Intact Financial Corporation · TSX:IFC
Intact Financial — Investor Presentation (2008)
22 slides from Intact Financial's investor presentation, 2008
Slide 1: Investor Presentation – Spring 2008
Investor Presentation – Spring 2008
Slide 2: The leader in the Canadian P&C market
The leader in the Canadian P&C market ROE performance of insurance subsidiaries • 11% market share compared to Canadian P&C insurance industry • $4.1 billion direct premiums written 40% • 4.7 million written insured risks 30% • $7.1 billion investment portfolio 10-year avg. 20% = 18.6% • Market lead
Slide 3: Two key business goals driving our strategy
Two key business goals driving our strategy Leveraging our competitive 1 Return on equity advantages to consistently outperform the Canadian P&C Exceed the Canadian P&C industry industry annually by 10-year superior 500 bps performance gap to industry Top-line growth Return on equity 760 bps 2 Premi
Slide 4: Scale drives superior performance in personal lines
Scale drives superior performance in personal lines 2007 Automobile direct premiums written – Automobile – loss ratio personal and commercial ($ millions) Industry ING Canada $2,500 $2,364 74% 71.6% 71.7% 72% $2,000 $1,723 70% 68.9% 68.7% $1,457 68% $1,500 66% $1,144 $1,139 63.5% 64% $1,000 62% 60.7
Slide 5: Long-term industry outperformance in commercial
Long-term industry outperformance in commercial ING Canada commercial non-auto DPW and market share versus key competitors 2007 net loss ratio gap versus industry (bps) Commercial property and liability combined ($ millions) Industry ING Canada 65% 991 59.4% 1000 60% 56.5% 56.1% 54.6% 55% 52.6% 900
Slide 6: Benefits of scale advantage
Benefits of scale advantage • Pricing and underwriting: • Sophisticated pricing segmentation • Large proprietary experience Superior loss ratio gap to the database industry (percentage points) • Disciplined and automated risk selection process • Identify and exploit profit pockets in Favourable gap
Slide 7: Diverse business model maximizes growth
Diverse business model maximizes growth Personal lines – 2007 direct Our family of insurance brands premiums written by distribution channel ($ millions) Affiliated ING Insurance: provides distribution network, insurance products and $333.5, 11% services through a network of 1,800 independent Direct
Slide 8: Strong capital position and borrowing capacity
Strong capital position and borrowing capacity (in $ millions) 1 Excess capital $ 614 Strategic capital priorities: Debt capacity2 $ 781 • Acquisitions Total capacity for • Share buybacks acquisitions, share buybacks and dividends $ 1,395 • Continued dividend increases 1 Includes cash at holding com
Slide 9: Capital management initiatives
Capital management initiatives Share buyback up to April 30, 2008 (in millions) • $1.4 billion in excess capital and debt 7.0 6.224 capacity at the end of Q1-2008 6.0 5.0 • Strong capital base allows us to 4.0 pursue our growth objectives while 3.0 returning capital to shareholders 2.0 1.065 1.0 • N
Slide 10: Future consolidation in a fragmented industry
Future consolidation in a fragmented industry Top 20 P&C insurers Market share (by DPW in 2007) P&C industry in Canada is highly Total = 80.6% fragmented compared to other financial services ING Canada Canadian public 10.9% (excl. ING) Current environment more likely to 5.9% Canadian private cre
Slide 11: $7.1B portfolio managed on after-tax return basis
$7.1B portfolio managed on after-tax return basis Investment philosophy: ÆPreservation of capital ING Canada invested assets by asset class ÆIncome generation Manage for economic value, not accounting income Other 3% Portfolio quality: ÆMore than 95% of our fixed Fixed income 53% income portfo
Slide 12: Leveraging our strengths to outperform the industry
Leveraging our strengths to outperform the industry Canadian P&C industry Unique advantages that outlook enable us to outperform the industry • Underwriting profitability and industry • Scale premium growth will trend toward • Underwriting discipline historical averages • Pricing sophistication • St
Slide 13: Appendices
Rei riven to lead Appendices ING S® 13
Slide 14: Premiums by business line and province
Premiums by business line and province 2007 Direct premiums written by business line 2007 Direct premiums written by ($ millions) geographic region ($ millions) Maritimes, 189.6, 5% Other, 68.9, 2% Commercial British non-auto, Columbia, $825.3, 20% $234.7, 6% Ontario, Commercial Alberta, $826.0, $1,
Slide 15: Personal lines – premiums by province
Personal lines – premiums by province 2007 Auto premiums by province 2007 Personal property premiums by ($ millions) province ($ millions) British Columbia, Other, $37.4, $26.6, 1% 2% Other, $42.8, 5% Nova Scotia, Nova Scotia, $80.0, 3% $36.6, 4% Alberta, $120.4, Alberta, $542.5, 13% Ontario, $303.9
Slide 16: Q1-08 Results
Driven to lead Q1-08 Results ING S® 16
Slide 17: Solid operating results in Q1-08
Solid operating results in Q1-08 Direct premiums written (excl. pools) Sources of earnings ($ millions) (in millions) $4,109 $800 $3,906 $3,994 Net gains on invested $4,000 $3,501 $169.5 assets and other gains Net operating income $600 $127.6 $91.9 $3,000 $38.3 $400 $2,000 $612.3 $860 $532.3 $530.5
Slide 18: Industry cyclicality, seasonality and regulation
Industry cyclicality, seasonality and regulation 18
Slide 19: Seasonality of the P&C insurance industry
Seasonality of the P&C insurance industry • Combined ratios are typically highest in the first and fourth Seasonal indicator quarters due to winter weather conditions Combined ratio typically highest in 1.06 the first quarter of • Snow, ice, hail, wind and rain 1.04 1.02 each year can affect both pr
Slide 20: What causes P&C cyclicality?
What causes P&C cyclicality? Inefficient Supply-driven industry industry capital Excess capital influences aggressive pricing, management particularly in commercial lines Time lag between pricing, historical data, final Time lag confirmation of costs Rate adjustments are made after trends de
Slide 21: Historical average industry return on equity
Historical average industry return on equity Canadian P&C Industry – Return on equity 1975-2007 • Over the past 30 years, 30-year average – returns in the P&C 25% Approx. 10%* insurance industry have 20% fluctuated substantially 15% with average ROE of 10% roughly 10% over that period 5% 0% 19 5 76
Slide 22: Forward-looking statement disclaimer
Forward-looking statement disclaimer Certain of the statements contained in this presentation about our 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 stateme