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					Second Quarter                     2012
2
Interim Consolidated Financial Statements (unaudited)
For the quarter ended June 30, 2012

Intact Financial Corporation
Intact Financial Corporation
Interim Consolidated financial statements (unaudited)



Table of contents


Interim Consolidated financial statements
Interim Consolidated balance sheets (unaudited)................................................................................................2
Interim Consolidated statements of comprehensive income (unaudited) ............................................................3
Interim Consolidated statements of changes in shareholders’ equity (unaudited) ...............................................4
Interim Consolidated statements of cash flows (unaudited) ................................................................................4

Notes to the interim Consolidated financial statements

Note 1 - Status of the Company ..........................................................................................................................5
Note 2 - Basis of presentation .............................................................................................................................5
Note 3 - Summary of significant accounting policies ...........................................................................................6
Note 4 - Business combination ............................................................................................................................6
Note 5 - Assets classified as held for sale and directly associated liabilities .......................................................7
Note 6 - Financial instruments .............................................................................................................................8
Note 7 - Claims liabilities ...................................................................................................................................13
Note 8 - Revenue ..............................................................................................................................................14
Note 9 - Income taxes .......................................................................................................................................15
Note 10 - Other assets and other liabilities ........................................................................................................16
Note 11 - Employee future benefits ...................................................................................................................17
Note 12 - Debt outstanding................................................................................................................................17
Note 13 - Common shares and preferred shares ..............................................................................................18
Note 14 - Earnings per share.............................................................................................................................19
Note 15 - Share-based payments......................................................................................................................19
Note 16 - Additional information on the interim Consolidated statements of cash flows....................................20
Note 17 - Commitments and contingencies .......................................................................................................21




                                                                                                                                                                    page 1 of 21
Intact Financial Corporation
Interim Consolidated balance sheets (unaudited)
(in millions of Canadian dollars, except as otherwise noted)


                                                                                      June 30,   December 31,
As at                                                                      Note          2012           2011
Assets
Investments                                                                 6
   Cash and cash equivalents                                                      $       223    $         206
   Debt securities                                                                      7,922            7,887
   Preferred shares                                                                     1,220            1,281
   Common shares                                                                        1,905            2,051
   Loans                                                                                  398              403
                                                                                       11,668           11,828

Assets classified as held for sale                                          5                -           1,631
Accrued investment income                                                                   65              66
Premium receivables                                                                      2,623           2,487
Reinsurance assets                                                                         346             410
Financial assets related to investments                                     6              161              15
Income taxes receivable                                                                     78              58
Deferred tax assets                                                                        184             158
Deferred acquisition costs                                                                 664             652
Other assets                                                               10              312             278
Investments in associates and joint ventures                                               256             241
Property and equipment                                                                      91              67
Intangible assets                                                                        1,075           1,068
Goodwill                                                                                   806             794
Total assets                                                                      $    18,329    $      19,753

Liabilities
Liabilities directly associated with assets classified as held for sale     5     $         -    $       1,330
Claims liabilities                                                          7           6,903            6,886
Unearned premiums                                                                       3,858            3,790
Financial liabilities related to investments                                6             563              532
Income taxes payable                                                                       10               17
Deferred tax liabilities                                                                  125              123
Other liabilities                                                          10           1,364            1,441
Debt outstanding                                                           12           1,092            1,293
                                                                                       13,915           15,412
Shareholders’ equity
Common shares                                                              13            1,889           1,889
Preferred shares                                                           13              489             489
Contributed surplus                                                                        118             115
Retained earnings                                                                        1,770           1,642
Accumulated other comprehensive income                                                     148             206
                                                                                         4,414           4,341
Total liabilities and shareholders’ equity                                        $    18,329    $      19,753
See accompanying notes to the interim Consolidated financial statements.




                                                                                                     page 2 of 21
Intact Financial Corporation
Interim Consolidated statements of comprehensive income (unaudited)
(in millions of Canadian dollars, except as otherwise noted)


                                                                               Three months                 Six months
For the periods ended June 30,                                Note              2012          2011          2012              2011
Direct premiums written                                         8          $   1,960    $     1,355    $   3,356     $       2,297
Net premiums earned                                             8              1,589          1,075        3,169             2,143
Net claims incurred                                             7               (948)         (699)        (1,891)          (1,386)
Underwriting expenses                                                           (518)         (343)        (1,034)            (666)
                                                                                 123            33            244               91
Impact of change in net claims discount rate                    7                (44)          (31)           (18)             (14)
Underwriting income                                                              79              2           226                77
Net investment income                                           6                94             76           194               149
Net investment gains                                            6                 3             71            15               133
Share of profit from investments in associates and
   joint ventures                                               8                  6             6             12                 9
Other revenues                                                  8                 23            14             55                28
Other expenses                                                                    (5)           (8)           (31)              (21)
Finance costs                                                                    (14)           (8)           (28)              (15)
Integration and restructuring costs                             10               (20)            -            (43)                -
Change in fair value of contingent consideration                10                 -             -            (11)                -
Income before income taxes                                                      166            153           389               360
Income taxes                                                    9               (33)           (30)          (79)              (80)
Net income attributable to shareholders                                    $    133     $      123     $     310     $         280

Weighted-average number of common shares, basic
  and diluted (in millions)                                     14              130            109           130               110
Earnings per common share, basic and diluted
  (in dollars)                                                  14         $    0.98    $      1.12    $    2.31     $        2.54
Dividends paid per common share (in dollars)                               $    0.40    $      0.37    $    0.80     $        0.74

Net income attributable to shareholders                                    $    133     $      123     $     310     $         280
Other comprehensive income (loss)
Net actuarial losses on employee future benefits                11               (67)           (49)          (72)              (41)
Available-for-sale securities:
   Net changes in unrealized gains (losses)                                      (48)            (6)          (41)              56
   Reclassification to income of net losses (gains)                               16            (53)          (36)            (152)
Share of other comprehensive income (loss) from
   associates and joint ventures                                                  1              -            (1)                -
Income tax benefit                                              9                25             26            38                36
Other comprehensive loss                                                         (73)           (82)        (112)             (101)
Total comprehensive income attributable to
  shareholders                                                             $     60     $       41     $     198     $         179
See accompanying notes to the interim Consolidated financial statements.




