Leading through Innovation

Transcription

1 INVESTOR DAY FEBRUARY 15, 2017 Leading through Innovation 1

2 INVESTOR DAY FEBRUARY 15, 2017 Welcome 2

3 3 Forward-looking statements Certain of the statements included in this presentation about the Company s current and future plans, expectations and intentions, 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.

4 Disclaimer This 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 in the Investors section. Additional information about the Company, including the Annual Information Form, may be found online on SEDAR at 4

5 5 09:00 09:15 09:35 09:55 BREAK 10:40 10:50 11:10 11:15 Introduction Charles Brindamour Chief Executive Officer Environment and Strategic Response Monika Federau Senior Vice President & Chief Strategy Officer Evolving Transportation Chris Reid Director, Strategy Data Advantage Mathieu Lamy Senior Vice President & Chief Information Officer Specialty Solutions Joe D Annunzio Senior Vice President, Specialty Solutions and Surety Capital Readiness Louis Marcotte Senior Vice President & Chief Financial Officer Conclusion Charles Brindamour Chief Executive Officer Q&A IFC Senior Management

6 Canada s largest home, auto and business insurer INTRODUCTION Largest P&C insurance provider Distinct brands 10-year outperformance versus the industry IFC #2 10.4% 17.0% Premium growth pts #3 8.7% Combined ratio pts #4 #5 6.5% 6.1% Top 5 represent 49% market share Return on equity pts 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, Premium growth includes the impact of industry pools 2 Combined ratio includes the market yield adjustment (MYA). 3 ROEs reflect IFRS beginning in Since 2011, IFC's ROE is adjusted return on common shareholders' equity (AROE). 6

7 INTRODUCTION What we are aiming to achieve Our customers are our advocates Two million advocates 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 alltime high and continues to climb Our employees are engaged One of Canada s best employers 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 Our company is one of the most respected in Canada Outperform industry ROE by 500 basis points every year Grow NOIPS 10% per year over time 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 7

8 Progress on key financial objectives INTRODUCTION ROE outperformance versus the industry NOIPS and common share dividend growth bps target NOIPS Growth in dividends declared 8.8% 8.1% 6.3% 10.0% $ % 10.4% $ % $ % $ $3.49 $3.91 $ $ year avg. YTD Q3-16 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 8

9 Sustaining performance going forward INTRODUCTION Beat industry ROE by 5 points every year NOIPS growth of 10% per year over time Claims Management 3 points Capital Management & Deployment 3-5% Pricing & Segmentation 2 points Investments & Capital Management 2 points Organic Growth 2-4% Margin Improvement 2-4% 9

10 How we see the world INTRODUCTION Consumer Consumer expectations are changing Industry Global industry consolidation continuing Technology Software changing how we live Economy Muted economic growth Data Data flows growing exponentially Environment Weather patterns are shifting 10

11 11 09:00 09:15 09:35 09:55 BREAK 10:40 10:50 11:10 11:15 Introduction Charles Brindamour Chief Executive Officer Environment and Strategic Response Monika Federau Senior Vice President & Chief Strategy Officer Evolving Transportation Chris Reid Director, Strategy Data Advantage Mathieu Lamy Senior Vice President & Chief Information Officer Specialty Solutions Joe D Annunzio Senior Vice President, Specialty Solutions and Surety Capital Readiness Louis Marcotte Senior Vice President & Chief Financial Officer Conclusion Charles Brindamour Chief Executive Officer Q&A IFC Senior Management

12 12 12 How we see the world

13 Twitter IPOs The environment is evolving rapidly Insurance must respond and change Facebook acquires WhatsApp iphone 6 Launch Uber Launches Ridesharing in Canada Apple Launches the Watch ENVIRONMENT & STRATEGIC RESPONSE Google selfdriving car hits 1 million miles Tesla Autopilot 7 Google AlphaGo Beats World Champion Microsoft achieves human parity in speech recognition IFC launches telematics offering IFC reaches 1 Billion KMs in telematics IFC introduces cyber insurance IFC launches flood coverage Intact launches drone insurance Intact launches 3 rd Service Centre UBI mobile launch Intact Data Lab launched Customer Fundamentals Ventures Quick Quote launched Intact Lab launched IFC Ventures established Metromile investment Uber ridesharing insurance product Online claims tracking launch 13

