Brian Madden - BNN - TOP PICKInteresting reasoning.
Intact Financial Corp (IFC TSX)
With a 20 per cent market share, Intact Financial is the largest property and casualty insurer in Canada. Intact underwrites auto, home, commercial and specialty insurance policies and is best known for the efficiency of its operations. It is also known for consistent underwriting profitability which enables it to target a return on equity five per cent higher than its rivals and which currently stands at 15 per cent. As a consolidator of the fragmented insurance market, Intact has grown earnings at a 12 per cent compound rate over the last decade. Long-term forces like climate change and rising property values advantage Intact through higher policy premiums on higher insured property values and over the medium term a “hardening” (i.e. premiums are rising steadily) property and casualty insurance market is providing a significant tailwind to their results as is the benefit of reinvesting their $30 billion bond portfolio at much higher yields as interest rates rise.