INTACT FINANCIAL CORP. $65.21 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341- 1464; www.intactfc.com; Shares outstanding: 133.3 million; Market cap: $8.7 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 September 30, 2012, Intact’s revenue rose 43.4%, to $1.66 billion from $1.16 billion a year earlier. That was mainly due to the contribution from AXA Canada, which Intact bought from Paris-based ASX Group for $2.6 billion in late 2011.
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 $0.83 a share, down 25.2% from $1.11 a year earlier. The insurance business was hit by higher claims, mostly from severe hail storms in Calgary and Ottawa.
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), weakened in the latest quarter, to 95.9% from 94.2%.
Intact trades at 10.4 times its forecast 2012 earnings of $6.26 a share. The stock yields 2.5%.
Intact Financial is a buy.