14 How we interpret these changes ENVIRONMENT & STRATEGIC RESPONSE Technology Bridging the physical and virtual Evolving transportation IoT = Internet of Everything Industry Consolidation Scale Sophisticated competition Environment Prevention Adaptation New opportunity Consumer Distribution Options Sharing Mobile first Data Internal + external New analytics Prediction beyond pricing Economy Underwriting is key Emerging market growth 14

15 How we are responding ENVIRONMENT & STRATEGIC RESPONSE Strengthen Distribution Customer Driven Transformation Excel at the Fundamentals Accelerating Progress through Ventures & Software Engineering 15

16 Customer Driven Transformation Reaching more Canadians with experiences that are second to none ENVIRONMENT & STRATEGIC RESPONSE Connected & On Demand Economy #1 in telematics #1 in sharing The preferred business and specialty insurer #1in surety in small business in commercial lines Brand & Customer Leadership Most recognized P&C brand nationally currently top of mind for 1 in 3 Canadians Digital leadership through speed and simplicity 3x tripling of digital sales in the last three years 16

17 ENVIRONMENT & STRATEGIC RESPONSE Quick Quote home 17

18 Customer Driven Transformation Reaching more Canadians with experiences that are second to none ENVIRONMENT & STRATEGIC RESPONSE Connected & On Demand Economy #1 in telematics #1 in sharing The preferred business and specialty insurer #1in surety in small business in commercial lines Brand & Customer Leadership Most recognized P&C brand nationally currently top of mind for 1 in 3 Canadians Digital leadership through speed and simplicity 3x tripling of digital sales in the last three years 18

19 Strengthen Distribution Differentiated and robust platforms that drive growth ENVIRONMENT & STRATEGIC RESPONSE Expand proprietary networks Grow to $2 Billion Providing best in class digital distribution for brokers Strengthen Specialty lines Grow to $1 Billion 19

20 Excel at Fundamentals Developing our expertise in big data and machine learning ENVIRONMENT & STRATEGIC RESPONSE Supply Chain Services Service Centres: Unique experience has improved customer satisfaction by 10% Extend Data Advantage Geospatial: 40 new variables Climate Change Enhanced water protection: Now available to 90% of Canadians 20

21 Accelerate with software engineering ENVIRONMENT & STRATEGIC RESPONSE Rapid Development Build the Best Team Improved Culture, Training and Recruitment Tripling of agile development teams Online Platforms: 3x Improvement on speed of delivery 10x Conversion Improvement New Tools Leveraging advanced techniques and development software New advanced dev environments deploying in

22 Accelerate with Ventures ENVIRONMENT & STRATEGIC RESPONSE Strategies Customer Driven Transformation Strengthen Distribution Excel at the Fundamentals Machine Learning and Automation Big Data Insurance Technology Mobility (incl. autonomous vehicles) Digital Tools and Marketplaces Sharing Economy Internet of Things 22

23 23 09:00 09:15 09:35 09:55 BREAK 10:40 10:50 11:10 11:15 Introduction Charles Brindamour Chief Executive Officer Environment and Strategic Response Monika Federau Senior Vice President & Chief Strategy Officer Evolving Transportation Chris Reid Director, Strategy Data Advantage Mathieu Lamy Senior Vice President & Chief Information Officer Specialty Solutions Joe D Annunzio Senior Vice President, Specialty Solutions and Surety Capital Readiness Louis Marcotte Senior Vice President & Chief Financial Officer Conclusion Charles Brindamour Chief Executive Officer Q&A IFC Senior Management

24 How we see the evolution of transportation EVOLVING TRANSPORTATION The car meets the internet unlocking new data, products and service opportunities CONNECTED A move to the end of ownership? Becomes a seismic shift when met with autonomy SHARED Smart cars that can drive and prevent accidents INTELLIGENT & AUTONOMOUS New powertrains; an ignition and vessel for shared autonomy ELECTRIFIED 24

25 Connected Cars will be generating 25 gigabytes of data per hour EVOLVING TRANSPORTATION The car becoming the new browser to the physical world Connected-Car Shipments Forecast 5 Year - CAGR 45% Consumers are demanding connectivity and new personalized invehicle experiences Global Cars Shipped Data starting to flow from cars, creating new opportunities and experiences 20 Shipped with Connectivity E 2017E 2018E 2019E 2020E New vehicles coming with new connectivity Source: BI Intelligence 25

