Intact Financial Corporation · TSX:IFC
Intact Financial — Investor Day (November 2013)
96 slides from Intact Financial's investor day presentation, Nov 27, 2013
Slide 1: Staying Ahead of the Curve – Investor Day
of the STAYING AHEAD CURVE INVESTOR DAY Intact Financial Corporation (TSX:IFC) Wednesday, November 27th, 2013
Slide 2: Forward Looking Statements
2 Investor Day 2013 Intact Financial Corporation FORWARD LOOKING STATEMENTS Certain of the statements included in this MD&A about the Company’s current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or develop
Slide 3: Disclaimer
3 Investor Day 2013 Intact Financial Corporation DISCLAIMER This Presentation does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any securities nor shall it or any part of it form the basis of or be relied on in connection with, or act as any
Slide 4: Agenda
4 Investor Day 2013 Intact Financial Corporation AGENDA Technology Strategic Foundation Ontario Priorities & Introduction Auto Outlook Customer Coffee Personal Q&A Driven Break Property Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property & Outlo
Slide 5: Introduction & Update
INTRODUCTION & UPDATE MARK TULLIS EVP, GOVERNANCE & CAPITAL MANAGEMENT
Slide 6: Who We Are
6 Investor Day 2013 Intact Financial Corporation WHO WE ARE We are the largest provider of P&C insurance in Canada. We insure more than five million individuals and businesses through our insurance subsidiaries and are the largest private sector provider of P&C insurance in British Columbia, Alberta
Slide 7: Industry Outperformer
7 Investor Day 2013 Intact Financial Corporation INDUSTRY OUTPERFORMER We strive for excellence in everything we do, which includes underwriting, operations, broker support and customer service. It is this discipline which allows us to anticipate and respond to the challenges facing the industry, br
Slide 8: Priorities From Last Year
8 Investor Day 2013 Intact Financial Corporation PRIORITIES FROM LAST YEAR INTEGRATIONS OF AXA & JEVCO • On track for completion in early (AXA) to mid (Jevco) 2014 • Performance of acquired businesses better than expected • Overall retention of customers and brokers very strong • Synergies at or abo
Slide 9: Our Future Direction
9 Investor Day 2013 Intact Financial Corporation OUR FUTURE DIRECTION We sustain our success by being customer driven, investing in our people, strengthening our distribution channels and ensuring that we are the most profitable P&C insurance company in the markets where we operate Our customers Our
Slide 10: Our 2014 Strategic Priorities
10 Investor Day 2013 Intact Financial Corporation OUR 2014 STRATEGIC PRIORITIES Ensure sustainability in home insurance & Ontario auto Improve Strengthen customer distribution experience Strengthen Become best technology employer Introduction Customer Driven Technology Ontario Personal Strategic Pri
Slide 11: Customer Driven
CUSTOMER DRIVEN ANNE FORTIN SENIOR VICE PRESIDENT MARKETING AND STRATEGIC RELATIONSHIPS, DTCD DEBBIE COULL-CICCHINI SENIOR VICE PRESIDENT, ONTARIO DIVISION
Slide 12: Consumers Expect More Than Just Price
12 Investor Day 2013 Intact Financial Corporation CONSUMERS EXPECT MORE THAN JUST PRICE Customer Loyalty: Key factors for not changing the insurer Invest in customer experience, Customers develop Customer service including the 360° customer view loyalty to their insurance Brand Trust Increase touch
Slide 13: Factors Shaping Customers' Choices
13 Investor Day 2013 Intact Financial Corporation FACTORS SHAPING CUSTOMERS’ CHOICES 1. REPUTATION 2. SERVICE 4. PRICE 3. BRAND 5. PRODUCT Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property & Outlook
Slide 14: 1. Reputation
14 Investor Day 2013 Intact Financial Corporation 1. REPUTATION Public Visibility in the Responsibility accountability community to the Individual Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property & Outlook
Slide 15: 1. Reputation
15 Investor Day 2013 Intact Financial Corporation 1. REPUTATION Intact is a highly-respected financial services company … IFC ranked #18 in the Corporate Knights 2013 Top 50 Best Corporate Citizens Globe & Mail ranked IFC #6 in their 2013 Board Games, based on the quality of our corporate governance
