Glossary

This glossary includes IFRS and Non-IFRS financial measures, as well as other insurance-related terms used in our financial reports. See our MD&A for the year ended December 31, 2020 for further details.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A
Acquisition, integration and restructuring costs

Include items such as acquisition-related expenses, severances, retention bonuses, system integration costs, changes in the fair value of the contingent considerations, as well as expenses related to the implementation of significant new accounting standards.

Adjusted earnings per share (AEPS)¹

Adjusted net income attributable to common shareholders, divided by the WANSO.

Adjusted net income attributable to common shareholders¹

Adjusted net income attributable to shareholders less preferred share dividends.

Adjusted net income attributable to shareholders¹

Net income attributable to shareholders, as reported under IFRS, adjusted for the after-tax impact of acquisition-related items, such as amortization of intangible assets recognized in business combinations, as well as acquisition and integration costs.

Adjusted return on equity (AROE)¹

Adjusted net income attributable to common shareholders for a 12-month period, divided by the Average common shareholders’ equity over the same 12-month period.

Affiliated brokers

Brokers in which we hold an equity investment or provide financing.

Attributable to shareholders

Excludes Non-controlling interests (NCI).

Average common shareholders’ equity

Mean of Common shareholders’ equity at the beginning and end of the period, adjusted on a prorata basis (number of days) for significant capital transactions, if appropriate.

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B
Book value per share

Common shareholders’ equity divided by the number of common shares outstanding at the same date.

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C
Case reserves

The liability established to reflect the estimated cost of unpaid claims that have been reported and claims expenses that the insurer will ultimately be required to pay.

CAT loss ratio

Current year CAT claims plus net reinstatement premiums, expressed as a percentage of NEP (MD&A basis) before reinstatement premiums.

Catastrophe losses (CAT losses)

Any one claim, or group of claims, equal to or greater than a predetermined CAT threshold, before reinsurance, related to a single event. Reported CAT losses can either be weather-related or not weather-related (‘other than weather-related’) and exclude those of exited lines. Effective July 1, 2021, our CAT threshold varies by segment and ranges from $7 million to $13 million.

Claims liabilities

Technical accounting provisions comprising case reserves, claims incurred but not reported by policyholders (IBNR), and a risk margin as required by accepted actuarial practice. Claims liabilities are discounted to consider the time value of money, using a rate that reflects the estimated market yield of the underlying assets backing these claims liabilities at the reporting date.

Claims ratio¹

Total net claims expressed as a percentage of NEP (MD&A basis).

Combined ratio¹

The sum of the Claims ratio and the Expense ratio. A combined ratio below 100% indicates a profitable underwriting result. A combined ratio over 100% indicates an unprofitable underwriting result.

Common shareholders’ equity

Equity attributable to shareholders determined in accordance with IFRS excluding preferred shares at the end of a specific period.

Company action levels (CALs)

Thresholds below which regulator notification is required together with a company action plan to restore capital levels. The CAL is 165% MCT for most Canadian insurance subsidiaries, 200% RBC for US insurance subsidiaries and 120% SCR for UK&I insurance subsidiaries.

Current year CAT claims

Current accident year Catastrophe losses, net of reinsurance, excluding those of exited lines.

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D
Debt-to-total capital ratio

Total debt outstanding, excluding hybrid debt, divided by the sum of total shareholders’ equity, total debt outstanding, as well as Restricted Tier 1 notes and preferred shares instruments held by subsidiaries, at the same date. The restricted Tier 1 notes and preferred shares instruments held by subsidiaries are included in the equity attributable to non-controlling interests.

Direct premiums written (DPW) (IFRS)

The total amount of premiums for new and renewal policies written during a specific period, as determined in accordance with IFRS.

Direct premiums written (DPW) (MD&A basis)¹

DPW (IFRS) normalized for the effect of multi-year policies, excluding the impact of industry pools, fronting and exited lines. This measure matches direct premiums written to the year in which coverage is provided, whereas under IFRS, the full value of multi-year policies is recognized in the year the policy is written.

Distribution EBITA and Other¹

Operating income excluding interest and taxes related to our distribution and supply chain strategies for a specific period. Distribution EBITA and Other includes the operating results of our consolidated brokers (including our wholly-owned broker, BrokerLink), our share of operating results of our broker associates, as well as the operating results of Frank Cowan Company Limited (a specialty managing general agent in Canada) and On Side Developments Ltd. (a Canadian restoration firm).

DPW growth in constant currency¹

DPW growth, excluding 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.