                                                                                                                         page 3 of 21
Intact Financial Corporation
Interim Consolidated statements of changes in shareholders’ equity (unaudited)
(in millions of Canadian dollars, except as otherwise noted)


                                                                                                                    Accumulated
                                                                                                                           other
                                                   Common         Preferred        Contributed      Retained     comprehensive
                                         Note        shares          shares            surplus      earnings       income (loss)                  Total
Balance as at January 1, 2012                      $ 1,889         $    489          $     115      $ 1,642           $      206             $    4,341
Net income attributable to
  shareholders                                               -                 -                -         310                      -                310
Other comprehensive loss                                     -                 -                -         (54)                   (58)              (112)
Total comprehensive income
  (loss)                                                     -                 -                -         256                    (58)              198
Dividends declared on common
  shares                                                     -                 -                -        (104)                       -             (104)
Dividends declared on preferred
  shares                                                   -                 -                  -         (10)                    -                 (10)
Share-based payment                        15              -                 -                  3         (14)                    -                 (11)
Balance as at June 30, 2012                        $   1,889       $       489       $        118   $   1,770        $          148          $    4,414

Balance as at January 1, 2011                      $     993       $           -     $        96    $   1,565            $      315          $    2,969
Net income attributable to
  shareholders                                               -                 -                -         280                      -                280
Other comprehensive loss                                     -                 -                -         (30)                   (71)              (101)
Total comprehensive income (loss)                            -                 -                -         250                    (71)               179
Common shares repurchased for
  cancellation                             13             (24)                 -                -        (105)                       -             (129)
Dividends declared on common
  shares                                                   -                   -                -         (81)                    -                 (81)
Share-based payment                        15              -                   -                5          (1)                    -                   4
Balance as at June 30, 2011                        $     969       $           -     $        101   $   1,628        $          244          $    2,942
See accompanying notes to the interim Consolidated financial statements.



Interim Consolidated statements of cash flows (unaudited)
(in millions of Canadian dollars, except as otherwise noted)

                                                                                    Three months                             Six months
For the periods ended June 30,                                   Note                2012               2011                 2012                 2011
Operating activities
Net income attributable to shareholders                                    $          133      $        123      $            310        $         280
Adjustments for non-cash items                                     16                  30               (28)                   60                 (122)
Changes in other operating assets and liabilities                  16                  11               (59)                 (290)                (167)
Changes in net claims liabilities                                   7                 105                59                    72                   88
Net cash flows provided by operating activities                                       279                95                   152                   79
Investing activities
Proceeds from sale of investments                                                    2,390            2,026               6,726                   4,158
Purchases of investments                                                            (2,731)          (2,118)             (6,755)                 (4,112)
Proceeds from sale of discontinued operations                       5                    -                -                 300                       -
Purchases of brokerages and books of business, net of
  sales                                                                               (15)                (5)                (34)                   (13)
Purchases of intangibles and property and equipment                                   (12)               (14)                (29)                   (25)
Net cash flows provided by (used in) investing activities                            (368)              (111)                208                      8
Financing activities
Proceeds from issuance of debt                                     12                 199                  -                  199                    -
Repayment of debt                                                  12                (150)                 -                 (400)                   -
Common shares repurchased for share-based payment                  15                 (28)                (3)                 (28)                  (3)
Common shares repurchased for cancellation                         13                   -                 (7)                   -                 (129)
Dividends paid on common shares and preferred shares                                  (57)               (40)                (114)                 (81)
Net cash flows used in financing activities                                           (36)               (50)                (343)                (213)
Net increase (decrease) in cash and cash equivalents                                 (125)               (66)                 17                  (126)
Cash and cash equivalents, beginning of period                                        348                 78                 206                   138
Cash and cash equivalents, end of period                           16      $          223      $         12      $           223         $          12
See accompanying notes to the interim Consolidated financial statements.


                                                                                                                                             page 4 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)




Note 1 - Status of the Company
Intact Financial Corporation (the “Company”) (TSX: IFC), incorporated under the Canada Business Corporations Act, is domiciled in
Canada and its shares are publicly traded on the Toronto Stock Exchange. The Company has investments in wholly-owned
subsidiaries which operate principally in the Canadian property and casualty (“P&C”) insurance market. On September 23, 2011,
the Company acquired all of the issued and outstanding shares of AXA Canada Inc. (“AXA Canada”). Further details of the
acquisition are provided in Note 4 – Business combination. The Company’s significant subsidiaries are Intact Insurance Company,
Belair Insurance Company Inc., The Nordic Insurance Company of Canada, Novex Insurance Company, Trafalgar Insurance
Company of Canada, Equisure Financial Network Inc., Canada Brokerlink Inc., Grey Power Insurance Brokers Inc., AXA Insurance
Inc. (previously known as Intact General Insurance Inc.), Intact Farm Insurance Inc., AXA Pacific Insurance Company and AXA
Insurance (Canada).

The registered office of the Company is 700 University Avenue, suite 1500-A (Legal), Toronto, Canada.


Note 2 - Basis of presentation

2.1     Statement of compliance
These interim Consolidated financial statements have been prepared in accordance with International Accounting Standards, 34 –
Interim Financial Reporting. These interim Consolidated financial statements and the accompanying notes were authorized for issue
in accordance with a resolution of the Board of Directors on July 31, 2012.

2.2     Preparation and presentation of financial statements
These interim Consolidated financial statements are condensed financial statements and should be read in conjunction with the
Company’s audited Consolidated financial statements for the year ended December 31, 2011.

The interim Consolidated financial statements have been prepared on a going concern basis, under the historical cost convention,
except for investments in associates and joint ventures that are accounted for using the equity method and financial instruments
measured at fair value. Financial assets and liabilities are offset and the net amount is reported on the interim Consolidated balance
sheets only when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net
basis, or to realize the assets and settle the liabilities simultaneously.

The Company presents its interim Consolidated balance sheets broadly in order of liquidity.