Slide 16: 1. Reputation
16 Investor Day 2013 Intact Financial Corporation 1. REPUTATION Our commitment to community is extensive and multi-faceted … Engaging the passion of our customers by supporting their passion: Local NHL hockey teams Supporting speed skating from the grass-roots local clubs to the National Team Olympi
Slide 17: 1. Reputation
17 Investor Day 2013 Intact Financial Corporation 1. REPUTATION We are having meaningful and informative dialogues with our customers using social media Objectives of belairdirect social media strategy: • Be present where Web users are spending time online • Open the conversation with our customers
Slide 18: 2. Service
18 Investor Day 2013 Intact Financial Corporation 2. SERVICE Superior Buy-Online for Web claims broker Innovation management channel Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property & Outlook
Slide 19: 2. Service
19 Investor Day 2013 Intact Financial Corporation 2. SERVICE Delivering on our Claims promise to customers Coast-to- coast response IFC Advantage Faster response Shorter claims cycle Internal Service adjusters Guarantee Lower cost and legal Greater control Superior service Superior partnerships Intr
Slide 20: 2. Service
20 Investor Day 2013 Intact Financial Corporation 2. SERVICE Intact Insurance Buy-Online: Leveraging multi-channel competencies For Consumers: The convenience of on online auto insurance quote tool with the advice and choice offered by a broker. For Brokers: Organic growth of their business through
Slide 21: 2. Service
21 Investor Day 2013 Intact Financial Corporation 2. SERVICE We are adapting our digital experience to our users 70% Audience coming from mobile devices is >50% growing exponentially 50% Responsive design offers the optimal user 30% experience (content and design) for every 19% device 10% 2009 2014
Slide 22: 2. Service
22 Investor Day 2013 Intact Financial Corporation 2. SERVICE We are engaging with customers in real-time Objective: Offer personalized service in our digital experience 3,000 74% average of chat use of chat tool in number of sessions with Facebook allows chat sessions current clients for private per
Slide 23: 2. Service
23 Investor Day 2013 Intact Financial Corporation 2. SERVICE Quarterly eNewsletter: We are engaging with consumers Increasing the frequency of interactions with customers (and prospects) 750,000 30% 17% Distribution Open Clickthrough (combined belairdirect, Grey Power and rate rate BrokerLink) belai
Slide 24: 3. Brand
24 Investor Day 2013 Intact Financial Corporation 3. BRAND New Growing our Existing Partnerships – brands Partnerships Sun Life Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property & Outlook
Slide 25: Strong Brands Build Strong Businesses
25 Investor Day 2013 Intact Financial Corporation STRONG BRANDS BUILD STRONG BUSINESSES Our brands continue to gain traction in the marketplace as unaided awareness increases. INTACT INSURANCE BELAIRDIRECT 25% 60% Quebec 20% 50% 40% 15% Target 30% 10% 20% Ontario 5% 10% 0% 0% Q3-13 Q1-12 Q2-12 Q3-12
Slide 26: Unaided Brand Awareness First Mention - National
26 Investor Day 2013 Intact Financial Corporation UNAIDED BRAND AWARENESS FIRST MENTION - NATIONAL Intact Insurance top-of-mind awareness (i.e. first mentions by consumers) exceeds that of more established companies and continues to increase. Intact Insurance 9% Competitors 5% - 6% Q3-2010 Q3-2011 Q
Slide 27: 3. Brand
27 Investor Day 2013 Intact Financial Corporation 3. BRAND Long-lasting partnerships with leading brands • Partner since 1999 • Partner since 1998 • 2.4M clients • 900,000 members • Largest Bank in Quebec • 38% penetration • Over 130,000 policies in force Introduction Customer Driven Technology Onta
Slide 28: 3. Brand
28 Investor Day 2013 Intact Financial Corporation 3. BRAND New partnership with Sun Life Financial is launching December 2nd, 2013 • Canada-wide distribution agreement; gradual regional launch • Sun Life Financial has a relationship with 1 out of 5 Canadians • Well respected Life Insurance brand • M
