Intact Financial Corporation
2024 Annual Report
We’re motivated by our purpose
We are here to help people, businesses and society prosper in good times and be
resilient in bad times.
We’re driven by our Values
Our Values guide our decision-making, keep us grounded, help us outperform
and are key to our success.
Integrity
Be honest,
open and fair
Set high
standards
Stand up for
what is right
Respect
Be kind
See diversity
as a strength
Be inclusive and
collaborate
Customer-
driven
Listen to our
customers
Make it easy,
find solutions
Deliver second-
to-none
experiences
Excellence
Act with discipline
and drive to
outperform
Embrace change,
improve every day
Celebrate
success, yet
remain humble
Generosity
Help others
Protect the
environment
Make our
communities
more resilient
We’re guided by our core belief
A belief that insurance is about people, not things.
About us
Table of contents
What we do
4
What we aim to achieve
6
Our roadmap
8
Our strong track record of
financial performance
11
CEO’s letter
14
Chair’s letter
34
Our board and leadership
38
MD&A and Financial Statements
40
Financial history
248
Forward-looking statements
252
Shareholder and corporate
information
253
Building resilience and helping
people adapt
254
Why invest in Intact
back cover
Our P&C segments
Our Lines of business2
What we do
Intact is the largest provider of Property
& Casualty insurance in Canada, a leading
Specialty Lines insurer with international
expertise, and a leader in Commercial Lines
in the UK and Ireland. With a global team
of 31,000 employees, we deliver exceptional
service through more than 350 offices
worldwide.
1 These are Non-GAAP financial measures, Non-GAAP ratios or supplementary measures. See “Section 29—Non-GAAP and other financial measures” of the
Company’s Q4-2024 MD&A for more details.
2 Commercial refers to Commercial Lines excluding Specialty Lines, as the latter is presented separately. Personal Lines in Ireland represent 1% of our IFC business
and is included within UK&I Commercial Lines.
Canada
UK&I
US
Personal Auto
Personal Property
Commercial Lines
Specialty Lines
2024 Operating Direct Premiums Written1
68%
28%
18%
27%
27%
20%
12%
2024 Intact Financial Corporation Annual Report
4
Our business has grown organically and through
strategic acquisitions. Our total annual operating Direct
Premiums Written1 has tripled over the last decade to
almost $24 billion. This robust trajectory has been
accelerated by successful acquisitions that have
supported our growth strategy and the achievement
of our financial goals. As a result, our market cap has
consistently increased over time and reached a record
high of close to $47 billion in 2024.
1 These are Non-GAAP financial measures, Non-GAAP ratios or supplementary measures.
2 IFC became a publicly traded company in 2009.
AXA
Canada
JEVCO
Metro
General
Canadian
Direct
Innovassur
OneBeacon
GCNA
RSA
DLG’s brokered
Commercial
Lines business
$24B
DPW1
$47B
Market Cap
$4.5B
Market Cap
$4.3B
DPW1
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
20092
2024 Intact Financial Corporation Annual Report
5
Our customers
are ou
r advocat
es:
3 out of 4 custo
mers are our advo
cates.
4 out of 5 broke
rs value ourspecialized
expertise.
Ou
r peopl
e are engaged:
We are
a best employer.
Our empl
oyees and leaders are rep
resentative of the c
ommunities
we serve.
Ou
r co
mpany is
one of the most respect
ed:
Exceed industry ROE by
5 pts.
Grow NOIPS 10% yearly
over time.
3 out of 4 stakeholders
recognize us as leaders in build
ing resilient communities.
A
chieve Net Zero by 2050, andha
What we aim to achieve
2024 Intact Financial Corporation Annual Report
6
2024 strategic highlights
Our customers
are our
ADVOCATES
74%
of our Personal Lines customers1
who had a transaction with us
are our advocates.
85%
of brokers in Canada, US and the
UK value our specialized expertise.
Our people are
ENGAGED
We are a Best Employer:
9th
consecutive year being named Best
Employer in Canada by Mercer.
6th
consecutive year being named Best
Employer in the US by Mercer.
39%
of VP+ roles at Intact are held
by women globally.
15%
of VP+ roles at Intact are held by
employees who identify as Black
People and People of Colour (BPOC).2
Our company
is one of the
MOST
RESPECTED
10%
10-year CAGR with a Net Operating
Income Per Share3 of $14.43.
6.5 points
of 10-year average Return on Equity3,4
outperformance.
57%
of stakeholders in Canada believe
Intact is a leader in helping build
resilient communities.5
55%
of stakeholders globally believe
Intact is a leader in helping build
resilient communities.5
1 Includes Canada and Ireland customers.
2 Excluding On Side Restoration due to data unavailability. BPOC data only available in Canada and US. Data is not collected in the UK&I due to legal restrictions
in certain jurisdictions.
3 These are Non-GAAP financial measures, Non-GAAP ratios or supplementary measures.
4 Intact’s ROE corresponds to an adjusted return on equity (AROE), which is more comparable to the industry.
5 Intact’s Resilience Barometer measures our progress on achieving our target of “3 out of 4 stakeholders recognize us as leaders in building resilient communities” through
feedback from key stakeholders. More information can be found in the annual Social Impact and ESG Report.
2024 Intact Financial Corporation Annual Report
7
10%
NOIPS
growth
annually
over time
Leading customer
experience
Expand leadership
position in Canada
Strengthen leading
position in UK & Ireland
Transform our competitive advantages & solidify outperformance
Build a Specialty
Lines leader
3 out of 4 customers
digitally engaged
Scale in
distribution
Outperform industry
combined ratio by 5 pts
Further
consolidation
in Canada
Leading broker &
customer experience
Expand broker
distribution
Optimize
underwriting & claims
for outperformance
Low 90s combined ratio
Responsive and
agile technology
and operations
Specialized customer
value proposition
Expand
distribution
Profitable &
growing mix
of verticals
Sub-90s combined ratio
Global leader in leveraging data
and AI for pricing and risk selection
Deep Claims expertise & strong
supply chain network
Strong capital & investment
management expertise
Invest in our people
Be a best employer
Be a destination for top talent & experts
Enable our people to thrive
Invest in our community
*Based on a weighted-average ROE benchmark of leading P&C insurers in Canada, the US and the UK.
Leverage our strengths to win on climate
Build resilient communities
Consolidate
fragmented
market
500 bps
Annual ROE
Outperformance*
Our roadmap
2024 Intact Financial Corporation Annual Report
8
Highlights of our strategic progress
Expand our leadership
position in Canada
• Achieved $16 billion of total
annual operating DPW1 and on
track to reach $20 billion by 2027.
• Ranked the #1 most trusted brand
in both auto and home insurance.
• Surpassed $500 million in web sales,
an 81% increase over last year.
• Acquired Jiffy, Canada’s leading
home maintenance app.
• BrokerLink’s top line increased by
21% thanks in part to 25 acquisitions,
which represented $491 million of
premiums.
• Partnered with the Professional
Women’s Hockey League (PWHL) to
strengthen our brand in Canada and
promote opportunities for women
to excel in their chosen careers,
including professional sports.
Strengthen our leading
position in the UK & Ireland
• Completed the operational transfer
of DLG’s brokered Commercial Lines
to become a leading Commercial
Lines insurer in the UK.
• Launched RSA’s “One Commercial”
program to deliver a single
compelling proposition to brokers
on service, product and price.
• Invested over $250 million
to modernize our technology
foundations and transform our
business for customers, brokers
and employees.
• Became the first UK insurer to
implement a cloud solution designed
to improve claims management.
Build a Specialty Lines leader
• Achieved over $6 billion in DPW1
and on track to reach $10 billion by
2030, while performing at a sub-90
operating combined ratio.
• Increased use of machine-learning
with 15% of our specialty premiums
being underwritten with state-of-
the-art pricing models, double from
last year.
• Increased broker satisfaction in the
US, with 9 out of 10 brokers valuing
our specialized expertise.
• Exported existing verticals to
additional markets, including Tech
and Management Liability in Europe.
• Launched a Project Cargo
consortium in the UK known as
BUILD, expanding our marine
coverage.
Transform our competitive
advantages and solidify
outperformance
• Invested over $500 million in
technology across our markets.
• Over 500 AI models deployed with
over $150 million in annual benefits.
• Over $14 billion in claims
paid globally.
• Responded to almost 50,000 claims
valued at $1.1 billion related to the
four severe catastrophes in Canada,
while maintaining speed and service.
• Investment income increased
by 16% and investment portfolio
outperformed peers over the last
five years by 100 basis points.
Invest in our people
• Global engagement increased by
two points and manager effectiveness
dimension scored above the
top quartile in every region.
• 76% of our leadership roles were
filled internally thanks to robust talent
management and succession planning.
• Launched claims trainee program
in US and introduced two new
leadership development programs
in the UK.
• Piloted a mental health training
program for a group of leaders
in Canada.
• Launched equal parental leave policy
in the UK and increased parental
leave benefits in the US.
Invest in our community
• Launched the intake for the
second round of Municipal Climate
Resiliency Grants, providing
$2 million for climate adaptation
projects across Canada.
• Partnered with UK Youth to support
and empower 135 young people
through access to an employability
skills curriculum, a scholarship
fund and paid work experience
placements.
• Partnered with Fondation CHU
Sainte-Justine and Université
de Montréal to launch the Intact
Health Resilience Initiative focused
on infectious diseases dedicated
to mother-child health —through
combined corporate and personal
donations totalling $5 million.
• Committed $2.25 million over five
years to help establish the Intact
Cybersecurity Hub—a cybersecurity
expertise centre at the Université
de Sherbrooke in Québec .
1 These are Non-GAAP financial measures, Non-GAAP ratios or supplementary measures.
2024 Intact Financial Corporation Annual Report
9
2024 Intact Financial Corporation Annual Report
10
A strong track record
14.6%
Average ROE1 over the past decade,
exceeding industry ROE1 by a yearly
average of 6.5 points.5
Overall, our ROE1 outperformance was
driven by our pricing and risk selection,
claims expertise and supply chain, as
well as our strong capital and investment
management. We have achieved our
objective of exceeding the industry ROE
by five points in nine out of the last 10 years.
10-year Annualized Total
Shareholder Return
15%
IFC
9%
TSX 60
We had 20 consecutive dividend
increases since our IPO, and a total
shareholder return outpacing the
TSX 60 by 600 basis points per year,
over the last 10 years.
1 These are Non-GAAP financial measures, Non-GAAP ratios or supplementary measures.
2 IFRS 17 basis.
3 See forward looking statements cautionary note on page 252.
4 Intact’s ROE corresponds to an adjusted return on equity (AROE), which is more comparable to the industry.
5 2024 ROE outperformance is estimated at 510 basis points and includes estimated UK industry ROE. Final 2024 outperformance results will be available in Q2-2025.
6 This graph compares the total cumulative return of $100 invested in Common Shares of the Company with the total cumulative return of the S&P/TSX, assuming the
reinvestment of dividends.
10%
10-year CAGR
$14.43
NOIPS1
Our NOIPS1 performance was driven by
solid organic growth, healthy underwriting
margins, as well as strong investment and
distribution results, altogether bolstered
by contributions from our numerous
acquisitions. We remain confident in
our ability to grow NOIPS1 by 10%
annually, over time.3
Net Operating Income Per Share1 over time
$14.43
NOIPS
$3
$6
$9
$12
$15
20242
20232
20222
2021
2020
2019
2018
2017
2016
2015
ROE1,4 outperformance
ROE1 outperformance versus the industry (in points)
0
3
6
9
12
15
20242
20232
2022
2021
2020
2019
2018
2017
2016
2015
5.1
Total shareholder return6
IFC
TSX 60
0%
50%
100%
150%
200%
250%
300%
350%
295%
138%
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2024 Intact Financial Corporation Annual Report
11
16.5%
OROE1
14.2%
ROE1
Our financial position continues to be strong5
1 These are Non-GAAP financial measures, Non-GAAP ratios or supplementary measures.
2 Growth is in constant currency.
3 Combined ratio is presented on an undiscounted basis, in line with how we manage our business.
4 Per share metric is calculated based on the weighted-average diluted number of common shares outstanding.
5 As at December 31, 2024.
6 Financial strength ratings for IFC’s principal Canadian P&C insurance subsidiaries.
19.4%
Adjusted Debt-to-Total
Capital Ratio1
$2.9B
Total Capital Margin1
$92.67
Book Value Per Share 1
up 13% year-over-year
2024 financial highlights
Our performance was driven by our sophisticated pricing,
disciplined underwriting, in-house claims expertise, strong supply
chain network, and robust capital and investment management.
Despite facing an unusually challenging operating environment, we
showed great financial resiliency, while continuing to advance on
our strategic roadmap. This was evidenced by our profitable growth
across all segments and solid financial position.
Underwriting
$24B
Operating DPW1
with year-over-year
growth2 of 5%
92.2%
Combined Ratio1, 3
including three points
of CAT losses above
expectations
$14.43
NOIPS1, 4
$12.36
EPS4
Regulatory Capital Ratios
200%
MCT
176%
SCR
419%
RBC
Credit Ratings6
A+
A.M. Best
AA
DBRS
AA-
Fitch
Aa3
Moody’s
Resilient year despite high catastrophe losses in 2024
Investment
$1.6B
Operating Net Investment
Income with year-over-
year growth of 16%
3.8%
Book yield on our
$30B of debt securities
portfolio
Distribution
$524M
Distribution Income1
with year-over-year
growth of 12%
$4.3B
of annual premiums in
BrokerLink with 25 closed
acquisitions
2024 Intact Financial Corporation Annual Report
12
2024 Intact Financial Corporation Annual Report
13
Charles Brindamour
Chief Executive Officer
CEO’s letter
2024 has been another challenging year for
the economy and society. Against a backdrop
of political change and upheaval, geopolitical
tensions, humanitarian crises, and economic
uncertainty, the growing climate emergency
remained a constant concern — with an
increasing number and severity of extreme
weather events.
At Intact, we experienced these
events first-hand across all our
markets — during the British Columbia
and Alberta wildfires, Ontario summer
floods, the remnants of Hurricane
Debby wreaking havoc in Québec,
a severe hailstorm in Calgary, Alberta,
Hurricane Helene in the southwestern
US, and Storm Boris in the UK
and Europe.
These events further reinforced how
important insurance is to people’s
lives and drove home the impact
Intact has on our customers. Never
is our purpose clearer than during
catastrophes. Our ability to get
customers back on track was on full
display during our response to each
of these events. Our teams again
proved their agility and resilience,
delivering on our purpose to help
people, businesses and society
prosper in good times and be resilient
in bad times.
While responding to an unprecedented
volume of severe weather, we also
advanced the longer-term aspects
of our strategy, expanding our leading
position in Canada, strengthening our
position as a Commercial Lines leader
in the UK, and growing our Global
Specialty Lines platform — all while
investing in and transforming
our competitive advantages across
our markets.
Our ability to continue to execute on
this ambitious strategy during a time of
political, economic, and social volatility
proves just how much a values-driven
organization can deliver.
At Intact, we think in terms of decades,
not quarters. This long-term view brings
a discipline and stability to our business
that keeps us on track during the most
uncertain times. This approach means
we see future-proofing our business
as a key responsibility we owe to all
of our stakeholders, from investors to
customers to employees.
Despite the year’s challenges, we
ended 2024 in a position of strength.
We continue to outperform because
we focus on the world as it is. Not as
it was or as we wish it would be. We
study trends, opportunities and threats
and we plan for change as the world
changes. We also recognize our role in
driving that change.
In this letter, I am sharing the year’s
highlights and the trends that influence
our performance and future.
2024 Intact Financial Corporation Annual Report
14
CEO’s letter
Financials
In 2024, we once again delivered strong financial results, despite a
turbulent environment and high catastrophe (CAT) volume. We ended
the year with a net operating income per share (NOIPS) of $14.43 —
the highest NOIPS in our history — and an operating return on equity
(OROE) of 16.5%. This is a testament to the strength of our long-term
strategy and the resilience of our platform. All of our lines of business,
across our geographies, contributed to these results. Against
this backdrop, we increased dividends for the 20th year in a row,
representing a ten-year compounded annual growth rate of 10%.
We are proud of our track record over
the past decade, with NOIPS growing
by 10% and ROE outperformance of
650 basis points on average. We also
delivered annualized total shareholder
return of 15% during this period,
outperforming the TSX 60 benchmark
by 600 basis points.
Despite $1.5 billion in CAT losses, our
combined ratio for the year remained
solid at 92.2%. This represents a two-
point improvement from last year, driven
by strong underlying performance.
Personal Auto performed within our
sub-95 combined ratio guidance, at
95.4%, after excluding half-a-point
of negative impact from CAT losses
above expectations. Personal property
achieved a combined ratio of 96.5%
for the year, a number we are proud
of, since this segment bore the most
significant impact from catastrophe
events. This line has shown great
resilience, generating a combined
ratio of 90% on average over the last
five and ten years. Commercial Lines
delivered a low 90s combined ratio
or better across all the regions where
we operate. This establishes a solid
foundation for the continued growth of
our business.
Top line growth of 5% was fueled by
rate actions and unit growth in Personal
Lines where hard market conditions
continue to prevail. In Commercial
Lines, growth was driven by rates and
favourable market conditions across
most lines of business.
Our net investment income grew
by 16%, mainly driven by our
strategic asset allocation and active
management from our team of
investment experts. Central banks
decreased rates in 2024, markets
are pricing small cuts over the next
12 months1 and common shares
market volatility is spiking due to global
trade structural changes. Accounting
for these market changes, we expect
investment income to grow 3% to
approximately $1.6 billion in 2025.
Distribution income increased by 12%,
resulting from growth achieved both
organically and through acquisitions as
as our distribution channels continue
to provide us with a dependable and
diversified source of earnings. In
2025, we expect distribution income
to grow by approximately 10%, driven
by a healthy pipeline of acquisitions at
BrokerLink.
We ended the year in a strong financial
position, despite the impact of higher-
than-expected catastrophe losses.
We increased our book value per
share (BVPS) by 13% year-over-year,
we reached $2.9 billion of total capital
margin and achieved a leverage that
was better than target.
The strength and diversification of our
platform is evident. So is our ability
to grow earnings and outperform. In
the context of economic and climate
uncertainties, we have proven that
our organization is resilient and well-
positioned to thrive operationally and
financially.1 We are also in a good
position to grow NOIPS by 10% annually
over time and exceed the industry ROE
by five points, in line with our objectives.1
1 See forward looking statements cautionary note on page 252.
2024 Intact Financial Corporation Annual Report
15
Our objectives
To progress on our purpose, and to succeed as a business, we must
be crystal clear on what we’re aiming to achieve. Our objectives
(shown on page 6) are our north star.
Customers are at the centre of
everything we do and are critical
to our success. We strive to
have our customers be our
advocates — specifically, three
out of four of them, and to have
four out of five brokers value our
specialized expertise.
Our customers won’t become
advocates if our employees aren’t
proud of the work they do and inspired
to deliver superior experiences for
our customers. This is one of the
reasons why we want our people to
be engaged. This means achieving
Best Employer status in our annual
engagement surveys, and having
our people reflect the diversity of the
communities we serve.
Finally, we aim to be one of the most
respected companies. Not only
because of our financial success —
by exceeding industry ROE by five
points and growing NOIPS by 10%
annually— but also because of our
investments in the community. We
have committed to achieving Net Zero
by 2050, which means cutting our
operations emissions in half by 2030,1
and we want to have three out of four
stakeholders recognize us as leaders
in building resilient communities.
↓ Charles Brindamour and John Kerry, 68th US Secretary of State, at IFC’s 2024 Global Leaders’ Summit in Toronto, Ontario.
CEO’s letter
1 See forward looking statements cautionary note on page 252.
2024 Intact Financial Corporation Annual Report
16
The landscape in which we operate
1 Escape to Individualism | Ipsos.
2 Intact’s ROE corresponds to an adjusted return on equity (AROE), which is more comparable to the industry.
3 See forward looking statements cautionary note on page 252.
4 Cyber Insurance: Risks and Trends 2024 | Munich Re.
5 U.S. MGA Market Grows Swiftly – Exceeds $102 billion in Premium in 2023
Study: MGA Market Still Growing.
U.S. MGA market grows swiftly, exceeds $85 billion in premium in 2022.
A set of goals is nothing without a plan to achieve them. That’s where
our strategic roadmap (shown on page 8) comes in. If our objectives
are what we’re aiming to achieve, our roadmap is how we’re going to
get there. It helps us decide what to do and, also, what not to do. This
is critically important because to achieve outperformance, every ounce
of effort must be calibrated in the right direction.
To develop our roadmap (or gameplan,
as I like to call it), we focus on where
the world and consumers are going.
Our strategy is outside-in. We combine
our understanding of the world and
our strengths to decide where to
operate and how to win. Lately, our
attention has been drawn to a number
of shifting trends.
Customer expectations are
evolving. One, economic headwinds
and inflationary pressure mean
customers are increasingly focused
on value for money. Two, technology
is now integrated into every aspect
of our lives, influencing how we
shop, share, learn, work, and move.
While this has a number of benefits,
many consumers are inundated
with information and are seeking a
more simplified experience. A recent
study by Ipsos1 revealed that 61%
of customers are overwhelmed by
choice. A similar proportion want a
seamless digital experience across
all their financial institutions’ digital
channels. This is why we are focused
on keeping our products available and
affordable, while investing in our digital
experiences.
As consumers and businesses
embrace technology, the scale at
which data is generated and stored
has exploded. This has given rise
to unprecedented progress in the
field of artificial intelligence (AI).
Intact was an early and significant
adopter of data and AI, and the
transformative power is undeniable.
For over a decade, Intact has used
data and predictive AI to expand our
competitive advantage in pricing and
segmentation, which accounts for
one-third of our ROE2 outperformance.
As we expand the use of proprietary
datasets and leverage the strengths
of both predictive and generative AI,
we are well positioned to grow our
competitive edge.3
As the use of technology and AI
increases globally, cybercrime and
the cyber risk pool are rapidly
increasing too. That’s why we’re
doubling down to protect our tech
ecosystem and the data of our
customers. At the same time, helping
people and businesses be cyber
resilient is a big business opportunity.
The current global cyber security
market is valued at $19 billion,4 and
that’s expected to grow to $40 billion
by 2027. It’s why we partnered with
Resilience, a cyber-MGA (Managing
General Agent), to offer cyber security
services and insurance coverage
across our global markets.
Another trend disrupting our
industry is the evolution of
distribution. Brokerages are growing
in size and alternative distributors,
such as MGAs and wholesalers, are
consistently outpacing the growth
of the insurance industry itself.5 This
has been driven by an increase in
demand for specialized solutions to
manage and transfer complex risk. It’s
also been exacerbated by capacity
constraints from traditional insurance
providers. Our owned distribution
strategy positions us well to continue
generating attractive, capital-light
earnings for our shareholders.
CEO’s letter
2024 Intact Financial Corporation Annual Report
17
And then, of course, there is climate
change — the defining trend of
our time. 2024 was the warmest
year on record1 and marked the fifth
consecutive year where global insured
losses exceeded US$100 billion.2
Given the role insurers play in de-
risking the economy, climate change is
the single biggest challenge faced by
our sector. It will take an all-of-society
approach to tackle this crisis.
We’ve been on the front lines of climate
change since Intact was created in
2009, helping our customers get back
on track following extreme weather
events. We recognized early on that
the changing climate was having a
significant impact on our customers
and property claims — and began
looking for solutions. We transformed
our products, data and service models
to ensure we could continue to
protect our customers for the long-
term. Based on our experience in this
transformation, we started making
significant investments in
1 World Meteorological Organization, 2025.
2 Swiss RE, AON.
3 See forward looking statements cautionary note on page 252.
climate adaptation while calling on
the government to increase their
investments with us. I will address
this in more detail later in this letter.
Lastly, we are closely monitoring the
emerging and quickly evolving trend
of economic tensions between
the United States and Canada.
We are well-positioned to navigate a
trade war both from an operational
and financial standpoint — across all
our geographies and markets.3 As a
business, we anticipate and prepare
for uncertainty. We are leaders in
pricing and risk selection, we maintain
a strong balance sheet, and our
business is set up to embrace risk.
When it comes to tariffs specifically,
the main impact for Intact is on our
supply chain, and the exposure
is manageable. In Canada, only
approximately 12% of auto costs and
8% of property costs are exposed to
tariffs. In the US, our supply chain is
even less exposed as our focus is on
business insurance and almost half of
costs are liability. In both markets, our
teams have been actively optimizing
our supply chain. We know exactly
where our products are coming from,
and we continue to source more
products domestically.
On investment management, our
portfolio is well diversified. Roughly
half of our investments are in
companies and governments outside
of Canada. Our US, UK and EU
businesses are generating revenue
in US dollars, pounds sterling and
euros, which will keep us stable even
if the Canadian dollar falls. We are
in a strong financial position, and
we are keen to keep growing in all
our markets.
Our strategy is driven by a long-term
view of where the world is going.
That long-term view provides stability
during moments of uncertainty. Our
gameplan gives me confidence that
we’ll continue to outperform for our
customers, brokers, employees and
shareholders.
CEO’s letter
“Our strategy is driven by a
long-term view of where the
world is going.”
2024 Intact Financial Corporation Annual Report
18
Our Gameplan
Thanks to the clarity of our roadmap, we made significant progress
on our strategic agenda in 2024. Our roadmap is broken into six
categories of action.
1 See forward looking statements cautionary note on page 252.
1. Expanding our
leadership position
in Canada
Our strategy has helped us build an
incredibly strong business in Canada.
We’ve been outperforming for decades,
we are the largest property and
casualty (P&C) insurance company in
the country, and we have more than
double the written premiums of the
next largest player. In 2024, we made
excellent progress in key strategic
areas.
Customers determine our
success, so delivering a leading
customer experience is essential.
That delivery stands out especially
well during catastrophes. Our ability
to get customers back on track
was evident throughout the many
severe weather events in 2024. We
maintained excellent service, despite
claims volumes that were close to
double what they normally are during
the catastrophe period. On Side, our
owned restoration firm, played a critical
role on the front line.
While so much of the claims experience
happens in the physical world, digital
helps a lot too. In certain catastrophes
this year, half of the claims were started
online. This is a new high, showcasing
how customers are increasingly
embracing the speed and simplicity
that technology can bring.
With that in mind, we aim to have
three out of four customers engage
with us digitally, and this year we
made meaningful progress. After years
of investment and iteration, 2024
was a key turning point in our digital
strategy. Our digital portfolio now brings
in more than one $1 billion dollars in
direct premiums written (DPW). We
own one of the most visited websites in
the country in the insurance category.
This helped drive over $500 million in
web sales — an 81% increase over last
year. And almost a quarter of our policy
transactions are now made online.
Key to a great digital experience is
good design. Over the past year, we
improved purchase flows, the quote
and checkout processes and added
new features in our app, which saw
28 million visits in 2024. I’m confident
our digital strategy will continue to
drive growth1 — especially when it is
delivered in conjunction
with other strategic steps.
The acquisition of Jiffy, Canada’s
No. 1 home maintenance app, is a
good example of that. It’s a home run,
sitting squarely at the intersection of
helping and winning. The app connects
↓ A drive-thru hail centre in Calgary, Alberta.
CEO’s letter
2024 Intact Financial Corporation Annual Report
19
customers with experts who provide
home maintenance and repairs. This
opens avenues for us to help make
customer’s homes more resilient to
severe weather which, in turn, helps
to prevent claims. Strategically, Jiffy
increases our opportunities for digital
connections with our customers and
creates new and repeat experiences
beyond their annual insurance policy.
Taken together, we see opportunity
to deepen relationships with existing
customers and interact with potential
customers who aren’t yet insured
with us.
As we look to 2025, growth in
Commercial Lines is a high priority.
We took several steps to build the
framework for that growth this past
year. We deployed new tools and
leveraged AI to improve ease of doing
business. 72% of Commercial quotes
now go through our PDF Parser,
an AI tool that eliminates duplicate
entry for underwriters and brokers
and increases our speed to quote.
For our brokers, we also launched
an online self-serve tool for new
business, and we’ve further enhanced
Commercial pricing sophistication
with new machine learning models.
We’ve also been investing in service
and expertise, and it’s paying off. Our
mid-market segment demonstrated
strong new business momentum.
We also reached an all-time high in
broker underwriting satisfaction at
88%, with significant increases in how
brokers view our Commercial offering,
knowledge and service. We want to
keep that momentum going in 2025 as
we execute on our Commercial Lines’
growth strategies.
1 Five points of combined ratio outperformance
as of Q3 2024.
Consolidation and scale
in distribution are also key
ingredients to expanding our
leadership position. We are well
positioned here. We are one of
Canada’s largest distributors of
insurance, through belairdirect and
BrokerLink, giving us an up-close
perspective of current customer
needs and preferences. And we
insource more aspects of our claims
than any other insurer, enabling a
more seamless claims experience.
Not only do we have scale, but we’ve
also translated it into a competitive
edge and an outstanding customer
experience that are hard to replicate.
BrokerLink has continued to be an
important driver of growth, with premiums
up by 21% over last year. That’s, in part,
because of acquisitions — 25 in 2024,
representing nearly $500 million in
premiums. BrokerLink also opened up
new pipelines for growth by entering
Manitoba and Saskatchewan and is
on track to achieving $5 billion of DPW
in 2025.
When it comes to distribution, our
brands communicate our purpose
and excellent value proposition to
customers — and they do it well.
Our goal is to be a household name,
with one out of two Canadians
thinking of us when they think about
insurance — and we are well on our
way. Of the top five most recognized
insurance brands in Canada, we own
two. Intact has been the number one
most recognized brand nationally for
five years straight, and belairdirect is in
the top four. And it’s not just that we are
known — in 2024 we were ranked the
#1 most trusted brand in both Auto and
Home Insurance.
This year we reached $16.1 billion in
operating direct premiums written,
with over five points1 of combined
ratio outperformance. This puts us in
a great position to reach our ambition
of $20 billion in operating direct
premiums written with five points of
combined ratio outperformance by
2027. With such a strong foundation,
2025 will be about accelerating
↓ Marie-Lucie Paradis, Senior Vice President, Direct Distribution, at belairdirect’s employee townhall
in Laval, Québec.
CEO’s letter
2024 Intact Financial Corporation Annual Report
20
growth. We will do so organically,
through the ongoing execution of our
strategy.1 And, with the integration of
RSA now successfully completed in
Canada, we remain open to inorganic
growth opportunities.
2. Strengthening our
leading position in the
UK and Ireland
June 2024 marked the three-year
anniversary of the RSA acquisition,
Intact’s largest acquisition to
date. The transformation of the
business over the last three years
has been exceptional. Today, with
the completion of our acquisition of
the NIG and FarmWeb brands, which
were part of the broker business from
Direct Line Group (DLG), we are a
leading Commercial Lines insurer in
the UK. We have strong momentum
in our products, capabilities and
1 See forward looking statements cautionary note on page 252.
relationships. With a clear strategy,
we are also well positioned to operate
sustainably with a combined ratio1
in the low 90s.
Offering a leading broker and
customer experience is critical to
our success and we’re transforming
our UK and Ireland business to ensure
we deliver. That includes re-shaping
the footprint of the business — which,
in 2024, meant executing a smooth
Personal Lines exit in the UK. We
successfully completed the transfer
of our Home and Pet operations to
Admiral Group and we completed
our exit of the motor book. We made
significant progress exiting our affinity
partnerships by finding them new
providers, and we’ve made transition
arrangements for our people, in line
with our Values. Throughout this
extraordinary evolution, our focus has
been on making sure our customers,
partners and people are supported.
Transforming the broker experience in
particular has been front and centre of
our strategy in the UK. We’re doing that
through our One Commercial program,
which combines the best of RSA and
NIG offerings into one product, aligning
pricing, service and branding. Starting
in 2025, we will provide brokers with
a single compelling proposition,
delivered with digital enhancements.
We’re also building strong momentum
in service by focusing on efficiencies,
responsiveness, and relationships.
In 2024, four of five brokers value
our specialized expertise, and that
number rises to nine of ten in claims
specifically.
Technology and operations
are also key building blocks to
advancing our leading position
in the UK & Ireland. In 2024, we
made significant progress modernizing
↑ Charles Brindamour and Ken Norgrove, CEO UK&I, with employees at the RSA Broker Leader Programme Graduation in London, UK.
CEO’s letter
2024 Intact Financial Corporation Annual Report
21
CEO’s letter
our IT foundations, an essential step
toward enabling outperformance.
We’ve decommissioned old systems
and implemented new ones,
substantially improving controls, cyber
security, and efficiency. For example, in
2024, RSA became the first UK insurer
to implement Guidewire, a new cloud
solution for claims management. It will
improve productivity, indemnity control,
customer experience and settlement
time, helping to optimize claims. The
changes we implemented this year
will set the foundation for similar
improvements in 2025.
For customers, we deployed digital
upgrades that make it easier to reach
us and to significantly reduce friction
points. We’ve also successfully
deployed technology changes to
support the DLG integration. Overall,
it’s been a significant year on the
IT front, with many on-time and
1 See forward looking statements cautionary note on page 252.
on-budget deliverables helping to
transform our business for customers,
brokers and employees.
I can’t reflect on 2024 and the
extraordinary transformation
of our UK business without
acknowledging the significant
contributions of our people. 2024
brought about enormous change. In
our annual engagement survey, our
employees expressed excitement
about the future, but also shared how
challenging the transformation can be
day-to-day. We also introduced new
hybrid working guidelines, which bring
our teams together in-person more
often. We believe this is an essential
part of building an engaged and top
performing team, but it added another
element of adjustment in a very busy
year. Overall, our employees in the
UK delivered outstanding things in
2024, but their engagement score
decreased. Even if it’s a pattern we
have seen before during periods of
integration, we take this seriously. We
are proud of the transformation they
are achieving. In the survey,
our employees provided us with
helpful feedback about the support
they need, and we intend to deliver for
them.
3. Building a Specialty
solutions leader
When we created the Specialty
business in 2016, we had roughly
$600 million in premiums. Today, it’s
over $6 billion, with a combined ratio1
sustainably running in the sub-90s.
We have access to over $460 billion
of the global specialty lines market.
Our opportunity here is using our
global capabilities in all of the markets
where we operate— and pursuing that
impressive growth runway. In 2024, we
achieved a few things that gave us the
confidence to do so.
We accelerated our pricing
and underwriting sophistication.
We built up our pricing governance
and 20 of our verticals now have
segmented rate strategies in place.
We did this by working together
across our markets, strengthening our
knowledge-sharing. Bolstered by the
past innovations of our Data Lab, we
also increased our use of machine-
learning. We’re giving our underwriters
powerful predictive models to use at
point-of-sale, to help them make better
decisions and focus on profitable
growth.
Expanding distribution is key to
building Specialty Lines. We’re
focused on broadening our reach and
on deepening broker relationships. We
↑ BrokerLink employees celebrating a branch opening in Kingston, Ontario.
2024 Intact Financial Corporation Annual Report
22
CEO’s letter
have significantly grown our Specialty
Lines platform and offering over the
last few years. Now we have to make
sure our brokers and customers
know what we have to offer. We want
brokers to see us as their top option
and understand that we have the
expertise they and their customers are
looking for. Brokers already appreciate
us as a partner, with nearly nine out of
ten valuing our specialized expertise.
But there remains an opportunity to
increase the number of verticals that
each of our distribution partners can
access, which will allow them to tap
into a wider range of products for more
of their customers.
Winning in specialty also requires a
growing mix of profitable verticals.
We continue to find new growth
opportunities within our existing
footprint. In 2024, we exported
a number of existing verticals to
additional markets where we operate.
In the UK, we launched a Project
Cargo consortium known as BUILD,
expanding our Marine coverage. We
also launched personal accident and
business travel coverage, expanding
our Accident & Health franchise in the
UK. And we launched our Technology
and Management Liability verticals in
Europe, building on our strong North
American expertise in those lines. As I
mentioned earlier, the Cyber insurance
market is projected to surge, and the
Renewable Energy insurance market
is growing steadily with potential for
massive growth in the long term. We
are well positioned to capitalize on
these opportunities.
Our specialized customer value
proposition is possible thanks to
the deep expertise of our Specialty
teams. We have a strong team of
experts and, by continuing to invest in
our people, we’re getting stronger. We
now have a team of over 3,500 people
across the globe. We’re introducing
new talent development programs,
engagement is high, and we’re
retaining top talent. We also bolstered
our senior leadership team in 2024, a
clear indication of our ability to attract
and retain top talent to support our
ambitions.
All in all, we’ve made solid strides
towards our long-term goal of building
a Global Specialty Lines leader
and achieving $10 billion of Direct
Premiums Written by 2030.
4. Transforming our
competitive advantages
and solidifying
outperformance
Investments in three key areas
enable our outperformance. In 2024,
we continued to demonstrate our
leadership in data and AI, enhance
the claims experience and our supply
chain network, and strengthen our
capital position.
Data and AI
This year, we invested more than
$500 million in technology across our
markets. This includes big advances
in AI, as we continually improve risk
selection and pricing sophistication in
the markets where we operate.
One third of our competitive advantage
comes from pricing and risk selection.
We began investing in machine
learning more than a decade ago,
allowing us to expand our competitive
advantages and realize significant
financial benefits. With the support
of more than 500 data experts in our
Intact Lab, we have 500+ models
deployed, generating $150 million
in annual benefits.
Our Personal Lines business is
almost entirely on state-of-the-art
pricing models and we’re now making
excellent progress in our Commercial
and Specialty Lines businesses. More
than 60% of our Commercial Lines’
products in Canada are on machine
learning models. 15% of our Specialty
Lines premiums are on advanced
pricing models, which is double what
we had last year. Despite strong
momentum in pricing sophistication
across all our regions, we see
significant room for deployment
of new and improved AI models for
Commercial and Specialty Lines
in 2025.
We are accelerating our development
of generative AI (Gen AI). In
Commercial Lines, we’ve developed
tools to help underwriters assess risks
and automate simple tasks. In Personal
Lines, we’re using Gen AI to make it
easier for customers to interact with
us by helping them navigate complex
decisions like choosing coverage.
We’ve also developed a proprietary
Gen AI tool to help our phone agents
answer customer requests quicker
and better. In claims, we’ve introduced
a tool that helps our legal teams
quickly summarize and extract key
information from large quantities of
documents. We’ve already gained
significant efficiencies from these
tools and that will only increase as we
accelerate our AI strategy based on
these early successes.
2024 Intact Financial Corporation Annual Report
23
CEO’s letter
Deep claims expertise and
strong supply chain network
Our ability to get customers back on
track was in the spotlight in 2024, as
severe weather events put pressure
on our daily operations. Our teams
rose to the challenge, outperforming
time and time again.
In Canada, we have built enviable
strength in claims and supply chain.
Our own Intact-trained adjusters
handle 99% of all our claims from
start to finish. Our team of 24/7
adjusters are there no matter what
time of day our customers need us.
Our Intact Service Centres simplify
the auto-repair experience. And On
Side is often the first to the scene of
damaged homes and businesses. In
2024, On Side scaled up to handle the
increased volume of claims, growing to
45 locations and 2,000 employees.
For Personal Property customers
in Western Canada, we launched a
pilot with Wildfire Defense Systems,
providing wildfire prevention services
at no extra cost. They were deployed
six times in 2024 including for the
devastating wildfires in Jasper.
On Side also played a critical role
in the restoration efforts in Jasper.
They were hired by the local
government as part of their “white
goods” evacuation program to remove
over 2,000 dysfunctional appliances
from evacuated and damaged homes
and businesses.
In the aftermath of a severe hailstorm
in Calgary, our teams converted five of
our Service Centres and a warehouse
into drive-thru hail centres, speeding
up vehicle inspections and the claims
process. We also opened up eight
new Intact Service Centres in Canada
this year — yielding faster service and
greater claims satisfaction. We now
have a total of 39 locations across
the country.
In the UK, we have focused our
claims operations on Commercial
Lines to enable outperformance.
That starts by investing in our people.
This allows us to then internalize
the claims adjustment process to
the greatest extent possible. This
leads to better customer outcomes
and outperformance. We saw great
momentum in 2024. We are now
recognized as a leading insurer on
complex commercial claims.
In Global Specialty Lines (GSL), our
expertise allows us to meet the unique
needs of our specialty customers. We
started our internalization journey in
2018, and we now handle nearly all of
our claims for US ongoing business
↑ Charles Brindamour and Sarah Hirst, Claims Manager, visiting Jasper, Alberta following the devastating wildfires.
2024 Intact Financial Corporation Annual Report
24
CEO’s letter
internally. This ensures that our
dedicated specialty teams are the first
point of contact for our customers.
A key claims priority in 2024 was
collaborating across GSL so that
customers received local expertise, no
matter where the business was written.
We also continue to expand our
internal legal and expert teams to
drive outperformance across lines
of specialty business where litigation
is required. Knowing that developing
expertise takes time and investment,
we also created a claims trainee
program to grow the claims talent
pipeline across North America.
Strong capital & investment
management expertise
Our top-rated in-house investment
team continued to outperform this
year. Investment income increased
16% year-over-year and 80% of our
investment strategies outperformed
their respective benchmarks.
Intact Investment Management
was once again named a TOP Gun
Investment Team by Brendan Wood,
scoring fourth overall in Canada. Most
importantly, over the last five years, our
investment portfolio outperformed our
industry peers by approximately 100
basis points, contributing to our ROE
outperformance objective.
With a strong balance sheet,
$2.9 billion in total capital margin, and
our leverage slightly below target,
we have re-risked our investment
portfolio to its long-term targets.
Our strong capital position will
enable us to take advantage of
opportunities as they arise.
↑ Alana Firingstoney, Content Supervisor at On Side Restoration, removes smoke damage in a
local art gallery in Jasper, Alberta.
“ We are now recognized as a
leading insurer on complex
commercial claims.”
2024 Intact Financial Corporation Annual Report
25
CEO’s letter
5. Investing in our people
Strategy drives our outperformance, but
strategy is nothing without a winning
team. Ours has now grown to 31,000
people across our markets. At Intact,
we know our people are our greatest
strength — so we invest in them and
work to create an environment where
everyone can thrive.
This is why one of our strategic
objectives is to ensure our people are
engaged. In 2024, our overall global
engagement increased by two points. I
am proud of that progress. Particularly
in Canada, where we were named a
Best Employer for the ninth year in a
row, and in the United States for the
sixth year in a row.
To deliver on our strategy, we must
grow our talent pool at the pace of our
business ambitions. This is why we
invest in being a destination for the
top talent and specialized experts
who will help us succeed today and
in the future. One of the ways we are
investing in specialized expertise
is through our partnership with the
Université de Sherbrooke in Québec to
create the Intact Cybersecurity Hub. The
hub focuses on cybersecurity research,
training and knowledge-sharing. The
collaboration with the university is also
helping to build the next generation of
cybersecurity experts.
In 2024, we demonstrated what
excellent talent management and
succession planning looks like. Our
rising reputation as a global specialty
lines firm helped us attract a tenured
specialty leader for our Europe/London
Market Business, Nadia Côté. Lynn
O’Leary, outgoing CEO, Europe, has
taken on a new role as President, US.
We also announced that Louis
Marcotte, our outgoing Chief
Financial Officer (CFO), is stepping
into a new role as Vice Chair and
that Ken Anderson, CFO for UK&I,
is succeeding him. I’d like to thank
Louis for his outstanding leadership.
He’s been instrumental in helping
to transform Intact into a leading
global P&C company. I’d also like to
congratulate Ken who has already had
a very successful 17-year career with
Intact, with key contributions such as
leading the RSA acquisition.
As we look to 2025, Mike Miller, GSL
CEO, will be retiring after a successful
44-year career in the insurance
industry. Emmanuel Clarke, IFC
Corporate Director and Chair of IFC’s
GSL Advisory Board, will succeed him.
Mike will remain with Intact serving
as Chair, GSL and the IFC board will
be appointing and welcoming him as
Director of IFC. I’d like to thank Mike
for bringing Specialty Lines to the
strong position it’s in today and I look
forward to his continued guidance
and leadership. Congratulations
to Emmanuel, who has played an
instrumental role on GSL’s Advisory
Board. I know Global Specialty Lines
will continue to thrive with him steering
the ship.
Our leaders, from frontline managers
to executives, play a key role in
enabling our people to thrive.
That’s why we’re investing heavily on
coaching them on our Leadership
Success Factors. And this works.
In our engagement survey, the
manager effectiveness dimension
scored above the top quartile in
every region. Employees recognized
the investments we have made in
modern tools and technology to
enable them to do their best work.
They also recognize that we’re making
investments in health and well-being
initiatives to help them be their
best selves.
↓ Attendees at IFC’s Global Leaders’ Summit in Toronto, Ontario.
2024 Intact Financial Corporation Annual Report
26
6. Investing in our
community
Helping society is at the root of our
purpose, and we focus on areas where
we’re uniquely positioned to make a
positive difference.
We continue to advance on the five big
intentions within our climate strategy.
We remain committed to halving
our operations emissions by 20301
and have also set a target to reduce
investment emissions intensity by
40%.2 We’re enabling the transition
to a low-emissions and climate
resilient economy by engaging with
top emitters to discuss their impact,
and we’re helping to de-risk critical
industries such as renewable energy.
We also continue to collaborate with
government and industry to accelerate
climate action.
Our dedication to building resilient
communities continues to increase, as
does our support of and collaboration
with the Intact Centre on Climate
Adaptation at the University of Waterloo.
This year we doubled our investment
in our Municipal Climate Resiliency
Grant program — providing $2 million3
to help municipalities in Canada
adapt to extreme weather events,
including flooding and wildfire. Over
170 municipalities responded to our
call to help de-risk their communities.
We continue to seek opportunities
to leverage our platform to shape
adaptation behaviours.
Our approach to building resilient
communities also includes a focus on
community well-being and building
economic resilience. This year we
1 Climate Strategy | Intact Financial Corporation. Includes Scope 1, Scope 2 (market-based), and Scope 3 (business travel, waste, water and paper).
Excludes On Side Restoration.
2 Climate Strategy | Intact Financial Corporation. Common shares, preferred shares and corporate bonds portfolio. Long strategies only of common shares held
within Intact’s investment portfolio were considered (i.e. excludes short positions or mixed long and short positions held in common shares).
3 Intact doubles down on its Municipal Climate Resiliency Grants program | Intact Financial Corporation.
launched the Intact Health Resilience
Initiative, through a combined donation
from Intact and personal contributions
from myself and our Canada CEO,
Louis Gagnon. The initiative helps
to establish a first-in-Canada centre
of excellence in infectious diseases
dedicated to mother-child health.
The project — a strategic partnership
between Centre hospitalier
universitaire (CHU) Sainte-Justine
and the Faculty of Medicine at the
Université de Montréal — exemplifies
how businesses, health, and academic
institutions can work together to
address critical societal issues.
For more information on the progress
we’ve made on our social impact and
climate performance, I invite you to
read our annual Social Impact and
ESG Report.
↑ Charles Brindamour, and Louis Gagnon, CEO Canada, at the unveiling of the Intact Health
Resilience Initiative at Centre hospitalier universitaire (CHU) Sainte-Justine in Montreal, Quebec.
CEO’s letter
2024 Intact Financial Corporation Annual Report
27
CEO’s letter
A call to action
1 A ‘super year’ for elections | United Nations Development Programme.
2 edelman.com/sites/g/files/aatuss191/files/2024-02/2024 Edelman Trust Barometer Global Report_FINAL.pdf.
3 https://www.bankofcanada.ca/2024/03/productivity-problem/.
4 Time to break the glass: Fixing Canada’s productivity problem – Bank of Canada.
5 Time to break the glass: Fixing Canada’s productivity problem – Bank of Canada.
6 Canada’s Growth Challenge: Why the economy is stuck in neutral – RBC Thought Leadership.
7 Understanding productivity – Bank of Canada.
8 Gross domestic spending on R&D | OECD.
9 Employer-sponsored skills training.
As I look back on 2024, I’m proud of what our teams achieved.
In a year filled with economic volatility, political change and a
high volume of extreme weather events, our teams rose to the
many challenges successfully. I am impressed but not surprised.
Our business is built to thrive in uncertain times. We are disciplined
yet agile, and our teams are energized to deliver in any environment.
The magnitude of the challenges
society, business and individuals faced
in 2024 underscores the need for us
to take a whole-of-society approach
to solving these problems. There’s an
opportunity for all leaders across
business and government to make
a meaningful and positive impact
on people’s lives.
2024 was the largest election
year in history with around half the
world’s population going to the
polls.1 Amid economic pressure and
international conflict, nearly every
incumbent has been unsuccessful in
securing re-election. This suggests
broad dissatisfaction with the status
quo among global citizens, and a
hope that new leaders will take a
fresh look at global challenges and
opportunities. In North America, an
unnecessary and unfounded trade
war has begun — a difficult moment
for Canada and the United States,
two long-standing allies. In this
environment — with macroeconomic
and geopolitical uncertainty,
increasing rhetoric, and an overall
decrease in trust across many
institutions2 including governments,
companies and media — leadership
matters.
With this as our backdrop, I see an
urgent need for leaders, especially
in Canada, our largest market, to
take action in a few areas of critical
importance for society.
Business leaders need to tackle
Canada’s productivity problem.
In recent years, Canada has seen
essentially no productivity growth.3
The level of productivity in Canada’s
business sector is roughly what it
was seven years ago.4 It’s only about
70% of that of the United States5
and, globally, we’ve fallen behind
most major economies since 2000.6
Tackling Canada’s productivity
problem is even more critical now,
against the backdrop of tariffs and
counter-tariffs with our closest
trading partner.
Productivity protects against
inflation — the more productive an
economy, the more it can grow
without sparking price increases.7
This matters because inflation may
be more of a persistent threat than it
has been in years past. Factors such
as global trade tensions, changing
demographics, and the economic
impacts of climate change threaten
to put pressure on prices. We need to
boost productivity now to protect the
Canadian economy from these issues
and others to come.
There is a path forward. To address
some of the root causes of the
productivity problem, business leaders
must face the crisis head on and take
concrete steps to tackle it. To do that,
leaders need to benchmark against
the best in the world and invest to
operate at that level. They need to
invest in technology, and research and
development. Canada only spends
1.9% of its GDP on research and
development — compared to 4.9%
in the US.8
Investing in their employees is
also essential — to make sure
they develop skills for today’s and
tomorrow’s jobs. Canadian firms
spend just 81 cents for every dollar US
firms spend on employee training.9
Canadian employers need to focus
on training, upskilling and giving
employees access to new tools and
CEO’s letter
2024 Intact Financial Corporation Annual Report
28
CEO’s letter
↑ Employees outside a drive-thru hail centre in Calgary, Alberta.
technology. In the last year, Intact
has invested $500 million dollars
in technology across our markets.
Through our Intact Lab, we have more
than 1,000 experts researching how
to be better at risk selection, how to
be more efficient and how to better
interact with customers.
Investing in people, focusing on
innovation, and finding creative
solutions have helped us reach the
strong position we’re in today. Intact
was created sixteen years ago in the
depth of the financial crisis. When we
first hit the Toronto Stock Exchange in
2009, we had $4.3 billion in
direct premiums written. Now we
“ Investing in people,
focusing on innovation,
and finding creative
solutions have helped us
reach the strong position
we’re in today.”
2024 Intact Financial Corporation Annual Report
29
have $23.7 billion. We had roughly
7,000 employees. Now we have
31,000 employees globally, we support
150+ countries with our products,
and we are the largest P&C insurer
in Canada — 23 times bigger than
the average industry player and close
to six times bigger than the top 20.
That doesn’t happen by accident.
By being innovative, taking risks and
investing in people, we have built an
organization with an incredible spirit.
We have built a winning team that, I
believe, has no match anywhere we
compete. One that has transformed
a strong domestic player into an
international force. A true Canadian
champion. And I think Canada
needs more champions.
So, I call on my fellow leaders to grow
their talent pool, invest in innovation,
and be more ambitious. It’s only
by being bold, imaginative and by
relentlessly challenging the status
quo that we’ll redefine how we do
business both here in Canada and
on the global stage.
We also need government leaders
and policymakers to step up — as
they too have a crucial role to play
in tackling society’s important
issues. Especially when it comes
to addressing the effects of climate
change.
Canada is warming twice as fast as
the global average.1 In 2024, insured
damages from severe weather events
passed $8 billion for the first time
in Canada’s history.2 For context,
40 years ago Canada experienced
19 natural disasters per decade.
1 Temperature change in Canada – Canada.ca | Government of Canada.
2 2024 shatters record for costliest year for severe weather-related losses in Canadian history at $8.5 billion | Insurance Bureau of Canada .
3 CatIQ, PCS, IBC Facts Book, IMF WEO Database.
4 Adapting to Rising Flood Risk – An Analysis of Insurance Solutions for Canada | Government of Canada.
5 Insurance Bureau of Canada analysis.
That number has now grown to 133.3
Increasingly, there are parts of our
country where natural disasters have
become unavoidable. For example,
the latest data shows that 10% of
Canadian homes are at high risk of
flooding from future major weather
events.4 As an insurer, risk is our
business, and we have an appetite
to assume it. But when those risks
become certainties, we need to
cooperate with governments to find
solutions that go beyond insurance.
First, government leaders need to
focus on building for the future and
building in the right places. This
means identifying areas that are prone
to catastrophes, like flooding, wildfires,
sea-level rise and permafrost melt, and
creating no-build zones. The no-build
zones should be used to inform land-
use planning. Government leaders also
need to focus on updating building
codes to better protect homes against
severe weather. For example, requiring
Class A fire-resistant roof coverings
for all new homes built in forested
regions. And, to help mitigate flood
risk, requiring backwater valves to be
installed in all newly built homes.
Second, governments need to
increase funding for adaptation,
so society is more resilient when
extreme weather strikes. The
current balance of climate funding
is tilted 90% in favour of Net-Zero
initiatives, with 10% directed to
adaptation.5 Increased funding in
support of adaptation would help
communities and local economies
to withstand worse weather to come
while Canada continues to transition
to Net-Zero. The business case for
meaningful government funding
for adaptation is clear. The World
Resources Institute calculates that the
return on investment for adaptation
is $2 – $10 in avoided losses per
↑ A Wildfire Defense Systems’ truck.
CEO’s letter
2024 Intact Financial Corporation Annual Report
30
CEO’s letter
dollar invested, per decade.1 And yet,
Canada’s National Adaptation Strategy
remains largely unfunded. For our
part, we’ve been focused on climate
adaptation for over a decade. We’ve
committed over $27 million to more
than 100 climate adaptation projects
since 2010. We also established the
Intact Centre on Climate Adaptation
at the University of Waterloo in 2015.
Through this partnership, we provide
direct support for research and climate
adaptation solutions. And we equip
communities, homeowners, and
businesses with practical tools and
resources to help them protect
their properties from the effects
of extreme weather.
Third, as part of funding adaptation,
it’s critical that governments invest
in nature-based solutions as a
first line of defence. Natural assets
provide climate change mitigation and
adaptation benefits, as well as social
and health benefits. According to the
Intact Centre, preserving wetlands can
reduce flood damage costs by almost
40%. Governments must prevent the
destruction of existing natural assets
by designating them as protected
areas and investing in the restoration
of eroded ones. This is critical given
the significant natural systems we’ve
already lost. While over 13% of Canada
is classified as wetland ecosystem,
many regions have lost over 50%
of their wetland ecosystems — with
urban centres losing up to 98%.2
This year, as part of our $8 million
five-year partnership with the Nature
Conservancy of Canada, we helped
protect over 1,300 hectares of
wetlands in Atlantic Canada and
Québec. We have also invested
1 Adaptation Finance and Investment | World Resources Institute.
2 Don’t Drain the Swamp (March 2020) | Canadian Climate Institute.
3 Get up-to-date facts on the insurance industry | Insurance Bureau of Canada.
£400,000 over two years through our
partnership with the Gloucestershire
Wildlife Trust to provide natural flood
management solutions to areas most
affected by flooding in the UK.
Finally, government and regulators
should not intervene in the
personal property market. The
pricing and underwriting of insurance
make invisible risks tangible — to
governments, businesses, and
individuals. Our industry offers the
opportunity to transfer risk. Our
prices and policies create important
conversations about what risks exist
and the actions required to prevent
and reduce their impact.
Premiums quantify risk — it should be
more expensive to insure a home in an
area prone to extreme weather. When
a government or regulator reacts to
rising premiums by constraining rating
or underwriting practices, like we saw
in the recent L.A. fires, it dulls important
signals and allows risks to proliferate
and reduce access to insurance.
The Property & Casualty market is
very competitive, with close to 200
P&C insurers actively competing in
Canada.3 With so many products
available across the country,
competitive forces will ensure
customers get the best deal. But,
when risk signals are dulled, this can
give customers a false sense of safety,
endangering our economy by putting
resources in severe weather zones,
and ultimately negatively impacting
more lives. We need to help society
prepare and adapt to our changing
climate instead of subsidizing
insurance in climate danger zones.
As we call on government and
regulators to act, we will continue to
do our part. We recognize that solving
the impacts of climate change is not
just a pricing issue — it’s tough for
homeowners to see rate increases
when protecting their most important
asset. That’s why we’re taking steps to
keep insurance affordable in the face
of growing climate risks.
We’re investing in machine learning
to improve our risk selection, so
we can more accurately signal risk
to the market and better target
our preventative measures. We’re
investing in supply chain management,
including by acquiring On Side in
2019 and continuing to invest in its
growth. During years with significant
weather, which puts pressure on
supply chain capacity, owning our
own restoration company speeds
up the claims process and helps us
contain costs. We’re also doubling
down on prevention with initiatives like
our partnership with Wildfire Defense
Systems, and we’re future-proofing
our products. We are committed to
helping our customers protect their
most important asset — but climate
adaptation requires an all-of-society
approach, and that’s not something
insurance companies can tackle alone.
We need governments to address
and reduce risk at the source. As
insurers, we can help identify those
risks while they are still manageable
and collaborate with governments on
actions that will both help people and
communities adapt and control costs.
The combination of good risk policy and
regulation, proactive risk reduction, and
investments in adaptation will pave the
way for a healthy economy and society.
2024 Intact Financial Corporation Annual Report
31
CEO’s letter
Final thoughts
Despite the challenges of 2024, our business made important
progress on our purpose. Our teams demonstrated their agility,
resourcefulness, and reinforced our resilience as an organization.
But resilience alone is not enough to succeed. As a business, we
anticipate and prepare for uncertainty. Whether they are political,
economic or climate-related, we have tested and modelled
against a wide range of scenarios to ensure we thrive under any
circumstances. Intact is not a fair-weather insurer. Our track
record of outperformance is a testament to this preparation.
The current climate underscores the
critical role insurance plays in society.
Our industry and the impact we make
on people’s lives has never been more
important. People need us — to get
them back on track, to protect them
against rising risks, to help them adapt
to a changing climate, and to advocate
with governments of all political
stripes for protection solutions beyond
insurance.
Our strategy and careful analysis of
the world and our investments in our
people and communities have brought
us to the strong position we’re in today.
As we look to 2025 and beyond, I’m
confident we’ll continue to outperform
for our customers, brokers, employees
and investors. We will continue to
find the intersections of helping and
winning and, as an industry leader, use
our voice to recruit momentum for our
purpose — to help people, businesses
and society prosper in good times and
be resilient in bad times.
Charles Brindamour
Chief Executive Officer
↓ Charles Brindamour exchanging with leaders at IFC’s 2024 Global Leaders’ Summit in Toronto, Ontario.
2024 Intact Financial Corporation Annual Report
32
2024 Intact Financial Corporation Annual Report
33
Chair’s letter
Intact ended the 2024 year once again in a
position of strength, while having helped our
customers get back on track through some
of the most difficult conditions many had ever
experienced.
1 These are Non-GAAP financial measures, Non-GAAP ratios or supplementary measures.
Last summer was the most destructive
season in Canadian history for insured
losses due to severe weather. We
reported total natural catastrophe (CAT)
losses of $1.2 billion in the third quarter,
which included four extreme weather
events in Canada, as well as Hurricane
Helene in the southwestern US, and
Storm Boris the UK and in Europe.
Throughout the year, Intact continued
to be guided by a clear strategy and
purpose to help people, businesses
and society prosper in good times
and be resilient in bad times.
Staying resilient in the face
of high catastrophic losses
Intact’s focus on outperformance
and financial strength has been
critical in its ability to manage the
impacts of climate change and other
key trends. Despite the three point
impact of catastrophic losses above
expectations the business delivered
an Operating Return on Equity1
of 16.5% and maintained a strong
balance sheet with $2.9 billion of total
capital margin.1
The board continues to focus on
and provide guidance to management
on its climate strategy. Following a
thorough review, which included the
direct impacts of the recent climate
events on the business, we remain
confident that the climate strategy is
sound and sustainable.
Future proofing our
business—understanding
and capitalizing on key trends
The board is responsible for
overseeing performance against Intact
Financial Corporation’s (IFC) strategic
objectives and roadmap on a quarterly
basis to ensure success in the short,
medium and longer term.
We are confident in IFC’s ‘outside-
in’ approach to strategy. It helps the
business explore key global trends,
understand and capitalize early
on opportunities based on Intact’s
competitive advantages, and manage
the risks. Based on that ongoing
assessment, the board has spent extra
time with management this past year
to assess the risks and opportunities
of Artificial Intelligence (AI), digital
engagement and, increasingly, on
geopolitics.
AI continues to transform Intact’s
competitive advantages with
significant recurring benefits
through the production of more
than 500 models. It is now being
increasingly deployed in Commercial
and Specialty Lines. Intact is also
harnessing the power of generative
AI within the organization to free
up employees’ time to focus where
they can add the greatest value.
All of this is being done with strong
guardrails and ethical guidelines that
William L. Young
Chair of the Board
2024 Intact Financial Corporation Annual Report
34
are regularly reviewed by the board to
protect employees and customers.
Digital engagement continued to
increase this past year, reflecting a
broader trend in consumer behaviour
for greater efficiency, flexibility and
personalization. The board was
pleased to see an 81% increase in new
online business premiums in Canada.
Furthermore, almost a quarter of policy
transactions are now made online,
and during the summer’s severe CAT
season, half of claims from certain
catastrophes were initiated online.
Given Intact’s global footprint, the
board has engaged in regular
discussions with management,
stakeholders and external advisors on
geopolitical issues. With major political
shifts in the UK and US in the last 12
months and now a federal election
underway in Canada, we continue to
stay close to these developments and
what it means for the business and our
customers.
The board is also closely monitoring
the growing economic tensions
between the US and Canada. We are
confident our business is in a strong
position to manage this situation and
that it will not impact our strategy or
growth. Our exposure to tariffs and
counter-tariffs is limited, and there are
many levers that the business can take
to minimize those impacts, including
through supply chain management.
Delivering on our strategy
The board remains confident in
management’s ability and options to
grow the business both organically
and through acquisitions.
In Canada, we continued to deliver
strong underlying growth on all
aspects of the business during
particularly challenging times.
Commercial Lines also had strong
results and added new tools to
increase ease of doing business
for brokers.
In our UK&I business, 2024 was a
year of significant achievements and
change. With the integration of the RSA
acquisition complete at the three-year
mark and a clear strategy in place, the
business successfully exited its Personal
Lines operations and became one of the
top Commercial insurers in the UK.
Our Global Specialty Lines (GSL)
business also continued to outperform.
In 2024, two new lines of business—
technology and management
liability—were launched in Europe,
building off the strength of these
verticals in North America.
Investing in our people is also an
essential part of our strategic roadmap.
In 2024, we were once again awarded
Best Employer in Canada and the
United States by Mercer. This marks
the ninth consecutive year in Canada
and the sixth year in the US that we’ve
received this distinction.
Strong governance is a
cornerstone of our success
Our business has grown significantly
in the last five years. It has become
more complex and global in nature.
At the same time, the financial services
industry is subject to numerous new
regulations, whether in respect to fair
treatment of customers, privacy, AI or
climate risk. Additionally, regulatory
oversight continues to increase in
every jurisdiction.
The board is continuously working
with management to ensure there is
no compromise on values and ethical
conduct and that a strong governance
system and internal controls are
in place. The overall governance
structure is reviewed on a regular
basis. As our business and the external
environment change, so does our
internal governance.
We are confident that we have
appropriate oversight over the entirety
of our business, whether it be the large
Canadian insurance operations, the
insurance operations located abroad,
or other lines of business, such as
On Side Restoration and BrokerLink.
As we’ve witnessed in the external
environment, failure to meet
the expectations of regulators,
shareholders, employees and
customers can have significant
impacts on shareholder and brand
value. Our board will, therefore,
continue to invest significant effort in
governance practices.
Engaging with our
shareholders
Shareholder engagement continues
to be an important part of my mandate.
This past year Corporate Director
Dr. Indira Samarasekera and I,
along with IFC’s Deputy Senior Vice
President, Finance and Chief Investor
Relations Officer, met with 10 of our
largest 20 shareholders, representing
approximately 36% of IFC shares. We
discussed a range of topics which
were top of mind for our investors,
including strategy, climate, key risks,
governance and succession planning.
Our shareholders have expressed
their satisfaction with our overall
governance, the composition of our
board and the robust level of oversight
it provides. Additionally, there has been
Chair’s letter
2024 Intact Financial Corporation Annual Report
35
Chair’s letter
strong support for the succession
planning within the executive team for
both the near-term and long-term.
Our approach towards Environmental,
Social, Governance (ESG) has been
widely acknowledged and appreciated,
with meeting participants valuing
the detailed insights into how ESG
considerations are integrated into
our strategy.
Shareholders expressed reassurance
that our capital deployment priorities
remain steadfast. They also expressed
their appreciation for our perspectives
on AI and its potential impact on our
business, competitive positioning and
financial performance.
Our succession pipeline
remains robust
This past year we continued to see
progress against our goal to be
representative of the communities we
serve, with 39% of VP and higher roles
held by women globally and 15% of VP
and higher roles held by employees
who identify as Black People and
People of Colour (BPOC) in Canada
and the US.
A solid succession plan is more
important than ever given the
company’s global footprint. Intact
has a well-tested plan with an average
of five successors available for
250 senior executive roles across
the business. This was evidenced
with smooth transitions through
recent executive announcements
and appointments, including Louis
Marcotte stepping down as Chief
Financial Officer (CFO) in February
2025 and assuming the role of Vice
Chair of IFC. Ken Anderson, formerly
Executive Vice President (EVP) and
CFO for RSA UK&I, succeeded Louis
as EVP and CFO of IFC. In Ken’s
place, Karim Hirji, formerly Senior Vice
President, Integration, and Managing
Director at Intact Ventures, became
CFO UK&I, while remaining involved in
the Intact Ventures portfolio.
We also announced some important
changes in Global Specialty Lines.
Michael Miller is retiring as Chief
Executive Officer of GSL as of March
31, 2025, but will continue with the
company as Chairman of GSL and
as a Director on the IFC Board.
Emmanuel Clarke, previously an IFC
Corporate Director and Chairman
of IFC’s GSL Advisory Board, is
succeeding Michael as CEO of GSL.
Additionally, Lynn O’Leary, formerly
CEO Luxembourg, has returned to
the US as President, US. Nadia
Côté, who most recently served as
Managing Director for the Commercial
Lines business of another global
specialty insurer and has over
25 years of experience, has
succeeded Lynn as CEO Europe,
which includes management
responsibility for our UK business.
The board offers our congratulations
and support to Louis, Ken, Karim,
Michael, Emmanuel, Lynn, and Nadia,
and the many other appointees that
took on new roles in 2024 and the
beginning of 2025. The board would
also like to thank and recognize our
fellow board member Janet DaSilva,
who is stepping down in 2025.
Celebrating milestones
and navigating challenges
together
Intact’s achievements in 2024 are a
testament to the collective efforts of
the 31,000 IFC team members across
our business. On behalf of the board,
I’d like to extend our heartfelt thanks
to Intact’s employees and leadership
team. The multiple accomplishments
reflect the entire team’s continued
drive to deliver on our objectives and
outperform in a very busy environment.
I would like to extend a special thanks
to our CEO, Charles Brindamour, for
“Intact’s achievements in 2024 are a
testament to the collective efforts of
the 31,000 IFC team members across
our business.”
2024 Intact Financial Corporation Annual Report
36
his extraordinary leadership and bold
decisions, which have transformed
Intact from a strong Canadian player
into a leading global property and
casualty insurer. Charles’ visionary
leadership was recognized in 2024
as CEO Strategist of the Year by the
Globe and Mail’s Report on Business
Magazine.
To my fellow board members, thank
you for your partnership and insightful
guidance over the past year. Your
dedication and strategic direction
have been instrumental in navigating
challenges and seizing opportunities,
enabling us to achieve our goals and
advance the company’s priorities.
Finally, to our shareholders, customers
and brokers, thank you for your
continued support. Your unwavering
trust and confidence in our company
have been the foundation of our
success and growth. We remain
dedicated to delivering exceptional
value and second-to-none experience.
Together, we have navigated
challenges and celebrated milestones,
and we look forward to the exciting
opportunities that lie ahead.
Sincerely,
William L. Young
Chair of the Board
Chair’s letter
2024 Intact Financial Corporation Annual Report
37
Our board
William L. Young
Chair of the Board, Intact Financial Corporation
and Chair of the Board, AtkinsRéalis
(formerly SNC Lavalin)
Michael Katchen
Chief Executive Officer and Co-Founder, Wealthsimple
Human Resources and Compensation Committee
Sylvie Paquette
Corporate Director
Human Resources and Compensation
Committee + Risk Management Committee
Charles Brindamour
Chief Executive Officer,
Intact Financial Corporation
Stephani Kingsmill
Corporate Director
Governance and Sustainability Committee
+ Human Resources and Compensation Committee
Stuart J. Russell
Professor of Electrical Engineering and Computer
Sciences at University of California at Berkeley
Human Resources and Compensation Committee
+ Risk Management Committee
Emmanuel Clarke*
Corporate Director
Audit Committee + Risk Management Committee
Jane E. Kinney
Corporate Director
Audit Committee + Governance and
Sustainability Committee
Indira V. Samarasekera
Corporate Director and Senior Advisor,
Bennett Jones, LLP
Governance and Sustainability Committee +
Human Resources and Compensation Committee
Janet De Silva
Corporate Director
Audit Committee + Risk Management Committee
Robert G. Leary
Corporate Director and Chairman, Arrow Global Group
Human Resources and Compensation Committee
+ Risk Management Committee
Frederick Singer
Corporate Director
Audit Committee + Governance and
Sustainability Committee
Complete biographies of the members of the
Board of Directors available at www.intactfc.com.
Carolyn A. Wilkins
Corporate Director and Senior Research Scholar at
the Griswold Center for Economic Policy Studies,
Princeton University
Audit Committee + Risk Management Committee
*Mr. Clarke will be joining IFC’s leadership team as CEO GSL
on March 31, 2025 and will concurrently step down from the board.
As at March 27, 2025
2024 Intact Financial Corporation Annual Report
38
*Mr Miller to retire on March 31, 2025 and will be appointed as
a Director on the IFC Board.
Our leadership
Frédéric Cotnoir
Executive Vice President
& Chief Legal Officer
Charles Brindamour
Chief Executive Officer,
Intact Financial Corporation
Ken Anderson
Executive Vice President
& Chief Financial Officer
Karim Hirji
Executive Vice President,
CFO UK & International
Patrick Barbeau
Chief Operating Officer
Anne Fortin
President, Intact Insurance
T. Michael Miller*
Chief Executive Officer,
Global Specialty Lines
Maude Choquette
Senior Vice President &
Chief Internal Auditor
Isabelle Girard
Senior Vice President,
Chief Data & Digital Officer
Marie-Lucie Paradis
Senior Vice President,
Direct Distribution Canadian Operations
Lynn O’Leary
President, Global Specialty Lines US
Louis Gagnon
Chief Executive Officer, Canada
Benoit Morissette
Executive Vice President,
Chief Risk & Actuarial Officer
Complete biographies of our executives available
at www.intactfc.com.
Werner Muehlemann
Executive Vice President & Managing Director,
Intact Investment Management Inc.
Ken Norgrove
Chief Executive Officer, UK&I
Carla Smith
Executive Vice President &
Chief People, Strategy and Climate Officer
As at March 27, 2025
2024 Intact Financial Corporation Annual Report
39
MD&A and Financial Statements
Please note that the following MD&A and Financial Statements are provided as distinct sections with
individual pagination:
MD&A —pages 1 to 100;
Financial Statements —pages 1 to 99.
2024 Intact Financial Corporation Annual Report
40
Intact Financial Corporation
Management’s Discussion and Analysis
For the year ended December 31, 2024
This page is intentionally left blank
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
1
OVERVIEW ................................................................................................................................................................................................................. 4
Section 1 - About Intact Financial Corporation .................................................................................................................................... 4
Section 2 - Building sustainable competitive advantages ................................................................................................................... 5
PERFORMANCE ........................................................................................................................................................................................................ 6
Section 3 - Consolidated performance ................................................................................................................................................ 6
Section 4 - Segment performance .................................................................................................................................................... 10
Section 5 - Canada segment ............................................................................................................................................................ 11
Section 6 - UK and International (UK&I) segment ............................................................................................................................. 15
Section 7 - US segment .................................................................................................................................................................... 17
Section 8 - Corporate and other ........................................................................................................................................................ 19
Section 9 - Catastrophe losses ......................................................................................................................................................... 20
Section 10 - Investment performance ................................................................................................................................................. 22
Section 11 - Distribution income ......................................................................................................................................................... 25
Section 12 - Non-operating results ..................................................................................................................................................... 26
Section 13 - Income taxes .................................................................................................................................................................. 28
ENVIRONMENT & OUTLOOK .................................................................................................................................................................................. 30
Section 14 - P&C insurance industry outlook ...................................................................................................................................... 30
Section 15 - Guidance and ambitions ................................................................................................................................................. 33
Section 16 - What we are aiming to achieve ....................................................................................................................................... 34
Section 17 - Our strategic roadmap .................................................................................................................................................... 35
Section 18 - Progress on our two financial objectives ......................................................................................................................... 38
Section 19 - Relative performance update .......................................................................................................................................... 39
Section 20 - Climate change ............................................................................................................................................................... 41
FINANCIAL CONDITION .......................................................................................................................................................................................... 44
Section 21 - Financial position ............................................................................................................................................................ 44
Section 22 - Claims liabilities and reinsurance .................................................................................................................................... 45
Section 23 - Employee future benefit programs .................................................................................................................................. 48
Section 24 - Capital management ....................................................................................................................................................... 49
RISK MANAGEMENT ............................................................................................................................................................................................... 57
Section 25 - Overview ......................................................................................................................................................................... 57
Section 26 - Risk management structure ............................................................................................................................................ 57
Section 27 - Enterprise Risk Management.......................................................................................................................................... 59
Section 28 - Financial risk ................................................................................................................................................................... 76
ADDITIONAL INFORMATION .................................................................................................................................................................................. 78
Section 29 - Non-GAAP and other financial measures ....................................................................................................................... 78
Section 30 - Accounting and disclosure matters ................................................................................................................................. 94
Section 31 - Shareholder information ................................................................................................................................................. 96
Section 32 - Selected annual and quarterly information ..................................................................................................................... 97
Section 33 - Glossary and definitions ................................................................................................................................................. 98
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
2
INTACT FINANCIAL CORPORATION
The following MD&A is the responsibility of management and has been reviewed and approved by the Board of Directors (the “Board”)
for the year ended December 31, 2024. This MD&A is intended to enable the reader to assess our results of operations and financial
condition for the three-month and twelve-month periods ended December 31, 2024, compared to the corresponding periods in 2023.
It should be read in conjunction with our Consolidated financial statements for our fiscal year ended December 31, 2024. This MD&A
is dated February 11, 2025.
“Intact”, the “Company”, “IFC”, “we” and “our” are terms used throughout this document to refer to Intact Financial Corporation and its
subsidiaries. Further information about Intact Financial Corporation, including the Annual Information Form and Social Impact & ESG
report, may be found online on SEDAR+ at www.sedarplus.ca or in the “Investors” section of our web site at www.intactfc.com.
Abbreviations and definitions of selected key terms used in this MD&A are defined in Section 33 – Glossary and definitions.
Other insurance-related terms are defined in Section 33 – Glossary and definitions of this MD&A, as well as in the glossary
available in the “Investors” section of our web site at www.intactfc.com.
Certain totals, subtotals and percentages may not agree due to rounding. Not meaningful (nm) is used to indicate that the current
and prior year figures are not comparable, not meaningful, or if the percentage change exceeds 1,000%.
