Intact Financial Corporation reported excellent financial results in 2020.

For the first time in its history, its net income surpassed the $1 billion mark.

Its combined ratio was also below 90 per cent. In the end, the insurer reported a return on equity of 18.4 per cent.

In discussions with financial analysts following the release of the Q4 2020 results, Intact CEO Charles Brindamour noted that Mother Nature has sided with the insurer in the past year.

What about 2021?  

Is a repeat performance in 2021 possible? It all depends on what happens on the macro level, the CEO explains. "We are in a tight marketplace. The industry’s combined ratio was 100 per cent at the end of Q3 this year. Automobile insurance was in around 100 per cent for the industry. And so we’re in that phase of the cycle, again at the macro level, where the outperformance is really strong, but the industry has yet to catch up on the actions we’ve been taking over the past three, four years.”

This means that Intact will be able to take advantage of market conditions in 2021, maintain strong outperformance and grow the business in a very healthy fashion, Brindamour says. He does not foresee any easing in personal lines insurance.

"I think there’s a fair bit of work that’s needed still at the industry level, and one year of favourable weather is not going to slow that down.”

In commercial lines,  Brindamour points out that the industry is entering the third year of a firm market, which has become a hard market. The COVID-19 pandemic has compounded the problems. He says he wants to expand profit margins in the U.S. market while increasing Intact's sales.

In automobile insurance, the CEO says that as early as 2016 and 2017, Intact had recognized the market pressure trends, which later amplified. The insurer then started to increase its rates for individuals and in trucking. These trends are "creating pressure for a number of players,”  Brindamour says. He expects the pressure in the auto insurance market to continue for at least another year.

Dividend increases deferred 

Brindamour also confirmed that Intact will not be increasing the dividends it pays its shareholders at this time, as it has been doing every February for the past 15 years. The reason is the regulatory environment imposed the Office of the Superintendent of Financial Institutions. Yet the CEO plans to raise the dividends in a future quarter in 2021, to maintain the insurer’s track record.