Intact Financial Corporation · TSX:IFC
Intact Financial — ING Canada — Non-Deal Roadshow (June 2007)
23 slides from Intact Financial's roadshow presentation, June 2007
Slide 1: Investor Presentation
Investor Presentation June 2007
Slide 2: 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 3: Agenda
Agenda 1. Goals / Proven track record 2. Key strategies 3. Expanding the ROE gap 4. Superior organic growth 5. Value-creating acquisitions 6. Managing through the P&C cycle 7. Appendices 3
Slide 4: Goals: ING Canada
Goals: ING Canada Leveraging our sustainable competitive advantages to consistently outperform the Canadian property and casualty (P&C) industry. Exceed the Canadian P&C industry by Return on Equity at least 500 basis points annually Exceed the annual growth rate of the Organic Growth Canadian P&C i
Slide 5: A track record of ROE outperformance
A track record of ROE outperformance ROE Performance of our Insurance Subsidiaries Compared to Canadian P&C Insurance Industry Key Key Drivers Drivers 40% Our ROE Our ROE performance of of ROE ROE performance has exceeded has exceeded Outperformance Outperformance Canadian industry 30% Canadian indu
Slide 6: Industry-leading growth rate
Industry-leading growth rate ING Canada Premium Growth vs. Industry Premium ING Growth1) INGCanada’s Canada’s premium premiumgrowth growth was was positiveinin2006 400% positive 2006 despite rate declines 10-year CAGR despite rate declines = 13.8% 300% 200% Industry 2) 10-year CAGR 100% = 7.6% 0% 96
Slide 7: Key strategies
Key strategies Leverage scale to expand ROE gap with competition Strengthen market position through superior organic growth Strengthen market position through value-creating acquisitions 7
Slide 8: Scale advantage in a fragmented market
Scale advantage in a fragmented market Direct Premiums Written ($ billions) Top $4.0 Topfive five insurers 4.0 insurers represent represent 35.2% 35.2%ofofthe the market $3.0 market 3.1 $2.0 2.1 1.9 1.8 $1.0 $0.0 Aviva Co-operators The Economical TD Meloche Canada General Insurance Group Monnex Mark
Slide 9: Leveraging our scale to generate higher returns
Leveraging our scale to generate higher returns Pricing and underwriting – Sophisticated pricing segmentation ING Canada Combined Ratio vs. Industry – Large proprietary experience database – Disciplined and automated risk selection process Combined Outperformed Ratio (%) Outperformed – Focus on ec
Slide 10: Superior after-tax investment returns
Superior after-tax investment returns Investments are managed on an after-tax total return basis - Investment returns have outperformed the industry - Realized gains can vary from quarter-to-quarter due to timing of asset sales ING Canada has a strong capital position (as at March 31, 2007) − Ex
Slide 11: Portfolio managed on an after-tax return basis
Portfolio managed on an after-tax return basis Investment philosophy - Preservation of capital - Asset diversification Incremental returns through active portfolio management High quality fixed income investments - 94% rated ‘A’ or higher ING Canada Invested Assets by Asset Class1) Other Mortg
Slide 12: Strengthen market position: Organic growth
Strengthen market position: Organic growth Offer increased value to customers − Product innovation and differentiation (e.g. Responsible Driver Guarantee, Aeroplan, Zero Deductible) − Renewed customer-centric focus (Client Service Guarantee) Strengthen relationships with brokers − Ease of doing
Slide 13: Expansion of multi-channel distribution
Expansion of multi-channel distribution Affiliated Expansion of Grey Power – no dominant Distribution player in the 50+ segment Network Broker consolidation through acquisitions and joint ventures Belairdirect – become the web insurer of Direct channel choice Enhancing service delivery throu
Slide 14: Strengthen market position: Acquisitions
Strengthen market position: Acquisitions History of successful acquisitions Proven integration capabilities 1995 1997 1998 1999 2001 2004 Wellington Canadian Guardian Pafco Zurich Allianz Surety Canada Personal lines Niche products Personal and Small Personal and (select provinces) Commercial Li
Slide 15: Consolidator in a fragmented P&C industry
Consolidator in a fragmented P&C industry Top 20 P&C Insurers 1) Potential for future Market Share (NPW, 2005) Total = 76.5% acquisitions given fragmented nature of Bank-owned industry 6.1% Capital strength tempered Foreign-owned ING Canada 11.4% by disciplined, patient Private 31.5% approach to
Slide 16: What drives P&C cyclicality?
What drives P&C cyclicality? Inefficient Supply-driven industry industry capital Excess capital influences price competition management Time lag between pricing, historical data, final confirmation of costs Time lag Rate adjustments are made after trends develop Premiums recognized over th
Slide 17: Delivering superior returns throughout the cycle
Delivering superior returns throughout the cycle The ING Advantage Leverage scale to create effective pricing and underwriting models Scale Use scale to create claims and expense cost advantage Strategically use ROE gap advantage to: – Improve returns at industry low points Balance – Accelerat
Slide 18: Sustainable competitive advantages
Sustainable competitive advantages • Extensive database of historical customer data • Focus on long-term value creation: • Preferred supplier relationships: – Preservation of capital Scale –reduces costs – Diversification of risk Advantage –facilitates timely claim settlement – Manage on after-tax t
Slide 19: Appendices
Appendices ING S®» 19
Slide 20: Q1 2007 highlights
Q1 2007 highlights Financial Summary Q1 07 Q1 06 Change Direct premiums written (in millions) $854.0 $812.5 5.1% Direct premiums written (excluding pools, in millions) $846.3 $812.5 4.2% Written insured risks (in thousands) 950.4 915.0 3.9% Net income (in millions) $126.2 $185.9 (32.1)% Net operatin
Slide 21: Sources of earnings - quarterly
Sources of earnings - quarterly (in millions) $250 $206.0 $200 $185.9 $23.4 $156.9 $150 $72.0 $24.6 $126.2 $109.4 $12.3 $7.6 $100 $182.6 $132.3 $113.9 $113.9 $50 $101.8 $0 Q106 Q206 Q306 Q406 Q107 Net operating income Realized invested assets and other gains Net operating earnings is a more predicti
Slide 22: Net income
Net income In millions $781.8 $800.0 $658.1 $624.2 $169.5 $600.0 $91.9 $127.5 $400.0 $612.3 $532.3 $530.6 $200.0 $150.5 $6.5 $144.0 $0.0 2003 2004 2005 2006 Net operating income Realized invested assets and other gains 22
Slide 23: A diversified portfolio
A diversified portfolio Business Lines % of 2006 direct premiums written Commercial Other 22% Personal Auto 49% Personal Property 21% Commercial Auto 8% 23