Intact Financial Corporation · TSX:IFC
Intact Financial — Investor Presentation (October 2010)
25 slides from Intact Financial's investor presentation, October 2010
Slide 1: Intact Financial Corporation (IFC) Investor Presentation Fall 2010
Intact Financial Corporation (IFC) Investor Presentation Fall 2010
Slide 2: Forward-looking statements
Forward-looking statements 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. The words
Slide 3: Canada's leader in auto, home and business insurance
Canada’s leader in auto, home and business insurance Who we are Distinct brands • Dominant P&C insurer in Canada • Over $4 billion in direct premiums written • #1 in Ontario, Québec, Alberta, Nova Scotia • Substantial size and scale advantage • 11 successful acquisitions since 1988 • $8.2 billion ca
Slide 4: Consistent industry outperformance
Consistent industry outperformance Significant Sophisticated In-house claims Broker Multi-channel Proven scale pricing and expertise relationships distribution acquisition advantage underwriting track record 2009 combined ratios Five-year average loss ratios Industry Intact 106% 75% 104.8% 71.5% 71.
Slide 5: We continued to outperform the industry in H1-2010
We continued to outperform the industry in H1-2010 Operating highlights: Comparison with Canadian P&C 2010 year-to-date industry1 benchmark • Net operating income of $231 million 105% Intact Top 20 or 42.7% higher than last year due to 102% 99.7% improved underwriting performance 99% 96% 94.8% • Sol
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 (excl. pools) $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) p
Slide 7: Strong financial position and excess capital
Strong financial position and excess capital Strong balance sheet $8.2 billion in cash and invested assets • Excess capital position of $766 million, based on 170% Loans Cash and short 4.1% term notes 3.9% MCT • As at June 30, 2010, the debt to total capital ratio was 14.6%. Based on a debt to total
Slide 8: 12-month outlook: Industry pricing environment firming up in Canada
12-month outlook: Industry pricing environment firming up in Canada • Premiums in personal lines increasing due to cost inflation Recent escalation in the costs of BI and AB claims should subside as a Personal lines result of the September Ontario auto reforms; however, we expect further rate increa
Slide 9: Ontario auto reforms are now in place
Ontario auto reforms are now in place 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 raisin
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 • Ontario auto rate increases accelerating our broker partners • Home insurance premiums also on the rise • Expand and grow belairdirect Commercial lines
Slide 11: Strong organic growth potential through multi-channel distribution
Strong organic growth potential through multi-channel distribution #1 Broker insurance company in Canada Targeting growing 50+ population • Network of more than 1,800 brokers in In 10 yrs, Canada 25% of the • Brokers in Canada own the commercial Canadian market and maintain large share of population
Slide 12: Recent accolades
Recent accolades Intact Insurance Highest in Customer Satisfaction among Québec Automotive Insurance Providers1 Grey Power Highest in Customer Satisfaction among Private Full-Coverage Automotive Insurance Providers1 Intact Financial Corporation Insurance Company of the Year 2010, Canada2 1. J.D. Pow
Slide 13: Conclusion
Conclusion Disciplined pricing, underwriting, investment and capital management have positioned us well for the future • Largest P&C insurance company with substantial scale advantage in the market • Strong financial position • Excellent long-term earnings power • Organic growth platforms easily exp
Slide 14: Appendices
Appendices
Slide 15: P&C insurance is a $39 billion market in Canada
P&C insurance is a $39 billion market in Canada 3% of GDP in Canada Industry DPW by line of business • Fragmented market, top five less than 36%, versus bank/lifeco Home Commercial markets which are closer to oligopoly insurance, P&C, 26.9% 18.4% • Brokers continue to own commercial lines and large
Slide 16: P&C industry 10-year performance versus IFC
P&C industry 10-year performance versus IFC IFC competitive advantages Combined ratio • Significant scale advantage 120% Canadian P&C 115% industry1 • Sophisticated pricing and underwriting 110% 10-year avg. • In-house claims expertise = 99.8% 105% 100% • Multi-channel distribution 95% • Broker rela
Slide 17: Further consolidation in Canadian P&C market likely
Further consolidation in Canadian P&C market likely Acquisition strategy Top 20 P&C insurers = 82% of market • Targeting large-scale acquisitions of $500 million or Canadian private, 10% more (direct premiums written) IFC, 11% • Pursuing acquisitions in lines of business where we Non-top 20, 18% Can
Slide 18: Good progress to date 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-V
Slide 19: The July 12th Alberta hailstorm presented another opportunity to demonstrate our core values
The July 12th Alberta hailstorm presented another opportunity to demonstrate our core values Catastrophes in context • Helped over 9,000 of our customers get back on track • As a P&C insurer, catastrophes are a normal part of our business • Increased capacity of our call centres • Historically, cata
Slide 20: Historical financials
Historical financials Income statement highlights 2009 2008 2007 2006 2005 Direct written premiums (excluding pools) $ 4,275 $ 4,146 $ 4,109 $ 3,994 $ 3,906 Underwriting income (excluding MYA*) 54 117 189 404 538 Net operating Income (excluding MYA*) 282 361 457 531 612 Net operating EPS (excluding
Slide 21: 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 6.3% 3.2% • Acquisitions 0.4 14.8% 0.4 8.0% $0.340 • Dividends $0.310 $0.320 0.3 53.8% $0.270 • Share buybacks $0.250 0.3 0.
Slide 22: Cash and invested assets
Cash and invested assets Asset class Fixed income Preferred shares Federal government and agency 33.7% Fixed perpetual 47% Corporate 29.4% Perpetual and callable floating Cdn. Provincial and municipal 26.1% and reset 31% Supranational and foreign 8.3% Fixed callable 22% ABS/MBS 2.4% TOTAL 100% Priva
Slide 23: 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 24: 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 22 22 Black, Susan SVP, Chief HR Officer 3 3 Blair, Alan SVP, Atlantic Canada 26 15 Coull-Cicchini, Debbie SVP, Ontario 6 6 Désilets, Claude Chief Ri
Slide 25: 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
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