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E
Earnings per share (EPS)

Net income attributable to common shareholders divided by the WANSO, as reported in the Consolidated financial statements.

Expense ratio¹

Underwriting expenses (MD&A basis), expressed as a percentage of NEP (MD&A basis).

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F
Finance costs (MD&A)¹

Finance costs, as reported under IFRS, adjusted to include finance costs from our broker associates, which are accounted for using the equity method under IFRS.

Frequency (of claims)

Average number of claims reported in a specific period.

Full-time equivalent number of employees

A unit of measurement equivalent to an employee with a full-time workload. If two employees each have a 50% workload, they would represent one full-time equivalent employee.

Funding ratio

Pension plan’s assets expressed as a percentage of funded plans’ obligations.

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I
Income before income taxes (MD&A basis)

Income before income taxes1, as reported under IFRS, excluding income taxes from our broker associates, which are accounted for using the equity method under IFRS. In the MD&A, income taxes from our broker associates are included in Total income taxes (MD&A). In the Financial statements, the share of profit (loss) from investments in associates and joint ventures is presented net of taxes.

Incurred but not reported (“IBNR”) claims reserve

Reserves for estimated claims that have been incurred but not reported by policyholders, including a reserve for future developments on claims which have been reported.

Industry pools
Canadian operations
– When certain automobile owners are unable to obtain insurance via the voluntary insurance market in Canada, they are insured via the Facility Association (“FA”). In addition, entities can choose to cede certain risks to the FA administered Risk Sharing Pool (“RSP”). The related risks associated with FA insurance policies and policies ceded to the RSP are aggregated and shared by the entities in the Canadian P&C insurance industry, generally in proportion to market share and volume of business ceded to the RSP. 

U.S. operations – As a condition of its license to do business in certain states in the U.S., the Company is required to participate in various mandatory shared market mechanisms commonly referred to as residual or involuntary markets. Each state dictates the type of insurance and the level of coverage that must be provided. 

Interest rate hedge ratio

A ratio calculated by the Company as the sum of the dollar duration of the pension asset portfolio divided by the dollar duration of the registered pension plans’ obligation. An interest rate hedge ratio below 100% indicates that funded status of the pension plans would increase if government bonds yield rise, all else equal.

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L
Large loss

A single claim, which is considered significant but that is smaller than the CAT threshold.

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M
Market yield adjustment (MYA)

Claims liabilities are discounted at the estimated market yield of the assets backing these liabilities. The impact of changes in the discount rate used to discount claims liabilities based on the change in the market-based yield of the underlying assets is referred to as MYA. MYA is included in Net claims incurred in our consolidated statements of income.

Market-based yield

The annualized total pre-tax investment income (before expenses) divided by the average net investments. Average net investments are defined as the mid-month average fair value of net equity and fixed-income securities held during the reporting period. 

Minimum capital test (“MCT”)

Ratio of total capital available to total capital required, as defined by the Office of the Superintendent of Financial Institutions (OSFI) and Autorité des marchés financiers (AMF).

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N
Net earned premiums (NEP) (IFRS)

Net premiums written recognized for accounting purposes as revenue during a specific period including net reinstatement premiums, as determined in accordance with IFRS.

Net earned premiums (NEP) (MD&A basis)¹

NEP (IFRS), excluding net earned premiums of exited lines.

Net income attributable to common shareholders

Net income attributable to shareholders, as reported under IFRS, less preferred share dividends.

Net operating income (NOI)¹

Net income attributable to shareholders, as reported under IFRS, excluding the after-tax impact of Non-operating results. NOI is presented net of Net income attributable to non-controlling interests.

Net operating income attributable to common shareholders¹

Net operating income, less preferred share dividends.

Net operating income per share (NOIPS)¹

Net operating income attributable to common shareholders, divided by the WANSO.

Net premiums written (MD&A basis)¹

Direct premiums written (MD&A basis) plus assumed premiums (external and industry pools) less ceded premiums (reinsurers and industry pools).

Non-catastrophe weather event

A group of claims, which is considered significant but that is smaller than the catastrophe threshold, related to a single weather event.

Non-operating pension expense

Difference between the asset return (interest income on plan assets) calculated using the expected return on plan assets versus the IFRS discount rate on Intact’s Canadian pension plan assets. The expected return better reflects our operating performance given our internal investment management expertise and the composition of our pension asset portfolio.

Non-operating results¹

Include elements that are not representative of our operating performance because they relate to special items, bear significant volatility from one period to another, or because they are not part of our normal activities. These include the Amortization of intangible assets recognized in business combinations, Acquisition, integration and restructuring costs, Net gains (losses), Non-operating pension expense, Market yield adjustment on underwriting, Underwriting results of exited lines, as well as other costs or revenues that are not representative of our operating performance.

