(in Canadian dollars except as otherwise noted)
Highlights
- Operating DPW1,2 increased 6%, with organic growth of 7%, driven by double-digit growth in personal lines
- Undiscounted combined ratio1 of 91.2%, led by solid underlying performance across all geographies
- Net operating income per share1 up 19% to
$3.63 , largely on the back of premium growth and strong investment results - EPS up 79% to
$3.68 driven by investment gains on our equity portfolio as well as the gain on the sale of ourUK direct Personal Lines operations - Operating ROE1 increased to 14.7% from higher operating earnings, while BVPS1 grew 9% to
$84.76 - Balance sheet is strong with
$2.7 billion of total capital margin1 and adjusted debt-to-total capital ratio1 of 20.5%, largely on target
"We delivered strong results again this quarter with contribution from all segments, resulting in mid-teens ROE and solid book value growth. We also continued to make good progress on the integration of DLG, closed the sale of our
Consolidated Highlights | Q1-2024 | Q1-2023 | Change |
Operating direct premiums written1,2 | 5,110 | 4,809 | 6 % |
Combined ratio (discounted)1 | 86.8 % | 87.4 % | (0.6) pts |
Combined ratio (undiscounted)1 | 91.2 % | 91.9 % | (0.7) pts |
Underwriting income1, 3 | 687 | 613 | 12 % |
Operating net investment income | 380 | 295 | 29 % |
Net unwind of discount on claims liabilities1,3 | (227) | (226) | nm |
Operating net investment result1 | 153 | 69 | 122 % |
Distribution income1 | 100 | 105 | (5) % |
Net operating income attributable to common shareholders1 | 648 | 537 | 21 % |
Net income | 673 | 377 | 79 % |
Per share measures (in dollars) | |||
Net operating income per share (NOIPS)1 | 19 % | ||
Earnings per share (EPS) | 79 % | ||
Book value per share1 | 9 % | ||
Return on equity for the last 12 months | |||
Operating ROE1 | 14.7 % | 14.1 % | 0.6 pts |
Adjusted ROE1 | 13.5 % | 18.3 % | (4.8) pts |
ROE1 | 10.6 % | 15.4 % | (4.8) pts |
Total capital margin1 | 2,654 | 2,796 | (142) |
Adjusted debt-to-total capital ratio1 | 20.5 % | 22.4 % | (1.9) pts |
12-Month Industry Outlook
- We expect favourable market conditions to continue, driven by inflation and catastrophe losses.
- In
Canada , both personal property and auto premium growth could reach a low double-digit level. - In commercial and specialty lines across all geographies, we expect mid to high 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 16 – Non-GAAP and other financial measures in the Q1-2024 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. |
Segment Results
(in millions of Canadian dollars except as otherwise noted) | Q1-2024 | Q1-2023 | Change |
Operating direct premiums written1,2 | |||
3,252 | 2,996 | 9 % | |
UK&I3 | 1,245 | 1,235 | (2) % |
US | 613 | 578 | 6 % |
Total | 5,110 | 4,809 | 6 % |
Combined ratio1 | |||
90.7 % | 91.7 % | (1.0) pt | |
UK&I3 | 94.6 % | 94.6 % | - pts |
US | 88.0 % | 89.1 % | (1.1) pts |
Combined ratio (undiscounted) | 91.2 % | 91.9 % | (0.7) pts |
Impact of discounting | (4.4) % | (4.5) % | 0.1 pts |
Combined ratio (discounted) | 86.8 % | 87.4 % | (0.6) pts |
Q1-2024 Consolidated Performance
- Overall operating DPW increased 6%, with organic growth of 7% (excluding exits and acquisitions) led by double-digit growth in
Canada personal lines and healthy rate increases across our commercial lines of business. - Overall combined ratio was solid at 91.2% (undiscounted), reflecting mild weather and lower catastrophe losses in the quarter, as well as continued rate actions in favourable market conditions.
- Operating net investment income of
$380 million for the quarter increased 29% year-over-year, reflecting higher reinvestment yields and increased turnover of our portfolio over the last 12 months. - Distribution income decreased by 5% to
$100 million , reflecting lower contribution from On Side due to mild winter weather, as well as lower variable commissions compared to last year's strong level. We continue to expect a growth of at least 10% in 2024.
