INTACT FINANCIAL CORP. $60.00 (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 December 31, 2011, Intact’s revenue rose 48.7%, to $1.58 billion from $1.06 billion. That was mainly due to AXA Canada, which Intact bought from Paris-based 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 $1.14 a share, up 18.8% from $0.96 a year earlier. The insurance business reported higher profits, partly because favourable weather cut the number of claims. Intact also earned higher returns on its investments.
Dividend on the rise
Intact continues to increase its premiums and profit margins. At the same time, reforms in the key Ontario personal auto 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 92.7% from 98.0%.
Intact has raised its quarterly dividend by 8.1%, to $0.40 from $0.37. The shares now yield 2.7%.
The shares trade at 11.5 times the company’s forecast 2012 earnings of $5.24 a share.
Intact Financial is a buy.
