Canada NewsWire
TORONTO, July 28, 2022
(in Canadian dollars except as otherwise noted)
TORONTO, July 28, 2022 /CNW/ - (TSX: IFC)
Highlights
Charles Brindamour, Chief Executive Officer, said:
"We delivered strong results in Q2-2022 with contribution from all segments. In the one year since the close of the RSA acquisition, we have achieved $175M in run-rate synergies and greatly strengthened our Canadian and specialty lines platforms. We remain optimistic about the growth opportunities across our business and particularly in specialty lines. We expect that our disciplined underwriting and deep claims expertise will continue to be assets in navigating inflation pressures, climate change and evolving driving patterns."
Consolidated Highlights1 | |||||||||
(in millions of Canadian dollars except as otherwise noted) | Q2-2022 | Q2-2021 | Change | H1-2022 | H1-2021 | Change | |||
Operating direct premiums written1 | 5,807 | 4,297 | 36 % | 10,485 | 6,819 | 54 % | |||
Direct premiums written | 6,238 | 4,414 | 41 % | 11,331 | 6,957 | 63 % | |||
Operating combined ratio1 | 90.7 % | 86.7 % | 4.0 pts | 91.2 % | 87.8 % | 3.4 pts | |||
Underwriting income1 | 441 | 464 | (5) % | 837 | 761 | 10 % | |||
Operating net investment income1 | 211 | 154 | 37 % | 416 | 295 | 41 % | |||
Distribution income1 | 141 | 118 | 19 % | 233 | 180 | 29 % | |||
Net operating income attributable to common shareholders1 | 553 | 502 | 10 % | 1,028 | 846 | 22 % | |||
Net income | 1,184 | 573 | 107 % | 1,631 | 1,087 | 50 % | |||
Per share measures (in dollars) | |||||||||
Net operating income per share (NOIPS)1 | $3.14 | $3.26 | (4) % | $5.84 | $5.69 | 3 % | |||
Earnings per share (EPS) | $6.64 | $3.59 | 85 % | $9.17 | $7.10 | 29 % | |||
Return on equity for the last 12 months | |||||||||
Operating ROE1 | 15.4 % | 19.8 % | (4.4) pts | ||||||
ROE | 18.5 % | 19.6 % | (1.1) pts | ||||||
Book value per share (in dollars)1 | $80.86 | $77.67 | 4 % | ||||||
Total capital margin | 2,479 | 2,558 | (79) | ||||||
Adjusted debt-to-total-capital ratio1 | 20.3 % | 24.1 % | (3.8) pts | ||||||
___________________________________________ |
1 This press release contains non-GAAP financial measures and Non-GAAP ratios (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 Q2-2022 Management's Discussion and Analysis for further details. |
2 DPW change (growth) is presented in constant currency |
Common Share Dividend
Normal Course Issuer Bid
12-Month Industry Outlook
Segment Results
(in millions of Canadian dollars except as otherwise noted) | Q2-2022 | Q2-2021 | Change | H1-2022 | H1-2021 | Change |
Operating direct premiums written | ||||||
Canada | 4,047 | 3,051 | 33 % | 6,956 | 5,176 | 34 % |
UK&I | 1,157 | n/a | n/a | 2,456 | n/a | n/a |
US | 603 | 512 | 14 % | 1,073 | 909 | 16 % |
Corporate (RSA - June 2021) | n/a | 734 | nm | n/a | 734 | nm |
Total | 5,807 | 4,297 | 36 % | 10,485 | 6,819 | 54 % |
Operating combined ratio | ||||||
Canada | 90.6 % | 85.0 % | 5.6 pts | 90.4 % | 86.5 % | 3.9 pts |
UK&I | 91.3 % | n/a | n/a | 95.2 % | n/a | n/a |
US | 91.1 % | 90.3 % | 0.8 pts | 89.0 % | 93.3 % | (4.3) pts |
Corporate (RSA - June 2021) | n/a | 90.7 % | n/a | n/a | 90.7 % | nm |
Total | 90.7 % | 86.7 % | 4.0 pts | 91.2 % | 87.8 % | 3.4 pts |
Underwriting income | ||||||
Canada | 312 | 374 | (62) | 633 | 656 | (23) |
UK&I | 89 | n/a | n/a | 101 | n/a | n/a |
US | 38 | 37 | 1 | 93 | 51 | 42 |
Corporate and Other | 2 | (4) | 6 | 10 | (3) | 13 |
RSA – June 2021 | n/a | 57 | n/a | n/a | 57 | nm |
Total | 441 | 464 | (23) | 837 | 761 | 76 |
Q2-2022 Insurance Business Performance
Lines of Business
P&C Canada
P&C UK&I
P&C US
Investments
Net Operating Income, EPS and ROE
Balance Sheet
RSA Acquisition
Preferred Share Dividends
The Board of Directors also approved a quarterly dividend of 21.225 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, 32.5 cents per share on the Class A Series 5 preferred shares, 33.125 cents per share on the Class A Series 6 preferred shares, 30.625 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 on September 30, 2022, to shareholders of record as at September 15, 2022.
