Intact Financial Increases Its Dividend After Reporting Strong Q4 Numbers

Intact Financial delivered robust Q4 results recently.
Net operating income per share (NOIPS) rose 23% to $4.93, driven by strong underwriting, investment, and distribution income.
The combined ratio improved to 86.5%, reflecting underwriting discipline and favorable market conditions, despite $1.5 billion in catastrophe losses throughout 2024.
Book value per share (BVPS) increased 13% to $92.67
The company raised its quarterly dividend was raised 10% to $1.33 per share, marking the 20th consecutive annual increase.

Strong Growth Across Key Metrics

Intact Financial (TSX: IFC) closed 2024 on a high note, posting a 5% increase in operating direct premiums written (DPW) for the quarter to $5.76 billion. Personal lines led the way, benefiting from rate increases and unit growth. The insurance company’s combined ratio improved to 86.5% from 90.1% in Q4 2023, highlighting improved profitability despite the year’s significant catastrophe losses.

Net operating income jumped 24% year-over-year to $881 million, reflecting solid underwriting performance, a 6% increase in investment income, and a 13% rise in distribution income. Earnings per share (EPS) surged 29% to $3.58, while full-year EPS rose by 77% to $12.36.

Intact strengthened its balance sheet, with book value per share rising 13% to $92.67. The company ended the quarter with $2.9 billion in total capital margin, supporting an adjusted debt-to-total capital ratio of 19.4%. Operating return on equity (ROE) reached 16.5%, exceeding industry benchmarks, while adjusted ROE climbed 5.1 points to 16.8%.

Dividend Growth and Shareholder Returns

The board approved a quarterly dividend increase of $0.12 to $1.33 per share, representing a decade-long compounded annual growth rate of 10%. This marks the 20th consecutive year of dividend growth. With the increase in the dividend, the stock is now paying $5.32 per share over the course of a full year, which means its yield is up to around 1.8%.

Additionally, under its normal course issuer bid, the company repurchased 110,921 shares at an average price of $220.

Outlook and Investor Takeaway

Looking ahead, Intact expects continued premium growth, with personal auto and property lines anticipated to grow at a low double-digit rate and commercial lines maintaining mid-single-digit expansion. With a strong balance sheet, disciplined underwriting, and a commitment to increasing shareholder returns, Intact remains well-positioned for steady growth.

For dividend-focused investors and those seeking a stable, well-managed financial stock with long-term earnings potential, Intact Financial could make for a good investment to buy and hold. Over the past five years, the stock has risen by more than 90%. It trades at a forward price-to-earnings multiple of 17.