Intact Financial Corporation · TSX:IFC
Intact Financial — Investor Presentation (February 2015)
26 slides from Intact Financial's investor presentation, February 2015
Slide 1: Investor Presentation
INVESTOR PRESENTATION Intact Financial Corporation (TSX:IFC) February 2015 Intact Financial Corporation
Slide 2: Canada's P&C insurance leader
Canada’s P&C insurance leader Leader in a fragmented industry Distinct brands • Largest P&C insurer in Canada • Over $7.3 billion in direct premiums written • #1 in British Columbia, Alberta, Ontario, Quebec and Nova Scotia • $13.4 billion investment portfolio • Proven industry consolidator 2013 Dir
Slide 3: Operational snapshot
Operational snapshot A strong and diversified base for growth 2014 DPW by 2014 DPW by 2014 DPW by Business Line Geography Distribution Channel 12% 12% 7% 32% 18% 42% 46% 22% 28% 81% Personal Auto Ontario Intact Insurance Personal Property Quebec BrokerLink Commercial Lines Alberta Direct to consumer
Slide 4: 36-month performance roadmap
36-month performance roadmap 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% management/ deployment: 2 – 4% Claims management: 3 poi
Slide 5: Consistent outperformance
Consistent outperformance Significant Sophisticated In-house Broker Multi-channel Proven Solid scale pricing and claims relationships distribution acquisition investment advantage underwriting expertise strategy returns YTD Q3-2014 outperformance Five-year average loss ratios (for the period ended S
Slide 6: Internally managed investments
Internally managed investments $13.4 billion investment portfolio Investment mix (net of hedging positions and financial liabilities related to investments, as of December 31, 2014) Objective: 160 bps Cash and short- Loans, 3% term notes, 3% of ROE outperformance Preferred shares, 9% Common equity F
Slide 7: Strategic capital management
Strategic capital management Capital management framework History of dividend growth • Strong capital base has allowed us to pursue our • We have increased our dividend each year growth objectives while returning capital to since our IPO shareholders Quarterly dividend per share • $681 million in to
Slide 8: P&C industry 12-month outlook
P&C industry 12-month outlook We remain well-positioned to continue outperforming the Canadian P&C insurance industry in the current environment • Industry premiums are likely to increase at a low single digit rate, with low single digit growth in personal auto, mid single digit growth in commercial
Slide 9: Four avenues of growth
Four avenues of growth Personal lines • Build on outperformance in auto • Bring advantages of scale to brokers • Hard market in personal property • Optimize brand architecture Commercial lines • Double direct capabilities • Leverage our industry Firming Develop outperformance, and acquired market ex
Slide 10: Acquisition of Canadian Direct Insurance (CDI)
Acquisition of Canadian Direct Insurance (CDI) Financially Financial position Strong strategic fit compelling remains strong • Broadens direct presence • IRR estimated above for IFC 15%1 • Acquisition to be financed • through excess capital Facilitates objective to • Immediately accretive to double
Slide 11: Streamlining our brands
Streamlining our brands Broker Channel Direct Channel Growth and innovation will be accelerated in 2015: • Grey Power will be rebranded as belairdirect and the • Increase investments in advertising, technology and two operations will be united product development • Customers of Grey Power and belair
Slide 12: Our people advantage
Our people advantage Building the best insurance team Identification, development and retention of key talent is fundamental to our talent management strategy – In 2013, 22% of key talent were promoted or developed through exposure to other business units – Voluntary turnover is significantly better
Slide 13: Key takeaways
Key takeaways We have a sustainable competitive edge due to our disciplined approach and size advantage Our broad distribution platform positions us well for organic growth We have a strong financial position and a proven track record of consolidation Deep bench in place to ensure the sustainability
Slide 14: Appendix
Appendix Intact Financial Corporation
Slide 15: P&C insurance in Canada
P&C insurance in Canada A $44 billion market representing 3% of GDP • Fragmented market: Industry DPW by line of business – Top five represent 48%, versus bank/lifeco Personal Commercial markets which are closer to 65-75% Property, P&C and – IFC is largest player with approx. 17% 21% other, 32% mark
Slide 16: P&C industry 10-year performance versus IFC
P&C industry 10-year performance versus IFC IFC’s competitive advantages Combined ratio 105% • Significant scale advantage 103% Industry1 10-year avg. • Sophisticated pricing and underwriting 101% = 97.2% 99% discipline 97% • In-house claims expertise 95% 10-year avg. 93% • Broker relationships 91%
Slide 17: Commercial P&C action plan
Commercial P&C action plan Targeting a combined ratio sustainably in the low 90s While we are pleased with our • FY2014 reported combined ratio of 94.2% progress thus far, actions to 98.2% 108.2% 109.0% 100.0% 105.6% 100.5% 84.7% 87.1% improve performance will continue 12.4% 7.4% Initiatives rolled
Slide 18: Home Improvement Plan
Home Improvement Plan Targeting a combined ratio sustainably below 95% Our Home Improvement Plan is helping to • FY2014 reported combined ratio of 89.0% improve our results, with ultimate benefits despite 8.6 points of catastrophe losses to be generated over the next 6-12 months • Retention better t
Slide 19: Ontario auto update
Ontario auto update Context Update • There is an Ontario government mandate • We believe that the June-2014 election to reduce insurance rates by an average which put the Liberal government in a of 15% by August 2015 majority position facilitates their ability to – Rate reductions are to be aided by
Slide 20: Further industry consolidation ahead
Further industry consolidation ahead Our domestic acquisition strategy Our track record of acquisitions1 • Targeting large-scale acquisitions of $500 million or 2012 – Jevco ($350 mil.) Industry IFC 2011 – AXA ($2 billion) more in direct premiums written 2004 – Allianz ($798 mil.) 7.4 • Pursuing acq
Slide 21: Historical financials
Historical financials Track record of stable financial performance IFRS (in $ millions, except as otherwise noted) 2014 2013 2012 2011 2010 Income statement highlights Direct written premiums $7,349 $7,319 $6,868 $5,099 $4,498 Underwriting income 519 142 451 273 194 Net investment income 427 406 389
Slide 22: Investments snapshot
Investments snapshot Debt securities portfolio Preferred shares (Hedging positions excluded) Other perpetual Fixed-rate 68% Supra-National and Foreign, 3% Corporate, 41% perpetual 25% Retractable Canadian 7% provincial and municipal, 20% 87% of preferred shares are rated at least ‘P2L’ Canadian fede
Slide 23: Track record of prudent reserving practices
Track record of prudent reserving practices • Quarterly and annual fluctuations in reserve Rate of claims reserve development development are normal (favourable prior year development as a % of opening reserves) 9% • 2005 reserve development 7.9% 8% was unusually high due to the favourable effects o
Slide 24: Contact Investor Relations
Contact Investor Relations General Contact Info Dennis Westfall, CFA, MBA Vice President, Investor Relations Website: http://www.intactfc.com Phone: 416.344.8004 Click on “Investor Relations” tab Mobile: 416.797.7828 Email: dennis.westfall@intact.net Email: ir@intact.net Maida Sit, CFA Phone: Direct
Slide 25: Forward-looking statements
Forward-looking statements Certain of the statements included in this presentation 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 developments constitute forward-looking statemen
Slide 26: Disclaimer
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 inducement to enter into, any contract or commitm
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