Intact Financial Corporation

Good morning, ladies and gentlemen, and welcome to the Intact Financial Corporation Q3 2024 results conference call. At this time, all lines are on listen only mode. Following the presentation, we will conduct a question and answer session. And if at any time during this call you require immediate assistance, please press star zero for the operator. Also note that this call is being recorded on November 6th, 2024. And now I would like to turn the conference over to Jeff Quant, Senior Vice President and Chief Investor Relations Officer. Please go ahead.

Thank you, Eric. Hello, everyone, and thank you for joining the call to discuss our third quarter financial results. A link to our live webcast and materials for this call have been posted on our website at intactfc.com under the Investors tab. Before we start, please refer to slide two for cautionary language regarding the use of forward-looking statements, which forms part of this morning's remarks. And slide three for a note on the use of non-GAAP financial measures in important notes on adjustments, terms, and definitions used in this presentation. To discuss our results today, I have with me our CEO, Charles Brindamore, our CFO, Louis Marcotte, Patrick Barbeau, Executive Vice President and Chief Operating Officer, Darren Godfrey, Executive Vice President and Chief Underwriting Officer for Global Specialty Lines, Guillaume Lamy, Senior Vice President, Personal Lines, and Ken Anderson, Executive Vice President and CFO of UKNI. We will begin with remarks followed by Q&A. And with that, I will turn the call over to Charles.

Good morning, everyone. Thank you for joining us today. This summer, many of our customers were impacted by numerous severe weather events, especially here in Canada. Our teams were on the ground within the first hours of these events and continue to play a crucial role in getting customers back on track. In fact, hundreds of employees answered calls 24-7, and three out of four clients were able to open a claim within a few seconds. We quickly created five drive-through health centers to expedite the claims process, which allowed us to appraise nearly 11,000 vehicles to date. We deployed all of our resources across Canada, including on-site and wildfire defense systems to help customers in affected areas and participate in rebuilding efforts. As a result, we already closed almost 60% of approximately 50,000 claims related to the four most severe events. Our expertise is in helping people navigate difficult situations, and this is when our teams are at their best. These moments underscore the importance of why we exist, helping people businesses and society prosper in good times and be resilient in bad times. As for our third quarter results, our resilience was in full display. Yesterday evening, we announced net operating income per share of $1.01 and an operating ROE of 15.8%. Our book value per share stood at $91 upwards. 3 quarters, 3% quarter over quarter. And finally, our capital position remains strong with a total capital margin of 2.6 billion. Our growth momentum continued with premiums increasing 6% year over year. Once you remove noise from the UK exits and acquisitions, our combined ratio of 104% included 22 points of CAT losses, 17 points higher than expected. Including excess CATs, our combined ratio was 87%, a three points improvement over last year. Given our profitability position, we're keen to grow in all of our segments. Let's now look at each of our lines of business, starting with Canada. In personal auto, premiums were up 12% year-over-year, driven by rates and customer growth. The combined ratio stood at 97.6, with more than four points of excess cap losses, mainly due to the Calgary hail storm. Adjusting for this, our combined ratio is well in line with our sub-95 guidance. From an industry perspective, profitability remains challenged. As a result, hard market conditions are expected to persist over the next 12 months. Moving now to personal property, premiums were up 8%, reflecting rates and customer growth. The combined ratio of 147.5% included 72 points of cash losses in the quarter. The underlying current year loss ratio was strong, with an improvement of 6 points year over year. We expect the impact of the catastrophes over the last few years will sustain hard market conditions for at least the next 12 months. We're continuously evolving our value proposition to make sure it helps our customers face the impact of climate change and delivers sustainable long-term performance. Our product is constructed around perils and priced based on a model that assumes the planet warms by three to five degrees Celsius by the end of the century, leveraging advanced AI models to optimize risk selection. On the supply chain front, we tripled the on-site business in the last four years, giving it a national footprint with over 40 branches. On risk control, we're investing in prevention, and are actively working with governments and regulators on climate resiliency. Our personal property business has shown long-term resiliency with a 5- and 10-year average combined ratio of 90%, including this quarter. We aim to deliver a sub-95 combined ratio even with severe weather, and we expect to end the year close to this goal. In commercial lines, top-line growth was 2% in the quarter. We focus on the SME and mid-market segment, which continues to perform well with rates in the middle single-digit range. And this was tempered by continued competition within large accounts. Looking forward, we expect mid-single-digit premium growth for the industry over the next 12 months. The combined ratio of 94.4% included 19 points of excess CAT losses with a partial upset from strong favorable PYD. The underlying current year loss ratio was strong with an improvement of almost five points year over year. We remain well positioned to deliver a low 90s or better combined ratio in this segment. Moving now to our UK and I business, Premium growth was 28% in the quarter, mainly due to the direct line transaction. Organic growth was muted, reflecting pressure in large accounts, upset by rates still being in the mid-single digits on average. The combined ratio was solid in the U.K. at 91.9%, and in line with our target of low 90s performance in 2024. Overall, I'm very pleased with the speed of our progress in the U.K., We are focused on continuing to improve service and broadening our broker relationships while investing in technology and integrating the DLG acquisition. In the U.S., premium growth was 4%, with our most profitable lines growing in the upper single digits. Overall, we expect industry premium growth to be mid to high single digits over the next 12 months. The combined ratio was strong at 87.4% in the quarter, making it the fifth quarter in a row that our performance was below 90%. And we continue to demonstrate our performance. We remain well positioned to continue to run this business in the low 90s or better. Turning to our strategic initiatives, let me highlight some important milestones delivered over the past few months That aligned very well with our strategic roadmap. With respect to increasing digital engagement, we have real positive momentum from our ongoing investments on the digital as well as the branding front. Impact is the most well-known insurer in Canada, a position now held for over four consecutive years. And by capitalizing on increased shopping traffic, our web influence quotes were up 83% year over year. This led to strong premium growth, particularly in our direct distribution business that are direct. In addition, of the almost 50,000 claims from the four most severe weather events, over 40% were reported digitally. Taking action to remain a leader in pricing and segmentation is a core element of our strategic roadmap. We're accelerating the deployment of AI models in all of our segments. For example, in Canadian commercial lines, nearly two-thirds of our products now leverage machine learning or pricing. Claims and supply chain is another key pillar in driving sustainable outperformance. Onsite, which has an average cycle time of about 50 days less than the rest of our network, handled two-thirds of all the intact claims from the southern Ontario floods. And our intact service centers, which have a 30% faster cycle time and 8-point higher net promoter score, handled an influx of claims from the Calgary Hill store. And beyond helping our customers, we're investing in our communities to build resilience. We continue to work with cities across Canada, over 100 to date, to support local prevention initiatives. Through the Impact Centre on Climate Adaptation, we've reached close to 3.5 million Canadians with practical resilience advice. And we've engaged directly with mayors and fire chiefs in the 20 most at-risk municipalities when it comes to forest fires. As we've said many times before, climate is a societal challenge, not just an insurance one. So without a doubt, Qtree was a challenging quarter for many, but the incredible work done by our teams in helping to support our customers in their time of need further reinforces our value proposition. Looking ahead, our global platform provides substantial organic growth opportunities, and with a strong balance sheet, we're really well positioned to execute on our strategy and achieve are NOIP's growth objective and ROE outperformance objective in the coming decade. With that, I'll turn the call over to our CFO, Louis Marcotte.