It is certainly an insurer I have paid attention to for a while. The primary reason I choose Intact over a company like DFY is the fact that Intact's underwriting skills, primarily represented through combined ratios, are much stronger.
In the simplest explanation possible, combined ratios take the premiums generated and compare them to the premiums paid. If an insurer has a combined ratio of 95%, it means they're collecting $100 in premiums and paying out $95 in claims. The lower the combined ratio, the better.
DFY has been a company that has always hovered in the 95%~ range. Intact, on the other hand, is typically in the 91%-92% range.
The only thing here though that makes DFY attractive to an extent is the fact it's growing at a faster pace than Intact. This makes sense as it is a much smaller insurer and has a bit more room to grow. With Intact having near 20%~ of the P&C market in Canada, there is going to be smaller opportunities for organic growth.
DFY has had a heck of a year after some soft operating results from 2021-2023. I would still opt for an industry leader like Intact. It has shown it can grow cash flows and revenue at a larger pace than DFY over the long-term, and is a more efficient company overall.
However, that doesn't mean DFY is a bad company. In fact, they're pretty solid.
Posted by Anonymous