Northbridge Financial Corporation: Financial Results for Fourth Quarter and Fiscal Year 2007 and Declaration of 2008 First Quarter Dividend

Market Wire, February, 2008

(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, 2007 of $295.0 million ($5.84 per share), a 76.6% increase from net earnings of $167.1 million ($3.29 per share) for the year ended December 31, 2006. Underwriting profit for 2007 increased to $84.3 million from $23.5 million for 2006, producing a combined ratio(1) of 92.3% for 2007 compared to 98.0% for 2006. Total investment income was $331.9 million for the year ended December 31, 2007 compared to $244.9 million for the previous year and included net gains on investments of $203.2 million compared to $130.6 million for 2006.

Net earnings for the fourth quarter of 2007 were $79.5 million ($1.60 per share), a 114.4% increase from net earnings of $37.1 million ($0.73 per share) for the fourth quarter of 2006. Underwriting results for the fourth quarter of 2007 reflected a loss of $2.0 million compared to a profit of $16.9 million for the fourth quarter of 2006. Northbridge's combined ratio for the fourth quarter of 2007 was 100.7% compared to 94.3% for the fourth quarter of 2006. Total investment income was $132.3 million for the fourth quarter of 2007 compared to $42.4 million for the fourth quarter of 2006 and included net gains on investments of $98.5 million, compared to $9.4 million for the fourth quarter of 2006.

Subsequent to the end of 2007, Northbridge had $85.2 million of pre tax net gains on investments relating to its credit default swap portfolio for the period ended February 15, 2008 (including gains on sales and mark-to-market movements since year end). Proceeds on sales of credit default swaps were $106.1 million for the same period. As at February 15, 2008, the fair market value and cost of the company's credit default swap portfolio were $108.6 million and $18.3 million, respectively, compared to $129.5 million and $27.5 million as at December 31, 2007. The credit default swaps are volatile, with the result that their market value and their liquidity may vary dramatically either up or down in short periods, and their ultimate value will therefore only be known upon their disposition.

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 31, 2008 to shareholders of record on March 4, 2008.

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

------------------------------------------------------------------------
For the Periods Ended December 31
(in $ millions except per share amounts   Fourth Quarter   Twelve Months
 and percentages                           2007     2006    2007    2006
------------------------------------------------------------------------
Total revenue                             404.1    337.7 1,430.1 1,408.4
Underwriting profit (loss)                (2.0)     16.9    84.3    23.5
Combined ratio(1)                        100.7%    94.3%   92.3%   98.0%
Net earnings                               79.5     37.1   295.0   167.1
Net earnings per share                    $1.60    $0.73   $5.84   $3.29
Net earnings per diluted share            $1.59    $0.73   $5.82   $3.28
------------------------------------------------------------------------

(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 $79.5 million ($1.60 per share) compared to $37.1 million ($0.73 per share) for the fourth quarter of 2006.

- Underwriting loss of $2.0 million compared to underwriting profit of $16.9 million for the fourth quarter of 2006.

- Combined ratio of 100.7% compared to 94.3% for the fourth quarter of 2006.

- 5.6% decline in net premiums written and 8.0% decline in net premiums earned compared to the fourth quarter of 2006.

- Interest and dividend income of $33.8 million compared to $33.0 million for the fourth quarter of 2006, and net pre-tax gains on investments of $98.5 million compared to $9.4 million for the fourth quarter of 2006.

Year End Highlights

- Net earnings of $295.0 million ($5.84 per share) compared to $167.1 million ($3.29 per share) in 2006, an increase of 76.6%.