Insurance companies have provided safety and comfort for many decades. They provide a safety net for the risks in life that would otherwise prove to be too catastrophic to recover from. So, we keep paying our insurance companies month after month, year after year, for that protection and peace of mind. This is what makes insurance stocks so attractive.
The long-term contracts, the priority they are given, and their financial stability all make insurance stocks good investment options. Please read on as I discuss the insurance stock that I’m most bullish on today, Intact Financial Corp. (TSX:IFC).
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A long history of excellence
Intact Financial is the largest provider of property and casualty (P&C) insurance in Canada. Since its initial public offering (IPO) back in 2004, Intact has grown its revenues from $3.8 billion to $26.5 billion in 2024. This was achieved through both organic growth and growth via acquisitions. In fact, Intact has been a leading consolidator in the P&C industry, with 19 successful acquisitions since 1988.
All of this has translated into strong returns for the company and its shareholders. Looking at company returns, Intact has a history of exceeding the industry’s return on equity (ROE) by a significant margin. In the first quarter of 2025, the company achieved an operating ROE of 16.5% and management intends to beat the industry ROE by 500 basis points annually.
As far as shareholder returns go, Intact Financial’s stock price has strong historical long-term performance. As you can see from the price graph below, it has increased 800% in the last 20 years.
Also, the company has increased its dividend every year since its IPO. In fact, the dividend has grown 716% to the current $5.32. This represents a compound annual growth rate (CAGR) of 11.1%.
More on the investment case for Intact
Intact has a number of competitive advantages. Its size and scale give the company access to a vast amount of claims information that is used to accurately identify trends, more accurately model risk, and help with the pricing of its various products. Its scale has allowed Intact to build Rely Networks, a network of professional restoration contractors. This has resulted in priority service, lower material costs and preferred terms with suppliers.
Intact is coming off of a record year. Net operating income per share (NOIPS) came in at $14.43, with an ROE of 16.5% and an improved combined ratio (claims as a percentage of premiums) of 92.2%. These results were produced despite difficult times that included $1.5 billion in catastrophic losses.
Looking ahead, Intact is looking to maintain and grow its leading position. This means that its objective is to grow its NOIPS by 10% annually and continue to exceed industry ROE by at least 500 basis points.
The bottom line
While many investors don’t automatically think of Intact when they think of insurance stocks, I think they should. This P&C insurer has a solid, financially sound business, with a capital margin of $3.1 billion and an operationally efficient business that keeps paying dividends.
The P&C market remains fragmented, and we can expect Intact to continue to be a consolidator and grow its mere 18% market share position.
