PrefBlog

National Bank of Canada has announced:

Further to its announcement of September 20, 2023, National Bank of Canada (the “Bank”) (TSX: NA) announced today the dividend rates applicable to the Non-Cumulative 5‑Year Rate Reset First Preferred Shares, Series 42 Non-Viability Contingent Capital (NVCC) (the “Series 42 Shares”) and the Non-Cumulative Floating Rate First Preferred Shares, Series 43 (NVCC) (the “Series 43 Shares”).

Holders of Series 42 Shares, should any remain outstanding after November 15, 2023, will be entitled to receive fixed-rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of the Bank and subject to the provisions of the Bank Act (Canada). The dividend rate for the five-year period commencing on November 16, 2023, and ending on November 15, 2028, will be 7.056%, being equal to the sum of the five-year Government of Canada Bond yield (4.286%) plus 2.77%, as determined in accordance with the terms of the Series 42 Shares.
Holders of Series 43 Shares, should any be issued on November 15, 2023, will be entitled to receive floating rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of the Bank and subject to the provisions of the Bank Act (Canada). The dividend rate for the three-month period commencing on November 16, 2023, and ending on February 15, 2024, will be 7.93%, being equal to the sum of the 90-day Government of Canada Treasury Bill yield (5.16%) plus 2.77%, calculated on the basis of actual number of days elapsed in such quarterly floating rate period divided by 365, as determined in accordance with the terms of the Series 43 Shares.

Holders of the Series 42 Shares have, subject to certain conditions, the right to convert all or part of their Series 42 Shares on a one-for-one basis into Series 43 Shares on November 15, 2023.

Beneficial owners of Series 42 shares who wish to exercise their conversion right should communicate as soon as possible with their broker or other nominee and ensure that they follow their instructions in order to meet the deadline to exercise such right, which is October 31, 2023, at 5:00 p.m. (EDT).

The September 20 press release referenced above stated:

National Bank of Canada (“National Bank”) (TSX: NA) announced today that it does not intend to exercise its right to redeem all or part of the currently outstanding 12,000,000 Series 42 Shares on November 15, 2023. As a result, subject to certain conditions, the holders of the Series 42 Shares will have the right to convert all or part of their Series 42 Shares on a one-for-one basis into Non-Cumulative Floating Rate First Preferred Shares, Series 43 (NVCC) (the “Series 43 Shares”) on November 15, 2023, in accordance with the terms of the Series 42 Shares described in the prospectus supplement dated June 4, 2018.

Holders who do not exercise their right to convert their Series 42 Shares into Series 43 Shares on November 15, 2023, will retain their Series 42 Shares.

The foregoing conversions are subject to the conditions that:

i. if National Bank determines that there would remain outstanding on November 15, 2023, less than 1,000,000 Series 43 Shares, after having taken into account all Series 42 Shares tendered for conversion into Series 43 Shares, then holders of Series 42 Shares will not be entitled to convert their shares into Series 43 Shares, and

ii. alternatively, if National Bank determines that there would remain outstanding on November 15, 2023, less than 1,000,000 Series 42 Shares, after having taken into account all Series 42 Shares tendered for conversion into Series 43 Shares, then all remaining Series 42 Shares will automatically be converted into Series 43 Shares without the consent of the holders on November 15, 2023.

In either case, National Bank shall give a notice to that effect to all registered holders of Series 42 Shares no later than November 8, 2023.

On October 17, 2023, National Bank will give notice of:

i. the annual fixed dividend rate applicable to the Series 42 Shares to which a holder of Series 42 Shares will be entitled for the 5-year period from November 16, 2023, up to and including November 15, 2028; and

ii. the floating quarterly dividend rate applicable to the Series 43 Shares to which a holder of Series 43 Shares will be entitled for the 3-month period from November 16, 2023, up to and including February 15, 2024.

Beneficial owners of Series 42 Shares who wish to exercise their conversion right should communicate with their broker or other nominee to obtain instructions for exercising such right during the conversion period, which will run from October 16, 2023, until October 31, 2023, at 5:00 p.m. (EDT).

NA.PR.G was issued as a FixedReset, 4.95%+277, NVCC compliant, that commenced trading 2018-6-11 after being announced 2018-05-31. It is tracked by HIMIPref™ and is assigned to the FixedResets (Discount) subindex.

Thanks to Assiduous Reader niagara for bringing this to my attention!

BCE Inc. renewed its Normal Course Issuer Bid on 2022-11-2:

BCE Inc. (BCE) today announced that the Toronto Stock Exchange (the “TSX”) has accepted a notice filed by BCE of its intention to renew its normal course issuer bid (“NCIB”) to purchase up to 10% of the public float of each series of BCE’s outstanding First Preferred Shares that are listed on the TSX (the “Preferred Shares”). The period of the NCIB will extend from November 9, 2022 to November 8, 2023, or an earlier date should BCE complete its purchases under the NCIB. BCE will pay the prevailing market price at the time of acquisition for any Preferred Shares purchased plus brokerage fees payable by BCE (except with respect to purchases made under an issuer bid exemption order, which will be at a discount to the prevailing market price), and all Preferred Shares acquired by BCE under the NCIB will be cancelled.

