- Agreement with Atlanta Group for MORE THAN direct motor
renewals
- UK Personal Lines business to continue focusing for
performance in Home and Pet
- Ongoing technology renewal and simplification to drive
efficiency across the platform
- UK & International business accelerates its path to
deliver a low-90s combined ratio
TORONTO, March 28,
2023 /CNW/ - Intact Financial Corporation (TSX:
IFC) (Intact, IFC or the Company) and its subsidiary RSA, announced
today initiatives aimed at improving the strength and
sustainability of the UK & International business.
The personal lines motor market in the UK remains extremely
competitive and requires significant scale to drive meaningful
outperformance. After a thorough review, RSA is exiting the UK
personal lines motor market, representing approximately £120
million of annual premium for the company. The exit includes an
agreement to introduce MORE THAN direct motor customers to Swinton
Insurance, a brand of Atlanta Insurance Intermediaries Limited
(Swinton) and part of Ardonagh Retail, upon renewal.
RSA is recognized as a leading provider of personal lines Home
and Pet insurance and holds strong positions in these markets. We
will continue to optimize our position in Home and Pet by improving
segmentation, focusing on growth in the direct business and
managing partnerships for value. We also intend to drive cost
improvements by leveraging ongoing investments in technology and
through further simplification of the business. With these actions,
as well as the exit from the UK personal lines motor market, we
expect muted top-line growth as we accelerate our path to deliver a
low 90s combined ratio for the UK&I.
"When we completed the acquisition of RSA, we were clear that we
would take necessary actions to drive sustainable outperformance in
UK&I," said Charles Brindamour,
Chief Executive Officer, Intact Financial Corporation. "Today's
announcement represents a further step in delivering against our
strategic roadmap to optimize our footprint around personal lines
Home and Pet, and our Commercial and Speciality lines
businesses."
"Our primary focus now is on delivering an orderly transition
that supports our colleagues and customers," said Ken Norgrove, Chief Executive Officer,
RSA UK & International. "We have
incredibly talented people working in this business, and we're
committed to treating them with fairness and respect."
Financial Impact
- The results of the UK Personal Lines motor portfolio will be
reported in Exited lines from Q1 2023 onwards.
- In 2023, we expect the combined ratio of the continuing
UK&I business to be in the mid-90s.
- Restructuring costs of approximately £35 million are expected
in Q1 2023, mostly related to a one-time write-off of
intangibles.
- Proceeds from the agreement with Swinton will be received as
policies are renewed and are not expected to be material.
- We expect to release approximately £60 million of capital held
against motor-related insurance risk over time as the portfolio
runs off.
- All key metrics related to the RSA acquisition remain largely
unchanged, including internal rate of return (IRR) above 20% and
NOIPS1 accretion of approximately 20%.
1 This
measure is a non-GAAP ratio, which does not have a standardized
meaning prescribed by IFRS and may not be comparable to similar
measures used by other companies in our industry. For historical
information about these measures, please see Section 36 – Non-GAAP
and other financial measures in our Management's Discussion and
Analysis for the year ended December 31, 2022 which is available on
our web site at www.intactfc.com or on SEDAR at
www.sedar.com.
|
About Intact Financial
Corporation
Intact Financial Corporation (TSX: IFC) is the largest provider
of property and casualty (P&C) insurance in Canada, a leading provider of global specialty
insurance, and, with RSA, a leader in the U.K. and Ireland. Our business has grown organically
and through acquisitions to over $21
billion of total annual premiums.
In Canada, Intact distributes
insurance under the Intact Insurance brand through a wide network
of brokers, including its wholly-owned subsidiary BrokerLink, and
directly to consumers through belairdirect. Intact also provides
affinity insurance solutions through the Johnson Affinity
Groups.
In the US, Intact Insurance Specialty Solutions provides a range
of specialty insurance products and services through independent
agencies, regional and national brokers, and wholesalers and
managing general agencies.
In the U.K., Ireland, and
Europe, Intact provides personal,
commercial and specialty insurance solutions through the RSA
brands.
Forward-Looking
Statements
Certain statements made in this press release are
forward-looking statements. These statements include, without
limitation: statements relating to the anticipated benefits and
other impacts of the transaction, the sources of funding for the
upfront contribution, and the anticipated effect on OROE, BVPS,
NOIPS, debt-to-total capital ratio, IRR and pre-tax annual run-rate
synergies. All such forward-looking statements are made pursuant to
the 'safe harbour' provisions of applicable Canadian securities
laws.
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. In the case
of estimated claims and losses, due to the preliminary nature of
the information available to prepare estimates, future estimates
and the actual amount and categorization of claims and losses
associated with events described above may be materially different
from current estimates.
All of the forward-looking statements included in this press
release are qualified by these cautionary statements and those made
in the "Risk Management" sections of our 2022 Management's
Discussion and Analysis (Sections 30-34), in Notes 10 and 13 of our
Consolidated Financial Statements for the year ended December 31, 2022 and in our Annual Information
Form dated February 7, 2023, all of
which are available on our web site at www.intactfc.com or on SEDAR
at www.sedar.com. The buy-in transaction is also subject to certain
risks including that the benefits of the transaction may fail to
materialize as anticipated. This may adversely impact the financial
performance of Intact. 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 in this press release. The Company
has no intention and undertakes 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.
SOURCE Intact Financial Corporation