TORONTO, Nov. 7, 2023
/CNW/ - (TSX: IFC)
(in Canadian dollars except as otherwise noted)
Highlights
- Net operating income per share1 of
$2.10 despite elevated
catastrophe losses, driven by solid underlying performance in all
geographies and 50% growth in net investment income
- Undiscounted combined ratio1 of 98.3%
(93.5% discounted) included 8 points of catastrophe losses in
excess of expectations, while inflation moderated as expected in
personal auto, and results remained strong across commercial
lines
- Operating DPW1,2 growth of 6% led by good
momentum in personal lines, and continued rate action across all
business segments
- Strong balance sheet with $2.8
billion of total capital margin1 and
BVPS1 increasing 1% sequentially, reflecting EPS of
$0.83 and an equity issuance for
the acquisition of Direct Line Insurance Group plc's brokered
commercial lines operations
- Accelerated our strategy by materially increasing our
presence in the outperforming UK commercial lines business, while a
strategic review of UK personal lines is underway
Charles Brindamour, Chief
Executive Officer, said:
"Our teams remain hard at work
getting customers back on track after several months of elevated
severe weather activity. It is in precisely these moments that we
can best demonstrate our purpose – to help people, businesses and
society be resilient in bad times," said Charles Brindamour, Chief Executive Officer of
Intact Financial Corporation. "We have a long track record of
successfully navigating volatility in catastrophe losses. The third
quarter was no different, as we delivered an operating ROE of
12.2%, and our balance sheet remained strong with $2.8 billion of total capital margin. I am
pleased to see continued organic growth momentum, in the context of
strong underlying underwriting performance and an acceleration in
the UK&I segment's path to outperformance."
Consolidated
Highlights
(in millions of Canadian dollars except as otherwise
noted)
|
Q3-2023
|
Q3-2022
restated3
|
Change
|
YTD
2023
|
YTD
2022 restated3
|
Change
|
Operating direct
premiums written1, 2
|
5,925
|
5,423
|
6 %
|
16,960
|
15,880
|
5 %
|
Combined ratio
(discounted)1
|
93.5 %
|
90.4 %
|
3.1 pts
|
91.1 %
|
89.1 %
|
2.0 pts
|
Combined ratio
(undiscounted)1
|
98.3 %
|
91.7 %
|
6.6 pts
|
95.6 %
|
91.3 %
|
4.3 pts
|
Underwriting
income1
|
340
|
472
|
(28) %
|
1,344
|
1,579
|
(15) %
|
Operating net
investment income1
|
349
|
232
|
50 %
|
970
|
648
|
50 %
|
Net unwind of discount
on claims liabilities1
|
(225)
|
(90)
|
nm
|
(667)
|
(261)
|
nm
|
Operating net
investment result1
|
124
|
142
|
(13) %
|
303
|
387
|
(22) %
|
Distribution
income1
|
116
|
113
|
3 %
|
358
|
347
|
3 %
|
Net operating income
attributable to common shareholders1
|
370
|
488
|
(24) %
|
1,309
|
1,585
|
(17) %
|
Net
income
|
163
|
375
|
(57) %
|
800
|
2,097
|
(62) %
|
Per share measures
(in dollars)
|
|
|
|
|
|
|
Net operating income
per share (NOIPS)1
|
$2.10
|
$2.78
|
(24) %
|
$7.46
|
$9.01
|
(17) %
|
Earnings per share
(EPS)
|
$0.83
|
$2.05
|
(60) %
|
$4.19
|
$11.75
|
(64) %
|
Book value per
share1
|
$77.24
|
$81.82
|
(6) %
|
|
|
|
Return on equity for
the last 12 months
|
|
|
|
|
|
|
Operating
ROE1
|
12.2 %
|
15.0 %
|
n/a
|
|
|
|
ROE1
|
7.8 %
|
19.1 %
|
n/a
|
|
|
|
Total capital
margin1
|
2,841
|
2,490
|
351
|
|
|
|
Adjusted debt-to-total
capital ratio1
|
22.7 %
|
21.9 %
|
0.8 pts
|
|
|
|
12-Month Industry Outlook
- Over the next twelve months, we expect hard insurance market
conditions to continue in most lines of business, driven by
inflation and natural disasters.
- In Canada, both personal
property and auto premiums are expected to grow by high
single-digits in response to higher severity.
- In commercial and specialty lines across all geographies, we
expect hard market conditions to continue in most lines of
business, with high single-digit premium growth on average.
- Given the rise in interest rates, we expect pre-tax investment
yield for the industry to continue increasing as portfolios roll
over.
____________________________
|
1 This
release contains Non-GAAP financial measures, Non-GAAP ratios and
other financial measures (each as defined in National Instrument
52-112 "Non-GAAP and Other Financial Measures Disclosure"). Refer
to Section 19 – Non-GAAP and other financial measures in the
Q3-2023 Management's Discussion and Analysis for further
details.
2 DPW change (growth) is presented in constant
currency.
