Intact Financial Corporation · TSX:IFC
Intact Financial — Investor Presentation (April 2023)
24 slides from Intact Financial's investor presentation, Apr 27, 2023
Slide 1: IFRS 17 & 9 Key Impact Review
IFRS 17 & 9 Key Impact Review April 27, 2023 Page 1
Slide 2: Shubha Khan, Vice President, Investor Relations
Shubha Khan Vice President, Investor Relations Page 2
Slide 3: Forward-looking statements
Forward-looking statements Certain of the statements included in this presentation constitute forward-looking statements. Unless otherwise indicated, all forward-looking statements in this presentation are made as at April 27, 2023, and are subject to change after that date. Forward-looking statemen
Slide 4: Disclaimer & important notes
Disclaimer & important notes 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 c
Slide 5: Louis Marcotte, Executive Vice President & CFO
Louis Marcotte Executive Vice President & CFO Page 5
Slide 6: Our fundamentals are unchanged
Our fundamentals are unchanged IFRS 9 and IFRS 17 aim to increase transparency and provide standardization across insurance companies. Overall impact is generally limited for IFC given the short-term nature of our contracts. NO CHANGE TO: LIMITED IMPACT ON: Impacted by changes in timing of earnings.
Slide 7: Key concepts relevant to IFC
Key concepts relevant to IFC TIMING PRESENTATION of earnings of earnings MINIMAL IMPACT Deferral of In-house claims handling costs Measurement Models acquisition costs & other underwriting revenues Page 8 Page 9 Page 12 Onerous contracts Balance Sheet Reinsurance presentation Page 10 Presentation Pa
Slide 8: New requirements with limited impact for IFC
New requirements with limited impact for IFC Minimal impact IFRS 17 introduces two measurement models: 1 PAA 2 GMM (Premium Allocation Approach) (General Measurement Model) Measurement • Simplified approach that can be applied for certain insurance • More complex model which requires the deferral of
Slide 9: Deferral of acquisition costs
Deferral of acquisition costs Under IFRS 17, for contracts measured under the PAA method, companies can elect to defer acquisition costs or expense them as incurred. We have elected to continue deferring acquisition costs as we believe it provides a better matching of expenses to revenues. Timing Di
Slide 10: Onerous contracts
Onerous contracts IFRS 17 prescribes a methodology for the identification of onerous insurance contracts, with the objective of both harmonizing and accelerating loss recognition amongst insurers, with no change in ultimate losses recognized. Timing Under IFRS 41, the adequacy of the Unlike IFRS 4,
Slide 11: Claims acquired in a business combination
Claims acquired in a business combination In the context of a business combination, IFRS 17 requires the use of the GMM to account for acquired claims liabilities. Under this method, the development of acquired claims will be matched to actual cash flows (claims payments). As such, the recognition o
Slide 12: In-house claims handling costs & other underwriting revenues
In-house claims handling costs & other underwriting revenues IFRS 17 provides more guidance on classification and presentation of revenues and expenses, with the objective of increasing comparability across insurers. Presentation Illustrative example1: MD&A RECLASSIFICATION OF : MD&A Other In-house
Slide 13: Reserving: Fundamental concepts
Reserving: Fundamental concepts IFRS 4 & 17 Fundamental concepts are unchanged from IFRS 4 to IFRS 17 Discount Risk Adjustment unwind Release Risk Adjustment Discount +$3 -$3 Previously called Risk Margin under IFRS 4. -$5 +$5 Represents the amount required to bring Fundamental concept is to add add
Slide 14: Reserving: Methodology refinements
Reserving: Methodology refinements Overall reserving philosophy is unchanged. Timing Methodology refinement under IFRS 17, intended to align measurement across insurers MD&A presentation under IFRS 4 MD&A presentation under IFRS 17 We will continue to apply risk adjustment to our reserves: Risk We a
Slide 15: Impact of discount unwind reclassification
Impact of discount unwind reclassification Changes to presentation of discount unwind under IFRS 17 will result in a decrease in the combined ratio and a higher PYD. Presentation IFRS 4 & 17 Year 1 IFRS 4 Year 2 IFRS 17 Year 2 At inception, presentation is the same under IFRS 4 and IFRS 17 Unwind of
Slide 16: Maintaining combined ratio comparability over time
Maintaining combined ratio comparability over time Presentation IFRS 4 Discounted & undiscounted results IFRS 17 Undiscounted result is comparable to IFRS 4 are comparable over the lifetime of a claim RA build & release Discount build & release RA build & release RA build & release RA build & releas
Slide 17: Overall MD&A impact of discount unwind reclassification
Overall MD&A impact of discount unwind reclassification Given the significant improvement to overall combined ratio, our segment combined ratios will now be presented on an undiscounted Presentation basis to maintain comparability and decrease volatility over time. This change will impact the follow
Slide 18: IFRS 17 impact on transition
IFRS 17 impact on transition IFRS 17 Transition Date TRANSITION IMPACT FROM IFRS 4 TO IFRS 17: Comparatives restated Fiscal 2023 financials Jan 1 Jan 1 for IFRS 17 presented under IFRS +$420M (AFTER TAX) OR $2.39 PER SHARE 2022 2023 (but not for IFRS 9) 17 & 9 $163M $17M $16M $384M $14,919M $(133M)
Slide 19: Balance sheet presentation
Balance sheet presentation IFRS 17 introduces significant terminology and presentation changes to the balance sheet, mainly requiring the grouping of insurance and reinsurance contracts in an asset or liability position. Presentation Significant reduction in total assets and total liabilities, with
Slide 20: IFRS 9: Investment classification
IFRS 9: Investment classification Standard introduces new classification requirements based on how investments are managed, with the underlying principle that investments should be measured at their fair value through P&L (FVTPL) unless they meet the restrictive criteria to be measured at fair value
Slide 21: Key takeaways: Our fundamentals are unchanged, limited impact for IFC
Key takeaways: Our fundamentals are unchanged, limited impact for IFC NO CHANGE TO: LIMITED IMPACT ON: Fundamentals, economics or how we manage our business MD&A presentation NOIPS, EPS/ROE and BVPS Strategic roadmap, financial objectives & medium-to-long term ambitions PRESENTATION IMPACT ON: Inves
Slide 22: Appendix: Measuring our underwriting performance under IFRS 17
Appendix: Measuring our underwriting performance under IFRS 17 Clear distinction in nomenclature will differentiate MD&A measures from Financial Statement captions. Full reconciliations of non-GAAP measures to their closest GAAP measures will be provided. MD&A measure Principal non-GAAP Closest IFRS
Slide 23: Thank you!
Thank you! Upcoming events: Q1-2023 Q1-2023 Earnings Release Earnings Call MAY MAY 10 11 11:00 am EST 23 IFRS 17 & 9: Key MD&A and KPI impacts
Slide 24: Contact us
Contact us Investor Inquiries Intact Financial Corporation 700 University Avenue Toronto, ON M5G 0A1 ir@intact.net www.intactfc.com Investor Relations Shubha Khan Vice President, Investor Relations 1 (416) 341-1464 ext. 41004 shubha.khan@intact.net 24 IFRS 17 & 9: Key MD&A and KPI impacts
Intact Financial — Investor Presentation (April 2023) on 6ix