february 15, 2017 leading through innovation · the company uses both international financial...
TRANSCRIPT
1
Leading
through
Innovation
INVESTOR DAY
FEBRUARY 15, 2017
2
INVESTOR DAY
FEBRUARY 15, 2017
Welcome
3
Certain of the statements included in this presentation about the Company’s current and future plans, expectations and intent ions, results, levels of activity, performance,
goals or achievements or any other future events or developments constitute forward-looking statements. The words “may”, “will”, “would”, “should”, “could”, “expects”,
“plans”, “intends”, “trends”, “indications”, “anticipates”, “believes”, “estimates”, “predicts”, “likely”, “potential” or the negative or other variations of these words or other
similar or comparable words or phrases, are intended to identify forward-looking statements.
Forward-looking statements are based on estimates and assumptions made by management based on management’s experience and perception of historical trends,
current conditions and expected future developments, as well as other factors that management believes are appropriate in the circumstances. Many factors could cause
the Company’s actual results, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking
statements, including, without limitation, the following factors: the Company’s ability to implement its strategy or operate its business as management currently expects; its
ability to accurately assess the risks associated with the insurance policies that the Company writes; its ability to successfully process and use its data and data analytics;
its ability to grow its distribution, direct-to-consumer and specialty solutions business; unfavourable capital market developments or other factors which may affect the
Company’s investments, floating rate securities and funding obligations under its pension plans; the cyclical nature of the P&C insurance industry; management’s ability to
accurately predict future claims frequency and severity, including in the Ontario line of business, as well as the evaluation of losses relating to the Fort McMurray wildfires,
catastrophe losses caused by severe weather and other weather-related losses; government regulations designed to protect policyholders and creditors rather than
investors; litigation and regulatory actions; periodic negative publicity regarding the insurance industry; intense competition; the Company’s reliance on brokers and third
parties to sell its products to clients and provide services to the Company; the Company’s ability to successfully pursue its acquisition strategy; the Company’s ability to
realize the potential of its investments in strategic ventures; the Company’s ability to execute its business and growth strategies; the Company’s ability to achieve
synergies arising from successful integration plans relating to acquisitions, as well as management's estimates and expectations in relation to resulting accretion, internal
rate of return and debt-to-capital ratio; the Company’s participation in the Facility Association (a mandatory pooling arrangement among all industry participants) and
similar mandated risk-sharing pools; terrorist attacks and ensuing events; the occurrence of catastrophe events, including a major earthquake; the Company’s ability to
maintain its financial strength and issuer credit ratings; access to debt financing and the Company's ability to compete for large commercial business; the Company’s
ability to alleviate risk through reinsurance and procure reinsurance at rates in keeping with the Company’s reasonable expectations; the Company’s ability to successfully
manage credit risk (including credit risk related to the financial health of reinsurers); the Company’s ability to contain fraud and/or abuse; the Company’s reliance on
information technology and telecommunications systems and potential failure of or disruption to those systems, including evolving cyber-attack risk; the Company’s
dependence on key employees; changes in laws or regulations; general economic, financial and political conditions; the Company’s dependence on the results of
operations of its subsidiaries; the volatility of the stock market and other factors affecting the Company’s share price; and future sales of a substantial number of its
common shares.
All of the forward-looking statements included in this presentation are qualified by these cautionary statements and those made in the MD&A for the year ended December
31, 2016 in the section entitled Risk management (Sections 17-21). These factors are not intended to represent a complete list of the factors that could affect the
Company. These factors should, however, be considered carefully. Although the forward-looking statements are based upon what management believes to be reasonable
assumptions, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. When relying on forward-looking
statements to make decisions, investors should ensure the preceding information is carefully considered. Undue reliance should not be placed on forward-looking
statements made herein. The Company and management have no intention and undertake no obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by law.
Forward-looking statements
4
DisclaimerThis Presentation does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any securities nor shall it or any part of it
form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever.
The information contained in this Presentation concerning the Company does not purport to be all-inclusive or to contain all the information that a prospective
purchaser or investor may desire to have in evaluating whether or not to make an investment in the Company. The information is qualified entirely by reference
to the Company’s publicly disclosed information.
No representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its the directors, officers or employees as to the
accuracy, completeness or fairness of the information or opinions contained in this Presentation and no responsibility or liability is accepted by any person for
such information or opinions. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the attendees with access
to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation that may become apparent.
The information and opinions contained in this Presentation are provided as at the date of this Presentation. The contents of this Presentation are not to be
construed as legal, financial or tax advice. Each prospective purchaser should contact his, her or its own legal adviser, independent financial adviser or tax
adviser for legal, financial or tax advice.
