Building a Resilient Future Intact Financial Corporation (TSX: IFC) Updated: May 22, 2020
COVID-19 Business Update People and Operations Dealing with the COVID-19 pandemic is our number one priority. Our focus is on the well-being of our employees and to be there for our customers and brokers, when they need us most. ▪ Over 99% of our employees are working from home and our robust IT infrastructure is performing very well ▪ Service levels are at pre-crisis performance ▪ Redeployed nearly 1000 employees to areas of our business needing more support ▪ Supporting our brokers network as they strive to serve customers and maintain business continuity Customer Relief Provided significant relief to customers to recognize the hardship and changing risk profiles, expected to exceed $200 million ▪ Fair and risk-based relief to customers who need it most. Our measures include: ▪ Personal auto insurance premium reductions to reflect changes in driving habits ▪ Flexible payment options, including payment deferrals ▪ Premium adjustments for small and medium sized business customers that are now closed or have been severely impacted by the crisis Financial Performance On track in Q1-2020 with NOIPS of $1.61 and Operating ROE of 14%. ▪ Recorded $83 million of direct COVID-19 related losses reflecting our best estimate of the ultimate loss ▪ Strong capital position with $1.5 billion of total capital margin, MCT above 200% and RBC close to 400% ▪ Debt-to-capital ratio of 24.1% is above our 20% target. We expect to return to our 20% over the next 18-24 months. ▪ While we expect the COVID-19 crisis to impact premium growth, underwriting performance is expected to be largely on track for the rest of 2020 INVESTOR PRESENTATION 2
Canada’s World Class P&C Insurer MULTI-CHANNEL PROVEN 10 YEAR SCALE ADVANTAGE TRACK RECORD DISTRIBUTION IN FRAGMENTED MARKET 2 INDUSTRY OUTPERFORMANCE - TOP 5 - 47% 47% MAR ARKET ET SH SHAR ARE E 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 IFC is 17x 17x the size of average 17% TSX60 competitor 7% 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 31/03/2020
A decade of meeting our financial objectives STRA ST RATE TEGIC GIC CA CAPITA PITAL OBJECTIVE: ORGA OR GANIC NIC GR GROWTH OWTH MAR MARGIN GIN EX EXPA PANS NSION ION DE DEPL PLOY OYMEN MENT 10% 10% 18% % … NOIPS $11.1B OF TOTAL CAPITAL COMMERCIAL 21% % DEPL EPLOYED ED SINCE 2009 GROWTH PERSONAL ~2 pts … PROPERTY ANNUALLY 15% 15% OVER TIME IFC 25% Organic Growth Dividends 36% % RESULT: 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 bps 500 PR PRICI ICING & RI NG & RISK SK INVES INVESTME TMENT NT & CAP & CAPITAL ITAL bps CL CLAIMS MANA AIMS MANAGE GEMEN MENT SELEC SE ECTION TION 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 out of of 4 4 customers are our advocates are are our Be a destination for top talen lent and engaged experts advocates 3 ou out of of 4 4 customers actively engage with us digitally Our Our Specialty company Achie Ac ieve comb mbine ined Solutions Exceed industry ROE by y 5 po point ints ratio io in the low 90s is one of the business is most Generate $6 bil illi lion in annual a lead leader er in Grow NOIPS 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
50 500b 0bps ps ROE ROE Out Outpe perfor rforman mance ce – An input to Strategy DIGITAL, PRICING & RISK CLAIMS INVESTMENT AND DATA & AI SELECTION MANAGEMENT CAPITAL DEPLOYMENT PLATFORMS DI DISCI CIPLI LINED D DE DEPLOYM YMENT OF C F CAP APITAL AL GENERA RATED CANADA MANUFACTURING CANADA DISTRIBUTION NORTH AMERICA TRANSFO TRA NSFORMING O ING OUR UR COM OMPETI PETITI TIVE E ADVANT NTAGES GES SPECIALTY LINES INVESTOR PRESENTATION 7
10 10% % NOIPS NOIPS Gro Growth wth an annu nually ally ov over er time time MARGIN EXPANSION ORGANIC GROWTH CAPITAL DEPLOYMENT MA MANAGE LEVERAGE IN INCREASE DIV IVID IDENDS SCALE IN DIGITAL DATA DEEP CLAIMS DISTRIBUTION ENGAGEMENT ADVANTAGE EXPERTISE MA MANAGE VOLATILIT ILITY +7% +9% IN INVEST IN IN 9% GROWT WTH Personal Lines Can Com. Lines Organic Growth SHARE Rate increase Rate increase FY2019 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. Personal Property Personal Auto US Commercial Lines Commercial Lines Prevailing hard market Crisis is not expected to have a Prevailing hard market Prevailing hardening markets, conditions have been impacted material impact on personal conditions have been impacted including upward pricing by the crisis property by the crisis trends, expected to continue. • Some companies, such as IFC, • Challenging weather over time • Industry premiums expected to • The economic impact of the are proactively providing relief continues to support hard be readjusted for changing crisis will affect some insurance to customers and businesses market conditions. business risk profiles. lines, such as D&O, E&O, as they reduce their activities, excess property and surety, • We expect growth at a mid-to- • Economic slow down will resulting in lower kilometers more than others, such as upper single-digit level over the impact premium growth. driven. commercial auto and some next 12 months. • Rate increases are expected to • Tempering of the previous segments of workers temper until the crisis has industry rate trend is expected. compensation. passed. While the COVID-19 crisis will result in dislocation in the Canadian market, a mid single-digit industry ROE in 2019 supports a continuation of the hard market environment once the crisis has passed. Given the capital market declines experienced in Q1-2020 we do not expect the industry ROE to significantly improve in 2020. 1 Refer to Section 9 – P&C insurance industry Outlook of the Q1-2020 MD&A INVESTOR PRESENTATION 9
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