PrefBlog

DBRS has announced that it:

changed the trend to Positive from Stable, and confirmed all ratings of Intact Financial Corporation (Intact or the Company) and its operating insurance subsidiaries, including the Financial Strength Rating (FSR) of its main operating insurance subsidiaries at AA (low) and Intact’s “A” Issuer Rating. The trend on the ratings of RSA Insurance Group Limited, Intact’s UK-based subsidiary, was also changed to Positive (see “DBRS Morningstar Changes Trend on RSA Insurance Group Limited and its Operating Entities to Positive from Stable; Confirms Financial Strength Ratings at AA (low)”).
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The Company’s risk profile reflects its prudent approach to risk management, and its high-quality investment portfolio is based on a high proportion of readily marketable bonds and equities. Derivatives are utilized strictly for hedging purposes. Intact’s approach to managing its investment portfolio has allowed it to earn significant investment returns over the years and to withstand market volatility reasonably well. The commercial products portfolio is well diversified, but DBRS Morningstar notes that it is exposed to systemic risk arising from its cyber insurance offerings. In addition to traditional catastrophic risk exposures, which it mitigates primarily through reinsurance and policy terms and conditions, the Company has undertaken actions to reduce its earthquake risk exposure in Canada, which DBRS Morningstar views positively.

Intact’s earnings ability reflects its strong underwriting and pricing discipline across its business segments and geographies, combined with solid revenue generation from its distribution businesses. The Company’s net earnings have proven to be strong and resilient over time with a very good combined ratio of 90%, based on a three-year weighted average, as calculated by DBRS Morningstar.

The Company maintains ample liquidity resources to deal with potential cash demands under reasonably severe stress scenarios. Its investment portfolio consists of a high proportion of marketable bonds and equities, in addition to its substantial cash and short-term investment holdings. Reinsurance cover is available to limit the impact of losses that exceed retention thresholds.

Intact’s regulatory capital ratios for its standalone entities reflect appropriate buffers above required solvency levels, allowing the Company to handle reasonably adverse events. Fixed charge coverage ratios are high as a result of Intact’s consistently strong net earnings. Financial leverage has also returned to its pre-acquisition level.

Affected issues are IFC.PR.A, IFC.PR.C, IFC.PR.E, IFC.PR.F, IFC.PR.G, IFC.PR.I and IFC.PR.K.

This entry was posted on Friday, October 14th, 2022 at 8:18 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.