Bullboard - Stock Discussion Forum Intact Financial Corp INFFF

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

Financial Services Insurance - Property & Casualty

Intact Financial Corporation is a Canada-based company, which is a provider of property and casualty insurance. Its 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. Its UK & International segment is engaged in underwriting of automobile, home,... see more

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TSX:IFC - Post Discussion

Intact Financial Corp > TD Upgrade

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Post by retiredcf on May 11, 2022 8:43am

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