Lines of Business4
P&C Canada
- Personal auto premium growth was strong at 11%, reflecting high single-digit rate increases and continued unit growth. The combined ratio of 98.6% reflected a 2-point impact from mild winter seasonality, 1-point impact from unfavourable industry pools and another
1-point impact from non-recurring expenses, essentially incentive compensation related. Underlying performance reflected a 3-point improvement year-over-year, which was tempered by lower favourable PYD in the quarter. We continue to expect a seasonally adjusted sub-95 combined ratio in 2024. - Personal property premiums grew by 9%, driven by strong rate increases and unit growth momentum. The combined ratio was strong at 82.5%, improving by 2 points from the prior year, reflecting the absence of catastrophe losses in the period, along with favourable development on prior year losses.
- Commercial lines premiums grew by 5%, reflecting continued rate discipline, tempered by increased competition in regular commercial and specialty lines. The combined ratio was strong at 87.3% for the quarter, reflecting solid underlying performance, low catastrophe losses and very favorable prior-year development.
P&C UK&I
- Excluding the impact of the
UK Personal Lines exit, operating DPW growth in constant currency was 29%, mainly due to the brokered Commercial Lines operations acquired from Direct Line Insurance Group plc in Q4-2023. The combined ratio of 94.6% included 7 points of catastrophe losses, approximately 2 points above expectations. The underlying performance including DLG was otherwise solid at 92.6% for the first quarter.
______________________________ | |
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 16 – Non-GAAP and other financial measures in the Q1-2024 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 |
4 | Combined ratios within the Lines of Business are reported on an undiscounted basis. |
P&C US
- Operating DPW grew 6% on a constant currency basis, reflecting healthy rate increases across most lines of business, with a focus on pricing discipline. The combined ratio was solid at 88.0% for the quarter, 1 point better than prior year, reflecting a favourable business mix and continued underwriting discipline.
Net Operating Income, EPS and ROE
- Net operating income attributable to common shareholders of
$648 million increased 21% from last year, driven by solid underwriting and investment results. - Strong Earnings Per Share of
$3.68 , up 79% year-over-year, as the gain on sale of ourUK direct Personal Lines operations and favourable equity movements largely offset strategic costs associated with the DLG and RSA acquisitions. - Operating ROE increased to 14.7% on strong operating performance across the business, despite an impact of nearly 2.5 points from excess catastrophe losses over the last 12 months. Adjusted ROE of 13.5% and ROE of 10.6% remained healthy despite strategic costs from our restructuring and de-risking activities in the UK&I.
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. - Adjusted debt-to-total capital ratio decreased to 20.5% as at
March 31, 2024 , returning close to our long-term target quicker than anticipated, reflecting strong capital generation in a benign catastrophe loss quarter, which was deployed for deleveraging activities. - IFC's book value per share (BVPS) of
$84.76 as atMarch 31, 2024 increased 9% year-over-year, and was 4% higher than in Q4-2023, due to strong operating earnings.
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 onJune 28, 2024 , to shareholders of record onJune 14, 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, and32.8125 cents per share on the Class A Series 11 preferred shares. The dividends are payable as ofJune 30, 2024 , to shareholders of record onJune 14, 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
$2.92 and$3.40 , 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 Q1-2024 MD&A, as well as the Q1-2024 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.
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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 16 – Non-GAAP and other financial measures in the Q1-2024 MD&A dated
Table 1 Reconciliation of NOI, NOIPS and OROE to Net income attributable to common shareholders, as reported under IFRS
Q1-2024 | Q1-2023 | |
Net income attributable to shareholders, as reported under IFRS | 673 | 377 |
Remove: pre-tax non-operating results | 13 | 141 |
Remove: non-operating tax expense (benefit) | (21) | 35 |
NOI attributable to shareholders | 665 | 553 |
