Intact - PowerPoint PPT Presentation

���������������������� ������� Intact Financial Corporation (TSX:IFC) Wednesday, July 29 th 2015 Intact Financial Corporation

���������������� � Chief Executive Officer Intact Financial Corporation

!�"�#���$��%���&���&�$� • Net operating income per share of $1.56 with a combined ratio of 91.6% • All business lines contributed to organic growth in DPW of 5%, or 6% including our recent acquisition of Canadian Direct Insurance Inc. • Strong financial position with $564 million of excess capital and operating ROE of 16.8% for the last 12 months Important notes: � Unless otherwise noted, DPW refers to DPW as reported under IFRS, excluding industry pools (referred to as “DPW” or “reported DPW” in this presentation). � All underwriting results and related ratios exclude the MYA, but include our share of the results of jointly held insurance operations, unless otherwise noted. � The expense and general expense ratios are presented herein net of other underwriting revenues. As a result, total revenues exclude other underwriting revenues. � Net investment income includes our share of the 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. � All references to “excess capital” in this presentation include excess capital in the P&C subsidiaries at 170% MCT plus net liquid assets outside of the P&C insurance subsidiaries, unless otherwise noted. Intact Financial Corporation 3

� $#��'�����&�� ��'����(���� $��&�$� $3.50 1400 $3.00 1200 500 bps target $2.50 1000 800 $2.00 600 $1.50 400 $1.00 200 $0.50 0 $0.00 Q1-11 Q1-12 Q1-13 Q1-14 Q1-15 H1-11 H1-12 H1-13 H1-14 H1-15 NOIPS growth ROE outperformance Our H1-2015 net operating income per share of We have consistently exceeded our 500 bps ROE $2.93 represents a 4-year compound growth rate outperformance target versus the industry* of 13.3% Industry data: IFC estimates based on MSA Research excluding Lloyd’s, ICBC, SGI, SAF, MPI, Genworth and IFC. Note: AMF (Québec) chartered insurance companies are not required to report on Q1 and Q3 results. As such, we have included estimates for non-reporters in our Industry benchmark group, based on publicly available information. Actual results may vary. Intact Financial Corporation 4

�%����� �$�"�������$��� $���) We remain well-positioned to continue � $#��'�����& the Canadian P&C insurance industry in the current environment • Industry premiums are likely to increase at a low single-digit rate, with slightly negative growth in personal auto, mid single-digit growth in commercial lines and upper single-digit growth in personal property Premium growth expected • We expect future premium reductions in Ontario auto will be commensurate with government cost reduction measures • We expect the current hard market conditions in personal property to continue as the magnitude of recent catastrophe losses negatively impacts industry results Underwriting • We believe the impact of continued low interest rates and limited underwriting profitability at the industry level have translated into firmer conditions in commercial lines • We expect the industry’s combined ratio to continue to improve in 2015 from the recent peak above 100% in 2013, though the level of investment income is unlikely to improve • Return on equity We expect the industry’s ROE to trend back toward its long-term average of 10% in 2015 • We believe we will outperform the industry’s ROE by at least 500 basis points in the next 12 months Intact Financial Corporation 5

*$���&�+�����+�����&��,$� Personal Lines Commercial Lines Year-over-year underlying DPW growth Year-over-year underlying DPW growth 11.1% Contribution from Jevco and CDI Contribution from Jevco 8.3% 5.7% 8.1% 4.9% 4.3% 4.1% 6.4% 2.7% 2.0% 0.6% 3.7% -3.2% 2.5% 2.1% 1.5% 1.1% 0.7% Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Intact Financial Corporation 6

��$������ $�� #��$� Update The Ontario government has a mandate to reduce insurance rates while also • The Ontario government budget outlines reducing costs for insurers additional actions to reduce costs which include: Cumulative Ontario Auto Rate Decreases * – Updating the catastrophic impairment 0% definition Bill 15 passed – Reducing the standard duration of medical Savings from: -2% • PJI and rehabilitation benefits to be more in line • DRS with other provinces • Towing -4% • Net cost reduction will become apparent as 6.1% the measures are defined in regulation -6% Bill 65 passed Savings from: -8% • MIG definition reaffirmed 9.6% • Heath Care Provider licencing • Ontario auto accounts for approximately one -10% quarter of our direct premiums written • We continued our solid outperformance -12% versus the industry Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 • We continue to believe we can protect our margins in Ontario Industry IFC * Source: IFC estimates based on FSCO quarterly rate filings Intact Financial Corporation 7

�(- ���$�����'����������.���($ Background Progress • Announced February 10, 2015 • The transaction closed on May 1, 2015 • $143 million in DPW and integration efforts are underway • Broadens direct presence for IFC • Targeting annual expense synergies of • Facilitates objective to double direct $10 million after-tax, and expect our run- capabilities rate to reach this level by mid-2017 • Track record of strong underwriting • IRR estimated above 15% results �(- ���$�����'��.�������������&' ��#�����(��������$���������� 2014 IFC Direct Channel: $975M DPW * Direct Channel pro forma with CDI: $1.1B DPW * 2% 7% 9% 8% 8% 30% 51% 59% 26% Ontario Quebec Atlantic Alberta B.C. * Includes Anthony Insurance and InnovAssur Intact Financial Corporation 8

��/��$��&����&��,$� Brands Brand awareness has increased notably though greater advertising presence, highlighting the Intact Insurance 30 minute claims guarantee, and continuing sports sponsorships. Digital experience We continued to invest in digital innovation, including faster quoting engines on both intact.ca and belairdirect.com websites. Diverse product offering We’ve experienced a strong customer and broker response to our Lifestyle Advantage product, which provides more flexibility for the customer if something happens to their homes. Intact Financial Corporation 9

* ����"�����)�"�$�)��,�"� � We have a � �$����+���(��#�$�$�/�� ��/��$�&�� versus the industry due to our disciplined approach and quality operations � Our �$���&�'����(����#���$���� enables us to take advantage of growth opportunities � We continue our ������������'������" approach to capital management Intact Financial Corporation 10

0� ������(�$$� Senior Vice President and Chief Financial Officer Intact Financial Corporation

��������'����(������&���&�$� Q2-2015 Q2-2014 Change YTD-2015 YTD-2014 Change (in $ millions, except as otherwise noted) DPW 2,346 2,173 8% 3,918 3,676 7% DPW (underlying) 2,344 2,212 6% 3,919 3,745 5% Underwriting income 158 128 23% 276 179 54% Combined ratio 91.6% 92.9% (1.3) pts 92.5% 95.0% (2.5) pts Net operating income per share to common $1.56 $1.53 2% $2.93 $2.47 19% shareholders 1 Earnings per share to common $1.47 $1.60 (8)% $2.79 $2.77 1% shareholders Operating return on common shareholders equity for the last 16.8% 11.6% 5.2 pts 12 months 1 • Underlying DPW grew by 6% compared to Q2-2014, driven by organic growth initiatives, but also included two months of premiums from recently acquired CDI, which represented 1.2 points of growth • Combined ratio of 91.6% is 1.3 points better than the same period last year, due to a better expense ratio, the success of our profitability initiatives and higher favourable prior year claims development, which more than offset the impact of prolonged winter conditions in Atlantic Canada 1 Refer to Section 5 - Non-IFRS financial measures of the MD&A Intact Financial Corporation 12