Intact Financial Corporation (TSX: - PowerPoint PPT Presentation

���� ���� �������� ��������������������� Intact Financial Corporation (TSX: IFC) August 2017

���������������������������� ���� ��������������� Largest market share 10-year outperformance Distinct brands in a fragmented industry versus the industry IFC 17.3% Premium 4.2 pts growth 1 #2 10.4% Combined #3 9.1% 3.3 pts ratio 2 #4 6.4% Top 5 represent Return on 5.4 pts 49% equity 3 #5 5.9% market share Industry data: IFC estimates based on MSA Research Inc. Please refer to Important notes on page 3 of the Q1-2017 MD&A for further information. All data as at December 31, 2016. 1 Premium growth includes the impact of industry pools. 2 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). 2

��������������!��"�����#� Sophisticated In-house Scale Broker Multi-channel Proven Tailored pricing and claims advantage relationships distribution acquisition investment underwriting expertise strategy management FY2016 outperformance Five-year average loss ratio outperformance gap (for the period ended December 31, 2016) IFC Industry (for the period ended December 31, 2016) 7.4 pts 3.8% Premium growth 1 2.4% 4.1 pts 3.6 pts 95.2% 3.1 pts Combined ratio 2 99.6% 11.0% Return on equity 3 5.2% Personal Auto Personal Commercial Commercial Property P&C Auto Industry data: IFC estimates based on MSA Research Inc. Please refer to Important notes on page 3 of the Q1-2017 MD&A for further information. 1 Premium growth includes the impact of industry pools. 2 Combined ratio includes the market yield adjustment (MYA). 3 IFC's ROE is adjusted return on common shareholders' equity (AROE). 3

$����%�����������������#����� Goal Target Progress � Unaided brand awareness is at Our customers an all-time high and continues to Two million are our climb advocates by 2020 ����#���� � Highest broker satisfaction scores ever recorded � For the second year in a row we were named one of Canada’s One of Canada’s Our employees Top 100 Employers and one of are ������� the Best Employers in Canada best employers � Recognized as one of Canada's Top Employers for Young People � The Globe and Mail’s Board Outperform industry ROE by Our company is Games ranked us #2 for the 500 basis points every year one of the ����� quality of our governance � Made the Best 50 Corporate Grow NOIPS 10% per year ���!�#��� Citizens in Canada list for 4th over time straight year 4

������������&�'�"����#���� � (�#����� $7.00 700 600 $6.00 500 bps 500 $5.00 target 400 $4.00 300 $3.00 200 $2.00 100 $1.00 0 $0.00 5-year avg. FY2016 2009 2010 2011 2012 2013 2014 2015 2016 NOIPS growth ROE outperformance We have regularly exceeded our 500 bps ROE Since we became a widely held Canadian company outperformance target versus the industry. in 2009 our net operating income per share has grown at a compound growth rate of 11%. We target Industry data: IFC estimates based on MSA Research. Please refer to Important notes on page 3 of the Q1-2017 MD&A for further information. NOIPS growth of 10% per year over time. IFC’s ROE corresponds to the AROE. 5

�����������!��"�����#�� ������"��%��� NOIPS growth of +,- Beat industry ROE by *�!����� every year per year over time ����������������������� ������� .�!�� ./*- ���������� ���������� �������� ���������� )�!�� )/0- ������ ������������ )�!�� ������� ���������������� )/0- ����������� ������������� * Leaves )�!������ to reinvest in customer experience (price, product, service, brand) 6

�������'�������&����#����#���� ����������������� Personal Auto Personal Property Commercial Lines 3.3% 6.1% 0.2% Next 12 months: Next 12 months: Next 12 months: • We expect low-to-mid single-digit • We expect mid single-digit growth • We expect low single-digit growth in growth in personal auto. in personal property. commercial lines. • Claims cost inflation should lead • We expect the current firm market • These lines of business remain highly to rate increases in all markets. conditions to continue. competitive, mainly in the larger risks. Growth numbers reflect Industry Top 20 for the 12 month period ended March 31, 2016. 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 the industry Top 20, based on publicly available information. Actual results may vary. 7