Non-weather catastrophe losses

Catastrophe losses mostly related to large commercial losses (including non-weather-related fires), surety and liability losses, as well as direct losses related to the COVID-19 crisis.

Normal course issuer bid (“NCIB”)

A program for the repurchase of the Company’s own common shares, for cancellation through a stock exchange that is subject to the various rules of the relevant stock exchange and securities commission.

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O
Operating return on equity (OROE)¹

Net operating income attributable to common shareholders for a 12-month period, divided by the Average common shareholders’ equity (excluding accumulated other comprehensive income) over the same 12-month period.

Other income (expense)¹

Include general corporate expenses and income, consolidation adjustments, regulatory fees related to our public company status, special projects and other operating items.

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P
Policies in force

The number of insurance policies in effect at a specific date. If two or more separate risks are covered under the same insurance policy, this counts as one policy in force.

Pre-tax operating income (PTOI)¹

Comprises of the following items (MD&A basis): Underwriting income, net investment income, Distribution EBITA and Other, Finance costs and Other income (expense).

Prior year claims development (PYD) (IFRS)

Change in total prior year claims liabilities during a specific period. 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.

PYD (MD&A basis)¹

Prior year claims development (IFRS basis), net of reinsurance, excluding the PYD related to exited lines. 

PYD ratio¹

PYD (MD&A basis), expressed as a percentage of NEP (MD&A basis).

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R
Regulatory capital ratios

Minimum capital test (as defined by the Office of the Superintendent of Financial Institutions and the Autorité des marchés financiers in Canada), Risk-based capital requirements (as defined by the National Association of Insurance Commissioners in the US), and Solvency capital requirement (as defined under Solvency II and regulated by the Prudential Regulation Authority in the UK).

Reinstatement premium

Premium payable to restore the original reinsurance policy limit as a result of a reinsurance loss payment under a catastrophe coverage. Reinstatement premiums are reported in Net earned premiums (IFRS).

Reinsurer

An insurance company that agrees to indemnify another insurance or reinsurance company, the ceding company, against all or a portion of the insurance or reinsurance risks underwritten by the ceding company, under one or more policies.

Return on equity (ROE)

Net income attributable to common shareholders for a 12-month period, divided by the Average common shareholders’ equity over the same 12-month period.


Risk-based Capital (RBC)

Risk-based capital, as defined by the National Association of Insurance Commissioners (NAIC) in the U.S. 

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S
Severity (of claims)

Average cost of a claim calculated by dividing the total cost of claims by the total number of claims.

Solvency Capital Requirement ratio (SCR)

Ratio of Eligible Own Funds to Solvency Capital Requirement as defined under Solvency II and regulated by the Prudential Regulation Authority in the UK.

Structured settlements

Periodic payments to claimants for a determined number of years for life, typically in settlement for a claim under a liability policy, usually funded through the purchase of an annuity.

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T
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.

Total income taxes (MD&A)¹

Income tax expense, as reported under IFRS, adjusted to include income taxes from our broker associates, which are accounted for using the equity method under IFRS. 

Total net claims¹

Claims incurred, net of reinsurance (as determined in accordance with IFRS), excluding the Impact of MYA on underwriting results, adjustment for Non-operating pension expense and net claims of exited lines.

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U
Underlying current year loss ratio¹

Total net claims, excluding Current year CAT claims and prior year claims development, expressed as a percentage of NEP (MD&A basis) before reinstatement premiums.

Underwriting expenses (MD&A basis)¹

Underwriting expenses, net of reinsurance and other underwriting revenues, including commissions, premium taxes and general expenses related to underwriting activities but excluding the adjustment for non-operating pension expense and underwriting expenses of exited lines.

Underwriting income (MD&A basis)¹

NEP (MD&A basis) less Total net claims and Underwriting expenses (MD&A basis) for a specific period.

Underwriting results of exited lines

Included the results of the U.S. Commercial’s business Programs, Architects and Engineers, Healthcare (effective July 1, 2019), BC auto exit (effective in Q4-2020), as well as UK & International (UK&I) exited lines as of the closing date.

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W
WANSO
Weighted-average number of common shares outstanding on a daily basis during a specific period.
Written insured risks

The number of vehicles in personal automobile insurance and the number of premises in personal property insurance written for a specific period.

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¹These are non-IFRS financial measures, which do not have any standardized meaning prescribed by IFRS and are unlikely to be comparable to similar measures presented by other companies.