TORONTO, Feb. 13,
2024 /CNW/ - (TSX: IFC)
(in Canadian dollars except as otherwise noted)
Highlights
- Net operating income per share1 up 45%
to $4.22, driven by strong
underwriting, investment and distribution results
- Undiscounted combined ratio1 was solid at
90.1% (85.0% discounted), reflecting strong underlying
performance across all geographies and our exit from the UK
personal lines market, tempered by catastrophe losses in the
UK&I
- Operating DPW1,2 increased 4%, with organic
growth of 8%, led by double-digit growth in personal lines
- BVPS1 up 6% from Q3-2023, driven by strong
EPS of $2.78 (with a 48% increase
year-over-year) and favourable capital markets
- Adjusted ROE1 of 11.7% (and
ROE1 of 8.8%) after absorbing elevated
catastrophe losses and UK personal lines exit costs. Operating
ROE1 increased to a solid 14.2% from 12.2% in
Q3-2023.
- Quarterly dividend increased by $0.11 to $1.21
per common share, representing a 10-year compound annual growth
rate of 10%
Charles Brindamour, Chief
Executive Officer, said:
" The past year has
been challenging for society, particularly in the face of numerous
natural disasters. Through it all, our people worked relentlessly
to ensure customers get back on track quickly. Despite shouldering
elevated catastrophe losses as a result, the business demonstrated
tremendous resilience. We achieved mid-teens operating ROE and
maintained a strong balance sheet with $2.7
billion of total capital margin. As we look ahead to 2024,
we are well positioned for outperformance, given strong top line
momentum, continued underwriting discipline, and a refocused
UK&I segment. We are pleased to increase dividends to common
shareholders for the nineteenth consecutive year."
Consolidated
Highlights
(in millions of Canadian dollars except as otherwise
noted)
|
Q4-2023
|
Q4-2022
Restated4
|
Change
|
2023
|
2022 Restated4
|
Change
|
Operating direct
premiums written1, 2
|
5,410
|
5,125
|
4 %
|
22,370
|
21,005
|
5 %
|
Combined ratio
(discounted)1
|
85.0 %
|
90.4 %
|
(5.4) pts
|
89.5 %
|
89.4 %
|
0.1 pts
|
Combined ratio
(undiscounted)1
|
90.1 %
|
93.2 %
|
(3.1) pts
|
94.2 %
|
91.8 %
|
2.4 pts
|
Underwriting
income1,3
|
787
|
485
|
62 %
|
2,131
|
2,064
|
3 %
|
Operating net
investment income1
|
376
|
279
|
35 %
|
1,346
|
927
|
45 %
|
Net unwind of discount
on claims liabilities1,3
|
(217)
|
(117)
|
nm
|
(884)
|
(378)
|
nm
|
Operating net
investment result1
|
159
|
162
|
(2) %
|
462
|
549
|
(16) %
|
Distribution
income1
|
109
|
94
|
16 %
|
467
|
441
|
6 %
|
Net operating income
attributable to common shareholders1
|
752
|
508
|
48 %
|
2,061
|
2,093
|
(2) %
|
Net
income
|
531
|
353
|
50 %
|
1,331
|
2,450
|
(46) %
|
Per share measures
(in dollars)
|
|
|
|
|
|
|
Net operating income
per share (NOIPS)1
|
$4.22
|
$2.91
|
45 %
|
$11.70
|
$11.92
|
(2) %
|
Earnings per share
(EPS)
|
$2.78
|
$1.88
|
48 %
|
$6.99
|
$13.63
|
(49) %
|
Book value per
share1
|
$81.71
|
$82.84
|
(1) %
|
|
|
|
Return on equity for
the last 12 months
|
|
|
|
|
|
|
Operating
ROE1
|
14.2 %
|
14.0 %
|
0.2
pts
|
|
|
|
Adjusted
ROE1
|
11.7 %
|
19.2 %
|
(7.5) pts
|
|
|
|
ROE1
|
8.8 %
|
16.3 %
|
(7.5) pts
|
|
|
|
Total capital
margin1
|
2,671
|
2,379
|
292
|
|
|
|
Adjusted debt-to-total
capital ratio1
|
22.4 %
|
20.7 %
|
1.7 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 catastrophe losses.
- In Canada, both personal
property and auto premiums are expected to grow by high
single-digits.
- 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.
