Intact Financial: A Stable and Profitable Investment in P&C Insurance

As the largest provider of property and casualty (P&C) insurance in Canada, Intact Financial Corporation (TSX: IFC) has consistently demonstrated a strong track record of financial performance and dividend growth. With a focus on disciplined underwriting, scale advantage, and in-house claims expertise, Intact Financial has proven to be a reliable and attractive investment option for income-focused investors.



Intact Financial's dividend growth and payout ratio have evolved positively over time, indicating a robust financial health. The company has increased its annual dividend for 19 consecutive years, with a compound annual growth rate (CAGR) of 10%. This consistent dividend growth is a testament to Intact Financial's strong financial performance and commitment to returning value to shareholders. In comparison, the average dividend growth rate for its peers in the P&C insurance industry is around 7% over the same period. Intact Financial's dividend yield of 1.82% is also higher than the industry average, further highlighting the company's attractive dividend profile.



Intact Financial's underwriting income and combined ratio trends have contributed to its long-term profitability. The company's underwriting income has been growing steadily, increasing by 62% in Q4-2023 compared to Q4-2022. This growth is driven by strong underlying performance across all geographies and the exit from the UK personal lines market. The combined ratio, a key measure of underwriting profitability, has improved to 85.0% in Q4-2023, down from 90.4% in Q4-2022. This improvement reflects the company's disciplined underwriting and exit from the UK personal lines market, which tempered catastrophe losses. Despite absorbing elevated catastrophe losses and UK personal lines exit costs, Intact Financial's adjusted ROE remained solid at 11.7%. These trends indicate that Intact Financial is managing its underwriting portfolio effectively, contributing to its long-term profitability.



Intact Financial's return on equity (ROE) and return on invested capital (ROIC) have shown a consistent upward trend over the past few years. In 2023, ROE was 13.00%, up from 12.2% in Q3-2023, and ROIC was 8.48%. This suggests that Intact Financial has been effective in generating shareholder value by efficiently utilizing its capital. The company's ability to maintain a solid ROE and ROIC, despite absorbing elevated catastrophe losses and UK personal lines exit costs, demonstrates its resilience and strong underlying performance.

In conclusion, Intact Financial Corporation (TSX: IFC) offers a stable and profitable investment opportunity in the P&C insurance sector. With a strong track record of dividend growth, consistent underwriting performance, and robust financial health, Intact Financial is an attractive choice for income-focused investors seeking reliable, long-term returns. As the company continues to focus on disciplined underwriting, scale advantage, and in-house claims expertise, it is well-positioned to maintain its competitive edge and generate shareholder value.