Celebrating our past, investing in our future

CEO Charles Brindamour:

“Our values, purpose, and strategy have been foundational to our success and they will be instrumental as we continue to build a world-class property and casualty insurer.”

May 8, 2019

Good morning,

Thank you for joining us at Intact Financial’s 10th Annual Meeting of Shareholders.

In February, we celebrated an important milestone. Ten years ago, with the support of employees, brokers, and investors, we established Intact Financial Corporation as an independent, widely held company.

Our game plan – to deliver exceptional customer service, become a best employer and earn the right to be one of the most respected companies – has delivered strong returns to you, our shareholders.

Over the last decade, our Return on Equity has outperformed the Canadian P&C industry by an average of 650 basis points. Market capitalization has quadrupled to $14 billion. We have become one of Canada’s best employers and entered the U.S. market. Over that period, our average annual total shareholder return of over 15% is almost twice that of the S&P/TSX60 Index.

Our values, purpose, and strategy have been foundational to our success and they will be instrumental as we continue to build a world-class property and casualty insurer.

We’ve done well, but we can do better. Looking forward to the next ten years, we intend to beat this performance by pursuing four big ideas: building a fortress in Canada, becoming the best Specialty Lines insurer in North America, transforming our competitive advantage and becoming THE destination for talent.

Building a Fortress in Canada

While we have strong relationships with one in five Canadians, we intend to deepen our presence at home by protecting one in three Canadians in the next decade. To build this fortress, Louis Gagnon, Mathieu Lamy and their teams will create an unparalleled advantage by transforming the customer experience. In fact, we want 3 out of 4 customers to be our advocates.

We see that consumers’ expectations have been changing rapidly over the last decade. The impact of technology on how we live is the main driver behind this shift. Today, close to 90% of Canadians own a smartphone and use the internet daily. What matters most in this new reality is simplicity, ease of access, transparency and value. We have made large investments to enhance our digital and mobile offerings and will continue to accelerate our progress.

Our aim is to have three out of four customers actively engaging with us digitally.

To further build our domestic fortress, we will continue to offer multiple options for Canadians to buy our products. From full advice-based support through our broker channels – to simplified, online convenience through belairdirect. While we have made tremendous strides in bringing Intact Insurance on-line and building both Brokerlink and belairdirect to close to $3 billion combined of direct written premiums, we need to build more scale in these channels. Anne Fortin, Joe D’Annunzio and Debbie Coull-Cicchini and their teams have shown they can get this done.

Beyond customer experience and distribution, we will use consolidation to serve more customers in Canada. We believe that 15 – 20% of market will change hands over the next few years. We intend to play a leading role in consolidation.

Setting our sights on becoming the best Specialty Lines business in North America

As we think about generating more than 10% operating earnings growth yearly in the coming decade, we have set our sights on becoming the best specialty lines carrier in North America. We have laid a solid foundation to achieve that with our One Beacon acquisition in 2017.

Our progress in 2018 under Mike Miller’s leadership is impressive. North American growth has been solid with $2.3 billion in premiums while the underwriting performance at 93% improved to levels superior to the industry. Our product expansion is starting to gain traction and the talent is engaged.

We are on track in the medium term to reach our goal of $3 billion in DPW, and in achieving a sustainable combined ratio in the low 90s.

Transforming our competitive advantage

To fuel this transformation, it is critical we continue to outperform our competitors on service and profitability. This means a minimum of 500 basis points of ROE outperformance versus the industry every year. This advantage is rooted in our capabilities in using data in risk selection better than anyone else, using our size in claims and being smart at investing and deploying capital. But the world is changing, and we cannot assume our past recipe will work in the future.

In risk selection, leveraging the explosion of data will be key in this transformation. The quantity of data available globally is expanding by a factor of 10 every 2 years. Our aim for this coming decade is to be the best insurance AI shop in the world. With over 40 applications in production and more than 120 experts, we are well on our way.

While the digital world is changing how we operate, we can expand our claims advantage by going deeper in the physical world. We have, over the years, created an advantage by using our size to provide a better claims experience at a better cost. This is the powerful effect of the claims team led by Patrick Barbeau.

