INTACT FINANCIAL CORP. $60 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 129.6 million; Market cap: $7.8 billion; Dividend yield: 2.7%) is Canada’s largest provider of property and casualty insurance, based on premiums. Its brands include Intact Insurance, Canada BrokerLink, belairdirect and Grey Power.
In the three months ended June 30, 2012, Intact’s revenue rose 47.8%, to $1.59 billion from $1.08 billion a year earlier. That was mainly due to the contribution from AXA Canada, which Intact bought from Parisbased ASX Group for $2.6 billion last year.
AXA Canada is the country’s sixth-largest home, auto and commercial insurer. It also gives Intact a presence in Quebec, B.C. and Atlantic Canada.
Before one-time items, Intact earned $1.11 a share, down 2.6% from $1.14 a year earlier. The insurance business reported higher profits, but that was offset by lower returns on its investments due to stock-market weakness.
The company continues to raise its premiums and profit margins. At the same time, reforms in the key Ontario auto insurance market are lowering its claims expenses. Intact’s combined ratio, or claims paid out divided by premiums taken in (the lower, the better), improved sharply, to 92.3% from 97.0%.
Intact trades at 13.5 times its forecast 2012 earnings of $4.45 a share. The shares yield 2.7%. Intact Financial is a buy.
