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 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). 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).

The very strong balance sheet strength assessment reflects IFC’s very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and 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 consistent net earnings, driven largely by favorable underwriting profitability, has also benefitted the company’s capital position. IFC maintains financial leverage ratios consistent with AM Best’s expectations with strong interest coverage ratios and the overall enterprise benefits from the financial flexibility afforded by IFC with access to both Canadian and U.S. capital markets.

For the full-year 2022, IFC reported the largest level of earnings before interest and taxes (EBIT) of the recent five-year period, building upon a strong year in 2021. The increase in earnings has generally been driven by a considerable increase in underwriting income, which has been augmented by growth in investment income. Results have also benefitted from favorable reserve development over the long term, which AM Best expects to continue going forward. IFC maintains favorable combined ratios in all of its major markets, which include Canada, the United States, the United Kingdom and Ireland.

IFC’s business profile is assessed as favorable, reflecting excellent geographic, product and channel diversification in both 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 Intact’s largest market, where it is a leading provider of personal auto, property and commercial lines coverage. The RSA acquisition in 2021 has expanded Intact’s leadership position within Canada, and has provided Intact with entry into the United Kingdom, Ireland and international markets.

IFC has a comprehensive ERM program in place which AM Best considers appropriate for the organization’s size, scale and risk profile.

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-

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

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 11, 1.207% senior unsecured medium-term notes, due 2024

-- “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

-- “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 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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