Q2 2024 Intact Financial Corp Earnings Call

Operator: Welcome to Cision. Please hold for the next available operator. Thanks for calling the Conferencing Center, which call are you joining? Hi, Intact Financial. Your first and last name. This is for Rachel Smith. The company you're with, era a i e r a, The conference is now being recorded. [inaudible] Thanks for watching! https://www.youtube.com.uk Good morning, ladies and gentlemen and welcome to the Intact Financial Corporation Q2 results conference call. At this time, all lines are now listen only.

Operator: Good morning ladies and gentlemen and welcome to the Intact Financial Corporation Q-tip, for Results Conference Call. At this time, all lines and the listen only.

Unknown Executive: Good morning, ladies and gentlemen, and welcome to the Intact Financial Corporation Q2 2024 results conference call. At this time, all lines in the lesson-only mode.

Good morning, ladies and gentlemen, and welcome to the intact Financial Corporation Q2, 'twenty 'twenty four results conference call. At this time all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session.

Unknown Executive: Following the presentation, we'll conduct a question-and-answer session. If at any time during this call, you require immediate assistance, please best start zero for the operator.

Operator: Following the presentation, we'll conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on July 31st. I would now like to turn the conference over to Kevin Lamy, Deputy Senior Vice President and Head of Financial Performance. Thank you, Julie.

At any time during this call you require immediate assistance. Please press star zero.

Unknown Executive: This call is being recorded on July 31, 2024.

Sure.

Speaker Change: Call is being recorded on July 31st 'twenty 'twenty four I would now like to turn the conference over to Kevin Let me Deputy Senior Vice President and head of our financial performance. Please go ahead.

Unknown Executive: I would not like to end the conference over to Kevin Lurman. Okay, the beauty Senior Vice President and Head of a Financial Performance, please go ahead.

Unknown Executive: Thank you, Judy.

Guillaume Lamy: Good morning, everyone, and thank you for joining the call to discuss our second quarter financial results. A link to our live webcast and materials for this call have been posted on our website at intactfc.com under the investor tab. Before we start, please refer to slide 2 for a disclaimer regarding the use of forward-looking statements, which form part of this morning's remarks, and slide 3 for a note on how to use non-gap financial measures and on terms used in this presentation.

Kevin: Thank you Tony Good morning, everyone and thank you for joining the call to discuss our second quarter financial results.

Kevin Lurman: Good morning, everyone, and thank you for joining the call to discuss our second quarter financial results. A link to our live webcast and materials for this call. I've been posted on our website at IntactFC.com, under the Investor tab. Before we start, please refer to slide two for the disclaimer regarding the use of forward-looking statements, which form part of this morning. And slide three for her note on how to use of non-GAAP financial measures and on terms used in this presentation.

Speaker Change: Link to our live webcast and nothing else will just calls have been posted on our website at <unk>.

Kevin: Etsy Dot com under the Investor tab.

Speaker Change: Before we start please refer to slide two for a disclaimer regarding the use of forward looking statements, which form part of this morning's remarks on slide three.

Kevin: Our use of non-GAAP financial measures and on terms used in this presentation.

Unknown Executive: The discuss our results today.

Guillaume Lamy: To discuss our results today, I have with me our CEO, Charles Brindamour, our CFO, Louis Marcotte, Patrick Barbeau, Chief Operating Officer, Darren Godfrey, Executive Vice President and Chief Underwriting Officer for Global Specialty Lines, Guillaume Lamy, Senior Vice President, Personal Lines, and Ken Anderson, Executive Vice President and CFO, UK&I. We will begin with prepared remarks followed by Q&A. With that, I will turn it all over to Charles. Good morning, everyone.

Kevin: Let's discuss our results to date.

Charles Brindamour: I have with me our CEO, Charles Brindamour, our CFO, Louis Marcotte, Patrick Barbeau, Chief Operating Officer, Darren Gutfrey, Executive Vice President and Chief Underwriting Officer for Global Specialty Lines, Guillaume Lamy, Senior Vice President, Personal Lines, and Ken Anderson, Executive Vice President and CFO UKNI.

Speaker Change: With me, our CEO Charles <unk>, our CFO.

Darin: I think back bolt Chief operating officer Darin.

Speaker Change: Darren Godfrey Executive Vice President and Chief underwriting Officer, our global specialty lines beyond any senior Vice President personal Alliance and Ken Anderson Executive Vice President and CFO.

Unknown Executive: We will begin with prepared remarks, followed by Q&A.

Speaker Change: We will begin with prepared remarks, followed by Q&A.

Charles Brindamour: But that I will turn it all over to Charles.

Speaker Change: I will turn the call over to Charles.

Charles Brindamour: Good morning, everyone. Thank you for joining us today. I want to take a minute to acknowledge the extreme weather events across Canada over the last few weeks. These are tough times with the loss of homes, the destruction of businesses, and stressful evacuations. We're focused on providing support to customers at any time of need. Plains, teams, on-site and wall-fire defense systems have been really quick to respond. We're proactively contacting customers to assess their situation, providing funding for additional living expenses, and our present on the ground we're possible to begin rebuilding efforts. It's in these moments that we're reminded of how important our purpose is.

Charles Joseph Gaston Brindamour: Thank you for joining us today. I want to take a minute to acknowledge the extreme weather events across Canada over the last few weeks. These are tough times with the loss of homes, destruction of businesses, and stressful evacuation. We're focused on providing support to customers at a time of need. On-site and wildfire defense systems have been really quick to respond.

Charles: Good morning, everyone. Thank you for joining us today.

Speaker Change: I wanted to take a minute to acknowledge the extreme weather events across Canada over the last few weeks.

Speaker Change: These are tough times with the loss of homes district disruption of businesses and stressful evacuations.

Charles: We're focused on providing support to customers any time of need.

Speaker Change: <unk>.

Speaker Change: On slide and wildfire defense systems have been really quick to respond.

Charles Joseph Gaston Brindamour: We're proactively contacting customers to assess their situation, providing funding for additional living expenses, and are present on the ground where possible to begin rebuilding it. It's in these moments that we're reminded of how important our purpose is, to help people, businesses, and society prosper in good times and be resilient in Bad Times. As for our second quarter results, Yesterday evening, we announced net operating income per share of $4.86, which doubled since last.

Speaker Change: We are proactively contacting customers to assess their situation <unk>.

Speaker Change: Providing funding for additional living expenses.

Speaker Change: And our presence on the ground where possible to begin rebuilding efforts.

Speaker Change: It's in these moments that we're reminded of how important our purpose.

Speaker Change: Is.

Charles Brindamour: That's to help people, businesses, and society prosper in good times and be resilient in bad times.

Speaker Change: That is to help people businesses and society.

Speaker Change: Prosper in good times and be resilient.

Speaker Change: In bad times.

Charles Brindamour: As for our second quarter results, yesterday evening we announced net operating income per share of $4.86, which doubled since last year. This was on the back of strong on the writing performance in all lines of business, as well as solid growth in distribution and investment income. Top line momentum is strong at 6%, led by double-digit growth in personal life. And while the market and commercial lines is changing, it remains favorable, and we expect the industry growth to be at least mid-single digits for the next 12 months. As such, we're quite positive about our own growth outlook.

Speaker Change: As for our second quarter results, yes.

Speaker Change: Yesterday evening, we announced net.

Speaker Change: Income per share of $4 86, which doubled since last year.

Charles Joseph Gaston Brindamour: This was on the back of strong underwriting performance in all lines of business, as well as solid growth in distribution and investment. Top line momentum is strong at 6%, led by double-digit growth in the purse line. And while the market and commercial lines are changing, it remains favorable, and we expect industry growth to be at least mid-single digits for the next 12 months. As such, we're quite positive about our own growth outcome.

Speaker Change: This was on the back of strong underwriting performance.

Speaker Change: All lines of business as well as solid growth in distribution and investment income.

Speaker Change: Top line momentum is strong at 6%.

Speaker Change: Led by double digit growth in personal lines.

Speaker Change: And while the market in commercial lines is changing its remains favorable and.

Speaker Change: And we expect the industry growth to be at least mid single digits for the next 12 months.

Speaker Change: As such we are.

Speaker Change: Quite positive about our loan growth outlook.

Charles Brindamour: Our combined ratio was excellent at 87.1%, 9 points better than last year. This reflected a two-point improvement in our underlying performance, driven by growth in the most profitable segments and favorable market conditions. The faster few losses were also low for a second quarter, in contrast to the severe weather events reported last year. Overall, with our operations performing really well, operating our waisted at 17 percent, up 4 points year-over-year, and we maintain our vantage sheet in a position of strength with an increased 2.9 billion of total capital margin and leverage in line with our 20 percent target.

Charles Joseph Gaston Brindamour: Our combined ratio was excellent at 87.1%, nine points better than last year. This reflected a two point improvement in our underlying performance, driven by growth in the most profitable segments and favorable market conditions. Catastrophe losses were also low for a second quarter in contrast to the severe weather events reported last year.

Speaker Change: Our combined ratio was excellent at 87, 1%.

Speaker Change: <unk> nine points better than last year.

Speaker Change: This reflected a two point improvement in our underlying performance.

Speaker Change: Driven by growth in the most profitable segments and favorable market conditions.

Speaker Change: Catastrophe losses were also low for our second quarter.

Speaker Change: Contrast to the severe weather events reported last year.

Charles Joseph Gaston Brindamour: Overall, our operations are performing really well. Operating ROE stood at 17%, up 4 points year over year. And we maintain our balance sheet in a position of strength with an increased $2.9 billion of total capital margin and leverage in line with our 20% target. Now, let me provide some color on the results and outlook by line of business, starting with Canada. So personal auto premiums grew 11% in the quarter, up five points from a year ago. Topline momentum reflected both rate increases and customer growth. The industry continues to face profitability challenges and is pursuing corrective measures.

Speaker Change: Overall with our operations performing really well.

Speaker Change: Operating ROE stood at 17% up four points year over year.

Speaker Change: And we maintain our balance sheet in a position of strength with an increased $2 9 billion of total capital margin.

Speaker Change: And leverage in line with our 20% target.

Charles Brindamour: Now, let me provide some color on the results and outlook by line of business, starting with Canada. So in personal auto, premiums grew 11 percent in the quarter, up 5 points from a year ago. Top line momentum reflected both rate increases and customer growth. The industry continues to face profitability challenges and is pursuing corrective measures. As such, we expect hard market conditions to prevail over the next 12 months, and industry growth to be in the double digits. This environment placed to our strength given early action, advanced segmentation, and deep supply chains. Our brand distribution and digital leadership help us grow in this tough environment.

Speaker Change: Now, let me provide some color on the results and outlook by line of business.

Speaker Change: Starting with Canada.

Speaker Change: So.

Speaker Change: So on the personal auto premiums grew 11% in the quarter up five points from a year ago.

Speaker Change: Offline momentum reflected both rate increases and customer growth.

Speaker Change: The industry continues to face profitability challenges and is pursuing corrective measures.

Charles Joseph Gaston Brindamour: As such, we expect hard market conditions to prevail over the next 12 months and industry growth to be in the double digits. This environment plays to our strength, given early action, advanced segmentation, and deep supply chains. Our brand distribution and digital leadership help us grow in this tough environment. And the combined ratio in Ottawa is solid at 91.4% in a seasonally favorable quarter.

Speaker Change: As such we expect hard market conditions to prevail over the next 12 months and industry growth to be in the double digits.

Speaker Change: This environment plays to our strength given early action.

Speaker Change: Segmentation.

Speaker Change: And deep supply chains.

Speaker Change: Our brand distribution and digital leadership.

Speaker Change: Help us grow in this tough environment.

Charles Brindamour: And the combined ratio in auto was solid at 91.4 percent in a season-eat-fairable quarter. Underlined performance was strong, improving three points year-over-year, which offset lower-fairable prior year development. As a result, we remain comfortable with our sub 95 guidance for this business in 24.

Speaker Change: And the combined ratio in auto was solid at 91, 4%.

Speaker Change: In a seasonally favorable quarter.

Charles Joseph Gaston Brindamour: Underlying performance was strong, improving three points year over year, which offset lower favorable prior year development. As a result, we remain comfortable with our sub-95 guidance for this business in 2025. Moving now to personal property in Canada.

Speaker Change: Underlying performance was strong improving three points year over year, which offset lower favorable prior year development.

Speaker Change: As a result, we remain comfortable with our sub 95 guidance for this business in 'twenty four.

Charles Brindamour: Moving now to personal property in Canada, premium growth was 9 percent in the quarter driven by our rate actions and continued customer growth. We expect the current hard market conditions to persist over the next 12 months, and industry growth could reach double digits. The combined ratio was very strong at 78 percent, with low cat losses in a typically active season. Underlined performance was robust, improving 9 points year-over-year as we reacted promptly to early signs of severity pressures last year and heavy cat losses.

Charles Joseph Gaston Brindamour: Premium growth was 9% in the quarter, driven by our rate actions and continued customer growth. We expect the current hard market conditions to persist over the next 12 months, and industry growth could reach double digits. Combined ratio is very strong at 78% with low cap losses in a typically active season. Underlying performance was robust, improving nine points year over year, as we reacted promptly to early signs of severity pressures last year and heavy cap losses and Commercial Lines. Premium growth was 1% in the quarter with a very strong combined ratio of 83.6%. Rate increases were healthy and in the mid-single digits.

Speaker Change: Moving now to personal property team, Canada premium growth was 9% in the quarter driven by our rate actions and continued customer growth.

Speaker Change: We expect the current hard market conditions to persist over the next 12 months and industry growth could reach double digits.

Speaker Change: Finally, schuh was very strong at 78% with low cat losses, and it typically active season.

Speaker Change: Underlying performance was.

Speaker Change: <unk> robust improving nine points year over year.

Speaker Change: As we reacted promptly to early signs of severity pressures last year.

Speaker Change: Heavy cat losses.

Charles Brindamour: In commercial lines, premium growth was 1 percent in the quarter with a very strong combined ratio of 83.6 percent. Senate. Red increases were healthy and in the mid-single digits. This was domainly upset by increased competition for large accounts, which was evident in 2-1 and continued through Q-2. Given our focus in the mid-market space, we're really keen to grow in this environment and out of the means to do so.

Speaker Change: In commercial lines premium growth was 1% in the quarter with very strong combined ratio of 83, 6%.

Speaker Change: Rate increases were healthy and in the mid single digits.

Charles Joseph Gaston Brindamour: This was though mainly upset by increased competition for large accounts which was evident in Q1 and continued through Q2. Given our focus in the mid-market space, we're really keen to grow in this environment and have the means to do so. Moving now to our UK and I business, premium growth was 42% in the first half, mainly due to the direct line transaction. Organic growth was 6%, driven by REIT actions and solid new business.

Speaker Change: Was due mainly offset by increased competition for large accounts, which was evident in Q1 and continued through Q2.

Speaker Change: Given our focus in the mid market space, we're really keen to grow in this environment means to do so.

Charles Brindamour: Moving now to our U.K. and in business, premium growth was 42% in the quarter, mainly due to the direct line transaction. Organic growth was 6% driven by red actions and solid new business. The combined ratio was healthy at 92.2%, in line with our expectations as we take a cautious stance on the recently acquired direct line business. Integration is progressing well as we've begun the migration of customers to the RSA platform. Going forward, we're well positioned to deliver a sustainably low-90s performance in this business.

Speaker Change: Moving now to our U K ni business premium growth.

Speaker Change: 42% in the quarter, mainly due to the direct line transaction.

Speaker Change: Organic growth was 6% driven by rate actions and solid new business.

