Intact - PowerPoint PPT Presentation

���� ���� �������� ��������������������� ������ Intact Financial Corporation (TSX: IFC) Wednesday, November 2 nd 2016

!"��#�$�����%���&� Chief Executive Officer

'�(�)���*$�+�"�,"#�,"*$ • Net operating income per share of $1.01 despite $0.93 of catastrophe losses from severe weather • Solid premium growth of 5% due to growth initiatives and improved market conditions • Combined ratio of 97.0%, as solid underlying performance was more than offset by 8.1 points of catastrophe losses • Operating ROE of 13.4% and a 10% increase in book value per share year-over- year Important notes: � Unless otherwise noted, DPW refers to DPW normalized for the effect of multi-year policies, excluding industry pools (referred to as “DPW” in this presentation and previously referred to as “DPW (underlying)”). This normalized measure is not significantly different from the comparable IFRS-based measure given that the impact of multi-year policies is no longer material to our results. See Table 27 for the reconciliation. � All underwriting results and related ratios exclude the MYA, but include our share of the underwriting results of jointly held insurance operations, unless otherwise noted. � The expense and general expense ratios are presented herein net of other underwriting revenues. � Net investment income includes our share of the net investment results of jointly held insurance operations, unless otherwise noted. � Catastrophe claims are any one claim, or group of claims, equal to or greater than $7.5 million, related to a single event. � A large loss is defined as a single claim larger than $0.25 million but smaller than the CAT threshold of $7.5 million. � A non-catastrophe weather event (“non-CAT weather event”) is a group of claims which is considered significant but that is smaller than the CAT threshold of $7.5 million, related to a single weather event. � All references to “total excess capital” in this presentation include excess capital in the P&C insurance subsidiaries at 170% MCT plus excess capital outside of the P&C insurance subsidiaries, unless otherwise noted. � Unless otherwise noted, market share and market related data are based on the latest available data (Q2 2016) from MSA Research Inc. (“MSA”) and excludes LIoyd’s Underwriters Canada, Insurance Corporation of British Columbia, Saskatchewan Government Insurance, Saskatchewan Auto Fund, Genworth Financial Mortgage Insurance Company Canada and Canada Guaranty Mortgage Insurance Company. MSA data excludes certain Quebec regulated entities. Market share and market positioning reflect the impact of announced or completed acquisitions and are therefore presented on a proforma basis. � Certain totals, subtotals and percentages may not agree due to rounding. Not meaningful (nm) is used to indicate that the current and prior year figures are not comparable, not meaningful, or if the percentage change exceeds 1,000%. 3

�&*)��������,��&����������#�*��,�*$ $7.00 800 500 bps target 700 $6.00 600 $5.00 500 $4.00 400 $3.00 300 $2.00 200 100 $1.00 0 $0.00 5-year avg. H1-2016 LTM Q3-12 LTM Q3-13 LTM Q3-14 LTM Q3-15 LTM Q3-16 NOIPS growth ROE outperformance We have regularly exceeded our 500 bps ROE Our net operating income per share over the past outperformance target versus the industry. 12 months represents a 5-year compound growth rate of almost 9%. We target NOIPS growth of 10% Industry data: IFC estimate based on MSA Research Inc. Please refer to Important Notes on slide 3 of this presentation for further information. per year over time. IFC’s ROE corresponds to the AROE, which excludes the after-tax impact of acquisition-related items. 4

�+!���%&$*�(�������*"��&*#��- We remain well-positioned to continue �&*)��������, the Canadian P&C insurance industry in the current environment • We expect low to mid single-digit growth in personal auto, as we expect claims cost inflation will lead to rate increases in all markets. • We expect mid to upper single-digit growth in personal property in current Market firm market conditions, as companies are adjusting to changing weather environment patterns. • We expect low single-digit growth in commercial lines, as the economy in Western Canada continues to pressure industry growth. • In the current interest rate environment, we estimate that the industry’s pre- tax investment yield will decline slightly, given its asset mix and duration. Capital • Industry capital levels could be negatively impacted if volatility resulting from global events puts downward pressure on market values. markets • Global capital requirements are continuing to influence the asset allocation decisions of many companies. • We expect growth at a low to mid single-digit rate. Overall • Overall, we expect the industry’s ROE to improve but remain slightly below its long-term average of 10%. 5