Non-GAAP and other financial measures
We use both Generally Accepted Accounting Principles (GAAP) financial measures (“reported measures”), as well as Non-GAAP
financial measures and Non-GAAP ratios (each as defined in National Instrument 52-112 “Non-GAAP and Other Financial Measures
Disclosure”) to assess our performance. Non-GAAP financial measures, Non-GAAP ratios (which are calculated using Non-GAAP
financial measures) and other financial measures do not have standardized meanings prescribed by IFRS and may not be comparable
to similar measures used by other companies in our industry.
The Non-GAAP financial measures included in the MD&A and other financial reports are operating net underwriting revenue,
operating net claims, operating net underwriting expenses, underwriting income (loss), distribution income, total finance costs, other
operating income (expense), operating and total income tax expense (benefit), PTOI, NOI attributable to common shareholders, pre-
tax income, non-operating results, adjusted net income attributable to common shareholders, adjusted average common
shareholder’s equity, adjusted average common shareholder’s equity (excluding AOCI) and adjusted total capital.
The Non-GAAP ratios included in the MD&A and other financial reports are operating net underwriting revenue growth and operating
net underwriting revenue growth in constant currency, combined ratio, claims ratio (including underlying current year loss ratio, CAT
loss ratio and PYD ratio), expense ratio (including commissions ratio, general expenses ratio and premium taxes ratio), operating
effective tax rate and total effective income tax rate, NOIPS, OROE, AEPS, AROE, ROE, adjusted debt-total capital ratio and total
leverage ratio.
We also use other financial measures to assess our performance, including supplementary financial measures and segment
measures included in the MD&A and other financial reports (other than the Consolidated financial statements). These include
operating DPW, operating DPW growth, operating DPW growth in constant currency, UK&I pro-forma underwriting results, total capital
margin, regulatory capital ratios, BVPS and BVPS (excluding AOCI).
We believe that similar measures and ratios are widely used in the industry and provide investors, financial analysts, rating agencies
and other stakeholders with a better understanding of our business activity and financial results over time, in line with how
management analyzes performance. Non-GAAP and other financial measures used by management are fully defined and reconciled
to the corresponding GAAP measures, where applicable.
See Section 29 – Non-GAAP and other financial measures for the definition and reconciliation to the closest GAAP measures (or
“reported measures”), as well as the rationale for their use.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
3
Cautionary note regarding forward-looking statements
Certain of the statements included in this MD&A about the Company’s current and future plans, expectations and intentions, results, levels of
activity, performance, goals or achievements or any other future events or developments constitute forward-looking statements. The words “may”,
“will”, “would”, “should”, “could”, “expects”, “plans”, “intends”, “trends”, “indicates”, “anticipates”, “believes”, “estimates”, “predicts”, “likely”, “potential”
or the negative or other variations of these words or other similar or comparable words or phrases, are intended to identify forward-looking
statements. Unless otherwise indicated, all forward-looking statements in this MD&A are made as at December 31, 2024, and are subject to change
after that date. This MD&A contains forward-looking statements with respect to the integration of the recently acquired Direct Line Insurance Group
plc’s (“DLG”) brokered Commercial lines operations (“the DLG integration”), the exit of Royal & Sun Alliance Insurance Limited from the UK
Personal lines market, the realization of the expected strategic, financial and other benefits of these transactions and the impact of economic and
other external conditions on the Company’s operations and financial performance. This MD&A also contains forward-looking statements with
respect to the Company’s climate-related strategy, goals or plans, based on our current expectations, estimates and projections involving inherent
risks and uncertainties, as they are based on various factors and assumptions, all of which are difficult to predict and many of which are beyond
our control, including technological advancement, development of climate-related measurement methodologies, varying decarbonization efforts
across economies, governmental or regulatory action, geopolitical factors impacting global energy needs, challenges of balancing emission
reduction targets with an orderly, just and inclusive transition, evolution of customer behavior, our ability to gather and verify data, the participation
of various stakeholders or our ability to implement various initiatives across our global operations within a specified timeframe.
Forward-looking statements are based on estimates and assumptions made by management based on management’s experience and perception
of historical trends, current conditions and expected future developments, as well as other factors that management believes are appropriate in the
circumstances. In addition to other estimates and assumptions which may be identified herein, estimates and assumptions have been made
regarding, among other things, the realization of the expected strategic, financial and other benefits of the DLG integration, the exit of Royal & Sun
Alliance Insurance Limited from the UK Personal lines market, economic and political environments as well as industry conditions. There can also
be no assurance that the strategic and financial benefits expected to result from the DLG integration will be realized. Many factors could cause the
Company’s actual results, performance or achievements or future events or developments to differ materially from those expressed or implied by
the forward-looking statements, including, without limitation, credit, market, liquidity, operational, strategic and legal risks and the risks discussed
in Section 27.6 - Top and emerging risks that may affect future results and Section 27.7 - Other risk factors that may affect future results
of this MD&A for the year ended December 31, 2024, including a major earthquake, climate change, climate-related litigation or activism,
catastrophe, geopolitical risk, increased competition and disruption, turbulence in financial markets, reserving inadequacy, underwriting inadequacy,
governmental and/or regulatory intervention, cyber security failure, project and change risk, inability to contain fraud and/or abuse, customer
dissatisfaction, social unrest, third party reliance, employee defined benefit pension plan risks, reinsurance inadequacy, distribution risks, inability
to retain and to attract talent, business interruption to our operations, credit downgrade, limit on dividend and capital distribution as well as artificial
intelligence risk.
All of the forward-looking statements included in this MD&A and the quarterly earnings press release dated February 11, 2025 are qualified by
these cautionary statements and those made in the section entitled Risk management (Sections 25 to 28) of this MD&A for the year ended
December 31, 2024 and the Company’s Annual Information Form for the year ended December 31, 2024. These factors are not intended to
represent a complete list of the factors that could affect the Company. These factors should, however, be considered carefully. Although the forward-
looking statements are based upon what management believes to be reasonable assumptions, the Company cannot assure investors that actual
results will be consistent with these forward-looking statements. When relying on forward-looking statements to make decisions, investors should
ensure the preceding information is carefully considered. Undue reliance should not be placed on forward-looking statements made herein. The
Company and management have no intention and undertake no obligation to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise, except as required by law.
Intact Financial Corporation, Belair Insurance Company Inc., Brokerlink Inc., RSA Insurance Group Limited, On Side Restoration Services Ltd. and
their respective affiliates own and/or use a number of trademarks in connection with their business operations. These trademarks (both registered
and unregistered) are the exclusive property of Intact Financial Corporation, Belair Insurance Company Inc., Brokerlink Inc., RSA Insurance Group
Limited, On Side Restoration Services Ltd. and/or their respective affiliates.
Summary of key structural changes from the Q4-2023 MD&A
Section
Change
US segment
Additional disclosures on E&S market (Section 7.1)
Distribution income
Additional disclosures on distribution balance sheet (Section 11)
Guidance and ambitions
Section added summarizing our 2025 expectations and long-term ambitions (Section 15)
Global Specialty lines (GSL)
Additional disclosures on Cyber insurance market (Section 17.3)
Relative performance update
IFC performance by region against P&C benchmarks (Section 19)
Prior-year claims development (PYD)
Moved to the Claims liabilities and reinsurance section (Section 22.2)
Sensitivity analysis to market risk
Added split by country, indicating proportion of impact to market risks (Section 28.3)
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
4
INTACT FINANCIAL CORPORATION
OVERVIEW
Section 1 - About Intact Financial Corporation
1.1
Our purpose, values and core belief
Our purpose – we are here to help people, businesses and society prosper in good times and be resilient in bad times.
Our values guide us – in our decision-making, they keep us grounded, help us outperform and are key to our success.
People are at the heart of our organization, and of our success – how we do things is just as important as what we achieve. We
are a purpose-driven company based on values and a belief that insurance is about people, not things.
1.2
What defines us
A global team of 31,000 employees putting our collective strengths to work – supporting customers and brokers and delivering
on the key strategies and best in class operations that are essential to the success of Intact Financial Corporation.
Largest provider of Property & Casualty insurance in Canada, a leading Specialty lines insurer with international expertise and a
leader in Commercial lines in the UK and Ireland. Our business has grown organically and through acquisitions to almost
$24 billion of total annual operating direct premiums written (DPW).
In Canada, we distribute insurance under the Intact Insurance brand through agencies and a wide network of brokers, including
our wholly owned subsidiary BrokerLink. We also distribute directly to consumers through the belairdirect brand and affinity
partnerships. Additionally, we provide exclusive and tailored offerings to high-net-worth customers through Intact Prestige. In the
US, Intact Insurance Specialty Solutions provides a range of Specialty insurance products and services through independent
agencies, regional and national brokers, wholesalers and managing general agencies. Across the UK, Ireland and Europe, we
provide Personal, Commercial and/or Specialty insurance solutions through the RSA, 123.ie, NIG and FarmWeb brands.
2024 Operating DPW1
By business segment and line of business2,3
By distribution channel
Personal Auto
28%
Personal
Prop
18%
Commercial
14%
Specialty
8%
Commercial
13%
Specialty
7%
Specialty
12%
Direct to
consumers
16%
Brokers &
MGAs
84%
Integrity | Respect | Customer-driven | Excellence | Generosity
1 See Section 29 – Non-GAAP and other financial measures for more details.
² Commercial refers to Commercial lines excluding Specialty lines, as the latter is presented separately.
3 Personal lines in Ireland represent 1% of our IFC business and is included within UK&I Commercial lines.
$23.7B
$23.7B
US 12%
UK&I 20%
Canada 68%
IFC consolidated
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
5
1 Measured by Ipsos, a market research company
Section 2 - Building sustainable competitive advantages
We have many unique advantages which have enabled us to consistently outperform P&C insurers in the markets where we operate.
These competitive advantages, which we continue to strengthen and leverage, are described below.
Global leader in
leveraging data
and AI for pricing
and risk selection
With over 500 data scientists, actuaries, data engineers, and data specialists, our AI and machine learning expertise
combined with our data advantage results in deeply sophisticated and widely-deployed algorithms that help us win in
the market.
Over 500 AI models are leveraged across pricing and risk selection, digital engagement, claims operations, and
customer service. These models help us optimize underwriting performance and customer experience.
Deep claims
expertise and
strong supply
chain network
The majority of our claims are handled in-house with the support of our preferred network of suppliers.
Our in-house claims experts and fully integrated claims handling processes allow us to take control of the claims
journey in a way that is optimized for customer experience, operational efficiency, and indemnity control.
We have invested directly in our auto supply chain through our Claims Service Centres and our property supply chain
through On Side Restoration to strengthen our network and secure capacity. This provides a simpler, faster and
superior experience and translates into a competitive advantage, as we can settle claims at a lower cost and achieve
higher levels of customer satisfaction.
Scale in
distribution
We leverage multiple distribution channels with meaningful scale in our key markets.
We have broker relationships across Canada, US, UK and EU for customers who value advice from the specialized
services that insurance brokers are known for. Our broker distribution brands are well recognized by customers and
brokers alike. Intact Insurance is the most recognized insurance brand in Canada1.
We have leading direct channel brands in Canada and Ireland for customers who prefer the convenience of a
simplified and digital-first experience.
Our growing portfolio of owned distribution assets of brokers and MGAs supports our growth strategies across
Personal, Commercial, and Specialty lines.
Leading digital
engagement
Speed, simplicity and transparency are core tenets of our customer-driven digital focus.
Our industry leading mobile and fully integrated digital solutions distinguish us from our Canadian peers, where our
ability to design, deliver and iterate on digital tools provides brokers and customers with a simple and straightforward
experience.
Strong capital
and investment
management
expertise
Our primary investment objective is to maximize after-tax returns, while preserving capital and limiting volatility. We
achieve this through an appropriate asset allocation and active management of investment strategies. We also
account for ESG considerations in our investments.
In establishing our asset allocation, we consider a variety of factors including prospective risk and return of various
asset classes, the duration of claim obligations, the risk of underwriting activities and the capital supporting our
business.
In-house investment management provides greater flexibility in support of our insurance operations at a competitive
cost.
Capital is managed on a group-wide basis. We utilize our group structure and regional footprint to maximize efficiency
while maintaining strong regulatory capital levels. Sophisticated capital modelling techniques are used to assess and
optimize the benefits of scale and diversification across the group.
Proven
consolidator
& integrator
Acquisitions play an important role in accelerating the achievement of our goals. Our M&A track record has delivered
strong value creation and an average internal rate of return of approximately 20% since 2011.
We are a proven industry consolidator with 19 successful P&C acquisitions since 1988. We make complex and
innovative deals, including our most recent acquisitions which allowed us to become a global specialty lines leader
and strengthened our position as a top UK Commercial lines player.
Our successful track record on acquisitions is driven by swift and effective integration that is seamless to our
customers and financial benefit from significant synergies due to our scale and core expertise in data, pricing and
segmentation, and claims and supply chain management.
Our People
Our people are the cornerstone to executing our strategy. Guided by our strong set of values and leadership success
factors, our highly engaged employees uphold the highest standards for our customers.
As a Kincentric Best Employer for the 9th and 6th consecutive years in Canada and the US, we attract, retain and
engage some of the best and most experienced talent from within and outside our industry.
Our commitment to Diversity, Equity, and Inclusion enriches our working environment as well as strengthens
innovation and creativity.
1 Measured by Ipsos, a market research company
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
6
INTACT FINANCIAL CORPORATION
1 These are Non-GAAP financial measures, Non-GAAP ratios and supplementary measures. See Section 29 – Non-GAAP and other financial measures for more details.
2 Presented on an undiscounted basis. Underwriting income comparative figures have been reclassified accordingly.
3 Per share metric is calculated based on the weighted-average diluted number of common shares outstanding. See Table 29.5 and Table 29.11 for more details.
PERFORMANCE
Section 3 - Consolidated performance
3.1
Consolidated highlights
Q4-2024 Highlights
Operating DPW1 grew 5%, led by continued momentum in Personal lines
Combined ratio1 was strong at 86.5%, mainly due to solid underlying results across all geographies and lines of business
Net operating income per share1 rose 23% to $4.93, with robust underwriting results, as well as investment and distribution
income increasing by 6% and 13% respectively
BVPS1 up 13% from last year to $92.67, reflecting EPS of $12.36 for 2024 and the overall strength of our platform
Solid operating ROE1 at 16.5% (ROE1 of 14.2%) and a strong balance sheet with $2.9 billion of total capital margin1
Quarterly dividend increased by $0.12 to $1.33 per common share, representing a 10-year compounded annual growth rate
of 10%
3.2
Consolidated performance
Table 3.1 – Consolidated performance
Section
Q4-2024
Q4-2023
Change
2024
2023
Change
Operating DPW1 (growth in constant currency)
3 - 7
5,755
5,410
5%
23,727
22,370
5%
Operating income
Underwriting income (loss)1,2
3 - 8
764
517
48%
1,689
1,183
43%
Operating net investment income
10
398
376
6%
1,559
1,346
16%
Distribution income1
11
123
109
13%
524
467
12%
Total finance costs1
3.2
(60)
(62)
2
(238)
(235)
(3)
Other operating income (expense) 1
3.2
(49)
(45)
(4)
(176)
(157)
(19)
Pre-tax operating income (PTOI)1
4
1,176
895
31%
3,358
2,604
29%
NOI attributable to common shareholders1
881
713
24%
2,576
2,014
28%
Non-operating results1
12
(330)
(152)
(178)
(447)
(765)
318
Net income
667
531
26%
2,310
1,331
74%
Combined ratio1,2
3 - 7
86.5%
90.1%
(3.6) pts
92.2%
94.2%
(2.0) pts
Effective income tax rates
Operating1
13
22.7%
16.5%
6.2 pts
20.2%
18.9%
1.3 pts
Total1
13
21.2%
28.5%
(7.3) pts
20.7%
27.6%
(6.9) pts
Per share measures (in dollars)
NOIPS1,3
3.2
4.93
4.00
23%
14.43
11.43
26%
EPS – diluted3
3.2
3.58
2.78
29%
12.36
6.99
77%
BVPS1
24.7
92.67
81.71
13%
Return on equity for the last 12 months
OROE1
3.2
16.5%
13.9%
2.6 pts
AROE1
3.2
16.8%
11.7%
5.1 pts
ROE1
3.2
14.2%
8.8%
5.4 pts
Capital management
Total capital margin1
24.2
2,890
2,671
219
Adjusted debt-to-total capital ratio1
24.3
19.4%
22.4%
(3.0) pts
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
7
1 These are Non-GAAP financial measures, Non-GAAP ratios and supplementary measures. See Section 29 – Non-GAAP and other financial measures for more details.
GAAP measures:
Throughout our MD&A and as presented in Table 3.1, we use both GAAP and Non-GAAP financial measures to assess our
performance. The table below indicates the closest GAAP measures comprising Pre-tax operating income (PTOI):
Table 3.2 – Closest GAAP to Non-GAAP measures
Our Non-GAAP financial measures represent GAAP measures with changes in the geography of certain components, which reflect
how we manage and evaluate our business. Although our individual Non-GAAP measures do not have a meaning prescribed under
IFRS, the sum of all operating and non-operating components reconcile in total to Net income, as per in the Consolidated financial
statements.
Consolidated underwriting results:
Table 3.3 – Consolidated underwriting results1
Q4-2024 vs Q4-2023
2024 vs 2023
Operating DPW
growth (in constant
currency) (Sections 5-7)
Operating DPW growth was 5% for the quarter and the year, driven by rate actions and continued
unit growth in Personal lines. Within Commercial lines, growth was led by mid-single-digit rates and
favourable market conditions across most lines of business.
Current year claims
(excluding CAT losses
and PYD)
(Sections 5-7)
Strong underlying current year loss ratio
of 56.4%, a 2-point improvement from last
year. This is due to strong performance
across all regions and lines of business,
reflecting continued underwriting discipline.
Underlying current year loss ratio was strong
at 56.9%, driven by robust performance across
all geographies, as a result of our continued
profitability actions.
For the twelve-month period ended December 31, 2024
Closest GAAP measures
Insurance service
result
Net investment
income
Share of profit from
investments in
associates and JV
Other finance
costs
Other income and
expense
Financial statement basis
$3,186
$1,559
$89
$(222)
$(879)
Non-GAAP measures
Underwriting
income (loss)
Operating net
investment income
Distribution income
Total finance
costs
Other operating
income (expense)
Reconciliation to GAAP
Table 29.3
N/A
Table 29.7
Table 29.7
Table 29.7
Q4-2024
Q4-2023
Change
2024
2023
Change
Operating DPW (growth in constant currency)
5,755
5,410
5%
23,727
22,370
5%
Operating net underwriting revenue
5,659
5,259
8%
21,658
20,365
6%
Underwriting income
764
517
48%
1,689
1,183
43%
Underlying current year loss ratio
56.4%
58.3%
(1.9) pts
56.9%
58.3%
(1.4) pts
CAT loss ratio
2.3%
3.8%
(1.5) pts
7.1%
6.6%
0.5 pts
(Favourable) unfavourable PYD ratio
(5.8)%
(4.5)%
(1.3) pts
(5.5)%
(4.1)%
(1.4) pts
Claims ratio
52.9%
57.6%
(4.7) pts
58.5%
60.8%
(2.3) pts
Commissions
16.0%
15.8%
0.2 pts
16.3%
16.0%
0.3 pts
General expenses
14.8%
13.9%
0.9 pts
14.6%
14.6%
- pts
Premium taxes
2.8%
2.8%
- pts
2.8%
2.8%
- pts
Expense ratio
33.6%
32.5%
1.1 pts
33.7%
33.4%
0.3 pts
Combined ratio
86.5%
90.1%
(3.6) pts
92.2%
94.2%
(2.0) pts
Composed of:
Canada
84.9%
86.7%
(1.8) pts
92.7%
94.5%
(1.8) pts
UK&I
92.7%
104.6%
(11.9) pts
92.8%
96.4%
(3.6) pts
US
86.1%
86.4%
(0.3) pts
87.5%
88.7%
(1.2) pts
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
8
INTACT FINANCIAL CORPORATION
CAT losses
(Section 9)
CAT loss ratio of 2.3% was lower than last
year, reflecting milder weather in Canada.
Catastrophe activity in the quarter primarily
included storms in Canada and in the UK, as
well as large commercial losses.
CAT loss ratio was elevated at 7.1%, largely
impacted by severe weather events in Q3 within
our Canadian segment.
Prior year claims
development
(Section 22.2)
Favourable PYD ratios were healthy at 5.8% and 5.5% for the quarter and year respectively. They
were over 1-point better than last year, in part due to favourable development on prior year CATs.
Expenses
(Sections 4-7)
Expense ratios of 33.6% for the quarter and 33.7% for the year were in line with expectations,
despite higher incentive compensation from better performance in 2024. See Section 19 – Relative
performance update for more details.
Underwriting income
(loss) (Sections 4-8)
Strong
combined
ratio
of
86.5%,
improving 3.6 points from last year driven by
solid underlying performances across all
geographies.
Combined ratio remained solid at 92.2%, after
incurring approximately 3 points of catastrophe
losses above expectations. Combined ratio also
improved by 2 points from last year, driven by
stronger underlying performance and higher
favourable PYD.
Operating net
investment income
(Section 10)
Operating net investment income rose by
6%, mainly due to higher book yields.
Operating net investment income rose by
16%, driven by higher reinvestment yields, mostly
captured in 2023. In 2025, we expect investment
income of approximately $1.6 billion.
Distribution income
(Section 11)
Distribution income increased by 13% to
$123 million, driven
by
solid
organic
growth,
contributions
from
our
M&A
activities, as well as higher variable
commissions.
Distribution income increased by 12% to
$524 million, driven by organic revenue growth
and acquisitions, primarily in BrokerLink. In 2025,
we
expect
distribution
income
growth
of
approximately 10%.
Total finance costs
Total finance costs were slightly lower than
last year, as higher interest rates on debt
were offset by recent deleveraging activities.
Total finance costs increased slightly compared
to last year, mainly due to financing required for
the DLG acquisition1, which occurred in Q4-2023.
Other operating
income (expense)
Other operating expenses increased compared to last year, primarily due the impact of higher
incentive compensation from better performance.
NOIPS
NOIPS increased by 23% to $4.93 for the quarter, and 26% to $14.43 for the year, driven by
robust underlying performance, coupled with strong growth in investment and distribution income.
Non-operating
results
(Section 12)
Non-operating losses of $330 million
were higher than last year, largely due to
mark-to-market
losses
on
our
equity
securities, tempered by lower exited lines,
restructuring and integration costs.
Non-operating losses of $447 million were
lower than last year, mainly due to gains from the
sale of our UK direct Home and Pet portfolio in
Q1, fewer exited lines losses, and favourable
equity market movements.
Effective income tax
rates
(Section 13)
Operating effective income tax rate of
22.7% was in line with expectations.
Operating effective income tax rate of 20.2%,
was lower than expected, due to almost 3 points
of tax recoveries related to our UK operations.
Total effective income tax rates of 21.2% for the quarter and 20.7% for the year were driven by
tax expenses from our operating business. 2023’s elevated tax rate included higher non-operating tax
expense from the UK pension buy-in transaction.
EPS - diluted
EPS increased 29% to $3.58, aligned with
increased operating income.
EPS increased 77% to $12.36, driven by a
robust operating performance and lower non-
operating losses in the period, as described
above.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
9
Return on equity for
the last 12 months
Operating ROE increased to 16.5%, despite 3 points of catastrophe losses above expectations over
the last 12 months. This demonstrates the strength of our platform, with robust performance across
all lines of business and geographies.
Adjusted ROE of 16.8% and ROE of 14.2% were strong, with an increase of 5 points from last year,
primarily due to higher operating earnings, other net gains and fewer exited lines losses.
BVPS
(Section 24.7)
BVPS of $92.67 increased 2% from Q3-
2024 driven by solid operating earnings,
which offset market-related losses on our
debt securities portfolio.
BVPS of $92.67 increased 13% from last year
due to strong earnings over the last twelve
months, as well as gains related to favourable
market movements in the period.
Adjusted debt-to-
total capital ratio
(Section 24.3)
Our adjusted debt-to-total capital ratio was 19.4% as at December 31, 2024, an improvement vs.
Q3-2024, as strong capital generation in the quarter allowed for the repayment of short-term debt.
Financial condition
(Section 24.2)
We ended the quarter in a strong financial position, with solid regulatory capital ratios in all
jurisdictions and a total capital margin of $2.9 billion.
1 Refers to the acquisition of Direct Line Insurance Group plc’s (“DLG”) brokered Commercial lines operations in Q4-2023.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
10
INTACT FINANCIAL CORPORATION
Section 4 - Segment performance
We report our financial results under three business segments and the lines of business set out below. The composition of our
segments is aligned with our internal financial reporting based on management structure and geography. Underwriting results exclude
those of exited lines, which are reported in Income (loss) from exited lines (see Section 12.1 – Income (loss) from exited lines for
more details).
SEGMENTS
Corporate and Other
Canada (CAN)
Segment
UK and International
(UK&I) Segment
US
Segment
(Corporate)
Underwriting and distribution
activities in Canada.
Three lines of business:
Personal auto
Personal property
Commercial lines (incl.
Specialty lines)
Underwriting activities in
the UK, Ireland and
Europe.
Predominately in:
Commercial lines (incl.
Specialty lines)
Underwriting and
distribution activities in
the US.
One line of business:
Commercial lines
(Specialty lines)
Activities managed centrally, including
investment activities, financing
activities as well as corporate centres
of expertise outside the business
segments, such as: group legal,
finance, investor relations, corporate
development, strategy and other head
office responsibilities.
In line with the Consolidated financial statements, pre-tax operating income (PTOI) is a key measure used by management to evaluate
the profitability of our business, by excluding elements that are not representative of our operating performance because they include
elements that arise mostly from changes in market conditions, relate to acquisition-related items or special items, or because they are
not part of our normal activities. Refer to Note 30 – Segment information of the Consolidated financial statements for more details.
Table 4.1 – Operating performance by segment 1,2
For the three-month periods ended December 31,
2024
2023
CAN
UK&I
US
Corp.
Total
CAN
UK&I
US
Corp.
Total
Operating net underwriting revenue
3,945
1,087
627
-
5,659
3,658
1,011
590
-
5,259
Operating net claims
(2,083)
(606)
(309)
4
(2,994)
(2,023)
(706)
(296)
(2)
(3,027)
Operating net underwriting expenses
(1,266)
(402)
(231)
(2)
(1,901)
(1,148)
(352)
(214)
(1)
(1,715)
Underwriting income (loss)
596
79
87
2
764
487
(47)
80
(3)
517
Operating net investment income
-
-
-
398
398
-
-
-
376
376
Distribution income
117
-
6
-
123
102
-
7
-
109
Total finance costs
(4)
-
-
(56)
(60)
(3)
-
-
(59)
(62)
Other operating income (expense)
-
-
-
(49)
(49)
-
-
-
(45)
(45)
PTOI
709
79
93
295
1,176
586
(47)
87
269
895
For the twelve-month periods ended December 31,
2024
2023
CAN
UK&I
US
Corp.
Total
CAN
UK&I
US
Corp.
Total
Operating net underwriting revenue
15,184
4,199
2,272
3
21,658
14,086
4,143
2,114
22
20,365
Operating net claims
(9,170)
(2,394)
(1,118)
(3)
(12,685)
(8,802)
(2,521)
(1,052)
1
(12,374)
Operating net underwriting expenses
(4,906)
(1,504)
(869)
(5)
(7,284)
(4,511)
(1,471)
(823)
(3)
(6,808)
Underwriting income (loss)
1,108
301
285
(5)
1,689
773
151
239
20
1,183
Operating net investment income
-
-
-
1,559
1,559
-
-
-
1,346
1,346
Distribution income
499
-
25
-
524
444
-
23
-
467
Total finance costs
(16)
-
-
(222)
(238)
(13)
-
-
(222)
(235)
Other operating income (expense)
-
-
-
(176)
(176)
-
-
-
(157)
(157)
PTOI
1,591
301
310
1,156
3,358
1,204
151
262
987
2,604
1 The totals of the segment measures reconcile to Table 3.1 – Consolidated performance.
2 See Section 29 – Non-GAAP and other financial measures for more details.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
11
Section 5 - Canada segment
Our underwriting activities in Canada
We have $16.1 billion in annual operating DPW in 2024. We are the largest player with an estimated market
share of 18% in 2023¹.
We underwrite automobile, home and business insurance contracts to individuals and businesses in
Canada.
Personal auto – protects our customers’ vehicles with coverages including accident benefits, third-
party liability, and physical damage.
Personal property – provides protection to our customers for their homes and belongings from risks
such as fire, theft, vandalism, water damage and other damages; it also provides coverage for
personal liability.
Commercial lines (including Specialty lines) – provides a broad range of coverages including
Commercial auto, property, and liability coverages tailored to the needs of a diversified group of businesses.
We offer our products through multiple distribution channels including brokers, direct-to-consumer and managing general agent
(MGA) platforms. For more information on our owned distribution platform, refer to Section 11 – Distribution income.
Our Intact Insurance branded products, customized for Personal lines, Commercial and Specialty lines customers, are offered
through a wide network of brokers, including our wholly-owned distributor BrokerLink. We also offer exclusive and tailored Intact
Insurance branded offerings to high-net-worth customers through Intact Prestige.
Our belairdirect brand offers our Personal lines customers self-serve tools, a simplified process and product, while delivering an
outstanding digital experience. It is also available to our affinity partnerships, representing over 700 groups, which offer travel and
group benefits insurance as well. In addition, we provide white label capability to select financial institutions.
In our strategic roadmap, we laid out our growth and profitability ambitions for Canada: to grow our operating DPW to
$20 billion by 2027, with 5 points of combined ratio outperformance.
As of the first nine months of 2024, we have over 5 points of combined ratio outperformance2, see Section 19 – Relative
performance update for more details. Furthermore, we have strong momentum and promising opportunities ahead, as we remain
focused on reaching our topline ambition.
P&C insurance industry in Canada1
In 2023, the P&C market grew by 9% to around $82 billion in annual premiums, driven by hard market conditions in Personal lines.
The Canadian P&C landscape remains fragmented as the top five insurers represented 48% of the market, and the top 20 had a
combined market share of 83%.
The P&C industry offers its products primarily through brokers, which make up approximately 2/3 of industry premiums. Nearly 55% of
Personal lines products are offered through direct distribution channels.
Personal and Commercial auto products are regulated in most provinces.
The Office of the Superintendent of Financial Institutions’ (OSFI) mandate is to regulate and supervise financial institutions, including
P&C insurance companies, conducting prudential reviews to determine their financial soundness.
¹ 2024 update will be available in the Q1-2025 MD&A.
2 Full year 2024 outperformance will be available in the Q1-2025 MD&A.
2024 Operating DPW3
by line of business
2024 Operating DPW3
by region
2024 Operating DPW3
by distribution channel
41%
26%
33%
PA
PP
CL
$16.1B
40%
29%
15%
16%
Ontario
Québec
Alberta
Other
$16.1B
77%
23%
Brokers and MGAs
Direct to consumers⁴
$16.1B
3 See Section 29 – Non-GAAP and other financial measures for more details.
4 Includes retail, affinity and travel.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
12
INTACT FINANCIAL CORPORATION
5.1
P&C Canada
Table 5.1 – Underwriting results for P&C Canada1
1 See Section 29 – Non-GAAP and other financial measures for more details.
5.2
Personal auto
Table 5.2 – Underwriting results for Personal auto
Q4-2024
Q4-2023
Change
2024
2023
Change
Operating DPW
1,575
1,408
12%
6,640
5,956
11%
Written insured risks (in thousands)
1,131
1,103
3%
5,111
5,034
2%
Operating net underwriting revenue
1,678
1,524
10%
6,392
5,808
10%
Underwriting income (loss)
97
74
31%
292
306
(5)%
Underlying current year loss ratio
74.3%
75.8%
(1.5) pts
71.8%
74.3%
(2.5) pts
CAT loss ratio
(0.5)%
(0.1)%
(0.4) pts
1.6%
1.1%
0.5 pts
(Favourable) unfavourable PYD ratio
(4.9)%
(5.9)%
1.0 pt
(3.8)%
(6.5)%
2.7 pts
Claims ratio
68.9%
69.8%
(0.9) pts
69.6%
68.9%
0.7 pts
Expense ratio
25.3%
25.4%
(0.1) pts
25.8%
25.8%
- pts
Combined ratio
94.2%
95.2%
(1.0) pt
95.4%
94.7%
0.7 pts
Q4-2024 vs Q4-2023
2024 vs 2023
Operating DPW growth of 12% for the quarter and 11% for the year, driven by rate actions in hard market conditions, as
well as unit growth of 3% and 2%, respectively.
Underlying current year loss ratio of 74.3%, 1.5 points
better than last year, reflecting higher earned premiums
which continued to outpace inflation. A portion of the
improvement was offset by the fact that we remain prudent
on long-tail lines exposures.
Underlying current year loss ratio of 71.8%, improved
2.5 points from last year, due to the benefits of our
profitability actions.
CAT loss ratio was favourable at (0.5)%, reflecting
positive development on the Calgary hailstorm from Q3-
2024.
CAT loss ratio of 1.6% was higher than expectations, due
to losses from the Calgary hailstorm in Q3-2024, tempered
by benign weather for the remainder of the year.
Favourable PYD ratios of 4.9% for the quarter and 3.8% for the year remained healthy, and largely in line with expectations.
Expense ratio of 25.3% was stable year-over-year, as
increased marketing investments were offset by our
continued expense management.
Expense ratio of 25.8% was comparable to last year.
Combined ratio was strong at 94.2%, despite
a
seasonally unfavourable quarter, and in line with
expectations, reflecting a robust underlying performance.
Combined ratio remained solid at 95.4% with half a point
of excess CAT losses. Excluding this, our combined ratio
was in line with our sub-95 guidance, which remains
unchanged for the next twelve months.
For details on the recent announcement of a new reform in Alberta, see Section 14 – P&C industry outlook.
Q4-2024
Q4-2023
Change
2024
2023
Change
Operating DPW
3,984
3,682
8%
16,060
14,891
8%
Underlying current year loss ratio
57.9%
59.9%
(2.0) pts
58.3%
60.2%
(1.9) pts
CAT loss ratio
1.0%
0.8%
0.2 pts
8.1%
7.5%
0.6 pts
(Favourable) unfavourable PYD ratio
(6.1)%
(5.3)%
(0.8) pts
(6.0)%
(5.2)%
(0.8) pts
Claims ratio
52.8%
55.4%
(2.6) pts
60.4%
62.5%
(2.1) pts
Expense ratio
32.1%
31.3%
0.8 pts
32.3%
32.0%
0.3 pts
Combined ratio
84.9%
86.7%
(1.8) pts
92.7%
94.5%
(1.8) pts
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
13
5.3
Personal property
Table 5.3 – Underwriting results for Personal property
Q4-2024
Q4-2023
Change
2024
2023
Change
Operating DPW
1,030
946
9%
4,222
3,877
9%
Written insured risks (in thousands)
717
708
1%
3,051
3,016
1%
Operating net underwriting revenue
1,031
949
9%
3,949
3,650
8%
Underwriting income (loss)
237
229
3%
138
(26)
nm
Underlying current year loss ratio
41.6%
44.4%
(2.8) pts
46.1%
49.0%
(2.9) pts
CAT loss ratio
3.9%
0.6%
3.3 pts
19.7%
18.3%
1.4 pts
(Favourable) unfavourable PYD ratio
(2.9)%
(1.7)%
(1.2) pts
(3.8)%
(0.3)%
(3.5) pts
Claims ratio
42.6%
43.3%
(0.7) pts
62.0%
67.0%
(5.0) pts
Expense ratio
34.5%
32.5%
2.0 pts
34.5%
33.7%
0.8 pts
Combined ratio
77.1%
75.8%
1.3 pts
96.5%
100.7%
(4.2) pts
Q4-2024 vs Q4-2023
2024 vs 2023
Operating DPW grew by 9% in the quarter and in the year, primarily due to rates, supported by hard market conditions.
Very strong underlying current year loss ratio of 41.6%,
down 3 points from last year, driven by our profitability
actions.
Underlying current year loss ratio improved by 3 points
to 46.1%, reflecting the continued benefit of higher earned
premiums.
Low CAT loss ratio of 3.9%, though higher than last year,
due to a storm in Western Canada.
CAT loss ratio was elevated at 19.7%, above
expectations due to significant weather events in Q3.
Healthy favourable PYD ratios of 2.9% for the quarter and 3.8% for the year increased from last year, mainly due to
favourable development on prior year catastrophe losses.
Expense ratio of 34.5% was higher than the prior year,
mainly due to higher variable commissions and incentive
compensation.
Expense ratio of 34.5% increased 0.8 points from last
year, largely due to higher incentive compensation following
a strong overall performance in 2024.
Combined ratio was very strong at 77.1%, driven by a
robust underlying performance, from higher earned rates
and continued underwriting discipline, as well as low
catastrophe losses.
Combined ratio remained solid at 96.5% following a year
of high CAT losses, showing strong resiliency. We remain
confident in maintaining our 10-year track record of a 90%
combined ratio, and sub-95% guidance even with severe
weather events.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
14
INTACT FINANCIAL CORPORATION
5.4
Commercial lines
Table 5.4 – Underwriting results for Commercial lines
Q4-2024
Q4-2023
Change
2024
2023
Change
Operating DPW
1,379
1,328
4%
5,198
5,058
3%
Operating net underwriting revenue
1,236
1,185
4%
4,843
4,628
5%
Underwriting income (loss)
262
184
42%
678
493
38%
Underlying current year loss ratio
49.2%
51.6%
(2.4) pts
50.2%
51.3%
(1.1) pts
CAT loss ratio
0.6%
2.1%
(1.5) pts
7.2%
7.1%
0.1 pts
(Favourable) unfavourable PYD ratio
(10.3)%
(7.5)%
(2.8) pts
(10.6)%
(7.5)%
(3.1) pts
Claims ratio
39.5%
46.2%
(6.7) pts
46.8%
50.9%
(4.1) pts
Expense ratio
39.3%
38.2%
1.1 pts
39.2%
38.4%
0.8 pts
Combined ratio
78.8%
84.4%
(5.6) pts
86.0%
89.3%
(3.3) pts
Q4-2024 vs Q4-2023
2024 vs 2023
Operating DPW growth of 4% for the quarter and 3% for the year, driven by mid-single-digit rates other than in large
accounts where we continue to see increased competition.
Strong underlying current year loss ratio of 49.2%,
improving 2.4 points from last year, driven by our continued
profitability actions.
Underlying current year loss ratio was strong at 50.2%
reflecting underwriting discipline.
CAT loss ratio of 0.6% was reflective of a benign quarter.
Elevated CAT loss ratio of 7.2% was approximately 2
points above expectations, largely attributable to the
weather events in Q3.
Strong favourable PYD ratios of 10.3% for the quarter and 10.6% for the year, reflective of our continued prudent
reserving, particularly in long-tail lines, as well as favourable development on prior year catastrophe losses.
Expense ratios of 39.3% for the quarter and 39.2% for the year increased from last year, mainly due to higher incentive
compensation following a strong overall performance in 2024.
Combined ratio of 78.8%, 6 points better than last year,
driven by continued underwriting discipline coupled with
muted CAT losses in the period, delivering very strong
results for the quarter.
Strong combined ratio of 86.0%, reflecting robust
underlying
performance
and
favourable
prior
year
development. We remain well positioned to continue to
deliver a low-90s or better combined ratio.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
15
Section 6 - UK and International (UK&I) segment
Our underwriting activities in the UK, Ireland and Europe1
We have reported £2.7 billion ($4.8 billion) in annual operating DPW for 2024 from our continuing business.
We provide a broad range of Commercial insurance and Specialty lines coverages in the UK,
Ireland and Europe, as well as internationally through our global network. We also provide home and
motor insurance products in Ireland.
In UK Commercial lines, we have a 6% market share, largely focused on SMEs to mid-sized
organizations offering a range of Property and Casualty coverages. Products are traded via
brokers through the RSA, NIG and FarmWeb brands and delegated partners.
In UK Specialty lines, we provide a broad range of insurance solutions, tailored to meet the
unique needs of specific industry segments, such as Marine and Renewable Energy, as well
as diverse customer groups, including Multi-nationals. These products are offered via
brokers, largely in the London Market.
In Ireland, we hold a top 6 position overall, with over £330 million in annual operating DPW. Personal and Commercial
insurance are offered through a multi-channel distribution network, including 123.ie (our direct-to-consumer brand) and
independent brokers, and affinity partnerships.
In Europe, we offer specialty and commercial products through the RSA brand via brokers in France, Belgium, Spain
and the Netherlands.
Effective Q4-2023, we exited our UK Personal lines operations and have expanded our Commercial lines portfolio through the
DLG brokered Commercial lines acquisition. These strategic actions accelerate our path to sustainable outperformance for the
continuing UK&I business.
Our refocused UK&I segment is well positioned to deliver a combined ratio towards 90% in 2026.
P&C Insurance industry in the UK1
In 2023, the UK domestic Commercial lines market represented over £25 billion in annual premiums. Additionally, with over £60
billion in annual premiums, the London Specialty Market has seen significant growth over recent years, primarily driven by hard
market conditions.
In the UK Commercial Lines market, the Commercial motor market is very concentrated with the largest 10 insurers representing
94% of the market, whereas Commercial property and liability are more fragmented with the largest 10 insurers accounting for
80% and 73% of the market, respectively.
Brokers remain the primary distribution channel for Commercial lines, including SME.
The UK non-life insurance industry is regulated by two regulatory bodies, the Prudential Regulation Authority (PRA) and the
Financial Conduct Authority (FCA). The PRA’s mandate is to provide supervision to ensure the safety and soundness of financial
institutions, while the FCA’s mandate is to provide oversight on pricing practices and product offerings.
1 Based on latest information available.
2024 Operating DPW2
by line of business
2024 Operating DPW2
by region
2024 Operating DPW2
by distribution channel
61%
33%
6%
CL
SL
PL
£2.7B
78%
12% 10%
UK
Ireland
Europe
£2.7B
95%
5%
Brokers
Direct
£2.7B
2 See Section 29 – Non-GAAP and other financial measures for more details.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
16
INTACT FINANCIAL CORPORATION
6.1
P&C UK&I
Table 6.1 – Underwriting results for P&C UK&I1
1 See Section 29 – Non-GAAP and other financial measures and Section 12.1 – Income (loss) from exited lines for more details.
2 To provide comparability with last year, results from the UK home and pet operations, which were exited effective Q4-2023, have been excluded from full-year 2023 results.
Q4-2024 vs Q4-2023 (reported basis)
2024 reported vs 2023 pro-forma
Operating DPW decreased 3% in the quarter, reflecting
profitability actions taken within the DLG portfolio.
Otherwise, conditions remain conducive to appropriate
rate actions.
Operating DPW growth was 23%, mainly due to the DLG
acquisition in Q4-2023. Otherwise, growth was driven by
solid new business, tempered by pressures in large
accounts.
Underlying current year loss ratio was 58.4%, 2.4
points better than last year, reflecting improved profitability
on the DLG portfolio, partly tempered by higher large
losses.
Underlying current year loss ratio remained solid at
57.1%, reflecting a cautious approach in the first full year
following the DLG acquisition, partly offset by continued
profitability actions.
CAT loss ratio of 5.8% was higher than expectations, and
attributable to storms, as well as a large specialty claim.
CAT loss ratio of 5.4% was more than half a point higher
than expectations, largely due to severe weather events
throughout the year.
Strong favourable PYD ratio of 8.5%, primarily due to
positive development on Commercial large losses.
Favourable PYD ratio was healthy at 5.5%, with broad
contributions from all portfolios.
Expense ratio of 37.0%, was 2 points higher than last
year, mainly due to a non-recurring commission expense,
and higher incentive compensation.
Expense ratio of 35.8%, reflecting higher commissions as
part of the current business mix.
Combined ratios of 92.7% for the quarter and 92.8% for the year were strong, considering elevated CAT losses. Our
refocused UK&I segment is well positioned to deliver a combined ratio towards 90% in 2026.
Q4-2024
Reported
Q4-2023
Reported
Change
2024
Reported
2023
Pro-forma2
Change
2023
Reported
Operating DPW
1,140
1,112
3%
4,775
3,768
27%
4,706
Growth in constant currency
(3)%
23%
Operating net underwriting revenue
1,087
1,011
8%
4,199
3,299
27%
4,143
Growth in constant currency
2%
23%
Underwriting income (loss)
79
(47)
nm
301
189
59%
151
Underlying current year loss ratio
58.4%
60.8%
(2.4) pts
57.1%
56.5%
0.6 pts
57.8%
CAT loss ratio
5.8%
15.0%
(9.2) pts
5.4%
6.6%
(1.2) pts
5.2%
(Favourable) unfavourable PYD ratio
(8.5)%
(6.0)%
(2.5) pts
(5.5)%
(4.0)%
(1.5) pts
(2.1)%
Claims ratio
55.7%
69.8%
(14.1) pts
57.0%
59.1%
(2.1) pts
60.9%
Expense ratio
37.0%
34.8%
2.2 pts
35.8%
35.2%
0.6 pts
35.5%
Combined ratio
92.7%
104.6%
(11.9) pts
92.8%
94.3%
(1.5) pts
96.4%
DID
YOU
KNOW
2024 premiums from the DLG acquisition were north of £600 million, significantly greater than the modelled premium
base of £530 million, allowing us flexibility for remediation on underperforming segments.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
17
Section 7 - US segment
Our underwriting activities in the US
We are focused on medium-sized businesses, with US$2.1 billion ($2.9 billion) in annual
operating DPW for 2024. Our share of the US Specialty insurance market is
approximately 1%1 in 2023.
We provide a broad range of Specialty insurance solutions tailored to meet the
unique needs of specific industry segments or product/customer groups.
o Businesses serving targeted industry segments include Accident & Health (transportation and sharing economy),
Technology, Ocean Marine, Inland Marine (construction, transportation, and fine arts), Builder’s Risk, Entertainment,
and Financial lines.
o Businesses offering distinct Specialty products to broad customer groups include Specialty Property, Surety, Tuition
Reimbursement, Management Liability, Cyber and Environmental.
We distribute insurance products and services in the US under the Intact Insurance Specialty Solutions brand through
independent agencies, regional and national brokers, wholesalers and managing general agencies (MGA). For more
information on our owned distribution platform, refer to Section 11 – Distribution income.
Our US segment is well positioned to continue delivering a low 90s or better combined ratio.
2 See Section 29 – Non-GAAP and other financial measures for more details.
Specialty Insurance industry in the US1
In 2023, the US Specialty insurance market accounted for 44%, or more than US$195 billion, of the total Commercial P&C
insurance market.
The US Commercial Specialty insurance industry is fragmented, with the largest player capturing less than 7% market share
in 2023. Outside of the top 8 players, no single insurer contributes more than 3% to the total estimated Specialty market.
The majority of the top 25 players have a market share between 1% and 3%.
The agency channel (independent agencies, brokers, wholesalers and MGAs) is the primary distribution channel for
Specialty insurance products.
Insurance companies are subject to regulation and supervision in each of the states where they are domiciled and licensed
to conduct business. The state insurance regulators are supported by the National Association of Insurance Commissioners
(NAIC), which establishes standards and best practices, as well as assists state insurance regulators in monitoring the
financial condition of insurance companies.
1 2024 update will be available in the Q1-2025 MD&A
Operating DPW2 in the US
Main lines of business:
Ocean and Inland Marine
(16%)
Surety (14%)
Accident and Health (13%)
Specialty Property (12%)
Technology (10%)
Key types of coverage:
Property (32%)
Liability (non-Auto) (12%)
Occupational Accident &
Worker’s compensation
(10%)
Auto (8%)
Cyber (8%)
Top 5 States:
California (15%)
Texas (8%)
Florida (6%)
New York (6%)
Tennessee (4%)
Distribution channels:
Brokers (74%)
MGAs (26%)
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
18
INTACT FINANCIAL CORPORATION
7.1
P&C US
Table 7.1 – Underwriting results for P&C US1
Q4-2024
Q4-2023
Change
2024
2023
Change
Operating DPW
631
616
2%
2,892
2,773
4%
Growth in constant currency
- %
3%
Operating net underwriting revenue
627
590
6%
2,272
2,114
7%
Growth in constant currency
4%
6%
Underwriting income (loss)
87
80
9%
285
239
19%
Underlying current year loss ratio
44.1%
44.4%
(0.3) pts
47.7%
47.8%
(0.1) pts
CAT loss ratio
4.4%
3.0%
1.4 pts
3.7%
3.0%
0.7 pts
Unfavourable (favourable) PYD ratio
0.7%
2.9%
(2.2) pts
(2.2)%
(1.0)%
(1.2) pts
Claims ratio
49.2%
50.3%
(1.1) pts
49.2%
49.8%
(0.6) pts
Expense ratio
36.9%
36.1%
0.8 pts
38.3%
38.9%
(0.6) pts
Combined ratio
86.1%
86.4%
(0.3) pts
87.5%
88.7%
(1.2) pts
1 See Section 29 – Non-GAAP and other financial measures for more details.
Q4-2024 vs Q4-2023
2024 vs 2023
Operating DPW growth was flat, reflecting corrective
actions taken in certain lines of business. Excluding these,
growth was 4% for the quarter.
Operating DPW growth was 3%, driven by mid-single-digit
rate increases across most lines of business, tempered by
profitability measures taken in certain lines of business.
Underlying current year loss ratio was very strong at
44.1% reflecting growth and improvements in some of our
most profitable lines of business.
Underlying current year loss ratio was strong at 47.7%
and comparable to last year, reflecting continued focus on
profitability actions.
CAT loss ratio of 4.4% was approximately 2 points above
expectations and reflected a couple of large non-weather-
related claims, as well as losses from Hurricane Milton.
CAT loss ratio of 3.7%, mainly due to large commercial
losses, as well as weather losses from Hurricane Helene in
Q3 and a tornado in Q2.
Unfavourable PYD ratio of 0.7%, mainly due to adverse
development on large losses within a certain line of
business where we are taking corrective actions, offsetting
otherwise favourable development across the majority of
business lines.
Favourable PYD ratio was healthy at 2.2%, reflecting
favourable prior year development across most business
lines.
Expense ratio of 36.9% was 1 point higher than last year
driven by higher incentive compensation.
Expense ratio of 38.3% was 0.6 points better than last
year, due to continued expense management.
Combined ratios were strong at 86.1% for the quarter and 87.5% for the year, reflecting continued underwriting discipline
and we remain well positioned to maintain a low 90s or better combined ratio.
The Excess and Surplus (E&S) market (or “non-admitted”) has become a larger part of the overall insurance market
over the past few years, with premiums doubling since 2019. This is due to hard market conditions, and the growing
size and complexity of risks.
Insurance coverage provided in the E&S market are for risks which admitted insurers do not have capacity to write.
As such, there is inherently more flexibility in tailoring coverage and underwriting risks as they have minimal rate and
form regulation. The E&S market is largely concentrated on Casualty and Property coverages.
Our premiums primarily consist of Specialty Property, Builders’ Risk and Cyber. Our premiums are worth over $900
million as of year-end, representing approximately 30% of our total US premiums.
DID
YOU
KNOW
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
19
Section 8 - Corporate and other
Corporate and Other
Consists of income and expenses related to activities managed centrally at the Corporate level, including:
Corporate underwriting income, which includes results from certain internal reinsurance treaties;
Investment management activities (see Section 10 – Investment performance);
Treasury and capital management (see Section 24 – Capital management); and
Other corporate activities related to the operation of the group and our public company status. These group functions
include group legal, finance, investor relations, corporate development, strategy and other head office responsibilities.
(see Section 3 – Consolidated performance)
Table 8.1 – Corporate underwriting income (loss)1
Q4-2024
Q4-2023
Change
2024
2023
Change
Operating net underwriting revenue
-
-
-
3
22
(19)
Operating net claims
4
(2)
6
(3)
1
(4)
Operating net underwriting expenses
(2)
(1)
(1)
(5)
(3)
(2)
Corporate underwriting income (loss)
2
(3)
5
(5)
20
(25)
1 See Section 29 – Non-GAAP and other financial measures for more details.
2024 vs 2023
Corporate underwriting income of $2 million was
comparable to last year and in line with expectations.
Corporate underwriting loss of $5 million was lower
than last year mainly due to a reduction in premiums
following an increased retention in our internal
reinsurance treaties in 2024.
See Section 3 – Consolidated performance for details on our corporate pre-tax-operating income components, including
operating net investment income, total finance costs and other operating income (expense).
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
20
INTACT FINANCIAL CORPORATION
Section 9 - Catastrophe losses
9.1
Net Catastrophe (CAT) losses
Catastrophe losses are an inherent part of our business and can be driven by either weather-related or non-weather events. At Intact,
catastrophe claims are determined as any one claim, or group of claims, equal to or greater than a predetermined CAT threshold,
before reinsurance, related to a single event. Our CAT thresholds are as follows; P&C Canada: $10 million, P&C UK&I: £7.5 million,
P&C US: US$5 million and IFC aggregate threshold: $15 million (combined impact across all segments of $15 million or more).
Table 9.1 – Net current year CAT losses by segment1
Q4-2024
Q4-2023
Change
2024
2023
Change
By segment
P&C Canada
40
29
11
1,230
1,058
172
P&C UK&I
63
152
(89)
225
217
8
P&C US
27
18
9
84
64
20
Current year CAT losses
130
199
(69)
1,539
1,339
200
Current year CAT loss ratio
P&C Canada
1.0%
0.8%
0.2 pts
8.1%
7.5%
0.6 pts
P&C UK&I
5.8%
15.0%
(9.2) pts
5.4%
5.2%
0.2 pts
P&C US
4.4%
3.0%
1.4 pts
3.7%
3.0%
0.7 pts
Consolidated current year CAT loss ratio
2.3%
3.8%
(1.5) pts
7.1%
6.6%
0.5 pts
1See Section 29 – Non-GAAP and other financial measures for more details.
Historical view of annual consolidated current year CAT loss ratio2
We have been subject to elevated levels of catastrophe losses in recent years, with CAT loss ratios of 6.6% in 2023 and 7.1%
in 2024.
As a P&C insurer, assuming physical risk for our customers is our business. Our primary focus is on resilience and protection
at the individual and the community level.
2 2024-2022 ratios are presented on an IFRS 17 basis, 2021-2010 on an IFRS 4 basis and 2009-2007 on a Canadian GAAP basis.
0.7%
2.9%
2.8%
2.2%
4.3%
3.8%
7.3%
3.3%
1.5%
5.0%
3.7%
3.4%
3.6%
3.2%
4.2%
4.3%
6.6%
7.1%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Q4-2024 highlights
2024 highlights
The current year CAT loss ratio of 2.3% (CAT losses of
$130 million), was lower than last year and reflected milder
weather in Canada.
In the UK&I, losses were attributable to storms in the UK, as
well as a large specialty claim.
The US CAT losses were higher than last year, due to a couple
large non-weather-related claims, as well as losses from
Hurricane Milton.
The current year CAT loss ratio of 7.1% (CAT losses
of $1,539 million) was approximately 3 points above
expectations for the year, largely due to severe weather
events in Q3 within our Canadian segment.
The US and UK were also above expectations following
events such as Hurricane Helene, Storm Boris and
heavy rains in the UK.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
21
9.2
CAT guidance
For 2025, we expect $1.2 billion of annual CAT losses (on a continuing basis, net of reinsurance), up from our previous guidance
of $900 million in 2024.
o
Nearly 30% of our consolidated annual estimate is expected in each of the second and third quarters, while CATs in
the first and fourth quarters can vary depending in part on the timing of the onset of winter conditions.
o
Though volatility is inherent, we expect that approximately 75% of CAT losses will impact our Canadian segment, and
within Canada approximately 70% is expected to impact Personal lines.
The revised estimate reflects our growing premium base, the increase in exposures, on-going inflation, our view of long-term
climate trends and higher credibility assigned to recent CAT losses.
It also reflects the renewal of our reinsurance programs as at January 1st 2025, including the increased retention of our
catastrophe treaty in Canada from $250 million to $350 million. This does not compromise the protection of our balance sheet.
Despite this increase in estimate, when combining the expected savings from our 2025 reinsurance programs in addition to the
pro-active rate actions we have been taking, we are confident in our ability to continue to grow our earnings in line with our
financial objectives, and to sustain our strong track record in Personal property. We will continue to focus on adaptation,
prevention, products improvement as well as reinsurance optimization and pricing actions.
9.3
Personal property resiliency to CAT losses
Historical view of rolling 12-month Personal property combined ratio
85.9%
88.3%
79.4%
88.3%
96.5%
Q1'15
Q4'15
Q4'16
Q4'17
Q4'18
Q4'19
Q4'20
Q4'21
Q4'22
Q4'23
Q4'24
PP Rolling 12-month Combined ratio
Combined ratio of 90%
Combined ratio of 100%
Highlights
Our Personal property business in Canada has shown long-term resiliency. In fact, over the past 10 years:
our rolling 12-month combined ratio operated below the 100% threshold 95% of the time
our rolling 12-month combined ratio operated within our sub-95 guidance 88% of the time; and
we delivered a sub-90 combined ratio nearly two-thirds of the time, with an average quarterly 10-year combined ratio of 89.9%.
Quarterly combined ratio 5Y average = 90.3% and 10Y average = 89.9%
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
22
INTACT FINANCIAL CORPORATION
Section 10 - Investment performance
10.1 Strategic objectives
Our approach to investment management continues to reflect our objective of:
maximizing after-tax returns, while preserving capital and limiting volatility, based on our risk profile, and
outperforming our peers’ investment returns over the long-term, while ensuring policyholder protection and maintaining
strong regulatory capital levels.
We continue to manage our investment portfolio to achieve these objectives through appropriate asset allocation and active
management investment strategies, while minimizing the potential for large investment losses with diversification and limits on our
investment exposures. Such limits are specified in our investment policies and are designed to be consistent with our overall risk
tolerance. Management monitors and ensures compliance with our investment policies.
10.2 Capital market update
While the correlation between the performance of capital markets and the performance of our investment portfolio is not exact, the
following market indicators may be useful in understanding the overall performance of our investment portfolio.
Table 10.1 – Selected market indicators
Selected market indicators
Q4-2024
Q4-2023
2024
2023
Equity markets
S&P/TSX Composite (Canada)
3%
7%
18%
8%
S&P/TSX Financials (Canada)
6%
12%
25%
9%
DJ Dividend 100 Composite (US)
(3)%
8%
7%
1%
FTSE 100 (UK)
(1)%
2%
6%
4%
S&P/TSX Preferred Share Index
2%
6%
18%
(1)%
Fixed-income markets
Canada 5Y Sovereign Index
23 bps
(107) bps
(21) bps
(24) bps
US 5Y Sovereign Index
82 bps
(76) bps
53 bps
(16) bps
UK 5Y Sovereign Index
48 bps
(105) bps
89 bps
(15) bps
Canada 5Y Corporate A spread
(21) bps
(7) bps
(42) bps
(36) bps
US 5Y Corporate A spread
(10) bps
(18) bps
(11) bps
(24) bps
UK 5Y Corporate A spread
(20) bps
(21) bps
(33) bps
(50) bps
Currency markets
Strengthening (weakening) of: USD vs CAD
6%
(2)%
9%
(2)%
Strengthening (weakening) of: GBP vs CAD
(1)%
2%
7%
3%
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
23
10.3 Operating performance: Operating net investment income
Table 10.2 – Operating net investment income
Q4-2024
Q4-2023
Change
2024
2023
Change
Interest income
322
307
15
1,255
1,038
217
Dividend income
83
75
8
323
327
(4)
Investment property rental income
7
7
-
31
23
8
Operating investment income
412
389
23
1,609
1,388
221
Investment expenses
(14)
(13)
(1)
(50)
(42)
(8)
Operating net investment income
398
376
22
1,559
1,346
213
10.4 Non-operating performance: Net gains (losses) excluding FVTPL debt securities
Table 10.3 – Net gains (losses) excluding FVTPL debt securities1, 2
Q4-2024
Q4-2023
Change
2024
2023
Change
Realized and unrealized gains (losses) on:
FVTOCI and amortized cost securities, net of derivatives
(25)
4
(29)
(13)
1
(14)
Equity securities, net of derivatives
(89)
156
(245)
275
36
239
Investment property
10
(11)
21
5
(14)
19
ECL expense
(1)
(2)
1
(3)
(4)
1
Net gains (losses) excluding FVTPL debt securities
(105)
147
(252)
264
19
245
1 See Note 22 – Net investment return and net insurance financial result to the Consolidated financial statements for details.
2 As of Q4-2024, all foreign currency gains (losses) on debt securities are presented within Net gains (losses) on FVTPL debt securities and FX in Section 12.
Comparative figures were reclassified accordingly.
Highlights
Net losses excluding FVTPL debt securities of $105
million, primarily reflected mark-to-market losses on our
equity securities.
Net gains excluding FVTPL debt securities of $264
million was driven by favourable equity market
movements in Q1 and Q3.
See Section 12 – Non-operating results for detail on our Net gains (losses) on FVTPL debt securities and FX.
Q4-2024 vs Q4-2023
2024 vs 2023
Operating net investment income increased by
6% mainly due to higher book yields.
Operating net investment income increased by 16%, driven
by higher reinvestment yields mostly captured in 2023.
Reminder: 2023 Operating net investment income included a
special dividend of $25 million.
At quarter-end, the reinvestment yield of 4.1% remained marginally above our book yield of 3.8%. During H2-2024, the
margin between the reinvestment and book yields narrowed by 60 basis points. We expect our book yield growth to
decelerate as portfolios continue to roll over.
Guidance: we expect investment income of approximately $1.6 billion in 2025.
To note, this figure already reflects a moderate decrease in floating interest rates during the next 12 months.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
24
INTACT FINANCIAL CORPORATION
10.5 Balance sheet: Our investment portfolio
Highlights as at December 31, 2024
Our investment portfolio was of $40.3 billion as at December 31, 2024. The $0.9 billion increase during the quarter reflected
the strengthening of the US dollar, investment income reinvested and the tightening of spreads for corporate debt securities.
This was partly offset by a rise in interest rates across all regions.
The composition of our net exposure by geography1 (country of incorporation) is: 49% Canada, 29% US, 10% UK, and
12% Other (mainly European countries).
82% of our fixed-income portfolio was rated ‘A-’ or better.
The average duration of our debt securities was 3.2 years as at December 31, 2024.
The weighted-average rating of our preferred shares portfolio was ‘P2’ as at December 31, 2024.
RSA’s investment property portfolio is unlevered, diversified in terms of sectors (office, commercial and industrial) and
geography within the UK.
1 Net of financial liabilities related to investments and hedging positions.
10.6 Balance sheet: Investment portfolio net exposure
Our approach to our investments is derived from an asset mix designed to optimize ROE outperformance, while accounting for capital
and other considerations. As part of our investment strategies, from time to time we take long/short equity positions in order to
maximize the value added from active equity portfolio management, or to mitigate overall common share market volatility.
Our net exposure (after reflecting the impact of hedging strategies related to investments) is outlined in the table below. Additional
information on our exposures can be found in our Supplementary Information, available in the “Investors” section of our web site at
www.intactfc.com.
Table 10.4 – Investment mix (net exposure)1
As at
December 31, 2024 September 30, 2024
December 31, 2023
By asset class
Cash and cash equivalents2
4%
6%
5%
Debt securities2
79%
78%
81%
Preferred shares
4%
4%
4%
Common equity
10%
9%
6%
Investment property
1%
1%
1%
Loans
2%
2%
3%
100%
100%
100%
By currency
CAD
62%
62%
66%
USD
17%
17%
15%
GBP
16%
16%
15%
Other currencies
5%
5%
4%
100%
100%
100%
1 Net of financial liabilities related to investments and hedging positions.
2 Effective Q4-2024, Short-term notes and Fixed-income securities are presented together within Debt securities to align with similar disclosures provided in other public
documents. Comparative periods have been reclassified accordingly.
Highlights as at December 31, 2024
Our fixed-income strategy remains the same: conservative credit exposure and stable interest rate duration.
Private debt securities provide diversification from public bonds, common shares and preferred shares
Common equity exposure is now at target, in line with our long-term risk appetite.
Cash, cash equivalents, investment property & loans are all in line with our long-term targets.
Our portfolio is diversified across sectors and our operating geographies (Canada, UK, US).
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
25
Section 11 - Distribution income
Distribution income
We own participations in brokers, MGAs and components of the supply chain, across Canada and the US, strategically complementing our
underwriting business, and representing a financially compelling diversified source of earnings. We provide our brokers with a variety of
digital distribution service platforms, alongside sales training and financing to enable them to continue to grow and develop their businesses.
Distribution income is reported on an earnings before interest, tax and amortization basis (“EBITA”), and mainly includes the earnings of:
BrokerLink, our wholly owned distributor of P&C insurance products in Canada.
Distribution Financial Strategies (“DFS”) portfolio which encompasses our Canadian broker associates and agencies, mainly in
Québec, for which we offer financial support and advice.
Our managing general agent (MGA) platform, which is composed of 5 specialized brokers in Canada and the US, represented as
Intact Public Entities, Coast Underwriters, Striior Insurance Solutions, Specialty Advantage Insurance Services and International
Bond & Marine Brokerage.
On Side Restoration, a Canadian firm we own, which provides repair and restoration services for Personal and Commercial property
claims across Canada. On Side specializes in damage restoration services following water, fire/smoke or weather-related events.
Distribution income by source
Highlights
BrokerLink topline (DPW)
Distribution income increased by 12% to $524 million in
2024, driven by organic revenue growth and acquisitions,
primarily in BrokerLink.
In 2025, we expect distribution income growth of
approximately 10%.
11.1 Distribution balance sheet
Our distribution business is a significant component of our operations that has grown over the years. The table below features the key
elements that differentiates our balance sheet structure from other insurers by highlighting the impacts from our distribution business.
As all debt outstanding is held & managed at the Holding Company level, for illustrative purposes, debt was allocated to reflect a debt / LTM
EBITA multiple of approximately 2.5x for the distribution business. Preferred shares remain allocated to the P&C business.
Table 11.1 – Distribution balance sheet
As at December 31, 2024
Total IFC
P&C business
Distribution business
Assets:
Intangible assets and goodwill
9,567
6,828
2,739
Other
49,959
48,053
1,906
Liabilities:
Debt outstanding
4,681
3,371
1,310
Other
36,697
35,579
1,118
Equities:
Equity attributable to common shareholders1
16,529
14,312
2,217
Equity attributable to preferred shareholders
1,619
1,619
-
Adjusted debt-to-total capital ratio
19.4%
16.2%
37.1%
Preferred shares and hybrids ratio
8.2%
9.7%
n/a
44%
40%
16%
BrokerLink
DFS
Other¹
47%
53%
Intact
Other
1 Distribution business’ equity reflects the combination of its assets and other liabilities. Refer to the introduction above for the assumptions taken regarding the debt
allocation to the distribution business.
1 Other includes Intact Public Entities, On Side Restoration, Coast Underwriters, Striior and other.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
26
INTACT FINANCIAL CORPORATION
Section 12 - Non-operating results
Non-operating results include acquisition-related items and elements that bear significant volatility from one period to another. These
items are not representative of our operating performance and as such are excluded from the calculation of our operating KPIs.
Table 12.1 – Non-operating results1
Section
Q4-2024
Q4-2023
Change
2024
2023
Change
Amortization of acquired intangible assets
(81)
(74)
(7)
(306)
(270)
(36)
Acquisition and integration costs
(59)
(86)
27
(230)
(255)
25
Net result from claims acquired in a business
combination
(1)
(1)
-
(4)
(3)
(1)
Acquisition-related non-operating results
(141)
(161)
20
(540)
(528)
(12)
Net gains (losses) on FVTPL debt securities and FX2
(72)
385
(457)
(116)
230
(346)
MYA and FX on claims liabilities3
16
(354)
370
(56)
(62)
6
Sub-total
(56)
31
(87)
(172)
168
(340)
Discount build on claims liabilities
230
270
(40)
925
948
(23)
Net unwind of discount on claims liabilities
(207)
(217)
10
(883)
(884)
1
Sub-total
23
53
(30)
42
64
(22)
Net gains (losses) excluding FVTPL debt securities2
10.4
(105)
147
(252)
264
19
245
Other net gains (losses)
44
22
22
303
50
253
Income (loss) from exited lines
12.1
(12)
(158)
146
(108)
(313)
205
Restructuring costs
(68)
(96)
28
(177)
(248)
71
Other (incl. pension expense)
(15)
10
(25)
(59)
23
(82)
Other non-operating results
(189)
9
(198)
93
(237)
330
Total non-operating results
(330)
(152)
(178)
(447)
(765)
318
1 See Section 29 – Non-GAAP and other financial measures for more details.
2 As of Q4-2024, all foreign currency gains (losses) on debt securities are presented within Net gains (losses) on FVTPL debt securities and FX. Comparative figures were
reclassified accordingly.
3 Represents the change in rates used to discount our claims liabilities and the foreign currency translation impact on claims.
Q4-2024 vs Q4-2023
2024 vs 2023
Non-operating results deteriorated by $178 million year-over-
year, largely due to mark-to-market losses on our equity
securities. Other movements included:
Non-operating results improved by $318 million year-over-year,
largely due to market-related gains on our equity securities.
Other movements included:
Net losses on FVTPL debt securities and FX of $72
million mainly reflected increases in interest rates across
all geographies, tempered by tightening spreads. Last
year’s results were impacted by strong decreases in
interest rates, especially in Canada and the US (see
Section 10.2 – Capital market update).
Net losses on FVTPL debt securities and FX were
$116 million. These mostly reflected foreign currency
losses and increasing interest rates in the UK and US. This
was tempered by
decreasing rates in Canada and
tightening spreads.
MYA and FX gains (losses) on claims liabilities of $16 million in the quarter and $(56) million for the year, reflecting the
change in interest rates relative to the duration of our claims liabilities, offset by foreign currency gains over the year.
Discount build and net unwind for the quarter and the year largely offset each other, for a respective net impact of $23
million and $42 million.
Other net gains of $44 million were broadly comparable
to last year.
Other net gains of $303 million were largely attributable
to the sale of the UK direct Home and Pet portfolio in Q1,
as well as gains on broker-related transactions from Q2.
Restructuring costs of $68 million in the quarter and $177 million for the year were lower than the prior year and
continued to include accelerated depreciation charges and impairment related to our UK Personal lines exit. We will continue
to incur restructuring costs related to our UK strategic exits in 2025 and 2026, but these are expected to be lower over time.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
27
12.1 Income (loss) from exited lines
Lines are classified as exited when a formal decision is made to exit a specific line of business and/or geographical area of operations.
This can be due to profitability concerns, the absence of a pathway to outperformance, or other strategic reasons. The results of these
lines are considered non-operating as they are no longer part of the core business and cannot be extrapolated to evaluate future
earnings. Comparative year results were not restated to exclude the exited lines.
Table 12.2 – Income (loss) from exited lines
Canada exits
UK&I exits
US exits
BC auto (effective in Q4-2020)
CNS operations (wind-down
effective Q3-2021 in all lines
of business)
Legacy exits of the UK&I portfolio
Sale of RSA Middle East(effective
in 2022)
UK Personal lines Motor portfolio
(effective in Q1-2023)
UK Home and Pet businesses
(effective in Q4-2023)
Programs,
Architects
and
Engineers business (effective in
Q4-2017)
Healthcare business (effective
Q3-2019)
Public Entities (effective in Q1-
2022)
Q4-2024
Q4-2023
Change
2024
2023
Change
DPW
252
366
(114)
1,279
538
741
Net underwriting revenue
326
346
(20)
1,395
562
833
Net claims
(200)
(359)
159
(935)
(614)
(321)
Net underwriting expenses
(138)
(145)
7
(568)
(261)
(307)
Underwriting income (loss)
(12)
(158)
146
(108)
(313)
205
Canada
8
(5)
13
14
(6)
20
UK&I
(29)
(138)
109
(131)
(250)
119
US
9
(15)
24
9
(57)
66
Q4-2024 highlights
2024 highlights
Within the UK&I, underwriting losses of $29 million mainly
reflected specific large losses on the Commercial lines
business exited pre-acquisition.
If exited lines were included within the UK&I segment, this
would have an unfavourable 3.7-point impact on the overall
UK&I combined ratio.
Within the UK&I, underwriting losses of $131 million were
mainly due to severe weather events in Q1 and Q3, which
impacted our UK home portfolio.
If exited lines were included within the UK&I segment, this
would have an unfavourable 4.1-point impact on the overall
UK&I combined ratio.
For 2025 and beyond, we expect a negligible impact on performance from our overall exited portfolio, assuming no significant
weather-related claims.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
28
INTACT FINANCIAL CORPORATION
Section 13 - Income taxes
13.1 Statutory income tax rates
We are subject to income tax law in various jurisdictions where we operate. The statutory income tax rates in the main jurisdictions
we operate were as follows:
Table 13.1 – Statutory income tax rates
As at December 31,
2024
2023
Canada1
26.1%
26.3%
UK
25.0%
23.5%
US
21.0%
21.0%
Corporate2
25.9%
25.9%
1 Represents the combined Canadian tax rates applicable in provinces where the Group operates.
2 Represents the combined Canadian federal and provincial statutory income tax rate of the top parent company.
13.2 Effective income tax rate
Our effective income tax rates (“ETR”), operating and total, are different from our combined Canadian federal and provincial statutory
income tax rates. Our overall ETR is impacted by the sources and geography of earnings, which are taxed at different rates, and
reflects differences between taxable and accounting profits. The following table presents the reconciliation of our total ETR to the
income tax expense calculated at the Corporate statutory tax rate.
Table 13.2 – Effective income tax rate reconciliation1
2024
2023
Corporate statutory income tax rate (Table 13.1)
25.9%
25.9%
Increase (decrease) in income tax rates resulting from:
Adjustments on operating income
(6.6)%
(10.0)%
Adjustments on non-operating income
1.4%
11.7%
Total effective income tax rate, as reported in MD&A
20.7%
27.6%
Remove: share of income tax expense of broker associates2
(1.0)%
(1.4)%
Effective income tax rate, as reported under IFRS3
19.7%
26.2%
1 Impact calculated on the basis of pre-tax income.
2 Includes income taxes from our broker associates, which are accounted for using the equity method (net of tax) under IFRS.
3 Refer to Note 26 – Income taxes to the Consolidated financial statements for further details.
Tax legislative changes
In 2024, the Canadian federal government enacted Bill C-59 which implemented tax measures to deny financial institutions a
deduction on dividends on certain types of portfolio shares of Canadian corporations that they own (other than taxable
preferred share), and to implement a tax of 2% on the net value of share repurchase transactions undertaken by public
corporations. Altogether, these measures did not have a material impact on our operating effective income tax rate.
The Canadian government also moved forward with the adoption of the Organization for Economic Co-operation and
Development’s Pillar Two rules, which had retroactive application as of January 1, 2024. The rules are designed to ensure
that large multinational enterprises pay a minimum effective corporate tax rate (agreed upon at 15%) on the income arising in
each jurisdiction where they operate. This had an overall limited effect on our operating effective income tax rate, as our
substantial operations are in jurisdictions with Pillar Two effective tax rates that are not less than 15%. Pillar Two rules were
enacted in the UK and Europe with effect as of January 1, 2024.
2024 vs 2023
Total ETR of 20.7% was lower than last year, as 2023’s ETR included an increase in non-operating income tax expense related
to the UK pension buy-in transaction.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
29
1 The 2024 figure reflects a strengthening GBP to CAD FX rate of 1.800 vs. 1.689 in 2023.
13.3 Operating effective income tax rate
The following table presents the reconciliation of our operating ETR to the income tax expense calculated at the Corporate statutory
tax rate on a consolidated level.
Table 13.3 – Operating effective income tax rate reconciliation1
2024
2023
Corporate statutory income tax rate (Table 13.1)
25.9%
25.9%
Adjustment for different rates of other jurisdictions (mainly US and UK)
(1.3)%
(1.5)%
Non-taxable investment income (mainly composed of dividends)
(2.8)%
(3.4)%
Utilization and recognition of previously unrecognized tax benefits (Section 13.4)
(2.7)%
(2.9)%
Other
1.1%
0.8%
Operating effective income tax rate, as reported in MD&A
20.2%
18.9%
1 Impact calculated on the basis of pre-tax operating income.
13.4
UK - unrecognized tax losses and other tax attributes
The following table presents a summary of unrecognized tax losses and other tax attributes in the UK as at December 31, 2024.