We also intend to leverage technology in claims -- not only to improve the customer experience but to become more efficient and reduce indemnity cost. Listening to customers, it’s clear we have a greater role to play in improving the repair and reconstruction process. While we have made strides with our service centres, we have big plans in this area.

Our competitive advantage is also driven by how we put our capital to work. Louis Marcotte and his team have been excellent guides at ensuring our capital -- driven by an operating ROE of close to 15% -- is invested in the best way possible.

When it comes to investing, Werner Muehlemann and his team have an excellent record. Our Montreal-based investment team manage an international portfolio and continue to create value. This team is among the best in Canada and they’re ready for prime time.

Investing in our people

Speaking of strong teams -- our people are at the heart of everything we do. Our 14,000 employees are essential to our success.

Intact is consistently recognized as a Top Employer in Canada. Our strong employee engagement is a testament to our efforts to deliver on our employee promise. We won’t compromise on our values of integrity and respect because they matter as much as results. We support skills development and career growth for our people. We provide an inspiring, team-oriented environment. And we offer a comprehensive financial rewards programs that recognizes success.

Talent is scarce, and we are increasingly a destination for top talent. We are recruiting customer-driven people with a wide-range of expertise – from data scientists to core insurance professionals to specialty experts. These people will help us to shape the future of insurance, get customers back on track after a claim and provide second-to-none experiences.

Future of work

We are shaping the future of insurance and the future of work. As investors in -- and beneficiaries of – AI, we are turning our attention to the evolution this creates for our own employees and for society as a whole.

Within 10 years, over 25% of jobs in Canada will be affected by automation. We will use AI and automation to expand and grow our business – in other words, we are embracing AI to grow the pie. Our issue will be finding and keeping talented people.

Insurance is a business centred around people; the human touch is critical. For our people to thrive in the coming years, our ask of employees is straightforward – be customer driven, embrace change, and invest in your development.

In return, we will be transparent about our use of AI and automation; take a people first approach in dealing with change, be positive about the future and, clear and concrete about the actions we will take to help employees adapt.

We’ve been working on a comprehensive action plan since last fall with five key workstreams to address hiring and recruitment: retention; training, skilling and re-skilling; dislocation and transition pathing; and, system and workflow design.

As a society, when our people are strengthened, skilled and empowered -- when they feel secure in their employment and in their livelihood -- our businesses and our communities benefit.

Making a difference

As trust declines in governments and other democratic institutions, employees, customers – and indeed shareholders – are looking to businesses to take the lead on important societal issues. And, investors are connecting financial and social performance more than ever before.

Making a difference is in Intact’s DNA. It is reflected in our purpose and how we live our values. We are focused primarily in three areas -- climate adaptation, addressing the root causes of child poverty and supporting causes important to employees through our Community Impact program.

I want to explain our work on climate adaptation as we look to address the human and economic impacts we’re seeing in the news every day.

Intact is committed to helping society adapt to climate change. Beginning in 2015, we invested $4.25 million in the Intact Centre for Climate Adaptation at the University of Waterloo. And, just two weeks ago, we announced $2.3 million in support of 16 charitable partners from coast to coast who are focused on protecting Canadians from the impacts of flood, fire and heat. And, as we speak, we are helping affected people in Ontario, Quebec and New Brunswick deal with another year of spring flooding.

The Intact Centre’s research has uncovered the critical role played by natural assets in protecting our communities against the impacts of climate change. In fact, protected wetlands can mitigate flood damage by up to 40%.

I have called on government to classify and leverage our natural assets as critical infrastructure. I recently met with Prime Minister Justin Trudeau to address the issue directly.

By making Canada one of the most climate resilient countries in the world, we can protect nature, our people and our economy.

We will continue to do our part. But we have a moral obligation to do more. We need to raise the bar for what is right for customers, employees and for our communities.

As an organization, we are challenging ourselves today and over the next ten years to increase our presence in communities, to stand up for what is right, and to share even more of our knowledge, skills and financial resources.


In closing, our people, our strategy and our values have been foundational to our success over the past decade. They will continue to underpin our work today, tomorrow and for the next ten years.

I am confident our strategic objectives, steeped as they are in our values, will fuel profitable growth and another decade of outperformance on our financial objectives as we establish ourselves as a world-class P&C insurer.

Thank you to our board of directors, shareholders, brokers and employees for a remarkable ten years.