Mr. Charles Brindamour reports

INTACT FINANCIAL CORPORATION REPORTS Q2-2016 RESULTS

Intact Financial Corp. has released its second quarter 2016 financial results.

Charles Brindamour, chief executive officer, said: "We delivered $114-million in net operating income despite the $127-million impact from the Fort McMurray wildfires, the costliest insured catastrophe in Canadian history. This is a strong testament to the resilience of our operations across the country and our ability to support our customers in good times and in bad. Our catastrophe response is well under way in Fort McMurray and we remain committed to helping our customers get back on track."

                                 CONSOLIDATED HIGHLIGHTS                                                                         
                    (in millions of dollars except as otherwise noted) 

                                                    Q2 2016   Q2 2015  YTD 2016  YTD 2015

Direct premiums written (1)                          $2,458    $2,344    $4,139    $3,919
Underwriting income (1)                                  16       158       161       276
Combined ratio                                        99.2%     91.6%     95.8%     92.5%
Net investment income                                   104       104       208       209
Net distribution income                                  43        34        57        54
Net operating income (1)                                114       210       311       396
Net income                                               93       199       245       377
Earnings per share (in dollars)                        0.67      1.47      1.78      2.79
Net operating income per share (in dollars) (1)        0.83      1.56      2.29      2.93
Operating ROE for the last 12 months (1)              14.6%     16.8%
Book value per share (in dollars)                     40.57     39.23
Total excess capital                                    857       564
MCT                                                    212%      200%
Debt-to-capital ratio                                 19.3%     16.8%

Notes                                                                                                
(1) This is a non-international financial reporting standards financial measure, 
which does not have a standardized meaning prescribed by IFRS and may not 
be comparable with similar measures used by other companies in the company's 
industry. Please refer to Section 14 -- non-IFRS financial measures in the 
management's discussion and analysis for further details.

Industry outlook

The company expects that industry premiums will grow at a low-single-digit rate. In personal auto, the company expects normal claims cost inflation will lead to moderate rate increases in all markets. In personal property, the company expects the current firm market conditions to continue, as companies adjust to changing weather patterns. While commercial lines remain competitive, the company believes that continued low interest rates and elevated loss ratios of the past years support firm market conditions.

Over all, the industry's return on equity is expected to remain around its long-term average of 10 per cent.

Dividend

The board of directors approved a quarterly dividend of 58 cents per share on the company's outstanding common shares. The board also approved a quarterly dividend of 26.25 cents per share on the company's Class A Series 1 and Class A Series 3 preferred shares. The dividends are payable on Sept. 30, 2016, to shareholders of record on Sept. 15, 2016.

Normal course issuer bid

As at June 30, 2016, the company had repurchased and cancelled 370,500 shares for approximately $32-million under its normal course issuer bid (NCIB). The NCIB allows for the purchase, for cancellation, of up to 6,577,156 common shares until Feb. 11, 2017, representing approximately 5 per cent of the company's issued and outstanding common shares as at Feb. 1, 2016.

Underwriting

Solid premium growth of 5 per cent was driven by personal lines, as customers responded positively to new product offerings, improved digital experiences, distribution and branding initiatives. In commercial lines, growth was dampened by the slowdown of the Alberta economy. For the first half of 2016, the company delivered solid premium growth of 6 per cent.

Underwriting income was $16-million, despite absorbing a $173-million impact from the Fort McMurray wildfires. For the first half of 2016, the company generated $161-million of underwriting income, lower by $115-million from last year, as improved underlying results were more than offset by the Fort McMurray catastrophe. For further details on the company's efforts, please refer to Section 7.1 Fort McMurray wildfires in the management's discussion and analysis.

Over all, the company delivered a combined ratio of 99.2 per cent, including 8.8 points of Fort McMurray catastrophe losses. Most of the losses were incurred in the property lines with a small portion in the auto lines. Excluding this catastrophe, the combined ratio was 90.4 per cent on strong performance in property lines and commercial auto. Similar factors drove a combined ratio of 95.8 per cent for the first half of 2016, which included 4.4 points of losses from the Fort McMurray wildfires.

