Northbridge Financial Corporation: Financial Results for Fourth Quarter and Fiscal Year 2006 and Declaration of 2007 First Quarter Dividend

Market Wire, February, 2007

(Note: All dollar amounts in this news release are expressed in Canadian dollars)

Northbridge Financial Corporation (TSX: NB) today announced net earnings for the year ended December 31, 2006 of $167.1 million ($3.29 per share), a 15.8% decrease from net earnings of $198.4 million ($3.90 per share) for the year ended December 31, 2005. Underwriting profit for 2006 declined to $23.5 million from $82.9 million for 2005, producing a combined ratio(1) of 98.0% for 2006 compared to 92.9% for 2005. Total investment income was $244.9 million for the year ended December 31, 2006 compared to $201.6 million for the previous year and included net realized gains on the sale of portfolio investments of $130.6 million compared to $122.0 million for 2005.

Net earnings for the fourth quarter of 2006 were $37.1 million ($0.73 per share), a 23.9% increase from net earnings of $29.9 million ($0.59 per share) for the fourth quarter of 2005. Underwriting income for the fourth quarter of 2006 increased to $16.9 million from $6.2 million for the fourth quarter of 2005. Northbridge's combined ratio for the fourth quarter of 2006 was 94.3% compared to 97.8% for the fourth quarter of 2005. Total investment income was $42.4 million for the fourth quarter of 2006 compared to $33.0 million for the fourth quarter of 2005 and included net realized gains on the sale of portfolio investments of $9.4 million, compared to $11.1 million for the fourth quarter of 2005.

Northbridge also announced that its Board of Directors has declared a dividend of $0.165 per share on its outstanding common shares, payable on March 30, 2007 to shareholders of record on March 6, 2007.

The following table presents a summary of consolidated financial results for the fourth quarter and twelve months ended December 31:

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For the Periods Ended December 31
(in $ millions except per share           Fourth Quarter     Twelve Months
 amounts and percentages)                 2006      2005     2006     2005
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Total revenue                            337.7     321.5  1,408.4  1,370.5
Underwriting profit                       16.9       6.2     23.5     82.9
Combined ratio(1)                        94.3%     97.8%    98.0%    92.9%
Net earnings                              37.1      29.9    167.1    198.4
Net earnings per share                   $0.73     $0.59    $3.29    $3.90
Net earnings per diluted share           $0.73     $0.59    $3.28    $3.89
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(1) The combined ratio is the sum of two components: the loss ratio, which represents claims and loss adjustment expenses incurred, net of reinsurance, expressed as a percentage of net premiums earned, and the expense ratio, which represents expenses including commissions, premium taxes and all general and administrative expenses incurred in operating the business during a period, expressed as a percentage of net premiums earned during that period. A combined ratio below 100% indicates profitable underwriting, while a combined ratio over 100% indicates unprofitable underwriting. The combined ratio does not include consideration of investment income. The underwriting ratios (the loss and expense ratios and the combined ratio) are all non-GAAP measures and do not have standard meanings prescribed by GAAP. They may not be comparable to similar measures used by other companies.

Fourth Quarter Highlights

- Net earnings of $37.1 million ($0.73 per share) compared to $29.9 million ($0.59 per share) for the fourth quarter of 2005.

- Combined ratio of 94.3% compared to 97.8% for the fourth quarter of 2005.

- Underwriting profit of $16.9 million compared to $6.2 million for the fourth quarter of 2005.

- 10.8% decline in net premiums written and 2.4% increase in net premiums earned compared to the fourth quarter of 2005.

Year End Highlights

- Net earnings of $167.1 million ($3.29 per share) compared to $198.4 million ($3.90 per share) in 2005, a decrease of 15.8%.

- Return on average equity of 15.3% compared to 21.0% for 2005.

- Combined ratio of 98.0% compared to 92.9% for 2005.

- Underwriting profit of $23.5 million compared to $82.9 million for 2005.

- 3.4% decline in net premiums written and 0.1% decline in net premiums earned compared to 2005.

- Interest and dividend income of $114.3 million compared to $79.6 million for 2005, and net realized gains on portfolio investments of $130.6 million compared to $122.0 million for 2005.

- Cash flow generated from operations of $214.8 million for 2006 compared to $420.1 million for 2005.

- Cash and short-term investments at year end of $934.0 million compared to $761.8 million at the end of 2005.

- Portfolio investments at carrying value (net of S&P short position) increased by $303.5 million to $2,881.6 million at December 31, 2006 from $2,578.1 million at December 31, 2005, with pre-tax net unrealized gains of $180.1 million at the end of 2006 compared to $207.8 million at the end of 2005.