A year after RSA Insurance Group plc was acquired by Intact Financial Corporation, nearly all personal lines broker policies, and commercial lines small business and fleet policies in Canada, have been converted to Intact systems, the insurer reported.
“I’m pleased to see that the integration is very much on track in Canada. Policy conversion in the broker channel is nearing completion and almost 85% of personal lines broker policies, as well as commercial lines small business and fleet policies, have converted to Intact systems so far,” said Intact CEO Charles Brindamour in a 2022 Q2 IFC earnings call.
This aligns with Brindamour’s prediction earlier this year that a large portion of the integration in Canada will be finished by the summer or early fall of 2022.
In terms of next steps, Intact is starting on the conversion of large commercial lines policies in 2022 Q2.
RSA was acquired by Intact Financial Corporation on June 1, 2021, and in the 13-months since closing, RSA contributed approximately 15% to Intact’s net operating income per share (NOIPS).
As of June 30, 2022, Intact estimated they have delivered $175 million in run-rate synergies as of June 30, 2022 and remain on track to realize at least $250 million of pre-tax annual run-rate synergies in 2024. Further, the internal rate of return (IRR) on RSA transactions is expected to exceed 20% — which comes above the 15% target announced with the acquisition.
Intact also completed the sale of its 50% stake in RSA Middle East to National Life & General Insurance Company (NLGIC) on July 7, 2022.
Mario Mendonca of TD Securities asked Brindamour about Intact’s expectations for policy growth and written insured risks in personal property and personal auto.
Brindamour said risk selection activities take place in year two of any given transaction.
“You migrate in year one. We’re capping the dislocation in year one, and we’re gradually bringing people to the actual Intact price over two, three years. That can lead to less growth than you otherwise would get in the following 12 months after the first year of integration,” he explained.
“We take a cautious stance on organic growth in PL, as we look out the next 12 months…we’re still cautious in relative terms from a pricing point of view, [though] we see that narrowing in the coming period,” Brindamour added.
“Being in the pandemic, and many competitors and us tempering our rate increases, that also was a factor for us seeing a muted growth in units,” added Isabelle Girard senior vice president, personal lines. “But as the market is returning to a rate position given inflation, we expect that it will generate more people that will shop for their insurance…we feel that would be a better position to take some opportunities there.”
In addition to the RSA integration, Brindamour said Intact executed several other initiatives as well.
“We launched a digital reporting tool for customers to file property claims through our mobile app. Approximately one in five of our client claimants have used the tool since launch, reducing claims cycle time and improving experience.
“On the distribution side, BrokerLink delivered, in the quarter, a record [number] of acquisitions, completing 10 transactions across the country,” he added.
Feature image by iStock.com/sesame