Remove: preferred share dividends and other equity distribution | (17) | (16) |
NOI attributable to common shareholders | 648 | 537 |
Divided by weighted-average number of common shares (in millions) | 178.3 | 175.3 |
NOIPS, basic and diluted (in dollars) | 3.63 | 3.06 |
NOI attributable to common shareholders for the last 12 months | 2,172 | 2,114 |
Adjusted average common shareholders' equity, excluding AOCI | 14,785 | 15,039 |
OROE for the last 12 months | 14.7 % | 14.1 % |
Table 2 Reconciliation of underwriting results on a MD&A basis with the interim condensed consolidated financial statements
Financial statements | FS | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | Total | MD&A | MD&A | ||
For the quarter ended | ||||||||||||||
Insurance revenue | 6,511 | (673) | (359) | (281) | (20) | 15 | (1,318) | 5,193 | Operating net underwriting revenue | |||||
Insurance service expense | (5,358) | 314 | 420 | (148) | 8 | (49) | 302 | 20 | (15) | 852 | (4,506) | Sum of: Operating net claims ( | ||
Expense from reinsurance contracts | (673) | 673 | 673 | - | n/a | |||||||||
Income from reinsurance contracts | 314 | (314) | (314) | - | n/a | |||||||||
Insurance service result | 794 | - | 61 | (148) | 8 | (49) | 21 | - | - | (107) | 687 | Underwriting income (loss) | ||
For the quarter ended | ||||||||||||||
Insurance revenue | 6,354 | (847) | (80) | (541) | (59) | 37 | (1,490) | 4,864 | Operating net underwriting revenue | |||||
Insurance service expense | (5,596) | 733 | 140 | (86) | 6 | (35) | 565 | 59 | (37) | 1,345 | (4,251) | Sum of: Operating net claims ( | ||
Expense from reinsurance contracts | (847) | 847 | 847 | - | n/a | |||||||||
Income from reinsurance contracts | 733 | (733) | (733) | - | n/a | |||||||||
Insurance service result | 644 | - | 60 | (86) | 6 | (35) | 24 | - | - | (31) | 613 | 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 reclassify Assumed (ceded) commissions and premium adjustments |
8 | Adjustment to reclassify Net insurance revenue from retroactive reinsurance contracts |
Table 3 Reconciliation of Net unwind of discount on claims liabilities to Net insurance financial result, as reported under IFRS
Q1-2024 | Q1-2023 | |||
Net insurance financial result, as reported under IFRS | (97) | (251) | ||
Remove: Changes in discount rates and other financial assumptions | (81) | 92 | ||
Remove: Net foreign currency gains (losses) | (30) | (44) | ||
Remove: Net insurance financial result from claims acquired in a business combination | (19) | (23) | ||
Net unwind of discount on claims liabilities | (227) | (226) |
Table 4 Reconciliation of ROE to Net income attributable to shareholders, as reported under IFRS
Q1-2024 | Q1-2023 | |
Net income attributable to shareholders | 673 | 377 |
Remove: preferred share dividends and other equity distribution | (17) | (16) |
Net income attributable to common shareholders | 656 | 361 |
Divided by weighted-average number of common shares (in millions) | 178.3 | 175.3 |
EPS, basic and diluted (in dollars) | 3.68 | 2.06 |
Net income attributable to common shareholders for the last 12 months | 1,527 | 2,269 |
Adjusted average common shareholders' equity | 14,397 | 14,762 |
ROE for the last 12 months | 10.6 % | 15.4 % |
Table 5 Reconciliation of consolidated results on a MD&A basis with the interim condensed consolidated financial statements
MD&A captions | Pre-tax | |||||||||||
As presented in the Financial statements | Distribution | Total | Other | Operating net investment | Total | Non- | Underwriting | Total F/S | ||||
For the quarter ended | ||||||||||||
Insurance service result | 43 | 6 | (90) | 835 | 794 | |||||||
Net investment income | 380 | 380 | ||||||||||
Net gains (losses) on investment portfolio | (40) | (40) | ||||||||||
Net insurance financial result | (227) | 130 | (97) | |||||||||
Share of profits from investments in associates and joint ventures | 38 | (5) | 2 | (7) | (6) | 22 | ||||||
Other net gains (losses) | 180 | 180 | ||||||||||
Other income and expense | 19 | (36) | (74) | (148) | (239) | |||||||
Other finance costs | (57) | (57) | ||||||||||
Acquisition, integration and restructuring costs | (113) | (113) | ||||||||||
Income tax benefit (expense) | (157) | (157) | ||||||||||
Total, as reported in MD&A | 100 | (62) | (28) | 153 | (164) | (13) | 687 | |||||
For the quarter ended | ||||||||||||
Insurance service result | 36 | (1) | (90) | 699 | 644 | |||||||
Net investment income | 295 | 295 | ||||||||||
Net gains (losses) on investment portfolio | 149 | 149 | ||||||||||
Net insurance financial result | (226) | (25) | (251) | |||||||||
