Intact Financial Corp. has adopted a poison pill, as a period of consolidation is expected to sweep Canada's property and casualty insurance sector.
The company's shareholder rights plan, which became effective at the close of business Wednesday, is intended to allow the company's board and shareholders enough time to evaluate any hostile takeover bid.
Intact is generally seen as a potential acquirer, not a target. In a note to clients Thursday CIBC analyst Paul Holden said he expects Intact to bid for Economical.
Intact's shares were up slightly Thursday morning, in the wake of a 4.5 per cent sell-off on Wednesday that Mr. Holden said he believes was overdone. The drop in the stock Wednesday occurred despite the fact that Intact raised its quarterly dividend from 34 cents to 37 cents. The company's profits, although higher than a year ago, missed expectations largely because of higher-than-expected claims losses as a result of severe weather, an issue that's becoming a bigger headache for insurers as a result of climate change.
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