Intact Financial Corporation · TSX:IFC
Intact Financial — Investor Presentation (December 2013)
23 slides from Intact Financial's investor presentation, December 2013
Slide 1: Intact Financial Corporation (TSX: IFC) Investor Presentation
Intact Financial Corporation (TSX: IFC) Continuing our journey to build a world-class P&C insurer Investor Presentation December 2013
Slide 2: Canada's P&C insurance leader
Canada’s P&C insurance leader Who we are1 Distinct brands • Largest P&C insurer in Canada • $7 billion in direct premiums written • #1 in BC, Alberta, Ontario, Quebec, Nova Scotia • $12.3 billion cash and invested assets • Proven industry consolidator Leader in a fragmented industry Industry outperf
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 2012 metrics Five-year average loss ratios Industry IFC 76.5% Industry
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 FY2010 FY2012 Combined Ratio1 YTD-2013 Personal Auto 50% 45% IFC 97.2% Personal Property 24% 23% Industry Benchmark2 102.8% Commercial 26% 32% Outperformance 5.6 pts Geography FY2010 FY2012 Return o
Slide 5: Canadian P&C industry 12-month outlook
Canadian 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 uppe
Slide 6: A 36-month roadmap for outperformance
A 36-month roadmap for outperformance Beat industry ROE by NOIPS growth of 10% 5 points every year per year over time Pricing & Segmentation: Organic growth: 2 points 4-6% Claims management: Margin improvement: 3 points 0-3% Investments and capital Capital management/deployment: management: 2 points
Slide 7: Strong financial foundation for growth
Strong financial foundation for growth $12.3 billion – conservatively managed Solid balance sheet Note: Investment mix is net of hedging positions and financial liabilities related to investments. • $515 million in total excess capital • MCT of 199% Loans, 4% • Debt-to-capital ratio of 19%, below ou
Slide 8: Strategic capital management
Strategic capital management Capital management framework Shareholder friendly approach 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 0.50 Quarterly dividend per share $0.44 0.45 $0.
Slide 9: Four distinct avenues for growth
Four distinct avenues for growth Firming market conditions (0-2 years) Develop existing platforms (0-3 years) • Continue to expand support to Personal lines our broker partners • Build on outperformance in auto to accelerate growth • Leverage addition of AXA • Industry premiums likely to be bolstere
Slide 10: Integrations are on track
Integrations are on track AXA Canada – closed September 2011 Jevco – closed September 2012 • Integration of AXA Canada continues to • Continuing to convert policies into IFC progress very well and nearing systems completion • Retention has been good and we are • Almost all policies have been convert
Slide 11: Building on our sustainable competitive advantages
Building on our sustainable competitive advantages We have a sustainable competitive advantage versus the industry due to our disciplined approach and quality operations We remain committed to adapting products to suit consumers’ needs We continue our shareholder-friendly approach to capital managem
Slide 12: Appendices
Intact Financial Corporation (TSX: IFC) Appendices
Slide 13: P&C insurance – a $42 billion market in Canada
P&C insurance – a $42 billion market in Canada 3% of GDP in Canada Industry DPW by line of business • Fragmented market1: Personal Commercial Property, P&C and – Top five represent 44%, versus bank/lifeco 21% other, 31% markets which are closer to 65-75% – IFC is largest player with approx. 17% 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 • Sophisticated pricing and underwriting 100% Industry1 10-year discipline avg. = 97.1% 95% • In-house claims expertise • Broker relationships 90% 10-year avg. = 93.8% • Solid i
Slide 15: Ontario auto environment
Ontario auto environment Ontario government’s strategy to reduce both rates and costs • Reduce insurance rates by an average of 15% over 2 years – 3% - 5% by January 2014, 8% by August 2014, for the full 15% by August 2015 • We expect the government to announce some cost reduction measures in the co
Slide 16: Plan for delivering 10 points improvement in personal property
Plan for delivering 10 points improvement in personal property Combined Ratio Composition Actions within 12 months 113.6% 109.0% 96.5% 103.5% 93.5% 110.7% • Rates 8.7% 8.6% 20.3% • Limit water coverage 5.9% 13.3% 10.3% • Curtail hail/wind exposure • Tie prevention to pricing 104.3% 101.2% • Exposure
Slide 17: 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 than in more in direct premiums written recent years: • Pursuing acquisitions in lines of business where we •
Slide 18: Historical financials
Historical financials IFRS Canadian GAAP (in $ millions, except as otherwise noted) 2012 2011 2010 2009 2008 Income statement highlights Direct written premiums $6,868 $5,099 $4,498 $4,275 $4,146 Underwriting income 451 273 193 54 117 Net operating income (NOI) 675 460 402 282 361 NOIPS to common sh
Slide 19: Cash and invested assets
Cash and invested assets Asset class Fixed income Preferred shares Corporate 34% Perpetual and callable floating and reset 66.6% Cdn. federal government and agency 34% Fixed-rate perpetual 24.7% Cdn. provincial and municipal 26% Retractable 8.7% Supra-National & Foreign 4% TOTAL 100.0% ABS/MBS 2% TO
Slide 20: Track record of prudent reserving practices
Track record of prudent reserving practices • Quarterly and annual Rate of claims reserve development (favourable prior year development as a % of opening reserves) fluctuations in reserve development are normal 9% 7.9% 8% • 2005 reserve development 7% was unusually high due to 6% 5.7% the favourabl
Slide 21: Investor Relations contact information
Investor Relations contact information Dennis Westfall, CFA Maida Sit, CFA Vice President, Investor Relations Manager, Investor Relations Phone: 416.344.8004 Phone: 416.341.1464 ext 45153 Cell: 416.797.7828 Email: Maida.Sit@intact.net Email: Dennis.Westfall@intact.net General Contact Info Email: ir@
Slide 22: Forward looking statements and disclaimer
Forward looking statements and disclaimer 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-l
Slide 23: 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
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