__________________________
|
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 31 –
Non-GAAP and other financial measures in the Q4-2023 Management's
Discussion and Analysis for further details.
|
2
|
DPW change (growth) is
presented in constant currency.
|
3
|
Underwriting income
includes our underlying performance, catastrophe losses, prior year
development as well as the discount build on claims liabilities.
The discount build is largely offset with the net unwind of
discount on claims liabilities presented within operating net
investment result.
|
4
|
Comparatives were
restated for IFRS 17 but not for IFRS 9.
|
Segment Results
(in millions of
Canadian dollars except as otherwise noted)
|
Q4-2023
|
Q4-2022 restated3
|
Change
|
2023
|
2022 restated3
|
Change
|
Operating direct
premiums written1,2
|
|
|
Canada
|
3,682
|
3,410
|
8 %
|
14,891
|
13,995
|
6 %
|
UK&I4
|
1,112
|
1,150
|
(9) %
|
4,706
|
4,664
|
(3) %
|
US
|
616
|
565
|
9 %
|
2,773
|
2,346
|
14 %
|
Total
|
5,410
|
5,125
|
4 %
|
22,370
|
21,005
|
5 %
|
Combined ratio
(undiscounted)1
|
|
|
|
Canada
|
86.7 %
|
87.6 %
|
(0.9) pts
|
94.5 %
|
90.2 %
|
4.3 pts
|
UK&I4
|
104.6 %
|
116.4 %
|
(11.8) pts
|
96.4 %
|
99.3 %
|
(2.9) pts
|
US
|
86.4 %
|
84.7 %
|
1.7 pts
|
88.7 %
|
87.8 %
|
0.9 pts
|
Combined ratio
(undiscounted)
|
90.1 %
|
93.2 %
|
(3.1) pts
|
94.2 %
|
91.8 %
|
2.4 pts
|
Impact of
discounting
|
(5.1) %
|
(2.8) %
|
(2.3) pts
|
(4.7) %
|
(2.4) %
|
(2.3) pts
|
Combined ratio
(discounted)
|
85.0 %
|
90.4 %
|
(5.4) pts
|
89.5 %
|
89.4 %
|
0.1 pts
|
|
|
|
|
|
|
|
|
|
|
Q4-2023 Consolidated Performance
- Overall operating DPW increased 4%, with organic
growth of 8% (excluding exits and acquisitions), led by strong
momentum in Canada personal lines
and continued rate actions across all geographies.
- Overall combined ratio of 90.1% (undiscounted) improved
by 3.1 points compared to last year, with strong underlying
performance across all regions and reflecting our exit from the UK
personal lines market.
- Operating net investment income of $376 million for the quarter increased 35%
year-over-year, benefiting from higher book yields and the
increased turnover of our portfolio over the last 12 months.
- Distribution income increased by 16% to
$109 million, mainly driven by
BrokerLink's recent acquisitions paired with solid organic
growth.
Lines of Business5
P&C Canada
- Personal auto premium growth accelerated to 12%,
reflecting the benefit of our rate actions in hard market
conditions and continued momentum in unit growth. The combined
ratio of 95.2% for the quarter reflected a 2-point improvement in
our current year loss ratio from higher earned rates, tempered by
lower favourable prior-year development. Our performance on a
full-year basis was 94.7%, in line with expectations. We continue
to expect a seasonally adjusted sub-95 combined ratio over the next
12 months.
- Personal property premiums grew by 8%, driven by rate
increases in hard market conditions and unit growth momentum. The
combined ratio was very strong at 75.8% for the quarter, reflecting
continued underwriting discipline and mild weather. The combined
ratio for the year was 100.7%, mainly on account of 11 points of
catastrophe losses in excess of expectations. With pricing, risk
selection, product, claims and supply chain actions already
underway, we remain well-positioned to deliver sub-95 performance,
even with severe weather.
- Commercial lines premiums grew by 4%, as continued rate
discipline was partially offset by targeted actions to optimize the
portfolio and increased competition for large accounts within
specialty lines. The combined ratios were strong at 84.4% for the
quarter and 89.3% for the year, primarily reflecting robust
underlying performance, which largely offset elevated catastrophe
losses during the year. We remain well positioned to continue
delivering a low-90s or better combined ratio as a result of our
profitability actions.
P&C UK&I
- Excluding the impact of the UK Personal Lines exit,
operating DPW growth in constant currency was 26%, bolstered
by the recent acquisition of Direct Line Insurance Group plc's
brokered Commercial Lines operations in the UK. Factoring out this
transaction and the end of a large commercial motor contract,
organic growth was 6% for the quarter, mainly due to rate actions
in supportive market conditions.
