1. Overall Role and Responsibility


1.1 The Audit & Risk Management Committee (“Committee”) shall:

(a)

assist the Board of Directors in its oversight role with respect to:

(i) the quality and integrity of financial information;

(ii) the effectiveness of the Company’s risk management and compliance practices;

(iii) the independent auditor’s performance, qualifications and independence;

(iv) the performance of the Company’s internal audit function; and

(v) the Company’s compliance with legal and regulatory requirements; and

(b)

prepare such reports of the Committee required to be included in the Proxy Circular in accordance with applicable laws or the rules of applicable securities regulatory authorities.


2. Structure and Composition

2.1

The Committee shall consist of three or more Directors appointed by the Board of Directors on the recommendation of the Corporate Governance and Nominating Committee.


2.2


No member of the Committee shall be an officer or employee of the Company, its subsidiaries or affiliates. Members of the Committee will not be affiliated with the Company as such term is defined in the Insurance Companies Act (Canada).


2.3


Each member of the Committee shall satisfy the applicable independence and experience requirements of the laws governing the Company, the applicable stock exchanges on which the Company’s securities are listed and applicable securities regulatory authorities.


2.4


The Board of Directors shall designate one member of the Committee as the Committee Chair.


2.5


Members of the Committee shall serve at the pleasure of the Board of Directors for such term or terms as the Board of Directors may determine.


2.6


Each member of the Committee shall be financially literate as such qualification is interpreted by the Board of Directors in its business judgment.


2.7


The Board of Directors shall determine whether and how many members of the Committee qualify as a financial expert as defined by applicable law.


2.8


The Committee shall annually determine whether any of its members serve on the audit committee of three or more other public companies. If any of the Committee members fall into this category, the Committee shall consider the ability of such members to effectively serve on the Committee and, if it is determined that such members are able to continue serving, the Committee shall record the reasons for such a decision.


3. Structure, Operations and Assessment

3.1

The Committee shall meet quarterly or more frequently as the Committee may determine. The Committee shall report to the Board of Directors on its activities after each of its meetings.


3.2


The affirmative vote of a majority of the members of the Committee participating in any meeting of the Committee is necessary for the adoption of any resolution.


3.3


The Committee may create one or more subcommittees and may delegate, in its discretion, all or a portion of its duties and responsibilities to such subcommittees.


3.4


The Committee shall, on an annual basis:


(a)


review and assess the adequacy of this Charter and, where necessary, recommend changes to the Board of Directors for its approval;


(b)


undertake a performance evaluation of the Committee comparing the performance of the Committee with the requirements of this Charter; and


(c)


report the results of the performance evaluation to the Board of Directors.


The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate. The report to the Board of Directors may take the form of an oral report by the chair of the Committee or any other member of the Committee designated by the Committee to make this report.


3.5


The Committee is expected to establish and maintain free and open communication with management, the independent auditor, the internal auditor and the Appointed Actuary and shall periodically meet separately with each of them.



4. Specific Duties


The Committee will carry out the following specific duties:

4.1 Oversight of the Independent Auditor

(a)

Appoint or replace the independent auditor (subject to shareholder ratification) and set the compensation for the independent auditor.


(b)


Provide the oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The independent auditor shall report directly to the Committee.


(c)


Preapprove all audit services and permitted non-audit services (including the fees, terms and conditions for the performance of such services) to be performed by the independent auditor.


(d)


When appropriate, the Committee may delegate to one or more members the authority to grant preapprovals of audit and permitted non-audit services.


(e)


Annually review any delegation of authority to grant preapprovals of audit and permitted non-audit services.


(f)


Review the decisions of such delegates under subsection (e) above, which shall be presented to the full Committee at its next scheduled meeting.


(g)


Evaluate the qualifications, performance and independence of the independent auditor, including:


(i)


reviewing and evaluating the lead partner on the independent auditor’s engagement with the Company; and


(ii)


considering whether the auditor’s quality controls are adequate and the provision of permitted non-audit services are compatible with maintaining the auditor’s independence.


(h)


Present its conclusions with respect to the independent auditor to the Board of Directors and, if so determined by the Committee, recommend that the Board of Directors take additional action to satisfy itself of the qualifications, performance and independence of the independent auditor.


(i)


Obtain and review a report from the independent auditor at least annually regarding:


(i)


the independent auditor’s internal quality-control procedures;


(ii)


any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm;


(iii)


any steps taken to deal with any such issues; and


(iv)


all relationships between the independent auditor and the Company.


(j)


Review and discuss with management and the independent auditor prior to the annual audit the scope, planning and staffing of the annual audit.


(k)


Ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law.


(l)


Review as necessary policies for the Company’s hiring of employees or former employees of the independent auditor.



4.2 Financial Reporting

(a)

Review and discuss with management and the independent auditor the annual audited financial statements and report to the Board of Directors prior to approval by the Board of Directors and the publication of earnings


(b)


Review such returns of the Company as the Superintendent of Financial Institutions may specify.


(c)


Review and discuss with management and the independent auditor the Company’s annual and quarterly disclosures made in management’s discussion and analysis. The Committee shall approve any reports for inclusion in the Company’s Annual Report, as required by applicable legislation and make a recommendation thereon to the Board.


(d)


Require management to implement and maintain appropriate internal control procedures.