26 Shared Ridesharing can reduce traffic by up to 300% in urban environments EVOLVING TRANSPORTATION Shared drives true transformation revolutionizing the concept of the automobile shared vehicle can replace owned vehicles New ridesharing and car sharing services are changing urban landscapes Manufacturers positioning themselves as mobility companies enable shared through new services and vehicle connectivity Source: UC Berkley Study 26

27 Intelligent and Autonomous An arms race to develop autonomous technology EVOLVING TRANSPORTATION 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 4,000 3,000 2,000 Safer roads & cars Widening gap between travel and fatalities 1,000 Vehicle Miles Traveled Fatalities/100M VMT Source: US DoT/IFC 27

28 Electrified New powertrains surpassing conventional in near term EVOLVING TRANSPORTATION Lithium-ion battery economics Electrification of the car - catalyst for shared and autonomous 1,200 1, Range anxiety starting to become a non-issue Canada taking a leadership position through government targets and incentives Battery $/KwH Energy density (watt hours/litre, RH scale) Costs declining while density and efficiency gaining Source: US Department of Energy 28

29 Auto Premium EVOLVING TRANSPORTATION Evolving and growing market $7.0 Personal premium by vehicle type $6.0 Shared premium by vehicle type $5.0 $4.0 $3.0 $2.0 $1.0 $ Limited disturbance in medium term continued opportunity to consolidate and grow Source: IFC Growth in shared will offset the potential of slowing personal lines market in the long term 29

30 Significant progress in the last twelve months EVOLVING TRANSPORTATION 3 BILLION KILOMETRES TRAVELLED CONNECTED UBI MOBILE SHARED DATA Segmentation PRICING 30 INTELLIGENT

31 The right mix of options and opportunities EVOLVING TRANSPORTATION Product & Distribution Optionality Expand to new platforms (M&A) Continue to grow other lines Deepen on home insurance Commercial Market Leader Continued discipline on growing commercial portfolio Growing distribution operations Data & Digital Expertise Leverage data and analytics, claims and digital Claims & Supply Chain Leverage supply chain Build new revenue streams Develop ventures 31

32 32 09:00 09:15 09:35 09:55 BREAK 10:40 10:50 11:10 11:15 Introduction Charles Brindamour Chief Executive Officer Environment and Strategic Response Monika Federau Senior Vice President & Chief Strategy Officer Evolving Transportation Chris Reid Director, Strategy Data Advantage Mathieu Lamy Senior Vice President & Chief Information Officer Specialty Solutions Joe D Annunzio Senior Vice President, Specialty Solutions and Surety Capital Readiness Louis Marcotte Senior Vice President & Chief Financial Officer Conclusion Charles Brindamour Chief Executive Officer Q&A IFC Senior Management

33 More data & more insights available at lower cost DATA ADVANTAGE 90 % of current data created in last 2 years 20 Bn sensors installed in the next 4 years 97 % drop in storage cost in the last 10 years 32 x microprocessing capacity per spend in the last 10 years 33

34 Complexity of Analytics Machine Learning Expanding our data sandbox DATA ADVANTAGE Chat Inspection files Claims comments U/W comments Social media Internet of things (IoT) Telematics Building and drone images Untouched to date Partially used Commonly used Credit report Website analytics Mobile Auto accident images Speech to text Size represents potential Brokers quotes Customers into file Policy & claims Geocoding of risk Live weather Open governmental data Financial statement Big Data 34 Size of Data

35 DATA ADVANTAGE Telematics delivering results fast Pickup rate >40% on eligible new business Clients that opt-in are BETTER DRIVERS than opt-out clients more than 350k users since

36 Variable predictive importance DATA ADVANTAGE Telematics delivering results fast KM driven >3.0B since 2014 Data points 20 per second New modeling techniques MACHINE LEARNING >40 variables 12 x more powerful than average variable 30 % more powerful than historical best variable IFC IP 36 36

37 INTERACTIONS TESTED Drive insights with Machine Learning DATA ADVANTAGE TRADITIONAL HUNDREDS MANUAL LABOUR INTENSIVE Gender Age Marital status MACHINE LEARNING MILLIONS AUTOMATIC UNBIASED GREATER PRECISION MORE INSIGHTS Gender Territory Age Vehicle Marital status 37

38 DATA ADVANTAGE Launching mobile to get more for less INCREASED VALUE TO THE CUSTOMER Cost reduction of 70% in collecting the same info 38 38

