Intact Financial Corporation · TSX:IFC
Intact Financial — Investor Presentation (September 2014)
23 slides from Intact Financial's investor presentation, September 2014
Slide 1: Investor Presentation
INVESTOR PRESENTATION Intact Financial Corporation (TSX:IFC) September 2014 Intact Financial Corporation
Slide 2: 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 British Columbia, Alberta, Ontario, Quebec and Nova Scotia • $12.9 billion investment portfolio • Proven industry consolidator 2013 Direc
Slide 3: Operational snapshot
Operational snapshot A strong and diversified base for growth 2013 DPW by 2013 DPW by 2013 DPW by Business Line Geography Distribution Channel 3% 9% 12% 6% 32% 17% 42% 46% 22% 29% 82% Personal Auto Ontario Intact Insurance Personal Property Quebec BrokerLink Commercial Lines Alberta belairdirect Res
Slide 4: 36-month performance roadmap
36-month performance roadmap BEAT INDUSTRY ROE BY 5 POINTS NOIPS GROWTH OF 10% PER YEAR EVERY YEAR OVER TIME Investments Margin Pricing & and capital improvement: Segmentation: management: 0 – 3% 2 points 2 points Organic growth: Capital 4 – 6% management/ deployment: 2 – 4% Claims management: 3 poi
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 2013 outperformance Five-year average loss ratios 100.7% Industry IFC 77.2% Indu
Slide 6: Internally managed investments
Internally managed investments $12.9 billion investment portfolio Investment mix (net of hedging positions and financial liabilities Objective: 160 bps related to investments, as of June 30, 2014) Loans, 3% of ROE outperformance Cash and short- term notes, 4% Preferred shares, 9% 50% Investment 50%
Slide 7: Strategic capital management
Strategic capital management Capital management framework History of dividend growth • Strong capital base has allowed us to pursue our • We have increased our dividend each year growth objectives while returning capital to since our IPO shareholders Quarterly dividend per share • $657 million in to
Slide 8: P&C industry 12-month outlook
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 upper Premium
Slide 9: Four avenues of growth
Four avenues of growth Personal lines • Bring advantages of scale to brokers • Build on outperformance in auto • Hard market conditions in personal • Optimize brand architecture property • Double direct capabilities Commercial lines Firming Develop • Leverage our industry • Build operated distributi
Slide 10: Our people advantage
Our people advantage Building the best insurance team Identification, development and retention of key talent is fundamental to our talent management strategy – In 2013, 22% of key talent were promoted or developed through exposure to other business units – Voluntary turnover is significantly better
Slide 11: Key takeaways
Key takeaways We have a sustainable competitive edge due to our disciplined approach and size advantage Our broad distribution platform positions us well for organic growth We have a strong financial position and a proven track record of consolidation Deep bench in place to ensure the sustainability
Slide 12: Appendix
Appendix Intact Financial Corporation
Slide 13: P&C insurance in Canada
P&C insurance in Canada A $44 billion market representing 3% of GDP • Fragmented market: Industry DPW by line of business – Top five represent 48%, versus bank/lifeco Personal Commercial markets which are closer to 65-75% Property, P&C and – IFC is largest player with approx. 17% 21% other, 32% mark
Slide 14: P&C industry 10-year performance versus IFC
P&C industry 10-year performance versus IFC IFC’s competitive advantages Combined ratio 105% • Significant scale advantage 103% Industry1 10-year avg. • Sophisticated pricing and underwriting 101% = 97.2% 99% discipline 97% • In-house claims expertise 95% 10-year avg. 93% • Broker relationships 91%
Slide 15: Home Improvement Plan
Home Improvement Plan Targeting a combined ratio sustainably below 95% • YTD-2014 reported combined ratio of 92.6% Our Home Improvement Plan is helping to despite almost 9 points of catastrophe losses improve our results, with ultimate benefits • Retention better than expected to be generated over t
Slide 16: Ontario auto update
Ontario auto update Context Update • There is an Ontario government mandate • We believe that the recent election putting to reduce insurance rates by an average the Liberal government in a majority of 15% by August 2015 position facilitates their ability to implement – Rate reductions are to be aid
Slide 17: Further industry consolidation ahead
Further industry consolidation ahead Our domestic acquisition strategy Our track record of acquisitions1 • Targeting large-scale acquisitions of $500 million or 2012 – Jevco ($530 mil.) Industry IFC 2011 – AXA ($2,600 mil.) more in direct premiums written 2004 – Allianz ($600 mil.) 7.4 • Pursuing ac
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: Investments snapshot
Investments snapshot Debt securities portfolio Preferred shares (Hedging positions excluded) Other Fixed-rate perpetual Supra-National perpetual 66% and Foreign, 3% Corporate, 40% 26% Retractable 8% Canadian provincial and municipal, 21% 96% of preferred shares are rated ‘P1’ or ‘P2’ Canadian federa
Slide 20: Track record of prudent reserving practices
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 the 7% favourable effect
Slide 21: 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: Direct
Slide 22: 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 23: 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
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