TORONTO, Aug. 2, 2023
/CNW/ - (TSX: IFC)
(in Canadian dollars except as otherwise noted)
Highlights1
- Operating DPW2 growth of 6% in Q2-2023 driven
by rate actions in supportive market conditions
- Net operating income per share2 decreased 30% to
$2.30, largely due to an increase
in catastrophe losses to $421
million, partially offset by higher investment income
- EPS of $1.30 was lower
than last year, which had benefited from the sale of Codan Denmark
and large gains on equity investments
- Combined ratio2 of 92.2% (96.3% undiscounted)
included 8 points of catastrophe losses that were twice as high as
expected, while underlying performance was strong in all
geographies
- Personal auto results were strong at a 91.2% combined
ratio2, reflecting our profitability actions and
moderating inflation
- Operating ROE2 of 12.8% (and ROE2
of 9.0%) despite elevated catastrophe losses and $2.5 billion of total capital
margin2
Charles Brindamour, Chief
Executive Officer, said:
"With multiple severe weather events this quarter, our
employees were often first on site in affected communities,
offering a reassuring presence and support to customers in a time
of need. Despite the scale of the fire, flood, and freeze events,
we maintained a strong balance sheet and delivered a 13% operating
ROE, a testament to the resilience of our operations. We will
continue to leverage our experience with natural disasters to
collaborate with governments and help communities adapt to climate
change."
Consolidated
Highlights
(in millions of Canadian dollars except as otherwise
noted)
|
Q2-2023
|
Q2-2022
restated3
|
Change
|
H1-2023
|
H1-2022 restated3
|
Change
|
Operating direct
premiums written1, 2
|
6,226
|
5,801
|
6 %
|
11,035
|
10,457
|
5 %
|
Combined ratio
(discounted)2
|
92.2 %
|
88.0 %
|
4.2 pts
|
89.8 %
|
88.4 %
|
1.4 pts
|
Combined ratio
(undiscounted)2
|
96.3 %
|
90.2 %
|
6.1 pts
|
94.2 %
|
91.2 %
|
3.0 pts
|
Underwriting
income2
|
391
|
576
|
(32) %
|
1,004
|
1,107
|
(9) %
|
Operating net
investment income2
|
326
|
211
|
55 %
|
621
|
416
|
49 %
|
Net unwind of discount
on claims liabilities2
|
(216)
|
(88)
|
nm
|
(442)
|
(171)
|
nm
|
Operating net
investment result2
|
110
|
123
|
(11) %
|
179
|
245
|
(27) %
|
Distribution
income2
|
137
|
142
|
(4) %
|
242
|
234
|
3 %
|
Net operating income
attributable to common shareholders2
|
402
|
581
|
(31) %
|
939
|
1,097
|
(14) %
|
Net
income
|
260
|
1,235
|
(79) %
|
637
|
1,722
|
(63) %
|
Per share measures
(in dollars)
|
|
|
|
|
|
|
Net operating income
per share (NOIPS)2
|
$2.30
|
$3.30
|
(30) %
|
$5.36
|
$6.23
|
(14) %
|
Earnings per share
(EPS)
|
$1.30
|
$6.93
|
(81) %
|
$3.36
|
$9.68
|
(65) %
|
Book value per
share2
|
$76.29
|
$83.74
|
(9) %
|
|
|
|
Return on equity for
the last 12 months
|
|
|
|
|
|
|
Operating
ROE2
|
12.8 %
|
15.4 %
|
n/a
|
|
|
|
ROE2
|
9.0 %
|
18.5 %
|
n/a
|
|
|
|
Total capital
margin2
|
2,482
|
2,479
|
3
|
|
|
|
Adjusted debt-to-total
capital ratio2
|
22.5 %
|
19.8 %
|
2.7 pts
|
|
|
|
______________________________________
|
1 DPW
change (growth) is presented in constant currency.
|
2 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 21 – Non-GAAP and other financial measures in the
Q2-2023 Management's Discussion and Analysis for further
details.
|
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.
|
12-Month Industry Outlook
- Over the next twelve months, we expect firm-to-hard insurance
market conditions to continue in most lines of business, driven by
inflation, natural disasters, and a hard reinsurance market.
- In Canada, we expect
firm-to-hard market conditions in personal lines. Both personal
property and auto premiums are expected to grow by high
single-digits in response to inflation and evolving driving
patterns.