Subsidiaries are entities over which the Company has the power to govern the financial and operating policies so as to obtain
benefits from their activities, generally involving a shareholding of more than one half the voting shares. The financial statements of
all subsidiary companies are fully consolidated from the date control is transferred to the Company. They are deconsolidated from
the date control ceases. All balances, transactions, income and expenses and profits and losses resulting from intercompany
transactions and dividends are eliminated in full on consolidation.

Associates are those entities over which the Company exerts significant influence as defined under International Financial
Reporting Standards (“IFRS”) and are accounted for using the equity method.

Joint ventures are those entities over which the Company exerts joint control as defined under IFRS and are accounted for using
the equity method.

In preparing these interim Consolidated financial statements, the Company has adopted certain presentation standards. All amounts
in these statements are in millions of Canadian dollars except as otherwise noted. Certain comparative figures have been
reclassified to conform with the presentation adopted in the current year.

2.3     Seasonality
The P&C insurance business is seasonal in nature. While net premiums earned are generally stable from quarter to quarter, net
underwriting income is driven mainly by weather conditions which may vary significantly between quarters.




                                                                                                                           page 5 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)



2.4     Operating segments
The Company’s business activities are directed towards P&C insurance operations. These activities are captured within a sole
reporting and operating segment, P&C insurance operations. Internal reports on the performance of the segment are regularly
reviewed by senior management, the Company’s Chief Executive Officer and the Board of Directors.


Note 3 - Summary of significant accounting policies
The accounting policies applied during the six-month period ended June 30, 2012 are the same as those described and disclosed in
Note 3 of the December 31, 2011 audited Consolidated financial statements.


Note 4 - Business combination
On May 31, 2011, the Company announced that it had signed a definitive agreement with AXA SA for the acquisition of all of the
issued and outstanding shares of its subsidiary AXA Canada for a cash consideration of $2,621 million and contingent consideration
of up to $100 million. Following receipt of all required regulatory approvals, the acquisition closed and AXA Canada became a
wholly owned subsidiary on September 23, 2011.

AXA Canada provided P&C insurance in Canada, principally through a network of independent brokers. It carried out its activities
primarily through its wholly-owned insurance subsidiaries. On January 1, 2012, the Company completed the sale of AXA Life
Insurance Inc. (“AXA Life Insurance”) (see Note 5 – Assets classified as held for sale and directly associated liabilities).

The following table summarizes the consideration paid for AXA Canada, and the amounts recognized for the assets acquired and
liabilities assumed at September 23, 2011 (the acquisition date).
Table 4.1 - Business combination

                                                                                                         June 30,    December 31,
As at                                                                                                       2012            2011
Cash consideration paid                                                                                     2,621            2,621
Fair value of contingent consideration                                                                         48               48
Purchase price                                                                                              2,669            2,669
   Provisional fair value of assets acquired and liabilities assumed
   Investments (including cash and cash equivalents of $75 million)                                         3,565             3,565
   Assets classified as held for sale                                                                       1,459             1,459
   Investments in associates and joint ventures                                                               100               100
   Premium receivables                                                                                        679               679
   Reinsurance assets                                                                                         131               131
   Deferred tax assets                                                                                         87                89
   Deferred acquisition costs                                                                                 211               211
   Property and equipment                                                                                      20                13
   Intangible assets                                                                                          897               897
   Other assets                                                                                                64                64
   Claims liabilities                                                                                      (2,193)           (2,193)
   Unearned premiums                                                                                       (1,148)           (1,148)
   Liabilities directly associated with assets classified as held for sale                                 (1,178)           (1,170)
   Deferred tax liabilities                                                                                  (129)             (128)
   Other liabilities                                                                                         (469)             (473)
   Total identifiable net assets                                                                            2,096             2,096
Goodwill                                                                                                      573              573

The fair value of the acquired identifiable intangible assets is based on a discounted cash flow analysis of the distribution network
and the customer relationships acquired. The useful life of the distribution network has been assessed as indefinite and is therefore
not subject to amortization, but tested for impairment on an annual basis. Customer relationships are amortized over a period of
10 years.




                                                                                                                         page 6 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)


Goodwill reflects the quality of the acquired business and the synergies expected following the integration of AXA Canada. The
goodwill is not expected to be deductible for tax purposes.

A contingent consideration contract clause required the Company to pay up to an additional $100 million to AXA SA based on the
development of the consolidated reserves of AXA Canada, excluding the life and health business, as at December 31, 2010. As of
March 31, 2012, the $100 million of contingent consideration has been recognized, of which $11 million was recognized in the first
quarter of 2012.

The determination of the fair value of the identifiable assets and liabilities acquired is complete, except for other assets. The review
of the fair values will be completed by September 30, 2012.


Note 5 - Assets classified as held for sale and directly associated liabilities
As part of the acquisition of AXA Canada, the Company acquired AXA Life Insurance. On September 26, 2011, the Company
announced that it had entered into a definitive share purchase agreement to sell this subsidiary to a third party. The transaction
closed on January 1, 2012, following receipt of all regulatory approvals, for an amount of $300 million. There was no gain or loss
from this transaction.

Prior to its disposal, AXA Life Insurance was measured at fair value less costs to sell and classified as a disposal group held for
sale. All its assets were grouped together in Assets classified as held for sale and all its liabilities were grouped together in
Liabilities directly associated with assets classified as held for sale on the interim Consolidated balance sheets.

AXA Life Insurance qualified as a discontinued operation, given its classification as a disposal group, acquired for resale purposes.