Charles Joseph Gaston Brindamour: The combined ratio was healthy at 92.2%, in line with our expectations as we take a cautious stance on the recently acquired direct line, integration is progressing well as we've begun the migration of customers to the RSA platform. Going forward, we're well positioned to deliver a sustainably low 90s performance in this. In the U.S., our premiums grew 1% in the quarter. Strategy is very segmented.

Speaker Change: The combined ratio was healthy at 92, 2% in.

Speaker Change: In line with our expectations as we take.

Speaker Change: Our cautious stance on the recently acquired direct client business.

Speaker Change: Integration is progressing well as we began the migration of customers to the RSA platform.

Speaker Change: Going forward, we are well.

Speaker Change: Well positioned to deliver a sustainably low ninety's performance in this business.

Charles Brindamour: In the U.S. Our premiums grew 1% in the quarter. Our strategy is very segmented. Growth in our most profitable lines is strong, while corrective actions are being applied on underperforming segments. The environment remains favorable, though uneven across lines and still provides good growth opportunities. The combined ratio was solid at 88.5% in the quarter, and the business remains well positioned to maintain a low-90s or better performance.

Speaker Change: Yes.

Speaker Change: In the U S. Our premiums grew 1% in the quarter our strategy is very segmented.

Charles Joseph Gaston Brindamour: Growth in our most profitable lines is strong, while corrective actions are being applied to underperforming sectors. The environment remains favorable, though uneven across lines, and still provides good growth reports. The combined ratio was solid at 88.5% in the quarter, and the business remains well positioned to maintain a low 90s or better performance. Our team continues to execute with rigor and discipline against our strategic priorities. Let me highlight important milestones and initiatives delivered over the past few months. A broker link further consolidated the market, successfully closing 9 acquisitions this quarter, and has now reached $4 billion in annual premium. The business is well on track to achieve its ambition of $5 billion in annual premiums by 2025.

Speaker Change: Growth in our most profitable lines is strong while corrective actions are being applied on underperforming segments.

Speaker Change: The environment remains favorable do uneven across lines and still provides good growth opportunities.

Speaker Change: Combined ratio was solid at 88, 5% in the quarter and the business remains well positioned to maintain a low nineties are better performance.

Charles Brindamour: Our team continues to execute with figure and discipline against our strategic priorities. Let me highlight important milestones and initiatives delivered for the past few months. In ten of the broker-length further consolidated the market, successfully closing nine acquisitions this quarter, and I was now reach four billion in annual premiums. The business is well on track to achieve its ambition of five billion in annual premiums by 2025. Ongoing investments on the digital and branding front have enabled their direct and impact insurance to capitalize on increased shopping traffic, with a 39% increase in our strong growth, especially in our direct distribution business, which grew by double digits in the quarter.

Speaker Change: Our team continues to execute with rigor and discipline against our strategic priorities.

Speaker Change: Let me highlight important milestones and initiatives delivered over the past few months.

Speaker Change: In Canada broker link further consolidated the market.

Speaker Change: Successfully closing nine acquisitions this quarter.

Speaker Change: <unk> now reached 4 billion in annual premiums the business is well on track to achieve its ambition.

Speaker Change: <unk> 5 billion in annual premiums by 2025.

Charles Joseph Gaston Brindamour: Ongoing investments on the digital and branding front have enabled Behr Direct and Intact Insurance to capitalize on increased shopping traffic, with a 39% increase in our Web Influence Quotes this year. This has led to strong growth, especially in our direct distribution business, which grew by double digits in the quarter. The expertise, data, and AI that we've built over the years in personal lines, then in regular commercial lines, is now being leveraged within specialty lines. NS models for property coverages in the U.S. are now being deployed.

Speaker Change: Ongoing investments on the digital and branding front have enabled <unk> correct and in fact insurance to capitalize on increased shopping traffic.

Speaker Change: With a 39% increase in our web influenced quotes this year.

Speaker Change: This led to strong growth, especially in our direct distribution business wins.

Speaker Change: <unk> grew by double digits in the quarter.

Charles Brindamour: The expertise and data and AI that we've built over the years in personal lines, then in regular commercial lines, is now being leveraged within specialty lines. Enhance models for property coverages in the U.S. are now being deployed. While our global specialty lines performance is already really good, there remains, and my view is, a lot of room to improve from a sophistication point of view. We continue to invest in our supply chain capabilities as well, a key driver of our underwriting outperformance. Five new claim service centers were open in Q2. Bringing the total 37 locations across Canada.

Speaker Change: The expertise and data and AI that we built over the years in personal lines than in regular commercial lines is now being leveraged within specialty lines.

Speaker Change: And then it's models for property coverages in the U S are now being deployed.

Charles Joseph Gaston Brindamour: Well, our global specialty lines performance is already really good, but there remains, in my view, a lot of room to improve from a sophistication point of view. We continue to invest in our supply chain capabilities as well, a key driver of our underwriting output. Five new claim service centers were opened in Q2, bringing the total to 37 locations across Canada.

Speaker Change: While our global specialty lines performance is already really good.

Speaker Change: There remains in my view a lot of room to improve from a sophistication point of view.

Speaker Change: We continue to invest in our supply chain capabilities as well a key driver of our underwriting outperformance.

Speaker Change: Five new claim service centers were opened in Q2.

Speaker Change: Bringing the totaled 37 locations across Canada.

Charles Brindamour: On the climate front, recent events have shown that we need to double down on our climate adaptation efforts. Since 2010, we've engaged with cities in Canada from coast to coast by providing funding of over $25 million to more than 100 climate adaptation projects. These are focused on helping communities become more resilient. And we're providing an additional $2 million in our municipal grants program to help communities adapt to extreme weather events.

Charles Joseph Gaston Brindamour: On the climate front, recent events have shown that we need to double down on our climate adaptation efforts. Since 2010, we've engaged with cities in Canada from coast to coast by providing funding of over $25 million for more than 100 climate adaptation projects. These are focused on helping communities become more resilient, and we're providing an additional $2 million in our municipal grants program to help communities adapt to Extreme Weather. June 1st this year marked the three-year anniversary of the RSA acquisition.

Speaker Change: On the climate front recent events have shown that we need to double down on our climate adaptation efforts.

Speaker Change: Since 2010, we've engaged engaged with cities in Canada from coast to coast by providing funding of over $25 million to more than 100 climate that a patient projects.

Speaker Change: These are focused on helping communities become more resilient.

Speaker Change: And we're providing an additional $2 million in our municipal grants program to help communities adapt to extreme weather events.

Charles Brindamour: June 1st this year marked the three-year anniversary of the Financially. With both IRR and net operating income for share accretion above 20%. And looking forward, the platform we've built is impressive when a meaningfully larger and more resilient footprint. We've become a global specialty line leader with more than 6 billion of premiums worldwide. We also now have a new pipeline of growth in the UK, which is on the path to delivering mid-teens operating RWE. And we have substantially expanded our scale advantage in Canada, where we're more than twice the size of number two in a highly fragmented market.

Speaker Change: June 1st this year marked the three year anniversary of the RSC acquisition.

Charles Joseph Gaston Brindamour: A landmark transaction, both strategically and financially, with both IRR and net operating income per share accretion above 20%, and looking forward. The platform we've built is impressive, with a meaningfully larger and more resilient footprint. We've become a global specialty lines leader with more than $6 billion of premiums worldwide.

Speaker Change: The landmark transaction for us.

Speaker Change: Strategically and financially.

Speaker Change: With both IRR and net operating income per share accretion above 20%.

Speaker Change: Looking forward.

Speaker Change: The platform, we built is impressive when a meaningfully larger and more resilient footprint.

Speaker Change: We've become a global specialty lines leader with more than $6 billion premiums worldwide.

Charles Joseph Gaston Brindamour: We also now have a new pipeline of growth in the UK, which is on the path to delivering mid-teens operating ROI. And we have substantially expanded our scale advantage in Canada, where we're more than twice the size of number two in a highly fragmented market. With an overall OROE in the high teens and a balance sheet in a position of strength, we're very well positioned to invest in growth and achieve our financial objectives in the years ahead. And with that, I'll turn the call over to our CFO, Louis Marcotte. Thanks, Charles, and good morning, everyone.

Speaker Change: We also now have a new pipeline of growth in the U K, which is on the path to delivering mid teens operating Roe.

Speaker Change: And we have substantially expanded our scale advantage in Canada, where we are more than twice the size of number two in a highly fragmented market.

Charles Brindamour: With an overall RWE and the high teens and a balance sheet and a position of strength, we're very well positioned to invest in growth and achieve our financial objectives in the years ahead.

Speaker Change: With an overall ROE in the high teens.

Speaker Change: The balance sheet in a position of strength.

Speaker Change: We're very well positioned to invest in growth and achieve our financial objectives in the years ahead.

Louis Marcotte: And with that, I'll turn the call over to our CFO. We love that.

Speaker Change: And with that I'll turn the call over to our CFO.

Speaker Change: Right.

Louis Marcotte: Thanks, Charles.

Speaker Change: Thanks, Charles and good morning, everyone.

Louis Marcotte: Good morning, everyone. This quarter is a further proof point that our strategic actions in recent years and are focused on outperformance is paying off. Strong underwriting performance as well as robust investment and distribution income growth have all contributed to an operating return on equity of 17%. It is worth noting that this return still includes the impact of the $600 million of catastrophe losses from Q3 last year. The catastrophe losses totaled $96 million this quarter Q2 and reached $193 million for the first half of 2024. While this is below expectations, we still have six months to go in 24.

Louis Marcotte: This quarter is a further proof point that our strategic actions in recent years and our focus on outperformance is paying off. Strong underwriting performance as well as robust investment in distribution income growth have all contributed to an operating return on equity of 17%. It is worth noting that this return still includes the impact of the $600 million of catastrophe losses from Q3 last year. Capacity losses totaled $96 million this quarter and reached $193 million for the first half of 2024. While this is below expectation, we still have six months to go in 24.

Speaker Change: This quarter is a further proof point that our strategic actions in recent years and our focus on the outperformance is paying off.

Speaker Change: Strong underwriting performance as well as robust investment and distribution income growth have all contributed to an operating return on equity of 17%.

Speaker Change: It is worth noting that this return still includes the impact of the $600 million of catastrophe losses from Q3 last year.

Speaker Change: Yeah.

Speaker Change: Catastrophe losses totaled $96 million this quarter Q2, and reached $193 million for the first half of 2024.

Speaker Change: While this is below expectations.

Speaker Change: We still have six months to go in 'twenty four.

Louis Marcotte: We have the recent floods in Toronto, and we are also monitoring the impact of the forest fires in Jasper, Alberta. Although we expect significant losses from these two events, we remain comfortable with our guidance of $900 million on an annual basis. Bigger bull prior year development of 4.7% was in line with last year and remained at the higher end of our guidance of 2 to 4% overall. This was driven by healthy development across all lines of business, reflecting our prudent approach to reserving, as well as favorable development on the elevated catastrophe losses from last year.

Louis Marcotte: We had the recent floods in Toronto, and we are also monitoring the impact of the forest fires in Jasper, Alberta. Although we expect significant losses from these two events, we remain comfortable with our guidance of $900 million on an annual basis.

Speaker Change: We had the recent floods in Toronto and we are also monitoring the impact of the forest fires and Jasper Alberta.

Speaker Change: Although we expect significant losses from these two events.

Speaker Change: We remain comfortable with our guidance of $900 million on an annual basis.

Louis Marcotte: Favorable priority development of 4.7% was in line with last year and remained at the higher end of our guidance of 2-4% overall. This was driven by healthy development across all lines of business. Reflecting our prudent approach to reserving, as well as favorable developments on the elevated catastrophe losses from last year, the consolidated expense ratio of 34.1% in a quarter was in line with the prior year, and while there are some movements by quarter, we continue to expect the full year ratio to land within the range of 33 to 34%. Operating net investment income increased by 19% to $387 million in the quarter, driven by higher reinvestment yields captured in the latter half of 2020, given persisting high short-term yields.

Speaker Change: Favorable prior year development of four 7% was in line with last year and remains at the higher end of our guidance of 2% to 4% overall.

Speaker Change: This was driven by healthy development across all lines of business.

Speaker Change: Selecting our prudent approach to reserving as.

Speaker Change: As well as favorable development on the elevated catastrophe losses from last year.

Louis Marcotte: last year. The consolidated expense ratio of 34.1% in a quarter was in line with prior year, and while there are some movements by quarter, we continue to expect the full year ratio to land within the range of 33 to 34%. Operating net investment income increased by 19% to $387 million in a quarter, driven by higher reinvestment yields, captured in the latter half of 2023. Given persisting high short-term yields, we expect investment income to be north of $1.5 billion in 2024. Distribution income was $169 million in a quarter, an increase of 23% versus last year on the back of higher revenues from solid organic growth and robust M&A activities in a latter part of 2023.

Speaker Change: The consolidated expense ratio was 34, 1% in the quarter was in line with prior year and while there are some movements by quarter. We continue to expect the full year ratio to land within the range of 33% to 34%.

Speaker Change: Operating net investment income increased by 19% to $387 million in the quarter.

Speaker Change: Driven by higher reinvestment yields captured in the latter half of 2023.

Speaker Change: Given persisting high short term yields.

Louis Marcotte: We expect investment income to be north of $1.5 billion in 2020. Distribution income was $169 million and a quarter, an increase of 23% versus last year, on the back of higher revenues from solid organic growth and robust M&A activities in the latter part of 2020. With this growth momentum, led by our wholly owned distributor, BrokerLink, and a healthy pipeline for acquisition, distribution income remains on course to deliver growth of at least 10% in 2021. However, our operating effective tax rate was lower than expected at 19.5% in the quarter.

Speaker Change: We expect investment income to be north of one $5 billion in 2024.

Speaker Change: Distribution income was $169 million in the quarter, an increase of 23% versus last year on the back of higher revenues from solid organic growth.

Speaker Change: And robust M&A activities in the latter part of 'twenty three.

Louis Marcotte: With this growth momentum led by our only-owned distributor, Broker Link, and a healthy pipeline for acquisitions, distribution income remains on course to deliver growth of at least 10% in 2024. Our operating effective tax rate was lower than expected at 19.4% or 5% in the quarter. This reflected the impact of new Canadian tax legislations recently enacted, offset by tax recoveries related to the increasing profitability in our UK operations. Looking ahead, we expect our operating effective tax rate to be around 22 to 23%. Overall, net operating income per share grew 108% in a quarter, a third of which was attributable to strong underlying performance in all geographies, as well as stronger investment in distribution results; the remainder from lower cat losses.

Speaker Change: With this growth momentum led by our wholly owned distributor broker link and a healthy pipeline for acquisitions distribution income remains on course to deliver growth of at least 10% in 2024.

Speaker Change: Our operating effective tax rate was lower than expected at 19, 5% in the quarter.

Louis Marcotte: This reflected the impact of new Canadian tax legislation recently enacted, offset by tax recoveries related to the increasing profitability in our UK operation. Looking ahead, we expect our operating effective tax rate to be around 22 to 23 percent. Overall, net operating income per share grew 108% in a quarter, a third of which was attributable to strong underlying performance in all geographies, as well as stronger investment than distribution, and the remainder from lower capital.

Speaker Change: This reflected the impact of a new Canadian tax legislation recently enacted offset by tax recoveries related to the increasing profitability in our U K operations.

Speaker Change: Looking ahead, we expect our operating effective tax rate to be around 22, 23%.

Speaker Change: Overall net operating income per share grew 108% in the quarter.

Speaker Change: One of which was attributable to strong underlying performance in all geographies as well as stronger investment in distribution results.