- The combined ratio of 104.6% for the quarter reflected
11 points of catastrophe losses in excess of expectations. Adjusted
for the impact of Personal Lines results in the first three
quarters, as well as higher-than-expected catastrophe losses, the
full-year combined ratio was also in the low 90s. We expect to run
the Commercial Lines-focused continuing business at a combined
ratio of approximately 92% in 2024, and see this improving to
roughly 90% in the subsequent 12 to 24 months.
P&C U.S.
- Commercial lines premiums grew 9% on a constant
currency basis, with hard market conditions in most of our lines of
business. The combined ratio was strong at 86.4% for the quarter
and at 88.7% for the year, driven by growth in profitable business
lines and continued underwriting discipline. We are well positioned
to maintain a low 90s or better combined ratio going forward.
__________________________
|
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 31 – Non-GAAP and other financial measures in the Q4-2023
Management's Discussion and Analysis for further
details.
|
2
|
DPW change (growth) is
presented in constant currency.
|
3
|
Comparatives were
restated for IFRS 17.
|
4
|
On a pro-forma basis
(which excludes UK Personal Lines results) growth in constant
currency was of 26% for Q4-2023 and 7% for 2023. Combined ratio was
of 104.6% for Q4-2023 (95.4% in Q4-2022) and of 94.3% for 2023
(89.7% in 2022).
|
5
|
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 $752 million was 48% higher
than in Q4-2022, driven by topline growth, solid underwriting
performance, as well as strong investment and distribution
results.
- Earnings per share of $2.78 was up 48%, driven by higher operating
income and market-related gains, offsetting increased costs related
to the strategic exit from the UK personal lines market. These
included underwriting losses of $138
million, of which $65 million
was driven by Storms Babet and Ciaran in the UK&I segment.
- Operating ROE was solid at 14.2% for the 12 months to
December 31, 2023, reflecting strong
operating performance across the business, tempered by a 3-point
impact from catastrophe losses in excess of expectations over the
year. Adjusted ROE and ROE also remained healthy at 11.7%
and 8.8% respectively, after absorbing higher exited lines and
restructuring costs as a result of the exit from the UK personal
lines market.
Balance Sheet
- The Company ended the quarter in a strong financial position,
with a total capital margin of $2.7
billion and solid regulatory capital ratios in all
jurisdictions.
- The adjusted debt-to-total capital ratio of
22.4% was relatively stable compared to last quarter, as the
growth in capital from strong earnings was tempered by financing
issued for our strategic initiatives. The adjusted debt-to-total
capital ratio is expected to return to our long-term target of 20%
by the end of 2024.
- IFC's book value per share (BVPS) of $81.71 at December 31,
2023 was 6% higher than in Q3-2023, driven by strong
operating results and favourable capital markets. BVPS was in line
with Q4-2022 as strong earnings fully offset the impact of the UK
pension buy-in transaction, which closed in Q1-2023.
M&A Update
- On December 7, 2023, we announced
the sale of our UK direct Personal Lines (Home and Pet) operations
to Admiral Group plc, as well as the exit of Home and Pet partner
and broker contracts in the UK. The company's exit from the UK
Personal Lines market accelerates the path to sustainable
outperformance for the continuing UK&I business.
- The acquisition of Direct Line Insurance Group plc's brokered
Commercial Lines operations in the UK closed on October 26, 2023. Substantially all of the future
economics of the business were transferred to RSA effective
October 1, 2023.
Common Share Dividend
- The Board of Directors approved the quarterly dividend of
$1.21 per share on the Company's
outstanding common shares. The common share dividends are payable
on March 29, 2024, to shareholders of
record on March 15, 2024. This
represents a $0.11 increase and marks
the 19th consecutive annual increase in our common share
dividend since our IPO in 2004.
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 March 31, 2024, to
shareholders of record on March 15,
2024.
Normal Course Issuer Bid
- As at December 31, 2023, the
Company had repurchased and cancelled 2,000 common shares under its
normal course issuer bid ("NCIB") program. The Board has
authorized, subject to TSX approval, the renewal of the NCIB to
purchase for cancellation up to 3% of the Company's issued and
outstanding common shares commencing February 17, 2024.
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 $2.79 and $3.38,
respectively.
Management's Discussion and Analysis (MD&A) and
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
Q4-2023 MD&A, as well as the Q4-2023 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 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
February 14, 2024 at 2:00 p.m. ET until midnight on February 21, 2024. To listen to the replay, call
416-764-8677 or 1-888-390-0541 (toll-free in North America), entry code 042559. 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 $22 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 our affinity groups, travel
insurance, as well as exclusive and tailored offerings through
Intact Prestige.