                                                                                                                            page 7 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)




Note 6 - Financial instruments

6.1         Investments
The following tables summarize the Company’s investments.
Table 6.1 - Investments by classification

                                                                                        Cash and cash
                                                                                          equivalents,
                                                                Classified   Designated      loans and
                                                    AFS1        as FVTPL2     as FVTPL2    receivables       Total
As at June 30, 2012
Cash and cash equivalents                                   -            -            -            223         223
Debt securities
  Short-term notes                                    354                -            -              -         354
  Fixed income
     Investment grade
        Government                                  2,352                -        2,600              -       4,952
        Corporate                                     972                -        1,398              -       2,370
        Asset-backed                                  137                -           96              -         233
     Non-rated                                          7                -            6              -          13
  Total debt securities                             3,822                -        4,100              -       7,922
Preferred shares
   Investment grade
      Retractable                                     135                -            -              -         135
      Fixed-rate perpetual                            299                -            -              -         299
      Other perpetual                                 786                -            -              -         786
   Total preferred shares                           1,220                -            -              -       1,220
Common shares                                       1,049             335          521               -       1,905
Loans                                                   -               -            -             398         398
Total investments                                   6,091             335         4,621            621      11,668

As at December 31, 2011
Cash and cash equivalents                                   -            -            -            206         206
Debt securities
  Short-term notes                                    244                -            -              -         244
  Fixed income
     Investment grade
        Government                                  2,318                -        2,315              -       4,633
        Corporate                                   1,170                3        1,583              -       2,756
        Asset-backed                                  119                -          117              -         236
     Below investment grade                             9                -            9              -          18
  Total debt securities                             3,860                3        4,024              -       7,887
Preferred shares
   Investment grade
      Retractable                                     165                -            -              -         165
      Fixed-rate perpetual                            323                -            -              -         323
      Other perpetual                                 792                -            -              -         792
   Non-rated                                            1                -            -              -           1
   Total preferred shares                           1,281                -            -              -       1,281
Common shares                                       1,063             435          553               -       2,051
Loans                                                   -               -            -             403         403
Total investments                                   6,204             438         4,577            609      11,828
1
    Available for sale (“AFS”)
2
    Fair value through profit or loss (“FVTPL”)


                                                                                                         page 8 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)


Table 6.2 - Carrying value of investments

                                                  FVTPL                                                              Total
                                            instruments                  Other investments                    investments
                                                          Unamortized Unrealized Unrealized Net unrealized     At carrying
                                            At fair value        cost     gains       losses gains (losses)          value
As at June 30, 2012
Cash and cash equivalents                             -          223           -           -              -           223
Debt securities
  Short-term notes                                    -          354           -           -              -           354
  Fixed income
     Investment grade
        Government                                2,600        2,272         80            -            80          4,952
        Corporate                                 1,398          957         15            -            15          2,370
        Asset-backed                                 96          134          3            -             3            233
     Non-rated                                        6            7          -            -             -             13
  Total debt securities                           4,100        3,724         98            -            98          7,922
Preferred shares
  Investment grade
     Retractable                                      -          133          3          (1)             2            135
     Fixed-rate perpetual                             -          229         70           -             70            299
     Other perpetual                                  -          724         75         (13)            62            786
  Total preferred shares                              -        1,086        148         (14)           134          1,220
Common shares                                      856         1,056         47         (54)            (7)         1,905
Loans                                                -           398          -           -              -            398
Total investments                                 4,956        6,487        293         (68)           225         11,668

As at December 31, 2011
Cash and cash equivalents                             -          206           -           -              -           206
Debt securities
  Short-term notes                                    -          244           -           -              -           244
  Fixed income
     Investment grade
        Government                                2,315        2,237         81            -            81          4,633
        Corporate                                 1,586        1,153         18           (1)           17          2,756
        Asset-backed                                117          116          3            -             3            236
     Below investment grade                           9            9          -            -             -             18
  Total debt securities                           4,027        3,759        102           (1)          101          7,887
Preferred shares
   Investment grade
      Retractable                                     -          164          3           (2)            1            165
      Fixed-rate perpetual                            -          245         78            -            78            323
      Other perpetual                                 -          715         83           (6)           77            792
   Non-rated                                          -            1          -            -             -              1
   Total preferred shares                             -        1,125        164           (8)          156          1,281
Common shares                                      988         1,019         89         (45)            44          2,051
Loans                                                -           403          -           -              -            403
Total investments                                 5,015        6,512        355         (54)           301         11,828




                                                                                                                page 9 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)


As of June 30, 2012, asset-backed securities consisted of auto loan receivables, credit card receivables and asset-backed
commercial paper. All of these asset-backed securities are AAA rated as at June 30, 2012 and December 31, 2011.

The fair value of the Company’s portfolio of loans, with a carrying value of $398 million as at June 30, 2012 ($403 million as at
December 31, 2011), was assessed and amounted to $418 million as at June 30, 2012 ($436 million as at December 31, 2011).
The fair value was established using valuation techniques that use both input parameters based on observable market data and
input parameters not based on observable market data.

The Company uses ratings from various rating agencies to rate debt securities and preferred shares. When there are two ratings for
the same instrument, the Company retains the lowest of the two. When there are three ratings for the same instrument, the
Company retains the median. Debt securities with a rating equal to or above BBB- are classified as investment grade. Preferred
shares with a rating equal to or above P3 low are classified as investment grade.

6.2      Equities sold short
Among the Company’s various investment strategies is a market neutral equity investment strategy. The objective of this strategy,
which consists of having both long and short equity positions, is to maximize the value added from active equity portfolio
management while at the same time using short positions to mitigate overall equity market volatility. Long positions are reported in
Common shares and short positions are reported in Financial liabilities related to investments on the interim Consolidated balance
sheets.

The Company has secured its short positions by pledging government debt securities as collateral.
Table 6.3 - Long and short positions

                                                                                   June 30, 2012                December 31, 2011
                                                                                         Debt securities                Debt securities
                                                                                              pledged as                    pledged as
As at                                                                        Fair value         collateral   Fair value       collateral
Long positions                                                                       256                -          369                -
Short positions                                                                     (260)             267         (368)             377


6.3      Financial assets related to investments
Table 6.4 - Details of the Company’s financial assets related to investments

                                                                                                               June 30,   December 31,
As at                                                                                                             2012           2011
Accounts receivable from investment brokers on unsettled trades                                                     154               1
Derivative assets (Table 6.7)                                                                                         7              14
Total financial assets related to investments                                                                       161              15


6.4      Financial liabilities related to investments
Table 6.5 - Details of the Company’s financial liabilities related to investments

                                                                                                               June 30,   December 31,
As at                                                                                                             2012           2011
Equities sold short positions (Table 6.3)                                                                           260             368
Accounts payable to investment brokers on unsettled trades                                                          156               4
Net asset value attributable to third party unit holders                                                             80              70
Embedded derivatives                                                                                                 64              67
Derivative liabilities (Table 6.7)                                                                                    3              23
Total financial liabilities related to investments                                                                  563             532