- In commercial and specialty lines across all geographies, we
expect hard market conditions to continue in most lines of
business.
- In the UK&I, the personal property market is firming, with
further rate increases expected.
Segment Results
(in millions of
Canadian dollars except as otherwise noted)
|
Q2-2023
|
Q2-2022 restated
|
Change
|
H1-2023
|
H1-2022 restated
|
Change
|
Operating direct
premiums written1,2
|
|
|
Canada
|
4,270
|
4,035
|
6 %
|
7,266
|
6,928
|
5 %
|
UK&I
|
1,202
|
1,164
|
(2) %
|
2,437
|
2,456
|
(1) %
|
US
|
754
|
602
|
19 %
|
1,332
|
1,073
|
17 %
|
Total
|
6,226
|
5,801
|
6 %
|
11,035
|
10,457
|
5 %
|
Combined
ratio2
|
|
|
|
Canada
|
97.9 %
|
89.6 %
|
8.3 pts
|
94.9 %
|
90.3 %
|
4.6 pts
|
UK&I
|
94.1 %
|
92.0 %
|
2.1 pts
|
94.3 %
|
95.2 %
|
(0.9) pts
|
US
|
91.3 %
|
91.0 %
|
0.3 pts
|
90.2 %
|
88.9 %
|
1.3 pts
|
Combined ratio
(undiscounted)
|
96.3 %
|
90.2 %
|
6.1 pts
|
94.2 %
|
91.2 %
|
3.0 pts
|
Impact of
discounting3
|
(4.1) %
|
(2.2) %
|
(1.9) pts
|
(4.4) %
|
(2.8) %
|
(1.6) pts
|
Combined ratio
(discounted)
|
92.2 %
|
88.0 %
|
4.2 pts
|
89.8 %
|
88.4 %
|
1.4 pts
|
Q2-2023 Consolidated Performance
- Operating DPW growth accelerated to 6%, or 7% excluding
strategic exits (such as UK personal lines motor and certain
delegated relationships), reflecting solid rate momentum
across all lines of business.
- Overall combined ratio of 96.3% (undiscounted) included
4 points of higher-than-expected catastrophe losses. Strong
performance in commercial lines was tempered by pressures in
personal property, while personal auto performed well and in line
with expectations.
- Including the impact of discounting, the overall combined
ratio of 92.2% was 4.2 points worse than last year. This was
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 $326 million for the quarter increased 55%
year-over-year, due to higher reinvestment yields, increased
portfolio turnover, and a $25 million
special dividend.
- Distribution income declined 4% to
$137 million, reflecting both
elevated variable commissions and contribution from On Side
restoration in the prior-year period, while underlying
profitability and acquisition pipeline remained solid in
Q2-2023.
Lines of Business4
P&C
Canada
- Personal auto premiums increased 6% from the prior year,
as a result of rate actions in firming market conditions and an
improving unit trajectory. The combined ratio of 91.2% is
reflective of our profitability actions, favourable seasonality and
elevated but moderating inflation. We expect to remain at a
seasonally adjusted sub-95 combined ratio over the next 12
months.
- Personal property premiums grew by 5% in firm-to-hard
market conditions. The combined ratio was elevated at 119.2%, or
22.7 points worse than last year due to higher catastrophe losses,
elevated large losses, and inflation. We are 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 6% reflected
continued rate increases and strong retention in most lines, offset
in part by targeted actions to optimize the portfolio. The combined
ratio was a solid 89.5%, but 7.4 points higher than last year
primarily due to higher catastrophe losses.
P&C UK&I
- Personal lines premiums declined 7% on a constant
currency basis. Excluding the impact of our UK personal lines motor
market exit, growth was 6% in the quarter, reflecting rate actions
in firming market conditions. The combined ratio of 98.0% reflects
inflation and adverse weather, offset by the benefits of ongoing
profitability actions.
- Commercial lines premiums grew 1% on a constant currency
basis, as continued strong rate increases were tempered 5 points by
strategic exits. The combined ratio improved 2.1 points to a solid
92.1%, despite 9.0 points of catastrophe losses.
__________________________________________
|
1 DPW
change (growth) is presented in constant currency.
|
2 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 21 – Non-GAAP and other financial
measures in the Q2-2023 Management's Discussion and Analysis for
further details.
|
3 Includes
the impact of discount build on our claims liabilities for all
P&C segments. Refer to Section 3 - IFRS 17 transitional
impact in the Q2-2023 Management's Discussion and Analysis for
further details.
|
4 Combined
ratios within the Lines of Business are reported on an undiscounted
basis.
|
P&C U.S.
