A.M. Best Affirms Ratings of Intact Financial Corporation and Its Subsidiaries

A.M. Best has affirmed the financial strength ratings (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of the members of Intact Insurance Group (Intact Group), which include Belair Insurance Company Inc. (Quebec), Intact Insurance Company, Novex Insurance Company, The Nordic Insurance Company of Canada, Trafalgar Insurance Company of Canada and Jevco Insurance Company, as well as its separately rated member, Intact Farm Insurance Inc. (IFI) (Quebec). All companies are domiciled in Ontario, unless otherwise specified.

In addition, A.M. Best has affirmed the ICR of “a-” and all debt ratings of the ultimate parent company, Intact Financial Corporation (IFC) [TSX: IFC]. The outlook for all ratings is stable. (Please see below for a detailed listing of the debt ratings.)

The ratings reflect Intact Group’s strong risk-adjusted capitalization, leading market position within the Canadian property/casualty insurance industry and its market access through multiple channels of distribution and geographic diversification. In addition, despite the severity of the 2013 catastrophic events in Canada, the Intact Group posted profitable underwriting results, demonstrating—once again—its pricing and segmentation prowess and efficient claims management. The ratings also continue to benefit from the added financial flexibility of IFC, whose shares are listed and traded on the Toronto Stock Exchange. Partially offsetting these rating strengths are the challenges the organization faces given the continuing soft commercial lines pricing, a trend of more frequent and severe storms across Canada and the strong competition for market share.

The rating affirmations for IFI acknowledge its strong risk-adjusted capitalization, expertise in farm property and liability insurance in Quebec, favorable earnings over the last five years and quality surplus protection and synergies with IFC, such as its corporate reinsurance program. Partially offsetting these positive rating factors are IFI’s concentration of farm risk in Quebec and its soft commercial lines market.

The following debt ratings have been affirmed:

Intact Financial Corporation—
- “a-” on CAD 250 million, Series 1, 5.41% senior unsecured medium-term notes, due September 3, 2019
- “a-” on CAD 250 million, Series 2, 6.40% senior unsecured medium-term notes, due November 23, 2039
- “a-” on CAD 300 million, Series 4, 4.70% senior unsecured medium-term notes, due August 18, 2021
- “a-” on CAD 250 million, Series 5, 5.16% senior unsecured medium-term notes, due June 16, 2042

The following debt ratings under the shelf registration have been affirmed:

Intact Financial Corporation—
- “a-” on senior unsecured debt securities
- “bbb+” on subordinated unsecured debt securities
- “bbb” on Class A preferred shares (included in the CAD 3 billion preliminary short form base shelf prospectus)

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

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