                                                                                                                             page 10 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)



6.5     Investment results
The following table provides additional details about the items reported in Net investment income and Net investment gains.
Table 6.6 - Details of the Company’s net investment income and net investment gains

                                                                                      Three months              Six months
For the periods ended June 30,                                                         2012       2011          2012       2011
Amounts reported in Net investment income
Interest income from:
   Financial instruments at FVTPL                                                        37         26            75             50
   AFS financial instruments                                                             25         18            53             36
   Loans and receivables                                                                  7          5            11             10
Total interest income                                                                    69         49           139             96
Dividend income (expense) from:
  AFS financial instruments                                                              26         28            54             55
  Financial instruments at FVTPL, net                                                     9          7            19             14
  Dividends paid on equities sold short                                                  (2)        (2)           (5)            (5)
  Dividends from long-term investments, at cost                                           -          -             1              1
Total dividend income                                                                    33         33            69             65
Expenses                                                                                 (8)        (6)           (14)           (12)
Net investment income                                                                    94         76           194            149
Amounts reported in Net investment gains
Net realized gains (losses) from:
  AFS financial instruments                                                               8         61             62           164
  Financial instruments designated as FVTPL                                             (20)        17            (45)           23
  Financial instruments classified as FVTPL                                              (2)        (4)            10            (7)
  Derivative financial instruments                                                       34          2             15           (27)
  Embedded derivatives                                                                    3          1             (4)          (12)
Impairment losses on common shares                                                      (23)        (4)           (27)           (6)
Other net gains (losses)                                                                  3         (2)             4            (2)
Net investment gains                                                                      3         71            15            133




                                                                                                                         page 11 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)



6.6      Derivative financial instruments
Table 6.7 - Fair values and notional amounts of derivatives by term to maturity and nature of risk

                                                             Fair value                                      Notional amount
                                                                                                           Over one
                                                                                      One year or        year to five   Over five
                                                        Positive        Negative            less               years       years         Total
As at June 30, 2012
Held for non-trading purposes
  Foreign currency contracts
     Forwards                                                    -                -             40                -             -           40
     Swaps                                                       3                -             23                -             -           23
  Interest rate contracts
     Futures                                                     -                -            248                -             -          248
     Swaps                                                       2                -              -              130             -          130
  Equity contracts
     Total return swaps                                          1               3             409              113             -          522
     Options                                                     -               -               3                7             -           10
     Futures                                                     -               -               2                -             -            2
  Credit contracts
     Credit default swaps                                        1                -             10              255             -          265
  Inflation contracts
     Swaptions                                                   -                -                  -          192           62           254
Total                                                            7               3

As at December 31, 2011
Held for non-trading purposes
  Foreign currency contracts
     Forwards                                                    -               4             285                -             -          285
     Swaps                                                       3               -              23                -             -           23
  Interest rate contracts
     Futures                                                     -                -            291                -             -          291
     Swaps                                                       3                -              -              130             -          130
     Options                                                     -                -            223                -             -          223
  Equity contracts
     Total return swaps                                          -              15             554                -             -          554
     Options                                                     8               4             780                7             -          787
  Credit contracts
     Credit default swaps                                        -                -             10                -             -           10
  Inflation contracts
     Swaptions                                                   -                -                  -          180           77           257
Total                                                          14               23




                                                                                                                                    page 12 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)




Note 7 - Claims liabilities

7.1      Movement of claims liabilities
Claims liabilities are established to reflect the estimate of the full amount of all liabilities associated with the insurance contracts
earned at the balance sheet date, including insurance claims incurred but not reported. The ultimate amount of these liabilities will
vary from the best estimate made for a variety of reasons, including additional information with respect to the facts and
circumstances of the insurance claims incurred.

The following table presents movements in the Company’s net claims liabilities.
Table 7.1 - Movement of the net claims liabilities

                                                                               Direct claims       Ceded claims            Net claims
                                                                                   liabilities         liabilities          liabilities
For the three months ended June 30, 2012
Balance, beginning of period                                                            6,838                353                6,485
Current period claims                                                                   1,047                  16               1,031
Prior year favourable claims development                                                 (116)                (33)                (83)
Total claims incurred                                                                     931                 (17)                948
Increase due to changes in discount rate                                                   45                   1                  44
Claims paid                                                                              (911)                (24)               (887)
Balance, end of period                                                                  6,903                313                6,590
For the three months ended June 30, 2011
Balance, beginning of period                                                            4,393                201                4,192
Current period claims                                                                     863                  91                  772
Prior year unfavourable (favourable) claims development                                   (67)                  6                  (73)
Total claims incurred                                                                     796                  97                  699
Increase due to changes in discount rate                                                   33                   2                   31
Claims paid                                                                              (681)                (10)                (671)
Balance, end of period                                                                  4,541                290                4,251

For the six months ended June 30, 2012
Balance, beginning of period                                                            6,886                368                6,518
Current period claims                                                                   2,139                  31                2,108
Prior year favourable claims development                                                 (260)                (43)                (217)
Total claims incurred                                                                   1,879                 (12)               1,891
Increase due to changes in discount rate                                                   18                   -                   18
Claims paid                                                                            (1,880)                (43)              (1,837)
Balance, end of period                                                                  6,903                313                6,590
For the six months ended June 30, 2011
Balance, beginning of period                                                            4,379                216                4,163
Current period claims                                                                   1,634                 94                 1,540
Prior year unfavourable (favourable) claims development                                  (147)                 7                  (154)
Total claims incurred                                                                   1,487                101                 1,386
Increase due to changes in discount rate                                                   15                  1                    14
Claims paid                                                                            (1,340)               (28)               (1,312)
Balance, end of period                                                                  4,541                290                4,251




                                                                                                                           page 13 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)



7.2         Reinsurance
In the ordinary course of business, the Company reinsures certain risks with other reinsurers to limit its maximum loss in the event
of catastrophic events or other significant losses. The following table shows the Company’s net retention and reinsurance coverage
limits by nature of risk.
Table 7.2 - Reinsurance net retention and coverage limits by nature of risk

                                                                                                                                June 30,      December 31,
                                                                                                                                                         1
As at                                                                                                                              2012             2011
Single risk events2
Net retentions:
 On property policies                                                                                                                   5                 2–5
 On liability policies                                                                                                             2 – 10                5 – 10
Multi-risk events and catastrophes3
Net retentions                                                                                                                         50               15 – 25
Coverage limit                                                                                                                      3,300          1,430 -1,500
1
    Until January 1, 2012, when most of the reinsurance programs were renewed, the Company and AXA Canada maintained their separate reinsurance
    programs and the numbers above reflect the retentions and limits of both programs.
2
    For certain special classes of business or types of risks, the retention may be lower through specific treaties or the use of facultative reinsurance.
3
    Includes a reinsurance treaty in place for a specific portfolio in British Columbia.


