Mr. Charles Brindamour reports

INTACT FINANCIAL CORPORATION REPORTS Q3-2023 RESULTS

Intact Financial Corp. has released its third quarter 2023 results (in Canadian dollars except as otherwise noted).

Highlights:

• Net operating income per share (1) of $2.10 despite elevated catastrophe losses, driven by solid underlying performance in all geographies and 50-per-cent growth in net investment income;
• Undiscounted combined ratio (1) of 98.3 per cent (93.5 per cent discounted) included 8 points of catastrophe losses in excess of expectations, while inflation moderated as expected in personal auto and results remained strong across commercial lines;
• Operating DPW (1) (2) growth of 6 per cent led by good momentum in personal lines and continued rate action across all business segments;
• Strong balance sheet, with $2.8-billion of total capital margin (1) and BVPS (book value per share) (1) increasing 1 per cent sequentially, reflecting EPS (earnings per share) of 83 cents and an equity issuance for the acquisition of Direct Line Insurance Group PLC'S brokered commercial lines operations;
• Accelerated the company's strategy by materially increasing Intact's presence in the outperforming U.K. commercial lines business, while a strategic review of U.K. personal lines is under way.

Charles Brindamour, chief executive officer, said:

"Our teams remain hard at work getting customers back on track after several months of elevated severe weather activity. It is in precisely these moments that we can best demonstrate our purpose -- to help people, businesses and society be resilient in bad times," said Mr. Brindamour. "We have a long track record of successfully navigating volatility in catastrophe losses. The third quarter was no different, as we delivered an operating ROE of 12.2 per cent and our balance sheet remained strong with $2.8-billion of total capital margin. I am pleased to see continued organic growth momentum, in the context of strong underlying underwriting performance and an acceleration in the UK&I segment's path to outperformance."

12-month industry outlook:

• Over the next 12 months, Intact Financial expects hard insurance market conditions to continue in most lines of business, driven by inflation and natural disasters.
• In Canada, both personal property and auto premiums are expected to grow by high single-digits in response to higher severity.
• In commercial and specialty lines across all geographies, Intact Financial expects hard market conditions to continue in most lines of business, with high-single-digit premium growth on average.
• Given the rise in interest rates, Intact Financial expects pretax investment yield for the industry to continue increasing as portfolios roll over.

(1) This release contains non-GAAP (generally accepted accounting principles) 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 19, regarding non-GAAP and other financial measures, in the Q3 2023 management's discussion and analysis (MD&A) for further details.

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

(3) Comparatives were restated for IFRS 17 (international financial reporting standards) but not for IFRS 9. OROE and ROE (return on equity) are not restated for IFRS 17, given that 2021 P&L (profit and loss) figures were not restated for IFRS 17.

Q3 2023 consolidated performance:

• Overall operating DPW growth was 6 per cent, or 8 per cent excluding strategic exits (such as U.K. personal lines motor and certain delegated relationships), led by strong momentum in personal lines, and continued rate actions across all geographies.
• Overall combined ratio of 98.3 per cent (undiscounted) included 12 points of catastrophe losses, mainly from severe weather events in Canada. Underlying performance was strong across all regions, particularly in commercial lines.
• Including the impact of discounting, the overall combined ratio of 93.5 per cent was 3.1 points higher than last year, mostly driven by the underwriting results mentioned above, offset in part by the benefit of underwriting discount build at higher interest rates compared with last year.
• Operating net investment income of $349-million for the quarter increased 50 per cent year over year, benefiting from the rising yields and increased turnover over the last 12 months.
• Distribution income increased by 3 per cent to $116-million, reflecting strong core profitability and contributions from recent acquisitions, tempered by moderating variable commissions.

Lines of business (4)

Property and casualty (P&C) Canada:

• Personal auto premiums growth accelerated to 9 per cent, driven by Intact Financial's rate actions in hard market conditions as well as an improving unit growth trajectory. The combined ratio of 95.4 per cent included roughly two points of higher-than-expected catastrophe losses and industry pools. Intact Financial expects to remain at a seasonally adjusted sub-95 combined ratio over the next 12 months.
• Personal property premiums grew by 7 per cent, up two points from the preceding quarter, reflecting rate actions in hard market conditions and strengthening unit growth. The elevated combined ratio of 123.7 per cent included 34 points of catastrophe losses in excess of expectations. Intact Financial remains 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 7 per cent was up 1 point from the preceding quarter, driven by continued rate increases and strong retention. The combined ratio at 92.7 per cent was 5.1 points higher than last year, mainly due to elevated catastrophe losses. Intact Financial remains well positioned to continue to deliver a combined ratio in the low 90s or better, as a result of Intact Financial's profitability actions in the prevailing hard market conditions.

