Intact Financial Corp INTAF

Primary Symbol: T.IFC Alternate Symbol(s): T.IFC.P.A | T.IFC.P.C | T.IFC.P.E | T.IFC.P.F | T.IFC.P.G | T.IFC.P.I | IFTPF | T.IFC.P.K | IFCZF | INFFF

Financial Services Insurance - Property & Casualty

Intact Financial Corporation is a Canada-based company, which provides property and casualty (P&C) insurance. The Company's segment includes Canada, US and UK & International. The Canada segment is engaged in the underwriting of automobile, home and business insurance contracts to individuals and businesses in Canada distributed through a network of brokers and directly consumers. The UK & International segment is engaged in underwriting of automobile, home, pet and business insurance contracts to individuals and businesses in the United Kingdom, Europe, Ireland and Middle East, as well as internationally. The Company distributes insurance through a network of affinity partners and brokers or directly to consumers. The US segment is engaged in the underwriting of specialty contracts mainly to small and midsize businesses in the United States. In Canada, the Company distributes insurance under the Intact Insurance brand through a network of brokers.

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Intact Financial Corp

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Post by retiredcfon May 11, 2022 8:43am

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Post# 34673351

TD Upgrade

Intact Financial Corp.

(IFC-T) C$173.40

Q1/22: EPS Beat Mostly From Favourable PYD and Expense Savings

Event

IFC reported Q1/22 operating EPS of $2.70 (up 12% y/y) vs. our estimate of $2.24 (consensus: $2.38). EPS was higher than our estimate, reflecting better PYD, lower expenses, and slightly better top-line. TTM OROE was 16.6%, in line with our forecast (16.9%). IFC repurchased 91,040 of its 5.28mm NCIB in the quarter. The proceeds from the sale of Codan DK for ~$1.15bln (May 2, 2022) were used to reduce the D/C ratio to ~20%.

Impact: POSITIVE

Operating DWP was up ~85% y/y, (75 points from RSA) and was ~$100mm or 2% higher than our forecast, reflecting stronger growth in U.K. commercial lines. Canadian DWP (ex-RSA and prior-year relief) was up 6% y/y, reflecting 5% and 13% organic growth in personal property and commercial, respectively. Personal auto top-line organic growth remains very modest. UK&I commercial lines DWP was up 6.5% y/y. We expect personal lines growth to remain muted for some time (conservative underwriting amidst regulatory change).
Underwriting income of $396mm (our estimate $339mm) includes the pre- announced CAT losses of $182mm (about double a normal Q1), excluding which underwriting income would have been almost $500mm vs. ~$350mm on the same basis last year. Higher underwriting income entirely reflects much stronger favourable PYD particularly in Canadian and U.K. commercial lines. The total company claims ratio of 60.8% was higher than last year (mostly CAT-related), and slightly higher than our forecast of 60.2%, reflecting higher claims in Canadian and U.K. commercial insurance. Canadian personal auto underlying claims ratio deteriorated as expected, increasing 450bps y/y (forecast: 500bps).

TD Investment Conclusion

We forecast operating ROE falling to 15% from ~17%. Applying a target P/B (ex- AOCI) of 2.3x, we arrive at our target price of $210.00 (up from $205.00). In the current risk-off environment, IFC's stable BV/share growth and resilient business model support our target price and BUY rating