Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Intact Financial Corp (IFCZF, Financial) reported a 10% increase in net operating income per share, reaching $4.01, with strong contributions across the business.
- The company's book value per share grew 4% from the last quarter and 13% year over year, indicating strong financial health.
- The combined ratio was solid at 91% despite higher catastrophe losses, showcasing strong underlying results and favorable prior-year development.
- BrokerLink expanded its presence by making its first acquisition in British Columbia, enhancing its distribution network.
- Intact Financial Corp (IFCZF) is making significant progress in reducing its carbon footprint, with emissions down 23% and a target of 50% reduction by 2030.
Negative Points
- Growth in Commercial Lines was muted due to specific profitability actions in the US and UK, with continued pressure in large accounts.
- The UK&I business saw a 4% decrease in premium due to remediation actions and competition in large account space.
- Premiums in the US decreased by 3%, impacted by the non-renewal of a large account and ongoing remediation work.
- The company faced higher-than-expected catastrophe losses, with $244 million reported in the first quarter.
- The regulatory environment in Alberta remains challenging, with industry profitability deteriorating and capacity issues increasing.
Q & A Highlights
Q: Can you elaborate on the favorable prior-year development and whether you continue to guide towards the high end of the 2% to 4% range?
A: Kenneth Anderson, CFO, explained that Q1's favorable development was 6.9%, with a significant contribution from Canada Commercial. The company continues to guide towards the high end of the 2% to 4% range, reflecting a cautious approach in the current accident year. Charles Brindamour, CEO, added that they are considering updating this guidance and will discuss it further at the upcoming Investor Day.
Q: What is the outlook for premium growth in Commercial Lines across Canada, UK, and US?
A: Charles Brindamour, CEO, expects growth to improve by year-end as remediation actions taper off. In the UK, the Direct Line integration is a significant drag, while in the US, remediation in specific verticals will taper off in the second half of the year. The company is focusing on deploying sophisticated pricing tools, enhancing broker relationships, and expanding verticals to improve growth trajectory.
Q: How confident are you in the mid-single-digit rate growth guidance for Commercial Lines, and what are you hearing from commercial clients about the economic outlook?
A: Charles Brindamour, CEO, noted that while there is pressure in larger accounts, the overall environment is constructive. Some economic changes are being observed, such as a slowdown in multi-family dwelling and transportation lines, but these are not yet major issues. Retentions remain strong, and the company is well-positioned to navigate economic uncertainties.
Q: Can you provide an update on the regulatory environment and any potential risks?
A: Charles Brindamour, CEO, stated that prudential regulators are engaged and proactive, with no major concerns. In Personal Auto, Alberta remains a challenge, but the company supports reforms addressing core issues. In home insurance, the focus is on addressing cost pressures from weather patterns, with constructive dialogue ongoing with government officials.
Q: What does playing offense mean for Intact in the current environment?
A: Charles Brindamour, CEO, explained that playing offense involves being on the front foot for growth, investing in service and technology, and pursuing acquisitions. The company is interested in deploying capital in Canada and the US, particularly in manufacturing and distribution, and is open to expanding its footprint in the UK Commercial Lines space.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