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 31 – Non-GAAP and
other financial measures in the
Q4-2023 MD&A dated February 13,
2024, 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
|
Q4-2023
|
Q4-2022
Restated
|
2023
|
2022
Restated
|
Net income
attributable to shareholders, as reported under IFRS
|
524
|
346
|
1,316
|
2,454
|
Remove: pre-tax
non-operating results
|
205
|
221
|
829
|
(341)
|
Remove: non-operating
tax expense (benefit)
|
51
|
(43)
|
-
|
64
|
Remove: non-operating
component of NCI
|
-
|
-
|
-
|
(24)
|
NOI attributable to shareholders
|
780
|
524
|
2,145
|
2,153
|
Remove: preferred share
dividends and other equity distribution
|
(28)
|
(16)
|
(84)
|
(60)
|
NOI attributable to
common shareholders
|
752
|
508
|
2,061
|
2,093
|
Divided by
weighted-average number of common shares (in millions)
|
178.3
|
175.3
|
176.2
|
175.6
|
NOIPS, basic and
diluted (in dollars)
|
4.22
|
2.91
|
11.70
|
11.92
|
NOI attributable to
common shareholders for the last 12 months
|
2,061
|
2,093
|
|
Adjusted average common
shareholders' equity, excluding AOCI
|
14,518
|
15,001
|
|
OROE for the last 12
months
|
14.2 %
|
14.0 %
|
|
Table 2
Reconciliation of underwriting results on a MD&A basis with
the 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
December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
revenue
|
6,525
|
(586)
|
(346)
|
|
|
|
(311)
|
|
(63)
|
40
|
(1,266)
|
5,259
|
Operating net
underwriting revenue
|
Insurance service
expense
|
(5,540)
|
388
|
504
|
(122)
|
5
|
(40)
|
310
|
-
|
63
|
(40)
|
1,068
|
(4,472)
|
Sum of: Operating net
claims ($2,757
million) and Operating net underwriting
expenses ($1,715 million)
|
Expense from
reinsurance contracts
|
(586)
|
586
|
|
|
|
|
|
|
|
|
586
|
-
|
n/a
|
Income from reinsurance
contracts
|
388
|
(388)
|
|
|
|
|
|
|
|
|
(388)
|
-
|
n/a
|
Insurance service
result
|
787
|
-
|
158
|
(122)
|
5
|
(40)
|
(1)
|
-
|
-
|
-
|
-
|
787
|
Underwriting income
(loss)
|
Quarter ended
December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
revenue
|
6,404
|
(867)
|
(49)
|
|
|
|
(446)
|
|
(38)
|
37
|
(1,363)
|
5,041
|
Operating net
underwriting revenue
|
Insurance service
expense
|
(5,621)
|
757
|
84
|
(162)
|
18
|
(33)
|
448
|
(48)
|
38
|
(37)
|
1,065
|
(4,556)
|
Sum of: Operating net
claims ($2,900
million) and Operating net underwriting
expenses ($1,656 million)
|
Expense from
reinsurance contracts
|
(867)
|
867
|
|
|
|
|
|
|
|
|
867
|
-
|
n/a
|
Income from reinsurance
contracts
|
757
|
(757)
|
|
|
|
|
|
|
|
|
(757)
|
-
|
n/a
|
Insurance service
result
|
673
|
-
|
35
|
(162)
|
18
|
(33)
|
2
|
(48)
|
-
|
-
|
(188)
|
485
|
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 Consolidated
financial statements (yearly)
Financial
statements
|
FS
IFRS 17
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
Total
|
MD&A
IFRS 17
|
MD&A
|
Twelve-month
period ended December 31, 20223
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
revenue
|
25,507
|
(3,056)
|
(562)
|
|
|
|
(1,418)
|
|
(244)
|
138
|
(5,142)
|
20,365
|
Operating net
underwriting revenue
|
Insurance service
expense
|
(22,584)
|
2,442
|
875
|
(417)
|
22
|
(151)
|
1,473
|
-
|
244
|
(138)
|
4,350
|
(18,234)
|
Sum of: Operating net
claims ($11,426
million) and Operating net underwriting
expenses ($6,808 million)
|
Expense from
reinsurance contracts
|
(3,056)
|
3,056
|
|
|
|
|
|
|
|
|
3,056
|
-
|
n/a
|
Income from reinsurance
contracts
|
2,442
|
(2,442)
|
|
|
|
|
|
|
|
|
(2,442)
|
-
|
n/a
|
Insurance service
result
|
