics Directors Committee Committee Committee Committee Brouillet, Normand** 9 / 9 7 / 7 Chalifoux, Jean-François* 2 / 2 2 / 2 (as of September 21, 2015) Choquette, Claude* 8 / 9 4 / 4 Doré, Chantal* 9 / 9 Dubé, Carolle** 2 / 3 (as of June 11, 2015) Genest, Pierre** 9 / 9 7 / 7 Hamel, René* 7 / 7 5 / 5 (until September 20, 2015) Jomphe, Eddy** 9 / 9 3 / 3 MacDougall, Andrew** 8 / 9 Martineau, Jude* 9 / 9 6 / 6 Morin, Gaétan* 8 / 9 7 / 7 Nadeau, Michel** 9 / 9 7 / 7 4 / 4 Paradis, Denyse** 8 / 9 3 / 3 Paré, Sylvain* 9 / 9 7 / 7 6 / 6 Pélissier, Alain** 7 / 9 Perron, Jean** 8 / 9 Picard, Sylvain** 9 / 9 6 / 6 Ross, Alistair Angus H.* 9 / 9 Turnbull, Norman A.* 8 / 9 4 / 4 6 / 6 Vallée, Émile** 9 / 9 7 / 7 Verreault, Dominique** 6 / 6 2 / 2 (until June 10, 2015) * Director of SSQ Life and SSQ Insurance ** Director of SSQ, Mutual Management Corporation, SSQ Life and SSQ Insurance ATTENDANCE RECORD FOR SSQauto DIRECTORS for the year ended December 31, 2015 Executive and Audit and Risk Board of Human Resources Investment Management Ethics Directors Committee Committee Committee Committee

Chalifoux, Jean-François 2 / 2 (as of September 21, 2015) Genest, Pierre 5 / 5 5 / 5 Hamel, René 3 / 3 (until September 20, 2015) Lachapelle, Josée 5 / 5 1 / 1 Lallemand, Danielle 4 / 5 4 / 4 L’Écuyer, André 5 / 5 4 / 4 Martineau, Lucie 5 / 5 1 / 1 Piché, Bernard 5 / 5 5 / 5 4 / 4 Rochefort, Jacques 5 / 5 5 / 5 Tremblay, Jocelyn 5 / 5 1 / 1 Vachon, Pierre-Maurice 5 / 5 4 / 4

9 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

LEFT: During an outdoor spring Giving back to the community cleaning activity involving The United Way Centraide campaign was in full swing from October 26 to many Company employees, ­November 6, 2015, in our Vancouver, Toronto, Montreal, and Quebec City offices. France Rodrigue developed With 102% of its goal being reached, $286,000 was raised. a special bond with one of the mothers at Mères et monde, In 2015, SSQ Financial Group chose to support Mères et monde, a ­Quebec City the organization sponsored community and residential centre devoted to improving the living conditions of by SSQ as part of the SSQ young mothers ages 16 to 30 and their families through the SSQ Quebec City Quebec City Marathon. Marathon. As a mutualist company, SSQ is inspired every day by mutualist values that make people and social development the central focus of its actions. Its com- RIGHT: The Health 5K of the mitment to Mères et monde offered employees a concrete opportunity for hands- SSQ Quebec City Marathon is on expression of these ­values by taking part in various fundraising activities such always a popular event. The as a denim days, as well as food drives and work bees. We managed to raise way young and the not so young more than we had hoped and were proud to present Mères et monde with over prepare to cross the starting $101,000 on behalf of employees, partners, and participants in the SSQ Quebec line of the annual event. City Health 5K event. SSQ’s employees played a very active role in the 2015 campaign organized by Magasin Partage. Thanks to their generosity and participation in different activi- ties, the objective was met and approximately 9,500 food items were collected and distributed to over 2,000 disadvantaged families in the Quebec City area. Intercooperation Hélène Plante, Corporate Secretary of SSQ Financial Group, continued to work with the team of the Université de Sherbrooke’s Cooperative/Mutual Research and Education Institute (IRECUS) for the 2015 winter term as an instructor in the ­master’s program in cooperative/mutual management and governance. As a guest of IRECUS, I had the pleasure of serving as “prof for a day” in connection with a seminar I gave on corporate governance for MBA students at the Université de Sherbrooke in the spring of 2015 and for executives enrolled in the MBA program at the Université de Sherbrooke’s Longueuil campus in the fall of 2015.

10 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

Promoting mutualism and mutualist values In 1992, a committee of employee volunteers was created by the Board of Direc- tors of SSQ, Mutual Management Corporation and tasked with promoting cooper- ative culture among employees of SSQ’s enterprises, with an emphasis on training and increasing awareness. In 2015, this committee began an in-depth examina- tion of its mission, its role within SSQ, and the importance of mutualist values and principles. After several meetings, the committee updated its mandate to pro­ moting mutualist and cooperative values among employees of SSQ’s enterprises, with an emphasis on an education-based approach. The committee’s objectives include promotion of the mutualist values so vital to SSQ. To help it do this, two researchers from lRECUS take part in the committee’s work and help it increase its own knowledge of mutualism with a view to setting the standard. Designating delegates The formula for delegate designation, which has been ensuring that mutualists from across Canada are represented at the annual meeting since 2006, continues to pay off. The number of designated delegates among the membership rose from 116 in 2007 to 209 in 2015. CQCM (Québec Council on Cooperation and Mutualism) SSQ continues to play an active role in the activities of the CQCM, which seeks to foster Quebec’s social and economic development by promoting the cooperative and mutualist movement, in accordance with the principles and values of the ­International Cooperative Alliance. In Quebec, the mutualist movement is made up of 39 mutual organizations, including SSQ, Mutual Management Corporation. FECM (Foundation for Cooperative and Mutualist Education) As a founding member of Quebec’s FECM, SSQ (via the SSQ Foundation) contrib- utes financially to this organization’s mission: to promote the values and diversity of the cooperative and mutualist formula among young people. SOCODEVI (Society for Cooperation and International Development) SSQ is among the Quebec-based cooperative and mutualist organizations that founded SOCODEVI in 1985 in order to promote and strengthen the cooperative formula as an international sustainable development tool. Through SOCODEVI, SSQ shares its expertise and experience with organizations in developing countries. For instance, it encourages its employees to take part in missions and offer technical assistance. I continue to serve on SOCODEVI’s board and I also chair its Audit and Risk Management Committee.

11 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

SSQ, Mutual Management Corporation’s financial results SSQ, Mutual Management Corporation’s financial results represent a percentage of SSQ Financial Group’s results, in accordance with its ownership stake in the Group. Accumulating over the years, these results constitute member equity. Total revenues for 2015 were $18.8 million, including the proportionate share of SSQ, Life Insurance Company Inc.’s net income, which amounted to $18.7 million. After deducting expenses of $0.1 million and the net surplus attributable to the non-controlling interest of $8.0 million, the net surplus attributable to members was $10.7 million. As at December 31, 2015, members’ equity totalled $121.7 million, up 8.2% from the previous year. SSQ, Mutual Management Corporation is delighted with the ­results obtained by SSQ, Life Insurance Company Inc., particularly considering the steps taken to ensure a fair balance between the members’ rights, the financial stability of the Group’s enterprises, and the shareholders’ reasonable return-on-­ investment expectations. Departure Dominique Verreault left her director’s position in June of 2015. She joined the Board of Directors of SSQ, Mutual Management Corporation on February 27, 2007, and the Board of Directors of SSQ, Life Insurance Company Inc. on Septem- ber 10, 2008, the same date she was also appointed to the Ethics Committee. On January 1, 2012, she began performing similar duties for SSQ Insurance Compa- ny Inc. Speaking on behalf of my colleagues on the boards of directors on which she served, I would like to thank her sincerely for a job well done over her years of unflagging loyalty to SSQ. Newcomers In June 2015, Carolle Dubé, President of the Alliance du personnel professionnel et technique de la santé et des services sociaux (APTS), was made a director on the boards of SSQ, Mutual Management Corporation; SSQ, Life Insurance Company Inc.; SSQ Insurance Company Inc.; and SSQ, Mutual Holding Inc. In his capacity as Chief Executive Officer of SSQ Financial Group, Jean-François Chalifoux has served on the boards of the Group’s three insurance companies and on that of SSQ, Mutual Holding Inc. since joining the Company on September 21, 2015. I am pleased to welcome these two new directors, whose skills and expertise will undoubtedly be of great benefit to SSQ.

12 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

Acknowledgements In concluding, I am deeply grateful to the directors who serve on SSQ’s boards. The high calibre of the boards is largely due to your expertise, knowledge, and experi- ence. I also salute the steadfast commitment to SSQ you demonstrate with your high attendance records and contributions to discussions, among other things. In addition, I would like to thank our customers, insureds and partners, and our 2,000 employees who are truly the lifeblood of the Company. The delegates of SSQ, Mutual Management Corporation are the embodiment of SSQ’s desire to remain faithful to its mutualist roots and keep mutualist values alive in its business management. Thank you for responding to our invitation and participating in the events surrounding your Company’s annual meeting—when you elect your directors, who also form the majority of SSQ Life’s board. They are the guardians of mutualist values and principles.

Pierre Genest Chairman SSQ, Mutual Management Corporation SSQ Financial Group

13 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

CEO’S MESSAGE Last year, we told you that imagination, creativity and audacity had served SSQ well as it navigated its way through its 70-year history and adapted to change. To continue to pursue growth, SSQ must continue to adapt and do so at a faster pace. Nothing can ever be taken for granted: our products, processes and interac- tions must constantly be reassessed, including the ways we communicate with our customers, who are increasingly better informed and more demanding. More than ever before, we want to ensure that their experience is as pleasant and posi- tive as possible each time they reach out to us, whatever their concerns may be or however they wish to make contact. Key financial results and highlights of 2015 SSQ Financial Group posted solid results in 2015. Our insurance business volume rose by 4.7%, a rate of growth that was lower than in past years. SSQ’s operating markets were extremely competitive, resulting in insurance sales that were 4.2% higher than in 2014. Our business retention efforts had a positive impact, thanks in part to our quality customer service. Stringent controls limited insurance expense increases to 3.2%. Interest rates remained very low in 2015. For example, the 30-year Canada bond rate hovered around 2.3% throughout the year. Persistently low rates had a negative impact on our financial results. On the one hand, there was a lower return on our unmatched investment portfolio than expected. On the other, the highly competitive market didn’t really allow us to increase premiums to fully offset these low interest rates, making the profit mar- gin slimmer in the case of long-term guarantee products. It looks like low interest rates are here to stay for a few more years. The most opti­ mistic short-term forecasts call for a 50 basis point increase in the 30-year Canada bond rate in 2016, with the average estimate closer to a 25 basis point rise. The introduction of SSQ’s travel insurance product was not entirely unrelated to the low interest rate situation. It is a relatively short-term guaranteed product, and consequently its pricing is not expected to be interest-rate sensitive. We are monitoring long-term disability insurance results closely. Claim frequency is high for all insurers across the country. This trend, coupled with lower interest rates, had a negative impact on financial results. A scheduled review of the actu- arial assumptions underpinning our group life insurance coverage therefore had a positive effect. SSQ’s profit is up 20%.

14 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

2015 2014 BUSINESS VOLUME – INSURANCE ($M) Group insurance 1,805.8 1,722.9 Individual insurance 142.7 122.6 General insurance 221.8 227.5 TOTAL 2,170.3 2,073.0 SEGREGATED FUND ASSETS – INVESTMENT AND RETIREMENT ($M) Individual 1,697.5 1,505.0 Group 3,072.3 2,864.6 TOTAL 4,769.8 4,369.6 SALES – INSURANCE ($M) Group insurance 161.8 148.6 Individual insurance 29.0 20.7 General insurance 53.3 65.0 Total – Insurance 244.1 234.3 SALES – INVESTMENT AND RETIREMENT ($M) Individual 354.0 264.9 Group 341.3 313.8 Total – Investment and Retirement 695.3 578.7 GRAND TOTAL – SALES 939.4 813.0 ASSETS UNDER MANAGEMENT ($M) General funds • SSQ Life 4,193.9 4,169.0 • SSQ Insurance 1,837.5 1,695.3 • SSQauto 382.1 388.4 Segregated funds 4,769.8 4,369.6 TOTAL 11,183.3 10,622.3 PROFIT ($M) SSQ Life (excluding insurance subsidiaries) 46.1 31.4 SSQ Insurance 17.0 15.5 SSQauto 5.5 11.1 TOTAL 68.6 58.0 Amortization of intangible assets and consolidation elements (3.8) (4.0) Profit 64.8 54.0 RETURN ON EQUITY (%) SSQ Insurance 8.0 8.3 SSQauto 5.2 11.7 SSQ Life consolidated – SSQ Financial Group 9.3 8.5

15 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

The legislation covering fees for services offered by pharmacists to individuals insured under private insurance plans (Bill 28) was ratified. SSQ therefore began in 2015 to reimburse the four new eligible services offered. Those services are: renewing a physician’s prescription, adjusting a physician’s prescription, prescrib- ing a medication when no diagnosis is required and prescribing medication for certain minor conditions if the diagnosis and treatment are known. Insured mem- bers may now submit claims for these new services through their pharmacist in the same way they do for their prescription drugs. Biologic and specialty drugs are putting pressure on group plans and contribut- ing to the increase in claim sharing costs for insurance companies across ­Quebec and the rest of Canada. Costs are also rising for plan promoters. Claim cost ­controls are crucial for reducing impacts. At SSQ, we are concerned about our customers’ ability to pay and have therefore already put controls in place. We believe, however, that the real challenge lies in coming up with claim cost reduc- tion solutions. In March 2015, SSQ completely revamped its critical illness group insurance product. This insurance now covers up to 40 illnesses and features a 14-day sur- vival period for eligibility instead of the usual 30-day requirement. SSQ is the only insurance company in Canada that offers this and also the only one that covers autoimmune diseases. Sales of individual insurance and investment products rose substantially, ­surpassing our expectations. Our general growth is clearly superior to that of the industry as a whole. This is partly due to the success of our universal life insur- ance product introduced at the end of 2014 and to increased distribution of the segregated fund product SÉCURIFONDS. This product is offered exclusively to shareholders of the Fonds de solidarité FTQ and distributed by SSQ Financial Services Firm, the exclusive distributor of SSQ’s individual savings products to FTQ shareholders. Individual insurance and investment sales were particularly impressive outside Quebec, where they now account for approximately 30% of total sales in comparison to last year’s 20%—a remarkable achievement. In conjunction with our transition to the new investment product management system, we have improved our Guaranteed Investment Funds (GIFs) by upgrad- ing guarantees and modernizing the segregated fund line-up. The launch was accompanied by a cross-Canada tour involving close to 1,500 financial security advisors.

16 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

The acquisition of assurancevoyages.ca, a company specializing in the distri- bution of travel insurance products, allowed SSQ to diversify by introducing its first individual travel insurance product and to position itself as an insurer in this ­sector. This product will initially be distributed exclusively by our partner assurancevoyages.ca and will eventually be available through SSQ’s other ­distribution networks. SSQ also took part in a private meeting with industry representatives set up by Finances Québec with a view to tabling a revised Act respecting insurance, which will become the Act respecting insurers. SSQ engaged actively with both the Canadian Life and Health Insurance Association (CLHIA) and the Insurance ­Bureau of Canada (IBC) in formulating the industry’s concerns with regard to this planned revision of the legislation. The A.M. Best credit rating agency once again gave SSQ a financial strength rating of A- (excellent) and an issuer credit rating of a-, both with stable outlooks. In spite of a challenging labour dispute, SSQauto posted good results. What is more, in 2015, we celebrated the renewal of agreements with the Fédération de la santé et des services sociaux (FSSS-CSN) and Université Laval, two partners with whom we have collaborated for 25 years. SSQ also stood out in the media: our executives heightened our Company’s profile both in the industry and at social and charity events. SSQ was vocal on issues ­including the new services offered by pharmacists, the real estate markets in Montreal and Quebec City, and the impacts of the online sale of life insurance and travel insurance, to name but a few.

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11111111111our products, processes and interactions 111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111must constantly be reassessed, including the ways we communicate with our customers, who are increasingly better informed and more demanding. 111111111111111111111111111111111 1111111111111111111111111111111 111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111

11111111111111111111111111111111117 1111111111111111111111111111111 111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

Total drug cost increase trend The past few years have been characterized by increased use of generic drugs, a reduction in their prices, an increase in the number of prescription drugs used, and the emergence of expensive new drugs. The first two have helped cut drug costs, while the latter two have helped raise them. Despite some slackening off, we are still seeing an overall increase in costs. With the aging of the population and greater reliance on medication, the amount of drugs used will clearly rise in the coming years, and this will inevitably drive up costs for insurance companies. The increase may be gradual, but it is undeniable. What is harder to forecast is the average price per drug used. Potential gains stem- ming from greater use of generic drugs and lower generic drug prices will reach a limit, but expensive new drugs, including biologics, are arriving on the scene at an increasingly fast pace.

Embracing the digital transformation and technology investment Group insurance plans must adapt to the reality of small business and SSQ has heard this loud and clear. We have innovated by offering small businesses a group insurance product that is competitive, comprehensive and adapted to today’s needs. SSQ SMEs offers a solution that is easy to manage and 100% online throughout the entire process. A number of steps were taken to ensure this plan’s sustainability, including generic drug substitution and regular drug list use. Following the overhaul of the ssq.ca website, SSQauto was incorporated with the SSQ Financial Group site. In addition to offering a rewarding and unique user ­experience, all of the Group’s online products are now adapted to a variety of mobile­ platforms. We have also upgraded our online services and mobile applications. Group insurance customers can already consult their files, submit health insurance claims, and receive reimbursements electronically in less than 48 hours. We also offer general insurance customers a mobile application allowing them to submit an insurance claim, file a joint report and prepare a property inventory. In 2015, a new web ­portal was introduced to allow glaziers to manage broken glass claim files without ­having to contact SSQ beforehand, speeding up claim processing. True to today’s world, we are continuing to invest in technology infrastructure to better serve our partners and customers. An advanced investment product management system was delivered in 2015. In individual insurance, we finished a digitization project designed to favour the transition to a paperless work environ- ment and process optimization. We also successfully completed a revision of our general insurance systems. SSQ now has one of the most modern technology platforms in the industry, permitting it to continue to innovate and provide stand- out products and customer service.

