Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Intact Financial Corp (IFCZF, Financial) demonstrated resilience with a net operating income per share of $1.01 and an operating ROE of 15.8% despite severe weather events.
- The company reported a 6% year-over-year increase in premiums, excluding the impact of UK exits and acquisitions.
- Intact Financial Corp (IFCZF) has a strong capital position with a total capital margin of $2.6 billion.
- The company is leveraging advanced AI models to optimize risk selection, particularly in personal property, which is constructed around perils and priced based on climate change models.
- Intact Financial Corp (IFCZF) is making significant investments in technology and digital engagement, leading to an 83% increase in web influence quotes year over year.
Negative Points
- The company faced $1.2 billion in net CAT losses in Q3, significantly impacting financial results.
- The combined ratio was 104%, including 22 points of CAT losses, which was 17 points higher than expected.
- Personal property premiums were heavily affected by CAT losses, with a combined ratio of 147.5% including 72 points of CAT losses.
- The UK and Ireland business faced pressure in large accounts, affecting organic growth despite a 28% increase in premiums due to acquisitions.
- The operating effective tax rate was low at 4%, impacted by the sources and geography of earnings, which could indicate volatility in tax expenses.
Q & A Highlights
Q: Can you discuss the potential impacts of the Ontario regulatory proposal to remove accident benefits from private insurance?
A: Guillaume Lamy, Senior Vice President, Personal Lines, explained that the proposal allows for more customer choice by making certain benefits optional. The mandatory accident coverage will continue for medical and rehabilitation costs, while other benefits will become optional. This change is expected to provide customers with more flexibility, especially if they are covered under other plans. Intact is supportive of these changes and is working to ensure the new product is simple for customers to understand.
Q: What is the timeline for the full implementation of Guidewire in the UK, and what are the expected benefits?
A: Patrick Barbeau, Chief Operating Officer, stated that the implementation of Guidewire for claims is well underway, with most lines already deployed. The system will enable harmonized processes and better control over indemnity. The focus is on internalizing work to build the same advantage in the UK as in Canada, leveraging Guidewire as an enabler.
Q: How do you view the reinsurance pricing environment, and what impact will it have on rates?
A: Louis Marcotte, Chief Financial Officer, noted that the reinsurance market remains firm but competitive, with capacity available. The impact of changing reinsurance prices is limited as ceded premiums are a small portion of total premiums. Intact's strategy remains unchanged, focusing on managing tail risk rather than quarterly volatility.
Q: Are you seeing any impact from tort inflation in your US operations?
A: Charles Brindamour, CEO, explained that Intact has exited lines with long tails and high variability, focusing on severity inflation in liability. Darren Godfrey, Executive Vice President & Chief Underwriting Officer, added that Intact's US portfolio has less casualty exposure and a shorter reserve duration compared to the industry average, which helps mitigate the impact of social inflation.
Q: Does the change in the UK pricing environment alter your appetite for market share gains in the SME market?
A: Charles Brindamour, CEO, confirmed that the pricing environment in the SME and midmarket space remains constructive, with mid-single-digit rate increases. Intact is keen to grow in this market, leveraging expanded distribution relationships from the NIG acquisition.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