Share of profits from investments in associates and joint ventures | 47 | (4) | 1 | (10) | (4) | 30 | ||||||
Other net gains (losses) | 17 | 17 | ||||||||||
Other income and expense | 22 | (31) | (52) | (86) | (147) | |||||||
Other finance costs | (50) | (50) | ||||||||||
Acquisition, integration and restructuring costs | (136) | (136) | ||||||||||
Income tax benefit (expense) | (174) | (174) | ||||||||||
Total, as reported in MD&A | 105 | (54) | (31) | 69 | (184) | (141) | 613 | |||||
Table 6 Reconciliation of AEPS and AROE to Net income attributable to shareholders, as reported under IFRS
Q1-2024 | Q1-2023 | |
Net income attributable to shareholders, as reported under IFRS | 673 | 377 |
Remove acquisition-related items, after tax | ||
Amortization of acquired intangible assets | 57 | 49 |
Acquisition and integration costs | 55 | 45 |
Tax adjustments on acquisition-related items | - | 1 |
Net result from claims acquired in a business combination | 2 | 1 |
Adjusted net income attributable to shareholders | 787 | 473 |
Remove: preferred share dividends and other equity distribution | (17) | (16) |
Adjusted net income attributable to common shareholders | 770 | 457 |
Divided by weighted-average number of common shares (in millions) | 178.3 | 175.3 |
AEPS, basic and diluted (in dollars) | 4.31 | 2.61 |
Adjusted net income attributable to common shareholders for the last 12 months | 1,950 | 2,697 |
Adjusted average common shareholders' equity | 14,397 | 14,762 |
AROE for the last 12 months | 13.5 % | 18.3 % |
Table 7 Calculation of BVPS and BVPS, excluding AOCI
As at | 2024 | 2023 |
Equity attributable to shareholders, as reported under IFRS | 16,740 | 15,241 |
Remove: Preferred shares and other equity, as reported under IFRS | (1,619) | (1,619) |
Common shareholders' equity | 15,121 | 13,622 |
Remove: AOCI, as reported under IFRS | 292 | 484 |
Common shareholders' equity (excluding AOCI) | 15,413 | 14,106 |
Number of common shares outstanding at the same date (in millions) | 178.4 | 175.3 |
BVPS | 84.76 | 77.72 |
BVPS (excluding AOCI) | 86.39 | 80.49 |
Table 8 Adjusted average common shareholders' equity and Adjusted average common shareholders' equity, excluding AOCI
As at | 2024 | 2023 |
Ending common shareholders' equity | 15,121 | 13,622 |
Remove: significant capital transaction in the last 12 months | (557) | 1,195 |
Ending common shareholders' equity, excluding significant capital transaction | 14,564 | 14,817 |
Beginning common shareholders' equity | 13,622 | 14,923 |
Average common shareholders' equity, excluding significant capital transaction | 14,093 | 14,870 |
Weighted impact of significant capital transactions1 | 304 | (108) |
Adjusted average common shareholders' equity | 14,397 | 14,762 |
Ending common shareholders' equity, excluding AOCI | 15,413 | 14,106 |
Remove: significant capital transaction in the last 12 months | (557) | 1,195 |
Ending common shareholders' equity, excluding AOCI and significant capital transaction | 14,856 | 15,301 |
Beginning common shareholders' equity, excluding AOCI | 14,106 | 14,993 |
Average common shareholders' equity, excluding AOCI and significant capital transaction | 14,481 | 15,147 |
Weighted impact of significant capital transactions1 | 304 | (108) |
Adjusted average common shareholders' equity, excluding AOCI | 14,785 | 15,039 |
1 |
Table 9 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 | ||
Debt outstanding, as reported under IFRS | 4,714 | 5,081 |
Remove: hybrid subordinated notes | (247) | (247) |
Debt outstanding (excluding hybrid debt) | 4,467 | 4,834 |
Debt outstanding, as reported under IFRS | 4,714 | 5,081 |
Equity attributable to shareholders, as reported under IFRS | 16,740 | 16,190 |
Preferred shares from Equity attributable to non-controlling interests | 285 | 285 |
Adjusted total capital | 21,739 | 21,556 |
Debt outstanding (excluding hybrid debt) | 4,467 | 4,834 |
Adjusted total capital | 21,739 | 21,556 |
Adjusted debt-to-total capital ratio | 20.5 % | 22.4 % |
Debt outstanding, as reported under IFRS | 4,714 | 5,081 |
Preferred shares and other equity, as reported under IFRS | 1,619 | 1,619 |
Preferred shares from Equity attributable to non-controlling interests | 285 | 285 |
Debt outstanding and preferred shares (including NCI) | 6,618 | 6,985 |
Adjusted total capital | 21,739 | 21,556 |
Total leverage ratio | 30.4 % | 32.4 % |
Adjusted debt-to-total capital ratio | 20.5 % | 22.4 % |
Preferred shares and hybrids | 9.9 % | 10.0 % |
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
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
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