18 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

SSQ Tower The construction of the SSQ Tower, a building with A stone’s throw from the Jacques-Cartier bridge, in the heart of bustling Place a distinctive architectural Charles-Le Moyne in Longueuil, SSQ Financial Group is finalizing construction on style, will be completed in the prestigious SSQ Tower, which welcomed its first tenant at the beginning of 2016. 2016. It will accommodate The building features direct access to public transit with rapid connections to all of SSQ Financial Group’s downtown Montreal as well as neighbouring communities on the South Shore. A employees working in the nearby bike path network and easy access to main roads make the SSQ Tower greater Montreal area. location extremely convenient. LEED® certification is also in the works. With its impressive architecture, the building’s 250,000 sq. ft. include a huge 35,000 sq. ft. promenade filled with shops and restaurants on the ground and second floors, and quality, light-filled office space on the floors above. In 2016, all SSQ Financial Group employees in the greater Montreal area will be housed in one place.

19 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

Sustainable Development and Societal Responsibility The third phase of SSQ’s Sustainable Development and Societal Responsibility plan was carried out in 2015. Here are some of the results: • SSQ received the Coup de cœur prize in the major donors category from the Centraide Québec and Chaudière-Appalaches chapter of United Way Centraide during an awards ceremony. SSQ also received a Maestria special mention for its high participation rate. Our contribution to the campaign was up 6%. • SSQ Financial Group contributed $101,091 to Mères et monde in conjunction with the SSQ Quebec City Marathon and $206,423 to the fundraising campaign organized by the Quebec City Fondation du CHU. • For the next three years, SSQ will officially host the newMarathon SSQ de Longueuil each May. • For a sixth year, SSQ joined forces with the Fondation des pompiers du Québec pour les grands brûlés during its annual Agir à grande échelle campaign to help burn victims. This is a major fundraiser for medical research and burn victim assistance. • SSQ created an environment committee of employees proposing activities ­designed to reduce the Company’s environmental footprint. What is more, ­energy efficiency for SSQ Place in Toronto rose 18%, resulting in a 15% decrease in energy costs. At SSQ 2525 in Quebec City, water consumption fell 5%. • SSQ continues to develop digital products and we now have over a dozen apps on offer for our customers and partners. For example, we have added cancer insurance to our line-up of 100% online products. Also, on the group ­insurance front, we now offer SSQ SMEs, a solution geared towards small ­business. We have noted a 42% increase in downloads of the claim app and a 122% increase in its use.

20 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

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Some 30 children who took part in Pignon Bleu’s homework aid program were compensated for their effort thanks to SSQ and its social club. The youngsters enjoyed a Christmas 11111111111activity at the Galeries de la Capitale shopping centre in 111111111111111111111111111111111 Quebec City. Pignon Bleu1111111111111111111111111111111111111111111111111111111111111111111111 is a multiservice community organization in Quebec City. In 2015, our employees rallied for numerous causes, such as the SickKids Foundation in Toronto, by forming a volleyball team; they crafted cozy hats and scarves and other comforting items and handed out Easter chocolate to hospitalized children, in cooperation with the Fondation CHU Sainte-Justine in Montreal; and they participated in the Terry Fox Run for the Canadian Cancer Society.

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111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111 111111111111111 111 111111111111111 1111111111111111111111111111111111111111 11111111111111111111111 1111111 1111111111111 111 1111111111 1111111111111111111111 1111111111111111111111111 1111111111111111 1 111 11111 1 1 1 1 1111 11111111111111 11111111111 1111111111111 1111111111 111111111111111111111111 111111111111111111 1111 Business synergies will fuel the 11111111111111111 1 11111 1 1111111111111111 1111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 Group’s growth and operational 11111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111 gains will improve its performance. 1 11111111111111111111111111111111111111111111111111111111 111 1111111111111111111111111111111111 1111111111111111 111111111111111111111111111111111111111111111 1 11111111111 11111111111111111111111 11111111111111111111111111111111111111111111 11111 1111111111111111111 11111111111111111111 More than ever, SSQ must act 11111111111111111111111111111 11111111111111111111111 1111111 11111 1111111111111111111111111111111 11111111111111111111111111111111111 111111111111111111111111111111 1111111111111111111111111111111 as a single entity and one group. 11111111111111111111111111111111111111111111111111 1111111111 1111111111111111111111111111111 111111111111111111111111111111 1111111111111111111111111111 1111111 1111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111 11111111 1111111111111111111111111111111111 1111111111111111111111111111111111 11111111111111111111111111111111 1111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111 1 111111111111111111111 1111111 1111111111111111 111111111111111111111 1111 11111 1111111111111111111111111 1111111111111111 11111111111111111111 111111 1111 1 1 11111111111111111111111 1 1 1 1111111 1111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111 11111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111 1 1111111 111 1 111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 One customer, one experience, one entity 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111 As with last year, in the short term SSQ will have to deal with low interest rates 1111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111 without taking on undue risks. Addressing group insurance and automobile insur- 111111111111111111 1 1 111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111 1 1 1 1 1 11111111111 1 111111111111111111111111111111111111111111111111111111111111 ance experience remains a priority. Despite many factors in favour of premium 11111111111111111111 1 111111111111111CREATING1 1 11111111111111111111111111111111111111111111111111111111111 increases in several sectors, the markets remain extremely competitive. Stringent 11111111111111111111 1 11111111111111111 11111111111111111111111111111111111111111111111111111111111 cost controls and ongoing efforts to improve performance will be essential. 11111111111111111111111111 1111111111111 1111111111111111111111111111111111111111111111111111111111 11111111111111111111 111111111111111111 111111111111111111111111111111111111111111111111111111111 Business synergies will fuel the Group’s growth and operational gains will improve 1111111111111111111 111111111111111111111 1 1 1 1 11111111111111111111111111111111111111111111111111 its performance. More than ever, SSQ must act as a single entity and one group. 1111111111 1 1 11111111111111111111111111 1 111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111 1 1 111111111111111111111111111111111111111111111111111111111 The International Financial Reporting Standards IFRS 9—Financial Instruments, 111111111111111 111111111111111 111 111111111111111111111111111111111111111111111111111111111 and IFRS 4—Insurance Contracts are in the process of being changed. At the same 11111111111111111111111111111111111 1111 111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111 11111 111111111111111111111111111111111111111111111111111111111OUR time, the Autorité des marchés financiers is revising the Life Insurance Capital 111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111 Framework governing solvency ratio calculation. In the medium term, the Group 111111111111111111111111111111111 1 11111111111111111111111111111111111111111111111111111111 will therefore have to cope with major revisions and, more importantly, coordinate 1111111111111111111111111111111111111111 1 11111111111111111111111111111111111111111111111111111111 timetables to accommodate these changes where actuarial valuation systems, 111111111111111111111111111111111111111 1 11111111111111111111111111111111111111111111111111111111 financial information systems and investment management are concerned. 1111111111111111111111111111111111111111111 1 11111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111 1 11111111111111111111111111111111111111111111111111111111 These changes will require a great deal of time and effort. SSQ is playing an active 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 role in industry representations on these issues to the relevant authorities. In the 111111111111111111111111111111111111111111111111111111111111111111111OWN1111111111111111111111111111111 longer term, the industry will have to address a number of daunting concerns, with 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 climate change foremost among them. While it’s tempting to think that only the 11111111111111111111111111 11111111111111111 1 11111111111111111111111111 111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111 general insurance sector will be affected by climate change, in the long term life 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 expectancy and health will be as well. 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111SYNERGY 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 22 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT1 111111111111111111111111 111111111111 11111 111111111111 1 1111111 111 1 1111111111111111111111 1 111111111111111111 1111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111 1 11111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111 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11111111111111 11111111111 1111111111111 1111111111 111111111111111111111111 111111111111111111 1111 11111111111111111 1 11111 1 1111111111111111 1111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111 1 11111111111111111111111111111111111111111111111111111111 111 1111111111111111111111111111111111 1111111111111111 111111111111111111111111111111111111111111111 1 11111111111 11111111111111111111111 11111111111111111111111111111111111111111111 11111 1111111111111111111 11111111111111111111 11111111111111111111111111111 11111111111111111111111 1111111 11111 1111111111111111111111111111111 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11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111 11111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111 1 1111111 111 1 111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111 1 1 111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111 1 1 1 1 1 11111111111 1 111111111111111111111111111111111111111111111111111111111111 11111111111111111111 1 111111111111111CREATING1 1 11111111111111111111111111111111111111111111111111111111111 11111111111111111111 1 11111111111111111 11111111111111111111111111111111111111111111111111111111111 11111111111111111111111111 1111111111111 1111111111111111111111111111111111111111111111111111111111 11111111111111111111 111111111111111111 111111111111111111111111111111111111111111111111111111111 1111111111111111111 111111111111111111111 1 1 1 1 11111111111111111111111111111111111111111111111111 1111111111 1 1 11111111111111111111111111 1 111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111 1 1 111111111111111111111111111111111111111111111111111111111 111111111111111 111111111111111 111 111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111 1111 111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111 11111 111111111111111111111111111111111111111111111111111111111OUR 111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111 1 11111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111 1 11111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111 1 11111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111 1 11111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111 1 11111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111OWN1111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111 11111111111111111 1 11111111111111111111111111 111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111SYNERGY 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111123 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

Customers’ needs and habits are also constantly changing. Rapidly evolving new technologies are creating havoc for many industries. The customer experience is changing radically and will continue to do so. SSQ must commit itself to and engage in promoting a multichannel approach to the customer journey. We will have to identify the drivers and motives of customer engagement. We are already speaking more in terms of customer engagement than customer experience. The customer experience is grounded in emotion while customer engagement is grounded in action. This engagement includes both customer interaction and SSQ interaction, and covers all the steps of the customer journey. Customer engagement needs to be a strategic priority for SSQ: its optimization will enable us to go beyond managing the experience itself and invest in a longer-term relationship. At SSQ, the customer is everything. The insurance industry is therefore facing major changes and new realities that give cause for concern. The industry is still too deeply rooted in tradition and is in dire need of a substantial transformation if it is to continue to grow. It must com- mand new ways of doing things and court new generations who identify them- selves differently—new generations that intrigue insurers but confound actuaries. The winds of change are already sweeping through the industry in the United States and Canada will not be spared. Amazon and eBay have entered the general insurance arena, and Facebook and Apple have announced their intention of ­becoming major players in the financial services industry. Many of these heavy- weights have already arrived in Canada, and they are kindling strong emotions and shaking up the status quo. The Canadian insurance and financial services industry must react quickly. The challenge is two-fold: evolving in step with our established customer bases and reinventing ourselves so that we can attract emerging customer bases. SSQ ­Financial Group is ready to take up this challenge as one group. I am confident that our size will allow us to embrace the digital transformation and “go digital” faster than the rest, not simply by altering current business mod- els, but by reinventing ourselves. I am confident that we will be able to develop a degree of agility that has been absent from our industry so far and that will drive us and set us apart in years to come. I am confident that SSQ will be able to adapt. We will do everything in our power to do so. I am confident that we will be able to act as one group at the service of our cus- tomers.

24 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

Acknowledgements In closing, I would like to thank our members, customers and partners for placing their trust in us and for having faith in our ability to adapt. Our board members have guided and supported SSQ as it has evolved over the years. They have helped us to anticipate and embrace change. I am grateful that they encourage us to keep making changes, thereby securing SSQ’s future. I would also like to thank all our employees across Canada, who continue, year after year, to seek out change and make it happen.

Jean-François Chalifoux Chief Executive Officer

25 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 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111111111111111111111111111111111111111111111111111111 111111 1111111111111 111111111111111111 1111111111111 11111111111111111111111111111111111111111111111111 111 11111111 111 11111111 111111111111 11111111111 11111111 11111111111111111111111111111111111111111111111 1 111111 11111111111 11111 1111111111 11111 11111111111 111111111111111111111111111111111111111111111111111 11111111111111111111 11111 111111 11111 111111111111111 11111 11111111111111111111111111111111111111111111 111 111 1 11111 1 11111 1 111 1111 1111 1111 1111111111111111111 1111 1111111111111111111111111111111111111111111 1 1 1111 1 11111 1 11111 1 1111 1111111111 11111111111111111111 1 1111111111111111111111111111111111111111111111 1 1 1 1 11111 1 11111 1 1111 1 1 1 1111 1 1 1111111111111111111111 1 1 1 1111 111111111111111111111111111111111111111111 1 1 1 1 1 11111 1 111 1 1 1 111 1 1 1 1 1111 1111 1111111111 1 1 1 1 1 111111 1 1 111111111111111111111111111111111111111111111 1 111 1111 1 1 1 111 1 1 1111 111 1 1111 11111111111 11111111111111 11111111111111111111111111111111111111111111111 1 1 1 1 11111 1 1 1 1 1 1 1 111111111111 111111111 111111111111 111 111111111111111111111111111111111111111111111111 1 1 111 1 1 1111 1 1 1111 1 1 1111 1 1111 11111111 111111111111111 1111 111111111111111111111111111111111111111111111 1 1 111 1 1 1111 1 1 1111 1 1 1111 1 1111 1 111 1111 11111111 1 11111 11111 111111111111111111111111111111111111111111111 1 1 111 1 1 1 1 111 1 1 1 1 1 1 1 1 1 1 1 1111 1 1 1111111 1111 1 1 1 1 11111 11111 1111 111111111111111111111111111111111111111111 111 1 11111 1 11111 1 11111 1 1111 1111 1111 1 1 1 1 1 11111111 1111111111 1111111111111111111111111111111111111111111 1111 1 1 1 11111 1 11111 1 1 1 1111 1111111111 1111 1 111 1 1 1111111 111111111111111111111111111111111111111111111111 1 11111 1 1 111 1 1 1 111 1 1 11111 11111111 11111 1111111111111 1 1111 111111111111111111111111111111111111111111111 1 1 1111111 1 1 1 1 1 1 1 1111111 1111111111 111111 1 1111111 1 111111 1111111111111111111111111111111111111111111111 1111 11111111111111111 11111111111111 11111111111111111 111111111111111111111111111111111111111111111111 1111111 1 111111111 1 11111111111111111111 1 111111111 1 111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111THE POWER 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111 1 1 1 1 1 1 111111111111111111111111 1 1 1111 1 1 1111111111111111111111111111111111111 111111111111111111111 11111111111111 11111111111111111 11111111111111 1111111111111111111111111111111111 111111111111111111 1 11111111 1 1 1 1111111 111111111111 1111111 1 1111 1 1111111 1111111111111111111111111111111 11111111111111111 11111 111111111111 11111 111111111 1111 1 111111111111 11111 111111111111111111111111111111 1111111111111111 1111 1111111111111111 1111 111111 11111 1111111111111111 111111111111111111111111111111111 111111111111111 1111111111111111111111 1111 11111111 11111111 1 1 1 111111111 111 1111111111111111111111111111 1111111111111 1 111 111111111 1 1 1 111111111 111 1OF111 111 11111111 1111 1ONE111111111 111 111111111111111111111111111 11111111111111111 1111111 1 111111 1 1111111 1111 1 1111 1111111111111 111111111 1111 11111111111111111111111111 1111111111111 111 111111 11111111111 1111111 111 1 111 11111111111 1 1 11111111111 111 11111111111111111111111111 1111111111111 111 111111111 1 1 1 1 1 1111 111111 111 1 111 111111 11111111111 1111111 111 11111111111111111111111111 1111111111111 111 11111 1111 1 1 1 1 1 1 1 11111111 111 1 111 111111111111111111 111111 111 11111111111111111111111111 1111111111111 111 11111 11111 1 1 1 11111111111 1111111 11111 111 1111111 111 111111 111 11111111111111111111111111 1111111111111 111111111 111111111 1 11111111111111111111 111 1111111 1 1 1 11111 1111 11111111111111111111111111 11111111111111 111 1111111 1 111111111 11111 111 111 111 1111 111 1111111 1 1 1 11111 111 111111111111111111111111111 11111111111111 1111 111111111 1 1 1 11111 111 11111111111 111 111 1111111 1 1 1 1111 1111111111111111111111111111111 111111111111111 1111 1 1 111111 1 1 111111 1 1 111111111 111111111 1111111 1 1 1 1 1 111111111111111111111111111111111 1111111111111111 111111111 1 1 1 1 1111111111111111111 1111111 1111111 1 1 1 1 1111 111111111111111111111111111111 111111111111111111 111111111 1 1 1 1 1111111 11111111111 1111111 11111 11111111 1111111111111111111111111111111 11111111111111111111 1111111111111111 111111111111111 1 11111111111111 1 111111111111111111111111111111111 11111111111111111111111 1 1 111111 1 1 1111111111111111111111 11111111 1111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

2015 SUSTAINABLE DEVELOPMENT AND SOCIETAL RESPONSIBILITY

111111111111 111111111111111111111111111111111 1111111111111111111111111111111REPORT 111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111

The third stage of the sustainable development and societal responsibility (SDSR) plan was reached in 2015. The actions taken gave results that were more than satisfactory. We are proud to report that the 5-year plan is 85% completed. Summary: • 15 actions implemented • 43 gestures taken to reach our objectives • 52 indicators for the gestures taken; 44 of which have been completed and 8 are in progress Plan status: Our responsibility is for this plan to stay on course so that SSQ continues to meet the challenges ahead on the social/human as well as economic/environmental scale to help build a better future. 85%

