REVIEW OF PERFORMANCE Q3-2015

(1)

Intact Financial Corporation

(TSX:IFC)

Wednesday, November 4

th

₂₀₁₅

REVIEW OF PERFORMANCE

Q3-2015

(2)

Charles Brindamour

(3)

Key points & highlights

Important notes:

Unless otherwise noted, DPW refers to DPW as reported under IFRS, excluding industry pools (referred to as “DPW” or “reported DPW”

in this presentation).

All underwriting results and related ratios exclude the MYA, but include our share of the results of jointly held insurance operations, unless

otherwise noted.

The expense and general expense ratios are presented herein net of other underwriting revenues. As a result, total revenues exclude

other underwriting revenues.

Net investment income includes our share of the results of jointly held insurance operations, unless otherwise noted.

Catastrophe claims are any one claim, or group of claims, equal to or greater than $7.5 million, related to a single event.

A large loss is defined as a single claim larger than $0.25 million but smaller than the catastrophe threshold of $7.5 million.

A non-catastrophe weather event is a group of claims which is considered significant but that is smaller than the catastrophe threshold of

$7.5 million, related to a single weather event

All references to “excess capital” in this presentation include excess capital in the P&C subsidiaries at 170% MCT plus net liquid assets

• Net operating income per share of $1.47 with a combined ratio of 93.2%

• All business lines and regions contributed to underlying DPW growth of

8%, including 6% organic growth

• Strong financial position with MCT of 195% and operating ROE of 16.9%

(4)

Outperforming our financial

targets

$0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00

YTD-11 YTD-12 YTD-13 YTD-14 YTD-15

0 100 200 300 400 500 600 700 800

5-year avg.

H1-2015

Our YTD-2015 net operating income per share of

$4.40 represents a 4-year compound growth rate

of 12%

NOIPS growth

We have consistently exceeded our 500 bps ROE

outperformance target versus the industry*

ROE outperformance

500 bps target

(5)

P&C industry 12-month outlook

We remain well-positioned to continue

outperforming

the

Canadian P&C insurance industry in the current environment

• We expect the current hard market conditions in personal property to

continue as the magnitude of catastrophe losses in recent years

negatively impacts industry results

• We believe the impact of continued low interest rates and limited

underwriting profitability at the industry level have translated into firmer

conditions in commercial auto, property and casualty lines

• Industry premiums are likely to increase at a low single-digit rate, with

minimal growth in personal auto, mid single-digit growth in commercial

lines and upper single-digit growth in personal property expected

• We expect future premium reductions in Ontario auto will be

commensurate with government cost reduction measures

• We expect the industry’s combined ratio to continue to improve in 2015

from the recent peak above 100% in 2013, though the level of

investment income is unlikely to improve

• We expect the industry’s ROE to trend back toward its long-term

average of 10% over the next twelve months

• We believe we will outperform the industry’s ROE by at least 500 basis

points in the next 12 months

Premium growth

Return on equity

Underwriting

(6)

Strong broad-based growth

11.1% 8.1% 3.7% 2.5% 1.5% 0.7% 1.1% 2.1% 6.4% 9.5%

Q

2 -1

3 Q

3 -1

3 Q

4 -1

3 Q

1 -1

4 Q

2 -1

4 Q

3 -1

4 Q

4 -1

4 Q

1 -1

5 Q

2 -1

5 Q

3 -1

5 Personal Lines

Year-over-year underlying DPW growth

Commercial Lines

Year-over-year underlying DPW growth

8.3% 4.3% 0.6% -3.2% 2.0% 2.7% 5.7% 4.1% 4.9% 4.0%

Q

2 -1

3 Q

3 -1

3 Q

4 -1

3 Q

1 -1

4 Q

2 -1

4 Q

3 -1

4 Q

4 -1

4 Q

1 -1

5 Q

2 -1

5 Q

3 -1

5 Contribution from Jevco

Contribution from Jevco

Contribution from CDI

(7)

Investing in growth

Diverse product offering

We’ve experienced a strong customer and broker response to our Lifestyle

Advantage product. We’ve been working on new product opportunities such

as fleet telematics to provide consumers with the coverage and services

they want.

