q4-2016 · q4 q3 q2 q1 q4 q3 q2 q1 q4 annual annual annual annual annual. 1. 4. 6. 7. 8. 11. 12....

Intact Financial Corporation (TSX : IFC)

Q4-2016

SUPPLEMENTARY FINANCIAL INFORMATION

(UNAUDITED)

Page (link) Page (link)

Notes to Supplementary Financial Information 3 Historical prior year claims development 10

Important notes By line of business

Definitions Annualized development (as a % of opening reserves)

Financial highlights 4 - Prior year claims development in 2016 11

Top Line Original reserve and cumulative deficiency (redundancy)

Underwriting results Development during 2016

Financial results Financial position 12

Per share results Balance sheet

Return on equity (for the last 12 months) Book value per share

Financial position Capital management and rating information 13

Full-time equivalent number of employees Minimum capital test (MCT) and excess capital

Shareholder information 5 Normal course issuer bid (NCIB) program

Number of shares outstanding Rating information

Common share performance Investment portfolio 14

Dividend Total portfolio

Comprehensive income 6 Credit quality

Comprehensive income Maturity

Non-operating results Sector

Other comprehensive income (loss) Net exposure: investment mix by asset class

Underwriting results 7 Net exposure: sector mix by asset class

Direct and net premiums written Net exposure: by currency

Underwriting results Investment performance 16

Underwriting ratios Net investment income

- Results: Personal lines 8 Net investment gains (losses)

Personal lines Net unrealized gains (losses) on AFS securities reported in AOCI

Personal auto Reconciliations to Financial Statements 17

Personal property Direct premium written

- Results: Commercial lines 9 Net premiums earned

Commercial lines Underwriting expenses

Commercial P&C Underwriting income (loss)

Commercial auto Net investment income

Net catastrophes by line of business 10 Net investment gains (losses)

Appendix 1 - Additional information 18

Direct premiums written (full term)

Canadian P&C insurance industry results (estimated)

We use both IFRS and non-IFRS measures to assess performance. Non-IFRS measures do not have any standardized meanings prescribed by IFRS and are unlikely to be comparable to any

similar measures presented by other companies. Management analyzes performance based on underwriting ratios such as combined, expense, loss and claims ratio, Minimum Capital Test (MCT),

and debt-to-capital, as well as other non-IFRS financial measures, namely: DPW, Underlying current year loss ratio, Underwriting income, Net operating income (NOI), NOIPS, Operating ROE,

Return on Equity (ROE), Adjusted ROE, Non-operating results, Adjusted EPS, Cash flow available for investment activities and Market-based yield. These measures and other insurance-related

terms used in this Supplementary Financial Information are defined in the glossary available in the «Investor Relations» section of our web site at www.intactfc.com.

INDEX

Non-IFRS measures

2

Important notes

Financial results are reported under International Financial Reporting Standards (IFRS).

Unless otherwise noted, catastrophes refers to current year catastophe losses net of reinsurance.

All underwriting results and related ratios exclude the market yield adjustment (MYA), but include our share of the underwriting results of jointly held insurance operations, unless otherwise noted.

The expense and general expense ratios are presented herein net of other underwriting revenues, unless otherwise noted.

Net investment income and net investments gains (losses) include our share of the investment results of jointly held insurance operations, unless otherwise noted.

Certain totals, subtotals and percentages may not agree due to rounding.

For additional information, the reader should refer to our MD&A and Consolidated financial statements.

Definitions

Adjusted EPS (AEPS) Net income from continuing operations for a specific period less preferred share dividends plus the after-tax impact of amortization of intangible assets

recognized in business combinations, integration and restructuring costs and change in fair value of contingent consideration, divided by the

weighted-average number of common shares outstanding during the same period.

Adjusted ROE (AROE) Net income from continuing operations for a 12-month period less preferred share dividends plus the after-tax impact of amortization of intangible assets

recognized in business combinations, integration and restructuring costs and change in fair value of contingent consideration, divided by the average

common shareholders’ equity over the same 12-month period.

Average shareholders' equity Shareholders’ equity at the beginning and the end of the period, adjusted for significant capital transactions, if appropriate.

Catastrophe losses Any one claim, or group of claims, equal to or greater than $7.5 million, related to a single event.

Claims ratio Claims incurred, net of reinsurance, during a specific period and expressed as a percentage of net premiums earned for the same period.

Combined ratio The sum of the claims ratio and the expense ratio. A combined ratio below 100% indicates a profitable underwriting result.

A combined ratio over 100% indicates an unprofitable underwriting result.

DPW (full term) The total amount of premiums for new and renewal policies billed (written) during a specific reporting period, as reported under IFRS and excluding industry pools.

DPW DPW normalized for the effect of multi-year policies, excluding industry pools. This measure matches DPW to the year in which coverage is provided, whereas under IFRS,

the full value of multi-year policies is recognized in the year the policy is written.

Dividend yield (annualized) Dividends declared per share (annualized) divided by the closing share price for the period.

Expense ratio Underwriting expenses including commissions, premium taxes and general expenses incurred in connection with underwriting activities

during a specific period and expressed as a percentage of net premiums earned for the same period.

Market-based yield Annualized total pre-tax investment income (before expenses) divided by the mid-month average fair values of net equity and fixed-income securities held during the period.

Market yield adjustment (MYA) Impact of changes in the discount rate used to discount claims liabilities based on the change in the market-based yield of underlying assets.

Market capitalization Number of common shares outstanding at the end of the period multiplied by the closing share price.

Minimum capital test (MCT) Ratio of available capital to capital required, as defined by the Office of the Superintendent of Financial Institutions (OSFI) and the Autorité des marchés financiers (AMF).

Net operating income (NOI) Net income from continuing operations for a specific period less preferred share dividends, plus the after-tax impact of amortization of intangible assets

recognized in business combinations, integration and restructuring costs, change in fair value of contingent consideration, net investment gains (losses),

difference between expected return and discount rate on pension assets, MYA, as well as other costs that we do not believe to be reflective of our operating performance.

NOIPS NOI for a specific period less preferred share dividends, divided by the weighted-average number of common shares outstanding during the same period.

Operating ROE (OROE) NOI for the last 12 months divided by the average common shareholders’ equity (excluding AOCI) over the same 12 month period.

Policies in force Number of policies under which coverage was in effect as of the end of the period.

Return on equity (ROE) Net income for a 12-month period less preferred share dividends, divided by the average common shareholders’ equity over the same 12-month period.

Total excess capital Excess capital in the P&C insurance subsidiaries at 170% MCT plus excess capital outside of the P&C insurance companies.

Underlying current year loss ratio Current year claims ratio excluding catastrophes and prior year claims development, calculated using net premiums earned excluding reinstatement premiums.

NOTES TO SUPPLEMENTARY FINANCIAL INFORMATION

Unless otherwise noted, direct premiums written (DPW) refers to DPW normalized for the effect of multi-year policies, excluding industry pools (referred to as 'DPW' in this statistical supplement and previously referred to as “DPW

(underlying)”).

