Fitch Rates Intact's CAD $250 Million Senior Unsecured Notes 'A-'

Fitch Ratings has assigned an 'A-' rating to Intact Financial Corporation's (Toronto: IFC) (Intact) new CAD $250 million senior unsecured notes. Intact's other ratings are unaffected by this event. A full list of ratings follows at the end of this release.

KEY RATING DRIVERS

Intact's new issuance is anticipated to be used for general corporate purposes therefore the new debt will increase financial leverage to 19.8% on a proforma year-end 2015 basis up from 16.8% actual. Fitch notes that increased financial leverage remains below any negative rating triggers. The newly issued 10 year notes rank pari passu with the Issuer's other senior unsecured obligations.

Fitch recently issued a press release on Feb. 22, 2016 affirming all of Intact's ratings. Please refer to that press release for further rationale on Intact's ratings.

RATING SENSITIVITIES

Key rating triggers that could lead to a downgrade include:

--A Minimum Capital Test (MCT) below 170%;

--Sustained adverse reserve development of more than 3% of prior year shareholder's equity;

--A material acquisition outside of the Canadian insurance market;

--Sustained GAAP fixed charge coverage ratio below 7.0x or financial leverage above 25%.

Key rating triggers that could lead to an upgrade include:

--Improvement in capital adequacy and leverage measures consistent with 'AA' sector credit factors;

--Consistent and sustained financial performance with return on equity in the low to mid-teens.

--Sustained favorable reserve trends;

--Sustained financial leverage below 20%.

FULL LIST OF RATING ACTIONS

Fitch has assigned an 'A-' to the following:

Intact Financial Corporation

--CAD 250 million unsecured senior debt 3.77% due March 2, 2026 'A-';

Fitch has taken no rating action on the following ratings:

Intact Financial Corporation

--Issuer-Default Rating 'A';

--CAD 250 million unsecured senior debt 5.41% due Sept. 3, 2019 'A-';

--CAD 300 million unsecured senior debt 4.70% due Aug. 18, 2021 'A-';

--CAD 250 million unsecured senior debt 6.40% due Nov. 23, 2039 'A-';

--CAD 250 million unsecured senior debt 5.16% due June 16, 2042 'A-';

--CAD 100 million unsecured senior debt 6.20% due July 8, 2061 'A-';

--CAD 250 million 4.2% non-cumulative class A series 1 preferred stock 'BBB;'

--CAD 250 million 4.2% non-cumulative class A series 3 preferred stock 'BBB.'

The Rating Outlook remains Stable.

Fitch has taken no rating action on the following 'AA-' Insurer Financial Strength Rating ratings:

--Intact Assurances Agricoles Inc.;

--Intact Insurance Company;

--Jevco Insurance Company;

--La Compagnie d'Assurances Belair Inc.;

--Nordic Insurance Company of Canada;

--Novex Insurance Company;

--Trafalgar Insurance Company of Canada.

The Rating Outlooks remains Stable.

Additional information is available on www.fitchratings.com

Applicable Criteria

Insurance Rating Methodology (pub. 16 Sep 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=871172

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1000081

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1000081

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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