3 Comparatives were restated for IFRS 17 but not for
IFRS 9. OROE and ROE are not restated for IFRS 17, given that 2021
P&L figures were not restated for IFRS 17.
|
Segment Results
(in millions of
Canadian dollars except as otherwise noted)
|
Q3-2023
|
Q3-2022 restated
|
Change
|
YTD
2023
|
YTD
2022 restated
|
Change
|
Operating direct
premiums written1,2
|
|
|
Canada
|
3,943
|
3,657
|
8 %
|
11,209
|
10,585
|
6 %
|
UK&I
|
1,157
|
1,058
|
(2) %
|
3,594
|
3,514
|
(2) %
|
US
|
825
|
708
|
13 %
|
2,157
|
1,781
|
16 %
|
Total
|
5,925
|
5,423
|
6 %
|
16,960
|
15,880
|
5 %
|
Combined
ratio1
|
|
|
|
Canada
|
101.8 %
|
92.5 %
|
9.3 pts
|
97.3 %
|
91.1 %
|
6.2 pts
|
UK&I
|
92.5 %
|
90.3 %
|
2.2 pts
|
93.7 %
|
93.6 %
|
0.1 pts
|
US
|
88.5 %
|
89.3 %
|
(0.8) pts
|
89.6 %
|
89.0 %
|
0.6 pts
|
Combined ratio
(undiscounted)
|
98.3 %
|
91.7 %
|
6.6
pts
|
95.6 %
|
91.3 %
|
4.3 pts
|
Impact of
discounting3
|
(4.8) %
|
(1.3) %
|
(3.5) pts
|
(4.5) %
|
(2.2) %
|
(2.3) pts
|
Combined ratio
(discounted)
|
93.5 %
|
90.4 %
|
3.1 pts
|
91.1 %
|
89.1 %
|
2.0 pts
|
|
|
|
|
|
|
|
|
|
|
Q3-2023 Consolidated Performance
- Overall operating DPW growth was 6%, or 8% excluding
strategic exits (such as UK personal lines motor and certain
delegated relationships), led by strong momentum in personal lines,
and continued rate actions across all geographies.
- Overall combined ratio of 98.3% (undiscounted) included
12 points of catastrophe losses, mainly from severe weather events
in Canada. Underlying performance
was strong across all regions, particularly in commercial
lines.
- Including the impact of discounting, the overall combined
ratio of 93.5% was 3.1 points higher than last year, mostly
driven by the underwriting results mentioned above, offset in part
by the benefit of underwriting discount build at higher interest
rates compared to last year.
- Operating net investment income of $349 million for the quarter increased 50%
year-over-year, benefiting from the rising yields and increased
turnover over the last 12 months.
- Distribution income increased by 3% to
$116 million, reflecting strong
core profitability and contributions from recent acquisitions,
tempered by moderating variable commissions.
Lines of Business4
P&C
Canada
- Personal auto premiums growth accelerated to 9%, driven
by our rate actions in hard market conditions as well as an
improving unit growth trajectory. The combined ratio of 95.4%
included roughly 2 points of higher-than-expected catastrophe
losses and industry pools. We expect to remain at a seasonally
adjusted sub-95 combined ratio over the next 12 months.
- Personal property premiums grew by 7%, up 2 points from
the preceding quarter, reflecting rate actions in hard market
conditions and strengthening unit growth. The elevated combined
ratio of 123.7% included 34 points of catastrophe losses in excess
of expectations. We remain well positioned to protect profitability
through rate actions in supportive market conditions, while
continuing to control costs through supply chain and other claims
improvements.
- Commercial lines premium growth of 7% was up 1 point
from the preceding quarter, driven by continued rate increases and
strong retention. The combined ratio at 92.7% was 5.1 points higher
than last year, mainly due to elevated catastrophe losses. We
remain well positioned to continue to deliver a low-90s or better
combined ratio, as a result of our profitability actions in the
prevailing hard market conditions.
P&C UK&I
- Commercial lines premiums decreased 1% on a constant
currency basis, as strong growth in specialty lines was offset by a
9-point impact from strategic exits, continued optimization of our
commercial delegated portfolio, and the end of a large commercial
motor contract. The combined ratio of 90.6% reflected strong
current year performance and the absence of catastrophes, offset by
an unusually high level of adverse prior year development.
- Personal lines premiums declined 2% on a constant
currency basis, reflecting a 15-point headwind from the exit of the
UK personal lines motor portfolio. The combined ratio of 96.6%
benefitted from our ongoing rating actions, as well as an absence
of catastrophe losses. We continue to believe that this line of
business is operating at a high 90s run rate. We are exploring
strategic options for our UK Personal Lines business, including a
possible sale.
P&C U.S.
- Commercial lines premiums grew 13% on a constant
currency basis, led by a 7-point contribution from new products
(following the Highland MGA acquisition a year ago), as well as
rate increases. The combined ratio improved to 88.5%, driven by
greater exposure to more profitable lines of business, as well as
rate increases.
_____________________________
|
1 This
release contains Non-GAAP financial measures, Non-GAAP ratios
and other financial measures (each as defined in National
Instrument 52-112 "Non-GAAP and Other Financial Measures
Disclosure"). Refer to Section 19 – Non-GAAP and other financial
measures in the Q3-2023 Management's Discussion and Analysis for
further details.
2 DPW change (growth) is presented in constant
currency.