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FINANCIAL HIGHLIGHTS

(in millions of Canadian dollars, except as otherwise noted - unaudited) 2014 2016 2015 2014 2013 2012

# Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Annual Annual Annual Annual Annual

Top line

Direct premiums written 1 1,961 2,193 2,458 1,681 1,908 2,095 2,344 1,575 1,775 8,293 7,922 7,461 7,345 6,854

Growth YOY 2 2.7% 4.7% 4.9% 6.7% 7.5% 7.9% 6.0% 2.8% 2.7% 4.7% 6.2% 1.6% 7.2% 34.3%

Written insured risks (in '000) 3 1,718 2,064 2,357 1,558 1,680 2,021 2,259 1,459 1,595 7,697 7,419 7,062 7,115 6,729

Growth YOY 4 2.2% 2.1% 4.3% 6.9% 5.3% 7.5% 5.5% 1.0% 0.4% 3.8% 5.0% (0.7)% 5.7% 32.3%

Policies in force (in '000) 5 5,899 5,794 5,739 5,663 5,626 5,583 5,523 5,264 5,251 5,899 5,626 5,251 5,296 5,274

Growth YOY 6 4.9% 3.8% 3.9% 7.6% 7.1% 6.4% 5.8% (0.2)% (0.8)% 4.9% 7.1% (0.8)% 0.4% 5.3%

Underwriting results

Underlying current year loss ratio 7 64.2% 62.8% 62.9% 69.2% 61.4% 64.8% 65.5% 73.1% 62.0% 64.8% 66.1% 64.3% 64.9% 63.5%

Claims ratio 8 62.9% 67.4% 67.5% 62.0% 57.6% 63.4% 60.9% 63.2% 58.3% 64.9% 61.3% 62.6% 66.9% 61.6%

Expense ratio 9 29.6% 29.6% 31.7% 30.5% 31.0% 29.8% 30.7% 30.2% 29.9% 30.4% 30.4% 30.2% 31.1% 31.5%

Combined ratio 10 92.5% 97.0% 99.2% 92.5% 88.6% 93.2% 91.6% 93.4% 88.2% 95.3% 91.7% 92.8% 98.0% 93.1%

Financial results

Underwriting income (loss) 11 153 61 16 145 221 131 158 118 216 375 628 519 142 451

Net investment income 12 104 102 104 104 110 105 104 105 111 414 424 427 406 389

Net operating income (NOI) 13 212 137 114 197 265 199 210 186 247 660 860 767 500 675

NOI attributable to common shareholders 14 208 131 109 192 260 193 205 181 242 640 839 746 479 654

Net income attributable to shareholders 15 171 125 93 152 198 131 199 178 205 541 706 782 431 571

Per share (basic and diluted) (in $)

Net operating income per share (NOIPS) 16 1.58 1.01 0.83 1.46 1.97 1.47 1.56 1.37 1.84 4.88 6.38 5.67 3.62 5.00

Growth YOY 17 (19.8)% (31.3)% (46.8)% 6.6% 7.1% 7.3% 2.0% 45.7% 75.2% (23.5)% 12.5% 56.6% (27.6)% 27.9%

Earnings per share to common shareholder (EPS) 18 1.27 0.91 0.67 1.11 1.46 0.95 1.47 1.32 1.52 3.97 5.20 5.79 3.10 4.20

Growth YOY 19 (13.0)% (4.2)% (54.4)% (15.9)% (3.9)% (36.2)% (8.1)% 12.8% 97.4% (23.7)% (10.2)% 86.8% (26.2)% 6.1%

Adjusted EPS (AEPS) 20 1.56 1.01 0.76 1.19 1.54 1.06 1.56 1.38 1.58 4.53 5.54 6.01 3.44 5.02

Growth YOY 21 1.3% (4.7)% (51.3)% (13.8)% (2.5)% (31.6)% (5.5)% 12.2% 79.5% (18.2)% (7.8)% 74.7% (31.5)% 4.1%

Return on equity (for the last 12 months)

Operating ROE (OROE) 22 12.0% 13.4% 14.6% 16.7% 16.6% 16.9% 16.8% 17.2% 16.3% 12.0% 16.6% 16.3% 11.2% 16.8%

Return on equity (ROE) 23 9.6% 10.5% 10.5% 12.7% 13.4% 14.2% 15.4% 16.1% 16.1% 9.6% 13.4% 16.1% 9.3% 13.5%

Adjusted ROE (AROE) 24 11.0% 11.4% 11.4% 13.6% 14.3% 15.0% 16.1% 16.7% 16.8% 11.0% 14.3% 16.8% 10.3% 16.1%

Financial position

Total investments 25 14,386 14,342 13,812 13,630 13,504 13,339 13,394 13,443 13,440 14,386 13,504 13,440 12,261 12,959

Debt outstanding 26 1,393 1,392 1,392 1,392 1,143 1,143 1,143 1,143 1,143 1,393 1,143 1,143 1,143 1,143

Common shareholders' equity 27 5,599 5,433 5,318 5,257 5,235 4,974 5,157 5,120 4,962 5,599 5,235 4,962 4,461 4,400

Book value per share (in $) 28 42.72 41.47 40.57 40.06 39.83 37.84 39.23 38.95 37.75 42.72 39.83 37.75 33.94 33.03

Growth YOY 29 7.3% 9.6% 3.4% 2.8% 5.5% 3.8% 8.1% 11.9% 11.2% 7.3% 5.5% 11.2% 2.8% 11.1%

Total shareholder's equity 30 6,088 5,922 5,807 5,746 5,724 5,463 5,646 5,609 5,451 6,088 5,724 5,451 4,950 4,889

MCT % 31 218% 215% 212% 215% 203% 195% 200% 213% 209% 218% 203% 209% 203% 205%

Total excess capital 32 970 881 857 904 625 389 564 763 681 970 625 681 550 599

Debt-to-capital ratio 33 18.6% 19.0% 19.3% 19.5% 16.6% 17.3% 16.8% 16.9% 17.3% 18.6% 16.6% 17.3% 18.7% 18.9%

Full-time equivalent number of employees 34 12,223 12,074 12,024 11,759 11,694 11,678 11,869 11,741 11,326 12,223 11,694 11,326 11,074 11,159

2016 2015

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SHAREHOLDER INFORMATION



Number of shares outstanding (in '000)

Common shares

End of period 1 131,050 131,121 131,173 131,316 131,543 131,543 131,543 131,543 131,543 131,050 131,543 131,543 131,543 133,334

Weighted-average 2 131,083 131,141 131,265 131,462 131,543 131,543 131,543 131,543 131,543 131,237 131,543 131,543 132,368 130,772

Preferred shares 3 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000

Common share performance

Common share price

High 4 97.34 97.20 94.16 91.08 96.77 95.82 95.36 95.77 84.42 97.34 96.77 84.42 69.74 65.13

Low 5 90.00 89.75 84.88 77.49 85.81 86.30 85.42 81.74 71.11 77.49 81.74 65.82 56.44 55.65

Close 6 96.10 94.84 92.29 90.93 88.68 93.72 86.79 95.42 83.85 96.10 88.68 83.85 69.37 64.77

Market capitalization 7 12,594 12,436 12,106 11,941 11,665 12,328 11,417 12,552 11,030 12,594 11,665 11,030 9,125 8,636

Dividend

Common shares

Dividends 8 76 75 77 76 70 69 70 70 65 304 279 255 233 210

Dividends paid per share (in $) 9 0.58 0.58 0.58 0.58 0.53 0.53 0.53 0.53 0.48 2.32 2.12 1.92 1.76 1.60

Growth YOY 10 9.4% 9.4% 9.4% 9.4% 10.4% 10.4% 10.4% 10.4% 9.1% 9.4% 10.4% 9.1% 10.0% 8.1%

Dividend yield (annualized) 11 2.4% 2.4% 2.5% 2.6% 2.4% 2.3% 2.4% 2.2% 2.3% 2.4% 2.4% 2.3% 2.5% 2.5%

Preferred shares

Dividends 12 4 6 5 5 5 6 5 5 5 20 21 21 21 21

Dividends paid per share - Series 1 (in $) 13 0.2625 0.2625 0.2625 0.2625 0.2625 0.2625 0.2625 0.2625 0.2625 1.0500 1.0500 1.0500 1.0500 1.0500

Dividends paid per share - Series 3 (in $) 14 0.2083 0.2625 0.2625 0.2625 0.2625 0.2625 0.2625 0.2625 0.2625 0.9958 1.0500 1.0500 1.0500 1.0500

Dividends paid per share - Series 4 (in $) 15 0.1993 - - - - - - - - 0.1993 - - - -

2016 2015

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COMPREHENSIVE INCOME



Comprehensive income

Net premiums earned 1 2,043 2,036 1,937 1,930 1,948 1,930 1,865 1,792 1,830 7,946 7,535 7,207 7,014 6,571



Finance costs 4 (18) (19) (18) (17) (16) (16) (16) (16) (16) (72) (64) (64) (64) (60)

Other income, net 5 37 28 36 20 25 30 22 26 9 121 103 65 76 74

Distribution, net 6 24 30 43 14 22 28 34 20 14 111 104 75 75 83

Corporate and other 7 13 (2) (7) 6 3 2 (12) 6 (5) 10 (1) (10) 1 (9)