Table 13.4 – Unrecognized tax losses and other tax attributes in the UK
Unrecognized tax losses and
other tax attributes
As at December 31,
2024
2023
Tax losses P&L1
1,318
1,260
Tax losses OCI
1,958
1,679
Other tax attributes
737
908
Total unrecognized tax losses and other tax attributes
4,013
3,847
Unrecognized UK deferred tax assets (at 25%)
1,003
962
2024 vs 2023
Operating ETR of 20.2% was higher than last year, due to higher operating profits in 2024, resulting in a lower proportion of
non-taxable investment returns over pre-tax operating income. 2024 operating ETR was lower than expected, due to almost 3
points of tax recoveries related to our UK operations.
Recognition of UK tax benefits
As at December 31, 2024, we have $1 billion of UK unrecognized deferred tax assets that can be used against potential future
taxable income and benefit our KPIs. Unrecognized losses will be proportionally recognized in the statement in which they
arose (i.e. P&L and OCI).
The current recognized net UK deferred tax asset stands at $475 million, increasing by $16 million in 2024.
In addition to the above summary, we also have unrecognized tax losses in Canada, Ireland and in other jurisdictions, refer to
Note 26.5 – Unused tax losses, tax credits and other tax attributes to the Consolidated financial statements for further details.
Guidance: we expect an operating effective tax rate of 22% to 23% in 2025.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
30
INTACT FINANCIAL CORPORATION
ENVIRONMENT & OUTLOOK
Section 14 - P&C insurance industry outlook
P&C insurance industry
12-month outlook
Our response
Personal
auto
Canada
No change from Q3-2024
We estimate that industry premiums grew by
low double-digits in the first three quarters of
2024.
Industry profitability was challenged in 2023
and continues to be in 2024, especially in
Alberta. We thus expect industry corrective
measures to continue in light of on-going long-
tail severity pressures.
We expect hard market conditions to prevail
over the next 12 months and industry premium
growth within the low double-digits.
We monitor inflation in our portfolio and adjust our pricing
and claims strategies to maintain control on indemnity.
This includes leveraging our strong supply chain network
and in-house legal capabilities.
We continue to invest in telematics, big data, and artificial
intelligence to maintain our advantage in pricing and risk
selection. Our brand investments, and customer driven
digital leadership contribute to accelerating growth in the
current hard market conditions.
Following the recent announcement of a new reform in
Alberta, to be effective January 1st 2027, we continue to
collaborate closely with the government for a successful
implementation.
We maintain our emphasis on portfolio quality and
expect to sustain a sub-95% combined ratio over the
next 12 months.
Personal
property
Canada
No change from Q3-2024
We estimate that industry premiums grew by
low double-digits in the first three quarters of
2024.
We expect hard market conditions to persist
as the industry responds to the recent severe
weather events.
We expect premium growth in the low double-
digits over the next 12 months.
We are continuously investing in our supply network to
strengthen our competitive advantage. With the majority
of claims handled in-house, this allows us to provide a
superior
customer
experience,
while
optimizing
operational efficiency.
We actively monitor and defend against inflation and
climate trends. We are continuously evolving our
products, enhancing segmentation and investing in
prevention, while ensuring product availability. We are
also
collaborating
with
stakeholders
(including
government and regulators) to help mitigate the impacts
of climate change.
We remain confident in maintaining our 10-year track
record of 90% combined ratio, and sub-95% guidance
even with severe weather events.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
31
P&C insurance industry
12-month outlook
Our response
Commercial
lines
Canada
No change from Q3-2024
We estimate that the industry registered mid-to-
high single-digit premium growth in the first three
quarters of 2024.
Though varying by line of business, we expect
current market conditions to persist, underpinned
by elevated CAT losses and reinsurance costs.
Overall, we expect mid-single-digit premium
growth for the industry over the next 12 months,
with pressures in large accounts.
We maintain our emphasis on portfolio quality and
pricing discipline, while remaining focused on loss
prevention and service excellence.
We have accelerated the pace on our Machine
Learning pricing journey, to keep ahead on risk
selection and segmentation.
We remain focused on pursuing growth opportunities,
by leveraging our distribution channels.
We remain well positioned to continue to deliver a low-
90s or better combined ratio, as a result of our
profitability actions.
UK&I
No change from Q3-2024
In the UK and EU, we estimate that the industry
registered mid-single-digit premium growth in the
first three quarters of 2024.
We expect current market conditions to persist,
with pressures in large accounts, as a result of
increased capacity. However, uncertainty remains
with continued inflationary pressures and elevated
weather-related losses.
We expect mid-single-digit premium growth for the
industry over the next 12 months.
Growth opportunities have been enhanced as we
increase our distribution footprint in the UK with the
DLG acquisition.
As we integrate the DLG business onto our platform,
we are focusing on improving portfolio quality and
remain disciplined on renewals and new business.
We are continuing to enhance pricing sophistication
and our segmentation capabilities.
These actions are aimed at improving portfolio quality
and evolving the combined ratio towards 90% in 2026.
US
Commercial
lines
No change from Q3-2024
In the first three quarters of 2024, we estimate that
industry premiums grew by mid-to-high single-
digits.
Though uneven across segments, we expect
current market conditions to persist, given weather
CAT losses, reinsurance costs, ongoing inflation
pressures, as well as geopolitical and economic
uncertainty.
Overall, we expect industry premium growth at a
mid-to-high single-digit level over the next
12 months.
Our objective remains to expand on our US Specialty
business while outperforming on profitability.
We continue to put emphasis on our pricing
sophistication
efforts.
We
are
achieving
rate
increases consistent with the broader industry while
maintaining retention levels in line with expectations.
We remain focused on growth execution, by
leveraging our distribution channels and specialized
expertise.
We are well positioned to deliver a low 90s or better
combined ratio, in line with our near-term objectives.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
32
INTACT FINANCIAL CORPORATION
P&C insurance industry
12-month outlook
Our response
Investments
Change from Q3-2024: Central banks have
decreased rates
Capital markets are reflecting inflation trending
toward policy target, geopolitical conflicts and
uncertainty around impacts of recent commercial
tariffs.
Central banks have decreased rates in Q4 and
should head lower over the next 12 months. We
expect the industry’s pre-tax investment yield to
remain relatively stable as reinvestment yields
remain close to book yields.
Our investment portfolio is managed like the rest of
our business, for the long-term. Our investment
management team seeks to maximize after-tax
returns, while preserving capital and limiting volatility.
We expect investment income of approximately
$1.6 billion in 2025, which already embeds
assumptions
around
floating
interest
rates
decreases.
Overall
Over the next twelve months, we expect the current market conditions to persist, in light of the recent elevated
catastrophe losses. In Personal lines, we expect premium growth in the low double-digits, while in Commercial
and Specialty lines, premiums are expected to grow by mid-single-digits.
We expect our industry benchmark ROE1 to be in the high single-digit range in the next 12 months, and we
remain well positioned to outperform this benchmark by at least 500 basis points in 2024 and beyond.
1 Our P&C industry benchmark ROE reflects a weighting based on the approximate amount of capital deployed by IFC in the markets in which we operate.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
33
Section 15 - Guidance and ambitions
Due to the inherent nature of our business, we do not provide specific guidance on earnings. However, we do provide our expected
operational performance by segment or by component, which is based on the current state of our business at the time of disclosure.
Our expectations may evolve over time in response to developing business needs and goals, or a changing industry environment.
The below table summarizes our expectations for a full year, though results may vary by quarter due to factors such as seasonality
or may differ overall due to factors such as severe catastrophe losses.
An analysis of our performance can be found in the sections listed alongside each guidance in the table below.
While the above table is more on the shorter-term, covering the next 12 months, we have multiple ambitions over the medium-to
longer-term. The below table summarizes these.
2025 Guidance
Analysis of
performance
Personal auto Canada
Sub-95% combined ratio
Section 5.2
Personal property Canada
Sub-95% even with severe weather
Section 5.3
Commercial lines Canada
Low-90s or better combined ratio
Section 5.4
UK&I
Combined ratio towards 90% in 2026
Section 6
US
Low 90s or better combined ratio
Section 7
Consolidated CAT losses
Annual CAT losses of $1.2 billion
Section 9
Consolidated PYD
2% to 4% range in the mid-term
Section 22.2
Consolidated expense ratio
Between 33% to 34%
Section 3.2
Net investment income
Approximately $1.6 billion
Section 10
Distribution income
Growth of approximately 10%
Section 11
Tax
Operating effective tax rate of 22% to 23%
Section 13
Medium-to-long-term ambitions
Analysis of
performance
Canada
Grow our operating DPW to $20 billion by 2027, with 5 points of combined ratio
outperformance.
Section 5
GSL
Reach $10 billion in operating DPW by 2030, performing at a sub-90 operating
combined ratio.
Section 17.3
Climate
Commit to achieving net zero by 2050 and halve emissions from our
operations by 2030.
Section 20
Financial objectives
10% NOIPS growth annually over time & 500 basis points annual ROE
outperformance.
Section 18
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
34
INTACT FINANCIAL CORPORATION
STRATEGY
Section 16 - What we are aiming to achieve
We are here to help people, businesses and society prosper in good times and be resilient in bad times. Our strategic objectives define
what we aim to achieve: placing customers at the centre of everything we do, making sure our employees are engaged and proud to work
at Intact, achieving outperformance, and being recognized as leaders in building resilient communities.
Progress on our strategic objectives
1The 2024 outperformance figure is an estimate that reflects Q3-2024 year-to-date data. Final 2024 outperformance metrics will be available in Q2-2025. See Section
18.2 – Exceed industry ROE by 5 points for more details.
2 Measured by Ipsos, a market research company.
3 Compared to same period in our baseline year 2019. Calculated using market-based method. Excluding On Side Restoration emissions. Final 2024 emissions will be
reported within our annual Social Impact and ESG Report.
What we are aiming to achieve
Where we stand today
Our customers are our
ADVOCATES
74% of our Personal lines customers who had a transaction with us are our advocates.
85% of brokers in Canada, US and the UK value our specialized expertise.
Our people are ENGAGED
Kincentric Best Employer in Canada for the 9th consecutive year.
Kincentric Best Employer in US for the 6th consecutive year.
39% of VP+ positions at IFC are held by women.
Our company is one of the
MOST RESPECTED
6.6 points of industry ROE outperformance between 2015 and 20241.
10% NOIPS CAGR over the last decade.
55%2 of stakeholders globally recognize us as leaders in building resilient communities.
25%3 reduction in our insurance operations emissions since 2019, estimated as at the end
of Q3-2024.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
35
Section 17 - Our strategic roadmap
Our strategic roadmap outlines how we will achieve our objectives. The following section highlights our progress on
our strategic roadmap and against key financial and non-financial measures.
17.1 Progress on the DLG integration
Highlights since the acquisition
On October 26, 2023, we completed the purchase of DLG’s brokered Commercial lines operations, expanding our Commercial
lines offering in the UK. In 2024, we have made significant progress on the integration of the DLG business.
Operational transfer of Direct Line’s brokered Commercial lines operations was successfully completed on May 1, 2024,
when all people, premises and assets moved to RSA, strengthening our broker distribution and presence in SME and mid-
market segment of the UK market.
The migration of existing underwriting customers on RSA platforms began mid-June, as planned, and is expected to be
completed at the end of Q3-2025. Our integration focus in 2025 is now on our “One Commercial” program which is set to
deliver a single compelling proposition to brokers on service, product and price.
2024 premiums were north of £600 million, significantly greater than the modelled premium base of £530 million, allowing
us flexibility for remediation on underperforming segments.
The DLG combined ratio is in line with expectations at this stage. We have also seen improved claims and service metrics
during 2024 and remain on track to realize £20 million of synergies within 36 months.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
36
INTACT FINANCIAL CORPORATION
17.2 Strategic updates
Strategic updates since last quarter
Pricing sophistication for GSL was bolstered following the implementation of improved segmentation and pricing
governance tools across 9 verticals in Q4, representing 21% of GSL volume. Our proprietary pricing governance framework
ensures exceptional execution of pricing strategies for new business and renewal accounts, supporting GSL’s sub-90
combined ratio performance target.
The integration of DLG is well underway. RSA’s “One Commercial” program – delivering a single compelling proposition
to brokers on service, product, and price – is a transformational step in our journey to become the leading Commercial lines
player in the UK and outperform the market.
Intact launched a new generative AI tool aimed at improving the ease of doing business for Commercial lines
brokers in Canada. Nearly 3/4 of Commercial lines quotes now go through the new quoting tool, which parses documents
and unstructured data to eliminate duplicate entry for brokers, increasing the speed to quote new business submissions.
Intact has been named a Kincentric Best Employer for the 9th consecutive year in Canada and the 6th consecutive year
in the US in 2024. UK&I engagement remains to be a focus during the transitional period following the Personal lines exits
and the acquisition of DLG.
BrokerLink reached $4.3 billion of annual premiums, after closing 25 acquisitions in the year, representing
$491 million. BrokerLink remains on target to achieve its goal of $5 billion of operating DPW in 2025, strengthening our
scale in distribution in Canada.
Intact acquired Jiffy, Canada's No. 1 home maintenance app. The Jiffy app allows homeowners to book pre-vetted,
highly rated home service professionals for same-day or future-scheduled jobs. Strategically, Jiffy’s services will enable us
to do more for existing and prospective customers, increasing opportunities for digital engagement and repeat experiences
beyond the traditional insurance relationship.
Uptake of usage-based insurance (UBI) reached nearly 2/3 of new customers at belairdirect, enabling enhanced
price segmentation and customer experience. Active UBI clients receive a highly individualized price based on their
driving, visit our mobile apps 3 times more frequently, and demonstrate a higher Net Promoter Score on average when
compared to non-UBI clients.
RSA launched a first-of-its-kind Professional Indemnity insurance product for Climate Professionals, designed
specifically for companies and consultants who advise on sustainability and the transition to net zero, supporting our efforts
to enable the transition to a low-carbon future, a key intention of our climate strategy.
Louis Marcotte, EVP and CFO, will step down in February 2025 and be succeeded by Ken Anderson, currently EVP and
CFO for UK&I. Louis will remain in the organization as IFC Vice Chair with a focus on growing our European operations
within Global Specialty Lines. Ken has been with Intact for 17 years and was the natural choice to be Intact’s next CFO.
Ken’s appointment is in line with Intact’s commitment to invest in its people and reflects the strong internal succession plans
in place at IFC.
Michael Miller, CEO, GSL, will step down effective March 2025 and be succeeded by Emmanuel Clarke, currently
Corporate Director and Chairman of IFC’s GSL Advisory Board. Michael will remain within the organization serving as
Chairman GSL and as a Director on the IFC Board. Emmanuel brings a wealth of knowledge given his 25 years in the
insurance sector and his intimate experience of GSL and will provide invaluable leadership along GSL’s ambition of
$10 billion of operating DPW by 2030.
IFC announced a $5 million commitment towards a first-in-Canada Centre of Excellence in infectious diseases
dedicated to mother-child health. This initiative, led through a strategic partnership between Centre hospitalier
universitaire Sainte-Justine and the Faculty of Medicine at the Université de Montréal, demonstrates our ongoing
commitment to building resilient communities and actively contributing to a brighter future.
Specialty
Solutions
UK &
Ireland
Competitive
advantages
People
Canada
Canada
Community
Competitive
advantages
People
UK &
Ireland
Specialty
Solutions
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
37
17.3 Global Specialty lines (GSL)
Our Specialty lines results are embedded in the Commercial operations of each segment (Canada – Section 5, UK&I – Section
6 and US – Section 7). Specialty insurance is about focus and deep knowledge of a unique customer segment (such as Accident,
Marine, Technology and Entertainment) or product niche (such as Surety, Excess Property, Multi-national programs,
Management Liability and Cyber). Each business unit is managed by an experienced team of Specialty insurance professionals
focused on a specific customer group or industry segment. We continue to capitalize on the opportunities to expand and bring
our capabilities to new markets across the globe.
In our strategic roadmap, we laid out GSL growth and profitability ambitions for the long term: to reach $10 billion in
operating DPW by 2030, performing at a sub-90 operating combined ratio.
Table 17.1 – Global Specialty lines results1,2
Q4-2024
Q4-2023
Change
2024
2023
Change
Operating DPW (in millions) (growth in constant currency)
1,469
1,376
4%
6,420
6,117
3%
Operating net underwriting revenue (growth in constant currency)
1,378
1,290
5%
5,163
4,825
6%
Combined ratio
84.6%
90.5%
(5.9) pts
85.6%
88.5% (2.9) pts
1 Figures have been aggregated, using management reports from each segment, and are based on the current definition of Specialty lines, which may change over time.
2 Combined ratio is undiscounted. It also includes the impact of risk adjustment and reinsurance non-performance risk (in both 2024 and 2023 restated).
Q4-2024 vs Q4-2023
2024 vs 2023
Operating DPW grew by 4% to $1.5 billion led by strong
new business, particularly in Canada and the UK, offset in
part by corrective actions in certain lines.
Operating DPW grew by 3% to $6.4 billion with
contributions from all geographies. Rate actions were offset
in part by increased competition and corrective actions in
certain segments.
Combined ratio was strong at 84.6%, with solid
underlying performance, and improving year-over-year due
to higher favourable PYD.
Combined ratio was strong at 85.6%, with a below-90s
performance across all geographies.
With the goal of enhancing the breadth of risk mitigation available to the Cyber insurance market, in 2020 we
launched a partnership with program manager Resilience Insurance. Through this partnership, standalone cyber
coverages coupled with cyber risk assessments and technical risk engineering are available to Commercial
middle-market clients through select retail and wholesale brokers. A large part of our cyber exposure is ceded to
reinsurers, and we have stop-loss mechanisms in place.
In light of the rapid expansion and evolving nature of this emerging market, we recognize the need to remain agile
and responsive. Therefore, we are continuously monitoring and adapting policy exclusions over time. We currently
retain approximately 30% of premiums across the US, Canada, and UK&I through the Resilience Partnership.
DID
YOU
KNOW
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
38
INTACT FINANCIAL CORPORATION
1 IFC’s ROE corresponds to an adjusted return on equity (AROE), which is more comparable to the industry.
2 The 2024 estimated outperformance reflects Q3-2024 YTD data, our final 2024 outperformance results will be available in Q2-2025.
Section 18 - Progress on our two financial objectives
18.1 Grow NOIPS by 10% yearly over time
During the last decade, our NOIPS grew at a CAGR of 10%. This was driven by solid organic growth, healthy
underwriting margin expansion, as well as investment and distribution income growth, altogether bolstered
by contributions from our numerous acquisitions.
Despite the severe weather conditions in recent years, we reported solid results, a testament to the resilience
of our operations as well as our ability to deliver strong profitable growth.
We remain confident in our ability to grow NOIPS by 10% annually over time.
18.2 Exceed industry ROE by 5 points
During the last decade, our average ROE was of 14.6%, exceeding the industry ROE by a yearly average
of 6.6 points, including our 2024 estimated figure, which is better than our target of 5 points. Our BVPS has
grown at a CAGR of 9% over the past 10 years.
We continue to target 500 basis points of ROE outperformance and are well positioned to achieve this in
2024:
o One third is driven by our pricing, risk selection and leading data & AI capabilities;
o One third is from our deep claims expertise as well as our strong supply chain network;
o The remaining portion of our outperformance is driven by our strong capital & investment management,
including distribution activities.
NOIPS performance over time (in dollars)1
ROE outperformance1 versus the industry over time2 (in points)
5.67
6.38
4.88
5.60
5.74
6.16
9.92
12.41
11.56
11.43
14.43
8.2
5.1
5.8
6.9
8.3
5.3
6.5
7.1
12.1
2.5
6.6
16.8
14.3
11.0
13.0
11.8
11.4
15.0
21.0
19.5
11.7
16.8
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024 Est.
Outperformance
IFC AROE
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
3Y-CAGR 5%, 5Y-CAGR 19%, 7Y-CAGR 14%, 10Y-CAGR 10%
1 Figures from 2014 to 2021 are on a IFRS 4 basis, while figures from 2022 to 2024 are on a IFRS 17 basis
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
39
Section 19 - Relative performance update
As part of our strategic objectives, we strive to exceed the industry ROE by 500 basis points annually. Our performance is measured
against P&C industry peers for the countries where we operate. Our estimated ROE outperformance for 2024 was reflected in Section
18.2, while final results will be available in our Q2-2025 MD&A.
We also monitor our growth and combined ratio performance relative to the top peers in each of the markets where we conduct
business (the P&C benchmark), which is further demonstrated in Sections 19.1 to 19.3 below.
19.1
IFC’s performance against Canadian P&C benchmark
The industry benchmark consists of 20 of the largest comparable companies in the P&C industry based on industry data. Industry
data represents an IFC estimate based on MSA, a provider of Canadian insurance industry financial data. AMF (Québec) chartered
insurance companies are not required to report on Q1 and Q3 results. As such, some adjustments are made to ensure comparability
of data across periods.
Table 19.1 – IFC outperformance (underperformance) vs Canadian P&C industry benchmark1
Outperformance (underperformance) vs Industry benchmark
Q3 YTD
2024
Full year
2023
Full year
2022
DPW growth (in constant currency)
(1.9) pts
(2.8) pts
6.4 pts
Combined ratio2
5.3 pts
4.4 pts
3.2 pts
1 Q3 YTD 2024 and Full year 2023 are on an IFRS 17 basis, whereas Full year 2022 is on an IFRS 4 basis. DPW growth definition has remained consistent in all 3 years.
2 IFC and peers combined ratios are compared on a discounted basis based on the information provided by MSA, defined as 1 - (insurance service result - indirect general
expenses) / Insurance revenue. This is in line with the Insurance Bureau of Canada (IBC) recommendations.
Q3 YTD 2024
performance
Our DPW growth underperformed against the industry by 1.9 points, reflective of increased competition
in large Commercial accounts, as well as different business mix within Personal property. However, this
represents close to a 1-point improvement from last year with contributions from all lines of business and
regions.
Our combined ratio outperformance was 5.3 points, improving by almost 1-point from last year, with
contributions from all lines of business and regions. This reflects our strong underlying performance as we
continue to outperform in all our lines of business and further strengthen our competitive advantages. In
particular, our Personal auto underwriting strength continues to standout when comparing to our peers due
to our sophisticated risk selection strategies and our strong supply chain network.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
40
INTACT FINANCIAL CORPORATION
19.2 IFC’s performance against the US P&C benchmark
The industry benchmark consists of the 12 most relevant competitors in the P&C industry, for which reliable and comparable
information is publicly available. The data below is compiled from company and segment data from SEC filings.
Table 19.2 – IFC outperformance (underperformance) vs US P&C industry benchmark1
Outperformance (underperformance) vs Industry benchmark
Q3 YTD
2024
Full year
2023
Full year
2022
DPW growth (in constant currency)
(4.4) pts
5.5 pts
0.5 pts
Combined ratio1
7.1 pts
5.8 pts
2.6 pts
1 Excluding the risk margin and discount impact for comparability purposes with peers (which are not on an IFRS 17 basis). Full year 2022 results are on IFRS 4 basis.
Q3 YTD 2024
performance
Our DPW growth underperformed against the industry by 4.4 points, mainly due to the impact of our
profitability actions, primarily impacting our Financial lines and Environment portfolios. However, rates in all
of our lines of business remain largely aligned with the industry.
Our combined ratio outperformance was 7.1 points, as our solid underlying loss ratio continued to
compare favourably against our peers. Our focus is on lines where we can achieve loss ratio outperformance
through risk selection and pricing, while actively improving underperforming lines. Our expense ratio
underperformed, as a result of our business mix, consisting of higher commissions and smaller relative scale.
19.3
IFC’s performance against UK P&C benchmark
Industry data below represents an IFC estimate based on a group of listed peers in the P&C industry, for which industry data is
compiled from each insurers’ own reports and accounts. UK relative performance results are available on a semi-annual basis, as
such the second half of 2024 results will be available in Q1 2025.
H1-2024
Outperformance
highlights
Our growth outperformance was 45.2 points, mainly due to the DLG brokered commercial lines
acquisition in Q4-2023. Excluding this, our growth outperformance was approximately 1 point, with mid-
single-digits and strong new business, specifically in Commercial SME and Specialty lines.
Our combined ratio underperformance was 4.6 points, which reflected the cautious reserving stance
and remediation actions within the DLG portfolio. We have seen steady improvement in DLG’s
performance during the second half of 2024, which is expected to continue in 2025. Excluding the impact
from DLG, our combined ratio would be outperforming the industry benchmark by nearly 2 points.
19.4 Discounted and undiscounted combined ratios by segment and line of business
Our segments and lines of business are presented on an undiscounted basis, in line with how we manage our business. We provided
discounted combined ratios in the table below as additional information. When assessing our performance versus our competitors, it
is important to compare combined ratios on a similar basis of calculation.
Table 19.3 – Discounted & undiscounted combined ratios by segment and by lines of business
Q4-2024
Q4-2023
2024
2023
By segment
Undisc.
Disc.
Undisc.
Disc.
Undisc.
Disc.
Undisc.
Disc.
Personal auto
94.2%
89.8%
95.2%
89.4%
95.4%
90.8%
94.7%
89.7%
Personal property
77.1%
76.8%
75.8%
74.6%
96.5%
95.1%
100.7%
98.8%
Commercial lines
78.8%
73.7%
84.4%
78.5%
86.0%
81.1%
89.3%
83.8%
P&C Canada
84.9%
81.4%
86.7%
82.0%
92.7%
88.8%
94.5%
90.1%
P&C UK&I
92.7%
87.2%
104.6%
98.6%
92.8%
87.4%
96.4%
91.0%
P&C US
86.1%
81.2%
86.4%
80.0%
87.5%
82.7%
88.7%
83.8%
Combined ratio
86.5%
82.4%
90.1%
85.0%
92.2%
87.9%
94.2%
89.5%
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
41
Section 20 - Climate change
At IFC, we are here to help people, businesses, and society prosper in good times and be resilient in bad times. This is our purpose,
and it drives everything we do. As a leading P&C insurer we have been on the front lines of climate change for over a decade,
positioning us to play a leadership role in strengthening society’s climate resilience.
20.1 Our Climate Strategy
Our Climate Strategy focusses on 5 big intentions – Commit, Adapt, Shape, Enable, and Collaborate – and is grounded in these
guiding principles:
We will help people, businesses, and society de-risk the transition to a sustainable future, by leveraging our strengths.
We will take an inclusionary approach to supporting our stakeholders, not an exclusionary one.
We will focus our actions on areas that maximize the overlap between helping and winning.
The following sections outlines how we:
Leverage our strengths to win on climate and manage the physical risks associated with climate change
Manage the transition risks associated with climate change
Help build climate resilient communities
20.2 Impact of climate change on our business
Since climate change increases risk for society, it also creates opportunities for insurers who are in the risk business. Over the years
we continued to innovate our products and services to meet the growing demand for protection against weather-related loss while
growing profitably, using our expertise to keep pace with an evolving climate. It is through this lens that we should consider the impacts
of climate change on our business, both as a risk but also as an opportunity.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
42
INTACT FINANCIAL CORPORATION
Leveraging our strengths to win on climate and manage physical risk
Assuming physical risk from our customers is core to our business. Our response to climate change has long been embedded in our
strategy and our approach to risk management. We rely on several levers to maintain our track record of sustainable growth and
profitability through actions that lower both the impact and the volatility of physical risks. These include:
Data & AI
Continuously investing in and redefining how we leverage data and predictive models, with the
specialized expertise within the Intact Lab across many disciplines such as AI, machine learning,
actuarial science, and data science.
Within the Intact Lab, the Centre for Climate and Geospatial Analytics uses weather, climate, and
topographic data, along with machine learning models to implement hazard maps to most accurately
quantify and manage exposure in our underwriting portfolio.
Conducting physical risk climate scenario analysis aligned to 3-5 °C global warming scenario
(RCP8.5), in consideration of insurance and financial risk, as well as risks related to our operations
and strategy.
Pricing
Re-pricing when needed, as most of our products are 12 months in duration. This allows for charged
prices to be responsive to the latest weather-related trends which we assess and action in our
property business.
To get the full benefits of our pricing sophistication, we have account level pricing governance metrics
for new business and renewals that are monitored closely to ensure execution of our pricing strategies.
Setting risk tolerances based on catastrophe model output and use it to determine pricing.
Product
Continually evolving our products to account for new climate realities, such as individualizing
coverages by peril; bundling and enhancing our water damage product to improve penetration rates of
flood protection for our customers; and implementing coverage endorsements that respond to
changing risk.
Supply chain &
claims
Capitalizing on opportunities in climate change by expanding our supply chain capacity through the
acquisition of On Side Restoration, one of the largest players in restoration in Canada. On Side
maintains expertise in clean-up and restoration, enabling us to mobilize our emergency response in
impacted regions.
Internalizing claims adjusting coast-to-coast with our in-house claims experts. Our scale allows us to
deploy a national and coordinated CAT response, to act promptly and take control of the claims journey
to optimize the customer experience and indemnity costs when natural disasters strike.
Risk control and
loss prevention
Investing in a global risk control team with vast backgrounds including former engineers, fire protection
experts, sprinkler designers, brokers, claims adjusters, and underwriters.
Leveraging technical expertise and data to mitigate risk and prevent losses, and offering incentives to
customers for taking preventative actions. For example, our proprietary forecast system identifies
properties at risk of roof collapse after snowfall, allowing us to offer customer subsidies that incentivize
snow removal and loss prevention.
Providing emergency risk mitigation services for homes at risk of impending wildfire, including setting
up sprinkler systems, covering vents to limit fire embers from entering a home, and removing material
from around the property that may fuel a fire.
Digitally engaging with insured customers through our mobile app to proactively provide weather and
seasonal alerts, while offering preventive tips to protect and maintain their homes and cars.
Risk transfer
Reinsuring certain risks with external reinsurers to limit our maximum loss in the event of catastrophes
or other significant losses. The placement of ceded reinsurance is mainly on an excess-of-loss basis
(per-risk or per-event), with the primary objective of capital protection. See Section 22.3 –
Reinsurance for more details.
Our approach to physical risk encompasses initiatives that we take in the short-to-mid-term, as well as actions with a longer-term
horizon, enabling strong financial performance even in lines heavily impacted by severe weather. In the Personal Property Canada
business line, for example, we have shown long-term resiliency with an average combined ratio of 90% over the last 10 years.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
43
Managing transition risk
The transition to a low-emissions future has the potential to negatively impact certain businesses, adding risk to the assets we hold
and customers we insure in certain sectors. The actions we have taken to reduce transition risks to our business include:
20.3 Leadership in building climate resilient communities
We believe our expertise positions us well to help people and society adapt to climate change. For over 10 years, we have been
leading various applied research and community-level investment projects and have demonstrated the concrete benefits of climate
adaptation to strengthen society’s climate resilience. Since 2010, we have committed $27.4 million in funding for climate adaptation
action, including:
The Intact Centre on Climate Adaptation at the University of Waterloo. Established in 2015, the ICCA is an applied research
centre which works with homeowners, communities, governments, and businesses in Canada to help reduce impacts of
climate change through the incubation and mobilization of adaptation action.
Municipal Climate Resiliency Grants. Municipalities are on the frontlines of climate adaptation, and we believe equipping
them with effective tools is essential to building resilience. The program prioritizes initiatives that protect entire communities,
focusing on vulnerable areas and solutions that mobilize residents to act.
Nature Conservancy Canada. Wetlands are one of nature’s most powerful tools for climate resilience, offering vital ecosystem
solutions like carbon storage, flood prevention, and water filtration. This year alone we helped to protect over 1,300 hectares
of land in Atlantic Canada and Quebec.
Gloucestershire Wildlife Trust. Through our partnership with GWT we’ve delivered a range of nature-based solutions in areas
of the UK that are prone to flooding, showcasing the value of natural flood management solutions in reducing flood risk and
boosting biodiversity.
More information on how IFC is helping and winning on climate is publicly reported within our annual Social Impact and ESG Report.
Transition risk
assessment
Analyzing transition risk on specific industries within our investment portfolio. We benefit from a
diversified, high-quality portfolio as well as our practice to review investee transition plans and
remain ready to adjust our security selection, sector/segment allocation, and asset mix – as
appropriate – as climate risk trends evolve.
Leveraging our internal climate risk management framework for the underwriting process across
Commercial, Personal, and Global Specialty Lines of business. We hold our leaders accountable
to identify, assess, measure and monitor climate transition risks and identify opportunities in our
insurance business.
Conducting transition risk climate scenario analysis aligned with the Network for the Greening of
Financial Systems’ (NGFS) “Delayed Transition” scenario (assuming delay to 2050) and the “Net
Zero 2050” scenario, in consideration of insurance and financial risks, as well as risk to our
operations and strategy.
Transition Risk
Engagement
Engaging with our Top 20 highest emitting investees, with a view to helping navigate the net zero
transition. We engage with investees on the integration of climate change into strategy and
governance measures.
Continuing to progress our engagement of investees through Climate Engagement Canada as a
founding participant, to drive dialogue with Canadian issuers about climate risks and opportunities.
Investment
policies and proxy
voting
Continuing to evolve our positions on coal and oil and gas, focusing on supporting the energy
sector transition towards a low-emissions future.
Leveraging our position as investors to have a say on climate related issues through proxy voting.
Setting interim targets for the emission intensity of our asset holdings in common shares,
preferred shares and corporate bonds.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
44
INTACT FINANCIAL CORPORATION
FINANCIAL CONDITION
Section 21 - Financial position
21.1 Balance sheets
Table 21.1 – Balance sheets
As at
Section
December 31,
2024
September 30,
2024
December 31,
2023
Assets
Investments
Cash and cash equivalents
1,145
1,355
1,171
Short-term notes
1,289
1,670
1,588
Fixed-income securities
28,482
27,603
26,848
Debt securities
29,771
29,273
28,436
Preferred shares
1,660
1,645
1,384
Common shares
6,350
5,790
4,668
Investment property
571
534
480
Loans
785
829
944
Total investments
10
40,282
39,426
37,083
Reinsurance contract assets
4,788
5,242
5,217
Investments in associates and joint ventures
940
935
944
Intangible assets and goodwill
9,567
9,461
9,132
Other
3,949
4,236
3,603
Total assets
59,526
59,300
55,979
Liabilities
Insurance contract liabilities
31,900
32,023
30,353
Debt outstanding
24.3
4,681
4,843
5,081
Other
4,797
4,654
4,070
Total liabilities
41,378
41,520
39,504
Equity
Common shares
8,126
8,126
8,099
Preferred shares and other equity
1,619
1,619
1,619
Share capital
9,745
9,745
9,718
Contributed surplus
298
271
290
Retained earnings
7,922
7,616
6,503
Accumulated other comprehensive income (loss)
183
148
(321)
Equity attributable to shareholders
18,148
17,780
16,190
Equity attributable to non-controlling interests
-
-
285
Total equity
18,148
17,780
16,475
Total liabilities and equity
59,526
59,300
55,979
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
45
Section 22 - Claims liabilities and reinsurance
22.1 Claims liabilities
Net liability for incurred claims1
by business segment
December 31, 2024
Net liability for incurred claims1
by line of business
1 Represents the net liability for incurred claims before net payables included in incurred claims and the reclass of net claims reported under the GMM.
22.2 Prior-year claims development (PYD)
PYD represents the change in total prior-year claims liabilities during the period, net of reinsurance, excluding PYD related to exited lines.
PYD can vary across our lines of business and fluctuates from quarter to quarter and year to year and, therefore, should be evaluated over
longer periods of time.
Favourable PYD ratio (2015-24)1
1 All figures presented under IFRS 4 basis (2015-2021) are on a discounted basis, while figures presented under IFRS 17 (2022-2024) are on an undiscounted basis.
IFRS 17 has a ∼1 to 2 point favourable impact on the PYD ratio.
62%
10%
28%
P&C Canada
P&C U.S.
P&C UK&I
43%
57%
PL
CL
6.3%
4.9%
2.8%
1.9%
0.0%
0.9%
3.8%
4.6%
4.1%
5.5%
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Our liability for incurred claims estimates are based on various quantitative and qualitative factors, including trends in claim severity and
frequency, payment patterns, inflation, discount rate, risk adjustment and other factors, with the main underlying assumption that our future
claims development will follow a similar pattern to past claims development experience.
Our total claims reserve is made up of reported claims case reserves and incurred but not reported (“IBNR”) reserves. In addition to
reserving for possible incurred claims that have not yet been reported by policyholders, IBNR also supplements the case reserves by
taking into account expected over/under estimation in case reserves based on historical patterns and other claims adjustment expenses
or subrogation amounts not included in the initial case reserve. Our liability for incurred claims is discounted at a rate that reflects the
characteristics of the liabilities and the duration of each portfolio. Our discount yield curves are established using risk-free rates adjusted
to reflect the appropriate illiquidity characteristics of the applicable insurance contracts.
The ultimate claims cost for any accident year is not known until all claims for that period have been reported and settled, which may span
many years in the case of casualty (long-tailed) coverages. Case reserves and IBNR should be sufficient to cover all expected claims
liabilities for events that have already occurred, whether reported or not, and are discounted to take into account the time value of money.
Our reserve estimates are evaluated quarterly.
Liability for incurred claims1 stood at
$27.4 billion (on a direct basis) and at
$23.0 billion (on a net basis) as at
December 31, 2024.
Guidance: we expect favourable PYD in the 2% to 4% range in the mid-term.
Favourable PYD ratio 5Y average = 3.8% and 10Y average = 3.5%
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
46
INTACT FINANCIAL CORPORATION
22.3 Reinsurance
In the ordinary course of business, we reinsure certain risks with external reinsurers to limit our maximum loss in the event of
catastrophic events or other significant losses. Our objectives related to ceded reinsurance are primarily capital protection and are
not intended to manage quarter to quarter volatility of results. The placement of ceded reinsurance is mainly on an excess-of-loss
basis (per event or per risk), but some proportional cessions are made for specific portfolios. Ceded reinsurance complies with
regulatory guidelines, including with respect to coverage limits for Canadian earthquake risk.
Annually, we review and adjust our reinsurance coverage to reflect our current exposures and our capital base. The most material
component of our reinsurance program is the catastrophe treaty, for which we provide more detail below.
Corporate reinsurance program for multi-risk events and catastrophes
The catastrophe reinsurance program covers our global operations. Our approach for setting limits in each country is consistent with
prior years. The following table summarises the net retention and coverage limits for multi-risk events and catastrophes.
Table 22.1 – Corporate reinsurance program for multi-risk events and catastrophes
As of January 1,
2025
2024
Canadian events (in million of CAD)
Retention1
350
250
Coverage limits2
5,600
5,400
US events (in million of CAD)
Retention1
150
150
Coverage limits2
1,300
1,300
UK events (in million of GBP)
Retention1
150
150
Coverage limits2
1,8003
2,100
1 Excludes reinstatement premium, tax impacts and co-participations between the retention level and coverage limit.
2 Represents the ground up limit before co-participations and retention level.
3 The coverage limit reduces to 1,650 on July 1, 2025.
In addition to the above, we have placed a new global cover to protect against multiple catastrophe events during 2025. Losses to
specified layers beneath our main catastrophe retentions, from all business segments, are added together across the year; the total
of these losses is then protected above an aggregate deductible. The new coverage provides $250 million of limit.
January 1, 2025
For Canadian events, the higher coverage limit reflects a small increase in our earthquake exposure in British Columbia.
As an illustration of the capacity of our 2025 reinsurance program, as at January 1, 2025, the retained cost of a 1 in 500-year
earthquake event in Western Canada would represent around 3 points of combined ratio (4 points in 2024), pre-tax, based on
latest exposures. This was calculated using our retained cost of $350 million retention plus reinstatement premiums and co-
participations. Overall, this demonstrates that an event of this magnitude can be well absorbed within our yearly earnings, with
limited impact on our balance sheet and capital position.
For UK&I events, the retention remains unchanged versus 2024. The lower UK&I coverage limit in 2025 reflects the reducing
exposure from UK Personal lines as the portfolio continues to run-off.
For US events, there has been no change to the retention or the coverage limit for 2025.
The 2024 catastrophe reinsurance program response.
2024 was subject to high catastrophe activity, particularly from significant weather events that occurred in a short time span in
Q3-2024. During Q3-2024, catastrophe losses totalled $1.2 billion, net of reinsurance, and $1.7 billion on a gross basis.
This was driven by 4 severe weather events in our Canadian segment, of which the Québec Floods from Hurricane Debby and
the Calgary Hailstorm both exceeded the $250 million retention threshold of our main catastrophe reinsurance treaty.
There were no other catastrophe losses that triggered reinsurance recoveries.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
47
In line with industry practice, our reinsurance recoverables with registered Canadian reinsurers are generally unsecured as Canadian
regulations require these reinsurers to maintain minimum asset and capital balances in Canada to meet their Canadian obligations,
and claims liabilities take priority over the reinsurer’s subordinated creditors. We have collateral in place to support amounts receivable
and recoverable from unregistered reinsurers.
We ensure our placement of reinsurance is diversified to avoid excessive concentration to a specific reinsurance group. We are
selective with respect to our choice of reinsurers, placing reinsurance with only those reinsurers having a strong financial condition.
See Note 12 – Reinsurance to the Consolidated financial statements for further details.
As our catastrophe treaties focus on managing tail risk to protect our capital and our ability to grow our book
value per share, we ensure that in our annual reinsurance program review, we optimize the balance of cost
against the volatility being ceded to reinsurers. Lower retention levels would necessitate ceding more premiums,
adversely affecting our combined ratios and long-term profitability. We believe our chosen retention levels and
the introduction of a new global cover for multiple catastrophe events optimally balance volatility protection and
cost.
DID
YOU
KNOW
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
48
INTACT FINANCIAL CORPORATION
Section 23 - Employee future benefit programs
We currently offer defined benefit (“DB”) pension plans, defined contribution (“DC”) pension plans, as well as other pension-related
savings plans to our employees. As a Best Employer, these pension offerings are valuable components of our total employee rewards
package and are designed to be competitive to attract and retain talent.
In Canada, we provide flexible pension plan benefits to current employees. Employees have the choice between three DB options
and one DC option. In the UK&I, we provide DC pension plans to current employees. In the US, we provide a 401(k) plan to our
employees.
Overall, our DB pension plans are well funded. We continuously manage the risks related to our net DB pension asset (liability) to
reduce volatility that stems from both the DB pension obligation and assets by considering and executing strategies such as:
opportunistic annuity purchases;
asset diversification; and
asset-liability matching to hedge against interest rate, inflation and credit risks.
The DB pension plans are recognized as an asset, when plans are in a net surplus position, or as a liability, when plans are in a net
deficit position. The net DB pension position and pension asset mix are summarized below.
Table 23.1 – Selected pension indicators
As at December 31,
2024
2023
Canada
UK&I
Total
Canada
UK&I
Total
Fair value of plan assets (see asset mix below)
2,444
8,941
11,385
3,276
9,332
12,608
DB pension obligation
(2,391)
(8,912)
(11,303)
(3,272)
(9,327)
(12,599)
Other net surplus remeasurements
-
(4)
(4)
(5)
(3)
(8)
Net DB pension asset (liability)
53
25
78
(1)
2
1
Pension asset mix
Debt securities
1,555
122
1,677
1,545
124
1,669
Annuity buy-in insurance contracts
276
8,747
9,023
1,035
9,188
10,223
Common shares
865
28
893
857
25
882
Derivative financial instruments
16
(6)
10
1
(7)
(6)
Deferred annuity premium
-
-
-
-
(180)
(180)
Other
(268)
50
(218)
(162)
182
20
Total assets
2,444
8,941
11,385
3,276
9,332
12,608
Funded status – funded plans only
111%
100%
104%
106%
100%
102%
% Annuities / Plan assets
11%
98%
79%
32%
98%
81%
Highlights
Significant steps have been taken in recent years to substantially de-risk our pension plans in Canada and the UK:
During 2021 and 2022, we entered into Canadian annuity buy-in insurance contracts, which represented approximately $1 billion.
In 2023, we entered into annuity buy-in agreement worth more than £6 billion in the UK, with Pension Insurance Corporation plc, a
specialist insurer of DB pension plans. Further details on the agreement and pension risks are described in Note 29.6 of the
Consolidated financial statements.
In March 2024, we entered into agreements to convert our Canadian annuity buy-in insurance contracts into annuity buy-outs. As a
result, we derecognized the annuity buy-in assets and the corresponding DB obligations of $1,009 million previously recognized on
a net basis from our balance sheet, with no impact on our total comprehensive income.
In October 2024, we purchased $275 million in annuity buy-in insurance contracts in Canada.
As such, through the UK buy-in transaction, which removed balance sheet exposure to pension risks, as well as the above-mentioned
annuity buy-in and buy-out transactions in Canada, we have de-risked over 80% of our pension risk exposure since 2021.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
49
Section 24 - Capital management
24.1 Our capital management framework
Capital management objectives
Capital management is a vital part of the financial management of the Company and is aligned with its strategy and business plan.
Capital is managed on a group basis as well as individually for each operating subsidiary.
Our objectives when managing capital consist of:
maximizing long-term shareholder value by optimizing capital used to operate and grow the Company; and
maintaining strong regulatory capital levels, to ensure policyholders are well protected and the probability of breaching regulatory
minimum requirements is very low.
Group capital position
Capital management at a group level focuses on optimizing overall capital within the various subsidiaries and ensuring there are
sufficient liquid resources to support regulatory capital requirements, debt obligations, the payment of shareholder dividends,
acquisitions and other business purposes.
The capital strength of the group is measured by the total capital margin. Total capital margin includes capital in excess of the internal
Company action levels (CALs) for insurance entities in Canada, US, UK and other internationally regulated jurisdictions, as well as
funds held in non-regulated entities, less any ancillary own funds committed by the Company to its subsidiaries. CALs represent the
thresholds below which regulator notification is required together with a company action plan to restore capital levels. These thresholds
are reviewed annually as part of risk management practices. As a point of reference, the normal operating range for the total capital
margin is anticipated to be around $2.5 billion, but the quarter-end position may be higher or lower than this.
Capital deployment strategy
Any deployment of capital is executed within the context of the stated capital management objectives and only after careful
consideration of the impact on the Company’s risk metrics. We tend to keep higher levels of capital margin when we foresee growth
or actionable opportunities in the near term.
Capital deployment will be considered in the context of the following capital management priorities:
Manage volatility
The Company will maintain an adequate capital margin to ensure that it is sufficiently capitalized to
withstand an acceptable level of insurance and/or market shocks.
Manage leverage
Prudent debt leverage is an important component of our capital structure. We target a 20% adjusted
debt-to-total capital ratio.
Leverage may increase temporarily to support value creation from M&A opportunities, with the goal
to return to the target within a two- to three-year time horizon.
Increase common
shareholder
dividends
Common shareholder dividend payments are reviewed annually. The Company seeks to maintain
a sustainable dividend payout level, with the intention of annually increasing common shareholder
dividends.
Invest in growth
Investing in growth opportunities continues to be a key pillar of the Company’s strategy. The
Company may use a portion of the capital margin for acquisitions or other growth opportunities.
Share buybacks
Where there is excess capital and no actionable growth opportunities on the near- to medium-term
horizon, we may consider share buybacks as a capital management tool.
Key considerations in any share buybacks include our estimate of intrinsic value and impacts on
NOIPS, ROE and BVPS.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
50
INTACT FINANCIAL CORPORATION
Regulatory capital
Our capital levels may vary over time depending on our evaluation of risks and their potential impact on capital. In addition, it is our
practice to complete our risk appetite requirement by maintaining funds within the holding companies, but actual amounts may vary
from time to time.
The amount of capital in any particular company or country depends upon the Company’s internal assessment of capital adequacy in
the context of its risk profile and strategic plans, as well as local regulatory requirements. The Company’s objective is to maintain the
capitalization of its regulated operating subsidiaries above the relevant minimum regulatory capital requirements in the jurisdictions in
which they operate (referred to as regulator supervisory minimum levels).
Regulatory capital guidelines change from time to time and may impact our capital levels. We carefully monitor all changes, actual or
proposed.
Operating targets for each jurisdiction are selected at a level that reflects our current risk appetite, market conditions, or regulatory
considerations. Capital levels are managed around these operating targets, with the expectation that actual results could vary above
or below the target for any single reporting period.
Canada
Our federally chartered Canadian P&C insurance subsidiaries are subject to the regulatory capital
requirements defined by OSFI and the Insurance Companies Act, while our Québec provincially chartered
subsidiaries are subject to the requirements of the AMF and the Insurers Act.
Federal and Québec regulated P&C insurers are required, at a minimum, to maintain a MCT ratio of 100%.
OSFI and the AMF have also established a regulator supervisory target capital ratio of 150%, which provides
a cushion above the minimum requirement.
The operating target for the aggregated Canadian entities is 195% MCT.
UK&I
RSA’s UK&I operations are subject to regulation and supervision by the Prudential Regulation Authority
(“PRA”). as well as other regulators at a subsidiary level.
UK&I operations use an internal model compliant with the Solvency II regime enacted in the UK and approved
by the PRA to calculate the SCR.
The coverage ratio represents total Eligible Own Funds over the SCR as determined by the internal model.
The operating target for the UK&I is 160% SCR.
US
Our US insurance operations are subject to regulation and supervision in each of the states where they are
domiciled and licensed to conduct business.
State insurance departments have established the insurer solvency laws and regulatory infrastructure to
maintain accredited status with the National Association of Insurance Commissioners (“NAIC”).
A key solvency driven NAIC accreditation requirement is a state's adoption of RBC requirements.
The operating target for the US is 375% RBC.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
51
24.2 Maintaining a strong capital position
Quarterly regulatory capital ratios and capital margins disclosed in the following table are estimates based on information available at
the time of reporting. These are finalized during regulatory filings, which are publicly available quarterly for Canadian entities and
annually for the UK&I and US entities. Differences are not expected to be material.
As at December 31, 2024, each of the Company’s regulated P&C insurance subsidiaries were well capitalized and in compliance with
regulatory capital requirements by jurisdiction.
Table 24.1 – Estimated aggregated capital position1
As at
CAL
Operating
target
Dec. 31,
2024
Sept. 30,
2024
June 30,
2024
Mar. 31,
2024
Dec. 31,
2023
Total capital margin
Canadian regulated entities
1,222
985
1,307
1,251
1,428
UK & International regulated entities2
773
762
873
712
633
US regulated entities
796
793
680
623
555
Holding Companies
99
26
24
68
55
Total capital margin
2,890
2,566
2,884
2,654
2,671
Regulatory capital ratios
Canadian regulated entities (MCT)
166%
195%
200%
192%
205%
203%
210%
UK & International regulated entities (SCR) 2
120%
160%
176%
171%
172%
171%
168%
US regulated entities (RBC)
200%
375%
419%
437%
405%
389%
381%
1 These are supplementary measures. See Section 29 – Non-GAAP and other financial measures for more details.
2 Ancillary Own Funds of £250 million are included in the SCR ratio calculation but excluded from the capital margin.
2024 Capital waterfall ($ in billions)
1 Includes changes in capital requirements, regulatory balance sheet adjustments and other items such as cash flow variations for corporate expenses.
2 Represents the issuance and repayment of financing instruments, and the payment of preferred share dividends.
3 Includes capitalized expenditures, net acquisitions/divestitures of brokers, strategic investments, changes in investment mix and special transactions.
2.7
2.7
(0.4)
0.6
(0.3)
(0.9)
(0.9)
(0.6)
2.9
Capital margin
Q4-2023
Net income
(with expected
CAT losses)
Excess CAT
losses (net of tax)
Other comp.
income
Variations in
regulatory
capital components
and other ¹
Financing
activities²
Payment of dividends
on common shares
Capital
deployment³
Capital margin
Q4-2024
2024 highlights
Total capital margin was strong at $2.9 billion as at December 31, 2024, increasing $0.2 billion from last year. In 2024, we
generated $2.6 billion of capital from strong earnings and favourable market movements. Capital deployment activities primarily
included deleveraging activities, investment in our distribution operations in Canada, as well as the cancellation of RSA’s preferred
shares in Q3.
Capital generated
Capital deployed
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
52
INTACT FINANCIAL CORPORATION
24.3 Capital structure
We believe that our optimal financing structure is one where:
1) the adjusted debt-to-total capital ratio is broadly at 20%; and
2) approximately 10% of our total capital is comprised of preferred shares and hybrid
subordinated notes (including LRCN).
We classify hybrids with preferred shares since they are convertible to preferred shares
pari passu to our existing preferred shares in case of default or bankruptcy and include an
interest payment deferral option, whereby payments can be delayed for a period of up to
five consecutive years.
Our financing is composed of a well diversified array of funding instruments, from short-
term commercial paper, bank debt, medium term notes, subordinated notes, preferred
shares and other equity and common shares. These are spread across the maturity ladder
to allow for deleveraging opportunities and mitigate against refinancing and interest rate
risk.
Table 24.2 – Weighted-average debt maturity, debt coupon and preferred share coupon
Weighted-average of funding instruments
As at December 31,
Debt maturity
(excl. commercial
paper & hybrid debt)
Debt coupon
(incl. commercial
paper & term loans)
Debt
carrying amount
(incl. commercial
paper & term loans)
Preferred share
coupon1
Preferred share
carrying amount1
2024
12 years
3.11%
4,434
4.81%
1,866
2023
12 years
3.01%
4,834
5.07%
2,151
1 Includes preferred shares and other equity outstanding, assumed preferred shares issued by RSA (for 2023), as well as hybrid subordinated notes
For acquisition purposes and other special transactions, we allow for temporary increases in the adjusted debt-to-total capital ratio
above our targeted level when we have good visibility on our ability to return to 20% in the short to medium term. As at December 31,
2024, our adjusted debt-to-total capital ratio decreased to 19.4%, driven by the following financing activities during the year:
Table 24.3 – Financing activity1
Financing
Total debt outstanding
Adjusted total
capital
Adjusted debt-to-total
capital ratio
As at December 31, 2023
4,834
21,556
22.4%
Commercial paper
(105)
(105)
(0.4)%
Term loans
Repayment of GBP tranche
(171)
(171)
(0.6)%
Repayment of GBP loan
(111)
(111)
(0.4)%
Issuance of common shares2
-
11
- %
Repurchase of common shares
-
(24)
- %
Medium-term notes
Issuance of Series 15
298
298
1.1%
Repayment of Series 11
(375)
(375)
(1.3)%
Cancellation of non-controlling interests
-
(279)
0.3%
Other movements
64
2,029
(1.7)%
As at December 31, 2024
4,434
22,829
19.4%
Hybrid subordinated notes
247
Debt outstanding
4,681
1 Refer to the Consolidated financial statements of cash flows for more details.
2 Issuance of common shares on the exercise of stock options. See Note 28.4 – Executive stock option plan of the Consolidated financial statements for more details.
Capital structure
December 31, 2024
19%
8%
73%
Debt
Preferred shares & Hybrid debt
Equity
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
53
Financing activity highlights in 20241
NCIB program
On February 17, 2024, we renewed the normal course issuer bid (“NCIB”) program to purchase for
cancellation up to 3% of IFC’s issued and outstanding common shares.
In 2024, we opportunistically repurchased and cancelled a relatively small amount of shares; 110,921
common shares at an average price of $220 for a total consideration of $24 million.
Subsequent to year-end, the Board has authorized, subject to TSX approval, the renewal of the NCIB
to repurchase for cancellation up to 3% of the Company’s issued and outstanding common shares
over the subsequent 12-month period, commencing February 17, 2025.
Term Loans
On February 8, 2024 and March 26, 2024, the GBP tranche and the GBP loan agreement were repaid
in full using available excess cash.
Medium-term notes
On May 16, 2024, we completed an offering of $300 million principal amount of Series 15 unsecured
medium-term notes through a private placement in Canada.
The net proceeds received were used to reimburse the Series 11 unsecured medium-term notes of
$375 million, which were due on May 21, 2024.
RSA preferred
shares (NCI)
On June 12, 2024, RSA’s Preference Shareholders were invited to tender their preferred shares at a
premium above their market value. This was part of an on-going process of optimizing our capital
structure, as these perpetual instruments would have lost their regulatory capital eligibility in 2026 and
would no longer satisfy the purpose for which they were originally issued.
Following shareholders’ approval on July 16, 2024, all 125,000,000 preferred shares outstanding were
cancelled at an offer price of £1.22 per preferred share, plus voting and transaction fees, representing
a total cash consideration of $279 million2 (£158 million2). The transaction was funded through a
combination of our commercial paper program and excess cash.
We derecognized $285 million of Equity attributable to Non-controlling interests and no longer have
any balance going-forward.
1 See Note 17 – Debt outstanding, Note 18 – Share capital and Note 19 – Non-controlling interests of the Consolidated financial statements for more details.
2 Excluding accrued dividends.
24.4 Contractual obligations
Table 24.4 – Contractual obligations
Payments due by period
As at December 31, 2024
Notes to F/S1
Total
Less than 1 year
1 – 5 years
Thereafter
Principal repayment on notes outstanding
9.5 b)
4,681
300
1,064
3,317
Interest payments on notes outstanding
3,172
188
662
2,322
Insurance contract liabilities2
9.5 c)
28,865
12,325
13,210
3,330
Leases3
9.5 b), 33.1 a)
1,318
200
571
547
Investments
33.1 a)
1,120
1,120
-
-
Financial liabilities related to investments
9.5 b)
962
330
-
632
Pension obligations4
29
115
10
44
61
Other financial liabilities
9.5 b)
1,931
1,407
102
422
Other commitments
33.1 a)
225
183
42
-
Total contractual obligations
42,389
16,063
15,695
10,631
1 Refer to the Notes to the Consolidated financial statements for more details.
2 Undiscounted value. Excludes periodic payment orders and the liability for remaining coverage measured under the PAA.
3 Includes fixed payments, reduced by any incentives receivable, as well as operational costs and variable lease payments.
4 Represent the expected benefit payments for funded and unfunded plans.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
54
INTACT FINANCIAL CORPORATION
24.5 Common shareholder dividends
2025: our 20th consecutive dividend increase
We strive to maintain our dividend track record through sustainable annual dividend increases. We have increased our
common share dividends each year since going public in 2004.
The decision to increase our dividends by $0.12 to $1.33 per quarter in 2025 reflects the strength of our financial position and
confidence in our ongoing operating earnings and capital generation. This represents the 20th consecutive increase in dividend
since our initial public offering (IPO).
24.6 Ratings
Independent third-party rating agencies assess our insurance subsidiaries’ ability to meet their ongoing policyholder obligations
(“financial strength rating”) and our ability to honour our financial obligations (“senior unsecured debt rating”). Ratings are an important
factor in establishing our competitive position in the insurance market, mainly in Commercial insurance, and accessing capital markets
at competitive pricing levels. Our objective is to maintain stable investment-grade ratings at all times.
Table 24.5 – Ratings1
A. M. Best
DBRS
Moody’s
Fitch
Latest review
June 4, 2024
Oct. 8, 2024
Oct. 8, 2024
Dec. 4, 2024
Outlook
Stable
Stable
Stable
Stable
Financial strength ratings
IFC’s principal Canadian P&C insurance subsidiaries
A+
AA
Aa3
AA-
RSA Insurance Group Limited
A
AA
A1
AA-
Intact U.S. Holdings Inc.
A+
AA
A1
AA-
Senior unsecured debt ratings - Intact Financial Corporation
a-
A (high)
A3
A-
1The full list of our credit ratings by entity can be found in the “Investors” section of our web site at www.intactfc.com.
2.12
2.32
2.56
2.80
3.04
3.32
3.40
4.00
4.40
4.84
5.32
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
3Y-CAGR 10%, 5Y-CAGR 10%, 10Y CAGR 10%
2024 highlights
During the year, A.M. Best, DBRS and Fitch reaffirmed our ratings.
On October 8th, 2024, Moody's upgraded the financial strength rating of our principal Canadian P&C insurance
subsidiaries from A1 to Aa3, as well as our senior unsecured debt rating from Baa1 to A3, with outlook back to
stable. The upgrade reflects our excellent market position, strong and consistent underwriting profitability, risk
management discipline, solid reserve adequacy, as well as strong and predictable levels of internal capital generation.
1Annual dividend for 2025 is projected, assuming 4 quarters at 1.33$
1
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
55
24.7 Book value per share
Book value per share increase over time
2024 Highlight
Our BVPS increased
13% from last year due
to strong earnings over
the last twelve months,
as well as gains related
to favourable market
movements.
Table 24.6 – Evolution of BVPS
For the periods
Q4-2024
2024
$
%1
$
%1
BVPS, beginning of period
90.60
n/a
81.71
n/a
Net income
NOIPS
4.93
5.4%
14.43
17.7%
After-tax non-operating gains (losses)
(1.35)
(1.4)%
(2.07)
(2.6)%
Net income to common shareholders (EPS - diluted)
3.58
4.0%
12.36
15.1%
Other comprehensive income (loss)
Impact of market movements on FVTOCI securities
(0.71)
(0.8)%
1.12
1.4%
Foreign exchange impact, net of hedges
0.93
1.0%
2.35
2.9%
Net actuarial gains (losses) on employee future benefits
(0.61)
(0.7)%
0.16
0.2%
Dividends on common shares
(1.21)
(1.3)%
(4.84)
(5.9)%
Other2
0.09
0.1%
(0.19)
(0.3)%
BVPS, end of period
92.67
2.3%
92.67
13.4%
1 Represents movements in the period based on the opening BVPS.
2 Includes share-based payments as well as the net impact from issuance/redemption of common shares.
37.75
39.83
42.72
48.00
48.73
53.97
58.79
82.34
82.84
81.71
92.67
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2024 Highlights
EPS contribution of $12.36 for the year was driven by solid operating and non-operating performances.
Gains on FVTOCI securities of $1.12 per share for the year reflected positive market returns on our preferred shares
securities, as well as favourable mark-to-market movements on our debt securities from interest rates decreases in Canada
Foreign exchange gain of $2.35 per share for the year due to a 7% and 9% strengthening of the UK pound sterling and US
dollar, respectively.
3Y-CAGR 4%, 5Y-CAGR 11%, 7Y-CAGR 10%, 10Y-CAGR 9%
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
56
INTACT FINANCIAL CORPORATION
24.8 Understanding our cash flows
Cash flows used in operating activities mainly consist of insurance premiums less claims and expense payments, plus investment income.
Cash is used to pay dividends on common and preferred shares and distributions on other equity. Cash may also be deployed for strategic
purposes like business acquisitions, investments in brokerage firms and share buybacks, or to repay outstanding financing. Cash inflows in
excess of these outflows are moved to our investment portfolio to generate additional investment income in the future.
Table 24.7 – Cash flows
Q4-2024
Q4-2023
Change
2024
2023
Change
Net cash flows provided by (used in) operating activities
1,077
381
696
3,387
1,846
1,541
Cash flows generated from (deployed on):
Investing activities
-
Business combinations, net
-
(869)
869
-
(869)
869
Proceeds from sale of (purchase of) investments, net
(572)
412
(984)
(1,140)
(552)
(588)
Proceeds from sale of (purchase of) brokerages and other equity
investments, net
(24)
(58)
34
(190)
(126)
(64)
Proceeds from sale of business
-
-
-
145
-
145
Purchase of intangibles and property and equipment, net
(102)
(114)
12
(429)
(458)
29
Financing activities
Proceeds from issuance of (repayment of) debt, net
-
58
(58)
(365)
601
(966)
Borrowing on (repayment of) the credit facility and commercial paper
(202)
105
(307)
(105)
(32)
(73)
Payment of dividends on common shares, preferred shares and
other equity distributions
(243)
(224)
(19)
(953)
(862)
(91)
Proceeds from issuance of common shares (incl. exercise of stock
options), preferred shares and other equity, net
-
-
-
11
847
(836)
Repurchase of common shares for cancellation
-
-
-
(24)
-
(24)
Repurchase of common shares for share-based payments
(28)
(6)
(22)
(180)
(128)
(52)
Payment of dividends to non-controlling interests
-
(7)
7
(13)
(15)
2
Payment of lease liabilities
(22)
(28)
6
(98)
(90)
(8)
Cancellation of non-controlling interests
-
-
-
(279)
-
(279)
Net increase (decrease) in cash and cash equivalents
(116)
(350)
234
(233)
162
(395)
Cash and cash equivalents, net of bank overdraft, beg. of period
1,083
1,531
(448)
1,171
1,010
161
Exchange rate differences on cash and cash equivalents
30
(10)
40
59
(1)
60
Cash and cash equivalents, net of bank overdraft, end of period
997
1,171
(174)
997
1,171
(174)
Table 24.8 – Cash flows at the holding company level
Q4-2024
Q4-2023
Change
2024
2023
Change
Net cash and cash equivalents, beginning of period
14
491
(477)
8
4
4
Cash flows generated from:
Our wholly owned operating subsidiaries
560
594
(34)
2,263
1,562
701
Cash flows deployed on:
Investing, financing and treasury activities
(210)
(741)
531
(898)
(217)
(681)
Capital returned to common shareholders
(216)
(196)
(20)
(888)
(778)
(110)
Corporate expenses1
(130)
(140)
10
(467)
(563)
96
Net cash and cash equivalents, end of period
18
8
10
18
8
10
1 Including debt interest payments, preferred shares dividend and other equity distributions, as well as other general expenses.
Cash position at the end of Q4-2024
We hold cash and cash equivalents at the holding company level, Intact Financial Corporation, and within our wholly owned operating
subsidiaries. We have sufficient capital resources, cash flows from operating activities and borrowing capacity to support our current and
anticipated activities, scheduled principal and interest payments on our outstanding debt, the payment of dividends and other expected financial
commitments in the near term.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
57
RISK MANAGEMENT
Section 25 - Overview
We designed the Enterprise Risk Management (ERM) Framework to ensure effective management and monitoring of the risks that
Intact is exposed to in order to protect our business, clients, employees and stakeholders, while delivering on our promises to our
shareholders. Our risk management practices focus on mitigating risks that could materially impair our financial position, accepting
risks that contribute to sustainable earnings and growth, and disclosing these risks in a full and complete manner. The framework
exists to support the identification, assessment, management, and monitoring of risk.
The risks described below, and all other information contained in our public documents, including our Consolidated financial
statements, should be considered carefully. The risks and uncertainties described below are those we currently believe to be material,
but they are not the only risks and uncertainties we face. If any of these risks, or any other risks and uncertainties that we have not
yet identified, or that we currently consider to be not material, actually occur or become material risks, our business prospects, financial
condition, results of operations and cash flows could be materially adversely affected.
While we employ a broad and diversified set of risk mitigation and risk transfer techniques, those techniques and the judgments that
accompany their application cannot anticipate every economic and financial outcome in all market environments or the specifics and
timing of such outcomes. In some circumstances, we choose to avoid certain risks by exiting lines of businesses that exceed our risk
appetite or are not expected to achieve our long-term profitability targets. Residual risks that are within the Board approved risk
tolerance are acceptable in the pursuit of our strategic objectives.
Section 26 - Risk management structure
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
58
INTACT FINANCIAL CORPORATION
The Board and Committee structures are reviewed periodically to align with best practices, applicable laws and regulatory guidelines
on corporate governance.
Board of Directors
Main responsibility is to oversee our management of business and affairs, including our pension funds. In this regard,
the Board establishes policies, reporting mechanisms and procedures in view of safeguarding our assets and ensuring
our long-term viability, profitability and development.
Risk Management
Committee
The Risk Management Committee assists the Board of Directors in overseeing the management of the Company in
order to build a sustainable competitive advantage, by fully integrating the Enterprise Risk Management policy into all
of our business activities, strategic planning and our subsidiaries and operations, including our pension funds.
Governance and
Sustainability
Committee
The Governance and Sustainability Committee (the “GSC”) ensures a high standard of governance, compliance, and
ethics in the Company, including its pension funds and that the Company meets its legal requirements and engages
in best practices as determined by the Board of Directors.
In this regard, the GSC oversees, amongst others: (i) the governance framework of the Company, its subsidiaries and
its pension plans, (ii) the compliance framework, (iii) the compliance programs of the Company and its subsidiaries
which include related party transactions, market conduct programs and policies, as well as the implementation of
corporate compliance initiatives and (iv) the Company’s ESG framework, performance thereunder and related
reporting.
Human Resources
and Compensation
Committee
The Human Resources and Compensation Committee assists the Board of Directors in fulfilling its governance
supervisory responsibilities for strategic oversight of the Company’s human capital, including organization
effectiveness, succession planning and compensation, and the alignment of compensation with the Company’s
philosophy and programs consistent with the overall business objectives of the Company. Compensation includes
base salaries, benefits, pension plans and incentive programs of the employees, management and executives.
Audit Committee
The Audit Committee assists the Board of Directors in its oversight of (i) the integrity, fairness and completeness of
the Company’s financial statements and financial information; (ii) the accounting and financial reporting process; (iii)
the qualifications, performance and independence of the external auditors; (iv) the performance of the internal finance
function and audit function; (v) the quality and integrity of internal controls and; (vi) actuarial practices of the Company.
Enterprise Risk
Committee
The Enterprise Risk Committee (the “ERC”) is an enterprise-wide executive committee with a mandate to assist the Board
and Senior Management with their responsibilities of managing and providing risk oversight on the operations of the
Company. The ERC was established to support the Chief Executive Officer (the “CEO”) and the Chief Risk Officer (the
“CRO”) in the matters of:
Formulating the risk strategy and setting and monitoring of the risk appetite and the key risk metrics, including
monitoring performance of the Group relative to the risk appetite, aiming for the right balance between risk,
return, and capital. Recommending risk appetite to the Risk Management Committee of the Board (“RMC”)
and the Board for approval.
Identification, assessment, responding, monitoring and reporting to the RMC of the main risks facing the
Company, including periodic review and evaluation of the top risks and emerging risks profiles. The main risk
categories include strategic risk, insurance risk, financial risk, and operational risk.
Overseeing actions to address material risks out of appetite and monitoring progress towards returning to
within appetite, including oversight of the key risk mitigation function of business continuity.
Risk governance, including the development of risk owned policies and frameworks, including the Enterprise
Risk Management Policy.
Promoting and reinforcing a culture of risk awareness throughout the Company.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
59
Section 27 - Enterprise Risk Management
27.1 Mandate
The enterprise risk management strategy is designed to provide the link between the Company’s strategies and our risk appetite and
to articulate how we manage risk to achieve our strategic objectives. As such, our overarching risk strategy, which is the ERM
mandate, is to oversee the Group’s risks and objectively challenge the Group’s risk management activities, while ensuring that
appropriate actions are taken to protect our clients, employees, shareholders, and other stakeholders. The following mission statement
outlines how we achieve our mandate:
Build a sustainable competitive advantage by fully integrating enterprise risk management into our business activities and
strategic planning;
Prevent and mitigate risks related to various areas that could impede the achievement of our business and strategic
objectives; and
Protect IFC’s reputation and safeguard the company from financial losses.
27.2 Guiding Principles
To achieve our enterprise risk management objectives, the following principles apply across the organization:
Risk is an essential part of the decision-making process;
Transparency and communication of our risks and incidents is essential;
Approach to risk management is systematic, structured, and timely; and
The risk management process facilitates continuous improvement.
27.3 Risk Management Process
Our Risk Management process consists of the following workflow: risk identification, risk assessment, risk response, risk monitoring
and risk reporting. This process identifies the risks that pose the biggest threats, fosters discussion on mitigation measures, and
enables management to make appropriate decisions to help the company achieve its objectives.
Managing risk is a shared responsibility at Intact. The three lines of defence model is employed to clearly identify the roles and
responsibilities of those involved in the risk management process and ensure accountability. On-going collaboration and clear
communication across the lines of defence are paramount to fostering alignment and optimal risk management.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
60
INTACT FINANCIAL CORPORATION
27.4 Risk Appetite
How do we manage corporate risk?
We take a prudent approach to managing risk, and the following principles help us establish the nature and scope of risks we are
willing to assume:
we focus on our core competencies;
we keep our overall risk profile in check;
we protect ourselves against extreme events;
we promote a strong risk management culture; and
we maintain our ability to access capital markets at reasonable costs.
Consult our website for a more detailed discussion of our Risk Appetite under the Governance section.
27.5 Main risk factors and mitigating actions
Our practice is to regularly identify our top risks, assess the likelihood of occurrence and evaluate the potential impacts should they
materialize both in terms of financial resources and reputation. We also consider potential emerging risks that are newly developing
or changing risks which are inherently more difficult to quantify.
We then determine mitigation plans and assign accountability for each risk if deemed appropriate given our overall assessment, our
risk appetite, and our business objectives.
Our risks are separated into four main categories: Strategic Risk, Insurance Risk, Financial Risk and Operational Risk.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
61
27.6 Top and emerging risks that may affect future results
On an on-going basis, the Enterprise Risk Committee identifies the top risks facing the Company. The following section presents the
top, emerging and transversal risks identified with the most severe potential impact. In assessing the potential impact for each of
these risks, the presence and effectiveness of risk mitigation activities are taken into consideration. Our main risk factors together
with our practices used to mitigate these risks are explained below.
TOP, EMERGING AND TRANSVERSAL RISKS
Major earthquake ................................................................................................................................................................................ 61
Climate change risk ............................................................................................................................................................................ 62
Catastrophe risk ................................................................................................................................................................................. 63
Increased competition and disruption ................................................................................................................................................. 64
Turbulence in financial markets .......................................................................................................................................................... 65
Reserving inadequacy ........................................................................................................................................................................ 66
Underwriting inadequacy .................................................................................................................................................................... 67
Governmental and/or regulatory intervention ...................................................................................................................................... 68
Cyber security failure .......................................................................................................................................................................... 70
Project and Change ............................................................................................................................................................................ 71
Inability to contain fraud and/or abuse ................................................................................................................................................ 71
Social unrest risk ................................................................................................................................................................................ 72
Major earthquake
Insurance risk
Risk we are facing
The occurrence of a major earthquake may produce significant damage in large, heavily populated areas.
Potential impact
The occurrence of a major earthquake could have
a significant impact on our profitability and
financial condition and that of the entire P&C
insurance industry in Canada. Depending on the
magnitude of the earthquake, its epicentre and
the extent of the damage, the losses could be
substantial even after significant reinsurance
recoveries of IFC treaties. There could also be
significant additional costs to find the required
reinsurance capacity upon further renewals. In
addition, we could be subject to increased
assessments
from
the
P&C
Insurance
Compensation Corporation (PACICC) leading to
further costs if other insurers are unable to meet
their contractual obligations with their clients.
We use the assistance of third-party models to
estimate the potential cost of a severe earthquake
and add an additional loading for non-modelled
risk.
How we manage this risk
Our risk management strategy consists of regular monitoring of insured value accumulation
and concentration of risks. We use earthquake risk models, with adjustments for non-modelled
losses, to help assess our possible losses at various return periods and use reinsurance to
transfer a substantial amount of risk. Consequently, the diversification of risk among an
appropriate number of reinsurers is vital for us. See Section 22.3 – Reinsurance for more
details on our reinsurance program.
We also purchase a prudent amount of catastrophe reinsurance beyond regulatory
requirements to transfer a significant portion of this risk. The modelled 1-in-500-year probable
maximum loss (PML) for an earthquake event in Canada, net of reinsurance and taxes, has an
impact of -3.2% on BVPS.
In 2024, we revised the pricing and segmentation of earthquake insurance in our Personal lines
business in Quebec.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
62
INTACT FINANCIAL CORPORATION
Climate change risk
Insurance risk
Risk we are facing
As a property and casualty insurer, a core element of our business is to assume physical climate risk from our customers. Changes in the climate
may have a material impact on the Company’s risk profile in several ways.
Physical risk has been affecting our property and auto insurance business due to changing climate patterns and an increase in the number and
cost of claims associated with severe storms and other natural disasters. Changing weather patterns have resulted in hotter, drier weather in some
areas and more humid, wetter weather in other areas. The result has been more unpredictability in weather and increasingly severe storms. In
2023 and again in 2024, this was increasingly evident as we incurred elevated catastrophe losses related to weather events.
Transition risk is the risk inherent in the transition to a low-carbon and more climate-resilient economy, involving changes in government policies,
the legal environment, technologies and financial markets. Awareness of the potential risk continued to increase this year with several examples of
large institutional investors shifting away from carbon-intensive sectors.
Physical and transition risks may also lead to liability risk, such as the risk of climate-related claims under liability policies, as well as the risk
arising from other climate-related litigation or direct actions against the Company. For instance, compensation could be sought for losses resulting
from an alleged failure of the Company to manage the climate-related risks outlined above, from allegations related to “greenwashing” in the
Company’s representations or from climate activism-driven actions. Such litigation or direct actions may also pose reputational risk.
Potential impact
The most significant climate change risks we face include physical risk
related to our insurance products and transition risk related to our
investments.