��#�%�,���*".�#�%�/(�)��$���#�#���$ Personal Lines Commercial Lines Year-over-year DPW growth Year-over-year DPW growth 10.5% 5.7% Contribution from CDI 10.0% 9.5% 4.9% 4.1% 4.0% 7.0% 6.4% 2.9% 2.7% 5.8% 2.0% 1.7% 0.0% 2.1% 1.5% 1.1% 0.7% -0.8% Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 6

���$���#�#���$ Combined Ratio Breakdown Q3-2016 Q3-2015 Change (in $ millions, except as otherwise noted) Personal Auto DPW 24.2% 1,032 987 5% Expense 24.4% Ratio (41) 51 nm Underwriting income (loss) 80.1% 70.0% Claims Ratio Combined ratio 104.3% 94.4% 9.9 pts Q3-2016 Q3-2015 • DPW grew 5% on a combination of unit growth and rate increases, as our growth initiatives continued to pay off. • Combined ratio of 104.3% was impacted by higher CAT and non-CAT weather losses, low favourable PYD, as well as cost inflation. We are accelerating our actions to improve results through rate increases and tighter underwriting rules. Combined Ratio Breakdown Q3-2016 Q3-2015 Change (in $ millions, except as otherwise noted) Personal Property DPW 569 527 8% 33.5% Expense 33.7% Ratio Underwriting income 2 11 (82)% 66.2% 63.7% Claims Combined ratio 99.7% 97.4% 2.3 pts Ratio Q3-2016 Q3-2015 • DPW grew 8%, in continued favourable market conditions, driven by new product offerings, distribution and branding initiatives. • Combined ratio of 99.7%, as an 11.9 point increase in CAT losses more than offset an improvement in our underlying underwriting performance. 7

!��������#�#���$ Combined Ratio Breakdown Q3-2016 Q3-2015 Change (in $ millions, except as otherwise noted) Commercial P&C DPW Expense 420 421 - 38.3% 38.3% Ratio Underwriting income 79 64 23% 46.3% 43.0% Claims Ratio Combined ratio 81.3% 84.6% (3.3) pts Q3-2016 Q3-2015 • DPW was consistent with last year, as rate increases were neutralized by headwinds in Western Canada and competitive market conditions. • Combined ratio of 81.3% improved by 3.3 points over last year due to our profitability actions. Combined Ratio Breakdown Q3-2016 Q3-2015 Change (in $ millions, except as otherwise noted) Commercial Auto 27.3% DPW 172 160 7% Expense 26.7% Ratio Underwriting income 21 5 320% 69.7% 61.9% Claims Ratio Combined ratio 88.6% 97.0% (8.4) pts Q3-2016 Q3-2015 • DPW grew 7%, positively impacted by the introduction of innovative products for the sharing economy, offset in part by our profitability actions. • Combined ratio improved by 8.4 points, due to our ongoing profitability actions, favourable prior year development, and lower large losses. 8

����$*��,����,���*" Brands Our objective to build household names for our core brands is progressing well, supported by new advertising campaigns and sports sponsorships for Intact Insurance and belairdirect. We continue to make significant progress on co-branding with brokers showing an increasing appetite to be aligned with the Intact Insurance brand. Customer experience This quarter we reached an important milestone – 1,000,000 Quick Quotes! Leveraging our experience in personal auto, we recently launched our Quick Quote for Homeowners tool for belairdirect in Ontario and Quebec. Our customer-centric approach is a great example of how we embrace change and innovative thinking. Innovative Products We continue to develop products that meet changing customer needs. Insurance regulators in Alberta and Ontario approved new ride-sharing insurance products offered by Intact to Uber which will provide coverage to every driver operating on the Uber platform. 9

'�(�*�-����($ We have a $&$*����/#�����)�*�*�����%���*�,�� versus the industry due to our disciplined approach and operational strength Our $*���,���������#�)�$�*���� enables us to take advantage of growth opportunities We continue our $"���"�#%��������%#( approach to capital management 10

0�&�$������**� SVP Finance & Chief Financial Officer