Speaker Change: Remainder from lower cat losses.

Louis Marcotte: Earnings per share growth was also robust thanks to the strength of our operating earnings but also due to improving non-operating results, including muted, exited lines losses. This contributed to a book value per share growth of 4% in the quarter and 15% year-over-year to $88.

Louis Marcotte: Earnings per share growth was also robust thanks to the strength of our operating earnings, but also due to improving non-operating results, including unit-exited lines losses. This contributed to a book value per share growth of 4% in the quarter and 15% year over year to 88 dollars. With the past 5 and 10 years, our book value grew 12% and 9% respectively on an annualized basis, before adding the impact of dividends. This is very consistent with our noise growth of 12% over the past decade, and our average ROIL performance of 6.8 points over the same period. In my perspective, this track record is industry leading, and we intend to maintain going forward.

Speaker Change: Earnings per share growth was also robust thanks to the strength of our operating earnings, but also improving nonoperating results, including exited lines losses.

Speaker Change: This contributed to a book value per share growth of 4% in the quarter and 15% year over year to $88.

Louis Marcotte: Over the past 5 and 10 years, our book value grew 12% and 9%, respectively, on an annualized basis before adding the impact of dividends. This is very consistent with our NOIPS growth of 12% over the past decade and our average ROE outperformance of 6.8 points over the same period. In my opinion, this track record is industry-leading, and we intend to maintain it going forward. Our balance sheet continues to strengthen thanks to approximately $1.4 billion of capital generated here to date, leading to a total capital margin of $2.9 billion at the end of June. Some of the capital generated was used for deleveraging, and Drover adjusted the total capital ratio down to 19.5.

Speaker Change: Over the past five years, and 10 years, our book value grew 12% and 9% respectively on an annualized basis before adding the impact of the dividend yields.

Speaker Change: This is very consistent with our growth of 12% over the past decade, and our average ROE outperformance of six eight points over the same period.

Speaker Change: Perspective, this track record is industry, leading and we intend to maintain that going forward.

Louis Marcotte: Our balance sheet continues to strengthen thanks to approximately 1.4 billion of capital generated year-to-date, leading to a total capital margin of 2.9 billion at the end of June. Some of the capital generated was used for de-leveraging, and over adjusted to total capital ratio down to 19.8%. Overall, our balance sheet is as strong as ever, and our capital generation capabilities provide flexibility to invest in growth both organically and the acquisitions. Overall, I am proud of the strength demonstrated by the business, again, this quarter. With the platform we have in place, the quality of talent we have across the globe and a clear strategic roadmap, we are in very good shape to grow net operating income per share by 10% for years to come, and I'll perform the industry ROI by a 2-500 basis.

Speaker Change: Our balance sheet continues to strengthen thanks to approximately $1 4 billion of capital generated year to date, leading to a total capital margin of $2 9 billion at the end of June.

Speaker Change: Some of the capital generated was used for deleveraging and drove our adjusted debt to total capital ratio down to 19, 8%.

Louis Marcotte: Overall, our balance sheet is as strong as ever, and our capital generation capabilities provide flexibility to invest in growth, both organically and via equity. Overall, I am proud of the strength demonstrated by the business again this quarter. With the platform we have in place, the quality of talent we have across the globe, and a clear strategic road map, we are in very good shape to grow net operating income per share by 10% for years to come and outperform the industry ROE by at least 500 basis points.

Speaker Change: Overall, our balance sheet is as strong as ever.

Speaker Change: Co generation capabilities provide flexibility to invest in growth, both organically and via acquisitions.

Speaker Change: Overall I'm proud of the strength demonstrated by the business again this quarter.

Speaker Change: With the platform we have in place the quality of talent, we have across the globe and a clear strategic roadmap. We are in very good shape to grow net operating income per share by 10% for years to come and outperform the industry ROE by 500 basis points.

Unknown Executive: Dispoints.

Louis Marcotte: I would like to thank all the teams that are there for those who have been impacted by the recent weather events across Canada. We've been on the front lines of climate change for over a decade, and with the strength of our people, we continue to help protect what matters most to customers and building a more resilient society.

Louis Marcotte: I would like to thank all the teams that are there for those who have been impacted by the recent weather events across Canada. We've been on the front lines of climate change for over a decade, and with the strength of our people, we continue to help protect what matters most to customers and build a more resilient society. With that, I'll give it back to Kevin.

Speaker Change: I would like to thank all the teams that are there for those who have been impacted by the recent weather events across Canada.

Ben: Ben on the front lines of climate change for over a decade and with the strength of our people. We continue to help protect what matters most to customers and building a more resilient society.

Kevin Lurman: With that, I'll give it back to Kevin. Thank you.

Speaker Change: That I'll give it back to Kevin.

Guillaume Lamy: Thank you, Louis. In order to give everyone a chance to participate in the Q&A, we would ask you to limit yourself to two questions per person. We can certainly reach you for follow-ups, and we'll do our best to accommodate if there is time and need. So Julie, we're ready to take questions now. Thank you. Ladies and gentlemen, if you'd like to ask a question, please press the star followed by one on your touch screen. [inaudible] would like to withdraw from, Please press the star followed by. If you are on a speakerphone, you will need to lift the headset before pressing any key.

Unknown Executive: In order to give everyone a chance to participate in the Q&A, we would ask you to limit yourself to two questions per person. You can certainly review for follow-ups, and we'll do our best to accommodate if there is time at the end.

Kevin Let: In order to give everyone a chance to participate in the Q&A, we would ask you to limit yourself to two questions per person.

Kevin Let: Can certainly re queue for follow ups and we'll do our best to accommodate if there is time idea.

Unknown Executive: So, Julie, we're ready to take questions now. Thank you, ladies and gentlemen. If you'd like to ask a question, please press star followed by one on your touch-tone phone. You will hear a three-phone prompt acknowledging your request. And if you'd like to withdraw from the question, please press star followed by two. And if you're on the speaker phone, you will need to lift the hand. The answer, be for pressing any keys. One moment, please, for your first question.

Speaker Change: So we're.

Speaker Change: We're ready to take questions now.

Speaker Change: Thank you, ladies and gentlemen, if you'd like to ask a question. Please press star followed by one on your Touchtone phone.

Speaker Change: You will hear threesome Trump acknowledging your request and each like to withdraw from the question queue. Please press star followed by Q.

Speaker Change: And if you're on a speaker phone.

Dan: <unk>, Dan said before pressing any keys one moment. Please for your first question.

Operator: Please type your questions into the Q&A box. This is a presentation about the CIP. This is a presentation of the CIP. Thank you. Good morning.

Paul Holden: Your first question comes from Paul Holden from CIBC. Please go ahead.

Speaker Change: Your first question comes from Paul Holden from CIBC. Please go ahead.

Paul David Holden: The first question is related to personal auto insurance. I'm getting a lot of questions on how sustainable this high level of premium growth might be as we go into 2025. So I guess my first question on that is, maybe you can provide some context in terms of auto rate approvals you've received year to date, and then maybe also in terms of the un- or less regulated markets you operate in where premium growth is trending as well, just to get a better sense of sustainability and those strong top line numbers you're posting. Thanks, Paul. We'll ask Guillaume to share his perspective. Thanks, Paul.

Paul Holden: Thank you.

Paul David Holden: Thank you good morning, first question's related to personal auto I'm getting a lot of questions on how sustainable this high level of premium growth might be as we go into 25, So I guess.

Guillaume Lamy: Good morning. First question is related to personal auto. I'm getting a lot of questions on how sustainable this high-level premium growth might be as we go into 25. So I guess my first question on that is maybe you can provide some context in terms of auto rate approvals. You've received year-to-date, and then maybe also in terms of like the un or less regulated markets you operate in, where premium growth is trending as well just to get a better sense of sustainability and that strong top-line numbers you're posting. Thank you.

Paul David Holden: My first question on that is maybe you can provide some context in terms of auto rate approvals.

Speaker Change: <unk> received year to date and then maybe also in terms of like the <unk> or less regulated markets you operate in.

Speaker Change: Premium growth is trending as well just to get a better sense of sustainability in that strong top line numbers you are posting thank you.

Guillaume Lamy: Thanks, Paul.

Speaker Change: Thanks, Paul last he owns shares perspective.

Charles Brindamour: We'll ask Guillaume to share his perspective. Thanks, Paul. So first, I'd like to point that industry is still not in a profitable position in personal auto. We've seen in 2023, as well as in the first quarter of 2024, our combined ratio of 100% for the industry. On our side, we're writing rates in the low-double digits right now. And with the rate approval that we already obtained, we're expecting to stay at the current rate level for the reminder of the year, with some residual flowing into 2025. Beyond that, it will really depend on how the last trends evolves in the upcoming quarters.

Guillaume Lamy: So first, I'd like to point out that the industry is still not in a profitable position. In personal auto, we saw in 2023, as well as in the first quarter of 2024, a combined ratio of north of 100% for the industry. On our side, we're writing rates in the low double digits right now, and with the rate approval that we have already obtained, we're expecting to stay at the current rate level for the remainder of the year, with some residual flowing into 2025.

Speaker Change: Thanks, Paul So first I'd like to point out.

Speaker Change: And the street is still not in a profitable position.

Speaker Change: In personal auto we've seen in 2023 as well as in the first quarter of 2024.

Speaker Change: Combined ratio.

Speaker Change: <unk>.

Speaker Change: 100%.

Speaker Change: For for the industry.

Speaker Change: On our side with rising.

Speaker Change: Rising rates and low double digit.

Speaker Change: Right now.

Speaker Change: And with the rates of approval that we have already obtained we're expecting to stay at the parent.

Speaker Change: <unk> level for the remainder of the year.

Speaker Change: With some residual flowing into 2025.

Guillaume Lamy: Beyond that, it will really depend on how the last trend evolves in the upcoming quarters. There's an obvious downward trend observed, especially on physical damage coverages, but we're keeping a close eye on the liability. So we'll adapt our rates strategy in each province based on the local outlook on trends and inflation. And nationally, we're already rate adequate. And outside of Alberta, we're in a good position to execute on rates where we need them and when we need them. Great, thank you very much, Guillaume.

Speaker Change: Beyond that.

Speaker Change: It will really depend on the loss trends evolves.

Guillaume Lamy: There's an obvious downward trend observed, especially on physical damage coverages, but we're keeping a close eye on the liability trends. So we'll adapt our rates with the strategy in each province based on the local outlook on trends and inflation, and nationally, we're already rate adequate, and outside of Alberta, we're in a good position to execute on rates where we need them and when we need them.

Speaker Change: How many quarters there is an obvious downward trend observed, especially on physical damage coverages.

Speaker Change: But we're keeping a close eye on the liability trends. So we'll adapt our rates strategy in each province base under local outlet.

Speaker Change: And inflation and nationally.

Speaker Change: We're already rate adequate and outside of Alberta, where in a good position to execute on rates, where we need them and when we did great.

Charles Brindamour: Thank you very much, Guillaume. So, Paul, you know, when you ask yourself how much time, the way the math probably works here is that you have an industry in aggregate that's operating above 100% combined ratio. So that tells you that there's a rate that equals the problem at the industry level. Now, the challenge is not just to bridge that gap. The challenge is also to cope with a mid-single-digit inflation that is currently in the system and prospectively. So, for me, it's easy to see that you've got 12 months' worth of correction, at least, I think, in the market.

Charles Joseph Gaston Brindamour: So Paul, you know, when you ask yourself how much time, the way the math probably works here is that you have an industry, an aggregate that's operating above 100% combined ratio. So that tells you that there's a rate adequacy problem at the industry level. Now, the challenge is not just to bridge that gap. The challenge is also to cope with the mid-single-digit inflation that is currently in the system and is projected.

Speaker Change: Great. Thank you very much so Paul.

Speaker Change: When you when you ask yourself, how much time the way the math probably works here is that you have an industry in aggregate that's operating above 100% combined ratio. So that tells you that there is a real.

Speaker Change: Rates adequacy problem at the industry level now.

Speaker Change: Now the challenge is not just to bridge that gap. The challenge is also to cope with the mid single digit inflation that is currently in the system and prospectively.

Charles Joseph Gaston Brindamour: So for me, it's easy to see that you've got 12 months worth of correction, at least, I think, in the market. So this plays to our strength because we moved really fast, and we're keen to grow in this environment in most jurisdictions. Okay, thank you for that. That's, that's helpful.

Speaker Change: For me, it's easy to see that you've got 12 months worth of correction at least I think in the market. So this plays to our strength because we moved really fast and we're team to grow in this environment in most jurisdictions.

Paul Holden: So, this place to our strength because we moved really fast and we're keen to grow in this environment in most jurisdictions. Okay, thank you for that. That's helpful.

Paul David Holden: And then my second question for me, and this is maybe a little bit more of a nuanced one, but I see that you expect to increase investment allocation to common equity by roughly four percentage points by the end of the year. So my question on this is, is this a move to enhance net investment income? Or is this more of a move to offset the anticipated downward pressure on short-term fixed income? None of the above, but I'll let Louis share his perspective.

Speaker Change: Okay. Thank you for that.

Speaker Change: Helpful. And then second question for me and this is maybe a little bit more of a nuanced one, but let's say that you expect to increase investment allocation to common equity by roughly four percentage points by end of the year. So my question on this is this a move to <unk>.

Louis Marcotte: And then second question for me, maybe a little bit more of a nuanced one, but I see that you expect to increase investment allocation to common equity by roughly four percentage points by end of the year. So, my question on this is this a move to enhance net investment income, or is this more of a move to offset anticipated downward pressure on short-term fixed income yields? No, none of the above, but I'll let Louis share his perspective.

Speaker Change: Enhance net investment income.

Speaker Change: Or is this more of a move to offset anticipated downward pressure on short term.

Speaker Change: Fixed income yields.

Speaker Change: None of the above but I'll, let Luis <unk>.

Luis: Sure his perspective.

Louis Marcotte: Now, Paul, you may have noticed that for probably over three years, we've been underweight on equities compared to our historical position. And for good reason, market volatility, but also in the midst of the RSA acquisition, following the COVID crisis, we were, you know, sort of very prudent. And now we're at the point where, you know, capital is reestablished, the balance sheet is strong, and we feel conditions are right to move back towards our targeted allocation, which is the four points you've raised earlier.

Luis: Yes.

Louis Marcotte: No, Paul, he may have noticed that I will say probably over three years we've been underweight on equities compared to a historical position. And for good reason, market volatility, but also in the midst of the RSA acquisition following the COVID crisis, we were sort of very prudent. And now we're at the point where capital is reestablished, balance sheet is strong, and we feel conditions are right to move back towards our targeted allocation, which is the four points here you've raised earlier. This is what we view as per our efficient frontier work as being the optimal way to allocate our assets, and their ports are returned based on long-term return expectations, not on a short-term basis.

Speaker Change: I will call you may have noticed our I will say probably over three years, we've been underweight on equities compared to our historical position.

Speaker Change: And for good reason if market volatility, but also in the midst of the RSA acquisition. Following the Covid crisis, we were.

Luis: Sort of very prudent.

Luis: And now we're at the point where.

Speaker Change: Capital is reestablished balance sheet is strong and we feel conditions are right to move back towards our targeted allocation, which is the four points Europe faced earlier. This is what we view as asper, our efficient frontier work as being the optimal way to allocate our assets and therefore, its a return based on long term.

Louis Marcotte: This is what we view, based on our efficient frontier work as being the optimal way to allocate our assets. And therefore, it's a return based on long-term return expectations, not on a short-term basis. So it should not come as a total surprise. We were there before. We're going back.

