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Manulife Financial Corporation (MFC)
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Fairfax Financial Holdings Limited Subordinate Voting Shares (FFH)
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Intact Financial Corporation (IFC)
Q: Would you please rank the 3 stocks in order of total return going forward. IFC has the best 10year return, but not so more recently. I currently own IFC and I am concerned about the effects of global warming on future performance. I am leaning toward MFC because of its recovered mojo. I sense that MFC is the most conservative play in the group. Thank you
5i Research Answer:
Global warming could certainly be a headwind in terms of catastrophe losses for most property & casualty insurance businesses. But at the same time, they are more likely to charge higher premiums to offset risks that may happen more frequently going forward. We think investors can hedge these risks by owning high-quality insurance names with a track record of underwriting profitability. In terms of total return going forward (five years), we think IFC and FFH have a better chance of outperforming MFC given that MFC is positioned as a conservative investment for income-seeking investors.