The Company uses both International Financial Reporting Standards (“IFRS”) and certain non-IFRS measures to assess performance. Non-IFRS measures do
not have any standardized meaning prescribed by IFRS and are unlikely to be comparable to any similar measures presented by other companies.
Management analyzes performance based on underwriting ratios such as combined, expense, loss and claims ratios, MCT, and debt-to-capital, as well as
other non-IFRS financial measures, namely DPW, Underlying current year loss ratio, Underwriting income, NOI, NOIPS, OROE, ROE, AROE, Non-operating
results, AEPS, Cash flow available for investment activities, and Market-based yield. These measures and other insurance related terms are defined in the
Company’s glossary available on the Intact Financial Corporation web site at www.intactfc.com in the “Investors” section. Additional information about the
Company, including the Annual Information Form, may be found online on SEDAR at www.sedar.com.
5
Charles Brindamour
Chief Executive Officer
Introduction
Monika Federau
Senior Vice President & Chief Strategy Officer
Environment and Strategic Response
Chris Reid
Director, Strategy
Evolving Transportation
Mathieu Lamy
Senior Vice President & Chief Information Officer
Data Advantage
Joe D’Annunzio
Senior Vice President, Specialty Solutions and Surety
Specialty Solutions
Louis Marcotte
Senior Vice President & Chief Financial Officer
Capital Readiness
Charles Brindamour
Chief Executive Officer
Conclusion
IFC Senior Management
Q&A
09:00
11:10
09:15
09:35
09:55
10:40
10:50
11:15
BREAK
6
Canada’s largest home, auto and business insurer
INTRODUCTION
Industry data: IFC estimates based on MSA Research. Please refer to Important notes on page 3 of the MD&A for the year ended Dec. 31, 2016 for further information.
All data as at December 31, 2015.1 Premium growth includes the impact of industry pools2 Combined ratio includes the market yield adjustment (MYA).3 ROEs reflect IFRS beginning in 2010. Since 2011, IFC's ROE is adjusted return on common shareholders' equity (AROE).
Distinct
brands
Largest P&C insurance
provider
6.1%
6.5%
8.7%
10.4%
17.0%IFC
#2
#3
#4
#5
Top 5
represent
49%market share
10-year outperformance
versus the industry
3.9 pts
3.1 pts
5.8 pts
Premium
growth
Combined
ratio
Return on
equity
1
2
3
7
What we are aiming to achieve
Our customers are
our advocates
Our employees
are engaged
Our company is one of the most
respected in Canada
Two million
advocates
One of Canada’s
best employers
Outperform industry ROE by 500
basis points every year
Grow NOIPS 10% per year over time
INTRODUCTION
Close to one million advocates, now goal
increased to 2 million by 2020
Highest broker satisfaction scores ever
recorded
Unaided brand awareness is at an all-
time high and continues to climb
Named one of Canada’s Top 100
Employers and one of the Best Employers
in Canada for second year
Recognized as one of Canada's Top
Employers for Young People
The Globe and Mail’s Board Games
ranked us #2 for the quality of our
governance
Made the Best 50 Corporate Citizens in
Canada list for 4th straight year
8
6.3%
8.8%8.1%
10.0%
9.1%
10.4%
9.4%
10.3%
Progress on key financial objectives
NOIPS and common share dividend growth
0
100
200
300
400
500
600
700
800
5-year avg. YTD Q3-16
500 bps
target
ROE outperformance
versus the industry
$2.35
$3.49$3.91
$5.00
$3.62
$5.67
$6.38
$4.88
2009 2010 2011 2012 2013 2014 2015 2016
NOIPS
Growth in dividends declared
Industry data: IFC estimates based on MSA Research. Please refer to Important notes
on page 3 of the MD&A for the year ended Dec. 31, 2016 for further information.