Analysts' Estimates
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 Q2-2022 MD&A as well as the Q2-2022 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 10:00 a.m. ET. To listen to the call via live audio webcast and to view the Company's 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 July 29, 2022 at 2:00 p.m. ET until midnight on August 5, 2022. To listen to the replay, call 416-764-8677 or 1-888-390-0541 (toll-free in North America), entry code 018351. 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 $20 billion of total annual premiums.
In Canada, Intact distributes insurance under the Intact Insurance brand through a wide network of brokers, including its wholly-owned subsidiary BrokerLink, and directly to consumers through belairdirect. Intact also provides affinity insurance solutions through the Johnson Affinity Groups.
In the US, Intact Insurance Specialty Solutions provides a range of specialty insurance products and services through independent agencies, regional and national brokers, and wholesalers and managing general agencies.
Outside of North America, the Company provides personal, commercial and specialty insurance solutions across the U.K., Ireland, and Europe 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 Q2-2022 MD&A dated July 28, 2022, which is available on our website at www.intactfc.com and on SEDAR at www.sedar.com.
Q2-2022 | Q2-2021 | H1-2022 | H1-2021 | |
Net income attributable to shareholders, as reported under IFRS | 1,183 | 566 | 1,642 | 1,080 |
Remove: pre-tax non-operating losses (gains) | (697) | (6) | (697) | (178) |
Remove: non-operating tax expense (benefit) | 89 | (45) | 136 | (30) |
Remove: non-operating component of NCI | (6) | - | (24) | - |
NOI | 569 | 515 | 1,057 | 872 |
Remove: preferred share dividends | (16) | (13) | (29) | (26) |
NOI attributable to common shareholders | 553 | 502 | 1,028 | 846 |
Divided by weighted-average number of common shares (in millions) | 175.8 | 153.9 | 175.9 | 148.5 |
NOIPS, basic and diluted (in dollars) | 3.14 | 3.26 | 5.84 | 5.69 |
NOI to common shareholders for the last 12 months | 2,199 | 1,698 | ||
Adjusted average common shareholders' equity, excluding AOCI | 14,275 | 8,567 | ||
OROE for the last 12 months | 15.4 % | 19.8 % |
Q2-2022 | Q2-2021 | H1-2022 | H1-2021 | |
DPW, as reported under IFRS | 6,238 | 4,414 | 11,331 | 6,957 |
Remove: impact of industry pools and fronting | (300) | (114) | (585) | (133) |
Remove: DPW from exited lines | (149) | (5) | (290) | (7) |
Add: impact of the normalization for multi-year policies | 18 | 2 | 29 | 2 |
Operating DPW, as reported in the MD&A | 5,807 | 4,297 | 10,485 | 6,819 |
Operating DPW growth | 35 % | 27 % | 54 % | 16 % |
Operating DPW growth (in constant currency) | 36 % | 29 % | 54 % | 17 % |
Q2-2022 | Q2-2021 | H1-2022 | H1-2021 | |
Net earned premiums, as reported under IFRS | 4,902 | 3,508 | 9,793 | 6,285 |
Other underwriting revenues, as reported under IFRS | 78 | 45 | 151 | 80 |
Net claims incurred, as reported under IFRS | (2,585) | (1,857) | (5,132) | (3,288) |
Underwriting expenses, as reported under IFRS | (1,640) | (1,272) | (3,237) | (2,228) |
Underwriting income (loss), as calculated under IFRS | 755 | 424 | 1,575 | 849 |
Remove: impact of MYA on underwriting results | (363) | 29 | (829) | (117) |
Remove: non-operating pension expense | 14 | 16 | 27 | 32 |
Remove: underwriting loss (income) from exited lines | 35 | (5) | 64 | (3) |
Underwriting income (loss), as reported in the MD&A | 441 | 464 | 837 | 761 |
Operating NEP | 4,758 | 3,482 | 9,500 | 6,241 |
Operating combined ratio | 90.7 % | 86.7 % | 91.2 % | 87.8 % |
Q2-2022 | Q2-2021 | H1-2022 | H1-2021 | |
