It may be the industry’s version of the Comeback Kid, with Moody’s Investor Service bumping up the outlook for
Intact Financial Corporation in part because of recent acquisitions.
"Intact's profitability has steadily increased over the past several years despite material catastrophe losses in 2013 and pricing pressure in Ontario Auto.” Said Moody’s lead analyst for Intact, Jason
Mercer. "The positive outlook on Intact's ratings reflects higher profitability from the successful integration of Axa and Jevco."
Moody’s has also extended Intact has a senior debt rating of Baa1 and its main insurance subsidiaries have been given A1 IFS (insurance financial strength) ratings.
This affirmation of the company’s ratings is a reflection of its strong position in the Canadian casualty and property insurance markets, good reserve adequacy and continuing track-record of integrating acquisitions with a solid risk management discipline. But, the credit ratings have been adversely influenced by Intact’s high financial and operational leverage, which can be considered aggressive when taken together with high gross catastrophe exposure and tangible capital.
The ratings agency expects Intact to improve its ability to maintain higher leverage while sustaining profitability levels.
However, there are a number of factors which could force a downgrade or an upgrade of the rating. Improving overall performance by reducing financial leverage and debt combined with increasing MCT capital ratio and return on capital could enhance the rating. A negative performance in these parameters could lead to a downgrade.
The following ratings have been given a positive outlook by Moody’s:
- Intact Financial Corporation - senior unsecured debt at Baa1; senior unsecured medium note program provisional rating at (P) Baa1; long-term foreign currency issuer rating at Baa1;
- Intact Insurance Company – IFS at A1;
- Belair Insurance Company - IFS at A1;
- The Nordic Insurance Company of Canada - IFS at A1;
- Novex Insurance Company - IFS at A1;
- Trafalgar Insurance Company of Canada - IFS at A1;
- Jevco Insurance Company - IFS at A1.
