Intact Financial Corp T.IFC.PR.F

Primary Symbol: T.IFC Alternate Symbol(s): IFCZF | T.IFC.PR.A | T.IFC.PR.C | INTAF | T.IFC.PR.E | INFFF | T.IFC.PR.G | IFTPF | IFZZF | T.IFC.PR.I | T.IFC.PR.K

Financial Services Insurance - Property & Casualty

Intact Financial Corporation is a Canada-based company, which is a provider of property and casualty insurance. Its Canada segment is engaged in underwriting of automobile, home and business insurance contracts to individuals and businesses in Canada distributed through a network of brokers and directly to consumers. Its UK & International segment is engaged in underwriting of automobile, home, pet and business insurance contracts to businesses in the United Kingdom, Europe, and Ireland as well as internationally. It distributes insurance through a network of affinity partners and brokers, or directly to consumers. Its US segment is engaged in underwriting of speciality contracts, mainly to small to medium-sized businesses in the United States. It distributes insurance through independent agencies, brokers, wholesalers and managing general agencies. It also offers an app-based service that connects homeowners with local service professionals to provide various home maintenance tasks.

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Intact Financial Corp

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Post by retiredcfon Mar 28, 2023 9:38am

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Post# 35364278

RBC

March 28, 2023

Intact Financial Corporation
Exiting U.K. Personal Auto market

TSX: IFC | CAD 192.00 | Outperform | Price Target CAD 228.00

Sentiment: Neutral

Summary: Intact announced that it was exiting the U.K. Personal Auto market and that existing customers would be introduced to Swinton Insurance (a brand of Atlanta Insurance Intermediaries Ltd. and part of Ardonagh Retail) at renewal. Intact's U.K. Personal Auto business has ~£120MM of direct premiums written (~1% of IFC's consolidated DPW). As a result, Intact's U.K. business still includes Personal Property, Pet and Commercial. Intact indicated that its existing optimization plans for the rest of its U.K. business combined with the U.K. Personal Auto exit is expected to result in muted top-line growth in 2023 as the company is targeting a low 90s combined ratio for UK&I.

In terms of other financial details:

The U.K. Personal Auto segment will be reported in Exited Lines in Q1/23 onwards;
Intact expects the remaining UK&I businesses to have a mid-90s combined ratio in 2023;
Intact expects to have ~£35MM (~$59MM) of restructuring costs booked in Q1/23, primarily due to one-time write-off of

intangibles;
Proceeds from the agreement with Swinton will be received as policies are renewed, but are not expected to be material;
Intact expects to release ~£60MM (~$100MM) of capital from its U.K. Personal Auto business over time as the segment runs

off; and
The transaction doesn't materially impact Intact's RSA acquisition targets (e.g., >20% IRR and ~20% operating EPS accretion).

Our take: Neutral. It is not overly surprising that Intact is exiting the U.K. Personal Auto segment given its smaller market share and challenging industry conditions and coupled with last month's announcement of addressing its U.K. pension situation, increased the likelihood of Intact taking proactive steps to improve profitability of its UK&I segment, in our view.