Speaker Change: Return expectations not on the short term.

Speaker Change: A short term basis, so it should not come as a total surprise we were there before we're going back. We think the time is right now and the reality is you might come back with the forecasted investment income with short term rates being where they are at the gap between the long term equity returns and those rates are not huge but over the long term we think that.

Louis Marcotte: So, it should not come as a total surprise. We were there before. We're going back. We think the time is right now. And the reality is you might come back with the forecasted investment income, which, short-term rates being where they are, the gap between the long-term equity returns and those rates are not huge. But over the long term, we think that that will drive actually our way up performance points based on historical experience with our asset allocation.

Louis Marcotte: We think the time is right now. And the reality is, you might come back with the forecasted investment income, with short-term rates being where they are, the gap between long-term equity returns and those rates is not huge. But over the long term, we think that that will drive our performance points based on historical experience with our asset allocation. Okay, Brian.

Speaker Change: That will drive actually are we outperformance points based on historical experience with our asset allocation.

Louis Marcotte: Okay. Right. We were playing defense a few years back and suspending the pension buy-in and acquisition in the UK, a bit of volatility. Now we're moving back to Target.

Speaker Change: Okay. That's helpful.

Speaker Change: Right.

Louis Marcotte: We were playing defense a few years ago, anticipating the pension buy-in and acquisition in the UK, a bit of volatility, and now we're moving back to target. All right. Thanks for that. Your next question comes from Tom MacKinnon from... Yeah, thanks very much. The first question, I guess, is, is there anything else you can add with respect to potential losses associated with the Toronto floods and the Jasper fires, other than this adhering to the 900 million annual cat loss guide? So why don't we ask Patrick to share his perspective on, you know, what's going on at the moment. It's all hands on deck. That's our business. And Patrick will give you a bit of perspective.

Speaker Change: We were playing.

Speaker Change: Defense, a few years back Kansas speeding the pension buy in an acquisition.

Speaker Change: In the U K a bit of volatility and now were moving back to target.

Paul Holden: Thanks for that.

Speaker Change: Got it thanks for that.

Speaker Change: Okay.

Tom Meckanan: Your next question comes from Tom Meckanan from BMO. Please go ahead.

Speaker Change: Your next question comes from Tom Mackinnon from BMO. Please go ahead.

Tom Meckanan: Yes, thanks very much.

Tom MacKinnon: Yeah, Thanks very much.

Louis Marcotte: The first question I guess is, is there anything else you can add with respect to potential losses associated with the Toronto floods and the Jasper fires other than this adhering to the 900 million annual cat lost guide?

Tom MacKinnon: Yes. The first question I guess is is there anything else you can add with respect to potential losses associated with the Toronto floods in the Jasper fires.

Speaker Change: Other than this said adhering to the $900 million annual Cat loss guide.

Patrick Barbeau: So, why don't we ask Patrick to share?

Speaker Change: So why don't we ask Patrick to share.

Patrick Barbeau: Is perspective on, you know, what's going on at the moment? It's all hands on deck. That's our business, and Patrick will give you a bit of perspective, right? So, you know, the flash flood in Toronto from two weeks ago was really the first significant weather events we had this year. So, our operations were ready to jump in. They were pretty quick to respond, both the claims operations and the onsite teams. We now have a pretty good view on the volume of claims and that, you know, a lot of the work, the emergency work is done, but we are at the early stage of the rebuild process.

Speaker Change: His perspective on whats going on at all unless it's all hands on deck, that's our business and Patrick will give you.

Patrick: A bit up perspective.

Speaker Change: Great.

Patrick Barbeau: Right. So, you know, the flash flood in Toronto from two weeks ago was really the first significant weather event we had this year. So our operations were ready to jump in. They were pretty quick to respond, both the claims operations and the onsite teams. We now have a pretty good idea of the volume of claims and a lot of the work. The emergency work is done, but we are at the early stage of the rebuild process.

Patrick: So you know that the flash flood and throttle from two weeks ago.

Patrick: Really the first significant weather events, we had this year so our operations were ready to jump in.

Patrick: Pretty quick to respond both the claims operations and the on site teams. We now have a Brexit you on the volume of claims and a lot of the work the.

Patrick: The emergency work is done but we are at the early stage out there rebuild process. It's very interesting for me to see that three quarters of all the files in the Toronto area are.

Patrick Barbeau: It's very interesting for me to see that three-quarters of all the files in the Toronto area are being handled by OnSite, which is by far the most files they've taken on any single event since we acquired them a few years ago. On the JASPER side, this one is more recent.

Patrick Barbeau: It's very interesting for me to see that three quarters of all the files in the Toronto area are being dealt by onsite, which is by far the most files they've taken on any single event since we acquired them a few years ago. On the Jasper side, this one is more recent thanks to WDS, who are on the ground. We receive some information. We have also other sources of mapping and imagery that helps us have a reasonably good understanding of the extent of the damage, but our teams are on the right thing. Our adjusting teams don't have direct access to the site as we speak.

Patrick: <unk> handled by on side, which is.

Patrick: By far.

Patrick: Most files they've taken on any single event since we acquired them a few years ago.

Patrick Barbeau: Thanks to WDS who are on the ground, we received some information. We also have other sources of mapping and imagery that helps us have a reasonably good understanding of the extent of the damage. But our teams are doing the right thing. Our adjusting teams don't have direct access to the site as we speak. We've been proactively contacting our clients in the area to offer help in their temporary relocation process.

Speaker Change: On the Jasper side at this one is more recent thanks to wds, who are on the ground, where we see some information. We have also other sources of mapping and imagery that helps us have a reason they've been good.

Speaker Change: Standing up the extent of the damage, but our teams are on the right thing.

Speaker Change: Adjusting themes are don't have direct access to the site.

Speaker Change: As we speak we've been proactively contacting our clients from the area to offer help and they're temporary relocation process and to give you a feel we ensure about 700 families and businesses in the area that's been evacuated and we estimate that around two.

Patrick Barbeau: We've been proactively contacting our clients from the area to offer help in their temporary relocation process. And to give you a fill, we ensure about 700 families and businesses in the area that have been evacuated. And we estimate that around 250 or so have very likely suffered significant damage. At this point, though, when we look at our estimates of these two events, like Charles mentioned, or we, and the low amounts that we've incurred in the first half of the year, our total year guidance of 900 million is still a good number at the moment.

Patrick Barbeau: And to give you a feel, we insure about 700 families and businesses in the area that have been evacuated, and we estimate that around 250 or so have very likely suffered significant damage. At this point, though, when we look at our estimates of these two events, like Charles mentioned, and the low amounts that we've incurred in the first half of the year, our total year guidance of $900 million is still a good number at the moment. Thanks, Patrick.

Speaker Change: 250, or so very likely suffered.

Speaker Change: Significant damage at this point, though when we look at our estimates of these two events like Charles mentioned.

Speaker Change: We.

Charles: And the low amounts that we've endured in the first half of the year. Our total year guidance of $900 million is still a good number at the moment.

Charles Brindamour: Thanks, Patrick. I think for us, true estimates at this stage, you know, when you think about our retention per event, 250 million roughly. If those events were meaningfully above that, that would be easy for us to put a number on the table. They're not, and therefore we want to get a bit more maturity on both these events at this stage, and all the energy is going to get customers back on track as opposed to filling around with models. Okay, thanks.

Patrick: Thanks, Patrick I think.

Charles Joseph Gaston Brindamour: I think, Tom, for us to give you true estimates at this stage, [inaudible] You know, when you think about our retention per event, 250 million roughly, if those events were meaningfully above that, that would be easy for us to put a number on the table. They're not.

Speaker Change: For us Trop estimates at this stage.

Speaker Change: When you think about our retention per event $250 million roughly if those events were meaningfully above that that would be easy for us to put a number on the table.

Louis Marcotte: And therefore, we want to get a bit more maturity on both these events at this stage, and all the energy is going to getting customers back on track, as opposed to fiddling around with models. Okay, thanks. And on the flip side, where does that show up in terms of your earnings? And which one of the lines would we be looking for in terms of your ownership of the earnings with respect to Onside? So our share of the earnings, which is 100%, is in the distribution income and other. Okay, great.

Speaker Change: And therefore, we want to get a bit more maturity on both these events at this stage and all the energy is going to.

Speaker Change: Getting customers back on track as opposed to fiddling around with models.

Speaker Change: Okay. Thanks.

Louis Marcotte: And on the on side, where does that show up in terms of your earnings?

Speaker Change: On the onside.

Speaker Change: Sure.

Speaker Change: Where does that show up in terms of your earnings.

Louis Marcotte: Which one of the lines would we be looking for in terms of your ownership of the earnings with respect to on side? So our share of the earnings, which is 100%, is in the distribution income and other.

Speaker Change: Which one of the lines would we be looking for in terms of your ownership of the earnings with respect to onside.

Speaker Change: So the.

Speaker Change: Our share of the earnings which is a 100% as into distribution income and other.

Louis Marcotte: And so then the second question has to do with the favorable development we continue to get that's kind of running north of your two to four guide. What can you attribute that to? What kind of, what accident years, what lines are you seeing the most favorable development? And if I look at 2023, you had unfavorable development in personal property. You said that was atypical.

Louis Marcotte: Okay, great.

Speaker Change: Okay great.

Louis Marcotte: And so then the second question has to do with the favorable development. We continue to get that's kind of running north of your two to four guide. What can you attribute that to? What kind of accident years, what lines are you seeing the most favorable development?

Speaker Change: So then the second question has to do with the favorable development, we continue to get that kind of running north of your two to four guide.

Speaker Change: What can you attribute that to what kind of.

Speaker Change: What accident years or what lines are you seeing the most favorable development and if I look in 2023, you had unfavorable development in personal property you said that was.

Louis Marcotte: And if I look in 2023, you had unfavorable development and personal property. You said that was at typical. If you can just elaborate on why that may have been at typical and why we wouldn't expect that going forward. Sure, so maybe I can start with some color here.

Louis Marcotte: If you can just elaborate on why that may have been atypical and why we wouldn't expect that going forward, thanks. Sure, so maybe I can start with some color here.

Speaker Change: Typical if you can just elaborate on why that may have been a typical and why we wouldn't expect that.

Speaker Change: Going forward. Thanks.

Louis Marcotte: So, 4.7 versus our guidance of 2 to 4, I will say there's probably close to a point that comes from prior year CAATS, and that should not be a surprise with the level of CAATS activity we had seen last year. You would expect some favorable developments given the way we reserve for the CAATS activity to come back in the following year. And, of course, it's outsized given the level of CAATS we had in the prior year.

Speaker Change: Sure So maybe I can start.

Speaker Change: Just some color here, so four seven versus our guidance of two to four I will say, there's probably close to a point that comes from prior year cats and that should not be a surprise with the level of cat activity, we had seen last year.

Louis Marcotte: So 4.7 versus our guidance at 2 to 4, I will say there's probably close to a point that comes from prior year cats, and that should not be a surprise with the level of cat activity we had seen last year. You would expect some favorable development to give in the way we reserve for the cat activity to come back in the following year, and of course it's outsized given the level of cats we had in the prior year.

Speaker Change: You would expect some favorable development that given the way we reserve for the cats.

Speaker Change: Cat activity to come back in the following year and of course, it's outsized given the level of cats, we had in the prior year I would say secondly, I think the we've talked about prudence.

Louis Marcotte: I would say secondly, I think we've talked about prudence for a long time, and you're seeing some of it come back. We're getting further away from the famous COVID years. So that's, you see it in auto, it's still very positive but tempering, which is as expected. When you talk about personal prop, last year was an exception.

Louis Marcotte: I would say secondly, I think the we've talked about prudence, you know, for a long time, and you're seeing some of it come back. We're getting further away from the famous COVID years, so you see the not so it's still very positive but tempering, which is as expected. When you talk about personal prop, last year was an exception. If I recall correctly, we had the late year storm, which we had some unfavorable development in the first half of the year. But if you look back a number of years, it's pretty unusual for us to see, you know, what the reality is. We reserve to make sure we never see fit in PYD.

Speaker Change: For a long time and you're seeing some of it come back we're getting further away from the famous over the years. So thats youll see it in auto it's still very positive, but temporary which is as expected.

Speaker Change: When you talk about personal profit last year was an exception if I recall correctly, we had a late year store, which we had some unfavorable development in the first half of the year, but if you look back a number of years, it's pretty unusual for us to see.

Louis Marcotte: If I recall correctly, we had the late-year storm which had some unfavorable development in the first half of the year. But if you look back a number of years, it's pretty unusual for us to see. You know, what the reality is; we reserve to make sure we never see PYD. In this case, it was a late storm that surprised us in the first half of the year. That's why we say it's unusual.

Speaker Change: The reality is we reserve to make sure we never see <unk> and.

Louis Marcotte: In this case, it was a late storm that surprised us in the first half of the year. That's why we say it's unusual, and we expect, you know, to go back to within the ranges. I will say it varies by line of business by quarter of it, but overall, you should expect us to land roughly within that 2 to 4, and I would say largely across lines of business. It won't be even over time, over quarters, but over time, it should be landing in those zones.

Speaker Change: In this case it was the late storms.

Speaker Change: Surprised us in the first half of the year. That's why we say, it's unusual and we expect to go back to.

Louis Marcotte: And we expect, you know, to go back to within the ranges. I will say it varies by line of business by a quarter of it. But overall, you should expect us to land roughly within that two to four. And I would say largely across lines of business. It won't be even over time, over quarters, but over time, it should be landing in those zones. Okay, thanks for that. Your next question comes from Doug Young from Desjardins Capital Markets. Please go ahead. Hi, good morning.

Speaker Change: Within the ranges I will say it varies by line of business by quarter of it but overall you should expect us to land roughly within that two to four and I would say largely across lines of business won't be even over time over quarters, but overtime it should be landing zones.

Louis Marcotte: Okay, thank you.

Speaker Change: Okay. Thanks.

Doug Young: Thank you so much. Your next question comes from Doug Young from Digital Day Capital Markets. Please go ahead.

Speaker Change: Okay.

Speaker Change: Right.

Doug Young: Hey Charles, on Canadian commercial, it looks like competitive pressures in the large cases persisted for I guess two quarters in a row, and I'm just hoping you can flush out just what you're seeing. Can you remind us how much of your Canadian commercial is large cases versus mid cases where you're trying to grow, and are you seeing this move into other segments of the commercial market, or are you starting to see some irrational behavior anywhere In aggregate, Noah, let Darren share his perspective on what we're seeing in Canada. Yeah, so thanks for that, Doug.

Speaker Change: Your next question comes from Doug Young from <unk> capital markets. Please go ahead.

Doug Young: Hi, good morning. Hey, Charles.

Doug Young: Hi, good morning.

Doug Young: Hey, Charles.

Darren Gutfrey: On Canadian commercial, it looks like competitive pressures in the large cases persisted for, I guess, two quarters in a row, and I'm just hoping you can flush out just what you're seeing. You know, it can remind us how much of your Canadian commercial is, large case versus mid-case where you're trying to grow, and are you seeing this move into other segments of the commercial market? Are you starting to see some irrational behavior anywhere across the Canadian commercial landscape?

Speaker Change: On Canadian commercial.

Doug Young: Looks like competitive pressures in the large cases persisted for I guess two quarters in a row and I was just hoping you can flesh out just what you are seeing can you remind us how much of your Canadian commercial is large case versus mid case, where youre trying to grow.

Speaker Change: And are you seeing this move into other segments of the commercial market are you starting to see some irrational behavior anywhere.

Speaker Change: Cross the Canadian commercial landscape.