27 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

1111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111 1111111111111111

11111111111111111111111111111111111111111111111111111111111111111 111111111111 PARTNERSHIPS AND EMPLOYEE111111111111 INVOLVEMENT 111111111111 1111111111111111111111111111111111111111111111111111111111111111111111 111111111111 111111111111111111111111111111111 111111111111 1111111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 $101,091 111111111111 111111111111 Amount raised through the 111111111111 SSQ Quebec City Marathon 111111111111 111111111111 and donated to Mères et 111111111111 monde community centre 111111111111 111111111111 and residence

11111111111111111111111111111111111111111111111111111111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 +6% 111111111111 A remarkable 6% increase SSQ becomes title sponsor of this in contributions to United Way new sports event in collaboration Centraide with the city of Longueuil

28 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

INNOVATION 1111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111 1111111111111111

The launch of SSQ’s program 1111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111 for SMEs, an eco-friendly 1111111111111111 and 100% paperless group insurance product, addressing the specific insurance needs of small businesses

122% increase New In online group insurance claims portal for glaziers 11111111111111111111111111111111111111111111111111111111111111111New portal for automated 111111111111 111111111111 processing of some 10,000 111111111111 broken windshield claims 111111111111 111111111111 every year. This program 111111111111 Cancer insurance is complementary to our 111111111111 mobile and online service 111111111111 The launch of cancer insurance, an individual 111111111111 insurance product sold 100% online offer to insured members 111111111111 and intermediaries 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 29 111111111111 111111111111

11111111111111111111111111111111111111111111111111111111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

1111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111 1111111111111111

INNOVATION 1111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111 1111111111111111 42% increase In downloads of the app for group insurance claims

11111111111111111111111111111111111111111111111111111111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 One single 111111111111 111111111111 100% 111111111111 website for the 111111111111 100% of requests for donations 111111111111 111111111111 and sponsorships are now 111111111111 submitted online entire Group 111111111111 111111111111 Integration of ssqauto.com with ssq.ca 111111111111 111111111111 111111111111 111111111111 111111111111

11111111111111111111111111111111111111111111111111111111111111111 111111111111 111111111111 111111111111 111111111111 30 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

11111111111111111111111111111111111111111111111111111111111111111 111111111111 111111111111 111111111111 111111111111 AWARDS AND CERTIFICATIONS111111111111 111111111111 1111111111111111111111111111111111111111111111111111111111111111111111 111111111111 111111111111111111111111111111111 111111111111 1111111111111111 111111111111 111111111111 111111111111 111111111111 111111111111Active 111111111111 111111111111 111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111Enterprise 111111111111111111111111111111111111111111111 1111111111111111 111111111111SSQ obtained the Active Enterprise certification – reflection of the significant employee participation in the SSQ Quebec City Marathon

11111111111111111111111111111111111111111111111111111111111111111 111111111111 111111111111 111111111111 Employer Healthy 111111111111 111111111111 111111111111 of the month Enterprise – Elite 111111111111 111111111111 111111111111 Healthy Enterprise – Elite re-certification 111111111111 on Jobboom 111111111111 111111111111 Presentation of SSQ, its corporate 111111111111 111111111111 structure, values and working 111111111111 environment: a nice way to 111111111111 111111111111 attract potential candidates 111111111111 111111111111

31 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

1111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111 1111111111111111

ENVIRONMENT 1111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111 1111111111111111 Energy efficiency 18% improvement in energy efficiency at SSQ Place in Toronto, lowering energy costs by 15%

Drinking water 5% reduction in drinking water consumption at SSQ 2525 and SSQ 2505 in Quebec City 1,000 trees 11111111111111111111111111111111111111111111111111111111111111111 111111111111 111111111111 Nearly 1,000 trees planted 111111111111 since 2009 to offset greenhouse 111111111111 Environment gases generated by the 111111111111 111111111111 annual meeting 111111111111 committee 111111111111 111111111111 111111111111 Creation of an environment committee 111111111111 made up of employees, to propose activities 111111111111 111111111111 aimed at reducing the Company’s 111111111111 environmental footprint 111111111111 111111111111 111111111111 111111111111 111111111111 32

11111111111111111111111111111111111111111111111111111111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 111111111111 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

HUMAN COMMITMENT 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111 11111111111111111111 ACTION 1 – Offer an accessible and high-quality customer experience Gestures Indicators 2015 Report

1. Conduct the necessary • Surveys measuring • Nearly 90% of insured members are surveys to measure the satisfaction of satisfied or totally satisfied with the member and customer our insured members, overall claim experience at SSQauto satisfaction rates with our customers and partners • In progress in the other sectors products and services

• Goals of excellence • In progress by business sector

2. Develop and maintain • Training new employees • Leverage management, development and specific training programs within six months training projects through the consolidation for employees who work of all training activities in the group for different customer insurance sector service departments • Tools for the management of training at SSQ requests and measurability of operations • Grouping trainers under the Centre for training expertise and operational information

3. Expand our mobile • Feasibility study detailing • New version of the group insurance mobile and online services the online needs to add app released in May integrating online to the overall offering claims with several other services for plan members

• Surveys to determine • Survey available at ssq.ca additional needs for online services

Status: Completed In progress

33 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

ACTION 1 – Offer an accessible and high-quality customer experience (cont’d) Gestures Indicators 2015 Report

3. Expand our mobile • Services with low • Product pamphlets for Privilege group and online services environmental impact insurance have been compiled: from (cont’d) 17 different documents into only 4 • Return envelopes no longer sent to Privilege insureds • Paper copies of client investment statements no longer sent to financial advisors. These are now accessible online • Paperless processing of 100% of auto and home claims • SSQauto receives invoices in e-format

• New mobile and online • Online claims integrated with group services insurance mobile app, allowing insureds to submit their claims via smartphones and obtain reimbursement in less than 48 hours • New innovative initiatives at SSQauto, such as the portal for glaziers to process some 10,000 broken windshield claims every year • Sustained presence for SSQauto customers through several communication channels

4. Promote the use of our • Increased use of online • 50% of group insurance members online services among services registered for the transactional website, our insured members and nearly 40% enjoy reimbursement by direct deposit, an increase of 30% • The new Health InSight newsletter was launched providing information and news in healthcare, and emailed to 276,000 insureds and partners in group insurance

Status: Completed In progress

34 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

ACTION 1 – Offer an accessible and high-quality customer experience (cont’d) Gestures Indicators 2015 Report

4. Promote the use of our • Identification of the • Objectives defined for group insurance online services among objectives of online • Objectives in development for individual our insured members services by business insurance and investment (cont’d) sector • Objectives defined for SSQauto

5. Promote the efficiency • Increased use of SSQ • Promotion of 48-hr reimbursement and speed of SSQ Mobile Mobile Services • 122% increase in online claims Services for submitting • 42% increase in downloads over last year claims

ACTION 2 – Encourage employees to become agents of change in sustainable development Gestures Indicators 2015 Report

1. Make employees • Activities to make • Environment committee of SSQ employees aware of sustainable employees aware of implemented. Its goal is to develop development principles the SDSR principles initiatives to reduce the Company’s environmental footprint • Several activities completed as part of the environment week in June, which included the publication of a capsule on sustainable development and implementation of awareness activities • The Group’s SDSR plan presented to all new employees

2. Build a shared company • Internal SDSR communi­ • Communication plan released to vision through a communi­ cations plan and employee 27 SDSR committee members from cations platform dedicated mobilization activities the various sectors to attracting and retaining • Publication of annual results to all employees employees

Status: Completed In progress

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ACTION 3 – Maintain a high level of employee expertise Gestures Indicators 2015 Report

1. Encourage employees • Budget percentage • Percentage of SSQ Financial Group’s to develop skills that help allocated to employee payroll maintained at 2.8% them reach their potential training and meet the needs of our customers

2. Set up a leadership • Training and professional • Group leadership training taken by two training and professional development programs cohorts of new managers through LEAD, development program a program for management staff for managers development • Leader of influence module launched in the fall of 2015. This is a training program for vice-presidents and senior directors • Budget for individual employee training maintained

3. Develop an internal • Internal communications • Policy implemented and communicated communications policy policy to all new employees that encourages dialogue between management and employees

4. Coach employees in • Change management • Services offered by the Centre of expertise change management support in change management to key stakeholders involved in SSQ’s transformation projects • Training workshops on leadership in change offered to managers • Positioning the notion of change manage­ ment in project portfolio management

Status: Completed In progress

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ACTION 4 – Take sustainable development principles into account when managing human capital and offer an engaging work environment Gestures Indicators 2015 Report

1. Examine the results of the • Integration of SDSR • Compiling health and wellness data for all different organizational principles with company of SSQ Financial Group in the spring and surveys and sustainable business practises fall of 2015 for the HealthWise program development principles • SSQ Years of Service Award program in programs related launched. This is a new activity recognizing to human resources to employees celebrating a multiple of offer an engaging work 5 years of service environment and become • As part of human resources week, the an employer of choice Close-up on Recognition activity invites that consistently employees to nominate a colleague using promotes equality and a selfie employee diversity • Requalification for the Healthy Enterprise – Elite certification in the fall of 2015

2. Promote health and • Health promotion and • Maintenance of diversified health support employees employee support activities programs and initiatives: HealthWise, MobilizAction, Employee Assistance Program (EAP), Recognition Time, and My Career Path portal • The HealthWise program implemented throughout the Company • Active enterprise certificate obtained as part of the 2015 SSQ Quebec City Marathon thanks to large employee participation in various marathon events • Participation in the fundraiser for Les Diabétiques de Québec, helped us raise the sum of $51,190 and hold two diabetes awareness and screening clinics in the workplace

Status: Completed In progress

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SOCIAL COMMITMENT 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111 11111111111111111111 ACTION 5 – Offer products and services that promote responsible behaviours Gestures Indicators 2015 Report

1. Promote online claims • User rates of online • Access to online claims for all Privilege to insureds services individual insurance holders and all group insurance members • Online claims submitted by insured members up by 122% • Promotional campaigns for the reimbursement by direct deposit on the transactional website and with targeted groups in group insurance, in order to increase registrations for this service • Nearly 40% of members using direct deposit for their claim reimbursements

2. Incite and encourage • Adherence to • In damage insurance, promotion of the consumers to adopt environmentally Kilo Program and green discounts in environmentally friendly responsible products marketing activities and ssq.ca website behaviours • Customer service agents promote the importance of accurately estimating mileage in order to save and reduce the environmental footprint

3. Increase the quantity • Development of new • Online sale of Cancer Insurance, of environmentally environmentally an individual insurance product responsible products responsible products • Development of new SSQ travel we offer insurance product distributed by the assurancevoyages.ca subsidiary • Launch of SSQ PMEs, an eco-responsible product that is 100% online, responding to specific group insurance needs in small businesses • Growing use of emails over regular mail in auto insurance • Promotion of a defensive driving course with a discount for SSQauto insurance customers

Status: Completed In progress

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ACTION 6 – Integrate environmentally responsible criteria into policies for donations and institutional sponsorships Gestures Indicators 2015 Report

1. Build on policies • Integration of SDSR in • Sustainable development criteria being for donations and the policies for donations integrated into policies since 2013 institutional sponsorships and sponsorships that take the sustainable development efforts of • Promotion of our commit­ • New partnership agreement between applicants into account ments in the community SSQ Financial Group, the city of Longueuil and the promoter Courses Thématiques for the SSQ Longueuil Marathon (Marathon SSQ de Longueuil), the first edition of which will be held in May 2016 • Important fundraising activity of the SSQ Quebec City Marathon raised a total of $101,091 for Mères et monde, a community centre and residence for young single mothers ages 16 to 30

2. Encourage employees • Measures to encourage • Large employee participation in the SSQ to volunteer in order to employee volunteer work Quebec City Marathon and fundraising help communities flourish activities for Mères et monde, such as spring clean-up and furniture collection • Continuation of activities supporting SSQauto’s partnership with Fondation des pompiers du Québec pour les grands brûlés • Increase in employee contributions to the United Way Centraide campaign • Agreement concluded to donate any food surplus from company holiday parties to local charities • Collection of Easter chocolate for the children of Mères et monde and CHU Sainte-Justine • Hats, socks, mittens, stuffed animals, made by employees for CHU Sainte-Justine children • Creation of teams of employees for the Longueuil Relay for Life event and the Urban Duathlon for the Fondation CHU Sainte-Justine

Status: Completed In progress

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ACTION 6 – Integrate environmentally responsible criteria into policies for donations and institutional sponsorships (cont’d) Gestures Indicators 2015 Report

2. Encourage employees • Promotion of the Corporate • Presentation of the Corporate Donations to volunteer in order to Donations Policy and the Policy and the directive on supporting help communities flourish directive on supporting the volunteer work to all new employees (cont’d) the volunteer work done by employees

3. Invest a portion of our • Percentage of net gains • 1% of net benefits donated to organizations net income in donations is invested in donations such as the Fondation de la Maison Michel- Sarrazin, Fondation du CHU Sainte-Justine, Monique-Fitz-Back Foundation, SickKids Foundation of Toronto, United Way Centraide, and Fondation OLO to name just a few

ACTION 7 – Give back to the community through the SSQ Foundation Gesture Indicator 2015 Report

1. Maintain support for • Percentage • 100% of requests for donations and the SSQ Foundation of the capitalization sponsorships now submitted online of SSQ Foundation • 35% increase in the capitalization of SSQ Foundation

Status: Completed In progress

40 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

ACTION 8 – Invest in the next generation Gestures Indicators 2015 Report

1. Support the establish­ • Establishment of a • Every year a group of young cooperators ment of a youth co-op youth co-op every year age 11 to 14 take part in the SSQ Youth with the children Co-op (CJSSQ). Two university students of employees are hired to accompany the youngsters in their educational and entrepreneurial venture

2. Consolidate succession • Succession planning • SSQ Succession Plan completed planning to ensure and presented to all managers the lasting success • 36 training sessions given by more of operations than 250 managers

3. Promote the SSQ • Promotion of the SSQ • SSQ chosen by Jobboom as Employer employer brand as employer brand of the month in June employer of choice • Presentation of “Best practises in workplace health and wellness: the case of SSQ Financial Group” at the 2015 Management and HR Conference, which profiled the success of the HealthWise program • Networking events organized in collaboration with several colleges and CEGEPs in the Quebec City and Montreal areas offering damage insurance programs

Status: Completed In progress

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ENVIRONMENTAL COMMITMENT 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111 11111111111111111111 ACTION 9 – Apply social and environmental considerations when acquiring goods and services Gestures Indicators 2015 Report

1. Apply a policy on • Policy for responsible • SDSR criteria added to calls for tender responsible goods acquisition of goods for the selection of responsible suppliers and services acquisition and services • Agreement concluded with a Quebec and a directive on coffee supplier, recuperating 100% calls for tenders and of coffee grinds responsible contracting

2. Efficiently dispose • 3R-D internal management • Certification obtained for installation of residual materials plan for residual materials of nearly 3,000 square metres of carpet according to the 3R-D certified 100% carbon neutral at SSQ 2515 that make up the first in Quebec City and old carpet recycled principle of the Quebec • HERE WE RECYCLE! certification for Residual Materials SSQ 2515 Management Policy: • 100% of paper shredded and recycled Reduction at the source, Reuse, Recycling • 95% increase in computer equipment and Disposal donations to Signes d’espoir, a community- based organization that assists the deaf

ACTION 10 – Reduce our greenhouse gas emissions Gestures Indicators 2015 Report

1. Create an inventory of • Inventory and definition • In development greenhouse gases (GHGs) of greenhouse gas (GHG) produced every year reduction objectives

2. Promote alternative • Promotion of public • 50% of the cost of public transport means of transportation transport and carpooling passes paid by employer: more than to driving alone 400 employees enrolled in the public transportation program (L’abonne BUS) • Incentive program developed to encourage use of public transport with a transportation allowance

Status: Completed In progress

42 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

ACTION 10 – Reduce our greenhouse gas emissions (cont’d) Gestures Indicators 2015 Report

3. Include a wider selection • Environmental • Improved performance of the automobile

of environmentally performance of the fleet by reduction of CO2 emissions friendly vehicles in automobile fleet • Incentives on purchases of green cars SSQ’s automobile fleet for the automobile fleet

4. Hold carbon-neutral • Carbon footprint of • Annually planting of hundreds of trees annual meetings (AM) the annual meeting on behalf of SSQ Financial Group in Peru and in Quebec to offset greenhouse gas emissions related to our annual meeting and to support reforestation efforts and fight climate change. Since 2009, nearly 1,000 trees have been planted with close to a 97% survival rate

ACTION 11 – Reduce our paper consumption Gestures Indicators 2015 Report

1. Encourage group • Intermediary registration • Registration for direct deposit by more insurance intermediaries rates for direct deposit than 50% of intermediaries to register for online • Development of payment by direct services deposit for a number of healthcare professionals

• Usage rate of e-billing • Usage of e-billing by more than 95% of group insurance groups

2. Implement a new • Measuring reduction • Support of initiatives to reduce paper employee awareness in the use of photocopiers use in various sectors of the Company program to reduce the and printers • Total elimination of administrative use of photocopies report printing

Status: Completed In progress

43 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

ACTION 11 – Reduce our paper consumption (cont’d) Gestures Indicators 2015 Report

3. Replace the My insurance • Production and • A summary of the booklet is now given at a glance booklet distribu­tion of an abridged to insureds, resulting in an annual 80% distributed to group version online reduction in paper use, the equivalent insurance members of 2.4 million pages with an abridged version and an online version

4. Promote printing on • Percentage of printers • Two-sided printing programmed both sides as a standard capable of printing on by default on 100% of all printers for all documents both sides

5. Ensure our Copy Centre • FSC® certification of the • Purchase of FSC® Mix paper, from maintains its FSC® Copy Centre and a policy controlled sources certification on paper supply

ACTION 12 – Reduce our water and energy consumption Gestures Indicators 2015 Report

