Mr. Charles Brindamour reports

INTACT FINANCIAL CORPORATION REPORTS Q2-2023 RESULTS

Intact Financial Corp. has released its financial results for the second quarter of 2023.

Highlights1 (in Canadian dollars except as otherwise noted)

• Operating DPW2 growth of 6% in Q2-2023 driven by rate actions in supportive market conditions
• Net operating income per share2 decreased 30% to $2.30 , largely due to an increase in catastrophe losses to $421 million, partially offset by higher investment income
• EPS of $1.30 was lower than last year, which had benefited from the sale of Codan Denmark and large gains on equity investments
• Combined ratio2 of 92.2% (96.3% undiscounted) included 8 points of catastrophe losses that were twice as high as expected, while underlying performance was strong in all geographies
• Personal auto results were strong at a 91.2% combined ratio2, reflecting our profitability actions and moderating inflation
• Operating ROE2 of 12.8% (and ROE2 of 9.0%) despite elevated catastrophe losses and $2.5 billion of total capital margin2

Charles Brindamour, Chief Executive Officer, said:

"With multiple severe weather events this quarter, our employees were often first on site in affected communities, offering a reassuring presence and support to customers in a time of need. Despite the scale of the fire, flood, and freeze events, we maintained a strong balance sheet and delivered a 13% operating ROE, a testament to the resilience of our operations. We will continue to leverage our experience with natural disasters to collaborate with governments and help communities adapt to climate change."

12-Month Industry Outlook

• Over the next twelve months, we expect firm-to-hard insurance market conditions to continue in most lines of business, driven by inflation, natural disasters, and a hard reinsurance market.
• In Canada, we expect firm-to-hard market conditions in personal lines. Both personal property and auto premiums are expected to grow by high single-digits in response to inflation and evolving driving patterns.
• In commercial and specialty lines across all geographies, we expect hard market conditions to continue in most lines of business.
• In the UK&I, the personal property market is firming, with further rate increases expected.

Q2-2023 Consolidated Performance

• Operating DPW growth accelerated to 6%, or 7% excluding strategic exits (such as UK personal lines motor and certain delegated relationships), reflecting solid rate momentum across all lines of business.
• Overall combined ratio of 96.3% (undiscounted) included 4 points of higher-than-expected catastrophe losses. Strong performance in commercial lines was tempered by pressures in personal property, while personal auto performed well and in line with expectations.
• Including the impact of discounting, the overall combined ratio of 92.2% was 4.2 points worse than last year. This was driven by the underwriting results mentioned above, offset in part by the benefit of underwriting discount build at higher interest rates compared to last year.
• Operating net investment income of $326 million for the quarter increased 55% year-over-year, due to higher reinvestment yields, increased portfolio turnover, and a $25 million special dividend.
• Distribution income declined 4% to $137 million , reflecting both elevated variable commissions and contribution from On Side restoration in the prior-year period, while underlying profitability and acquisition pipeline remained solid in Q2-2023.

Lines of Business4

P&C Canada

• Personal auto premiums increased 6% from the prior year, as a result of rate actions in firming market conditions and an improving unit trajectory. The combined ratio of 91.2% is reflective of our profitability actions, favourable seasonality and elevated but moderating inflation. We expect to remain at a seasonally adjusted sub-95 combined ratio over the next 12 months.
• Personal property premiums grew by 5% in firm-to-hard market conditions. The combined ratio was elevated at 119.2%, or 22.7 points worse than last year due to higher catastrophe losses, elevated large losses, and inflation. We are well positioned to protect profitability through rate actions in supportive market conditions, while continuing to control costs through supply chain and other claims improvements.
• Commercial lines premium growth of 6% reflected continued rate increases and strong retention in most lines, offset in part by targeted actions to optimize the portfolio. The combined ratio was a solid 89.5%, but 7.4 points higher than last year primarily due to higher catastrophe losses.

P&C UK&I

• Personal lines premiums declined 7% on a constant currency basis. Excluding the impact of our UK personal lines motor market exit, growth was 6% in the quarter, reflecting rate actions in firming market conditions. The combined ratio of 98.0% reflects inflation and adverse weather, offset by the benefits of ongoing profitability actions.
• Commercial lines premiums grew 1% on a constant currency basis, as continued strong rate increases were tempered 5 points by strategic exits. The combined ratio improved 2.1 points to a solid 92.1%, despite 9.0 points of catastrophe losses.

1 DPW change (growth) is presented in constant currency.

2 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 21 - Non-GAAP and other financial measures in the Q2-2023 Management's Discussion and Analysis for further details.

3 Includes the impact of discount build on our claims liabilities for all P&C segments. Refer to Section 3 - IFRS 17 transitional impact in the Q2-2023 Management's Discussion and Analysis for further details.

4 Combined ratios within the Lines of Business are reported on an undiscounted basis.

P&C U.S.

• US Commercial premiums grew 19% on a constant currency basis, driven by new products (following the Highland acquisition last year), new business, and rate increases. The combined ratio remained solid at 91.3%, but slightly higher than last year due to higher catastrophe losses.
• Net Operating Income, EPS and ROE
• Net operating income attributable to common shareholders of $402 million was 31% lower than Q2-2022, as a $176 million increase in catastrophe losses offset the impact of higher earned premiums and investment income.
• Earnings per share of $1.30 reflected lower operating income and an expected level of non-operating expenses. EPS was elevated in the comparable period last year due to the sale of Codan Denmark and other investment gains.
• Operating ROE of 12.8% and ROE of 9.0% for the 12 months to June 30, 2023 reflected solid operating performance despite elevated catastrophe losses. As the benefits of the pension de-risking activities are fully realized, we expect this to contribute approximately 1 point to ROE by year-end.

Balance Sheet

• The Company ended the quarter in a strong financial position, with a total capital margin of $2.5 billion and solid regulatory capital ratios in all jurisdictions.
• The adjusted debt-to-total capital ratio of 22.5% was in line with our expectations and on track to return towards 20% over the next few quarters.
• IFC's book value per share (BVPS) was $76.29 at June 30, 2023, down 2% from Q1-2023. Solid earnings were offset by unfavourable market movements on fixed income securities.

Common Share Dividend

• The Board of Directors approved the quarterly dividend to $1.10 per share on the Company's outstanding common shares. The dividends are payable on September 29, 2023, to shareholders of record on September 15, 2023.

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 September 30, 2023, to shareholders of record on September 15, 2023.

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 $1.84 and $2.34, 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 Q2-2023 MD&A, as well as the Q2-2023 interim condensed Consolidated Financial Statements, which are available on the Company's website and later today on SEDAR.

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 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 August 3, 2023 at 2:00 p.m. ET until midnight on August 10, 2023. To listen to the replay, call 416-764-8677 or 1-888-390-0541 (toll-free in North America), entry code 721275. 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 $21 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 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.

We seek Safe Harbor.