- US Commercial premiums grew 19% on a constant
currency basis, driven by new products (following the Highland
acquisition last year), new business, and rate increases. The
combined ratio remained solid at 91.3%, but slightly higher than
last year due to higher catastrophe losses.
Net Operating Income, EPS and ROE
- Net operating income attributable to common shareholders
of $402 million was 31% lower
than Q2-2022, as a $176 million
increase in catastrophe losses offset the impact of higher earned
premiums and investment income.
- Earnings per share of $1.30 reflected lower operating income and an
expected level of non-operating expenses. EPS was elevated in the
comparable period last year due to the sale of Codan Denmark and
other investment gains.
- Operating ROE of 12.8% and ROE of 9.0% for the 12
months to June 30, 2023 reflected
solid operating performance despite elevated catastrophe losses. As
the benefits of the pension de-risking activities are fully
realized, we expect this to contribute approximately 1 point to ROE
by year-end.
Balance Sheet
- The Company ended the quarter in a strong financial position,
with a total capital margin of $2.5
billion and solid regulatory capital ratios in all
jurisdictions.
- The adjusted debt-to-total capital ratio of
22.5% was in line with our expectations and on track to
return towards 20% over the next few quarters.
- IFC's book value per share (BVPS) was $76.29 at June 30,
2023, down 2% from Q1-2023. Solid earnings were offset by
unfavourable market movements on fixed income securities.
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
September 29, 2023, to shareholders
of record on September 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 September 30, 2023,
to shareholders of record on September 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 $1.84 and $2.34,
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 Q2-2023 MD&A, as well as the Q2-2023 interim condensed
Consolidated Financial Statements, which are available on the
Company's website at www.intactfc.com and later today on SEDAR at
www.sedar.com.
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 August 3, 2023 at
2:00 p.m. ET until midnight on
August 10, 2023. To listen to the
replay, call 416-764-8677 or 1-888-390-0541 (toll-free in
North America), entry code 721275.
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 21 – Non-GAAP and
other financial measures in the Q2-2023 MD&A dated
August 2, 2023, which is available on
our website at www.intactfc.com and on SEDAR at
www.sedar.com.
Table 1
Reconciliation of NOI, NOIPS and OROE to Net income attributable
to shareholders, as reported under IFRS
|
Q2-2023
|
Q2-2022
Restated
1
|
H1-2023
|
H1-2022
Restated 1
|
|
|
|
|
|
Net income
attributable to shareholders, as reported under IFRS
|
252
|
1,234
|
629
|
1,733
|
Remove: Pre-tax
non-operating results
|
191
|
(725)
|
332
|
(723)
|
Remove: Non-operating
tax expense (benefit)
|
(18)
|
94
|
17
|
140
|
Remove: Non operating
component of NCI
|
-
|
(6)
|
-
|
(24)
|
NOI attributable to
shareholders
|
425
|
597
|
978
|
1,126
|
Remove: preferred share
dividends and other equity distribution
|
(23)
|
(16)
|
(39)
|
(29)
|
NOI attributable to
common shareholders
|
402
|
581
|
939
|
1,097
|
Divided by
weighted-average number of common shares (in millions)
|
175.3
|
