IFC has been a long time favorite of 5i and stock has performed well, barring the recent softness.
Question is that after 2-3 years of strong performance by P&C sector, do you believe the present weakness to be simply transitionary or it is indicative of a reversal/change of direction in the industry fortunes. And if it is even partly true or possible, how is IFC positioned to protect its business model and revenue/profitability for shareholders ?
The follow up question is that considering these factors, does IFC continue to still present itself as compelling opportunity for a long term investor, as a core position in the portfolio, ignoring everything else as noise ?
Thank You
We continue to like IFC as part of a long-term holding, and while it has seen a drawdown in recent months, its decline of 10% off the highs is in line with historical drawdowns. The insurance industry is currently transitioning into a soft market, which is a more challenging environment for insurance companies. This is opposed to a hard market, where insurance companies' profits grow.
IFC is the leading P&C insurer in Canada, and while the broader industry may pullback in terms of price and fundamentals, over the long-term, insurance is a product that is quite sticky, recurring, resilient, and required in several instances.
We continue to like IFC, and would be quite comfortable holding here for the long-term.