Intact Financial Corporation reports Q3-2024 results
(in Canadian dollars except as otherwise noted)
TORONTO, Nov. 5, 2024 /CNW/ - (TSX: IFC)
Highlights
Organic operating DPW1,2 growth of 6%, excluding acquisitions and exits, led by continued momentum in Personal lines
Combined ratio1 of 103.9% included 22 points of catastrophe losses, offsetting otherwise strong underlying performances across all geographies
Net operating income per share1 was $1.01 (and EPS of $1.06), despite $5.03 of catastrophe losses, with double-digit growth in investment and distribution income
Operating ROE1 remained strong at 15.8% over the last 12 months, up 4 points year-over-year, with BVPS1 of $90.60, up 3% sequentially, despite the unusually challenging operating environment
Strong and resilient balance sheet with $2.6 billion of total capital margin1 and an adjusted debt-to-total capital ratio1 of 20.3%
Charles Brindamour, Chief Executive Officer, said:
"The devastating effects from severe weather events in the quarter have impacted the lives of tens of thousands of customers. Our employees were on the ground within the first hours of these events providing immediate assistance to affected communities. We are leveraging our competitive advantages, which include On Side Restoration and Intact Service Centres, to minimize losses for our customers. In this context, our operations have shown great financial resiliency, reflected by our strong capital position and mid-teens operating ROE over the last 12 months. It's in these challenging moments that we demonstrate our purpose - to help people, businesses and society prosper in good times and be resilient in bad."
Consolidated Highlights(in millions of Canadian dollars except as otherwise noted)
Q3-2024
Q3-2023
Change
YTD-2024
YTD-2023
Change
Operating direct premiums written1,2
6,207
5,925
4 %
17,972
16,960
5 %
Combined ratio1
103.9 %
98.3 %
5.6 pts
94.2 %
95.6 %
(1.4) pts
Underwriting (loss) income1
(215)
88
(344) %
925
666
39 %
Operating net investment income
394
349
13 %
1,161
970
20 %
Distribution income1
132
116
14 %
401
358
12 %
Net operating income attributable to common shareholders1
182
349
(48) %
1,695
1,301
30 %
Net income
212
163
30 %
1,643
800
105 %
Per share measures (in dollars)
Net operating income per share (NOIPS)1,3
$1.01
$1.98
(49) %
$9.49
$7.41
28 %
Earnings per share (EPS), diluted3
$1.06
$0.83
28 %
$8.78
$4.19
110 %
Book value per share1
$90.60
$77.24
17 %
Return on equity for the last 12 months
Operating ROE1
15.8 %
12.0 %
3.8 pts
Adjusted ROE1
16.7 %
10.6 %
6.1 pts
ROE1
13.8 %
7.8 %
6.0 pts
Total capital margin1
2,566
2,841
(275)
Adjusted debt-to-total capital ratio1
20.3 %
22.7 %
(2.4) pts
12-Month Industry Outlook
We expect the current insurance market conditions to persist, in light of the recent elevated catastrophe losses:
In both Personal auto and property, we expect low double-digit premium growth; and
In Commercial and Specialty lines across all geographies, we expect mid-single-digit premium growth.
___________________________________________
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 14, Non-GAAP and other financial measures in the Q3-2024 Management's Discussion and Analysis for further details.
2
DPW change (growth) is presented in constant currency.
3
Per share metric is calculated based on the weighted-average diluted number of common shares.
Segment Results
(in millions of Canadian dollars except as otherwise noted)
Q3-2024
Q3-2023
Change
YTD-2024
YTD-2023
Change
Operating direct premiums written1,2
Canada
4,261
3,943
8 %
12,076
11,209
8 %
UK&I3
1,075
1,157
(11) %
3,635
3,594
(2) %
US
871
825
4 %
2,261
2,157
4 %
Total
6,207
5,925
4 %
17,972
16,960
5 %
Combined ratio1
Canada
109.5 %
101.8 %
7.7 pts
95.4 %
97.3 %
(1.9) pts
UK&I3
91.9 %
92.5 %
(0.6) pts
92.9 %
93.7 %
(0.8) pts
US
87.4 %
88.5 %
(1.1) pts
88.0 %
89.6 %
(1.6) pts
Combined ratio
103.9 %
98.3 %
5.6 pts
94.2 %
95.6 %
(1.4) pts
Q3-2024 Consolidated Performance
Overall operating DPW increased 4%, with organic growth of 6%, after excluding the net impact from acquisitions and exits. This was led by rate increases and unit growth in hard market conditions across Personal lines. Within Commercial lines, growth was led by rates in the mid-single digits, with market conditions varying by line of business and increased competition in large accounts.
Overall combined ratio was elevated at 103.9% after incurring 22 points of catastrophe losses (approximately 17 points in excess of expectations) driven by severe weather events, mainly impacting our Canadian segment. Our results otherwise reflected robust underlying performance (excluding catastrophe losses and prior year development) across all geographies.
Operating net investment income of $394 million increased 13% year-over-year, mainly due to higher reinvestment yields captured in 2023.
Distribution income of $132 million increased 14% from last year, driven by strong contributions from our M&A activities, along with improved margins within BrokerLink.
Lines of Business
P&C Canada
Personal auto operating DPW grew 12%, reflecting rates and continued unit momentum in hard market conditions. The combined ratio of 97.6% included 7 points of catastrophe losses, more than 4 points above expectations. Excluding this, performance was strong, with an underlying improvement of 3 points year-over-year, which offset lower favourable PYD in the quarter.