Speaker Change: Okay.

Darren Gutfrey: Doug, thanks for your question. In aggregate, no, I'll live variance share his perspective on what we're seeing in Canada. Yeah, so thanks for that, Doug.

Speaker Change: Doug Thanks for your.

Speaker Change: Question in aggregate no I'll, let Darren share his perspective on what we're seeing in Canada.

Darren Christopher Godfrey: A number of moving pieces that I probably want to highlight in the quarter. But firstly, I mean, as we said in the remarks, rates are in that sort of mid-single-digit range. Quotes are new business.

Darren: Yes, so thanks for that Doug a number of moving pieces that I would probably want to highlight.

Darren Gutfrey: A number of moving pieces that I probably want to highlight in the quarter. But firstly, I mean, as we said in the remarks, rates are in that sort of mid-single digit range. Quotes in new business were both up in the quarter year over years, so that's positive. As we highlighted, we did see some pressure in the large accounts space. There is about 10% of our total Canadian commercial lines portfolio, and I should highlight that Q2 in particular is our largest quarter from our large account renewal standpoint. So obviously, we felt the effect more in Q2.

Speaker Change: Quarter.

Darren: But firstly I mean, as we said in our remarks rates are in that sort of mid single digit range quotes in new business.

Darren Christopher Godfrey: We're both up in the quarter year over year, so that's positive. However, as we highlighted, we did see some pressure in the large account space. That is about 10% of our total Canadian commercial lines portfolio. And I should highlight that Q2, in particular, is our largest quarter from a large account renewal standpoint, so obviously, we felt the effect more in Q2. We had a number of other pieces of, say, timing related to the movement of renewals from quarter to quarter that had about a point of impact.

Speaker Change: Both up in the quarter year over year, so that's causing this.

Speaker Change: As we highlighted we did see some pressure in the large account space that is about 10% of that total Canadian commercial lines portfolio and I should highlight that Q2 in particular.

Speaker Change: Is al largest quarter from a large account renewal standpoint, so obviously, we felt the effect more in Q2.

Darren Gutfrey: Yeah, we had a number of other pieces of, say, timing related with movement of renewals from quarter to quarter that had about a point of an impact. And, as we mentioned, last quarter, we continued to take action on unprofitable accounts, and that was worth about a point as well. So even though there was all that noise in the quarter, retention was still relatively flat, but the biggest driver in the quarter was really around a three to four point negative mix impact on the top line. Now, we'll often see that in terms of, I mean, obviously, large accounts is one example of that, but we sometimes will see that.

Speaker Change: We had a number of other pieces of say timing related with movement of renewals from quarter to quarter that had about a point of an impact and as we mentioned last quarter. We continue to take action on unprofitable accounts and that was worth about a point as well.

Darren Christopher Godfrey: And as we mentioned last quarter, we're continuing to take action on unprofitable accounts, and that was worth about a point as well. So even though there was all that noise in the quarter, retention was still relatively flat.

Speaker Change: So even though there was all that noise in the quarter retention was still relatively flat, but the biggest driver in the quarter.

Darren Christopher Godfrey: But the biggest driver in the quarter was really around a three to four point negative mix impact on the top line. Now, we'll often see that in terms of, I mean, obviously, large accounts are one example of that, but we sometimes will see that. But that, for me, I think was the biggest driver.

Speaker Change: It was really around a three to four point negative mix impact on the top line that will often see that in terms of I mean, obviously large accounts is one example of that but we sometimes will see that but that's something that I think was the biggest driver. It's not something we see consistently every single quarter on quarter on quarter. So I think Q2 is more of an anomaly.

Darren Gutfrey: But that, for me, I think, was the biggest driver. It's not something we see consistently every single quarter or quarter-on-quarter.

Darren Christopher Godfrey: It's not something we see consistently every single quarter or quarter on quarter. So I think Q2 is more of an anomaly from that standpoint. We like where we're positioned. The rate is still strong. It's a good operating environment. We want to grow here. So I think that's some of the color that I would give on Q2 in and of itself. And can you flesh out what you mean by sorry, a negative mix? Can you just kind of elaborate?

Darren Gutfrey: So I think Q2 is more of an anomaly from that standpoint. We like where we're positioned. Rate is still strong. It's a good operating environment. We want to grow here.

Speaker Change: From that standpoint, we like where we're positioned right.

Speaker Change: It's still strong.

Speaker Change: A good operating environment, we want to go out here. So I think that some of the color that I would give on Q2 itself.

Darren Gutfrey: So I think that's some of the color that we give on Q2 in and of itself.

Darren Gutfrey: And can you flush out what do you mean by sort of a negative mix? Can you just kind of elaborate on that? Yeah, if the math goes like this: you have retention for SME, retention for mid market, retention for a large account. When your retention for a large account is meaningfully lower than the average retention across the rest of the book, you get a mixed change.

Speaker Change: And can you flesh out what do you mean by sorry negative mix can you just kind of elaborate on that.

Speaker Change: Yes.

Darren Christopher Godfrey: Yeah, and that goes like this. Um, you have retention for SME, retention for mid-market, and retention for a large account. When your retention for a large account is meaningfully lower than the average retention across the rest of the book, you get a mixed change, so to speak. Not much to do with profitability. In fact, profitability is strong across the board. It's just the average size of the account written in the quarter has created a drag of three to four points. Got it.

Speaker Change: And that goes like this.

Speaker Change: You have retention for SME.

Speaker Change: Tension for mid market retention for our large account when your retention for our large account is meaningfully lower than the average retention across the rest of the book you get a mix change so to speak.

Darren Gutfrey: Change, so to speak, not much to do with profitability. In fact, the profitability is stronger across the board. It's just the average size of account written in the quarter as created a drag of three to four points that are interest, I'd like to got it.

Speaker Change: Not much to do with profitability and in fact, the profitability is.

Darren: It's strong across the board. It's just the average size of account written in the quarter as created a drag of three to four points as Darren just highlighted.

Darren Christopher Godfrey: And, and so you're still seeing price increases in the large case, Darren, like is that, and that is just you're not seeing the market as hard as, And it doesn't sound like there's any irrational behavior going on. I mean, in that live account space, it's case-price underwriting, so some are up, some are down; it's a function of the individual account. Yeah, okay. And then the second question is just something that I'll throw out there. I'm not sure if it's relevant or not, but obviously, we have the CrowdStrike outage.

Darren Gutfrey: And so you're still seeing price increases in the large case, Darren. Like, is that just you're not seeing the market as hard as it once was. And it doesn't sound like there's an irrational behavior going on, but yeah. I mean in that live account space, it's case price underwriting, so summer up, summer down, it's function of the individual account. Yeah. Okay.

Darren: Got it and and so you are still seeing price increases in the large case Darrin is that.

Darrin: Is that just youre not seeing in the market as hard as it once was.

Speaker Change: And it doesn't sound like there's really irrational behavior going on but.

Speaker Change: Yes.

Darrin: I mean that large account space.

Speaker Change #106: <unk> priced underwriting so.

Speaker Change: Some are up some down.

Darrin: It's a function of the individual account yes.

Darrin: Yes.

Darrin: Okay.

Patrick Barbeau: And then the second question is just something that I'll throw up there. I'm not sure it's relevant or not, but obviously we have the CrowdStrike outage. I'm just curious; you know, what implications that has, you know, on your business from that business interruption perspective. I know you; I think you've been starting to write cyber policies. You know, maybe kind of, how does that impact you from a current business perspective, but even kind of framing your view in terms of the outlook. For building out that side of your business. Yep.

Doug Young: And just curious, you know, what implications that has, you know, on your business from a business interruption perspective. I know you, I think you've been starting to write cyber policies, maybe kind of how does that impact you from a current business perspective, but even kind of framing your view in terms of the outlook for building out that side of your business? Yeah. I'll ask Patrick to share his perspective. That's the first of all on the look at the commercially based product business interruption. This kind of outage from the system is not covered.

Speaker Change #108: And then the second question is just something that I'll throw out there I'm not sure it's relevant or not but obviously, we had the crowd strike outage.

Speaker Change: And just curious what implications that has.

Speaker Change: On your business from the business interruption perspective, I know you I think you've been starting to write cyber policies maybe.

Speaker Change: Maybe kind of how does that impact you from a current business perspective, but even kind of framing your view in terms of the outlook for.

Speaker Change: Building out that side of your business.

Speaker Change: Yes.

Patrick Barbeau: I'll ask Patrick to share his perspective. Yeah, so first of all, on the commercial base product business interruption, this kind of outage from system is not covered. If it's similar to, you know, the covet business interruption, it requires physical damage to trigger business interruption, very in this case. This is not the case. We do; there is some coverage on our cyber insurance policy for this, but for the large majority of these products, there's a time waiting time period. Financial deductibles and then for access policies, fairly high attachment points. So we don't expect any significant costs from this event.

Speaker Change: I'll ask Patrick to share his perspective.

Patrick: So first of all on the <unk>.

Patrick: On the commercial based product business interruption.

Speaker Change: This kind of assets from system is not covered.

Doug Young: It's a bit similar to the COVID business interruption. It requires physical damage to trigger a business interruption. In this case, this is not covered. We do have some coverage on our cyber insurance policy for this, but for the large majority of these products, there is a time, a waiting time period.

Speaker Change: Similar to <unk>.

Patrick: The coveted business interruption it requires physical damage trigger business interruption period in this case.

Patrick: This is.

Speaker Change: Not the case.

Speaker Change: We do.

Speaker Change: There is some coverage on our cyber insurance policy for this but.

Speaker Change: The large majority of these products there is a.

Speaker Change: I'm waiting time period.

Patrick Barbeau: Financial Deductibles, and then for excess policies, fairly high attachment points, so we don't expect any significant costs from this event. We have received a few claims that will investigate things, but overall, it won't be a problem. Most people were back on track in a very short period of time. Yeah, same day.

Speaker Change: Fine until deductibles and then for excess policies fairly high attachment points. So we don't expect any significant costs from this event. We have received a few claims.

Patrick Barbeau: We have received a few claims. That's one best thing, but overall, it won't be significant. Most people were back on track. Sorry, short period of time. Yeah. Thank you, same day. Perfect.

Speaker Change: The best thing, but overall it talks.

Speaker Change: Most people were back on track.

Speaker Change: Yes.

Speaker Change: Yes.

Patrick Barbeau: Perfect. Thank you. Your next question comes from Mario Mendonca. Good morning. I want to go to the U.S.

Speaker Change #102: Perfect. Thank you.

Unknown Executive: Thank you.

Speaker Change #102: Okay.

Mario Mendonca: Your next question comes from Mario Mendunda from T. Go ahead.

Speaker Change #102: Your next question comes from Mario Mendonca from please go.

Speaker Change #101: Go ahead.

Mario Mendonca: Good morning.

Mario Mendonca: Specialty, specifically the comments around... lines are segments that require corrective action, uh... the areas where The Corrective Action Week, what's going on there and how important. Darren, why don't you share your perspective? Thanks, Mario.

Darren Gutfrey: I want to go to U.S. Specialty, specifically the comments around certain business lines or segments that require corrective action. Could you speak to the areas where you figure you need corrective action? What's going on there, and help? Partner, those segments too, intact.

Mario Mendonca: Good morning, I wanted to use specialty specifically would be the comments around certain business lines or segments that require corrective action could you speak to.

Speaker Change: The areas where.

Speaker Change: Figure you need corrective action with what's going on there and how important are those segments too.

Darren Gutfrey: Darren, I want to make sure you're perspective. Thanks, Mario. I mean, this is at a high level new business with up in the courtyard here, but retention was down to points. And that was mostly the result of our own actions. So, so business units that I would highlight is entertainment and financial lines; both were down double digits in the quarter. That was driven combination of re-underwriting the portfolios, shifting of appetite, you know, think about our financial institutions portfolio, but also where we've been pushing strong, aggressive rates with the aim to improve flexibility. If I was to strip out those actions and those business units, our growth profile in the US in the quarter is more in the mid to high single digit range.

Speaker Change: Alright sure your perspective, thanks Mario.

Darren Christopher Godfrey: I mean, at a high level, new business was up in the quarter year, but retention was down two points, and that was mostly the result of our own actions. So the business units that I would highlight are entertainment and financial lines. Both were down double digits in the quarter.

Speaker Change #122: Just at a high level.

Speaker Change: Business was up in.

Speaker Change: In the quarter year on year, but retention was down two points.

Speaker Change: And that was mostly the result of our own actions.

Speaker Change: Those business units that I would highlight.

Speaker Change: Entertainment and financial lines.

Speaker Change: Both were down double digits.

Speaker Change: In the quarter.

Darren Christopher Godfrey: That was driven by a combination of re-underwriting the portfolios and a shift in appetite in our financial institutions portfolio, but also where we've been pushing strong, aggressive rates with the aim to improve profitability. If I were to strip out those actions and those business units, our growth profile in the U.S. for the quarter is more in the mid to high single-digit range, now similar to Canada when we talked about a negative mix. We had three points of negative mix in the quarter in the U.S., and that was driven by one single large account in our accident and health portfolio, which was really a downsizing of a transportation account.

Speaker Change: And that was driven a combination of re underwriting the portfolios shifting of appetite.

Speaker Change: Think about a financial institution portfolio, but also we've been pushing strong aggressive rights with the aim to improve profitability.

Speaker Change: I was to strip out those actions.

Speaker Change: Those business units our growth profile in the U S. In the quarter is more in the mid to high single digit range now similar to Canada, when we talked about negative mix.

Darren Gutfrey: Now, similar to Canada when we talked about a negative mix, we had three points of negative mix in the quarter in the US. And that was driven by one single large account in our accident and health portfolio, which was really a downsizing of a transportation account. So, again, not something that we would see every single quarter, but that clearly had a significant impact on the top line growth in the quarter. When I strip out two lines, which obviously we're working on remediating, we have very, very strong growth in our strongest performing possible lines. That's continuation of what was seen over the last sort of 12, 18 months.

Speaker Change: We had three points of negative mix in the quarter in the U S and that was driven by one single large account in our accident and health portfolio, which is really a downsizing other transportation accounts. So again not something that we would see every single quarter, but that clearly had a significant impact.

Darren Christopher Godfrey: So, again, not something that we would see every single quarter, but that clearly had a significant impact on the top line growth in the quarter. When I strip out two lines which, obviously, we're working on remediating, we have very, very strong growth in our strongest performing possible lines. It's a continuation of what we've seen over the last sort of 12 to 18 months, and I expect that to continue moving forward as well. So again, just a little bit of noise.

Speaker Change: The topline growth in the quarter.

Speaker Change: When I strip out the two lines, which obviously, we're working on remediation we.

Speaker Change: We are very very strong growth in our strongest performing possible lines.

Speaker Change: It's continuation of what we've seen over the last sort of 12 to 18 months and I expect that to continue moving forward as well too. So again, a little bit of noise. Most of it was self inflicted I would suggest that Mario but the outlook remains strong with Reits in that mid single digit range.

Darren Gutfrey: And I expect that to continue moving forward as well, too. So, again, a little bit of noise. Most of it was self-inflicted; I would suggest the Mario, but the outlook remains strong with rates in that mid single digit range. We're really looking to grow in that particular marketplace at the moment.

Darren Christopher Godfrey: Most of it was self-inflicted, I would suggest there, Mario, but the outlook remains strong with rates in that mid-single digit range. We're really looking to grow in that particular marketplace at the moment. And those lines.

Speaker Change: Really looking to grow in that particular marketplace at the moment and those lines entertainment and financial lines.