3 Includes the impact of discount build on our claims
liabilities for all P&C segments.
4 Combined ratios within the Lines of Business are
reported on an undiscounted basis.
|
Net Operating Income, EPS and ROE
- Net operating income attributable to common shareholders
of $370 million was 24% lower
than Q3-2022, as a $373 million
increase in catastrophe losses offset the impact of improving
underwriting fundamentals, and higher earned premiums and
investment income.
- Earnings per share of $0.83 due to increased catastrophe losses of
approximately $1.60 per share and
higher non-operating losses.
- As of September 30, 2023, the
Operating ROE remained healthy at 12.2%, despite a 3-point
impact from catastrophe losses over the last 12 months. The ROE
of 7.8% reflected the operating challenge mentioned above, as
well as exited lines and equity investment losses.
Balance Sheet
- The Company ended the quarter in a strong financial position,
with a total capital margin of $2.8 billion and solid regulatory capital
ratios in all jurisdictions.
- The adjusted debt-to-total capital ratio of
22.7% was relatively stable as a portion of the
financing of the Direct Line Insurance Group plc's brokered
Commercial Lines operations (the "UK Commercial Lines acquisition")
was temporarily used to reduce short-term debt. Following the
closing of the acquisition in Q4, our adjusted debt-to-total
capital ratio is expected to be below 24%.
- IFC's book value per share (BVPS) was $77.24 at September
30, 2023, and 1% higher than Q2-2023, reflecting the
resilience of the platform and an equity issuance to partially fund
the UK Commercial Lines acquisition.
M&A Update
- On September 6, 2023 we announced
the acquisition of Direct Line Insurance Group plc's brokered
Commercial Lines operations, another significant step to accelerate
our strategy and better position our UK&I operations for
outperformance. We closed the UK Commercial Lines acquisition on
October 26, 2023. Substantially all
of the future economics of the business have been transferred to
RSA effective October 1, 2023.
Starting in Q4-2023, results from these operations will be reported
within our UK&I Commercial Lines segment.
- We continue to explore strategic options for our UK Personal
Lines business, including a possible sale.
Common Share Dividend
- The Board of Directors approved the quarterly dividend to
$1.10 per share on the Company's
outstanding common shares. The dividends are payable on
December 29, 2023, to shareholders of
record on December 15,
2023.
Preferred Share Dividends
- The Board of Directors also approved a quarterly dividend of
30.25625 cents per share on the
Company's Class A Series 1 preferred shares, 21.60625 cents per share on the Class A Series 3
preferred shares, 32.50 cents per
share on the Class A Series 5 preferred shares, 33.125 cents per share on the Class A Series 6
preferred shares, 37.575 cents per
share on the Class A Series 7 preferred shares, 33.75 cents per share on the Class A Series 9
preferred shares, and 32.8125 cents
per share on the Class A Series 11 preferred shares. The dividends
are payable as of December 31, 2023,
to shareholders of record on December 15,
2023.
Analysts' Estimates
- The average estimate of earnings per share and
net operating income per share for the quarter among the
analysts who follow the Company was $0.86 and $1.46,
respectively.
Management's Discussion and Analysis (MD&A) and interim
condensed Consolidated Financial Statements
This Press
Release, which was approved by the Company's Board of Directors on
the Audit Committee's recommendation, should be read in conjunction
with the Q3-2023 MD&A, as well as the Q3-2023 interim condensed
Consolidated Financial Statements, which are available on the
Company's website at www.intactfc.com and later today on SEDAR+ at
www.sedarplus.ca.
For the definitions of measures and other insurance-related
terms used in this Press Release, please refer to the MD&A and
to the glossary available in the "Investors" section of the
Company's website at www.intactfc.com.
Conference Call Details
Intact Financial Corporation
will host a conference call to review its earnings results tomorrow
at 11:00 a.m. ET. To listen to the
call via live audio webcast and to view the Company's interim
condensed Consolidated Financial Statements, MD&A, presentation
slides, Supplementary financial information and other information
not included in this press release, visit the Company's website at
www.intactfc.com and link to "Investors". The conference call is
also available by dialing 416-764-8659 or 1-888-664-6392 (toll-free
in North America). Please call 10
minutes before the start of the call. A replay of the call will be
available on November 7, 2023 at
2:00 p.m. ET until midnight on
November 15, 2023. To listen to the
replay, call 416-764-8677 or 1-888-390-0541 (toll-free in
North America), entry code 778214.
A transcript of the call will also be made available on Intact
Financial Corporation's website.
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 U.S., 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.
Non-GAAP and other financial measures
Non-GAAP
financial measures and Non-GAAP ratios (which are calculated using
Non-GAAP financial measures) do not have standardized meanings
prescribed by IFRS (or GAAP) and may not be comparable to similar
measures used by other companies in our industry. Non-GAAP and
other financial measures are used by management and financial
analysts to assess our performance. Further, they provide users
with an enhanced understanding of our financial results and related
trends, and increase transparency and clarity into the core results
of the business.
Non-GAAP financial measures and Non-GAAP ratios used in this
Press Release and the Company's financial reports include measures
related to our consolidated performance, our underwriting
performance and our financial strength.