IFC’s ROE corresponds to the AROE
INTRODUCTION
9
Sustaining performance going forward
INTRODUCTION
Beat industry ROE by 5 points every year
Investments & Capital Management
2 points
Pricing & Segmentation
2 points
Claims Management
3 points
NOIPS growth of 10%
per year over time
Organic Growth2-4%
Margin Improvement2-4%
Capital Management & Deployment3-5%
10
How we see the world
INTRODUCTION
Consumer expectations
are changing
Consumer
Global industry
consolidation continuing
Industry
Muted economic
growth
Economy
Software changing
how we live
Technology
Data flows growing
exponentially
Data
Weather patterns
are shifting
Environment
11
Charles Brindamour
Chief Executive Officer
Introduction
Monika Federau
Senior Vice President & Chief Strategy Officer
Environment and Strategic Response
Chris Reid
Director, Strategy
Evolving Transportation
Mathieu Lamy
Senior Vice President & Chief Information Officer
Data Advantage
Joe D’Annunzio
Senior Vice President, Specialty Solutions and Surety
Specialty Solutions
Louis Marcotte
Senior Vice President & Chief Financial Officer
Capital Readiness
Charles Brindamour
Chief Executive Officer
Conclusion
IFC Senior Management
Q&A
09:00
11:10
09:15
09:35
09:55
10:40
10:50
11:15
BREAK
1212
How we see the world
13
2016
IPOs
IFC
launches
telematics
offering
iPhone 6
Launch
acquires
20152014
Uber
Launches
Ridesharing
in Canada
Apple
Launches
the Watch
Google self-
driving car
hits 1 million
miles
Tesla
Autopilot 7
IFC reaches
1 Billion
KMs in
telematics
Quick
Quote
launched
Intact Lab
launched
Intact
launches
3rd Service
CentreIntact
launches
drone
insurance
IFC
Ventures
established
Uber ride-
sharing
insurance
product
UBI
mobile
launch
Online
claims
tracking
launch
Insurance must respond and change
IFC
introduces
cyber
insurance
AlphaGo
Beats World
Champion
Intact Data
Lab
launched
IFC
launches
flood
coverage
Metromile
investment
The environment is evolving rapidly
ENVIRONMENT & STRATEGIC RESPONSE
Customer VenturesFundamentals
Microsoft
achieves
human
parity in
speech
recognition
14
How we interpret these changes
Technology
• Bridging the physical
and virtual
• Evolving transportation
• IoT = Internet of
Everything
Data
• Internal + external
• New analytics
• Prediction beyond
pricing
Industry
• Consolidation
• Scale
• Sophisticated
competition
Economy
• Underwriting is key
• Emerging market
growth
Environment
• Prevention
• Adaptation
• New opportunity
Consumer
• Distribution Options
• Sharing
• Mobile first
ENVIRONMENT & STRATEGIC RESPONSE
15
How we are responding
Accelerating Progress through
Ventures & Software Engineering
Strengthen
Distribution
Excel at the
Fundamentals
Customer Driven
Transformation
ENVIRONMENT & STRATEGIC RESPONSE
16
Customer Driven Transformation
Connected & On
Demand Economy
Brand & Customer
Leadership
Most recognized P&C brand nationally
The preferred business
and specialty insurer
Digital leadership through
speed and simplicity
Reaching more Canadians with experiences that are second to none
ENVIRONMENT & STRATEGIC RESPONSE
#1 in telematics
#1 in sharing
currently top of
mind for 1 in 3
Canadians
in small business
in commercial lines
in surety#1
tripling of
digital sales in
the last three
years3x
17
Quick Quote home
ENVIRONMENT & STRATEGIC RESPONSE
18
Customer Driven Transformation
Connected & On
Demand Economy
Brand & Customer
Leadership
Most recognized P&C brand nationally
The preferred business
and specialty insurer
Digital leadership through
speed and simplicity
Reaching more Canadians with experiences that are second to none
ENVIRONMENT & STRATEGIC RESPONSE
#1 in telematics
#1 in sharing
currently top of
mind for 1 in 3
Canadians
in small business
in commercial lines
in surety#1
tripling of
digital sales in
the last three
years3x
19
Strengthen Distribution
Expand proprietary networks
Grow to $2 Billion
Strengthen Specialty lines
Grow to $1 Billion
Providing best in class
digital distribution for
brokers
Differentiated and robust platforms that drive growth
ENVIRONMENT & STRATEGIC RESPONSE
20
Excel at Fundamentals
Extend Data
Advantage
Geospatial: 40 new variables
Developing our expertise in big data and machine learning
Supply Chain
Services
Climate Change
Enhanced water protection: Now
available to 90% of Canadians
ENVIRONMENT & STRATEGIC RESPONSE
Service Centres: Unique
experience has improved
customer satisfaction by 10%
21
Accelerate with software engineering
ENVIRONMENT & STRATEGIC RESPONSE
Rapid Development
Online Platforms:
• 3x Improvement on speed of delivery
• 10x Conversion ImprovementBuild the Best Team
Improved Culture, Training and
Recruitment
• Tripling of agile development
teamsNew Tools
Leveraging advanced techniques and
development software
• New advanced dev environments
deploying in 2017
22
Accelerate with Ventures
Machine Learning and Automation
Big Data
Digital Tools and Marketplaces
Internet of Things
Sharing Economy
Insurance Technology
Mobility (incl. autonomous vehicles)
Strengthen DistributionExcel at the
Fundamentals
Customer Driven
TransformationStrategies
ENVIRONMENT & STRATEGIC RESPONSE
23
Charles Brindamour
Chief Executive Officer
Introduction
Monika Federau
Senior Vice President & Chief Strategy Officer
Environment and Strategic Response
Chris Reid
Director, Strategy
Evolving Transportation
Mathieu Lamy
Senior Vice President & Chief Information Officer
Data Advantage
Joe D’Annunzio
Senior Vice President, Specialty Solutions and Surety
Specialty Solutions
Louis Marcotte
Senior Vice President & Chief Financial Officer
Capital Readiness
Charles Brindamour
Chief Executive Officer
Conclusion
IFC Senior Management
Q&A
09:00
11:10
09:15
09:35
09:55
10:40
10:50
11:15
BREAK
24
CONNECTED
INTELLIGENT & AUTONOMOUS
ELECTRIFIED
A move to the end of ownership?
