Intact Financial Corporation · TSX:IFC
Intact Financial — Investor Presentation (August 2010)
26 slides from Intact Financial's investor presentation, August 2010
Slide 1: Intact Financial Corporation (IFC) Investor Presentation
Intact Financial Corporation (IFC) Investor Presentation August 2010
Slide 2: Forward-looking statement disclaimer
Forward-looking statement disclaimer 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.
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 • Dominant P&C insurer in Canada • Over $4 billion in direct premiums written • #1 in Ontario, Québec, Alberta, Nova Scotia • Substantial size and scale advantage • 11 successful acquisitions since 1988 • $8.2 billion ca
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 track record 2009 combined ratios Five-year average loss ratios Industry Intact 106% 75% 104.8% 71.5% 71.
Slide 5: Q2-2010 Key points
Q2-2010 Key points Second quarter highlights • Net operating income of $118.6 million or $1.03 per share – 33.8% higher than last year due to improved underwriting performance • Solid overall Q2 combined ratio of 93.7%: − Improved underwriting in personal property and commercial P&C, − Despite conti
Slide 6: Q2-2010 Financial highlights
Q2-2010 Financial highlights (in $ millions, except as otherwise noted) Q2-2010 Q2-2009 Change YTD-2010 YTD-2009 Change Direct premiums written (excl. pools) $1,317.8 $1,250.6 5.4% $2,232.1 $2,119.4 5.3% Net underwriting income $66.3 $43.2 53.5% $135.3 $51.1 164.8% Combined ratio 93.7% 95.7% (2.0) p
Slide 7: The July 12th Alberta hailstorm presented another opportunity to demonstrate our core values
The July 12th Alberta hailstorm presented another opportunity to demonstrate our core values Catastrophes in context • Helped over 9,000 of our customers get back on track • As a P&C insurer, catastrophes are a normal part of our business • Increased capacity of our call centres • Historically, cata
Slide 8: Strong financial position and excess capital
Strong financial position and excess capital Strong balance sheet $8.2 billion in cash and invested assets • Excess capital position of $766 million, based on 170% Loans Cash and short 4.1% term notes 3.9% MCT • As at June 30, 2010, the debt to total capital ratio was 14.6%. Based on a debt to total
Slide 9: 12-month outlook: Industry pricing environment firming up in Canada
12-month outlook: Industry pricing environment firming up in Canada • Premiums in personal lines increasing due to cost inflation Continued escalation in the costs of BI and AB claims in advance of the Personal lines September Ontario auto reforms Home insurance premiums continue to increase reflect
Slide 10: Ontario auto reforms: a summary
Ontario auto reforms: a summary Context Key features • Accident benefits and tort-related bodily injury cost increases • Capping medical/rehabilitation and assessment/ (AB inflation: 19% in last four years) have resulted in the examination expenses for minor injuries to $3,500. industry raising rate
Slide 11: Four distinct avenues for growth
Four distinct avenues for growth Benefit from firming market conditions Develop existing platforms Personal lines • Offer Intact Insurance solutions • Ontario auto rate increases accelerating on the web • Home insurance premiums also on the rise • Expand and grow belairdirect Commercial lines and Gr
Slide 12: Strong organic growth potential through multi-channel distribution
Strong organic growth potential through multi-channel distribution #1 Broker insurance company in Canada Targeting growing 50+ population • Network of more than 1,800 brokers in In 10 yrs, Canada 25% of the • Brokers in Canada own the commercial Canadian market and maintain large share of population
Slide 13: 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 14: Appendices
Appendices | intact] —
Slide 15: P&C insurance is a $39 billion market in Canada
P&C insurance is a $39 billion market in Canada 3% of GDP in Canada Industry DWP by line of business • Fragmented market, top five less than 36%, versus bank/lifeco Home Commercial markets which are closer to oligopoly insurance, P&C, 26.9% 18.4% • Brokers continue to own commercial lines and large
Slide 16: P&C industry 10-year performance versus IFC
P&C industry 10-year performance versus IFC IFC competitive advantages Combined ratio • Significant scale advantage 120% Canadian P&C 115% industry1 • Sophisticated pricing and underwriting 110% 10-year avg. • In-house claims expertise = 99.8% 105% 100% • Multi-channel distribution 95% • Broker rela
Slide 17: Further consolidation in Canadian P&C market likely
Further consolidation in Canadian P&C market likely Acquisition strategy Top 20 P&C insurers = 82% of market • Targeting large-scale acquisitions of $500 million or Canadian private, 10% more (direct premiums written) IFC, 11% • Pursuing acquisitions in lines of business where we Non-top 20, 18% Can
Slide 18: Good progress to date made on value creation opportunity in home insurance
Good progress to date made on value creation opportunity in home insurance Industry loss ratio advantage (percentage points) Opportunity to create loss ratio advantage similar to other business lines Favourable gap (five-year average) • Rate increases • Segmentation Automobile * 6.4 • Insurance-to-V
Slide 19: Historical financial performance
Appendix Historical financial performance
Slide 20: Historical financials
Historical financials Income statement highlights 2009 2008 2007 2006 2005 Direct written premiums (excluding pools) $ 4,275 $ 4,146 $ 4,109 $ 3,994 $ 3,906 Underwriting income (excluding MYA*) 54 117 189 404 538 Net operating Income (excluding MYA*) 282 361 457 531 612 Net operating EPS (excluding
Slide 21: 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 6.3% 3.2% • Acquisitions 0.4 14.8% 0.4 8.0% $0.340 • Dividends $0.310 $0.320 0.3 53.8% $0.270 • Share buybacks $0.250 0.3 0.
Slide 22: Cash and invested assets
Cash and invested assets Asset class Fixed income Preferred shares Federal government and agency 33.7% Fixed perpetual 47% Corporate 29.4% Perpetual and callable floating Cdn. Provincial and municipal 26.1% and reset 31% Supranational and foreign 8.3% Fixed callable 22% ABS/MBS 2.4% TOTAL 100% Priva
Slide 23: 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 24: Leadership team
Appendix Leadership team | intact] —
Slide 25: 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 22 22 Black, Susan SVP, Chief HR Officer 3 3 Blair, Alan SVP, Atlantic Canada 26 15 Coull-Cicchini, Debbie SVP, Ontario 6 6 Désilets, Claude Chief Ri
Slide 26: 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
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