39 Centralizing our data experts & data DATA ADVANTAGE DATA LAB Actuaries Data Scientists Engineers Geospatial experts Meteorologist 30 employees with plans to expand to 200 Leverage world leaders in data science Our data lake is proprietary Mobile Chat Claims Comments Website Policy & Claims Analytics Brokers Quotes Credit Report Telematics 39

40 DATA ADVANTAGE We are ahead of the game Scale advantage twice the data of 2nd largest Canadian P&C insurer Will improve 1. Margins 2. Growth 3. Customer experience Expanding the data sandbox with external data People advantage 200 analysts to exploit data 40

41 41 09:00 09:15 09:35 09:55 BREAK 10:40 10:50 11:10 11:15 Introduction Charles Brindamour Chief Executive Officer Environment and Strategic Response Monika Federau Senior Vice President & Chief Strategy Officer Evolving Transportation Chris Reid Director, Strategy Data Advantage Mathieu Lamy Senior Vice President & Chief Information Officer Specialty Solutions Joe D Annunzio Senior Vice President, Specialty Solutions and Surety Capital Readiness Louis Marcotte Senior Vice President & Chief Financial Officer Conclusion Charles Brindamour Chief Executive Officer Q&A IFC Senior Management

42 SPECIALTY SOLUTIONS Specialty solutions by the numbers Trucking Surety Special Risk Auto Auto P&C $628MM Farm Group Programs 350+ Specialists from coast to coast and growing Marine Equipment Breakdown DPW in 2016 Professional Liability Large Manufacturing 90.3% 5-year average Combined Ratio Niche Management Liability 42

43 Company's Commercial Lines DPW ($ billions) Industry landscape SPECIALTY SOLUTIONS A: Traditional writers Small to Medium size accounts IFC E: Lloyd's insurance market B: Traditional writers Medium to Large size accounts C: Large & Specialty and D: Niche Players 0.5 IFC Speciality Lines % 20% 40% 60% 80% 100% 120% Company's Commercial Lines DPW as % of Total DPW *The Bubble size represents Company's Total 2015 DPW

44 Growing specialty solutions SPECIALTY SOLUTIONS Fragmented market Capacity to expand market share in underpenetrated lines of business Future growth driver Future market potential of non-traditional and customized insurance solutions Financial impact Consistent with Intact s NOIPS and ROE objectives $1B in the mid-term 44

45 Our path to $1 billion SPECIALTY SOLUTIONS Partnerships & Acquisitions Leverage National Scale New Product Lines Profitable Growth Sharing economy partnerships Data analytics Brand investment Broker network Claims and underwriting expertise Product and development teams Talent acquisition 45

46 46 09:00 09:15 09:35 09:55 BREAK 10:40 10:50 11:10 11:15 Introduction Charles Brindamour Chief Executive Officer Environment and Strategic Response Monika Federau Senior Vice President & Chief Strategy Officer Evolving Transportation Chris Reid Director, Strategy Data Advantage Mathieu Lamy Senior Vice President & Chief Information Officer Specialty Solutions Joe D Annunzio Senior Vice President, Specialty Solutions and Surety Capital Readiness Louis Marcotte Senior Vice President & Chief Financial Officer Conclusion Charles Brindamour Chief Executive Officer Q&A IFC Senior Management

47 $0.3Bn $0.5Bn $0.2Bn $0.4Bn $0.5Bn $0.7Bn $0.6Bn $0.9Bn Generating long-term value for shareholders CAPITAL READINESS Strong Capital Generation Disciplined Capital Deployment Track Record of Generating Value TOTAL CAPITAL GENERATED SINCE 2009 $4.0Bn TOTAL CAPITAL DEPLOYED SINCE 2009 $6.6Bn MANUFACTURING M&A $2.7Bn Total Shareholder s Return 17.6% CAGR DIVIDENDS & BUYBACKS $2.4Bn DISTRIBUTION M&A ORGANIC GROWTH $0.9Bn $0.6Bn Net Operating Income Per Share (NOIPS) CAGR 11.0%

48 $0.1Bn $0.3Bn $0.2Bn $0.5Bn $0.5Bn $0.5Bn $0.4Bn $0.6Bn $0.4Bn $0.5Bn $0.5Bn $0.8Bn $0.7Bn $0.7Bn $0.6Bn $0.9Bn Consistent earnings drive capital generation CAPITAL READINESS CAGR: 18.1% Capital Generated from Operations For the period CAGR: 23.0% $4Bn of Capital generated from operations, before access to capital markets for financing 13.5% Adjusted Return on Equity average return Net Income Capital generated from operations 48