Becomes a seismic shift when met with autonomy
Smart cars that can drive
and prevent accidents
The car meets the internet – unlocking new data,
products and service opportunities
New powertrains; an ignition and
vessel for shared autonomy
SHARED
How we see the evolution of transportation
EVOLVING TRANSPORTATION
25
0
20
40
60
80
100
2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Connected-Car Shipments Forecast5 Year - CAGR 45%
Global Cars Shipped
The car becoming the new
browser to the physical
world
• Consumers are demanding
connectivity and new personalized in-
vehicle experiences
• Data starting to flow from cars,
creating new opportunities and
experiences
Connected
New vehicles coming with new connectivity
EVOLVING TRANSPORTATION
Cars will be generating 25 gigabytes of data per hour
Source: BI Intelligence
Shipped with Connectivity
26
Shared drives true transformation –
revolutionizing the concept of the
automobile
• New ridesharing and car sharing services are
changing urban landscapes
• Manufacturers positioning themselves as mobility
companies – enable shared through new
services and vehicle connectivity
shared vehicle
can replace19-13 owned vehicles
Ridesharing can reduce traffic by up to 300% in urban environments
Shared
EVOLVING TRANSPORTATION
Source: UC Berkley Study
27
Intelligent and Autonomous
Collision Avoidance (ADAS) becoming mainstream, introduction
will start gradual decline in frequency and increase in severity
Full autonomy will fundamentally
change what cars and cities are
1,000
2,000
3,000
4,000
1920
1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
2030
Vehicle Miles Traveled Fatalities/100M VMT
EVOLVING TRANSPORTATION
An arms race to develop autonomous technology
Source: US DoT/IFC
Safer roads & carsWidening gap between
travel and fatalities
28
Electrification of the car -
catalyst for shared and autonomous
• Range anxiety starting to become a non-issue
• Canada taking a leadership position through
government targets and incentives0
200
400
600
800
1,000
1,200
2008 2009 2010 2011 2012 2013 2014 2015
300
250
200
150
100
50
0
Battery $/KwH Energy density (watt hours/litre, RH scale)
Lithium-ion battery economics
Electrified
Costs declining while density and efficiency gaining
EVOLVING TRANSPORTATION
New powertrains surpassing conventional in near term
Source: US Department of Energy
29
Limited disturbance in medium term – continued
opportunity to consolidate and grow
Growth in shared will offset the potential of
slowing personal lines market in the long term
Evolving and growing market
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
2015 2020 2025 2030 2035
Auto
Pre
miu
m
Personal premium by vehicle type
Shared premium by vehicle type
EVOLVING TRANSPORTATION
Source: IFC
30
SHARED
CONNECTED
3 BILLIONKILOMETRES
TRAVELLED
UBIMOBILE
INTELLIGENT
AUTONOMOUS
Significant progress in the last twelve months
DATASegmentation
PRICING
EVOLVING TRANSPORTATION
31
Expand to new platforms (M&A)
Continue to grow other lines
Deepen on home insurance
The right mix of options and opportunities
EVOLVING TRANSPORTATION
Product & Distribution
Optionality
Data & Digital
Expertise
Commercial Market
Leader
Claims & Supply Chain
Continued discipline on
growing commercial portfolio
Growing distribution
operations
Leverage data and analytics,
claims and digital
Leverage supply chain
Build new revenue streams
Develop ventures
32
Charles Brindamour
Chief Executive Officer
Introduction
Monika Federau
Senior Vice President & Chief Strategy Officer
Environment and Strategic Response
Chris Reid
Director, Strategy
Evolving Transportation
Mathieu Lamy
Senior Vice President & Chief Information Officer
Data Advantage
Joe D’Annunzio
Senior Vice President, Specialty Solutions and Surety
Specialty Solutions
Louis Marcotte