1. Obtain BOMA BESt® • BOMA BESt® certification • In progress certification for all SSQ-owned buildings • Objective to reduce • SSQ Place: upgrade on the electromechan­ to improve their water and energy use ical systems completed, improving energy performance and efficiency by 18%. Increasing level of their environmental comfort for occupants while cutting management energy costs by 15% • SSQ 2525 and SSQ 2505: 5% reduction in consumption of drinking water annually, compared to average consumption rates • SSQ 2525 – Laurentian tower: work completed on the electromechanical systems, generating energy savings of more than 6%

2. Obtain LEED® • LEED® certification • Aiming for LEED® certification for SSQ certification for all Tower in Longueuil and all new buildings of SSQ Realty’s construction projects

Status: Completed In progress

44 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

ACTION 12 – Reduce our water and energy consumption (cont’d) Gestures Indicators 2015 Report

3. The Cité Verte project • Promotion of Cité Verte’s • Awarded real estate prize in the multi- is raising awareness environmental friendliness residential category from the Institut about the prescribed de développement urbain du Québec building methods and • Installation of a charging station for electric leading-edge products cars in commercial parking lot, promoting used in energy and envi­ green travel ronmental management: • Three additional buildings employing an sustainable architecture, alternative biomass thermal plant. In waste materials mana­ addition to innovative waste collection gement and storm process that uses an underground water and wastewater transportation network eliminating use management and transport of waste containers on Cité Verte site and resulting in a reduction of over 80% in greenhouse gas emissions

Status: Completed In progress

45 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

ECONOMIC COMMITMENT 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111 11111111111111111111 ACTION 13 – Integrate our sustainable development policy into our business practises Gestures Indicators 2015 Report

1. Integrate sustainable • Progress report • Production of progress report to be shared development indicators as a collaborative tool into the policy’s progress report

2. Present an annual report • SDSR section integrated • SDSR section—a part of SSQ Financial that integrates the SDSR in the annual report Group’s annual report since 2013 report

ACTION 14 – Build on the sustainable and responsible profile of our investments Gestures Indicators 2015 Report

1. Promote the policy • Distribution of the policy • SSQ Financial Group participated in governing socially on socially responsible conference on responsible investing responsible invest­ments investments and training organized by Quebec’s chapter of adopted in 2006 and of employees involved the PRI network in November improved in 2008, by endorsing the PRI (Principles for Responsible Investment) initiative

2. Establish targets for • Targets for change • SSQ annual report is enhanced by detailing change in response to in response to the our responsible investing practises the six PRI principles six PRI principles • Introduction of criteria for responsible investment in the selection of external managers for SSQ Funds

Status: Completed In progress

46 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

ACTION 14 – Build on the sustainable and responsible profile of our investments (cont’d) Gestures Indicators 2015 Report

3. Continue with external • External audits and • External audit of our investments in audits of the Canadian communications to Canadian companies, with focus on company investment investment committee social responsibility, performed in portfolio, with a focus on January and July the responsible aspect of these investments

ACTION 15 – Ensure the Company’s sustainability through steady growth and reasonable returns Gesture Indicator 2015 Report

1. Determine reasonable • Financial indicators • 40.1% growth in individual insurance sales and responsible targets • 4.7% growth in insurance business volume for overall company • Assets up by 5.3% performance • Improvement in expense rate results • Improvement in our financial soundness

Status: Completed In progress

47 11111111111 111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111

SSQ, MUTUAL MANAGEMENT CORPORATION 11111111111 111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111 CONSOLIDATED

111111111111111111111111111111111 1111111111111111111111111111111 111111111111111111111111111111111111111111111111FINANCIAL STATEMENTS 11111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111

As at December 31, 2015 Together with Independent Auditor’s Report

111111111111111111111111111111111 1111111111111111111111111111111 111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

SSQ, MUTUAL MANAGEMENT CORPORATION Independent auditor’s report To the members of SSQ, Mutual Management Corporation, We have audited the accompanying consolidated financial statements of SSQ, MUTUAL MANAGEMENT ­CORPORATION, which comprise the consolidated statement of financial position as at December 31, 2015, and the consolidated statements of net surplus, comprehensive income, equity and cash flows for the year then ­ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from mate- rial misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards re- quire that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the con- solidated financial statements. The procedures selected depend on the auditor’s judgment, including the assess- ment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or er- ror. In making those risk assessments, the auditor considers internal control relevant to the Mutual’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appro- priate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Mutual’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the rea- sonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of SSQ, Mutual Management Corporation as at December 31, 2015, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

1

Mallette L.L.P. Partnership of chartered professional accountants Québec, Canada February 24, 2016

1 CPA auditor, CA, public accountancy permit No. A119429 49 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

CONSOLIDATED STATEMENT OF NET SURPLUS For the year ended December 31, (in thousands of dollars) 2015 2014 $ $ REVENUES Share in net income of the associated company (Note 4) 18,733 16,409 Interest (Note 5) 73 76 18,806 16,485

EXPENSES Interest 70 70 70 70 EXCESS OF REVENUES 18,736 16,415 Excess of revenues attributable to non-controlling interests 8,047 7,041 EXCESS OF REVENUES ATTRIBUTABLE TO MEMBERS 10,689 9,374

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended December 31, (in thousands of dollars) 2015 2014 $ $

EXCESS OF REVENUES 18,736 16,415

OTHER COMPREHENSIVE INCOME Share in other comprehensive income of the associated company (Note 4) Items that might be reclassified subsequently to net income (980) 5,056 Items that will not be reclassified to net income (1,507) 3,513 (2,487) 8,569 COMPREHENSIVE INCOME 16,249 24,984 Comprehensive income attributable to non-controlling interests 6,976 10,719 COMPREHENSIVE INCOME ATTRIBUTABLE TO MEMBERS 9,273 14,265

50 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at December 31, (in thousands of dollars) 2015 2014 $ $ ASSETS Interests in the associated company SSQ, Life Insurance Company Inc. (Note 4) 234,147 217,901 Note (Note 5) 900 900 235,047 218,801 Cash (Note 5) 944 888 Account receivable from the associated company 356 – Interest receivable 11 11 TOTAL ASSETS 236,358 219,700

LIABILITIES Chattel mortgage (Note 5) 900 900 Advance from the associated company (Note 5) 221 215 Account payable to the associated company – 22 Interest payable 11 11 TOTAL LIABILITIES 1,132 1,148

EQUITY Non-controlling interests 113,477 106,076 Attributable to members Accumulated net surplus 129,871 119,182 Accumulated other comprehensive income (8,122) (6,706) Total equity attributable to members 121,749 112,476 TOTAL LIABILITIES AND EQUITY 236,358 219,700

On behalf of the Board,

Pierre Genest Émile Vallée Chairman of the Board Vice-Chairman of the Board

51 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

CONSOLIDATED STATEMENT OF EQUITY For the year ended December 31, (in thousands of dollars) 2015 2014 $ $ Members Accumulated net surplus Balance, beginning of year 119,182 109,808 Excess of revenues 10,689 9,374 Balance, end of year 129,871 119,182

Accumulated other comprehensive income Balance, beginning of year (6,706) (11,597) Other comprehensive income (1,416) 4,891 Balance, end of year (8,122) (6,706) Total equity attributable to members 121,749 112,476

Non-controlling interests Balance, beginning of year 106,076 95,525 Excess of revenus 8,047 7,041 Other comprehensive income (1,071) 3,678 Net capital injection 425 (168) Total equity attributable to non-controlling interests 113,477 106,076 TOTAL EQUITY 235,226 218,552

52 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended December 31, (in thousands of dollars) 2015 2014 $ $ CASH FLOWS FROM THE FOLLOWING ACTIVITIES: OPERATING Cashed interest 73 76 Paid interest (64) (64) 9 12 FINANCING Net capital injection1 47 (206)

INCREASE (DECREASE) IN CASH 56 (194) CASH, beginning of year 888 1,082 CASH, end of year 944 888

1 As at December 31, 2015, an amount of $356 is included in the accounts receivable (2014 – accounts payable of $22) of the Mutual for net capital injection.

53 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

1. STATUS AND NATURE OF ACTIVITIES SSQ, Mutual Management Corporation (the Mutual) is formed under the Act respecting health services and social services, SSQ, Mutual Management Corporation and SSQ, Life Insurance Company Inc. Its main activity is to hold an investment in SSQ, Life Insurance Company Inc. The Mutual’s head office is located at 2525 Laurier Blvd., Quebec City, Quebec, Canada. The Mutual’s consolidated financial statements were approved by the Board of Directors on February 24, 2016.

2. SIGNIFICANT ACCOUNTING POLICIES Presentation of consolidated financial statements The consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS). Consolidated financial statements include the accounts of the Mutual and those of its sub- sidiary, SSQ, Mutual Holding Inc., owned at 56.92% (2014 – 57.08%), whose principal office is located in Quebec City, Quebec, Canada, and holds an investment in SSQ, Life Insurance Company Inc. The Mutual’s consolidated financial statements are presented in Canadian dollars, which is the functional currency of the Mutual. Use of estimates and Management’s judgments The preparation of consolidated financial statements in accordance with IFRS requires Management to rely on best estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting year. Actual results may differ from estimates. These estimates are periodically reviewed and adjustments are made, if needed, to the year’s results in which they are known. Management uses its judgment to prepare the consolidated financial statements. Revenue recognition Revenues from investments are recognized when earned. Interest in the associated company The investment of 28.91% (2014 – 28.91%) in its associated company SSQ, Life Insurance Company Inc. is accounted for using the equity method. Of this ownership, in interest, 16.46% (2014 – 16.50%) is attributable to members.

54 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d) Financial Instruments Note is classified as Loans and receivables and is carried at amortized cost using the effective interest rate method. Cash is made up of bank accounts. It is classified as Loans and receivables and is carried at amortized cost according to the effective interest rate method. Other financial assets and liabilities are recognized at amortized cost using the effective interest rate method and classified as Loans and receivables and Other liabilities, respectively.

3. CHANGES IN ACCOUNTING POLICIES Application of a new accounting standard Employee benefits In November 2013, the IASB issued amendments to IAS 19, Employee Benefits, which clarify the accounting of employee or third-party contributions to defined benefit plans. These amendments have been applied to annual periods beginning on or after July 1, 2014. The amendments to the standard had no impact on the Mutual’s consolidated financial statements. New accounting standards not yet effective Consolidated financial statements, disclosure of interests in other entities, and investments in associates and joint ventures In December 2014, the IASB issued amendments to IFRS 10, Consolidated Financial Statements, to IFRS 12, Disclosure of Interests in Other Entities and to IAS 28, Investments in Associates and Joint Ventures, which clarify the rules for exempting investment entities from consolidation. The amendments are effective for annual periods beginning on or after January 1, 2016 and will have no impact on the Mutual’s consolidated financial statements. Financial instruments In July 2014, the IASB issued IFRS 9, Financial Instruments, which replaces IAS 39, Financial Instruments: Recognition and Measurement regarding the classification and measurement of financial assets and liabili- ties, impairment and hedge accounting. On September 23, 2015, the IASB issued an update containing measures to give companies whose business model is to issue insurance contracts the option to defer the effective date of IFRS 9 until 2021 or until the application of IFRS 4, Insurance Contracts if that standard is applied before 2021. The Mutual is currently assessing the impact of this new standard on its consolidated financial­statements.

55 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

4. INTEREST IN THE ASSOCIATED COMPANY

2015 2014 SSQ, SSQ, SSQ Life Insurance Life Insurance Insurance Company Inc. Company Inc. Company Inc. Total $ $ $ $

Balance, beginning of year 217,901 108,786 84,137 192,923 Share in net income 18,733 14,366 2,043 16,409 Share in other comprehensive income (2,487) 6,118 2,451 8,569 Disposal of the interest – – (88,631) (88,631) Acquisition fees on an additional interest – 88,631 – 88,631 Balance, end of year 234,147 217,901 – 217,901 As at September 30, 2014, the Mutual has disposed of its interest in SSQ Insurance Company Inc. The following table provides a summary of the financial information of the associated company, SSQ, Life Insurance Company Inc. 2015 2014 $ $ Statement of financial position Cash and cash equivalents 241,300 236,800 Total assets 11,183,300 10,622,300 Total liabilities 10,456,300 9,951,600 727,000 670,700

Net Income Interest revenues 114,700 117,800 Total revenues 2,073,200 2,186,300 Amortization of fixed assets and intangible assets 32,000 30,200 Interest expenses 12,000 12,100 Income taxes 21,600 17,400 Net income 64,800 54,000

Comprehensive income Other comprehensive income (8,500) 29,800 Comprehensive income 56,300 83,800

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NOTES TO THE FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

5. FINANCIAL INSTRUMENTS 2015 2014 Carrying Fair Carrying Fair value value value value $ $ $ $

Financial assets Note, 7.09%, maturing May 1, 20201 900 999 900 1,014 Interest receivable on note 11 11 11 11 Account receivable from the associated company 356 356 – – Cash bearing interest at prime rate less 1.75%2 944 944 888 888 2,211 2,310 1,799 1,913 Financial liabilities Chattel mortgage, secured by the note, 7.09 % maturing May 1, 20201 900 999 900 1,014 Interest payable on chattel mortgage 11 11 11 11 Account payable to the associated company – – 22 22 Advance from the associated company, 2.63% 221 221 215 215 1,132 1,231 1,148 1,262

1 The fair value of the note and the chattel mortgage, classified as Loans and receivables and Other liabilities, is evaluated according to a model discounting the expected future cash flows and classified as Level 3. The discount rate used corresponds to the rate of return of the benchmark that has a similar risk profile as the underlying assets and a term matching the maximum term for the loan and chattel mortgage. 2 The fair value of cash is classified as Level 1.

Financial instruments recorded at fair value are classified using a hierarchy that reflects the significance of the inputs used in determining valuations and includes three levels: • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities; • Level 2 – A valuation based on inputs observable in markets for the asset or liability, obtained either directly or indirectly; • Level 3 – A valuation based on inputs other than inputs observable in markets for the asset or liability. As at December 31, 2015 and 2014, no financial instrument is recognized at fair value in the Consolidated Statement of Financial position. 2015 2014 $ $

Interest revenues Note 64 64 Cash 9 12 73 76

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NOTES TO THE FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

6. FINANCIAL INSTRUMENTS RISK MANAGEMENT The Mutual adopted control policies and procedures to manage risks related to financial instruments. The Board of Directors approves the investment policy and its objective is to supervise investment decision-making. Risks related to financial instruments consist of credit risk and liquidity risk. The Mutual is exposed to credit risk in terms of the note. This risk is mitigated by the fact that the note is issued to the associated company. Liquidity risk refers to the risk that the Mutual may have difficulty generating sufficient cash flows to cover its financial liabilities. The Mutual manages liquidity risk by matching cash flows from its note with those required to cover its chattel mortgage. There is no liquidity risk related to the advance from the associated company. The following tables present contractual maturities of the cash flows of the Mutual’s financial liabilities. 2015

Payable From 1 to Over Total on demand 5 years 5 years $ $ $ $

Chattel mortgage – 900 – 900 Advance from the associated company 221 – – 221 Accrued interest payable 11 – – 11 232 900 – 1,132

2014

Payable From 1 to Over Total on demand 5 years 5 years $ $ $ $

Chattel mortgage – – 900 900 Advance from the associated company 215 – – 215 Account payable to the associated company 22 – – 22 Accrued interest payable 11 – – 11 248 – 900 1,148

58 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

7. CAPITAL MANAGEMENT In terms of capital management, the Mutual’s objective is to preserve its assets. The Mutual defines capital as the chattel mortgage and members’ equity. The Mutual achieves its objective through careful management of the capital generated by internal growth and by making optimal use of low-cost capital. Composition of the capital 2015 2014 $ $

Chattel mortgage 900 900 Members’ equity 121,749 112,476 122,649 113,376

8. RELATED PARTY TRANSACTIONS In the normal course of operations, the Mutual carries out transactions with the associated company, SSQ Life Insurance Company Inc. These transactions are measured at the exchange amount. During the year, the Mutual received interest of $64 (2014 – $64) from the associated company, SSQ, Life Insurance Company Inc. As at December 31, 2015, a balance of $11 (2014 – $11) is included under interest receivable. This amount is not guaranteed and will be settled in cash. During the year, the Mutual capitalized interest of $6 (2014 – $6) to the advance from the associated company, SSQ, Life Insurance Company Inc. On November 27, 2014, the Mutual received 7,380,750 Class A shares from the associated company, SSQ, Life Insurance Company Inc., in exchange for all shares held in the associated company, SSQ Insurance Company Inc. The transaction was recorded at book value established as at September 30, 2014. The associated company, SSQ, Life Insurance Company Inc. offers to some of its employees to participate in an investment fund. This investment fund owns a non-controlling interest in the Mutual.

59 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

9. INTERESTS IN OTHER ENTITIES The following table presents the impact of the consolidation of the subsidiary not wholly owned on the ­consolidated financial statements of the Mutual. 2015 2014 $ $

Statement of financial position Total assets 235,157 218,815 Total liabilities 1,132 1,126

Statement of net income Revenues 18,797 16,473 Net income 18,727 16,403

Statement of comprehensive income Other comprehensive income (2,487) 8,569 Comprehensive income 16,240 24,972

Statement of cash flows No change in any cash flow categories

60

11111111111 111111111111111111111111111111111 SSQ, LIFE INSURANCE1111111111111111111111111111111111111111111111111111111111111111111111 COMPANY INC.

