Skip to main content

Ever since Intact Financial Corp. announced at the end of May that it will buy AXA Canada from AXA Group for $2.6-billion, the shares of the property and casualty insurer have risen nearly 9 per cent. However, Mario Mendonca, an analyst at Canaccord Genuity, believes that the big gains are still to come.

He raised his target price on Intact to $63 from $53 - a significant 19 per cent bump - and also raised his recommendation on the stock to "buy" from "hold." Part of his enthusiasm comes from his belief that bigger is better in the P&C sector.

"We believe the strategic and financial merits of the transaction are almost indisputable," he said in a note. "IFC, already the largest P&C company in Canada, will become the largest by a factor of two times the next competitor, Aviva, giving the combined company significant pricing, claims, expense and distribution advantages."

Story continues below advertisement

The combined companies should drive Intact's 2012 earnings up 12 per cent from Mr. Mendonca's estimates for the pre-merged Intact. For 2013, the merger should drive earnings 16 per cent higher. Additionally, he has raised his book value estimates for Intact by 8 to 9 per cent.

Report an error
About the Author
Investing Reporter

David Berman has been writing about business and investing since 1995. He has written for a number of magazines, including Canadian Business and MoneySense. He worked at the Financial Post as an investing writer and daily columnist before moving to the Globe and Mail in 2008. More

Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.