Intact Financial Corporation · TSX:IFC
Intact Financial — Q4 2008 Earnings Presentation
22 slides from Intact Financial's earnings presentation, 2009
Slide 1: 2008 Fourth quarter Review of performance
2008 Fourth quarter Review of performance
Slide 2: Q4-2008 Review of performance conference call
Q4-2008 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: Q4-2008 Key points
Q4-2008 Key points Fourth quarter highlights • Strong financial position with MCT of 205%; a 5.1 point improvement over Q3 • Combined ratio of 98.9% reflects higher claims associated with severe storms and a decrease in favourable prior year claims development in personal lines, which offset strong
Slide 4: Q4-2008 Financial highlights
Q4-2008 Financial highlights (in $ millions, except as otherwise noted) Q4-2008 Q4-2007 Key points Cost pressures and changing weather patterns will drive higher Direct premiums $968.2 $961.3 personal lines premiums in 2009; indications that commercial rates written (excl. pools) could start to firm
Slide 5: Key drivers of change in operating income in Q4-08
Key drivers of change in operating income in Q4-08 (in $ millions, except as otherwise noted) Pre-tax operating income, 2007 $156.6 Higher / (lower) • Strong favourable prior year Favourable prior year claims development (10.2) claims development but below Q4-2007 level Current accident year underwr
Slide 6: Q4-2008 Common share impairments
Q4-2008 Common share impairments • Common shares impaired by $186 million. Aging of unrealized losses (in $ millions) Value • Impairment process for common shares involves the following: • We review all equities particularly focusing on >25% below book value for <3 $77 those which have traded below
Slide 7: Our strong financial position
Our strong financial position Strong balance sheet $6.6 billion in cash and invested assets • 205% MCT regulatory capital ratio, improved from 188% year-end 2007 Preferred shares • No debt and $150 million unsecured committed 19% credit facility Common shares • $427 million excess capital, based on
Slide 8: Q4-2008 Performance results
Q4-2008 Performance results
Slide 9: A challenging quarter in personal lines
A challenging quarter in personal lines (in $ millions, except as otherwise noted) Combined ratios** Personal auto Q4-08 Chg %* 95.9% 102.9% 94.5% 95.9% Net premiums earned $520.6 1.0% 23.8% 24.4% 24.7% 24.7% Underwriting $(14.8) n/a 72.1% 78.5% 69.8% 71.2% income** Combined ratio** 102.9% 7.0 pts Q
Slide 10: Very strong combined ratios in commercial lines
Very strong combined ratios in commercial lines (in $ millions, except as otherwise noted) Combined ratios** Comm. non-auto Q4-08 Chg %* 77.9% 73.2% 90.1% 85.3% Net premiums earned $190.7 (0.2)% 35.9% 35.6% 35.6% 36.8% Underwriting $51.0 20.9% income** 42.0% 36.4% 54.5% 49.7% Combined ratio** 73.2%
Slide 11: Year-to-date combined ratio relative to P&C insurance industry average (to Q3-2008)
Year-to-date combined ratio relative to P&C insurance industry average (to Q3-2008) 2008 combined ratios* a) Sophisticated pricing and 104% underwriting 102.9% 102.4% 102% 101.5% Cdn. P&C Industry average b) In-house claims expertise: = 99.2% 100% • Innovation 98% 96.5% • Supplier relationships and
Slide 12: Loss ratios by line of business versus the P&C insurance industry
Loss ratios by line of business versus the P&C insurance industry Personal property Automobile* Industry ING Canada Industry ING Canada 75% 75% 71.6% 70% 70% 65.4% 65% 64.0% 65% 63.5% 60% 60% 55% 55% 50% 50% 5 year avg 5 year avg Commercial non-auto Liability 75% 75% 70% 70% 64.9% 65% 65% 59.4% 60%
Slide 13: 2008 Full year results
2008 Full year results ING
Slide 14: 2008 Financial highlights
2008 Financial highlights (in $ millions, except as otherwise noted) 2008 2007 2008 Key points Direct written premium growth reflects pricing discipline in all lines of Direct premiums $4,145.5 $4,108.6 business; cost pressures are expected to move industry premiums upward written (excl. pools) over
Slide 15: Key drivers of change in 2008 operating income
Key drivers of change in 2008 operating income (in $ millions, except as otherwise noted) Pre-tax operating income, 2007 $578.2 Higher / (lower) • Strong favourable claims development continued in 2008 Favourable prior year claims development 46.6 • Higher claims and catastrophe claims reflect chang
Slide 16: Cash and invested assets
Cash and invested assets ING
Slide 17: Cash and invested assets at December 31, 2008
Cash and invested assets at December 31, 2008 Book Market Unrealized % of market % of market values values G/L values values Asset class in $ millions Q4-08 Q4-07 Cash and Cda. T-bills $804 $804 $0 12% 0% Fixed income $3,508 $3,539 $31 53% 53% Preferred shares $1,743 $1,220 ($523) 19% 20% Common sha
Slide 18: Supplemental information – Investment asset class
Supplemental information – Investment asset class Asset class Fixed income Quality: 97% rated A or better Federal government and agency 32% Corporate 30% Canadian 81% Provincial 14% United States 2% Supranational and foreign 13% Int’l (excl. U.S.) 17% ABS/MBS 8% TOTAL 100% Municipal 2% Private place
Slide 19: Q4-2008 Sector diversification (market value)
Q4-2008 Sector diversification (market value) Bonds & Preferred Common S&P/TSX Total short pos shares shares weighting Energy 5% 2% 3% 21% 27.4% Materials 0% 0% 0% 4% 17.6% Industrials 2% 2% 0% 5% 6.1% Technology 0% 0% 0% 0% 3.3% Telecom 3% 1% 7% 11% 6.0% Consumer Disc 2% 1% 2% 10% 4.7% Staples 1% 0
Slide 20: Well-positioned for the future
Well-positioned for the future • Largest P&C insurance company with substantial scale advantage in the market • Substantial operational strengths that will enable us to continue to deliver superior underwriting results • Strong financial position and no debt • Organic growth platforms easily Discipl
Slide 21: 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
Slide 22: Q1-2009 Earnings conference call
Q1-2009 Earnings conference call May 13, 2009 at 10 a.m. ET www.ingcanada.com