Teal Linde Intact Financial IFC-T BUY ON WEAKNESS Feb 10, 2025

Executing so well. High catastrophic losses, but ROE still at 16.5%. Underwriting beat. Strong Q4. Canadian and US commercial beat. Firing on all cylinders, resilient in this environment. Trading ~17.5x 2026, growing ~16%. Not a bad buy, but don't chase -- can probably get at $270.

Valuation is high. P&C insurance is very defensive, so it draws crowds when people get panicky in the market and the price gets bid up.  Wait for a better valuation.

It is always expensive. Has a ranking of 422, overall sales growth is modest and has a low ROC. There appears to be better opportunities.

It's delivered, and it's been a great acquisition story. He's not playing the insurance side as much right now. Food for thought:  what's autonomous driving going to do to rates and payouts? Theoretically, it should be positive. Could be a cornerstone of the financial part of your portfolio, but he doesn't own it right now on valuation.

There has been a decline in recent weeks due to lower revenue but the bottom line was not impacted and met expectations. There was an over-reaction to the report so it has become a buying opportunity, now trading at half below its norm for the past 5 to 10 years. It is one of the premium names in the insurance space and has very solid fundamentals.

Impressive management. The entire space is subject to the unpredictability of catastrophic losses. But this company has done great, able to manage all the risks. Post-pandemic inflationary environment helped (replacement costs went up, so premiums did too). 

Recent results were fine, but stock dropped. Could have just exhausted itself for now. May have to grow into the multiple. Or, if there's a market pullback and people are really scared, they might sell their winners because that's all they can sell with liquidity. In which case, some of the higher-valued stocks might be in for more of a drop. Or if the fear is just temporary, other stocks may be trimmed and the leaders continue to hold up well. We'll have to see.

Given the quality of the business, he'd certainly look at it on a material pullback. If you hold it now, don't let the current weakness shake you out. Likely to close the gap up, unless something dramatic happens in the macro or micro story.

Likes the thesis of buying companies that you pay into via your monthly bills. Likes the business. Nice diversifier within the financials. Weather events are always risks, but company's done good job with that. Strong management. About 20% market share of the overall industry.  

Quite a bit of M&A. Trying to diversify in the digital space, as shown by recent home repair app acquisition. Valuation too high now. Would look at in a broad market pullback, and if yield moved up to over 2% (a function of the stock price going down).

We would be comfortable buying IFC today. 
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Insurance companies have recently fallen or traded sideways for the past year or so, as expectations for rate cuts can impact their investment returns, and as these are more 'defensive' names, the market has been trading defense for growth over the past year. We continue to like IFC for a long-term hold, but until there is a risk rotation that takes place, we think IFC likely trades flat. Although, we still view it as one of our long-term, high-quality plays that can benefit when growth stocks stop working.
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Took some profits around $300, as the stock didn't owe him anything. Growth rate is starting to not work as well as the group or, for example, DFY. Last quarter was great, beat by 30%. Underwriting profitability has been wonderful. Trades ~14.5x with 4% growth rate.

For new $$, he'd rather go with the banks or with DFY.