Net claims incurred, as reported under IFRS | 2,585 | 1,857 | 5,132 | 3,288 |
Remove: positive (negative) impact of MYA on underwriting results | 363 | (29) | 829 | 117 |
Remove: adjustment for non-operating pension expense | (5) | (6) | (10) | (12) |
Remove: net claims from exited lines | (118) | (12) | (233) | (26) |
Net with: other underwriting revenues | (11) | - | (21) | - |
Operating net claims, as reported in the MD&A | 2,814 | 1,810 | 5,697 | 3,367 |
Remove: net current year CAT losses | (248) | (73) | (430) | (125) |
Remove: favourable (unfavourable) PYD | 179 | 136 | 402 | 286 |
Operating net claims excluding current year CAT losses and PYD | 2,745 | 1,873 | 5,669 | 3,528 |
Operating NEP | 4,758 | 3,482 | 9,500 | 6,241 |
Remove: reinstatement premiums ceded (recovered) | 3 | - | 3 | 1 |
Operating NEP before reinstatement premiums | 4,761 | 3,482 | 9,503 | 6,242 |
Underlying current year loss ratio1 | 57.6 % | 53.8 % | 59.6 % | 56.6 % |
CAT loss ratio (including reinstatement premiums) 1 | 5.3 % | 2.1 % | 4.6 % | 2.0 % |
(Favourable) unfavourable PYD ratio2 | (3.8) % | (3.9) % | (4.2) % | (4.6) % |
Claims ratio2 | 59.1 % | 52.0 % | 60.0 % | 54.0 % |
1 Calculated using Operating NEP before reinstatement premiums. |
2 Calculated using Operating NEP. |
Q2-2022 | Q2-2021 | H1-2022 | H1-2021 | |
Underwriting expenses, as reported under IFRS | 1,640 | 1,272 | 3,237 | 2,228 |
Net with: other underwriting revenues | (67) | (45) | (130) | (80) |
Remove: adjustment for non-operating pension expense | (9) | (10) | (17) | (20) |
Remove: underwriting expenses from exited lines | (61) | (9) | (124) | (15) |
Operating net underwriting expenses, as reported in the MD&A | 1,503 | 1,208 | 2,966 | 2,113 |
Commissions | 787 | 673 | 1,528 | 1,155 |
General expenses | 583 | 422 | 1,172 | 747 |
Premium taxes | 133 | 113 | 266 | 211 |
Operating NEP | 4,758 | 3,482 | 9,500 | 6,241 |
Commissions ratio | 16.6 % | 19.4 % | 16.1 % | 18.5 % |
General expenses ratio | 12.2 % | 12.1 % | 12.3 % | 11.9 % |
Premium taxes ratio | 2.8 % | 3.2 % | 2.8 % | 3.4 % |
Expense ratio | 31.6 % | 34.7 % | 31.2 % | 33.8 % |
Q2-2022 | Q2-2021 | H1-2022 | H1-2021 | ||||
Net income attributable to shareholders | 1,183 | 566 | 1,642 | 1,080 | |||
Remove: preferred share dividends | (16) | (13) | (29) | (26) | |||
Net income attributable to common shareholders | 1,167 | 553 | 1,613 | 1,054 | |||
Divided by weighted-average number of common shares (in millions) | 175.8 | 153.9 | 175.9 | 148.5 | |||
EPS, basic and diluted (in dollars) | 6.64 | 3.59 | 9.17 | 7.10 | |||
Net income attributable to common shareholders for the last 12 months | 2,573 | 1,740 | |||||
Adjusted average common shareholders' equity | 13,934 | 8,895 | |||||
ROE for the last 12 months | 18.5 % | 19.6 % | |||||
MD&A captions | Pre-tax | ||||||||
As presented in the Financial statements | Distribution income |
Total | Other |
Operating |
Total |
Non- |
Underwriting income |
Total F/S caption | |
For the quarter ended June 30, 2022 | |||||||||
Underwriting income1 | - | - | - | - | - | 314 | 441 | 755 | |
Investment income | - | - | - | 220 | - | 2 | - | 222 | |
Other revenues | 137 | - | 1 | - | - | - | - | 138 | |
Net gains (losses) | - | - | - | - | - | 123 | - | 123 | |
Gain on sale of business | - | - | - | - | - | 423 | - | 423 | |
Share of profits from investments in associates and joint ventures | 59 | (3) | - | - | (14) | (5) | - | 37 | |
Finance costs | - | (43) | - | - | - | - | - | (43) | |
Acquisition, integration and restructuring costs | - | - | - | - | - | (103) | - | (103) | |
Other expenses | (55) | - | (32) | - | - | (57) | - | (144) | |
Income tax benefit (expense) | - | - | - | - | (215) | - | - | (215) | |