For more information about these supplementary financial
measures, Non-GAAP financial measures, and Non-GAAP ratios,
including definitions and explanations of how these measures
provide useful information, refer to Section 19 – Non-GAAP and
other financial measures in the
Q3-2023 MD&A dated November 7,
2023, which is available on our website
at www.intactfc.com and on SEDAR+ at www.sedarplus.ca.
Table 1
Reconciliation of NOI, NOIPS and OROE to Net income attributable
to shareholders, as reported under IFRS
|
Q3-2023
|
Q3-2022
Restated1
|
YTD-2023
|
YTD-2022
Restated1
|
Net income
attributable to shareholders, as reported under IFRS
|
163
|
375
|
792
|
2,108
|
Remove: pre-tax
non-operating results
|
292
|
161
|
624
|
(562)
|
Remove: non-operating
tax expense (benefit)
|
(68)
|
(33)
|
(51)
|
107
|
Remove: non-operating
component of NCI
|
-
|
-
|
-
|
(24)
|
NOI attributable to shareholders
|
387
|
503
|
1,365
|
1,629
|
Remove: preferred share
dividends and other equity distribution
|
(17)
|
(15)
|
(56)
|
(44)
|
NOI attributable to
common shareholders
|
370
|
488
|
1,309
|
1,585
|
Divided by
weighted-average number of common shares (in millions)
|
175.9
|
175.4
|
175.5
|
175.7
|
NOIPS, basic and
diluted (in dollars)
|
2.10
|
2.78
|
7.46
|
9.01
|
NOI attributable to
common shareholders for the last 12
months2
|
1,817
|
2,167
|
|
Adjusted average common
shareholders' equity, excluding AOCI2
|
14,894
|
14,415
|
|
OROE for the last 12
months2
|
12.2 %
|
15.0 %
|
|
1 Restated for the adoption of
IFRS 17 – Insurance contracts
|
2 These
measures are not restated for IFRS 17, given that the 2021 P&L
figures were not restated for IFRS 17
|
Table 2
Reconciliation of underwriting results on a MD&A basis with
the interim condensed consolidated financial statements
(quarterly)
Financial
statements
|
FS
IFRS 17
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
Total
|
MD&A
IFRS 17
|
MD&A
|
|
Quarter ended
September 30, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
revenue
|
6,385
|
(815)
|
(63)
|
|
|
|
(245)
|
|
(67)
|
31
|
(1,159)
|
5,226
|
Operating net
underwriting revenue
|
|
Insurance service
expense
|
(5,948)
|
780
|
121
|
(97)
|
5
|
(42)
|
259
|
-
|
67
|
(31)
|
1,062
|
(4,886)
|
Sum of: Operating net
claims ($3,168 million) and Operating net underwriting expenses
($1,718 million)
|
|
Allocation of
reinsurance premiums
|
(815)
|
815
|
|
|
|
|
|
|
|
|
815
|
-
|
n/a
|
|
Amounts recoverable
from reinsurers
|
780
|
(780)
|
|
|
|
|
|
|
|
|
(780)
|
-
|
n/a
|
|
Insurance service
result
|
402
|
-
|
58
|
(97)
|
5
|
(42)
|
14
|
-
|
-
|
-
|
(62)
|
340
|
Underwriting income
(loss)
|
|
Quarter ended
September 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
revenue
|
6,296
|
(817)
|
(63)
|
|
|
|
(478)
|
|
(36)
|
16
|
(1,378)
|
4,918
|
Operating net
underwriting revenue
|
Insurance service
expense
|
(5,555)
|
746
|
112
|
(112)
|
12
|
(39)
|
481
|
(111)
|
36
|
(16)
|
1,109
|
(4,446)
|
Sum of: Operating net
claims ($2,806 million) and Operating net underwriting expenses
($1,640 million)
|
Allocation of
reinsurance premiums
|
(817)
|
817
|
|
|
|
|
|
|
|
|
817
|
-
|
n/a
|
Amounts recoverable
from reinsurers
|
746
|
(746)
|
|
|
|
|
|
|
|
|
(746)
|
-
|
n/a
|
Insurance service
result
|
670
|
-
|
49
|
(112)
|
12
|
(39)
|
3
|
(111)
|
-
|
-
|
(198)
|
472
|
Underwriting income
(loss)
|
Reconciling items in the table above:
1
|
Adjustment to present
results net of reinsurance
|
2
|
Adjustment to exclude
net underwriting revenue, net claims, net underwriting expenses
from exited lines (treated as non-operating)
|
3
|
Adjustment to include
indirect underwriting expenses (from Other income and expense under
IFRS)
|
4
|
Adjustment to exclude
the non-operating pension expense
|
5
|
Adjustment to
reclassify intercompany commissions (to Distribution income &
Other corporate income (expense))
|
6
|
Adjustment to exclude
Net insurance service results from claims acquired in a business
