Intact Financial warns of bigger losses

Intact Financial Corp. did little to calm investors still jittery from the losses insurers incurred after the Fort McMurray wildfires, when the insurer warned Tuesday that catastrophe losses from other events in the third quarter would be higher than expected.

“Canadians across the country have been impacted by multiple weather events this summer and we are working hard to help our customers get back on track,” Charles Brindamour, CEO of Toronto-based Intact, said in a statement.

An event is deemed a catastrophe loss once it crosses a threshold of $7.5 million.

The damage — estimated at $170 million ($124 million after tax) or 95 cents per share — is due to eight separate incidents including hail, wind, and rain, and is the highest in three years, according to John Aiken, an analyst at Barclays Capital.

“Cat(astrophe) losses continue to inflate and the third-quarter’s estimate is actually higher than the $164 million taken in the second quarter related to the Fort McMurray wildfires,” Aiken wrote in a note to clients. “Investors may begin to be tiring of cat losses, particularly as this comes after the impact of the Fort McMurray wildfires last quarter,” the analyst said.

The estimated hit is double the $84 million anticipated by Paul Holden, an analyst at CIBC World Markets.

In a note to clients, Holden said he is reducing his third quarter earnings estimate for Intact to $1.01 per share from $1.51 to account for the estimated catastrophe losses, but leaving his price target of $109 unchanged.

“We continue to rate Intact a sector outperformer,” the analyst wrote.

Analysts say the third quarter is typically the peak for catastrophe losses.