INTACT FINANCIAL CORP. $63.96 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 129.6 million; Market cap: $8.3 billion; Dividend yield: 2.5%) 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 March 31, 2012, Intact’s revenue rose 47.9%, to $1.58 billion from $1.07 billion. That was mainly due to the contribution from 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 $1.59 a share, up 11.1% from $1.43 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.
Intact is now buying Jevco Insurance Co. for $530 million. Jevco sells insurance to high-risk drivers, as well as owners of motorcycles, snowmobiles and recreational vehicles. It operates in Ontario, Quebec and Alberta. Jevco will add $350 million to Intact’s annual revenue.
Jevco’s focus on high-risk drivers adds risk, but the company is profitable. It is also benefiting from new regulations in Ontario that limit the size of certain claims.
Intact’s shares trade at 11.9 times the company’s forecast 2012 earnings of $5.36 a share. The stock yields 2.5%.
Intact Financial is a buy.
