Intact Financial Corp T.IFC

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

Financial Services Insurance - Property & Casualty

Intact Financial Corporation is a Canada-based provider of property and casualty insurance in Canada. The Company’s segments include Canada, UK & International, and US. The Canada segment is engaged in underwriting of automobile, home and business insurance contracts to individuals and businesses in Canada distributed through a network of brokers and directly to consumers. The UK & International segment is engaged in underwriting of automobile, home, pet and business insurance contracts to businesses in the United Kingdom, Europe, and Ireland as well as internationally through the Company’s global network. The Company distributes insurance through a wide network of affinity partners and brokers or directly to consumers. The US segment is engaged in underwriting of specialty contracts mainly to small to medium-sized businesses in the United States. The Company distributes insurance through independent agencies, brokers, wholesalers and managing general agencies.

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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