Slide 29: 3. Brand
29 Investor Day 2013 Intact Financial Corporation 3. BRAND Voluntary benefits: % of employees willing to pay for specific products Benefit research conducted by Mercer in Canada showed that the top two benefits that employees are most willing to pay for out-of-pocket are auto and home insurance. Whe
Slide 30: 3. Brand
30 Investor Day 2013 Intact Financial Corporation 3. BRAND Leads Started Quotes Quotes Sun Life Financial promotion of Home and Auto offer Option to Call transfers from start a quote Sun Life Financial on the phone call centre Completed Quotes Completed quotes tagged in our systems DTCD call centres
Slide 31: 4. Price
31 Investor Day 2013 Intact Financial Corporation 4. PRICE Scale Customized Expertise Segmentation Price Discipline Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property & Outlook
Slide 32: 5. Product
32 Investor Day 2013 Intact Financial Corporation 5. PRODUCT Customer stickiness Customer choice and through broader product control - UBI offerings and bundling Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property & Outlook
Slide 33: 5. Product
33 Investor Day 2013 Intact Financial Corporation 5. PRODUCT We have insurance products to meet all of our customers needs Home & Auto Auto Motorcycles Snowmobiles ATV Boats RVs IFC Home Identity Theft Portfolio Home & Auto Travel Garden Condo Tenant Rented Dwelling Accident Cottage Forgiveness Intr
Slide 34: Higher Product Diversity = Higher Retention
34 Investor Day 2013 Intact Financial Corporation 5. PRODUCT HIGHER CUSTOMER PRODUCT DIVERSITY = HIGHER RETENTION = SATISFACTION 96% 92% 93% 92% 91% 89% 85% 86% 82% 78% 72% 69% 25-34 35-44 45-54 55-64 Monoline One Vehicle Monoline Two or more vehicles MH&A Two or more vehicles Introduction Customer
Slide 35: Innovating Our Product
35 Investor Day 2013 Intact Financial Corporation INNOVATING OUR PRODUCT Usage-based-insurance will allows us to provide a personalized rate down to every individual Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property & Outlook
Slide 36: Innovating Our Product
36 Investor Day 2013 Intact Financial Corporation INNOVATING OUR PRODUCT How will our UBI offering work? Acceleration pattern Braking Up to 25% pattern Score discount Time of day on the road Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property &
Slide 37: Innovating Our Product
37 Investor Day 2013 Intact Financial Corporation INNOVATING OUR PRODUCT Why are we offering UBI? 1 Acquire & retain the best 2 Provide choice & flexibility 3 State of the art pricing intelligence Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Prope
Slide 38: Innovating Our Product
38 Investor Day 2013 Intact Financial Corporation INNOVATING OUR PRODUCT Tailored information accessible anywhere Estimated discount, at any time updated every week, after initial 30 days Customized tips based on driving profile Detailed stats on driving behaviour (sudden Easy access to acceleration
Slide 39: How Are We Doing?
39 Investor Day 2013 Intact Financial Corporation HOW ARE WE DOING? CUSTOMER SCORECARD- J.D. Power #2 Intact Insurance – Auto Claims (National) #1 Grey Power – Overall Customer Satisfaction (ON & ATL) #2 belairdirect – Overall Customer Satisfaction (ON & ATL) Introduction Customer Driven Technology
Slide 40: How Are We Doing?
40 Investor Day 2013 Intact Financial Corporation HOW ARE WE DOING? CUSTOMER SCORECARD – Net Promoter Score How likely are you to recommend a college or friend? Detractors Passives Promoters 0 1 2 3 4 5 6 7 8 9 10 Not at all likely Neutral Extremely likely % of PROMOTERS % of DETRACTORS NPS (9s and
Slide 41: How Are We Doing?
41 Investor Day 2013 Intact Financial Corporation HOW ARE WE DOING? Broker satisfaction is at record highs National West Ontatio Quebec Atlantic Historic High 7.4 7.3 7.2 7.2 7.1 7.1 7.1 7.1 7.0 6.9 6.9 6.9 6.9 6.8 6.8 6.8 6.7 6.7 6.6 6.6 6.6 2004 2005 2006 2008 2010 2012 Source: MARCON, 2012 Introd
Slide 42: How Are We Doing?
