Intact Financial Corporation · TSX:IFC
Intact Financial — Investor Presentation (June 2011)
30 slides from Intact Financial's investor presentation, June 2011
Slide 1: Intact Financial Corporation Investor Presentation June 2011
Intact Financial Corporation (TSX: IFC) Investor Presentation June 2011
Slide 2: Forward-looking statements and disclaimer
Forward-looking statements and disclaimer Certain of the statements included in this presentation about IFC’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 s
Slide 3: Forward-looking statements and disclaimer
Forward-looking statements and disclaimer These factors are not intended to represent a complete list of the factors that could affect us. These factors should, however, be considered carefully. All of the forward-looking statements included in this presentation are qualified by these cautionary sta
Slide 4: Canada's leader in auto, home and business insurance
Canada’s leader in auto, home and business insurance Who we are Distinct brands • Largest P&C insurer in Canada • $4.5 billion in direct premiums written • #1 in Ontario, Quebec, Alberta, Nova Scotia • $8.6 billion cash and invested assets Scale advantage Industry outperformer 2010 Direct premiums w
Slide 5: Consistent industry outperformance
Consistent industry outperformance Significant Sophisticated In-house claims Broker Multi-channel Proven scale pricing and expertise relationships distribution acquisition advantage underwriting strategy 2010 combined ratios Five-year average loss ratios Industry Intact 106% 80% 104.3% Cdn. P&C 75.1
Slide 6: We continue to outperform the industry
We continue to outperform the industry Operating highlights: Comparison with Canadian P&C Q1-2011 results industry1 benchmark Intact Top 20 • Net operating income per share of $0.91 108% 105% 104.3% – a strong start to the year 102% • Healthy combined ratio of 94.6%, above 99% 96.3% last year’s exce
Slide 7: Q1-2011 Financial highlights
Q1-2011 Financial highlights Q1-2011 Q1-2010 Change (in $ millions, except as otherwise noted) Direct premiums written (in $ millions, except as otherwise noted) $943 $914 3% Net underwriting income $58 $69 (16)% Combined ratio 94.6% 93.2% 1.4 pts Net operating income per share (in dollars) $0.91 $0
Slide 8: Strong financial position and excess capital
Strong financial position and excess capital Strong balance sheet $8.6 billion in cash and invested assets • Excess capital of $784 million, based on 170% MCT Loans • As at March 31, 2011, the debt to total capital Cash and short term notes 6% 4% ratio was 14.4%. Based on a debt to total capital rat
Slide 9: 12-month industry outlook
12-month industry outlook We remain well-positioned to continue outperforming the Canadian P&C insurance industry in the current environment • Industry premiums are likely to increase at a similar pace as in 2010, with Premium growth mid-single digit growth in personal auto (driven by Ontario); uppe
Slide 10: Four distinct avenues for growth
Four distinct avenues for growth Benefit from firming market conditions Develop existing platforms Personal lines • Continue to expand support to • Industry premiums remain inadequate in ON auto our broker partners • Home insurance premiums also on the rise • Expand and grow belairdirect Commercial
Slide 11: Conclusion: Intact Financial
Conclusion: Intact Financial Disciplined pricing, underwriting, investment and capital management have positioned us well for the future • Largest P&C insurance company in Canada with substantial scale advantage in the market • Strong financial position • Excellent long-term earnings power • Organic
Slide 12: IFC's acquisition of AXA Canada: Building a world-class Canadian P&C insurer
IFC’s acquisition of AXA Canada: Building a world-class Canadian P&C insurer
Slide 13: IFC's acquisition of AXA Canada: Building a world-class Canadian P&C insurer
IFC’s acquisition of AXA Canada: Building a world-class Canadian P&C insurer Strong strategic fit Financially compelling • Strengthens IFC’s premiums by over 40% • Management estimates IRR1 of 20% • Bolsters our risk selection and claims management • Acquisition is accretive to NOIPS2,3 in 2012; ann
Slide 14: Leading position…
Leading position… Top 10 Canadian P&C insurance 6.5 companies by 2010 direct premiums written ($ billions) 3.3 2.4 2.4 2.3 2.0 2.0 1.9 1.7 1.6 PF Intact + Aviva TD RSA Co-operators AXA Wawanesa State Farm Economical Desjardins AXA Assurance Rank 1 2 3 4 5 6 7 8 9 10 Share 16.5% 8.4% 6.1% 6.0% 5.9% 5
Slide 15: …Leading performance