Senior Vice President & Chief Financial Officer
Capital Readiness
Charles Brindamour
Chief Executive Officer
Conclusion
IFC Senior Management
Q&A
09:00
11:10
09:15
09:35
09:55
10:40
10:50
11:15
BREAK
33
More data & more insights available at lower cost
DATA ADVANTAGE
20 Bn
sensors
installed in
the next 4
years
97%
drop in
storage cost
in the last
10 years
32x
micro-
processing
capacity per
spend in the
last 10 years
90%
of current
data created
in last 2
years
34
Expanding our data sandbox
Size of Data
Com
ple
xity o
f A
na
lytics
Big Data
Ma
ch
ine
Le
arn
ing
Untouched
to date
Partially used
Commonly used
Size represents
potential
DATA ADVANTAGE
Chat
Mobile
U/W
comments
Social
media
Internet of
things (IoT)
Auto
accident
images
Live
weather
Inspection
files
Claims
comments
Website
analytics
Geocoding
of risk
Building
and drone
images
Speech to
text
Open
governmental
data
Financial
statement
Brokers
quotes
Customers
into file
Policy & claims
Credit report
Telematics
35
Telematics delivering results fast
35
DATA ADVANTAGE
users since
2014
Pickup rate
>40%on eligible new
business
Clients that opt-in are
BETTER DRIVERS
than opt-out clients
more than
350k
36
Telematics delivering results fast
36
KM driven
>3.0Bsince 2014
Va
ria
ble
pre
dic
tive
im
po
rta
nce
Data points
20per second
New modeling techniques
IFC IP
MACHINE LEARNING
>40variables
12x
more powerful than
average variable
30%
more powerful than
historical best variable
DATA ADVANTAGE
37
Drive insights with Machine Learning
DATA ADVANTAGE
HUNDREDS
TRADITIONAL
INT
ER
AC
TIO
NS
TE
ST
ED
MILLIONS
MACHINE LEARNING
Age
Gender
Marital
status
Age
Gender
Marital
status
Vehicle
TerritoryAUTOMATIC
UNBIASED
GREATER PRECISION
MORE INSIGHTS
MANUAL
LABOUR INTENSIVE
38
Launching mobile to get more for less
38
INCREASED
VALUE TO THE
CUSTOMER
Cost reduction of
70%in collecting
the same info
DATA ADVANTAGE
39
Centralizing our data experts & data
Actuaries
Data Scientists
Engineers
Geospatial experts
Meteorologist
Leverage world leaders in
data science
Website
Analytics
Chat
Mobile
Credit
Report
Policy & Claims
TelematicsBrokers
Quotes
Claims
Comments
DATA ADVANTAGE
DATA
LAB
30 employees with plans to expand to 200
Our “data lake”
is proprietary
40
We are ahead of the game
DATA ADVANTAGE
Scale advantagetwice the data of 2nd largest
Canadian P&C insurer
People advantage200 analysts to exploit data
Will improve …
1. Margins2. Growth3. Customer experience
Expanding the data sandbox
with external data
41
Charles Brindamour
Chief Executive Officer
Introduction
Monika Federau
Senior Vice President & Chief Strategy Officer
Environment and Strategic Response
Chris Reid
Director, Strategy
Evolving Transportation
Mathieu Lamy
Senior Vice President & Chief Information Officer
Data Advantage
Joe D’Annunzio
Senior Vice President, Specialty Solutions and Surety
Specialty Solutions
Louis Marcotte
Senior Vice President & Chief Financial Officer
Capital Readiness
Charles Brindamour
Chief Executive Officer
Conclusion
IFC Senior Management
Q&A
09:00
11:10
09:15
09:35
09:55
10:40
10:50
11:15
BREAK
42
Specialists from
coast to coast
and growing
5-year average
Combined Ratio
DPW in 2016
$628MM
Professional
Liability
SuretyTrucking
Equipment
Breakdown
Auto P&C
90.3%
350+
Niche
Marine
Management
Liability
Farm
Group
Programs
Special Risk
Auto
Large
Manufacturing
Specialty solutions by the numbers
SPECIALTY SOLUTIONS
43
*The Bubble size represents
Company's Total 2015 DPW
Industry landscape
SPECIALTY SOLUTIONS
E: Lloyd's insurance market
C: Large & Specialty
and D: Niche
Players
A: Traditional writers
Small to Medium
size accounts
B: Traditional writers
Medium to Large size
accounts
IFC
IFC Speciality Lines
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0% 20% 40% 60% 80% 100% 120%
Co
mp
an
y's
C
om
merc
ial
Lin
es
DP
W (