42 Investor Day 2013 Intact Financial Corporation HOW ARE WE DOING? In Ontario we rank #1 in broker satisfaction CHANNEL PRODUCT & LEADERSHIP SERVICE INNOVATION OVERALL TECHNOLOGY PERCEPTION Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property &
Slide 43: Technology Foundation
TECHNOLOGY FOUNDATION JACK OTT CHIEF INFORMATION TECHNOLOGY OFFICER
Slide 44: The IT Team
44 Investor Day 2013 Intact Financial Corporation THE IT TEAM Experienced Leadership Team 28 12 years of IT experience years of service with on average IFC on average 850 4 full-time major sites, attracting the employees talent pools in Toronto and Montreal Introduction Customer Driven Technology On
Slide 45: Strong Fundamentals
45 Investor Day 2013 Intact Financial Corporation STRONG FUNDAMENTALS • Operate our own highly redundant data centre • System availability > 99.8% last 3 yrs OPERATIONS • Support 45,000 brokers and employees • 16,000 support calls per month with high satisfaction levels • Security spend 6.5% of IT b
Slide 46: Competitive and Robust Systems in Place Today
46 Investor Day 2013 Intact Financial Corporation COMPETITIVE AND ROBUST SYSTEMS IN PLACE TODAY A few highlights.... Broker Portals Web enabled transaction systems deployed to +30,000 broker users doing 1 million transactions per year belairdirect & Grey Power Rating & Rules Engine Modern rules engi
Slide 47: Our Three Pillar Strategy
47 Investor Day 2013 Intact Financial Corporation OUR THREE PILLAR STRATEGY Consolidate acquired claims systems into a Strategic Impact single, national platform based on Guidewire Claims software • Customer service • Employee engagement • Agile – Faster time-to- market Replace legacy systems with m
Slide 48: Three Recent Innovations
48 Investor Day 2013 Intact Financial Corporation THREE RECENT INNOVATIONS 1 Intact Buy On-Line 2 Enterprise Content Manager 3 Virtual Customer Care Centre Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property & Outlook
Slide 49: 1. Intact Buy Online
49 Investor Day 2013 Intact Financial Corporation 1. INTACT BUY ONLINE Description The Customer sees: • National platform with local branding • Hybrid model that combines Web experience with a trusted Broker What makes it special? • Help Brokers compete with direct insurers • Broker support througho
Slide 50: 2. Enterprise Content Management
50 Investor Day 2013 Intact Financial Corporation 2. ENTERPRISE CONTENT MANAGEMENT Mobile App Description • Content Manager enabling “Store, Search & Find” for +500 types of document (photos, videos, sound...) What makes it special? • Document intake fully automated • Mobile app for field adjustors
Slide 51: 3. Virtual Customer Care
51 Investor Day 2013 Intact Financial Corporation 3. VIRTUAL CUSTOMER CARE Description • Virtual Customer Care Centre 12,000 35 99.99% • National scope • Latest Voice-over-IP technology phones sites availability What makes it special? Calgary Floods: • Send every call to the best location • Select a
Slide 52: Acquisition & Integration
52 Investor Day 2013 Intact Financial Corporation ACQUISITION & INTEGRATION We have a track record of successful acquisitions and we are always ready to help integrate our next deal Methodology and Seasoned project project plans tested leaders and ready Acquisition culture Experience in deal Scalabl
Slide 53: Coffee Break
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Slide 54: Ontario Auto
ONTARIO AUTO TRACY LAUGHLIN VICE PRESIDENT, PERSONAL LINES ONTARIO & ATLANTIC SHARON BRIDGE DEPUTY SENIOR VICE PRESIDENT CLAIMS, ONTARIO
Slide 55: Ontario Auto Overview
55 Investor Day 2013 Intact Financial Corporation ONTARIO AUTO OVERVIEW • Ontario personal auto represents $10.5 billion in industry DPW • Most regulated P&C insurance product in Canada • Prior approval system PERSONAL AUTO AS % ONTARIO PERSONAL AUTO IFC ONTARIO AUTO OF ONTARIO DPW AS % OF TOTAL IFC
Slide 56: Factors of Our Outperformance
56 Investor Day 2013 Intact Financial Corporation FACTORS OF OUR OUTPERFORMANCE Scale Segmentation & Pricing Industry Out- People performance Claims Discipline Expertise Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property & Outlook
