Intact Financial Corporation · TSX:IFC
Intact Financial — Merger or Acquisition (November 2020)
28 slides from Intact Financial's merger presentation, Nov 18, 2020
Slide 1: Building a Leading P&C Insurer
Building a Leading P&C Insurer Acquisition of RSA's Canada and UK&I operations November 18, 2020
Slide 2: Accelerating Strategy to Drive Significant Value
Accelerating Strategy to Drive Significant Value 1 Bolsters our Canadian business, unlocking synergies and opportunities for growth Expands our leadership position in Enhances commercial lines and both direct and broker channels simultaneously Canada Builds on our strengths in data, claims, pr
Slide 3: Expands our Leadership Position in Canada
1 Expands our Leadership Position in Canada Bolsters our Leading Platform in the Competitive Canadian P&C Industry Pro forma 2019 DPW: $13B Specialty1 Pro forma: $1.6B 12% 21% Commercial Pro forma: $2.8B Intact intends to combine its $60B Intact: $1.2B 12% 21% Intact: $2.1B Canadian P&C RSA: $0.4B R
Slide 4: Creates a Leading Specialty Lines Platform
2 Creates a Leading Specialty Lines Platform UK & International geographies open for our leading Combined product mix bolsters North American Specialty specialty products; opportunity to create strong global Solutions franchise and broadens distribution footprint, franchises in highly competitive li
Slide 5: Entry into the UK & Ireland at Scale
3 Entry into the UK & Ireland at Scale Top 5 Position1 with Strong Brands in the UK Top 10 in Ireland3 RSA UK Pet RSA Ireland 11% • Target combined ratio improvement from risk selection and claims management Commercial Personal • Leverage customer driven and digital 37% Property 28% NPW: advantages
Slide 6: Builds a Diversified Platform to Drive Shareholder Value
4 Builds a Diversified Platform to Drive Shareholder Value Compelling Pro Forma Business with Expanded Market Opportunity 2021 2015 Builds on our strengths 8x expansion in market and provides ample ~$50B ~$400B market opportunity to opportunity since 2015 pursue outperformance C AN AD I AN P & C 1 C
Slide 7: Value Creation Leads to Upper Teens NOIPS Accretion
4 Value Creation Leads to Upper Teens NOIPS Accretion And drives improvement in RSA’s current mid-90’s performance • Transition the portfolio to the Intact platform with benefits from AI based ~75% pricing and segmentation as well as optimized supply chain management • Leverage RSA products and dist
Slide 8: Expect to Maintain a Strong and Resilient Balance Sheet
4 Expect to Maintain a Strong and Resilient Balance Sheet Objective to Maintain Maintain Conservative Robust Capital Position… … and Leverage Structure Credit Ratings Investment Portfolio Capital Ratio Intact2 Leverage Ratios: A.M. Best A+ Portfolio $19.6B MCT >194% (FSR)1 Debt / Pref / Capital Capi
Slide 9: Prudent Management of Pension Liabilities
4 Prudent Management of Pension Liabilities • Intact will retain and guarantee the obligations of the closed pension schemes • Pension schemes IFRS surplus estimated at £416M at September 30, 2020 • Schemes are well-managed, with significant steps already taken to lower exposure to market and demogr
Slide 10: Transaction Financing Overview
Transaction Financing Overview Intact is structuring its acquisition to maintain its current credit ratings, targeting a debt-to-capital ratio of 20% within 3 years Financing Overview • Total transaction consideration for RSA of approximately $12.3B • Intact intends to finance $5.1B of acquisition a
Slide 11: Our Evolved Strategic Roadmap: The Next Decade of Growth
Our Evolved Strategic Roadmap: The Next Decade of Growth EXPAND OUR LEADERSHIP STRENGTHEN OUR LEADING BUILD A SPECIALTY POSITION IN CANADA POSITION IN UK & IRELAND SOLUTIONS LEADER Leading Leading Specialized Digital Digital customer Expand customer customer engagement engagement value distribution
Slide 12: Key Takeaways
Key Takeaways Expands our Creates a leading Entry into UK & Financially leadership position specialty lines Ireland at scale compelling in Canada platform A unique opportunity to create tremendous shareholder value 12
Slide 13: Transaction Summary
Transaction Summary • In partnership with Tryg, Intact is proposing to acquire RSA in an all-cash offer of 685p per share, plus payment by RSA of the announced interim dividend of 8p per share (the “Acquisition”)1 Transaction Intact will acquire RSA’s Canada and U.K. & International businesses, an
Slide 14: Appendices
[intact] — APPENDICES
Slide 15: A Proven Track Record to Build On