Total, as reported in MD&A | 141 | (46) | (31) | 220 | (229) | 697 | 441 | ||
For the quarter ended June 30, 2021 | |||||||||
Underwriting income1 | - | - | - | - | - | (40) | 464 | 424 | |
Investment income | - | - | - | 161 | - | - | - | 161 | |
Other revenues | 92 | - | 13 | - | - | - | - | 105 | |
Net gains (losses) | - | - | - | - | - | 25 | - | 25 | |
Gain on the RSA Acquisition | - | - | - | - | - | 200 | - | 200 | |
Share of profits from investments in associates and joint ventures | 60 | (2) | - | - | (14) | (6) | - | 38 | |
Finance costs | - | (38) | - | - | - | - | - | (38) | |
Acquisition, integration and restructuring costs | - | - | - | - | - | (138) | - | (138) | |
Other expenses | (34) | - | (25) | - | - | (35) | - | (94) | |
Income tax benefit (expense) | - | - | - | - | (103) | - | - | (103) | |
- | |||||||||
Total, as reported in MD&A | 118 | (40) | (12) | 161 | (117) | 6 | 464 | ||
MD&A captions | Pre-tax | ||||||||
As presented in the Financial statements | Distribution income |
Total | Other |
Operating |
Total |
Non- |
Underwriting income |
Total F/S caption | |
For the six-month period ended June 30, 2022 | |||||||||
Underwriting income1 | - | - | - | - | - | 738 | 837 | 1,575 | |
Investment income | - | - | - | 433 | - | 4 | - | 437 | |
Other revenues | 268 | - | 4 | - | - | - | - | 272 | |
Net gains (losses) | - | - | - | - | - | (173) | - | (173) | |
Gain on sale of business | - | - | - | - | - | 423 | - | 423 | |
Share of profits from investments in associates and joint ventures | 97 | (4) | - | - | (22) | (9) | - | 62 | |
Finance costs | - | (84) | - | - | - | - | - | (84) | |
Acquisition, integration and restructuring costs | - | - | - | - | - | (167) | - | (167) | |
Other expenses | (132) | - | (66) | - | - | (119) | - | (317) | |
Income tax benefit (expense) | - | - | - | - | (380) | - | - | (380) | |
Total, as reported in MD&A | 233 | (88) | (62) | 433 | (402) | 697 | 837 | ||
For the six-month period ended June 30, 2021 | |||||||||
Underwriting income1 | - | - | - | - | - | 88 | 761 | 849 | |
Investment income | - | - | - | 307 | - | - | - | 307 | |
Other revenues | 181 | - | 16 | - | - | - | - | 197 | |
Net gains (losses) | - | - | - | - | - | 143 | - | 143 | |
Gain on the RSA Acquisition | - | - | - | - | - | 200 | - | 200 | |
Share of profits from investments in associates and joint ventures | 83 | (6) | - | - | (18) | (10) | - | 49 | |
Finance costs | - | (66) | - | - | - | - | - | (66) | |
Acquisition, integration and restructuring costs | - | - | - | - | - | (181) | - | (181) | |
Other expenses | (84) | - | (34) | - | - | (62) | - | (180) | |
Income tax benefit (expense) | - | - | - | - | (219) | - | - | (219) | |
Total, as reported in MD&A | 180 | (72) | (18) | 307 | (237) | 178 | 761 | ||
1 Comprised of the following captions in the Consolidated statements of income: Net earned premiums, Other underwriting revenues, Net claims incurred and Underwriting expenses. |
Table 9 Calculation of BVPS and BVPS (excluding AOCI) | |||||
As at June 30, | 2022 | 2021 | |||
Equity attributable to shareholders, as reported under IFRS | 15,515 | 14,851 | |||
Remove: Preferred shares, as reported under IFRS | (1,322) | (1,175) | |||
Common shareholders' equity | 14,193 | 13,676 | |||
Remove: AOCI, as reported under IFRS | 1,165 | (483) | |||
Common shareholders' equity (excluding AOCI) | 15,358 | 13,193 | |||
Number of common shares outstanding at the same date (in millions) | 175.5 | 176.1 | |||
BVPS | 80.86 | 77.67 | |||
BVPS (excluding AOCI) | 87.50 | 74.93 | |||
As at June 30, | 2022 | 2021 |
Ending common shareholders' equity | 14,193 | 13,676 |
Remove: common shares issued during the period | - | (4,311) |