2,309
|
-
|
313
|
(417)
|
22
|
(151)
|
55
|
-
|
-
|
-
|
(178)
|
2,131
|
Underwriting income
(loss)
|
Twelve-month
period ended December 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
revenue
|
25,914
|
(3,475)
|
(406)
|
|
|
|
(2,472)
|
|
(181)
|
142
|
(6,392)
|
19,522
|
Operating net
underwriting revenue
|
Insurance service
expense
|
(22,750)
|
2,913
|
536
|
(438)
|
53
|
(132)
|
2,487
|
(166)
|
181
|
(142)
|
5,292
|
(17,458)
|
Sum of: Operating net
claims ($11,016
million) and Operating net underwriting
expenses ($6,442 million)
|
Expense from
reinsurance contracts
|
(3,475)
|
3,475
|
|
|
|
|
|
|
|
|
3,475
|
-
|
n/a
|
Income from reinsurance
contracts
|
2,913
|
(2,913)
|
|
|
|
|
|
|
|
|
(2,913)
|
-
|
n/a
|
Insurance service
result
|
2,602
|
-
|
130
|
(438)
|
53
|
(132)
|
15
|
(166)
|
-
|
-
|
(538)
|
2,064
|
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
|
Q4-2023
|
Q4-2022
Restated
|
2023
|
2022
Restated
|
|
|
|
|
|
Operating net
claims
|
2,757
|
2,900
|
11,426
|
11,016
|
Remove: net current
year CAT losses
|
(199)
|
(171)
|
(1,339)
|
(836)
|
Remove: favourable
(unfavourable) PYD
|
272
|
233
|
958
|
936
|
|
|
|
|
|
Operating net claims
excluding current year CAT losses and PYD
|
2,830
|
2,962
|
11,045
|
11,116
|
Operating net
underwriting revenue
|
5,259
|
5,041
|
20,365
|
19,522
|
|
|
|
|
|
Underlying current year
loss ratio
|
53.9 %
|
58.7 %
|
54.2 %
|
56.9 %
|
CAT loss
ratio
|
3.8 %
|
3.4 %
|
6.6 %
|
4.3 %
|
(Favourable)
unfavourable PYD ratio
|
(5.2) %
|
(4.6) %
|
(4.7) %
|
(4.8) %
|
Claims
ratio
|
52.5 %
|
57.5 %
|
56.1 %
|
56.4 %
|
Table 5
Reconciliation of the components within Operating net
underwriting expenses
|
Q4-2023
|
Q4-2022
Restated
|
2023
|
2022
Restated
|
|
|
|
|
|
Operating net
underwriting expenses
|
1,715
|
1,656
|
6,808
|
6,442
|
Commissions
|
834
|
759
|
3,267
|
3,120
|
General
expenses
|
732
|
754
|
2,979
|
2,770
|
Premium
taxes
|
149
|
143
|
562
|
552
|
Operating net
underwriting revenue
|
5,259
|
5,041
|
20,365
|
19,522
|
Commissions
ratio
|
15.8 %
|
15.1 %
|
16.0 %
|
16.0 %
|
General expenses
ratio
|
13.9 %
|
15.0 %
|
14.6 %
|
14.2 %
|
Premium taxes
ratio
|
2.8 %
|
2.8 %
|
2.8 %
|
2.8 %
|
Expense
ratio
|
32.5 %
|
32.9 %
|
33.4 %
|
33.0 %
|
Claims
ratio
|
52.5 %
|
57.5 %
|
56.1 %
|
56.4 %
|
Combined ratio
(discounted)
|
85.0 %
|
90.4 %
|
89.5 %
|
89.4 %
|
Table 6
Reconciliation of Operating net investment income to Net
investment income, as reported under IFRS
|
Q4-2023
|
Q4-2022
Restated
|
2023
|
2022
Restated
|
|
|
|
|
|
Net
investment income, as reported under IFRS
|
376
|
279
|
1,346
|
931
|
Remove:
investment income from the RSA
Middle-East exited operations
|
-
|
-
|
-
|
(4)
|
Operating net
investment income
|
376
|
279
|
1,346
|
927
|
Table 7
Reconciliation of Net unwind of discount on claims liabilities
to Net insurance financial result, as reported under IFRS
|
Q4-2023
|
Q4-2022
Restated
|
2023
|
2022
Restated
|
|
|
|
|
|
Net insurance
financial result, as reported under IFRS
|
(573)
|
(82)
|
(894)
|
439
|
Remove: Changes in
discount rates and other financial
assumptions1
|
394
|
39
|
156
|
(962)
|
Remove: Net foreign
currency gains (losses) 1
|
(40)
|
(73)
|
(94)
|
155
|
Remove: Net insurance
financial result from claims acquired in a business
combination
|
2
|
(1)
|
(52)
|
(10)
|
Net unwind of
discount on claims liabilities
|
(217)
|
(117)
|
(884)
|
(378)
|
1 Included within Note 24 – Net
investment return and net insurance financial
result from the Consolidated financial
statements.
