Intact Financial Corporation · TSX:IFC
Intact Financial — Investor Presentation (April 2014)
23 slides from Intact Financial's investor presentation, April 2014
Slide 1: Intact Financial Corporation (TSX: IFC)
Intact Financial Corporation (TSX: IFC) Continuing our journey to build a world-class P&C insurer Investor Presentation April 2014
Slide 2: Canada's P&C insurance leader
Canada’s P&C insurance leader Who we are Distinct brands • Largest P&C insurer in Canada • $7 billion in direct premiums written • #1 in BC, Alberta, Ontario, Quebec, Nova Scotia • $12.3 billion cash and invested assets • Proven industry consolidator Leader in a fragmented industry Industry outperfo
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 2013 metrics Five-year average loss ratios 100.7% Industry IFC 77.2% I
Slide 4: A strong base from which to grow
A strong base from which to grow Enhanced business mix Strong capacity to outperform Line of business FY2010 FY2013 Combined Ratio1 FY2013 Personal Auto 50% 46% IFC 97.3% Personal Property 24% 22% Industry Benchmark2 101.8% Commercial 26% 32% Outperformance 4.5 pts Geography FY2010 FY2013 Return on
Slide 5: Canadian P&C industry 12-month outlook
Canadian 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 and commercial lines and uppe
Slide 6: A 36-month roadmap for outperformance
A 36-month roadmap for outperformance Beat industry ROE by NOIPS growth of 10% 5 points every year per year over time Pricing & Segmentation: Organic growth: 2 points 4-6% Claims management: Margin improvement: 3 points 0-3% Investments and capital Capital management/deployment: management: 2 points
Slide 7: Strong financial foundation for growth
Strong financial foundation for growth $12.3 billion – conservatively managed Solid balance sheet Note: Investment mix is net of hedging positions and financial liabilities related to investments. • $550 million in total excess capital Cash and short- • MCT of 203% term notes, 2% • Debt-to-capital r
Slide 8: Strategic capital management
Strategic capital management Capital management framework Shareholder friendly approach 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 $0.48 Maintain leve
Slide 9: 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 • Build on outperformance in auto to accelerate growth to our broker partners • Industry premiums likely to be bolstered by hard market conditions
Slide 10: Building on our sustainable competitive advantages
Building on our sustainable competitive advantages We have a sustainable competitive advantage versus the industry due to our disciplined approach and quality operations We remain committed to adapting products to suit consumers’ needs We continue our shareholder-friendly approach to capital managem
Slide 11: Some of our recent accolades
Some of our recent accolades … J.D. Power ranked Grey Power as #1 in both auto and home insurance in Ontario/Atlantic and belairdirect #2 in both auto and home insurance in Ontario/Atlantic Nationally, our broker survey marked an all-time high, while in Ontario the IBAO ranked Intact Insurance first
Slide 12: Appendices
Intact Financial Corporation (TSX: IFC) Appendices
Slide 13: P&C insurance – a $44 billion market in Canada
P&C insurance – a $44 billion market in Canada 3% of GDP in Canada Industry DPW by line of business • Fragmented market1: Personal Commercial Property, P&C and – Top five represent 48%, versus bank/lifeco 21% other, 32% markets which are closer to 65-75% – IFC is largest player with approx. 17% mark
Slide 14: 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 101% 10-year avg. • Sophisticated pricing and underwriting 99% = 97.2% discipline 97% 95% • In-house claims expertise 93% 10-year avg. = 93.7% • Broker relationsh
Slide 15: Ontario auto environment
Ontario auto environment Ontario government’s strategy to reduce both rates and costs • Reduce insurance rates by an average of 15% over 2 years – Average 4% industry reduction approved in Q4-2013, effective on new business and renewals through the first half of 2014 (approximately half of the marke
Slide 16: Plan for delivering 10 point improvement in personal property
Plan for delivering 10 point improvement in personal property Combined Ratio Composition Benefits generated next 18-24 months 113.6% 109.0% 96.5% 103.5% 93.5% 104.4% Ongoing: 8.7% • Renewals at the higher rates 8.6% 13.3% 17.9% 5.9% 10.3% • Increasing education and awareness • Reducing earthquake ex
Slide 17: Further industry consolidation ahead
Further industry consolidation ahead Our domestic acquisition strategy Canadian M&A environment • Targeting large-scale acquisitions of $500 million or Environment more conducive to acquisitions now than in more in direct premiums written recent years: • Pursuing acquisitions in lines of business wh
Slide 18: Historical financials
Historical financials IFRS Cdn. GAAP (in $ millions, except as otherwise noted) 2013 2012 2011 2010 2009 Income statement highlights Direct written premiums $7,319 $6,868 $5,099 $4,498 $4,275 Underwriting income 142 451 273 193 54 Net investment income 405 388 326 294 293 Net operating income (NOI)
Slide 19: Cash and invested assets
Cash and invested assets Asset class Fixed income Preferred shares Corporate 36% Perpetual and callable floating and reset 67% Cdn. federal government and agency 36% Fixed-rate perpetual 24% Cdn. provincial and municipal 23% Retractable 9% Supra-National & Foreign 3% TOTAL 100% ABS/MBS 2% TOTAL 100%
Slide 20: Track record of prudent reserving practices
Track record of prudent reserving practices • Quarterly and annual Rate of claims reserve development (favourable prior year development as a % of opening reserves) fluctuations in reserve 9% development are normal 7.9% 8% • 2005 reserve development 7% was unusually high due to 6% 5.7% 5.1% the favo
Slide 21: Investor Relations contact information
Investor Relations contact information Dennis Westfall, CFA Maida Sit, CFA Vice President, Investor Relations Manager, Investor Relations Phone: 416.344.8004 Phone: 416.341.1464 ext 45153 Cell: 416.797.7828 Email: Maida.Sit@intact.net Email: Dennis.Westfall@intact.net General Contact Info Email: ir@
Slide 22: 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 23: Forward looking statements and disclaimer
Forward looking statements and 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 inducem
Intact Financial — Investor Presentation (April 2014) on 6ix