175.8
|
175.3
|
175.9
|
NOIPS, basic and
diluted (in dollars)
|
2.30
|
3.30
|
5.36
|
6.23
|
NOI to common
shareholders for the last 12 months2
|
1,935
|
2,199
|
|
|
Adjusted average common
shareholders' equity, excluding AOCI2
|
15,145
|
14,275
|
|
|
OROE for the last 12
months2
|
12.8 %
|
15.4 %
|
|
|
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 June
30, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
revenue
|
6,243
|
(808)
|
(73)
|
|
|
|
(321)
|
|
(55)
|
30
|
(1,227)
|
5,016
|
Operating net
underwriting revenue
|
Insurance service
expense
|
(5,500)
|
541
|
110
|
(112)
|
6
|
(34)
|
339
|
-
|
55
|
(30)
|
875
|
(4,625)
|
Sum of: Operating net
claims ($2,902
million) and Operating net underwriting
expenses ($1,723 million)
|
Allocation of
reinsurance
premiums
|
(808)
|
808
|
|
|
|
|
|
|
|
|
808
|
-
|
n/a
|
Amounts recoverable
from
reinsurers
|
541
|
(541)
|
|
|
|
|
|
|
|
|
(541)
|
-
|
n/a
|
Insurance service
result
|
476
|
-
|
37
|
(112)
|
6
|
(34)
|
18
|
-
|
-
|
-
|
(85)
|
391
|
Underwriting income
(loss)
|
Quarter ended June
30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
revenue
|
6,408
|
(905)
|
(146)
|
|
|
|
(564)
|
|
(51)
|
60
|
(1,606)
|
4,802
|
Operating net
underwriting revenue
|
Insurance service
expense
|
(5,532)
|
718
|
158
|
(55)
|
11
|
(38)
|
567
|
(46)
|
51
|
(60)
|
1,306
|
(4,226)
|
Sum of: Operating net
claims ($2,647
million) and Operating net underwriting
expenses ($1,579 million)
|
Allocation of
reinsurance
premiums
|
(905)
|
905
|
|
|
|
|
|
|
|
|
905
|
-
|
n/a
|
Amounts recoverable
from
reinsurers
|
718
|
(718)
|
|
|
|
|
|
|
|
|
(718)
|
-
|
n/a
|
Insurance service
result
|
689
|
-
|
12
|
(55)
|
11
|
(38)
|
3
|
(46)
|
-
|
-
|
(113)
|
576
|
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
|
Six-month period ended June 30, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
revenue
|
12,597
|
(1,655)
|
(153)
|
|
|
|
(862)
|
|
(114)
|
67
|
(2,717)
|
9,880
|
Operating net
underwriting revenue
|
Insurance service
expense
|
(11,096)
|
1,274
|
250
|
(198)
|
12
|
(69)
|
904
|
-
|
114
|
(67)
|
2,220
|
(8,876)
|
Sum of: Operating net
claims ($5,501
million) and Operating net underwriting
expenses ($3,375 million)
|
Allocation of
reinsurance premiums
|
(1,655)
|
1,655
|
|
|
|
|
|
|
|
|
1,655
|
-
|
n/a
|
Amounts recoverable
from reinsurers
|
1,274
|
(1,274)
|
|
|
|
|
|
|
|
|
(1,274)
|
-
|
n/a
|
Insurance service result
|
1,120
|
-
|
97
|
(198)
|
12
|
(69)
|
42
|
-
|
-
|
-
|
(116)
|
1,004
|
Underwriting income (loss)
|
Six-month period ended June 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
revenue
|
13,214
|
(1,791)
|
(294)
|
|
|
|
(1,548)
|
|
(107)
|
89
|
(3,651)
|
9,563
|
Operating net
underwriting revenue
|
Insurance service
expense
|
(11,574)
|
1,410
|
340
|
(164)
|
23
|
(60)
|
1,558
|
(7)
|
107
|
(89)
|
3,118
|
(8,456)
|
Sum of: Operating net
claims ($5,310
million) and Operating net underwriting
expenses ($3,146 million)
|
Allocation of
reinsurance premiums
|
(1,791)
|
1,791
|
|
|
|
|
|
|
|
|
1,791
|
-
|
n/a
|
Amounts recoverable
from reinsurers
|
1,410
|
(1,410)
|
|
|
|
|
|
|
|
|
(1,410)
|
-
|
n/a
|
Insurance service result
|
1,259
|
-
|
46
|
(164)
|
23
|
(60)
|
10
|
(7)
|
-
|
-
|
(152)
|
1,107
|
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
|
Q2-2023
|
Q2-2022
Restated
|
H1-2023
|
H1-2022
Restated
|
|
|
|
|
|
|
Operating net
