Building a Resilient Future Intact Financial Corporation (TSX: IFC) Updated: July 30, 2020
COVID-19 Business Update People and Operations We continue to focus on the safety and well-being of employees and being there for customers and brokers when they need us the most. ▪ In July 2020, we began a risk-based, voluntary return to the office strategy. ▪ Our operations and service levels remain strong. Customer Relief & Community Support Providing financial relief to recognize the hardship, the changing driving behaviours and the lower business activity resulting from the pandemic. ▪ As of July 20 th , we have provided over $350 million of relief, including premium reduction and payment flexibility, to more than a million customers. ▪ To date, we have donated close to $4 million to help our most vulnerable populations cope with social, health and economic implications of the pandemic. Financial Performance Q2-2020 NOIPS was up 63% to $2.35 and an Operating ROE of 15.6%. ▪ Premium relief reductions lowered DPW by $134 million and NEP by $79 million in Q2-2020 and YTD 2020. ▪ No material COVID-19 related losses were recorded in Q2-2020; The provision of $83 million recorded in Q1-2020 in Canada commercial lines ($50 million) and U.S. commercial lines ($33 million), remains adequate. ▪ Our balance sheet remains strong, with $1.7 billion of total capital margin, strong regulatory capital levels and ample liquidity. ▪ Q2-2020 results include a $34 million (1.2 points) bad debt provision, mostly in Canada. INVESTOR PRESENTATION 2
Canada’s World Class P&C Insurer MULTI-CHANNEL PROVEN 10 YEAR SCALE ADVANTAGE DISTRIBUTION TRACK RECORD IN FRAGMENTED MARKET 2 INDUSTRY OUTPERFORMANCE - TOP 5 - 47% 47% MARK ARKET SHARE ARE 730 bps 5.7 pts 3.4 pts 1 IFC Premium Growth Combined Ratio Return on Equity 17% 3 DIVIDEND AND NOIPS GROWTH +9% +9% +10% +10% #3 #2 9% 9% 10-yr dividend 10-yr NOIPS CAGR CAGR #4 #5 6% 6% 4 AVERAGE ANNUAL TSR IFC TSX60 IFC is 17x 17x the size of average 17% 14% competitor PROVEN INDUSTRY CONSOLIDATOR 1 Industry data: IFC estimates based on MSA Research Inc. - Top 5 (IFC pro-forma GCNA) FY 2019. Please refer to Important notes on page 2 of the Q1-2020 MD&A for further information. 2 Industry data: IFC estimates based on MSA Research Inc. data as of Dec. 31, 2019. Please refer to section 10 of Q1-2020 MD&A for further information . INVESTOR PRESENTATION 3 3 10-year CAGRs (FY 2010-FY 2019) 4 TSR = Total shareholder return, figures from 04/02/2009 to 30/06/2020
A decade of meeting our financial objectives ST STRA RATE TEGIC GIC CA CAPITAL PITAL OBJECTIVE: ORGA OR GANIC NIC GR GROWTH OWTH MARGIN MAR GIN E EXPANSIO XPANSION DEPLOYMENT DEPLOYMENT 10% 10% 18% 18 % … NOIPS $11.1B OF TOTAL CAPITAL COMMERCIAL 21% 21 % DEPLOYED DEPL YED SINCE 2009 GROWTH PERSONAL ~2 pts … PROPERTY ANNUALLY 15% 15% OVER TIME IFC 25% Organic Growth Dividends 36% 36 % RESULT: 10% 10 % NORTH Combined Ratio AMERICAN +10% +10% Improvement 2 SPECIALTY PERSONAL AUTO M&A* Buybacks 10-yr NOIPS CAGR 11% 11% 17% 17% 2 0 0 9 2 0 0 9 2 0 1 9 2 0 1 9 *Includes Manufacturing, Distribution and Ventures MARKET SHARE 1 MARKET SHARE 1 OBJECTIVE: 500 500 bps PRICING PRICI NG & RISK & RISK INV INVES ESTME TMENT NT & & CA CAPITAL PITAL bps CLAIMS MAN CLA IMS MANAG AGEME EMENT NT SE SELE LECTION CTION MANAG MAN AGEME EMENT NT ANNUAL + + ROE 134 134 19% 19% 3 bps bps OUTPERFORMANCE RESULT: 5.5 pts 730bps 730bps 4.5 pts M&A INTERNAL 3.8 pts 3.6 pts I N V E S T M E N T R A T E O F M A N A G E M E N T I N D U S T R Y R E T U R N OUTPERFORMANCE Personal Auto Personal Property Commercial P&C Commercial Auto OUTPERFORMANCE 10-yr AVERAGE 1 Industry data: IFC estimates based on MSA Research Inc. IFC pro-forma GCNA - FY 2019. Please refer to Important notes on page 2 of the Q1-2020 MD&A for further information. 2 2019 5-year average Combined Ratio vs. 2010 5-year average Combined Ratio, ex-Cat INVESTOR PRESENTATION 4 3 Industry data: IFC estimates based on MSA Research Inc. 10 year average (FY 2010 to FY 2019)
