At Intact Financial Corporation, the company has its sights set squarely on becoming a serious player in North American and global specialty lines business. In Canada, it is focused on nailing the integration of RSA Insurance Group PLC, a deal the company completed in June 2021. In the United Kingdom it wants to strengthen its position in distribution by bringing responsibility for pricing, risk selection, underwriting and claims back to the company.
Finally, the company’s CEO, Charles Brindamour says Intact wants to deploy capital in North American distribution as well, both to support the company’s Canadian business, and to support the specialty lines business in the United States.
All of these comments were made by Brindamour at the most recent Scotiabank Financials Summit, held virtually in September.
Personal lines integration
“I think that in Canada, we have our work cut out quite frankly,” he told those gathered for the virtual presentation. “We're doubling down on direct business, we're doubling down on our commercial lines business. And then we have a personal lines integration in the broker distributed world, which is also all encompassing.”
In looking at different elements affecting the Canadian business, he says there are inflationary forces at play in personal auto which should lead to a firmer pricing environment within 12 months. Driving is also within five per cent of what it was before the pandemic, but he adds that claims patterns are slightly different today than they have been in the past.
Opportunities to grow
“We think this creates opportunities to grow in areas where margins are better,” he says.
He adds that Intact’s Canadian team will be especially focused on making the most of its RSA acquisition over the next six to nine months. He says the RSA’s business is an accelerator for the company’s growth strategy.
“It really helps us accelerate the path we were on before the deal. It helps us expand our leadership position in Canada by 30%. It gives us at least 30% more scale and specialty lines and global capabilities,” he says.
In the UK, he adds that there will be more emphasis on direct distribution going forward. “The distribution strategy in the UK is to de-emphasize where authority has been provided to distributors. I think we want to make sure that we're always in control of pricing, risk selection, underwriting and claims. That's a core principle of Intact, and we want to de-emphasize the areas where that control is not strong in the UK.”
Tech investments
In the UK, he adds that the company also needs to make significant investments in that business’s technology. “Big investments in technology can be risky but we have a very good track record,” he says. “We feel pretty good about the progress we're making.”
The U.S. team, meanwhile, has also done well. “The US team, as I mentioned, created outperformance,” he adds. “I feel much more comfortable about capital deployment in the US. We’re not there yet. We're very close.”
He adds that the company wants to be one of the best specialty lines operators globally and will be assessing opportunities in that space in the next 12 to 24 months.
Four main themes
When looking broadly at the insurance market in Canada and around the world, he says there are four main themes on his mind: the COVID-19 pandemic, climate change, economic dislocation and market conditions.
Priorities for the firm include supporting customers, bringing its workforce back over the next 12 months, “keep the trains running on time,” and continue investing for medium and long-term growth.
In practice, he says this means expanding the company’s leadership position in Canada, investing in digital, distribution and artificial intelligence (AI), coupled with a focus on claims and supply chain management.
Global specialty lines
“Strategic positioning for us also means building the global specialty lines platform,” he adds. “We're becoming a serious player in specialty lines in North America, and soon, globally. And we're really focused on expanding our footprint and specialty lines and creating outperformance. The team in the US has done a really good job.”
“The critical factor for me is to maintain and expand our outperformance in Canada, to build on the outperformance that the US team as built, and to create outperformance in the UK and Ireland in the next 24 to 36 months.” - Charles Brindamour
In discussing the company’s performance and growth prospects, he adds that outperformance is a requisite input needed for business development and decision making.
“We've generated 670 basis points of ROE outperformance over the last decade. We want to continue to outperform by at least 500 basis points every year, across the whole platform. This is not an average outcome. This means we want to win everywhere we play,” he says. “The critical factor for me is to maintain and expand our outperformance in Canada, to build on the outperformance that the US team as built, and to create outperformance in the UK and Ireland in the next 24 to 36 months. That's what needs to happen. I feel the market is very supportive for us to achieve that. We have strong action plans in place.”
