Intact Financial Corporation · TSX:IFC
Intact Financial — Debt Investor Presentation (June 2014)
24 slides from Intact Financial's debt investor presentation, Jun 12, 2014
Slide 1: Fixed Income Investor Presentation
FIXED INCOME INVESTOR PRESENTATION Intact Financial Corporation (TSX:IFC) Dennis Westfall, VP Investor Relations Thursday, June 12th, 2014 Intact Financial Corporation
Slide 2: 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 3: 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
Slide 4: 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 BC, Alberta, Ontario, Quebec, Nova Scotia • $12.4 billion cash and invested assets • $670 million in excess capital and an MCT of 213% •
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 10-year outperformance vs. industry Five-year average loss ratios 8.4 pts 77.2%
Slide 6: Committed to strong balance sheet and capital structure
Committed to strong balance sheet and capital structure Management has a track Q1 2014 YE 2013 YE 2012 record of maintaining a strong Investments 12,371 12,261 12,959 balance sheet and disciplined Total assets 19,856 19,774 19,813 financial management Medium Terms Notes 1,143 1,143 1,143 Committed t
Slide 7: Quality of Investment Portfolio
Quality of Investment Portfolio $12.4 billion of high quality investments – strategically managed Investment mix (net of hedging positions and financial liabilities related to investments, as of March 31, 2014) Bonds – Credit Ratings AAA Cash and short- term notes, 2% 46% Loans, 3% BBB 1% Preferred
Slide 8: Insurance Liabilities
Insurance Liabilities Track record of prudent reserving practices • Quarterly and annual Rate of claims reserve development fluctuations in reserve (favourable prior year development as a % of opening reserves) development are normal 9% 7.9% • 2005 reserve development 8% was unusually high due to th
Slide 9: Solid Capital Base
Solid Capital Base Strong excess capital position and forecast continued capital generation Excess capital at 170% $1,000 859 809 $800 702 550 670 Excess capital levels are 599 C$ Millions $600 maintained to ensure a 428 435 $400 very low probability of $200 breaching 170% MCT $0 2007 2008 2009 2010
Slide 10: Leverage Below Target
Leverage Below Target Strong capital generation resulting in reduced leverage Debt-to-total Capitalization Ratio 25% 22.9% 18.9% IFC target Continued 20% 18.7% 18.4% 20% debt-to-capital 14.3% reduction 15% since AXA acquisition 10% 2010 2011 2012 2013 2014-Q1 Earnings Coverage Ratio 18.7x 18.7x 20x
Slide 11: Four Avenues of Growth
Four Avenues of Growth Personal lines • Build on outperformance in auto to • Continue to expand support to our accelerate growth broker partners • Industry premiums likely to be bolstered by hard market conditions in personal • Optimize brand architecture property Commercial lines Firming Develop •
Slide 12: Catastrophe Risk Management
Catastrophe Risk Management Reinsurance • Reinsurance protection of approximately $3.2 billion Gross industry losses $5.0B Operating Income IFC 2013 Pre-Tax • Net retention of $100 million on Multi-risk events $3.0B and catastrophes ($2 to $10 million for single risk events). We retain on average 8%
Slide 13: Well Positioned for the Future
Well Positioned for the Future Our strong financial position and disciplined approach to the business provide a strong foundation from which to build • Largest P&C insurance company in Canada • Consistent track record of industry outperformance • Superior long-term earnings power Focus on Performanc
Slide 14: Appendix
APPENDIX Intact Financial Corporation
Slide 15: Debt Maturity Profile
Debt Maturity Profile Reasonable levels of debt and preferreds improve our overall cost of capital $400 Preferred shares Notes Series 4 4.70% $300 Preferred Share Series 1 Series 2 Series 5 Series 1 & 3 5.41% 6.40% 5.16% (C$ millions) $200 $300 Series 3 $250 $250 $250 $250 $250 6.20% $100 $100 $0 13
Slide 16: Strong Credit Ratings
Strong Credit Ratings Long term issuer Financial strength ratings credit ratings (principal operating insurance Outlook subsidiaries) Baa1 A1 Stable “The IFS ratings are based on excellent market position in the highly fragmented Canadian P&C industry…. Intact’s market leading position in short-tail
Slide 17: Canadian Insurance Peers
Canadian Insurance Peers DBRS A (low) BBB AA (low) A (high) AA (low) A (high) A(high) S&P -- BBB- A- A A+ A A+ Moody’s Baa1 Baa3 -- -- -- -- -- Market $9,050 $10,016 $3,581 $39,516 $30,444 $23,373 $4,530 Capitalization1 (C$M) Total Assets2 (C$M) $19,856 $36,656 $5,514 $538,873 $342,860 $208,225 $45,
Slide 18: Historical Financials
Historical Financials Track record of stable financial performance IFRS Cdn. GAAP (in $ millions, except as otherwise noted) 2013 2012 2011 2010 2009 Income statement highlights Direct written premiums $7,319 $6,868 $5,099 $4,498 $4,275 Underwriting income 142 451 273 194 54 Net investment income 40
Slide 19: Strategic Capital Management
Strategic Capital Management Capital management framework provides strength, sustainability and flexibility Capital management framework Integrated decision making process Strong capital base has allowed us to pursue our growth objectives while returning capital to shareholders Target Leverage & Mai
Slide 20: Embedded Risk Management Culture
Embedded Risk Management Culture ERM framework • Build sustainable competitive advantage Enterprise by fully integrating enterprise risk Risk Management management into business activities and strategic planning Strategic Risk • Prevent and mitigate risks related to various areas that could impede t
Slide 21: P&C Industry Characteristics
P&C Industry Characteristics The risks insured and economic drivers of P&C Insurance are very different from those of life insurance Canadian P&C Intact Canadian Life Insurance • Short-tailed risks which are • Focus on short term risk • Longer term risk duration re-priced every 12-24 months duration
Slide 22: Canadian P&C industry 12-month outlook
Canadian 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 low single-digit growth in personal auto and commercial lines and uppe
Slide 23: Over 200 Years of Experience
Over 200 Years of Experience Intact Financial Corporation 23
Slide 24: Contact Investor Relations
Contact Investor Relations General Contact Info Dennis Westfall, CFA, MBA Vice President, Investor Relations Website: http://www.intactfc.com Phone: 416.344.8004 Click on “Investor Relations” tab Mobile: 416.797.7828 Email: dennis.westfall@intact.net Email: ir@intact.net Maida Sit, CFA Phone: Manage
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