Pre-tax operating income 8 276 172 138 252 340 250 268 233 320 838 1,091 947 560 854

Operating income tax benefit (expense) 9 (64) (35) (24) (55) (75) (51) (58) (47) (73) (178) (231) (180) (60) (179)

Effective tax rate on operating income 10 23.2% 20.3% 17.4% 21.8% 22.1% 20.4% 21.6% 20.2% 22.8% 21.2% 21.2% 19.0% 10.7% 21.0%

Net operating income (NOI) 11 212 137 114 197 265 199 210 186 247 660 860 767 500 675

Non-operating gains (losses) 12 (52) (16) (26) (58) (99) (89) (14) (14) (55) (152) (216) 10 (95) (142)

Income before income taxes 13 224 156 112 194 241 161 254 219 265 686 875 957 465 712

Income tax benefit (expense) 14 (53) (31) (19) (42) (43) (30) (55) (41) (60) (145) (169) (175) (34) (141)

Effective tax rate 15 23.7% 19.9% 16.9% 21.6% 17.8% 18.6% 21.7% 18.7% 22.6% 21.1% 19.3% 18.3% 7.3% 19.8%

Net income 16 171 125 93 152 198 131 199 178 205 541 706 782 431 571

Other comprehensive income (loss) 17 75 72 68 (29) 132 (239) (82) 58 32 186 (131) 3 5 (10)

Total comprehensive income 18 246 197 161 123 330 (108) 117 236 237 727 575 785 436 561

Non-operating results

Net investment gains (losses) 19 (97) 17 28 (20) (72) (64) (29) 101 (3) (72) (64) 174 (83) 37

Positive (negative) impact of MYA on underwriting results 20 87 (6) (29) (18) (6) 7 38 (97) (37) 34 (58) (103) 75 (17)

Amortization of intangible assets recognized in business combinations 21 (12) (15) (13) (13) (11) (12) (13) (10) (8) (53) (46) (30) (25) (21)

Integration and restructuring costs 22 (19) (2) (2) - (3) (4) (3) - (1) (23) (10) (9) (35) (108)

Change in fair value of contingent consideration 23 - - - - - - - - - - - - - (11)

Difference between expected return and discount rate on pension assets 24 (6) (7) (6) (7) (7) (8) (7) (8) (6) (26) (30) (22) (27) (22)

Other non-operating costs 25 (5) (3) (4) - - (8) - - - (12) (8)

Total non-operating gains (losses) 26 (52) (16) (26) (58) (99) (89) (14) (14) (55) (152) (216) 10 (95) (142)

Other comprehensive income (loss)

Employee future benefits

Discount rate - pension plans 27 3.80% 3.30% 3.50% 3.80% 4.10% 4.10% 4.00% 3.60% 4.00% 3.80% 4.10% 4.00% 4.80% 4.00%

Actuarial gains (losses) due to changes in:

discount rate 28 214 (89) (121) (110) - 32 133 (133) (21) (106) 32 (235) 226 (112)

other assumptions 29 (4) - - - 36 - - - - (4) 36 (6) (53) 82

experience 30 (1) (6) - - - (24) - - (1) (7) (24) (20) (4) 1

asset reserve 31 - - - - - - - - - - - 6 (6)

Actuarial gains (losses) related to actual return on plan assets 32 (121) 82 91 30 27 (56) (100) 133 56 82 4 214 (59) 46

Total pre-tax income (loss) 33 88 (13) (30) (80) 63 (48) 33 - 34 (35) 48 (41) 104 17

AFS securities

Net changes in unrealized gains (losses) 34 61 148 146 23 74 (329) (153) 69 (13) 378 (339) 170 (13) 52

Reclassification to income of net losses (gains) 35 (49) (41) (30) 15 46 57 11 9 22 (105) 123 (125) (85) (87)

Share of OCI from investments in associates and joint ventures 36 2 1 3 (3) - (2) - (1) - 3 (3) (1) (1) -

Derivatives designated as cash flow hedges 37 1 - - - (1) - - - 1 1 (1) 1 1 1

Income tax benefit (expense) 38 (28) (23) (21) 16 (50) 83 27 (19) (12) (56) 41 (1) (1) 7

Other comprehensive income (loss) 39 75 72 68 (29) 132 (239) (82) 58 32 186 (131) 3 5 (10)

20152016

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UNDERWRITING RESULTS




By distribution channel

Brokers 2 86% 84% 85% 86% 86% 84% 86% 88% 87% 85% 86% 88% 88% 88%

Direct-to-consumer 3 14% 16% 15% 14% 14% 16% 14% 12% 13% 15% 14% 12% 12% 12%

Total 4 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

By line of business

Personal auto 5 42% 47% 47% 47% 42% 47% 46% 45% 42% 46% 45% 46% 46% 45%

Personal property 6 25% 26% 24% 23% 24% 25% 23% 22% 22% 25% 24% 22% 22% 23%

Commercial P&C 7 24% 19% 21% 22% 25% 20% 22% 24% 27% 21% 23% 24% 24% 24%

Commercial auto 8 9% 8% 8% 8% 9% 8% 9% 9% 9% 8% 8% 8% 8% 8%

Total 9 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

By geography

Ontario 10 40% 41% 41% 41% 40% 41% 41% 42% 41% 41% 41% 42% 42% 40%

Québec 11 28% 27% 29% 26% 28% 27% 29% 27% 28% 27% 28% 28% 29% 30%

Alberta 12 18% 18% 17% 19% 19% 18% 17% 19% 18% 18% 18% 18% 17% 17%

Rest of Canada 13 14% 14% 13% 14% 13% 14% 13% 12% 13% 14% 13% 12% 12% 13%

Total 14 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Net premiums written 15 1,906 2,140 2,370 1,632 1,863 2,048 2,309 1,541 1,739 8,048 7,761 7,300 7,123 6,633

Underwriting results

Net earned premiums, before reinstatement premiums 16 2,045 2,035 1,964 1,931 1,948 1,930 1,862 1,793 1,830 7,975 7,533 7,207 7,058 6,581

Reinstatement premiums recovery (ceded) 17 (2) 1 (27) (1) - - 3 (1) - (29) 2 - (44) (10)

Net earned premiums 18 2,043 2,036 1,937 1,930 1,948 1,930 1,865 1,792 1,830 7,946 7,535 7,207 7,014 6,571

Current year claims (excluding catastrophes and prior year claims development) 19 1,313 1,278 1,236 1,338 1,196 1,250 1,219 1,311 1,134 5,165 4,976 4,636 4,580 4,179


Current year catastrophes claims (excluding reinstatement premiums) 21 34 166 164 21 2 81 22 11 10 385 116 243 486 245

Unfavourable (favourable) PYD 22 (62) (71) (93) (163) (75) (107) (106) (189) (78) (389) (477) (364) (374) (372)

Total net claims 23 1,285 1,373 1,307 1,196 1,123 1,224 1,135 1,133 1,066 5,161 4,615 4,515 4,692 4,052

Commissions 24 319 327 328 318 316 313 308 294 297 1,292 1,231 1,200 1,181 1,151

Premium taxes 25 75 73 71 68 68 68 64 62 62 287 262 248 245 232

General expenses 26 211 202 215 203 220 194 200 185 189 831 799 725 754 685

Total underwriting expenses 27 605 602 614 589 604 575 572 541 548 2,410 2,292 2,173 2,180 2,068


Underwriting ratios


CAT loss ratio (including reinstatement premiums) 30 1.8% 8.1% 9.4% 1.2% 0.0% 4.1% 1.1% 0.6% 0.5% 5.0% 1.5% 3.3% 7.3% 3.8%

Unfavourable (favourable) PYD ratio 31 (3.1)% (3.5)% (4.8)% (8.4)% (3.8)% (5.5)% (5.7)% (10.5)% (4.2)% (4.9)% (6.3)% (5.0)% (5.3)% (5.7)%

