Monday, February 4, 2008

ING Canada – IIC

I recently purchased a small amount of ING Canada (IIC - TSX). I am going to continue to follow it and possibly double down in the future. I plan on holding this name for approximately 2 to 5 years (due to the cyclicality of the P&C industry). However, I don’t expect much movement in the stock for the next 6-12 months.

“ING Canada Inc. is the largest provider of property and casualty (P&C) insurance in Canada, operating through ING Insurance, ING Novex, Nordic, belairdirect and Trafalgar. Our principal products are automobile, property and liability insurance, which we provide to individuals and small to medium-sized businesses across Canada. Consumers can purchase insurance products from ING Insurance through a network of 2800 brokers across the country, from belairdirect through its web site and call centres as well as from Trafalgar Insurance through Grey Power brokers and call centres”

Current P/E – 8.5X
-2008 Estimated PE – 9.1X
-2009 Estimated PE – 8.1X
-ROE – 20% (over the last 10 years they have outperformed their industry peers by 820bps)
-Current Yield – 3.1%
-Current Payout Ratio – 19 %
-trading at 1.4X book
-Debt to Equity Ratio – 0%

Other Facts:
-have captured 11% of the P&C market share in Canada.
-trading on the TSX since 2004 when their parent company, The ING Group, spun out 30% of their Canadian operations.
-largest and best in class of the Canadian P&C insurers.
-potential for the parent company to repurchase the shares (however do not buy this company on the potential of a takeover)
-they are the major industry consolidator in Canada.
-$1.5 billion available for acquisitions.
-no U.S subprime exposure.
-hedge all U.S foreign currency risk.

(Disclaimer: I’m am not a financial advisor. Please do your own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice.)


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