Slide 57: Scale and People
57 Investor Day 2013 Intact Financial Corporation SCALE AND PEOPLE We have the people to do the job TOTAL TORONTO ACTUARIES: SUDBURY & 43 Underwriters: 176 THUNDER BAY Claims: 313 Underwriters: 3 Legal: 60 Claims: 21 OTTAWA Underwriters: 82 LONDON Claims: 140 Underwriters: 57 Legal: 9 Claims:109 Leg
Slide 58: Segmentation
58 Investor Day 2013 Intact Financial Corporation SEGMENTATION Regulatory constraints leads to subsidization As per FSCO… Max of Max of 55 territories 10 territories in Ontario in Toronto Min of Contiguity 2,500 customers In each territory Introduction Customer Driven Technology Ontario Personal Str
Slide 59: Segmentation
59 Investor Day 2013 Intact Financial Corporation SEGMENTATION TRADITIONAL HOW WE DO IT… PRICING … Base Premium Base Premium Territory Class Claims History Claims History Territory Traffic Violations Age Traffic Violations Tier Scoring “Noise” “Noise” “Noise” CHARGED PRICE CHARGED PRICE Introduction
Slide 60: Segmentation – Tiered Pricing
60 Investor Day 2013 Intact Financial Corporation SEGMENTATION Tiered Pricing AGE TERRITORY CLAIMS TRAFFIC HISTORY VIOLATIONS PATTERN RECOGNITION ... Profile 1 Profile 2 Profile 3 Profile 4 Profile 20 LR Adequacy -0.66 LR Adequacy -0.69 LR Adequacy -0.73 LR Adequacy -0.75 LR Adequacy +1.97 Introduct
Slide 61: Segmentation by Tier
61 Investor Day 2013 Intact Financial Corporation SEGMENTATION Segmentation by Tier 2.0 1.8 This price inadequacy at the tail 1.6 cannot be explained by a general linear model alone L/R Relativity 1.4 1.2 1.0 0.8 0.6 0.4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Tier Introduction Customer D
Slide 62: Claims Outperformance
62 Investor Day 2013 Intact Financial Corporation CLAIMS OUTPERFORMANCE What we are currently doing Our people are where the Rely Network customers are Internal Fraud adjusters and detection legal staff initiatives Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Fou
Slide 63: Rate and Cost Reduction Strategy
63 Investor Day 2013 Intact Financial Corporation RATE AND COST REDUCTION STRATEGY • Policy statement issued August 23rd • Government mandating 15% rate reduction by August 2015 • Focused on rewarding safe drivers • Expect government to deliver cost containment measures Introduction Customer Driven
Slide 64: Rewarding Safe Drivers
64 Investor Day 2013 Intact Financial Corporation REWARDING SAFE DRIVERS Adding another layer ... Base Premium Traffic Territory Violations Age Claims Tier History Scoring Acceleration Time of Day Pattern Braking Pattern Usage-based- insurance CHARGED PRICE Introduction Customer Driven Technology On
Slide 65: Cost Reduction Measures
65 Investor Day 2013 Intact Financial Corporation COST REDUCTION MEASURES What the government can do • Tighten MIG (prior-condition, psycho-social) Short Term • Compensate for actual loss incurred attendant care • Regulating health and assessment providers • Transforming the dispute resolution syste
Slide 66: Claims Cost Reduction
66 Investor Day 2013 Intact Financial Corporation CLAIMS COST REDUCTION Our future initiatives Expand Outsourcing Health Rely fewer legal files Build upon fraud detection initiatives with new variables Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto
Slide 67: Mediation and Arbitration
67 Investor Day 2013 Intact Financial Corporation MEDIATION AND ARBITRATION • Industry failed mediations rising, increasing arbitration backlog • In addition, higher percentage of failed mediations filing for arbitration • We are managing mediation and arbitration better than industry Mediations Arb
Slide 68: Uncertainty Remains
68 Investor Day 2013 Intact Financial Corporation UNCERTAINTY REMAINS Few claims make it to arbitration, so it takes time for reforms to be tested. 100 IFC claims 21 go to mediation Approx 10 months 8 claims between DOL and filing for Mediation fail and 6 move to arb Going forward, approx 2 months f
Slide 69: Bodily Injury: Post-Reform Trends
