Intact - PowerPoint PPT Presentation

���� ���� �������� ��������������������� ������ Intact Financial Corporation (TSX: IFC) Wednesday, November 8th, 2017

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

'�(�)���*$�+�"�,"#�,"*$ • Net operating income per share up 59% to $1.61 on improved underwriting performance • Combined ratio improved to 91.8%, reflecting lower catastrophe losses, strong underlying performance in personal property and commercial lines, and challenging results in personal auto • OneBeacon transaction closed; profitability action plan under way and growth initiatives launched • Operating ROE of 13.3% and book value per share increase of 12% over the last twelve months 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). See Table 27 of the Q3-2017 MD&A for the reconciliation. � All underwriting results and related ratios exclude the MYA, unless otherwise noted. � The expense and general expense ratios are presented herein net of other underwriting revenues. � 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 loss (“non-CAT weather loss”) 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. � Regulatory Capital Ratios refer to MCT (as defined by the OSFI and the AMF in Canada) and RBC (as defined by the NAIC in the U.S.). � All references to “total capital margin” in this presentation include the aggregate of capital in excess of company action levels in regulated jurisdictions (170% MCT, 200% RBC) plus available cash in other entities (see Section 12.2 of the Q3-2017 MD&A for details). � Unless otherwise noted, market share and market related data for our Canadian operations are based on the latest available data (Q2-2017) 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

�+!���%&$*�(�������*"��&*#��- We remain well-positioned to continue outperforming the Canadian P&C insurance industry in the current environment • We expect growth at a mid single-digit rate in personal auto, as claims cost inflation should lead to meaningful rate increases in all markets, expansion of the risk sharing pools and our own non-standard auto business. • We expect mid single-digit growth in personal property in current firm market Market Market conditions, as companies adjust to changing weather patterns. environment environment • We expect low single-digit growth in commercial lines in Canada, as these lines of business remain competitive, mainly in the larger risks. • In the U.S., while the pricing environment is competitive, there are early signs of upward trends in certain specialty lines. Investments Investments • In the current interest rate environment, we estimate that the industry’s pre-tax investment yield will continue to decline slightly, given its asset mix and duration. & Financial & Financial • Global capital requirements are continuing to influence the asset allocation decisions Strength Strength of many companies. • We expect growth at a low-to-mid single-digit rate. Overall Overall • Overall, we expect the Canadian P&C insurance industry’s ROE to improve but remain below its long-term average of 10% over the next 12 months. 4

���$���#�#���$ Combined Ratio Breakdown Q3-2017 Q3-2016 Change (in C$ millions, except as otherwise noted) Personal Auto 22.6% DPW 24.2% 1,028 1,032 -% Expense Ratio Underwriting income (loss) (50) (41) (22)% 82.5% 80.1% Claims Ratio Combined ratio 105.1% 104.3% 0.8 pts Q3-2017 Q3-2016 • DPW were flat in the quarter reflecting rate increases taken across the country, ahead of our competitors. • Combined ratio of 105.1% 1 was higher than expected due to increasing physical damage costs, despite dampened auto claims inflation. Underlying performance deteriorated by 2.2 points mainly from industry pools and net strengthening of claims liabilities following actuarial review. Combined Ratio Breakdown Q3-2017 Q3-2016 Change (in C$ millions, except as otherwise noted) Personal Property DPW 591 569 4% 33.5% Expense 31.9% Ratio Underwriting income 78 2 nm 66.2% 53.1% Claims Combined ratio 85.0% 99.7% (14.7) pts Ratio Q3-2017 Q3-2016 • DPW grew 4%, as rate increases and growth initiatives continued to be supported by favourable market conditions. • Our combined ratio improved 14.7 points to 85.0% 2 , reflecting lower catastrophe losses and improved underlying performance. 1 The combined ratio was negatively impacted by 2.1 points in the quarter by the net reserve change, with approximately half impacting the underlying current year loss ratio and half impacting PYD (refer to Section 10.3 of the Q3-2017 MD&A for further details). 2 The combined ratio was positively impacted by 1.9 points in the quarter by the net reserve change (refer to Section 10.3 of the Q3-2017 MD&A for further details). 5

!��������#�#���$ Combined Ratio Breakdown Q3-2017 Q3-2016 Change (in C$ millions, except as otherwise noted) Commercial P&C DPW Expense 410 420 (2)% 38.3% 37.2% Ratio Underwriting income 117 79 48% 43.0% 34.6% Claims Ratio Combined ratio 71.8% 81.3% (9.5) pts Q3-2017 Q3-2016 • DPW decreased by 2% as our ongoing pricing and segmentation actions are deployed in competitive markets. • Combined ratio improved 9.5 points to 71.8% 1 reflecting continued strong underlying performance, and favourable prior year claims development. Combined Ratio Breakdown Q3-2017 Q3-2016 Change (in C$ millions, except as otherwise noted) Commercial Auto 26.7% 25.0% DPW 180 172 5% Expense Ratio 61.8% 61.9% Underwriting income 25 21 19% Claims Ratio Combined ratio 86.8% 88.6% (1.8) pts Q3-2017 Q3-2016 • DPW grew 5% led by strong growth in specialty lines. • Combined ratio improved slightly to 86.8% 2 from lower expenses. 1 The combined ratio was positively impacted by 10.1 points in the quarter by the net reserve change (refer to Section 10.3 of the Q3-2017 MD&A for further details). 2 The combined ratio was positively impacted by 4.2 points in the quarter by the net reserve change (refer to Section 10.3 of the Q3-2017 MD&A for further details). 6

����������*���$�*����&�%����( • With the addition of the OneBeacon team we have created a leading North American specialty lines Creation Value insurer focused on small to medium sized enterprises. • We expect the acquisition to deliver mid-single digit accretion to net operating income per share by the end of 2019. • Actions are in progress to grow the many profitable OneBeacon specialty lines. Profitable Growth • Additional growth pipelines have been opened with commercial lines underwriting desks on each side of the border to support customers with businesses in both countries. • We also plan to leverage OneBeacon’s expertise in tailored specialty products and services in Canada beginning with the introduction of technology and entertainment products in Q4-2017. • We are targeting a low-90s combined ratio for the U.S. specialty business within 24-36 months. Improvement Profitability • The profitability action plan is now in progress, comprising: Underwriting : Exit Programs and Architects & Engineers plus leveraging IFC’s analytics and 1 segmentation expertise to take underwriting actions in select other lines Deploy proven claims practices: increase internalization of claims handling and indemnity control 2 procedures Other savings : reinsurance, eliminate public company costs, shared services and technology 3 savings, and internalize investment management 7

'�(�*�-����($ 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 8

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