11111111111 111111111111111111111111111111111 EXCERPT1111111111111111111111111111111111111111111111111111111111111111111111 FROM THE CONSOLIDATED

111111111111111111111111111111111 1111111111111111111111111111111 111111111111111111111111111111111111111111111111FINANCIAL STATEMENTS 11111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111

As at December 31, 2015

111111111111111111111111111111111 1111111111111111111111111111111 111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 1111111111111111111111111111111111111111111111111111111111111111111111111111111111 111111111111111111111111111111111111111111111111111111111111111111111111 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

SSQ, LIFE INSURANCE COMPANY INC. Management’s Report Preparation of the consolidated financial statements of SSQ, LIFE INSURANCE COMPANY INC. (the Company) is the responsibility of Management. These audited consolidated financial statements, which have been approved by the Board of Directors, are prepared in accordance with International Financial Reporting Standards (IFRS) and include certain amounts that are based on our best judgements and estimates. The financial information ­presented in this annual report is excerpted from our audited consolidated financial statements. In order to carry out its responsibilities with respect to the consolidated financial statements, Management main- tains internal systems of control aimed at providing a reasonable degree of certitude that operations have been duly authorized, that assets are well safeguarded and that adequate and proper records have been kept. These systems of control are reinforced by the work of a team of internal auditors who regularly review all sectors of activity within the Company. In conformity with the Insurance Act, the Board of Directors appoints the actuary, who is charged with the respon- sibility to value the actuarial liabilities of the Company in accordance with the standards and practices of the Canadian Institute of Actuaries. Moreover, independent auditors, appointed at the Annual Meeting of sharehold- ers, ensure the accuracy of the data presented in the consolidated financial statements and express their opinion on these. Audits are carried out regularly by the Autorité des marchés financiers to ascertain that the Company is in com- pliance with the Act respecting insurance, which aims primarily to protect policyholder interests and maintain a sound financial position. The Audit and Risk Management Committee of the Board of Directors, the members of which are neither from Management nor employees of the Company, ensures that Management fulfills its responsibilities with respect to financial information. The Committee meets regularly with Management, internal auditors and external audi- tors. The latter can, if they wish, meet with said Committee in the presence or absence of Management, to ­discuss questions regarding the audit and the financial information.

Jean-François Chalifoux Chief Executive Officer Quebec City, Canada February 24, 2016

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CONSOLIDATED STATEMENT OF INCOME For the year ended December 31, (in millions of dollars) 2015 20141 $ $ REVENUES Gross premiums (Note 14) 2,204.9 2,084.4 Premiums ceded to reinsurers (392.9) (381.6) Net premiums 1,812.0 1,702.8 Change in unearned premiums 8.1 0.7 Investment income 131.1 126.0 Change in fair value of financial assets at fair value through profit or loss 40.6 261.4 Income on investment property (Note 17) 20.3 23.9 Administration fees and other revenues 61.1 71.5 2,073.2 2,186.3

BENEFITS AND EXPENSES Insurance and annuities Gross benefits 1,643.0 1,548.2 Benefits recovered from reinsurers (325.5) (318.8) Change in actuarial reserve of life and health insurance contracts 174.5 510.9 Change in actuarial reserve of ceded reinsurance assets (88.3) (206.0) Interest on deposits 3.7 7.5 1,407.4 1,541.8 Selling and administrative expenses 332.1 323.1 General fund investment expenses 7.1 7.2 Investment property expenses (Note 17) 16.7 19.2 Commissions and fees on sales 163.7 141.3 Premium taxes 65.7 48.2 1,992.7 2,080.8

INCOME BEFORE EXPERIENCE REFUNDS AND INCOME TAXES 80.5 105.5 Experience refunds (5.9) 34.1 INCOME BEFORE INCOME TAXES 86.4 71.4 Income taxes (Note 13) 21.6 17.4 NET INCOME 64.8 54.0 NET INCOME ATTRIBUTABLE TO: Shareholders 64.8 49.7 Non-controlling interest – 4.3

1 Figures for the year ended December 31, 2014 have been restated (Note 3).

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended December 31, (in millions of dollars) 2015 2014 $ $

NET INCOME 64.8 54.0

OTHER COMPREHENSIVE (LOSS) INCOME Items that might be reclassified subsequently to net income Unrealized gains on available-for-sale financial assets 0.6 29.1 Income tax expense (0.2) (7.8) Reclassification to net income of gains on disposal or impairment of financial assets (5.3) (4.9) Income tax expense 1.5 1.2 Total items that might be reclassified subsequently to net income (3.4) 17.6 Items that will not be reclassified to net income Actuarial (losses) gains arising from employee retirement benefits and the effect of the asset ceiling (7.0) 16.6 Income tax recovery (expense) 1.9 (4.4) Total items that will not be reclassified to net income (5.1) 12.2 TOTAL OTHER COMPREHENSIVE (LOSS) INCOME (8.5) 29.8 COMPREHENSIVE INCOME 56.3 83.8 COMPREHENSIVE INCOME ATTRIBUTABLE TO: Shareholders 56.3 70.8 Non-controlling interest – 13.0

65 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at December 31, (in millions of dollars) 2015 2014 $ $ ASSETS Investments (Note 4) 4,004.9 3,947.2 Asset held for sale 3.3 8.8 Outstanding premiums 276.1 284.5 Ceded reinsurance assets 1,567.1 1,497.4 Investment property under development 40.9 34.2 Income taxes receivable 11.4 1.8 Other assets 141.8 141.2 Investment property 28.2 32.4 Fixed assets 170.3 130.0 Intangible assets 155.4 161.1 Goodwill 14.1 14.1 Total general fund assets 6,413.5 6,252.7 Segregated fund investments (Note 15) 4,769.8 4,369.6 TOTAL ASSETS 11,183.3 10,622.3

LIABILITIES Life and health insurance contracts (Note 8) 5,027.2 4,892.8 Property and casualty insurance contracts (Note 9) 242.0 249.2 General fund investment contracts 0.3 0.3 Accounts payable 147.3 144.5 Income taxes payable 9.8 20.2 Subordinated debt (Note 10) 175.0 175.0 Other liabilities 61.1 62.7 Deferred income tax liability 23.8 37.3 Total general fund liabilities 5,686.5 5,582.0 Segregated fund insurance contracts (Note 15) 1,697.5 1,591.5 Segregated fund investment contracts (Note 15) 3,072.3 2,778.1 TOTAL LIABILITIES 10,456.3 9,951.6

EQUITY Share capital (Note 11) 343.2 343.2 Retained earnings 418.7 353.9 Accumulated other comprehensive loss (34.9) (26.4) TOTAL EQUITY 727.0 670.7 TOTAL LIABILITIES AND EQUITY 11,183.3 10,622.3

On behalf of the Board:

Pierre Genest Jean-François Chalifoux Chairman of the Board Chief Executive Officer

66 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended December 31, (in millions of dollars) 2015 2014 $ $ Shareholders Share capital Balance, beginning of year 343.2 36.6 Shares issued (Note 11) – 306.6 Balance, end of year 343.2 343.2

Retained earnings Balance, beginning of year 353.9 374.7 Net income 64.8 49.7 Repurchase of non-controlling interest (Note 11) – (70.5) Balance, end of year 418.7 353.9

Accumulated other comprehensive loss Balance, beginning of year (26.4) (47.5) Other comprehensive (loss) income (8.5) 21.1 Balance, end of year (34.9) (26.4) Total equity attributable to shareholders 727.0 670.7

Non-controlling interest Balance, beginning of year – 223.1 Net income – 4.3 Other comprehensive income – 8.7 Repurchase of non-controlling interest (Note 11) – (236.1) Total equity attributable to non-controlling interest – – TOTAL EQUITY 727.0 670.7

67 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended December 31, (in millions of dollars) 2015 2014 $ $ CASH FLOWS FROM THE FOLLOWING ACTIVITIES: OPERATING Income before income taxes 86.4 71.4 Income taxes (paid) received, less refunds received (51.8) 17.2 Items not affecting cash Gains on investments (41.9) (262.1) Gain on disposal of an asset held for sale (1.3) – Gain on disposal of investment property (1.0) – Amortization of discounts and premiums on bonds (32.7) (34.8) Depreciation and amortization of investments property 0.6 0.6 Depreciation and amortization of fixed assets and intangible assets 31.4 29.6 Life and health insurance contracts 134.4 494.9 Other items 1.3 (2.4) 125.4 314.4 Net change in other operating assets and liabilities (83.9) (213.0) 41.5 101.4 INVESTING Purchases of investments (1,432.8) (1,064.5) Sales, maturities and repayments of investments 1,451.5 973.3 Purchases of investment property (2.0) (11.4) Disposal of investment property 6.8 – Purchases of fixed assets and intangible assets (60.6) (40.7) Disposal of fixed assets and intangible assets 0.1 0.1 Business acquisition – (0.7) (37.0) (143.9)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4.5 (42.5) CASH AND CASH EQUIVALENTS, beginning of year 236.8 279.3 CASH AND CASH EQUIVALENTS, end of year 241.3 236.8

Cash flows from operating activities include: Interest paid on subordinated debt 12.0 12.0

As at December 31, 2015, accounts payable include an amount of $9.7 related to fixed assets and intangible ­assets (2014 – $4.2).

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EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

1. GOVERNING STATUTES AND NATURE OF ACTIVITIES SSQ, Life Insurance Company Inc. (the Company), majority owned by the Fonds de solidarité des travailleurs du Québec (F.T.Q.), was established in accordance with An Act respecting insurance. The Company offers its insureds a complete range of financial services including financial protection in the event of death, disability, illness or retirement through a variety of individual and group insurance products as well as savings, retirement and investment products. It is also active in property and casualty insurance and real estate management. The Company’s head office is located at 2525 Laurier Boulevard, Quebec City, Quebec, Canada. The Company’s consolidated financial statements were approved by the Board of Directors on February 24, 2016.

2. SIGNIFICANT ACCOUNTING POLICIES Presentation of consolidated financial statements The consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS). The consolidated financial statements include the accounts of the Company and of its wholly-owned subsidiaries. The following table presents the subsidiaries held by the Company:

Principal place Participation of business % SSQ General Insurance Company Inc. 100 Quebec City, Quebec, Canada SSQ Insurance Company Inc.1 100 Montreal, Quebec, Canada SSQ Realty Inc. 100 Quebec City, Quebec, Canada 6801188 Canada Inc. 100 Quebec City, Quebec, Canada 1 10% until September 30, 2014

Use of estimates and Management’s judgments The preparation of financial statements in accordance with IFRS requires Management to rely on best estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting year. Actual results may differ from estimates. The most important estimates involve determining: • liabilities related to life and health insurance contracts, property and casualty insurance contracts and ceded reinsurance assets • fair values of financial instruments in the general funds and segregated funds and insurance and investment contracts liabilities in the segregated funds • assumptions used in determining provisions, income taxes and write-downs of financial instruments and non-financial assets • retirement benefits asset and liability

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EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d) Use of estimates and Management’s judgments (cont’d) Management used its judgment to evaluate the exercise of control for consolidation purposes, to classify insurance and investment contracts and financial instruments. Management’s judgment is also required in the recognition of investment property, fixed assets and intangible assets. Foreign currencies The Company’s consolidated financial statements are presented in Canadian dollars, which is the functional currency of the Company. Fund units denominated in foreign currencies are converted at the exchange rate in effect at the date of the financial statements. Business acquisition Business acquisitions are accounted for using the acquisition method. The acquisition cost consists of the fair value of the consideration transferred and measured at the acquisition date. Acquisition-related costs are accounted for as expenses in the period in which they are incurred. Insurance contracts and investment contracts – classification The Company issues contracts that transfer an insurance risk, a financial risk, or both. Insurance contracts are contracts that involve a significant insurance risk. A significant insurance risk exists when the Company agrees to indemnify policyholders or policy beneficiaries should a specified uncertain future event have an adverse effect on the policyholder. Investment contracts are contracts that carry a financial risk with no signi- ficant insurance risk. Life and health insurance contracts and segregated fund Revenue recognition and related expenses Life and health insurance premiums are recognized as revenues when they become due. Once premiums are recognized, liability related to life and health insurance contracts is computed in a manner such that expenses are matched with such revenues. Claims are recognized when a notice is received of an event that gives entit- lement to compensation. Furthermore, commissions and premium taxes are recognized on the same basis as life and health insurance premiums. The Company collects commission revenues on individual contracts ceded to reinsurance. The commissions are recorded when the contracts are ceded to reinsurance and are posted uniformly to the consolidated sta- tement of income over the term of the corresponding ceded contracts. Unearned reinsurance commissions correspond to the portion of the commissions for the unexpired period of the corresponding contracts, prorated over the remaining number of days. The portion attributable to subsequent periods is recognized in liabilities related to life and health insurance.

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2. SIGNIFICANT ACCOUNTING POLICIES (cont’d) Life and health insurance contracts and segregated fund (cont’d) Life and health insurance contracts The actuarial reserve, provisions for claims and experience refunds, and deposits related to life and health insurance contracts are established by the actuary in accordance with the standards of practice of the Canadian Institute of Actuaries and reflect the amounts required to meet obligations resulting from insurance contracts in force. The actuarial reserve is calculated according to the Canadian asset liability method, a recognized actuarial method established by the Canadian Institute of Actuaries. This method requires the use of assump- tions based on best estimates of future experience, according to the Company’s own experience and that of the industry, and includes additional amounts for plausible adverse deviations related to assumptions made on the different factors considered. Some insurance contracts may contain embedded derivative instruments. These derivative instruments either meet the definition of insurance contracts themselves or correspond to an option to surrender an insurance contract for a fixed amount and are not valued separately from the host contract. Segregated fund insurance contracts Liabilities for segregated fund insurance contracts include the deposit portion of these contracts, recognized in the same manner as investment contracts. The guaranteed portion recognized from the life and health insurance contracts liability, which is determined by an actuary in accordance with the practice standards of the Canadian Institute of Actuaries, corresponds to the amount required to cover current insurance contract commitments. The insurance contract liabilities of segregated funds are calculated according to the Canadian asset liability method, and include additional amounts for plausible adverse deviations related to assumptions made on the different factors considered. Segregated fund insurance premiums related to the insurance component of the contract are recognized as revenue when they become due. Liability adequacy test On each date of the financial statements, a liability adequacy test is performed to ensure the adequacy of liability related to life and health insurance contracts, net of deferred acquisition costs. Since the concept of liability adequacy is an integral part of the Canadian asset liability method, any inadequacy of provisions is immediately carried to profit or loss in order to ensure compliance. Property and casualty insurance contracts Revenue recognition and related expenses Property and casualty insurance premiums are recognized as revenue in prorata to the duration of the policies. Unearned premiums represent the portion of written premiums for the unexpired in-force policies, according to the daily prorata method. For some products, unearned premiums are adjusted to account for changes in the related risks. Furthermore, commissions and premium taxes are recognized on the same basis as property and casualty insurance premiums.

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EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d) Property and casualty insurance contracts (cont’d) Unpaid claims Unpaid claims are attributable to events associated with the ultimate settlement of claims. The amount of unpaid claims is established in accordance with the standards of practice of the Canadian Institute of Actuaries. It is presented on a discounted basis, based on the experience of the Company and the industry. Claims are recognized when a notice is received of an event that gives entitlement to compensation. Claims liability adequacy test The claims liability adequacy analysis is done on each reporting date and reviewed as necessary, if an event that could affect results occurs. To this end, past claims development by business sector are analyzed in order to project anticipated claims at the time of the valuation. Assumptions regarding the rate of payment of liabi- lities are necessary to value obligations on a discounted basis. Finally, margins for adverse deviations in interest rates, materiality and reinsurance are added to consider the uncertainties related to the assumptions. Premiums liability adequacy test Premiums liability adequacy is evaluated on each reporting date. Unearned premiums are decreased by defer- red acquisition costs, reinsurance premium, claims and adjustment costs anticipated between the valuation date and the expiry of the contracts, and expected maintenance costs to administer the contracts. In addition, the impact of the time value of money is considered. Finally, margins for adverse deviations in interest rates, materiality and reinsurance are added to consider the uncertainties related to the assumptions. Ceded reinsurance assets In the normal course of business, the Company uses reinsurance to manage its level of risk exposure. The risk and the corresponding premium are transferred to duly registered reinsurers that are subject to the same regulatory bodies as the Company. The ceded reinsurance assets are valued in a similar manner to the liabili- ties related to life and health insurance contracts and property and casualty insurance contracts and in accordance with the terms and conditions of each reinsurance contract. Ceded reinsurance assets represent amounts due to the Company with respect to the liabilities of the ceded policies. Ceding a risk does not release the Company from its obligation to fully comply with the commitments made to its insureds. These assets are subject to an impairment test and, if they are impaired, their carrying value is reduced and the loss in value is carried to profit and loss. Investment contracts Revenue recognition Investment contracts fall under the scope of IAS 39, Financial Instruments: Recognition and Measurement. Deposit accounting applies to these contracts, which involves recording the premiums received and benefits paid on these contracts as deposits and withdrawals, with no impact on the income statement. Revenues from these contracts consist of fees related to contract issue, administration and surrender as well as asset mana- gement, and are recognized in Administration fees and other revenues.

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EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d) Investment contracts (cont’d) Investment contract liabilities All investment contracts are designated at fair value through profit or loss, since changes in net income are offset by changes in the value of investments related to the general funds and segregated funds and are managed on a fair value basis. Recognition of other income Income on investment property is recognized in profit or loss on a straight-line basis over the term of the lease. Fees for the management of segregated funds and for the management of administrative service contracts are recognized when earned in Administration fees and other revenues. Financial Instruments – classification On initial recognition of its financial instruments, the Company must classify financial assets into one of the following categories: at fair value through profit or loss, held to maturity, loans and receivables and available- for-sale. The “fair value through profit or loss” category includes financial assets held for trading and financial assets designated at fair value through profit or loss. The Company must classify financial liabilities into one of the following categories: designated at fair value through profit or loss and at amortized cost. Financial instruments are classified upon initial recognition according to their nature and the Company’s use of the financial instrument. Bonds Bonds backing liability related to life and health insurance contracts are designated at fair value through profit or loss, since changes in their fair value on the income statement are offset by changes in liability related to life and health insurance contracts. Bonds backing general fund investment contracts are designated at fair value through profit or loss, since they are managed and measured on a fair value basis in accordance with a strategy for managing the risks in investment contracts. Bonds not backing liability related to life and health insurance contracts and investment contracts are classified as assets available-for- sale and are carried at fair value. Changes in fair value of these bonds are recorded in other comprehensive (loss) income. Upon disposal of these bonds, or upon the recognition of any impairment loss, the gain or loss is reclassified from accumulated other comprehensive (loss) income to net income. Reversals to impairment losses may occur and are recognized in profit or loss when there is objective evidence of recovery. Interest income and the amortization of discounts and premiums on bonds are recorded in income according to the effective interest rate method. Purchases and disposals of bonds are recognized at trade date.

