Buy Carfinco, hold on to Intact

Article Excerpt

INTACT FINANCIAL CORP. $69.42 (Toronto symbol IFC; TSINetwork Rating: Speculative) (416-341-1464; www.intactfc.com; Shares outstanding: 131.5 million; Market cap: $9.2 billion; Dividend yield: 2.8%) 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, 2013, Intact’s revenue rose slightly, to $1.70 billion from $1.69 billion a year earlier. The company earned $143 million, or $1.05 a share, down sharply from $194 million, or $1.42. However, the latest results include a pre-tax loss of $55 million related to December ice storms in Ontario and Quebec. Intact’s personal auto insurance business reported improved results in the latest quarter, with a combined ratio, or claims paid out divided by premiums taken in (the lower, the better), of 98.4%, down from 103.1%. The longer-term outlook for the car insurance market is uncertain, partly because Ontario’s Liberal government agreed to an NDP demand for a 15% premium cut in early…

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