Intact Financial Corporation · TSX:IFC
Intact Financial — National Bank Financial 2012 Canadian Financial Services Conference
20 slides from Intact Financial's conference presentation, Mar 29, 2012
Slide 1: Intact Financial Corporation (TSX: IFC)
Intact Financial Corporation (TSX: IFC) National Bank Financial 2012 Canadian Financial Services Conference Montréal, Québec March 29, 2012
Slide 2: Canada’s leader in auto, home and business insurance
Canada’s leader in auto, home and business insurance Who we are1 Distinct brands • Largest P&C insurer in Canada • $6.5 billion in direct premiums written • #1 in BC, Alberta, Ontario, Quebec, Nova Scotia • $11.8 billion cash and invested assets • Proven industry consolidator Scale advantage Industr
Slide 3: Consistent industry outperformance
Consistent industry outperformance Significant Sophisticated In-house Broker Multi- Proven Solid scale pricing and claims relationships channel acquisition investment advantage underwriting expertise distribution strategy returns 2011 combined ratios Five-year average loss ratios Industry Intact 102
Slide 4: A strong base from which to build
A strong base from which to build Enhanced Business Mix Strong Capacity To Outperform Line of Business 2010 Q4-2011 Combined Ratio 20111 Personal Auto 50% 42% IFC 96.1% Personal Property 24% 23% Top 20 Industry2 101.0% Commercial 26% 35% Outperformance 4.9 pts Geography 2010 Q4-2011 Return on Equity
Slide 5: Solid financial position and excess capital
Solid financial position and excess capital Solid balance sheet $11.8 billion in cash and invested assets • Solid financial position : – $435 million in excess capital – Regulatory capital (MCT) well over target at 197% Cash Column1 – Debt to total capital ratio of approximately and 19% pro forma th
Slide 6: Strategic capital management
Strategic capital management • Strong capital base has allowed us to pursue our growth objectives while returning capital to shareholders Quarterly dividend Capital priorities 8.1% 0.45 8.8% • Dividends 0.40 3.2% 6.3% $0.37 $0.40 • Acquisitions 0.35 14.8% $0.31 $0.32 $0.34 8.0% • Share buybacks 0.30
Slide 7: Industry outlook for 2012
Industry outlook for 2012 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 similar rate as in 2011: – Mid single digit growth in personal auto (driven by Ontario) – Upper single digit gr
Slide 8: Four distinct avenues for growth
Four distinct avenues for growth Firming market conditions (0-2 years) Develop existing platforms (0-3 years) Personal lines • Continue to expand support to • Industry premiums remain inadequate in ON auto our broker partners • Home insurance premiums also on the rise Commercial lines • Evidence of
Slide 9: Conclusion
Conclusion Disciplined pricing, underwriting, investment and capital management have positioned us well for the future • Largest P&C insurance company in Canada • Consistent track record of industry outperformance • Solid financial position • Excellent long-term earnings power • Organic growth platf
Slide 10: Appendices
Appendices [intact] =
Slide 11: P&C insurance is a $40 billion market in Canada
P&C insurance is a $40 billion market in Canada 3% of GDP in Canada Industry DPW by line of business • Fragmented market1: −Top five represent 43%, versus bank/lifeco markets which are closer to 65-75% −IFC is largest player with 16.5% market share, versus largest bank/lifeco with 22- 25% market sha
Slide 12: P&C industry 10-year performance versus IFC
P&C industry 10-year performance versus IFC IFC’s competitive advantages Combined ratio 110% • Significant scale advantage 105% • Sophisticated pricing and underwriting Industry1 10-year avg. = 98.0% discipline 100% • In-house claims expertise 95% 10-year avg. • Broker relationships 90% = 94.6% • So
Slide 13: Near-term themes to monitor
Near-term themes to monitor Impact on Industry from Low Yields Reinsurance • Major catastrophes in the world in 2011 have impacted reinsurer’s capital levels P&C Industry • The Canadian industry one of the most profitability 3-5 year conservative markets in the world in terms of Government of Canada
Slide 14: Further industry consolidation ahead
Further industry consolidation ahead Our acquisition strategy Canadian M&A environment • Targeting large-scale acquisitions of $500 million or Environment more conducive to acquisitions now more in direct premiums written than in recent years: • Pursuing acquisitions in lines of business where we •
Slide 15: Historical financials
Historical financials IFRS Canadian GAAP (in $ millions, except as otherwise noted) 2011 2010 2009 2008 2007 Income statement highlights Direct written premiums $5,099 $4,498 $4,275 $4,146 $4,109 Underwriting income 273 193 54 117 189 Net operating income 460 402 282 361 457 Net operating income per
Slide 16: Cash and invested assets
Cash and invested assets Asset class Fixed income Preferred shares Corporate 33.5% Perpetual and callable floating 62.0% Federal government and agency 23.6% and reset Cdn. Provincial and municipal 33.2% Fixed perpetual 25.3% Supranational and foreign 6.6% Fixed callable 12.5% ABS/MBS 3.0% TOTAL 100%
Slide 17: Long-term track record of prudent reserving practices
Long-term track record of prudent reserving practices Rate of claims reserve development • Quarterly and annual (favourable prior year development as a % of opening reserves) fluctuations in reserve development are normal • 2005/2006 reserve development was unusually high due to the favourable effec
Slide 18: Investor Relations contact information
Investor Relations contact information Dennis Westfall Director, Investor Relations Phone: 416.341.1464 ext 45122 Cell: 416.797.7828 Email: Dennis.Westfall@intact.net Email: ir@intact.net Phone: 416.941.5336 or 1.866.778.0774 (toll-free within North America) Fax: 416.941.0006 www.intactfc.com/Invest
Slide 19: Forward-looking statements and disclaimer
Forward-looking statements and disclaimer 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-l
Slide 20: Forward-looking statements and disclaimer
Forward-looking statements and disclaimer All of the forward-looking statements included in this presentation are qualified by these cautionary statements and those made in the “Risk Management” section of our presentation for the year ended December 31, 2011. These factors are not intended to repre
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