combination (treated as non-operating)
|
7
|
Adjustment to normalize
discount build in IFRS 17 transition year (from Net insurance
financial result under IFRS)
|
8
|
Adjustment to
reclassify Assumed (ceded) commissions and premium
adjustments
|
9
|
Adjustment to
reclassify Net insurance revenue from retroactive reinsurance
contracts
|
Table 3 Reconciliation
of underwriting results on a MD&A basis with the interim
condensed consolidated financial statements
(year-to-date)
Financial
statements
|
FS
IFRS 17
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
Total
|
MD&A
IFRS 17
|
MD&A
|
Nine-month
period ended September 30, 2023
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
revenue
|
18,982
|
(2,470)
|
(216)
|
|
|
|
(1,107)
|
|
(181)
|
98
|
(3,876)
|
15,106
|
Operating net
underwriting revenue
|
Insurance service
expense
|
(17,044)
|
2,054
|
371
|
(295)
|
17
|
(111)
|
1,163
|
-
|
181
|
(98)
|
3,282
|
(13,762)
|
Sum of: Operating net
claims ($8,669 million) and Operating net underwriting expenses
($5,093 million)
|
Allocation of
reinsurance premiums
|
(2,470)
|
2,470
|
|
|
|
|
|
|
|
|
2,470
|
-
|
n/a
|
Amounts recoverable
from reinsurers
|
2,054
|
(2,054)
|
|
|
|
|
|
|
|
|
(2,054)
|
-
|
n/a
|
Insurance service
result
|
1,522
|
-
|
155
|
(295)
|
17
|
(111)
|
56
|
-
|
-
|
-
|
(178)
|
1,344
|
Underwriting income
(loss)
|
Nine-month
period ended September 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
revenue
|
19,510
|
(2,608)
|
(357)
|
|
|
|
(2,026)
|
|
(143)
|
105
|
(5,029)
|
14,481
|
Operating net
underwriting revenue
|
Insurance service
expense
|
(17,129)
|
2,156
|
452
|
(276)
|
35
|
(99)
|
2,039
|
(118)
|
143
|
(105)
|
4,227
|
(12,902)
|
Sum of: Operating net
claims ($8,116 million) and Operating net underwriting expenses
($4,786 million)
|
Allocation of
reinsurance premiums
|
(2,608)
|
2,608
|
|
|
|
|
|
|
|
|
2,608
|
-
|
n/a
|
Amounts recoverable
from reinsurers
|
2,156
|
(2,156)
|
|
|
|
|
|
|
|
|
(2,156)
|
-
|
n/a
|
Insurance service
result
|
1,929
|
-
|
95
|
(276)
|
35
|
(99)
|
13
|
(118)
|
-
|
-
|
(350)
|
1,579
|
Underwriting income
(loss)
|
Reconciling items in the table above:
1
|
Adjustment to present
results net of reinsurance
|
2
|
Adjustment to exclude
net underwriting revenue, net claims, net underwriting expenses
from exited lines (treated as non-operating)
|
3
|
Adjustment to include
indirect underwriting expenses (from Other income and expense under
IFRS)
|
4
|
Adjustment to exclude
the non-operating pension expense
|
5
|
Adjustment to
reclassify intercompany commissions (to Distribution income &
Other corporate income (expense))
|
6
|
Adjustment to exclude
Net insurance service results from claims acquired in a business
combination (treated as non-operating)
|
7
|
Adjustment to normalize
discount build in IFRS 17 transition year (from Net insurance
financial result under IFRS)
|
8
|
Adjustment to
reclassify Assumed (ceded) commissions and premium
adjustments
|
9
|
Adjustment to
reclassify Net insurance revenue from retroactive reinsurance
contracts
|
Table 4
Reconciliation of the components within Operating net
claims
|
Q3-2023
|
Q3-2022
Restated
|
YTD-2023
|
YTD-2022
Restated
|
|
|
|
|
|
Operating net
claims
|
3,168
|
2,806
|
8,669
|
8,116
|
Remove: net current
year CAT losses
|
(611)
|
(238)
|
(1,140)
|
(665)
|
Remove: favourable
(unfavourable) PYD
|
189
|
215
|
686
|
703
|
|
|
|
|
|
Operating net claims
excluding current year CAT losses and PYD
|
2,746
|
2,783
|
8,215
|
8,154
|
Operating net
underwriting revenue
|
5,226
|
4,918
|
15,106
|
14,481
|
|
|
|
|
|
Underlying current year
loss ratio
|
52.5 %
|
56.7 %
|
54.4 %
|
56.3 %
|
CAT loss
ratio
|
11.7 %
|
4.8 %
|
7.5 %
|
4.6 %
|
(Favourable)
unfavourable PYD ratio
|
(3.6) %
|
(4.4) %
|
(4.5) %
|
(4.8) %
|
Claims
ratio
|
60.6 %
|
57.1 %
|
57.4 %
|
56.1 %
|
Table 5
Reconciliation of the components within Operating net
underwriting expenses
|
Q3-2023
|
Q3-2022
Restated
|
YTD-2023
|
YTD-2022
Restated