Claims ratio 32 62.9% 67.4% 67.5% 62.0% 57.6% 63.4% 60.9% 63.2% 58.3% 64.9% 61.3% 62.6% 66.9% 61.6%

Commissions 33 15.6% 16.1% 16.9% 16.5% 16.3% 16.2% 16.5% 16.4% 16.2% 16.3% 16.3% 16.7% 16.8% 17.5%

General expenses 34 10.3% 9.9% 11.1% 10.5% 11.2% 10.1% 10.7% 10.4% 10.3% 10.5% 10.6% 10.1% 10.7% 10.4%

Premium taxes 35 3.7% 3.6% 3.7% 3.5% 3.5% 3.5% 3.5% 3.4% 3.4% 3.6% 3.5% 3.4% 3.6% 3.6%

Expense ratio 36 29.6% 29.6% 31.7% 30.5% 31.0% 29.8% 30.7% 30.2% 29.9% 30.4% 30.4% 30.2% 31.1% 31.5%

Combined ratio 37 92.5% 97.0% 99.2% 92.5% 88.6% 93.2% 91.6% 93.4% 88.2% 95.3% 91.7% 92.8% 98.0% 93.1%

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RESULTS: PERSONAL LINES



Personal lines


Growth YOY 2 4.3% 5.8% 7.0% 10.5% 10.0% 9.5% 6.4% 2.1% 1.1% 6.7% 7.2% 1.4% 8.1% 27.7%

Underwriting income (loss) 3 111 (39) (7) 110 151 62 116 76 162 175 405 363 162 226

Combined ratio 4 92.2% 102.7% 100.5% 91.9% 88.9% 95.4% 91.1% 93.8% 87.1% 96.9% 92.3% 92.7% 96.7% 95.0%

Personal auto

Direct premiums written 5 829 1,032 1,154 777 808 987 1,090 706 739 3,792 3,591 3,374 3,383 3,092

Growth YOY 6 2.5% 4.5% 5.9% 10.0% 9.4% 9.1% 5.9% 0.9% (0.6)% 5.6% 6.5% (0.3)% 9.4% 27.2%

Written insured risks (in '000) 7 928 1,164 1,373 893 899 1,135 1,307 818 840 4,358 4,159 3,900 3,902 3,584

Growth YOY 8 3.2% 2.6% 5.0% 9.4% 6.9% 9.8% 7.1% 1.5% 0.5% 4.8% 6.6% (0.1)% 8.9% 31.6%

Net premiums written 9 818 1,025 1,135 774 809 993 1,099 716 745 3,752 3,617 3,392 3,404 3,091

Net earned premiums 10 942 944 918 900 909 903 868 828 847 3,704 3,508 3,387 3,349 3,077

Total net claims 11 731 756 663 644 645 632 565 626 584 2,794 2,468 2,362 2,276 2,154

Total underwriting expenses 12 220 229 232 224 236 220 218 205 210 905 879 839 845 791

Underwriting income (loss) 13 (9) (41) 23 32 28 51 85 (3) 53 5 161 186 228 132


CAT loss ratio (including reinstatement premiums) 15 0.4% 6.2% 1.2% 0.0% 0.4% 3.4% 0.2% 0.0% (0.1)% 2.0% 1.1% 1.2% 1.4% 1.3%


Claims ratio 17 77.5% 80.1% 72.2% 71.5% 71.0% 70.0% 65.1% 75.6% 68.9% 75.4% 70.4% 69.7% 68.0% 70.0%

Expense ratio 18 23.4% 24.2% 25.4% 24.9% 25.9% 24.4% 25.2% 24.7% 24.8% 24.5% 25.0% 24.8% 25.2% 25.7%

Combined ratio 19 100.9% 104.3% 97.6% 96.4% 96.9% 94.4% 90.3% 100.3% 93.7% 99.9% 95.4% 94.5% 93.2% 95.7%

Impact of MYA on underwriting results 20 53 (3) (18) (11) (4) 4 23 (59) (22) 21 (36) (62) 44 (10)

Personal property

Direct premiums written 21 486 569 592 383 452 527 542 343 407 2,030 1,864 1,715 1,635 1,550

Growth YOY 22 7.4% 8.2% 9.3% 11.5% 11.1% 10.3% 7.6% 4.7% 4.4% 8.9% 8.6% 4.9% 5.5% 28.7%

Written insured risks (in '000) 23 562 669 701 461 547 651 664 432 514 2,393 2,294 2,192 2,221 2,225

Growth YOY 24 2.6% 2.8% 5.5% 8.2% 6.5% 6.6% 4.0% 0.7% (0.8)% 4.3% 4.7% (1.3)% (0.2)% 27.7%

Net premiums written 25 470 555 559 368 436 511 527 330 391 1,952 1,804 1,656 1,557 1,480


Total net claims 27 197 319 313 220 176 283 250 191 166 1,049 900 893 1,048 845


Underwriting income (loss) 29 120 2 (30) 78 123 11 31 79 109 170 244 177 (66) 94




Claims ratio 33 39.7% 66.2% 70.0% 48.3% 38.8% 63.7% 58.3% 46.5% 40.0% 55.8% 51.8% 55.2% 69.0% 57.8%

Expense ratio 34 35.9% 33.5% 36.7% 34.6% 33.9% 33.7% 34.4% 34.2% 33.6% 35.1% 34.1% 33.8% 35.4% 35.7%

Combined ratio 35 75.6% 99.7% 106.7% 82.9% 72.7% 97.4% 92.7% 80.7% 73.6% 90.9% 85.9% 89.0% 104.4% 93.5%

Impact of MYA on underwriting results 36 3 - (1) (1) - - 1 (3) (2) 1 (2) (4) 3 (1)

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RESULTS: COMMERCIAL LINES

(in millions of Canadian dollars, except as otherwise noted - unaudited) 2014 2016 2015 2014 2013


Commercial lines


Growth YOY 2 (0.2)% 1.7% 0.0% (0.8)% 2.9% 4.0% 4.9% 4.1% 5.7% 0.2% 4.0% 2.0% 5.2% 50.5%

Underwriting income (loss) 3 42 100 23 35 70 69 42 42 54 200 223 156 (20) 225

Combined ratio 4 93.2% 83.5% 95.9% 93.9% 88.0% 88.2% 92.6% 92.5% 90.5% 91.5% 90.3% 92.9% 100.9% 88.9%

Commercial P&C


Growth YOY 6 (2.9)% (0.3)% (0.8%) (2.3)% 2.9% 2.6% 4.4% 2.9% 4.7% (1.6)% 3.2% 1.5% 4.0% 53.7%

Written insured risks (in '000) 7 107 113 126 99 109 108 126 100 113 445 443 450 466 443

Growth YOY 8 (1.8)% 4.6% 0.0% (0.5)% (3.7)% (2.5)% 1.1% (2.0)% 1.8% 0.5% (1.6)% (3.4)% 5.2% 50.7%

Net premiums written 9 438 389 469 347 451 385 479 356 441 1,643 1,671 1,621 1,555 1,517


Total net claims 11 215 182 231 218 170 193 214 209 202 846 786 883 981 775


Underwriting income (loss) 13 45 79 7 31 83 64 33 36 53 162 216 92 (60) 126


CAT loss ratio (including reinstatement premiums) 15 4.0% 2.9% 14.5% 2.9% (0.7)% 3.9% 2.0% 2.8% 1.7% 6.1% 2.0% 3.6% 11.7% 3.5%


Claims ratio 17 51.4% 43.0% 56.9% 53.1% 40.7% 46.3% 52.5% 52.4% 49.4% 51.1% 47.9% 55.6% 63.6% 51.9%

Expense ratio 18 38.0% 38.3% 41.3% 39.3% 39.4% 38.3% 39.3% 38.5% 37.7% 39.1% 38.9% 38.6% 40.3% 39.7%

Combined ratio 19 89.4% 81.3% 98.2% 92.4% 80.1% 84.6% 91.8% 90.9% 87.1% 90.2% 86.8% 94.2% 103.9% 91.6%


Commercial auto

Direct premiums written 21 180 172 207 144 168 160 204 139 163 703 671 632 612 563