Physical risk
Underwriting: Weather patterns could continue to change and impact on
the likelihood and severity of natural catastrophes, such as wildfires, hail
and flooding in the west, and wind, heavy precipitation and hurricanes in
the east. The impact of climate change may result in increased earnings
volatility and negatively affect our property and automobile insurance
results, which collectively contribute to a majority of our total annual
premiums.
There were examples again in 2024 including wildfire (Jasper), flooding
(Montreal and Toronto) and severe storms (Calgary) that materially
impacted our earnings. These types of events are likely to become more
frequent and/or severe as a result of climate change.
Operations: Could disrupt our operations, should severe weather events
affect our premises or the premises of any outsourced business functions.
Transition risk
Investments: The risk could lead to a decline in the valuation of assets
we hold in certain sectors that are vulnerable to transition risk.
Furthermore, the exposure to carbon-intensive sectors or companies could
result in the perception of disregard towards a greener economy and
increase reputational risk for insurers who underwrite these risks.
How we manage this risk
Physical risk
Underwriting: To address this risk, we have ongoing initiatives
including pricing and product changes to reflect new climate realities,
regular reviews of claims processes and a greater focus on consumer
loss prevention. Many initiatives have been implemented over the last
several years including the expanded use of deductibles and sub-
limits, segmentation refinement, the introduction of depreciation
schedules in Personal property insurance across Canada, and the
supply chain enhancement with the ownership of On Side Restoration.
These initiatives help mitigate, to some extent, P&C insurance losses
resulting from water damage and harsh weather. As climate risk
continues to evolve, and given that it is subject to uncertainty, we are
continuously developing or acquiring new modelling tools to help
better assess risks from weather patterns. We input weather, climate
and topographic data into machine learning models to develop and
adapt risk maps used to assess weather perils including severe
convective storms, flood and wildfire. We also developed peril-by-peril
projections through to 2040 using global warming scenarios to identify
key areas of focus to drive initiatives and help us better manage this
risk. See Section 20 – Climate change for more details on our
initiatives and ongoing management related to the risks of climate
change. In addition, our reinsurance program offers protection against
unexpected weather-related catastrophe events, see Section 22.3 –
Reinsurance for details on our reinsurance program. Changes in the
cost and/or availability of reinsurance can significantly impact our
ability to manage the physical risk associated with climate change.
Transition risk
Investments: See Section 20.2 – Impact of climate change on our
business for more details on initiatives undertaken by Intact
Investment Management (IIM) to help mitigate transition risk in our
investment portfolio.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
63
Catastrophe risk (excluding earthquake risk)
Insurance risk
Risk we are facing
Catastrophe events include natural disasters and non-natural events.
There is a wide variety of natural disasters that are mainly weather-related including but not limited to hurricanes, windstorms, hailstorms,
rainstorms, ice storms, floods, severe winter weather and forest fires. In addition, natural disasters could originate from outer space including
solar storms and asteroid strikes.
Non-natural catastrophe events include but are not limited to hostilities, terrorist acts, riots, explosions, crashes and derailments, and wide scale
cyber-attacks.
Despite the use of sophisticated models, the incidence and severity of catastrophe events are inherently unpredictable. The extent of losses from a
catastrophe event is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. Most
catastrophe events are restricted to small geographic areas; however, hurricanes and other storms may produce significant damage in large, heavily
populated areas. Catastrophe events can cause losses in a variety of P&C insurance lines.
Potential impact
Claims resulting from natural or non-natural
catastrophe events could cause substantial
volatility in our financial results and could
materially reduce our profitability or harm our
financial condition.
Non-natural catastrophe risk
We offer cyber risk insurance to our Personal and
Commercial customers and in our Specialty lines
business. We may be adversely affected by large-
scale
cyber-attacks
that
simultaneously
compromise the systems of many of our insureds.
In addition, we have exposure to terrorism risk
through our Specialty business. Terrorism can
take many forms and both our property and
workers’ compensation policies may be affected
by an event.
How we manage this risk
Underwriting segmentation through the use of detailed maps (flood, hail, etc.).
Country diversification through uncorrelated catastrophe events helps mitigate our overall
exposure. We monitor our peak catastrophe exposures in all our main markets.
Location and exposure data is monitored and provides effective control over geographic
risk accumulation.
Natural catastrophe risk
Some of the risk mitigations referred to in the section above on climate change risk also mitigate
the catastrophe risk.
With the assistance of third-party models, we model a range of natural catastrophes across all
the main jurisdictions in which we operate. The modelled aggregate 1-in-100-year probable
maximum loss (PML), net of reinsurance and taxes, has an incremental impact of -5.7% on
BVPS above our expected level of annual catastrophe losses.
Non-natural catastrophe risk
To help mitigate the risks associated with our cyber risk insurance product, we generally focus
on small to medium-size companies with modest policy limits. Our strategy regarding this
business line is to have disciplined growth while prudently managing tail risk. We closely monitor
growth and the composition of exposures in this line of business. We leverage both external and
internal cyber catastrophe modelling scenarios to assess our exposure. We purchase
reinsurance specifically to transfer some of the risk in the event a large-scale cyber-attack
triggers a high volume of claims.
In addition to private reinsurance, we also participate in the US federal government terrorism
insurance backstop (TRIPRA), which mitigates our exposure under certain circumstances as
outlined in US federal legislation and we also participate in the UK government-backed pool
reinsurance facility, which limits our retention to terrorism-related risks.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
64
INTACT FINANCIAL CORPORATION
Increased competition and disruption
Strategic risk
Risk we are facing
We believe that competition in our business lines is based on price, service, commission structure, product features, financial strength and scale,
ability to pay claims, ratings, reputation and name or brand recognition. We compete with many domestic and foreign insurers as well as other
financial institutions that sell insurance products. Disruptors with lower costs and/or better technology could enter our markets and quickly
accumulate market share. These firms may use business models that are different than ours and sell products through various distribution channels,
including aggregators, fintechs, brokers and agents who sell products exclusively for one insurer and directly to the consumer. We compete not
only for business and individual customers, employers and other group customers but also for brokers and other distributors of investment and
insurance products.
We distribute our products primarily through a network of brokers and a great part of our success depends on the capacity of this network to be
competitive. These brokers sell our competitors’ insurance products and may stop selling our insurance products altogether. Strong competition
exists among insurers for brokers with demonstrated ability to sell insurance products.
Potential impact
Intense competition for our insurance products could harm our
ability to maintain or increase our profitability, premium levels
and written insured risk volume.
The entrance of a sophisticated player or disruptor in the market
could shift methods for purchasing insurance and challenge our
distribution model. The use of information technology in the
distribution and pricing of insurance products has increased over
the last several years and this trend is expected to continue.
Artificial intelligence is another area that is gaining much
attention and could have a material impact on the insurance
industry. Potential disruptors may use these technologies more
effectively than us or there may be negative reputational
consequences arising from our initiatives.
Demutualization and further consolidation in the Canadian P&C
industry remains likely which may result in an erosion of our
competitive advantage.
The evolution of customer preferences for different distribution
channels, including purchasing insurance directly from auto
manufacturers, or through alternate business models (e.g. peer-
to-peer insurance) could lead to a material decline in our market
share. Premium volume and profitability could be materially
adversely affected if there is a material decrease in the number
of brokers that choose to sell our insurance products. In addition,
our strategy of distributing through the direct channel may
adversely impact our relationship with brokers who distribute our
products.
How we manage this risk
There are several initiatives to mitigate the risk of competition and disruption
including, but not limited to:
Our multi-channel distribution strategy including the broker channel, direct
distribution brands and web platforms, enhances our ability to adapt to
evolving conditions in the insurance market. We have established close
relationships with our independent distributors by providing them with
advanced technology, as well as training to help strengthen their market
position. We closely monitor pricing gaps between our various channels
and manage the different channels under different brand names including
BrokerLink, our wholly owned broker network.
We are promoting our brands with a focus on using web and mobile
technology to reach consumers. The recent acquisition of Jiffy, Canada’s
No. 1 home maintenance app, enables us to accelerate the expansion of
our service offering to customers.
We are insourcing part of our claim supply chain process to differentiate
ourselves from a cost and customer experience perspective. With our
wholly-owned subsidiary On Side Restoration, we have vertically
integrated an important supply chain vendor to provide emergency and
restoration services for property insurance clients.
We have established innovative service centres in major Canadian cities to
provide an unmatched customer experience in auto repair. We have also
deployed digital tools to accelerate claims settlement and enhance
communication with our customers.
We are investing in our Data Lab and our large team of experts. We use
artificial intelligence and machine learning in a variety of business
applications to acquire and retain more profitable clients (e.g. usage-based
insurance). With recent advancements in generative artificial intelligence
applications, we expect this trend will accelerate in the coming years.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
65
Turbulence in financial markets
Financial risk
Risk we are facing
Movements in interest rates, credit spreads, foreign exchange rates, inflation rates, and equity prices cause changes in realized and unrealized
gains and losses. Generally, our interest and dividend income will be reduced during sustained periods of lower interest rates. During periods of
rising interest rates, the fair value of our existing fixed-income securities will generally decrease and our realized gains on fixed-income securities
will likely be reduced or result in realized losses. Changes in credit spreads would have similar impacts as those described above for changes in
interest rates. Severe deflation or unexpected and sustained inflation could materially impact both our assets and liabilities, including our employee
defined benefit pension plans. In 2023 and again in 2024, inflation trended downwards towards central bank targets while equity markets rebounded.
The current geopolitical environment increases uncertainty in financial markets with a possible resurgence of trade tariffs and inflation, including
upward pressure on oil prices and the potential for global supply-chain disruptions. See Section 10.2 – Capital market update.
Potential impact
Changes in the market variables mentioned
above could adversely affect our investment
income and/or the market value of our securities.
In addition to the risk related to investments
discussed previously, an economic downturn
and/or increase in the inflation rate would have
a significant impact on the funded status of our
defined benefit pension plans. Consequently,
this could impact our financial condition.
General
economic
conditions,
geopolitical
conditions, social unrest and many other factors
can also adversely affect the equity markets
and, consequently, the fair value of the equity
securities we own and ultimately affect the
timing and level of realized gains or losses.
Our preferred share portfolio depreciates in
value as a result of negative developments in
interest rates, credit or liquidity markets.
Our fixed-income portfolio may experience
defaults resulting in impairments and lower
income prospectively.
How we manage this risk
While our strategy is long-term in nature, it is regularly reviewed to adapt to the investment
environment when necessary, especially in times of turbulence and increased volatility. We
closely monitor concentration across and within asset classes and ensure that exposures remain
within the risk tolerance stated in our investment policy.
Periodically, we employ risk mitigation measures such as changes to our strategic asset mix,
hedging of interest rate, foreign exchange, or equity risk and increased holdings in cash. These
actions serve to reduce exposures in the investment portfolio and decrease the sensitivity of our
regulatory capital ratios to financial market volatility. In 2024, our investment portfolio has moved
closer to our long-term target investment policy allocation.
Regular stress testing of our investment risk exposures assists management in assessing the
overall level of financial risk and helps to ensure that exposures remain within established risk
tolerances. These stress tests help assessing whether our financial risk exposure requires any
adjustments.
The Company’s exposure to financial risk arising from its financial instruments together with the
Company’s risk management policies and practices used to mitigate it are explained in our
Consolidated financial statements. Consult the following sections for more information.
Reference to our Consolidated financial statements
Market risk/Interest risk
Credit risk
Notes 9.1 and 9.2
Note 9.4
Basis risk
Liquidity risk
Note 9.3
Note 9.5
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
66
INTACT FINANCIAL CORPORATION
Reserving Inadequacy
Insurance risk
Risk we are facing
Our success depends upon our ability to accurately assess the risks associated with the insurance policies that we write. We establish insurance
contract liabilities (i.e. reserves) to cover our estimated liability for the payment of all losses and loss adjustment expenses (“LAE”) incurred with
respect to premiums collected or due on the insurance policies that we write. Reserves do not represent an exact calculation of a liability. Rather,
reserves are our estimates of what we expect to be the ultimate cost of resolution and administration of claims. These estimates are based upon
various factors, including:
actuarial projections of the cost of settlement and administration of claims reflecting facts and circumstances then known;
estimates of trends in claims severity and frequency;
judicial theories of liability;
variables in claims handling procedures;
economic factors such as inflation;
judicial and legislative trends, and actions such as class action lawsuits and judicial interpretation of coverage or policy exclusions; and
the level of insurance fraud.
Potential impact
Most or all of these factors are not directly quantifiable, particularly on a
prospective basis, and the effects of these and unforeseen factors could
negatively impact our ability to accurately assess the risks of the policies that we
write. In addition, there may be significant reporting lags between the occurrence
of the insured event and the time it is actually reported to the insurer and
additional lags between the time of reporting and final settlement of claims.
The following factors may have a substantial impact on our future actual losses
and LAE experience:
amounts of claims payments;
expenses that we incur in resolving claims;
legislative and judicial developments (e.g. auto insurance reforms); and
changes in economic variables such as interest rates and/or inflation.
To the extent that actual losses and LAE exceed our expectations, and the
reserves reflected in our Consolidated financial statements, we will be required
to reflect those changes by increasing our reserves. In addition, government
regulators could require that we increase our reserves if they determine that our
reserves were understated in the past. When we increase reserves, our earnings
before taxes for the period will decrease by a corresponding amount. In addition,
increasing or strengthening reserves causes a reduction in our P&C insurance
subsidiaries’ regulatory capital. See Section 22.1 – Claims liabilities for more
details.
How we manage this risk
Establishing an appropriate level of reserves is an inherently
uncertain process. We continually refine our reserve estimates
in an ongoing process as claims are reported and settled.
Our broader international exposure enhances diversification
and reduces the potential impact of overall reserve inadequacy.
Our reserve review committees scrutinize reserves by business
segment, analyze trends and variations in losses to ensure that
we maintain a sufficient level of claims reserves and
recommends adjustments when necessary. Claims and
Reserving teams also closely monitor severity trends for
inflation, particularly on short-tail lines.
On a regular basis, we conduct deep dives on certain areas of
our reserves. As a result, in 2024, we increased reserves on
latent abuse claims in Canada and subsidence claims in the UK
as we progress in settling these claims.
We also have internal assurance and external independent
reviews of our reserve levels to help ensure that they are set
appropriately.
We continue to closely monitor the impact of inflation on our
claims and making appropriate adjustments to our reserves,
particularly in short-tail lines of business, to help mitigate the
risk of adverse development.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
67
Underwriting Inadequacy
Insurance risk
Risk we are facing
Product design and pricing risk is the risk that the established price is or becomes insufficient to ensure an adequate return for shareholders as
compared to our profitability objectives. This risk may be due to an inadequate assessment of market needs, a poor estimate of the future experience
of several factors, or risk selection inadequacy.
Potential impact
Pricing inadequacy may lead to material
declines in underwriting results and/or
deficient reserves. In addition, the increase
in frequency and/or severity of claims could
also create pressure on profitability. The
following factors could deviate claims from
expected levels:
deterioration of the economy;
unexpected cost inflation;
inadequate segmentation;
misestimation of replacement costs;
unclear wording;
deviation from underwriting
guidelines.
How we manage this risk
Our profitability committees review the results of each business line and determine if appropriate
action is required in terms of product design or pricing to remediate poor underwriting performance.
These committees also review our portfolio quality and the evolution of our pricing versus internal rate
indications to ensure ongoing rate adequacy. We have ongoing monitoring and action to mitigate
inflation. On Side Restoration’s size and scale helps mitigate the impacts of inflation on our Canadian
insurance results. The inflation impact was also tempered by the increase in salvage value in auto
claims.
We generally write one-year policies and the short-term nature of our business allows us to implement
timely action to mitigate inflation that impacts our claim costs. Supply chain agreements also help
mitigate this risk.
We adopted policies that specify our retention limits and risk tolerance, and our application depends
on training and the discipline of our underwriting teams. Once the retention limits have been reached,
we use reinsurance to cover the excess risk. Moreover, our profitability and ability to grow may also
be adversely affected by our mandatory participation in the Facility Association and assumed risk-
sharing pools in several automobile insurance markets including Ontario, Québec, Alberta, and the
Maritimes.
We maintain a strong underwriting discipline in the hard market environment and increase our rates
while maintaining a good retention.
We closely monitor the impact of increased inflation in our claims data and promptly increase rates
accordingly, particularly in non-regulated segments which accounts for most of our premium volume.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
68
INTACT FINANCIAL CORPORATION
Governmental and/or regulatory intervention
Strategic Risk
Risk we are facing
Our subsidiaries and affiliates are subject to regulation and supervision by regulatory authorities of the jurisdictions in which they are incorporated
and licensed to conduct business.
These laws and regulations:
delegate regulatory, supervisory and administrative powers to federal, state, provincial and territorial insurance commissioners and
are generally designed to protect policyholders and creditors, and are related to matters including:
requirements on privacy and the protection of personal information;
Personal auto insurance rate setting;
risk-based capital and solvency standards;
restrictions on types of investments;
maintenance of adequate reserves for unearned premiums and unpaid claims;
examination of insurance companies by regulatory authorities, including periodic financial and market conduct examinations;
licensing of insurers, agents and brokers;
limitations on upstream dividends from operating companies; and
transactions with affiliates.
typically require us to periodically file financial statements and annual reports, prepared on a statutory accounting basis, and other information
with insurance regulatory authorities, including information concerning our capital structure, ownership and financial condition including, on an
annual basis, the aggregate amount of contingent commissions paid and general business operations.
Regulatory authorities closely monitor the solvency of insurance companies by requiring them to comply with strict solvency standards based on
the risk assumed by each company with respect to asset composition, liability composition, and the matching between these two components. We
are required to submit regular reports to the regulatory authorities regarding our solvency and publish our solvency ratio every quarter. Solvency
requirements are amended from time to time.
Expectations from Canadian regulators are increasing due to our larger size, multinational operations and gain of share in the insurance market.
We are also exposed to regulators with their own set of requirements. This includes the Prudential Regulation Authority, Financial Conduct Authority,
Central Bank of Ireland and Commissariat aux Assurances in the UK and International region.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
69
Governmental and/or regulatory intervention (cont’d)
Strategic risk
Potential impact
We believe that our subsidiaries are in material compliance with all applicable
regulatory requirements. However, it is not possible to predict the future impact
of changing federal, states, provincial and territorial regulations on our
operations. Laws and regulations enacted in the future may be more restrictive
than current laws. Overall, our business is heavily regulated and changes in
regulation may reduce our profitability and limit our growth prospects.
We could be subject to regulatory actions, sanctions and fines if a regulatory
authority believes we have failed to comply with any applicable law or
regulation. Any such failure to comply with applicable laws could result in the
imposition of significant restrictions on our ability to do business or significant
penalties, which could adversely affect our reputation, results of operations
and financial condition. In addition, any changes in laws and regulations could
materially adversely affect our business, results of operations and financial
condition.
We may be subject to governmental or administrative investigations and
proceedings in the context of our highly regulated sectors of activity. We
cannot predict the outcome of these investigations, proceedings and reviews,
and cannot be sure that such investigations, proceedings or reviews or related
litigation or changes in operating policies and practices would not materially
adversely affect our results of operations and financial condition. In addition, if
we were to experience difficulties with our relationship with a regulatory body
in a given jurisdiction, it could have a material adverse effect on our ability to
do business in that jurisdiction.
Furthermore, a significant increase in solvency requirements would increase
the possibility of regulatory intervention and may reduce our ability to generate
attractive returns for shareholders. This may also negatively impact our ability
to execute our growth strategy and attain our financial objectives.
How we manage this risk
We are supported by an in-house team of lawyers and staff, and
by outside counsel when deemed necessary or appropriate, in
handling general regulation and litigation issues and are an active
member of the major industry associations.
Our government relations team ensures contact with the
governments of the various jurisdictions in which we operate and
can be proactive in situations that could affect our business.
We regularly monitor trends and adjust our strategy and products,
when deemed appropriate, to ensure the sustainability of
insurance products and to avoid the potential for additional
regulation that may negatively impact our reputation, profitability,
and financial condition.
To reduce the risk of breaching the regulatory capital
requirements, we have Board approved thresholds for the
regulatory capital ratios in all jurisdictions in which we operate. We
operate above these thresholds under normal circumstances to
reduce the likelihood of regulatory intervention. Our Enterprise
Risk Committee regularly review risks related to solvency and
uses stress testing to identify vulnerabilities and areas for possible
remediation. Our capital management policy contains guidelines
to help ensure that we maintain adequate capital to withstand
adverse event scenarios and has documented procedures to take
corrective actions should any unanticipated conditions arise. In
2024, the Board approved a recovery plan to strengthen our
resilience to deal with adverse scenarios.
We have implemented a robust regulatory compliance process to
ensure close tracking of, and adherence to, regulations and laws
across the jurisdictions in which we operate.
In addition, we conducted a full internal solvency assessment as
described hereafter in Section 27.8 – Own Risk and Solvency
Assessment.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
70
INTACT FINANCIAL CORPORATION
Cyber security failure
Operational risk
Risk we are facing
Information technology and cyber security risks continue to be key risks for many companies. Criminal organizations, hackers, and other external
actors have become more active and better equipped to attack even robust systems and networks. Our dependency on technology, network,
telephony and critical applications makes our ability to operate and our profitability vulnerable to business interruptions, service disruptions, theft of
intellectual property and confidential information, litigation and reputational damage.
The volume and sophistication of cyber-attacks have continued to accelerate in recent years. Geopolitical conflict could exacerbate this risk further.
These attacks may include targeted attacks on systems and applications, introduction of malicious software, denial of service attacks, and phishing
attacks that could result in the fraudulent use or theft of data, and may involve attempts to fraudulently induce employees, customers or third-party
service providers to disclose sensitive information in order to gain access to the Company’s data. Ransomware attacks have particularly accelerated
in frequency and severity. These activities are designed to disrupt the operations of an organization and/or to benefit the attacker financially.
We may be unable to prevent cyber-attacks that result in system disruption or a breach of confidential information, whether personal or corporate
in nature. Third party service providers and other suppliers may also be the targets of successful cyber-attacks leading to a material impact on our
systems or the theft of confidential information.
Potential impact
Despite our commitment to information and cyber
security, we may not be able to fully mitigate all
risks associated with the increased sophistication
and volume in the threat landscape.
The working-from-home environment during the
pandemic also increases the level of some risks.
As such, we may be subject to a cyber-attack
resulting in system unavailability, data corruption
or deletion, or the disclosure of confidential or
personal information. Massive denial of service
attacks and system intrusion attempts could
compromise our ability to operate or we may be
unable to safeguard personal and confidential
information from public disclosure. Other potential
consequences include our inability to provide
customers with real-time access to information on
their insurance policies, provide quotes for new
insurance products or enable customers to report
claims electronically.
These events and attacks may lead to wide
ranging consequences including:
financial loss, which also includes lost
productivity, remediation costs, and costs
associated with potential legal action;
regulatory
action,
which
may
include
regulatory fines and/or increased scrutiny by
government; and
reputational damage such as lost consumer
confidence and lower customer retention.
How we manage this risk
To ensure the security and resilience of our systems, the safeguarding of our confidential
information and the integrity of our information and databases, dedicated teams plan, test and
execute our continuity and security plans. This includes threat and vulnerability assessments
and the implementation of appropriate mitigation actions. Our security teams constantly
monitor our systems and are ready to intervene if an incident occurs. In the context of work-
from-home, there was also an acceleration of investment and initiatives related to data loss
protection.
We continuously upgrade our applications to better protect our systems and information. We
regularly monitor external trends in cyber security to ensure we are able to rapidly mitigate
known vulnerabilities.
We periodically benchmark our information security practices to assess areas of our cyber
security program that may require additional effort and to ensure we learn from industry leading
practices. We closely monitor external cyber-attacks and strive to continually learn from them
to improve our defences.
Our Information Technology Security Committee oversees information security initiatives and
ensures effective collaboration across teams. As part of our overall security program, we
provide employee information security awareness and training to enhance our ability to resist
cyber-attacks. The Enterprise Risk Committee oversees the establishment of our cyber
security strategy and monitors the progress of our mitigation action plans. Cyber security
awareness was continually provided to employees in addition to regular phishing tests to
strengthen our cyber defense.
In 2024, we increased our cyber insurance limit to continue to mitigate a portion of the financial
impact in the event of a major cyber security incident affecting our operations.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
71
Project and Change
Operational risk
Risk we are facing
To maintain our performance levels in a world of digitalization, we are required to regularly modernize and enhance our systems. Often significant
time and investment are required for accomplishing these projects. Any unplanned delays, unforeseen costs, or unsuccessful execution of such
projects could lead to a significant decline in service levels, impact employee morale negatively and reduce our competitiveness. There is no
assurance that we will succeed in meeting our objectives for these projects.
Potential impact
Our technology strategy may take too long to
execute or may not be adequate to maintain a
competitive advantage. The complexity and
interdependence
of
our
infrastructure
and
applications may lead to higher costs and more
errors. Implementation of new technology may
introduce more complexity in the interim prior to
simplification
after
decommissioning
older
systems. We could decide to abandon one or more
of our technology initiatives resulting in a material
write down.
How we manage this risk
Senior management provides careful oversight and ensures that proper funding and
resources are allocated to our key projects. Risk assessments and real-time internal audits
are regularly conducted to identify potential areas for remediation or the necessity for
additional controls. A dedicated committee ensuring proper focus is devoted to major
technology projects.
A series of successful deliverables for our major policy administration systems offer proofs of
our ability to deliver on this project and mitigates the risk of failure.
In 2024, we created a nation change management team in Canada to actively contribute
strategic projects by supporting the business during each phase of the change. This
dedicated team helps mitigate the risk of project failure.
Inability to contain fraud and abuse
Operational risk
Risk we are facing
As a P&C insurer, we may be subject to internal or external fraud. Our insureds may exaggerate claims for personal gain. Despite our efforts to
control fraud and abuse, our staff, systems, and processes may be unable to accurately detect and prevent internal or external fraud. An economic
downturn could increase pressure on individuals and result in increased fraud and abuse. The work-from-home context brings additional challenges
to mitigating this risk.
Potential impact
Fraud may result in unanticipated losses and a
negative impact on our reputation. Our written
premiums and profitability can be significantly
affected by regulatory regimes that limit our ability
to detect and defend against fraudulent claims and
fraud rings.
How we manage this risk
We have strong internal controls in place to prevent and detect potential internal fraud.
Internal and external audits are performed to verify that the controls are followed.
We have national investigative services and a number of investigative tools to help detect
and root out fictitious losses or injuries, staged accidents and material misrepresentation or
exaggeration of loss amounts or personal injury. We have multiple ways of detecting potential
fraud either through automated reports, adjuster referrals, and external alerts. In 2021, we
became one of the founding members of Équité Association in Canada. Through Équité,
members have access to an advanced network dedicated to detecting and preventing
insurance fraud and crime, including advanced analytics and countermeasures, investigative
services, intelligence education and engagement, and reporting on emerging threats and
trends.
Government authorities also have an incentive to help reduce fraud in the system and
maintain affordable insurance for consumers. Ontario Bill 15 – Fighting Fraud and Reducing
Automobile Insurance Rates Act is one example of government action that aims to reduce
auto insurance fraud.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
72
INTACT FINANCIAL CORPORATION
Social unrest risk
Insurance risk
Risk we are facing
Potential catalysts for social unrest include, but are not limited to, public health measure related to the pandemic, movements for social justice,
climate change inaction, economic downturn, labor shortage and supply chain issues could all spark social unrest. Geopolitical tension, including
the use of political warfare, could exacerbate the risk of social unrest. The speed of communication and social media could amplify this risk or
facilitate the spread across jurisdictions. The ensuing physical conflict and violence could result in property damage impacting our underwriting
results and operations.
Potential impact
Social unrest events in high-density areas could
result in material losses on our automobile and
property business.
Social unrest could also disrupt our operations and
affect the security of our employees.
How we manage this risk
We stress tested our exposures against a severe social unrest scenario across our
geographic locations. We concluded that we have sufficient capital and reinsurance to absorb
losses despite a material decline in underwriting results and lower regulatory capital levels
prior to management actions. A playbook has been developed to manage our operations in
a social unrest environment and a number of actions were identified to help mitigate the
impact of this risk on our Personal and Commercial lines.
While we have not experienced a material level of losses from social unrest (i.e. rioting and
vandalism), we closely monitor indicators to assess social unrest risk in our main jurisdictions
(Canada, US and UK) and identify potential areas of higher relative risk.
27.7 Other risk factors that may affect future results
Third-Party risk
The acceleration of digitalization has increased the reliance on third parties and increases the risk of disruption to our operations. The
work-from-home context has increased our reliance on critical utilities/communications infrastructures. Moreover, the economic
downturn increases supplier failure risk and adds pressure on supply chain quality of service and capacity. Our third parties may face
internal and external incidents that could compromise the confidentiality of our information and/or limit the service level. Widespread
power grid, internet or phone failure could limit our operations, impact our customer support and lead to substantial reputational
damages. Depending on the length of the failure, significant opportunity costs could also be incurred.
We view acquisitions as an accelerator of our corporate strategy. We pursue consolidation in the Canadian market and expansion in
foreign markets where we can deploy our expertise in data analytic, pricing, underwriting, claims management and multi-channel
management. Specialty lines is another key avenue of growth where we can leverage our expertise and leading-edge customer
experience. The main risks related to acquisitions include the following: inability to achieve expected synergy targets, improper
integration process, failure to properly account for external factors, cultural issues and poorly aligned values, particularly in
international jurisdictions, may hinder our ability to effectively integrate the acquired company.
Customer satisfaction risk
Our insurance products and services are ultimately distributed to individual consumers and businesses. From time to time, unsatisfied
customers, consumer advocacy groups or the media, may generate negative publicity related to our claims handling or underwriting
practices. Untimely or poor handling of such negative publicity may increase the impact of a situation and materially affect our
reputation and growth prospects. In addition, a lack of appropriate focus on customers’ needs and wants may threaten our ability to
meet customer expectations, resulting in low customer retention. There is also a risk of negative publicity related to the perception of
not providing affordable insurance. Social media could amplify the impact of a reputational issue and could result in further damage
to our reputation as well as impair our future growth prospects.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
73
Legal risk
We are a defendant in many claims relating to our insurance and other business operations. We may from time to time be subject to
a variety of legal actions, including lawsuits, regulatory examinations, investigations, audits and reassessments by various parties
including customers, suppliers, brokers, employees and government regulatory agencies and authorities, relating to our current and
past business operations. Plaintiffs may also continue to bring new types of legal claims against us. Current and future court decisions
and legislative or regulatory activity may increase our exposure to these types of claims. Multiparty or class action claims may present
additional exposure to substantial economic, non-economic or punitive damage awards. The loss of even one of these claims, if it
resulted in a significant damage award or a judicial ruling that was otherwise detrimental, could have a material adverse effect on our
results of operations and financial condition. Unfavourable claim rulings may render fair settlements more difficult to reach. We cannot
determine with any certainty what new theories of recovery may evolve or what their impact may be on our businesses.
Reinsurance risk
We use reinsurance to help manage our exposure to insurance risk, including major catastrophe events. The availability and cost of
reinsurance is subject to prevailing market conditions, both in terms of price and available capacity, which can affect our premium
volume, profitability and regulatory capital position. Worldwide catastrophe losses have an impact on the reinsurance market.
Reinsurance companies may exclude some coverage from the policies that we purchase from them or may alter the terms of such
policies from time to time. These gaps in reinsurance protection expose us to greater risks and greater potential losses and could
adversely affect our ability to write future business. Communicable disease exclusions are an example of protection that has been
added by most of our reinsurers. We may not be able to successfully mitigate risks through reinsurance arrangements, which could
cause us to reduce our premiums written in certain lines or could result in losses. In addition, the cost of reinsurance could increase
significantly year over year, impacting our profitability if we are unable to pass on these costs to consumers. Furthermore, a significant
decline in the availability of reinsurance could impact our premium volume, our profitability and our regulatory capital position.
People risk
Our success has been, and will continue to be, dependent on our ability to retain the services of key employees and to attract additional
qualified personnel in the future. In addition, a significant decline in employee morale could materially affect our operations including
an increase in the risk of human error or deliberate acts that harm the Company. The loss of the services of any of our key employees,
or the inability to identify, hire and retain other highly-qualified personnel in the future, could adversely affect the quality and profitability
of our business operations.
We have developed a focused recruiting strategy to aggressively market careers and opportunities at Intact. The strategy includes an
updated web site, focused external recruiting, campaigns, rebranding, and targeted advertising. It also includes partnering with four
universities on graduate recruiting as well as Commercial and Personal lines trainee program recruiting. Talent identification and
development programs have been implemented to retain and grow existing talent. We also have a comprehensive succession
planning program at various levels within the organization to ensure we are prepared for unplanned departures and retirements.
Furthermore, our employee engagement surveys continue to reveal a high level of engagement among employees. IFC was
recognized by multiple organizations as one of Canada’s best employers. We believe that a high level of employee engagement helps
mitigate some of the operational risks associated with people. However, there is no assurance that the Company will be successful
in retaining and motivating our key talent across the organization.
Labour shortages are present, competition for labour is increasing and candidates’ expectations are changing. In addition to the
above, a number of actions have been implemented to mitigate these trends: human resource restructurings, compensation reviews
and a deep dive to identify sectors experiencing challenges and issues and better understand the underlying rationale.
Employee development, onboarding and knowledge transfer can prove challenging in the work-from-home environment. A stretch in
resources and increased pace of some projects could lead to further employee fatigue, mental health issues, as well as loss of staff
through disability, extended leaves, early retirement and turnover. High levels of employee engagement, robust human resource
programs to support our employees and our return-to-office strategy helps mitigate this risk.
The risk of business interruption to our operations
We may experience an abrupt interruption of activities caused by unforeseeable and/or catastrophe events, an example being a global
pandemic or a large-scale cyber-attack. Our service levels may decline materially resulting in negative financial and reputational
consequences. Losses can relate to property, financial assets, trading positions and key personnel. If our business continuity plans
cannot be put into action or do not take such events into account, losses may increase further.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
74
INTACT FINANCIAL CORPORATION
We continuously monitor world events to enable us to pro-actively adapt our response plan. In order to maintain the integrity and
continuity of our operations in the event of a crisis, we have developed personalized alert and mobilization procedures as well as
communication protocols. For example, emergency action plans, business continuity plans, business recovery plans, major health
crisis plans, building evacuation plans and crisis communication plans have all been defined and are tested on an ongoing basis. This
process is supported by a crisis management structure adapted to our organization and to the type of events we may have to manage.
Credit downgrade risk
Independent third-party rating agencies assess our ability to honour our financial obligations (the “senior unsecured debt rating”) and
our insurance subsidiaries’ ability to meet their ongoing policyholder obligations (the “financial strength rating”). See Section 24.6 –
Ratings for more details.
The rating agencies periodically evaluate us to confirm that we continue to meet the criteria of the ratings previously assigned to us.
We may not be in a position to maintain either the issuer credit ratings or the financial strength ratings we have received from the
rating agencies. An issuer credit rating downgrade could result in materially higher borrowing costs. A financial strength rating
downgrade could result in a reduction in the number of insurance contracts we write and in a significant loss of business; such business
could move to other competitors with higher ratings, thus causing premiums and earnings to decrease.
This is more applicable to our Commercial insurance where clients place a higher emphasis on such ratings. Credit downgrades may
affect our ability to raise capital or may result in an increase in the cost of raising capital with negative implications for shareholders
and other stakeholders.
Limit on dividend and capital distribution risk
As a holding company, IFC is a legal entity and is separate and distinct from its operating subsidiaries, most of which are regulated
insurance companies. While no regulatory approval is required for dividend payments from the regulated insurance companies, notice
to OSFI is required together with pro forma capital calculations showing internal target capital levels are maintained both before and
after such dividends are paid out. Our regulated subsidiaries in the US and UK are also subject to limitations on capital distributions
as set out in applicable regulations. In addition, for competitive reasons, our insurance subsidiaries maintain financial strength ratings
which require us to maintain minimum capital levels in our insurance subsidiaries. These regulations and ratings targets limit the ability
of our insurance subsidiaries to pay unlimited dividends or invest all of their capital in other ways. In certain stress scenarios limitations
on our subsidiaries’ ability to pay dividends to IFC could have a material adverse effect on our ability to pay shareholder dividends
and may result in a material decline in the price of securities we have issued.
Distribution risk
Distribution risk is the risk related to the distribution of our P&C insurance products. It includes the inherent risk of dealing with
independent distributors, the risk related to new market entrants and the risk associated with our multiple distribution channel strategy.
We may also face the risk that one of our channels or business models would not be sustainable in a specific market or context. From
time to time we issue loans or take equity participation in certain brokers and consequently, we expose ourselves to other risks
including financial risk and regulatory risk. For various reasons, the broker channel has been in a consolidation mode for the last few
years and we believe that this situation will continue. The acquisition of brokers by others or even by other insurers may impact our
relationship with some of them and harm our ability to grow our business. In order to maintain strong relationships with brokers, each
relationship is managed by officers in each of the main regions in which we operate. To mitigate the financial risk arising from loans
to brokers we generally receive guarantees and use standard agreements which contain general security and oversight clauses. The
Board of Directors participates in this oversight process by reviewing these activities periodically.
Employee defined benefit pension plan risk
We sponsor defined benefit pension plans in several jurisdictions, including Canada and the U.K. These plans are exposed to financial
market risk, credit risk, and longevity risk. In 2023, we completed a UK pension buy-in transaction, a significant step in de-risking the
UK pension plans. See Section 23 – Employee future benefit programs and Note 29 in our Consolidated financial statements.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
75
Artificial Intelligence risk
The recent developments in generative AI represent increasing risks. This includes risks related to AI safety, ethics, privacy or
exploitation. AI could have effects on several of our risks including cyber security, where AI may increase the likelihood and impact of
cyber-attacks as hackers could exploit AI algorithms. In competition and disruption, there is prospect risk of AI algorithms creating risk
profiles quickly and reducing the cycle times for completing the purchase of an insurance policy. It also presents the risk of smaller
insurance carriers growing rapidly with the enhanced technology. There are government and regulatory risks as they could make it
onerous for us to implement new AI technologies or tools. Increases in fraud could become present as AI could be used to make
fraudulent claims or facilitate fraud in the claims cycle. Furthermore, there is an increased likelihood of system failures or errors arising
from AI systems implemented to automate and streamline processes and increase operational efficiency.
Geopolitical risk
We define geopolitical risk as the risk associated with the tensions between states, conflicts, wars and terrorist acts that affect the
normal and peaceful course of international relations. The risk includes political polarization, nationalism and populism. Geopolitical
risk captures both the risk that these events materialize, and the new risks associated with an escalation of existing events. In the
context of the current global political climate, the top geopolitical risk themes are as follows: U.S.-China strategic competition, Russia-
Ukraine, and Middle East regional war. The key risks are higher inflation, financial market turmoil, cyber-attacks, supply chain
disruption, slower growth and recession.
With the recent changes in the U.S. Government, the threat of protectionism is increasing. The potential impacts of protectionism
include an increase in the risk of stagflation, turbulence in the financial markets and a weakening of the Canadian Dollar against other
currencies. Supply-chain inflation is likely to increase which would reduce underwriting income. Recessionary conditions could also
lead to lower overall demand for insurance products negatively impacting insurance revenue.
27.8 Own Risk and Solvency Assessment
Since 2014, we have conducted an Own Risk and Solvency Assessments (“ORSA”) for Intact Financial Corporation at least annually.
ORSA encompasses processes to identify, assess, monitor, and manage the risks we take in conducting our business. ORSA also
covers the determination of our capital needs and solvency position. ORSA is an integral part of the implementation of our Enterprise
Risk Management Policy. The ORSA process is well integrated into our operations and influences the definition of our corporate risk
tolerance, the target levels of capital by jurisdiction and in aggregate, and underwriting profit targets by line of business. See
Section 24 – Capital management for details.
In 2024, our annual ORSA Process revealed that the financial resources of our insurance subsidiaries are sufficient to meet
policyholder obligations after adverse situations at a confidence level of 99.5% Value-at-Risk (VaR) over a one-year time horizon. Our
risk profile is more weighted to insurance risk than financial risk with operational risk accounting for a small portion of overall internal
capital requirements. Our risk profile remains well diversified across business lines and geographies.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
76
INTACT FINANCIAL CORPORATION
Section 28 - Financial risk
28.1 Exposure to currency risk
The table below presents the level of foreign currency exposure on our consolidated net assets, after hedging which aims at
protecting against fluctuations in foreign exchange rates.
Table 28.1 – Foreign currency exposure
As at December 31,
2024
2023
All amounts in CAD
USD
GBP
EUR
USD
GBP
EUR
Net assets of foreign operations
3,075
4,519
527
2,556
4,267
515
Foreign-currency derivatives
-
(1,959)
(253)
-
(1,403)
(249)
Net exposure from investments1
17
-
-
39
-
-
Other net assets in foreign currency
178
(94)
-
54
(38)
-
Total net currency exposure
3,270
2,466
274
2,649
2,826
266
Common shareholders’ equity
16,529
14,571
Net exposure ratio (as a % of common shareholders’ equity)
20%
15%
2%
18%
19%
2%
1 Supporting Canadian operations.
2024 vs 2023
Our net currency exposure to the GBP decreased from last year, primarily due to the implementation of additional GBP book value
hedges, which more than offset the 7% strengthening of the UK pound sterling. Additionally, the 9% appreciation of the USD,
coupled with the year-over-year increase in USD-denominated net assets, resulted in a higher USD exposure ratio.
Net investment hedges
We protect our book value from currency risk arising from our ownership of non-Canadian entities by hedging foreign currency. The
hedging is done using foreign currency forward contracts and debt in foreign currency as per our internal risk appetite, which we aim
to keep below 40% of total foreign currency.
Operational / cash flow hedging
As part of regular operations, we can from time to time enter into derivative contracts to hedge expected future cash flows in different
currencies to protect against exchange rate volatility.
See Note 7 – Derivative financial instruments and Note 9.1 b) – Exposure to currency risk to the Consolidated financial
statements for more details.
28.2 Foreign currency rates
We operate principally in the Canadian, UK and US P&C insurance markets. We are exposed to foreign currency impacts from
translating foreign currency denominated transactions to Canadian dollars.
Table 28.2 – Key exchange rates used
As at
Average rates for the periods
Dec. 31, 2024
Dec. 31, 2023
Q4-2024
Q4-2023
2024
2023
USD vs CAD
1.438
1.325
1.399
1.362
1.370
1.350
GBP vs CAD
1.800
1.689
1.792
1.690
1.751
1.679
EUR vs CAD
1.489
1.463
1.492
1.465
1.482
1.460
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
77
28.3 Sensitivity analysis to market risk
The below sensitivity analysis was prepared using the following assumptions: 1) shifts in the yield curve are parallel; 2) interest rates,
equity prices, property prices and foreign currency move independently; 3) credit, liquidity, spread and basis risks have not been
considered; and 4) impact on our pension plans has been considered. Actual results can differ materially from these estimates for a
variety of reasons and therefore, these sensitivities should be considered as directional estimates.
Table 28.3 – Sensitivity analysis to market risk (after tax)
As at December 31, 2024
Net
income
OCI
Total
By region
BVPS
Canada
UK&I
US
Equity price risk
Common share prices (10% decrease)1
(284)
(69)
(1.98)
61%
15%
24%
Preferred share prices (5% decrease)
(20)
(41)
(0.34)
100%
-
-
Property price risk (10% decrease)
(43)
-
(0.24)
-
100%
-
Interest rate risk (100 basis point increase)2
Debt securities 3,4
(328)
(419)
(4.19)
55%
30%
15%
Net liability for incurred claims5
380
-
2.13
58%
33%
9%
Defined benefit pension plan obligation, net of related debt
securities and annuity buy-in insurance
-
70
0.39
100%
-
-
Currency risk6 (strengthening of CAD by 10% vs all currencies)
Net assets of foreign operations in:
USD
(12)
(281)
(1.64)
n/a
n/a
n/a
GBP
7
(233)
(1.27)
n/a
n/a
n/a
As at December 31, 2023
Net
Total
By region
income
OCI
BVPS
Canada
UK&I
US
Equity price risk
Common share prices (10% decrease)1
(158)
(66)
(1.26)
62%
13%
25%
Preferred share prices (5% decrease)
(14)
(36)
(0.28)
100%
-
-
Property price risk (10% decrease)
(35)
-
(0.20)
-
100%
-
Interest rate risk (100 basis point increase)2
Debt securities 3,4
(301)
(424)
(4.07)
59%
27%
14%
Net liability for incurred claims5
350
-
1.96
58%
33%
9%
Defined benefit pension plan obligation, net of related debt
securities and annuity buy-in insurance
-
84
0.47
100%
-
-
Currency risk6 (strengthening of CAD by 10% vs all currencies)
Net assets of foreign operations in:
USD
(5)
(234)
(1.34)
n/a
n/a
n/a
GBP
3
(286)
(1.59)
n/a
n/a
n/a
1 Includes the impact of common shares (net of any equity hedges).
2 Excludes the impact of credit spreads.
3 Excludes the impact of debt securities related to the defined benefit pension plan.
4 Interest rate sensitivity is based on the debt securities portfolio, which comprises of roughly 42% in government-related securities and 58% in corporate-related securities.
5 Represents the net liability for incurred claims before net payables and claims reported under the GMM, including the impact of a +0.5% change in the discount rate of
net periodic payment orders.
6 After giving effect to currency forwards.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
78
INTACT FINANCIAL CORPORATION
ADDITIONAL INFORMATION
Section 29 - 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). However, we believe that similar measures and ratios are widely used in the
industry and provide investors, financial analysts, rating agencies and other stakeholders with a better understanding of our business
activity and financial results over time, in line with how management analyzes performance.
The sum of all operating and non-operating components reconcile in total to Net income, as presented in our Consolidated financial
statements. The below key performance indicators reflect what we use to evaluate our performance consistently over time:
Table 29.1 – Non-GAAP and GAAP key performance indicators
Non-GAAP measures
Closest GAAP measures
Reconciliation
to GAAP
MD&A captions
2024
2023
Financial Statement captions
2024
2023
Operating net underwriting revenue
21,658
20,365
Insurance revenue
26,523
25,507
Table 29.3
Expense from reinsurance
contracts
(2,579)
(3,056)
Total operating net claims &
expenses
19,969
19,182
Insurance service expense
(22,418)
(22,584)
Table 29.3
Income from reinsurance
contracts
1,660
2,442
Underwriting income
1,689
1,183
Insurance service result
3,186
2,309
Table 29.3
Operating net investment income
1,559
1,346
Net investment income
1,559
1,346
N/A-
identical
Distribution income
524
467 Share of profit from investments
in associates and joint ventures
89
96
Table 29.7
Total finance costs
(238)
(235)
Other finance costs
(222)
(222)
Table 29.7
Other operating income (expense)
(176)
(157)
Other income and expense
(879)
(627)
Table 29.7
PTOI
3,358
2,604 Income before income taxes
2,878
1,804
Table 29.4
NOI attributable to common
shareholders
2,576
2,014
Net income attributable to
shareholders
2,297
1,316
Table 29.5
NOIPS
14.43
11.43
EPS - diluted
12.36
6.99
Table 29.11
Non-GAAP financial measures and Non-GAAP ratios used in this MD&A and other Company’s financial reports include measures
related to:
Underwriting profitability and premiums volume (see Section 29.1)
Other operating results (see Section 29.2)
Consolidated operating performance (see Section 29.3)
Non-operating results (see Section 29.4)
Relative performance KPIs (see Section 29.5)
Consolidated performance KPIs (see Section 29.6)
Equity & Financial strength (see Section 29.7)
Non-GAAP financial measures and Non-GAAP ratios are marked with an asterisk* throughout the following section.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
79
29.1 Underwriting profitability and premiums volume
Operating DPW, Operating DPW growth, Operating net underwriting revenue and Operating net underwriting growth
Our top line consolidated performance is measured based on operating direct premiums written (Operating DPW), a
supplementary financial measure not presented in the Consolidated financial statements. Operating DPW represents the total
amount of premiums for new and renewal policies written during the reporting period, excluding industry pools, fronting and exited
lines. Our operating DPW growth is measured based on the change in operating DPW year-over-year and represents the
growth or decline in our top line measure.
Operating net underwriting revenue*, a Non-GAAP financial measure, is comprised of earned premiums net of reinsurance
contracts (previously ‘Operating NEP’) and other revenues directly related to our insurance activities including fees collected from
policyholders in connection with the costs incurred for the Company’s yearly billing plans and fees received for the administration
of other policies. The closest GAAP measure is Insurance revenue, as reported under IFRS, net of expense from reinsurance
contracts, as reported under IFRS.
Our operating net underwriting revenue growth* is measured based on the change in operating net underwriting revenue,
which is a Non-GAAP ratio. This represents the growth or decline in operating net underwriting revenue year-over-year (as defined
above).
For our non-Canadian operating segments, growth is also measured in constant currency, which is calculated by applying the
respective exchange rates in effect for the current year to the previous year. We believe that this enhances the analysis of our
financial performance with comparative periods as it excludes the impact of foreign currency fluctuations.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
80
INTACT FINANCIAL CORPORATION
Underwriting income (loss) and combined ratio
Our underwriting performance* is measured based on the combined ratio*, claims ratio* (including underlying current year loss
ratio*, CAT loss ratio* and PYD ratio*) and expense ratio* (including commissions ratio*, general expenses ratio* and premium
taxes ratio*), which are Non-GAAP ratios.
Our underwriting performance is consistently managed and measured on an operating basis, in line with how we report NOI and
NOIPS. We believe that this basis provides investors and financial analysts with a valuable measure of our ongoing underwriting
performance in terms of underwriting discipline and profitability.
While combined ratio and components of underwriting performance are commonly used across the industry, they 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. The Combined ratio* is presented on an undiscounted basis which excludes the impact of the discount build on
claims liabilities, and it represents the sum of the Claims ratio* and Expense ratio*, as defined hereafter. A combined ratio below
100% indicates a profitable underwriting result. A combined ratio over 100% indicates an unprofitable underwriting result.
Operating net claims* is a Non-GAAP operating financial measure comprised of undiscounted claims related to our underwriting
activities, including losses on onerous contracts, net of reinsurance. The Claims ratio* represents Operating net claims divided
by Operating net underwriting revenue. To provide more insight into our underlying current year performance, we further analyze
Operating net claims as follows in our MD&A and other financial reports:
Operating net claims excluding current year CAT losses and PYD* are used in the calculation of the Underlying
current year loss ratio. CAT losses and PYD are not predictable and subject to volatility, and as such, excluding them
provides clearer insight into our analysis of underlying current year performance. The Underlying current year loss
ratio* represents Operating net claims excluding current year CAT losses and PYD divided by Operating net underwriting
revenue.
Net current year CAT losses*, including reinstatement premiums, are used in the calculation of the CAT loss ratio.
Reported CAT losses can either be weather-related or not weather-related and exclude those from exited lines. A CAT
loss represents any one claim, or group of claims, equal to or greater than a predetermined CAT threshold, before
reinsurance, related to a single event for the current accident year (on an undiscounted basis). The CAT loss ratio*
represents Net current year CAT losses divided by Operating net underwriting revenue.
Prior year claims development (PYD)* is used in the calculation of the PYD ratio. PYD represents the change in total
prior year claims liabilities during the period, net of reinsurance, excluding the PYD related to exited lines. The PYD
ratio* represents Prior year claims development divided by Operating net underwriting revenue.
Operating net underwriting expenses* is a Non-GAAP operating financial measure comprised of commissions (including
regular and variable commissions), premium taxes and general expenses related to our underwriting activities, as well as the
amortization of our deferred allocated acquisition costs. The Expense ratio* represents Operating net underwriting expenses
divided by Operating net underwriting revenue. The Commissions ratio*, General expense ratio* and Premium taxes ratio* are
also calculated by dividing the respective financial measure by Operating net underwriting revenue.
The closest GAAP measure for Operating net claims* and Operating net underwriting expenses* is Insurance service expense,
as reported under IFRS, net of income from reinsurance contracts, as reported under IFRS.
UK&I pro-forma underwriting results* are supplementary financial measures which represents our Underwriting performance*
for the UK&I segment, adjusted to exclude UK Personal lines operations (home and pet) for all of 2023.
A reconciliation of our underwriting-related Non-GAAP financial measures to their closest comparable GAAP measures can
be found on the following pages, in Table 29.2 and Table 29.3.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
81
Table 29.2 – Reconciliation of underwriting results on a MD&A basis with the Consolidated financial statements (quarterly)
Reconciling items in the table above:
Financial statements
F/S
1
2
3
4
5
6
7
8
9
Total
MD&A
MD&A
Quarter ended December 31, 2024
Insurance revenue
6,767
(642)
(326)
(104)
(38)
2
(1,108)
5,659
Operating net underwriting revenue
Insurance service expense
(5,055)
133
338
(161)
8
(61)
(230)
97
38
(2)
160
(4,895)
Sum of: Operating net claims ($2,994
million) and Operating net underwriting
expenses ($1,901 million)
Expense from reinsurance
contracts
(642)
642
642
-
n/a
Income from reinsurance
contracts
133
(133)
(133)
-
n/a
Insurance service result
1,203
-
12
(161)
8
(61)
(230)
(7)
-
-
(439)
764
Underwriting income (loss)
Quarter ended December 31, 2023
Insurance revenue
6,525
(586)
(346)
(311)
(63)
40
(1,266)
5,259
Operating net underwriting revenue
Insurance service expense
(5,540)
388
504
(122)
5
(40)
(270)
310
63
(40)
798
(4,742)
Sum of: Operating net claims ($3,027
million) and Operating net underwriting
expenses ($1,715 million)
Expense from reinsurance
contracts
(586)
586
586
-
n/a
Income from reinsurance
contracts
388
(388)
(388)
-
n/a
Insurance service result
787
-
158
(122)
5
(40)
(270)
(1)
-
-
(270)
517
Underwriting income (loss)
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 operating income (expense))
6
Adjustment to exclude discount build on claims liabilities (treated as non-operating)
7
Adjustment to exclude Net insurance service results from claims acquired in a business combination (treated as non-operating)
8
Adjustment to reclassify Assumed (ceded) commissions and premium adjustments
9
Adjustment to reclassify Net insurance revenue from retroactive reinsurance contracts
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
82
INTACT FINANCIAL CORPORATION
Table 29.3 – Reconciliation of underwriting results on a MD&A basis with the Consolidated financial statements (for the year)
Reconciling items in the table above:
Financial statements
F/S
1
2
3
4
5
6
7
8
9
Total
MD&A
MD&A
Twelve-month period ended December 31, 2024
Insurance revenue
26,523
(2,579)
(1,395)
(842)
(95)
46
(4,865)
21,658
Operating net underwriting revenue
Insurance service expense
(22,418)
1,660
1,503
(553)
32
(203)
(925)
886
95
(46)
2,449
(19,969)
Sum of: Operating net claims
($12,685 million) and Operating net
underwriting expenses ($7,284 million)
Expense from reinsurance
contracts
(2,579)
2,579
2,579
-
n/a
Income from reinsurance
contracts
1,660
(1,660)
(1,660)
-
n/a
Insurance service result
3,186
-
108
(553)
32
(203)
(925)
44
-
-
(1,497)
1,689
Underwriting income (loss)
Twelve-month period ended December 31, 2023
Insurance revenue
25,507
(3,056)
(562)
(1,418)
(244)
138
(5,142)
20,365
Operating net underwriting revenue
Insurance service expense
(22,584)
2,442
875
(417)
22
(151)
(948)
1,473
244
(138)
3,402
(19,182)
Sum of: Operating net claims ($12,374
million) and Operating net underwriting
expenses ($6,808 million)
Expense from reinsurance
contracts
(3,056)
3,056
3,056
-
n/a
Income from reinsurance
contracts
2,442
(2,442)
(2,442)
-
n/a
Insurance service result
2,309
-
313
(417)
22
(151)
(948)
55
-
-
(1,126)
1,183
Underwriting income (loss)
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 operating income (expense))
6
Adjustment to exclude discount build on claims liabilities (treated as non-operating)
7
Adjustment to exclude Net insurance service results from claims acquired in a business combination (treated as non-operating)
8
Adjustment to reclassify Assumed (ceded) commissions and premium adjustments
9
Adjustment to reclassify Net insurance revenue from retroactive reinsurance contracts
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
83
29.2 Other operating results
Other operating results
Operating net investment income, which represents Net investment income as presented in the financial statements.
Distribution income* is an operating measure used to report the performance of our distribution channel, which includes
operating income before interest, taxes and amortization from our consolidated brokers, broker associates, MGAs and other
supply chain related businesses. Other income and expense, as reported under IFRS (for our consolidated entities) as well
as our Share of profit from investments in associates and joint ventures (for those that we do not consolidate) under IFRS
are the closest GAAP measures.
Total finance costs* includes all finance costs, including those from our broker associates, which are accounted for using
the equity method under IFRS. Other finance costs, as reported under IFRS, is the closest GAAP measure.
Other operating income (expense)* includes general corporate expenses related to the operation of the group and our
public company status, consolidation adjustments, and other operating items. Other income and expense, as reported under
IFRS, is the closest GAAP measure.
For a reconciliation of the above Non-GAAP financial measures to their closest comparable GAAP measures, see Table 29.6
and Table 29.7.
29.3 Consolidated operating performance
PTOI
Pre-tax operating income (PTOI)*, which is used in the calculation of NOI, represents the Income before income taxes (closest
GAAP measure), including the Share of income tax expense (benefit) of broker associates (accounted for using the equity method
– net of tax – under IFRS), and excluding the pre-tax impact of Non-operating results*. Income before income taxes, as reported
under IFRS, is the closest GAAP measure.
PTOI on a segment basis, which is determined in the same manner as PTOI, allows for a better understanding of our business
results. See Table 4.1 for the details of PTOI by component and segment.
Table 29.4 – Reconciliation of PTOI to Income before income taxes
Q4-2024
Q4-2023
2024
2023
Income before income taxes, as reported under IFRS
838
736
2,878
1,804
Add: share of income tax expense of broker associates
8
7
33
35
Remove: Pre-tax non-operating results (Table 29.8)
330
152
447
765
PTOI
1,176
895
3,358
2,604
Add: operating income tax benefit (expense)
(267)
(147)
(679)
(491)
Remove: net operating income attributable to NCI
-
(7)
(13)
(15)
NOI attributable to shareholders (Table 29.5)
909
741
2,666
2,098
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
84
INTACT FINANCIAL CORPORATION
NOI attributable to common shareholders, NOIPS and OROE
Our operating performance is measured based on NOIPS* and OROE*, which are Non-GAAP ratios. These ratios are
calculated using Non-GAAP financial measures that exclude elements that are not representative of our operating performance
(referred to as “Non-operating results*”). Non-operating results include elements that arise mostly from changes in market
conditions, from acquisition-related items or special items, or that are not part of our normal activities. We believe that analysing
our consolidated performance excluding these elements reflects more accurately our underlying business performance over time.
We note that investors, financial analysts, rating agencies and media organizations use NOIPS, OROE and other components of
operating income (such as underwriting income, operating net investment income and distribution income) to evaluate and report
our financial performance and make investment decisions and recommendations. These measures are widely used as they
represent a reliable, representative and consistent measure of our financial performance over time.
NOIPS is also used in incentive compensation as one of our financial objectives is to grow NOIPS by 10% yearly over time.
Net operating income (NOI) attributable to common shareholders* represents the Net income attributable to shareholders
(closest GAAP measure), excluding the after-tax impact of Non-operating results*, net of net income (loss) attributable to non-
controlling interests (non-operating component), preferred share dividends and other equity distribution.
NOIPS* and OROE* represent NOI attributable to common shareholders divided by weighted-average diluted number of common
shares or adjusted average common shareholders’ equity excluding AOCI*, respectively.
Table 29.5 – Reconciliation of NOI, NOIPS, OROE to Net income attributable to shareholders
Q4-2024
Q4-2023
2024
2023
Net income attributable to shareholders, as reported under IFRS
667
524
2,297
1,316
Remove: pre-tax non-operating results (Table 29.8)
330
152
447
765
Remove: non-operating tax expense (benefit) (Table 29.8)
(88)
65
(78)
17
NOI attributable to shareholders
909
741
2,666
2,098
Remove: preferred share dividends and other equity distribution
(28)
(28)
(90)
(84)
NOI attributable to common shareholders
881
713
2,576
2,014
Divided by weighted-average diluted number of common shares (in millions)
(Table 29.11)
178.6
178.3
178.6
176.2
NOIPS (in dollars)
4.93
4.00
14.43
11.43
NOI attributable to common shareholders for the last 12 months
2,576
2,014
Adjusted average common shareholders’ equity, excluding AOCI (Table 29.13)
15,619
14,518
OROE for the last 12 months
16.5%
13.9%
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
85
Table 29.6 – Reconciliation of consolidated results on a MD&A basis with the Consolidated financial statements (quarterly)
MD&A captions
Pre-tax
As presented in the Financial
statements
Distribution
income
Total
finance
costs
Other
operating
income
(expense)
Operating
net
investment
income
Total
income
taxes
Non-
operating
results
Underwriting
income (loss)
Total
F/S
caption
For the quarter ended December 31, 2024
Insurance service result
81
-
(20)
-
-
217
925
1,203
Net investment income
-
-
-
398
-
-
-
398
Net gains (losses) on investment
portfolio
-
-
-
-
-
(177)
-
(177)
Net insurance financial result
-
-
-
-
-
(199)
-
(199)
Share of profits from investments
in associates and joint ventures
44
(4)
-
-
(8)
(10)
-
22
Other net gains (losses)
-
-
-
-
-
44
-
44
Other income and expense
(2)
-
(29)
-
-
(78)
(161)
(270)
Other finance costs
-
(56)
-
-
-
-
-
(56)
Acquisition, integration and
restructuring costs
-
-
-
-
-
(127)
-
(127)
Income tax benefit (expense)
-
-
-
-
(171)
-
-
(171)
Total, as reported in MD&A
123
(60)
(49)
398
(179)
(330)
764
For the quarter ended December 31, 2023
Insurance service result
78
-
(38)
-
-
108
639
787
Net investment income
-
-
-
376
-
-
-
376
Net gains (losses) on investment
portfolio
-
-
-
-
-
532
-
532
Net insurance financial result
-
-
-
-
-
(573)
-
(573)
Share of profits from investments in
associates and joint ventures
38
(3)
1
-
(7)
(7)
-
22
Other net gains (losses)
-
-
-
-
-
22
-
22
Other income and expense
(7)
-
(8)
-
-
(52)
(122)
(189)
Other finance costs
-
(59)
-
-
-
-
-
(59)
Acquisition, integration and
restructuring costs
-
-
-
-
-
(182)
-
(182)
Income tax benefit (expense)
-
-
-
-
(205)
-
-
(205)
Total, as reported in MD&A
109
(62)
(45)
376
(212)
(152)
517
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
86
INTACT FINANCIAL CORPORATION
Table 29.7 – Reconciliation of consolidated results on a MD&A basis with the Consolidated financial statements (for the year)
MD&A captions
Pre-tax
As presented in the Financial
statements
Distribution
income
Total
finance
costs
Other
operating
income
(expense)
Operating
net
investment
income
Total
income
taxes
Non-
operating
results
Underwriting
income (loss)
Total
F/S
caption
For the twelve-month period ended December 31, 2024
Insurance service result
180
-
23
-
-
741
2,242
3,186
Net investment income
-
-
-
1,559
-
-
-
1,559
Net gains (losses) on investment
portfolio
-
-
-
-
-
148
-
148
Net insurance financial result
-
-
-
-
-
(899)
-
(899)
Share of profits from investments
in associates and joint ventures
165
(16)
-
-
(33)
(27)
-
89
Other net gains (losses)
-
-
-
-
-
303
-
303
Other income and expense
179
-
(199)
-
-
(306)
(553)
(879)
Other finance costs
-
(222)
-
-
-
-
-
(222)
Acquisition, integration and
restructuring costs
-
-
-
-
-
(407)
-
(407)
Income tax benefit (expense)
-
-
-
-
(568)
-
-
(568)
Total, as reported in MD&A
524
(238)
(176)
1,559
(601)
(447)
1,689
For the twelve-month period ended December 31, 2023
Insurance service result
149
-
2
-
-
558
1,600
2,309
Net investment income
-
-
-
1,346
-
-
-
1,346
Net gains (losses) on investment
portfolio
-
-
-
-
-
249
-
249
Net insurance financial result
-
-
-
-
-
(894)
-
(894)
Share of profits from investments in
associates and joint ventures
167
(13)
-
-
(35)
(23)
-
96
Other net gains (losses)
-
-
-
-
-
50
-
50
Other income and expense
151
-
(159)
-
-
(202)
(417)
(627)
Other finance costs
-
(222)
-
-
-
-
-
(222)
Acquisition, integration and
restructuring costs
-
-
-
-
-
(503)
-
(503)
Income tax benefit (expense)
-
-
-
-
(473)
-
-
(473)
Total, as reported in MD&A
467
(235)
(157)
1,346
(508)
(765)
1,183
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
87
29.4 Non-operating results
Non-operating results
Non-operating results* include elements that arise mostly from changes in market conditions, from acquisition-related items or that
are not part of our normal activities. The following table provides the breakdown of non-operating results between acquisition-related
non-operating results as well as other non-operating results, showing the pre-tax and after-tax amount by line item. Under IFRS,
Insurance service result, Net gains (losses) on investment portfolio, Net insurance financial result, Other net gains (losses), as well
as Acquisition, integration and restructuring costs are the closest GAAP measures.
Table 29.8 – Acquisition-related gains (losses) and other non-operating results
Q4-2024
Q4-2023
Pre-tax
After-tax
Pre-tax
After-tax
Amortization of acquired intangible assets
(81)
(62)
(74)
(55)
Acquisition and integration costs
(59)
(44)
(86)
(66)
Tax adjustment on acquisition-related items
-
(1)
-
(2)
Net result from claims acquired in a business combination
(1)
(1)
(1)
-
Acquisition-related non-operating results
(141)
(108)
(161)
(123)
Net gains (losses) on investment portfolio excluding Net gain (loss) on
currency derivative economic hedges (acquisitions)
(177)
(138)
532
395
MYA and FX on claims liabilities
16
12
(354)
(264)
Discount build on claims liabilities
230
173
270
201
Net unwind of discount on claims liabilities
(207)
(155)
(217)
(162)
Non-operating pension expense
(14)
(11)
9
7
Other net gains (losses)
44
35
22
18
Income (loss) from exited lines
(12)
(9)
(158)
(122)
Restructuring and other non-operating costs
(69)
(41)
(95)
(167)
Other non-operating results
(189)
(134)
9
(94)
Non-operating results
(330)
(242)
(152)
(217)
2024
2023
Pre-tax
After-tax
Pre-tax
After-tax
Amortization of acquired intangible assets
(306)
(233)
(270)
(204)
Acquisition and integration costs
(230)
(172)
(255)
(193)
Tax adjustment on acquisition-related items
-
(5)
-
(6)
Net result from claims acquired in a business combination
(4)
(3)
(3)
(2)
Acquisition-related non-operating results
(540)
(413)
(528)
(405)
Net gains (losses) on investment portfolio excluding Net gain (loss) on
currency derivative economic hedges (acquisitions)
148
112
249
178
MYA and FX on claims liabilities
(56)
(40)
(62)
(44)
Discount build on claims liabilities
925
692
948
710
Net unwind of discount on claims liabilities
(883)
(660)
(884)
(663)
Non-operating pension expense
(53)
(42)
28
22
Other net gains (losses)
303
249
50
46
Income (loss) from exited lines
(108)
(81)
(313)
(244)
Restructuring and other non-operating costs
(183)
(186)
(253)
(382)
Other non-operating results
93
44
(237)
(377)
Non-operating results
(447)
(369)
(765)
(782)
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
88
INTACT FINANCIAL CORPORATION
Non-operating results are comprised of the following items:
Net gains (losses) on investment portfolio arise mostly from changes in market conditions and investment decisions.
MYA and FX on claims liabilities arises mostly from movements in interest rates and in foreign currency exchange rates,
which impact our claims liabilities.
Non-operating pension expense for our Canadian pension plans is the difference between the total IAS 19 pension expense
and the operating pension expense calculated using the expected return on assets. For our UK pension plans, the non-
operating pension experience represents the net of the asset return on the DB pension plans assets and the administrative
expenses for these plans.
Acquisition and integration costs arise following a strategic action and are non-recurring & non-underwriting related. These
include severances, retention bonuses, system integration, the initial net impact of a reinsurance coverage for the purpose
of an acquisition, as well as changes in the fair value of the contingent considerations.
Restructuring and other costs include non-recurring reorganization costs not related to an acquisition, such as impairment of
IT systems related to our exited lines businesses and expenses related to the implementation of significant new accounting
standards.
Other net gains (losses) include the gains (losses) on acquisition and sale of businesses as well as unrealized gains (losses)
related to certain venture investments remeasured at fair value or our distribution network.
Income (loss) from exited lines includes the underwriting results from exited lines.
Net result from claims acquired in a business combination is a result of IFRS 17 and applies to all claims from the RSA
acquisition in 2021. These will continue to be treated the same as other claims, in line with how we manage them, and the
net impact of applying the GMM under IFRS 17 to these claims will be reported separately, rather than classifying it within
our liabilities for incurred claims.
Discount build of claims liabilities brings a claim to its present value, using yield curves based on risk-free rates adjusted for
an illiquidity premium. Discount build is favourable and mostly benefits the current accident year.
Net unwind of discount on claims liabilities represents the passage of time of the effect of the discounting of our claims
liabilities. Discount unwind is unfavourable and mostly impacts the prior accident year.
Table 29.9 – Reconciliation of MYA and FX on claims liabilities and Net unwind of discount on claims liabilities to Net insurance financial result
Q4-2024
Q4-2023
2024
2023
Net insurance financial result, as reported under IFRS
(199)
(573)
(899)
(894)
Remove: Net insurance financial result from claims acquired in a
business combination
8
2
(40)
(52)
MYA and FX on claims liabilities and Net unwind of discount on
claims liabilities
(191)
(571)
(939)
(946)
MYA and FX on claims liabilities
16
(354)
(56)
(62)
Net unwind of discount on claims liabilities
(207)
(217)
(883)
(884)
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
89
29.5 Relative performance KPIs
Adjusted net income attributable to common shareholders, AEPS and AROE
Our relative performance is measured based on AEPS* and AROE*, which are Non-GAAP ratios. These ratios are calculated
using Non-GAAP financial measures that exclude the impact of acquisition-related items (as detailed hereafter). Table 29.8
provides the breakdown of non-operating results between acquisition-related items as well as other non-operating results, showing
the pre-tax and after-tax amount by line item. We believe that analyzing our consolidated performance excluding the impact of
these acquisition-related items reflect more accurately our financial performance compared to our peers over time.
One of our key financial objectives is to exceed industry ROE by 500 basis points annually. For industry comparison and incentive
compensation purposes, IFC’s ROE corresponds to IFC’s AROE, which we believe is the most comparable to the industry.
Adjusted net income attributable to common shareholders* represents the Net income attributable to shareholders (closest
GAAP measure), excluding the after-tax impact of acquisition-related items, preferred share dividends and other equity distribution.
AEPS* and AROE* represent adjusted net income attributable to common shareholders divided by weighted-average diluted
number of common shares or adjusted average common shareholders’ equity*, respectively.
Table 29.10 – Reconciliation of AEPS and AROE to Net income attributable to shareholders
Q4-2024
Q4-2023
2024
2023
Net income attributable to shareholders, as reported under IFRS
667
524
2,297
1,316
Remove acquisition-related items, after tax (see Table 29.8 for details)
Amortization of acquired intangible assets
62
55
233
204
Acquisition and integration costs
44
66
172
193
Tax adjustments on acquisition-related items
1
2
5
6
Net result from claims acquired in a business combination
1
-
3
2
Adjusted net income attributable to shareholders
775
647
2,710
1,721
Remove: preferred share dividends and other equity distribution
(28)
(28)
(90)
(84)
Adjusted net income attributable to common shareholders
747
619
2,620
1,637
Divided by weighted-average diluted number of common shares (in millions)
(Table 29.11)
178.6
178.3
178.6
176.2
AEPS (in dollars)
4.18
3.47
14.67
9.29
Adjusted net income attributable to common shareholders for the last
12 months
2,620
1,637
Adjusted average common shareholders’ equity (Table 29.13)
15,550
14,021
AROE for the last 12 months
16.8%
11.7%
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
90
INTACT FINANCIAL CORPORATION
29.6 Consolidated performance KPIs
EPS and ROE
Our consolidated performance is measured based on EPS (GAAP) and ROE*, a Non-GAAP ratio.
ROE* is based on Net income attributable to common shareholders (GAAP), excluding the dividends declared on preferred
shares and other equity distribution. The denominator is adjusted to reflect the weighted-impact of significant capital transactions,
using Adjusted average common shareholders’ equity*.
Net income attributable to common shareholders is determined in accordance with IFRS and excludes the dividends declared
on preferred shares and other equity distribution.
Table 29.11 – Reconciliation of ROE to Net income attributable to shareholders
Q4-2024
Q4-2023
2024
2023
Net income attributable to shareholders, as reported under IFRS
667
524
2,297
1,316
Remove: preferred share dividends and other equity distribution
(28)
(28)
(90)
(84)
Net income attributable to common shareholders
639
496
2,207
1,232
Divided by weighted-average basic number of common shares (in millions)
178.4
178.3
178.3
176.2
EPS, basic (in dollars)
3.58
2.78
12.37
6.99
Divided by weighted-average diluted number of common shares1 (in millions)
178.6
178.3
178.6
176.2
EPS, diluted (in dollars)
3.58
2.78
12.36
6.99
Net income attributable to common shareholders for the last 12 months
2,207
1,232
Adjusted average common shareholders’ equity (Table 29.13)
15,550
14,021
ROE for the last 12 months
14.2%
8.8%
1 Includes the net effect of the exercise of stock options. See Note 27 – Earnings per share to the Consolidated financial statements for more details.
Effective income tax rates
Our effective income tax rates are measured based on Total effective income tax rate* and Operating effective income
tax rate*, which are Non-GAAP ratios. These ratios take into account the impact of income taxes from our broker associates,
which are accounted for using the equity method (net of tax) under IFRS.
Total income tax expense (benefit)* and Operating income tax expense (benefit)* include the impact of income taxes from
our broker associates, which are accounted for using the equity method (net of tax) under IFRS. Income tax benefit (expense) is
the most comparable GAAP measure.
Pre-tax income* and PTOI* are presented on a consistent basis. These Non-GAAP financial measures are aligned with how
management analyzes the operating performance of our broker associates (recorded in Distribution income), which is on a pre-
tax basis. Income before income taxes, as reported under IFRS, is the closest GAAP measure.
Total effective income tax rate* and Operating effective income tax rate* represent total income tax expense (benefit)
divided by pre-tax income, and operating income tax expense (benefit) divided by pre-tax operating income, respectively.
Table 29.12 – Reconciliation of effective income tax rates
Q4-2024
Q4-2023
2024
2023
Income tax benefit (expense), as reported under IFRS
(171)
(205)
(568)
(473)
Add: share of income tax expense of broker associates
(8)
(7)
(33)
(35)
Total income tax benefit (expense)
(179)
(212)
(601)
(508)
Pre-tax income
846
743
2,911
1,839
Total effective income tax rate
21.2%
28.5%
20.7%
27.6%
Total income tax benefit (expense)
(179)
(212)
(601)
(508)
Remove: non-operating component of tax benefit (expense) (Table 29.8)
(88)
65
(78)
17
Operating income tax benefit (expense)
(267)
(147)
(679)
(491)
PTOI
1,176
895
3,358
2,604
Operating effective income tax rate
22.7%
16.5%
20.2%
18.9%
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
91
29.7 Equity and Financial strength
Adjusted average common shareholders’ equity
Adjusted average common shareholders’ equity* is a Non-GAAP financial measure used in the calculation of ROE and AROE.
It is the mean of the shareholders’ equity at the beginning and the end of the period, adjusted on a pro rata basis (number of days)
for significant capital transactions. Equity attributable to shareholders (closest GAAP measure) is determined in accordance with
IFRS, and excludes preferred shares and other equity, as per IFRS.
Adjusted average common shareholders’ equity, excluding AOCI* is a Non-GAAP financial measure used in the calculation
of OROE. It is the mean of the shareholders’ equity, excluding AOCI at the beginning and the end of the period, adjusted on a pro
rata basis (number of days) for significant capital transactions. Equity attributable to shareholders and AOCI (closest GAAP
measure) are determined in accordance with IFRS, and excludes preferred shares and other equity, as per IFRS.