claims, as reported in Tables 2 - 3
|
2,902
|
2,647
|
5,501
|
5,310
|
|
Remove: net current
year CAT losses
|
(421)
|
(245)
|
(529)
|
(427)
|
|
Remove: favourable
(unfavourable) PYD
|
238
|
205
|
497
|
488
|
|
|
|
|
|
|
|
Operating net claims
excluding current year CAT losses and PYD
|
2,719
|
2,607
|
5,469
|
5,371
|
|
Operating net
underwriting revenue
|
5,016
|
4,802
|
9,880
|
9,563
|
|
|
|
|
|
|
|
Underlying current year
loss ratio
|
54.2 %
|
54.2 %
|
55.3 %
|
56.2 %
|
|
CAT loss
ratio
|
8.4 %
|
5.1 %
|
5.4 %
|
4.5 %
|
|
(Favourable)
unfavourable PYD ratio
|
(4.7) %
|
(4.2) %
|
(5.0) %
|
(5.2) %
|
|
Claims
ratio
|
57.9 %
|
55.1 %
|
55.7 %
|
55.5 %
|
|
Table 5
Reconciliation of the components within Operating net
underwriting expenses
|
Q2-2023
|
Q2-2022
Restated
|
H1-2023
|
H1-2022
Restated
|
|
|
|
|
|
Operating net
underwriting expenses, as reported in Tables 2 -
3
|
1,723
|
1,579
|
3,375
|
3,146
|
Commissions
|
799
|
790
|
1,600
|
1,532
|
General
expenses
|
784
|
654
|
1,499
|
1,342
|
Premium
taxes
|
140
|
135
|
276
|
272
|
Operating net
underwriting revenue
|
5,016
|
4,802
|
9,880
|
9,563
|
Commissions
ratio
|
15.9 %
|
16.5 %
|
16.2 %
|
16.0 %
|
General expenses
ratio
|
15.6 %
|
13.6 %
|
15.1 %
|
14.0 %
|
Premium taxes
ratio
|
2.8 %
|
2.8 %
|
2.8 %
|
2.9 %
|
Expense
ratio
|
34.3 %
|
32.9 %
|
34.1 %
|
32.9 %
|
Claims ratio (as
reported in Table 4)
|
57.9 %
|
55.1 %
|
55.7 %
|
55.5 %
|
Combined
ratio
|
92.2 %
|
88.0 %
|
89.8 %
|
88.4 %
|
Table 6
Reconciliation of Operating net investment income to Net
investment income, as reported under IFRS
|
Q2-2023
|
Q2-2022
Restated
|
H1-2023
|
H1-2022
Restated
|
|
|
|
|
|
Net
investment income, as reported under IFRS
|
326
|
213
|
621
|
420
|
Remove:
investment income from the RSA
Middle-East exited operations
|
-
|
(2)
|
-
|
(4)
|
Operating net
investment income
|
326
|
211
|
621
|
416
|
Table 7
Reconciliation of Net unwind of discount on claims liabilities
to Net insurance financial result, as reported under IFRS
|
Q2-2023
|
Q2-2022
Restated
|
H1-2023
|
H1-2022
Restated
|
|
|
|
|
|
Net insurance
financial result, as reported under IFRS
|
79
|
113
|
(172)
|
486
|
Remove: Changes in
discount rates and other financial assumptions
|
(225)
|
(316)
|
(133)
|
(821)
|
Remove: Net foreign
currency gains (losses)
|
(53)
|
118
|
(97)
|
171
|
Remove: Net insurance
financial result from claims acquired in a business
combination
|
(17)
|
(3)
|
(40)
|
(7)
|
Net unwind of
discount on claims liabilities
|
(216)
|
(88)
|
(442)
|
(171)
|
Table 8
Reconciliation of ROE to Net income attributable to
shareholders, as reported under IFRS
|
Q2-2023
|
Q2-2022
Restated
|
H1-2023
|
H1-2022
Restated
|
|
|
|
|
|
Net income
attributable to shareholders, as reported under
IFRS
|
252
|
1,234
|
629
|
1,733
|
Remove: preferred share
dividends and other equity distribution
|
(23)
|
(16)
|
(39)
|
(29)
|
|
|
|
|
|
Net income
attributable to common shareholders
|
229
|
1,218
|
590
|
1,704
|
Divided by
weighted-average number of common shares (in millions)
|
175.3
|
175.8
|
175.3
|
175.9
|
EPS, basic and
diluted (in dollars)
|
1.30
|
6.93
|
3.36
|
9.68
|
|
|
|
|
|
Net income
attributable to common shareholders for the last 12
months1
|
1,280
|
2,573
|
|
|
Adjusted average common
shareholders' equity1
|
14,226
|
13,934
|
|
|
ROE for the last 12
months1
|
9.0 %
|
18.5 %
|
|