Note 8 - Revenue
Table 8.1 - Total revenue

                                                                                                  Three months                           Six months
For the periods ended June 30,                                                                     2012        2011                      2012       2011
Net premiums earned                                                                                1,589            1,075               3,169             2,143
Interest income (Table 6.6)                                                                           69               49                 139                96
Dividend income (Table 6.6)                                                                           33               33                  69                65
Net investment gains (Table 6.6)                                                                       3               71                  15               133
Share of profit from investments in associates and joint ventures                                      6                6                  12                 9
Other revenues                                                                                        23               14                  55                28
Total revenue                                                                                      1,723            1,248               3,459             2,474



Table 8.2 - Net premiums written and earned

                                                                                                  Three months                           Six months
For the periods ended June 30,                                                                     2012        2011                      2012       2011
Premiums written
  Direct                                                                                           1,960            1,355               3,356             2,297
  Ceded                                                                                              (57)             (50)               (111)              (78)
  Net                                                                                              1,903            1,305               3,245             2,219
Changes in unearned premiums                                                                        (314)             (230)                 (76)             (76)
Net premiums earned                                                                                1,589            1,075               3,169             2,143




                                                                                                                                                    page 14 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)




Note 9 - Income taxes

9.1      Income tax expense (benefit)
The following table shows the major components of income tax expense (benefit).
Table 9.1 - Income tax expense (benefit)

                                                                             Three months               Six months
For the periods ended June 30,                                                2012        2011          2012       2011
Current tax expense
Current year                                                                      27         1            67             100
Prior year adjustment                                                              -         -            (3)              -
                                                                                  27         1            64             100
Deferred tax expense (benefit)
Origination and reversal of temporary differences                                  6        29            15             (20)
Income tax expense                                                                33        30            79              80
Income tax recorded in Other comprehensive income (“OCI”)
Reclassification to income of net losses (gains) on AFS securities                  3      (15)           (10)           (43)
Net actuarial losses on employee future benefits                                  (18)     (13)           (19)           (11)
Net changes in unrealized gains (losses) on AFS securities                        (10)       2             (9)            18
Income tax benefit recorded in OCI                                                (25)     (26)           (38)           (36)


9.2      Effective income tax rate
The effective income tax rate on the interim Consolidated statements of comprehensive income is different from the combined
Canadian federal and provincial income tax rates. The difference is broken down as follows:
Table 9.2 - Effective tax rate reconciliation

                                                                            Three months                Six months
For the periods ended June 30,                                               2012        2011           2012            2011
Income tax expense calculated at statutory tax rates                         26.4%       28.0%         26.4%          28.0%
Increase (decrease) in income tax rates resulting from:
   Non-taxable dividend income                                               (6.1)%      (7.0)%        (5.1)%         (5.5)%
   Non-taxable income                                                        (0.7)%      (1.2)%        (1.2)%         (0.7)%
   Other                                                                       0.3%      (0.2)%          0.2%           0.4%
Effective income tax rate                                                    19.9%       19.6%         20.3%          22.2%




                                                                                                                 page 15 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)




Note 10 - Other assets and other liabilities

10.1     Components of other assets
Table 10.1 - Components of other assets

                                                                                                       June 30,      December 31,
As at                                                                                                     2012              2011
Other receivables                                                                                           263                216
Prepaids                                                                                                     27                 14
Long-term investments, at cost                                                                               15                 16
Employee future benefit assets                                                                                3                 21
Other                                                                                                         4                 11
Total other assets                                                                                          312                278

During the reporting period, there were no events or changes in circumstances that indicated that the carrying values of the
long-term investments may not be recoverable.

10.2     Components of other liabilities
Table 10.2 - Components of other liabilities

                                                                                                       June 30,      December 31,
As at                                                                                                     2012              2011
Employee future benefit liabilities                                                                         375                320
Commissions payable                                                                                         238                277
Industry pools payable                                                                                      234                202
Premium and sale taxes payable                                                                              132                132
Restructuring provision                                                                                      21                 27
Contingent consideration (Note 4)                                                                            11                 90
Other                                                                                                       353                393
Total other liabilities                                                                                    1,364             1,441

Following the announcement of the acquisition of AXA Canada, the Company established an integration plan directed at integrating
the acquired business with its own business and capturing cost synergies across the combined entities, including shared services
and corporate functions. Integration and restructuring costs are primarily related to employee-related costs, occupancy, consulting,
branding and technology-related expenses. These costs totalled $20 million and $43 million for the three- and six-month periods
ended June 30, 2012 respectively (nil for the three- and six-month periods ended June 30, 2011) and are included in Integration and
restructuring costs on the interim Consolidated statements of comprehensive income. The restructuring provision has been
established based on the decisions communicated as at June 30, 2012. For the six-month period ended June 30, 2012, cash paid
for the restructuring provision totalled $10 million.

As at March 31, 2012, the fair value of the contingent consideration was reassessed from $89 million to $100 million. The
$11 million increase in value was recorded in Change in fair value of contingent consideration on the interim Consolidated
statements of comprehensive income. The contingent consideration liability will be paid in the first quarter of 2013.