We believe that adjusting for significant capital transactions on pro rata basis based on the number of days is a better reflection
of our average common shareholders’ equity base used to calculate ROE*, AROE* and OROE*.
Table 29.13 – Adjusted average common shareholders’ equity and Adjusted average common shareholders’ equity, excluding AOCI
As at December 31,
2024
2023
Ending common shareholders' equity
16,529
14,571
Remove: significant capital transaction in the last 12 months
-
638
Ending common shareholders' equity, excluding significant capital transaction
16,529
15,209
Beginning common shareholders' equity
14,571
14,521
Impact of the initial application of IFRS 9
n/a
(2)
Beginning common shareholders' equity, adjusted for the impact of IFRS 9
14,571
14,519
Average common shareholders’ equity, excluding significant capital transaction
15,550
14,864
Weighted impact of significant capital transactions1
-
(843)
Adjusted average common shareholders’ equity
15,550
14,021
Ending common shareholders’ equity, excluding AOCI
16,346
14,892
Remove: significant capital transaction in the last 12 months
-
638
Ending common shareholders' equity, excluding AOCI and significant capital transaction
16,346
15,530
Beginning common shareholders' equity, excluding AOCI
14,892
15,612
Impact of the initial application of IFRS 9
n/a
(420)
Beginning common shareholders' equity, excluding AOCI and adjusted for the impact of IFRS 9
14,892
15,192
Average common shareholders’ equity, excluding AOCI and significant capital transaction
15,619
15,361
Weighted impact of significant capital transactions1
-
(843)
Adjusted average common shareholders’ equity, excluding AOCI
15,619
14,518
1 December 31, 2023 figure represents the net weighted impact of the September 13, 2023 and February 27, 2023 significant capital transactions.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
92
INTACT FINANCIAL CORPORATION
Total capital margin and regulatory capital ratios
The capital strength of the group is measured by the Total capital margin, a supplementary financial measure. Each regulated
insurance jurisdiction has its own supervisory capital ratio that is used to evaluate the ability of insurance companies to meet all
policyholder liabilities, which are also supplementary financial measures. See Section 24 – Capital management for more
details.
1 Total capital margin and Regulatory capital ratios disclosed for the current reporting year are estimated on a quarterly basis using internal models,
and are only finalized annually after year-end, during the regulatory annual filing process.
The Company action level (“CAL”) in Canada is determined by individual legal entity and are reviewed at least annually as part
of the Own Risk and Solvency Assessments (“ORSA”) process. In the UK&I, indicated CAL and coverage figures are for Royal
& Sun Alliance Insurance Limited which includes all UK & International insurance subsidiaries.
Book value per share (BVPS) and BVPS (excluding AOCI)
The evolution of our book value is measured using BVPS, a supplementary financial measure, which represents the Equity
attributable to shareholders less Preferred shares and other equity, divided by the number of common shares outstanding at the
same date. BVPS is an important valuation measure used by investors and is consistently disclosed in our MD&A and other
financial reports.
In line with a number of peers in the industry, we also disclose BVPS (excluding AOCI), a supplementary financial measure
which represents the Equity attributable to shareholders less Preferred shares and other equity and AOCI, divided by the number
of common shares outstanding at the same date. We believe that excluding AOCI from the numerator is useful to investors
because it eliminates volatility that arises mostly from changes in market conditions, such as changes in interest and foreign
exchange rates.
Table 29.14 – Calculation of BVPS and BVPS (excluding AOCI)
As at December 31,
2024
2023
Equity attributable to shareholders, as reported under IFRS
18,148
16,190
Remove: Preferred shares and other equity, as reported under IFRS
(1,619)
(1,619)
Common shareholders’ equity
16,529
14,571
Remove: AOCI, as reported under IFRS
(183)
321
Common shareholders’ equity (excluding AOCI)
16,346
14,892
Number of common shares outstanding at the same date (in millions)
178.4
178.3
BVPS
92.67
81.71
BVPS (excluding AOCI)
91.64
83.51
Total capital
margin1
as at the end of
a specific period
Total capital margin includes capital in excess
of the internal CALs for regulated insurance
entities in Canadian, US, UK and other
internationally regulated jurisdictions and the
funds held in non-regulated entities, less any
ancillary own funds committed by the
Company.
Regulatory
capital ratios1
as at the end of
a specific period
Minimum capital test (as defined by the OSFI and the
AMF in Canada), Risk-based capital (as defined by the
NAIC in the US) and SCR (as defined by the PRA in the
UK&I).
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
93
Adjusted total capital and Adjusted debt-to-total capital ratio
Total debt outstanding before hybrid subordinated notes is a supplementary financial measure representing the debt
outstanding excluding hybrid subordinated notes. We classify hybrids with the preferred shares since they are convertible to
preferred shares pari passu to our existing preferred shares in case of default or bankruptcy.
Adjusted total capital* represents the sum of Debt outstanding, Equity attributable to shareholders and preferred shares
instruments held by subsidiaries, at the same date.
Adjusted debt-to-total capital ratio*, which is a Non-GAAP ratio, is calculated using total debt outstanding before hybrid
subordinated notes* divided by adjusted total capital.
We also disclose Total leverage ratio*, a Non-GAAP ratio calculated using debt outstanding, preferred shares and other
equity (including NCI) divided by adjusted total capital.
Table 29.15 – Reconciliation of Total debt outstanding before hybrid subordinated notes and Total capital to Debt outstanding, Equity attributable to
shareholders and Equity attributable to NCI
As at
Dec. 31,
2024
Sept. 30,
2024
Dec. 31,
2023
Debt outstanding, as reported under IFRS
4,681
4,843
5,081
Remove: hybrid subordinated notes
(247)
(247)
(247)
Total debt outstanding before hybrid subordinated notes
4,434
4,596
4,834
Debt outstanding, as reported under IFRS
4,681
4,843
5,081
Equity attributable to shareholders, as reported under IFRS
18,148
17,780
16,190
Preferred shares from Equity attributable to non-controlling interests
-
-
285
Adjusted total capital
22,829
22,623
21,556
Total debt outstanding before hybrid subordinated notes
4,434
4,596
4,834
Adjusted total capital
22,829
22,623
21,556
Adjusted debt-to-total capital ratio
19.4%
20.3%
22.4%
Debt outstanding, as reported under IFRS
4,681
4,843
5,081
Preferred shares and other equity, as reported under IFRS
1,619
1,619
1,619
Preferred shares from Equity attributable to non-controlling interests
-
-
285
Debt outstanding and preferred shares (including NCI)
6,300
6,462
6,985
Adjusted total capital (see above)
22,829
22,623
21,556
Total leverage ratio
27.6%
28.6%
32.4%
Adjusted debt-to-total capital ratio
19.4%
20.3%
22.4%
Preferred shares and hybrids
8.2%
8.3%
10.0%
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
94
INTACT FINANCIAL CORPORATION
Section 30 - Accounting and disclosure matters
Reference to our Consolidated financial statements for the year ended December 31, 2024
Adoption of new accounting
standards
Material accounting
judgments, estimates and
assumptions
Related-party transactions
Standards issued but not
yet effective
Note 2
Note 4
Note 32
Note 35
30.1 Material accounting judgments, estimates and assumptions
The preparation of financial statements in conformity with IFRS requires management to use judgments, estimates and assumptions that can
have a significant impact on reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as at the balance sheet
date, as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from these
estimates.
The key estimates and assumptions that have a risk of causing a material adjustment to the carrying value of certain assets and liabilities are
as follows:
Reference to our Consolidated financial statements for the year ended December 31, 2024
Business combinations and disposals
Note 5.3
Impairment of financial assets
Note 22.1
Insurance and reinsurance contracts
Note 10.4
Measurement of income taxes
Note 26.6
Impairment of goodwill and intangible assets
Note 13.2
Valuation of defined benefit obligation
Note 29.8
30.2 Related-party transactions
We enter into transactions with associates and joint ventures in the normal course of business. Most of these related-party transactions are
with entities associated with our distribution channel. These mostly comprise of commissions for insurance policies, interest and principal
payments on loans, as well as reinsurance agreements. These transactions are at normal market prices.
As at December 31,
2024
2023
Income (expenses) recognized in:
Insurance service expense
(448)
(363)
Net investment income
7
8
Assets (liabilities) recognized in:
Loans and other receivables
136
111
Other payables and other liabilities
(190)
(188)
Insurance contract liabilities
127
69
We also enter into transactions with key management personnel and pension plans. Our key management personnel are those that have the
authority and responsibility for planning, directing and controlling the activities of the Company, which includes the entirety of the Executive
Officers of the Company as well as the Board of Directors. They can purchase IFC insurance products offered in the normal course of
business. The terms and conditions of such transactions are essentially the same as those available to our clients and employees. The
aggregate compensation of key management personnel, comprising of both compensation and share-based payments, totalled $69 million
in 2024 ($56 million in 2023). Transactions with pension plans comprise the contributions paid to the Canadian and UK pension plans, which
were of $151 million for the year ended December 31, 2024 ($1,027 million – December 31, 2023).
30.3 Financial instruments
An important portion of our Consolidated balance sheets is composed of financial instruments.
Reference to our Consolidated financial statements for the year ended December 31, 2024
Summary of material accounting policies
Derivative financial instruments
Fair value measurement
Note 3
Note 7
Note 8
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
95
30.4 Off-balance sheet arrangements
We participate in a securities lending program to generate fee income. This program is managed by our custodian, a major Canadian
financial institution, whereby we lend securities we own to other financial institutions to allow them to meet their delivery commitments.
See Note 6.3 – Collateral to the Consolidated financial statements for more details.
We also have structured settlements in place with obligations to pay certain fixed amounts to claimants on a recurring basis, and we
have thus purchased annuities from various Canadian life insurers to provide for those payments. See Note 9.4 – Credit risk to the
Consolidated financial statements for more details.
30.5 Disclosure controls and procedures
We are committed to providing timely, accurate and balanced disclosure of all material information about the Company and to
providing fair and equal access to such information. Management is responsible for establishing and maintaining our disclosure
controls and procedures to ensure that information used internally and disclosed externally is complete and reliable. Due to the
inherent limitations in all control systems, an evaluation of controls can provide only reasonable, not absolute assurance, that all
control issues and instances of fraud or error, if any, within the Company have been detected. We continue to evolve and enhance
our system of controls and procedures.
Management, at the direction and under the supervision of the Chief Executive Officer and the Chief Financial Officer of the Company,
has evaluated the effectiveness of our disclosure controls and procedures. The evaluation was conducted in accordance with the
requirements of National Instrument 52-109 – Certification of Disclosure in Issuer’s Annual and Interim Filings (“NI 52-109”) of the
Canadian Securities Administrators. This evaluation confirmed, subject to the inherent limitations noted above, the effectiveness of
the design and operation of disclosure controls and procedures as at December 31, 2024. Management can therefore provide
reasonable assurance that material information relating to the Company and its subsidiaries is reported to it on a timely basis so that
it may provide investors with complete and reliable information.
30.6 Internal controls over financial reporting
Management has designed and is responsible for maintaining adequate internal control over financial reporting (“ICFR”) to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with IFRS.
Management has evaluated the design and operating effectiveness of its ICFR as defined in NI 52-109. The evaluation was based
on the criteria established in the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”). This evaluation was performed by the Chief Executive Officer and the Chief Financial Officer of the
Company with the assistance of other Company Management and staff to the extent deemed necessary. Based on this evaluation,
the Chief Executive Officer and the Chief Financial Officer concluded that the ICFR were appropriately designed and operating
effectively, as at December 31, 2024.
In spite of its evaluation, Management does recognize that any controls and procedures, no matter how well designed and operated,
can only provide reasonable assurance and not absolute assurance of achieving the desired control objectives.
No significant changes were made to our ongoing ICFR during the twelve-month period ended December 31, 2024 that have materially
affected, or are reasonably likely to materially affect, the Company’s ICFR.
30.7 Seasonality of our P&C insurance business
The insurance business is seasonal in nature, in particular within Personal lines. While net underwriting revenue is generally stable
from quarter to quarter, underwriting results are driven by weather conditions which may vary significantly between quarters. The
impact of seasonality (excluding catastrophes) is not a prominent driver on Commercial lines, due to the larger proportion of losses
coming from liability exposure.
The beginning of the year usually sees a higher combined ratio, driven by harsh winter weather conditions impacting our Personal
lines of business. By line of business, Personal auto tends to have unfavourable seasonality in the winter months and favourable
seasonality in the warmer months. In contrast, Personal property tends to be to seasonally favourable in the latter months of the year.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
96
INTACT FINANCIAL CORPORATION
Section 31 - Shareholder information
31.1 Authorized share capital and outstanding share data
Our authorized share capital consists of an unlimited number of common shares and Class A shares.
Table 31.1 – Outstanding share data (number of shares and amount)
As of February 11, 2025
Number of shares
Amount (in millions)
Common shares1
178,342,768
8,121
Preferred shares - Class A Shares
Series 1
10,000,000
244
Series 3
10,000,000
245
Series 5
6,000,000
147
Series 6
6,000,000
147
Series 7
10,000,000
245
Series 9
6,000,000
147
Series 11
6,000,000
147
Other equity
LRCN Series 1 Notes
n/a
297
1 As at December 31, 2024, we had 178,363,968 common shares outstanding. As of February 11, 2025, subsequent to year-end, 21,200 common shares were repurchased
and cancelled under the NCIB program.
Refer to our Annual Information Form for more detailed information on the rights of shareholders and to Note 18 – Share Capital
to the Consolidated financial statements for additional information.
31.2 Distribution on common shares, preferred shares and other equity instruments
Table 31.2 – Quarterly dividends declared per share
Q1-2025
Q4-2024
Common shares
1.33
1.21
Preferred shares – Class A Shares
Series 1
0.3025625
0.3025625
Series 3
0.2160625
0.2160625
Series 5
0.325
0.325
Series 6
0.33125
0.33125
Series 7
0.37575
0.37575
Series 9
0.3375
0.3375
Series 11
0.328125
0.328125
On February 11, 2025, the Board of Directors approved the quarterly dividend for Q1-2025.
On March 7, 2023, we issued the LRCN Series 1 Notes. Holders are entitled to receive semi-annual payments at a rate of 7.338%
per annum until June 30, 2028. Distributions for 2024 were made on July 2, 2024 and December 31, 2024. Distributions for 2025 will
be made on June 30, 2025 and December 31, 2025.
31.3 Expected release dates of our financial results and earnings conference calls
Q1-2025
Q2-2025
Q3-2025
Q4-2025
Results release
May 6, 2025
July 29, 2025
November 4, 2025
February 10, 2026
Earnings call
May 7, 2025
July 30, 2025
November 5, 2025
February 11, 2026
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
97
Section 32 - Selected annual and quarterly information
32.1 Selected annual information
Table 32.1 – Selected annual information
IFRS 17 basis
2024
2023
2022
Operating DPW
23,727
22,370
21,005
Total revenues1
28,796
27,516
27,455
Net income
2,310
1,331
2,450
Net income attributable to shareholders
2,297
1,316
2,454
EPS, basic (in dollars)
12.37
6.99
13.63
EPS, diluted (in dollars)
12.36
6.99
13.63
Cash dividends declared per share (in dollars)
Common shares
4.84
4.40
4.00
Preferred shares - Class A
Series 1
1.21
1.21
0.85
Series 3
0.86
0.86
0.86
Series 5
1.30
1.30
1.30
Series 6
1.33
1.33
1.33
Series 7
1.50
1.36
1.23
Series 9
1.35
1.35
1.35
Series 11
1.31
1.31
1.04
Total investments
40,282
37,083
35,601
Total assets
59,526
55,979
53,741
Total financial liabilities2
37,211
35,643
34,320
Total non-current financial liabilities2
22,735
20,697
20,721
Equity attributable to shareholders
18,148
16,190
15,843
1 Under IFRS 17, this measure is aligned with our Consolidated financial statements, and includes Insurance revenue, Net investment income and Other income. See
Note 30.2 - Segment operating performance of the Consolidated financial statements for more details.
2 From the Consolidated financial statements, this includes Financial liabilities by contractual maturity (in Note 9.5 b) and Insurance contracts liabilities (in Note 9.5 c).
32.2 Selected quarterly information
Table 32.2 – Selected quarterly information1
IFRS 17 basis
2024
2023
2022
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Operating DPW
5,755
6,207
6,655
5,110
5,410
5,925
6,226
4,809
5,125
Total revenues2,3
7,345
7,325
7,066
7,060
7,058
6,880
6,738
6,840
6,851
Segment operating revenues3
6,211
6,049
5,854
5,719
5,768
5,700
5,488
5,325
5,470
Operating net underwriting revenue
5,659
5,505
5,301
5,193
5,259
5,226
5,016
4,864
5,041
Current year CAT losses
130
1,216
96
97
199
611
421
108
171
(Favourable) PYD
(330)
(314)
(247)
(295)
(237)
(161)
(235)
(211)
(228)
Underwriting income (loss)
764
(215)
681
459
517
88
184
394
345
Combined ratio
86.5%
103.9%
87.1%
91.2%
90.1%
98.3%
96.3%
91.9%
93.2%
Operating net investment income
398
394
387
380
376
349
326
295
279
Distribution income
123
132
169
100
109
116
137
105
94
Net income
667
212
758
673
531
163
260
377
353
Net income attributable to
shareholders
667
207
750
673
524
163
252
377
346
Per share measures
NOIPS
4.93
1.01
4.86
3.63
4.00
1.98
2.34
3.09
2.80
EPS – basic
3.58
1.07
4.05
3.68
2.78
0.83
1.30
2.06
1.88
EPS – diluted
3.58
1.06
4.04
3.68
2.78
0.83
1.30
2.06
1.88
1 See Section 29 – Non-GAAP and other financial measures for more details.
2 This measure is aligned with our Consolidated financial statements, and includes Insurance revenue, Net investment income and Other income.
3 See Note 30.2 - Segment operating performance of the Consolidated financial statements for more details.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
98
INTACT FINANCIAL CORPORATION
Section 33 - Glossary and definitions
33.1 Glossary of abbreviations
Description
Description
AEPS
Adjusted earnings per share
Moody’s
Moody’s Investor Service Inc.
AMF
Autorité des marchés financiers
MGA
Managing general agent
AOCI
Accumulated other comprehensive income
MYA
Market yield adjustment
AROE
Adjusted return on equity
NCI
Non-controlling interests
bps
Basis points
NCIB
Normal course issuer bid
BVPS
Book value per share
NAIC
National Association of Insurance Commissioners
CAD
Canadian Dollar
NOI
Net operating income
CAGR
Compound annual growth rate
NOIPS
Net operating income per share
CAL
Company action level
OCI
Other comprehensive income
CAN
Canada
OSFI
Office of the Superintendent of Financial Institutions
CAT
Catastrophe
OROE
Operating ROE
CL
Commercial lines
P&C
Property & Casualty
DB
Defined benefit
PA
Personal auto
DBRS
Dominion Bond Rating Services
P&L
Profit & loss
DC
Defined contribution
PL
Personal lines
DPW
Direct premiums written
PP
Personal property
EBITA
Earnings before interest, tax and amortization
NCI
Non-controlling interests
ECL
Expected credit loss
PRA
Prudential Regulatory Authority
EPS
Earnings per share to common shareholders
PTOI
Pre-tax operating income
ESG
Environmental, Social and Governance
PYD
Prior year claims development
FCA
Financial Conduct Authority
RBC
Risk-based capital (US)
F/S
Financial Statements
ROE
Return on equity
Fitch
Fitch Ratings Inc.
RSA
RSA Insurance Group Limited, a subsidiary
domiciled in the UK (parent of UK&I business)
FVTOCI
Fair value through other comprehensive income
SCR
Solvency Capital Requirement (Europe)
FVTPL
Fair value through profit and loss
SL
Specialty lines
FX
Net foreign currency gains (losses)
SME
Small and Medium-sized Enterprises
GBP (£)
British pound sterling, UK’s official currency
S&P
Standard & Poor’s
GSL
Global Specialty lines
TSX
Toronto Stock Exchange
IFRS
International Financial Reporting Standards
UK
United Kingdom
KPI
Key performance indicator
UK&I
United Kingdom and International
LRCN
Limited Recourse Capital Notes
US
United States
MCT
Minimum capital test (Canada)
USD (US$)
US Dollar
MD&A
Management’s Discussion and Analysis
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
99
33.2 KPI definitions
Our most relevant key performance indicators are defined in the table below.
Underwriting
performance
Claims ratio*
Operating net claims* / Operating net underwriting revenue*
Expense ratio*
Operating net underwriting expenses* / Operating net underwriting revenue*
Combined ratio*
Claims ratio* + Expense ratio*
Claims ratio
Underlying current year
loss ratio*
Operating net claims excluding current year CAT losses and PYD* /
Operating net underwriting revenue*
CAT loss ratio*
Net current year CAT losses* / Operating net underwriting revenue*
PYD ratio*
PYD* / Operating net underwriting revenue*
Expense ratio
Commissions ratio*
Commissions* / Operating net underwriting revenue*
General expenses ratio*
General expenses* / Operating net underwriting revenue*
Premium taxes ratio*
Premium taxes* / Operating net underwriting revenue*
Consolidated
performance
NOIPS (in dollars)*
NOI attributable to common shareholders* / WANSO1
OROE*
NOI attributable to common shareholders* /
Adjusted average common shareholders’ equity (excluding AOCI)*
AEPS (in dollars)*
Adjusted net income attributable to common shareholders* / WANSO1
AROE*
Adjusted net income attributable to common shareholders* /
Adjusted average common shareholders’ equity*
EPS (in dollars)
Net income attributable to common shareholders / WANSO1
ROE*
Net income attributable to common shareholders /
Adjusted average common shareholders’ equity*
Financial
strength
BVPS (in dollars)
Common shareholders' equity /
Number of common shares outstanding at the same date
BVPS (excluding AOCI)
Common shareholders' equity (excluding AOCI) /
Number of common shares outstanding at the same date
Adjusted debt-to-total
capital ratio*
Total debt outstanding before hybrid subordinated notes /
Adjusted total capital*
Total leverage ratio*
Debt outstanding, preferred shares and other equity (including NCI) /
Adjusted total capital*
1 Weighted-average number of common shares outstanding on a daily basis during the period.
*See Section 29 – Non-GAAP and other financial measures for more details.
Management’s Discussion and Analysis
For the year ended December 31, 2024
(in millions of Canadian dollars, except as otherwise noted)
100
INTACT FINANCIAL CORPORATION
33.3 Definitions of key terms used in our MD&A
The list below presents key terms that are used in the MD&A. These definitions are in line with how management analyzes
performance and may not be comparable to similar measures used by other companies in our industry. For other insurance-related
terms and definitions of our MD&A, a glossary is available in the “Investors” section of our web site at www.intactfc.com.
Catastrophe loss
thresholds
Our CAT thresholds are as follows by segment: P&C Canada: $10 million, P&C UK&I: £7.5 million and
P&C US: US$5 million. For multi-jurisdiction events, IFC aggregate threshold: $15 million (combined
impact across all segments of $15 million or more).
Combined ratio
Presented on an undiscounted basis and represents the sum of our claims ratio and expense ratio.
A combined ratio over 100% indicates an unprofitable underwriting result. A combined ratio below
100% indicates a profitable underwriting result.
Constant currency
growth
Growth that excludes the impact of foreign currency fluctuations, calculated by applying the exchange
rate in effect for the current period results to the results of the previous year.
Frequency (of claims)
Average number of claims reported in a specific period.
Large loss
A single claim, which is considered significant but that is smaller than the CAT threshold.
Net current year
catastrophe (CAT)
losses
A CAT loss represents any one claim, or group of claims, equal to or greater than a predetermined
CAT threshold, before reinsurance, related to a single event for the current accident year (on an
undiscounted basis). Reported CAT losses can either be weather-related or non weather-related.
Prior year claims
development (PYD)
PYD represents the change in total prior year claims liabilities during a specific period, on an
undiscounted basis, net of reinsurance, excluding the PYD related to exited lines.
A decrease to claims liabilities is referred to as favourable prior year claims development. An increase
in claims liabilities is referred to as unfavourable prior year claims development.
Severity (of claims)
Average cost of a claim calculated by dividing the total cost of claims by the total number of claims.
Underlying performance
(underwriting)
Represents our current accident year performance, excluding the impact of catastrophe losses and
prior year claims development.
Written insured risks
Also referred to as Units. It represents the number of vehicles in Personal automobile insurance and
the number of premises in Personal property insurance written for a specific period.
Intact Financial Corporation
Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
Management’s responsibility for financial reporting
Management is responsible for the preparation and presentation of the Consolidated financial statements of Intact Financial
Corporation and its subsidiaries, collectively known as “the Company”. This responsibility includes selecting appropriate accounting
policies and making estimates and informed judgments based on the anticipated impact of current transactions, events and trends,
consistent with International Financial Reporting Standards.
In meeting its responsibility for the reliability of consolidated financial statements, management maintains and relies on a
comprehensive system of internal control comprising organizational procedural controls and internal controls over financial reporting.
The Company’s system of internal control includes the communication of policies and of the Company’s Code of Conduct, proper
segregation of duties, delegation of authority for transactions, personal accountability, selection and training of personnel,
safeguarding of assets and maintenance of records. The system of internal controls is reviewed and evaluated on an ongoing basis
by management and the Company’s Group Financial Control function.
The Company’s Board of Directors, acting through the Audit Committee, which is composed entirely of independent Directors who
are neither officers nor employees of the Company, oversees management’s responsibility for the design and operation of effective
financial reporting and internal controls, as well as the preparation and presentation of financial information.
The Audit Committee conducts such review and inquiry of management and the internal and external auditors as it deems necessary
to establish that the Company employs an appropriate system of internal control, adheres to legislative and regulatory requirements
and applies the Company’s Code of Conduct. The internal and external auditors, the Group Financial Control function, and the Group
Chief Risk and Actuarial Officer, have full and unrestricted access to the Audit Committee, with and without the presence of
management.
The Regional Chief Actuaries, who are members of management, are appointed by the relevant entity Board of the Company. The
Regional Chief Actuaries are responsible for discharging the various actuarial responsibilities and conduct a valuation of claims
liabilities, in accordance with generally accepted actuarial standards, reporting results to management and the Audit Committee.
The Company’s external auditors, Ernst & Young LLP, are appointed by the shareholders to conduct an independent audit of the
Consolidated financial statements of the Company and meet separately with both management and the Audit Committee to discuss
the results of their audit, financial reporting and related matters. The Independent Auditor’s Report to shareholders appears on the
following pages.
February 11, 2025
Charles Brindamour
Chief Executive Officer
Louis Marcotte
Executive Vice President and
Chief Financial Officer
Independent auditor’s report
To the shareholders of
Intact Financial Corporation
Opinion
We have audited the consolidated financial statements of Intact Financial Corporation and its subsidiaries
[the “Company”], which comprise the consolidated balance sheets as at December 31, 2024 and 2023, and the
consolidated statements of income, consolidated statements of comprehensive income, consolidated statements
of changes in equity and consolidated statements of cash flows for the years then ended, and notes to the
consolidated financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Company as at December 31, 2024 and 2023, and its consolidated financial
performance and its consolidated cash flows for the years then ended, in accordance with IFRS Accounting
Standards.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated
financial statements section of our report. We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of
the consolidated financial statements of the current period. These matters were addressed in the context of the
audit of the consolidated financial statements as a whole, and in forming the auditor’s opinion thereon, and we do
not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed
the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated
financial statements section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement of the
consolidated financial statements. The results of our audit procedures, including the procedures performed to
address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial
statements.
Valuation of the liability for incurred claims
The Company describes its material accounting judgments, estimates and assumptions in relation to the valuation
of insurance contract liabilities, which include the liability for incurred claims, in note 4 and note 10 to the
consolidated financial statements. As at December 31, 2024, the Company recognized insurance contract liabilities
amounting to $31.9 billion, of which the liability for incurred claims was $24.0 billion and represented 58% of total
liabilities.
A member firm of Ernst & Young Global Limited
– 2 –
The principal consideration for our conclusion that the liability for incurred claims is a key audit matter is that its
determination involves the application of models, methodologies, and assumptions that require significant auditor
attention. The main assumption underlying these estimates is that the Company’s past claims development
experience can be used to project future claims development. As such, actuarial claims projection techniques
extrapolate the development of paid and incurred losses, frequency and severity of claims based on the observed
development of earlier years and expected loss ratios. Additional qualitative judgment is used to assess the extent
to which past trends may not apply in the future to arrive at the estimated ultimate cost of claims that represents
the likely outcome from the range of possible outcomes, considering the uncertainties involved, including the
impact of the changes in the prevailing social, economic and legal environment. As a result, estimates of the liability
for incurred claims have a high degree of estimation uncertainty and may materially change in future periods.
Our audit procedures related to the determination of the liability for incurred claims included the following, among
other procedures:
Obtained an understanding, evaluated the design, and tested the operating effectiveness of the controls
related to the claims handling portion of the liability for incurred claims processes, including the integrity of
data flows through the administration systems for the majority of the Company’s business in Canada and the
United States;
Obtained an understanding of the Company’s actuarial methodologies and assessed whether they were
determined in accordance with IFRS 17 - Insurance Contracts;
Evaluated the objectivity, independence and expertise of the actuarial valuator appointed by management;
Performed an independent valuation of the liability for incurred claims, with the support of our actuarial
specialists, for a sample of lines of business that reflected our expectations based on the Company’s historical
experience, current trends, inflation, and benchmarking to our industry knowledge including information
relating to forthcoming legislation and the changes in the prevailing social, economic and legal environment
that could affect claims settlement in terms of speed or amount;
Performed data integrity testing of incurred claims, paid claims, and earned premiums used in the valuation
of liability for incurred claims; and
Assessed the adequacy of the disclosures pertaining to the liability for incurred claims provided in note 10 to
the consolidated financial statements.
Other information
Management is responsible for the other information. The other information comprises:
Management’s Discussion and Analysis; and
The information, other than the consolidated financial statements and our auditor’s report thereon, in the
Annual Report.
Our opinion on the consolidated financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information, and in doing so, consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
A member firm of Ernst & Young Global Limited
– 3 –
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact in this auditor’s report. We have nothing to report in this regard.
The Annual Report is expected to be made available to us after the date of the auditor’s report. If based on the
work we will perform on this other information, we conclude there is a material misstatement of other information,
we are required to report that fact to those charged with governance.
Responsibilities of management and those charged with governance for the consolidated financial
statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with IFRS Accounting Standards, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Company or to cease operations,
or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Canadian generally accepted auditing standards will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control;
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control;
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management;
A member firm of Ernst & Young Global Limited
– 4 –
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Company to cease to continue as a going concern;
Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation; and
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business units within the Company as a basis for forming an opinion on the
consolidated financial statements. We are responsible for the direction, supervision and review of the work
performed for the purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Doru Pantea.
Toronto, Canada
February 11, 2025
A member firm of Ernst & Young Global Limited
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Consolidated Financial Statements
2
INTACT FINANCIAL CORPORATION
For the years ended December 31, 2024 and 2023
Table of contents
Consolidated financial statements
Consolidated balance sheets ................................................................................................................................................................ 3
Consolidated statements of income ...................................................................................................................................................... 4
Consolidated statements of comprehensive income ............................................................................................................................ 5
Consolidated statements of changes in equity ..................................................................................................................................... 6
Consolidated statements of cash flows ................................................................................................................................................ 7
Notes to the Consolidated financial statements
Note 1 – Status of the Company ........................................................................................................................................................... 8
Note 2 – Adoption of new accounting standards .................................................................................................................................. 9
Note 3 – Summary of material accounting policies ............................................................................................................................... 9
Note 4 – Material accounting judgments, estimates and assumptions ............................................................................................... 31
Note 5 – Business combinations and disposals .................................................................................................................................. 31
Note 6 – Investments .......................................................................................................................................................................... 34
Note 7 – Derivative financial instruments............................................................................................................................................ 36
Note 8 – Fair value measurement ...................................................................................................................................................... 39
Note 9 – Financial risk ........................................................................................................................................................................ 40
Note 10 – Insurance and reinsurance contracts ................................................................................................................................. 49
Note 11 – Insurance risk ..................................................................................................................................................................... 57
Note 12 – Reinsurance ....................................................................................................................................................................... 60
Note 13 – Goodwill and intangible assets ........................................................................................................................................... 62
Note 14 – Investments in associates and joint ventures ..................................................................................................................... 64
Note 15 – Property and equipment ..................................................................................................................................................... 64
Note 16 – Other assets and other liabilities ........................................................................................................................................ 64
Note 17 – Debt outstanding ................................................................................................................................................................ 66
Note 18 – Share capital ...................................................................................................................................................................... 68
Note 19 – Non-controlling interests .................................................................................................................................................... 72
Note 20 – Accumulated other comprehensive income (loss) .............................................................................................................. 72
Note 21 – Capital management .......................................................................................................................................................... 72
Note 22 – Net investment return and net insurance financial result .................................................................................................... 74
Note 23 – Other net gains (losses) and other income and expense ................................................................................................... 75
Note 24 – Expense by nature ............................................................................................................................................................. 76
Note 25 – Acquisition, integration and restructuring costs .................................................................................................................. 76
Note 26 – Income taxes ...................................................................................................................................................................... 77
Note 27 – Earnings per share ............................................................................................................................................................. 80
Note 28 – Share-based payment plans .............................................................................................................................................. 81
Note 29 – Employee future benefits ................................................................................................................................................... 83
Note 30 – Segment information .......................................................................................................................................................... 92
Note 31 – Additional information on the Consolidated statements of cash flows ................................................................................ 95
Note 32 – Related-party transactions ................................................................................................................................................. 96
Note 33 – Commitments and contingencies ....................................................................................................................................... 97
Note 34 – Disclosures on rate regulation ............................................................................................................................................ 98
Note 35 – Standards issued but not yet effective ............................................................................................................................... 98
Consolidated Balance Sheets
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
3
As at
Note
December 31,
2024
December 31,
2023
Assets
Investments
6
Cash and cash equivalents
$
1,145 $
1,171
Debt securities
29,771
28,436
Preferred shares
1,660
1,384
Common shares
6,350
4,668
Investment property
571
480
Loans
785
944
Total investments
40,282
37,083
Reinsurance contract assets
10
4,788
5,217
Income taxes receivable
71
57
Deferred tax assets
26
744
811
Investments in associates and joint ventures
14
940
944
Property and equipment
15
820
799
Intangible assets
13
5,060
5,047
Goodwill
13
4,507
4,085
Other assets
16
2,314
1,936
Total assets
$
59,526 $
55,979
Liabilities
Insurance contract liabilities
10
$
31,900 $
30,353
Income taxes payable
142
205
Deferred tax liabilities
26
593
726
Debt outstanding
17
4,681
5,081
Other liabilities
16
4,062
3,139
Total liabilities
$
41,378 $
39,504
Equity
Common shares
$
8,126 $
8,099
Preferred shares and other equity
1,619
1,619
Share capital
18
9,745
9,718
Contributed surplus
298
290
Retained earnings
7,922
6,503
Accumulated other comprehensive income (loss)
20
183
(321)
Equity attributable to shareholders
18,148
16,190
Equity attributable to non-controlling interests
19
-
285
Total equity
$
18,148 $
16,475
Total liabilities and equity
$
59,526 $
55,979
See accompanying notes to the Consolidated financial statements.
On behalf of the Board:
Charles Brindamour
Director
Jane E. Kinney
Director
Consolidated Statements of Income
(in millions of Canadian dollars, except as otherwise noted)
4
INTACT FINANCIAL CORPORATION
Years ended December 31,
2024
2023
Note
Insurance revenue
10
$
26,523 $
25,507
Insurance service expense
10, 24
(22,418)
(22,584)
Insurance service result from insurance contracts
4,105
2,923
Expense from reinsurance contracts
10
(2,579)
(3,056)
Income from reinsurance contracts
10
1,660
2,442
Net expense from reinsurance contracts
(919)
(614)
Insurance service result
3,186
2,309
Net investment income
22
1,559
1,346
Net gains (losses) on investment portfolio
22
148
249
Net investment return
1,707
1,595
Insurance finance income (expense)
22
(1,083)
(1,091)
Reinsurance finance income (expense)
22
184
197
Net insurance financial result
(899)
(894)
Net investment return and net insurance financial result
808
701
Share of profit from investments in associates and joint ventures
14
89
96
Other net gains (losses)
23
303
50
Other income and expense
23
(879)
(627)
Other finance costs
(222)
(222)
Acquisition, integration and restructuring costs
25
(407)
(503)
Income before income taxes
2,878
1,804
Income tax benefit (expense)
26
(568)
(473)
Net income
$
2,310 $
1,331
Net income attributable to:
Shareholders
2,297
1,316
Non-controlling interests
19
13
15
$
2,310 $
1,331
Earnings per common share (in dollars)
27
Basic
$
12.37 $
6.99
Diluted
$
12.36 $
6.99
Dividends paid per common share (in dollars)
18
$
4.84 $
4.40
See accompanying notes to the Consolidated financial statements.
Consolidated Statements of Comprehensive Income
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
5
Years ended December 31,
2024
2023
Note
Net income
$
2,310 $
1,331
Items that may be reclassified subsequently to Net income
FVTOCI debt securities:
Net changes in unrealized gains (losses)
89
382
Reclassification of net losses (gains)
26
16
Income tax benefit (expense)
(30)
(83)
85
315
Foreign currency gains (losses) on:
Translation of foreign operations
811
5
Net investment hedges
(410)
24
Income tax benefit (expense)
18
6
419
35
504
350
Items that will not be reclassified subsequently to Net income
Employee future benefits:
Actuarial gains (losses), net of other surplus remeasurement
29
23
(1,526)
Income tax benefit (expense)
6
227
29
(1,299)
FVTOCI equity securities:
Net changes in unrealized gains (losses)
167
1
Realized gains (losses)
2
-
Income tax benefit (expense)
(54)
(1)
115
-
144
(1,299)
Other comprehensive income (loss)
648
(949)
Total comprehensive income (loss)
$
2,958 $
382
Total comprehensive income (loss) attributable to:
Shareholders
2,945
367
Non-controlling interests
13
15
$
2,958 $
382
See accompanying notes to the Consolidated financial statements.
Consolidated Statements of Changes in Equity
(in millions of Canadian dollars, except as otherwise noted)
6
INTACT FINANCIAL CORPORATION
Equity attributable to shareholders
Equity
attributable
to NCI
Note
Share
Capital
Contributed
surplus
Retained
earnings
AOCI
Total
Equity
Balance as at January 1, 2024
$
9,718 $
290 $
6,503 $
(321) $
285 $
16,475
Net income
-
-
2,297
-
13
2,310
Other comprehensive income (loss)
-
-
144
504
-
648
Total comprehensive income (loss)
-
-
2,441
504
13
2,958
Issuance of common shares
18
32
-
-
-
-
32
Repurchase of common shares for
cancellation
18
(5)
-
(19)
-
-
(24)
Dividends and other distributions:
Common shares
-
-
(863)
-
-
(863)
Preferred shares and other equity
-
-
(90)
-
-
(90)
Share-based payment plans
-
8
(56)
-
-
(48)
Non-controlling interests:
Dividends
-
-
-
-
(13)
(13)
Cancellation
19
-
-
6
-
(285)
(279)
Balance as at December 31, 2024
$
9,745 $
298 $
7,922 $
183 $
- $
18,148
Balance as at January 1, 2023
$
8,864 $
269 $
7,379 $
(671) $
285 $
16,126
Net income
-
-
1,316
-
15
1,331
Other comprehensive income (loss)
-
-
(1,299)
350
-
(949)
Total comprehensive income (loss)
-
-
17
350
15
382
Issuance of common shares
18
557
-
-
-
-
557
Issuance of preferred shares and other
equity
18
297
-
-
-
-
297
Dividends and other distributions:
Common shares
-
-
(778)
-
-
(778)
Preferred shares and other equity
-
-
(84)
-
-
(84)
Share-based payment plans
-
21
(31)
-
-
(10)
Non-controlling interests:
Dividends
-
-
-
-
(15)
(15)
Balance as at December 31, 2023
$
9,718 $
290 $
6,503 $
(321) $
285 $
16,475
See accompanying notes to the Consolidated financial statements.
Consolidated Statements of Cash Flows
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
7
Years ended December 31,
2024
2023
Note
Operating activities
Income before income taxes
$
2,878 $
1,804
Income tax received (paid), net
(745)
(153)
Adjustments for non-cash items
31
294
445
Changes in other operating assets and liabilities
31
960
(250)
Net cash flows provided by (used in) operating activities
3,387
1,846
Investing activities
Business combinations, net of cash acquired
5
-
(869)
Proceeds from sale of business
5
145
-
Proceeds from sale of investments
29,989
31,930
Purchase of investments
(31,129)
(32,482)
Proceeds from sale of (purchases of) brokerages and other equity investments, net
(190)
(126)
Purchase of intangibles and property and equipment, net
(429)
(458)
Net cash flows provided by (used in) investing activities
(1,614)
(2,005)
Financing activities
Payment of lease liabilities
(98)
(90)
Proceeds from issuance of debt, net
17
298
799
Repayment of debt
17
(663)
(198)
Borrowing on (repayment of) the credit facility and commercial paper
17
(105)
(32)
Proceeds from issuance of common shares, net
18
-
551
Proceeds from issuance of common shares on exercise of stock options
18
11
-
Proceeds from issuance of preferred shares and other equity, net
18
-
296
Repurchase of common shares for cancellation
18
(24)
-
Repurchase of common shares for share-based payments
28
(180)
(128)
Payment of dividends on common shares and preferred shares, and other equity
distributions
18
(953)
(862)
Payment of dividends to non-controlling interests
19
(13)
(15)
Cancellation of non-controlling interests
19
(279)
-
Net cash flows provided by (used in) financing activities
(2,006)
321
Net increase (decrease) in cash and cash equivalents
(233)
162
Cash and cash equivalents, net of bank overdraft, beginning of year
1,171
1,010
Exchange rate differences on cash and cash equivalents
59
(1)
Cash and cash equivalents, net of bank overdraft, end of year
31
$
997 $
1,171
See accompanying notes to the Consolidated financial statements.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
8
INTACT FINANCIAL CORPORATION
Glossary of abbreviations
12mECL
12-month expected credit loss
LTECL
Lifetime expected credit loss
ABS
Asset-backed securities
LTIP
Long term incentive plan
AIC
Asset for incurred claims
MBS
Mortgage-backed securities
AMF
Autorité des marchés financiers
MCT
Minimum capital test (Canada)
AOCI
Accumulated other comprehensive income
MD&A
Management’s Discussion and Analysis
ARC
Asset for remaining coverage
NAV
Net assets value
CAD
Canadian Dollar
NCI
Non-controlling interests
CALs
Company action levels
NCIB
Normal course issuer bid
CAN
Canada
NOI
Net operating income
CDOR
Canadian Dollar Offered Rate
OCI
Other comprehensive income
CGU
Cash generating unit
OSFI
Office of the Superintendent of Financial
Institutions
CPI
Consumer price index
PAA
Premium Allocation Approach
DB
Defined benefits
P&C
Property and casualty
DSU
Deferred share unit
PSU
Performance stock units
ECL
Expected credit losses
PTOI
Pre-tax operating income
EPS
Earnings per share to common shareholders
RBC
Risk-based capital (US)
ESOP
Executive stock option plan
ROE
Return on equity
ESPP
Employee share purchase plan
RPI
Retail price index
EUR (€)
Euro, currency of the European Union
RSA
RSA Insurance Group Limited, a subsidiary
domiciled in the UK (parent of UK&I business)
FVTOCI
Fair value through other comprehensive income
RSU
Restricted stock units
FVTPL
Fair value through profit or loss
SAR
Stock appreciation rights
GBP (£)
British pound sterling, UK’s official currency
SCR
Solvency Capital Requirement (Europe)
GDP
Gross domestic product
SOFR
Secured Overnight Financing Rate
GMM
General Measurement Model
SONIA
Sterling overnight index average
IAS
International Accounting Standard
SPPI
Solely payments of principal and interest
IASB
International Accounting Standards Board
TSX
Toronto Stock Exchange
IFRS
International Financial Reporting Standards
UK
United Kingdom
JV
Joint ventures
UK&I
United Kingdom and International
LIC
Liability for incurred claims
US
United States
LRC
Liability for remaining coverage
USD
US Dollar
LRCN
Limited recourse capital notes
Note 1 – Status of the Company
Intact Financial Corporation (the “Company”), incorporated under the Canada Business Corporations Act, is domiciled in Canada and
its shares are publicly traded on the Toronto Stock Exchange (TSX: IFC). The Company has investments in wholly owned subsidiaries
which operate principally in the Canadian, UK, European, and US P&C insurance markets. The Company, through its operating
subsidiaries, principally underwrites automobile, home, as well as commercial P&C contracts to individuals and businesses.
These Consolidated financial statements include the accounts of the Company and its subsidiaries. The Company’s significant
operating subsidiaries are presented in Note 30 – Segment information.
The registered office of the Company is 700 University Avenue, Suite 1500, Toronto, Ontario, Canada, M5G 0A1.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
9
Note 2 – Adoption of new accounting standards
2.1 Amendments to IAS 1 – Presentation of Financial Statements
The Company adopted the amendments to IAS 1 – Presentation of Financial Statements (“IAS 1”) on January 1, 2024. These
amendments clarify how covenants with which an entity must comply on or before the reporting date affect the classification of a
liability. They also require an entity to disclose additional information in the notes to the financial statements to enable stakeholders
to understand the risk that non-current liabilities could become repayable within twelve months after the reporting date.
The amendments were applied retrospectively with no financial impact on these Consolidated financial statements. Refer to Note 17
– Debt outstanding for additional disclosures.
Note 3 – Summary of material accounting policies
3.1 Basis of presentation .................................................................................................................................................................. 10
3.2 Basis of consolidation ................................................................................................................................................................ 10
3.3 Insurance and reinsurance contracts ........................................................................................................................................ 11
a) Classification and summary of measurement models ................................................................................................ 11
b) Separating components from insurance and reinsurance contracts ......................................................................... 11
c) Level of aggregation ....................................................................................................................................................... 11
d) Recognition ..................................................................................................................................................................... 12
e) Contract boundary .......................................................................................................................................................... 13
f) Measurement models ..................................................................................................................................................... 13
g) Claims acquired in a business combination in the scope of IFRS 3 .......................................................................... 17
h) Modification and derecognition ..................................................................................................................................... 17
i) Insurance revenue .......................................................................................................................................................... 18
j) Insurance service expense ............................................................................................................................................ 18
k) Insurance finance income and expense ....................................................................................................................... 18
l) Net expense from reinsurance contracts ..................................................................................................................... 18
m) Other income and expense ............................................................................................................................................ 18
3.4 Financial instruments ................................................................................................................................................................. 18
a) Classification and measurement of financial assets and financial liabilities ............................................................ 18
b) Fair value measurement ................................................................................................................................................. 21
c) Derivative financial instruments and hedging ............................................................................................................. 22
d) Derecognition of financial assets and financial liabilities ........................................................................................... 23
e) Offsetting of financial assets and financial liabilities .................................................................................................. 24
f) Revenue and expense recognition ................................................................................................................................ 24
g) Impairment of financial assets other than those classified or designated as FVTPL............................................... 24
3.5 Business combinations .............................................................................................................................................................. 25
3.6 Goodwill and intangible assets .................................................................................................................................................. 25
a) Goodwill ........................................................................................................................................................................... 25
b) Intangible assets ............................................................................................................................................................. 25
3.7 Foreign currency translation ...................................................................................................................................................... 26
3.8 Investments in associates and joint ventures .......................................................................................................................... 27
3.9 Property and equipment ............................................................................................................................................................. 27
3.10 Investment property and rental income .................................................................................................................................. 27
3.11 Leases ........................................................................................................................................................................................ 27
3.12 Income taxes .............................................................................................................................................................................. 28
a) Income tax expense (benefit) ......................................................................................................................................... 28
b) Recognition and offsetting of current tax assets and liabilities ................................................................................. 28
3.13 Share-based payment plans ..................................................................................................................................................... 28
a) Long Term incentive plan .............................................................................................................................................. 28
b) Employee share purchase plan ..................................................................................................................................... 29
c) Deferred share unit plan ................................................................................................................................................. 29
d) Executive stock option plan .......................................................................................................................................... 29
3.14 Employee future benefits – pension ........................................................................................................................................ 30
3.15 Current vs non-current ............................................................................................................................................................. 30
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
10
INTACT FINANCIAL CORPORATION
3.1 Basis of presentation
These Consolidated financial statements and the accompanying notes are prepared in accordance with IFRS Accounting Standards,
as issued by the IASB. They were authorized for issue in accordance with a resolution of the Board of Directors on February 11, 2025.
The material accounting policies applied in the preparation of these Consolidated financial statements are described below. These
policies have been applied consistently to all periods presented, except for the amendments to existing standards adopted on
January 1, 2024, as described in Note 2 – Adoption of new accounting standards.
Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.
The Company presents its Consolidated balance sheets broadly in order of liquidity.
3.2 Basis of consolidation
These Consolidated financial statements include the accounts of the Company and its subsidiaries. Table 3.1 presents the basis
of consolidation.
In some cases, voting rights in themselves are not sufficient to assess power or significant influence over the relevant activities of the
investee or the sharing of control in a joint arrangement. In such cases, judgment is applied through the analysis of management
agreements, the effectiveness of voting rights, the significance of the benefits to which the Company is exposed and the degree to
which the Company can use its power to affect its returns from investees.
Acquisitions or disposals of equity interests in a subsidiary that do not result in the Company obtaining or losing control are treated as
equity transactions and recognized as acquisitions or disposals of NCI in the Consolidated statements of changes in equity. All
balances, transactions, income and expenses and profits and losses resulting from intercompany transactions and dividends are
eliminated on consolidation.
Table 3.1 – Basis of consolidation
Investment category
Shareholding
Accounting policies
Subsidiaries
Entities over which the Company:
•
has the power over the relevant activities of the investee;
•
is exposed, or has rights to variable returns from its
involvement with the investee; and
•
has the ability to affect those returns through its power
over the investee.
Generally, more
than 50% of voting
rights
All subsidiaries are fully consolidated
from the date control is transferred to the
Company.
They are deconsolidated from the date
control ceases and any gain or loss is
recognized in Other net gains (losses).
Associates
Entities over which the Company:
•
has the power to participate in the decisions over the
relevant activities of the investee; but
•
does not have control.
Generally, between
20% to 50% of
voting rights
Equity method1
Note 3.8 for more details
Joint ventures
Joint arrangements whereby the parties have:
•
joint control of the arrangements, requiring unanimous
consent of the parties sharing control for strategic and
operating decision making; and
•
rights to the net assets of the arrangements.
Generally, an equal
percentage of
voting rights from
each party to the
joint arrangement
Equity method1
Note 3.8 for more details
1 Unless the investment is held by a venture capital organization, in which case the Company may elect to measure it at FVTPL.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
11
3.3 Insurance and reinsurance contracts
a)
Classification and summary of measurement models
Insurance contracts transfer significant insurance risk at the inception of the contract. Insurance risk is transferred when the Company
agrees to compensate a policyholder on the occurrence of an adverse specified uncertain future event. As a general guideline, the
Company determines whether it has significant insurance risks by comparing the benefits that could become payable under various
possible scenarios relative to the premium received from the policyholder for insuring the risk.
The Company issues insurance contracts in the normal course of business (direct business) and holds reinsurance contracts (ceded
business), under which it is compensated by other entities for claims arising from one or more insurance contracts issued by the
Company. The Company may acquire insurance and reinsurance contracts through a business combination or transfer of contracts.
Claims and ceded claims acquired in a business combination (“acquired claims”) in the scope of IFRS 3 – Business combinations
(“IFRS 3”) are treated as new insurance contracts issued by the Company at the date of their acquisition. All references to insurance
and reinsurance contracts include contracts issued, held, and acquired by the Company, unless otherwise stated.
The Company uses different measurement models depending on the type of contract. The Company chose to apply the simplified
measurement model (the PAA) for all of its insurance and reinsurance contracts except in limited circumstances where the GMM is
required as described in the following table. The GMM is the default model for the recognition and measurement of insurance
contracts; however, there is an option to use the PAA for contracts that have a coverage period of one year or less or if the resulting
liability for remaining coverage (insurance coverage to be provided after the reporting period) is not expected to materially differ from
its measurement under the GMM.
Table 3.2 – Summary of the Company’s types of contracts and measurement models
Type of contracts
Measurement model
All of the Company’s insurance and reinsurance contracts except for acquired claims and retroactive
reinsurance contracts.
PAA (refer to Table 3.4)
Acquired claims including those from the RSA acquisition on June 1, 2021 and any future
acquisitions.
GMM (refer to Table 3.6)
Retroactive reinsurance contracts to cover adverse development of existing claims mainly in the UK&I
and US.
GMM (refer to Table 3.6)
b)
Separating components from insurance and reinsurance contracts
Insurance and reinsurance contracts are assessed to determine whether they contain components which must be accounted for under
an IFRS Accounting Standard other than the insurance contract standard. The Company’s insurance and reinsurance contracts do
not include such components.
Also, the Company applies judgment when particular facts and circumstances require the separation of its insurance contracts into
distinct insurance components. The Company's judgment is based on interdependency between the different risks covered, whether
components lapse together and whether components can be priced and purchased separately.
A limited number of insurance contracts contain profit commission arrangements where the policyholder will always receive a minimum
guaranteed amount irrespective of the insured event occurring. The Company assessed the minimum guaranteed amount to be highly
interrelated with the insurance component; as a result, they are considered non-distinct investment components and are not accounted
for separately. Investment components are excluded from Insurance revenue and Insurance service expense with no impact on
Net income.
c)
Level of aggregation
Insurance and reinsurance contracts are aggregated into portfolios and groups for measurement purposes. Portfolios are comprised
of contracts with similar risks which are managed together. The Company divides its direct and ceded business into portfolios.
Management uses judgment in establishing its various portfolios, the drivers considered include the main geographic areas, lines of
businesses, distribution channels, and legal entities in which it operates. Portfolios are then divided into groups of contracts based on
expected profitability. Groups do not contain contracts issued more than one year apart since they are further subdivided into
annual cohorts.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
12
INTACT FINANCIAL CORPORATION
Portfolios of insurance contracts that are assets and those that are liabilities, and portfolios of reinsurance contracts that are assets
and those that are liabilities are presented separately in the Consolidated balance sheets.
Portfolios and groups may change prospectively if there are changes to how the Company manages its business.
d)
Recognition
The Company initially recognizes groups of insurance contracts it issues from the earliest of the following:
•
The beginning of the coverage period of the group of contracts;
•
The date when the first payment from a policyholder in the group is due or when the first payment is received if there is no
due date; or
•
The issue date when the group of insurance contracts is onerous.
The Company initially recognizes a group of reinsurance contracts held:
•
From the beginning of the coverage period of the group unless the reinsurance contracts provide proportionate coverage, in
which case it is from the later of the beginning of the coverage period of the group, or the initial recognition of any underlying
contract; or
•
The date the Company recognizes an onerous group of underlying insurance contracts if the Company entered into the
related reinsurance contract at or before that date.
Acquired direct claims and acquired ceded claims are treated as new insurance contracts issued and reinsurance contracts held at
the date of their acquisition.
Groups of contracts are established on initial recognition. The Company adds new contracts to the group when they individually meet
the criteria above. Composition of groups is not revised subsequently.
Any premiums received before the recognition of the corresponding group of insurance contracts are recognized as deferred revenues
in Other liabilities. When a group of contracts is recognized as per above the premiums received are reclassified to the liability for
remaining coverage.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
13
e)
Contract boundary
The measurement of groups of insurance and reinsurance contracts includes all the future cash flows within the boundary of
each contract.
Cash flows are within the boundary of a contract if they arise from substantive rights and obligations that exist during the reporting
period in which the entity can compel the policyholder to pay the premiums or has a substantive obligation to provide the policyholder
with services.
A substantive obligation or right ends when the entity has the practical ability to reassess risks and can set a price or level of benefits
that fully reflects those risks.
f)
Measurement models
The carrying amount of a group of insurance and reinsurance contracts at the end of each reporting period is composed of
the following:
Table 3.3 – Basic components of insurance and reinsurance contracts
Component
Description
Relates to
Liability for
remaining
coverage
The obligation to provide coverage after the reporting period for insured events that have not
yet occurred.
Future service
Liability for
incurred claims
The obligation to investigate and pay valid claims for insured events that have already
occurred, including events that have occurred but for which claims have not been reported,
and other incurred insurance expenses.
Past service
Asset for
remaining
coverage
The right to receive coverage from a reinsurer after the reporting period for reinsured events
that have not yet occurred.
Future service
Asset for
incurred claims
The right to receive compensation for reinsured events that have already occurred, including
events that have occurred but for which reinsured claims have not been reported.
Past service
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
14
INTACT FINANCIAL CORPORATION
Premium Allocation Approach
The Company applies the PAA when measuring the liability for remaining coverage as follows:
Table 3.4 – Summary of the PAA for the liability for remaining coverage
Topic
Description
Overview
The PAA is a simplified measurement model which may be applied to insurance contracts when:
•
The coverage period is one year or less; or
•
For contracts longer than one year if there is no material difference in the liability for remaining coverage
measured under both the PAA and the GMM.
Contracts
applying this
model
The Company applies the PAA to all of its insurance and reinsurance contracts, except in limited circumstances
where the GMM is required (refer to Table 3.6).
Initial and
subsequent
measurement
The liability for remaining coverage includes:
•
Premiums received;
•
Minus insurance acquisition cash flows paid net of the amortization of the insurance acquisition cash
flows recognized (refer to j) Insurance service expense below);
•
Minus amounts recognized as insurance revenue for the services provided, generally allocated based
on the passage of time which is usually 12 months (refer to i) Insurance revenue below);
•
Any investment component paid or transferred to the liability for incurred claims; and
•
Loss component for onerous contracts.
Insurance
acquisition cash
flows
Insurance acquisition cash flows are costs directly attributable to selling or underwriting a portfolio of insurance
contracts and are presented in the liability for remaining coverage. These cash flows include:
•
Direct costs such as commissions and premium taxes; and
•
An allocation of indirect costs such as salaries, rent and technology costs.
Management used judgment in determining the drivers used to allocate indirect costs to groups of insurance
contracts.
Onerous
contracts
The Company assumes that no contracts in a portfolio are potentially onerous at initial recognition unless facts
and circumstances indicate otherwise.
The Company has developed a methodology for identifying indicators of possible onerous contracts, which
includes internal management information on planning information, forecast information and historical
experience. In addition, the Company has developed models for measuring potential onerous contract losses
(refer to Onerous contracts below).
Other elections
The Company has elected to:
•
Not discount the liability for remaining coverage under the PAA; and
•
Capitalize all insurance acquisition cash flows to the related group and amortize these costs over the
coverage period of the related group.
Reinsurance
contracts
Reinsurance contracts are measured on the same basis as insurance contracts, except:
•
They are adapted to reflect the features of reinsurance contracts that differ from insurance contracts,
for example the generation of expenses or reduction in expenses rather than revenue;
•
They include an allowance for non-performance risk by the reinsurer (which is presented in Net
expense from reinsurance contracts); and
•
The risk adjustment represents the amount of risk being transferred to the reinsurer.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
15
For contracts measured under the PAA, the Company measures the liability for incurred claims as follows:
Table 3.5 – Summary of the PAA for the liability for incurred claims
Topic
Description
Liability for
incurred claims
Generally, the liability for incurred claims is discounted to consider the time value money (refer to Discount
rate below). However, for contracts measured under the PAA only, the Company is not required to adjust future
cash flows for the time value of money and the effect of financial risk if those cash flows are expected to be
paid or received in one year or less from the date the claims are incurred. The Company has elected to discount
all of its liability for incurred claims.
The Company estimates the liability for incurred claims as the fulfilment cash flows related to incurred claims.
The fulfilment cash flows incorporate, in an unbiased way, all reasonable and supportable information available
without undue cost or effort about the amount, timing and uncertainty of those future cash flow. They reflect
current estimates from the perspective of the Company and include an explicit risk adjustment (refer to Risk
adjustment below).
Liability for incurred claims include periodic payment orders which are settlements in the form of annuities
awarded by UK courts on some high value injury claims where the claimant’s quality of life has been impaired
due to severe injuries. These annuities are payable until death and increase annually, applying a defined index
set in the court decision, usually linked to care provider professionals’ salaries and are eligible for reinsurance
where applicable.
Refer to Note 10.4 – Material accounting judgments, estimates and assumptions for more details.
Onerous contracts
A group of contracts is onerous at initial recognition if there is a net outflow of fulfilment cash flows. As a result, a liability for the net
outflow is recognized as a loss component within the liability for remaining coverage and a loss is recognized immediately in Net
income in Insurance service expense. The loss component is then amortized to Net income over the coverage period to offset incurred
claims in Insurance service expense. The loss component is measured on a gross basis but may be mitigated by a loss recovery
component if the contracts are covered by reinsurance. Refer to Table 3.4 and Table 3.6 for more details.
At initial recognition, the loss recovery component is calculated by multiplying the initial loss recognized on the underlying insurance
contracts and the percentage of claims on the underlying insurance contracts the Company expects to recover from the group of
reinsurance contracts. The loss recovery component is included in the asset for remaining coverage and the recovery is recognized
immediately in Net income in Income from reinsurance contracts. The loss recovery is subsequently amortized in Income from
reinsurance contracts.
During the coverage period, if facts and circumstances indicate that a group of insurance contracts is potentially onerous, the Company
applies the same analysis it has performed for groups potentially onerous at initial recognition.
For more details on identifying onerous contracts under the PAA model, refer to Table 3.4.
Discount rate
The liability for incurred claims under the PAA and the GMM and the liability for remaining coverage under the GMM are discounted.
Estimates of future cash flows are discounted to reflect the time value of money and financial risk that considers the characteristics of
the liabilities and the duration of each portfolio. The Company has established discount yield curves using risk-free rates adjusted to
reflect the appropriate illiquidity characteristics of the applicable insurance contracts. Refer to Note 10.4 – Material accounting
judgments, estimates and assumptions for more details.
Risk adjustment
The measurement of insurance contracts includes a risk adjustment for non-financial risk which is the compensation required for
bearing the uncertainty about the amount and timing of the cash flows of groups of insurance contracts. The risk adjustment includes
the benefit of diversification and excludes the impact of financial risks. Refer to Note 10.4 – Material accounting judgments,
estimates and assumptions for more details.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
16
INTACT FINANCIAL CORPORATION
General Measurement Model
The Company applies the GMM when measuring the liability for remaining coverage as follows:
Table 3.6 – Summary of the GMM for the liability for remaining coverage
Topic
Description
Overview
The GMM is the default model to measure insurance contracts using updated estimates and assumptions that
reflect the timing of cash flows and any uncertainty relating to insurance contracts.
The liability for remaining coverage includes:
•
Fulfilment cash flows which are comprised of:
o
Discounted estimates of future cash flows (refer to Discount rate above and Note 10.4 – Material
accounting judgments, estimates and assumptions for more details); and
o
A risk adjustment (refer to Risk adjustment above) which is the compensation required for bearing
uncertainty; and
•
Contractual service margin which is the unearned profit that is recognized as services are provided.
Contracts
applying this
model
The Company applies the GMM to a limited number of contracts including:
•
Acquired claims from the RSA acquisition and any future acquisitions (refer to Table 3.7 for more
details); and
•
Retroactive reinsurance contracts to cover adverse development of existing claims mainly in the UK&I
and US segments.
Initial and
subsequent
measurement
At initial recognition, unless the group of contracts is onerous, the contractual service margin is measured at
an amount that results in no income nor expense arising from:
•
Initial recognition of fulfilment cash flows; and
•
Any cash flows arising from the contracts in the group.
Subsequently, the contractual service margin is adjusted for:
•
The effect of any new contracts;
•
Interest accreted at the discount rates at initial recognition (locked-in discount rate);
•
Changes in fulfilment cash flows relating to future service, except to the extent that such:
o
Increases exceed the contractual service margin, in which case the excess is recognized as a loss
in Net income and a loss component is recognized; and
o
Decreases are allocated to the loss component, reversing losses previously recognized in Net
income;
•
The effect of any currency exchange differences; and
•
Amounts recognized as insurance revenue for services provided, determined by allocating the
contractual service margin over the current and remaining service coverage period which is the
expected claims settlement pattern for acquired claims.
Changes in fulfilment cash flows related to current services are recognized immediately in Net income
which include:
•
Changes in risk adjustment for expired risk; and
•
Experience adjustments which are the difference between estimated premiums and claims and other
insurance service expense incurred in the period.
Onerous
contracts
Groups of contracts are assessed as onerous when fulfilment cash flows exceed the carrying amount of the
liability for remaining coverage (refer to Onerous contracts above). Refer to the Subsequent measurement
section of Table 3.7 for onerous contracts in the context of acquired claims.
Other elections
Estimates made in previous interim periods are revised therefore cash flows are measured on a year-to-
date basis.
Reinsurance
contracts
Reinsurance contracts are measured on the same basis as insurance contracts, except:
•
They include an allowance for non-performance risk by the reinsurer (which is presented in Net
expense from reinsurance contracts);
•
The risk adjustment represents the amount of risk being transferred to the reinsurer;
•
Day 1 gains/losses are recognized initially as a contractual service margin and released to Net income
as the reinsurer renders services, except for day 1 losses related to events before initial
recognition; and
•
Changes in fulfilment cash flows adjust the contractual service margin only to the extent that they relate
to changes in underlying fulfilment cash flows that have adjusted the underlying contractual service
margin. Any changes to the reinsurance contracts' fulfilment cash flows outside this limit are recognized
immediately in Net income.
For contracts measured under the GMM, the liability for incurred claims is measured similar to that under PAA. Refer to Table 3.5.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
17
g)
Claims acquired in a business combination in the scope of IFRS 3
Table 3.7 – Summary of the claims acquired in a business combination
Topic
Description
Overview
Acquired claims are treated as new insurance contracts issued by the Company at the date of their acquisition.
The Company is deemed to have received a premium in consideration to cover adverse development and the
settlement of future claims which is expected to be long tail, and as a result the GMM must be applied.
Consequently, acquired direct claims are reclassified as a liability for remaining coverage (acquired ceded
claims are reclassified as an asset for remaining coverage) in the acquirer’s Consolidated balance sheets.
Additionally, a loss component may be recognized after the acquisition if the Company pays claims later than
initially anticipated.
There is a gross presentation in Net income of Insurance service revenue representing the liability for remaining
coverage recognized over the claims settlement pattern and expenses representing the settlement of claims.
Contracts applying
this model
Acquired claims from the RSA acquisition on June 1, 2021 and any future acquisitions.
Initial recognition
(Acquisition date)
At initial recognition, the Company identifies the groups of contracts acquired based on the level of aggregation
requirements as if it entered into the contracts at the date of the acquisition.
For measurement purposes, the consideration received or paid for the contracts is treated as a proxy for the
premiums received and excludes any consideration for other assets and liabilities acquired in the same
transaction. This consideration is deemed to be the contracts’ fair value at the date of the acquisition.
The Company compares the fair value of acquired claims to its measurement of fulfilment cash flows related
to the acquired claims. If the fair value exceeds the fulfilment cash flows, a contractual service margin is
established at initial recognition. If the fulfilment cash flows exceed the fair value, the difference is treated as a
loss component and adjusts the goodwill or gain on bargain purchase.
Subsequent
measurement
The Company measures these contracts following the GMM (refer to Table 3.6).
The liability for remaining coverage is released into Net income over the coverage period based on coverage
units provided during the period. Coverage units are based on the expected claims settlement pattern, as they
expire:
•
The contractual service margin is released into Insurance revenue; and
•
The loss component is released into Insurance service expense.
As claims are settled, they are recognized as Insurance service expense.
For more details regarding coverage units, refer to Note 10.4 – Material accounting judgments, estimates
and assumptions.
Since the expected settlement pattern is used to determine how insurance revenue will be recognized, any
unexpected changes in payments beyond the reporting date such as developments in fulfilment cash flows or
changes in timing, will be recognized within the contractual service margin or the loss component as follows:
•
Unexpected increases will either erode any existing contractual service margin until exhausted and
establish a loss component for the excess or will increase any existing loss component; and
•
Unexpected decreases will either erode any existing loss component until exhausted and establish a
contractual service margin for the excess or will increase any existing contractual service margin.
h)
Modification and derecognition
The Company derecognizes insurance contracts when:
•
The rights and obligations relating to the contract are extinguished; or
•
The contract is modified such that it results in a change in the measurement model, substantially changes the contract
boundary, or requires the modified contract to be included in a different group.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
18
INTACT FINANCIAL CORPORATION
In such cases, the Company derecognizes the initial contract and recognizes the modified contract as a new contract. When a
modification is not treated as a derecognition, the Company recognizes amounts paid or received for the modification as an adjustment
to the relevant liability for remaining coverage.
i)
Insurance revenue
Insurance revenue on direct business is allocated over the coverage period of the contract and includes:
•
Premium receipts net of cancellations and promotional returns, and excluding sales taxes and any investment
components; and
•
Other insurance revenue which includes fees collected from policyholders in connection with the costs incurred for the
Company’s yearly billing plans and fees received for the administration of other policies.
j)
Insurance service expense
Insurance service expense includes fulfilment and acquisition cash flows which are costs directly attributable to insurance contracts
and are comprised of both direct costs and an allocation of indirect costs. It is composed of the following:
•
Incurred claims and other insurance service expense, which are fulfilment cash flows and include direct incurred claims and
non-acquisition costs directly related to fulfilling insurance contracts (excluding any investment component);
•
Amortization of insurance acquisition cash flows (refer to Table 3.4 and Table 3.6 for more details); and
•
Losses and reversals on onerous contracts (refer to Onerous contracts above for more details).
The Company has elected to present changes in risk adjustment related to the non-financial portion in Insurance service result and
changes in the financial portion (discount unwinding and changes in discount rates) in Net insurance financial result.
k)
Insurance finance income and expense
Insurance finance income and expense comprise the change in the carrying amount of the group of insurance contracts arising from:
•
The discount unwinding;
•
Changes in discount rates;
•
The effect of financial risk and changes in financial risk; and
•
Net foreign currency gains (losses).
The Company has elected to record changes in discount rates in Net income in Net insurance financial result.
l)
Net expense from reinsurance contracts
Net expense from reinsurance contracts comprises of the amounts expected to be recovered from reinsurers (Income from
reinsurance contracts) and an allocation of the reinsurance premiums paid (Expense from reinsurance contracts).
The Company treats reinsurance cash flows that are contingent on claims of the underlying contracts as part of the amounts
recoverable from reinsurers and includes ceded commissions not contingent on claims as a reduction of the premiums paid
to reinsurers.
m)
Other income and expense
The Company also has contracts other than insurance and reinsurance contracts which are recognized in Other income on an accrual
basis. They mainly include commission revenues received from external insurance providers by consolidated brokers and revenues
related to supply chain operations.
Other expense includes expenses that are not directly attributable to insurance contracts, the amortization of acquired intangible
assets, and administrative expenses.
3.4 Financial instruments
a)
Classification and measurement of financial assets and financial liabilities
Debt instruments
The classification and measurement of debt instruments is dependent on the business model under which the Company manages its
investments as well as their cash flow characteristics (refer to SPPI assessment below). They are reclassified when and only when
the business model for managing those assets changes.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
19
Table 3.8 – Classification of the Company’s debt instruments
Amortized cost
FVTOCI
FVTPL
Assets held for the collection of
contractual cash flows.
Cash flows represent solely
payments of principal and interest.
Assets held for the collection of
contractual cash flows and for the
sale of financial assets.
Cash flows represent solely
payments of principal and interest.
Assets that do not meet the criteria for amortized
cost nor FVTOCI are measured at FVTPL.
An irrevocable election can be made (on an
instrument-by-instrument basis) to designate assets
as FVTPL if doing so eliminates or significantly
reduces an accounting mismatch.
Business model assessment
The Company determines its investment business model by considering its insurance activities. In addition, judgment is used in
concluding which model aligns best with its core business objectives and practices. Factors that are used in business model decisions
include how insurance business generate benefits, significant risks facing the business on asset and liability fronts, how compensation
is determined for portfolio managers responsible for managing investments, as well as historical and projected turnover of the
investment portfolio to fund insurance business on a day-to-day basis. The Company’s business models fall into two categories, which
are indicative of the key strategies to generate returns:
•
The Company’s primary business model is held-to-collect and sell which provides a desired flexibility to support the
Company’s insurance business i.e., contractual cash flows from financial assets are collected by holding such investments,
and these financial assets are sold when required to fund insurance contract liabilities.
•
The Company also carries certain financial assets under the held-to-collect business model where the emphasis is to collect
contractual cash flows. Sales are incidental to this objective and are expected to be insignificant or infrequent.
The Company also specifically designates on an individual basis, a portion of investments as FVTPL to reduce accounting mismatch
in Net income. This designation is irrevocable.
SPPI assessment
Financial assets which are held within held-to-collect and sell and held-to-collect business models are assessed to evaluate if their
contractual cash flows are comprised of SPPI. Contractual cash flows generally meet SPPI criteria if such cash flows reflect
compensation for basic credit risk and customary returns from a debt instrument which also includes time value for money. Where the
contractual terms introduce exposure to risk or variability of cash flows that are inconsistent with a basic lending arrangement, the
related financial asset is classified and measured at FVTPL.
Equity instruments
There are two measurement categories under which an equity instrument could be classified: as FVTOCI or FVTPL.
Table 3.9 – Classification of the Company’s equity instruments
FVTOCI (without recycling)
FVTPL
Irrevocable election (on an instrument-by-instrument basis) on
the date of acquisition.
Designation is not permitted if the equity instrument is held
for trading.
Default classification for all equity instruments.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
20
INTACT FINANCIAL CORPORATION
Financial instruments
Table 3.10 – Classification of the Company’s most significant financial instruments
Classification
Financial
instruments
Description
Initial and subsequent measurement
FVTOCI
Debt securities
not backing
insurance
contracts
Investments intended to be held for an indefinite
period and which may be sold in response to liquidity
needs or changes in market conditions.
Initially measured at fair value using
transaction prices at the trade date.
Subsequently measured at fair value
using bid prices (except as noted below
for Level 3 instruments) at end of period,
with changes in fair value recognized in
OCI (when unrealized) or in Net gains
(losses) on investment portfolio when
realized or impaired.
Preferred
shares
Most of the Company’s preferred shares portfolios as
they are held for the purpose of earning dividend
income, with the intent of holding them for the long-
term.
Initially measured at fair value using
transaction prices at the trade date.
Subsequently measured at fair value
using bid prices at end of period, with
changes in fair value recognized in OCI
(without recycling to Net income).
Designated
as FVTPL on
initial
recognition
Debt securities
backing
insurance
contracts
A portion of the Company’s investments backing its
insurance contracts has been voluntarily designated
as FVTPL to eliminate the accounting mismatch
caused by fluctuations in fair values of underlying
insurance contracts due to changes in discount rates.
To comply with regulatory guidelines, the Company
ensures that the weighted-dollar duration of debt
securities designated as FVTPL is approximately
equal to the weighted-dollar duration of insurance
contracts.
Initially measured at fair value using
transaction prices at the trade date.
Subsequently measured at fair value
using bid prices (for financial assets) or
ask prices (for financial liabilities) at end
of period, with changes in fair value
recognized in Net gains (losses) on
investment portfolio, except for
contingent considerations which are
recognized in Acquisition, integration,
and restructuring costs.
The effective portion of designated cash
flow hedges and net investment hedges
in foreign operations is recognized in
foreign currency gains (losses) in OCI.
Classified as
FVTPL
Equity
instruments
All common share portfolios and certain preferred
shares which are classified as FVTPL.
Derivative
financial
instruments
Derivatives used for economic hedging purposes and
for the purpose of modifying the risk profile of the
Company’s investment portfolio as long as the
resulting exposures are within the investment
policy guidelines.
Contingent
considerations
Financial liability arising from a business combination
to be remeasured at fair value based on future
performance.
Other
instruments
Investments in mutual and private funds.
Amortized
cost – Other
financial
assets
Cash and cash
equivalents
Highly liquid investments held to meet short-term
requirements that are readily convertible into a known
amount of cash, are subject to an insignificant risk of
changes in value and have an original maturity of
three months or less.
Initially measured at fair value using
transaction prices at the trade date.
Subsequently measured at amortized
cost using the effective interest method.
Loans and
receivables
Financial assets with fixed or determinable payments
not quoted in an active market (including securities
purchased under reverse repurchase agreements).