69 Investor Day 2013 Intact Financial Corporation BODILY INJURY: POST-REFORM TRENDS • Frequency post reform lower than anticipated in the original reform assumptions • Claims reporting later post Reform • We have expanded our in-house legal expertise Taking longer to be notified of legal action post
Slide 70: Focused on Ontario Auto
70 Investor Day 2013 Intact Financial Corporation FOCUSED ON ONTARIO AUTO Leveraging the factors of our outperformance • Our People and Scale allow superior Segmentation/Pricing and Claims Service • Track record of industry outperformance • Continue to believe that the government’s Rate and Cost Red
Slide 71: Personal Property
PERSONAL PROPERTY JEAN-FRANÇOIS BLAIS PRESIDENT, INTACT INSURANCE
Slide 72: Personal Property
72 Investor Day 2013 Intact Financial Corporation PERSONAL PROPERTY • 2.2 million written insured risks in 2012, representing $1.6 billion of IFC DPW • Not regulated from a product or pricing perspective IFC’s PERSONAL PERSONAL PROPERTY AS PROPERTY MARKET % OF IFC DPW SHARE Personal 17.8% Other 77%
Slide 73: Rapid Response Results
73 Investor Day 2013 Intact Financial Corporation RAPID RESPONSE RESULTS in improved customer satisfaction and better cost control Southern Alberta Flooding – June 2013 5,662 $250 12 total number of claims million in gross number of hours to made to IFC claims costs set up our Cat Response Centre 60
Slide 74: The New Climate Reality
74 Investor Day 2013 Intact Financial Corporation THE NEW CLIMATE REALITY Five consecutive years of industry losses ~$1 billion Canadian Gross Catastrophe Losses Indexed (C$000) Extreme precipitation events are more frequent Sources: Brown Chart and IBC Fact Book Introduction Customer Driven Technol
Slide 75: Cats in Personal Property
75 Investor Day 2013 Intact Financial Corporation CATS IN PERSONAL PROPERTY 113.6% 109.0% 96.5% 103.5% 93.5% 110.7% 8.7% 8.6% 20.3% 5.9% 13.3% 10.3% 104.3% 101.2% 94.6% 93.6% 89.2% 94.7% 0.6% -0.8% -4.0% -3.4% -6.0% -4.3% FY2008 FY2009 FY2010 FY2011 FY2012 YTD-13 PYD CR excl. CAT and PYD CAT Introdu
Slide 76: Losses by Peril
76 Investor Day 2013 Intact Financial Corporation LOSSES BY PERIL Average Water claim: $12,000 Average Theft claim: $5,000 Average SBU claim: $15,000 Average Wind/Hail Average Fire claim: claim: $8,000 $101,000 Water excl. SBU Sewer Back-up Wind/Hail Fire Theft Other * Note: 2012 average claims cost
Slide 77: Home Improvement Plan
77 Investor Day 2013 Intact Financial Corporation HOME IMPROVEMENT PLAN PRODUCT RATES CHANGES 10 points improvement in Personal Property CUSTOMER EDUCATION & CLAIMS INCENTIVES Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property & Outlook
Slide 78: Segmented Approach
78 Investor Day 2013 Intact Financial Corporation SEGMENTED APPROACH BC AB ON QC Atlantic Premium 15% 23% 20% 15% 20% Base: $1,000 Base: $1,000 Base: $1,000 Deductible Base: $500 Wind/Hail and $500 Water: $2,000 Water: $2,000 SBU: $2,500 Sublimit* 15% 50% 12% 96% 100% * Percentage of portfolio recei
Slide 79: Product Changes
79 Investor Day 2013 Intact Financial Corporation PRODUCT CHANGES Reduction in Removal of 2-year earthquake policies exposure Depreciation of roofs Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property & Outlook
Slide 80: Claims
80 Investor Day 2013 Intact Financial Corporation CLAIMS Tighter Internal adjusters emergency work to control cost control rules and indemnity Technology to optimize processes Introduction Customer Driven Technology Ontario Personal Strategic Priorities Q&A Foundation Auto Property & Outlook
Slide 81: Education & Incentives
81 Investor Day 2013 Intact Financial Corporation EDUCATION & INCENTIVES Supporting and motivating the customer to prevent or minimize loss Sponsoring Separating claims research for perils to help communities to customers understand and understand what better adapt to they are paying for climate cha
Slide 82: Customer Retention
82 Investor Day 2013 Intact Financial Corporation CUSTOMER RETENTION Intent is to maximize % of IFC Retention retention and minimize book impact on auto portfolio Monoline 30% Mid-80s% Segmented rate increases for different Multiline 70% Mid-90s% customer profiles Introduction Customer Driven Techno
Slide 83: Customer Retention
