Intact CFO talks auto strategy, biggest portfolio risks

When it comes to remaining profitable in personal auto, Canada’s largest carrier is closely monitoring its Alberta portfolio, the impact of tariffs, and its approach to long-tail risks, Ken Anderson, executive vice president and chief financial officer of Intact Financial Corporation, said in a fireside chat Wednesday. 

“Those are probably the three areas in personal auto, from a risk point of view, that we focus on,” Anderson said at the National Bank Financial’s Canadian Financial Services Conference in Montreal. 

In Alberta in particular, Intact is at the margin of becoming profitable in personal auto, Anderson adds. Intact wrote $1.1 billion in Alberta auto premiums in 2023, giving it a market share of 27.2%, according to Canadian Underwriter’s 2024 Stats Guide, which uses data supplied by MSA Research.

As of 2024 Q4, the carrier’s national auto portfolio is growing at a double-digit rate and is maintaining its sub-95% combined ratio, Anderson says.  

Specifically, direct premiums written increased by 12%, and unit growth by 3%. The combined ratio for the quarter was 94.2%, according to Intact’s latest results.  

“We’re starting to see unit growth emerge. We’re comfortable with that because we’re running auto now in that combined ratio zone, which is generating mid-teens [return on equity],” he says.  

“So if we’re able to run at a sub-95 combined ratio, we’re certainly comfortable growing — maybe outside of Alberta, I would say — which is probably the one area that is a little more problematic, as we all know,” he says. “But beyond that, the auto portfolio is performing well.” 

Alberta auto  

Insurers in Alberta have seen their profitability nosedive due to a series of rate interventions by the provincial government.  

As for how Intact is performing in Alberta, “We’re at the margin, in the zone of getting profitable, but that’s an area we’re watching very closely,” Anderson says. “We’re probably marginally in a better place than we were six to nine months ago.” 

Alberta’s United Conservative Party implemented a 5% rate cap on auto insurance premiums in January, with an additional 2.5% surcharge to account for natural disaster-related costs from last year’s Jasper wildfire and Calgary hailstorm. That’s a 7.5% total cap on rates in 2025, up from the 3.7% rate cap instituted in 2024. 

Earlier this week, the UCP announced Bill 47, which will deliver a type of no-fault insurance designed to largely eliminate litigation from the auto insurance system and drive down litigation-related claims costs. If passed, the privately delivered model will be effective Jan. 1, 2027.  

Until then, the 5% rate cap will remain in place. It’s unclear if the 2.5% surcharge will extend beyond 2025.  

Before the provincial government announced its no-fault plan in late 2024, Intact’s CEO Charles Brindamour said the rate cap was causing the company to lose its “appetite” for writing Alberta auto. 

Brindamour said at the time the company wanted to “lean in” to its auto business in other provinces. “I’d say the exception here for me remains Alberta, where there’s this artificial cap that is below inflation.” 

Of the current 7.5% rate cap, Intact would prefer it not be in place, “but it’s better to get that than get nothing,” says Anderson. “We have been successful on the new business side, where the rate cap doesn’t apply.” 

Under the current rate cap regime, if drivers shop around, change their vehicle, move neighbourhoods, or move into Alberta from out of province, they might be subject to a new insurers’ rating methodology, and the cap does not apply, Matt Hands, vice president of insurance at RateHub, explained to Canadian Underwriter when the 5% rate cap was first announced. 

Tariffs and reserves 

While tariffs present a risk to personal auto profitability, it’s one that Intact feels shielded against, Anderson says.  

“We’re pretty immunized, I would say, in terms of our loss cost — only about 13% of our loss cost is imported. And we feel [we’re] in a good position, therefore, if there’s pressure on that component, from an inflation point of view, to be able to deal with that.” 

On an Intact earnings call in February, Brindamour said the company is positioned well, both operationally and financially, to address tariff risk.  

As for how the company responds to other long-tail risks, Anderson says that’s where conservative reserving comes in. 

Intact, he says, sets aside reserve funds cautiously to cover future claims and prevent financial surprises from unexpected risks.  

“So conservative reserving on the long-tail is important to ensure you don’t get surprises when it comes to personal auto — that’s something that we focus on,” he says. “Our reserving has been conservative historically because we have that long-tail element to it, but we’ve been very successful in spotting the trends ahead of our competitors and adjusting our pricing and our segmentation accordingly.” 

Feature image by iStock.com/Jinda Noipho