Personal property operating DPW grew by 8%, reflecting rates and unit growth in hard market conditions. The combined ratio of 147.5% was elevated after absorbing 72 points of catastrophe losses in the quarter. This line of business has shown long-term resiliency with an average combined ratio of 90% over the last 10 years.
Commercial lines operating DPW grew by 2%, reflecting mid-single-digit rate increases, offset by the impact of continued competition in large accounts. The combined ratio remained solid at 94.4%, as elevated catastrophe losses were largely offset by strong favourable PYD and a very robust underlying performance.
P&C UK&I2
Excluding the impact of the UK Personal lines exit, operating DPW growth was 28%, mainly due to the Q4-2023 DLG brokered Commercial lines acquisition. Organic growth was muted in the quarter, as mid-single-digit rate actions and solid new business in Commercial lines were offset by moderating market conditions, particularly in large accounts in specialty lines. The combined ratio remained solid at 91.9%, in line with expectations following the DLG acquisition.
P&C US2
Operating DPW grew 4%, reflecting mid-single-digit or better rate actions in most lines of business, offset by the impact of corrective actions taken in certain lines of business. The combined ratio was strong at 87.4% for the quarter, 1 point better than the prior year, reflecting continued underwriting discipline.
_____________________________________________
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 14, Non-GAAP and other financial measures in the Q3-2024 Management's Discussion and Analysis for further details.
2
DPW change (growth) is presented in constant currency.
3
The comparative period results presented in the table are on a reported basis. Following the exit of the UK Personal lines operations in 2023, performance of this segment is now analyzed on a pro-forma basis (which excludes UK Personal lines results) for comparability. Pro-forma growth in constant currency was 28% in Q3-2024 and 33% in YTD-2024. Pro-forma combined ratios were 90.4% for Q3-2023 and 89.7% for YTD-2023.
Net Operating Income, EPS and ROE
Net operating income attributable to common shareholders remained profitable at $182 million after absorbing $1,216 million of catastrophe losses in the quarter. This reflected strong underwriting fundamentals, coupled with solid growth in distribution and investment activities.
Earnings Per Share increased year-over-year to $1.06, despite the challenging environment, driven by our diversified sources of income and further supported by gains on our equity securities.
Operating ROE was resilient at 15.8%, withstanding the negative impact from catastrophe losses over the past 12 months.
Balance Sheet
The Company ended the quarter in a strong financial position, with a robust total capital margin of $2.6 billion despite the heavy catastrophe losses in the quarter. Regulatory capital ratios remained solid in all jurisdictions.
Adjusted debt-to-total capital ratio was 20.3% as at September 30, 2024, up slightly from last quarter, following the severe weather events in the period combined with the cancellation of RSA's preferred shares.
IFC's book value per share (BVPS) of $90.60 as at September 30, 2024 increased 17% year-over-year, and was 3% higher than Q2-2024, led by solid earnings and market-related gains on our bond portfolio.
Common Share Dividend
The Board of Directors approved the quarterly dividend of $1.21 per share on the Company's outstanding common shares. The dividends are payable on December 31, 2024, to shareholders of record on December 16, 2024.
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, 2024, to shareholders of record on December 16, 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 a loss of $(0.17) and $(0.06), 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 Q3-2024 MD&A, as well as the Q3-2024 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 437-900-0527 or 1-888-510-2154 (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 6, 2024 at 1:00 p.m. ET until 11:59 p.m. ET on November 13, 2024. To listen to the replay, call 289-819-1450 or 1-888-660-6345 (toll-free in North America), entry code 05046. 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 UK and Ireland. Our business has grown organically and through acquisitions to over $22 billion of total annual operating DPW.
In Canada, Intact distributes insurance under the Intact Insurance brand through agencies and a wide network of brokers, including its wholly- owned subsidiary BrokerLink. Through belairdirect, Intact distributes directly to consumers. Intact also provides affinity insurance solutions through affinity groups, travel insurance, as well as exclusive and tailored offerings through Intact Prestige.
In the US, Intact Insurance Specialty Solutions provides a range of specialty insurance products and services through independent agencies, regional and national brokers, and wholesalers and managing general agencies.
In the UK, Ireland, and Europe, Intact provides Personal, Commercial and/or Specialty insurance solutions through the RSA, 123.ie, NIG and FarmWeb 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 other Company's financial reports include measures related to our consolidated performance, underwriting performance and 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 14, Non-GAAP and other financial measures in the Q3-2024 MD&A dated September 30, 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
Q3-2024
Q3-2023
YTD-2024
YTD-2023
Net income attributable to shareholders, as reported under IFRS
207
163
1,630
792
Remove: pre-tax non-operating results
(23)
265
117
613
Remove: non-operating tax expense (benefit)
15
(62)
10
(48)
NOI attributable to shareholders
199
366
1,757
1,357
Remove: preferred share dividends and other equity distribution
(17)
(17)
(62)
(56)
NOI attributable to common shareholders
182
349
1,695
1,301
Divided by weighted-average diluted number of common shares (in millions)
178.6
175.9
178.6
175.5
NOIPS (in dollars)
1.01
1.98
9.49
7.41
NOI attributable to common shareholders for the last 12 months
2,408
1,791
Adjusted average common shareholders' equity, excluding AOCI
15,277
14,894
OROE for the last 12 months
15.8 %
12.0 %
Table 2 Reconciliation of underwriting results on a MD&A basis with the interim condensed consolidated financial statements (quarterly)
Financial statements
F/S
1
2
3
4
5
6
7
8
9
Total
MD&A
MD&A
Quarter ...
