Intact Financial Corporation · TSX:IFC
Intact Financial — Investor Presentation (May 2011)
22 slides from Intact Financial's investor presentation, May 2011
Slide 1: Intact Financial Corporation Investor Presentation May 2011
Intact Financial Corporation (TSX: IFC) Investor Presentation May 2011
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 • Largest P&C insurer in Canada • $4.5 billion in direct premiums written • #1 in Ontario, Quebec, Alberta, Nova Scotia • Substantial size and scale advantage • 11 successful acquisitions since 1988 • $8.6 billion cash a
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 strategy 2010 combined ratios Five-year average loss ratios Industry Intact 106% 80% 104.3% Cdn. P&C 75.1
Slide 5: We continue to outperform the industry
We continue to outperform the industry Operating highlights: Comparison with Canadian P&C Q1-2011 results industry1 benchmark Intact Top 20 • Net operating income per share of $0.91 108% 105% 104.3% – a strong start to the year 102% • Healthy combined ratio of 94.6%, above 99% 96.3% last year’s exce
Slide 6: Q1-2011 Financial highlights
Q1-2011 Financial highlights (in $ millions, except as otherwise noted) Q1-2011 Q1-2010 Change Direct premiums written (in $ millions, except as otherwise noted) $943 $914 3% Net underwriting income $58 $69 (16)% Combined ratio 94.6% 93.2% 1.4 pts Net operating income per share (in dollars) $0.91 $0
Slide 7: Strong financial position and excess capital
Strong financial position and excess capital Strong balance sheet $8.6 billion in cash and invested assets Loans • Excess capital of $784 million, based on 170% MCT Cash and short 4% term notes 4% • As at March 31, 2011, the debt to total capital ratio was 14.4%. Based on a debt to total capital rat
Slide 8: 12-month industry outlook
12-month industry 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 similar pace as in 2010, with Premium growth mid-single digit growth in personal auto (driven by Ontario); uppe
Slide 9: 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 • Industry premiums remain inadequate in ON auto our broker partners • Home insurance premiums also on the rise • Expand and grow belairdirect Commercial
Slide 10: Strong organic growth potential through multi-channel distribution
Strong organic growth potential through multi-channel distribution #1 Broker insurance company in Canada Targeting 25+ years of good driving • Network of more than 1,800 brokers coast-to-coast • Brokers in Canada own the commercial market and maintain large share of • Operating in Alberta, Ontario p
Slide 11: 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 12: Appendices
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Slide 13: P&C insurance is a $40 billion market in Canada
P&C insurance is a $40 billion market in Canada 3% of GDP in Canada Industry DPW by line of business Home Commercial • Fragmented market: insurance, P&C, 26.6% 19.0% •Top five less than 36%, versus bank/lifeco markets which are closer to 65-75% •IFC is largest player with 11% market share, Commercia
Slide 14: Economic uncertainties will affect industry profitability
Economic uncertainties will affect industry profitability • Slow global recovery with significant The Canadian P&C industry can no longer downside risks count on high investment income • Continued volatility in financial, currency and commodity markets 14% • Financial systems still somewhat 12% vuln
Slide 15: P&C industry 10-year performance versus IFC
P&C industry 10-year performance versus IFC IFC’s competitive advantages Combined ratio 115% • Significant scale advantage Industry1 • Sophisticated pricing and underwriting discipline 105% 10-year avg. = 99.0% • In-house claims expertise 95% • Broker relationships 10-year avg. • Solid investment re
Slide 16: Further consolidation in the Canadian P&C market is likely
Further consolidation in the Canadian P&C market is likely Acquisition strategy Top 20 P&C insurers = 82% of market • Targeting large-scale acquisitions of $500 million or more in Canadian private, 10% direct premiums written IFC, 11% • Pursuing acquisitions in lines of business where we have Non-to
Slide 17: Historical financials
Historical financials IFRS Canadian GAAP (in $ millions, except as otherwise noted) 2010 2009 2008 2007 2006 Income statement highlights Direct written premiums $4,498 $4,275 $4,146 $4,109 $3,994 Underwriting income 194 54 117 189 404 Net operating income 402 282 361 457 531 Net operating income per
Slide 18: 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 8.8% 6.3% 3.2% • Acquisitions 0.40 14.8% $0.370 $0.340 • Dividends 0.35 8.0% $0.310 $0.320 0.30 53.8% • Share buybacks $0.25
Slide 19: Cash and invested assets
Cash and invested assets Asset class Fixed income Preferred shares Federal government and agency 29.0% Fixed perpetual 40% Corporate 34.6% Perpetual and callable floating Cdn. Provincial and municipal 27.1% and reset 42% Supranational and foreign 8.1% Fixed callable 18% ABS/MBS 1.1% TOTAL 100% Priva
Slide 20: 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 21: 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 23 23 Black, Susan SVP, Chief HR Officer 3 3 Blair, Alan SVP, Atlantic Canada 27 27 Coull-Cicchini, Debbie SVP, Ontario 6 6 Désilets, Claude Chief Ri
Slide 22: 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