Darren Gutfrey: And those lines, entertainment and financial lines, or yeah, financial lines, I think you said, how relevant are those two inter to that business, particularly in the US? Well, they're relevant. I mean, they're part of the 12 verticals that we believe in and want to grow. And I think in those two segments, we want to make sure that they're on the right footing to grow. So, I would say they're not the largest lines by any stretch, but they're lines that I want to make sure we have a sustainable, profitable path going forward. And I do believe that these are lines that they'll grow back in time.

Mario: Financial lines I think you said how relevant are those two interact.

Speaker Change #131: That business in particular in the U S.

Darren Christopher Godfrey: [inaudible] Well, they're relevant. I mean, they're part of the 12 verticals that we believe in and want to grow. And I think in those two segments, we want to make sure that they're on the right footing to grow. So I would say they're not the largest lines by any stretch, but they're lines that I want to make sure we have a sustainable, profitable path going forward. And I do believe that these are lines that will grow back in time.

Speaker Change #125: Well they are relevant I mean, they are part of the 12 verticals that we believe in and want to grow and I think in those two.

Speaker Change: Segments, we want to make sure that the.

Speaker Change: On the right footing to grow so I would say there are not the largest lines by any stretch, but there are lines that I want to make sure we have a sustainable profitable path going forward and and I do believe.

Speaker Change #117: Uh huh.

Speaker Change #104: These are lines that that will grow back in time, and then just maybe very broadly what is what is the company's outlook for U S. Specialty just broadly is this business do you still feel like it's a firm market.

Charles Joseph Gaston Brindamour: And then just maybe, very broadly, what is the company's outlook for U.S. specialty, just broadly? We still feel like it's a firm market. We love the specialty lines business in the US.

Darren Gutfrey: And then just maybe very broadly, what is the company's outlook for U.S. specialty? Just broadly, is this business, do you still feel like it's a firm market? Is there any change in your sentiment in that business line? We love the specialty lines business in the US. If I go macro for a moment, Mario, specialty lines performs better than commercial lines in the US, which performs better than personal lines in the US. So, I feel that entering in the US or operating in the US in really the most profitable segment of the marketplace is the right entry point for us.

Speaker Change #124: Is there any change in your sentiment on that business line.

Charles Joseph Gaston Brindamour: You know, and if I go macro for a moment, Mario, specialty lines perform better than commercial lines in the U.S., which performs better than purse lines in the U.S. So I feel that entering the U.S., or operating in the U.S. in, really, the most profitable segment of the marketplace is the right entry point for us. We've been at it for almost eight years now. This business turned into one was outperforming its peers by five and a half points of combined ratio outperformance, and with a growth pattern that very much looks like our peers. Now, what is the competitive environment? At the moment, I would say it is a very good competitive environment.

Speaker Change #148: We loved the specialty lines business in the U S.

Speaker Change #100: I know macro for a moment.

Speaker Change #100: Specialty lines performs better than commercial lines in the U S, which performs better than personal lines in the U S. So I feel that entering into the U S.

Speaker Change #100: Our operating in the U S in <unk>.

Speaker Change #100: Really the most profitable segment of the marketplace is the right entry point.

Speaker Change #130: For us we've been at it.

Darren Gutfrey: We've been at it for almost eight years now. This business into one was outperforming its peers by five and a point of combined ratio outperforming. Conference, and with a growth pattern that very much looks like our Pearson. Now, what is the competitive environment at the moment? I would say it is a very good competitive environment just to put things in perspective, Mario, and Q2, the average rate increase in the US was 4%. The difference between Q2 this year and Q2 last year where we were closer to 5.5% is that there are a few lines that have softened, and we've talked about those. Line management liability would be a good example.

Speaker Change #130: For almost eight years now this business in Q1 was.

Speaker Change #100: Outperforming its peers by five points of combined ratio outperformance.

Speaker Change #100: And with the growth pattern that very much looks like.

Speaker Change #100: Our peer set now what is the competitive environment.

Speaker Change #100: At the moment I would see it is a.

Speaker Change: Very good competitive environment, just to put things in perspective, Mario in Q2, the average rate increase in the U S was 4%.

Charles Joseph Gaston Brindamour: Just to put things in perspective, Mario, in Q2, the average rate increase in the U.S. was 4%. The difference between Q2 this year... And Q2 last year, where we were closer to 5.5%, is that there are a few lines that have softened. And we've talked about line management; liability would be a good example. Cyber would be a good example.

Mario: The difference between Q2 this year.

Mario: Q2 last year, we were closer to 5% is that there are a few lines.

Mario: Have softened and we've talked about those line management liability would be a good example.

Darren Gutfrey: Cyber would be a good example, and as a result, in these two lines, we're not seeing the sort of growth we have seen as rates were harder in the past 4 or 5 years. But this is still an excellent environment, and frankly, one in which we want to see more growth. Thank you.

Mario: Cyber would be a good example, and as a result in these two lines, we're not seeing the sort of growth we have seen as rates were harder.

Charles Joseph Gaston Brindamour: And as a result, in these two lines, we're not seeing the sort of growth we have seen as rates have been higher in the past four or five years. But this is still an excellent environment, and, frankly, one in which we want to see more growth. Your next question comes from Grace Carter from Bank of America. Please go ahead, and Grace. I wanted to go back to the earlier question about premium growth and personal auto and, I guess, kind of personal lines more broadly.

Speaker Change: In the past four five years, but this is still an excellent environment and frankly, one in which we want to see more growth.

Speaker Change #129: Thank you.

Grace Carter: Your next question found some Grace Carter from back of America? Please go ahead.

Charles Joseph Gaston Brindamour: How should we think about the policy count growth component of the top line over the next several quarters? It seems like it's inflected to sequential growth in the past couple of quarters, and I was just curious what you're seeing from a shopping perspective, if there are any updates there, and if we should expect maybe acceleration in the policy count growth. And I guess, just kind of to round it out, if given I think some of the profitability actions you've been taking in property lines after the caps last year, if we should expect Yeah, thanks, Grace.

Speaker Change: Your next question comes from Chris Carter from Bank of America. Please go ahead.

Grace Carter: Hi, everyone. I wanted to go back to the earlier question about premium growth and personal auto, and I guess kind of personal lines more broadly. How should we think about the policy count growth component of the top line over the next several quarters? It seems like it's inflicted to sequential growth in the past couple of quarters, and I was just curious what you're seeing from a shopping perspective, if there's any updates there, and if we should expect maybe acceleration in the policy count growth, and I guess it's kind of rounded out, if given, I think some of the profitability actions you've been taking in property lines after the cat's last year, if we should expect a goal, a gap in personal auto policy count growth versus personal property growth.

Grace: Grace your line.

Chris Carter: I wanted to go back to the earlier question about premium growth in personal auto.

Chris Carter: Personal lines more broadly how should we think about the <unk>.

Chris Carter: Policy count growth component of the topline over the next several quarters. It seems like it's inflicted sequential growth in the past couple of quarters and I was just curious what youre seeing from a shopping perspective, if theres any updates there and if we should expect.

Speaker Change: Maybe acceleration in the policy count growth and I guess, just kind of round. It out if given I think some of the profitability actions you've been taking in property lines. After the app. The cats last year, if we should expect.

Speaker Change #112: GAAP and.

Speaker Change #114: Personal auto policy count growth versus personal property growth.

Guillaume Lamy: Thanks. Thanks, Grace.

Grace Helen Carter: We'll ask Guillaume to give his perspective on what we're seeing from a shopping point of view, what we're seeing on the digital channels, and how that should translate into customer growth over time. So we're very comfortable with our profitability position in both personal auto and personal property and are really happy to be growing in that environment. I think the growth was strong again in Q2, 11% in personal auto and 9-ish percent in personal property, while the unit growth was mildly positive.

Grace: Thanks Grace.

Guillaume Lamy: We'll ask you to give this perspective on what we're seeing from a shopping point of view, what we're seeing in the digital channels, and now that should translate into customer growth over time. Thanks. So we're very comfortable with our profitability position in both personal auto and personal property, and are really happy to be growing in that environment. I think the growth was strong again in Q2, 11% in personal auto, 90% in personal property, while the unit growth was mildly positive, as we're still continuing to be active on rates to reflect the emerging trends that we're seeing in the portfolio.

Speaker Change #139: We will ask <unk> to give his perspective on what we're seeing from a shopping point of view, what we're seeing in the digital channels and now that should translate into customer growth overtime.

Speaker Change #118: Thanks, So we're very comfortable with our profitability position in both personal auto and personal property DNR really happy to be growing in that environment. I think the growth was strong again in Q2, 11% personal auto.

Speaker Change #118: 98%.

Speaker Change #118: Personal property, while the unit growth was mildly positive as.

Grace Helen Carter: As we're still continuing to be active on rates to reflect the emerging trends that we're seeing in the portfolio, we're seeing strong growth in our digital channel. Sales are up 84% year-to-date, which benefits mostly our direct channel, where a larger portion of the traffic is digital. The Direct Channel also benefits from the conversion of the RSA portfolio, and the Affinity portfolio, to the Bel Air Direct brand, which can now access the same digital ecosystem as the rest of the retail portfolio. Through time, we're still expecting our competitive position to improve as given what we mentioned earlier that the industry profitability is not 100%.

Speaker Change #118: We're still continuing to be active on on rates.

Chris Carter: <unk> the.

Chris Carter: The emerging trends that we're seeing in the portfolio.

Guillaume Lamy: We're seeing strong growth in our digital channel. Sales are up 84% year to date, which benefits mostly our direct channel, where a larger portion of the traffic is digital. The direct channel also benefited from the conversion of the RSA portfolio, the affinity portfolio to the Belar Direct brand, which can now access all the same digital ecosystem as the rest of the retail portfolio. Through time, we're still expecting our competitive position to improve, as given what we mentioned earlier, that the industry profitability is north of 100%. There's still a fair bit of catch up to do for the industry, and that should help unit growth going forward, while our retention remains really strong in most markets.

Chris Carter: We're seeing strong growth in our digital channel sales are up 84% year to date, which benefits, mostly our direct channel where a larger portion of the traffic.

Chris Carter: As digital.

Chris Carter: Direct channel also benefited from the conversion of the RSA portfolio.

Chris Carter: Affinity portfolio to the direct brand, which can now access all of that same digital ecosystem as the rest of the retail portfolio.

Chris Carter: Two time, we're still expecting our profitable.

Chris Carter: Competitive position to improve as given.

Guillaume Lamy: There's still a fair bit of catch-up to do for the industry, and that should help unit growth going forward while our retention remains really strong in most markets. So we're already seeing customer growth when we look at written. Written is kind of a leading indicator of the policy in force. So we're expecting that to also become positive. And it's already actually become positive this quarter, and we're expecting that to trend positive for the next few quarters. And Grace, we're practically practically the same.

Chris Carter: Once we mentioned that.

Speaker Change: The industry profitability is north of a 100% there is still a fair bit of catch up to do for the industry and that shouldn't out unit growth.

Speaker Change: Going forward, while our retention remains really strong and most market. So.

Guillaume Lamy: So we're already seeing customer growth when we look at written. Written is kind of a leading indicator of the policy and force, so we're expecting that to also become positive, and it's already actually became positive this quarter, and we're expecting that to turn positive for the next few quarters. We're tactically adding to our marketing or call this response generation sort of budget in the jurisdictions where it makes most sense to do so because we want to lean in in this environment. I'd say, you know, the exception here for me remains Alberta, where there's this artificial cat that is below inflation.

Speaker Change: We're already seeing customer growth when we look at Tristan.

Speaker Change #120: <unk> is kind of a leading indicator of that.

Speaker Change #120: OFC enforced so we're expecting that to also become positive.

Speaker Change #120: And it's already actually become became but then in this quarter and we're expecting that trend positive for the next few quarters.

Grace: Grace where tactically.

Charles Joseph Gaston Brindamour: I'd say, you know, the exception here for me remains Alberta, where there's this artificial cat, of Canada, every month where you're in a position where there's more inflation than the cap. Our own appetite in this province is reducing, you know, I would say at a pretty good speed at this stage. We think there are very clear solutions on the table.

Grace: Adding to our.

Grace: Marketing or call. This response generation sort of budget and the jurisdictions, where it makes most sense to do so because we want to lean in in this environment I would say the exception here for me remains Alberta, where theres this artificial cap.

Speaker Change #111: That is below inflation is very hard for the industry.

Guillaume Lamy: It's very hard for the industry. And as a result, players as anticipated started to exit this market. I do think that if the cat stays in place, you'll see more exit from the market. And every month where you're in a position where there's more inflation than the cat, our own appetite in this province is reducing. You know, I would say at a pretty good speed at this stage, we think there are very clear solutions on the table. We've shared those with the government; the ball is in their court. Thank you.

Speaker Change #111: And as a result players as anticipated started to exit this market I do think that if the cap stays in place you will see more exit from the market and.

Speaker Change: Every month, where you're in a position where there's more inflation.

Speaker Change #113: Then the cat all rolling appetite in this province is reducing I would say it at a pretty good speed at this stage. We think there are very clear solutions on the table, we shared dose with the government. The ball is in their court.

Charles Joseph Gaston Brindamour: We've shared those with the government. The ball is in their court. Improvement in the underlying combined ratio kind of on a natural basis would have been maybe in 2019, but that trend obviously got a bit disrupted by the pandemic environment. And I was just kind of wondering, given the slowing reserve releases in that line, if you could help us think about maybe kind of making the long-term target range for the underlying combined ratio in personal autos and if we should expect, you know, sub-95 on a total combined ratio basis to be achievable over the course of the personal auto cycle, just kind of regardless of the environment. Thank you. You don't want to share your perspective,

Speaker Change #151: Thank you.

Guillaume Lamy: I'm sticking with personal auto. I mean, I think the last time we saw such strong, you're over your improvement in the underlying combined ratio kind of on a natural basis was maybe in 2019, but that trend obviously got a bit disrupted by the pandemic environment.

Speaker Change #137: Sticking with personal auto I mean, I think the last time, we saw.

Speaker Change #137: Such strong year over year improvement.

Speaker Change #140: The underlying combined ratio kind of on a natural basis was maybe in 2019, but that trend obviously it got a bit.

Speaker Change: <unk>.

Speaker Change #174: By the by the pandemic environment and I was just kind of wondering given the slowing reserve releases in that line. If you could help us think about maybe kind of the long term target range for the underlying combined ratio in personal auto and if we should expect sub 95 on a total combined ratio basis.

Guillaume Lamy: And I was just kind of wondering, given the slowing reserve releases in that line, if you could help us think about maybe kind of the long-term target range for the underlying combined ratio in personal auto. So, and if we should expect you know, sub 95 on a total combined ratio basis to be achievable over the course of the personal auto cycle is kind of regardless of the environment. Thank you.

Speaker Change #110: To be.

Speaker Change #143: Achievable over the course of the personal auto cycle I'm, just kind of regardless of the environment. Thank you.

Guillaume Lamy: You don't want to share your perspective. Yeah, so combined ratio was again really strong this quarter at 91 for on. Let's not forget this is a seasonally favorable quarter. So this is really in line with our guidance of sub 95. We're observing the underlying last ratio improvement of three points with still LT. TYD of three point three points, which which is lower than last year's level. On the cost side, we're seeing inflation in the mid single. Digest very similar to last year quarter, while on the premium side both are written and earn rates are hovering around 10%.

Speaker Change #158: You don't you want to share your perspective.