$ b
illio
ns)
Company's Commercial Lines DPW as % of Total DPW
44
Financial impact
Fragmented market
Future growth driver
Capacity to expand market share in
underpenetrated lines of business
Future market potential of non-traditional
and customized insurance solutions
Consistent with Intact’s NOIPS and ROE
objectives
Growing specialty solutions
SPECIALTY SOLUTIONS
in the mid-term$1B
45
Our path to $1 billion
SPECIALTY SOLUTIONS
Profitable Growth
Leverage National Scale
New Product Lines
Partnerships & Acquisitions
Data analytics
Brand investment
Broker network
Claims and underwriting
expertise
Product and
development teams
Talent acquisition
Sharing economy
partnerships
46
Charles Brindamour
Chief Executive Officer
Introduction
Monika Federau
Senior Vice President & Chief Strategy Officer
Environment and Strategic Response
Chris Reid
Director, Strategy
Evolving Transportation
Mathieu Lamy
Senior Vice President & Chief Information Officer
Data Advantage
Joe D’Annunzio
Senior Vice President, Specialty Solutions and Surety
Specialty Solutions
Louis Marcotte
Senior Vice President & Chief Financial Officer
Capital Readiness
Charles Brindamour
Chief Executive Officer
Conclusion
IFC Senior Management
Q&A
09:00
11:10
09:15
09:35
09:55
10:40
10:50
11:15
BREAK
47
$0
.3B
n
$0
.5B
n
$0
.2B
n
$0
.4B
n
$0
.5B
n
$0
.7B
n
$0
.6B
n $0
.9B
n
2009 2010 2011 2012 2013 2014 2015 2016
Strong
Capital Generation
Disciplined
Capital Deployment
Track Record of
Generating Value
ORGANIC GROWTH
MANUFACTURING M&A
DISTRIBUTION M&A
DIVIDENDS
& BUYBACKS
$0.6Bn
$2.7Bn
$0.9Bn
$2.4Bn
Total Shareholder’s Return
│2009-2016 CAGR17.6%
Net Operating Income
Per Share (NOIPS)
│2009-2016 CAGR
11.0%
$4.0BnTOTAL CAPITAL GENERATED
SINCE 2009 $6.6BnTOTAL CAPITAL DEPLOYED
SINCE 2009
Generating long-term value for shareholders
CAPITAL READINESS
48
13.5%
of Capital generated from
operations, before access to
capital markets for financing
$0
.1B
n
$0
.5B
n
$0
.5B
n
$0
.6B
n
$0
.4B
n
$0
.8B
n
$0
.7B
n
$0
.5B
n
$0
.3B
n
$0
.5B
n
$0
.2B
n
$0
.4B
n
$0
.5B
n $0
.7B
n
$0
.6B
n
$0
.9B
n
2009 2010 2011 2012 2013 2014 2015 2016
Net Income Capital generated from operations
Capital Generated
from Operations
$4Bn
Adjusted Return on Equity
2009-2016 average return
For the period 2009-2016
2009 - 2016 CAGR: 23.0%
2009 - 2016 CAGR: 18.1%
Consistent earnings drive capital generation
CAPITAL READINESS
49
Pre-tax
$293M $294M $326M$389M $406M $427M $424M $414M
$7M$46M
$42M
$83M $75M $75M $104M $111M
$54M
$194M
$273M
$451M
$142M
$519M
$628M
$375M
$115M
$95M
$208M
$245M
$486M
$243M
$116M
$385M
2009 2010 2011 2012 2013 2014 2015 2016
Net investment income Distribution income Underwriting income Current year catastrophes Consistent
Outperformance
95.3%
Combined Ratio
Outperformance
(including MYA)3.1 pts
Average Combined Ratio
(including MYA)
Diversified earnings reduces capital volatility
CAPITAL READINESS
10-year period: 2006-2015
50
$5.0Bn
Fort McMurray
Wildfires
$3.5Bn
100M
200M
Risk Retained By
Intact
-
Our Reinsurance
Program
Canada’s costliest disaster
Total Damages
$3.6BnTotal Insured
$400MIFC Gross Loss
$175MIFC Net Loss(net of reinsurance, including reinstatement, pre-tax)
9.0-magnitude
BC earthquake
“The Big One”
$75Bn
$20Bn
$3.4Bn
$375M
(1) Based on the estimation of Swiss Re of US$3.9Bn at a FX rate of 1.3(2) Air Worldwide, October 2013. “Study of Impact and the Insurance and Economic Cost of a Major Earthquake in British Columbia and Ontario/ Quebec”
Western Cascadia Subduction Scenario: Magnitude 9.0 earthquake on the Richter scale occurring in the Cascadia subduction zone at the shallow depth of 11 km(3) Indicative gross and net loss for IFC based on a significant catastrophe with industry insured loss of ~20 Bn. (4) Net retention percentages are indicative only. Actual numbers will vary.