49 Diversified earnings reduces capital volatility CAPITAL READINESS Pre-tax Net investment income Distribution income Underwriting income Current year catastrophes Consistent $116M $243M $385M $245M Outperformance 10-year period: $208M $451M $486M $519M $628M $375M 3.1 pts Combined Ratio Outperformance (including MYA) $95M $273M $194M $115M $54M $42M $46M $7M $293M $294M $326M $142M $83M $75M $75M $104M $111M $389M $406M $427M $424M $414M 95.3% Average Combined Ratio (including MYA)

50 Protecting capital to capture growth opportunities CAPITAL READINESS Fort McMurray Wildfires Canada s costliest disaster 9.0-magnitude BC earthquake The Big One (2) $3.5Bn Our Reinsurance Program Net retention (4) Total Damages $5.0Bn (1) $75Bn (2) ~4 % Net Total Insured $3.6Bn $20Bn (2) 200M IFC Gross Loss $400M $3.4Bn (3) ~40% Net IFC Net Loss (net of reinsurance, including reinstatement, pre-tax) $175M $375M (3) 100M - Risk Retained By Intact 100% Net 50 (1) Based on the estimation of Swiss Re of US$3.9Bn at a FX rate of 1.3 (2) Air Worldwide, October 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.

51 Limited sensitivity to interest rate changes CAPITAL READINESS Short-Term Impact 1% increase in interest rates Mid-Term Impact 1% increase in interest rates Net income +$4M OCI MCT BVPS ($75)M (3) pts (1)% ~$20M before tax Additional net investment income in 3 rd year Investments +3% Claims Liabilities +1% Pension (1%) 35 bps Effective throughout 2017 Increase in interest rates to maintain our investment income stable at 2016 level (5%) 51 (1) Effective throughout 2017

52 Freeing up resources to stay ahead CAPITAL READINESS Making room for innovation Expense Outperformance $206M $207M $159M $176M 2.1 pts Broker Distribution Average expense ratio outperformance since 2012 $129M 31.5% 31.1% 30.2% 30.4% 30.4% pts Direct-to-Consumer Average expense ratio outperformance since 2012 Marketing & Innovation Expense ratio 52

53 Consistent deployment strategy CAPITAL READINESS Capital Framework Capital Generation Deployment Alternatives Maintain leverage ratio (target 20% debt-to-total capital) Increase dividends ~$300M Per year Capital generated annually available to deploy, after dividends and capital required for growth 15% Expected Returns (1) Manage volatility Representing Invest in growth opportunities Share buybacks ~14 pts of MCT ~70 bps of ROE Organic growth Manufacturing M&A Distribution M&A Share buybacks Hold (1) Illustrative: Actual numbers will vary. 53

54 Significant capital returned to shareholders CAPITAL READINESS 8.6% 3.4% 4.2% 2.5% 3.7% 2.3% 2.4% 2.8% Capital Deployed Through Dividends and Buybacks For the period $341M $129M $106M $44M $2.4BN of Capital returned to shareholders through dividends and buybacks $153M $156M $170M $210M $233M $255M $279M $304M +8.9% Dividend Per Share CAGR Common dividends Share Buybacks Dividend and buyback yield 54

55 Strong capital position for M&A opportunities CAPITAL READINESS 2016 Looking ahead ~200M Invested in M&A CANADA 15 points of manufacturing market share to change hands Distribution remains very fragmented 100M+ Invested in Ventures UNITED STATES Small to midsized Commercial / Specialty $970M Total Excess Capital Above 170% MCT as of December 31, 2016 EMERGING MARKETS & VENTURES Large emerging markets to deploy our expertise Ventures to accelerate our strategy 55

56 Conclusion CAPITAL READINESS 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 56

57 57 09:00 09:15 09:35 09:55 BREAK 10:40 10:50 11:10 11:15 Introduction Charles Brindamour Chief Executive Officer Environment and Strategic Response Monika Federau Senior Vice President & Chief Strategy Officer Evolving Transportation Chris Reid Director, Strategy Data Advantage Mathieu Lamy Senior Vice President & Chief Information Officer Specialty Solutions Joe D Annunzio Senior Vice President, Specialty Solutions and Surety Capital Readiness Louis Marcotte Senior Vice President & Chief Financial Officer Conclusion Charles Brindamour Chief Executive Officer Q&A IFC Senior Management

