��������������������� Intact Financial Corporation (TSX:IFC) November 2014 Intact Financial Corporation
����������������������������� Leader in a fragmented industry Distinct brands • Largest P&C insurer in Canada • Over $7 billion in direct premiums written • #1 in British Columbia, Alberta, Ontario, Quebec and Nova Scotia • $13.2 billion investment portfolio • Proven industry consolidator 2013 Direct premiums written ($ billions) Top five insurers 10-year outperformance represent 48% of 7.4 �������������������� � the market 3.9 3.7 3.1 2.9 Premium growth 5.1 pts Combined ratio 3 3.5 pts 1 IFC Desjardins Aviva Canada RSA Canada TD Insurance Estimated Market Share Return on equity 4 8.4 pts 16.8% 8.9% 8.5% 7.0% 6.6% 1 Desjardins direct premiums written in 2013 is pro forma including State Farm. 2 Industry data source: MSA Research excluding Lloyd’s, ICBC, SGI, SAF, MPI, Genworth and IFC. All data as at December 31, 2013. 3 Combined ratio includes the market yield adjustment (MYA). 4 ROEs reflect IFRS beginning in 2010. Since 2011, IFC's ROE is adjusted return on common shareholders' equity (AROE). Intact Financial Corporation 2
������� ���������! � A strong and diversified base for growth 2013 DPW by 2013 DPW by 2013 DPW by Business Line Geography Distribution Channel 3% 9% 6% 12% 32% 17% 42% 46% 82% 29% 22% Personal Auto Intact Insurance Ontario BrokerLink Personal Property Quebec belairdirect Commercial Lines Alberta Grey Power Rest of Canada * Excluding pools Intact Financial Corporation 3
"#$% ��!����& �%������ ��%�� BEAT INDUSTRY ROE BY '�������� NOIPS GROWTH OF ()* PER YEAR EVERY YEAR OVER TIME Margin Investments improvement: Pricing & and capital )�, "* Segmentation: management: ��� ���� ��� ���� Organic growth: +�, #* Capital management/ deployment: � , +* Claims management: " � ���� * Leaves ��� ����� to reinvest in customer experience (price, product, service, brand) Intact Financial Corporation 4
� ��������� �����& �%���� Sophisticated In-house Broker Proven Solid Significant Multi-channel pricing and claims relationships acquisition investment scale distribution underwriting expertise advantage strategy returns H1-2014 outperformance Five-year average loss ratios (for the period ended June 30, 2014) (for the period ended December 31, 2013) 16.5% 77.2% Industry IFC Industry IFC 101.1% 68.3% 67.6% 65.3% 64.1% 8.0% 97.2% 58.0% Combined ratio ROE (annualized) Auto Personal Property Commercial P&C Industry data source: MSA Research excluding Lloyd’s, ICBC, SGI, SAF, MPI, Genworth and IFC Combined ratio includes market yield adjustment (MYA) IFC’s ROE corresponds to the AROE Intact Financial Corporation 5
�����������%���-���������%���� $13.2 billion investment portfolio Investment mix (net of hedging positions and financial liabilities Objective: (#)�.��� related to investments, as of September 30, 2014) Loans, 3% Cash and short- of ROE outperformance term notes, 3% Preferred shares, 9% ')*�������%���� ')*�������� Common equity Fixed-income strategies, 12% � ���� /���-�%��� strategies, 73% • Leverage the tax- • Active free nature of management has dividends contributed to our ROE from Investments (after-tax) solid track record 8.8% • Overweight 8.1% 6.9% of consistently 6.7% dividend paying 6.0% 6.0% outperforming equities and our benchmarks preferred shares to improve after- tax returns 5 Year 3 Year 1 Year Industry IFC Intact Financial Corporation 6
������-�����������%���-�%��� Capital management framework History of dividend growth • Strong capital base has allowed us to pursue our • We have increased our dividend each year growth objectives while returning capital to since our IPO shareholders Quarterly dividend per share • $497 million in total excess capital * $0.48 $0.44 Maintain leverage ratio $0.40 $0.37 (target 20% debt-to-total capital) $0.34 $0.32 $0.31 $0.27 $0.25 Maintain existing dividends $0.163 Increase dividends 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Invest in growth initiatives • We believe we have organic growth opportunities within our multi-brand offering • We have a track record of 13 accretive acquisitions, Share buybacks the most recent being AXA Canada and Jevco * As of September 30, 2014 Intact Financial Corporation 7
�������������(�$% ��!� ��� 0 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 low single digit growth in personal auto and commercial lines and upper single digit growth in personal property expected. Premium growth • 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 continued low interest rates and the impact on commercial lines loss ratios from elevated catastrophe losses is translating into firmer conditions. • We expect the industry’s ROE to trend back toward its long-term average of 10% in 2014. Return on equity • We believe we will outperform the industry’s ROE by at least 500 basis points in the next 12 months. Intact Financial Corporation 8
� ����������� &�-� 1�! Personal lines • Bring advantages of scale to brokers • Build on outperformance in auto • Hard market in personal property • Optimize brand architecture Commercial lines • Double direct capabilities Firming Develop • Leverage our industry market • Build operated distribution existing outperformance, and acquired to $1 billion expertise and products, to gain conditions platforms share in a firming environment (0-2 years) (0-3 years) Expand Consolidate Capital beyond Canadian • Strong financial position Build organic growth existing market Strategy pipeline by leveraging our markets • Grow areas where IFC has a (0-5 years) world-class strengths in: competitive advantage (3-5 years) 1) pricing and segmentation, Opportunities 2) claims management, and • P&C industry remains fragmented • We expect 15-20% of market share will 3) online expertise change hands in the next 5 years Intact Financial Corporation 9
������ �����������-� � Building the best insurance team � Identification, development and retention of key talent is fundamental to our talent management strategy – In 2013, 22% of key talent were promoted or developed through exposure to other business units – Voluntary turnover is significantly better than industry average* � Deep executive talent pool � Executive Committee members have an average of 15 years experience with the organization in various roles � We have identified approximately 7 successors for each Executive Committee position � Becoming a best employer * 2013 Mercer survey of 17 Canadian P&C insurance companies (GIHRG Index) Intact Financial Corporation 10
2�����0��1��� � We have a ��������.���� %�����������-�� due to our disciplined approach and size advantage � Our .� ���������.��� ������& �%� positions us well for organic growth � We have a ��� �-�&���������� ���� �� and a proven track record of consolidation � 3����.���!� in place to ensure the sustainability of our performance Intact Financial Corporation 11
�������4 Intact Financial Corporation
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