AM Best Affirms Credit Ratings of Intact Financial Corporation and Subsidiaries

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “aa-” (Superior) of Intact Insurance Company, the lead company of Intact Financial Corporation (IFC) [TSX: IFC], as well as the other insurance subsidiaries of IFC. Concurrently, AM Best has affirmed the Long-Term ICR of “a-” (Excellent) and the Long-Term Issue Credit Ratings (Long-Term IRs) of IFC, the parent holding company. In addition, AM Best has affirmed the Long-Term ICR of “a-” (Excellent) of Intact U.S. Holdings Inc. (Delaware), an intermediate holding company of IFC. The outlook of these Credit Ratings (ratings) is stable. All companies are domiciled in Ontario, Canada, unless otherwise specified. See below for a complete listing of the members of Intact Financial Corporation’s FSRs, Long-Term ICRs and Long-Term IRs.

The ratings reflect IFC’s consolidated balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

IFC’s balance sheet strength assessment is supported by its very strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), a solid liquidity profile, and a prudent reserving approach. The balance sheet also reflects substantial surplus accumulation over the long term, which has been driven by capital raises (both debt and stock offerings) in support of acquisitions. IFC’s financial leverage ratios remain within AM Best guidelines, despite an uptick for the full year ending 2023. Nonetheless, financial leverage has improved through the first quarter of 2024 driven by favorable net earnings. Overall, IFC benefits from financial flexibility through access to Canadian and U.S. capital markets.

AM Best notes that IFC has reported favorable operating results over the long term, driven by consistent underwriting performance in all geographic territories, which includes Canada, the United States, the United Kingdom and Ireland (UK&I). Additionally, overall net earnings also have benefited from increasing net investment income due to rising interest rates. In 2023, IFC continued to refine its business operations in the UK and Europe by executing on multiple strategic initiatives, which include the exit from the UK personal lines motor business, the acquisition of Direct Line Insurance Group plc’s brokered commercial lines operations, and the exit of the UK home and pet personal lines book of business. AM Best expects these strategic actions to enhance operating performance further in the organization’s UK&I book of business.

AM Best assesses IFC’s business profile as favorable, reflecting excellent geographic, product and channel diversification in the independent broker channel and direct to consumer. IFC is the largest provider of property/casualty insurance in Canada and benefits from a strong brand name recognition through its operating entities. Intact US provides the organization with further diversification and a North America-based platform to write specialty commercial lines. Canada is IFC’s largest market, where it is a leading provider of personal auto, property and commercial lines coverage.

AM Best views IFC’s ERM program as appropriate given the enterprise’s comprehensive risk management framework with strong internal controls and well-defined risk appetites, tolerances and mitigation plans.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) have been affirmed with stable outlooks for the following members of the Intact Financial Corporation:

• Atlantic Specialty Insurance Company
• Belair Insurance Company Inc.
• Homeland Insurance Company of New York
• Homeland Insurance Company of Delaware
• Intact Insurance Company
• Jevco Insurance Company
• Novex Insurance Company
• OBI America Insurance Company
• OBI National Insurance Company
• Split Rock Insurance, Ltd.
• The Guarantee Company of North America USA
• The Nordic Insurance Company of Canada
• Trafalgar Insurance Company of Canada

The following Long-Term IR has been assigned with a stable outlook:

Intact Financial Corporation—

-- “a-” (Excellent) on CAD 300 million, 4.653% senior unsecured medium-term notes, due May 2034

The following Long-Term IRs have been affirmed with stable outlooks:

Intact Financial Corporation—

-- “a-” (Excellent) on $500 million, 5.459% senior unsecured medium-term notes, due 2032

-- “a-” (Excellent) on CAD 250 million, Series 2, 6.40% senior unsecured medium-term notes, due 2039

-- “a-” (Excellent) on CAD 100 million, Series 3, 6.2% senior unsecured medium-term notes, due 2061

-- “a-” (Excellent) on CAD 250 million, Series 5, 5.16% senior unsecured medium-term notes, due 2042

-- “a-” (Excellent) on CAD 250 million, Series 6, 3.77% senior unsecured medium-term notes, due 2026

-- “a-” (Excellent) on CAD 425 million, Series 7, 2.85% senior unsecured medium-term notes, due 2027

-- “a-” (Excellent) on CAD 300 million, Series 8, 3.691% senior unsecured medium-term notes, due 2025

-- “a-” (Excellent) on CAD 300 million, Series 9, 1.928% senior unsecured medium-term notes, due 2030

-- “a-” (Excellent) on CAD 300 million, Series 10, 2.954% senior unsecured medium-term notes, due 2050

-- “a-” (Excellent) on CAD 375 million, Series 12, 2.179% senior unsecured medium-term notes, due 2028

-- “a-” (Excellent) on CAD 250 million, Series 13, 3.765% senior unsecured medium-term notes, due 2053

-- “a-” (Excellent) on CAD 400 million, Series 14, 5.276 % senior unsecured medium-term notes, due 2054

-- “bbb” (Good) on CAD 150 million, 5.25% preferred shares

-- “bbb+” (Good) on CAD 250 million, 4.125% subordinated debentures, due 2081

-- “bbb” (Good) on CAD 300 million, 7.338% subordinated debentures, due June 30, 2083

-- “bbb” (Good) on CAD 250 million, 4.841% non-cumulative five-year reset Class A Series 1 preferred shares

-- “bbb” (Good) on CAD 250 million, 3.457% non-cumulative five-year rate reset Class A Series 3 preferred shares

-- “bbb” (Good) on CAD 150 million, 5.2% non-cumulative fixed rate Class A Series 5 preferred shares

-- “bbb” (Good) on CAD 150 million, 5.3% non-cumulative fixed rate Class A Series 6 preferred shares

-- “bbb” (Good) on CAD 250 million, 4.9% non-cumulative five-year rate reset Class A Series 7 preferred shares

-- “bbb” (Good) on CAD 150 million, 5.4% non-cumulative fixed rate shares Class A Series 9 preferred shares

The following indicative Long-Term IRs under the shelf registration have been affirmed with stable outlooks:

Intact Financial Corporation—

-- “a-” (Excellent) on senior unsecured notes

-- “bbb+” (Good) on subordinated unsecured notes

-- “bbb” (Good) on Class A preferred shares

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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