Growth YOY 22 7.6% 7.0% 1.9% 3.4% 2.7% 8.2% 6.1% 7.8% 8.8% 4.8% 6.1% 3.4% 8.8% 42.0%

Written insured risks (in '000) 23 121 118 157 105 125 127 162 109 128 501 523 520 526 477

Growth YOY 24 (3.2)% (6.5)% (3.1)% (3.5)% (2.2)% 1.2% 2.1% 1.9% 3.2% (4.2)% 0.6% (1.1)% 10.3% 46.8%

Net premiums written 25 180 171 207 143 167 159 204 139 162 701 669 631 607 545

Net earned premiums 26 188 186 166 165 168 166 162 155 159 705 651 615 603 536

Total net claims 27 142 116 100 114 132 116 107 106 114 472 461 376 387 278


Underwriting income (loss) 29 (3) 21 16 4 (13) 5 9 6 1 38 7 64 40 99



Unfavourable (favourable) PYD ratio 32 3.6% (0.7)% (3.1)% (2.0)% 1.1% 3.4% 2.5% (4.7)% (9.0)% (0.4)% 0.7% (3.6)% (0.9)% (6.9)%

Claims ratio 33 76.3% 61.9% 60.5% 69.0% 78.6% 69.7% 65.8% 68.8% 71.9% 67.1% 70.8% 61.3% 64.2% 51.6%

Expense ratio 34 25.6% 26.7% 29.8% 28.5% 29.3% 27.3% 28.6% 27.6% 27.6% 27.5% 28.2% 28.3% 29.1% 29.9%

Combined ratio 35 101.9% 88.6% 90.3% 97.5% 107.9% 97.0% 94.4% 96.4% 99.5% 94.6% 99.0% 89.6% 93.3% 81.5%


201220152016

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NET CATASTROPHES BY LINE OF BUSINESS (in millions of Canadian dollars, except as otherwise noted - unaudited) 2016 2015 2014 2013


Current year catastrophes claims (excluding reinstatement premiums)

Personal auto 1 4 59 10 - 5 30 2 - (1) 73 37 41 44 41

Personal property 2 13 91 96 10 - 31 11 - 4 210 42 140 271 151

Commercial P&C 3 16 13 55 11 (3) 16 9 11 7 95 33 58 167 50

Commercial auto 4 1 3 3 - - 4 - - - 7 4 4 4 3

Total 5 34 166 164 21 2 81 22 11 10 385 116 243 486 245

Unfavourable (favourable) prior year CAT claims development

Personal auto 6 (1) - (1) (2) - - (2) (1) 1 (4) (3) (6) (1) (1)

Personal property 7 (1) (3) (4) (1) (2) (1) (8) (6) (6) (9) (17) (45) (9) (4)

Commercial P&C 8 (5) (1) (5) 3 (3) (6) (8) (3) (2) (8) (20) (10) 2 2

Commercial auto 9 - - - (1) - - - - - (1) - - - -

Total 10 (7) (4) (10) (1) (5) (7) (18) (10) (7) (22) (40) (61) (8) (3)

Net catastrophes claims (excluding reinstatement premiums)

Personal auto 11 3 59 9 (2) 5 30 - (1) - 69 34 35 43 40

Personal property 12 12 88 92 9 (2) 30 3 (6) (2) 201 25 95 262 147

Commercial P&C 13 11 12 50 14 (6) 10 1 8 5 87 13 48 169 52

Commercial auto 14 1 3 3 (1) - 4 - - - 6 4 4 4 3

Total 15 27 162 154 20 (3) 74 4 1 3 363 76 182 478 242

HISTORICAL PRIOR YEAR CLAIMS DEVELOPMENT

2016 2015 2014 2013

Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 YTD Annual Annual Annual Annual

By line of business

Personal auto 16 (13) (11) (24) (67) (29) (58) (36) (89) (38) (115) (212) (141) (188) (59)

Personal property 17 (13) (14) (21) (40) (13) (8) (19) (30) (5) (88) (70) (71) (65) (88)

Commercial P&C 18 (43) (44) (43) (53) (34) (47) (55) (63) (21) (183) (199) (130) (115) (189)

Commercial auto 19 7 (2) (5) (3) 1 6 4 (7) (14) (3) 4 (22) (6) (36)

Total unfavourable (favourable) development 20 (62) (71) (93) (163) (75) (107) (106) (189) (78) (389) (477) (364) (374) (372)

Annualized development (as a % of opening reserves) 21 3.2% 3.6% 4.7% 8.3% 3.9% 5.5% 5.5% 9.9% 4.2% 5.0% 6.2% 4.9% 5.1% 5.7%

2016

2016 2015

2015 2014 2012

2014 2012

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(in millions of Canadian dollars, except as otherwise noted - unaudited)

# 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 & -

Original reserve 1 2,610 2,574 2,613 2,484 2,417 2,126 1,838 1,654 1,459 3,945

Reserve re-estimated

One year later 2 2,441 2,433 2,494 2,375 2,268 1,991 1,758 1,627 1,459 3,846

Two years later 3 2,412 2,432 2,294 2,174 1,956 1,762 1,602 1,442 3,697

Three years later 4 2,410 2,237 2,091 1,908 1,728 1,594 1,423 3,618

Four years later 5 2,198 2,036 1,884 1,684 1,559 1,394 3,548

Five years later 6 1,999 1,827 1,655 1,517 1,375 3,493

Six years later 7 1,797 1,621 1,500 1,350 3,393

Seven years later 8 1,591 1,479 1,345 3,381

Eight years later 9 1,465 1,328 3,376

Nine years later 10 1,318 3,343

Ten years later 11 3,327

Cumulative deficiency (redundancy) 12 (6.5)% (6.3)% (7.8)% (11.5)% (17.3)% (15.5)% (13.4)% (11.4)% (9.6)% (15.7)%

Development during Q4-2016

Deficiency (redundancy) of $(62) 13 (24) (3) 3 (14) (9) (2) (8) 1 (2) (4)

14 (0.9)% (0.1)% 0.1% (0.5)% (0.4)% (0.1)% (0.4)% 0.0% (0.1)% (0.1)%

Development during 2016Deficiency (redundancy) of $(389) 15 (169) (21) (22) (39) (37) (30) (30) (14) (10) (17)

16 (6.5)% (0.8)% (0.9)% (1.6)% (1.6)% (1.4)% (1.6)% (0.9)% (0.6)% (0.4)%

Development during Q4-2016 Total 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 & -

Personal auto 17 (13) (5) 5 12 (9) (6) (4) (2) (2) - (2)

Personal property 18 (13) (8) (1) - (3) (2) - - - 1 -

Commercial P&C 19 (43) (14) (7) (6) (4) (3) - (6) 2 (2) (3)

Commercial auto 20 7 3 - (3) 2 2 2 - 1 (1) 1

Total unfavourable (favourable) 21 (62) (24) (3) 3 (14) (9) (2) (8) 1 (2) (4)

Development during 2016 Total 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 & -

Personal auto 22 (115) (19) (1) (4) (11) (24) (23) (12) (11) (5) (5)

Personal property 23 (88) (67) (2) (5) (4) (4) (1) (1) (2) - (2)

Commercial P&C 24 (183) (76) (25) (17) (18) (12) (6) (14) (1) (4) (10)

Commercial auto 25 (3) (7) 7 4 (6) 3 - (3) - (1) -

Total unfavourable (favourable) 26 (389) (169) (21) (22) (39) (37) (30) (30) (14) (10) (17)

PRIOR YEAR CLAIMS DEVELOPMENT IN 2016

Accident year

Accident year

Accident year

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FINANCIAL POSITION

(in millions of Canadian dollars, except as otherwise noted - unaudited) 2014¹ 2016¹ 2015¹ 2014¹ 2013¹ 2012¹

Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Annual Annual Annual Annual Annual

Balance sheet

Investments

Cash and cash equivalents 1 168 137 174 221 141 185 161 186 89 168 141 89 99 172

Debt securities 2 8,801 9,132 8,776 8,640 8,709 8,667 8,502 8,573 8,684 8,801 8,709 8,684 7,909 8,757

