Intact Financial (IFC.TO)

Very strong second quarter. Still grows earnings at a sustainable high teens rate, impressive. Combined ratio is ~87%. Modest dampening enthusiasm due to its richer valuation at 17.5x earnings, compared to its average of 15.5x.

Depends on what percentage it makes of your portfolio, plus what your cost base is. #1 competitor to DFY is IFC. The industry is consolidating more. DFY might have a leg up on IFC, as DFY is smaller and can buy a few more things in Canada.

Cost inflation and extreme weather give him pause in this area. Both well-run businesses, but inclined to stay away. The sector poses some risks.

In financials, his biggest weight is insurance. His #1 position is FFH in P&C, but MFC is a significant position as well. He also has IFC. This group is behaving well. 

It has good upward momentum but he wouldn't buy at these levels. He is concerned about insurance payments for weather related events. Intact has been able to pass along increasing replacement costs to their clients.

There are a lot of risks out there -- presidential elections, wars, hard landings, soft landings, stagflation. This name has very little sensitivity to the macro. No matter what, can return solid returns from organic growth and M&A. 14x PE, growing 18%. Yield is 2.1%.

Core position. If the A thesis doesn't work, there's a B thesis. Not if it will help your portfolio, but when.

All reinsurance in property & casualty business. Really expensive in Canada. IFC is the monster, DFY is a newer entrant. He owns none of them. Likes the business, but valuation is too high.

Defense and offense. Executing very well. Book value is up 6%. Beat on underwriting by 25%. Increased dividend by 10%. Organic revenue up 8% YOY. Increased his target price to $256. 19% EPS growth. Trades at 14x, reasonable.

Great name to have in a portfolio, great capital builder. Solid underwriting, solid investment income. ROE above 12% on last report. Reasonable 15x, with 17% growth rate. He likes to get things at a bit of a discount, so try for $200-202.

IFC is the industry-leading property and casualty insurer in Canada and it has held a strong lead for many years. Its main competitors include DFY, TRV, FFH, GWO, SLF, and a few other private insurers. 

IFC has demonstrated the highest annual returns against these names over both a five and 10-year timeframe. IFC holds the highest market share in Canada for P&C, representing around 17% market share as of 2022. IFC trades at a relatively higher valuation compared to its peers, although, we feel this is justified given its industry-leading position and quality fundamentals. Its main segments include Canadian P&C insurance (69% of sales), UK and international (21% of sales), and specialty lines within the US (10% of sales).

IFC has decided to sell the UK direct personal lines operations (RSA's assets). This move allows RSA to focus on becoming a leading UK commercial and specialty lines player, which we feel is a smart strategic move. Commercial and specialty lines is a more lucrative line of business, and we feel IFC has made the right move. The stock has recovered from the initial news, and continues to demonstrate its quality management team.
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Well-run and enjoys impressive growth through acquisitions. Has pricing power. He expects more growth and market share. High profitability, but trades at a higher-than-market 17x PE. You can buy a position here.

The biggest P&C insurer at 20% market share. They boast sharp underwriting, consistently around 90-95% combine ratios, and ROE is higher than peers at 15% ROE. Expects them to keep buying smaller companies in a fragmented industry. Their huge bond portfolio is thriving during high bond yields; that's a kicker.

It is the gold standard for companies in property and casualty insurance, but is expensive. He prefers Definity (DFY) which has better value, better results and is growing faster. Definity is transferring from a policy holder type of company to a corporation and there is lots of upside in acquisitions that could be made.

It is in the insurance business, has made good acquisitions, and executes well.

Spectacularly well run. Only thing holding him back is the price, has to justify how he's going to get a good return. Hefty valuation, probably well deserved. He'd be interested at least 20% cheaper than today.

Super-high quality. Sold on peak levels. His thinking was, "How much better can it get?" Monitoring closely, and he'd get back in at a lower level.