100% Net
~40% Net
~4 % Net
Net retention (4)
(2)
(2)
(2)
(3)
(3)
(1)
CAPITAL READINESS
Protecting capital to capture growth opportunities
51
Short-Term Impact Mid-Term Impact
~$20M
before tax
Additional
net investment income
in 3rd year+$4M
OCI
($75)M (3) pts (1)%
Net income BVPSMCT
(5%)
+3%+1%
(1%)Investments Claims
LiabilitiesPension
CAPITAL READINESS
(1) Effective throughout 2017
Limited sensitivity to interest rate changes
1% increase in interest rates
35 bps
Effective throughout
2017
Increase in interest rates
to maintain our investment
income stable at 2016 level
1% increase in interest rates
52
Making room for innovation Expense Outperformance
Freeing up resources to stay ahead
CAPITAL READINESS
$129M
$159M
$176M
$206M $207M
31.5% 31.1% 30.2% 30.4% 30.4%
2012 2013 2014 2015 2016
Marketing & Innovation Expense ratio
2.1 pts
Broker Distribution
Average expense ratio outperformance
since 2012
Direct-to-Consumer
Average expense ratio outperformance
since 2012
2.5 pts
53
~$300M
Per year
Capital generated
annually available
to deploy, after
dividends and capital
required for growth
Representing
~14 pts
of MCT
~70 bps
of ROE
15%
Organic
growth
Manufacturing
M&ADistribution
M&A
Share
buybacksHold
Expected Returns (1)
(1) Illustrative: Actual numbers will vary.
Consistent deployment strategy
CAPITAL READINESS
Maintain leverage ratio (target 20% debt-to-total capital)
Increase dividends
Manage volatility
Invest in growth
opportunities
Share buybacks
Capital Framework Capital Generation Deployment Alternatives
54
of Capital returned to
shareholders through
dividends and buybacks
Capital Deployed Through
Dividends and Buybacks
$2.4BN
Dividend Per Share
2009-2016 CAGR+8.9%
For the period 2009-2016
Significant capital returned to shareholders
CAPITAL READINESS
$153M $156M $170M$210M $233M $255M
$279M$304M
$341M
$129M
$106M
$44M
3.4%
8.6%
4.2%
2.5%
3.7%
2.3% 2.4% 2.8%
2009 2010 2011 2012 2013 2014 2015 2016
Common dividends Share Buybacks Dividend and buyback yield
55
• 15 points of manufacturing market share to
change hands
• Distribution remains very fragmented
Strong capital position for M&A opportunities
CAPITAL READINESS
• Small to midsized Commercial / Specialty
CANADA
UNITED STATES
• Large emerging markets to deploy our expertise
• Ventures to accelerate our strategy
EMERGING MARKETS & VENTURES
~200M
Invested in
M&A
100M+Invested in
Ventures
$970M
Total Excess
Capital
Above 170% MCT
as of December 31, 2016
2016 Looking ahead
56
Very strong capital position, with an MCT of 218% and total
excess capital of $970 million
Exceptional capital generation capacity
Capital well protected against earthquake and interest rates
Investing in future while staying ahead of competition
Maintaining discipline in capital deployment leads to
superior returns
Conclusion
CAPITAL READINESS
57
Charles Brindamour
Chief Executive Officer
Introduction
Monika Federau
Senior Vice President & Chief Strategy Officer
Environment and Strategic Response
Chris Reid
Director, Strategy
Evolving Transportation
Mathieu Lamy
Senior Vice President & Chief Information Officer
Data Advantage
Joe D’Annunzio
Senior Vice President, Specialty Solutions and Surety
Specialty Solutions
Louis Marcotte
Senior Vice President & Chief Financial Officer
Capital Readiness
Charles Brindamour
Chief Executive Officer
Conclusion
IFC Senior Management
Q&A
09:00
11:10
09:15
09:35
09:55
10:40
10:50
11:15
BREAK
58
Capturing opportunities by building on our strengths
Accelerating Progress through
Ventures & Software Engineering
CONCLUSION
Strengthen
Distribution
Excel at the
Fundamentals
Customer Driven
Transformation
59
The people of Intact
of employees are
“Millennials” 39%
34%of Senior Leadership
roles held by women
Depth of talent with an average of 7
successors for each Senior Leadership role
Two more than last year
CONCLUSION
years of experience,
on average, that
Executive Committee
members have with
the organization in
various roles163pt
better voluntary turnover
than industry in 2016
2016 Employee Engagement Survey shows …
of respondents understand why being
customer-driven is necessary for our success96%
84%feel positively that our customer experience
differentiates us from our competitors
60
Solid financial positionand proven track record of consolidation
Deep bench in place and growing talent reflective of the evolving environment
with diversified offers to meet changing needs
Customer driven
driven by strong fundamentals, scale and discipline
Sustainable competitive edge
61
Charles Brindamour
Chief Executive Officer
Introduction
Monika Federau
Senior Vice President & Chief Strategy Officer
Environment and Strategic Response
Chris Reid
Director, Strategy
Evolving Transportation
Mathieu Lamy
Senior Vice President & Chief Information Officer
Data Advantage
Joe D’Annunzio
Senior Vice President, Specialty Solutions and Surety
Specialty Solutions
Louis Marcotte
Senior Vice President & Chief Financial Officer
Capital Readiness
Charles Brindamour
Chief Executive Officer
Conclusion
IFC Senior Management
Q&A
09:00
11:10
09:15
09:35
09:55
10:40
10:50
11:15
BREAK
62
What are you doing to improve personal auto?