Digital experience

We continued to invest in digital innovation, including faster quoting

engines on both intact.ca and belairdirect.com websites.

Brands

Brand awareness has increased notably though greater advertising

presence, highlighting the Intact Insurance 30 minute claims guarantee,

and continuing sports sponsorships.

(8)

Summary and key takeaways

We have a

sustainable competitive

advantage

versus the industry due to our

disciplined approach and quality operations

Our

strong financial position

enables us to

take advantage of growth opportunities

We continue our shareholder-friendly approach

(9)

Louis Marcotte

(10)

Q3-2015 financial highlights

• Underlying DPW grew by 8% compared to Q3-2014, driven by organic growth initiatives, and included 2

points from our acquisition of CDI earlier this year

• Combined ratio was unchanged compared to Q3-2014 as lower catastrophe losses were offset by

several non-catastrophe weather events, large losses and slightly higher frequency

(in $ millions, except as otherwise noted)

Q3-2015

Q3-2014

Change

YTD-2015

YTD-2014

Change

DPW

2,092

1,913

9%

6,010

5,589

8%

DPW (underlying)

2,095

1,941

8%

6,014

5,686

6%

Underwriting income

131

124 6%

407

303 34%

Combined ratio

93.2%

-

92.7%

94.4%

(1.7) pts

Net operating income per

share to common

shareholders

1

$1.47

$1.37

7%

$4.40

$3.84

15%

Earnings per share to common

shareholders

$0.95

$1.49

(36)%

$3.74

$4.27

(12)%

Operating return on common

shareholders equity for the last

12 months

1

(11)

Personal lines

P

e

rs

o

n

a

l

A

u

to

P

e

rs

o

n

a

l

P

ro

p

e

rt

y

Q3-2015

Q3-2014

Change

Underlying DPW

527

478 10%

Underwriting income

11

10 10%

Combined ratio

97.4%

97.7%

(0.3) pts

• Underlying DPW increased on strong organic unit growth of 6%. Investments in brand, digital strategies and

distribution networks drove organic premium and unit growth in improved market conditions

• Combined ratio improved in the quarter due to fewer catastrophe losses and favourable prior year claims

development, including a benefit from industry pools

• Underlying DPW growth of 10% reflecting organic unit growth of 4%, higher average premiums, and a 3 point

contribution from the CDI acquisition

• The combined ratio of 97.4% was 0.3 points better than Q3-2014

70.0%

71.4%

24.4%

Q3-2015

Q3-2014

Combined Ratio Breakdown

Expense

Ratio

Claims

Ratio

63.7%

64.4%

33.7%

33.3%

Q3-2015

Q3-2014

Combined Ratio Breakdown

Expense

Ratio

Claims

Ratio

Q3-2015

Q3-2014

Change

Underlying DPW

987

905 9%

Underwriting income

51

36 42%

(12)

Commercial lines

C

o

m

e

rc

ia

l

A

u

to

• Commercial auto delivered strong underlying DPW growth, helped by firming in certain market segments

• Combined ratio deteriorated 7.6 points due to an increase in large losses and unfavourable prior year claims

development. We are implementing corrective measures, targeting a sustainable combined ratio in the low 90’s.

Q3-2015

Q3-2014

Change

Underlying DPW

160

148 8%

Underwriting income

5

16 (69)%

Combined ratio

97.0%

89.4%

7.6 pts

69.7%

_62.2%

27.3%

_27.2%

Q3-2015

Q3-2014

Combined Ratio Breakdown

Expense

Ratio

Claims

Ratio

C

o

m

e

rc

ia

l

P

&

C

• Commercial P&C underlying DPW grew in the quarter on higher rates, supporting firmer market conditions

• Combined ratio continues to benefit from our action plan

Q3-2015

Q3-2014

Change

Underlying DPW

421

410 3%

Underwriting income

64

62 3%

Combined ratio

84.6%

84.7%

(0.1) pts

46.3%

46.7%

38.3%

38.0%

Q3-2015

Q3-2014

Combined Ratio Breakdown

Expense

Ratio

Claims

Ratio

(13)