…Leading performance Return on equity (2010) Combined ratio (2010) Intact pro forma 14.9% Intact pro forma 94.8% Top 20 adjusted* 3.2% Top 20 adjusted* 105.0% Outperformance 11.7% Outperformance 10.2% *Excludes AXA *Excludes AXA Expands our outperformance versus the Top 20 P&C insurance industry ben
Slide 16: AXA Canada: Expanding our expertise
AXA Canada: Expanding our expertise − Offers a range of P&C and Life & Health insurance products through its relationships with 1,300 insurance brokers and 2,700 independent insurance advisors − The sixth largest P&C insurer in Canada with a 5.1% share in 2010 − Strong presence in provinces of Quebe
Slide 17: IFC + AXA: A winning combination
IFC + AXA: A winning combination • Greater earnings stability as a result of increased diversification: ‒ Higher exposure to commercial lines accomplishes an important strategic objective ‒ Less reliance on personal automobile insurance ‒ Improves geographic footprint in underrepresented areas (Queb
Slide 18: IFC + AXA: Building a world-class Canadian P&C insurer
IFC + AXA: Building a world-class Canadian P&C insurer Strong strategic fit: combining sophisticated underwriting and claims management, while enhancing our multi-channel distribution • Increased scale advantage bolsters our risk selection and claims management capabilities • Enhanced commercial lin
Slide 19: Appendices
Appendices [intact ] =
Slide 20: 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 Home Commercial • Fragmented market: insurance, P&C, 26.6% 19.0% •Top five represent 37%, versus bank/lifeco markets which are closer to 65-75% •IFC is largest player with 11% market share, Commercia
Slide 21: Economic uncertainties will affect industry profitability
Economic uncertainties will affect industry profitability • Slow global recovery with significant The Canadian P&C industry can no longer downside risks count on high investment income • Continued volatility in financial, currency and commodity markets 14% • Financial systems still somewhat 12% vuln
Slide 22: P&C industry 10-year performance versus IFC
P&C industry 10-year performance versus IFC IFC’s competitive advantages Combined ratio 115% • Significant scale advantage Industry1 • Sophisticated pricing and underwriting discipline 105% 10-year avg. = 99.0% • In-house claims expertise 95% • Broker relationships 10-year avg. • Solid investment re
Slide 23: Historical financials
Historical financials IFRS Canadian GAAP (in $ millions, except as otherwise noted) 2010 2009 2008 2007 2006 Income statement highlights Direct written premiums $4,498 $4,275 $4,146 $4,109 $3,994 Underwriting income 194 54 117 189 404 Net operating income 402 282 361 457 531 Net operating income per
Slide 24: 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 8.8% 6.3% 3.2% • Acquisitions 0.40 14.8% $0.370 $0.340 • Dividends 0.35 8.0% $0.310 $0.320 0.30 53.8% • Share buybacks $0.25
Slide 25: Cash and invested assets
Cash and invested assets Asset class Fixed income Preferred shares Federal government and agency 29.0% Fixed perpetual 40% Corporate 34.6% Perpetual and callable floating Cdn. Provincial and municipal 27.1% and reset 42% Supranational and foreign 8.1% Fixed callable 18% ABS/MBS 1.1% TOTAL 100% Priva
Slide 26: 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 9% development are normal 7.9% 8% • 2005/2006 reserve development 7% was unusually high due to the 6%
Slide 27: Scale translates into superior CAT management capabilities
Scale translates into superior CAT management capabilities and faster speed-of-response CAT response Customers MODEL • Largest network of preferred providers: • Focus on getting customers • More than 600 auto and 500 property back on track: suppliers in the Rely Network •24/7 Claims teams • Prefer l
Slide 28: Recent CAT: May 15, 2011 in Slave Lake, Alberta
Recent CAT: May 15, 2011 in Slave Lake, Alberta • Wildfire forced the complete evacuation of Slave Lake's 7,000 residents; considered the largest displacement of this type in the province's history • Intact opened three mobile claims centres following the devastating wildfires which were staffed wit
Slide 29: Experienced and united leadership team
Experienced and united leadership team Years In Years With Industry IFC Brindamour, Charles President & CEO 18 18 Beaulieu, Martin SVP, Personal Lines 23 23 Black, Susan SVP, Chief HR Officer 3 3 Blair, Alan SVP, Atlantic Canada 27 27 Coull-Cicchini, Debbie SVP, Ontario 6 6 Désilets, Claude Chief Ri
Slide 30: 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/Inves