Preferred shares 3 1,377 1,271 1,202 1,197 1,235 1,087 1,193 1,172 1,268 1,377 1,235 1,268 1,190 1,263

Common shares 4 3,635 3,404 3,211 3,132 2,971 2,894 3,053 3,107 2,992 3,635 2,971 2,992 2,644 2,376

Loans 5 405 398 449 440 448 506 485 405 407 405 448 407 419 391

Total 6 14,386 14,342 13,812 13,630 13,504 13,339 13,394 13,443 13,440 14,386 13,504 13,440 12,261 12,959

Accrued investment income 7 63 79 60 79 67 79 64 79 65 63 67 65 64 66

Premium receivables 8 3,057 3,054 3,010 2,629 2,868 2,923 2,901 2,493 2,711 3,057 2,868 2,711 2,764 2,670

Reinsurance assets 9 482 508 517 277 274 296 311 315 335 482 274 335 505 320

Financial assets related to investments 10 21 134 72 27 64 130 77 207 56 21 64 56 9 3

Income taxes receivable 11 116 158 152 130 24 21 11 9 5 116 24 5 343 105

Deferred tax assets 12 142 47 44 46 146 170 53 37 32 142 146 32 37 104

Deferred acquisition costs 13 747 760 742 671 720 730 712 631 669 747 720 669 693 705

Other assets 14 590 509 500 526 591 538 516 513 515 590 591 515 572 409

Investments in associates and joint ventures 15 543 553 519 465 396 388 391 288 313 543 396 313 255 266

Property and equipment 16 139 140 142 144 104 100 103 107 110 139 104 110 110 105

Intangible assets 17 1,302 1,303 1,291 1,284 1,285 1,274 1,265 1,249 1,202 1,302 1,285 1,202 1,164 1,153

Goodwill 18 1,403 1,346 1,312 1,283 1,272 1,268 1,265 1,268 1,206 1,403 1,272 1,206 1,076 1,027

Total assets 19 22,991 22,933 22,173 21,191 21,315 21,256 21,063 20,639 20,659 22,991 21,315 20,659 19,853 19,892

Claims liabilities 20 8,536 8,744 8,540 8,158 8,094 8,278 8,177 8,144 8,021 8,536 8,094 8,021 7,996 7,656

Unearned premiums 21 4,573 4,616 4,517 4,090 4,390 4,487 4,371 3,859 4,110 4,573 4,390 4,110 4,125 4,046

Financial liabilities related to investments 22 529 599 447 449 378 446 428 605 432 529 378 432 234 486

Income taxes payable 23 10 5 3 2 101 66 88 61 105 10 101 105 8 35

Deferred tax liabilities 24 404 280 210 175 190 174 136 153 176 404 190 176 143 223

Other liabilities 25 1,458 1,375 1,257 1,179 1,295 1,199 1,074 1,065 1,221 1,458 1,295 1,221 1,254 1,414

Debt outstanding 26 1,393 1,392 1,392 1,392 1,143 1,143 1,143 1,143 1,143 1,393 1,143 1,143 1,143 1,143

Total liabilities 27 16,903 17,011 16,366 15,445 15,591 15,793 15,417 15,030 15,208 16,903 15,591 15,208 14,903 15,003

Common shares 28 2,082 2,083 2,084 2,086 2,090 2,090 2,090 2,090 2,090 2,082 2,090 2,090 2,090 2,118

Preferred shares 29 489 489 489 489 489 489 489 489 489 489 489 489 489 489

Contributed surplus 30 129 122 117 120 119 113 111 112 115 129 119 115 116 121

Retained earnings 31 3,197 3,048 3,018 3,042 3,047 2,878 2,859 2,715 2,612 3,197 3,047 2,612 2,143 1,978

Accumulated other comprehensive income (loss) (AOCI) 32 191 180 99 9 (21) (107) 97 203 145 191 (21) 145 112 183

Shareholders' equity 33 6,088 5,922 5,807 5,746 5,724 5,463 5,646 5,609 5,451 6,088 5,724 5,451 4,950 4,889

Book value per share

Book value per share (in $) 34 42.72 41.47 40.57 40.06 39.83 37.84 39.23 38.95 37.75 42.72 39.83 37.75 33.94 33.03

Book value per share (excluding AOCI) (in $) 35 41.27 40.09 39.82 40.00 39.99 38.66 38.50 37.41 36.65 41.27 39.99 36.65 33.09 31.66

¹ Comparative periods were restated for a change in accounting policy. Please see Note 4 - Change in accounting policy to the Consolidated financial statements for the year ended December 31, 2016. Ratios, including OROE, ROE, AROE and Book value per share were not restated

as the impact is not considered to be significant.

2016¹ 2015¹

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CAPITAL MANAGEMENT AND RATING INFORMATION



Minimum capital test (MCT) and Excess capital

Total capital available 1 4,300 4,175 4,075 4,024 3,840 3,687 3,819 4,036 3,933 4,300 3,840 3,933 3,750 3,764

Total capital required 2 1,972 1,939 1,919 1,873 1,889 1,893 1,912 1,891 1,878 1,972 1,889 1,878 1,849 1,840

MCT % 3 218% 215% 212% 215% 203% 195% 200% 213% 209% 218% 203% 209% 203% 205%

Excess capital at 100% in P&C companies 4 2,328 2,236 2,156 2,151 1,951 1,794 1,907 2,145 2,055 2,328 1,951 2,055 1,901 1,924

Excess capital at 150% in P&C companies 5 1,342 1,267 1,196 1,214 1,007 848 951 1,200 1,116 1,342 1,007 1,116 977 1,004

Excess capital at 170% in P&C companies 6 947 879 813 840 629 469 569 821 740 947 629 740 607 636

Excess capital outside of the P&C companies 7 23 2 44 64 (4) (80) (5) (58) (59) 23 (4) (59) (57) (37)

Total excess capital 8 970 881 857 904 625 389 564 763 681 970 625 681 550 599

Normal course issuer bid (NCIB) program

Common shares repurchased for cancellation (in '000) 9 71 51 140 231 - - - - - 493 - - 1,791 -

Total value of common shares repurchased for cancellation 10 7 5 12 20 - - - - - 44 - - 106 -

Rating information

Long-term issuer credit ratings of IFC

A.M. Best 11 a- a- a- a- a- a- a- a- a- a- a- a- a- a-

Moody's 12 Baa1 Baa1 Baa1 Baa1 Baa1 Baa1 Baa1 Baa1 Baa1 Baa1 Baa1 Baa1 Baa1 Baa1

DBRS 13 A A A A A A(low) A(low) A(low) A(low) A A A(low) A(low) A(low)

Fitch 14 A- A- A- A- A- A- A- A-

Financial strength ratings of IFC’s principal insurance subsidiaries

A.M. Best 15 A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+

Moody's 16 A1 A1 A1 A1 A1 A1 A1 A1 A1 A1 A1 A1 A1 A1

DBRS 17 AA(low) AA(low) AA(low) AA(low) AA(low) AA(low) AA(low)

Fitch 18 AA- AA- AA- AA- AA- AA- AA- AA-

2016 2015

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INVESTMENT PORTFOLIO


#

Total portfolio

By class

Cash and cash equivalents 1 168 141 89 99 172

Short-term notes 2 105 210 124 42 214

Fixed-income securities 3 8,696 8,499 8,560 7,867 8,543

Preferred shares 4 1,377 1,235 1,268 1,190 1,263

Common shares 5 3,635 2,971 2,992 2,644 2,376

Loans 6 405 448 407 419 391

Total 7 14,386 13,504 13,440 12,261 12,959

By geography (country of incorporation)

