Intact Financial Posts CAD 3.63 EPS as Cat Losses Hit 94% Combined Ratio

Intact Financial (TSE:IFC) earned CAD 3.63 per share in net operating income for the third quarter and posted a 94% combined ratio, as catastrophe losses of CAD 660 million ran 4 points above expectations while premium growth strengthened to 5% across its businesses.

Operating return on equity reached 16%, the 10th consecutive quarter above 15%, Chief Executive Officer Charles Brindamour told analysts on the November 4 earnings call. Excess capital shaved 2 percentage points off that return, he said. The combined ratio — claims and expenses measured against premiums — sat below the 100% line that marks an underwriting profit, but well above the levels Intact runs in calmer quarters.

"The number tells the quarter," as one analyst put it afterward: growth improved everywhere, and the weather bill did most of the damage.

What drove Canadian growth?

Canadian personal auto led the way. Premiums grew 10%, including 2 points of unit growth, on a 91.2% combined ratio. Brindamour said Intact outgrew the Canadian auto market by 4 points in the first half of the year and expects to keep outperforming the industry over the next 12 months. He sees industry growth in the mid-single digits over that period.

Alberta's reform looms over that forecast. Under the province's Care-First system, new claims from January 1 will move to a model focused on care rather than litigation, said Achraf Louitri, senior vice president of personal lines. Louitri said the changes should meaningfully lower new claim costs and lead to lower rates in Alberta in 2027. Brindamour expects Intact's auto combined ratio to stay in line with current performance, and he cautioned against assuming the reform will expand margins. Chief Operating Officer Patrick Barbeau said the timing of cost benefits and premium changes would be aligned.

Canadian personal property premiums rose 7%, but the segment recorded a 105% combined ratio, including 33 points of catastrophe losses. The home insurance combined ratio was 92.5% over the past 12 months, Brindamour said. Commercial lines improved to 2% premium growth with a 91.9% combined ratio, despite catastrophe losses running 7 points above expectations. Pricing in small and midsize accounts remained firm, even as Intact reduced exposure to some larger accounts, Brindamour said.

How are the U.S. and U.K. performing?

The U.S. delivered again: 3% growth and an 85.2% combined ratio, the 13th consecutive quarter below 90%. Brindamour expects a sub-90% U.S. combined ratio over the next year and faster growth from profitable business lines, geographic expansion and newer products, including fine arts and excess and surplus casualty coverage.

The U.K. and Ireland remain the laggard. Premiums were flat; the combined ratio was 94.1%. Chief Financial Officer Ken Anderson said the result reflected management's view of the business's current performance, following unusually large losses in the second quarter. Intact is targeting a combined ratio toward 90% in the region through more sophisticated pricing and lower technology costs. Anderson expects the technology transition to take up to about 36 months, with overlapping old and new systems raising costs in the meantime. Quarterly growth could be uneven during integration and pricing changes, Brindamour cautioned.

Where does AI and capital fit in?

Artificial intelligence is already paying. Intact earns close to CAD 250 million in recurring annual pretax earnings from measured AI deployments, and Brindamour expects to double that within 24 months. About 60% of the benefit will hit the loss ratio, Barbeau said, with the remainder helping the expense ratio. Some savings will fund further AI investment, he added.

Operating net investment income rose 5% to CAD 422 million, and distribution income climbed 16% to CAD 171 million. Anderson reiterated guidance for investment income above CAD 1.7 billion in 2026 and above CAD 1.8 billion in 2027.

On capital, Intact repurchased roughly CAD 200 million of shares in the quarter and ended with a CAD 3.6 billion capital margin. Management intends to stay active in buybacks while preserving capacity for acquisitions — its preferred use of excess capital. Size matters here. A transaction north of CAD 15 billion could push equity financing toward the upper limit of what is feasible, Anderson said. Brindamour put it plainly: CAD 10 billion would be large, while CAD 15 billion would require the company to use its financing options to their maximum.

Intact distributes insurance under the Intact Insurance brand through brokers and its BrokerLink subsidiary, and directly through Belairdirect, with most direct premiums written in personal auto. The quarter's story, in one line: growth held, cats bit, and capital kept compounding.