Guillaume Lamy: Yeah, so the combined ratio was, again, really strong this quarter at 91.4. But let's not forget this is a seasonally favorable quarter. So, this is really in line with our guidance of sub-95. We're observing an underlying loss ratio improvement of three points with an still LTPYD of 3.3 points, which is lower than last year's level. On the cost side, we're seeing inflation in the mid-single digits, very similar to the last few quarters, while on the premium side, both our return and earn rates are hovering around 10%. So, really, our profitability outlook remains unchanged. I think the inflation trajectory is definitely downward, especially on physical damage.

Speaker Change #110: Yes, so I'm Andrea Shaw was again really strong this quarter at 91 four.

Speaker Change #160: Forget the see that this is a seasonally favorable quarter.

Speaker Change: This is really in line with our guidance of <unk> 95.

Speaker Change: Observing the underlying loss ratio improvement up three points would still.

Speaker Change: QAD.

Speaker Change: Three three points, which is lower than last year's level.

Speaker Change #115: On the cost side, we're seeing inflation in the mid single digit very similar to the last few quarter, while on the premium side both are written.

Speaker Change #115: Earned rates are operating around 10%, so really our profitability outlook remain unchanged and I think the inflation trajectory definitely downward, especially.

Guillaume Lamy: So, really our prosecutability outlook remains unchanged. I think the inflation trajectory, definitely downward, especially on physical damage, but we're not banking on a much larger decrease. And we're keeping an eye on the liability trend. So that's why we don't want to really decrease guidance at this point, but we'd very much like to beat that guidance. Overall, we're comfortable with our position and in personal auto, and really happy to be growing in that environment.

Speaker Change #115: On physical damage, but we're not banking on a much larger decrease and we're keeping an eye on the liability trends. So that's why we don't want to risk really decreased guidance at this point, but we would very much like two to beat that guidance. So overall, we're comfortable with our position in personal auto and really.

Jaeme Gloyn: But we're not banking on a much larger decrease, and we're keeping an eye on the liability trend. So, that's why we don't really want to decrease guidance at this point, but we'd very much like to beat that guidance. So, overall, we're comfortable with our position and personal auto and really happy to be growing in that environment. Your next question comes from Jaeme, from National Bank Financial. Please go ahead. Yeah, thank you. The first question is just on capital. I believe the score was about $2.9 billion.

Speaker Change #115: B to be growing in that environment.

Jamie Gourne: Thank you. Your next question on some Jamie Gourne from National Bank Financial, please go ahead.

Speaker Change #103: Thank you.

Speaker Change #103: Your next question comes from Jamie.

Jamie: From National Bank financial Please go ahead.

Louis Marcotte: Yes, thank you. First question just on the on Capitol. The March. Virgin, I believe, disclosed that $2.9 billion. Louis, can you give us a sense of how much of that you would describe as excess or deployable capital, and then is there any constraints on the mobility of that capital across jurisdictions? So I would say on the deployable of that margin, I would figure 10 to 15% is probably the pure deployable. It's high because of the capital generation and the first half. There are a few uses expected in the second half. Now, as you know, we've redeemed preferred chairs out of our UK business, and these were closing in July, so that will consume a bit.

Jamie: Yes. Thank you.

Jamie: First question just on capital.

Speaker Change #134: On the margin.

Speaker Change #165: I believe disclosed that $2 9 billion.

Louis Marcotte: Lillie, can you give us a census? How much of that would you describe as excess or deployable capital? And then are there any constraints on the mobility of that capital across jurisdictions? So I would say on the deployable of that margin, I would peg it at 10 to 15%, is probably the pure deployable. It's high because of capital generation in the first half. There are a few uses expected in the second half now.

Speaker Change #147: Can you add can you give us a sense of scale.

Speaker Change #142: How much of that you would describe as excess or deployable capital and then is there any constraints on the mobility of that capital across jurisdictions.

Speaker Change #144: So I.

Speaker Change #136: I would say on the deployable of that margin I would say 10% to 15%.

Speaker Change #136: Probably the.

Speaker Change #121: Sure deployable.

Speaker Change #121: It's high because of the capital generation in the first half there are a few uses expected in the second half now as you know.

Louis Marcotte: As you know, we've redeemed preferred shares out of our UK business, and these were closing in July, so that will consume a bit. So that's one element, and the re-risking of the equity portfolio will be another consumption of capital. So I expect to level down a bit before the end of the year on that basis, and then hopefully, next year we'll start generating a fair bit as well. But the deployable, you know, I would peg it in the 10-15% range. And then across geographies, it depends on the calendar structure specifically.

Speaker Change #121: Redeemed preferred shares out of our UK business.

Speaker Change #121: These were closing in July so that will consume a bit.

Louis Marcotte: So that's one element, and the re-risking of the equity portfolio will be another consumption of capital. So I expect to level down a bit before the end of the year on that basis, and then hopefully next year will start generating a fair bit as well. But the deployable, you know, I would beg it in the 10 to 15 range, and then across geographies, it depends on the calendar structure. Specifically, generally speaking, what we need to do is pull it out and bring it up to the corporate and then having the ability to deploy wherever we want from that point of view.

Speaker Change #121: So that's one element into re risking of the equity portfolio will be another consumption of capital. So I expect to level down a bit by before the end of the year.

Speaker Change #121: On that basis and then.

Speaker Change #121: Next year, we'll start generating.

Jamie: Fair bit as well, but the deployable.

Jamie: It would take it in the 10 to 15.

Speaker Change #119: Okay, Great and then across geographies.

Speaker Change #119: On the calendar structure, specifically generally speaking what we need to do is pull it out and bring it up to the corporate and then having the ability to deploy it wherever we want from that point of view, but I would say given the strength of our capital position in each of the countries the ability to pull out dividends is quite high.

Louis Marcotte: Generally speaking, what we need to do is pull it out and bring it up to the corporate level, and then have the ability to deploy it wherever we want from that point of view. But I would say, given the strength of our capital position in each of the countries, the ability to pull out dividends is quite high. Yeah, no, I think it is indeed the case, and I think one thing to keep in mind is that, in particular, in the U.K., each time we improve the earnings profile of the organization, this is an EDH Capital requirement.

Louis Marcotte: But I would say, given the strength of our capital position in each of the countries, the ability to pull out dividends is quite high. Yeah, though, I think it is indeed the case, and I think one thing to keep in mind is that, in particular in the UK, each time we improve the earnings profile of the organization, this is the its capital requirements.

Speaker Change #119: No I think it is indeed key.

Speaker Change #119: Jason.

Jason: And I think one thing to keep in mind is that in particular in the U K.

Jason: Each time, we improved the earnings profile of the organization.

Speaker Change #127: This alleviates capital requirements.

Louis Marcotte: And this is good for capital requirement, and so we made a lot of progress there. You think of the pension buy-in, you think of the improvement, the refocusing of the footprint towards commercial lines. Maybe can you can give us a perspective on profitability in the UK and the trajectory that we should expect. So, yeah, look, firstly, things are going very well, and Q2 combined ratio, nice to very solid, in line with the overall 2024 goal of opportunities and the DIG business. I know we began recording class in Q4 last year in the form of a cold share.

Charles Joseph Gaston Brindamour: And this is good for capital requirements. And so we've made a lot of progress there. You think of the pension buy-in, you think of the improvement, the refocusing of the footprint towards commercial lines. Maybe, Ken, you can give us a perspective on profitability in the UK and the trajectory that we should expect. Sure.

Speaker Change #127: This is good for capital requirement and so we've made a lot of progress. There you think of the pension buy in you think of the improvement.

Speaker Change #155: Refocusing of the footprint towards commercial lines, maybe can you can give us.

Speaker Change #154: Our perspective on profitability in the UK and the trajectory that we should expect for and yes look first of these things are going very well.

Kenneth Anderson: Yeah, look, firstly, things are going very well. Q2 combined ratio, 92.2, very solid in line with the overall 2024 goal of the 1990s. The DLG business, as you know, we began recording that in Q4 last year in the form of a cold share. We have been taking a cautious stance, though, as we assume and integrate that new portfolio. That brings a little bit of a drag on the near-term performance, but very much in line with expectations. The integration is in full swing, though, now.

Speaker Change #150: Q2 combined ratio 92 two.

Speaker Change #127: Our solid in line with the overall 2020 goal.

Speaker Change #171: And the <unk> business as you know we began recording pass in.

Jamie: Q4 last year in the form of a quota share we have been taking a cautious stance, though as we assume and integrate that new portfolio that brings a little bit of a drag on the near term performance, but very much in line with expectations.

Louis Marcotte: We have been taking a cautious standstill as we assume and integrate that new portfolio that brings a little bit of a drag on the near term performance, but very much in line with expectations and the inspirations and full swing though now policies are now actually renewing onto our platform. This is much better insight into the portfolio, which by the way is 20% larger than what we anticipated, and we're getting strong race on that portfolio, which will bring the ratio benefit in the coming quarters, and we're on track to realize the 20 million pounds of synergies over 36 months.

Jamie: The integration is in full swing, though now policies are now actually renewing onto our platform gives.

Kenneth Anderson: Policies are now actually renewing onto our platform, which gives us much better insight into the portfolio, which, by the way, is 20 percent larger than what we anticipated. We're getting a strong rate on that portfolio, which will bring a loss ratio benefit in the coming quarters. We're on track to realize the £20 million of synergies over 36 months. If you go back to when we announced the DLG acquisition in Q3 last year, we said that we expected the UK and I business to run in the 92 or low 90s range in 2024 but down close to 90 percent by 2026. We're right on track to deliver that.

Jamie: Gives us much better insight into the portfolio.

Speaker Change #138: By the way is 20% larger than what we are.

Speaker Change #138: Anticipated and we're getting strong rates on that portfolio, which will break.

Speaker Change #138: <unk> benefits in the coming quarters, and we're on track to realize the 20 million pounds of synergies over 36 months. So if you go back to when we announced the <unk> acquisition Q3 last year, we said that we expected the UK ni business to run in the 90 to low 90% range in 'twenty four.

Louis Marcotte: So, if you go back to when we announced the DOG acquisition Q3 last year, we said that we expected the UK and our business to run in the 92 or low 90s range in 24, but down close to 90% by 2026. We're right on track to deliver that. That's getting us in the zone to mid and above mid teams. Are we in the UK business, and that starts to create room for dividends and capital repatriation from the UK. Especially that capital requirements come down when your forward profitability is improvement, and so this is really double impact here in terms of generating strong R and wind that jurisdiction.

Speaker Change #138: But down close to 90% by 2026, we're right on track to deliver that that's getting in the zone to mid on above mid teens ROE and the UK business and that starts to create room for dividend and capital.

Kenneth Anderson: That's getting us in the zone to mid and above mid-teens ROE in the UK business, and that starts to create room for dividends and capital repatriation from the UK. Especially, capital requirements come down when your forward profitability is improving. And so this is really a double impact here in terms of generating strong ROI in that jurisdiction, and we get more tax recoveries. It's all positive. Yeah. Thanks, Jaeme.

Speaker Change #138: Repatriation from the UK, especially that capital requirements come down.

Speaker Change #138: When youre forward profitability is improving and so this is really.

Speaker Change #138: Double in fact here in terms of generating strong Roe in that jurisdiction.

Louis Marcotte: Action, and we get more tax recoveries. And we get more tax; you know, it's all positive. Yeah. Thanks, Damon.

Speaker Change #138: We get more tax recoveries and we get more tax it's all positive yes.

Speaker Change #116: Thanks, Jamie.

Lemar Persaud: Great.

Speaker Change #116: Great.

Lemar Persaud: Your next question comes from Lemar Persaud, from Car March. Please go ahead.

Jaeme Gloyn: Great. Your next question comes from Lemar Persaud from CarMart. Please go ahead.

Speaker Change #161: Your next question comes from Nomura firsthand from car Mark. Please go ahead.

Lemar Persaud: Yeah, thanks. So it's meaningful to me that you guys are reminding us that the 70% ROI includes elevated capacity cash from Q3 last year. Is that to suggest that you guys feel like 17% ROI feels like something that Intact could deliver in a normalized environment? Is that kind of the point to that comment? Or am I reading too much into it? I would say your reading is exactly right. That's, we wanted to highlight the fact that the 17 year was not driven by lower cat losses in the quarter. It is impacted. It still is impacted by last year's heavy cat losses in Q3 as we're giving a figure on the last 12 months' basis.

Lemar Persaud: So it's meaningful to me that you guys are reminding us that the 17% ROE includes elevated caps from Q3 last year. Is that to suggest that you guys feel like a 17% ROE feels like something that Intact could deliver in a normalized environment? Is that kind of the point of that comment, or am I reading too much into it?

Mark: Yes. Thanks.

Mark: So it's meaningful to me that you guys are a mining asset.

Speaker Change #141: The 17% ROE includes.

Speaker Change #135: Elevated cash from Q3 last last year is that to suggest that you guys feel like a 17% ROE feels like something that intact could.

Speaker Change #167: Could deliver in a normalized environment is that is that kind of the point to that to that commentary I might be reading too much into it.

Louis Marcotte: I would see your reading. Your reading is exactly right. That's why we we wanted to highlight the fact that the 17 here was not driven by lower cat losses in the quarter. It is impacted. It is still impacted by last year's heavy cat losses in Q3 as we're giving a figure on the last 12 months basis. I think we're running at a very solid 17 percent right now. And I think our view is, you know, with every measure we have in place, this is sustainable. Yeah, I think the focus for me, when you get past 15, is Earnings Growth.

Speaker Change #175: I see Youre reading your reading is exactly right that we we wanted to highlight the fact that the 17 here was not driven by lower cat losses in the quarter.

Speaker Change #135: It is in fact, it still is impacted by last year's.

Speaker Change #164: Have your cat losses in Q3, as we're giving a figure on a last 12 months basis I think we're running at a very solid 17% right now.

Louis Marcotte: I think we're running at a very solid 17% right now. And I think our view is, you know, with every measure we have in place, you know, this is sustainable. Okay. Yeah.

Speaker Change #164: And I think our view is with every measure we have in place.

Speaker Change #135: This is sustainable.

Speaker Change #128: Okay, Yes, I think the focus the focus for me when you when you get past 15.

Charles Brindamour: I think the focus, the focus for me, when you, when you get past 15, it's earnings growth. And so you need to find that right balance between, you know, your growth profile, which translates into earnings growth. And I think that your earnings growth profile of the firm is really good with our new footprint. And, you know, where above 15 should you be? In my mind, it should be determined by the balance between growth and bottom line, translating into earnings growth. That's helpful now. Does it feel like all these positive underlying trends with intact? Like, at what point do you revisit that 500 basis point are we gap versus the industry because it seems to me like you're putting some distance between yourself and peers.

Speaker Change #126: Its earnings growth.

Charles Joseph Gaston Brindamour: So you need to find that right balance between, you know, your growth profile, which translates into earnings growth. And I think that the earnings growth profile of the firm is really good with our new footprint. And you know, where above 15 should you be? In my mind, it should be determined by the balance between Growth and Bottom Line Translating into Earnings. That's helpful. Now, does it feel like all these positive underlying trends with Intact, at what point do you revisit that 500 basis point ROE gap versus the industry? Because it seems to me like you're putting some distance between yourself and peers, and maybe that has to be revisited?

Speaker Change #170: And so you need to find that right balance between.

Speaker Change #116: Your growth profile, which translates into earnings growth and I think that.

Speaker Change #116: The earnings growth profile of the firm is really good with our new footprint.

Speaker Change #116: We're above 15 should you be in my mind should be determined by the balance between.

Speaker Change #116: Growth and bottom line trends translating into earnings growth.

Speaker Change #169: That's helpful now.

Speaker Change #157: Does it feel like all of these positive underlying trends with intact.

