Intact Financial TSE: IFC Chief Operating Officer Patrick Barbeau said the company entered 2026 “in a very good position,” citing strong fundamentals, continued momentum in top-line growth, and market conditions that he believes “play to our strengths.” Speaking in a conference-style discussion, Barbeau pointed to Intact’s performance in 2025—including “almost a 20% ROE”—and said investors should not expect a meaningful change in growth momentum during the first quarter of 2026.
Early 2026 backdrop by market
Barbeau broke down market conditions across Intact’s key geographies. In Canada, he referenced recently released industry results for the fourth quarter/full year, saying Intact grew “about 3 points more than the industry” while producing a combined ratio “8 points favorable to the industry.” He added that the outperformance was broad-based, “including commercial lines.”
He said hard market conditions in Canadian personal lines are continuing, noting the industry is “running in the 100 zone,” with “about 5 points of inflation,” implying that “more rates is needed in that line.” Barbeau said Intact has produced a sub-95 combined ratio for a sustained period.
In personal property, Barbeau said 2025 was helped by lower catastrophe volumes, but that the industry is pricing for longer-term climate trends and remains conscious of elevated catastrophe levels seen in 2023 and 2024. He added that “more rates is also needed” in that business.
In commercial lines, Barbeau said competition is higher for “very large risks,” but he said Intact is still achieving rates needed to cover inflation “in the places where we play.” He also described a “mix shift” dynamic: average premium can decline due to lower retention on large risks and better retention on smaller risks, which can weigh on top line but “doesn’t impact your margin.”
In the U.S., Barbeau emphasized Intact participates only in specialty lines, not personal lines or standard commercial. He said the outlook for the industry footprint where Intact operates is for mid-single-digit growth in 2026, and he noted Intact has seen growth momentum in new business. He highlighted the company’s ability to steer growth toward better-performing product lines, citing 2025 as an example where lines with a combined ratio below 90% grew “7 points more” than lines with a combined ratio above 90%.
In the U.K. and Ireland, Barbeau said the company is nearing the end of remediation work on its portfolio, including the portion acquired from Direct Line. He said Intact launched the Intact brand in the fall and is integrating RSA and Direct Line offerings into a single offer under the Intact brand for more than 1,000 brokers in the U.K.
AI investments: current benefits and where management is focused
Barbeau said Intact has implemented “more than 600 AI models” at scale, which he said are generating recurring annual benefits of around CAD 200 million. He said the company’s goal is to reach around CAD 500 million by 2030 and added that, given the recent acceleration in AI toolsets, Intact believes it will exceed that target.
He outlined Intact’s priorities for AI investment in the following order:
- Loss ratio improvement through pricing, segmentation, and claims (which he described as “50–55 cents in the dollar”)
- Top-line growth via customer journeys and broker interactions
- Software engineering, given Intact’s sizable internal development teams
- Efficiency, which he said ranks lower due to controllable expenses representing about “15 cents in the dollar”
On whether AI adoption across the industry could compress Intact’s advantage, Barbeau said he sees the opposite, arguing scale matters in investment capacity, proprietary data, and the ability to deploy AI across processes. He said Intact has “more than 600 data scientists and experts” working on AI. He also cited what he called a “quantum piece”—a precise view of profitability by policy used to automate decisions in underwriting and claims—as a differentiator that supports pricing segmentation and underwriting performance.
How management views a “new zone” of ROE
Barbeau described three primary levers behind Intact’s historical ROE outperformance: segmentation/pricing and risk selection; claims management (including deep internalization of adjusting, an internal legal operation for liability defense, and supply chain involvement); and capital and investment management, including distribution income. He characterized the contribution as roughly “a third, a third, and a third.”
He said management believes Intact’s ROE has shifted from the mid-teens into the upper teens, driven by factors he framed as structural. Among them, he highlighted mix shift toward commercial and specialty lines, which he said produce higher ROE over the long term. He also pointed to performance improvement in acquired businesses, citing OneBeacon in the U.S.: acquired in the upper-90s combined ratio, targeted to low-90s, and now producing combined ratios in the 80s for “12 quarters in a row.”
Barbeau also said AI-driven pricing sophistication is being deployed beyond Canadian personal lines into commercial and specialty lines and into the U.S. and U.K., producing similar benefits in combined ratio improvement. He said Intact’s pricing decisions are made at the policy level rather than at the portfolio level, with underwriters able to see indicators including a “walkaway price.”
M&A: priorities and capacity
Barbeau said the M&A environment is “more active today than it’s been over the 12, 18 months,” while emphasizing Intact’s approach has not changed. He said the company prices acquisitions to a minimum 15% expected rate of return, noting its 15-year track record is “in the 20% range IRR,” while also considering contributions to NOIPS growth and ROE outperformance and seeking overlap with existing geographies and capabilities.
On priorities, Barbeau said:
- Canada manufacturing and distribution remains the top priority
- Global specialty lines (particularly the U.S., but also leveraging capabilities across the U.K. and Ireland and Canada) is second
- U.K. commercial lines is third, with a near-term operational focus on completing Direct Line integration
He said Intact’s “sandbox is now 10x bigger than what it was 10 years ago,” citing the scale and performance of its U.S. business and global specialty presence. Barbeau added that, based on current balance sheet and excess capital, Intact could deploy around CAD 5 billion in acquisitions before issuing shares, and said that figure could be “in the CAD 7 billion range by the end of the year” given capital creation. He said Intact looks at both smaller tuck-ins (including distribution acquisitions through BrokerLink and some MGAs) and larger deals, adding that the RSA experience has increased confidence to consider more complex transactions while remaining disciplined on overlap and returns.
What management thinks investors may be missing
Barbeau said the shift to a “new zone” of ROE may be underappreciated, and he pointed to Intact’s track record of growing NOIPS at a 12% compound rate over the past decade, saying management believes there is enough opportunity to continue that record. He also cautioned on favorable prior year development (PYD), saying it should be normalized and noting Intact operates a short-tail book where favorable development typically comes from the current and immediately prior accident years, not older vintages. He added that management is “not that worried about state of the cycle,” citing Intact’s ability to sustain ROE even when industry profitability is lower.
About Intact Financial TSE: IFC
Intact Financial Corp is a property and casualty insurance company that provides written premiums in Canada. The company distributes insurance under the Intact Insurance brand through a network of brokers and a wholly-owned subsidiary, BrokerLink, and directly to consumers through Belairdirect. Most of the company's direct premiums are written in the personal automotive space. Intact directly manages its investments through subsidiary Intact Investment Management. The vast majority of these invested assets are fixed-income securities.
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