Today, we look at Intact Financial, a leading Canadian insurance company that has made several profitable acquisitions in recent years. Growth by acquisition can add risk, but Intact has a record of buying complementary companies and successfully integrating them into its business. The company is also cutting costs and selling more profitable insurance policies, which has also helped push up earnings. The firm’s growth prompted it to raise its quarterly dividend by more than 10% in early 2015, and its shares are trading at only 13 times forecast earnings. We view Intact Financial as a buy for investors looking for value.
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 September 30, 2015, Intact’s revenue rose 9.4%, to $2.09 billion from $1.91 billion a year earlier.
Revenue improved across all of the company’s insurance lines and geographic regions. Canadian Direct Insurance, which Intact purchased for $197 million in early 2015, also added to its sales. Canadian Direct offers home, auto and travel insurance, mainly in Alberta and B.C.
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Value stocks: Timely acquisitions push Intact’s earnings—and dividends—higher
Growth by acquisition adds risk, but Canadian Direct is turning out to be 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 company still has a lot of excess cash and will keep looking for more acquisitions.
Earnings rose 7.6%, to $199 million, or $1.47 a share, from $185 million, or $1.37. Intact continues to write more-profitable insurance policies and cut its operating costs.
The company reported a combined ratio, or claims paid out divided by premiums taken in (the lower, the better) of 93.2% in the latest quarter, unchanged from a year earlier.
The stock trades at 13.1 times Intact’s forecast 2016 earnings of $6.81 a share. The company raised its quarterly dividend by 10.4% in March 2015, to $0.53 from $0.48. The shares yield 2.4%.
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Today, we look at Intact Financial, a leading Canadian insurance company that has made several profitable acquisitions in recent years. Growth by acquisition can add risk, but Intact has a record of buying complementary companies and successfully integrating them into its business. The company is also cutting costs and selling more profitable insurance policies, which has also helped push up earnings. The firm’s growth prompted it to raise its quarterly dividend by more than 10% in early 2015, and its shares are trading at only 13 times forecast earnings. We view Intact Financial as a buy for investors looking for value.