High quality investment portfolio

• Approximately 99% of fixed-income securities

are rated ‘A’ or better

• 83% of preferred shares are rated at least ‘P2L’

• No leveraged investments

Fixed-income

strategies, 70%

Common equity

strategies, 13%

Preferred shares,

8%

Cash and

short-term notes, 5%

Loans, 4%

Investment mix

(net of hedging positions and financial liabilities

related to investments)

$13.3 billion – strategically managed

Net investment gains (losses)

(in $ millions, except as otherwise noted)

Q3-15

Q3-14

Change

Gains (losses) on

fixed-income strategies and

related derivatives

(23)

(19)

(4)

Gains (losses) on

equity strategies and

related derivatives

(42)

40 (82)

Net gains on broker

transactions

1

9 (8)

Net investment gains

(losses)

(64)

30 (94)

Net investment gains

(losses) excluding

FVTPL fixed-income

securities

(14)

Strong financial position

• Our financial position was strong with

$389 million

of

excess capital and an estimated MCT of 195%

• Book value per share increased by 4% for the last 12

months to

$37.84

, despite challenging capital markets

• Strong Operating ROE of

16.9%

, up 2.6 points from last

year

(15)

Q4-2015 earnings call

(16)

Contact Investor Relations

General Contact Info

Website:

http://www.intactfc.com

Click on “Investor Relations” tab

Email:

Phone:

416.941.5336

1.866.778.0774 (toll-free)

Samantha Cheung, MBA, M.Sc.Eng., P.Eng.

Vice President, Investor Relations

Phone: 416.344.8004

Maida Sit, CFA

Director, Investor Relations

Phone: 416.341.1464 ext 45153

To access our 2014 online annual report featuring interactive photos,

videos, dynamic charts, and additional media, please scan the QR

code or visit reports.intactfc.com/2014.

(17)

(18)

Ontario auto update

• Ontario auto accounts for approximately one

quarter of our direct premiums written

• We continued our solid outperformance

versus the industry

• We continue to believe we can protect our

Update

• Bill 91, stemming from the April budget

announcement outlines additional actions to

reduce costs which include:

–

Updating the catastrophic impairment

definition

–

Reducing the standard duration of medical

and rehabilitation benefits to be more in line

with other provinces

• Companies have filed rates at the end of

October to reflect the latest reforms

The Ontario government has a mandate

to reduce insurance rates while also

reducing costs for insurers

-12%

-10%

-8%

-6%

-4%

-2%

0%

Q

2 -1

3 Q

3 -1

3 Q

4 -1

3 Q

1 -1

4 Q

2 -1

4 Q

3 -1

4 Q

4 -1

4 Q

1 -1

5 Q

2 -1

5 Q

3 -1

5 Cumulative Ontario Auto Rate Decreases *

6.8%

9.6%

B ill 6 5 p a s s e d Savings from:

• MIG definition reaffirmed • Heath Care Provider

licencing B ill 1 5 p a s s e d Savings from: • PJI • DRS • Towing B ill 9 1 p a s s e d Savings from: • Updated Cat definition • AB Changes

(19)

Acquisition of Canadian Direct

Background

• Announced February 10, 2015

• $143 million in DPW

• Broadens direct presence for IFC

• Facilitates objective to double direct

capabilities

• Track record of strong underwriting

results

Progress

• The transaction closed on May 1, 2015

and integration efforts are well underway

• Targeting annual expense synergies of

$10 million after-tax, and expect our run

rate to reach this level by mid-2017

• IRR estimated above 15%

51%

26%

8%

7%

59%

30%

9%

2%

2014 IFC Direct Channel: $975M DPW*

Direct Channel pro forma with CDI: $1.1B DPW*

(20)

Forward-looking statements

Certain of the statements included in this MD&A about the Company’s current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward-looking statements. The words “may”, “will”, “would”, “should”, “could”, “expects”, “plans”, “intends”, “trends”, “indications”, “anticipates”, “believes”, “estimates”, “predicts”, “likely”, “potential” or the negative or other variations of these words or other similar or comparable words or phrases, are intended to identify forward-looking statements.

