Intact Financial Corporation · TSX:IFC
Intact Financial — Investor Presentation (September 2012)
22 slides from Intact Financial's investor presentation, September 2012
Slide 1: Building a world-class P&C insurer
Intact Financial Corporation (TSX: IFC) Building a world-class P&C insurer Investor Presentation September 2012
Slide 2: Canada's leader in auto, home and business insurance
Canada’s leader in auto, home and business insurance Who we are1 Distinct brands • Largest P&C insurer in Canada • $7.0 billion in direct premiums written • #1 in BC, Alberta, Ontario, Quebec, Nova Scotia • $12.7 billion cash and invested assets • Proven industry consolidator Scale advantage Industr
Slide 3: Consistent industry outperformance
Consistent industry outperformance Significant Sophisticated In-house Broker Multi- Proven Solid scale pricing and claims relationships channel acquisition investment advantage underwriting expertise distribution strategy returns 2011 metrics Five-year average loss ratios Industry Top 20 102.0% 101.
Slide 4: A strong base from which to grow
A strong base from which to grow Enhanced Business Mix Strong Capacity To Outperform Line of Business H1-2011 H1-2012 Combined Ratio1 H1/2012 Personal Auto 49% 46% IFC 92.8% Personal Property 23% 22% Top 20 Industry2 94.3% Commercial 28% 32% Outperformance 1.5 pts Geography H1-2011 H1-2012 Return on
Slide 5: Solid financial position and excess capital
Solid financial position and excess capital Solid balance sheet $12.7 billion in cash and invested assets* • Solid financial position at Q2-2012: – $649 million in excess capital – Estimated MCT of 205% – Debt-to-total-capital ratio of 19.8% – Book value per share increased 13% from a year earlier t
Slide 6: 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 8.1% 0.45 8.8% • Dividends 0.40 6.3% $0.40 3.2% $0.37 • Acquisitions 0.35 14.8% $0.32 $0.34 8.0% $0.31 • Share buybacks 0.30
Slide 7: Industry outlook for 2012
Industry outlook for 2012 We remain well-positioned to continue outperforming the Canadian P&C insurance industry in the current environment • Industry premiums are likely to grow at a mid single digit rate Premium growth • Low interest rate environment and reinsurance market conditions will likely
Slide 8: Ensuring profitability by mitigating Cat losses
Ensuring profitability by mitigating Cat losses Combined Ratios Impacted by Cats Personal Property 113.6% 109.0% 96.5% 103.5% 94.0% Reported Combined Ratio 8.7% 8.6% 5.9% 14.5% 8.1% Cats Ex-Cats 104.9% 100.4% 90.6% 89.0% 85.9% 2008 2009 2010 2011 H1-2012 Home Improvement Plan to Date Still to Come •
Slide 9: Four distinct avenues for growth
Four distinct avenues for growth Firming market conditions (0-2 years) Develop existing platforms (0-3 years) Personal lines • Continue to expand support to • Industry premiums remain inadequate in ON auto our broker partners • Home insurance premiums also on the rise • Leverage addition of JEVCO Co
Slide 10: Recent acquisitions are on track
Recent acquisitions are on track AXA Canada JEVCO • Retention of the AXA book has been • Closed September 4, 2012 stronger than expected • A leading provider of specialty and • Customer attrition and broker niche insurance. Strengthens cancellations, in total, have been product offering across IFC c
Slide 11: Summary
Summary Disciplined pricing, underwriting, investment and capital management have positioned us well for the future • Largest P&C insurance provider in Canada • Consistent track record of industry outperformance • Solid financial position • Excellent long-term earnings power • Organic growth platfor
Slide 12: Appendices
Appendices
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 • Fragmented market1: −Top five represent 44%, versus bank/lifeco markets which are closer to 65-75% −IFC is largest player with 17.2% market share, versus largest bank/lifeco with 22- 25% market sha
Slide 14: P&C industry 10-year performance versus IFC
P&C industry 10-year performance versus IFC IFC’s competitive advantages Combined ratio 110% • Significant scale advantage 105% • Sophisticated pricing and underwriting Industry1 10-year avg. = 98.0% discipline 100% • In-house claims expertise 95% 10-year avg. • Broker relationships 90% = 94.6% • So
Slide 15: Near-term themes to monitor
Near-term themes to monitor Impact on Industry from Low Yields Reinsurance • Major catastrophes in the world in 2011 have impacted reinsurer’s capital levels P&C Industry • The Canadian industry one of the most profitability 3-5 year conservative markets in the world in terms of Government of Canada
Slide 16: Further industry consolidation ahead
Further industry consolidation ahead Our acquisition strategy Canadian M&A environment • Targeting large-scale acquisitions of $500 million or Environment more conducive to acquisitions now more in direct premiums written than in recent years: • Pursuing acquisitions in lines of business where we •
Slide 17: Historical financials
Historical financials IFRS Canadian GAAP (in $ millions, except as otherwise noted) 2011 2010 2009 2008 2007 Income statement highlights Direct written premiums $5,099 $4,498 $4,275 $4,146 $4,109 Underwriting income 273 193 54 117 189 Net operating income 460 402 282 361 457 Net operating income per
Slide 18: Cash and invested assets
Cash and invested assets Asset class Fixed income Preferred shares Corporate 33% Perpetual and callable floating 64.4% Federal government and agency 28% and reset Cdn. Provincial and municipal 31% Fixed-rate perpetual 24.5% Supranational and foreign 4% Retractable 11.1% ABS/MBS 4% TOTAL 100% Private
Slide 19: Track record of prudent reserving practices
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 development are normal • 2005/2006 reserve development was unusually high due to the favourable effects of cert
Slide 20: Investor Relations contact information
Investor Relations contact information Dennis Westfall, CFA Vice President, 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
Slide 21: Forward looking statements and disclaimer
Forward looking statements and disclaimer Certain of the statements included in this Presentation about Intact Financial Corporation’s, its subsidiaries’ and affiliated companies’ (collectively, the “Company”) current and future plans, expectations and intentions, results, levels of activity, perfor
Slide 22: Forward looking statements and disclaimer
Forward looking statements and 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 inducem
Intact Financial — Investor Presentation (September 2012) on 6ix