Intact Financial Corporation · TSX:IFC
Intact Financial — Investor Presentation (May 2015)
25 slides from Intact Financial's investor presentation, May 2015
Slide 1: Investor Presentation
INVESTOR PRESENTATION Intact Financial Corporation (TSX:IFC) May 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 billion in direct premiums written • #1 in British Columbia, Alberta, Ontario, Quebec and Nova Scotia • $13.4 billion investment portfolio • Proven industry consolidator 2014 Direc
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% 13% 7% 32% 18% 42% 46% 22% 27% 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 NOIPS growth of 10% 5 points every year per year over time Investments Margin Pricing & and capital improvement: 3 pts Segmentation:Claims management management: 0 – 3% Organic growth 3–5% Organic 2 points 2 points growth: 3 – 5% Pricing & Capital 3–
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 FY2014 outperformance Five-year average loss ratios (for the period ended Decemb
Slide 6: Internally managed investments
Internally managed investments $13.4 billion investment portfolio Investment mix (net of hedging positions and financial liabilities Objective: 160 bps related to investments, as of March 31, 2015) Loans, 3% of ROE outperformance Cash and short- term notes, 3% Preferred shares, 9% Common equity Fixe
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 • $601 million in total excess capital * 0.53 Qua
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 slightly negative growth in personal auto, mid single-digit growth in commercia
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
Acquisition of Canadian Direct Background Progress • Announced February 10, 2015 • The transaction closed on May 1, 2015 • $143 million in DPW and integration planning is well underway • Broadens direct presence for IFC • Facilitates objective to double direct • Targeting annual expense synergies of
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 Deep executive talent pool Building the best team Identification, development and retention of Executive Committee members have an average of 17 years experience with the organization key talent is fundamental to our talent in various roles management strategy In 2014, 32.1% of
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 $45 billion market representing approximately 3% of GDP • Fragmented market: Industry DPW by line of business – Top five represent 47%, versus bank/lifeco Personal Commercial markets which are closer to 65-75% Property, P&C and – IFC is largest player with approx. 17% 22% o
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 • Sophisticated pricing and underwriting 101% 10-year avg. = 98.0% 99% discipline 97% • In-house claims expertise 95% 93% 10-year avg. • Broker relationships 91%
Slide 17: Progress on Action Plans
Progress on Action Plans Personal Property Commercial P&C Our Home Improvement Plan is largely We continue our action plan targeting a low complete; all policies will have completed 90s combined ratio on a sustainable basis one renewal cycle in May 2015 by 2016 113.3% 124.7% 86.4% 91.8% 93.5% 97.7%
Slide 18: Ontario auto update
Ontario auto update The Ontario government has a mandate Update to reduce insurance rates while also • The recently released Ontario government reducing costs for insurers budget outlines additional actions to reduce costs which include: Cumulative Ontario Auto Rate Decreases * – Updating the catast
Slide 19: Further industry consolidation ahead
Further industry consolidation ahead Our domestic acquisition strategy Our track record of acquisitions • Targeting large-scale acquisitions of $500 million or Year Company DPW more in direct premiums written 2015 Canadian Direct Insurance $143 million • Pursuing acquisitions in lines of business wh
Slide 20: Historical financials
Historical financials Track record of stable financial performance (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 427 406 389 326
Slide 21: Investments snapshot
Investments snapshot Fixed income securities portfolio Preferred shares (Hedging positions excluded) Other Fixed-rate perpetual perpetual 66% Supra-National 26% and Foreign, 3% Corporate, 43% Retractable 8% Canadian provincial and 87% of preferred shares are rated at least ‘P2L’ municipal, 20% Geogr
Slide 22: 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 23: Contact Investor Relations
Contact Investor Relations General Contact Info Dennis Westfall, CFA, MBA Website: Vice President, Investor Relations http://www.intactfc.com Phone: 416.344.8004 Click on “Investor Relations” tab Email: dennis.westfall@intact.net Email: ir@intact.net Maida Sit, CFA Phone: Director, Investor Relation
Slide 24: 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 25: 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