OREANDA-NEWS. Fitch Ratings has assigned the following ratings to Intact Financial Corporation (Toronto: IFC) (Intact):

--Issuer Default Rating (IDR) 'A';
--Senior debt rating 'A-'.

Fitch has also assigned an Insurer Financial Strength rating (IFS) of 'AA-' to Intact's property/casualty insurance subsidiaries. A full rating list follows at the end of this release. The Rating Outlook is Stable.

KEY RATING DRIVERS

Intact's ratings reflect its large market share and scale, very strong reserve position, and solid capitalization. Balanced against these strengths is a company with reported above average premium growth, which will likely continue to grow through acquisitions and has the potential to add goodwill to the balance sheet.

Intact is the largest property/casualty insurer in Canada and the number one writer in British Columbia, Quebec, Alberta, Ontario, and Nova Scotia. This size and scale is consistent with the 'AA' rating category and has helped Intact generate strong profitability. For the first half of 2015, Intact had a GAAP calendar year combined ratio of 92.5% and a prior full year-end four year average of 94.6%. The first half 2015 combined ratio benefitted from 8.1 pp of favorable reserve development. Fitch believes the company is prudent in setting reserve levels and is aided by the use of a Provision for Adverse Development (PfAD) margin that is used in setting reserve levels.

The company's pretax operating income for the first half of 2015 was CAD 345 million an approximate CAD 67 million increase over first half 2014. First half 2015 ROE was strong at 14.7% albeit down modestly from year-end 2014 and up dramatically from year-end 2013.

Intact's traditional capital metrics are strong and have been stable for several years. Operating leverage was 1.4x at June 30, 2015. From a risk based perspective, Intact's regulatory Minimum Capital Test (MCT) score was 200% at June 30, 2015 above managements stated target of 170% implying an excess capital level of CAD 564 million. Fitch believes management will maintain capital metrics in line with historical results.

Intact's financial leverage ratio was 17.0% at June 30, 2015 in line with year-end 2014 and below management's stated target of 20%. Fixed charge coverage was 9.0x which was in line with year-end 2014. Due to the history of acquisitions Intact has almost CAD 1.2 billion in goodwill on its balance sheet with CAD 573 million being generated from the 2011 purchase of AXA Canada. Favorably the acquisition has had time to mature; however, the large goodwill balance is a credit negative and makes tangible financial leverage, excluding goodwill, 21% as of June 30, 2015. Fitch does note that the company currently trades at 2.3x book value and had debt/EBITDA of 1.0x as of June 30, 2015.

RATING SENSITIVITIES
Factors that could lead to consideration of a ratings downgrade include:

--A MCT below 170%;
--Sustained adverse reserve development of more than 3% of prior year shareholder's equity;
--A material acquisition outside of the Canadian insurance market;
--Sustained GAAP fixed charge coverage ratio below 7.0x or financial leverage above 25%.

Factors that could lead to an upgrade include:

--Improvement in capital adequacy and leverage measures consistent with 'AA' sector credit factors;
--Consistent and sustained financial performance with return on equity in the low to mid-teens.
--Sustained favorable reserve trends;
--Sustained financial leverage below 20%;

FULL LIST OF RATING ACTIONS

Fitch has assigned the following ratings:

Intact Financial Corporation
--IDR 'A';
--CAD 250 million unsecured senior debt 5.41% due Sept. 3, 2019 'A-';
--CAD 300 million unsecured senior debt 4.70% due Aug. 18, 2021 'A-';
--CAD 250 million unsecured senior debt 6.40% due Nov. 23, 2039 'A-';
--CAD 250 million unsecured senior debt 5.16% due June 16, 2042 'A-';
--CAD 100 million unsecured senior debt 6.20% due July 8, 2061 'A-';
--CAD 250 million 4.2% non-cumulative class A series 1 preferred stock 'BBB;'
--CAD 250 million 4.2% non-cumulative class A series 3 preferred stock 'BBB.'

The Rating Outlook is Stable.

Fitch has assigned a 'AA-' IFS rating to the following:
--Intact Assurances Agricoles Inc.;
--Intact Insurance Company;
--Jevco Insurance Company;
--La Compagnie d'Assurances Belair Inc.;
--Nordic Insurance Company of Canada;
--Novex Insurance Company;
--Trafalgar Insurance Company of Canada.

The Rating Outlook is Stable.