Intact Financial Corporation · TSX:IFC
Intact Financial — Bank of America Merrill Lynch 2012 Insurance Conference
22 slides from Intact Financial's conference presentation, Feb 15, 2012
Slide 1: Intact Financial Corporation (TSX: IFC)
Intact Financial Corporation (TSX: IFC) Bank of America Merrill Lynch 2012 Insurance Conference New York, NY February 15, 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 • $11.8 billion cash and invested assets • Proven industry consolidator Scale advantage Industr
Slide 3: Consistent industry outperformance
Consistent industry outperformance Significant Sophisticated In-house Broker Multi-channel Proven scale pricing and claims relationships distribution acquisition advantage underwriting expertise strategy 2010 combined ratios Five-year average loss ratios Canadian P&C industry average = 101.0% Top 20
Slide 4: A young brand with years of experience
2011 AXA Canada was acquired A young brand with 200 years of experience ING Group sells 2009 remaining ownership Initial Public Offering Allianz Canada 2004 (IPO) was acquired 2001 Zurich’s Canadian portfolio of Home, Auto and Small Business was acquired 1998 Guardian Insurance acquired 4 National –
Slide 5: IFC is a top-tier North American insurer
IFC is a top-tier North American insurer Largest North American Non- Life Insurers by Market Capitalization (US$ billions) IFC US P&C Share Price Performance vs. US Insurance P&C Insurance and S&P/TSX Index Composite Indices S&P/TSX Composite Index 5
Slide 6: 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 2010 YTD 2011 Personal Auto 50% 42% IFC* 94.8% 95.8% Personal Property 24% 23% Top 20 Industry* 105.0% 101.6% Commercial 26% 35% Outperformance 10.2 pts 5.8 pts Geograph
Slide 7: 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 8: 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% $0.40 • Dividends 0.40 3.2% 6.3% $0.37 • Acquisitions 0.35 14.8% $0.31 $0.32 $0.34 8.0% • Share buybacks 0.30
Slide 9: 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 10: Four distinct avenues for growth
Four distinct avenues for growth Firming market conditions (0-24 months) 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 o
Slide 11: 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 12: Appendices
Appendices [intact] —
Slide 13: 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 14: P&C industry 10-year performance versus IFC
P&C industry 10-year performance versus IFC IFC’s competitive advantages Combined ratio • Significant scale advantage Industry1 10-year • Sophisticated pricing and underwriting avg. = 99.0% discipline • In-house claims expertise 10-year avg. • Broker relationships = 95.3% • Solid investment returns
Slide 15: 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 16: 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 17: 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 18: 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 19: 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 9% 7.9% 8% • 2005/2006 reserve 7% development was unusually 6% 4.9% 4.8% 4.9%
Slide 20: 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 21: 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 22: 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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