-
Manulife Financial Corporation (MFC)
-
Intact Financial Corporation (IFC)
-
iA Financial Corporation Inc. (IAG)
Q: Hello,
I own IAG and it recently missed earnings expectations by 5% and, as a consequence, the market reaction was brutally punitive. How can you compare IAG's overall financial strength to larger Canadian Insurers, say IFC and MFC, and are there overall reasons to worry apart from the market's bad quarter reaction ?
I own IAG and it recently missed earnings expectations by 5% and, as a consequence, the market reaction was brutally punitive. How can you compare IAG's overall financial strength to larger Canadian Insurers, say IFC and MFC, and are there overall reasons to worry apart from the market's bad quarter reaction ?
5i Research Answer:
IAG is an okay insurer with a decent track record of achieving low double-digit ROEs over the years and consistent capital return. That said, growth over the years has been quite cyclical. The market reaction has been quite negative after the recent earnings miss. MFC is a good insurance company, but again growth is quite mature, and ROE is average. MFC and IAG are also trading at a cheap valuation of 1.3x Price/Book. Both are okay names to hold as a value investment. But for a high-quality insurance name, we would side with IFC due to its healthy growth and above-average ROEs.