Amortized
cost - Other
financial
liabilities
Debt
outstanding
Financial liabilities with fixed or determinable
payments and maturity date, such as the Company’s
medium-term and subordinated notes, term loans
and amount drawn under a credit facility.
Initially measured at fair value at the
issuance date net of transaction costs.
Subsequently measured at amortized
cost using the effective interest method.
Securities sold
under
repurchase
agreements
The sale of securities together with an agreement to
repurchase them in the short-term, at a set price
and date.
Initially measured at fair value at the
amount owing.
Subsequently measured at amortized
cost using the effective interest method.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
21
b)
Fair value measurement
The fair value of financial instruments on initial recognition is normally the transaction price, being the fair value of the consideration
given or received. After initial recognition, the fair value of financial instruments is determined based on available information and
categorized according to a three-level fair value hierarchy.
Table 3.11 – Three-level fair value hierarchy
Levels
Description
Type of financial instruments normally classified as such
Level 1
Quoted prices in active
markets for identical assets or
liabilities
•
Government debt securities1
•
Common shares and preferred shares
•
Investments in mutual funds
•
Exchange-traded derivatives
Level 2
Valuation techniques for
which all inputs that have a
significant effect on the fair
value are observable (either
directly or indirectly)
•
Government and Corporate debt securities not deemed to be Level 1
•
Debt outstanding2
•
ABS and MBS
•
Over-the-counter derivatives
Level 3
Valuation techniques for
which inputs that have a
significant effect on the fair
value are not based on
observable market data
•
Loans2
•
Private funds
•
Contingent considerations
•
Investment property
•
Other investments
1 Includes securities issued by governments and government agencies of the following countries: Canada, US, UK, Germany, France, Italy, and Japan.
2 Measured at amortized cost with fair value disclosed.
Level 1
A financial instrument is regarded as quoted in an active market if quoted prices for that financial instrument are readily and regularly
available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual
and regularly occurring market transactions on an arm’s length basis.
Level 2
Where the fair values of financial assets and financial liabilities cannot be derived from active markets, they are determined using a
variety of valuation techniques that include the use of discounted cash flow models and/or mathematical models.
For discounted cash flow models, estimated future cash flows and discount rates are based on current market information and rates
applicable to financial instruments with similar yields, credit quality and maturity characteristics.
•
Estimated future cash flows are influenced by factors such as economic conditions (including country specific risks),
concentrations in specific industries, types of instruments, currencies, market liquidity and financial condition of
counterparties.
•
Discount rates are influenced by risk free interest rates and credit risk.
The inputs to these models are derived from observable market data where possible. Inputs used in valuations include:
•
Prevailing market rates for bonds with similar characteristics and risk profiles;
•
Closing prices of the most recent trade date subject to liquidity adjustments; or
•
Average brokers’ quotes when trades are too sparse to constitute an active market.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
22
INTACT FINANCIAL CORPORATION
Level 3
The Company uses input parameters that are not based on observable market data. Non-market observable inputs use fair values
determined in whole or in part using a valuation technique or model based on assumptions that are neither supported by prices from
observable current market transactions for the same instrument nor based on available market data. In these cases, judgment is
required to establish fair values. Changes in assumptions about these factors could affect the recognized fair value of
financial instruments.
•
Loans – The fair value of loans is determined using a valuation technique based on the income approach. Future inflows of
principal and interest are discounted using a pre-tax risk-free rate from a Government bonds curve plus a risk premium that
is based on the credit risk to which the Company would be exposed from the borrowers. The Company ensures that the
discount rate is consistent with borrowing rates on similar loans issued by financial institutions. The Company receives
guarantees for loans.
•
Private funds – Private funds are measured at fair value for which the net assets value (‘’NAV’’) is generally the practical
expedient. The Company employs several procedures to assess the reasonableness of the NAV reported by the fund,
including obtaining and reviewing periodic and audited financial statements and estimating fair value based on a discounted
cash flow model that adds spreads for credit and illiquidity to a risk-free discount rate. Discount rates employed in the model
range from 2.8% to 8.7% and have a weighted average of 6.1% as at December 31, 2024 (4.2% to 9.9% and 7.2%,
respectively, as at December 31, 2023). In some cases, the Company discusses each fund’s pricing with the fund manager
throughout the year. In the event the Company believes that its estimate of the NAV differs from that reported by the fund
due to illiquidity or other factors, the Company will adjust the fund’s reported NAV to more appropriately represent the fair
value of its interest in the investment.
•
Contingent considerations – The fair value of the contingent considerations is based on future revenues or profitability
metrics discounted using a rate adjusted for specific risks related to the transaction using information as at the
measurement date.
•
Investment property – The fair value is determined, at least annually, at their highest and best use by external independent
valuers. The valuation techniques include the comparative method with reference to sales of other comparable buildings as
well as discounted cash flow models which consider the net present value of cash flows to be generated from the properties.
The cash flow streams reflect the current rent payable to lease expiry, at which point each unit is assumed to be re-let at its
estimated rental value. The discount rate considers many factors such as recent transactions on similar properties, building
location and quality, tenant credit quality and lease terms. These valuations reflect yield ranges between 5.5% to 12.0% and
a weighted average of 6.5% as at December 31, 2024 (5.4% to 12.1% and 6.4%, respectively, as at December 31, 2023).
•
Other investments – Other investments mainly include direct investments in early-stage companies, fund investments, and
investments in brokers for which the Company does not have significant influence nor control. They also include investments
in associates held by a venture capital organization that the Company elected to measure at FVTPL in accordance with
IFRS 9 – Financial Instruments (“IFRS 9”). The fair value is determined using estimates such as future cash flows, discount
rates, projected earnings multiples, multiples of broker commissions, or recent transactions.
c)
Derivative financial instruments and hedging
The Company enters a variety of derivative financial instruments to manage its exposure arising from financial assets and financial
liabilities. Derivative financial instruments are financial contracts whose value is derived from an underlying interest rate, foreign
exchange rate, equity or commodity instrument or index. The Company uses derivatives for economic hedging purposes and for the
purpose of modifying the risk profile of the Company’s investment portfolio as long as the resulting exposures are within the investment
policy guidelines. In some instances, the Company enters into derivatives in order to manage its exposure arising from the purchase
price of acquisitions made in foreign currency.
Derivatives are initially measured at fair value at the trade date and subsequently remeasured at fair value at the end of each reporting
date. Derivative financial instruments with a positive fair value are recognized as assets and presented in Other assets, while derivative
financial instruments with a negative fair value are recognized as liabilities and presented in Financial liabilities related to investments.
Changes in fair value are recognized in Net gains (losses) on investment portfolio unless the derivative financial instruments are part
of a qualified hedging relationship.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
23
Derivatives that qualify for hedge accounting
In certain circumstances, these derivatives also meet the requirements for hedge accounting. In which case, a hedging relationship
is designated and formally documented at inception by describing the risk management objective and strategy, the hedged item as
well as the methodology used to assess hedge effectiveness. Risk management strategies when eligible for hedge accounting have
been designated as net investment hedges in a foreign operation, cash flow hedges or fair value hedges.
•
Net investment hedges – The Company uses foreign currency derivatives to manage its book value exposure to foreign
operations with a functional currency other than CAD. Where the Company has elected to apply hedge accounting, the
effective portion of gains or losses on hedging derivatives, together with foreign exchange translation gains or losses on
foreign operations, is recognized in Foreign currency gains (losses) in OCI.
•
Cash flow hedges – The Company uses “fixed to fixed” interest rate swaps to hedge changes in the fair value of debt
securities. Where the Company has elected to apply hedge accounting, the effective portion of changes in the fair value of
the derivatives are recognized in OCI and the ineffective portion is recognized in Net gains (losses) on investment portfolio
in Net income.
•
Fair value hedges – The Company uses “fixed to floating” interest rate swaps to hedge changes in the fair value of debt
securities. Where the Company has elected to apply hedge accounting, the gains and losses on hedging instruments are
recognized in Net gains (losses) on investment portfolio in Net income and the change in fair value of the hedged item that
are attributable to the hedged risk is transferred from AOCI to Net income.
Hedge effectiveness is evaluated at inception and throughout the term of the hedge. For net investment hedges, effectiveness is
evaluated by using the dollar offset method based on spot foreign currency rates which is not expected to result in any ineffectiveness.
Hedge accounting is only applied when the Company expects that the hedging relationship will be highly effective in achieving
offsetting changes in fair value or changes in cash flows attributable to the risk being hedged.
Hedge accounting is discontinued prospectively when it is determined that the hedging instrument is no longer effective as a hedge,
the hedging instrument is terminated or sold, or upon the sale or early termination of the hedged item. In the case of a sale or early
termination of the hedged item, any balance remaining in AOCI as a result of hedge accounting with this hedged item is reclassified
to Net income.
Derivatives not designated for hedge accounting
Certain derivative instruments, while providing effective economic hedges, are not designated as hedging instruments in formal hedge
accounting relationships. Changes in the fair value of such derivatives are recognized in Net gains (losses) on investment portfolio in
Net income. Refer to Note 7 – Derivative financial instruments for details.
d)
Derecognition of financial assets and financial liabilities
Financial assets are no longer recognized when the rights to receive cash flows from the instruments have expired or have been
transferred and the Company has transferred substantially all the risks and rewards of ownership. Financial liabilities are no longer
recognized when they have expired or have been cancelled. Refer to Table 3.10 for the initial recognition of financial assets and
financial liabilities.
Securities purchased under reverse repurchase agreements and sold under repurchase agreements – The Company
purchases securities from major Canadian financial institutions with an agreement to resell them to the original seller in the short-term
(reverse repurchase agreements), at a set price and date. It also sells securities to major Canadian financial institutions together with
an agreement to repurchase them in the short-term (repurchase agreements), at a set price and date.
Securities purchased in the course of reverse repurchase agreements are not recognized on the Consolidated balance sheets
because the seller substantially retained the risks and rewards related to the assets sold. The commitment to resell the assets
purchased is presented in Financial assets related to investments in Other assets in the Consolidated balance sheets.
Securities sold in the course of repurchase agreements remain on the Consolidated balance sheets because the Company has not
substantially transferred the risks and rewards related to the assets sold. The obligation to repurchase the assets sold is presented in
Financial liabilities related to investments in the Consolidated balance sheets.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
24
INTACT FINANCIAL CORPORATION
Structured settlements – The Company enters into annuity agreements with various Canadian life insurance companies to provide
for fixed and recurring payments to claimants.
•
When the annuity agreements are non-commutable, non-assignable and non-transferable, the Company is released by the
claimant for the settlement of the claim amount. As a result, the liability to its claimants is substantially discharged and the
Company removes that liability from its Consolidated balance sheets. However, the Company remains exposed to the credit
risk that life insurers may fail to fulfill their obligations.
•
When the annuity agreements are commutable, assignable, or transferable, the Company keeps the liability and the
corresponding asset on its Consolidated balance sheets.
e)
Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities are offset, and the net amount is recognized on the Consolidated balance sheets only when
there is:
•
A legally enforceable right to offset the recognized amounts; and
•
An intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
f)
Revenue and expense recognition
Net investment income
•
Interest income from loans is recognized on an accrual basis, using the effective interest rate method.
•
Dividends are recognized when the shareholders’ right to receive payment is established, which is the ex-dividend date.
•
Income on debt securities is classified as follows:
o
FVTOCI is recognized in interest income using the effective interest rate method, including the amortization of premiums
earned or discounts incurred as well as transaction costs.
o
FVTPL is recognized in interest and similar income on securities designated or classified as FVTPL using a similar
methodology except that transaction costs are expensed as incurred.
Net gains (losses) on investment portfolio
•
Gains and losses on the sale of FVTOCI debt as well as FVTPL debt and equity securities are generally calculated on a first
in, first out basis, except for certain equity strategies on investment portfolio.
•
Transaction costs associated with the acquisition of financial instruments classified or designated as FVTPL are expensed
as incurred; otherwise, transaction costs are capitalized on initial recognition and amortized using the effective
interest method.
•
Transaction costs incurred at the time of disposition of a financial instrument are expensed as incurred.
g)
Impairment of financial assets other than those classified or designated as FVTPL
The Company assesses, on a forward-looking basis, the ECL associated with its assets carried at amortized cost and FVTOCI debt
securities. The impairment methodology applied depends on whether there has been a significant increase in credit risk or an
actual default.
Table 3.12 – Staging
Staging
Debt securities
Stage 1 (12 months)
Credit risk of the financial instrument is low (investment grade) or credit risk has not increased
significantly since initial recognition (performing).
Stage 2 (Life-time)
Credit risk has increased significantly since inception (underperforming) but the financial instrument is
not credit impaired.
Stage 3 (Life-time)
Financial instrument is credit impaired. Refer to Note 9.4 d) – Impairment assessment.
At each reporting date, the Company recognizes an allowance for debt instruments measured at FVTOCI or at amortized cost.
•
The ECL does not reduce the carrying amount of FVTOCI financial assets, which remain at their fair value. Instead, an
amount equal to the allowance and its subsequent changes is reclassified from OCI to Net income. Refer to Note 9.4 d) –
Impairment assessment for more details.
•
The ECL for financial instruments measured at amortized cost reduces the carrying amount of these financial assets with a
corresponding expense recognized in Net income in Net gains (losses) on investment portfolio.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
25
IFRS 9 provides a simplification where an entity may assume that the criterion for recognizing lifetime ECL is not met if the credit risk
on the financial instrument is low (“investment grade”) at the reporting date. The Company uses the low credit risk simplification as
approximatively 94% of the debt securities portfolio (94% as at December 31, 2023) consists of investment-grade financial instruments
with a quoted market price.
For trade receivables only, the Company applies the simplified approach as permitted by IFRS 9, which requires expected lifetime
losses to be recognized from initial recognition of the receivables.
3.5 Business combinations
Business combinations are accounted for using the acquisition method. The purchase consideration is measured at fair value at
acquisition date. At that date, the identifiable assets acquired, and liabilities assumed are estimated at their fair value. Acquisition-
related costs are expensed as incurred. When the Company acquires a business, it assesses financial assets acquired and financial
liabilities assumed for appropriate classification and designation in accordance with the contractual term, economic circumstances,
and relevant conditions at the acquisition date. The excess of the purchase consideration over the fair value of the net identifiable
assets acquired and liabilities assumed in a business combination results in Goodwill. When the excess is negative, a bargain gain is
recognized in Net income.
3.6 Goodwill and intangible assets
a)
Goodwill
Goodwill is initially measured at cost, being the excess of the fair value of the consideration transferred over the Company’s share in
the net identifiable assets acquired and liabilities assumed in a business combination. After initial recognition, goodwill is measured
at cost less any accumulated impairment losses.
Goodwill is allocated to CGUs, or groups of CGUs, that are expected to benefit from the business combination in which they arose.
Impairment testing is performed at least annually or more frequently if there are objective indicators of impairment, by comparing the
recoverable amount of a CGU with its carrying amount. Impairment testing is undertaken at the lowest level at which goodwill is
monitored for internal management purposes, which corresponds to the Company’s operating segments (refer to Note 30 – Segment
information).
Upon disposal of a portion of a CGU through a sale of a business as defined within IFRS 3, the carrying amount of goodwill related
to the portion of the CGU sold is included in the determination of gains and losses on disposal. The carrying amount is determined
based on the relative fair value of the disposed portion to the total CGU.
b)
Intangible assets
The Company’s intangible assets consist of distribution networks, customer relationships, trade names and internally
developed software.
•
Distribution networks represent the contractual agreements between the Company and unconsolidated brokers for the
distribution of its insurance products. It also includes selling insurance through affinity partnerships, usually to a group of
similar customers such as store-card holders, alumni groups, unions and utility company customers.
•
Customer relationships represent mainly the relationships that exist with the policyholders, either directly (as a direct insurer)
or indirectly (through consolidated brokers).
Intangible assets are initially measured at cost. The useful lives of intangible assets are assessed to be either finite or indefinite. For
each distribution network acquired, that assessment depends on the nature of the distribution network. When the related cash flows
are expected to continue indefinitely, intangible assets are assessed as having an indefinite useful life.
Intangible assets with finite lives are amortized over their useful lives and assessed for impairment whenever there is an indication
that the intangible asset may be impaired. Intangible assets with indefinite lives, as well as those intangible assets that are under
development, are not subject to amortization, but are tested for impairment on an annual basis at the CGU level.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
26
INTACT FINANCIAL CORPORATION
The amortization method and terms of intangible assets assessed as having finite useful lives are shown below.
Table 3.13 – Amortization methods and terms of intangible assets – finite useful life
Intangible assets
Method
Term
Distribution networks
Straight-line
6 to 25 years
Customer relationships
Straight-line
3 to 15 years
Trade names
Straight-line
3 to 10 years
Internally developed software
Straight-line
3 to 10 years
Amortization of intangible assets is included in Other income and expense in the Consolidated statements of income.
3.7 Foreign currency translation
The Consolidated financial statements are presented in Canadian dollars, which is the Company’s functional currency. The functional
currency is the currency of the primary economic environment in which an entity operates. The functional currency of most foreign
subsidiaries is their local currency.
Foreign currency transactions
Transactions denominated in foreign currencies are initially recognized in the functional currency of the related entity using the
exchange rates in effect at the date of the transaction.
•
Monetary assets and liabilities denominated in foreign currencies are translated using the closing exchange rates. Any
resulting exchange difference is recognized in Net income.
•
Non-monetary assets and liabilities denominated in foreign currencies and measured at historical cost are translated using
historical exchange rates, and those measured at fair value are translated using the exchange rate in effect at the date the
fair value is determined.
•
Revenues and expenses are translated using the average exchange rates for the period or the exchange rate at the date of
the transaction for significant items.
•
Net foreign currency gains and losses are recognized in income except for:
o
FVTOCI equity securities where unrealized foreign currency gains and losses remain in OCI; and
o
Designated hedges where unrealized foreign currency gains and losses are recognized in OCI.
Foreign operations
•
Assets and liabilities of foreign operations whose functional currency is other than the Canadian dollar are translated into
Canadian dollars using closing exchange rates.
•
Revenues and expenses, as well as cash flows, are translated using the average exchange rates for the period.
•
Translation gains or losses are recognized in OCI and are reclassified to income on disposal or partial disposal of the
investment in the related foreign operation.
The exchange rates used in the preparation of the Consolidated financial statements were as follows:
Table 3.14 – Exchange rates used
As at
Average rate for the years
December 31,
2024
December 31,
2023
2024
2023
USD vs CAD
1.438
1.325
1.370
1.350
GBP vs CAD
1.800
1.689
1.751
1.679
EUR vs CAD
1.489
1.463
1.482
1.460
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
27
3.8 Investments in associates and joint ventures
The Company’s investments in associates and joint ventures are mainly composed of investments in brokers which are part of the
Company’s distribution channels through which it offers its insurance products. These investments are initially recognized at the
amount of consideration paid, which includes the fair value of tangible assets, intangible assets and goodwill identified on acquisition,
plus post-acquisition changes in the Company’s share of their net assets. They are subsequently measured using the equity method.
The Company’s profit or loss from such investments is shown in Share of profit from investments in associates and joint ventures and
reflects the after-tax share of the results of operations of the associates and joint ventures. The Company determines at each reporting
date whether there is any objective evidence that investments in associates and joint ventures are impaired.
3.9 Property and equipment
Property and equipment are carried at cost less accumulated depreciation. Depreciation terms are established to depreciate the cost
of the assets over their estimated useful lives. Depreciation methods and terms are shown below.
Table 3.15 – Depreciation methods and terms of property and equipment
Property and equipment
Method
Term
Buildings
Straight-line
15 to 40 years
Furniture and equipment
Straight-line
2 to 10 years
Leasehold improvements
Straight-line
Over the terms of related leases or 10 years
3.10 Investment property and rental income
Investment property includes land and buildings mainly located in the UK which are held to earn rental income and are externally
managed and not owner-occupied.
Investment property is initially measured at cost, including transaction costs, and is subsequently measured at fair value based on
revised estimates, with changes in fair value recognized in Net gains (losses) on investment portfolio in Net income. Rental income
from the related operating leases is recognized as Net investment income in Net income on a straight-line basis over the length of
the lease.
3.11 Leases
On the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset is initially measured
at cost, which corresponds to the value of the lease liability adjusted for any lease payment made at or before the commencement
date, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method over the
lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the Company’s incremental borrowing rate for a similar asset. Lease payments included in the measurement of the
lease liability comprise fixed payments, reduced by any incentive receivable, and exclude operational costs and variable lease
payments. The lease liability is subsequently measured at amortized cost using the effective interest method.
The Company presents right-of-use assets in Property and equipment and lease liabilities in Other liabilities in the Consolidated
balance sheets. The depreciation expense is presented in Insurance service expense or Other income and expense, and the interest
expense is presented in Other finance costs in the Consolidated statements of income.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
28
INTACT FINANCIAL CORPORATION
3.12 Income taxes
a)
Income tax expense (benefit)
Income tax is recognized in Net income, except to the extent that it relates to items recognized in OCI, or directly in equity where it is
recognized in OCI or equity. Income tax expense (benefit) comprises current and deferred tax.
•
Current income tax is based on current year’s results of operations, adjusted for items that are not taxable or not deductible.
Current income tax is calculated based on income tax laws and rates enacted or substantively enacted as at the balance
sheet date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulations are subject to interpretation and provisions are established where appropriate based on amounts expected to
be paid to the tax authorities.
•
Deferred income tax is provided using the liability method on temporary differences between the carrying amount of assets
and liabilities and their respective tax values. Deferred tax is calculated using income tax laws and rates enacted or
substantively enacted as at the balance sheet date, which are expected to apply when the related deferred tax asset is
realized, or the deferred tax liability is settled. Deferred tax assets are recognized for all deductible temporary differences as
well as unused tax losses and tax credits to the extent that it is probable that taxable profit will be available against which the
losses can be utilized. For each entity for which there is a history of tax losses, deferred tax assets are only recognized in
excess of deferred tax liabilities if there is convincing evidence that future profit will be available.
Deferred tax in respect of the unremitted earnings of subsidiaries, associates and joint ventures is recognized as an expense in the
year in which the profits arise, except where the remittance of earnings can be controlled and it is probable that remittance will not
take place in the foreseeable future.
b)
Recognition and offsetting of current tax assets and liabilities
For each legal entity consolidated, current tax assets and liabilities are offset when they relate to the same taxation authority, which
allows the legal entity to receive or make one single net payment, and when it intends to settle the outstanding balances on a net
basis. Upon consolidation, a current tax asset of one entity is offset against a current tax liability of another entity if, and only if, entities
concerned have a legally enforceable right to make or receive a single net payment and entities intend to make or receive such net
payment or to recover the asset or settle the liability simultaneously.
3.13 Share-based payment plans
The Company has four types of shared-based payment plans:
a)
Long Term incentive plan
Certain key employees are eligible to participate in the LTIP. Participants are awarded notional share units referred to as PSUs and
RSUs. The PSU payout is subject to the achievement of specific targets with regards to:
•
The Company’s estimated ROE outperformance versus the global P&C industry benchmark based on a three-year average
of Canada, US and the UK weighted on the Company’s deployed capital in each country;
•
The three-year average combined ratio of the US, UK or Global Specialty Line operations compared to a specific target; or
•
A combination of both.
Most RSUs automatically vest three years from the year of the grant. Vesting of RSUs is not linked to the Company’s performance.
PSUs and RSUs – Subject to the Company’s Board of Directors’ approval, certain participants can receive cash in lieu of shares of
the Company:
•
Based on the plan structure; and
•
If they meet a defined share ownership threshold (“eligible participants”) and elect to receive cash.
At the time of the payout, the plan administrator purchases in the market the number of common shares based upon the vested PSUs
and RSUs, and elections of eligible participants.
The awards are estimated and valued at fair value at grant date, which corresponds to the average share price of the Company over
the last quarter of the preceding year.
The LTIP is accounted for as an equity-settled plan, except for the participants that are eligible to receive cash in lieu of shares of the
Company (accounted for as a cash-settled plan).
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
29
Equity-settled plan
The cost of the awards is recognized as an expense over the vesting period, with a corresponding entry to Contributed surplus. The
value of each award is not revalued subsequently, but the Company re-estimates the number of awards that are expected to vest at
each reporting period. The difference between the market price of the shares purchased and the cumulative cost for the Company of
these vested units, net of income taxes, is recognized in Retained earnings.
Cash-settled plan
The cost of the awards is recognized as an expense over the vesting period, with a corresponding entry to Other liabilities. The liability
is remeasured at each reporting period based on the number of awards that are expected to vest and the current share price, with
any fluctuations in the liability also recognized as an expense until it is settled.
b)
Employee share purchase plan
Employees who are not eligible for the LTIP are entitled to make contributions to a voluntary ESPP. Eligible employees can contribute
up to 10% of their annual base salary through a payroll deduction to purchase the Company’s common shares in the market. As an
incentive to participate in the plan, the Company matches, at the end of each year, a number of shares equal to 50% of the common
shares purchased by the employees during the year (subject to certain conditions). During the following year, the common shares
contributed by the Company are purchased by an independent broker at each pay period and deposited in the employee account
evenly each pay. The common shares contributed by the Company are awarded and vested at the time they are deposited in the
employee account.
Equity-settled plan
The fair value of awards is estimated at the grant date and is not revalued subsequently, but the Company re-estimates the number
of awards that are expected to vest at each reporting period. The cost of awards is recognized as an expense over the vesting period,
with a corresponding entry to Contributed surplus. The difference between the market price of the common shares purchased and the
cumulative cost for the Company of these vested awards, net of income taxes, is recognized in Retained earnings.
c)
Deferred share unit plan
Non-employee directors of the Company are eligible to participate in the Company’s DSU plan. A portion of the remuneration of non-
employee directors of the Company must be received in DSUs or common shares of the Company. For the remainder of their
compensation, the directors are given the choice of cash, common shares of the Company, DSUs or a combination of the three. Both
DSUs and common shares vest at the time of the grant. The DSUs are redeemed upon director retirement or termination and are
settled for cash afterwards. When directors elect to receive shares, the Company makes instalments to the plan administrator for the
purchase of shares of the Company on behalf of the directors.
Cash-settled plan
The DSUs are cash-settled awards which are expensed at the time of granting with a corresponding financial liability recognized in
Other liabilities. This liability is remeasured at each reporting date based on the current share price, with any fluctuations in the liability
also recognized as an expense until it is settled.
d)
Executive stock option plan
The Company maintains an ESOP for certain key executive employees of the Company. Under the ESOP, the Human Resources
and Compensation Committee may, at its discretion, from time-to-time grant options and SARs and also determines the terms and
conditions of grants.
The options entitle participants to purchase common shares of the Company at an exercise price that is normally equal to the volume
weighted average trading price per common share on the TSX for a period of a few days preceding the grant date. The options granted
generally vest over three to seven years upon achievement of performance objectives and are exercisable within a ten-year period,
except in the event of termination of employment or death.
The number of options expected to vest are estimated on the grant date and will be subsequently revised on each reporting date.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
30
INTACT FINANCIAL CORPORATION
Equity-settled plan
The fair value of the options, adjusted for expectations related to performance conditions and forfeitures, is accounted for as an equity-
settled plan and is recognized as an expense over the vesting period with a corresponding credit to Contributed surplus. When the
options are exercised, any consideration paid is credited to Common shares and the recognized fair value of the options is removed
from Contributed surplus and credited to Common shares.
3.14 Employee future benefits – pension
The actuarial determination of the DB obligation uses the projected unit credit method and management’s best estimate assumptions.
DB pension expense
Cost recognized in Net income in the current period includes:
•
Service cost: benefits cost provided in exchange for employees’ services rendered during the year (current service cost) or
prior years (past service cost);
•
Net interest expense: change in the DB obligation and the plan assets resulting from the passage of time; and
•
Administrative expenses paid from the pension assets.
The discount rate methodology used to determine the DB expense is determined with reference to the yields on high quality
corporate bonds.
Remeasurement of net DB asset (liability)
The rate used to discount the DB obligation is determined by reference to market yields on high quality corporate bonds with cash
flows that match the timing and amount of expected benefit payments, determined at the end of each reporting period.
Remeasurements are recognized directly in OCI in the period in which they occur and include:
•
Return on plan assets, which represents the difference between the actual return on plan assets and the return based on the
discount rate determined using high quality corporate bonds;
•
Actuarial gains and losses arising from plan experience; and
•
Changes in actuarial assumptions, such as the discount rate used to discount the DB obligation.
Such remeasurements are also immediately reclassified to Retained earnings as they will not be reclassified to Net income in
subsequent periods.
3.15 Current vs non-current
In line with industry practice for insurance companies, the Company’s balance sheets are not presented using current and
non-current classifications but are rather presented broadly in order of liquidity. Most of the Company’s assets and liabilities are
considered current given they are expected to be realized or settled within the Company’s normal operating cycle. All other assets
and liabilities are considered as non-current and generally include: Investments in associates and joint ventures, Deferred tax assets,
Property and equipment, Intangible assets, Goodwill, Deferred tax liabilities and Debt outstanding.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
31
Note 4 – Material accounting judgments, estimates and assumptions
4.1 Use of judgments, estimates and assumptions
The preparation of financial statements in conformity with IFRS Accounting Standards requires management to use judgments,
estimates and assumptions that can have a significant impact on the recognized amounts of assets and liabilities, disclosure of
contingent assets and liabilities as at the balance sheet date, as well as recognized amounts of revenues and expenses during the
reporting period. Actual results could differ significantly from these estimates.
The key estimates and assumptions that have a risk of causing a material adjustment to the carrying amount of certain assets and
liabilities are as follows:
Description
Reference
Description
Reference
Business combinations and disposals
Note 5.3
Impairment of financial assets
Note 22.1
Insurance and reinsurance contracts
Note 10.4
Measurement of income taxes
Note 26.6
Impairment of goodwill and intangible assets
Note 13.2
Valuation of DB obligation
Note 29.8
4.2 Geopolitical risk
The current geopolitical environment increases uncertainty in financial markets with a possible resurgence of trade tariffs and inflation,
including upward pressure on oil prices and the potential for global supply-chain disruptions. With the recent changes in the U.S.
Government, the threat of protectionism increases the risk of tariffs, stagflation, turbulence in the financial markets, and a weakening
of the Canadian Dollar against other currencies. Supply-chain inflation is likely to increase which would reduce insurance service
results. Recessionary conditions could also lead to lower overall demand for insurance products negatively impacting
insurance revenue.
Management will continue to monitor the impact of geopolitical risk on its use of judgements, estimates, and assumptions.
Note 5 – Business combinations and disposals
5.1 Business combinations
a)
Business acquisitions completed in 2023
The Company completed the following acquisition during the year ended December 31, 2023:
Direct Line Insurance Group plc’s brokered commercial lines operations
On September 6, 2023, the Company entered into an agreement to acquire the brokered commercial lines operations of Direct Line
Insurance Group plc (“DLG”), a P&C company with leading market positions in the UK (“the DLG acquisition”).
The purchase price included an initial cash consideration of £520 million ($869 million) paid on October 26, 2023, with potential for
up to a further £30 million ($50 million) contingent payment under earnout provisions relating to the financial performance of the
acquired business lines.
The acquisition was structured through several agreements as described below:
•
Business combination – The business transfer agreement related to new business franchise and certain operations,
renewal rights, data, brands, employees, contractors, third party contracts, and premises and the operational transfer was
completed on May 1, 2024. The business transfer agreement resulted in a business combination as the Company controlled
these net assets from the closing date of October 26, 2023, as a result, the acquired net assets were consolidated from
that date.
•
Quota share reinsurance agreement – The reinsurance agreement related to premiums written but not yet earned starting
from October 1, 2023. As a result, substantially all of the future economics of the business were transferred to the Company
before the transfer of policy renewals, which started in June 2024, and before new business was written directly by the
Company, which started in July 2024. The reinsurance agreement was recognized in direct insurance results since the fourth
quarter of 2023. In addition, if approved by the High Court of Justice in England and Wales, these policies will be legally
transferred to the Company.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
32
INTACT FINANCIAL CORPORATION
•
Administration and transitional services arrangements – The Company entered into certain arrangements to ensure the
servicing of policies during the transition.
As part of the acquisition, DLG will retain claims incurred related to premiums earned pre-October 1, 2023. As a result, the Company
is not exposed to any development on prior-year claims related to premiums earned pre-October 1, 2023.
The purchase price allocation was finalised in 2024 and there were no adjustments to the preliminary fair values. The following table
summarizes the consideration and the final determination of the fair value of identifiable assets acquired and liabilities assumed at
the acquisition date.
Table 5.1 – The DLG acquisition
As at the acquisition date (October 26, 2023)
GBP
CAD
Purchase price
Cash consideration
520
869
Contingent consideration1
3
5
Total purchase price
523
874
Fair value of the identifiable assets acquired and liabilities assumed
Assets
Intangible assets
229
383
Other
2
3
Liabilities
Deferred tax liabilities
(32)
(53)
Other
(2)
(3)
Total identifiable net assets acquired
197
330
Goodwill
326
544
Exchange rate (GBP/CAD)
1.67080
1 Recorded at fair value based on estimates of future profitability metrics, discounted using information as of the measurement date and classified in Level
3 of the fair value hierarchy. As at December 31, 2024, the contingent consideration was reassessed to nil.
The intangible assets recognized on acquisition were mainly related to distribution networks, amortized over a 15-year period, and
trade names, amortized over an 8-year period.
The fair value of the acquired distribution networks was determined using discounted cash flows with the key estimates and
assumptions as follows:
•
Cash flow projections included estimated growth rates and profitability, broker attrition rates, synergies and contributory asset
charges such as capital required to operate.
•
Discount rate was based on the weighted-average cost of capital for comparable companies with similar activities.
Trade names were determined using the relief-from royalty method, an income approach using a projection of growth to which a
royalty rate is applied. The key estimates and assumptions are the growth rate, the useful life, the royalty rate and the discount rate.
Goodwill reflects new business growth, tax synergies and the quality of the acquired businesses. Goodwill is not deductible for
tax purposes.
For the year ended December 31, 2024, the Company recognized integration costs of $60 million in Acquisition, integration and
restructuring costs (acquisition costs of $24 million and integration costs of $9 million - December 31, 2023), related to the
DLG acquisition.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
33
5.2 Disposals
a)
Disposals completed in 2024
The Company completed the following disposals during the year ended December 31, 2024:
UK Personal Lines
In 2023, the Company exited the UK Personal Lines market (motor, Home and Pet), including the announcement of both the sale of
its direct Home and Pet operations to Admiral Group plc (“Admiral”) and its decision to transfer the Home and Pet partnerships to
other parties or to let them expire over time.
The sale to Admiral closed on March 31, 2024, for an initial cash consideration of £85 million ($145 million), received on April 2, 2024,
with a potential for up to a further £33 million ($56 million) subject to the fulfilment of certain retention thresholds. The sale included
the transfer of new business franchise, certain operations, data, renewal rights, brands, and employees on March 31, 2024. The
transfer of new business and policy renewals started in July 2024. The Company will retain claims related to business it has written.
The sale resulted in a gain of $138 million which was recognized in Other net gains (losses) in the year ended December 31, 2024,
and considers a contingent consideration of nil as at December 31, 2024.
For the year ended December 31, 2024, the Company recorded restructuring costs of $129 million in Acquisition, integration and
restructuring costs ($147 million – December 31, 2023), related to the exit of the UK Personal Lines market.
5.3 Material accounting judgments, estimates and assumptions
Upon initial recognition, the acquiree’s assets and liabilities and the contingent consideration (if any) have been included in the
Consolidated balance sheets at fair value. Management determined the fair values using estimates of future cash flows and discount
rates. However, actual results can be different from those estimates. During the measurement period following the acquisition, the
changes in the estimates that relate to new information obtained about facts and circumstances that existed as of the acquisition date,
would have an impact on the amount of goodwill or gain on bargain purchase recognized. Any other changes in the estimates would
be recognized in income.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
34
INTACT FINANCIAL CORPORATION
Note 6 – Investments
6.1 Classification of investments
Table 6.1 – Classification of investments
FVTOCI
FVTPL
Amortized cost1
Total
carrying
amount
As at
Classified
as FVTOCI1
Designated
as FVTOCI
Classified
as FVTPL
Designated
as FVTPL
Carrying
amount
December 31, 2024
Cash and cash equivalents
-
-
-
-
1,145
1,145
Short-term notes
939
-
-
350
-
1,289
Fixed income
Government
4,141
-
-
6,068
-
10,209
Corporate
8,652
-
-
3,778
-
12,430
ABS and MBS2
3,155
-
223
763
-
4,141
Private funds (Non-rated)
-
-
1,702
-
-
1,702
Debt securities
16,887
-
1,925
10,959
-
29,771
Preferred shares
-
1,117
543
-
-
1,660
Common shares
-
-
6,350
-
-
6,350
Investment property
-
-
571
-
-
571
Loans
-
-
-
-
785
785
16,887
1,117
9,389
10,959
1,930
40,282
December 31, 2023
Cash and cash equivalents
-
-
-
-
1,171
1,171
Short-term notes
1,365
-
-
223
-
1,588
Fixed income
Government
3,760
-
-
6,448
-
10,208
Corporate
7,959
-
-
3,226
-
11,185
ABS and MBS2
2,925
-
183
780
-
3,888
Private funds (Non-rated)
-
-
1,567
-
-
1,567
Debt securities
16,009
-
1,750
10,677
-
28,436
Preferred shares
-
992
392
-
-
1,384
Common shares
-
-
4,668
-
-
4,668
Investment property
-
-
480
-
-
480
Loans
-
-
-
-
944
944
16,009
992
7,290
10,677
2,115
37,083
1 As at December 31, 2024 these investments were classified as stage 1 and the allowance for ECL on securities at amortized cost and classified as
FVTOCI were $1 million and $11 million, respectively ($2 million and $11 million, respectively, as at December 31, 2023).
2 Includes publicly traded MBS, which carry the full faith and credit guarantee of the US Government or are guaranteed by a government sponsored entity,
and ABS such as credit card receivables or auto loans.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
35
6.2 Carrying amount of investments
Table 6.2 – Carrying amount of investments
FVTPL
investments
Other investments
Total
investments
As at
Carrying
amount
Amortized
cost
Unrealized
gains1
Unrealized
losses1
Carrying
amount
Carrying
amount
December 31, 2024
Cash and cash equivalents
-
1,145
-
-
1,145
1,145
Debt securities
12,884
17,294
136
(543)
16,887
29,771
Preferred shares
543
1,099
80
(62)
1,117
1,660
Common shares
6,350
-
-
-
-
6,350
Investment property
571
-
-
-
-
571
Loans
-
785
-
-
785
785
20,348
20,323
216
(605)
19,934
40,282
December 31, 2023
Cash and cash equivalents
-
1,171
-
-
1,171
1,171
Debt securities
12,427
16,513
124
(628)
16,009
28,436
Preferred shares
392
1,141
9
(158)
992
1,384
Common shares
4,668
-
-
-
-
4,668
Investment property
480
-
-
-
-
480
Loans
-
944
-
-
944
944
17,967
19,769
133
(786)
19,116
37,083
1 Amounts in foreign currency are translated using the period-end exchange rate.
6.3 Collateral
The following table summarizes the investment related collateral:
Table 6.3 – Collateral
As at December 31,
2024
2023
Collateral pledged
1,488
649
Collateral accepted
2,405
2,754
The Company has pledged financial assets as collateral for liabilities or contingent liabilities, mainly consisting of debt and cash and
cash equivalents. The terms and conditions of the collateral pledged are market standard in relation to letter of credit facilities,
derivative transactions and repurchase agreements.
The Company has accepted collateral mainly consisting of government securities. The terms and conditions of the collateral accepted
are market standard in relation to securities loaned, derivative transactions and reverse repurchase agreements. The collateral cannot
be sold or re-pledged externally by the Company unless the counterparty defaults on its financial obligations. The obligation to repay
the cash is recognized in Other liabilities and the corresponding receivable is recognized in Other assets. Collateral accepted is mainly
related to securities loaned which as at December 31, 2024 had a fair value of $2,017 million ($2,631 million as at
December 31, 2023). The related collateral accepted represents approximately 105% of the fair value of the securities loaned as at
December 31, 2024 (105% as at as at December 31, 2023).
6.4 Market neutral equity investment strategy
Table 6.4 – Market neutral equity investment strategy
2024
2023
As at December 31,
Fair value
Collateral
Fair value
Collateral
Long positions – reported in Common shares
612
-
9
-
Short positions – reported in Financial liabilities related to
investments (Table 16.4)
(614)
623
(9)
10
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
36
INTACT FINANCIAL CORPORATION
Note 7 – Derivative financial instruments
7.1 Types of derivatives used
The Company generally uses derivatives for economic hedging purposes and to improve the risk profile of its investment portfolio, as
long as the resulting exposures remain within the guidelines of its investment policy. In certain circumstances, these derivatives also
meet the requirements for hedge accounting. Risk management strategies eligible for hedge accounting have been designated as net
investment hedges in foreign operations, cash flow hedges and fair value hedges. The following table summarizes the types of
derivatives used by the Company.
Table 7.1 – Types of derivatives used
Derivatives
Description
Objective
Designation
Forwards
Contractual obligations to exchange:
Currency
One currency for another at a predetermined
future date
Mitigate risk arising from foreign currency
fluctuations on:
•
Foreign currency cash inflows and outflows
impacting the Company’s operations;
Not designated
•
The Company’s net investment in foreign
operations; and
•
Foreign currency cash flows related to the
purchase price and the Company’s net
investment in foreign operations.
Net investment
hedge
Cash flow hedge if
the transaction
meets the
requirements of
“highly probable"
Futures
Contractual obligations to buy or sell:
Interest rate
An interest rate sensitive financial instrument at
a specified price and a predetermined future
date
Modify or mitigate exposure to interest rate
fluctuations
Not designated
Equity
A specified number of stocks, a basket of stocks
or an equity index at an agreed price and a
specified date
Mitigate exposure to equity market
Not designated
Swaps
Over-the-counter contracts:
Cross currency
interest rate
In which two counterparties exchange a stream
of future interest payment for another, based on
a specified principal amount and in two different
currencies
Modify or mitigate exposure to interest rate and
foreign currency fluctuations
Cash flow hedge and
Fair value hedge
Interest rate
In which two counterparties exchange a stream
of future interest payment for another, based on
a specified principal amount
Modify or mitigate exposure to interest rate
fluctuations
Fair value hedge
Equity
In which two counterparties exchange a series of
cash flows based on a basket of stocks, applied
to a notional amount
Mitigate exposure to equity market fluctuations
Not designated
Credit default
That transfer credit risk related to an underlying
financial instrument from one counterparty to
another
Modify exposure to credit risk
Not designated
Inflation
That transfer inflation risk from one party to
another
Modify exposure to inflation risk
Not designated
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
37
7.2 Fair value and notional amount of derivatives
The following table presents the notional amount by remaining term to maturity and fair value of the derivatives held by the Company
based on their designation in qualifying hedge accounting relationships.
Table 7.2 – Fair value and notional amount of derivatives
As at December 31, 2024
Term to maturity (notional amount)
Fair value
Type of hedge
Risk hedged
Instrument type
Less than 1
year
From 1
to 5 years
Over 5
years
Total
Asset
Liability
Designated for hedge accounting
Net investment hedges
Currency risk
Currency forwards
6,112
-
-
6,112
6
204
6,112
-
-
6,112
6
204
Not designated for hedge accounting
Currency forwards
1,205
-
-
1,205
2
29
Cross currency interest
rate swaps
2
-
-
2
-
-
Interest rate futures
331
-
-
331
-
-
Equity futures
3
-
-
3
-
-
Equity swaps
1,587
-
-
1,587
51
-
Inflation swaps
-
-
216
216
52
18
3,128
-
216
3,344
105
47
9,240
-
216
9,456
111
251
As at December 31, 2023
Term to maturity (notional amount)
Fair value
Type of hedge
Risk hedged
Instrument type
Less than 1
year
From 1
to 5 years
Over 5
years
Total
Asset
Liability
Designated for hedge accounting
Net investment hedges
Currency risk
Currency forwards
4,992
-
-
4,992
62
2
Cash flow hedges
Currency risk and
interest risk
Cross currency interest
rate swaps
5
42
27
74
-
9
Fair value hedges
Currency risk and
interest risk
Cross currency interest
rate swaps
-
5
-
5
-
-
Fair value hedges
Interest risk
Interest rate swaps
-
-
92
92
29
-
4,997
47
119
5,163
91
11
Not designated for hedge accounting
Currency forwards
1,343
-
-
1,343
39
7
Interest rate futures
357
-
-
357
-
-
Equity futures
843
-
-
843
-
-
Equity swaps
1,586
-
-
1,586
8
52
Inflation swaps
-
-
203
203
56
21
4,129
-
203
4,332
103
80
9,126
47
322
9,495
194
91
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
38
INTACT FINANCIAL CORPORATION
7.3 Currency hedging in relation with the DLG acquisition in 2023
Purchase price hedges
In September 2023, in connection with the DLG acquisition, the Company entered into foreign currency forward contracts to hedge
the £520 million ($869 million) purchase price to exposures from fluctuations in the CAD/GBP currency pair. These derivatives have
a notional amount of £500 million ($835 million) of which £265 million ($443 million) were contingent on the closing of the acquisition.
These derivatives, while providing effective economic hedges, did not qualify as cash flow hedges because the transaction was not
highly probable, as it was not yet approved by DLG’s shareholders. As a result, the changes in the fair value were recognized in Other
net gains (losses) in Net income. The Company recognized a loss of $20 million for the year ended December 31, 2023, related to
these derivatives. Refer to Note 23 – Other net gains (losses) and other income and expense for more details.
These derivatives were settled upon closing of the acquisition.
Net investment hedges
In September 2023, the Company also entered into a foreign currency forward contract for a notional amount of £235 million
($393 million) to hedge the currency risk related to the initial carrying value of the business to be acquired. The change in the fair
value of this derivative was recognized through Other net gains (losses) in Net income until closing of the transaction as the Company
did not have any book value exposure to the business until the acquisition closed. The Company recognized a gain of $6 million for
the year ended December 31, 2023 related to this derivative. Refer to Note 23 – Other net gains (losses) and other income and
expense for more details.
After the closing of the acquisition, this derivative was designated as a hedge of net investments in foreign operations, with changes
in fair value recognized in OCI.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
39
Note 8 – Fair value measurement
8.1 Categorization of fair value
Table 8.1 – Fair value hierarchy of financial assets, investment property and financial liabilities measured at fair value
Level 1
Level 2
Level 3
Valued using
quoted
(unadjusted)
market prices
Valued using models
As at
with
observable
inputs
without
observable
inputs
Total
December 31, 2024
Short-term notes
1,289
-
-
1,289
Fixed income
Government
3,578
6,631
-
10,209
Corporate
-
12,430
-
12,430
ABS and MBS
-
4,141
-
4,141
Private funds (Non-rated)
-
-
1,702
1,702
Debt securities
4,867
23,202
1,702
29,771
Preferred shares
1,660
-
-
1,660
Common shares
6,251
-
99
6,350
Investment property
-
-
571
571
Derivative financial assets (Table 16.2)
-
111
-
111
Financial assets and investment property measured at fair value
12,778
23,313
2,372
38,463
Financial liabilities measured at fair value (Table 16.4)
614
251
-
865
December 31, 2023
Short-term notes
1,582
6
-
1,588
Fixed income
Government
4,749
5,459
-
10,208
Corporate
-
11,185
-
11,185
ABS and MBS
-
3,888
-
3,888
Private funds (Non-rated)
-
-
1,567
1,567
Debt securities
6,331
20,538
1,567
28,436
Preferred shares
1,384
-
-
1,384
Common shares
4,539
-
129
4,668
Investment property
-
-
480
480
Derivative financial assets (Table 16.2)
-
194
-
194
Financial assets and investment property measured at fair value
12,254
20,732
2,176
35,162
Financial liabilities measured at fair value (Table 16.4)
9
91
-
100
The fair value of loans was $759 million as at December 31, 2024 ($904 million as at December 31, 2023). The carrying amount of
certain short-term financial instruments not measured at fair value is a reasonable approximation of their fair value.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
40
INTACT FINANCIAL CORPORATION
8.2 Reconciliation of fair value measurement of Level 3 financial assets and investment property
Table 8.2 – Reconciliation of fair value measurement of Level 3 financial assets and investment property
Classified as FVTPL
Years ended
Debt
securities
Common
shares
Investment
property
Total
December 31, 2024
Balance, beginning of the year
1,567
129
480
2,176
Total gains (losses) recognized in Net income
45
(1)
5
49
Purchases
224
-
59
283
Disposals
(205)
(37)
(7)
(249)
Exchange rate differences
37
8
34
79
Transfer from Level 2
34
-
-
34
Balance, end of year
1,702
99
571
2,372
December 31, 2023
Balance, beginning of the year
1,506
165
476
2,147
Total gains (losses) recognized in Net income
10
(16)
(14)
(20)
Purchases
265
-
20
285
Disposals
(188)
(26)
(15)
(229)
Exchange rate differences
(17)
6
13
2
Transfer to Level 2
(9)
-
-
(9)
Balance, end of year
1,567
129
480
2,176
Note 9 – Financial risk
The Company has a comprehensive risk management framework and internal control procedures designed to manage and monitor
various risks to protect the Company’s business, clients, shareholders and employees. The risk management programs aim to manage
risks that could materially impair the Company’s financial position, accept risks that contribute to sustainable earnings and growth and
disclose these risks in a full and complete manner.
Effective risk management consists of identifying, assessing, responding, monitoring, and reporting on all material risks that the
Company is exposed to in the course of its operations. To make sound business decisions, both strategically and operationally,
management must have continual direct access to the most timely and accurate information possible. Either directly or through its
committees, the Board of Directors ensures that the Company’s management has put appropriate risk management programs in
place. The Board of Directors, directly and through its Risk Management Committee, oversees the Company’s risk management
programs, procedures and controls and, in this regard, receives periodic reports from, among others, the Risk Management
Department through the Chief Risk Officer and internal auditors.
The current geopolitical environment increases uncertainty in financial markets. Refer to Note 4.2 – Geopolitical risk for more details.
Table 9.1 – Financial risk
Market risk
Basis risk
Credit risk
Liquidity risk
Risk
definition
Risk that the fair value or
future cash flows of a financial
instrument or investment
property will fluctuate because
of changes in equity market
prices, interest rates or credit
spreads, foreign exchange
rates, property prices or
commodity market.
Risk that offsetting
investments in an economic
hedging strategy will not
experience price changes
that entirely offset each
other.
Risk that
counterparties may not
be able to meet
payment obligations
when they become
due.
Risk that the
Company will
encounter difficulty in
raising funds to meet
obligations
associated with
financial liabilities.
Reference
Notes 9.1 and 9.2
Note 9.3
Note 9.4
Note 9.5
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
41
9.1 Market risk
Table 9.2 – Market risk
Equity price risk
Interest rate and credit spread risk
Currency risk
Property price risk
Risk
definition
Risk of losses
arising from changes
in equity market
prices.
Risk that the fair value or future cash
flows of a financial instrument will
fluctuate because of changes in
interest rates or credit spreads.
Risk that the fair value
or future cash flows of
a financial instrument
will fluctuate because
of changes in foreign
exchange rates.
Risk of losses arising from
changes in property prices.
Risk
exposure
Significant exposure
to price changes for
common shares and
preferred shares,
including pension
plan equities.
Significant exposure to changes in
interest rates from:
•
Debt securities and preferred
shares;
•
DB pension plan obligations, net
of related debt securities; and
•
Insurance and reinsurance
contracts.
A portion of the
Company’s net
investment in foreign
operations.
Investments
supporting the
Company’s Canadian
operations
denominated in
foreign currencies.
A portion of foreign
currency inflows and
outflows impacting the
Company’s
operations.
Exposure to price changes
for property.
Risk
management
Set forth limits in
terms of equity
exposure through
investment policies.
Through geographic
and economic sector
diversification and, in
some cases, the use
of derivatives.
Set forth limits in terms of interest rate
and credit spread duration through
investment policies.
Using interest-rate derivatives.
Changes in the discount rate applied
to the Company’s insurance and
reinsurance contracts offers a partial
offset to the change in price of interest
sensitive assets.
Set forth limits in
terms of currency
exposure through
investment policies.
Using foreign currency
derivatives.
Set forth limits in terms of
direct property exposure
through investment
policies.
Used to back the
Company’s long-tailed
liability for incurred claims.
The Operational Investment Committee and Governance and Sustainability Committee regularly monitor and review compliance,
respectively, with the Company’s investment policies.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
42
INTACT FINANCIAL CORPORATION
a)
Sensitivity analysis to market risk
Sensitivity analysis is a risk management technique that assists management in ensuring that risks assumed remain within the
Company’s risk tolerance level. Sensitivity analysis involves varying a single factor to assess the impact that this would have on the
Company’s results and financial condition, excluding any management action. Actual results can differ materially from these estimates
for a variety of reasons and therefore, these sensitivities should be considered as directional estimates.
Table 9.3 – Sensitivity analysis (after tax)
2024
2023
Years ended December 31,
Net income
OCI
Net income
OCI
Equity price risk
Common share prices (10% decrease)1
(284)
(69)
(158)
(66)
Preferred share prices (5% decrease)
(20)
(41)
(14)
(36)
Property price risk (10% decrease)
(43)
-
(35)
-
Interest rate risk (100 bps increase)2
Debt securities3,4
(328)
(419)
(301)
(424)
Net liability for incurred claims before net payables and claims
reported under the GMM5
380
-
350
-
DB pension plan obligation, net of related debt securities and
annuity buy-in insurance
-
70
-
84
Currency risk6
Strengthening of CAD by 10% vs all currencies
Net assets of foreign operations in:
USD
(12)
(281)
(5)
(234)
GBP
7
(233)
3
(286)
1 Includes the impact of common shares (net of any equity hedges).
2 Excludes the impact of credit spreads.
3 Excludes the impact of debt securities related to the DB pension plan.
4 Interest rate sensitivity is based on the debt securities portfolio, which comprises approximately 42% of government-related securities and 58% of
corporate-related securities.
5 Includes the impact of a +0.5% change in the discount rate of net periodic payment orders.
6 After giving effect to currency forwards.
The sensitivity analysis was prepared using the following assumptions:
•
Shifts in the yield curve are parallel;
•
Interest rates, equity prices, property prices and foreign currency move independently;
•
Credit, liquidity, spread and basis risks have not been considered; and
•
Impact on the Company’s pension plans has been considered.
FVTOCI debt securities in an unrealized loss position, as reflected in AOCI, may be realized through sales in the future.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
43
b)
Exposure to currency risk
Table 9.4 – Net foreign currency and translation exposure
As at December 31,
2024
2023
All amounts in CAD
USD
GBP
EUR
USD
GBP
EUR
Investments supporting Canadian operations
4,147
-
-
3,694
-
-
Foreign-currency derivatives, notional amount1
(4,130)
-
-
(3,655)
-
-
17
-
-
39
-
-
Consolidated net assets of foreign operations
3,075
4,519
527
2,556
4,267
515
Foreign-currency derivatives, notional amount1
-
(1,959)
(253)
-
(1,403)
(249)
3,075
2,560
274
2,556
2,864
266
Other net assets in foreign currency
178
(94)
-
54
(38)
-
Total net currency exposure
3,270
2,466
274
2,649
2,826
266
1 The average contractual rate of currency forwards designated in hedging relationships as net investment hedges were 1.3598 for USD/CAD contracts
and 1.7782 for GBP/CAD contracts as at December 31, 2024 (1.3639 and 1.6890 respectively, as at December 31, 2023).
9.2 Interest risk
The following table presents the fair value and respective duration of the Company’s assets and liabilities measured at fair value, as
well as financial instruments that are sensitive to movements in interest rates.
Table 9.5 – Interest risk
2024
2023
As at December 31,
Fair value
Duration
(in years)
Fair value
Duration
(in years)
Investments:
Debt securities
29,771
3.2
28,436
3.5
Preferred shares
1,660
3.9
1,384
3.6
Net liability for incurred claims before net payables and claims
reported under the GMM
22,994
2.2
21,641
2.1
The Company manages the interest rate risk exposure of its investment portfolio in accordance with its investment policies.
Compliance with interest rate risk exposure ranges and targets established in these policies is monitored regularly.
As a result of the transition to Alternative Reference Rates (“ARRs”) as part of the Interbank Offered Rate (“IBOR”) reform, certain
benchmark rates were discontinued. The transition resulted in changes in methodology and may have caused increased financial,
operational, legal and regulatory risks. In order to manage those risks, the Company established an enterprise-wide IBOR Transition
Working Group, supported by senior management, to coordinate the transition from IBORs to ARRs, and to monitor the development
and adoption of ARRs across the industry. The Company finalized its transition in 2024 when its exposure to the transition ended.
As at December 31, 2023, the Company had no significant exposure to IBORs that had yet to transition to ARRs.
9.3 Basis risk
The use of derivatives exposes the Company to several risks, including credit and market risks. The hedging of certain risks with
derivatives results in basis risk. The imperfect correlation between the hedging instrument and hedged item creates the potential for
excess gains or losses in a hedging strategy, thus adding risk to the position. The Company monitors the effectiveness of its economic
hedges on a regular basis. Basis risk is controlled by limits prescribed in the investment policy, which are monitored regularly.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
44
INTACT FINANCIAL CORPORATION
9.4 Credit risk
The Company’s credit risk exposure is concentrated primarily in its debt securities and preferred shares and, to a lesser extent, its
reinsurance contracts assets and its structured settlement agreements entered with various life insurance companies. The Company
is also subject to counterparty credit risk arising from over-the-counter derivatives, repurchase agreements, and securities lending
and borrowing transactions. A counterparty is any person or entity from which cash or other forms of consideration are expected to
extinguish a liability or obligation to the Company. These exposures and the Company’s risk management policy and practices used
to mitigate credit risk are explained below.
a)
Credit exposure
The table below presents the Company’s maximum exposure to credit risk without considering any collateral held or other credit
enhancements available to the Company to mitigate this risk. For on-balance sheet exposures, maximum exposure to credit risk is
defined as the carrying amount of the asset.
Table 9.6 – Maximum exposure to credit risk
As at December 31,
2024
2023
Cash and cash equivalents
1,145
1,171
Debt securities
29,771
28,436
Preferred shares
1,660
1,384
Loans
785
944
Reinsurance contract assets
4,788
5,217
Other financial assets1
1,617
1,340
On-balance sheet credit risk exposure
39,766
38,492
Structured settlements
1,571
1,488
Off-balance sheet credit risk exposure
1,571
1,488
1 Mainly includes other receivables and recoverables, financial assets related to investments, restricted funds, accrued investment income, and on-balance
sheet structured settlements.
Structured settlements
The Company has obligations to pay certain fixed amounts to claimants on a recurring basis and has purchased annuities from various
Canadian life insurers to provide for those payments. If the life insurers are in default, the Company may have to assume a financial
guarantee obligation. Therefore, the net risk to the Company is any credit risk related to the life insurers. This credit risk is reduced
since the Company deals with registered life insurers. In addition, the credit risk is further mitigated by an industry compensation
scheme which would assume a significant majority of the remaining outstanding obligations in case a life insurer defaults.
b)
Credit quality
The Company’s risk management strategy is to invest in debt securities and preferred shares of high credit quality issuers and to limit
the amount of credit exposure with respect to any one issuer by imposing limits based upon credit quality. The Company’s investment
policy requires at least 98% of the public fixed income investments portfolio to be rated investment grade and at least 57% of preferred
shares portfolio to be rated P2 (low) or better. This credit quality restriction excludes investments through debt funds. In the case of
funds, specific policy limits apply to manage the overall exposure to these investments. Management monitors subsequent credit
rating changes on a regular basis.
The Company uses data from various rating agencies to rate debt securities and preferred shares. When there are two ratings for the
same instrument, the Company uses the lower of the two. When there are three ratings for the same instrument, the Company uses
the median.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
45
The following tables present the credit quality of the Company’s debt securities and preferred shares.
Table 9.7 – Credit quality of debt securities
As at December 31,
2024
2023
Debt securities:
AAA
37%
37%
AA
20%
22%
A
25%
23%
BBB
12%
12%
Not rated
6%
6%
100%
100%
Table 9.8 – Credit quality of preferred shares1
As at December 31,
2024
2023
Preferred shares:
P2
82%
74%
P3
18%
26%
100%
100%
1 All Canadian preferred shares, including institutional, now use the same rating methodology; as a result, comparative figures have been reclassified
accordingly.
Credit risk concentration
Concentration of credit risk exists where several borrowers or counterparties are engaged in similar activities, are located in the same
geographic area or have comparable economic characteristics. Their ability to meet contractual obligations may be similarly affected
by changing economic, political or other conditions. The Company’s investments could be sensitive to changing conditions in specific
geographic regions or industries.
Investments
The Company has a significant concentration of its investments in the financial sector and in Canada. These risk concentrations are
closely monitored. To enhance sector diversification, the Company holds investment-grade non-financial US corporate bonds. The
US and European investment portfolios help diversify out of Canadian Financial issuers. The following table summarizes the
concentration risk of the Company’s investments (excluding cash and cash equivalents), net of financial liabilities related to
investments and hedging positions.
Table 9.9 – Investment breakdown by country of incorporation and by industry
As at December 31,
2024
2023
By country of incorporation:
Canada
49%
53%
US
29%
26%
UK
10%
10%
Other (mainly European countries)
12%
11%
100%
100%
By industry:
Government
30%
33%
Financials
31%
30%
ABS and MBS
11%
11%
Utilities
5%
5%
Industrials
5%
4%
Consumer staples
4%
3%
Energy
3%
2%
Other
11%
12%
100%
100%
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
46
INTACT FINANCIAL CORPORATION
The Company's regulated subsidiaries are subject to limitations on issuer concentration that vary by jurisdiction; the Company ensures
continuous compliance with these regulations. The Company also monitors aggregate concentrations of credit risk by country of issuer
and by industry regardless of the asset class (refer to Note 12.2 – Risk management and counterparty credit risk). The Company
applies limits against that aggregate exposure, which are more conservative than OSFI’s limits. Investment portfolio diversification
helps to mitigate credit risk and is monitored against established guidelines with respect to exposure to individual issuers.
Most of the investment portfolio is invested in well established, active and liquid markets.
c)
Counterparty credit risk
Counterparty credit risk arises from reinsurance (refer to Note 12.2 – Risk management and counterparty credit risk), over-the-
counter derivatives, repurchase agreements, securities lending and borrowing transactions.
Over-the-counter derivatives, repurchase agreements, securities lending and borrowing transactions
Credit risk from over-the-counter derivative transactions reflects the potential for the counterparty to default on its contractual
obligations when one or more transactions have a positive market value to the Company. Therefore, derivative-related credit risk is
represented by the positive fair value of an over-the-counter instrument and is normally a small fraction of the contract’s notional
amount. In addition, the Company may be subject to wrong-way risk arising from certain derivative transactions. Wrong-way risk
occurs when exposure to a counterparty is adversely correlated with the credit quality of that counterparty.
Credit risk from securities lending and borrowing transactions arises when the counterparty can re-hypothecate or re-pledge the
collateral externally. Credit risk from securities borrowing is the potential for the counterparty to default when the value of the collateral
posted is higher than the value of the security borrowed.
The Company subjects its derivative-related, as well as securities lending and borrowing credit risk to the same credit approval, limit
and monitoring standards that it uses for managing other transactions that create credit exposure. This includes evaluating the
creditworthiness of counterparties, and managing the size, diversification and maturity structure of the portfolio. Credit utilization for
all products is compared with established limits and is subject to a monthly review by the Operational Investment Committee. The
Company has adopted a policy whereby, upon signing the derivative contract, the counterparty is required to have a minimum credit
rating of ‘A-’ or to be guaranteed by such entity, and to have an issuer credit spread below established thresholds.
The Company uses netting clauses in master derivative agreements to reduce derivative-related credit exposure. Netting clauses in
master derivative agreements provide for a single net settlement of all financial instruments covered by the agreement in the event of
default. However, credit risk is reduced only to the extent that the Company’s financial obligations toward the counterparty to such an
agreement can be set off against obligations such counterparty has toward the Company. The overall exposure to credit risk that is
reduced through the netting clauses may change substantially following the reporting date as the exposure is affected by each
transaction subject to the agreement as well as by changes in underlying market rates and values.
The Company’s rigorous collateral management process is another significant credit mitigation tool used to manage counterparty
credit risk arising from over-the-counter derivatives, repurchase agreements, and securities lending and borrowing transactions. Most
of the Company’s legal agreements allow for daily collateral movement. Consequently, the Company regularly validates that the
collateral that it pledges is not too high and that mark-to-market provisions for derivatives are sufficient. Mark-to-market provisions
provide the Company with the right to request that the counterparty pay down or collateralize the current market value of its derivative
positions when the value exceeds a specified threshold amount.
The aggregate credit risk exposure was $280 million as at December 31, 2024 ($207 million as at December 31, 2023) and is the
sum of the replacement cost net of collateral plus an add-on amount for potential future credit exposure. The risk-weighted amount
represents the credit risk equivalent, weighted according to the creditworthiness of the counterparty.
d)
Impairment assessment
The Company’s ECL assessment and measurement method is set out below.
Expected credit loss
The Company assesses the possible default events within 12 months for the calculation of the 12mECL for investments in stage 1 of
the ECL. Given the investment policy, the probability of default for new instruments acquired is generally determined to be minimal.
Lifetime ECL is required to be calculated for instruments in stages 2 or 3. In all instances, the expected loss given default is based on
external historical data.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
47
Significant increase in credit risk and default
The Company continuously monitors all assets subject to ECLs. To determine whether an instrument or a portfolio of instruments is
subject to 12mECL or LTECL, the Company assesses whether there has been a significant increase in credit risk since
initial recognition.
The Company considers that there has been a significant increase in credit risk when any contractual payments are more than 30
days past due. In addition, the Company also considers a variety of instances that may indicate unlikeliness to pay by assessing
whether there has been a significant increase in credit risk. Such events include:
•
The internal rating of the counterparty indicating default or near-default;
•
The counterparty having past due liabilities to public creditors or employees;
•
The counterparty (or any legal entity within the debtor’s group) filing for bankruptcy application/protection; and
•
The counterparty’s listed debt or equity suspended at the primary exchange because of rumours or facts about
financial difficulties.
The Company considers a financial instrument credit impaired for ECL calculations in all cases when the counterparty becomes 90
days past due on its contractual payments. The Company may also consider an instrument to be in default when internal or external
information indicates that the Company is unlikely to receive the outstanding contractual amounts in full. In such cases, the Company
recognizes a LTECL.
Forward-looking information
In its ECL models, the Company relies on a broad range of forward-looking information as economic inputs, such as GDP growth,
unemployment, equity markets indexes and other economic inputs.
The Company’s debt instruments measured at FVTOCI and loans measured at amortized cost are in stage 1 of the ECL model. Due
to the high quality of the Company’s investment portfolio, the allowance for ECL was not significant as at December 31, 2024. Refer
to Table 6.1 – Classification of investments for more details.
9.5 Liquidity risk
The Company’s liquidity management is governed by establishing a prudent policy that identifies oversight responsibilities as well as
by setting limits and implementing effective techniques to monitor, measure and control exposure to liquidity risk. Given the nature of
the Company’s P&C insurance activities, cash flows may be volatile and unpredictable. The Company uses internal liquidity metrics
to monitor and control liquidity risk within its insurance subsidiaries and at the consolidated level.
The Company’s liquidity needs are rigorously managed by matching asset and liability cash flows and by establishing forecasts for
cash inflows and outflows. The Company invests in various types of assets to match them to its liabilities. This method maps the
obligations towards insured clients to asset life and performance. The Company reviews the matching status on a quarterly basis. To
manage its cash flow requirements, a portion of the Company’s investments is maintained in short-term (less than one year) highly
liquid money market securities. A large portion of the investments is unencumbered and held in highly liquid federal and provincial
government debt to protect against any unanticipated large cash requirements. In addition, the Company also has an unsecured
committed credit facility (refer to Note 17.4 – Other financing).
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
48
INTACT FINANCIAL CORPORATION
a)
Investments and derivative financial assets by contractual maturity
Table 9.10 – Investments and derivative financial assets by contractual maturity
As at
Less than
1 year
From 1 to
5 years
Over
5 years
No specific
maturity
Total
December 31, 2024
Cash and cash equivalents
1,145
-
-
-
1,145
Debt securities
3,506
14,469
10,047
1,749
29,771
Preferred shares
-
4
308
1,348
1,660
Common shares
-
-
-
6,350
6,350
Investment property
-
-
-
571
571
Loans
30
296
459
-
785
4,681
14,769
10,814
10,018
40,282
Derivative financial assets
59
-
52
-
111
4,740
14,769
10,866
10,018
40,393
December 31, 2023
Cash and cash equivalents
1,171
-
-
-
1,171
Debt securities
3,004
14,811
8,975
1,646
28,436
Preferred shares
-
4
91
1,289
1,384
Common shares
-
-
-
4,668
4,668
Investment property
-
-
-
480
480
Loans
82
221
641
-
944
4,257
15,036
9,707
8,083
37,083
Derivative financial assets
109
-
85
-
194
4,366
15,036
9,792
8,083
37,277
b)
Financial liabilities by contractual maturity
Table 9.11 – Financial liabilities by contractual maturity
As at
Less than
1 year
From 1 to
5 years
Over
5 years
No specific
maturity
Total
December 31, 2024
Debt outstanding
300
1,064
3,317
-
4,681
Other liabilities:
Lease liabilities – undiscounted value1
114
329
329
-
772
Financial liabilities related to investments
330
-
18
614
962
Other financial liabilities2
1,407
102
13
409
1,931
2,151
1,495
3,677
1,023
8,346
December 31, 2023
Debt outstanding
655
1,457
2,969
-
5,081
Other liabilities:
Lease liabilities – undiscounted value1
120
341
366
-
827
Financial liabilities related to investments
96
8
22
9
135
Other financial liabilities2
1,280
144
28
391
1,843
2,151
1,950
3,385
400
7,886
1 Lease liabilities includes discounting of $126 million as at December 31, 2024 ($167 million as at December 31, 2023) (refer to Note 16.2 – Other
liabilities).
2 Excludes facility carrier payables, pension plans in a deficit position and unfunded plans, other post-employment benefits and other post-retirement
benefits, and other non-financial liabilities.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
49
The contractual maturity of lease liabilities excludes operational costs and variable lease payments. The Company has extension
options for its real estate leases. Such extensions were excluded from the measurement of lease liabilities as management concluded
that it is not reasonably certain that they will be exercised.
c)
Insurance and reinsurance contracts by maturity
The following table summarizes the maturity profile of portfolios of insurance and reinsurance contracts based on the undiscounted
future cash flows and net payables included in incurred claims expected to be paid out in the periods presented.
Table 9.12 – Insurance and reinsurance contracts by contractual maturity1
Estimates of undiscounted future cash flows
As at
Less
than 1
year
From
1 to 2
years
From
2 to 3
years
From
3 to 4
years
From 4
to 5
years
Over 5
years
No
specific
maturity
Total
December 31, 2024
Insurance contracts liabilities
12,325
5,546
3,596
2,453
1,615
3,289
41
28,865
Reinsurance contracts assets
2,192
912
550
342
215
509
-
4,720
December 31, 2023
Insurance contracts liabilities
12,795
5,029
3,237
2,204
1,424
3,031
37
27,757
Reinsurance contracts assets
2,967
836
399
238
149
438
-
5,027
1 Excludes periodic payment orders and the liability for remaining coverage measured under the PAA.
Note 10 – Insurance and reinsurance contracts
10.1 Net carrying amounts of insurance and reinsurance contracts
Table 10.1 – Net carrying amounts of insurance and reinsurance contracts
As at December 31,
2024
2023
Remaining
coverage
Incurred
claims
Total
Remaining
coverage
Incurred
claims
Total
Insurance contracts:
Canada
2,842
15,070
17,912
3,134
14,012
17,146
UK&I
2,939
5,797
8,736
3,905
5,071
8,976
US
2,115
3,137
5,252
1,603
2,628
4,231
Total insurance contract liabilities
7,896
24,004
31,900
8,642
21,711
30,353
Reinsurance contracts:
Canada
39
1,492
1,531
289
1,097
1,386
UK&I
1,036
1,269
2,305
1,307
1,630
2,937
US
161
791
952
192
702
894
Total reinsurance contract assets
1,236
3,552
4,788
1,788
3,429
5,217
Net insurance and reinsurance contracts
6,660
20,452
27,112
6,854
18,282
25,136
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
50
INTACT FINANCIAL CORPORATION
10.2 Insurance revenue
Table 10.2 – Insurance revenue
Years ended December 31,
2024
2023
Contracts measured under PAA
25,279
23,546
Contracts measured under the GMM1
Amounts related to changes in liability for remaining coverage
Risk adjustment recognized for the risk expired
45
77
Expected incurred claims and other insurance service expense
1,199
1,884
Total insurance revenue
26,523
25,507
1 Insurance revenue from contracts measured under the GMM was related to acquired claims.
10.3 Reconciliation of carrying amounts
The following reconciliations show how the net carrying amounts of insurance and reinsurance contracts changed during the period
as a result of cash flows and amounts recognized in Comprehensive income.
The Company presents tables that separately analyze movements in the liability for remaining coverage and the liability for incurred
claims and reconcile these movements to the line items in Comprehensive income (Refer to Tables 10.3 and 10.5).
A second reconciliation is presented for contracts measured under the GMM, which separately analyzes changes in the estimates of
the present value of future cash flows, the risk adjustment and the contractual service margin (Refer to Tables 10.4 and 10.6).
Table 10.3 – Insurance contracts analysis by remaining coverage and incurred claims
December 31, 2024
LRC
LIC
Total
Contracts
under GMM
Contracts under PAA
Year ended
Excluding
loss
component
Loss
Component1
Present value
of future
cash flows
Risk
adjustment
Insurance contract liabilities, beginning of year
6,034
2,608
11
20,868
832
30,353
Changes in comprehensive income:
Insurance revenue
(26,523)
-
-
-
-
(26,523)
Incurred claims and other insurance service
expense
-
(1,240)
1,121
16,971
315
17,167
Amortization of insurance acquisition cash
flows
5,440
-
-
-
-
5,440
Losses and reversals on onerous contracts
-
1,109
-
-
-
1,109
Prior-year development
-
-
-
(986)
(312)
(1,298)
Insurance service expense
5,440
(131)
1,121
15,985
3
22,418
Insurance service result from insurance
contracts
(21,083)
(131)
1,121
15,985
3
(4,105)
Insurance finance expense (income)
27
92
-
926
38
1,083
Exchange rate differences
256
101
1
635
33
1,026
Total changes in comprehensive income
(20,800)
62
1,122
17,546
74
(1,996)
Cash flows
Premiums received
25,431
-
-
-
-
25,431
Claims and other insurance service expense paid
-
-
(1,097)
(15,352)
-
(16,449)
Insurance acquisition cash flows
(5,439)
-
-
-
-
(5,439)
Total cash flows
19,992
-
(1,097)
(15,352)
-
3,543
Insurance contract liabilities, end of year
5,226
2,670
36
23,062
906
31,900
1 Loss component related to acquired claims was $2,665 million as at December 31, 2024 ($2,595 million as at December 31, 2023) which reflects claims
that the Company will settle later than initially anticipated.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
51
December 31, 2023
LRC
LIC
Total
Contracts
under GMM
Contracts under PAA
Year ended
Excluding
loss
component
Loss
component1
Present value
of future
cash flows
Risk
adjustment
Insurance contract liabilities, beginning of year
7,350
2,341
52
18,642
745
29,130
Changes in comprehensive income:
Insurance revenue
(25,507)
-
-
-
-
(25,507)
Incurred claims and other insurance service
expense
-
(1,091)
1,537
16,136
345
16,927
Amortization of insurance acquisition cash
flows
5,168
-
-
-
-
5,168
Losses and reversals on onerous contracts
-
1,224
-
-
-
1,224
Prior-year development
-
-
-
(439)
(296)
(735)
Insurance service expense
5,168
133
1,537
15,697
49
22,584
Investment component
(118)
-
-
118
-
-
Insurance service result from insurance
contracts
(20,457)
133
1,537
15,815
49
(2,923)
Insurance finance expense (income)
96
88
-
870
37
1,091
Exchange rate differences
47
46
-
102
1
196
Total changes in comprehensive income
(20,314)
267
1,537
16,787
87
(1,636)
Cash flows:
Premiums received
24,375
-
-
-
-
24,375
Claims and other insurance service expense paid
-
-
(1,578)
(14,561)
-
(16,139)
Insurance acquisition cash flows
(5,397)
-
-
-
-
(5,397)
Total cash flows
18,978
-
(1,578)
(14,561)
-
2,839
Disposals and other2
20
-
-
-
-
20
Insurance contract liabilities, end of year
6,034
2,608
11
20,868
832
30,353
1 Loss component related to acquired claims was $2,595 million as at December 31, 2023 ($2,250 million as at December 31, 2022) which mostly reflects
claims that the Company will settle later than initially anticipated. The loss component not related to acquired claims is mainly due to certain groups of
insurance contracts in the UK&I.