|
Table 8
Reconciliation of ROE to Net income attributable to
shareholders, as reported under IFRS
|
Q4-2023
|
Q4-2022
Restated
|
2023
|
2022
Restated
|
Net income
attributable to shareholders, as reported under
IFRS
|
524
|
346
|
1,316
|
2,454
|
Remove: preferred share
dividends and other equity distribution
|
(28)
|
(16)
|
(84)
|
(60)
|
Net income
attributable to common shareholders
|
496
|
330
|
1,232
|
2,394
|
Divided by
weighted-average number of common shares (in
millions)
|
178.3
|
175.3
|
176.2
|
175.6
|
EPS, basic and
diluted (in dollars)
|
2.78
|
1.88
|
6.99
|
13.63
|
Net income
attributable to common shareholders for the last 12
months1
|
1,232
|
2,394
|
|
|
Adjusted average common
shareholders' equity1
|
14,021
|
14,720
|
|
|
ROE for the last 12
months1
|
8.8 %
|
16.3 %
|
|
|
Table 9
Reconciliation of consolidated results on a MD&A basis with
the 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 December 31, 2023
|
Insurance service
result
|
78
|
|
(38)
|
|
|
(162)
|
909
|
787
|
Net investment
income
|
|
|
|
376
|
|
|
|
376
|
Net gains (losses) on
investment portfolio
|
|
|
|
|
|
532
|
|
532
|
Net insurance
financial result
|
|
|
|
(217)
|
|
(356)
|
|
(573)
|
Share of profits from
investments in associates and joint ventures
|
38
|
(3)
|
1
|
|
(7)
|
(7)
|
|
22
|
Other net gains
(losses)
|
|
|
|
|
|
22
|
|
22
|
Other income and
expense
|
(7)
|
|
(8)
|
|
|
(52)
|
(122)
|
(189)
|
Other finance
costs
|
|
(59)
|
|
|
|
|
|
(59)
|
Acquisition,
integration and restructuring costs
|
|
|
|
|
|
(182)
|
|
(182)
|
Income tax benefit
(expense)
|
|
|
|
|
(205)
|
|
|
(205)
|
|
|
|
|
|
|
|
|
|
Total, as reported
in MD&A
|
109
|
(62)
|
(45)
|
159
|
(212)
|
(205)
|
787
|
|
For the quarter
ended December 31, 2022 (Restated)
|
Insurance service
result
|
37
|
|
(4)
|
|
|
(55)
|
695
|
673
|
Net investment
income
|
|
|
|
279
|
|
|
|
279
|
Net gains (losses) on
investment portfolio
|
|
|
|
|
|
(139)
|
|
(139)
|
Net insurance
financial result
|
|
|
|
(117)
|
|
83
|
(48)
|
(82)
|
Share of profits from
investments in associates and joint ventures
|
35
|
(5)
|
|
|
(6)
|
(6)
|
|
18
|
Other net gains
(losses)
|
|
|
|
|
|
38
|
|
38
|
Other income and
expense
|
22
|
|
(34)
|
|
|
(58)
|
(162)
|
(232)
|
Other finance
costs
|
|
(50)
|
|
|
|
|
|
(50)
|
Acquisition,
integration and restructuring costs
|
|
|
|
|
|
(84)
|
|
(84)
|
Income tax benefit
(expense)
|
|
|
|
|
(68)
|
|
|
(68)
|
|
|
|
|
|
|
|
|
|
Total, as reported
in MD&A
|
94
|
(55)
|
(38)
|
162
|
(74)
|
(221)
|
485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
10 Reconciliation of consolidated results on a MD&A
basis with the Consolidated financial
statements (yearly)
|
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 twelve-month
period ended December 31, 2023
|
|
|
|
|
|
|
|
Insurance service
result
|
149
|
|
2
|
|
|
(390)
|
2,548
|
2,309
|
Net investment
income
|
|
|
|
1,346
|
|
|
|
1,346
|
Net gains (losses) on
investment portfolio
|
|
|
|
|
|
249
|
|
249
|
Net insurance
financial result
|
|
|
|
(884)
|
|
(10)
|
|
(894)
|
Share of profits from
investments in associates and joint ventures
|
167
|
(13)
|
|
|
(35)
|
(23)
|
|
96
|
Other net gains
(losses)
|
|
|
|
|
|
50
|
|
50
|
Other income and
expense
|
151
|
|
(159)
|
|
|
(202)
|
(417)
|
(627)
|
Other finance