Canada 8 87% 87% 86% 93% 97%

U.S. 9 11% 11% 10% 3% 0%

Other 10 2% 2% 4% 4% 3%

Total 11 100% 100% 100% 100% 100%

Credit quality

Fixed-income securities

AAA 12 3,957 46% 4,269 50% 4,219 49% 3,705 47% 3,701 44%

AA 13 3,100 36% 2,664 31% 2,975 35% 3,031 39% 3,467 41%

A 14 1,431 16% 1,502 18% 1,348 16% 1,052 13% 1,268 14%

BBB 15 174 2% 64 1% 10 0% 70 1% 93 1%

BB and lower (including non rated) 16 34 0% - 0% 8 0% 9 0% 14 0%

Total 17 8,696 100% 8,499 100% 8,560 100% 7,867 100% 8,543 100%

Preferred shares

P1 18 3 0% 8 1% 118 9% 100 8% 369 29%

P2 19 1,090 79% 1,000 81% 991 78% 1,042 88% 797 63%

P3 20 284 21% 227 18% 159 13% 47 4% 89 7%

Not rated 21 - 0% - 0% - 0% 1 0% 8 1%

Total 22 1,377 100% 1,235 100% 1,268 100% 1,190 100% 1,263 100%

Maturity


< 1 year 23 890 10% 1,023 12% 739 9% 782 10% 776 9%

1-5 years 24 4,695 54% 4,286 51% 4,224 49% 4,128 53% 4,529 53%

5-10 years 25 3,016 35% 3,075 36% 3,183 37% 2,844 36% 3,128 37%

Over 10 years 26 61 1% 115 1% 414 5% 113 1% 110 1%

No specific maturity 27 34 0% - 0% - 0% - 0% - 0%

Total 28 8,696 100% 8,499 100% 8,560 100% 7,867 100% 8,543 100%

Sector


Corporate 29 3,281 38% 3,565 42% 3,546 41% 2,960 38% 2,846 33%

Canadian federal government and agency 30 3,034 35% 3,092 36% 3,048 36% 2,835 36% 2,745 32%

Canadian provincial and municipal 31 2,089 24% 1,680 20% 1,751 20% 1,792 23% 2,609 31%

Supra-national and foreign 32 258 3% 162 2% 215 3% 280 4% 343 4%

Private placements 33 34 0% - 0% - 0% - 0% - 0%

Total 34 8,696 100% 8,499 100% 8,560 100% 7,867 100% 8,543 100%

20142016

Annual Annual

2015

Annual Annual Annual

2013 2012

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INVESTMENT PORTFOLIO (Cont'd)


#

Net exposure: investment mix by asset class (1)

Cash, cash equivalents and short-term notes 1 3% 4% 3% 2% 3%

Fixed income strategies 2 70% 71% 72% 73% 74%

Preferred shares 3 10% 9% 9% 10% 10%

Common equity strategies 4 14% 13% 13% 12% 10%

Loans 5 3% 3% 3% 3% 3%

Total 6 100% 100% 100% 100% 100%

Net exposure: sector mix by asset class (1)


Goverment 7 62% 58% 59% 62% 67%

Financials 8 28% 30% 29% 29% 30%

Other sectors 9 10% 12% 12% 9% 3%

Total 10 100% 100% 100% 100% 100%

Common shares

Energy 11 20% 19% 22% 38% 31%

Financials 12 16% 15% 13% 13% 14%

Materials 13 7% 8% 13% 12% 8%

Telecommunication 14 7% 8% 10% 13% 16%

Consumer discretionary 15 9% 9% 9% 10% 10%

Consumer staples 16 9% 10% 10% 4% 4%

Industrials 17 13% 12% 10% 6% 8%

Utilities 18 6% 8% 5% 4% 6%

Information technology 19 9% 7% 4% 0% 2%

Other sectors 20 4% 4% 4% 0% 1%

Total 21 100% 100% 100% 100% 100%

Preferred shares

Financials 22 76% 73% 69% 78% 78%

Energy 23 13% 15% 19% 15% 13%

Utilities 24 11% 12% 12% 7% 5%

Other sectors 25 0% 0% 0% 0% 4%

Total 26 100% 100% 100% 100% 100%

Total portfolio (2)

Goverment 27 41% 40% 41% 43% 49%

Financials 28 37% 37% 35% 38% 37%

Energy 29 5% 5% 6% 7% 6%

Other sectors 30 17% 18% 18% 12% 8%

Total 31 100% 100% 100% 100% 100%

Net exposure: by currency (1)

Canadian dollar 32 95% 95% 96% 100% 100%

U.S. dollar 33 5% 5% 4% 0% 0%

Total 34 100% 100% 100% 100% 100%

(1) Net of financial liabilities related to investments and hedging positions

(2) Excluding cash, short-term notes and loans

2016 2014 2013 20122015

Annual Annual Annual AnnualAnnual

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INVESTMENTS PERFORMANCE

(in millions of Canadian dollars, except as otherwise noted - unaudited) 2016 2015 2014 2013 2012


Net investment income

Interest income

Debt securities 1 61 59 60 62 62 64 64 65 69 242 255 267 253 254

Loans and others 2 5 7 6 5 8 6 4 8 5 23 26 21 22 22

Total 3 66 66 66 67 70 70 68 73 74 265 281 288 275 276

Dividend income

Preferred shares 4 16 14 17 14 15 13 13 13 14 61 54 55 56 58

Common shares 5 31 31 30 31 33 32 32 28 29 123 125 119 112 86

Total 6 47 45 47 45 48 45 45 41 43 184 179 174 168 144

Investment income, before expenses 7 113 111 113 112 118 115 113 114 117 449 460 462 443 420

Expenses 8 (9) (9) (9) (8) (8) (10) (9) (9) (6) (35) (36) (35) (37) (31)


Average net investments 10 13,819 13,613 13,151 13,000 13,067 12,902 12,805 13,124 12,882 13,396 12,974 12,270 11,746 11,487

Market-based yield 11 3.27% 3.27% 3.43% 3.47% 3.62% 3.55% 3.62% 3.41% 3.61% 3.36% 3.55% 3.65% 3.68% 3.63%

Net investment gains (losses)

Fixed-income strategies

Realized and unrealized gains (losses) 12 (120) (13) 19 10 (17) (22) (44) 76 38 (104) (7) 84 (132) (12)

Equity strategies

Realized and unrealized gains (losses) on:

Equity securities, net of derivatives 13 37 30 22 (23) (8) (7) 12 7 16 66 4 149 114 92

Embedded derivatives 14 (8) (6) (4) 5 (7) 18 9 18 (4) (13) 38 (3) 13 (11)

Net foreign currency gains (losses) 15 4 3 1 13 4 3 4 8 - 21 19 - - -

Impairment losses on:

Common shares 16 (4) (2) (13) (22) (44) (42) (15) (23) (46) (41) (124) (68) (57) (40)

Preferred shares 17 - - - - - (14) (17) (7) (5) - (38) (9) (22) (2)

Gains (losses) on equity strategies 18 29 25 6 (27) (55) (42) (7) 3 (39) 33 (101) 69 48 39

Other gains (losses) 19 (6) 5 3 (3) - - 22 22 (2) (1) 44 21 1 10

Net investment gains (losses) 20 (97) 17 28 (20) (72) (64) (29) 101 (3) (72) (64) 174 (83) 37

Net unrealized gains (losses) on AFS securities reported in AOCI

Fixed-income securities 21 83 165 166 140 121 118 127 183 94 83 121 94 10 81

Preferred shares 22 (67) (117) (158) (184) (111) (165) (13) 20 66 (67) (111) 66 38 121

Common shares 23 253 210 142 79 (12) (74) 36 88 54 253 (12) 54 120 63

Total 24 269 258 150 35 (2) (121) 150 291 214 269 (2) 214 168 265

(1) Fair value through profit and loss

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RECONCILIATIONS TO FINANCIAL STATEMENTS



Direct premiums written

DPW as per MD&A 1 1,961 2,193 2,458 1,681 1,908 2,095 2,344 1,575 1,775 8,293 7,922 7,461 7,345 6,854

Impact of normalization for multi-year policies 2 (7) (2) (2) (6) (11) (3) 2 (3) (15) (17) (15) (112) (26) 14

DPW (full-term) 3 1,954 2,191 2,456 1,675 1,897 2,092 2,346 1,572 1,760 8,276 7,907 7,349 7,319 6,868

Industry pools 4 (10) (7) (14) (1) 3 7 13 11 7 (32) 34 26 30 29

Jointly held insurance operations 5 (7) (14) (17) (9) (10) (13) (16) (9) (9) (47) (48) (46) (44) (43)