What we are aiming to achieve Our Our Be a best employer people customers 3 ou 3 out t of of 4 4 customers are our advocates are are our Be a destination for top top talen talent t an and d engaged exp xper erts ts advocates 3 out 3 ou t of of 4 4 customers actively engage with us digitally Our Our Specialty company Achie Ac hieve e co combine mbined d Solutions Exceed industry ROE by by 5 po 5 points ints ratio tio in the low 90s is one of the business is most Generate $6 $6 bil billi lion on in annual a leader leader in Grow NOIPS 10 10% % yearly over time respected DPW by 2025 N.A. INVESTOR PRESENTATION 5
Our Strategic Roadmap for the next decade S T R E N G T H E N O U R L E A D E R S H I P B U I L D A N O R T H A M E R I C A N P O S I T I O N I N C A N A D A S P E C I A L T Y L E A D E R Low 90’s Leading Build on Digital customer combined strength in engagement experience ratio sharing economy 10% 10% Consolidate Further Optimize Scale in fragmented consolidation NOIPS distribution 500 500 bps distribution market in Canada bps GROWTH ANNUALLY ANNUAL OVER TIME T R A N S F O R M O U R C O M P E T I T I V E A D V A N T A G E S ROE Become the best Deep Claims Strong capital & OUTPERFORMANCE insurance AI shop expertise & strong investment in the world supply chain network management expertise I N V E S T I N O U R P E O P L E Anticipate the future of Be a destination for Be a best employer work & help employees top talent & experts adapt to AI & automation INVESTOR PRESENTATION 6
500 500bps bps ROE Outperf ROE Outperfor orma mance ce – An input to Strategy DIGITAL, PRICING & RISK CLAIMS INVESTMENT AND DATA & AI SELECTION MANAGEMENT CAPITAL DEPLOYMENT PLATFORMS DISCIPLINED DEP DISCIPLINED DEPLOYMENT YMENT OF CAPIT OF CAP ITAL AL GENER GENERATED TED CANADA MANUFACTURING CANADA DISTRIBUTION NORTH AMERICA TRANSFORMING OUR TRANSFORMING OUR COMPETI COMPETITIVE TIVE AD ADVANT ANTAGES GES SPECIALTY LINES INVESTOR PRESENTATION 7
10% NOIPS 10% NOIPS Growth Growth ann annually ually over over time time MARGIN EXPANSION ORGANIC GROWTH CAPITAL DEPLOYMENT MANAGE MANAGE LEVE LEVERAGE RAGE INCREA INCREASE SE DIVIDENDS DIVID ENDS SCALE IN DEEP CLAIMS DIGITAL DATA DISTRIBUTION ENGAGEMENT ADVANTAGE EXPERTISE MANAGE MANAGE VOLATILITY VOLATILITY +7% +9% INVES INVEST T IN IN 9% GROWTH GROWTH Personal Lines Can Com. Lines Organic Growth SHARE SHARE Rate increase Rate increase FY2019 BUYBACKS BUYBACKS FY2019 FY2019 INVESTOR PRESENTATION 8
P&C industry outlook 1 Our outlook has been modified to reflect impact of the COVID-19 pandemic and is dependent on the duration and severity of the lockdown. Commercial Lines US Commercial Lines Personal Auto Personal Property Commercial Lines Prevailing hard market As consumers continue to need Prevailing hard market Hardening markets conditions, conditions have been impacted by protection, the crisis has not had conditions have been impacted by including upward pricing trends, the crisis an impact on personal property the crisis are expected to continue • Some companies, such as IFC, • Industry premiums expected to be • Increasing reinsurance costs will • Challenging weather continues to have provided various relief to adjusted for changing business further support hardening market support hard market conditions. consumers and businesses to risk profiles. conditions. • We expect growth at a mid-to- reflect the decline of their • The pace of economic recovery • The economic impact of the crisis upper single-digit level over the activities, resulting in lower following the crisis will impact has affected some insurance lines next 12 months. kilometers driven. premium growth. more than others. • The previous industry rate trend • Rate increases are expected to • Exposures will be reduced in may be tempered while frequency resume in the coming months as commercial auto and some remains below normal levels lockdowns lift. segments of workers • We expect Q3-2020 DPW growth compensation. While other lines impact from relief measures to be such as liability, excess property low-double digit range. and surety will see upward pricing. While the COVID-19 crisis resulted in dislocation in the market, a mid single-digit industry ROE over the past year supports a continuation of the hard market environment once the crisis has passed. We do not expect the industry ROE to significantly improve in 2020. 1 Refer to Section 9 – P&C insurance industry Outlook of the Q2-2020 MD&A INVESTOR PRESENTATION 9
Recommend
More recommend