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EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d) Loans Loans are classified as loans and receivables and are carried at amortized cost according to the effective interest rate method, less the allowance for investment losses. Their fair value is established by discounting future cash flows at the current market rate for this type of receivable and for a term equal to the term of the loan. The allowance for investment losses is established on an individual and collective basis from the esti- mated realizable value measured by discounting the expected future cash flows. Commissions paid on issuance of new loans are recognized with loans and amortized according to the effec- tive interest rate method. Fund units and shares Fund units and shares backing liability related to life and health insurance contracts are designated at fair value through profit or loss, since changes in their fair value on the income statement are offset by changes in liabi- lity related to life and health insurance contracts. Fund units and shares not backing liability related to life and health insurance contracts are classified as asset available-for-sale. Purchases and disposals of fund units and shares are recognized at trade date. They are carried at fair value and all changes in fair value are recorded in other comprehensive (loss) income. Transac- tion costs paid upon purchase, if any, are capitalized at cost. Upon disposal of these fund units and shares, or upon the recognition of any impairment loss, the gain or loss is reclassified from accumulated other compre- hensive (loss) income to net income. No reversal of impairment losses is allowed. However, fund units and shares continue to be carried at fair value, even if an impairment loss has previously been recognized. Investment fund The investment fund is held for trading and includes Canadian equity securities acquired with the proceeds from the offering of certain debentures. In accordance with the debenture acts, the excess fair value of these securities over the capital of the debentures is recorded to the liability account of the Company. When fair value of the securities is less than the capital value of the debentures, the Company records a receivable from the decline in value equal to the difference. Cash and cash equivalents Cash and cash equivalents are made up of bank accounts and short-term fixed income securities held with financial institutions. The bank accounts are classified as loans and receivables and are carried at amortized cost according to the effective interest rate method. Short-term money market securities are designated as held for trading. Derivative financial instruments Derivative financial instruments include foreign exchange contracts, daily settlement stock index contracts and interest rate swaps. These financial instruments are held for trading. Derivative financial instruments with a positive fair value are presented as investments while derivative financial instruments with a negative fair value are presented as other liabilities.

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EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d) Derivative financial instruments (cont’d) The Company uses derivative financial instruments in support of the liability related to life and health insurance contracts. Gains and losses related to these contracts are recognized in income under Investment income. The Company also uses foreign exchange contracts under its currency risk management strategy. Such finan- cial instruments cover fair value of assets and their effectiveness is reviewed on a monthly basis. Exchange gains and losses on forward contracts and fluctuations in fair value related to asset currency price are reco- gnized in income under Investment income. Recognition of investment income Investment income is recognized on an accrual basis. Investments fair value The best evidence of fair value is published price quotations in an active market. This value is observed in the case of fund units, shares and futures contracts. Fair value of bonds and shares is based on their bid price at year-end. Fair value of derivative financial instruments and when the market for an investment is not active, is established by using a valuation technique that makes maximum use of inputs observed from the markets. Asset held for sale An asset held for sale is classified as such if it is expected that its book value will mainly be recovered through a sale rather than continuous usage. This is the case when an asset is immediately available for sale in its current state and the sale is highly likely to occur. An asset held for sale is measured at the lower of book value and fair value, net of sale fees. Other financial assets and liabilities Other financial assets and liabilities are recognized at amortized cost and classified as loans and receivables and other liabilities, respectively. Investment property under development Investment property under development consists of portion of real estate properties under construction held for resale. These properties are valued at the lower of cost and net realizable value. Cost is determined accor- ding to the specific identification method, and net realizable value corresponds to the estimated disposal price of the property less estimated completion costs and disposal costs.

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EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d) Investment property Investment property held by the Company, real estate properties held either to earn rentals or for capital appre- ciation, are recognized at acquisition cost less losses in value. The cost of property is depreciated by major component, using each component’s estimated useful life and according to the straight-line method. Useful lives, residual values and the depreciation method are reviewed at the end of each year. The impact of any change in estimates is recorded prospectively. The profit or loss on the disposal or retirement of an investment property, which is the difference between proceeds on the asset’s disposal and its carrying value, is recognized in profit or loss. Depreciation is calculated using the following useful lives:

Structure 100 years Building envelope 60 years Mechanical services 40 years Land improvements 20 years Government grants The Company receives government grants to build properties under development and investment properties. It recognizes the grants to reduce the carrying amount of these assets. The grants related to properties under development are recognized in income when the assets are sold and are presented to reduce gains. The grants related to investment properties are recognized in income in proportion to the depreciation of the assets, and presented to reduce the depreciation expense. Foreclosed assets Property acquired by foreclosure and held for resale are recorded at the lower of either the investment in the mortgage foreclosed or the estimated net proceeds from the disposal of the property. Gains and losses on resale of these properties are recorded in income in the period in which they arise. Fixed assets Fixed assets are recognized at acquisition cost less impairment. The cost of these fixed assets is depreciated by major component, using each component’s estimated useful life and according to the straight-line method except for land, which is not depreciated. Useful lives, residual values and the depreciation method are reviewed at the end of each year. The impact of any change in estimates is recorded prospectively. The profit or loss on the disposal or retirement of a fixed asset, which is the difference between proceeds on the asset’s disposal and its carrying value, is recognized in profit or loss.

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EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d) Fixed assets (cont’d) Depreciation is calculated using the following useful lives:

Buildings Structure 100 years Building envelope 60 years Mechanical services 40 years Land improvements 20 years IT equipments 5 years Office furniture and equipment 10 years Leasehold improvements Lease term Intangible assets Intangible assets acquired separately Intangible assets include application software and are recorded at acquisition cost less impairment losses. Amortization is calculated according to the straight-line method over an estimated useful life of five years. Intangible assets resulting from business combinations Intangible assets resulting from business combinations include finite life intangible assets, i.e., a portfolio of in-force policies, software, distribution networks, and other items as well as indefinite life intangible assets, i.e., a trademark. These intangible assets are initially recognized at their fair value at the date of the business combination. Subsequent to initial recognition, intangible assets resulting from business combinations are recognized at cost less impairment. For finite life intangible assets, amortization is calculated using the straight-line method and useful life varies from five to twenty-seven years, except for the trademark, which is not amortized but subject to an annual impairment test. Internally developed intangible assets Internally developed intangible asset include application software meeting the criteria for deferral. The amount initially recognized for an internally developed intangible asset is equal to the sum of expenses incurred from the date that the asset first met the recognition criteria. When no internally developed intangible asset can be recognized, development expenses are charged to income in the year in which they were incurred. Following their initial recognition, internally developed intangible assets are recognized at cost less impairment losses. Amortization is calculated according to the same method and term used for intangible assets that are acquired separately. Useful lives and the amortization method of intangible assets are reviewed at the end of each year, and the impact of any change in estimates is recognized prospectively.

77 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d) Depreciation and amortization of investment property, fixed assets and intangible assets with finite useful lives At each reporting date, the Company reviews the carrying values of investment property, fixed assets and intangible assets to determine whether there is any evidence that these assets are impaired. If such evidence exists, an estimate is made of the recoverable amount of the asset to determine the amount of the impair- ment loss. If the estimated recoverable value of an asset is less than its carrying value, the asset’s carrying value is reduced to its recoverable value. An impairment loss is immediately recognized in profit or loss. If an impairment loss is subsequently reversed, the carrying value of the asset is increased to the revised estimate of its recoverable value up to a maximum of its amortized cost. The reversal of impairment is imme- diately recognized in profit or loss. At each year-end date, intangible assets not yet available for use are subject to an annual impairment test. Goodwill and intangible asset with indefinite useful life Goodwill represents the excess of the fair value of the transferred consideration over the identifiable assets acquired and liabilities assumed and is deemed to have an indefinite useful life. An intangible asset with an indefinite useful life is classified as such when the Company determines that there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. Goodwill and intangible asset with indefinite useful life are not amortized but are tested for impairment at least annually. For purposes of the impairment test, goodwill and intangible asset with indefinite useful life are allocated to cash-generating units (CGU), which are the smallest groups of assets and liabilities for which the identifiable cash inflows are independent. Within each CGU, net carrying value is compared with the recoverable amount. The recoverable amount ­corresponds to the higher of the fair value less costs to sell and the value in use. The value in use corresponds to the anticipated future net assets and net revenues of existing portfolios and new business, taking the CGU’s future cash flows into consideration, discounted with the current risk-free interest rate on the market, to which a risk premium is added. Impairment losses related to the CGU are applied against the carrying value of the goodwill and intangible assets with indefinite useful lives allocated to the CGU. No impairment loss reversal is allowed. Segregated fund investments Segregated fund investments are the accumulated net assets of the segregated funds, including inter-fund eliminations. They include bonds, shares, investment fund units and other assets and liabilities, including derivative financial instruments. The investments are designated at fair value through profit or loss since they are managed and valued on a fair value basis in accordance with the investment strategy approved by Management. Other assets and liabilities are classified as loans and receivables and other liabilities, respectively, and are recognized at amortized cost except for derivative financial instruments, which are held for trading and reco- gnized at their fair value.

78 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d) Employee retirement benefits The Company offers its employees pension plans and other retirement benefits such as severance pay and life and health insurance coverage. The cost of pensions and other retirement benefits earned by employees is actuarially determined according to the projected benefit method prorated on services and Management’s best estimate of salary increases, retirement ages of employees and expected health care costs. Actuarial gains or losses are recorded immediately in other comprehensive (loss) income. The cost of past services is included in the statement of income when a modification arises. The plans’ assets are carried at fair values and are held in separate trustee pension funds. Income taxes Income taxes include current and deferred taxes. Income taxes are recognized in profit or loss, except for income taxes on items included under other comprehensive (loss) income or Equity. In these specific cases, the income tax expense is recognized in other comprehensive (loss) income and Equity, respectively. Income taxes receivable and payable are obligations to or claims by tax authorities for prior years or the current year that have not been received or paid at the end of the year. Current income taxes are calculated based on taxable income, which is different from net income. The calculation is made based on the tax rates and laws in force at the end of the year. The Company recognizes income taxes using the deferred tax asset and liability method. According to this method, deferred tax assets and liabilities are determined based on the difference between the carrying value and the taxable value of the assets and liabilities. Any change in the net amount of deferred assets and liabili- ties is posted to income and accumulated other comprehensive (loss) income. Deferred tax assets and liabilities are determined based on currently applicable or applied tax rates and laws which, to the extent that can be predicted, will apply to the taxable income in the periods in which the assets and liabilities will be reco- vered or paid. Deferred tax assets are recognized when it is probable that they will be realized. Operating leases Leases that do not transfer substantially all the risks and rewards of ownership to the Company are classified as operating leases. Payments made under operating leases are presented on the income statement in Selling and administrative expenses. The amounts of future rents under operating leases are presented in the note on contingencies and commitments.

79 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

3. CHANGES IN ACCOUNTING POLICIES Application of a new accounting standard Employee benefits In November 2013, the IASB issued amendments to IAS 19, Employee Benefits, which clarify the accounting of employee or third-party contributions to defined benefit plans. These amendments have been applied to annual periods beginning on or after July 1, 2014. The amendments to the standard had no impact on the Company’s consolidated financial statements. New accounting standards not yet effective Fixed assets and intangible assets In May 2014, the IASB issued an amendment to IAS 16, Property, Plant and Equipment and IAS 38, Intangible Assets. Entitled Clarification of Acceptable Methods of Depreciation and Amortisation, the amendment specifies that a revenue-based depreciation and amortization method can no longer be used. The depreciation and amortization method must reflect the consumption of the future economic benefits of an asset. The provisions of this amendment will apply prospectively to the financial statements of annual periods beginning on or after January 1, 2016. The amendment to these standards will have no impact on the Company’s consolidated financial statements. Consolidated financial statements, disclosure of interests in other entities, and investments in associates and joint ventures In December 2014, the IASB issued amendments to IFRS 10, Consolidated Financial Statements, to IFRS 12, Disclosure of Interests in Other Entities and to IAS 28, Investments in Associates and Joint Ventures, which clarify the rules for exempting investment entities from consolidation. The amendments are effective for annual periods beginning on or after January 1, 2016 and will have no impact on the Company’s consolidated financial statements. Financial instruments In July 2014, the IASB issued IFRS 9, Financial Instruments (IFRS 9), which replaces IAS 39, Financial Instru- ments: Recognition and Measurement regarding the classification and measurement of financial assets and liabilities, impairment and hedge accounting. On September 23, 2015, the IASB issued an update containing measures to give companies whose business model is to issue insurance contracts the option to defer the effective date of IFRS 9 until 2021 or until the application of IFRS 4, Insurance Contracts if that standard is applied before 2021. The Company is currently assessing the impact of this new standard on its consolidated financial statements.

80 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

3. CHANGES IN ACCOUNTING POLICIES (cont’d) New accounting standards not yet effective (cont’d) Revenue recognition In May 2014, the IASB issued IFRS 15, Revenue from Contracts with Customers (IFRS 15), which replaces IAS 18, Revenue and IAS 11, Construction Contracts. This new standard establishes a single framework for how and when to recognize revenue, except in the case of leases, financial instruments and insurance contracts. ­Following the IASB’s decision to defer the effective date of the standard by one year, IFRS 15 will apply retro­ spectively or prospectively with a cumulative adjustment as of January 1, 2018. The Company is currently assessing the impact of this new standard on its consolidated financial statements. Income taxes In January 2016, the IASB issued an amendment to IAS 12, Income Taxes to clarify the accounting of deferred tax assets related to debt instruments measured at fair value. The provisions of this amendment will apply retrospectively to financial statements of annual periods beginning on or after January 1, 2017. The Company is currently assessing the impact of this standard on its consolidated financial statements. Leases In January 2016, the IASB issued IFRS 16, Leases, which replaces IAS 17, Leases. This new standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. It provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, unless the lease term is 12 months or less or the underlying asset has a low value. However, lessor accounting remains largely unchanged, and the distinction between operating and finance leases is retained. This standard will apply retrospectively to annual periods beginning on or after January 1, 2019. The Company is currently assessing the impact of this standard on its consolidated financial statements. Statement of cash flows In February 2016, the IASB issued narrow-scope amendments to IAS 7, Statement of Cash Flows, which require companies to provide disclosures on changes in liabilities in the financing section. The amendments will apply prospectively to annual periods beginning on or after January 1, 2017. The Company is currently assessing the impact of this standard on its consolidated financial statements.

81 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

3. CHANGES IN ACCOUNTING POLICIES (cont’d) Restatement of the consolidated statement of income for the year ended December 31, 2014 The Company changed its accounting policy applicable to recognizing segregated fund premiums. The Com- pany now unbundles segregated fund contracts. Accordingly, only the premiums of the insurance component are recognized as income. The deposit component is now recognized using deposit accounting in accordance with IAS 39, Financial Instruments: Recognition and Measurement and is no longer recorded in the consolidated statement of income. The Company believes that the new accounting policy provides disclosures that enhance the comparability of its consolidated financial statements with those of other insurance companies. The retrospective application of the standard has required an adjustment to the consolidated statement of income of the comparative period. The table below summarizes the impact of the change in accounting policy for the year ended December 31, 2014: Before the change in Impact of the new Restated accounting policy accounting policy balance $ $ $ REVENUES Gross premiums 2,400.1 (315.7) 2,084.4 Investment income 125.7 0.3 126.0 Administration fees and other revenues 79.6 (8.1) 71.5 TOTAL REVENUES 2,509.8 (323.5) 2,186.3

BENEFITS AND EXPENSES Gross benefits 1,540.1 8.1 1,548.2 Transfers to segregated funds 331.6 (331.6) 0.0 TOTAL BENEFITS AND EXPENSES 2,404.3 (323.5) 2,080.8

82 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

4. INVESTMENTS Carrying value and fair value of general fund investments 2015

Designated at fair value through Held for profit or Available- Loans and Fair trading loss for-sale receivables1 Total value $ $ $ $ $ $

Bonds Canada, Quebec and other provinces – 1,342.5 251.7 – 1,594.2 Municipal and subsidized – 389.3 72.9 – 462.2 Canadian corporations – 813.5 107.3 – 920.8 – 2,545.3 431.9 – 2,977.2 2,977.2

Loans Residential mortgages – – – 376.6 376.6 Non-residential mortgages – – – 17.9 17.9 Other – – – 138.7 138.7 – – – 533.2 533.2 538.4

Fund units and shares Canadian fund units – 35.0 32.3 – 67.3 United States (U.S.) fund units – 27.3 10.6 – 37.9 International fund units – 5.7 – – 5.7 Preferred shares – 21.7 47.1 – 68.8 – 89.7 90.0 – 179.7 179.7 Investment fund 45.9 – – – 45.9 45.9 Cash and cash equivalents 75.0 – – 166.3 241.3 241.3 Derivative financial instruments 27.6 – – – 27.6 27.6 148.5 2,635.0 521.9 699.5 4,004.9 4,010.1

1 Fair values provided for cash and cash equivalents and loans classified as loans and receivables use Level 1 and Level 3 inputs, respectively. Refer to Note 5 for details of the fair value levels.