|
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 June 30, 2023
|
|
|
|
|
|
|
|
Insurance service
result
|
9
|
|
25
|
|
|
(61)
|
503
|
476
|
Net investment
income
|
|
|
|
326
|
|
-
|
|
326
|
Net gains (losses) on
investment
portfolio
|
|
|
|
|
|
(295)
|
|
(295)
|
Net insurance
financial result
|
|
|
|
(216)
|
|
295
|
|
79
|
Share of profits from
investments in
associates and joint ventures
|
50
|
(4)
|
(2)
|
|
(11)
|
(5)
|
|
28
|
Other net gains
(losses)
|
|
|
|
|
|
2
|
|
2
|
Other income and
expense
|
78
|
|
(70)
|
|
|
(51)
|
(112)
|
(155)
|
Other finance
costs
|
|
(52)
|
|
|
|
|
|
(52)
|
Acquisition,
integration and restructuring
costs
|
|
|
|
|
|
(76)
|
|
(76)
|
Income tax benefit
(expense)
|
|
|
|
|
(73)
|
|
|
(73)
|
|
|
|
|
|
|
|
|
|
Total, as reported
in MD&A
|
137
|
(56)
|
(47)
|
110
|
(84)
|
(191)
|
(391)
|
|
For the quarter
ended June 30, 2022 (Restated)
|
|
|
|
|
|
|
|
Insurance service
result
|
31
|
|
7
|
|
|
(26)
|
677
|
689
|
Net investment
income
|
|
|
|
211
|
|
2
|
|
213
|
Net gains (losses) on
investment
portfolio
|
|
|
|
|
|
221
|
|
221
|
Net insurance
financial result
|
|
|
|
(88)
|
|
247
|
(46)
|
113
|
Share of profits from
investments in
associates and joint ventures
|
59
|
(3)
|
(1)
|
|
(14)
|
(4)
|
|
37
|
Other net gains
(losses)
|
|
|
|
|
|
443
|
|
443
|
Other income and
expense
|
52
|
|
(53)
|
|
|
(55)
|
(55)
|
(111)
|
Other finance
costs
|
|
(43)
|
|
|
|
|
|
(43)
|
Acquisition,
integration and restructuring
costs
|
|
|
|
|
|
(103)
|
|
(103)
|
Income tax benefit
(expense)
|
|
|
|
|
(224)
|
|
|
(224)
|
|
|
|
|
|
|
|
|
|
Total, as reported
in MD&A
|
142
|
(46)
|
(47)
|
123
|
(238)
|
725
|
576
|
|
|
|
|
|
|
|
|
|
|
|
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 six-month
period ended June 30, 2023
|
|
|
|
|
|
|
|
Insurance service
result
|
45
|
|
24
|
|
|
(151)
|
1,202
|
1,120
|
Net investment
income
|
|
|
|
621
|
|
|
|
621
|
Net gains (losses) on
investment
portfolio
|
|
|
|
|
|
(146)
|
|
(146)
|
Net insurance
financial result
|
|
|
|
(442)
|
|
270
|
|
(172)
|
Share of profits from
investments in
associates and joint ventures
|
97
|
(8)
|
(1)
|
|
(21)
|
(9)
|
|
58
|
Other net gains
(losses)
|
|
|
|
|
|
19
|
|
19
|
Other income and
expense
|
100
|
|
(101)
|
|
|
(103)
|
(198)
|
(302)
|
Other finance
costs
|
|
(102)
|
|
|
|
|
|
(102)
|
Acquisition,
integration and restructuring
costs
|
|
|
|
|
|
(212)
|
|
(212)
|
Income tax benefit
(expense)
|
|
|
|
|
(247)
|
|
|
(247)
|
|
|
|
|
|
|
|
|
|
Total, as reported
in MD&A
|
242
|
(110)
|
(78)
|
179
|
(268)
|
(332)
|
1,004
|
|
For the six-month
period ended June 30, 2022 (Restated)
|
|
|
|
|
|
|
Insurance service
result
|
51
|
|
9
|
|
|
(79)
|
1,278
|
1,259
|
Net investment
income
|
|
|
|
416
|
|
4
|
|
420
|
Net gains (losses) on
investment
portfolio
|
|
|
|
|
|
-
|
|
-
|
Net insurance
financial result
|
|
|
|
(171)
|
|
664
|
(7)
|
486
|
Share of profits from
investments in
associates and joint ventures
|
97
|
(4)
|
-
|
|
(22)
|
(9)
|
|
62
|
Other net gains
(losses)
|
|
|
|
|
|
423
|
|
423
|
Other income and
expense
|
86
|
|
(92)
|
|
|
(113)
|
(164)
|
(283)
|
Other finance
costs
|
|
(84)
|
|
|
|
|
|
(84)
|
Acquisition,
integration and restructuring
costs
|
|
|
|
|
|
(167)
|
|
(167)
|
Income tax benefit
(expense)
|
|
|
|
|
(394)
|
|
|
(394)
|
|
|
|
|
|
|
|
|
|
Total, as reported
in MD&A
|
234
|
(88)
|
(83)
