Strong sales in the quarter, in part because of higher pricing, helped offset the insurer’s loss from Alberta wildfire claims.
INTACT FINANCIAL (Toronto symbol IFC; www.intactfc.com) is Canada’s largest provider of property and casualty insurance. Its brands include Intact Insurance, Canada BrokerLink and belairdirect.
In the three months ended June 30, 2016, Intact’s revenue rose 2.8%, to $1.96 billion from $1.88 billion a year earlier.
Earnings per share fell 46.8%, to $0.83 from $1.56. However, the latest quarter includes a $0.97-a-share loss from claims associated with the wildfires at Fort McMurray, Alberta. Without that loss, per-share earnings rose 15.4%, to $1.80 from $1.56.
Again excluding the wildfires, the company reported a combined ratio, the claims paid out divided by the premiums taken in (the lower, the better), of 90.4%. That’s below the 91.6% of a year earlier.
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Premium growth across Canada offset a slowdown in Alberta. As a result, revenue improved for all of the company’s main insurance lines. Intact also continues to cut its operating costs and write more profitable insurance policies.
Canadian Direct Insurance, which Intact purchased for $197 million in early 2015, also contributed to the sales increase. Growth by acquisition adds risk, but Canadian Direct was a great fit. Intact has successfully integrated a number of other companies in the past few years, including AXA Canada, Jevco and Metro General.
The stock trades at 16.1 times Intact’s forecast 2016 earnings of $5.70 a share. That profit could rise to $7.29 a share in 2017, and the shares trade at 12.6 times that estimate. The stock yields 2.5%.
It will be interesting to see what the share price will do on the next earnings release if profit is back to where it should be. Perhaps, that performance will be interpreted as a major gain and the market will send the price on a tear.
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Thanks for the info. Intact has already rebounded nicely from the Alberta fires. Decent dividend too.
It will be interesting to see what the share price will do on the next earnings release if profit is back to where it should be. Perhaps, that performance will be interpreted as a major gain and the market will send the price on a tear.