|
|
|
|
|
|
Operating net
underwriting expenses
|
1,718
|
1,640
|
5,093
|
4,786
|
Commissions
|
833
|
829
|
2,433
|
2,361
|
General
expenses
|
748
|
674
|
2,247
|
2,016
|
Premium
taxes
|
137
|
137
|
413
|
409
|
Operating net
underwriting revenue
|
5,226
|
4,918
|
15,106
|
14,481
|
Commissions
ratio
|
16.0 %
|
16.8 %
|
16.1 %
|
16.3 %
|
General expenses
ratio
|
14.3 %
|
13.7 %
|
14.9 %
|
13.9 %
|
Premium taxes
ratio
|
2.6 %
|
2.8 %
|
2.7 %
|
2.8 %
|
Expense
ratio
|
32.9 %
|
33.3 %
|
33.7 %
|
33.0 %
|
Claims
ratio
|
60.6 %
|
57.1 %
|
57.4 %
|
56.1 %
|
Combined ratio
(discounted)
|
93.5 %
|
90.4 %
|
91.1 %
|
89.1 %
|
Table 6
Reconciliation of Operating net investment income to Net
investment income, as reported under IFRS
|
Q3-2023
|
Q3-2022
Restated
|
YTD-2023
|
YTD-2022
Restated
|
|
|
|
|
|
Net
investment income, as reported under IFRS
|
349
|
232
|
970
|
652
|
Remove:
investment income from the RSA
Middle-East exited operations
|
-
|
-
|
-
|
(4)
|
Operating net
investment income
|
349
|
232
|
970
|
648
|
Table 7
Reconciliation of Net unwind of discount on claims liabilities
to Net insurance financial result, as reported under IFRS
|
Q3-2023
|
Q3-2022
Restated
|
YTD-2023
|
YTD-2022
Restated
|
|
|
|
|
|
Net insurance
financial result, as reported under IFRS
|
(149)
|
35
|
(321)
|
521
|
Remove: Changes in
discount rates and other financial
assumptions1
|
(105)
|
(180)
|
(238)
|
(1,001)
|
Remove: Net foreign
currency gains (losses) 1
|
43
|
57
|
(54)
|
228
|
Remove: Net insurance
financial result from claims acquired in a business
combination
|
(14)
|
(2)
|
(54)
|
(9)
|
Net unwind of
discount on claims liabilities
|
(225)
|
(90)
|
(667)
|
(261)
|
1 Included within Note 17 –Net
investment return and net insurance financial result from the
interim condensed consolidated financial statements.
|
Table 8
Reconciliation of ROE to Net income attributable to
shareholders, as reported under IFRS
|
Q3-2023
|
Q3-2022
Restated
|
YTD-2023
|
YTD-2022
Restated
|
Net income
attributable to shareholders, as reported under IFRS
|
163
|
375
|
792
|
2,108
|
Remove: preferred share
dividends and other equity distribution
|
(17)
|
(15)
|
(56)
|
(44)
|
Net income
attributable to common shareholders
|
146
|
360
|
736
|
2,064
|
Divided by
weighted-average number of common shares (in millions)
|
175.9
|
175.4
|
175.5
|
175.7
|
EPS, basic and
diluted (in dollars)
|
0.83
|
2.05
|
4.19
|
11.75
|
Net income
attributable to common shareholders for the last 12
months1
|
1,066
|
2,647
|
|
Adjusted average common
shareholders' equity1
|
13,695
|
13,888
|
|
ROE for the last 12
months1
|
7.8 %
|
19.1 %
|
|
1 These
measures are not restated for IFRS 17, given that the 2021 P&L
figures were not restated for IFRS 17
|
Table 9
Reconciliation of consolidated results on a MD&A basis with
the interim condensed consolidated financial statements
(quarterly)
|
MD&A
captions
|
Pre-tax
|
|
|
As presented in the
Financial statements
|
Distribution
income
|
Total finance
costs
|
Other operating
income (expense)
|
Operating
net investment
result
|
Total income
taxes
|
Non-operating
results
|
Underwriting
income
(loss)
|
Total F/S
caption
|
For the quarter
ended September 30, 2023
|
Insurance service
result
|
26
|
|
16
|
|
|
(77)
|
437
|
402
|
Net investment
income
|
|
|
|
349
|
|
|
|
349
|
Net gains (losses) on
investment portfolio
|
|
|
|
|
|
(137)
|
|
(137)
|
Net insurance
financial result
|
|
|
|
(225)
|
|
76
|
|
(149)
|
Share of profits from
investments in associates and joint ventures
|
32
|
(2)
|
|
|
(7)
|
(7)
|
|
16
|
Other net gains
(losses)
|
|
|
|
|
|
9
|
|
9
|
Other income and
expense
|
58
|
|
(50)
|
|
|
(47)
|
(97)
|
(136)
|
Other finance
costs
|
|
(61)
|
|
|
|
|
|
(61)
|
Acquisition,
integration and restructuring costs
|
|
|
|
|
|
(109)
|
|
(109)
|
Income tax benefit
(expense)
|
|
|
|
|
(21)
|
|
|
(21)
|
|
|
|
|
|
|
|
|
|
Total, as reported
in MD&A
|
116
|
(63)
|
(34)
|
124
|
(28)
|
(292)
|
340
|
|