1�������������"����%�� Multiple levers for profitable growth Near term Medium term Firming market 01 conditions Develop existing 02 platforms Consolidate 03 Canadian market Expand beyond 04 existing markets 8

������#����#2�������� Strong strategic rationale � Creating a leading North American specialty insurer � Focuses on small to mid-size businesses � New growth pipeline � New products and cross-border capabilities � Brings high caliber management team � Diversifies IFC’s business and geographic mix. Upon closing of the transaction in Q4-16: � Specialty Solutions will represent 23% of our direct premiums written (DPW), up from 8%. � The United States will represent 17% of Intact’s total business . Source: 2016 direct written premium as reported in MSA (Intact) and 10-K (OneBeacon), using April 26 th exchange rate 9

������#����#2�������� Driving cross market synergies Financial Entertainment Environmental Institutions Accident Technology Import expertise and expand product offering in Canada Cross-Border 1. Ability for both Intact and OneBeacon to service domestic clients that do business in both countries 2. Better compete with other North American insurers by offering a seamless cross-border experience Small to Mid-Size Commercial & Specialty Lines Leverage Intact underwriting and pricing expertise to broaden offering in the US and drive profitable growth 10

������#����#2�������� Financially compelling & conservatively structured � NOIPS neutral in year one and mid-single digit Selected financial highlights accretive in 24 months $2.3 � Immediately accretive to BVPS billion total purchase price, in Canadian dollars, � Attractive IRR estimated to be in excess of 15% 1 or US$1.7 billion 2 . � Maintains strong financial position and robust capitalization: 1.65x P/BV 3 purchase price, or � MCT above 200% 15.8x P/E 4 . � Debt-to-total capital ratio returning below target level of 20% within 24 months > 200% estimated MCT � Significant downside protection against adverse at close. reserve development � Thorough reserve assessment factored in 15% internal rate of return (IRR) valuation target is expected to be � exceeded. Reinsurance coverage of up to US$200M 1 Internal rate of return based on equity returns per proposed financing plan. 2 Purchase price based on 94.041mm outstanding shares as at March 31, 2017 3 Price to book value based on book value as at March 31, 2017. 4 Price to earnings based on consolidated earnings for year ended December 31, 2016 11

�������"����#����!������� Low sensitivity to capital Our balance sheet markets volatility 2 is solid 34+ ))0- ))56- /) !�� /+ !� /) !�� billion in Minimum debt-to-capital of MCT per of MCT per 5% of MCT per total excess Capital Test ratio, returning 100 bps 10% decrease decrease in capital (MCT) below 20% within increase in preferred share in common 24 months interest rates share prices prices Credit ratings 1 A.M. Best DBRS Fitch Moody’s a- A A- Baa1 Long-term issuer credit ratings of IFC A+ AA (low) AA- A1 IFC’s principal P&C insurance subsidiaries * All data as of June 30, 2017 1 Refer to Section 12.2 – Ratings of the Q2-2017 MD&A for additional commentary. 2 Refer to Section 14– Sensitivity analyses of the Q2-2017 MD&A for additional commentary. 12

��������#�#�!��������������� Debt-to-capital ratio Maintain leverage ratio 22.8% 22.9% (target 20% debt-to-total capital) 18.9% 18.7% 16.6% 17.3% 18.6% 14.3% 11.8% Increase dividends 2009 2010 2011 2012 2013 2014 2015 2016 Q2-17 Manage volatility Quarterly common share dividends (per share) $0.64 $0.58 $0.53 Invest in growth $0.48 opportunities $0.44 $0.40 $0.37 $0.34 $0.32 $0.31 $0.27 $0.25 $0.16 Share buybacks 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3-17 * * Declared 13