83 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

4. INVESTMENTS (cont’d) Carrying value and fair value of general fund investments (cont’d) 2014

Designated at fair value through Held for profit or Available- Loans and Fair trading loss for-sale receivables1 Total value $ $ $ $ $ $

Bonds Canada, Quebec and other provinces – 1,464.0 285.0 – 1,749.0 Municipal and subsidized – 321.7 63.0 – 384.7 Canadian corporations – 786.8 109.0 – 895.8 – 2,572.5 457.0 – 3,029.5 3,029.5

Loans Residential mortgages – – – 338.7 338.7 Non-residential mortgages – – – 16.3 16.3 Other – – – 107.3 107.3 – – – 462.3 462.3 468.5

Fund units and shares Canadian fund units – 32.0 35.3 – 67.3 United States (U.S.) fund units – 24.1 8.7 – 32.8 International fund units – 5.2 – – 5.2 Preferred shares – 19.1 22.3 – 41.4 – 80.4 66.3 146.7 146.7 Investment fund 52.2 – – – 52.2 52.2 Cash and cash equivalents 116.3 – – 120.5 236.8 236.8 Derivative financial instruments 19.7 – – – 19.7 19.7 188.2 2,652.9 523.3 582.8 3,947.2 3,953.4

84 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

4. INVESTMENTS (cont’d) Derivative financial instruments The Company uses daily settlement foreign exchange contracts, stock index contracts and interest rate swaps in support of certain obligations towards insureds and under its currency risk management strategy. Futures contracts, which are negotiated contracts in an organized market, represent firm commitments to buy or sell financial instruments at a given date. Swaps are contracts in which the Company and a third party commit to paying cash flows based on a notional amount, during a set time period and frequency. The following tables detail the notional principal amounts and remaining terms to expiration and the fair value of the Company’s derivative financial instruments: 2015

Notional Fair value Less than 1 year 1 to 5 years Over 5 years Total Positive Negative $ $ $ $ $ $

Foreign exchange contracts 71.8 – – 71.8 – (0.3) Stock index contracts 118.9 – – 118.9 – – Interest rate swaps 30.0 68.3 245.0 343.3 27.6 (1.4) 220.7 68.3 245.0 534.0 27.6 (1.7)

2014

Notional Fair value Less than 1 year 1 to 5 years Over 5 years Total Positive Negative $ $ $ $ $ $

Foreign exchange contracts 46.2 – – 46.2 – (0.1) Stock index contracts 89.3 – – 89.3 – – Interest rate swaps – 37.3 159.0 196.3 19.7 – 135.5 37.3 159.0 331.8 19.7 (0.1)

85 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

5. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES Financial instruments recorded at fair value in the consolidated statements of financial position are classified using a hierarchy that reflects the significance of the inputs used in determining valuations and includes three levels: Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 – A valuation based on inputs observable in markets for the asset or liability, obtained either directly or indirectly Level 3 – A valuation based on inputs other than inputs observable in markets for the asset or liability The following table shows financial assets and liabilities classified based on the fair value hierarchy: 2015

Level 1 Level 2 Level 3 Total $ $ $ $

Financial assets at fair value through profit or loss Bonds Canada, Quebec and other provinces 8.5 1,334.0 – 1,342.5 Municipal and subsidized 0.2 389.1 – 389.3 Canadian corporations 3.6 809.9 – 813.5 Fund units and shares Canadian fund units 35.0 – – 35.0 U.S. fund units 27.3 – – 27.3 International fund units 5.7 – – 5.7 Preferred shares 21.7 – – 21.7 Investment fund 45.9 – – 45.9 Cash and cash equivalents – 75.0 – 75.0 Derivative financial instruments – 27.6 – 27.6 147.9 2,635.6 – 2,783.5 Available-for-sale financial assets Bonds Canada, Quebec and other provinces 13.2 238.5 – 251.7 Municipal and subsidized 0.4 72.5 – 72.9 Canadian corporations 5.5 101.8 – 107.3 Fund units and shares Canadian fund units 32.3 – – 32.3 U.S. fund units 10.6 – – 10.6 Preferred shares 47.1 – – 47.1 109.1 412.8 – 521.9 Financial liabilities at fair value through profit or loss Derivative financial instruments – 1.7 – 1.7 General fund investment contracts – – 0.3 0.3 – 1.7 0.3 2.0

The determination of the fair value hierarchy levels is performed at the end of each financial year. During the years ended December 31, 2015 and 2014, there were no transfers of financial assets between Levels 1 and 2.

86 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

5. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (cont’d) 2014

Level 1 Level 2 Level 3 Total $ $ $ $

Financial assets at fair value through profit or loss Bonds Canada, Quebec and other provinces 9.2 1,454.8 – 1,464.0 Municipal and subsidized 0.3 321.4 – 321.7 Canadian corporations 4.0 782.8 – 786.8 Fund units and shares Canadian fund units 32.0 – – 32.0 U.S. fund units 24.1 – – 24.1 International fund units 5.2 – – 5.2 Preferred shares 19.1 – – 19.1 Investment fund 52.2 – – 52.2 Cash and cash equivalents – 116.3 – 116.3 Derivative financial instruments – 19.7 – 19.7 146.1 2,695.0 – 2,841.1 Available-for-sale financial assets Bonds Canada, Quebec and other provinces 46.9 238.1 – 285.0 Municipal and subsidized 1.4 61.6 – 63.0 Canadian corporations 20.3 88.7 – 109.0 Fund units and shares Canadian fund units 35.3 – – 35.3 U.S. fund units 8.7 – – 8.7 Preferred shares 22.3 – – 22.3 134.9 388.4 – 523.3 Financial liabilities at fair value through profit or loss Derivative financial instruments – 0.1 – 0.1 General fund investment contracts – – 0.3 0.3 – 0.1 0.3 0.4

87 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

6. FINANCIAL INSTRUMENTS RISK MANAGEMENT The Company has adopted control policies and procedures to manage risks related to financial instruments. An investment policy was approved by the Board of Directors to provide a framework for making investment decisions. The control procedures arising from this policy ensure sound management of investment risks. Segregated funds are excluded from the financial instruments risk management analysis since the policy­ holders assume the risks and benefit from the rewards of the segregated fund contracts. Risks related to financial instruments are credit risk, liquidity risk and market risk. Credit risk Credit risk is the risk of financial loss to the Company if a debtor fails to honour its obligations. The Company is exposed to this type of risk through its investment portfolios and, in particular, through credit extended as loans. The Company is also exposed to credit risk with regard to outstanding premiums and amounts receivable from reinsurers. It manages credit risk by applying the following control procedures: • utilization guidelines that set minimum and maximum limits are established for each class of investment to meet the specific needs of each business sector; • the guidelines allocate liability among various quality Canadian issuers with credit ratings from recognized sources of BBB or higher at trade date; • an overall limit is established for each credit rating quality level; • an overall limit is also established for investments of a related issuer or group of issuers to mitigate concen- tration risk; • a detailed mortgage loan policy specifies the requirements for guarantees and credit; • loans to insureds, included in other loans, correspond to the unpaid capital balances of policy loans and are fully secured by the cash surrender value of the insurance contracts on which the respective loans are made; • the Investment Committee of the Board of Directors carries out regular reviews of the investment portfolio and its transactions; • when entering into reinsurance agreements, the Company monitors the financial position of the reinsurers;

88 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

6. FINANCIAL INSTRUMENTS RISK MANAGEMENT (cont’d) Credit risk (cont’d) Maximum exposure to credit risk 2015 2014 $ $

Bonds 2,977.2 3,029.5 Loans 533.2 462.4 Preferred shares 68.8 41.5 Cash and cash equivalents 241.3 236.8 Derivative financial instruments 27.6 19.7 Outstanding premiums 167.2 175.3 Ceded reinsurance assets 1,567.1 1,497.4 Other assets Other receivables 53.4 46.2 Investment income due and accrued 16.3 14.9 5,652.1 5,523.7

Bond portfolio quality 2015 2014 $ % $ %

Bonds Canada, Quebec and others provinces 1,594.2 53.5 1,749.0 57.7 Municipal and subsidized 462.2 15.5 384.7 12.7 Canadians corporations, per credit rating AAA 32.8 1.1 36.0 1.2 AA 125.6 4.2 115.6 3.8 A 565.2 19.0 532.6 17.6 BBB 197.2 6.7 211.6 7.0 2,977.2 100.0 3,029.5 100.0

Loan portfolio quality 2015 2014 $ $

Insured loans 370.9 285.7 Conventional loans 162.3 176.6 533.2 462.3 As at December 31, 2015, the current portion of bonds and loans amount to $176.9 (2014 – $204.4) and $94.0 (2014 – $110.1), respectively.

89 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

6. FINANCIAL INSTRUMENTS RISK MANAGEMENT (cont’d) Credit risk (cont’d) Allowance for investment losses The allowance for investment losses is established based on the Company’s assessment of its financial assets, considering all objective evidence of impairment. Such evidence stems from the financial difficulties of the issuer or from defaults on principal or interest payments. Obligations towards insureds also include an allo- wance to cover any potential loss on loans and investments in debt securities. The Company maintains an allowance for credit losses relating to the carrying value of its loans. A loss provi- sion is established when the Company entertains doubt regarding the full recovery of the principal or interest on a loan. For allowance purposes, estimated realizable loan value takes into account recovery forecasts, guarantee valuations and market conditions. The following table summarizes impaired loans and allowances for investment losses:

2015 2014

Allowance for Allowance for investment investment Impaired loans losses Impaired loans losses $ $ $ $

Residential mortgages loans 0.5 0.2 0.7 0.2 Other loans 30.1 1.7 30.0 1.7 30.6 1.9 30.7 1.9 General allowance on mortgage loans – 1.8 – 1.7 30.6 3.7 30.7 3.6

2015 2014 $ $

Allowance for investment losses Balance, beginning of year 3.6 3.8 New allowance 0.1 – Recovery – (0.2) Balance, end of year 3.7 3.6

Past due financial assets A financial asset is deemed past due when the counterparty has failed to make a payment when contractually due. A financial asset that is past due is subject to a provision for loss to adjust its accounting value in relation to its estimated net realizable value when the Company doubts its recovery. As at December 31, 2015, the Company has financial assets past due for $4.2 (2014 – $3.5).

90 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

6. FINANCIAL INSTRUMENTS RISK MANAGEMENT (cont’d) Credit risk (cont’d) Securities lending The Company engages in securities lending to generate additional income, which are recorded in investment income. Some securities are lended to other institutions for a short period. The Company receives garantees that represent a minimum of 102% of the fair value of the securities lent out. These garantees are deposited by the borrower with a depository to be retained until the securities lent out are recovered by the Company. The fair value of the securities on loan are monitored on a daily basis. Additional security is required depending on fluctuations in the fair value of the underlying securities on loan. As at December 31, 2015, the carrying value of the securities on loan by the Company included in investments is of $124.1 (2014 – $202.1). Liquidity risk Liquidity risk refers to the risk that the Company might experience cash flow difficulties arising from its obli- gations and financial liabilities. The Company manages liquidity risk by applying the following control procedures: • the Company manages its liquidities by matching cash flows from its operations and investments to those required to meet its obligations • its cash position is analyzed on short and medium term horizons to meet the needs of the different business sectors The following table presents contractual maturities of the undiscounted cash flows of financial liabilities and unsettled claims of the Company’s property and casualty insurance contracts.

2015

Payable on Less than demand 1 year 1 to 5 years Over 5 years Total $ $ $ $ $

Unpaid claims – 30.2 4.0 0.1 34.3 General fund investment contracts 0.3 – – – 0.3 Accounts payable – 147.3 – – 147.3 Derivative financial instruments – 1.7 – – 1.7 Subordinated debt – – 10.0 165.0 175.0 Other financial liabilities 0.8 1.2 – – 2.0 1.1 180.4 14.0 165.1 360.6

91 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

6. FINANCIAL INSTRUMENTS RISK MANAGEMENT (cont’d) Liquidity risk (cont’d) 2014

Payable on Less than demand 1 year 1 to 5 years Over 5 years Total $ $ $ $ $

Unpaid claims – 29.4 3.7 0.2 33.3 General fund investment contracts 0.3 – – – 0.3 Accounts payable – 144.5 – – 144.5 Derivative financial instruments – 0.1 – – 0.1 Subordinated debt – – 3.0 172.0 175.0 Other financial liabilities 0.8 3.6 – – 4.4 1.1 177.6 6.7 172.2 357.6

Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to market factors. Market risk includes three types of risk: interest rate risk, market price risk and currency risk. A) Interest rate risk The Company matches its assets with liabilities from obligations in each of its business sectors. Interest rate risk exists when interest rates fluctuate due to widening spreads in matching expected cash flows between assets and liabilities. In managing interest rate risk, the Company focuses on matching expected cash flows of assets and liabilities in selecting the investments backing its obligations. It uses different measures and performs sensitivity ana- lyses to evaluate the spreads between the cash flows generated by investments held and those required to meet obligations according to various future interest rate scenarios. The Company’s investment policy sets maximum spread limits for those measures as applied to assets and liabilities. This information is disclosed to the Investment Committee on a quarterly basis. The results of the interest rate sensitivity analyses also serve to establish the amounts to be included in the valuation of obligations towards insureds for interest rate risk. A change of 1% in the interest rate curve would not have a significant impact on income of 2015 and 2014. For its available-for-sale financial assets not matched to obligations towards insured, the Company believes that a 1% increase in the interest rate curve would result in a decrease of $23.7 (2014 – $21.3) in other com- prehensive income.

92 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

6. FINANCIAL INSTRUMENTS RISK MANAGEMENT (cont’d) Market risk (cont’d) B) Market price risk The Company is exposed to market price risk through its available-for-sale equity investments and fund units. The investment policy puts restrictions on equity investments and fund units and sets out their limits. Changes in the fair value of these investments are recognized in comprehensive (loss) income. A sudden 10% decrease in the value of such investments would result in an estimated decrease of $6.6 (2014 – $4.8) in other comprehensive income. The Company is also exposed to market price risk through income from investment fund management fees and expenses related to capital guarantees provided to segregated funds. A sudden 10% decrease in stock markets would result in an estimated decrease of $1.1 (2014 – $1.1) in income. C) Currency risk Currency risk exists when transactions in currencies other than the Canadian dollar are affected by unfavourable exchange rate changes. As at December 31, 2015 and 2014, the Company was not exposed to any significant currency risk in respect of financial instruments.

7. RIGHT OF OFFSET, COLLATERAL HELD AND TRANSFERRED The Company negotiates financial instruments in accordance with the Credit Support Annex (CSA) of the International Swaps and Derivative Association’s (ISDA) Master Agreement and in accordance with the ­Supplemental Terms and Conditions Annex of the Global Master Repurchase Agreement (GMRA). These agreements require guarantees by the counterparty or by the Company. The amount of assets pledged is based on changes in fair value of financial instruments. Under that agreement, the Company has the right to offset in the event of default, insolvency, bankruptcy or other early termination. The Company does not offset financial instruments due to conditional rights.

8. LIFE AND HEALTH INSURANCE CONTRACTS Fair value of gross reserve The fair value of the actuarial reserve is determined based on the fair value of the assets supporting the liabi- lities it represents. Insofar as the assets supporting the actuarial reserve are recorded on the statement of financial position at fair value, the carrying value of the actuarial reserve reflects fair value.

93 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

8. LIFE AND HEALTH INSURANCE CONTRACTS (cont’d) Nature of obligations The liability related to life and health insurance contracts are amounts that, added to future premiums and investment revenues, will allow the Company to respect its commitment to pay future claims, experience refunds and corresponding expenses originating from contracts in force. The liability related to life and health insurance contracts are periodically reviewed and allow for additional amounts required to cover risks origina- ting from plausible adverse deviations in experience as compared to the most probable assumptions. These amounts take into account the uncertainty included in the valuation assumptions. Inherent uncertainty of the appraisal process In order to estimate the liability related to life and health insurance contracts, assumptions are required regar- ding future events related to mortality, morbidity, lapses, investment returns and operating expenses. These assumptions also include a provision for adverse deviations attributable to the inherent uncertainty of the appraisal process. Mortality The mortality assumption is based on a combination of the Company’s most recent experience and the recent industry experience published by the Canadian Institute of Actuaries. Morbidity The morbidity assumptions used are those published by the industry adjusted to consider the Company’s own experience over a long period of time. Each year, the actual experience is compared to the one anticipated to ensure that the morbidity assumptions used are adequate. Investment returns The investment returns considered in the valuation of liability related to life and health insurance contracts are based mostly on those of the assets held to back these obligations. In this context, cash inflows from assets are compared to those of the liability related to life and health insurance contracts to detect any mismatch taking properly into account the reinvestment or disinvestment risks inherent to such situations. To ensure that the amount of assets will be sufficient to cover all the obligations, a multi-scenario analysis is performed regarding future evolution of interest rates when cash flow mismatches are expected. Losses due to credit impairment have impacts on the future cash flows of assets backing the obligations. In addition to the allowance for investment losses already deducted from the carrying value of investments, additional credit risk, whose level is close to the one experienced by the Company or determined through analysis performed by the industry, is considered in the determination of future cash flows from invested assets.

94 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

8. LIFE AND HEALTH INSURANCE CONTRACTS (cont’d) Lapses Policyholders may choose to let their contracts lapse by ceasing to pay their premiums. The Company bases its estimate of the lapse rate on past results of each of its business portfolios. A business portfolio is consi- dered to be lapse-supported if an increase in the ultimate lapse rate is associated with increased profitability. On the other hand, if a decrease in the ultimate lapse rate is associated with increased profitability, the business portfolio is not considered to be lapse-supported. Operating expenses The assumptions regarding operating expenses are drawn from internal analyses performed yearly by the Company, with adjustments for expected future inflation.

9. PROPERTY AND CASUALITY INSURANCE CONTRACTS Nature of obligations Liabilities related to property and casualty insurance contracts represent the amounts that, increased by future investment income, will enable the Company to honour the appraised amount of future claims and the corres- ponding fees under the terms of the contracts in force. Liabilities related to property and casualty insurance contracts are periodically reviewed and include additional amounts representing possible adverse deviations in relation to the most probable assumptions; these additional amounts vary based on the degree of uncertainty inherent in the assumptions used. Inherent uncertainty of the appraisal process In calculating the liability related to property and casualty insurance contracts, assumptions are made regarding probable future events related to materialization and the discount rate. These assumptions also include a margin for adverse deviations attributable to the inherent uncertainty of the appraisal process. Margin for claims development The margin for claims development assumption is used to take several factors into account such as the fre- quency and severity of claims. This assumption is based on the Company’s experience and on forecasts made in accordance with the requirements of the Canadian Institute of Actuaries. Discount rates Discount rates are used in calculating the liability related to property and casualty insurance contracts to take the time value of money into account.