FAQ
63
94.4%
93.1%
98.0%
92.8%
91.7%
96.2%
IFC combined ratio (MD&A basis)
1070
340
820
540
400 370
F2011 F2012 F2013 F2014 F2015 YTD Q3-16
Direct loss ratio outperformance (before reinsurance, in bps)
Many initiatives in place to improve personal auto
Q&A
We have strong plans in place: mid single-digit improvement in the next 12 months
Segmented rate increases across the country.
There is already rate momentum in portfolio
which will continue to build throughout 2017.
Personal Auto Outperformance vs. Industry
Industry data: IFC estimates based on MSA Research.
We are making improvements in our risk
selection models, including tighter controls.
Claims initiatives include special action plans
for BI and AB, tighter indemnity controls, and
enhanced analytics.
Further benefits from reforms in Ontario
Actions we’re taking
3
1-3
CR points
CR points
Uncertainty: Trends and impact on PYD
64
Q&A
Reform benefits not fully earned yet
April 2016 June 2016 July 2016 January 2017
Licensing Appeal Tribunal
established for dispute
resolution
Non-earning benefits capped in-
line with other jurisdictions
Shorted timeframe fro non-CAT
Med/Rehab benefits
Combined limit for Med/Rehab
and Attendant Care benefits at
$65k on Basic claims, $1M on
Catastrophic claims
Strengthened definition of
Catastrophic Impairment
Reduced towing rates/day and
duration
Force car storage providers to
allow access to vehicles
Limits financial incentive for tow
and storage providers to refer
business to affiliates
Effective dates:
65
FAQ
How should we think about auto industry pools?
66
-0.1%
-1.3%
-1.1%
0.9%
-0.1% -0.1%
3.5%
1.7%
0.3%
2.3%
1.3%
-1.4%
0.5% 0.4%
-0.4%
1.3%
0.6%
2012 2013 2014 2015 2016
Pools have a slightly positive impact over time
Q&A
Directly insures
drivers
Premiums, claims
cost and expenses
are shared between
insurers based on
market share
IFC
Other insurance
companies
Insurers elect to
cede specific risk
(drivers) to the
pools
Risk Sharing
Pools
Insurers assume
premium, claims
costs and
commissions
based on market
share
Facility
Association$200M volume *
$700M volume *
* As of 2015
Pools Impact on Personal Auto Combined Ratio
By year …
And by quarter …
Fa
voura
ble
Unfa
voura
ble
Fa
voura
ble
Unfa
voura
ble
67
What have you learned from your Ventures so far?
FAQ
68
Building relationships with ground-breaking
companies that will accelerate our learning
Q&A
Sharing
Economy
Mobility
Digital Tools &
Marketplaces
1. Develop products to meet customer needs in the Sharing Economy
2. Leveraged regulatory expertise to support emerging business models in Canada
3. Generate strong brand recognition with tech-enabled businesses
• Understanding tech-enabled improvements
to customer relationships
• Exposure to US marketplace
• Exposure to thought leaders in the future
of mobility
• Co-investment opportunities
• Understanding around advanced tech-
enabled claims settlement process
• Exposure to US marketplace
• Understanding of key players in Brazil
• Best practices in digital distribution
69
What is your 12 month outlook?FAQ
70
2017 Outlook
1.1% 4.8% -1.2%
Next 12 months:
• Expect low to mid single-digit growth
in personal auto.
• Claims cost inflation is leading to
rate increases in all markets.
Next 12 months:
• Expect low single-digit growth in
commercial lines.
• The economy in Western Canada
continues to pressure industry growth.
Next 12 months:
• Expect mid to upper single-digit
growth in personal property.
• Firm market conditions likely to
continue.
Last 12 month growth
Personal Auto Personal Property Commercial Lines
Growth numbers reflect Industry Top 20 (excluding IFC and including estimates for AMF non reporters) for the 12 month period ended September 30, 2016
Q&A
Last 12 month growth Last 12 month growth
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Contact investor relations
Samantha Cheung
Vice President, Investor Relations
1 (416) 344-8004
Maida Sit
Director, Investor Relations
1(416) 341-1464 ext. 45153