costs
|
|
(222)
|
|
|
|
|
|
(222)
|
Acquisition,
integration and restructuring costs
|
|
|
|
|
|
(503)
|
|
(503)
|
Income tax benefit
(expense)
|
|
|
|
|
(473)
|
|
|
(473)
|
|
|
|
|
|
|
|
|
|
Total, as reported
in MD&A
|
467
|
(235)
|
(157)
|
462
|
(508)
|
(829)
|
2,131
|
|
For the twelve-month
period ended December 31, 2022 (Restated)
|
|
|
|
|
|
|
Insurance service
result
|
121
|
|
11
|
|
|
(198)
|
2,668
|
2,602
|
Net investment
income
|
|
|
|
927
|
|
4
|
|
931
|
Net gains (losses) on
investment portfolio
|
|
|
|
|
|
(326)
|
|
(326)
|
Net insurance
financial result
|
|
|
|
(378)
|
|
983
|
(166)
|
439
|
Share of profits from
investments in associates and joint ventures
|
169
|
(12)
|
|
|
(36)
|
(18)
|
|
103
|
Other net gains
(losses)
|
|
|
|
|
|
477
|
|
477
|
Other income and
expense
|
151
|
|
(174)
|
|
|
(228)
|
(438)
|
(689)
|
Other finance
costs
|
|
(177)
|
|
|
|
|
|
(177)
|
Acquisition,
integration and restructuring costs
|
|
|
|
|
|
(353)
|
|
(353)
|
Income tax benefit
(expense)
|
|
|
|
|
(557)
|
|
|
(557)
|
|
|
|
|
|
|
|
|
|
Total, as reported
in MD&A
|
441
|
(189)
|
(163)
|
549
|
(593)
|
341
|
2,064
|
|
|
|
|
|
|
|
|
|
|
|
Table
11 Reconciliation of AEPS and AROE to Net income
attributable to shareholders, as reported under IFRS
|
Q4-2023
|
Q4-2022
Restated
|
2023
|
2022
Restated
|
Net income
attributable to shareholders, as reported under
IFRS
|
524
|
346
|
1,316
|
2,454
|
Adjustments, after
tax
|
|
|
|
|
Remove: amortization
of acquired intangible assets
|
55
|
49
|
204
|
193
|
Remove:
acquisition and integration
costs
|
66
|
46
|
193
|
228
|
Remove: net loss
(gain) on currency derivative hedges (acquisitions)
|
-
|
-
|
-
|
-
|
Remove: tax
adjustments on acquisition-related items
|
2
|
1
|
6
|
4
|
Remove: net result
from claims acquired in a business combination
|
-
|
2
|
2
|
5
|
Adjusted net income
attributable to shareholders
|
647
|
444
|
1,721
|
2,884
|
Remove: preferred
share dividends and other equity distribution
|
(28)
|
(16)
|
(84)
|
(60)
|
Adjusted net income
attributable to common shareholders
|
619
|
428
|
1,637
|
2,824
|
Divided by
weighted-average number of common shares (in millions)
|
178.3
|
175.3
|
176.2
|
175.6
|
AEPS, basic and
diluted (in dollars)
|
3.47
|
2.43
|
9.29
|
16.08
|
Adjusted net income
attributable to common shareholders for the last 12
months
|
1,637
|
2,824
|
|
|
Adjusted
average common shareholders'
equity
|
14,021
|
14,720
|
|
|
AROE for the last
12 months
|
11.7 %
|
19.2 %
|
|
|
Table 12 Calculation
of BVPS and BVPS, excluding AOCI
As at December
31,
|
2023
|
2022
Restated
|
|
|
|
Equity attributable to
shareholders, as reported under
IFRS
|
16,190
|
15,843
|
Remove:
Preferred shares and other equity, as
reported under IFRS
|
(1,619)
|
(1,322)
|
|
|
|
Common shareholders'
equity
|
14,571
|
14,521
|
Remove:
AOCI, as
reported under IFRS
|
321
|
1,091
|
|
|
|
Common shareholders'
equity (excluding AOCI)
|
14,892
|
15,612
|
|
|
|
Number of common shares
outstanding at the same date (in
millions)
|
178.3
|
175.3
|
BVPS
|
81.71
|
82.84
|
BVPS (excluding
AOCI)1
|
83.51
|
89.07
|
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
13 Adjusted average common shareholders' equity and Adjusted
average common shareholders' equity, excluding AOCI
|
As at December
31,
|