(e)


Review and discuss with management and the independent auditor management’s report on its assessment of internal controls over financial reporting and the independent auditor’s attestation report on management’s assessment.


(f)


Review, evaluate and approve the procedures established under s. 4.2(d).


(g)


Review such investments and transactions that could adversely affect the well-being of the Company as the auditor or any officer of the Company may bring to the attention of the Committee.


(h)


Review and discuss with management and the independent auditor the Company’s quarterly financial statements prior to the publication of earnings, including:


(i)


the results of the independent auditor’s review of the quarterly financial statements; and


(ii)


any matters required to be communicated by the independent auditor under applicable review standards.


(i)


Review and discuss with management and the independent auditor at least annually significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including:


(i)


any significant changes in the Company’s selection or application of accounting principles;


(ii)


any major issues as to the adequacy of the Company’s internal controls; and


(iii)


any special steps adopted in light of material control deficiencies.


(j)


Review and discuss with management and the independent auditor at least annually reports from the independent auditor on:


(i)


critical accounting policies and practices to be used;


(ii)


significant financial reporting issues, estimates and judgments made in connection with the preparation of the financial statements;


(iii)


alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; and


(iv)


alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; and


(k)


Meet with the independent auditor to discuss the annual financial statements and any investments or transactions that may adversely affect the well-being of the Company.


(l)


Discuss with the independent auditor at least annually any “management” or “internal control” letters issued or proposed to be issued by the independent auditor to the Company.


(m)


Review and discuss with management and the independent auditor at least annually any significant changes to the Company’s accounting principles and practices suggested by the independent auditor, internal audit personnel or management.


(n)


Discuss with management the Company’s earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information, as well as financial information and earnings guidance (if any) provided to analysts and rating agencies.


(o)


Review and discuss with management and the independent auditor at least annually the effect of regulatory and accounting initiatives as well as off-balance-sheet structures on the Company’s financial statements.


(p)


Discuss with the independent auditor matters required to be discussed by American Institute of Certified Public Accountants Statement on Auditing Standards No. 61 relating to the conduct of the audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to requested information and any significant disagreements with management.


(q)


Review and discuss with the Chief Executive Officer and the Chief Financial Officer the procedures undertaken in connection with the Chief Executive Officer and Chief Financial Officer certifications for the annual and interim filings with applicable securities regulatory authorities.


(r)


Review disclosures made by the Company’s Chief Executive Officer and Chief Financial Officer during their certification process for the annual and interim filing with applicable securities regulatory authorities about any significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data or any material weaknesses in the internal controls, and any fraud involving management or other employees who have a significant role in the Company’s internal controls.


(s)


Meet with the Appointed Actuary of the Company at least annually to receive and review reports, opinions and recommendations prepared by the Appointed Actuary in accordance with the Insurance Companies Act (Canada), including the parts of the annual financial statement and the annual return filed under s. 665, prepared by the actuary, and such other matters as the Committee may direct.


(t)


Discuss with the Company’s General Counsel at least annually any legal matters that may have a material impact on the financial statements, operations, assets or compliance policies and any material reports or inquiries received by the Company or any of its subsidiaries from regulators or governmental agencies.


(u)


Meet with the Chief Internal Auditor and with Management to discuss the effectiveness of the internal control procedure established pursuant to s.4.2(d).


4.3 Oversight of the Company's Internal Audit Function

(a)

Review with the internal auditor, the independent auditor and management at least annually the mandate, independence, qualifications, staffing and budget of the internal audit department and its annual work plan.


(b)


Review the periodic reports of the internal audit department on internal audit activities and the results of its audits.


4.4 Oversight of Risk Management

(a)

Review and approve periodically:


(i)


management’s risk philosophy; and


(ii)


risk management policies.


(b)


Review with management at least annually reports demonstrating compliance with risk management policies.


(c)


Review reports at least annually relating to the adequacy of the Company’s risk management practices together with management’s responses from the:


(i) independent auditor; and

(ii) the internal auditor


(d)


Discuss with management at least annually the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies.


4.5 Oversight of Regulatory Compliance

(a)

Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.


(b)


Discuss with management and the independent auditor at least annually any correspondence with regulators or governmental agencies and any published reports which raise material issues regarding the Company’s financial statements or accounting.


(c)


Review at least annually with the Global Compliance Chief the Company’s compliance with applicable laws and regulations, and correspondence from regulators.


(d)


Meet with the Company’s regulators, according to applicable law.


(e)


Exercise such other powers and perform such other duties and responsibilities as are incidental to the purposes, duties and responsibilities specified herein and as may from time to time be delegated to the Committee by the Board of Directors.


4.6 Proxy Circular

(a)

The Committee shall prepare a report on its activities on an annual basis to be included in the Proxy Circular, as may be required by applicable laws or rules of applicable securities regulatory authorities.



5. Funding for the Independent Auditor and Retention of Other Independent Advisors


The Company shall provide for appropriate funding, as determined by the Committee, for payment of compensation to the independent auditor for the purpose of issuing an audit report and to any advisors retained by the Committee. The Committee shall have the authority to retain such independent advisors as it may from time to time deem necessary or advisable for its purposes and to set the terms of the retainer. The expenses related to any such engagement shall also be funded by the Company.