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March 20, 2009. Western Financial Group 2008 Year End Financial Results Conference Call. Forward-Looking Statements.

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march 20 2009
March 20, 2009

Western Financial Group2008 Year End Financial Results Conference Call

forward looking statements
Forward-Looking Statements

This presentation contains certain forward-looking statements. Forward-looking statements include, without limitation, statements regarding the future financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, taxes and plans and objectives of or involving Western Financial Group Inc. (the “Company”) or its subsidiaries. Many of these statements can be identified by looking for words such as ‘‘believe’’, ‘‘expects’’, ‘‘expected’’, ‘‘will’’, ‘‘intends’’, ‘‘projects’’, ‘‘anticipates’’, ‘‘estimates’’, ‘‘continues’’ or similar words. The Company believes the expectations reflected in such forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties only some of which are described herein. Many factors could cause the Company’s actual results, performance or achievements to, or future events or developments to, differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the risk factors, which are discussed in greater detail in the ‘‘Risk Factors’’ section of the prospectus. Any forward-looking statements are made as of the date hereof and the Company does not assume any obligation to publicly update or revise such statements to reflect new information, subsequent events or otherwise.

Non-GAAP Measures

Throughout this presentation, the Company may use the term ‘‘operating income’’ to refer to earnings, including investment income, before interest expense, taxes, depreciation and amortization of intangible and capital assets, excluding gain (loss) from the sale of assets and income (loss) from equity investments. The Company uses ‘‘operating income’’ to assist it in measuring corporate performance before the costs of capital and amortization of capital and intangible assets. Operating income is not a measure recognized by GAAP and does not have a standardized meaning prescribed by GAAP. Therefore, this measure may not be comparable to similar measures presented by other issuers and investors are cautioned that it should not be used as an alternative to ‘‘net income’’ or other measures of financial performance calculated in accordance with GAAP.

today s remarks
Today’s Remarks
  • Operational progress in 2008
  • Top achievements and disappointments in 2008
  • 2008 financial review
  • Priorities for 2009
wfg agency network
WFG Agency Network
  • Same store customer count +3.5%
  • Same store sales +8.9%
  • Soft pricing market continued - bottomed out in Q4
  • Deteriorating loss ratios at insurance companies in 2nd half cause adjustment of $1.0 million to 2008 profit share commission estimates
wfg agency network1
WFG Agency Network


  • Southern
  • Simpson
  • Woodland
  • Dunn
  • Vet’s
  • Boyd
  • Bakes-Jarvie (Jan 1/09)
western life assurance
Western Life Assurance
  • Sales and production increases – all lines
  • Certificate count growth 11.5% in 2008
  • Bolt-on product for network is at 6,400+ policies. Target was 20,000 by Q2/08, extended through 2008 Y/E - has flattened. Target of 7,500 for Y/E 2009
  • Western & Affiliates account for $3.2 million of 2008 net premium revenue
  • Smooth CEO transition
bank west
Bank West
  • Loan book stable at $273.4 MM – capacity held for AgriFinancial
  • AgriFinancial will add $80 MM in 2009
  • Non-performing loans – 1.2% at year end
  • Specific provisions at 37 bps
  • Overspent on new banking platform
  • Bruce Ratzlaff takes helm in November
top 2 achievements in 20081
Top 2 Achievements in 2008
  • Strong market share gains at Network
  • Cross sales between WFG/Western Life
top 4 disappointments in 20081
Top 4 Disappointments in 2008
  • “Lost Year” at Bank West – delay in AgriFinancial approvals
  • Equity portfolio write-downs – liberalization of policies aggravated the loss
  • Execution delays on acquisitions
  • Collapse of share price
total revenue
Total Revenue

CAGR 25.7%

2009 priorities
2009 Priorities
  • Manage NPLs at Bank West
  • Internal growth focus – same store sales, cross sales, PPCA
  • Increasing ownership in partner company – HED
  • Managing costs
  • Re-establishing profitability
  • Enhancing brand and reputation