Intact Financial Corporation · TSX:IFC
Intact Financial — Q2 2010 Earnings Presentation
22 slides from Intact Financial's earnings presentation, August 2010
Slide 1: Q2-2010 Review of performance
Q2-2010 Review of performance
Slide 2: Q2-2010 Review of performance conference call
Q2-2010 Review of performance conference call Charles Brindamour Chief Executive Officer Mark Tullis Chief Financial Officer Martin Beaulieu SVP, Personal lines Byron Hindle SVP, Commercial lines 2
Slide 3: Charles Brindamour, Chief Executive Officer
Charles Brindamour Chief Executive Officer
Slide 4: Q2-2010 Key points
Q2-2010 Key points Second quarter highlights • Net operating income of $118.6 million or $1.03 per share – 33.8% higher than last year due to improved underwriting performance. • Solid overall Q2 combined ratio of 93.7%: − Improved underwriting in personal property and commercial P&C, − Despite cont
Slide 5: Contributions from all lines of business
Contributions from all lines of business Personal property Personal auto • Combined ratio of 100.3%; 7.6 points better • Combined ratio of 95.7%; reflecting higher than Q2-2009, despite increased catastrophes claims severity in Ontario • Premium growth of 8.5% driven by increases in • Outside of Ont
Slide 6: Q2-2010 Financial highlights
Q2-2010 Financial highlights (in $ millions, except as otherwise noted) Q2-2010 Q2-2009 Change YTD-2010 YTD-2009 Change Direct premiums written $1,317.8 $1,250.6 5.4% $2,232.1 $2,119.4 5.3% Net underwriting income $66.3 $43.2 53.5% $135.3 $51.1 164.8% Combined ratio 93.7% 95.7% (2.0) pts 93.5% 97.4%
Slide 7: 12-month industry outlook unchanged
12-month industry outlook unchanged We remain well-positioned to continue outperforming the Canadian P&C insurance industry in the current environment • Increasing frequency of water damages/storms; Home insurance no abatement in price strengthening • Product changes should serve to further improve
Slide 8: A solid quarter; we remain confident of our prospects
A solid quarter; we remain confident of our prospects • Strategies and action plans leading to growth and improved bottom line. • We remain cautious in outlook for Ontario auto prior to September 1. • Unpredictable nature of weather reinforces importance of action plans. • Well-positioned to take ad
Slide 9: Mark Tullis, Chief Financial Officer
Mark Tullis Chief Financial Officer
Slide 10: Personal lines continue solid performance
Personal lines continue solid performance (in $ millions, except as otherwise noted) Combined ratios Personal auto Q2-2010 Q2-2009 Change 95.7% 96.3% 92.8% 89.6% Direct premiums written $664.7 $635.2 4.6% 26.4% 24.7% 26.3% 24.4% 69.3% 64.9% 70.0% 68.4% Underwriting income $23.0 $53.6 (57.1)% Q2-2010
Slide 11: Strong underwriting in commercial lines
Strong underwriting in commercial lines (in $ millions, except as otherwise noted) Combined ratios Commercial auto Q2-2010 Q2-2009 Change 73.9% 84.7% 81.0% 74.6% Direct premiums written $100.6 $97.2 3.5% 30.8% 27.8% 31.0% 28.2% Net underwriting income $20.5 $20.4 0.5% z 53.9% 53.2% 43.6% 45.7% Combi
Slide 12: High quality investment portfolio
High quality investment portfolio Healthy investment portfolio $8.2 billion in cash and invested assets • 98.3% of bonds are rated A or better Cash and short • 77.9% of preferred shares are rated P1 or P2 Loans term notes 3.9% 4.1% • Minimal U.S. exposure Common shares 10.7% • No leveraged investmen
Slide 13: Strong capital position enables us to return capital
Strong capital position enables us to return capital Strong balance sheet NCIB update as of August 3, 2010 • Financial position remains very strong with • Number of shares purchased: 5.6 million more than $766 million in excess capital, based on MCT of 170% • Average price per share: $43.44 • Our ra
Slide 14: Strategic, operational and financial strength
Strategic, operational and financial strength • Largest P&C insurance company with substantial scale advantage in the market • Strong financial position • Excellent long-term earnings power • Organic growth platforms easily expandable • M&A environment more conducive to consolidation Disciplined pri
Slide 15: Forward-looking statement disclaimer
Forward-looking statement disclaimer Certain of the statements in this document 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 statements.
Slide 16: Q3-2010 Earnings conference call, November 3, 2010
Q3-2010 Earnings conference call Wednesday November 3, 2010
Slide 17: Appendices
Appendices | intact] —
Slide 18: Key drivers of change in operating income in Q2-2010
Key drivers of change in operating income in Q2-2010 (in $ millions, except as otherwise noted) Pre-tax operating income, 2009 $122.5 Higher / Changes in pre-tax operating income: (lower) Key points • Favourable prior year development, at 3.9% of Favourable prior year claims development 32.8 initial
Slide 19: Composition of invested assets at June 30, 2010
Composition of invested assets at June 30, 2010 Market Unrealized % of market % of market values G/L values values net of Asset class in $ millions Q2-2010 hedges Q2-2010 Cash and cash equivalents $304.4 $0 4% 4% Fixed income securities $4,487.0 $52.9 54% 63% Preferred shares $1,485.9 ($156.2) 18% 1
Slide 20: Good progress made on value creation opportunity in home insurance
Good progress to date made on value creation opportunity in home insurance Industry loss ratio advantage (percentage points) Opportunity to create loss ratio advantage similar to other business lines Favourable gap (five-year average) • Rate increases • Segmentation Automobile 6.4 • Insurance-to-Val
Slide 21: Ontario auto reforms: a summary
Ontario auto reforms: a summary Context Key features • Accident benefits and tort related bodily injury cost increases • Capping medical/rehabilitation and assessment/ (AB inflation: 19% in last four years) have resulted in the examination expenses for minor injuries to $3,500. industry raising rate
Slide 22: Four distinct avenues for growth
Four distinct avenues for growth Benefit from firming market conditions Develop existing platforms Personal lines • Offer Intact Insurance solutions • Ontario auto rate increases accelerating on the web • Home insurance premiums also on the rise • Expand and grow belairdirect Commercial lines and Gr