Ending common shareholders' equity, excluding common shares issued during the period | 14,193 | 9,365 |
Beginning common shareholders' equity | 13,676 | 7,716 |
Average common shareholders' equity, excluding common shares issued during the period | 13,934 | 8,541 |
Weighted impact of June 1, 2021 common shares issuance | - | 354 |
Adjusted average common shareholders' equity | 13,934 | 8,895 |
Ending common shareholders' equity (excluding AOCI) | 15,358 | 13,193 |
Remove: common shares issued during the period | - | (4,311) |
Ending common shareholders' equity, excluding AOCI and common shares issued during the period | 15,358 | 8,882 |
Beginning common shareholders' equity, excluding AOCI | 13,193 | 7,544 |
Average common shareholders' equity, excluding AOCI and common shares issued during the period | 14,275 | 8,213 |
Weighted impact of June 1, 2021 common shares issuance | - | 354 |
Adjusted average common shareholders' equity, excluding AOCI | 14,275 | 8,567 |
As at | June 30 2022 | March 31 2022 | Dec. 31 2021 |
Debt outstanding, as reported under IFRS | 4,345 | 5,370 | 5,229 |
Remove: hybrid subordinated notes | (247) | (247) | (247) |
Debt outstanding (excluding hybrid debt) | 4,098 | 5,123 | 4,982 |
Debt outstanding, as reported under IFRS | 4,345 | 5,370 | 5,229 |
Equity attributable to shareholders, as reported under IFRS | 15,515 | 15,787 | 15,674 |
Equity attributable to NCI, as reported under IFRS | |||
Include: RSA Insurance Group plc, as reported under IFRS Tier 1 notes | - | - | 510 |
Preferred shares | 285 | 285 | 285 |
Adjusted total capital | 20,145 | 21,442 | 21,698 |
Debt outstanding (excluding hybrid debt) | 4,098 | 5,123 | 4,982 |
Adjusted total capital | 20,145 | 21,442 | 21,698 |
Adjusted debt-to-total capital ratio | 20.3 % | 23.9 % | 23.0 % |
Debt outstanding, as reported under IFRS | 4,345 | 5,370 | 5,229 |
Preferred shares, as reported under IFRS | 1,322 | 1,322 | 1,175 |
Equity attributable to NCI: RSA Insurance Group plc, as reported under IFRS Tier 1 notes | - | - | 510 |
Preferred shares | 285 | 285 | 285 |
Debt outstanding and preferred shares (including NCI) | 5,952 | 6,977 | 7,199 |
Adjusted total capital (see above) | 20,145 | 21,442 | 21,698 |
Total leverage ratio | 29.5 % | 32.5 % | 33.2 % |
Adjusted debt-to-total capital ratio | 20.3 % | 23.9 % | 23.0 % |
Preferred shares and hybrids | 9.2 % | 8.6 % | 10.2 % |
Forward Looking Statements
Certain statements made in this news release are forward-looking statements. These forward-looking statements include, without limitation, statements relating to the outlook for the property and casualty insurance industry in Canada, the US and the UK, the Company's business outlook, the Company's growth prospects, the impact on the Company in relation to the occurrence of and in response to the coronavirus (COVID-19) pandemic and ensuing events, the acquisition and integration of RSA Insurance Group PLC ("RSA"), the sale of the Company's 50% stake in RSA Middle East B.S.C. (c) to National Life & General Insurance Company (NLGIC) (the "Sale of Middle East"), the receipt of all requisite approvals or clearances of the Sale of Middle East in a timely manner and on terms acceptable to the Company, the realization of the expected strategic, financial and other benefits of the Sale of Middle East, and the sale of Codan Denmark . 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 8, 2022 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 Q2-2022 MD&A.
SOURCE Intact Financial Corporation
View original content: http://www.newswire.ca/en/releases/archive/July2022/28/c6820.html
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