For the quarter
ended September 30, 2022 (Restated)
|
Insurance service
result
|
33
|
|
6
|
|
|
(64)
|
695
|
670
|
Net investment
income
|
|
|
|
232
|
|
|
|
232
|
Net gains (losses) on
investment portfolio
|
|
|
|
|
|
(187)
|
|
(187)
|
Net insurance
financial result
|
|
|
|
(90)
|
|
236
|
(111)
|
35
|
Share of profits from
investments in associates and joint ventures
|
37
|
(3)
|
|
|
(8)
|
(3)
|
|
23
|
Other net gains
(losses)
|
|
|
|
|
|
16
|
|
16
|
Other income and
expense
|
43
|
|
(48)
|
|
|
(57)
|
(112)
|
(174)
|
Other finance
costs
|
|
(43)
|
|
|
|
|
|
(43)
|
Acquisition,
integration and restructuring costs
|
|
|
|
|
|
(102)
|
|
(102)
|
Income tax benefit
(expense)
|
|
|
|
|
(95)
|
|
|
(95)
|
|
|
|
|
|
|
|
|
|
Total, as reported
in MD&A
|
113
|
(46)
|
(42)
|
142
|
(103)
|
(161)
|
472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
10 Reconciliation of consolidated results on a MD&A
basis with the interim condensed consolidated financial
statements (year-to-date)
|
MD&A
captions
|
Pre-tax
|
|
|
As presented in the
Financial statements
|
Distribution
income
|
Total finance
costs
|
Other operating
income (expense)
|
Operating
net investment
result
|
Total income
taxes
|
Non-operating
results
|
Underwriting income
(loss)
|
Total F/S
caption
|
For the nine-month
period ended September 30, 2023
|
|
|
|
|
|
|
|
Insurance service
result
|
71
|
|
40
|
|
|
(228)
|
1,639
|
1,522
|
Net investment
income
|
|
|
|
970
|
|
|
|
970
|
Net gains (losses) on
investment portfolio
|
|
|
|
|
|
(283)
|
|
(283)
|
Net insurance
financial result
|
|
|
|
(667)
|
|
346
|
|
(321)
|
Share of profits from
investments in associates and joint ventures
|
129
|
(10)
|
(1)
|
|
(28)
|
(16)
|
|
74
|
Other net gains
(losses)
|
|
|
|
|
|
28
|
|
28
|
Other income and
expense
|
158
|
|
(151)
|
|
|
(150)
|
(295)
|
(438)
|
Other finance
costs
|
|
(163)
|
|
|
|
|
|
(163)
|
Acquisition,
integration and restructuring costs
|
|
|
|
|
|
(321)
|
|
(321)
|
Income tax benefit
(expense)
|
|
|
|
|
(268)
|
|
|
(268)
|
|
|
|
|
|
|
|
|
|
Total, as reported
in MD&A
|
358
|
(173)
|
(112)
|
303
|
(296)
|
(624)
|
1,344
|
|
For the nine-month
period ended September 30, 2022 (Restated)
|
|
|
|
|
|
|
Insurance service
result
|
84
|
|
15
|
|
|
(143)
|
1,973
|
1,929
|
Net investment
income
|
|
|
|
648
|
|
4
|
|
652
|
Net gains (losses) on
investment portfolio
|
|
|
|
|
|
(187)
|
|
(187)
|
Net insurance
financial result
|
|
|
|
(261)
|
|
900
|
(118)
|
521
|
Share of profits from
investments in associates and joint ventures
|
134
|
(7)
|
|
|
(30)
|
(12)
|
|
85
|
Other net gains
(losses)
|
|
|
|
|
|
439
|
|
439
|
Other income and
expense
|
129
|
|
(140)
|
|
|
(170)
|
(276)
|
(457)
|
Other finance
costs
|
|
(127)
|
|
|
|
|
|
(127)
|
Acquisition,
integration and restructuring costs
|
|
|
|
|
|
(269)
|
|
(269)
|
Income tax benefit
(expense)
|
|
|
|
|
(489)
|
|
|
(489)
|
|
|
|
|
|
|
|
|
|
Total, as reported
in MD&A
|
347
|
(134)
|
(125)
|
387
|
(519)
|
562
|
1,579
|
|
|
|
|
|
|
|
|
|
|
|
Table 11 Calculation
of BVPS and BVPS, excluding AOCI
As at September
30,
|
2023
|
2022
Restated
|
|
|
|
Equity attributable to
shareholders, as reported under
IFRS
|
15,392
|
15,662
|
Remove:
Preferred shares and other equity, as
reported under IFRS
|
(1,619)
|
(1,322)
|
|
|
|
Common shareholders'
equity
|
13,773
|
14,340
|
Remove:
AOCI, as
reported under IFRS
|
767
|
1,632
|
|
|
|
Common shareholders'
equity (excluding AOCI)
|
14,540
|
15,972
|
|
|
|
Number of common shares
outstanding at the same date (in
millions)
|
178.3
|
175.3
|
BVPS
|
77.24
|
81.82
|
BVPS (excluding
AOCI)1
|
81.54
|
91.13
|
1 The
Company adopted IFRS 9 retrospectively on January 1, 2023 and
elected to recognize any IFRS 9 measurement differences by
adjusting its Consolidated balance sheet on January 1, 2023, as a
result comparative information was not restated. Prior periods
continue to be reported under IAS 39 – Financial instruments:
recognition and measurement ("IAS 39").