|
245
|
(416)
|
723
|
1,107
|
|
|
|
|
|
|
|
|
|
|
|
Table 11 Calculation
of BVPS and BVPS, excluding AOCI
As at June
30,
|
2023
|
2022
Restated
|
|
|
|
Equity attributable to
shareholders, as reported under
IFRS
|
14,989
|
16,245
|
Remove: Preferred
shares and other equity, as reported under IFRS
|
(1,619)
|
(1,322)
|
|
|
|
Common shareholders'
equity
|
13,370
|
14,923
|
Remove: AOCI, as
reported under IFRS
|
670
|
70
|
|
|
|
Common shareholders'
equity (excluding AOCI)
|
14,040
|
14,993
|
|
|
|
Number of common shares
outstanding at the same date (in
millions)
|
175.3
|
176.0
|
BVPS
|
76.29
|
84.78
|
BVPS, excluding
AOCI1
|
80.11
|
85.18
|
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 June
30,
|
2023
|
20221
|
|
|
|
Ending common
shareholders' equity
|
13,370
|
14,193
|
Remove: significant
capital transaction during the period
|
1,195
|
-
|
Ending common
shareholders' equity, excluding significant capital
transaction
|
14,565
|
14,193
|
Beginning common
shareholders' equity2
|
14,699
|
13,676
|
Average common
shareholders' equity, excluding significant capital
transaction
|
14,632
|
13,934
|
Weighted impact of
significant capital transaction
|
(406)
|
-
|
Adjusted average
common shareholders' equity
|
14,226
|
13,934
|
|
|
|
Ending
common shareholders' equity, excluding AOCI
|
14,040
|
15,358
|
Remove: significant
capital transaction during the period
|
1,195
|
-
|
Ending common
shareholders' equity, excluding AOCI and significant capital
transaction
|
15,235
|
15,358
|
Beginning common
shareholders' equity, excluding AOCI2
|
15,867
|
13,193
|
Average common
shareholders' equity, excluding AOCI and significant capital
transaction
|
15,551
|
14,275
|
Weighted impact of
significant capital transaction
|
(406)
|
-
|
Adjusted average
common shareholders' equity, excluding AOCI
|
15,145
|
14,275
|
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.
|
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
As at
|
June
30
2023
|
March
31
2023
|
Dec. 31
2022
Restated
|
|
|
|
|
Debt outstanding, as
reported under IFRS
|
4,741
|
4,789
|
4,522
|
Remove: hybrid
subordinated notes
|
(247)
|
(247)
|
(247)
|
|
|
|
|
Debt outstanding
(excluding hybrid debt)
|
4,494
|
4,542
|
4,275
|
|
|
|
|
Debt outstanding, as
reported under IFRS
|
4,741
|
4,789
|
4,522
|
Equity attributable to
shareholders, as reported under IFRS
|
14,989
|
15,241
|
15,843
|
Preferred shares from
Equity attributable to non-controlling interests
|
285
|
285
|
285
|
Adjusted total
capital
|
20,015
|
20,315
|
20,650
|
|
|
|
|
Debt outstanding
(excluding hybrid debt)
|
4,494
|
4,542
|
4,275
|
Adjusted total
capital
|
20,015
|
20,315
|
20,650
|
Adjusted
debt-to-total capital ratio
|
22.5 %
|
22.4 %
|
20.7 %
|
|
|
|
|
Debt outstanding, as
reported under IFRS
|
4,741
|
4,789
|
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)
|
6,645
|
6,693
|
6,129
|
Adjusted total
capital
|
20,015
|
20,315
|
20,650
|
Total leverage
ratio
|
33.2 %
|
32.9 %
|
29.7 %
|
Adjusted
debt-to-total capital
ratio
|
22.5 %
|
22.4 %
|
20.7 %
|
Preferred shares and
hybrids
|
10.7 %
|
10.5 %
|
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 acquisition and integration of RSA. 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.sedar.com. 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
Q2-2023 MD&A.
SOURCE Intact Financial Corporation