2023
|
2022
Restated
|
|
|
|
Ending common
shareholders' equity
|
14,571
|
14,521
|
Remove: significant
capital transactions during the period
|
638
|
-
|
Ending common
shareholders' equity, excluding significant capital
transaction
|
15,209
|
14,521
|
Beginning common
shareholders' equity
|
14,521
|
14,919
|
Impact of the initial
application of IFRS 9
|
(2)
|
n/a
|
Beginning common
shareholders' equity, adjusted for the impact of IFRS 9
|
14,519
|
n/a
|
Average common
shareholders' equity, excluding significant capital transaction
|
14,864
|
14,720
|
Weighted impact of
significant capital transactions1
|
(843)
|
-
|
Adjusted average common shareholders'
equity
|
14,021
|
14,720
|
|
|
|
Ending
common shareholders' equity,
excluding AOCI
|
14,892
|
15,612
|
Remove: significant
capital transaction during the period
|
638
|
-
|
Ending common
shareholders' equity, excluding AOCI and significant capital
transaction
|
15,530
|
15,612
|
Beginning common
shareholders' equity, excluding AOCI
|
15,612
|
14,389
|
Impact of the initial
application of IFRS 9
|
(420)
|
n/a
|
Beginning common
shareholders' equity, excluding AOCI adjusted with the impact of
the initial application of IFRS 9
|
15,192
|
n/a
|
Average common
shareholders' equity, excluding AOCI and significant capital
transaction
|
15,361
|
15,001
|
Weighted impact of
significant capital transactions1
|
(843)
|
-
|
Adjusted average common shareholders'
equity, excluding AOCI
|
14,518
|
15,001
|
1 Represents the net weighted impact
of the September 13, 2023 and February 27, 2023 significant capital
transactions.
|
Table
14 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
|
Dec.
31,
2023
|
Sept.
30,
2023
|
Dec.
31, 2022 Restated
|
|
|
|
|
Debt outstanding, as
reported under IFRS
|
5,081
|
4,927
|
4,522
|
Remove: hybrid
subordinated notes
|
(247)
|
(247)
|
(247)
|
|
|
|
|
Debt outstanding
(excluding hybrid debt)
|
4,834
|
4,680
|
4,275
|
|
|
|
|
Debt outstanding, as
reported under IFRS
|
5,081
|
4,927
|
4,522
|
Equity attributable to
shareholders, as reported under IFRS
|
16,190
|
15,392
|
15,843
|
Preferred shares from
Equity attributable to non-controlling interests
|
285
|
285
|
285
|
Adjusted total
capital
|
21,556
|
20,604
|
20,650
|
|
|
|
|
Debt outstanding
(excluding hybrid debt)
|
4,834
|
4,680
|
4,275
|
Adjusted total
capital
|
21,556
|
20,604
|
20,650
|
Adjusted
debt-to-total capital ratio
|
22.4 %
|
22.7 %
|
20.7 %
|
|
|
|
|
Debt outstanding, as
reported under IFRS
|
5,081
|
4,927
|
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)
|
6,985
|
6,831
|
6,129
|
Adjusted total
capital
|
21,556
|
20,604
|
20,650
|
Total leverage
ratio
|
32.4 %
|
33.2 %
|
29.7 %
|
Adjusted
debt-to-total capital
ratio
|
22.4 %
|
22.7 %
|
20.7 %
|
Preferred shares and
hybrids
|
10.0 %
|
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, the Direct Line
Insurance Group plc's brokered Commercial Lines operations
acquisition and the exit of Royal & Sun Alliance Insurance
Limited ("RSA") from the UK personal lines market, including the
sale of our UK direct personal lines operations to Admiral Group
plc. 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 13,
2024 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
Q4-2023 MD&A.
SOURCE Intact Financial Corporation