83 Investor Day 2013 Intact Financial Corporation CUSTOMER RETENTION We are conscientious of market sensitivity to rate changes, both on an absolute dollar basis and percent basis. 96% 98% 94% 96% 92% 94% 90% 92% Retention Retention 88% 90% 86% 88% 84% 86% 82% 84% 80% 82% 78% 80% 0-20% 20-50% >50% $
Slide 84: Committed to 95% C/R or Better in the Long Run
84 Investor Day 2013 Intact Financial Corporation COMMITED TO 95% C/R OR BETTER IN THE LONG RUN • We have made progress in the core combined ratio • Profitability remains a focus: • Plan for 10 point improvement in combined ratio • Need to reduce impact of Cats • Still more work to do on core CR • S
Slide 85: Strategic & Outlook Priorities
STRATEGIC & OUTLOOK PRIORITIES CHARLES BRINDAMOUR CHIEF EXECUTIVE OFFICER
Slide 86: Near Term Focus: Ensuring Sustainability
86 Investor Day 2013 Intact Financial Corporation NEAR TERM FOCUS Ensuring sustainability Home Insurance Ontario Auto OPPORTUNITIES CHALLENGES & • Political pressure • Weather-related claims • Industry breaking-even from an • Align incentives underwriting perspective • Redefine the product • Create
Slide 87: Low-Yield Environment
87 Investor Day 2013 Intact Financial Corporation LOW-YIELD ENVIRONMENT Driving the need for improved underwriting 5.0 Q3-2008 Q1-2013 Q3-2013 450 5.5% 4.5 Net investment income Pre-tax yield 4.0 400 5.0% 3.5 3.0 350 4.5% Yield 2.5 2.0 300 4.0% 1.5 1.0 250 3.5% 0.5 0.0 200 3.0% 1 2 3 4 5 6 7 8 9 10
Slide 88: Managing Tail Risk
88 Investor Day 2013 Intact Financial Corporation MANAGING TAIL RISK Reducing our earthquake exposure EARTHQUAKE REDUCTION Estimated Impact from 1-in-500 year event (% of NEP) • Initial target to reduce IFC’s BC 12% earthquake exposure ~9% by 2014 11% • We are currently on track to exceed our 10% in
Slide 89: Industry Growth Outlook
89 Investor Day 2013 Intact Financial Corporation INDUSTRY GROWTH OUTLOOK Total auto Rate reductions in Ontario likely to LTM growth: largely offset growth in other Industry 2.0% jurisdictions, leading to low single- digit growth Personal property Hard market conditions expected to LTM growth: accel
Slide 90: Primary Area of Focus
90 Investor Day 2013 Intact Financial Corporation PRIMARY AREA OF FOCUS Shifts in customer expectations Improve customer experience Strengthen distribution • Pursue cultural transformation • Optimize brand architecture • Accelerate concrete improvements • Expand direct capabilities • Expand and leve
Slide 91: Strong Financial Foundation for Growth
91 Investor Day 2013 Intact Financial Corporation STRONG FINANCIAL FOUNDATION FOR GROWTH Low sensitivity to capital Our balance sheet is solid markets volatility $515 199% 19% 3 pts 4 pts million in Minimum debt-to-capital ratio, of MCT per of MCT per 10% excess Capital Test below our target level 1
Slide 92: Leadership Team
92 Investor Day 2013 Intact Financial Corporation LEADERSHIP TEAM Charles Brindamour, CEO Mark Tullis, EVP Jean-François Louis Gagnon, Governance & Jack Ott, Lucie Martel, SVP, Claude Désilets, Monika Federau, Blais, President, President Service Capital SVP & CIO CHRO SVP & CRO SVP & CSO Intact Insu
Slide 93: 36-Month Roadmap for Outperformance
93 Investor Day 2013 Intact Financial Corporation 36-MONTH ROADMAP FOR OUTPERFORMANCE BEAT INDUSTRY ROE BY 5 POINTS NOIPS GROWTH OF 10% PER YEAR EVERY YEAR OVER TIME Investments Margin Pricing & and capital improvement: Segmentation: management: 0 – 3% 2 points 2 points Organic growth: Capital 4 – 6
Slide 94: Conclusion
94 Investor Day 2013 Intact Financial Corporation CONCLUSION Sustainable competitive advantages Customer driven platform Solid financial position to take advantage of growth opportunities Strong team with deep succession Transparent, disciplined, “can-do” attitude Introduction Customer Driven Techno
Slide 95: Questions & Answers
QUESTIONS & ANSWERS
Slide 96: Contact Us
Investor Day 2013 Intact Financial Corporation CONTACT US INVESTOR RELATIONS DENNIS WESTFALL, CFA GENERAL INFO VICE PRESIDENT, IR Dennis.Westfall@intact.net http://www.intactfc.com Click on “Investor Relations” tab 416.344.8004 ir@intact.net 416.797.7828 416.941.5336 1.866.778.0774 (toll-free) MAIDA