2 Includes the write-off of insurance acquisition cash flows related to the UK Personal Lines exit. Refer to Note 5.2 – Disposals for more details.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
52
INTACT FINANCIAL CORPORATION
Table 10.4 – Insurance contracts analysis by measurement component – Contracts measured under the GMM
2024
2023
Years ended December 31,
Present value
of future
cash flows
Risk
adjustment
Total
Present value
of future
cash flows
Risk
adjustment
Total
Insurance contract liabilities, beginning of year
5,034
190
5,224
6,447
251
6,698
Changes in comprehensive income:
Changes that relate to current services:
Risk adjustment recognized for the risk
expired
-
(90)
(90)
-
(116)
(116)
Experience adjustments
(1,255)
-
(1,255)
(1,314)
-
(1,314)
Changes that relate to future services:
Changes in estimates that do not adjust the
contractual service margin
1,060
35
1,095
1,178
44
1,222
Insurance service result from insurance
contracts
(195)
(55)
(250)
(136)
(72)
(208)
Insurance finance expense (income)
141
3
144
191
6
197
Exchange rate differences
171
6
177
110
5
115
Total changes in comprehensive income
117
(46)
71
165
(61)
104
Cash flows:
Claims and other insurance service expense paid
(1,097)
-
(1,097)
(1,578)
-
(1,578)
Total cash flows
(1,097)
-
(1,097)
(1,578)
-
(1,578)
Insurance contract liabilities, end of year
4,054
144
4,198
5,034
190
5,224
Table 10.5 – Reinsurance contracts analysis by remaining coverage and incurred claims
December 31, 2024
ARC
AIC
Contracts under PAA
Year ended
Excluding
loss
recovery
component
Loss
recovery
component1
Contracts
under GMM
Present value
of future
cash flows
Risk
adjustment
Total
Reinsurance contract assets, beginning of year
1,003
785
111
3,188
130
5,217
Changes in comprehensive income:
Expense from reinsurance contracts
(2,579)
-
-
-
-
(2,579)
Amounts recoverable for incurred claims and
other expenses
-
(387)
344
1,396
45
1,398
Loss recoveries and reversals on onerous
contracts
-
298
-
-
-
298
Prior-year development
-
-
-
3
(43)
(40)
Changes in non-performance risk of reinsurers
7
-
-
(3)
-
4
Income from reinsurance contracts
7
(89)
344
1,396
2
1,660
Net expense from reinsurance contracts
(2,572)
(89)
344
1,396
2
(919)
Reinsurance finance income (expense)
24
26
-
128
6
184
Exchange rate differences
47
41
9
140
5
242
Total changes in comprehensive income
(2,501)
(22)
353
1,664
13
(493)
Cash flows
Premiums paid
2,146
-
-
-
-
2,146
Amounts received
(175)
-
(455)
(1,452)
-
(2,082)
Total cash flows
1,971
-
(455)
(1,452)
-
64
Reinsurance contract assets, end of year
473
763
9
3,400
143
4,788
1 Loss recovery component related to acquired claims was $759 million December 31, 2024 ($781 million as at December 31, 2023) and is related to the
underlying loss component that was recoverable under the terms of the reinsurance contracts held.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
53
December 31, 2023
ARC
AIC
Contracts under PAA
Year ended
Excluding
loss
recovery
component
Loss
recovery
component1
Contracts
under GMM
Present value
of future
cash flows
Risk
adjustment
Total
Reinsurance contract assets, beginning of year
1,458
662
157
2,608
119
5,004
Changes in comprehensive income
Expense from reinsurance contracts
(3,056)
-
-
-
-
(3,056)
Amounts recoverable for incurred claims and
other expenses
2
(321)
542
1,823
46
2,092
Loss recoveries and reversals on onerous
contracts
-
404
-
-
-
404
Prior-year development
-
-
-
(5)
(41)
(46)
Changes in non-performance risk of reinsurers
1
-
-
(9)
-
(8)
Income from reinsurance contracts
3
83
542
1,809
5
2,442
Net expense from reinsurance contracts
(3,053)
83
542
1,809
5
(614)
Reinsurance finance income (expense)
42
22
1
127
5
197
Exchange rate differences
22
18
1
23
1
65
Total changes in comprehensive income
(2,989)
123
544
1,959
11
(352)
Cash flows
Premiums paid
2,537
-
-
-
-
2,537
Amounts received
(3)
-
(590)
(1,379)
-
(1,972)
Total cash flows
2,534
-
(590)
(1,379)
-
565
Reinsurance contract assets, end of year
1,003
785
111
3,188
130
5,217
1 Loss recovery component related to acquired claims was $781 million as at December 31, 2023 ($649 million as at December 31, 2022) and is related
to the underlying loss component that was recoverable under the terms of the reinsurance contracts held.
Table 10.6 – Reinsurance contracts analysis by measurement component – Contracts measured under the GMM
December 31, 2024
Year ended
Present value
of future
cash flows
Risk
adjustment
Contractual
service
margin
Total
Reinsurance contract assets, beginning of year
1,685
55
9
1,749
Changes in comprehensive income
Changes that relate to current services
Contractual service margin recognized for services received
-
-
(4)
(4)
Risk adjustment recognized for the risk expired
-
(22)
-
(22)
Experience adjustments
(463)
-
-
(463)
Changes that relate to future services
Changes in estimates that do not adjust the contractual service margin
294
3
-
297
Changes in non-performance risk of reinsurers
6
-
-
6
Net expense from reinsurance contracts
(163)
(19)
(4)
(186)
Reinsurance finance income (expense)
50
2
-
52
Exchange rate differences
80
2
-
82
Total changes in comprehensive income
(33)
(15)
(4)
(52)
Cash flows
Amounts received
(455)
-
-
(455)
Total cash flows
(455)
-
-
(455)
Reinsurance contract assets, end of year
1,197
40
5
1,242
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
54
INTACT FINANCIAL CORPORATION
December 31, 2023
Year ended
Present value
of future
cash flows
Risk
adjustment
Contractual
service
margin
Total
Reinsurance contract assets, beginning of year
2,173
84
12
2,269
Changes in comprehensive income
Changes that relate to current services
Contractual service margin recognized for services received
-
-
(3)
(3)
Risk adjustment recognized for the risk expired
-
(32)
-
(32)
Experience adjustments
(450)
-
-
(450)
Changes that relate to future services
Changes in estimates that do not adjust the contractual service margin
439
(2)
-
437
Changes in non-performance risk of reinsurers
1
-
-
1
Net expense from reinsurance contracts
(10)
(34)
(3)
(47)
Reinsurance finance income (expense)
67
3
-
70
Exchange rate differences
45
2
-
47
Total changes in comprehensive income
102
(29)
(3)
70
Cash flows
Amounts received
(590)
-
-
(590)
Total cash flows
(590)
-
-
(590)
Reinsurance contract assets, end of year
1,685
55
9
1,749
10.4 Material accounting judgments, estimates and assumptions
Liability for incurred claims – Estimate of undiscounted future cash flows
The Company establishes claims liabilities to cover the estimated liability for the cash flows associated with incurred losses as at the
balance sheet date, including claims not yet reported and loss adjustment expenses incurred with respect to insurance contracts
underwritten and reinsurance contracts placed by the Company. The ultimate cost of claims liabilities is estimated by using generally
accepted standard actuarial techniques.
The main assumption underlying these techniques is that the Company’s past claims development experience can be used to project
future claims development and hence ultimate claims costs. As such, these methods extrapolate the development of paid and incurred
losses, average costs per claim (severity) and average number of claims (frequency) based on the observed development of earlier
years and expected loss ratios. Historical claims development is analyzed by accident year, geographical area, as well as significant
business line and claim type. Catastrophic weather events are separately projected to reflect the fact that their development might
differ from historical losses while very large losses are typically left reserved at the face value of claims adjuster estimates.
Additional qualitative judgment is used to assess the extent to which past trends may not apply in the future (e.g., to reflect one-off
occurrences, changes in external or market factors such as public attitudes to claiming, economic conditions, levels of claims inflation,
judicial decisions and legislation, as well as internal factors such as portfolio mix, policy features and claims handling procedures) to
arrive at the estimated ultimate cost of claims that present the probability-weighted expected value outcome from the range of possible
outcomes, taking into account all the uncertainties involved.
A particular area of consideration during the year ended December 31, 2024 has been the reducing levels of inflation. While inflation
remains higher than historically, the Company has observed slower increases to the assessed cost of claims across many different
lines of business and types of claims, consistent with the general economic environment and the wider insurance industry. A lot of
focus was put on reviewing changes in inflation assumptions, updating methodologies to project the ultimate cost of claims given the
changing trends, ensuring consistency of reserving assumptions with other areas of the business and running sensitivity tests to
understand the impact of alternative assumptions in order to get comfort with final selections. Claims inflation is likely to remain as a
key area of risk and uncertainty for the purpose of estimating the ultimate cost of claims over 2025.
In relation to COVID-19, the Company applied actuarial standards to determine its claims liabilities reserve as well as judgment, using
different scenarios and assumptions based on the increasing amount of information available. As a result of the COVID-19 crisis, the
claims liabilities may be subject to volatility from potential distortion in claims development pattern and claim severity for certain lines
of business.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
55
Discount rates
The liability for incurred claims under the PAA and GMM and the liability for remaining coverage under the PAA, when onerous, and
GMM are calculated by discounting expected future cash flows at a risk-free rate, plus an illiquidity premium where applicable. Risk-
free rates are determined by reference to the yields of highly liquid sovereign securities in the currency of the insurance contracts.
The illiquidity premium is determined by reference to observable market rates of investment grade bonds that the Company believes
reflects the nature of the liabilities and are a suitable proxy for assessing the value of illiquidity.
Discount rates applied for discounting of future cash flows are listed below:
Table 10.7 – Yield curves used to discount cash flows for insurance and reinsurance contracts for major currencies
2024
2023
As at December 31,
1 year
3 years
5 years
10 years
1 year
3 years
5 years
10 years
CAD
3.3%
3.5%
3.7%
4.1%
4.9%
4.3%
4.2%
4.2%
USD
4.6%
4.7%
4.9%
5.2%
5.2%
4.7%
4.6%
4.7%
GBP
4.9%
4.8%
5.0%
5.3%
5.0%
4.5%
4.4%
4.5%
EUR
2.6%
2.8%
3.0%
3.3%
3.5%
3.2%
3.1%
3.2%
Periodic payment orders
4.0%
4.0%
4.0%
4.0%
4.0%
4.0%
4.0%
4.0%
Risk adjustment
The risk adjustment is the compensation that the Company requires for bearing the uncertainty about the amount and timing of the
cash flows of groups of insurance contracts. It reflects an amount the Company would rationally pay to remove the uncertainty that
future cash flows will exceed the expected value amount.
The main non-financial risks considered in determining the risk adjustment are:
•
The level of uncertainty in the best estimate;
•
The variability of key inflation assumptions; and
•
Possible economic and legislative changes.
The Company has estimated the risk adjustment based on a percentile (80% as at December 31, 2024 and 2023) of the loss
distribution of the Company’s economic capital model less the mean of the loss distribution. Percentile estimates for loss distribution
are highly uncertain. The loss distribution is estimated using standard statistical techniques in accordance with generally accepted
actuarial principles.
The main assumptions underlying these techniques are:
•
Historical claims development can be used to generate the full range of potential outcomes; and
•
Expert judgments to allow for the correlation between line of business and region.
Additional qualitative judgment is used to assess the extent to which there are events not included in the historical data.
Liability for remaining coverage under the PAA (when onerous) and GMM – Estimate of undiscounted future cash flows
The Company’s objective in estimating future cash flows is to determine the expected value of the full range of possible outcomes,
considering a range of scenarios which have commercial substance and give a good representation of possible outcomes. The cash
flows from each scenario are probability-weighted and discounted using current assumptions.
When estimating future cash flows, the Company includes all cash flows on a probability-weighted basis that are within the contract
boundary. The Company incorporates, in an unbiased way, all reasonable and supportable information available without undue cost
or effort about the amount, timing and uncertainty of those future cash flows.
Coverage units
Recognition of deferred profit in Net income through the amortization of the contractual service margin is dictated by coverage units
which quantify the amount of insurance service provided in any given period. In the context of retrospective reinsurance contracts and
acquired claims, the Company deems the expected settlement pattern of outstanding future cash flows to be the best representation
of service provided.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
56
INTACT FINANCIAL CORPORATION
10.5 Sensitivity analysis
The liability for incurred claims’ sensitivity to certain key assumptions is outlined below. It is not possible to quantify the sensitivity to
certain assumptions such as legislative changes or uncertainty in the estimation process. The analysis is performed for possible
movements in the assumptions with all other assumptions held constant, showing the impact on Net income. Movements in these
assumptions may be non-linear and may be correlated with one another.
Table 10.8 – Sensitivity analysis (liability for incurred claims) – Impact on Net income
2024
2023
As at December 31,
Direct1
Net2
Direct1
Net2
Reserves
Discount
rate
Reserves
Discount
rate
Reserves
Discount
rate
Reserves
Discount
rate
+5%
+1%
+5%
+1%
+5%
+1%
+5%
+1%
Canada
(579)
241
(523)
222
(557)
222
(508)
204
UK&I3
(469)
172
(327)
105
(501)
174
(301)
95
US
(119)
44
(89)
33
(105)
40
(81)
31
1 Represents the liability for incurred claims before net payables included in incurred claims and the reclass of claims reported under the GMM.
2 Represents the net liability for incurred claims before net payables included in incurred claims and the reclass of net claims reported under the GMM.
3 Excludes periodic payment orders. A change of +0.5% in the discount rate of the direct periodic payment orders would increase Net income by $39 million
and $37 million as at December 31, 2024 and 2023, respectively. A change of +0.5% in the discount rate of net periodic payment orders would increase
Net income by $20 million and $20 million as at December 31, 2024 and 2023, respectively.
10.6 Fair value of the net liability for incurred claims
The Company estimates that the fair value of its net liability for incurred claims approximates its carrying amount.
Table 10.9 – Carrying amount of the net liability for incurred claims
2024
2023
As at December 31,
Direct
Ceded
Net
Direct
Ceded
Net
Undiscounted value
28,099
4,346
23,753
27,065
4,560
22,505
Effect of time value of money
(2,282)
(356)
(1,926)
(2,356)
(372)
(1,984)
Undiscounted risk adjustment
1,132
206
926
1,106
217
889
Periodic payment orders1
451
210
241
417
186
231
Net liability for incurred claims before net
payables and claims reported under the GMM
27,400
4,406
22,994
26,232
4,591
21,641
Net payables included in incurred claims
766
374
392
692
467
225
Reclass of claims reported under the GMM2
(4,162)
(1,228)
(2,934)
(5,213)
(1,629)
(3,584)
Net liability for incurred claims
24,004
3,552
20,452
21,711
3,429
18,282
1 The net periodic payment orders are net of the discount and risk adjustment of $358 million as at December 31, 2024 ($346 million as at
December 31, 2023).
2 Includes the acquired claims and retroactive reinsurance reclassifications from liability for incurred claims to liability for remaining coverage.
10.7 Prior-year claims development
The claims development table below demonstrates the extent to which the original claim cost estimates in any one accident year has
subsequently developed favourably (lower than originally estimated) or unfavourably. This table illustrates the variability and inherent
uncertainty in estimating the claims estimate on a yearly basis. The ultimate claims cost for any accident year is not known until all
claims payments have been made. For property insurance, payout of claims liabilities generally occurs shortly after the occurrence of
the loss. For casualty (long-tailed) coverages, the loss may not be paid, or even reported, until well after the loss occurred. The
estimated ultimate claims payments at the end of each subsequent accident year demonstrate how the original estimate has been
revised over time.
The outstanding claims liabilities assumed and revised estimates resulting from a business combination are included in the claims
development table from the acquisition year. Prior years are adjusted to ensure comparability while avoiding the presentation of
development in pre-acquisition accident years. Future developments are presented from the acquisition year.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
57
The following table presents the estimates of cumulative incurred claims after reinsurance with subsequent developments during the
periods and together with cumulative payments to date.
Table 10.10 – Prior-year claims development – net of reinsurance
Accident year
As at December 31, 2024
Total
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015 Earlier
Estimates of undiscounted net cumulative claims
8,365 8,149 7,448 7,015 5,130 4,851 4,269 4,180 3,552 3,056
Revised estimates
One year later
7,770 7,468 6,462 4,819 4,743 4,170 4,030 3,590 2,953
Two years later
7,341 6,233 4,693 4,682 4,181 3,996 3,596 2,988
Three years later
6,014 4,519 4,575 4,228 3,996 3,659 3,010
Four years later
4,405 4,503 4,167 4,012 3,705 3,030
Five years later
4,419 4,143 3,998 3,719 3,046
Six years later
4,109 3,970 3,678 3,037
Seven years later
3,945 3,634 2,982
Eight years later
3,604 3,003
Nine years later
3,019
Current estimate
8,365 7,770 7,341 6,014 4,405 4,419 4,109 3,945 3,604 3,019
Cumulative net claims paid to date
- (3,069) (4,270) (3,978) (2,883) (3,478) (3,399) (3,492) (3,232) (2,802)
Undiscounted net claims
23,753 8,365 4,701 3,071 2,036 1,522
941
710
453
372
217 1,365
Effect of time value of money
(1,926)
Undiscounted risk adjustment
926
Periodic payment orders
241
Net liability for incurred claims before net
payables and claims reported under the GMM
22,994
Net payables included in incurred claims
392
Reclass of claims reported under the GMM1
(2,934)
Net liability for incurred claims (Table 10.9)
20,452
1 Includes the acquired claims and retroactive reinsurance reclassifications from liability for incurred claims to liability for remaining coverage.
The original reserve estimates are evaluated quarterly for redundancy or deficiency. The evaluation is based on actual payments in
full or partial settlement of claims and current estimates of claims liabilities for claims still open or claims still unreported.
To eliminate the distortion resulting from changes in foreign currency rates, all amounts denominated in currencies other than the
CAD have been translated into CAD using the exchange rate in effect as at December 31, 2024.
10.8 Industry pools
The Company participates in several voluntary and mandatory industry pools in different jurisdictions as it operates in various
countries. The impact of these industry pools on the Consolidated financial statements may vary, as in some cases the Company
pays a levy to the pool and in other cases it may assume or cede risks.
Note 11 – Insurance risk
The Company principally underwrites automobile, home, as well as commercial P&C contracts to individuals and businesses in the
Canadian, UK&I and US insurance market. Refer to Note 30 – Segment information for more details.
Most of the insurance risk to which the Company is exposed is of a short-tail nature. Policies generally cover a 12-month period. The
following table presents the average duration of the net liability for incurred claims.
Table 11.1 – Average duration of the net liability for incurred claims (in years)1
As at December 31,
2024
2023
Canada
2.1
2.0
UK&I2
2.5
2.5
US
2.0
2.1
1 Represents the net liability for incurred claims before net payables included in incurred claims and the reclass of net claims reported under the GMM.
2 Includes the duration of period payment orders of 19.7 years as at December 31, 2024 (19.6 years as at December 31, 2023).
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
58
INTACT FINANCIAL CORPORATION
Insurance risk is the risk that a loss arises from the following reasons:
•
underwriting and pricing (Note 11.1);
•
fluctuation in the timing, frequency and severity of claims relative to expectations (Note 11.2);
•
large, unexpected losses arising from a single event such as a catastrophe (Note 11.3);
•
risk related to the liability for incurred claims (Note 11.4); and
•
inadequate reinsurance protection (Note 12.2).
Insured events can occur at any time during the coverage period and can generate losses of variable amounts. An objective of the
Company is to ensure that a sufficient liability for incurred claims is established to cover future insurance claim payments related to
past insured events. The Company’s success depends upon its ability to accurately assess the risk associated with the insurance
contracts underwritten by the Company. The Company establishes a liability for incurred claims to cover the estimated liability for the
payment of all losses, incurred with respect to insurance contracts underwritten by the Company.
The liability for incurred claims is the Company’s best estimate of its expected ultimate cost of resolution and administration of claims.
Expected claim cost inflation is considered when estimating the liability for incurred claims, thereby mitigating inflation risk. The
composition of the Company’s insurance risk, as well as the methods employed to mitigate risks, are described hereafter.
11.1 Underwriting and pricing risks
The insurance business is cyclical in nature whereby the industry generally reduces insurance rates following periods of increased
profitability, while it generally increases rates following periods of sustained loss. The Company’s profitability tends to follow this
cyclical market pattern and can also be affected by demand and competition. In addition, the Company’s underwriting performance is
at risk from a deterioration of the economy, unexpected cost inflation, inadequate segmentation, the misestimation of replacement
costs, and/or unclear wording in our contracts. The Company also manages emerging risks that may arise.
The Company has a risk appetite statement approved by the Board of Directors that includes guiding principles for risk taking and key
risk metrics. These metrics are monitored and reported on frequently to ensure underwriting risk remains within our tolerance.
a)
Concentration by countries and lines of business
Table 11.2 – Concentration by countries and lines of business
2024
2023
As at December 31,
Insurance
revenue1
Net liability
for incurred
claims2
Insurance
revenue1
Net liability
for incurred
claims2
By countries
Canada
64%
62%
64%
63%
UK&I
25%
28%
25%
28%
US
11%
10%
11%
9%
100%
100%
100%
100%
By lines of business
Personal auto - Canada
27%
31%
26%
31%
Personal property - Canada
16%
6%
16%
7%
Commercial lines - Canada
21%
25%
22%
25%
Personal lines - UK&I
7%
6%
7%
7%
Commercial lines - UK&I
18%
22%
18%
21%
Commercial lines - US
11%
10%
11%
9%
100%
100%
100%
100%
1 Excludes insurance revenue from acquired claims related to the RSA acquisition and assumed commissions.
2 Represents the net liability for incurred claims before net payables included in incurred claims and the reclass of net claims reported under the GMM.
Risks associated with commercial lines and personal insurance contracts may vary in relation to the geographical area of the risk
insured by the Company. For instance, legislation for automobile insurance is in place at a provincial level in Canada and this creates
differences in the benefits provided among the provinces.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
59
The Company’s exposure to concentration of insurance risk, in terms of type of risk and level of insured benefits, is mitigated by
careful selection and implementation of underwriting strategies, which is in turn largely achieved through diversification across industry
sectors and geographical areas. Diversification also reduces the uncertainty associated with the unfavourable development of claims
liabilities for the Company’s Canadian, US and UK&I operations. The Company maintains Growth and Profitability Committees
responsible for balancing growth and profitability of its insurance business and ensuring it remains adequately compensated for the
risks that it underwrites.
The Enterprise Risk Committee monitors the Company’s overall risk profile, aiming for a balance between risk, return and capital and
determines policies concerning the Company’s risk management framework. Its mandate is to identify, measure and monitor risks, as
well as avoid risks that are outside of the Company’s risk tolerance level. Further, to minimize unforeseen risks, new products are
subject to an internal product and approval review process. The Company also uses reinsurance under its strategy for managing the
underwriting risk. The availability and cost of reinsurance are subject to prevailing market conditions, both in terms of price and
available capacity, which can affect the Company’s ceded premium volume and profitability. Reinsurance companies exclude some
types of coverage from the contracts that the Company purchases from them or may alter the terms of such contracts from time to
time. These gaps in reinsurance protection expose the Company to greater risk and greater potential loss and could adversely affect
its ability to underwrite future business. Where the Company cannot successfully mitigate risk through reinsurance arrangements,
consideration is given to reducing premiums written to lower its risk.
11.2 Risk related to the timing, frequency and severity of claims
With the occurrence of claims being unforeseeable, the Company is exposed to the risk that the number and the severity of claims
could exceed the estimates.
Strict claim review policies are in place to assess all new and ongoing claims. Regular detailed reviews of claims handling procedures
and frequent investigations of possible fraudulent claims reduce the Company’s risk exposure. Further, the Company enforces a
policy of actively managing and promptly pursuing claims, to reduce its exposure to unpredictable future developments that could
negatively impact the business. The Company regularly reviews large losses and contentious matters to ensure that an appropriate
liability for incurred claims is established and approved.
11.3 Catastrophe risk
Catastrophe risk is the risk of occurrence of a catastrophe defined as any one claim, or group of claims related to a single event such
as a natural disaster or any climatic, environmental, technological, political, or geopolitical risk. Catastrophes can have a significant
impact on the underwriting income of an insurer. Changing climate conditions may add to the unpredictability, frequency and severity
of natural disasters and create additional uncertainty as to future trends and exposures.
Catastrophic events include natural disasters and unnatural events:
•
There are a wide variety of natural disasters including but not limited to earthquakes, hurricanes, windstorms, hailstorms,
rainstorms, ice storms, floods, solar storms, severe winter weather and wildfires.
•
Unnatural catastrophe events include but are not limited to hostilities, terrorist acts, riots, explosions, crashes and derailments,
and wide scale cyber-attacks.
Despite the use of sophisticated models, the incidence and severity of catastrophic events are inherently unpredictable. The extent of
losses from a catastrophic event is a function of both the total amount of insured exposure in the area affected by the event and the
severity of the event.
The Company manages its exposure to catastrophe risk by imposing limits of insurance, deductibles, exclusions and strong
underwriting guidelines on contracts, as well as by using reinsurance arrangements. The placement of ceded reinsurance is mainly
on an excess-of-loss basis (per event or per risk), but some proportional cessions are performed on specific portfolios. Ceded
reinsurance complies with regulatory guidelines. Retention limits for the excess-of-loss reinsurance vary by product line. Refer to
Note 12.1 – Company’s reinsurance net retention and coverage limits by nature of risk.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
60
INTACT FINANCIAL CORPORATION
11.4 Liability for incurred claims risk
The principal assumption underlying the liability for incurred claims estimates is that the Company’s future claims development will
follow a similar pattern to past claims development experience. Liability for incurred claims estimates are also based on various
quantitative and qualitative factors, including:
•
average claim costs, including claim handling costs (severity);
•
average number of claims by accident year (frequency);
•
trends in claim severity and frequency;
•
payment patterns;
•
inflation including social inflation;
•
other factors such as expected or in-force government pricing and coverage reforms, and level of insurance fraud;
•
discount rate; and
•
risk adjustment (refer to Note 10.4 – Material accounting judgments, estimates and assumptions for more details).
Refer to Note 10.5 – Sensitivity analysis for the liability for incurred claims’ sensitivity to certain key assumptions.
Most or all the qualitative factors are not directly quantifiable, particularly on a prospective basis, and the effects of these and
unforeseen factors could negatively impact the Company’s ability to accurately assess the risk of insurance contracts that the
Company underwrites. There may also be significant lags between the occurrence of the insured event and the time it is reported to
the Company and additional lags between the time of reporting and final settlement of claims.
Regional Reserve Review Committees provide Chief Actuaries a forum to present their estimates to business stakeholders and get
their feedback to ensure consistency across divisions within each region on key assumptions. Additionally, the Executive Vice
President, Chief Risk and Actuarial Officer being a member of each Regional Reserve Review Committee ensures that macro-level
assumptions are considered consistently across regions.
Note 12 – Reinsurance
12.1 Company’s reinsurance net retention and coverage limits by nature of risk
In the ordinary course of business, the Company reinsures certain risks with reinsurers to limit its maximum loss in the event of
catastrophic events or other significant losses.
The Company has a corporate reinsurance program which covers single risk events and multi-risk events and catastrophes. The
following table shows the reinsurance retention and coverage limits for multi-risk events and catastrophes.
Table 12.1 – Company’s reinsurance net retention and coverage limits by nature of risk
As at December 31,
2024
2023
Canadian events (in million of CAD)
Retention1
250
250
Coverage limits2
5,400
6,400
US events (in million of CAD)
Retention1
150
150
Coverage limits2
1,300
1,300
UK events (in million of GBP)
Retention1
150
125
Coverage limits2
2,100
1,600
1 Excludes reinstatement premiums, tax impacts, and co-participations between the retention level and coverage limits.
2 Represents the ground up limits before co-participations and retention level.
Effective January 1, 2024, the Company reduced its coverage limits for Canadian events to reflect the reduction in earthquake
exposure in British Columbia, while maintaining a consistent risk appetite. For US events, the Company maintained the same retention
and coverage limit for 2024. For UK events, the Company increased its UK retention and coverage limits to reflect the impact of the
DLG acquisition.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
61
Effective January 1, 2025, the Company increased its coverage limits for Canadian events from $5.4 billion to $5.6 billion to reflect a
small increase in earthquake exposure in British Columbia. The Company increased its retention in Canada from $250 million to
$350 million to reflect reinsurance market conditions. For US events, the Company maintained the same retention and coverage limit
for 2025. For UK events, the Company maintained the same retention at £150 million and reduced its coverage limits from £2.1 billion
to £1.8 billion, and effective July 1, 2025, the coverage limits will be reduced to £1.65 billion to reflect the reducing exposure from UK
Personal Lines as it continues to run-off.
In addition to the above, the Company placed a new global cover to protect against multiple catastrophe events during 2025. Losses
to specified layers beneath the main catastrophe retentions, from all business segments, are added together across the year. The
total of these losses is then protected above an aggregate deductible. The new coverage provides $250 million of limit.
The Company’s approach for setting limits in each country is consistent with prior years.
12.2 Risk management and counterparty credit risk
The Company relies on reinsurance to manage underwriting risk. Under reinsurance programs, management considers that for a
contract to reduce exposure to risk, it must be structured to ensure that the reinsurer assumes significant insurance risk related to the
underlying reinsured risks and it is reasonably possible that the reinsurer may realize a significant loss from the reinsurance.
Although reinsurance makes the assuming reinsurer liable to the Company to the extent of the risk ceded, the Company is not relieved
of its primary liability to its policyholders as the direct insurer. There is no certainty that its reinsurers will pay all reinsurance claims
on a timely basis or at all. As a result, the Company bears credit risk with respect to its reinsurers on potential future recoverable and
collectability of balances due from reinsurers is important to the Company’s financial strength.
The Company is selective with its reinsurers, placing reinsurance with only those reinsurers having a strong financial condition. The
Company’s placement of reinsurance is diversified such that it is not dependent on a single reinsurer and the Company’s operations
are not substantially dependent upon any single reinsurance contract. The Company also has a policy that limits potential exposure
to a single reinsurer. The Company monitors the financial strength of its reinsurers on a regular basis. Uncollectible amounts
historically have not been significant.
As at December 31, 2024 and 2023, the Company did not have significant concentration of credit risk with any single reinsurer.
Management concluded that the Company was not exposed to significant loss from reinsurers for potentially uncollectible reinsurance
as at December 31, 2024 and 2023.
The Company also has minimum rating requirements for its reinsurers. Substantially all reinsurers are required to have a minimum
credit rating of 'A-' at inception of the contract. The Company also requires that its contracts include a special termination and security
review clause allowing the Company to replace a reinsurer during the contract period should the reinsurer’s credit rating fall below the
level acceptable to the Company or for other reasons that might jeopardize the Company’s ability to continue doing business with
such reinsurer as intended at the time of entering into the reinsurance arrangement.
When applicable, the Company obtains collateral to support reinsurance contract assets and reduce exposure to credit risk from
unregistered reinsurers in Canada, and from unauthorized reinsurers in the US and captive reinsurers in the UK&I, which amounted
to $673 million as at December 31, 2024 ($417 million as at December 31, 2023). This collateral consists of cash, security agreements,
and letters of credit and could be used should these reinsurers be unable to meet their obligations.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
62
INTACT FINANCIAL CORPORATION
Note 13 – Goodwill and intangible assets
13.1 Summary of goodwill and intangible assets
Table 13.1 – Reconciliation of the carrying amount of goodwill and intangible assets
Intangible assets
Goodwill
Distribution
networks
Customer
relationships
and trade
names
Internally
developed
software
Total
intangible
assets
Cost
Balance as at January 1, 2024
4,085
3,847
1,246
1,888
6,981
Acquisitions and costs capitalized
302
3
129
352
484
Disposals and write-off
-
-
(10)
(30)
(40)
Exchange rate differences
120
117
13
51
181
Balance as at December 31, 2024
4,507
3,967
1,378
2,261
7,606
Accumulated amortization
Balance as at January 1, 2024
-
(568)
(584)
(782)
(1,934)
Amortization expense
-
(158)
(127)
(278)
(563)
Disposals and write-off
-
-
3
1
4
Exchange rate differences
-
(31)
(3)
(19)
(53)
Balance as at December 31, 2024
-
(757)
(711)
(1,078)
(2,546)
Net carrying amount
4,507
3,210
667
1,183
5,060
Cost
Balance as at January 1, 2023
3,350
3,547
1,105
1,560
6,212
Business combinations (Note 5)
544
313
53
17
383
Acquisitions and costs capitalized
207
9
84
385
478
Disposals and write-off1
-
-
-
(86)
(86)
Exchange rate differences
(16)
(22)
4
12
(6)
Balance as at December 31, 2023
4,085
3,847
1,246
1,888
6,981
Accumulated amortization
Balance as at January 1, 2023
-
(443)
(466)
(603)
(1,512)
Amortization expense
-
(132)
(117)
(187)
(436)
Disposals and write-off
-
-
-
8
8
Exchange rate differences
-
7
(1)
-
6
Balance as at December 31, 2023
-
(568)
(584)
(782)
(1,934)
Net carrying amount
4,085
3,279
662
1,106
5,047
1 Mainly related to the UK Personal Lines exit. Refer to Note 5.2 – Disposals for more details.
Intangible assets under development amounted to $345 million as at December 31, 2024 ($396 million as at December 31, 2023).
These intangible assets are not subject to amortization but are tested for impairment on an annual basis.
During the year ended December 31, 2024, the Company completed multiple acquisitions, related to distribution activities and supply
chain operations with a total purchase price of $368 million. The purchase price was mainly allocated to goodwill and intangibles.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
63
13.2 Material accounting judgments, estimates and assumptions
a)
Allocation of goodwill and intangible assets with indefinite lives to the group of CGUs
Goodwill and intangible assets with indefinite lives are allocated to CGUs, or groups of CGUs, that are expected to benefit from the
business combination in which they arose.
Table 13.2 – Allocation of goodwill and intangible assets with indefinite lives to the groups of CGUs
Goodwill
Intangible assets
As at December 31,
2024
2023
2024
2023
Canada
2,845
2,543
832
829
UK&I
586
550
-
-
US
1,076
992
9
9
4,507
4,085
841
838
b)
Impairment testing of goodwill and intangible assets with indefinite lives
The Company determines whether goodwill and intangible assets with indefinite useful lives (not subject to amortization) are impaired
at least annually and whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable at the
CGU or group of CGUs level.
The annual impairment tests were performed as at June 30, 2024 and 2023 for the Canada and US groups of CGUs and as at
September 30, 2024 for the UK&I CGU.
No impairment test was performed for the UK&I CGU as at December 31, 2023 since the DLG acquisition was completed in October
2023 and the related goodwill was already at fair value. Previously, there was no goodwill and intangible assets with indefinite lives
allocated to this CGU as the RSA acquisition in 2021 resulted in a bargain gain and there were no intangible assets with indefinite lives.
The Canada, UK&I, and US groups of CGUs, which correspond to the Company’s operating segments level, were tested for
impairment by comparing their carrying amount to their recoverable amount, which has been determined based on a value in use
calculation using the following key estimates and assumptions:
•
Cash flow projections for the next three years are based on financial budgets approved by the Board of Directors and
determined using budgeted margins based on past performance and management expectations for the Canada, UK&I, and
US groups of CGUs and their industry.
•
Cash flow projections beyond the three-year period are extrapolated using estimated growth rates, based mainly on the
Canadian, UK&I, and US inflation, as well as demographic or gross domestic product growth perspectives.
•
Pre-tax discount rate is based on the weighted-average cost of capital for comparable companies whose activities are similar
to the Canada, UK&I, and US groups of CGUs.
•
In some cases, the Company can use, for its current year impairment test, the most recent detailed calculation of the
recoverable amount made in a preceding year, but only if there are no significant changes to the CGU, the likelihood of
impairment is remote based on the analysis of current events and circumstances, and the most recent recoverable amount
substantially exceeds the carrying amount of the CGU. The impairment tests as at June 30, 2024 for the Canada and US
groups of CGUs were performed using the 2023 calculation of their respective recoverable amounts.
Table 13.3 – Key assumptions used (groups of CGUs)
Terminal growth rate
Pre-tax discount rate
2024
2023
2024
2023
Canada
3.0%
3.0%
11.1%
11.1%
UK&I
-%
n/a
10.5%
n/a
US
3.0%
3.0%
10.8%
10.8%
No impairment loss on goodwill or intangible assets with indefinite lives has been recognized for these CGUs for the years ended
December 31, 2024 and 2023.
The key assumptions used to determine the recoverable amount of each group of CGUs were tested for sensitivity by applying a
reasonably possible change to those assumptions, with all other assumptions held constant. The results of the sensitivity analysis
would not have resulted in an impairment of the any of the groups of CGUs.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
64
INTACT FINANCIAL CORPORATION
Note 14 – Investments in associates and joint ventures
Table 14.1 – Movement in investments in associates and joint ventures
Years ended December 31,
2024
2023
Balance, beginning of year
944
845
Acquisitions, net of disposals
(49)
42
Dividends received
(44)
(39)
Share of profit (loss) recognized in:
Net income
89
96
Balance, end of year
940
944
Of which:
Associates
572
579
Joint ventures
368
365
During the year ended December 31, 2024, there were no events or changes in circumstances that indicated that the carrying amounts
of the Company’s investments in associates and joint ventures, all of which are investments in private entities, may not be recoverable.
The Company had no significant contingent liabilities or capital commitments relating to these associates and joint ventures as at
December 31, 2024 and 2023.
Note 15 – Property and equipment
Table 15.1 – Net carrying amount of property and equipment
As at December 31,
2024
2023
Right-of-use assets1
480
493
Furniture and equipment
112
120
Leasehold improvements
154
116
Land and buildings
74
70
820
799
1 Right-of-use assets mainly related to real estate for which additions for the year ended December 31, 2024 amounted to $71 million ($123 million –
December 31, 2023). Total additions to right-of-use assets related to business combinations were nil for the year ended December 31, 2024 ($2 million –
December 31, 2023)
Note 16 – Other assets and other liabilities
16.1 Other assets
Table 16.1 – Components of other assets
As at December 31,
2024
2023
Other receivables and recoverables
534
553
Financial assets related to investments (Table 16.2)
433
203
Other investments1
376
338
Pension plans in a surplus position (Table 29.1)
296
229
Accrued investment income
248
206
Prepaids
242
195
Restricted funds
43
54
Other
142
158
2,314
1,936
1 Mainly includes preferred shares and private funds recorded at fair value based on information such as future cash flows, discount rates, projected
earnings multiples, multiples of broker commissions, or recent transactions, classified in Level 3 of the fair value hierarchy.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
65
Table 16.2 – Financial assets related to investments
As at December 31,
2024
2023
Securities purchased under reverse repurchase agreements
215
-
Derivative financial assets (Table 7.2)
111
194
Accounts receivable from investment brokers on unsettled trades
107
9
433
203
16.2 Other liabilities
Table 16.3 – Components of other liabilities
As at December 31,
2024
2023
Financial liabilities related to investments (Table 16.4)
962
135
Lease liabilities
646
660
Accrued salaries and related compensation
640
535
Accounts payable and accrued expenses
390
417
Pension plans in a deficit position and unfunded plans (Table 29.1)
218
228
Other payables to broker
190
188
Bank overdraft (Table 31.3)
148
-
Facility carrier payables
144
132
Collaterals from third parties
131
154
Industry pool payables
131
133
Provisions
106
93
Premiums payable by brokers to insurers
91
116
Other post-employment benefits and other post-retirement benefits
88
85
Other
177
263
4,062
3,139
Table 16.4 – Financial liabilities related to investments
As at December 31,
2024
2023
Equities sold short positions (Table 6.4)
614
9
Derivative financial liabilities (Table 7.2)
251
91
Accounts payable to investment brokers on unsettled trades
97
35
962
135
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
66
INTACT FINANCIAL CORPORATION
Note 17 – Debt outstanding
17.1 Summary of debt outstanding
Table 17.1 – Carrying amount of debt outstanding
Maturity
date
Initial
term
(years)
Fixed
rate
Coupon
(payment)
Principal
amount
Carrying amount (net of fees)
As at December 31,
2024
2023
Medium-term notes1
Series 2
Nov. 2039
30
6.40%
May & Nov.
250
248
248
Series 3
Jul. 2061
50
6.20%
Jan. & Jul.
100
99
99
Series 5
Jun. 2042
30
5.16%
Jun. & Dec.
250
249
249
Series 6
Mar. 2026
10
3.77%
Mar. & Sep.
250
250
250
Series 7
Jun. 2027
10
2.85%
Jun. & Dec.
425
424
424
Series 8
Mar. 2025
5
3.69%
Mar. & Sep.
300
300
299
Series 9
Dec. 2030
10
1.93%
Jun. & Dec.
300
299
299
Series 10
Dec. 2050
30
2.95%
Jun. & Dec.
300
298
298
Series 11
May 2024
3
1.21%
May & Nov.
375
-
375
Series 12
May 2028
7
2.18%
May & Nov.
375
374
374
Series 13
May 2053
32
3.77%
May & Nov.
250
248
248
Series 14
Sep. 2054
31
5.28%
Mar. & Sep.
400
396
396
Series 152
May 2034
10
4.65%
May & Nov.
300
298
-
2022 US senior notes3
Sep. 2032
10
5.46%
Mar. & Sep.
USD500
713
655
Term loans (Refer to 17.3)
GBP tranche
Feb. 2024
1
£100
-
169
GBP loan
Oct. 2025
2
£65
-
110
Guaranteed subordinated
GBP notes4 (Refer to 17.4)
Oct. 2045
31
5.13%
Oct.
£120
222
214
US bonds
Oct. 2029
30
8.95%
Apr. & Oct.
USD9
16
16
Commercial paper
-
105
Other Debt
Various
-
6
Total debt outstanding before hybrid subordinated notes
4,434
4,834
Hybrid subordinated notes
Series 15
Mar. 2081
60
4.13%
Mar. & Sep.
250
247
247
Total debt outstanding
4,681
5,081
1 Series 2 to 14 may be redeemed at the option of the issuer, in whole or in part, at any time, at a redemption price equal to the greater of the Government
of Canada Yield at the date of redemption plus a margin or their par value.
2 May be redeemed at the option of the issuer, in whole or in part, at any time within five years of maturity, from May 2029, at a redemption price equal
to their par value.
3 May be redeemed at the option of the issuer, in whole or in part, at any time, at a redemption price equal to the greater of the Treasury Rate at the date
of redemption plus a margin or their par value.
4 May be redeemed at the option of the issuer, in whole, on specific dates from October 2025 at a redemption price equal to their par value.
5 May be redeemed at the option of the issuer, in whole or in part, every five years, on specific dates, from March 2026, at a redemption price equal to
their par value.
Fair value of debt outstanding amounted to $4,692 million as at December 31, 2024 ($5,004 million as at December 31, 2023) and
was established using valuation data from a benchmark firm.
17.2 Financing issued in 2024
Series 15
Unsecured
Medium-Term
Notes
•
On May 16, 2024, the Company completed an offering of $300 million principal amount of Series 15
unsecured medium-term notes through a private placement in Canada. The notes bear interest at a fixed
annual rate of 4.65% payable in semi-annual instalments, commencing on November 16, 2024, until
May 16, 2029. Subsequently, the interest is reset at a rate of 1.00% over the Daily Compounded Canadian
Overnight Repo Rate Average and is payable in quarterly instalments until the maturity date on May 16, 2034.
•
The net proceeds received were used to redeem the Company’s $375 million Series 11 unsecured medium-
term notes due May 21, 2024.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
67
17.3 Financing issued in 2023
Series 14
Unsecured
Medium-Term
Notes
•
On September 14, 2023, the Company completed an offering of $400 million principal amount of Series 14
unsecured medium-term notes through a private placement in Canada. These notes bear interest at an annual
rate of 5.276% until maturity on September 13, 2054, payable in semi-annual instalments, commencing on
March 14, 2024.
•
The net proceeds received were used to partially fund the DLG acquisition. Refer to Note 5 – Business
combinations and disposals for more details.
Term loans
•
On February 27, 2023, the Company entered into a 12-month agreement to issue a term loan in two tranches,
one being denominated in GBP for an amount of $164 million (£100 million) (the “GBP tranche”) and the other
in CAD for an amount of $130 million (the “CAD tranche”) (together the “Term loans”). The proceeds were
used for the purpose of partially funding the UK pension plans buy-in transaction. Refer to Note 29.6 –
Additional information on UK DB pension plans for more details.
o
The GBP tranche and the CAD tranche bore interest at a rate of SONIA plus 80 basis points (“bps”) and
CDOR plus 55 bps, respectively.
o
The Company designated the GBP tranche as a net investment hedge of its UK foreign operations.
o
The CAD and GBP tranches were repaid in full using available cash as at December 31, 2023 and
December 31, 2024, respectively.
•
On October 24, 2023, the Company entered into a 24-month term loan agreement for an amount of
$109 million (£65 million), bearing interest at a rate of SONIA + 70 bps (“the GBP loan”). The proceeds were
used to partially fund the DLG acquisition. Refer to Note 5 – Business combinations and disposals for
more details. The GBP loan was repaid in full on March 26, 2024 using available excess cash.
17.4 Other financing
Credit facility
The Company has an unsecured revolving term credit facility of $1.8 billion, which matures on October 19, 2028. As at
December 31, 2024, no balance was drawn under this credit facility (nil as at December 31, 2023).
Type:
At a rate of:
Prime loans
Prime rate plus a margin
Base rate (Canada) advances
Base rate (Canada) plus a margin
Bankers’ acceptances
Bankers’ acceptance rate plus a margin
SOFR advances
SOFR rate plus a margin
The Company’s credit facility agreement contains certain financial covenants which require the Company to maintain a minimum ratio
for funded debt to consolidated capitalization and Equity attributable to shareholders at all times. As at December 31, 2024 and 2023,
the Company was in compliance with these financial covenants.
Redemption of guaranteed subordinated GBP notes
On June 6, 2023, the Company redeemed $67 million (£40 million) principal amount of the GBP notes ahead of the maturity date
using its commercial paper and available cash and cash equivalents. The redemption price was $65 million (£39 million), and the
notes had a carrying value of $72 million (£43 million). A gain on redemption of $7 million (£4 million) was recognized in Other finance
costs in Net income.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
68
INTACT FINANCIAL CORPORATION
17.5 Movement in debt outstanding
Table 17.2 – Movements in debt outstanding
Years ended December 31,
2024
2023
Balance, beginning of year
5,081
4,522
Cash flows from financing activities
Proceeds from issuance of debt
298
799
Repayment of debt
(663)
(198)
Borrowing (repayment) on the credit facility and commercial paper, net
(105)
(32)
Other
12
(10)
Exchange rate differences
58
-
Balance, end of year
4,681
5,081
Note 18 – Share capital
18.1 Authorized
Authorized share capital consists of an unlimited number of common shares and preferred shares (“Class A Shares”).
18.2 Issued and outstanding
Table 18.1 – Issued and outstanding shares
2024
2023
As at December 31,
Number
of shares
Carrying
amount
Number
of shares
Carrying
amount
Common shares
178,363,968
8,126
178,320,868
8,099
Preferred shares - Class A shares
Series 1
10,000,000
244
10,000,000
244
Series 3
10,000,000
245
10,000,000
245
Series 5
6,000,000
147
6,000,000
147
Series 6
6,000,000
147
6,000,000
147
Series 7
10,000,000
245
10,000,000
245
Series 9
6,000,000
147
6,000,000
147
Series 11
6,000,000
147
6,000,000
147
Total Class A
54,000,000
1,322
54,000,000
1,322
Other equity
LRCN Series 1 Notes
n/a
297
n/a
297
Preferred shares and other equity
1,619
1,619
Share capital
9,745
9,718
Issued and outstanding Class A shares rank in priority to common shares with regards to payment of dividends.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
69
Table 18.2 – Reconciliation of share capital
Common shares
Preferred shares
Class A shares
Other equity
Share
capital
Years ended
Number
of shares
Carrying
amount
Number
of shares
Carrying
amount
Number
of units
Carrying
amount
Carrying
amount
December 31, 2024
Balance, beginning of year
178,320,868
8,099
54,000,000
1,322
n/a
297
9,718
Issuance of common shares1
84,021
19
-
-
n/a
-
19
Issuance of common shares on
exercise of stock options2
70,000
13
-
-
n/a
-
13
Repurchase of common shares
for cancellation
(110,921)
(5)
-
-
n/a
-
(5)
Balance, end of year
178,363,968
8,126
54,000,000
1,322
n/a
297
9,745
December 31, 2023
Balance, beginning of year
175,256,968
7,542
54,000,000
1,322
n/a
-
8,864
Issuance of common shares
3,065,900
557
-
-
n/a
-
557
Issuance of other equity
-
-
-
-
n/a
297
297
Repurchase of common shares
for cancellation
(2,000)
-
-
-
n/a
-
-
Balance, end of year
178,320,868
8,099
54,000,000
1,322
n/a
297
9,718
1 Common shares issued were related to a broker acquisition transaction.
2 Refer to Note 28.4 – Executive stock option plan for more details.
18.3 Financing issued in 2023
Common
shares
•
On September 13, 2023, the Company issued 2,666,000 common shares at a price of $187.60 per common
share for gross proceeds of $500 million pursuant to a bought deal public offering in Canada, and a private
offering to qualified institutional buyers in the United States.
•
On that same date, the Company issued another 399,900 common shares for additional gross proceeds of
$75 million following the exercise, in full, of an over-allotment option.
•
Share issuance costs of $24 million ($18 million after tax) were accounted for as a reduction in common
shares on the Consolidated balance sheets.
•
$500 million of net proceeds from the issuance of common shares were used to partially fund the purchase
price of the DLG acquisition. Refer to Note 5 – Business combinations and disposals for more details.
•
The remaining $51 million of the net proceeds were used for other general corporate purposes.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
70
INTACT FINANCIAL CORPORATION
Other equity
•
On March 7, 2023, the Company issued $300 million of Limited Recourse Capital Notes Series 1
(“LRCN Series 1 Notes”) maturing on June 30, 2083. Holders of the LRCN Series 1 Notes are entitled to
receive semi-annual payments at a rate of 7.338% per annum until June 30, 2028. Thereafter, the yield will
reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 3.95%.
•
In connection with the issuance of the Notes, the Company issued 300,000 Non-Cumulative Rate Reset
Class A Shares, Series 12 (the "Series 12 Preferred Shares") which are held by a trustee of a newly formed
trust (the "Limited Recourse Trust") and which are eliminated from the Company’s consolidated financial
statements.
•
The net proceeds of $297 million are presented as equity instruments under Preferred shares and other equity.
Semi-annual payments are recorded as equity distributions, and, for tax purposes, are considered as interest.
•
In case of non-payment of interest on or the principal or redemption price of the LRCN Series 1 Notes when
due, the recourse of each holder of LRCN Series 1 Notes will be limited to that holder's proportionate share
of the Limited Recourse Trust's assets, which will consist of Series 12 Preferred Shares except in limited
circumstances.
•
The net proceeds from the LRCN Series 1 Notes were used for the purpose of partially funding the execution
of the UK pension plans buy-in transaction. Refer to Note 29.6 – Additional information on UK DB pension
plans for more details.
18.4 Preferred share conversions and dividend rate reset
Series 7 Preferred Shares
On May 31, 2023, the Company announced that it did not intend to exercise its right to redeem the Company’s Non-cumulative Rate
Reset Class A Series 7 Preferred Shares (the “Series 7 Preferred Shares”) on June 30, 2023. Holders of Series 7 Preferred shares
could elect to convert all or any of their shares into Non-cumulative Floating Rate Class A Series 8 Preferred Shares (the “Series 8
Preferred Shares”) on a one-for-one basis on June 30, 2023. There were less Series 7 Preferred Shares tendered for conversion than
the minimum required for the ability to proceed with the conversion, in accordance with the terms of the Series 7 Preferred Shares.
As a result, no conversion took place and the dividend rate was reset on June 30, 2023 to 6.012%, which will prevail from and including
June 30, 2023 to but excluding June 30, 2028.
18.5 Dividends declared and paid per share
Table 18.3 – Dividends declared and paid per share (in dollars)
Years ended December 31,
2024
2023
Common shares
4.84
4.40
Preferred shares
Series 1
1.21
1.21
Series 3
0.86
0.86
Series 5
1.30
1.30
Series 6
1.33
1.33
Series 7
1.50
1.36
Series 9
1.35
1.35
Series 11
1.31
1.31
Subsequent to year end, on February 11, 2025, the Board of Directors approved the increase of the Company's quarterly dividend
by $0.12 to $1.33 per common share. On the same day, the Board of Directors approved the quarterly dividend for common and
preferred shares for the first quarter of 2025.
The payment of dividends on common shares is subject to the discretion of the Board of Directors of the Company.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
71
The holders of record of the Company’s preferred shares are entitled to receive non-cumulative preferential cash dividends on a
quarterly basis, as and when declared by the Board of Directors of the Company.
•
Series 1 Preferred Shares – The annual dividend rate for the five-year period from and including December 31, 2022 to
December 30, 2027 is 4.841%, subject to a rate reset every five years at a rate equal to the five-year Government of Canada
bond yield plus 1.72%. The next dividend rate reset will occur on December 31, 2027.
•
Series 3 Preferred Shares – The annual dividend rate for the five-year period from and including September 30, 2021 to but
excluding September 30, 2026 is 3.457%.
•
Series 5 Preferred Shares – The annual dividend rate is 5.20% and is not subject to a rate reset.
•
Series 6 Preferred Shares – The annual dividend rate is 5.30% and is not subject to a rate reset.
•
Series 7 Preferred Shares – The annual dividend rate for the five-year period from and including June 30, 2023 to but
excluding June 30, 2028 is 6.012% (4.90% from June 30, 2018 to June 29, 2023). The dividend rate will be reset at this time
and every five years thereafter.
•
Series 9 Preferred Shares – The annual dividend rate is 5.40% and is not subject to a rate reset.
•
Series 11 Preferred Shares – The annual dividend rate is 5.25% and is not subject to a rate reset.
18.6 Normal course issuer bid
On February 17, 2024, the Company renewed its NCIB to repurchase, for cancellation, up to 5,349,626 common shares during the
next twelve months, representing approximately 3% of its issued and outstanding common shares. The actual number of common
shares purchased for cancellation and the timing of any such purchases will be determined by the Company.
The Company has entered into an automatic share purchase plan (“ASPP”) with a designated broker to repurchase its common
shares during the NCIB. The ASPP allows for purchases of shares during pre-determined black-out periods, subject to certain
parameters. Outside of these black-out periods, shares will be purchased at management’s discretion. The price for any shares will
be the market price at the time of acquisition or such other price as may be permitted by the TSX.
Subsequent to year end, on February 11, 2025, the Board authorized, subject to TSX approval, the renewal of the NCIB for the
repurchase of up to 3% of the Company’s issued and outstanding common shares over the subsequent 12-month period, commencing
February 17, 2025.
The following table presents the summary of the common shares repurchased for cancellation under the NCIB.
Table 18.4 – Summary of the common shares repurchased and cancelled under the NCIB
Years ended December 31,
2024
2023
Common shares repurchased for cancellation (in shares)
110,921
2,000
Average price (in dollars)
220.04
193.33
Total consideration paid
24
-
The cost paid, including fees, was first charged to Share capital to the extent of the average carrying amount of the common shares
purchased for cancellation. The excess of the cost paid over the average price of shares, amounting to $19 million and nil, was
charged to Retained earnings as at December 31, 2024 and 2023, respectively.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
72
INTACT FINANCIAL CORPORATION
Note 19 – Non-controlling interests
Table 19.1 – Non-controlling interests recognized in the consolidated balance sheet
As at December 31,
2024
2023
Preferred shares issued by RSA
-
285
Preferred shares
The Company assumed preferred shares issued by RSA which had a nominal value of £1 each, were not redeemable, had preferential
rights over the holders of RSA’s ordinary shares in respects of dividends and were entitled to a cumulative preferential dividend of
7.375% per annum in semi-annual installments subject to approval by the Board of Directors. As at December 31, 2023, shares issued
to and fully paid by preferred shareholders were 125,000,000.
Upon closing of the RSA acquisition in 2021, preferred shares were remeasured at fair value of $285 million (£166 million) using a
quoted market price.
On June 12, 2024, RSA’s Preference Shareholders were invited to tender their preferred shares. This transaction was part of the
Company’s on-going process of optimizing its capital structure, as these perpetual instruments would have lost their regulatory capital
eligibility in 2026 and would no longer have satisfied the purpose for which they were originally issued.
Following the shareholders’ approval on July 16, 2024, all 125,000,000 preferred shares issued by RSA were cancelled at an offer
price of £1.22 per preferred share plus voting and transaction fees for total cash consideration of $279 million (£158 million). In
addition, $5 million (£3 million) of dividends related to this transaction were accrued and paid to the preferred shareholders during the
year ended December 31, 2024. The transaction was funded through the Company’s commercial paper program and excess cash.
As a result, the Company derecognized the NCI’s carrying amount of $285 million and recorded a gain of $6 million in Retained
earnings. Following this transaction, the Company no longer has any NCI.
Note 20 – Accumulated other comprehensive income (loss)
Table 20.1 – Components of AOCI
As at December 31,
2024
2023
FVTOCI debt securities
(253)
(338)
Translation of foreign operations, net of hedges
436
17
183
(321)
Note 21 – Capital management
21.1 Capital management objectives
Capital management is a vital part of the financial management of the Company and is aligned with its strategy and business plan.
Capital is managed on a group basis as well as individually for each operating subsidiary.
The Company’s objectives when managing capital consist of:
•
maximizing long-term shareholder value by optimizing capital used to operate and grow the Company; and
•
maintaining strong regulatory capital levels, to ensure policyholders are well protected and the probability of breaching
regulatory minimum requirements is very low.
The Company seeks to maintain adequate capital levels to ensure the probability of breaching the regulatory minimum requirements
is very low. Such levels may vary over time depending on the Company’s evaluation of risks and their potential impact on capital. The
Company also keeps higher levels of capital margin when it foresees growth or actionable opportunities in the near term. Furthermore,
the Company may return capital to shareholders through annual dividend increases and, when appropriate, through share buybacks.
Any deployment of capital is executed within the context of the stated capital management objectives and only after careful
consideration of the impact on the Company’s risk metrics.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
73
21.2 Group capital position
Capital management at a group level focuses on optimizing overall capital within the various subsidiaries and ensuring there are
sufficient liquid resources to support regulatory capital requirements, debt obligations, the payment of shareholder dividends,
acquisitions and other business purposes.
The capital strength of the group is measured by the Total Capital Margin. Total Capital Margin includes capital in excess of the
internal CALs for insurance entities in Canadian, US, UK and other internationally regulated jurisdictions and the funds held in non-
regulated entities less any ancillary own funds committed by the Company. CALs represent the thresholds below which regulator
notification is required together with a company action plan to restore capital levels. These thresholds are reviewed annually as part
of risk management practices.
21.3 Regulatory capital
The amount of capital in any particular company or country depends upon the Company’s internal assessment of capital adequacy in
the context of its risk profile and strategic plans, as well as local regulatory requirements. The Company’s objective is to maintain the
capitalization of its regulated operating subsidiaries above the relevant minimum regulatory capital requirements in the jurisdictions in
which they operate (referred to as regulator supervisory minimum levels).
Regulatory capital guidelines change from time to time and may impact the Company’s capital levels. The Company carefully monitors
all changes, actual or proposed.
As at December 31, 2024 and 2023, each of the Company’s regulated P&C insurance subsidiaries was in compliance with regulatory
capital requirements.
Canada
•
The Company’s federally chartered Canadian P&C insurance subsidiaries are subject to the regulatory capital
requirements defined by OSFI and the Insurance Companies Act, while its Québec provincially chartered
subsidiaries are subject to the requirements of the AMF and the Insurers Act.
•
Federal and Québec regulated P&C insurers are required, at a minimum, to maintain a MCT ratio of 100%.
•
OSFI and the AMF have also established a regulator supervisory target capital ratio of 150%, which provides a
cushion above the minimum requirement.
UK&I
•
RSA’s UK&I operations are subject to regulation and supervision by the Prudential Regulation Authority (“PRA”), as
well as other regulators at a subsidiary level.
•
UK&I operations use an internal model compliant with the Solvency II regime enacted in the UK and approved by
the PRA to calculate the SCR.
•
The coverage ratio represents total Eligible Own Funds over the SCR as determined by the internal model.
US
•
The Company’s US insurance operations are subject to regulation and supervision in each of the states where they
are domiciled and licensed to conduct business.
•
State insurance departments have established the insurer solvency laws and regulatory infrastructure to maintain
accredited status with the National Association of Insurance Commissioners (“NAIC”).
•
A key solvency driven NAIC accreditation requirement is a state's adoption of RBC requirements.
Annually, the Company performs Capital Adequacy Testing to ensure that the Company has sufficient capital to withstand significant
adverse event scenarios. These scenarios are reviewed each year to ensure appropriate risks are included in the testing process. In
addition, the target, actual and forecasted capital position of the Company is subject to ongoing monitoring by management using
stress and scenario analysis to ensure its adequacy.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
74
INTACT FINANCIAL CORPORATION
Note 22 – Net investment return and net insurance financial result
Table 22.1 – Net investment return and net insurance financial result
Years ended December 31,
2024
2023
Net investment income
1,559
1,346
Net gains (losses) on investment portfolio
148
249
Net investment return
1,707
1,595
Net insurance financial result
(899)
(894)
Net investment return and net insurance financial result
808
701
Table 22.2 – Net investment income
Years ended December 31,
2024
2023
Interest income calculated using the effective interest method:
Debt securities classified as FVTOCI
637
493
Loans and cash and cash equivalents
108
107
Interest and similar income on securities classified or designated as FVTPL
510
438
Interest income
1,255
1,038
Dividend income (expense) from:
Common shares, net
Classified as FVTPL
229
242
Preferred shares, net
Designated as FVTOCI
65
63
Classified as FVTPL
29
22
Dividend income
323
327
Investment property rental income
31
23
Investment income
1,609
1,388
Investment expense
(50)
(42)
1,559
1,346
Table 22.3 – Net gains (losses) on investment portfolio
Years ended December 31,
2024
2023
Portfolios
Debt
securities
Equity and
property
Total
Debt
securities
Equity and
property
Total
Financial instruments:
Classified as FVTOCI and amortized cost
(20)
-
(20)
(18)
-
(18)
Designated as FVTPL
35
-
35
313
-
313
Classified as FVTPL
10
584
594
13
112
125
25
584
609
308
112
420
Derivatives1:
Swap agreements
28
(191)
(163)
-
(19)
(19)
Forwards and futures
(21)
(118)
(139)
19
(57)
(38)
7
(309)
(302)
19
(76)
(57)
Investment property
-
5
5
-
(14)
(14)
Net foreign currency gains (losses)
(161)
-
(161)
(96)
-
(96)
ECL expense
(3)
-
(3)
(4)
-
(4)
(132)
280
148
227
22
249
1 Excluding foreign currency contracts, which are recognized in Net foreign currency gains (losses) on investments.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
75
Table 22.4 – Net insurance financial result
Years ended December 31,
2024
2023
Change in the carrying amount of insurance contracts due to:
Unwind of discount
(1,026)
(1,036)
Changes in discount rates and other financial assumptions
(209)
(179)
Net foreign currency gains (losses)
152
124
Insurance finance income (expense)
(1,083)
(1,091)
Change in the carrying amount of reinsurance contracts due to:
Unwind of discount
183
204
Changes in discount rates and other financial assumptions
13
23
Net foreign currency gains (losses)
(12)
(30)
Reinsurance finance income (expense)
184
197
(899)
(894)
22.1 Material accounting judgments, estimates and assumptions
The ECL impairment model applies only to financial assets classified as amortized cost and debt securities classified as FVTOCI and
is forward looking. Refer to Note 3.4 g) – Impairment of financial assets other than those classified or designated as FVTPL for
more details.
Note 23 – Other net gains (losses) and other income and expense
Table 23.1 – Components of other net gains (losses)
Years ended December 31,
2024
2023
Gain on sale of business1
138
-
Currency derivative hedges related to acquisitions (Note 7.3)
Purchase price
-
(20)
Net investment
-
6
Other net foreign currency gains (losses)
33
(8)
Other2, 3
132
72
303
50
1 Related to the sale of the UK direct Home and Pet operations completed on March 31, 2024. Refer to Note 5 – Business combinations and disposals.
2 Includes gains related to broker transactions recognized in 2024 of $68 million and of $25 million consisting of the acquisition of control and the disposal
of investments in associates and joint ventures, respectively.
3 Mainly includes realized gains recognized in 2023 on broker transactions.
Table 23.2 – Other income and expense
Years ended December 31,
2024
2023
Other income (Table 30.2)
714
663
Other expense (Table 24.1)
(1,593)
(1,290)
Other income and expense
(879)
(627)
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
76
INTACT FINANCIAL CORPORATION
Note 24 – Expense by nature
Table 24.1 – Expense by nature
Year ended December 31, 2024
Amortization of
insurance
acquisition
cash flows
Other
insurance
service
expense
Other
expenses
Total
Claims and adjustment expenses
-
15,198
-
15,198
Risk adjustment
-
3
-
3
Losses and reversals on onerous contracts1
-
(131)
-
(131)
Commissions
2,971
269
-
3,240
Premium taxes and levies
580
105
-
685
Allocated indirect expenses2
1,889
1,534
552
3,975
Amortization of acquired intangible assets3
-
-
285
285
Administrative and other expenses
-
-
756
756
5,440
16,978
1,593
24,011
Represented by:
Insurance service expense (Table 10.3)
5,440
16,978
-
22,418
Other expense (Table 23.2)
-
-
1,593
1,593
5,440
16,978
1,593
24,011
Year ended December 31, 2023
Amortization of
insurance
acquisition
cash flows
Other
insurance
service
expense
Other
expenses
Total
Claims and adjustment expenses
-
15,437
-
15,437
Risk adjustment
-
49
-
49
Losses and reversals on onerous contracts1
-
133
-
133
Commissions
2,857
256
-
3,113
Premium taxes and levies
545
97
-
642
Allocated indirect expenses2
1,766
1,444
415
3,625
Amortization of acquired intangible assets3
-
-
249
249
Administrative and other expenses
-
-
626
626
5,168
17,416
1,290
23,874
Represented by:
Insurance service expense (Table 10.3)
5,168
17,416
-
22,584
Other expense (Table 23.2)
-
-
1,290
1,290
5,168
17,416
1,290
23,874
1 Includes the initial recognition of losses on onerous contracts, any subsequent reversals, and the amortization of the loss component. Mainly related to
acquired claims from the RSA acquisition which amounted to $(125) million for the year-ended December 31, 2024 ($216 million – December 31, 2023).
The remaining amount is mainly due to certain groups of insurance contracts in the UK&I.
2 Mainly includes salaries, rent and technology costs.
3 Includes the amortization of acquired distribution networks, customer relationships and trade names.
Note 25 – Acquisition, integration and restructuring costs
25.1 Acquisition, integration and restructuring costs
Acquisition costs include professional fees related to the closing of acquisitions. Integration costs include restructuring costs related
to an acquisition such as severances, retention bonuses and system integration, the initial net impact of a reinsurance coverage for
the purpose of an acquisition as well as changes in the fair value of the contingent considerations. Restructuring and other costs
include restructuring costs not related to an acquisition, including impairment expenses, and expenses related to the implementation
of significant new accounting standards.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
77
Table 25.1 – Acquisition, integration and restructuring costs
Years ended December 31,
2024
2023
Acquisition costs
-
24
Integration costs
230
231
Restructuring and other costs
177
248
407
503
Note 26 – Income taxes
26.1 Income tax expense recognized in Net income
Table 26.1 – Components of income tax expense recognized in Net income
Years ended December 31,
2024
2023
Current income tax expense (benefit)
Current year
678
529
Adjustments to prior years
(16)
17
Deferred income tax expense (benefit)
Origination and reversal of temporary differences
(114)
(60)
Adjustments to prior years
20
(13)
568
473
26.2 Effective income tax rate
The effective income tax rates are different from the combined Canadian federal and provincial statutory income tax rates. The
Consolidated statements of income contain items that are non-taxable or non-deductible for income tax purposes, which cause the
income tax expense to differ from what it would have been if based on statutory tax rates.
The following table presents the reconciliation of the effective income tax rate to the income tax expense calculated at statutory
tax rates.
Table 26.2 – Effective income tax rate reconciliation
Years ended December 31,
2024
2023
Statutory tax rates
25.9%
25.9%
Increase (decrease) in income tax rates resulting from:
Non-deductible losses (non-taxable gains)
(0.8)%
(0.5)%
Non-taxable investment income
(3.0)%
(4.8)%
Non-deductible losses (non-taxable income) from subsidiaries and associates
(0.8)%
(1.5)%
Change in unrecognized deferred income taxes
(2.5)%
2.8%
Higher (lower) effective rates on income subject to taxation in foreign jurisdictions
(1.5)%
3.0%
Non-deductible expenses
0.5%
0.5%
Other
1.9%
0.8%
Effective income tax rate
19.7%
26.2%
The effective income tax rate reconciliation may be impacted by a mix of losses and earnings taxed at different statutory rates. The
insurance service results are tax affected at the full statutory rate while investment income is taxed at a lower rate.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
78
INTACT FINANCIAL CORPORATION
26.3 Components of deferred tax assets and liabilities
Table 26.3 – Components of deferred tax assets and liabilities
Balance sheet
Asset (liability)
Comprehensive income
Expense (benefit)
As at December 31,
2024
2023
2024
2023
Investments
97
118
29
76
Property and equipment
33
22
(4)
31
Intangible assets
(896)
(873)
(20)
(50)
Other assets
8
-
(7)
(3)
Losses available for carry forward
329
317
1
(111)
Financing costs
14
29
16
16
Insurance and reinsurance contracts
64
5
(60)
(148)
Accrued liabilities
396
335
(27)
137
DB pension plans
108
159
59
(175)
Other liabilities
(2)
(27)
(26)
20
Net deferred tax asset (liability) / expense (benefit)
151
85
(39)
(207)
The Company believes that it is probable that it will generate sufficient taxable income in the future to realize the above deferred
tax assets.
The Company recognizes a deferred tax liability on all temporary differences associated with investments in subsidiaries, associates,
and joint ventures unless it can control the timing of the reversal of these differences, and it is probable that these differences will not
reverse in the foreseeable future. As at December 31, 2024 and 2023, no deferred tax liability has been recognized on the temporary
differences of $1,224 million ($811 million as at December 31, 2023) associated with investments in subsidiaries and associates.
26.4 Movement in the net deferred tax asset (liability)
Table 26.4 – Movement in the net deferred tax asset (liability)
Years ended December 31,
2024
2023
Balance, beginning of year
85
(83)
Business combinations and other acquisitions
(25)
(72)
Income tax benefit (expense):
Recognized in net income
94
73
Recognized in OCI
(55)
134
Recognized in equity
24
21
Exchange rate differences and other
28
12
Net deferred tax asset (liability), end of year
151
85
Recognized in:
Deferred tax assets
744
811
Deferred tax liabilities
(593)
(726)
Net deferred tax asset (liability), end of year
151
85
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
79
26.5 Unused tax losses, tax credits and other tax attributes
The following table presents a summary of unused tax losses and credits, as well as the amount for which a deferred tax asset was
recognized on the Consolidated Balance sheets as at December 31, 2024 and 2023.
Table 26.5 – Unused tax losses and tax credits
2024
2023
As at December 31,
Total Recognized
Expiry date
Total Recognized
Expiry date
Unused net operating losses:
US
115
115
2033-2036
131
131
2024-2036
Canada
663
659
2036-2044
693
684
2038-2043
UK
3,559
283 No expiry date
3,160
221 No expiry date
Ireland
530
200 No expiry date
539
179 No expiry date
Other jurisdictions1
136
19
Various
135
29
Various
Unused tax credits:
US
30
30
2030-2036
27
27
2030-2036
Canada
9
-
2042-2044
9
-
2038-2042
Unused allowable capital losses:
Canada
11
10 No expiry date
-
- No expiry date
Ireland
-
- No expiry date
1
- No expiry date
UK
2,311
- No expiry date
2,151
- No expiry date
1 Includes $37 million of losses that expire between 2038 and 2041 as at December 31, 2024 ($24 million that expire between 2038 and 2040 as at
December 31, 2023). The remaining balances have no expiry date.
Unused tax credits can be used to offset US tax payable in the future. Unused allowable capital losses in Canada can be used to
reduce future taxable capital gains. Unused capital losses in Canada, UK and Ireland have not been recognized as it is not considered
probable that they will be utilized in the future.
In addition to tax losses and tax credits not recognized, the Company had deductible temporary differences of $742 million as at
December 31, 2024 ($949 million as at December 31, 2023), for which no deferred tax asset was recognized on the Consolidated
Balance Sheet. These deductible temporary differences are predominantly located in the UK.
Deferred tax assets in respect of losses, deductible temporary differences and tax credits have been recognized on the basis that
management consider it probable that future taxable profits will be available against which deferred tax assets can be utilized. The
utilization of deferred tax assets will depend on whether it is possible to generate sufficient taxable income based on future profit
projections in the respective tax type and jurisdiction. Management also considers tax planning opportunities that will create future
taxable income against which the unused losses, deductible temporary differences and tax credits can be utilized.
26.6 Material accounting judgments, estimates and assumptions
Management exercises judgment in estimating the provision for income taxes. The Company is subject to income tax law in various
jurisdictions where it operates. Various tax laws are potentially subject to different interpretations by the taxpayer and the relevant tax
authority. To the extent that the Company’s interpretations of tax laws differ from those of tax authorities or that the timing of realization
of deferred tax assets is not as expected, the provision for income taxes may increase or decrease in future periods to reflect
actual experience.
26.7 Dividend received deduction
During the fiscal years 2022, 2021 and 2020, the Company was reassessed by the Canada Revenue Agency, Revenu Québec and
the Alberta Tax and Revenue Administration for additional income tax and interest with respect to the 2013-2016 taxation years. The
total amount of additional income taxes and interest owed (including provincial tax and interest) is approximately $41 million for the
2013-2016 taxation years combined.
All reassessments received to date have been paid in full and accordingly, no additional interest should be owing in the event of an
unfavourable outcome.
These tax authorities are denying certain dividend deductions on the basis that they were part of a “dividend rental arrangement”. The
Company is confident that its tax filing position was appropriate and intends to defend itself vigorously. As a result, no amounts have
been accrued in the Consolidated financial statements.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
80
INTACT FINANCIAL CORPORATION
26.8 Tax legislative changes
Pillar two
In May 2023, the IASB issued International Tax Reform—Pillar Two Model Rules, which amended IAS 12 – Income Taxes (“IAS 12”),
for fiscal years beginning as of December 31, 2023. The amendments, which the Company has applied, include a mandatory
temporary exception from recognizing and disclosing deferred tax assets and liabilities related to Pillar Two income taxes. This
exception will allow entities time to assess the implications of the new rules and to avoid diverse interpretations of IAS 12 which could
result in inconsistent applications until the IASB can complete further work.
The Company has prepared its financial statements to consider enacted and substantively enacted Pillar Two legislation, with an
effective date of January 1, 2024, in jurisdictions in which it operates. There was no material impact on the Consolidated financial
statements for the year ended December 31, 2024.
Canadian Federal Tax Measures
In June 2024, the Government of Canada enacted certain tax measures, including the proposal to deny financial institutions a
deduction on dividends received after December 31, 2023, on certain types of shares of Canadian corporations. The enacted
measures that impact the Company have been applied in the consolidated financial statements. There was no material impact for the
year ended December 31, 2024.
Note 27 – Earnings per share
Basic EPS was calculated by dividing the Net income attributable to common shareholders of the Company by the weighted-average
number of common shares outstanding during the year. Diluted EPS considered the effect of stock options.