Forward-looking statements are based on estimates and assumptions made by management based on management’s experience and perception of historical trends, current conditions and expected future developments, as well as other factors that management believes are appropriate in the

circumstances. Many factors could cause the Company’s actual results, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors: the Company’s ability to implement its strategy or operate its business as management currently expects; its ability to accurately assess the risks associated with the insurance policies that the Company writes; unfavourable capital market developments or other factors which may affect the Company’s investments and funding obligations under its pension plans; the cyclical nature of the P&C insurance industry; management’s ability to accurately predict future claims frequency; government

regulations designed to protect policyholders and creditors rather than investors; litigation and regulatory actions; periodic negative publicity regarding the insurance industry; intense competition; the Company’s reliance on brokers and third parties to sell its products to clients; the Company’s ability to

successfully pursue its acquisition strategy; the Company’s ability to execute its business strategy; the Company’s ability to achieve synergies arising from successful integration plans relating to acquisitions including its acquisition of Canadian Direct Insurance Inc. (“CDI”), as well as management's estimates and expectations in relation to resulting accretion, internal rate of return and debt-to-capital ratio; the Company’s participation in the Facility Association (a mandatory pooling arrangement among all industry participants) and similar mandated risk-sharing pools; terrorist attacks and ensuing events; the occurrence of catastrophic events; the Company’s ability to maintain its financial strength and issuer credit ratings; access to debt financing and the Company's ability to compete for large commercial business; the Company’s ability to alleviate risk through reinsurance; the Company’s ability to successfully manage credit risk (including credit risk related to the financial health of reinsurers); the Company’s reliance on information technology and telecommunications systems and potential disruption to those systems, including evolving cyber attack risk; the Company’s dependence on key employees; changes in laws or regulations; general economic, financial and political conditions; the Company’s dependence on the results of operations of its

subsidiaries; the volatility of the stock market and other factors affecting the Company’s share price; and future sales of a substantial number of its common shares.

All of the forward-looking statements included in this MD&A are qualified by these cautionary statements and those made in the Risk management section of our MD&A for the year ended December 31, 2014. These factors are not intended to represent a complete list of the factors that could affect the

Company. These factors should, however, be considered carefully. Although the forward-looking statements are based upon what management believes to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. When relying on forward-looking statements to make decisions, investors should ensure the preceding information is carefully considered. Undue reliance should not be

(21)

Disclaimer

This Presentation does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any securities nor shall it or any part of it form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever.

The information contained in this Presentation concerning the Company does not purport to be all-inclusive or to contain all the information that a prospective purchaser or investor may desire to have in evaluating whether or not to make an investment in the Company. The information is qualified entirely by reference to the Company’s publicly disclosed information.

No representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its the directors, officers or employees as to the accuracy, completeness or fairness of the information or opinions contained in this Presentation and no responsibility or liability is accepted by any person for such information or opinions. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the attendees with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation that may become apparent. The information and opinions contained in this Presentation are provided as at the date of this Presentation. The contents of this Presentation are not to be construed as legal, financial or tax advice. Each prospective purchaser should contact his, her or its own legal adviser, independent financial adviser or tax adviser for legal, financial or tax advice.

The Company uses both International Financial Reporting Standards (“IFRS”) and certain non-IFRS measures to assess performance. Non-IFRS measures do not have any standardized meaning prescribed by IFRS and are unlikely to be comparable to any similar measures presented by other companies. Management of the Company analyzes performance based on underwriting ratios such as combined, general expenses and claims ratios as well as other performance measures such as return on equity (“ROE”) and operating return on equity. These measures and other insurance related terms are defined in the Company’s glossary available on the Intact Financial Corporation web site at www.intactfc.com in the “Investor Relations” section. Additional information about the Company, including the Annual Information Form, may be found online on SEDAR at www.sedar.com.