|
|
|
|
Table
12 Adjusted average common shareholders' equity and
Adjusted average common shareholders' equity,
excluding AOCI
|
|
|
As at September
30,
|
2023
|
20221
|
|
|
|
Ending common
shareholders' equity
|
13,773
|
13,828
|
Remove: significant
capital transactions during the period
|
638
|
-
|
Ending common
shareholders' equity, excluding significant capital
transaction
|
14,411
|
13,828
|
Beginning common
shareholders' equity2
|
14,340
|
13,948
|
Average common
shareholders' equity, excluding significant capital transaction
|
14,376
|
13,888
|
Weighted impact of
significant capital transactions3
|
(681)
|
-
|
Adjusted average common shareholders'
equity
|
13,695
|
13,888
|
|
|
|
Ending
common shareholders' equity,
excluding AOCI
|
14,540
|
15,457
|
Remove: significant
capital transaction during the period
|
638
|
-
|
Ending common
shareholders' equity, excluding AOCI and significant capital
transaction
|
15,178
|
15,457
|
Beginning common
shareholders' equity, excluding AOCI2
|
15,972
|
13,373
|
Average common
shareholders' equity, excluding AOCI and significant capital
transaction
|
15,575
|
14,415
|
Weighted impact of
significant capital transactions3
|
(681)
|
-
|
Adjusted average common shareholders'
equity, excluding AOCI
|
14,894
|
14,415
|
1 These
measures are not restated for IFRS 17, given that the 2021 P&L
figures were not restated for IFRS 17.
|
2 Beginning common shareholders'
equity has not been adjusted for the adoption of IFRS 9 – Financial
instruments ("IFRS 9") for purposes of calculating average common
shareholders' equity.
|
3 Represents
the net weighted impact of the September 13, 2023 and February 27,
2023 significant capital transactions.
|
Table
13 Reconciliation of Debt outstanding (excluding hybrid
debt) and Total capital to Debt outstanding, Equity attributable to
shareholders and Equity attributable to NCI, as reported under
IFRS
|
Sept.
30,
2023
|
June
30,
2023
|
Dec.
31, 2022 Restated
|
|
|
|
|
Debt outstanding, as
reported under IFRS
|
4,927
|
4,741
|
4,522
|
Remove: hybrid
subordinated notes
|
(247)
|
(247)
|
(247)
|
|
|
|
|
Debt outstanding
(excluding hybrid debt)
|
4,680
|
4,494
|
4,275
|
|
|
|
|
Debt outstanding, as
reported under IFRS
|
4,927
|
4,741
|
4,522
|
Equity attributable to
shareholders, as reported under IFRS
|
15,392
|
14,989
|
15,843
|
Preferred shares from
Equity attributable to non-controlling interests
|
285
|
285
|
285
|
Adjusted total
capital
|
20,604
|
20,015
|
20,650
|
|
|
|
|
Debt outstanding
(excluding hybrid debt)
|
4,680
|
4,494
|
4,275
|
Adjusted total
capital
|
20,604
|
20,015
|
20,650
|
Adjusted
debt-to-total capital ratio
|
22.7 %
|
22.5 %
|
20.7 %
|
|
|
|
|
Debt outstanding, as
reported under IFRS
|
4,927
|
4,741
|
4,522
|
Preferred shares
and other equity, as reported under IFRS
|
1,619
|
1,619
|
1,322
|
Preferred shares from
Equity attributable to non-controlling interests
|
285
|
285
|
285
|
Debt outstanding and
preferred shares (including NCI)
|
6,831
|
6,645
|
6,129
|
Adjusted total
capital
|
20,604
|
20,015
|
20,650
|
Total leverage
ratio
|
33.2 %
|
33.2 %
|
29.7 %
|
Adjusted
debt-to-total capital
ratio
|
22.7 %
|
22.5 %
|
20.7 %
|
Preferred shares and
hybrids
|
10.5 %
|
10.7 %
|
9.0 %
|
Forward Looking Statements
Certain statements made in
this news release are forward-looking statements. These statements
include, without limitation, statements relating to the outlook for
the property and casualty insurance industry in Canada, the U.S. and the UK, the Company's
business outlook, the Company's growth prospects, and the UK
Commercial Lines acquisition. All such forward-looking statements
are made pursuant to the 'safe harbour' provisions of applicable
Canadian securities laws.
Forward-looking statements, by their very nature, are subject to
inherent risks and uncertainties and are based on several
assumptions, both general and specific, which give rise to the
possibility that actual results or events could differ materially
from our expectations expressed in or implied by such
forward-looking statements as a result of various factors,
including those discussed in the Company's most recently filed
Annual Information Form dated February 7,
2023 and available on SEDAR+ at www.sedarplus.ca. As a
result, we cannot guarantee that any forward-looking statement will
materialize and we caution you against relying on any of these
forward-looking statements. Except as may be required by Canadian
securities laws, we do not undertake any obligation to update or
revise any forward-looking statements contained in this news
release, whether as a result of new information, future events or
otherwise. Please read the cautionary note at the beginning of the
Q3-2023 MD&A.
SOURCE Intact Financial Corporation