                                                                                                                       page 16 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)




Note 11 - Employee future benefits
The Company has a number of defined benefit and defined contribution pension plans. The Company offers post-retirement benefit
plans providing life insurance and health and dental benefits to certain retirees, which are closed to active employees. It also offers
to its employees, post-employment benefit plans that provide health, dental, disability and life insurance coverage. The post-
retirement and post-employment benefit plans are unfunded.
Table 11.1 - Movement in employee future benefit expense

                                                                                      Three months                        Six months
For the periods ended June 30,                                                         2012        2011                   2012              2011
Current service cost – defined benefit plans                                             14                 8               28                 16
Interest costs on benefit obligation                                                     16                10               32                 19
Expected return on plan assets                                                          (17)              (10)             (34)               (21)
Net actuarial losses recognized in OCI                                                   67                49               72                 41
Expense recognized on the interim Consolidated statements of
  comprehensive income                                                                   80                57                  98             55


Note 12 - Debt outstanding
The following table present details of debt outstanding:
Table 12.1 - Fair value and carrying value of debt outstanding

                                                                                    June 30, 2012                     December 31, 2011
                                                                                 Carrying                             Carrying
As at                                                                               value    Fair value                  value  Fair value
Medium term notes, Series 1                                                             249               286              249               275
Medium term notes, Series 2                                                             247               301              247               282
Medium term notes, Series 3                                                              99               119               99               110
Medium term notes, Series 4                                                             298               327              298               307
Medium term notes, Series 5                                                             199               202                -                 -
Tranche A Facility                                                                        -                 -              100               100
Tranche B Facility                                                                        -                 -              300               300
Total debt outstanding                                                                1,092              1,235           1,293             1,374

The unsecured medium term notes may be redeemed at the option of the issuer, in whole or in part at any time, at a redemption
price equal to the greater of the Government of Canada Yield at the date of redemption plus a margin or their par value.

12.1     Medium term notes
On June 15, 2012, the Company completed an offering of $200 million principal amount of unsecured medium term notes series 5.
These notes bear interest at a fixed annual rate of 5.16% until maturity on June 16, 2042, payable in semi-annual instalments
commencing on December 16, 2012.
Table 12.2 - Medium term notes outstanding terms as at June 30, 2012

                                                    Series 1               Series 2           Series 3              Series 4            Series 5
Date issued                      August 31, 2009                 November 23, 2009      July 8, 2011      August 18, 2011       June 15, 2012
Date of supplemental issue                                          March 23, 2010
Maturity date                  September 3, 2019                 November 23, 2039      July 8, 2061      August 18, 2021       June 16, 2042
Principal amount outstanding
   (in millions)                            $250                              $250               $100                  $300                $200
Fixed annual rate                         5.41%                              6.40%              6.20%                 4.70%               5.16%
Semi-annual coupon payment due
   each year on:                        March 3                             May 23       January 8               February 18            June 16
                                    September 3                        November 23          July 8                August 18         December 16



                                                                                                                                     page 17 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)


12.2    Credit facilities
During the first quarter of 2012, following the sale of AXA Life Insurance, the Company repaid in full the two-year term loan facility,
as well as $150 million on the three-year term loan facility (the “Tranche B Facility”), for a total cash consideration of $250 million.
On June 18, 2012, the Company repaid the remaining $150 million on the Tranche B Facility.

The Company also has a four-year unsecured revolving term facility of $250 million maturing on September 23, 2015. This credit
facility may be drawn as prime loans at the prime rate plus a margin or as bankers’ acceptances at the bankers’ acceptance rate
plus a margin. This facility was undrawn as at June 30, 2012 and December 31, 2011.


Note 13 - Common shares and preferred shares

13.1    Authorized
Authorized share capital consists of an unlimited number of common shares and Class A shares.

13.2    Issued and outstanding
Table 13.1 - Issued and outstanding shares

                                                                                                         Number of       Amount
Classes of shares                                                                                           shares (in millions $)
As at June 30, 2012
Common                                                                                                  129,553,665              1,889
Class A
   Series 1 Preferred                                                                                    10,000,000                244
   Series 3 Preferred                                                                                    10,000,000                245
                                                                                                         20,000,000                489

As at December 31, 2011
Common                                                                                                  129,553,665              1,889
Class A
   Series 1 Preferred                                                                                    10,000,000                244
   Series 3 Preferred                                                                                    10,000,000                245
                                                                                                         20,000,000                489

Issued and outstanding Class A shares would rank both with regards to dividends and return of capital in priority to the common
shares.

13.3    Normal course issuer bid
The normal course issuer bid ("NCIB") program expired on February 22, 2012 and was not renewed. No common shares have been
repurchased for cancellation under the NCIB in 2012. As at June 30, 2011, 2,750,900 common shares at an average price of
$47.03 were repurchased for cancellation for a total cash consideration of $129 million. Total cost paid, including fees, was first
charged to share capital to the extent of the average carrying value of the common shares purchased for cancellation and the
excess of $105 million was charged to Retained earnings.




                                                                                                                           page 18 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)




Note 14 - Earnings per share
Earnings per common share were calculated by dividing the net income attributable to common shares of the Company by the
weighted-average number of common shares outstanding during the period. Dilution is not applicable, as there are no conversion
rights or options to be settled by issuance of new common shares that are exercisable as at June 30, 2012. The net income
attributable to common shares and the weighted-average number of common shares during the period are calculated as follows:
Table 14.1 - Earnings per share

                                                                               Three months                    Six months
For the periods ended June 30,                                                  2012        2011               2012           2011
Net income attributable to common shares
Net income                                                                       133            123             310            280
Less: Dividends declared on preferred shares, net of tax                           5              -              10              -
Net income attributable to common shares                                         128            123             300            280
Weighted-average number of common shares outstanding
Number of common shares outstanding at beginning of the period           129,553,665    109,553,165    129,553,665     112,179,565
Adjustment for weighted-average common shares repurchased under
  the NCIB program                                                                  -       (82,703)               -    (2,012,572)
Weighted-average number of common shares outstanding during the
 period                                                                  129,553,665    109,470,462    129,553,665     110,166,993
EPS – basic and diluted (in dollars)                                             0.98          1.12            2.31            2.54



Note 15 - Share-based payments

15.1    Long-term incentive plans
The following table shows the movements in the Long-Term Incentive Plans (“LTIP”) share units during the period.
Table 15.1 - Movements in LTIP

                                                                               Three months                    Six months
For the periods ended June 30, (in units)                                       2012        2011               2012           2011
LTIP (share equivalents)
  Outstanding at beginning of period                                       1,424,231       681,168        1,015,691        629,637
  Net change in estimate                                                    (337,839)      198,637           70,701        250,168
  Outstanding at end of period                                             1,086,392       879,805        1,086,392        879,805
LTIP (restricted common shares)
  Outstanding at end of period                                               273,405         50,719         273,405         50,719

The amount charged to Other expenses in the interim Consolidated statements of comprehensive income for LTIP was $7 million
and $13 million for the three- and six-month periods ended June 30, 2012 respectively ($3 million and $7 million for the three- and
six-month periods ended June 30, 2011 respectively).

