Intact Financial Corporation · TSX:IFC
Intact Financial — Investor Presentation (November 2012)
22 slides from Intact Financial's investor presentation, November 2012
Slide 1: Building a world-class P&C insurer
Intact Financial Corporation (TSX: IFC) Building a world-class P&C insurer Investor Presentation November 2012
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 • $7.0 billion in direct premiums written • #1 in BC, Alberta, Ontario, Quebec, Nova Scotia • $12.8 billion cash and invested assets • Proven industry consolidator Leader in a fragmented industry Industry outpe
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 IFC Industry Top 2
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 Return on Equity3 H1-2012 Geography
Slide 5: 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 • Overall premium growth to be driven by hard market conditions in personal property Premium growth • Low interest rate environment will likely lead to firmer
Slide 6: 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% 102.8% Reported Combined Ratio • We are committed to running the business 8.7% 8.6% at a combined ratio of 95% or better 5.9% 14.5% 12.9% • Initiatives to improve the perform
Slide 7: Recent acquisitions are on track
Recent acquisitions are on track 2012 2013 2014 AXA Canada LAE reductions Operational efficiencies Systems Shared services LAE reductions Operational efficiencies Systems Synergy run-rate $50 million $90 million $100 million JEVCO Shared services LAE reductions Systems Operational efficiencies Reins
Slide 8: Strong financial foundation for growth
Strong financial foundation for growth $12.8 billion – conservatively managed Solid balance sheet Note: Investment mix is net of hedging positions and financial liabilities related to investments. • $598 million in total excess capital • MCT of 201% Loans, 3% Cash and • Debt-to-capital ratio of 19.5
Slide 9: 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 0.45 $0.40 Quarterly dividend per share 0.40 $0.
Slide 10: 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 likely to be bolstered by hard our broker partners market conditions in personal property • Leverage addition of JEVCO Comm
Slide 11: Building on our sustainable competitive advantages
Building on our sustainable competitive advantages We have a sustainable competitive advantage versus the industry Our solid financial position enables us to take advantage of growth opportunities Acquisition synergies are on track, but headwinds exist with low yields and challenging property result
Slide 12: Appendices
Intact Financial Corporation (TSX: IFC) Appendices 12
Slide 13: P&C insurance – a $40 billion market in Canada
P&C insurance – 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 sh
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 discipline 100% avg. = 98.0% • In-house claims expertise 95% • Broker relationships 90% 10-year avg. = 94.6% • So
Slide 15: Near-term themes to monitor
Near-term themes to monitor Impact on Industry from Low Yields Reinsurance 14% 12% • Major catastrophes in the world in 2011 have 10% impacted reinsurer’s capital levels P&C Industry 8% profitability • The Canadian industry one of the most 3-5 year 6% Government of conservative markets in the world
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 than in more in direct premiums written 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 32% Perpetual and callable floating and reset 65.6% Federal government and agency 28% Fixed-rate perpetual 24.1% Cdn. Provincial and municipal 33% Retractable 10.3% Supranational 4% TOTAL 100.0% ABS/MBS 4% Private placement
Slide 19: Track record of prudent reserving practices
Track record of prudent reserving practices • Quarterly and annual fluctuations Rate of claims reserve development in reserve development are (favourable prior year development as a % of opening reserves) normal 9% 7.9% 8% • 2005/2006 reserve development 7% 6% was unusually high due to the 4.9% 4.8%
Slide 20: Investor Relations contact information
Investor Relations contact information Dennis Westfall, CFA Maida Sit, CFA Vice President, Investor Relations Manager, Investor Relations Phone: 416.341.1464 ext 45122 Phone: 416.341.1464 ext 45135 Cell: 416.797.7828 Email: [email protected] Email: [email protected] General Contact Info
Slide 21: 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 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
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