95 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

10. SUBORDINATED DEBT 2015 2014 $ $

Debenture, Series A, 7.75%, maturing in 20191 3.0 3.0 Debenture, 7.49%, maturing in 2022 and redeemable by the Company under certain conditions 50.0 50.0 Debenture payable to majority shareholder, 6.4%, maturing in 2027 10.0 10.0 Debenture, 6.3%, maturing in 2030 and redeemable by the Company under certain conditions 20.0 20.0 Debenture payable to majority shareholder, 6.74%, maturing in 2030 15.0 15.0 Debenture, 6%, maturing in 2032 and redeemable by the Company under certain conditions 20.0 20.0 Debenture payable to majority shareholder, 7.446%, maturing in 2032 and redeemable by the Company under certain conditions 30.0 30.0 148.0 148.0 Subordinated notes, maturing in 2020 and bearing interest at 7.09% compounded semi-annual1 6.1 6.1 Majority shareholder 0.9 0.9 Shareholder 7.0 7.0

Subordinated note payable to majority shareholder, maturing in 2023, bearing interest at 5.93% compounded semi-annual until 2018, bearing interest at the 3-month Canadian Dealer Offered Rate plus 2.50% compounded quarterly until 2023 20.0 20.0 27.0 27.0 175.0 175.0 Fair value2 200.3 206.2

1 Convertible at the discretion of the holder into shares under certain circumstances such as change in control, merger, public offering or default in the payment of interest and principal at maturity. 2 The fair value provided for the subordinated debt uses Level 3 inputs. Refer to Note 5 for additional information on of the fair value levels.

The fair value of subordinated debt classified as other financial liabilities is determined using a model based on discounted expected cash flows. Cash flows are discounted at a rate equal to the rate of return of a benchmark index with a risk profile that is similar to that of underlying assets and with a term whose duration equals the maximum anticipated maturity of the subordinated debt.

96 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

11. SHARE CAPITAL Authorized Class A 150,000,000 shares, with no par value, with participating and voting right Class B 150,000,000 shares, with no par value, with participating and voting right, redeemable by mutual agreement, convertible at the discretion of the holder in whole or in part, into Class A shares, one Class A share for each Class B share exchanged Class C 100,000,000 shares, with a par value of one dollar each, non-voting, giving the right to fixed preferred dividends to Class A and B shares, issuable in one or several series. 2015 2014 $ $

Issued 20,615,293 Class A shares 95.4 95.4 50,690,905 Class B shares 247.8 247.8 343.2 343.2

On November 27, 2014, the Company converted 16,666,667 Class A shares which had a book value of $17.2 into 16,666,667 Class B shares. The Company also issued 7,380,750 Class A shares to its minority sharehol- der along with 18,151,378 Class B shares to its majority shareholder with book value of $88.6 and $218.0 respectively, in exchange for the non-ownership stake in SSQ Insurance Company Inc. The difference of $70.5 between the issued share capital and the book value of $236.1 of the non-ownership stake was adjusted to retained earnings. These book values were established as at September 30, 2014, in accordance with any agreement between the parties.

12. CAPITAL MANAGEMENT The Company’s capital management policy is designed to satisfy the laws, regulations, guidelines of the Autorité des marchés financiers (Autorité) and applicable instructions regarding capital management. To ensure sound and prudent capital management, the Company is required to comply with the guideline on capital adequacy requirements. The Company is subject to the requirements defined by theAutorité . According to the Autorité’s guideline on capital adequacy requirements, the capital adequacy ratio is calculated by dividing available capital by required capital. Available capital represents total capital, less the deductions prescribed by the Autorité. Required capital is determined on the basis of certain risk factors.

97 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

12. CAPITAL MANAGEMENT (cont’d) To maintain a capital amount that satisfies the criteria of the Autorité, the Company makes annual financial forecasts for the next five years; among the data reviewed are the solvency ratio and changes to the solvency ratio. The actuary, appointed by the Board of Directors in conformity with An Act respecting insurance, pre- pares an annual assessment of the financial position of the Company; he carries out dynamic capital adequacy testing (DCAT) of which one objective is to verify the capital adequacy of the Company despite plausible unfavourable events. These documents are submitted and presented to the Board of Directors. The Autorité’s guideline states that the Company must set a target level of available capital that exceeds the minimum requirements. The Company’s current solvency ratio exceeds minimum requirements and is higher than the set target. Available capital position 2015 2014 $ $

Equity 727.0 670.7 Subordinated debt 175.0 175.0 Prescribed reductions and other adjustments (106.7) (121.8) Available capital 795.3 723.9

Concerning its subsidiaries, SSQ Insurance Company Inc. and SSQ General Insurance Company Inc., the Company’s policy is to maintain a higher target level of capital than required under the Autorité’s guidelines on capital adequacy requirements, namely CAR and MCT, that apply respectively to the subsidiaries. The solvency ratios of the subsidiaries as at December 31, 2015 and 2014 exceed the level required under the guidelines.

13. INCOME TAXES 2015 2014 $ $

Income tax expense for the year – Income Current income taxes 33.2 23.9 Deferred income taxes resulting from the origination or reversal of temporary differences (11.6) (6.5) 21.6 17.4

98 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

14. COMPONENTS OF THE CONSOLIDATED STATEMENT OF INCOME 2015 2014 $ $

Gross premiums Life and health insurance 1,917.6 1,816.5 Investment and retirement 72.4 47.8 Property and casualty insurance 214.9 220.1 2,204.9 2,084.4

15. SEGREGATED FUNDS A) Carrying value of segregated fund investments 2015 2014 $ $

Investment fund units 3,612.4 3,276.2 Bonds and other fixed income investments 600.4 660.7 Shares 526.5 422.6 Derivative financial instruments 0.7 0.5 Total investments 4,740.0 4,360.0 Other assets and liabilities 29.8 9.6 4,769.8 4,369.6

99 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

15. SEGREGATED FUNDS (cont’d) B) Fair value of segregated fund investments The following tables present investments in segregated funds classified according to the fair value hierarchy defined in Note 5 and exclude all other financial assets except derivative financial instruments: 2015

Level 1 Level 2 Level 3 Total $ $ $ $

Segregated fund financial assets at fair value through profit or loss Investment fund units 3,114.2 498.2 – 3,612.4 Bonds – 476.5 – 476.5 Money market – 123.9 – 123.9 Shares 517.0 – 9.5 526.5 Derivative financial instruments 0.7 – – 0.7 3,631.9 1,098.6 9.5 4,740.0 Segregated fund financial liabilities at fair value through profit or loss Derivative financial instruments (6.6) – – (6.6) (6.6) – – (6.6)

During the years ended December 31, 2015 and 2014, there were no transfers of investments related to segregated funds between Levels 1 and 2. 2014

Level 1 Level 2 Level 3 Total $ $ $ $

Segregated fund financial assets at fair value through profit or loss Investment fund units 2,872.9 403.3 – 3,276.2 Bonds – 517.9 – 517.9 Money market – 142.8 – 142.8 Shares 413.8 – 8.8 422.6 Derivative financial instruments 0.5 – – 0.5 3,287.2 1,064.0 8.8 4,360.0 Segregated fund financial liabilities at fair value through profit or loss Derivative financial instruments (7.8) – – (7.8) Share purchase commitment (9.2) – – (9.2) (17.0) – – (17.0)

100 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

15. SEGREGATED FUNDS (suite) C) Changes in segregated fund insurance contracts and investment contracts 2015 2014 Insurance Investment Insurance Investment contracts contracts contracts contracts $ $ $ $

Balance, beginning of year 1,591.5 2,778.1 2,050.3 2,593.5 Amounts collected from poli- cyholders 339.5 435.9 344.0 300.3 Investment income 31.7 138.3 121.3 365.7 Amounts paid to policyholders (265.2) (280.0) (330.9) (403.6) Disposal of portfolios – – (593.2) (77.8) Balance, end of year 1,697.5 3,072.3 1,591.5 2,778.1

In accordance with the contractual maturities of cash flows, segregated fund insurance contracts and ­investment contracts are payable on demand.

16. CONTINGENCIES AND COMMITMENTS Contingencies The Company and its subsidiaries are subject to legal actions, including proposed class actions. The Com- pany does not expect that settlement of current legal actions will have a material adverse effect on its consolidated financial position. Letters of credit In the normal course of business, banking institutions issue letters of credit on the Company’s behalf. As at December 31, 2015, these letters of credit amount to $3.3 (2014 – $2.9). No assets were pledged against these letters of credit. Commitments The Company leases vehicule, IT equipment and office space as lessee. These leases mature between 2016 and 2025. Lease payments, equal to the minimum payments expensed during the year, totalled $9.9 (2014 – $10.1). The expected payments on the leases are as follows:

Less than 1 year 1 to 5 years Over 5 years Total $ $ $ $ Basic rents 7.3 17.0 15.3 39.6

101 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

EXCERPT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2015 (in millions of dollars, unless otherwise indicated)

17. LEASES The Company leases, as lessor, certain investment properties and fixed assets under operating leases. These leases mature between 2016 and 2030. During the year, the Company’s rental income from its investment property and fixed assets totalled $20.0 (2014 – $19.0), while direct operating expenses totalled $13.9 (2014 – $14.0). Expected receipts on operating leases are as follows:

Less than 1 year 1 to 5 years Over 5 years Total $ $ $ $ Basic rents 9.5 28.6 25.3 63.4

102 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

STRUCTURE

SSQ, Mutual SSQ Dedicated Fonds de solidarité FTQ Management Corporation Segregated Fund

SSQ, Mutual Holding Inc.

SSQ, Life Insurance Company Inc.

SSQ Insurance SSQ General Insurance SSQ Realty Inc. Company Inc. Company Inc.

SSQ Foundation

103 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

SSQ, LIFE INSURANCE COMPANY INC. AND SSQ INSURANCE COMPANY INC.

Boards of Directors Michel Nadeau* / Longueuil Executive Director Chairman Institute for Governance of Private and Pierre Genest* / Quebec City Public Organizations Chairman of the Board Denyse Paradis* / Terrebonne SSQ, Mutual Management Corporation Secretary and Treasurer Fédération de la santé et des services sociaux (FSSS) Vice-Chairman – CSN Émile Vallée* / Gatineau Sylvain Paré / Montreal Retiree Executive Vice-President, Finance Fédération des travailleurs et travailleuses Fonds de solidarité FTQ du Québec (FTQ) Alain Pélissier* / Montreal Directors Retiree Normand Brouillet* / Saint-Lambert Centrale des syndicats du Québec (CSQ) Retiree Jean Perron* / Quebec City Confédération des syndicats nationaux (CSN) Corporate Director Jean-François Chalifoux / Quebec City Sylvain Picard* / Wendake Chief Executive Officer Executive Director SSQ, Life Insurance Company Inc. Régime des bénéfices autochtones Claude Choquette / Quebec City Alistair Angus H. Ross / Picton President President HDG Inc. L&A Concepts Chantal Doré / Boucherville Norman A. Turnbull / Varennes Vice-President – Information Technology, Corporate Director Project Management and Administration Fonds de solidarité FTQ Corporate Secretary Carolle Dubé* /Repentigny Hélène Plante President Alliance du personnel professionnel et technique * Member of the Board of Directors of de la santé et des services sociaux (APTS) SSQ, Mutual Management Corporation Eddy Jomphe* / Lévis Union Representative Canadian Union of Public Employees (CUPE) – FTQ Andrew MacDougall* / Toronto President Spencer Stuart Canada Jude Martineau / Quebec City Corporate Director Gaétan Morin / Terrebonne President and Chief Executive Officer Fonds de solidarité FTQ

Member of Mutualism Promotion Committee Member of Executive and Human Resources Committee Member of Audit and Risk Management Committee Member of Investment Committee Member of Ethics Committee

104 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

SSQ GENERAL SSQ FINANCIAL GROUP INSURANCE COMPANY INC. Senior Management

Chairman Jean-François Chalifoux Pierre Genest / Quebec City Chief Executive Officer Chairman of the Board Serge Boiteau SSQ, Life Insurance Company Inc. Appointed Actuary and Strategic Advisor to the Chief Executive Officer Vice-Chairman Patrick Cyr Jacques Rochefort / Montreal Senior Vice-President Chief Executive Officer Finance and Realty TC Media Books Carl Laflamme Directors Senior Vice-President Jean-François Chalifoux / Quebec City Group Insurance Chief Executive Officer Marie Lamontagne SSQ, Life Insurance Company Inc. Senior Vice-President Josée Lachapelle / Laval Corporate Communications and E-business Senior Director Denis Légaré Investments – Financial Services, Services, Senior Vice-President Mining and Metal Products Investment Director Human Resources and Internal Communications Fonds de solidarité FTQ Michel Loranger Danielle Lallemand / L’Assomption Senior Vice-President Accountant Information Technologies Confédération des syndicats nationaux (CSN) Gilles Mourette André L’Écuyer / Saint-Augustin-de-Desmaures Chief Executive Officer President SSQ General Insurance Company Inc. Rabaska Bernard Tanguay Lucie Martineau / Lévis Senior Vice-President General President Investment and Retirement and Syndicat de la fonction publique et parapublique SSQ Insurance Company Inc. du Quebec (SFPQ) Éric Trudel Bernard Piché / Montreal Senior Vice-President Corporate Director Corporate Services Jocelyn Tremblay / Quebec City Union Representative Canadian Union of Public Employees (CUPE) – FTQ Pierre-Maurice Vachon / Québec Corporate Director Corporate Secretary Hélène Plante

Member of Executive and Human Resources Committee Member of Audit and Risk Management Committee Member of Investment Committee Member of Ethics Committee

105 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

SSQ, LIFE INSURANCE COMPANY INC.

Corporate Secretary Investments Hugo Drouin Hélène Plante Vice-President – Investments Vice-presidencies Corporate Services Group insurance Carl Cleary Chantal Auger Vice-President – Corporate Development Vice-President – Administration France LeBlanc Dany Caron Vice-President – Corporate Actuarial Regional Vice-President Information Technologies Quebec City Office Éric Benoit Donald Cyr Vice-President – IT Business Solutions Development – Vice-President – Actuarial Group Insurance and Corporate Services Diane Gaulin Martin Paré Vice-President – Sales, Public Sector Vice-President – IT Infrastructure, Integration and Security Blair MacIntyre Éric Savard Regional Vice-President – Corporate Accounts Vice-President – IT Business Solutions Development – Toronto Office Individual Products Ron Smitko Regional Vice-President – TPA Sector Toronto Office Individual Insurance and Investment Martin Bédard Regional Vice-President – Business Development Institutional and Private Wealth Luc Bossé Regional Vice-President – Business Development Montreal Office Sylvain Charbonneau Vice-President – Actuarial and Marketing Jean Cinq-Mars Vice-President – Client Services and Administration Douglas Paul Regional Vice-President – Business Development Ontario, Western Canada and Atlantic Region Marc Trépanier Vice-President – National Business Development Individual Insurance and Retirement

106 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

SSQ INSURANCE COMPANY INC.

Vice-presidencies Jean Cinq-Mars Vice-President – Client Services and Administration Sylvain Charbonneau Vice-President – Actuarial and Marketing Gilles Loiselle Vice-President – Strategic Advisor SSQ GENERAL INSURANCE COMPANY INC.

Corporate Secretary Hélène Plante Vice-presidencies Ginette Fortin Vice-President – Insurance Aurel Lessard Vice-President – Sales and Marketing Patrice Raby Vice-président – Actuarial Éric Thériault Vice-President – Claims SSQ REALTY INC.

Vice-presidency France Rodrigue Vice-President – Realty and Material Resources

107 SSQ FINANCIAL GROUP ... 2015 ANNUAL REPORT

ADDRESSES SSQ Insurance Company Inc. 800 6th Avenue SW, Suite 650 SSQ, Life Insurance Company Inc. Calgary, AB T2P 3G3 Tel.: 403-592-8516 Head Office 1-855-772-3082 2525 Laurier Blvd Quebec City, QC G1V 2L2 1680 Bedford Row Tel.: 418-651-7000 PO Box 1001 1-800-463-5525 Halifax, NS B3J 2X1 Tel.: 1-800-848-0158 1200 Papineau Avenue, Suite 460 Montreal, QC H2K 4R5 2020 Robert-Bourassa Blvd, Suite 1800 Tel.: 514-521-7365 Montreal, QC H3A 2A5 1-800-361-8100 Tel.: 514-282-6064 1-855-233-7056 110 Sheppard Avenue East, Suite 500 Toronto, ON M2N 6Y8 110 Sheppard Avenue East, Suite 500 Tel.: 416-221-3477 Toronto, ON M2N 6Y8 1-866-696-6001 Tel.: 416-928-8801 1-877-928-8801 SSQ General Insurance Company Inc. 701 Georgia Street West, Suite 1500 Head Office Vancouver, BC V7Y 1C6 Tel.: 604-681-9266 2515 Laurier Blvd 1-855-803-5797 Quebec City, QC G1V 2L2 Tel.: 418-683-5515 1-888-683-5515 CONTACT US Corporate Communications 1010 Sérigny Street, Suite 800 Longueuil, QC J4K 5G7 SSQ Financial Group Tel.: 450-321-0056 2525 Laurier Blvd 1-888-683-5515 Quebec City, QC G1V 2L2 Tel.: 1-866-332-3806 SSQ Realty Inc. [email protected] 2525 Laurier Blvd You can also visit us at ssq.ca. Quebec City, QC G1V 2L2 Tel.: 418-682-1245

ISSN 1700-0688 Legal Deposit – 2nd quarter 2016 Bibliothèque et Archives nationales du Québec National Library of Canada

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