During the three-month period ended June 30, 2012, the Company settled LTIP units granted in 2009 that vested through the plan
administrator by purchasing shares on the market and remitting them to the participants. The cumulative cost of the vested units,
amounting to $10 million, was removed from Contributed surplus. The difference between the market price of the shares and the
cumulative cost for the Company of the vested units, amounting to $14 million, net of $4 million of income taxes, was recorded in
Retained earnings.




                                                                                                                       page 19 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)



15.2     Employee Share Purchase Plan
The following table shows the movements in Employee Share Purchase Plan (“ESPP”) restricted common shares during the period.
Table 15.2 - Movements in ESPP

                                                                                           Three months              Six months
For the periods ended June 30, (in units)                                                   2012        2011         2012           2011
ESPP (restricted common shares)
  Outstanding at beginning of period                                                   119,296       108,452    120,317          107,562
  Awarded                                                                               33,081        25,833     58,059           52,801
  Vested or forfeited                                                                  (24,850)      (21,115)   (50,849)         (47,193)
  Outstanding at end of period                                                         127,527       113,170    127,527          113,170

The amount charged to Other expenses in the interim Consolidated statements of comprehensive income for the ESPP was
$2 million and $3 million for the three- and six-month periods ended June 30, 2012 respectively ($1 million and $2 million for the
three- and six-month periods ended June 30, 2011 respectively).


Note 16 - Additional information on the interim Consolidated statements of cash flows
The following table provides additional details on the items included in net cash flows from operating activities.
Table 16.1 - Additional information on the interim Consolidated statements of cash flows

                                                                                           Three months              Six months
For the periods ended June 30,                                                              2012        2011         2012          2011
Adjustments for non-cash items
Net investment gains                                                                          (3)        (71)         (15)          (133)
Deferred income tax expense (benefit)                                                          6          29           15            (20)
Depreciation of property and equipment                                                         3           3           11              6
Amortization of intangible assets                                                             10           9           24             17
Net premiums on debt securities classified as available for sale                               8           3           16              6
Share-based payments                                                                           7           3           13              7
Other                                                                                         (1)         (4)          (4)            (5)
Total                                                                                         30         (28)          60           (122)
Changes in other operating assets and liabilities
Unearned premiums, net                                                                       314         229           76             75
Deferred acquisition costs, net                                                              (52)        (39)         (12)           (16)
Premium receivables                                                                         (299)       (212)        (136)           (85)
Income taxes receivable, net                                                                 (16)        (48)         (27)            (6)
Other operating assets                                                                       247          12         (179)           (24)
Other operating liabilities                                                                 (183)         (1)         (12)          (111)
Total                                                                                         11         (59)        (290)          (167)
Composition of cash and cash equivalents
Cash                                                                                         198           1          198              1
Cash equivalents                                                                              25          11           25             11
Total cash and cash equivalents                                                              223          12          223             12
Other relevant cash flow disclosure
Interest paid – operating activities                                                          14           8           28             15
Interest received – operating activities                                                      92          64          143             95
Dividends received – operating activities                                                     34          32           67             65
Income taxes paid – operating activities                                                      43          49           89            105




                                                                                                                             page 20 of 21
Intact Financial Corporation
Notes to the interim Consolidated financial statements (unaudited)
(in millions of Canadian dollars, except as otherwise noted)




Note 17 - Commitments and contingencies

Acquisition of JEVCO Insurance Company
On May 2, 2012, the Company announced that it had signed a definitive agreement with The Westaim Corporation for the
acquisition of all of the issued and outstanding shares of its subsidiary JEVCO Insurance Company (“JEVCO”). The total cash
consideration for the acquisition is $530 million. The acquisition is expected to close in the fall of 2012, once all regulatory approvals
are received.

On May 4, 2012, the Company entered into an underwriting agreement with a syndicate of underwriters, co-led by CIBC World
Markets Inc. and TD Securities Inc. (the “Underwriters”) under which the Underwriters agreed to purchase from the Company and
sell to the public 3,600,000 subscription receipts each representing the right to receive one Common share, at a price of $62.75 per
subscription receipt for gross proceeds of $226 million.

On May 11, 2012, the Company closed the bought deal offering of subscription receipts (the “Offering”), resulting in gross proceeds
to the Company of $237 million. This included the over-allotment option exercised by the Underwriters, who purchased an additional
180,000 subscription receipts at a price of $62.75 per subscription receipt for gross proceeds of $11 million. On May 11, 2012, the
subscription receipts began trading on the Toronto Stock Exchange under the symbol IFC.N.

Until such time as the acquisition closes, the gross proceeds from the subscription receipts will be held in escrow. Upon closing of
the acquisition, each subscription receipt will entitle the holder to receive one common share of the Company and a dividend
equivalent amount representing dividends declared on its common shares by the Company between the closing of the subscription
receipt offering and the closing of the JEVCO acquisition. If the acquisition is not completed by October 29, 2012, the holders of
subscription receipts will be entitled to receive their full subscription price together with their share of any interest that was earned
during the term of escrow.

The Company intends to finance the acquisition and related-transaction expenses from a combination of the $237 million gross
proceeds from the Offering, a portion of the $200-million unsecured medium term notes Series 5 offering (see Note 12 – Debt
outstanding), a portion of its existing cash resources and funds to be advanced under its existing revolving credit facility.




                                                                                                                             page 21 of 21

				
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