Lemar Persaud: So maybe Charles or Louis, at what point do you revisit that 500 basis point ROE gap and say, "This is a large enough organization; we've done enough to improve profitability. And now we think the gap is something higher, maybe 700. What do you think about that?" I think it's a great question, and it's a question we debate from time to time.

Speaker Change #132: Like at what point do you revisit that 500 basis point ROA gap versus the industry because.

Charles: It seems to me like you're putting some distance between yourself and peers that maybe that that has to be revisited. So maybe Charles our Louie at what point do you revisit that that 500 basis point ROE gap and say.

Charles Brindamour: And maybe that, that has to be revisited. So maybe Charles or Louis, at what point do you revisit that 500 basis point gap and say, this is a large enough organization we've done enough to improve profitability. And now we think the gap is something higher, maybe 750. How do you think about that? Yeah. I think it's a great question. And it's a question we debate from time to time. We think the machine. You know, can generate more than 500 basis points. In fact, our track record over 10, 15, 5, whatever you want to cut it, is closer to 600, 700 basis points.

Speaker Change #123: This is a large enough organization, we've done enough to improve profitability and now we think the gap is something higher maybe $750. How do you think about that yet.

Speaker Change #179: I think it's a great question.

Speaker Change #176: And it's a question we debate from time to time, we think the machine.

Charles Joseph Gaston Brindamour: We think the machine, uh, you know, can generate more than 500 basis points. In fact, our track record over 10, 15, 5, whatever you want to cut it, is closer to six, seven hundred basis points. Um, but creating out performance on a sustainable basis, day in, day out, as to be achieved, you know, at the customer level in a way. And we know in Canada, given our size advantage and the fact that we've been focused for decades on creating out performance, we know it's super well anchored. We're really happy with the progress we've made outside of Canada.

Speaker Change #123: Can generate more than 500 basis points in fact, our track record over 10 to 15, five whatever you want to cut it is closer to six 700 basis points.

Speaker Change #123: But.

Charles Brindamour: But creating out performance on a sustainable basis, they end they out as to be achieved, you know, at the customer level in a way. And we know in Canada, given our size advantage and the fact that we've been focused for decades on creating outperformance, we know it's super well anchored. We're really happy with the progress we've made outside of Canada.

Speaker Change #123: Creating outperformance on a sustainable basis.

Speaker Change #123: Day in day out as to be achieved.

Speaker Change #123: At the customer level.

Speaker Change #123: <unk>.

Speaker Change #123: <unk>.

Speaker Change #123: And we know in Canada, given our size advantage in the fact that we've been focused for decades on creating outperformance we know its super well anchored we're really happy with the progress we've made outside of Canada.

Charles Brindamour: Bye. We've gone from 100% Canadian business eight years ago, and now it's 65% Canadian. So we feel this is still very much the right objective. We have the horsepower to outperform that objective, but we need to deepen the foundation about performance in the U.S. and in the UK at this stage. And then we can have the betas to whether we move the bar, the goalpost up. We're not, but so far, so good. All these business units are firing on all cylinders, and we're really keen to grow in the markets where we have the good news is that the sandbox in which Intact operates is 10 times bigger than what it was eight years ago.

Speaker Change #123: Yes.

Charles Joseph Gaston Brindamour: We went from 100% Canadian business eight years ago, and now it's 65% Canadian. So we feel this is still very much the right objective. We have the horsepower to outperform that objective, but we need to deepen the foundation of outperformance in the U.S. and in the U.K. at this stage, and then we can have a debate as to whether we move the bar, the goalposts up. All these business units are firing on all cylinders, and we're really keen to grow in the markets where we are. The sandbox in which Intact operates is 10 times bigger than it was eight years ago.

Speaker Change #123: We've gone from 100% Canadian business eight years ago, and now it's 65%.

Speaker Change #123: So we feel this is still very much the right objective, we have the horsepower to outperform that objective, but we need to deepen the foundation of outperformance in the U S.

Speaker Change #123: In the UK.

Speaker Change #123: At this stage and then we can have a debate as to whether we move the bar the goalpost up.

Speaker Change #123: We're not but so far so good all these business units are firing on all cylinders and.

Speaker Change #123: We're really keen to grow in the markets, where we have the good news is.

Speaker Change #123: That.

Speaker Change #123: The sandbox in which in fact operates.

Speaker Change #123: 10 times bigger than what it was eight years ago.

Charles Brindamour: So there's out performance everywhere. So we can just keep our head down, grow where we operate today, and meet our earnings growth objective. While outperforming from an hour, we pointed you in a few years from now. We can debate whether 500 basis points is the right objective. But we think there are very few companies and very few industries that have generated this sort of outperformance. And we're very keen to protect that outperformance.

Charles Joseph Gaston Brindamour: There's outperformance everywhere. So we can just keep our heads down, grow where we operate today, and meet our earnings growth objective while outperforming from an ROE point of view. And a few years from now, we can debate whether 500 basis points is the right objective. But we think there are very few companies and very few industries that have generated this sort of outperformance, and we're very keen to protect that outperformance. And if we can grow it, we definitely will.

Speaker Change #123: <unk> outperformance everywhere. So we can just keep our head down grower and we operate today.

Speaker Change #123: Our earnings growth objective, while outperforming from an ROE point of view and a few years from now we can debate whether 500 basis points is the right objective.

Speaker Change #123: But.

Unknown Executive: And if we can grow it, we definitely will appreciate the time.

Speaker Change #123: We're very keen to protect that outperformance, and if we can grow it, we definitely will.

Lemar Persaud: Appreciate it. Your next question comes from John Aiken from Jeffreys, please go ahead. Good morning, thanks for squeezing me in.

John Aiken: Here next question, and some John Aiken from Jeffries, please go ahead.

Speaker Change #173: I appreciate the time.

Speaker Change #123: Your next question comes from John Aiken from Jefferies. Please go ahead.

John Aiken: Good morning. Thanks for squeezing me in.

John Aiken: Charles wanted to revisit some of the comments you made in your prepared commentary about the specialty lines and basically, a little bit more room for improvement. Now, I think this is in the context of when you were talking about digital and AI. Are you willing to give us a couple of examples just for my own edification in terms of what you're trying to do with specialty lines?

Charles Brindamour: Charles wanted to revisit some of the comments we made in your prepared commentary, but this is especially lines and basically a little bit more room for improvement. I think this is in context of when you were talking about digital and AI. Are you willing to give us a couple of examples just for my own edification in terms of what you're trying to do with specialty lines? And then I guess pushing my luck and you go actually discuss whether or not you're willing to quantify what the impact of these improvements could be. So if you look at the specialty lines business, now it's running in the 80s in a favorable environment.

John Aiken: Good morning, thanks for squeezing me in. Charles wanted to revisit some of the comment you made in your prepared commentary about the specialty lines and

John Aiken: basically a little bit more room for improvement. Now I think this is in context of when you were talking about digital and AI. Are you willing to give us a couple examples just for my own edification in terms of what you're trying to do with specialty lines and then I guess pushing my luck can you go actually discuss whether or not you're willing to quantify what the impact of this of these improvements could be?

Charles Joseph Gaston Brindamour: And then, I guess, pushing my luck, can you actually discuss whether or not you're willing to quantify what the impact of these improvements could be? So, if you look at the Specialty Lines Business, now it's running in the 80s in a favorable environment.

John Aiken: So

Speaker Change #153: If you look at the

Speaker Change #123: Specialty Lines Business

Speaker Change #156: Now it's running in the 80s.

Charles Brindamour: And I think the sophistication lift we can get can keep us operating in that zone on a sustainable basis. That's really what we're trying to achieve.

Speaker Change #156: in a favorable environment.

Charles Joseph Gaston Brindamour: And I think the sophistication lift we can get can keep us operating in that zone on a sustainable basis. That's really what we're trying to achieve. The example I would give you, just to be very concrete, is that on Canadian commercial lines, so our main street commercial lines of operation.

Speaker Change #123: and I think the...

Speaker Change #123: can keep us operating in that zone on a sustainable basis. That's really what we're trying to achieve.

Charles Brindamour: The example I would give you just to be very concrete is that in Canadian commercial lines or main street commercial lines of operation. You have a very sophisticated pricing engine, machine learning based and many segments, a specific view of expected profit per customer that is used to manage the business. All that is automated, and it generates tens of billions of price points. Funds in a product in a given province. We're not there in other jurisdictions, and that's where I see a fair bit of upside. Like we're racing to deploy segmentation models, we're not working yet with systems who are as modern as we have in the kinetic ecosystem, so we're investing heavily in our systems in the US as well as in the UK and increasing the Europe that helps lift the quality of the data you use when you segment.

Charles Joseph Gaston Brindamour: You have a very sophisticated pricing engine, machine learning based on many segments. Interesting view of expected profit per customer that is used to manage the business. All that is automated, and it generates... tens of billions of price points for any product in a given province. We're not there in other jurisdictions.

Speaker Change #123: you have a very sophisticated pricing engine

Speaker Change #123: All that is automated and it generates

Speaker Change #123: Tens of billions of price points.

Charles Joseph Gaston Brindamour: And that's where I see a fair bit of upside, like we're racing to deploy segmentation models. We're not working yet with systems that are as modern as we have in the Canadian ecosystem, so we're investing heavily in our systems in the U.S., as well as in the U.K. and increasingly in Europe. That helps lift the quality of the data you use when you segment. The performance is really good, but when I look at the depth of the sophistication that's in the field right now outside of Canada, I see a lot of upside myself, and that's why we're investing massively in that space.

Charles Brindamour: And so the performance is really good, but when I looked at the depth of the sophistication that's in the field right now outside of Canada, I see a lot of upside myself, and that's why we're investing massively in that space.

Charles Brindamour: Intact Financial, so give me time; I'll leave it there.

Charles Joseph Gaston Brindamour: Fantastic. Thanks, Charles. Give me time.

Unknown Executive: Thanks.

Nigel de Souza: And we have time for one more question from Nigel de Souza from Veritas.

John Aiken: I'll leave it there. And we have time for one more question from Nigel D'Souza from Veritas. Please go ahead. Good morning.

Nigel de Souza: Please go ahead.

Louis Marcotte: Good morning. Thank you for taking my question. I just had some minor follow-ups for you on cat losses, just to get a better understanding of how it plays out going forward. Should we expect that most of the losses from recent events that's going to be reflected in Q3, and is any of it going to bleed into Q4? Could you remind us how long the tails are for these types of events? So in future quarters or future years, how long could your PYD be impacted? And the last point on the Jasper wildfires: there's a lot of disruption to businesses and potential loss revenue.

Nigel D'Souza: Thank you for taking my question. I just had some minor follow-ups for you on cat losses, just to get a better understanding of how it plays out going forward.

Charles Joseph Gaston Brindamour: Should we expect that most of the losses from recent events are going to be reflected in Q3? And is any, any of it going to bleed into Q4? Could you remind us how long the tails are for these types of events? So, in future quarters or future years, how long could your PYD be impacted?

Patrick Barbeau: And the last point on the Jasper wildfires, there's a lot of disruption to businesses and potential lost revenue. So any commentary or color on the potential impact on your commercial lines from those losses? So just in aggregate tax losses, you should not expect Canada to grow very fast, uh, in fact, faster than the industry, and you see that in big cat moments, our outperformance can shrink for a quarter or two as the industry moves to ultimate, so I would not expect Adverse Development from Current Cash outside of the current quarter. That's the first point.

Speaker Change #133: Could you remind us how long the tails are for these type of events so in you know future quarters or future years how long

Speaker Change #162: Prithvir P. Y. D.

Louis Marcotte: So, any commentary or color on the potential impact on your commercial lines from those wildfires?

Louis Marcotte: So just an aggregate cat losses, you should not expect any of the Q2 and Q3 losses to bleed into Q4. In fact, the pattern we've shown over time is you have favorable development in subsequent quarters because we go to the ultimate very fast. In fact, faster than the industry. And you see that in big cat moments, our outperformance can shrink for a quarter or two as the industry moves to ultimate. So I would not expect adverse development from current cats outside of the current quarter.

Louis Marcotte: That's the first point. And then there was commercial. Yeah, commercial in Jasper, in the overall kind of guidance or color that just provided earlier around these events and potential impact with the catastrophe retention. When we project the ultimate, we fully take into account all coverage. So, with the cost to repair, we rebuild the houses, the content, the additional big expense during the evacuation, including the business interruption. Another fall of the clients that are interrupted during the evacuation, but also for the clients who need to be rebuilt, and that's where the business interruption period might be long.

Charles Joseph Gaston Brindamour: And then there was a commercial, yeah, a commercial in Jasper on the overall kind of guidance and color that Charles provided earlier around, you know, these events and the potential impact with the catastrophe retention. When we project the ultimates, we fully take into account all coverages.

Speaker Change #177: And then there was commercial, yeah, commercial in Jasper. In the overall kind of guidance of color that Charles provided earlier around, you know, these events.

Speaker Change #159: and the potential impact with the catastrophe retention.

Speaker Change #172: When we project the ultimates, we fully take into account all the coverages, so the cost to repair, rebuild the houses, the content, the additional living expense during the evacuation, including the business interruption.

Patrick Barbeau: So the cost to repair and rebuild the houses, the content, the additional living expenses during the evacuation, including business interruption. Not for all of the clients that are interrupted during the evacuation but also for the clients who need to be rebuilt, and that's where the business interruption period might be long. So, to your point, Doug, by the end of Q3, we'll fully book the full extent of that dust, including adverse misinterruption potential.

Louis Marcotte: Order. So, to your point, by the end of Q3, we'll look fully at the full extent of that, thus including that business interruption potential.

Speaker Change #168: So, to your point, by the end of Q3, we'll book fully the full extent of that dust, including adverse misinterruptions, eventually.

Unknown Executive: Perfect. Thank you, everyone, for joining us today. Replay of the call will be available for one week, and the webcast will be archived on our website for one year. A transcript will also be available on our website in the Financials report section.

Patrick Barbeau: Perfect. Thank you, everyone, for joining us today. A replay of the call will be available for one week, and the webcast will be archived on our website for one year. A transcript will also be available on our website in the financial reports section. Our 2024 third quarter results are scheduled to be released after market close on Tuesday, November 5th, with the earnings call starting at 11 a.m. Eastern Time the following day.

Speaker Change #149: Perfect. Thank you everyone for joining us today.

Speaker Change #163: A replay of the call will be available for one week and the webcast will be archived on our website for one year.

Speaker Change #163: A transcript will also be available on our website in the financial reports section.

Unknown Executive: Our 2024 third quarter results are scheduled to be released after a market close on Tuesday, November 5th, with the earnings call starting at 11 a.m. Eastern Time, the following day.

Speaker Change #166: Our 2024 third quarter results are scheduled to be released after market close on Tuesday, November 5th, with the earnings call starting at 11 a.m. Eastern Time the following day.

Unknown Executive: Thank you again, and this concludes our call for today. Thank you, sir.

Operator: Thank you again, and this concludes our call for today. Thank you, sir. Ladies and gentlemen, this does conclude your conference call for today. Once again, thank you for attending. At this time, we ask you to please disconnect your lines. Thank you.

Speaker Change #166: Thank you again, and this concludes our call for today.

Unknown Executive: Ladies and gentlemen, this does ended conclude your conference call for today. Once again, thank you for attending at this time. We ask you to please disconnect your lines. Thank you.

Speaker Change #178: Thank you, sir. Ladies and gentlemen, this does end and conclude your conference call for today. Once again, thank you for attending. At this time, we ask you to please disconnect your lines. Thank you.

Speaker Change #149: [music].