Line of business second quarter 2016

Personal auto premiums grew 6 per cent on the company's telematics offer, improved, digital experiences, distribution and branding initiatives. The combined ratio of 97.6 per cent was impacted by a mild increase in claims frequency and severity, while earned rates were flat in the quarter. The resulting underwriting income was $23-million compared with $85-million last year.

Personal property premiums grew 9 per cent, as growth initiatives were supported by favourable market conditions. The combined ratio was 106.7 per cent, including 24.7 points of losses from the Fort McMurray wildfires. This resulted in an underwriting loss of $30-million compared with income of $31-million last year. Excluding this catastrophe, the combined ratio of 82.0 per cent was very strong due to milder weather in Atlantic Canada, lower claims frequency and the effectiveness of the company's profitability actions. On a year-to-date basis, the combined ratio of 94.7 per cent, including Fort McMurray, was in line with the company's target to operate at 95 per cent or better, even with elevated catastrophe losses.

Commercial property and casualty premiums declined slightly as rate increases were offset by headwinds from the Alberta economy. The combined ratio was 98.2 per cent, including 10.7 points of losses from the Fort McMurray wildfires. This resulted in an underwriting income of $7-million compared with $33-million last year. Excluding this catastrophe, the combined ratio of 87.5 per cent was strong, driven by lower large losses.

Commercial auto premiums grew slightly as rate actions were offset by headwinds from the Alberta economy. The combined ratio improved substantially to 90.3 per cent, driven by profitability actions and favourable prior-year development. This resulted in an underwriting income of $16-million compared with $9-million last year.

Investments

Net investment income of $104-million was unchanged for the quarter. Net investment gains of $28-million were driven by higher bond prices and more favourable equity markets. For the first half of 2016, the company delivered net investment income of $208-million, largely unchanged from the prior year. Net investment gains of $8-million were driven by higher bond prices offset by challenging equity markets at the start of the year.

Distribution

Net distribution income of $43-million was $9-million higher than last year due to growth in the company's broker network and improved profitability. Similar factors drove an increase in net distribution income to $57-million for the first half of 2016.

Net income

Net operating income of $114-million, or 83 cents per share, was lower by 46 per cent compared with last year, impacted by the Fort McMurray catastrophe. Excluding this catastrophe, net operating income per share would have increased by 15 per cent year over year driven by higher underwriting and distribution income. For the first half of 2016, net operating income was $311-million.

Earnings per share of 67 cents were lower by 54 per cent compared with last year, impacted by the Fort McMurray catastrophe. For the first half of 2016, earnings per share were $1.78.

Balance sheet

The company ended the quarter in a very strong financial position, with an estimated MCT (minimum capital test) of 212 per cent and $857-million in total excess capital. The company's book value per share was $40.57, an increase of 3 per cent from a year ago. The company's debt-to-capital ratio was 19.3 per cent at June 30, 2016, close to the company's target level of 20 per cent. The operating ROE for the last 12 months remains healthy at 14.6 per cent.

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 55 cents and 62 cents, 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 second quarter 2016 MD&A as well as the second quarter 2016 consolidated financial statements, which are available on the company's website and later today on SEDAR.

Conference call

Intact Financial will host a conference call to review its earnings results later today at 11 a.m. Eastern Time. To listen to the call via live audio webcast and to view the company's financial statements, MD&A, presentation slides, the supplementary financial information and other information not included in this press release, visit the company's website and link to investor relations.

The conference call is also available by dialling 647-427-7450 or 1-888-231-8191 (toll-free in North America). Please call 10 minutes before the start of the call. A replay of the call will be available later today at 2 p.m. ET until midnight on Aug. 3. To listen to the replay, call 1-855-859-2056, pass code 42274084. A transcript of the call will also be available on Intact Financial's website.

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