58 Capturing opportunities by building on our strengths Strengthen Distribution CONCLUSION Customer Driven Transformation Excel at the Fundamentals Accelerating Progress through Ventures & Software Engineering 58

59 The people of Intact CONCLUSION Depth of talent with an average of 7 successors for each Senior Leadership role Two more than last year years of experience, on average, that Executive Committee members have with the organization in 16various roles 3pt better voluntary turnover than industry in % 34% of Senior Leadership roles held by women of employees are Millennials 2016 Employee Engagement Survey shows 96% 84% of respondents understand why being customer-driven is necessary for our success feel positively that our customer experience differentiates us from our competitors 59

60 Sustainable competitive edge driven by strong fundamentals, scale and discipline Customer driven with diversified offers to meet changing needs Solid financial position and proven track record of consolidation Deep bench in place and growing talent reflective of the evolving environment 60

61 61 09:00 09:15 09:35 09:55 BREAK 10:40 10:50 11:10 11:15 Introduction Charles Brindamour Chief Executive Officer Environment and Strategic Response Monika Federau Senior Vice President & Chief Strategy Officer Evolving Transportation Chris Reid Director, Strategy Data Advantage Mathieu Lamy Senior Vice President & Chief Information Officer Specialty Solutions Joe D Annunzio Senior Vice President, Specialty Solutions and Surety Capital Readiness Louis Marcotte Senior Vice President & Chief Financial Officer Conclusion Charles Brindamour Chief Executive Officer Q&A IFC Senior Management

62 FAQ What are you doing to improve personal auto? 62

63 Q&A Many initiatives in place to improve personal auto We have strong plans in place: mid single-digit improvement in the next 12 months 3 CR points 1-3 CR points Actions we re taking Segmented rate increases across the country. There is already rate momentum in portfolio which will continue to build throughout 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 Uncertainty: Trends and impact on PYD Personal Auto Outperformance vs. Industry IFC combined ratio (MD&A basis) Direct loss ratio outperformance (before reinsurance, in bps) 98.0% 96.2% 94.4% 92.8% % % F2011 F2012 F2013 F2014 F2015 YTD Q3-16 Industry data: IFC estimates based on MSA Research. 63

64 Q&A Reform benefits not fully earned yet Effective dates: April 2016 June 2016 July 2016 January 2017 Licensing Appeal Tribunal established for dispute resolution Non-earning benefits capped inline 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 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 Strengthened definition of Catastrophic Impairment 64

65 FAQ How should we think about auto industry pools? 65

66 Unfavourable Favourable Unfavourable Favourable Q&A Pools have a slightly positive impact over time Pools Impact on Personal Auto Combined Ratio Facility Association $200M volume * Directly insures drivers Premiums, claims cost and expenses are shared between insurers based on market share By year 0.5% 0.4% 1.3% 0.6% -0.4% IFC Other insurance companies Risk Sharing Pools $700M volume * Insurers elect to cede specific risk (drivers) to the pools Insurers assume premium, claims costs and commissions based on market share And by quarter 3.5% 2.3% 0.9% 1.7% 1.3% -0.1% 0.3% -1.3% -0.1% -0.1% -1.4% -1.1% * As of

67 FAQ What have you learned from your Ventures so far? 67

68 Q&A Building relationships with ground-breaking companies that will accelerate our learning Sharing Economy 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 Mobility Understanding tech-enabled improvements to customer relationships Exposure to US marketplace Exposure to thought leaders in the future of mobility Co-investment opportunities Digital Tools & Marketplaces Understanding of key players in Brazil Best practices in digital distribution Understanding around advanced techenabled claims settlement process Exposure to US marketplace 68

69 69 FAQ What is your 12 month outlook?

70 2017 Outlook Q&A Personal Auto Personal Property Commercial Lines Last 12 month growth Last 12 month growth Last 12 month growth 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 mid to upper single-digit growth in personal property. Firm market conditions likely to continue. Next 12 months: Expect low single-digit growth in commercial lines. The economy in Western Canada continues to pressure industry growth. Growth numbers reflect Industry Top 20 (excluding IFC and including estimates for AMF non reporters) for the 12 month period ended September 30,

71 Contact investor relations Samantha Cheung Vice President, Investor Relations 1 (416) samantha.cheung@intact.net ir@intact.net 1 (416) (toll-free) Maida Sit Director, Investor Relations 1(416) ext maida.sit@intact.net