A Proven Track Record to Build On Proven Acquisition Track Record INNOVASSUR ASSURANCES GÉNÉRALES ` $2.0B $350M $27M $143M $50M US$1.2B $200M+ $568M DPW DPW DPW DPW DPW DPW REVENUES DPW 2011 2012 2014 2015 2016 2017 2019 2019 $5B DPW 19% Avg. $200M 6,700 Added IRR Synergies People 10-Year Track Reco
Slide 16: Co-ownership in a Top-3 Franchise in Denmark
Co-ownership in a Top-3 Franchise in Denmark Denmark GWP Ranking ($B)1 Attractive Sector as Demonstrated by COR RSA is a top 3 player in the Danish non-life segment Average combined ratio for key Mid-80’s 1 Competitor 1 2.6 competitors2 Excellent performance in personal lines 2 Competitor 2 1.9 Bala
Slide 17: Expected Deal Timeline
Expected Deal Timeline November 18 Rule 2.7 announcement November / Scheme document posted December Mid-January RSA scheme shareholder meeting Q2-2021 Deal completion • Obtain competition and insurance related regulatory approvals • Rule 2.7 announcement on November 18 • Prepare carve-out of Sweden
Slide 18: Simplified Transaction Structure
Simplified Transaction Structure For UK, Canada and International For Scandinavia Intact Intact Tryg Canada Holdco To facilitate deal Tryg will provide “certain funds” execution, Danish to Canada Holdco to acquire JointCo business to be held 1 Norway and Sweden and co- 3 via a co-owned ownership of
Slide 19: Sources & Bases of Information
Sources & Bases of Information Disclaimer: No statement in this Announcement is intended as a profit forecast or profit estimate for any period. No statement in this Announcement should be interpreted to mean that cash flow from operations, free cash flow, earnings or earnings per share for Intact,
Slide 20: Investor Inquiries
Investor Inquiries Investor Relations Intact Financial Corporation Ken Anderson 700 University Avenue SVP Investor Relations & Corporate Development Toronto, ON M5G 0A1 1 (855) 646-8228 ext. 87383 ir@intact.net kenneth.anderson@intact.net 1 (416) 941-5336 Ryan Penton 1-866-778-0774 (toll-free in N.A
Slide 21: Forward-looking statements
Forward-looking statements Certain of the statements included in this Presentation about the proposed acquisition by the Company of all of the issued and outstanding ordinary shares of RSA, the expected timing of the proposed transaction, certain strategic benefits expected to result from the propos
Slide 22: 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
Slide 23: UK Takeover Code Disclaimers
UK Takeover Code Disclaimers This presentation is not intended to, and does not, constitute or form part of any offer, invitation or solicitation of any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities or the solicitation of any vote or approval in any
Slide 24: Risk Factors - Risks Related to the Acquisition
Risk Factors - Risks Related to the Acquisition Disclaimer: In addition to the other information contained in this presentation and the risks described under the “Risk Management” sections of the Company’s MD&A for the year ended December 31, 2019 (“Annual MD&A”) and the Company’s MD&A for the quart
Slide 25: Risk Factors - Risks Related to the Acquisition (cont'd)
Risk Factors - Risks Related to the Acquisition (cont’d) Risk Factor Description The Company expects to incur a number of costs associated with completing the Acquisition, separating RSA’s Scandinavian business and integrating the operations of the Company and the remainder of RSA business. The subs
Slide 26: Risk Factors - Risks Related to RSA
Risk Factors - Risks Related to RSA Risk Factor Description If the Acquisition is completed, there are risks regarding undisclosed or unknown liabilities of, or issues concerning, RSA. Following the Acquisition, the Company may discover that RSA has Unexpected Costs or Liabilities of RSA substantial
Slide 27: Risk Factors - Risks Related to RSA (cont'd)
Risk Factors - Risks Related to RSA (cont’d) Risk Factor Description If the Acquisition is completed, in addition to the catastrophic events risks the Company currently faces in Canada, ownership of RSA’s Canadian business would increase the Company’s Catastrophe Events Risk exposure to natural cata
Slide 28: Risk Factors - Risks Related to Foreign Markets
Risk Factors - Risks Related to Foreign Markets Risk Factor Description If the Acquisition is completed, a substantial portion of RSA’s operations that would be acquired by the Company are in the UK and Europe, jurisdictions where the Company currently has does not have operations. The risks applica
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