P&C United Kingdom and international (UK&I):

• Commercial lines premiums decreased 1 per cent on a constant-currency basis, as strong growth in specialty lines was offset by a nine-point impact from strategic exits, continued optimization of Intact Financial's commercial delegated portfolio and the end of a large commercial motor contract. The combined ratio of 90.6 per cent reflected strong current-year performance and the absence of catastrophes, offset by an unusually high level of adverse prior-year development.
• Personal lines premiums declined 2 per cent on a constant-currency basis, reflecting a 15-point headwind from the exit of the U.K. personal lines motor portfolio. The combined ratio of 96.6 per cent benefited from Intact Financial's continuing rating actions as well as an absence of catastrophe losses. Intact Financial continues to believe that this line of business is operating at a run rate in the high 90s. The company is exploring strategic options for its U.K. personal lines business, including a possible sale.

P&C United States:

• Commercial lines premiums grew 13 per cent on a constant-currency basis, led by a seven-point contribution from new products (following the Highland MGA acquisition a year ago) as well as rate increases. The combined ratio improved to 88.5 per cent, driven by greater exposure to more profitable lines of business as well as rate increases.

(1) This news release contains non-GAAP (generally accepted accounting principles) 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 19 of the MD&A for further details.

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

(3) Includes the impact of discount build on Intact Financial's claims liabilities for all P&C segments.

(4) Combined ratios within the lines of business are reported on an undiscounted basis.

Net operating income, EPS and ROE:

• Net operating income attributable to common shareholders of $370-million was 24 per cent lower than Q3 2022, as a $373-million increase in catastrophe losses offset the impact of improving underwriting fundamentals, and higher earned premiums and investment income.
• Earnings per share was 83 cents due to increased catastrophe losses of approximately $1.60 per share and higher non-operating losses.
• As of Sept. 30, 2023, the operating ROE remained healthy at 12.2 per cent, despite a three-point impact from catastrophe losses over the last 12 months. The ROE of 7.8 per cent reflected the operating challenge mentioned above, as well as exited lines and equity investment losses.

Balance sheet:

• The company ended the quarter in a strong financial position, with a total capital margin of $2.8-billion and solid regulatory capital ratios in all jurisdictions.
• The adjusted debt-to-total capital ratio of 22.7 per cent was relatively stable as a portion of the financing of the Direct Line Insurance Group's brokered commercial lines operations (the U.K. commercial lines acquisition) was temporarily used to reduce short-term debt. Following the closing of the acquisition in Q4, the company's adjusted debt-to-total-capital ratio is expected to be below 24 per cent.
• Intact Financial's book value per share (BVPS) was $77.24 at Sept. 30, 2023, and 1 per cent higher than Q2 2023, reflecting the resilience of the platform and an equity issuance to partially finance the U.K. Commercial Lines acquisition.

M&A (merger and acquisition) update:

• On Sept. 6, 2023, Intact Financial announced the acquisition of Direct Line Insurance Group's brokered commercial lines operations, another significant step to accelerate the company's strategy and better position its UK&I operations for outperformance. Intact Financial closed the U.K. commercial lines acquisition on Oct. 26, 2023. Substantially all of the future economics of the business have been transferred to RSA effective Oct. 1, 2023. Starting in Q4 2023, results from these operations will be reported within Intact's UK&I commercial lines segment.
• Intact Financial continues to explore strategic options for its U.K. personal lines business, including a possible sale.

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 Dec. 29, 2023, to shareholders of record on Dec. 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 Dec. 31, 2023, to shareholders of record on Dec. 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 86 cents and $1.46, respectively.

Management's discussion and analysis and interim condensed consolidated financial statements

This news 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 2023 MD&A and the Q3 2023 interim condensed consolidated financial statements, which are available on the company's website and later today on SEDAR+.

For the definitions of measures and other insurance-related terms used in this news release, please refer to the MD&A and to the glossary available in the investors section of the company's website.

Conference call details

Intact Financial will host a conference call to review its earnings results tomorrow at 11 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 news release, visit the company's website and link to investors. The conference call is also available by dialling 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 Nov. 7, 2023, at 2 p.m. ET, until midnight on Nov. 15, 2023. To listen to the replay, call 416-764-8677 or 1-888-390-0541 (toll-free in North America), entry code 778214. A transcript of the call will also be made available on Intact Financial's website.

About Intact Financial Corp.

Intact Financial 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. The company's business has grown organically and through acquisitions to over $21-billion of total annual premiums.

In Canada, Intact Financial 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 United States, 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 United Kingdom, Ireland, and Europe, Intact Financial provides personal, commercial and specialty insurance solutions through the RSA brands.

Non-GAAP (generally accepted accounting principles) 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 with similar measures used by other companies in Intact's industry. Non-GAAP and other financial measures are used by management and financial analysts to assess the company's performance. Further, they provide users with an enhanced understanding of the company's 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 news release and the company's financial reports include measures related to its consolidated performance, its underwriting performance and its 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 of the Q3 2023 MD&A dated Nov. 7, 2023, which is available on the company's website and on SEDAR+.

We seek Safe Harbor.