Table 27.1 – Earnings per share
Years ended December 31,
2024
2023
Net income attributable to shareholders
2,297
1,316
Less: dividends declared on preferred shares and other equity distribution, net of tax
(90)
(84)
Net income attributable to common shareholders
2,207
1,232
Weighted-average number of common shares outstanding (in millions)
178.3
176.2
Net effect of stock options
0.3
-
Weighted-average diluted number of common shares outstanding (in millions)
178.6
176.2
EPS (in dollars)
Basic
12.37
6.99
Diluted
12.36
6.99
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
81
Note 28 – Share-based payment plans
28.1 Long Term incentive plan
a)
Outstanding LTIP units and fair value at grant date
Table 28.1 – Outstanding units and weighted-average fair value at grant date by performance cycle
As at December 31,
2024
2023
Performance cycles
Number
of units
Weighted-
average fair
value at
grant date
(in $)
Amount
(in millions
of $)
Number
of units
Weighted-
average fair
value at
grant date
(in $)
Amount
(in millions
of $)
2021 – 2023
-
-
-
680,077
149.17
102
2022 – 2024
612,892
165.01
101
606,376
165.01
100
2023 – 2025
383,186
198.74
76
364,315
198.74
72
2024 – 2026
459,145
202.40
93
-
-
-
1,455,223
185.69
270
1,650,768
166.05
274
b)
Movements in LTIP units
Table 28.2 – Movements in LTIP share units
Years ended December 31,
2024
(in units)
2023
(in units)
Outstanding, beginning of year
1,650,768
1,733,703
Awarded
385,491
389,684
Net change in estimate of units outstanding
121,011
132,910
Units settled
(702,047)
(605,529)
Outstanding, end of year
1,455,223
1,650,768
c)
LTIP expense recognized in Net income
The LTIP is accounted for as an equity-settled plan, except for the participants that are eligible to receive cash in lieu of shares of the
Company (accounted for as a cash-settled plan).
Table 28.3 – LTIP expense recognized in Net income
Years ended December 31,
2024
2023
Cash-settled plans
31
19
Equity-settled plans
74
75
105
94
28.2 Employee share purchase plan
a)
Movements in restricted common shares
Table 28.4 – Movements in restricted common shares
Years ended December 31,
2024
(in units)
2023
(in units)
Outstanding, beginning of year
122,703
114,637
Accrued
118,054
124,318
Awarded and vested
(122,803)
(113,648)
Forfeited
(1,768)
(2,604)
Outstanding, end of year
116,186
122,703
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
82
INTACT FINANCIAL CORPORATION
b)
ESPP expense recognized in Net income
The ESPP is accounted for as an equity-settled plan. For the year ended December 31, 2024, the ESPP expense was $25 million
($22 million – December 31, 2023).
28.3 Deferred share unit plan
The DSU plan is accounted for as a cash-settled plan. For the year ended December 31, 2024, the expense was $12 million ($3
million – December 31, 2023). The DSU provision amounted to $32 million as at December 31, 2024 ($29 million as at
December 31, 2023).
28.4 Executive stock option plan
Table 28.5 – Outstanding stock options by grant date
As at December 31,
2024
2023
Grant date
Exercise price
(in $)
Maturity date
Stock options
(in units)
Stock options
(in units)
June 1, 2021
161.67
June 1, 2031
760,166
830,166
February 15, 2024
223.46
February 15, 2034
120,000
-
880,166
830,166
As at December 31, 2024, 1,783,208 common shares (1,430,181 as at December 31, 2023) were reserved for issuance under
the ESOP.
On February 13, 2024, the Board of Directors approved a grant of 120,000 stock options. The grant date fair value of $46.16 was
calculated using the Black-Scholes stock option valuation methodology with a dividend yield of 2.27%, an expected share price
volatility of 18.44%, a risk-free interest rate of 3.54%, and an expected life of 8 years.
During the year ended December 31, 2024, 70,000 stock options were exercised for cash consideration of $11 million and the
Company derecognized the fair value of these options of $2 million from Contributed surplus resulting in the issuance of common
shares totalling $13 million.
The ESOP is accounted for as an equity-settled plan. For the year ended December 31, 2024, the ESOP expense was $5 million
($4 million – December 31, 2023).
28.5 Common shares repurchased for share-based payment plans
The Company’s equity-settled plans were settled through the plan administrator purchasing common shares on the market and
remitting them to the participants. The cumulative cost of these units was removed from Contributed surplus.
The difference between the market price of the shares and the cumulative cost for the Company of these vested units, net of income
taxes, was recognized in Retained earnings.
Table 28.6 – Settlement in shares
Years ended December 31,
2024
2023
Value of common shares repurchased for share-based payments
180
128
Less: cumulative cost of the units for the Company
113
88
Excess of market price over the cumulative cost for the Company
67
40
Amount recognized in Retained earnings, net of taxes
56
31
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
83
Note 29 – Employee future benefits
29.1 Overview of employee future benefits
The Company provides various post-employment plans, including DB and defined contribution pension plans as well as other benefit
plans for its employees as described below. In the US, the Company offers a 401(k) plan to its employees.
a)
Employee future benefits in the UK
DB pension plans
The plans were closed to new entrants in 2002 and subsequently closed to future accruals in 2017.
Accrued benefits are revalued up to retirement in accordance with government indices for inflation. After retirement, pensions in
payment are increased each year based on the increases in the government indices for inflation, subject to maximum caps.
The plans are managed through trusts with independent trustees (“the Trustees”) responsible for safeguarding the interests of all members.
The plans in surplus are net a 25% tax expense of an authorized return of surplus as at December 31, 2024 (35% as at
December 31, 2023). The Company does not believe the tax to be an income tax expense within the meaning of IAS 12; rather, it
classifies it with “other net surplus remeasurements”.
On February 27, 2023, as part of its de-risking strategy, the Company entered into annuity buy-in insurance contracts (“buy-ins”) for
its two major UK DB pension plans (the “UK buy-in transaction”). Refer to Note 29.6 – Additional information on UK DB
pension plans.
b)
Employee future benefits in Canada
DB pension plans
The Company has funded and unfunded DB pension plans that provide benefits to members in the form of a pension payable for life
based on final average earnings and contingent upon certain age and service requirements. The Company provides active employees
a choice between a DB and a defined contribution pension plan.
Subject to applicable pension legislation, the plans are administered either by the Company or by a pension committee that has
delegated certain of its responsibilities to the Company, with assets held in a pension fund that is legally separated from the Company.
The assets cannot be used for any purpose other than payment of pension benefits and related administrative fees.
Provincial minimum funding regulations require special payments from the Company to amortize any shortfall of registered plans’
assets relative to the corresponding funding targets. Security in the form of letters of credit is permitted in lieu of those special
payments, up to a limit of 15% of the actuarial liability used to determine the funding target.
Subject to applicable legal requirements, any balance of assets remaining after providing for the accrued benefits of the plan members
may be returned to the Company upon termination of the plan. Pension legislation in certain provinces may require that the Company
submit a proposal to the members and beneficiaries regarding the allocation of surplus assets. However, on an ongoing basis, a
portion of such surplus may be recoverable by the Company through a reduction in future contributions or through payment of eligible
administrative expenses.
As part of its de-risking strategy, the Company entered into buy-ins for its Canadian DB pension plans, some of which were converted
into annuity buy-out insurance contracts (“buy-outs”) in 2024. Refer to Note 29.7 – Additional information on Canadian DB
pension plans.
Other post-employment benefits and other post-retirement benefits
The Company also offers employer-paid post-retirement life insurance and health care benefit plans to a limited number of active
employees and retirees as well as post-employment benefit plans that provide health and dental coverage to employees on disability
for the duration of their leaves. These post-retirement and post-employment benefit plans are unfunded.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
84
INTACT FINANCIAL CORPORATION
29.2 Funded status
DB pension plans are recognized on the Consolidated balance sheet as an asset when plans are in a surplus position, or as a liability,
when plans are in a deficit position. This classification is determined on a plan-by-plan basis.
Table 29.1 – DB pension plan assets (liabilities) by country
2024
2023
As at December 31,
UK&I
Canada1
Total
UK&I
Canada
Total
DB obligation2
(8,912)
(2,391)
(11,303)
(9,327)
(3,272)
(12,599)
Annuity buy-in insurance contracts
8,747
276
9,023
9,188
1,035
10,223
Debt securities
122
1,555
1,677
124
1,545
1,669
Other plan assets
72
613
685
20
696
716
Fair value of plan assets
8,941
2,444
11,385
9,332
3,276
12,608
Other net surplus remeasurement3
(4)
-
(4)
(3)
(5)
(8)
Net DB asset (liability)
25
53
78
2
(1)
1
Recognized in:
Other assets – plans in a surplus position
(Table 16.1)
45
251
296
40
189
229
Other liabilities – plans in a deficit position
and unfunded plans (Table 16.2)
(20)
(198)
(218)
(38)
(190)
(228)
25
53
78
2
(1)
1
Funded status – funded plans
100%
111%
104%
100%
106%
102%
1 The Company derecognized buy-ins and a corresponding DB obligation of $1,009 million related to the conversion of Canadian buy-ins into buy-outs
during the year ended December 31, 2024. Refer to Note 29.7 – Additional information on Canadian DB pension plans.
2 The weighted average duration of the DB obligation for the UK plans was 11.8 years and 18.0 years for the Canada plans at December 31, 2024
(13.1 years and 14.6 years, respectively, as at December 31, 2023).
3 Includes a 25% authorized surplus payments charge (35% as at December 31, 2023) related to certain UK DB pension plans as it does not fall within
the meaning of IAS 12 and changes to the amount of the asset ceiling applicable to certain Canadian DB pension plans.
Funding and contributions to DB pension plans
The Company makes contributions to the DB pension plans to secure the benefits, the amount and timing of which are determined in
accordance with applicable pension and tax legislation following the advice of an actuary. The Company must contribute the excess
of the total required funding over the members’ contributions. Under the provisions of the pension plans in Canada,
members’ contribution rates vary according to their choice of benefit accrual rate, which they may change annually.
Required contributions by the Company will vary depending on the number of active members accruing benefits and their level of
pensionable earnings, the results of any new actuarial valuations, the impact of any funding rule changes and decisions taken by the
Company to use or not use surplus or letters of credit or to take contribution holiday as permitted by legislation. The Company is also
expected to meet the cost of eligible administrative expenses through the pension funds.
a)
UK DB pension plans
The funding valuations of the UK plans, which determine the level of cash contributions payable into the plans and which must be agreed
between the Trustees and the Company, are typically based on a prudent assessment of future experience with the discount rate reflecting
a prudent expectation of returns based on actual investment strategy. This differs from IAS 19, which requires that future benefit cash flows
are projected on the basis of best-estimate assumptions and discounted in line with high-quality corporate bond yields. The Trustees’ funding
assumptions are updated only every three years, in conjunction with the triennial funding valuations.
The triennial funding valuations are used to determine future funding, including funding to eliminate any funding deficit. Since the UK plans
are closed to future accruals, contributions that are made are strictly with respect to past service deficiencies.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
85
The effective date of the most recent valuations of the main UK plans was March 31, 2021. At that date, the main UK plans had an
aggregate funding deficit of $227 million (£138 million), equivalent to a funding level of 98%. The Company and the Trustees agreed
on funding plans to eliminate the funding deficits by 2025. In addition, the funding commitments that had been agreed in 2020 were
reaffirmed, which included:
•
Continuation of current funding arrangements of approximately $123 million (£75 million) per year plus expenses and
regulatory levies until the plans are fully funded on a previously agreed longer term funding basis; and
•
Parental guarantees of the obligations by the Company.
As part of its funding arrangements in place prior to the UK buy-in transaction, the Company paid its last annual contribution of $123 million
(£75 million) plus expenses and regulatory levies during the year ended December 31, 2023. As it was agreed with the Trustees, the
Company is not required to make any additional annual mandatory funding contribution but will continue to provide a parental guarantee of
the obligations.
The Company was still required to make contributions to the main UK DB pension plans to meet outstanding deferred annuity premium
obligations, as well as ongoing expenses and regulatory levies. During the year ended December 31, 2024, the Company contributed a total
amount of $140 million (£80 million) to the UK plans and, during the year ended December 31, 2023, a total of $1,003 million (£610 million),
which included the annual contribution and upfront contribution to PIC. Refer to Note 29.6 – Additional information on UK DB pension
plans for more details.
The next funding valuation will be dated as at March 31, 2024 and is expected to be completed in the first half of 2025.
b)
Canadian DB pension plans
Each plan is generally subject to triennial valuations, which are used to determine the future funding, including funding to eliminate
any deficit. The effective date of the most recent valuations of the main plans was December 31, 2023. The next required funding
valuation is as at December 31, 2026; however, the Company has the option to perform a new valuation at an earlier date. The
Company’s liquidity risk with regards to these pension plans is low, as they have a high proportion of quality liquid assets and sufficient
inflows from contributions and buy-ins to cover a portion of the benefit payments. Indeed, a large portion of the invested assets is held
in highly liquid federal and provincial government debt to protect against any unanticipated large cash requirements.
The Company had a contribution holiday in 2023 and 2024 for its Ontario and Quebec pension plans and, based on the latest
projections of the financial position of the plans, the contribution holiday is expected to continue in 2025 for the Ontario plan. As a
result, the Company does not expect to make cash contributions to the Ontario pension plan in 2025, while cash contributions of
$26 million will resume for the Quebec plan starting on January 1, 2025.
29.3 Movement in the DB obligation and fair value of plan assets
The DB obligation is based on the present value of expected benefit payment cash flows to plan members over their expected lifetime.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
86
INTACT FINANCIAL CORPORATION
Table 29.2 – Movement in the DB obligation and fair value of plan assets
Year ended December 31, 2024
DB obligation
Fair value of
plan assets
Other net
surplus
remeasurement
Net DB asset
(liability)
Balance, beginning of year
(12,599)
12,608
(8)
1
Current service cost
(65)
-
-
(65)
Net interest revenue (expense)
(542)
541
-
(1)
Annuity buy-out insurance contracts1
1,046
(1,051)
-
(5)
Other
-
(26)
-
(26)
Total benefit (expense) recognized in Net income
439
(536)
-
(97)
Change in discount rate
1,182
-
-
1,182
Changes in other financial assumptions2
(172)
-
-
(172)
Changes in plan experience
(115)
-
-
(115)
Changes in demographic assumptions
2
-
-
2
Actual return on plan assets
-
(816)
-
(816)
Annuity buy-in insurance contracts3, 4
-
(63)
-
(63)
Other net surplus remeasurements
-
-
4
4
Net actuarial gains (losses) recognized in OCI
897
(879)
4
22
Employee contributions
(51)
51
-
-
Employer contributions
-
151
-
151
Benefit payments
589
(589)
-
-
Exchange rate differences
(578)
579
-
1
Balance, end of year
(11,303)
11,385
(4)
78
1 Mainly includes the derecognition of buy-ins and corresponding DB obligation of $1,009 million related to the conversion of Canadian buy-ins into buy-
outs. Refer to Note 29.7 – Additional information on Canadian DB pension plans.
2 Changes in other financial assumptions are mainly related to inflation rate.
3 The Company purchased buy-ins in the amount of $275 million on behalf of certain Canadian DB pension plans, as part of its de-risking strategy. Refer
to Note 29.7 – Additional information on Canadian DB pension plans.
4 The Company terminated longevity swaps related to the UK DB pension plans resulting in a net actuarial loss of $58 million (£33 million) in OCI. Refer
to Note 29.6 – Additional information on UK DB pension plans.
Year ended December 31, 2023
DB obligation
Fair value of
plan assets
Other net
surplus
remeasurement
Net DB asset
(liability)
Balance, beginning of year
(11,837)
12,520
(188)
495
Current service cost
(49)
-
-
(49)
Net interest expense
(585)
657
-
72
Other
(1)
(23)
-
(24)
Total benefit (expense) recognized in Net income
(635)
634
-
(1)
Change in discount rate
(621)
-
-
(621)
Changes in other financial assumptions1
117
-
-
117
Changes in plan experience
(83)
-
-
(83)
Changes in demographic assumptions
173
-
-
173
Actual return on plan assets
-
115
-
115
Annuity buy-in insurance contracts2
-
(1,404)
-
(1,404)
Other net surplus remeasurements
-
-
181
181
Net actuarial gains (losses) recognized in OCI
(414)
(1,289)
181
(1,522)
Employee contributions
(45)
45
-
-
Employer contributions
-
1,027
-
1,027
Benefit payments
617
(617)
-
-
Exchange rate differences
(285)
288
(1)
2
Balance, end of year
(12,599)
12,608
(8)
1
1 Changes in other financial assumptions are mainly related to inflation rate.
2 The UK buy-in transaction completed on February 27, 2023 resulted in a net impact of $1,195 million (£727 million), composed of a remeasurement loss
on plan assets of $1,404 million (£854 million) included in buy-ins and the derecognition of a tax expense on surplus of $209 million (£127 million)
included in other net surplus remeasurements. Refer to Note 29.6 – Additional information on UK DB pension plans for more details.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
87
29.4 Actuarial gains (losses) on employee future benefits, net of other surplus remeasurement, recognized
in OCI
Table 29.3 – Actuarial gains (losses) on employee future benefits, net of other surplus remeasurement, recognized in OCI
Years ended December 31,
2024
2023
Pension plans (Table 29.2)
22
(1,522)
Other post-retirement benefits
1
(4)
23
(1,526)
29.5 Composition of pension plan assets
The pension plan assets were mainly composed of annuity buy-ins as at December 31, 2024 and 2023.
Table 29.4 – Composition of fair value of pension plan assets by quoted and unquoted
As at December 31, 2024
UK&I
Canada
Total
% of total
Total
quoted
Total
unquoted
Cash and cash equivalents
39
9
48
-%
39
9
Debt securities1
Government
88
961
1,049
9%
1,049
-
Non-government
34
594
628
6%
548
80
Debt securities
122
1,555
1,677
15%
1,597
80
Annuity buy-in insurance contracts
8,747
276
9,023
79%
-
9,023
Common shares
28
865
893
8%
634
259
Derivative financial instruments
(6)
16
10
-%
-
10
Property
2
-
2
-%
2
-
Other
9
-
9
-%
-
9
Securities sold under repurchase agreements
-
(277)
(277)
(2)%
-
(277)
Total assets
8,941
2,444
11,385
100%
2,272
9,113
Total
% of total
Total
quoted
Total
unquoted
As at December 31, 2023
UK&I
Canada
Cash and cash equivalents
45
(1)
44
-%
45
(1)
Debt securities1
Government
95
837
932
7%
932
-
Non-government
29
708
737
6%
600
137
Debt securities
124
1,545
1,669
13%
1,532
137
Annuity buy-in insurance contracts
9,188
1,035
10,223
81%
-
10,223
Common shares
25
857
882
7%
637
245
Derivative financial instruments
(7)
1
(6)
-%
-
(6)
Property
2
-
2
-%
2
-
Other
135
-
135
1%
-
135
Securities sold under repurchase agreements
-
(161)
(161)
(1)%
-
(161)
Total investments
9,512
3,276
12,788
101%
2,216
10,572
Deferred annuity premium2
(180)
-
(180)
(1)%
-
(180)
Total assets
9,332
3,276
12,608
100%
2,216
10,392
1 The weighted average duration of debt securities was 17.5 years as at December 31, 2024 (15.8 years as at December 31, 2023).
2 The Company repaid the remaining balance of deferred annuity premium during the year ended December 31, 2024.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
88
INTACT FINANCIAL CORPORATION
29.6 Additional information on UK DB pension plans
Purchase of buy-ins in 2023
On February 27, 2023, the Company announced that the Trustees of its two major UK DB pension plans (the “UK plans”) entered into
an agreement with Pension Insurance Corporation plc (“PIC”), a specialist insurer of DB pension plans, to purchase buy-ins, as part
of their de-risking strategy. The buy-ins transferred the remaining economic and demographic risks associated with the plans to PIC
and removed volatility in the Company’s consolidated balance sheet. The main risks retained by the Company are the counterparty
risk to PIC as well as residual risk related to benefits provided by the plans, such as changes in legal interpretation.
At the transaction date, the UK plans transferred the majority of their assets and an upfront contribution of $791 million (£481 million)
to PIC. Of the total buy-in premium of $10.4 billion (£6.3 billion), an amount of $904 million (£550 million) was deferred. During the
years ended December 31, 2024 and 2023, the plans fully repaid the deferred premium for an amount of $184 million (£107 million)
and $759 million (£457 million), respectively, including accrued interests. The plans retained longevity swaps that were already in
place. Refer to Asset and longevity swaps below for more details.
The UK buy-ins comprised various contracts which were considered in aggregate as one single contract because they form a structure
designed to collectively match the exact amount and timing of all the benefits payable by the plans. The Company was not legally
relieved of the primary responsibility for the obligation, and the benefit payments continue to be payable by the plans. The contracts
provide the option to convert the buy-ins into buy-outs. While this course of action may be considered in the future, a separate decision
would be required, and certain significant conditions would need to be met before it could be executed. Consequently, the transaction
was considered a buy-in. As a result, an initial actuarial loss of $1,195 million (£727 million) was recognized in OCI during the year
ended December 31, 2023. The fair value of buy-ins subsequently fluctuates based on changes in the value of the associated
DB obligation.
The UK buy-in transaction was funded through the issuance of short-term loans for an amount of $294 million, issuing LRCN Series 1
Notes in an amount of $300 million and excess capital held by the Company. Refer to Note 17.3 – Financing issued in 2023 and
Note 18.3 – Financing issued in 2023, respectively.
Asset and longevity swaps
In 2009, the UK DB pension plans had entered into an arrangement that provided coverage against longevity risk for 55% of the
retirement obligations relating to pensions in payment from the UK plans at that time. The arrangement provided for reimbursement
of the covered pension obligations in return for the contractual return receivable on a portfolio made up of quoted government debt
which was offset by asset swaps and longevity swaps held by the pension funds. On the UK buy-in transaction date, the portfolio and
asset swaps were novated to PIC and the longevity swaps remained in place as plan assets of the UK plans. In combination with the
other buy-in insurance policies purchased from PIC, these longevity swaps were accounted for as qualifying insurance policies at the
UK buy-in transaction date, based on the value of the associated DB obligation under IAS 19.
On November 11, 2024, the Company agreed to terminate the longevity swaps and, simultaneously, to adjust the buy-ins acquired in
2023 from PIC to receive replacement cover. This termination enhances the Company’s strategic flexibility in managing its pension
obligations. As a result, on the agreements’ effective date of November 15, 2024, the Company recognized a net actuarial loss of
$58 million (£33 million) in OCI. The net actuarial loss reflects a combination of the termination fees due and differences in the latest
views of life expectancy.
Other net surplus remeasurement
The net DB asset (liability) of the plans was presented net of a 35% tax expense of an authorized return of surplus, which was
classified with Other net surplus remeasurements. Since the surplus of the related plans was derecognized through the UK buy-in
transaction, the 35% tax provision of $209 million (£127 million) was also derecognized through OCI during the year ended
December 31, 2023.
29.7 Additional information on Canadian DB pension plans
Conversion of Canadian buy-ins in 2024
Effective March 1, 2024, the Company converted qualifying annuity buy-ins into buy-out annuities. As a result, during the year ended
December 31, 2024, the Company derecognized the buy-in annuity assets and the corresponding DB obligation of $1,009 million
previously recognized on a net basis in Other liabilities. The impact on the Company’s Net income and Other comprehensive income
was nil as the fair value of the buy-in annuities fluctuated based on changes in the associated DB obligation.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
89
Purchase of Canadian buy-ins in 2024
On October 16, 2024, the Company purchased qualifying buy-ins in the amount of $275 million on behalf of certain Canadian DB
pension plans, as part of its de-risking strategy. An actuarial loss of $5 million as a result of this transaction was recognized in OCI
during the year ended 2024. The fair value of annuity buy-in insurance contracts will fluctuate based on changes in the associated
DB obligation.
29.8 Material accounting judgments, estimates and assumptions
The cost of the DB plans and the DB obligation are measured by the Company’s independent actuaries using assumptions determined
by management. The actuarial valuation involves making assumptions about discount rates, future salary increases, future inflation,
the employees’ age upon termination and retirement, mortality rates, future pension increases, disability incidence and health and
dental care cost trends. If actual experience differs from the assumptions used, the expected obligation could increase or decrease
in future years.
Due to its long-term nature, the DB obligation is highly sensitive to changes in some of the assumptions. Assumptions are reviewed
at each reporting date.
a)
Assumptions used and sensitivity analysis
Table 29.5 – Key weighted-average assumptions used in measuring the Company’s pension plans
2024
2023
As at December 31,
UK&I
Canada
UK&I
Canada
To determine the DB obligation:
Discount rate
5.46%
4.76%
4.54%
4.64%
Rate of increase in future compensation:
First year
n/a
3.50%
n/a
3.25%
Long term
n/a
3.04%
n/a
2.85%
Rate of inflation (CPI)
First year
2.63%
2.60%
2.45%
4.00%
Long term
2.63%
2.04%
2.45%
1.85%
Rate of inflation (RPI)
3.18%
n/a
3.05%
n/a
Rate of increase in pensions1
3.01%
n/a
2.91%
n/a
2024
2023
Years ended December 31,
UK&I
Canada
UK&I
Canada
To determine the benefit expense:
Discount rate:
Current service cost
n/a
4.63%
n/a
5.26%
Interest expense on the DB obligation
4.54%
4.63%
4.86%
5.22%
Rate of increase in future compensation:
First year
n/a
3.25%
n/a
3.75%
Long-term
n/a
2.85%
n/a
3.32%
Rate of inflation (CPI)
First year
2.45%
4.00%
2.46%
6.51%
Long-term
2.45%
1.85%
2.46%
2.32%
Rate of inflation (RPI)
3.05%
n/a
3.11%
n/a
Rate of increase in pensions1
2.91%
n/a
2.96%
n/a
1 For the UK, the annual rate of increase in pensions shown is the rate that applies to pensions that increase at RPI subject to a cap of 5%.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
90
INTACT FINANCIAL CORPORATION
The following table presents the assumptions regarding future mortality. The current life expectancies underlying the DB obligation
and benefit expenses in the DB plans are as follows.
Table 29.6 – Future mortality assumptions
2024
2023
As at December 31,
UK&I
Canada
UK&I
Canada
Life expectancy (in years) for pensioners at the age of 65:
Male
22.0
22.9
22.1
22.8
Female
23.6
24.4
23.6
24.4
The core mortality rates assumed for the main UK plans are based on the latest industry-standard UK tables published in 2018 by the
Continuous Mortality Investigation (“CMI”) (S3 series tables) with percentage adjustments to reflect the plans’ recent experience based
on the latest study conducted in 2021. Reductions in future mortality rates are allowed for by using the CMI 2023 tables with a long-
term improvement rate of 1.25%.
The rate of compensation increase for the Canadian DB plans was based on management expectation for the next year, and on
inflation and long-term expectations of wage salary increase beyond the next year. Assumptions regarding life expectancy for
participants in the Canadian DB plans are based on the standard Canadian private sector mortality table published in 2014 by the
Canadian Institute of Actuaries (“CPM2014Priv table”), adjusted based on the results of a mortality experience study conducted
in 2022.
The following table presents the sensitivity analysis of the main DB obligation to key assumptions.
Table 29.7 – Sensitivity of the DB obligation to key assumptions
2024
2023
As at December 31,
Change
UK&I
Canada
UK&I
Canada
Discount rate
+1%
(863)
(367)
(1,063)
(415)
Discount rate
-1%
1,175
501
1,310
555
Inflation-related assumption rate
+1%
718
143
789
174
Inflation-related assumption rate
-1%
(587)
(122)
(748)
(153)
Life expectancy
+ One year
315
44
288
71
Life expectancy
- One year
(202)
n/a
(290)
n/a
The effect on the DB obligation at the end of the year has been calculated by changing one assumption for the sensitivity but without
changing any other assumptions. The impact of a one-year increase (decrease) in life expectancy has been approximated by
measuring the impact of members being one year younger (older) than their actual age on the valuation date.
29.9 Risk management and investment strategy
DB pension plans expose the Company to balance sheet volatility resulting from changes in actuarial assumptions (such as longevity,
interest rates, credit spreads and inflation). The ultimate cost depends on future events rather than on assumptions made. In general,
the risk to the Company is that the assumptions underlying the disclosures, or the calculation of contribution requirements are not
borne out in practice and the cost to the Company is higher than expected. This could result in higher contributions required from the
Company and a higher deficit disclosed.
Factors that may vary significantly include:
•
The actual return on plan assets;
•
Decrease in asset values not being matched by a similar decrease in the value of the obligation; and
•
Unanticipated future changes in mortality patterns leading to an increase in the DB obligation.
The DB obligation and the service cost are sensitive to the assumptions made about the discount rate, which is based on estimates
of market yields of highly rated corporate bonds and also to salary growth levels, inflation and life expectancy.
With the purchase of buy-ins for UK and Canadian DB pension plans, the Company significantly reduced its exposure to balance
sheet volatility, since the value of DB obligation and corresponding buy-ins change in the same proportion. As of December 31, 2024,
80% of the DB obligation was funded through buy-in annuities (81% as of December 31, 2023).
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
91
a)
UK DB pension plans
The UK plans are managed through trusts with the Trustees responsible for all oversight and the safeguarding of the interests of all
members at all times. The Trustees work closely with the Company and meet regularly to discuss the funding position, investment
strategy and any proposed changes to the plans. The plans are regulated by The Pensions Regulator in the UK.
The assets of the UK plans are held under trust, with control of these arrangements belonging to the Trustees. Investment strategy is
set by the Trustees after consultation with the Company. Both the Company and the Trustees with the support of their investment
advisers regularly review the performance of the plans’ assets to ensure that they are performing in line with expectations.
The assets of the UK plans were mainly composed of buy-ins as at December 31, 2024 and 2023. Refer to Note 29.6 – Additional
information on UK DB pension plans for more details.
b)
Canadian DB pension plans
The Management Pension Committee is responsible for the oversight of the pension plans, including the review of the funding policy
and investment performance. The Statement of Investment Policies and Procedures of the pension plans (the “SIP&P”) formulates
investment principles, guidelines and monitoring procedures to meet the funds’ needs and objectives, in conformity with applicable
rules. It also establishes principles and limits pertaining to debt and equity market risks. Any deviation from the SIP&P is reviewed by
the Operational Investment Committee. The Risk Management Committee, which is a committee of the Company’s Board of Directors,
is responsible for the approval of the SIP&P and the review of the pension plans’ investment performance.
The pension plans investment portfolio is managed by Intact Investment Management Inc., a subsidiary of the Company, in
accordance with the SIP&P that focuses on asset diversification and asset-liability matching. The Company regularly monitors
compliance with the SIP&P.
Asset diversification
The goal of asset diversification is to limit the potential of sustaining significant capital losses.
Debt securities in the pension plans are significantly exposed to changes in interest rates and movements in credit spreads.
Investment policies seek a balanced target investment allocation between debt and equity securities, within credit concentration limits.
The pension plans’ risk management strategy is to invest in debt instruments of high credit quality issuers and to limit the amount of
credit exposure with respect to any one issuer by imposing limits based upon credit quality. The adopted SIP&P requires that the
credit rating of debt securities must be at least ‘BBB-’ at purchase and limits its concentration in any one investee or related group of
investees to 10% of the cost of its total assets (except for securities that are issued or guaranteed by the Government of Canada or
by a province of Canada). The Company has overall limits on credit exposure that include debt and equity securities, as well as off-
balance sheet exposure.
Sensitivity analysis is one risk management technique that assists management in ensuring that equity risks assumed remain within
the pension plans’ risk tolerance level. The Company’s pension plans have a significant concentration of their investments in Canada
as well as in the Government sector. This risk concentration is closely monitored.
As part of a de-risking strategy, buy-ins were acquired in 2021, 2022, and 2024 for Canadian DB pension plans. These contracts
effectively removed all market and demographic risks associated with over 90% of the retiree liabilities at the time of purchase of the
buy-ins in the Company’s Canadian registered pension plans. The buy-ins purchased in 2021 and 2022 were subsequently converted
to buy-outs in March 2024. Refer to Note 29.7 – Additional information on Canadian DB pension plans.
The Company also establishes asset allocation limits to ensure sufficient diversification (refer to Note 9.4 – Credit risk).
Asset-liability matching
One objective established in the SIP&P is to maintain an appropriate balance between the interest rate exposure of the plans’ invested
assets and the duration of its contractual liabilities. The Company calculates an interest rate hedge ratio as the interest rate duration
of the pension asset portfolio divided by the duration of the funded registered pension plans’ obligation, adjusted to reflect the relative
size of each. A lower interest rate hedge ratio increases the Company’s exposure to changes in interest rates. In performing this
calculation, the obligation covered by buy-ins is considered to be fully hedged. The interest rate hedge ratio was 80% as at
December 31, 2024 (78% as at December 31, 2023).
A portion of the pension plan liabilities contains an indexation provision linked to CPI. The Company invests in inflation sensitive
assets to partially mitigate the risk of an unanticipated increase in inflation. As at December 31, 2024, 23% of the remaining pension
plan assets excluding the annuities were invested in Government of Canada Real Return Bonds (23% as at December 31, 2023).
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
92
INTACT FINANCIAL CORPORATION
The Company used repurchase agreements to partly fund the increase of debt securities in the pension plan asset mix with the
objective to improve its asset-liability matching.
Note 30 – Segment information
30.1 Reportable segments
The Company has three reportable segments, in line with its management structure and internal financial reporting which is based on
country and the nature of its activities as described below.
Canada
•
Underwriting of automobile, home and business insurance contracts to individuals and businesses in Canada distributed
through a wide network of brokers and directly to consumers.
•
Distribution income includes the operating results from the Company’s wholly owned subsidiary, BrokerLink Inc., broker
associates, managing general agent platforms, and supply chain operations from On Side Developments LTD.
UK & International
•
Underwriting of automobile, home, pet and business insurance contracts to businesses in the UK, Europe, and Ireland as
well as internationally through the Company’s global network. The Company distributes insurance through a wide network of
affinity partners and brokers or directly to consumers.
•
As the Company exited these businesses, the following were excluded from operating performance effective:
o
January 1, 2023, the underwriting results of the UK Personal Lines motor market; and
o
October 1, 2023, the underwriting results of the UK Home and Pet Personal Lines.
•
Effective October 1, 2023, results from the DLG acquisition were included in this segment.
Refer to Note 5 – Business combinations and disposals for more details.
US
•
Underwriting of specialty contracts mainly to medium-sized businesses in the United States. The Company distributes
insurance through independent agencies, brokers, wholesalers and managing general agencies.
•
Distribution income includes the operating results from the Company’s wholly owned subsidiary, Striior Insurance Solutions,
and managing general agent platforms.
Corporate and Other (“Corporate” or “Corp”) consists of investment management, treasury and capital management activities,
corporate reinsurance, including certain internal agreements as well as other corporate activities.
30.2 Segment operating performance
All segment operating revenues presented in Table 30.1 are generated from external customers.
Management measures the profitability of the Company’s segments based on PTOI which excludes elements that are not
representative of the Company’s operating performance because they include elements that arise mostly from changes in market
conditions, relate to acquisition-related items or special items, or because they are not part of the Company’s normal activities. Refer
to Section 29 – Non-GAAP and other financial measures of the Company’s MD&A for the definition and reconciliation of related
operating measures.
The reconciliation of the segment operating revenue and PTOI to the amounts recognized in the consolidated statements of income
is presented in Table 30.2 and Table 30.3, respectively.
As at April 1, 2024, the Company refined the reporting of its segment information and reclassified the comparative information
accordingly. The discount build and the net unwind of discount on claims liabilities were previously reported within Corporate and
other in operating results and are now reported within non-operating results. The change removes volatility related to changes in
discount rates from the Company’s operating results as it was not representative of the fundamental performance of the Company’s
business. This change in presentation does not impact how the Company manages its lines of business as these were already
presented on an undiscounted basis. For the year ended December 31, 2023, this resulted in a decrease of $64 million in PTOI and
a decrease of $47 million in NOI attributable to common shareholders.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
93
Table 30.1 – Segment operating performance
2024
2023
Years ended December 31,
CAN
UK&I
US
Corp
Total
CAN
UK&I
US
Corp
Total
Operating income
Operating net underwriting revenue
15,184
4,199
2,272
3
21,658
14,086
4,143
2,114
22
20,365
Operating net investment income
-
-
-
1,559
1,559
-
-
-
1,346
1,346
Other operating income
573
-
33
10
616
505
-
57
8
570
Segment operating revenue
15,757
4,199
2,305
1,572
23,833
14,591
4,143
2,171
1,376
22,281
Operating net claims
(9,170)
(2,394) (1,118)
(3) (12,685)
(8,802) (2,521)
(1,052)
1 (12,374)
Operating net underwriting expenses
(4,906)
(1,504)
(869)
(5) (7,284)
(4,511) (1,471)
(823)
(3) (6,808)
Share of profit from invest. in associates & JV
165
-
-
-
165
167
-
-
-
167
Total finance costs
(16)
-
-
(222)
(238)
(13)
-
-
(222)
(235)
Other operating expense
(239)
-
(8)
(186)
(433)
(228)
-
(34)
(165)
(427)
PTOI
1,591
301
310
1,156
3,358
1,204
151
262
987
2,604
Operating income tax expense
(679)
(491)
Net income (loss) attributable to NCI
(13)
(15)
Preferred shares dividends and other equity
distributions
(90)
(84)
NOI attributable to common shareholders
2,576
2,014
PTOI is comprised of:
Underwriting income (loss)
1,108
301
285
(5)
1,689
773
151
239
20
1,183
Operating net investment income
-
-
-
1,559
1,559
-
-
-
1,346
1,346
Distribution income
499
-
25
-
524
444
-
23
-
467
Total finance costs
(16)
-
-
(222)
(238)
(13)
-
-
(222)
(235)
Other operating income (expense)
-
-
-
(176)
(176)
-
-
-
(157)
(157)
PTOI
1,591
301
310
1,156
3,358
1,204
151
262
987
2,604
Table 30.2 – Reconciliation of segment operating revenue to amounts recognized in the Consolidated statements of income
Years ended December 31,
2024
2023
Segment operating revenue (Table 30.1)
23,833
22,281
Expense from reinsurance contracts
2,579
3,056
Net insurance revenue from claims acquired in a business combination
842
1,418
Assumed (ceded) commissions and premium adjustment
95
244
Net insurance revenue from retroactive reinsurance contracts
(46)
(138)
Other income included in Operating net underwriting expenses
98
93
Net underwriting revenue from exited lines
1,395
562
Revenue, as reported below
28,796
27,516
Represented by:
Insurance revenue
26,523
25,507
Net investment income
1,559
1,346
Other income (Table 23.2)
714
663
28,796
27,516
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
94
INTACT FINANCIAL CORPORATION
Table 30.3 – Reconciliation of PTOI to amounts recognized in the Consolidated statements of income
Years ended December 31,
2024
2023
Segment PTOI (Table 30.1)
3,358
2,604
Non-operating items:
Net gains (losses) on investment portfolio
148
249
Changes in discount rate and other financial assumptions
(196)
(156)
Net foreign currency gains (losses) included in net insurance financial result
140
94
Discount build on claims liabilities
925
948
Net unwind of discount on claims liabilities
(883)
(884)
Other net gains (losses)
303
50
Income (loss) from exited lines
(108)
(313)
Amortization of acquired intangible assets
(306)
(270)
Acquisition, integration and restructuring costs
(407)
(503)
Net result from claims acquired in a business combination
(4)
(3)
Other
(59)
23
Pre-tax income, as reported in the MD&A
2,911
1,839
Less: share of income tax expense from broker associates
(33)
(35)
Income before income taxes, as reported
2,878
1,804
30.3 Selected segment assets and liabilities
Table 30.4 – Selected segment assets and liabilities
2024
2023
As at December 31,
CAN
UK&I
US
Corp
Total
CAN
UK&I
US
Corp
Total
Investments (Note 6)
-
-
- 40,282 40,282
-
-
- 37,083 37,083
Net liability for incurred claims1
14,126
6,502
2,360
6 22,994 13,746
5,867
2,026
2 21,641
1 Represents the net liability for incurred claims before net payables included in incurred claims and the reclass of net claims reported under the GMM.
Refer to Table 10.9 – Carrying amount of the net liability for incurred claims.
30.4 Information by geographic areas
Table 30.5 – Geographic areas
2024
2023
As at December 31,
Canada
UK&I
US
Total
Canada
UK&I
US
Total
Insurance and reinsurance contracts:
Insurance revenue
16,464
7,194
2,865
26,523
15,514
7,389
2,604
25,507
Insurance service expense
(14,314)
(5,840)
(2,264) (22,418) (13,497)
(6,945)
(2,142) (22,584)
Expense from reinsurance contracts
(878)
(1,231)
(470)
(2,579)
(798)
(1,781)
(477)
(3,056)
Income from reinsurance contracts
877
434
349
1,660
492
1,569
381
2,442
Other information:
Total revenues (Table 30.2)
18,076
7,615
3,105
28,796
17,014
7,672
2,830
27,516
Total assets
32,293
17,822
9,411
59,526
31,293
16,869
7,817
55,979
The amounts presented above are allocated based on the country where the risks originate. The Company’s significant operating
subsidiaries by geographic areas of operations are presented below.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
95
Table 30.6 – Significant operating subsidiaries by geographic areas
Operations
Legal entities
Canada
•
Belair Insurance Company Inc.
•
Brokerlink Inc.
•
Canadian Northern Shield Insurance Company
•
Equisure Financial Network Inc.
•
IB Reinsurance Inc.
•
Intact Insurance Company
•
Intact Public Entities Inc.
•
Jevco Insurance Company
•
Novex Insurance Company
•
On Side Developments Ltd.
•
Quebec Assurance Company
•
Royal & Sun Alliance Insurance Company of Canada
•
The Johnson Corporation
•
The Nordic Insurance Company of Canada
•
Trafalgar Insurance Company of Canada
•
Unifund Assurance Company
•
Western Assurance Company
US
•
Atlantic Specialty Insurance Company
•
Intact Insurance Group USA Holdings Inc.
•
Intact U.S. Financial Services Inc.
•
The Guarantee Company of North America USA
•
Striior Insurance Solutions LLC
UK&I
•
Royal & Sun Alliance Insurance Limited
•
RSA Luxembourg S.A.
•
RSA Insurance Ireland DAC
Note 31 – Additional information on the Consolidated statements of cash flows
31.1 Cash flows from operating activities
Table 31.1 – Cash flows from operating activities
Years ended December 31,
2024
2023
Adjustments for non-cash items
Net (gains) losses on investment portfolio (Note 22)
(148)
(249)
Other net (gains) losses (Note 23)
(303)
(50)
Depreciation of property and equipment1
163
161
Amortization of intangible assets (Note 13)
563
436
Net (discounts) premiums on debt securities classified as FVTOCI
(131)
(37)
DB pension expense (Note 29)
97
1
Share-based payment plan expense
135
120
Share of profit from investments in associates and joint ventures (Note 14)
(89)
(96)
Other
7
159
294
445
Changes in other operating assets and liabilities
Contributions to the DB pension plans (Note 29)
(151)
(1,027)
Changes in insurance and reinsurance contracts
1,192
879
Share-based payments
(20)
(14)
Other operating assets
(74)
10
Other operating liabilities
(31)
(137)
Dividends received from investments in associates and joint ventures (Note 14)
44
39
960
(250)
1 Includes depreciation of right-of-use assets of leases.
Table 31.2 – Other relevant cash flow disclosures – operating activities
Years ended December 31,
2024
2023
Interest paid
225
228
Interest received
1,217
1,011
Dividends received
362
366
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
96
INTACT FINANCIAL CORPORATION
31.2 Composition of cash and cash equivalents, net of bank overdraft
Table 31.3 – Composition of cash and cash equivalents, net of bank overdraft
As at December 31,
2024
2023
Cash
881
905
Cash equivalents
264
266
Cash and cash equivalents
1,145
1,171
Bank overdraft, recorded in Other liabilities (Table 16.3)
(148)
-
Cash and cash equivalents, net of bank overdraft
997
1,171
Cash and cash equivalents with restricted use was approximately $251 million and $232 million as at December 31, 2024 and
2023, respectively.
Note 32 – Related-party transactions
The Company enters into transactions with associates and joint ventures in the normal course of business as well as with key
management personnel and pension plans. Transactions with related parties are at normal market prices and mostly comprise of
commissions for insurance policies, interest and principal payments on loans and reinsurance agreements.
32.1 Transactions with associates and joint ventures
Table 32.1 – Transactions with associates and joint ventures
As at December 31,
2024
2023
Income (expenses) recognized in:
Insurance service expense
(448)
(363)
Net investment income
7
8
Assets (liabilities) recognized in:
Loans and other receivables
136
111
Other payables and other liabilities
(190)
(188)
Insurance contract liabilities
127
69
32.2 Compensation of key management personnel
The Company’s key management personnel are those that have the authority and responsibility for planning, directing and controlling
the activities of the Company, which includes the entirety of the Executive Officers of the Company as well as the Board of Directors.
Table 32.2 – Aggregate compensation of key management personnel
Years ended December 31,
2024
2023
Compensation1
31
22
Share-based payments
38
34
69
56
1 Compensation is comprised of short-term employee benefits and long-term employee benefits, including pension benefits.
Key management personnel can purchase insurance products offered by the Company in the normal course of business. The terms
and conditions of such transactions are essentially the same as those available to clients and employees of the Company.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
97
32.3 Pension plans
Intact Investment Management Inc., a subsidiary of the Company, manages the investment portfolio of the Canadian pension plans’
Master Trust in return for investment advisory fees charged to the pension plans, for a total of $6 million for the year ended
December 31, 2024 ($6 million – December 31, 2023).
The Company made contributions to the Canadian and UK pension plans of $151 million for the year ended December 31, 2024
($1,027 million – December 31, 2023).
Note 33 – Commitments and contingencies
33.1 Commitments
The Company has entered into commercial leases mainly related to real estate right-of-use assets, as well as other commitments.
The remaining life of these commitments ranges from one to 16 years. Refer to Note 9.5 b) – Financial liabilities by contractual
maturity and Note 16.2 – Other liabilities for details on lease liabilities.
a)
Other non-cancellable commitments
The following table presents other non-cancellable commitments including operational costs and variable lease payments.
Table 33.1 – Other non-cancellable commitments
As at December 31, 2024
Leases1 Investments2
Other
Total
Less than 1 year
86
1,120
183
1,389
From 1 to 5 years
242
-
42
284
Over 5 years
218
-
-
218
546
1,120
225
1,891
1 Includes variable lease payments not based on an index or rate, such as property taxes.
2 Represents property funds, collateralized debt obligations and other classes of investments which are callable on demand over the life of the funds.
b)
Amounts recognized in the Consolidated statements of income
Table 33.2 – Amounts recognized in the Consolidated statements of income
Years ended December 31,
2024
2023
Interest expense on lease liabilities
22
19
Operational costs and variable lease payment expenses
108
114
33.2 Contingencies
In the normal course of operations, various insurance claims and legal proceedings are instituted against the Company. Legal
proceedings are often subject to numerous uncertainties, and it is not possible to predict the outcome of individual cases. In
management’s opinion, the Company has made adequate provisions for, or has adequate insurance and reinsurance to cover all
insurance claims and legal proceedings. Consequently, any settlements reached should not have a material adverse effect on the
Company’s consolidated future operating results and financial position.
The Company provides indemnification agreements to directors and officers, to the extent permitted by law, against certain claims
made against them as a result of their services to the Company. The Company has insurance coverage for these agreements.
Regarding the class actions relating to business interruption coverage in Canada, most commercial policies, except in very limited
instances, do not provide for business interruption coverage in the context of a closure due to COVID-19 since direct physical loss or
damage is required to trigger this coverage. The Company continues to monitor the progression of these judgments and believes they
will not have a material effect on its Consolidated financial statements.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
98
INTACT FINANCIAL CORPORATION
Note 34 – Disclosures on rate regulation
34.1 Canada
The Company’s Canadian insurance subsidiaries are licensed under insurance legislation in each of the provinces and territories in
which they conduct business. Personal and commercial automobile insurance is a compulsory product and is subject to different
regulations across the provinces and territories in Canada, including those with respect to rate setting.
Rate setting mechanisms generally fall under three categories:
Table 34.1 – Rate filing categories
Category
Description
File and approve
Insurers must wait for specific approval of filed rates before they may be used.
File and use
Insurers file their rates with the relevant authorities and wait for a prescribed period and then
implement the proposed rates.
Use and file
Rates are filed following use.
In Canada, essentially all provinces and territories use a “file and approve” rate setting mechanism except for Québec, which uses a
“use and file” mechanism. Automobile insurance revenue covered by a “file and approve” rate setting mechanism totalled $5.5 billion,
or 74% of the Canadian Company’s automobile insurance revenue for the year ended December 31, 2024 ($5.1 billion, or 74% –
December 31, 2023).
34.2 US
Most states have insurance laws generally requiring property and casualty insurance companies to file their rates, rules and policy or
coverage forms with the state's regulatory authority. In most cases, such rates, rules and forms must be approved prior to use. While
pricing laws vary from state to state, their objectives are generally to ensure that rates are not excessive, inadequate or unfairly
discriminatory or used to engage in unfair price competition. The Company’s ability to increase rates and the timing of the process
are dependent upon the regulatory requirements in each state. Certain lines of property and casualty insurance may be exempt from
these requirements.
34.3 UK&I
In the UK&I, there are no regulations requiring insurance companies to file their rates, however, there are rules to ensure that insurance
companies provide quotes for renewing home and automobile insurance policies that are not greater than quotes for a new customer
through the same channel.
Note 35 – Standards issued but not yet effective
35.1 IFRS 18 – Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18 – Presentation and Disclosure in Financial Statements (“IFRS 18”) to improve reporting of
financial performance. IFRS 18 replaces IAS 1, however, it carries forward many requirements from IAS 1 unchanged. IFRS 18 will
be effective for annual reporting periods beginning on or after January 1, 2027, with earlier application permitted. IFRS 18 introduces
specified subtotals in the statements of income, new disclosures for management-defined performance measures, and additional
requirements for the aggregation and disaggregation of information.
The Company is currently assessing the impact of this new standard on the presentation and disclosure of its financial statements.
Notes to Consolidated Financial Statements
(in millions of Canadian dollars, except as otherwise noted)
INTACT FINANCIAL CORPORATION
99
35.2 Amendments to the Classification and Measurement of Financial Instruments
In May 2024, the IASB published Amendments to the Classification and Measurement of Financial Instruments - Amendments to
IFRS 9 and IFRS 7 to address matters identified during the post-implementation review of IFRS 9. The amendments clarify the
classification of certain financial assets as well as the derecognition of a financial liability and introduce an accounting policy option
for the derecognition of financial liabilities settled through electronic transfer if certain conditions are met. The amendments also add
disclosure requirements for certain financial instruments.
The amendments are effective for annual reporting periods beginning on or after January 1, 2026, with earlier application permitted,
and will apply retrospectively.
The Company is currently assessing the impact of these amendments on its financial statements.
Five-year financial history
This table contains non-GAAP and other financial measures. Refer to Section 29—Non-GAAP and other financial measures
of the MD&A for the year-ended December 31, 2024 for further details.
IFRS 17 basis
IFRS 4 basis
2024
2023
2022
2021
2020
Consolidated performance¹
Operating direct premiums written1
23,727
22,370
21,005
17,283
12,039
Operating net underwriting revenue1 / Operating net earned premiums1
21,658
20,365
19,522
16,043
11,220
Underwriting income (loss)1
1,689
1,183
1,598
1,787
1,227
Operating net investment income1
1,559
1,346
927
706
577
Distribution income1
524
467
441
362
275
Pre-tax operating income1
3,358
2,604
2,614
2,668
1,916
Net operating income attributable to common shareholders1
2,576
2,014
2,030
2,017
1,419
Non-operating results1
(447)
(765)
429
(70)
(535)
Net income
2,310
1,331
2,450
2,088
1,082
Combined ratio1, 2 / Operating combined ratio1, 3
92.2%
94.2%
91.8%
88.8%
89.1%
Discounted combined ratio1
87.9%
89.5%
89.4%
n.a.
n.a.
Per share measures ($)
Net operating income per share1
14.43
11.43
11.56
12.41
9.92
Earnings per share (basic)
12.37
6.99
13.63
12.40
7.20
Earnings per share (diluted)
12.36
6.99
13.63
12.40
7.20
Book value per share¹
92.67
81.71
82.84
82.34
58.79
Dividend per common share
4.84
4.40
4.00
3.40
3.32
Return on equity (last 12 months)
Operating return on equity1
16.5%
13.9%
13.5%
17.8%
18.4%
Adjusted return on equity1
16.8%
11.7%
19.2%
21.0%
15.0%
Return on equity¹
14.2%
8.8%
16.3%
17.0%
12.8%
1 These are non-GAAP and other financial measures. Refer to Section 29—Non-GAAP and other financial measures of the MD&A for the year-ended December 31, 2024
for further details.
2 Since the adoption of IFRS 17 on January 1, 2023, underwriting results of segments and their Lines of business are presented on an undiscounted basis
(including risk adjustment). Prior to the adoption, results were presented on a discounted basis.
3 Operating combined ratios under IFRS 4 include impact of discount build on claims liabilities as well as the Net unwind of discount on claims liabilities.
2024 Intact Financial Corporation Annual Report
248
1 These are non-GAAP and other financial measures. Refer to Section 29—Non-GAAP and other financial measures of the MD&A for the year-ended December 31, 2024
for further details.
2 Since the adoption of IFRS 17 on January 1, 2023, underwriting results are presented on an undiscounted basis (including risk adjustment). Prior to the adoption, results
were presented on a discounted basis.
3 Operating combined ratios under IFRS 4 include impact of discount build on claims liabilities as well as the Net unwind of discount on claims liabilities.
4 Effective Q4-2023, we have exited our UK Personal Lines operations. As a result, the UK&I segment will no longer show a breakdown between Personal Lines and
Commercial Lines.
IFRS 17 basis
IFRS 4 basis
2024
2023
2022
2021
2020
Underwriting performance¹
P&C Canada
Operating direct premiums written1
16,060
14,891
13,995
12,023
10,216
Operating net underwriting revenue1 / Operating net earned premiums1
15,184
14,086
13,531
11,450
9,633
Combined ratio1, 2 / Operating combined ratio1, 3
92.7%
94.5%
90.2%
86.7%
88.0%
Personal auto
Operating direct premiums written1
6,640
5,956
5,514
4,843
4,322
Operating net underwriting revenue1 / Operating net earned premiums1
6,392
5,808
5,557
4,825
4,187
Combined ratio1, 2 / Operating combined ratio1, 3
95.4%
94.7%
93.2%
86.9%
86.6%
Personal property
Operating direct premiums written1
4,222
3,877
3,632
3,104
2,586
Operating net underwriting revenue1 / Operating net earned premiums1
3,949
3,650
3,493
2,924
2,444
Combined ratio1, 2 / Operating combined ratio1, 3
96.5%
100.7%
89.2%
83.8%
81.7%
Commercial Lines — Canada
Operating direct premiums written1
5,198
5,058
4,849
4,076
3,308
Operating net underwriting revenue1 / Operating net earned premiums1
4,843
4,628
4,481
3,701
3,002
Combined ratio1, 2 / Operating combined ratio1, 3
86.0%
89.3%
87.2%
88.6%
95.1%
P&C UK&I (in Canadian dollars)4
Operating direct premiums written1
4,775
4,706
4,664
2,538
–
Operating net underwriting revenue1 / Operating net earned premiums1
4,199
4,143
4,107
2,319
–
Combined ratio1, 2 / Operating combined ratio1, 3
92.8%
96.4%
99.3%
93.4%
–
P&C US (in Canadian dollars)
Operating direct premiums written1
2,892
2,773
2,346
1,988
1,823
Operating net underwriting revenue1 / Operating net earned premiums1
2,272
2,114
1,866
1,652
1,582
Combined ratio1, 2 / Operating combined ratio1, 3
87.5%
88.7%
87.8%
92.9%
94.9%
Corporate & Other (RSA June 2021)
Operating direct premiums written1
–
–
–
734
–
Operating net earned premiums1
–
–
–
608
–
Operating combined ratio1, 3
–
–
–
90.7%
–
Financial condition
Total assets
59,526
55,979
53,741
66,349
35,119
Total capital margin1
2,890
2,671
2,379
2,891
2,729
Adjusted debt-to-total capital ratio1
19.4%
22.4%
20.7%
23.0%
24.1%
2024 Intact Financial Corporation Annual Report
249
Three-year quarterly financial history
This table contains non-GAAP and other financial measures. Refer to Section 29—Non-GAAP and other financial measures
of the MD&A for the year-ended December 31, 2024 for further details.
1 These are non-GAAP and other financial measures. Refer to Section 29—Non-GAAP and other financial measures of the MD&A for the year-ended December 31, 2024
for further details.
2 Since the adoption of IFRS 17 on January 1, 2023, underwriting results of segments and their lines of business are presented on an undiscounted basis
(including risk adjustment). Prior to the adoption, results were presented on a discounted basis.
IFRS 17 basis 2024
IFRS 17 basis 2023
IFRS 17 basis 2022
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Consolidated performance¹
Operating direct premiums written1
5,755
6,207
6,655
5,110
5,410
5,925
6,226
4,809
5,125
5,423
5,801
4,656
Operating net underwriting revenue1
5,659
5,505
5,301
5,193
5,259
5,226
5,016
4,864
5,041
4,918
4,802
4,761
Underwriting income (loss)1
764
(215)
681
459
517
88
184
394
345
407
471
375
Operating net investment income1
398
394
387
380
376
349
326
295
279
232
211
205
Distribution income1
123
132
169
100
109
116
137
105
94
113
142
92
Pre-tax operating income1
1,176
213
1,120
849
895
456
544
709
625
664
731
594
Net operating income attributable to
common shareholders1
881
182
866
647
713
349
410
542
490
510
569
461
Non-operating results1
(330)
23
(128)
(12)
(152)
(265)
(200)
(148)
(198)
(186)
742
71
Net income
667
212
758
673
531
163
260
377
353
375
1,235
487
Combined ratio1, 2
86.5%
103.9%
87.1%
91.2%
90.1%
98.3%
96.3%
91.9%
93.2%
91.7%
90.2%
92.1%
Discounted combined ratio1
82.4%
99.7%
82.7%
86.8%
85.0%
93.5%
92.2%
87.4%
90.4%
90.4%
88.0%
88.9%
Per share measures ($)
Net operating income per share1
4.93
1.01
4.86
3.63
4.00
1.98
2.34
3.09
2.80
2.91
3.24
2.62
Earnings per share (basic)
3.58
1.07
4.05
3.68
2.78
0.83
1.30
2.06
1.88
2.05
6.93
2.76
Earnings per share (diluted)
3.58
1.06
4.04
3.68
2.78
0.83
1.30
2.06
1.88
2.05
6.93
2.76
Book value per share¹
92.67
90.60
88.00
84.76
81.71
77.24
76.29
77.72
82.84
81.82
83.74
84.78
Dividend per common share
1.21
1.21
1.21
1.21
1.10
1.10
1.10
1.10
1.00
1.00
1.00
1.00
Return on equity (last 12 months)
Operating return on equity1
16.5%
15.8%
17.0%
14.3%
13.9%
12.0%
12.9%
14.0%
13.5%
n.a.
n.a.
n.a.
Adjusted return on equity1
16.8%
16.7%
16.7%
13.5%
11.7%
10.6%
11.8%
18.3%
19.2%
n.a.
n.a.
n.a.
Return on equity¹
14.2%
13.8%
13.7%
10.6%
8.8%
7.8%
9.0%
15.4%
16.3%
n.a.
n.a.
n.a.
2024 Intact Financial Corporation Annual Report
250
IFRS 17 basis 2024
IFRS 17 basis 2023
IFRS 17 basis 2022
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Underwriting performance¹
P&C Canada
Operating direct premiums written1
3,984
4,261
4,563
3,252
3,682
3,943
4,270
2,996
3,410
3,657
4,035
2,893
Operating net underwriting revenue1
3,945
3,870
3,727
3,642
3,658
3,586
3,474
3,368
3,454
3,447
3,356
3,274
Combined ratio1, 2
84.9%
109.5%
85.4%
90.7%
86.7%
101.8%
97.9%
91.7%
87.6%
92.5%
89.6%
91.1%
Personal auto
Operating direct premiums written1
1,575
1,873
1,892
1,300
1,408
1,668
1,711
1,169
1,256
1,535
1,608
1,115
Operating net underwriting revenue1
1,678
1,637
1,566
1,511
1,524
1,475
1,430
1,379
1,402
1,423
1,385
1,347
Combined ratio1, 2
94.2%
97.6%
91.4%
98.6%
95.2%
95.4%
91.2%
97.1%
93.5%
94.4%
91.3%
93.7%
Personal property
Operating direct premiums written1
1,030
1,203
1,161
828
946
1,109
1,062
760
874
1,034
1,008
716
Operating net underwriting revenue1
1,031
1,004
969
945
949
925
898
878
895
884
865
849
Combined ratio1, 2
77.1%
147.5%
78.0%
82.5%
75.8%
123.7%
119.2%
84.5%
76.5%
95.9%
96.5%
88.3%
Commercial Lines —Canada
Operating direct premiums written1
1,379
1,185
1,510
1,124
1,328
1,166
1,497
1,067
1,280
1,088
1,419
1,062
Operating net underwriting revenue1
1,236
1,229
1,192
1,186
1,185
1,186
1,146
1,111
1,157
1,140
1,106
1,078
Combined ratio1, 2
78.8%
94.4%
83.6%
87.3%
84.4%
92.7%
89.5%
90.8%
89.1%
87.6%
82.1%
89.9%
P&C UK&I (in Canadian dollars)3
Operating direct premiums written1
1,140
1,075
1,315
1,245
1,112
1,157
1,202
1,235
1,150
1,058
1,164
1,292
Operating net underwriting revenue1
1,087
1,062
1,040
1,010
1,011
1,103
1,037
992
1,037
993
1,016
1,061
Combined ratio1, 2
92.7%
91.9%
92.2%
94.6%
104.6%
92.5%
94.1%
94.6%
116.4%
90.3%
92.0%
98.2%
P&C US (in Canadian dollars)
Operating direct premiums written1
631
871
777
613
616
825
754
578
565
708
602
471
Operating net underwriting revenue1
627
573
534
538
590
530
498
496
546
475
424
421
Combined ratio1, 2
86.1%
87.4%
88.5%
88.0%
86.4%
88.5%
91.3%
89.1%
84.7%
89.3%
91.0%
86.8%
Financial condition
Total assets
59,526
59,300
56,535
56,443
55,979
55,007
53,255
53,692
53,741
53,570
52,837
54,766
Total capital margin1
2,890
2,566
2,884
2,654
2,671
2,841
2,482
2,796
2,379
2,490
2,479
2,567
Adjusted debt-to-total capital ratio1
19.4%
20.3%
19.8%
20.5%
22.4%
22.7%
22.5%
22.4%
20.7%
21.9%
19.8%
23.4%
1 These are non-GAAP and other financial measures. Refer to Section 29—Non-GAAP and other financial measures of the MD&A for the year-ended December 31, 2024
for further details.
2 Since the adoption of IFRS 17 on January 1, 2023, underwriting results of segments and their lines of business are presented on an undiscounted basis
(including risk adjustment). Prior to the adoption, results were presented on a discounted basis.
3 Effective Q4 2023, we have exited our U.K. Personal Lines operations. As a result, the UK&I segment will no longer show a breakdown between Personal Lines
and Commercial Lines.
2024 Intact Financial Corporation Annual Report
251
Forward-looking statements
Certain of the statements included in this annual report
constitute forward-looking statements. Unless otherwise
indicated, all forward-looking statements in this annual
report are made as at March 27, 2025, and are subject
to change after that date. This annual report contains
forward-looking statements with respect to the integration
of Direct Line Insurance Group plc’s (“DLG”) brokered
Commercial Lines operations (“the DLG integration”), the
exit of Royal & Sun Alliance Insurance Limited from the
UK Personal Lines market, the realization of the expected
strategic, financial and other benefits of the transactions and
the impact of economic conditions and other external on
the Company’s operations and financial performance. This
annual report also contains forward-looking statements with
respect to the Company’s climate-related strategy, goals
or plans, based on our current expectations, estimates and
projections involving inherent risks and uncertainties, as they
are based on various factors and assumptions, all of which
are difficult to predict and many of which are beyond our
control, including technological advancement, development
of climate-related measurement methodologies, varying
decarbonization efforts across economies, governmental
or regulatory action, geopolitical factors impacting global
energy needs, challenges of balancing emission reduction
targets with an orderly, just and inclusive transition, evolution
of customer behaviour, our ability to gather and verify data,
the participation of various stakeholders or our ability to
implement various initiatives across our global operations
within a specified timeframe.
Forward-looking statements are based on estimates and
assumptions made by management based on management’s
experience and perception of historical trends, current
conditions and expected future developments, as well as
other factors that management believes are appropriate
in the circumstances. In addition to other estimates and
assumptions which may be identified herein, estimates and
assumptions have been made regarding, among other
things, the realization of the expected strategic, financial
and other benefits of the DLG integration, Royal & Sun
Alliance Insurance Limited’s exit from the UK personal
lines market economic and political environments and
industry conditions. There can also be no assurance that
the strategic and financial benefits expected to result from the
DLG integration will be realized. Many factors could cause
the Company’s actual results, performance or achievements
or future events or developments to differ materially
from those expressed or implied by the forward-looking
statements, including, without limitation, credit, market,
liquidity, operational, strategic and legal risks and the risks
discussed in Section 27.6—Top and emerging risks that may
affect future results and Section 27.7—Other risk factors
that may affect future results of the MD&A of the Company
for the year ended December 31, 2024, including a major
earthquake, climate change, climate-related litigation or
activism, catastrophe, geopolitical risk, increased competition
and disruption, turbulence in financial markets, reserving
inadequacy, underwriting inadequacy, governmental and/
or regulatory intervention, cyber security failure, project
and change risk, inability to contain fraud and/or abuse,
customer dissatisfaction, social unrest, third party reliance,
employee defined benefit pension plan risks, reinsurance
inadequacy, distribution risks, inability to retain and to
attract talent, business interruption to our operations, credit
downgrade, limit on dividend and capital distribution as well
as artificial intelligence risk.
All of the forward-looking statements included in this annual
report are qualified by these cautionary statements. These
factors are not intended to represent a complete list of the
factors that could affect the Company. These factors should,
however, be considered carefully. Although the forward-
looking statements are based upon what management
believes to be reasonable assumptions, the Company cannot
assure investors that actual results will be consistent with
these forward-looking statements. When relying on forward-
looking statements to make decisions, investors should
ensure the preceding information is carefully considered.
Undue reliance should not be placed on forward-looking
statements made herein. The Company and management
have no intention and undertake no obligation to update or
revise any forward-looking statements, whether as a result
of new information, future events or otherwise, except as
required by law.
Disclaimer
Intact Financial Corporation, Belair Insurance Company Inc., BrokerLink
Inc., RSA Insurance Group Limited, On Side Restoration Services Ltd.
and their respective affiliates own and/or use a number of trademarks
in connection with their business operations. These trademarks (both
registered and unregistered) are the exclusive property of Intact Financial
Corporation, Belair Insurance Company Inc., BrokerLink Inc., RSA Insurance
Group Limited, On Side Restoration Services Ltd. and/or their respective
affiliates ©2025 Intact Financial Corporation. All rights reserved.
2024 Intact Financial Corporation Annual Report
252
Shareholder and corporate information
Toronto Stock Exchange (TSX) listings
Common Shares Ticker Symbol: IFC
Series 1 Preferred Shares Ticker Symbol: IFC.PR.A
Series 3 Preferred Shares Ticker Symbol: IFC.PR.C
Series 5 Preferred Shares Ticker Symbol: IFC.PR.E
Series 6 Preferred Shares Ticker Symbol: IFC.PR.F
Series 7 Preferred Shares Ticker Symbol: IFC.PR.G
Series 9 Preferred Shares Ticker Symbol: IFC.PR.I
Series 11 Preferred Shares Ticker Symbol: IFC.PR.K
Annual meeting of shareholders
Date: Wednesday, May 7, 2025
Time: 1:00 PM (Eastern Time)
Place: Virtual-only meeting via
live webcast. The webcast will
be available at meetings.
lumiconnect.com/400-465-706-
963. Detailed information on how
to participate in the Meeting is
included in our Management
Proxy Circular.
Earnings conference
call dates
Q1 —May 7, 2025
Q2 —July 30, 2025
Q3 —November 5, 2025
Q4 —February 11, 2026
Common share dividend history
Record date
Payable date
Amount
December 16, 2024
December 31, 2024
$1.21
September 13, 2024
September 27, 2024
$1.21
June 14, 2024
June 28, 2024
$1.21
March 15 2024
March 29, 2024
$1.21
December 15, 2023
December 29, 2023
$1.10
September 15, 2023
September 29, 2023
$1.10
June 15, 2023
June 30, 2023
$1.10
March 15, 2023
March 31, 2023
$1.10
Common share dividend dates in 2025*
Record date
Payable date
March 14, 2025
March 31, 2025
June 16, 2025
June 30, 2025
September 15, 2025
September 29, 2025
December 17, 2025
December 31, 2025
Preferred share dividend dates in 2025*
Record date
Payable date
March 14, 2025
March 31, 2025
June 16, 2025
June 30, 2025
September 15, 2025
September 30, 2025
December 17, 2025
December 31, 2025
* Dividends are not guaranteed and are subject to approval by the Board of Directors.
Transfer agent and registrar
Computershare Investor Services Inc.
100 University Avenue, 8th Floor, North Tower
Toronto, Ontario M5J 2Y1
1-800-564-6253
Dividend reinvestment
Shareholders can reinvest their common share dividends of Intact Financial
Corporation on a commission-free basis either through their broker under a
Dividend Reinvestment Plan (DRIP) administered on behalf of the Company
by our transfer agent, Computershare Investor Services Inc., or via the
Co-Operative Investing Service operated by Canadian ShareOwner
Investments Inc. Full details can be obtained by visiting the “Investors”
section of the www.intactfc.com website.
Eligible dividend designation
For purposes of the enhanced dividend tax credit rules contained in the
Income Tax Act (Canada) and any corresponding provincial and territorial
tax legislation, all dividends (and deemed dividends) paid by Intact Financial
Corporation to Canadian residents on our common and preferred shares
after December 31, 2005, are designated as eligible dividends. Unless
stated otherwise, all dividends (and deemed dividends) paid by the
Company hereafter are designated as eligible dividends for the purposes
of such rules.
Information for shareholders outside of Canada
Dividends paid to residents of countries with which Canada has bilateral
tax treaties are generally subject to the 15% Canadian non-resident
withholding tax. Where a tax treaty is not applicable, the withholding tax
rate is 25%. There is no Canadian tax on gains from the sale of shares
(assuming ownership of less than 25%) or debt instruments of the
Company owned by non-residents not carrying on business in Canada.
No government in Canada levies estate taxes or succession duties.
Auditors
Ernst & Young LLP
Investor inquiries
Geoff Kwan
Deputy SVP, Finance and Chief
Investor Relations Officer
1-866-440-8300 ext. 20022
ir@intact.net
Media inquiries
Caroline Audet
Manager, Media Relations
and Public Affairs
416 227-7905 / 514-985-7165
media@intact.net
Data items are not adjusted for stock splits and consolidations. This data
is provided “AS IS”. TSX, its affiliates and their respective service providers,
suppliers and licensors: (i) make no warranties or representations of any
kind, express, implied or otherwise regarding this data or its accuracy,
completeness or timeliness, (ii) disclaim the implied warranties of
merchantability and fitness for a particular purpose, and (iii) assume no
liability in making this data available.
A glossary of abbreviations can be found in Section 33—Glossary and
definitions of the MD&A. A glossary of definitions of GAAP and non-GAAP
financial measures, as well as other insurance-related terms used in our
financial reports, can be obtained by visiting the “Investors” section of the
www.intactfc.com website.
Version française
Il existe une version française du présent rapport annuel à la section
Investisseurs de notre site Web www.intactfc.com/French.
Les personnes intéressées peuvent obtenir une version imprimée en
envoyant un courriel à ir@intact.net.
2024 Intact Financial Corporation Annual Report
253
Building
resilience
and helping
people
adapt to a
changing
climate
Intact has been on the frontlines of
climate change with our customers
for more than a decade. We are
helping customers get back on track
and communities better prepare for
extreme weather events related to a
changing climate. We are investing
in innovative solutions to prevent or
reduce damages — including committing
$27.4 million globally in more than 100
climate adaptation projects since 2010 —
while safeguarding people, businesses
and the environment for a sustainable,
resilient future.
Investing in action-based and applied
research through the Intact Centre
on Climate Adaptation
The Intact Centre on Climate Adaptation at the University
of Waterloo is our lighthouse partnership in adaptation.
We’ve invested more than $10 million over ten years to help
support their leadership in applied research, equipping
communities, homeowners and businesses with practical
tools to adapt to climate change. The Intact Centre
addresses critical risks like flooding, extreme heat and
wildfires while fostering resilience. Highlights from their
work in 2024 include:
• Creating Canada’s first Municipal Flood Risk Check-up
tool to help municipalities better prepare for flooding
caused by heavy rainfall, rivers and coastal events.
• Sharing infographics with 3.4 million households to
help them take action to protect their homes.
• Supporting Intact Insurance and the CBC in launching an
interactive educational tool, Intact Home Quest: A House
Safety Game, which teaches flood prevention strategies
for homes.
A FLOOD RISK CHECK-UP FOR
CANADIAN MUNICIPALITIES:
TACKLING FLOODING
TOGETHER
!
!
!
Canada’s National Adaptation Strategy
in Action
Joanna Eyquem
Mélie Monnerat
Supported by:
April 2024
2024 Intact Financial Corporation Annual Report
254
Protecting wetlands through our
partnerships with the Nature
Conservancy of Canada and
Gloucestershire Wildlife Trust
in the UK
According to the Intact Centre on Climate Adaptation,
preserving wetlands can reduce flood damage costs
by almost 40%.
This year, as part of our $8 million five-year partnership with
the Nature Conservancy of Canada, we helped protect over
1,300 hectares of wetlands in Atlantic Canada and Québec.
2024 was the second year of our £400,000 two-year
partnership the Gloucestershire Wildlife Trust (GWT) to
provide natural flood management solutions to areas
most affected by flooding in the UK. GWT’s nature-based
solutions to reduce flood risk and boost biodiversity include
installing rain gardens and leaky dams, de-paving driveways,
and constructing new attenuation basins and wetlands.
Funding climate adaptation projects
through our Municipal Climate
Resiliency Grants program
Municipalities are at the frontlines of protecting people from
the impacts of extreme weather. We believe equipping them
with solutions to address their risk — while also mobilizing
residents in the process — is essential to building climate
resilient communities.
In 2024, we doubled our investment in this program to
$2 million. The successful projects will implement proven
climate adaptation solutions, such as those identified by
the Intact Centre, to help mitigate the impacts of wildfires
and floods.
This builds on our first round of funding in 2022, which
helped ten communities across Canada implement proven
solutions to reduce the impacts of extreme weather.
Projects included a FireSmartTM home action rebate
program by the Regional Municipality of Wood Buffalo
in Fort McMurray, Alberta, and a rain garden program
for the citizens of Lac-Sergent in Québec.
Why invest in Intact
Largest provider of P&C
insurance in Canada, a leading
Specialty Lines insurer with
international expertise, and a
leader in Commercial Lines in
the UK and Ireland, representing
almost $24 billion of operating
direct premiums written1 (DPW).
Strong balance sheet, with
$2.9 billion of total capital
margin1, reinforced by our
prudent risk management and
reserving practices.
Attractive earnings growth
story with annual NOIPS1
increasing by 10% CAGR over
the last 10 years, in line with our
financial objectives. Additionally,
we have increased our quarterly
dividend by 10% per year over
the last 10 years.
Proven industry consolidator
& integrator with six
acquisitions completed over the
last 10 years, generating an IRR
of approximately 20%.
Consistent outperformance vs.
the industry with around 650 bps
of ROE1 outperformance
annually over the last 10 years,
due to disciplined underwriting,
scale advantage and in-house
claims expertise as well
as effective capital and
investment management.
2024 Mercer Best Employer
• 9th consecutive year being
named Best Employer
in Canada.
• 6th consecutive year
being named Best Employer
in the US.
1 These are Non-GAAP financial measures, Non-GAAP ratios or supplementary measures.