As per Consolidated financial statements 6 1,937 2,170 2,425 1,665 1,890 2,086 2,343 1,574 1,758 8,197 7,893 7,329 7,305 6,854

Net premiums earned

As per MD&A 7 2,043 2,036 1,937 1,930 1,948 1,930 1,865 1,792 1,830 7,946 7,535 7,207 7,014 6,571


Jevco results - month ended September 30, 2012 9 - - - - - - - - - - - - - 32

As per Consolidated financial statements 10 2,035 2,023 1,926 1,918 1,937 1,918 1,854 1,781 1,819 7,902 7,490 7,164 6,972 6,561

Underwriting expenses

As per MD&A 11 605 602 614 589 604 575 572 541 548 2,410 2,292 2,173 2,180 2,068

Difference between expected return and discount rate on pension assets 12 4 4 4 4 5 4 5 5 3 16 19 13 17 22


Jevco results - month ended September 30, 2012 14 - - - - - - - - - - - - - 9

Other underwriting revenues 15 30 31 31 31 31 31 30 30 28 123 122 100 79 -

As per Consolidated financial statements 16 635 632 646 620 636 606 602 573 574 2,533 2,417 2,271 2,262 2,085

Underwriting income (loss)

As per MD&A 17 153 61 16 145 221 131 158 118 216 375 628 519 142 451

Jointly held insurance operations 18 (1) - (1) 2 (2) (1) (1) - 1 - (4) (1) (5) (5)

Difference between expected return and discount rate on pension assets 19 (6) (7) (6) (7) (7) (8) (7) (8) (6) (26) (30) (22) (27) (22)

Jevco results - month ended September 30, 2012 20 - - - - - - - - - - - - - (1)


As per Consolidated financial statements 22 233 48 (20) 122 206 129 188 13 174 383 536 393 185 406

Net investment income

As per MD&A 23 104 102 104 104 110 105 104 105 111 414 424 427 406 389

Jointly held insurance operations 24 - - - - (1) 1 (1) - (1) - (1) (1) (1) (1)

As per Consolidated financial statements 25 104 102 104 104 109 106 103 105 110 414 423 426 405 388

Net investment gains (losses)

As per MD&A 26 (97) 17 28 (20) (72) (64) (29) 101 (3) (72) (64) 174 (83) 37

Jointly held insurance operations 27 - - - - - 1 (1) - (1) - - (1) - -

Share of net gains in investments in associates and other operating gains 28 - 2 - - 4 1 - (5) - 2 - - - -

As per Consolidated financial statements 29 (97) 19 28 (20) (68) (62) (30) 96 (4) (70) (64) 173 (83) 37

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APPENDIX 1- ADDITIONAL INFORMATION



Direct premiums written (full term)

Direct premiums written (full term) 1 1,954 2,191 2,456 1,675 1,897 2,092 2,346 1,572 1,760 8,276 7,907 7,349 7,319 6,868

Growth YOY (year over year) 2 3.0% 4.7% 4.7% 6.6% 7.8% 9.4% 8.0% 4.6% 3.4% 4.5% 7.6% 0.4% 6.6% 34.7%

By line of business

Personal auto

Direct premiums written (full term) 3 830 1,037 1,161 779 801 986 1,094 703 739 3,807 3,584 3,376 3,373 3,093

Growth YOY 4 3.6% 5.1% 6.2% 10.8% 8.4% 8.5% 6.0% 0.9% 0.7% 6.2% 6.2% 0.1% 9.1% 27.9%

Personal property

Direct premiums written (full term) 5 487 571 593 383 452 527 541 344 390 2,034 1,864 1,597 1,621 1,562

Growth YOY 6 7.7% 8.3% 9.6% 11.4% 16.1% 18.4% 17.5% 14.3% 4.3% 9.1% 16.8% (1.5)% 3.8% 29.3%

Commercial P&C

Direct premiums written (full term) 7 457 411 494 370 477 418 508 386 468 1,732 1,789 1,744 1,713 1,661

Growth YOY 8 (4.2)% (1.7)% (2.6)% (4.3)% 1.7% 1.8% 3.8% 2.7% 5.4% (3.2)% 2.6% 1.8% 3.1% 54.4%

Commercial auto

Direct premiums written (full term) 9 180 172 208 143 167 161 203 139 163 703 670 632 612 552

Growth YOY 10 7.8% 6.9% 2.0% 3.3% 2.6% 8.2% 6.0% 7.8% 8.7% 4.9% 6.0% 3.3% 10.9% 39.4%

Canadian P&C insurance industry results (estimated) Year-to-date results

(unaudited) 2014 2016 2015 2014 2013 2012

# Q3 Q2 Q1 Annual Q3 Q2 Q1 Annual Q3 Annual Annual Annual Annual

DPW growth (YTD, including industry pools)

IFC 11 4.4% 4.6% 6.6% 6.1% 5.7% 4.5% 2.8% 1.6% 4.4% 6.1% 1.6% 7.2% 34.3%

Industry benchmark 12 1.4% 1.5% 2.1% 2.7% 2.7% 2.4% 2.7% 3.1% 1.4% 2.7% 3.1% 3.5% 2.7%

Outperformance 13 3.0% 3.1% 4.5% 3.4% 3.0% 2.1% 0.1% (1.5)% 3.0% 3.4% (1.5)% 3.7% 31.6%

P&C industry 14 2.0% 1.7% 1.8% 3.3% 3.4% 3.3% n/a 3.7% 2.0% 3.3% 3.7% 3.8% 2.8%

Outperformance (underperformance) 15 2.4% 2.9% 4.8% 2.8% 2.3% 1.2% n/a (2.1)% 2.4% 2.8% (2.1)% 3.4% 31.5%

Combined ratio (YTD, including MYA)

IFC 16 97.5% 97.4% 93.8% 92.8% 94.1% 94.5% 99.2% 94.5% 97.5% 92.8% 94.5% 97.3% 93.4%


Outperformance 18 5.7% 6.8% 3.9% 5.2% 4.6% 4.1% 6.5% 6.5% 5.7% 5.2% 6.5% 4.5% 4.7%

P&C industry 19 103.4% 104.8% 96.7% 96.6% 97.5% 97.6% n/a 99.4% 103.4% 96.6% 99.4% 100.7% 96.7%

Outperformance 20 5.9% 7.4% 2.9% 3.8% 3.4% 3.1% n/a 4.9% 5.9% 3.8% 4.9% 3.4% 3.3%

ROE (last 12 months)

IFC¹ 21 11.4% 11.4% 13.6% 14.3% 15.0% 15.3% 14.3% 16.8% 11.4% 14.3% 16.8% 10.3% 16.5%


Outperformance 23 6.7% 6.9% 6.0% 4.0% 5.8% 4.4% 6.7% 8.3% 6.7% 4.0% 8.3% 4.5% 6.2%

P&C industry 24 4.7% 4.6% 7.4% 9.2% 8.8% 10.1% n/a 8.6% 4.7% 9.2% 8.6% 6.2% 10.6%

Outperformance 25 6.7% 6.8% 6.2% 5.1% 6.2% 5.2% n/a 8.2% 6.7% 5.1% 8.2% 4.1% 5.9%

¹IFC's ROE corresponds to the AROE

n/a: Q1-2015 industry results were incomplete in the MSA database

Industry data: IFC estimate based on MSA Research Inc.

P&C industry results exclude companies such as LIoyd’s Underwriters Canada, Insurance Corporation of British Columbia, Saskatchewan Government Insurance, Saskatchewan Auto Fund, Genworth Financial Mortgage Insurance Company Canada

and Canada Guaranty Mortgage Insurance Company. MSA data excludes certain Quebec regulated entities.

Industry benchmark generally consists of the 20 largest comparable companies in the P&C industry (as defined above). Our definition of industry benchmark evolves over time and reflects acquisitions and mergers in the P&C insurance industry.

AMF (Québec) chartered insurance companies are not required to report on Q1 and Q3 results. As such, we have included estimates for non-reporters in our Industry benchmark group, based on publicly information. Actual results may vary.

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