The actual number of Preferred Shares repurchased under the NCIB and the timing of such repurchases will be at BCE’s discretion and shall be subject to the limitations set out in the TSX Company Manual.

The NCIB will be conducted through a combination of discretionary transactions and purchases under an automatic securities purchase plan through the facilities of the TSX as well as alternative trading systems in Canada, if eligible, or by such other means as may be permitted by securities regulatory authorities, including pre-arranged crosses, exempt offers, private agreements under an issuer bid exemption order issued by securities regulatory authorities and block purchases of Preferred Shares. Purchases made under an issuer bid exemption order will be at a discount to the prevailing market price.

Under the NCIB, BCE is authorized to repurchase shares of each respective series of the Preferred Shares as follows:

Series	Ticker	Issued and Outstanding Shares(1)	Public Float(1)	Average Daily Trading Volume(2)	Maximum Number of Shares Subject to Purchase
					Total(3)	Daily(4)
R	BCE.PR.R	7,998,900	7,998,900	4,055	799,890	1,013
S	BCE.PR.S	2,128,267	2,128,267	1,067	212,826	1,000
T	BCE.PR.T	5,870,133	5,870,133	11,269	587,013	2,817
Y	BCE.PR.Y	8,079,291	8,079,291	6,383	807,929	1,595
Z	BCE.PR.Z	1,918,509	1,918,509	659	191,850	1,000
AA	BCE.PR.A	12,307,661	12,307,661	9,932	1,230,766	2,483
AB	BCE.PR.B	7,688,739	7,688,739	6,989	768,873	1,747
AC	BCE.PR.C	10,027,991	10,027,991	3,598	1,002,799	1,000
AD	BCE.PR.D	9,963,209	9,963,209	5,255	996,320	1,313
AE	BCE.PR.E	6,512,913	6,512,913	5,004	651,291	1,251
AF	BCE.PR.F	9,481,487	9,481,487	5,397	948,148	1,349
AG	BCE.PR.G	8,979,530	8,979,530	5,276	897,953	1,319
AH	BCE.PR.H	5,017,570	5,017,570	2,961	501,757	1,000
AI	BCE.PR.I	9,535,040	9,535,040	3,983	953,504	1,000
AJ	BCE.PR.J	4,464,960	4,464,960	3,703	446,496	1,000
AK	BCE.PR.K	23,190,312	23,190,312	15,753	2,319,031	3,938
AL	BCE.PR.L	1,799,388	1,799,388	462	179,938	1,000
AM	BCE.PR.M	10,439,978	10,439,978	7,767	1,043,997	1,941
AN	BCE.PR.N	1,054,722	1,054,722	968	105,472	1,000
AQ	BCE.PR.Q	9,200,000	9,200,000	5,946	920,000	1,486
(1) As of November 2, 2022. (2) For the 6 months ended October 31, 2022. (3) Represents approximately 10% of the public float in respect of each series of Preferred Shares. (4) Represents the maximum number of shares of each series of Preferred Shares that may be purchased over the TSX (or alternative trading systems in Canada, if eligible) during the course of one trading day. This amount is equal to the greater of (i) 25% of the average daily trading volume on the TSX calculated in accordance with the rules of the TSX, and (ii) 1,000 shares. This limitation does not apply to purchases made pursuant to block purchase exemptions.

BCE is making this NCIB because it believes that, from time to time, the Preferred Shares may trade in price ranges that do not fully reflect their value. BCE believes that, in such circumstances, the repurchase of its Preferred Shares represents an appropriate use of its available funds.

As of November 2, 2022, under its current normal course issuer bid that commenced on November 9, 2021 and will expire on November 8, 2022, and for which the company received approval from the TSX, BCE did not purchase any Preferred Shares.

BCE will enter into an automatic securities purchase plan (“ASPP”) with a designated broker in relation to the NCIB on or about the commencement date of the NCIB. The ASPP will allow for the purchase of Preferred Shares, subject to certain trading parameters, at times when BCE ordinarily would not be active in the market due to applicable regulatory restrictions or self-imposed trading black-out periods. Outside of these periods, the Preferred Shares will be repurchased by BCE at its discretion under the NCIB.

I normally don’t report these announcements because they normally don’t mean anything. But:

According to the 2022 Annual Report:

Normal course issuer bid for BCE First Preferred Shares

On November 3, 2022, BCE announced the renewal of its NCIB to purchase for cancellation up to 10% of the public float of each series of BCE’s outstanding First Preferred Shares that are listed on the Toronto Stock Exchange. The NCIB will extend up to November 8, 2023, or an earlier date should BCE complete its purchases under the NCIB.

In 2022, BCE repurchased and canceled 584,300 First Preferred Shares with a stated capital of $15 million for a total cost of $10 million. The remaining $5 million was recorded to contributed surplus.

Subsequent to year end, BCE repurchased and canceled 1,090,400 First Preferred Shares with a stated capital of $27 million for a total cost of $20 million. The remaining $7 million was recorded to contributed surplus

… and according to the 23Q2 Quarterly Report:

Normal course issuer bid for BCE First Preferred Shares

For the three and six months ended June 30, 2023, BCE repurchased and canceled 1,848,950 and 3,560,950 First Preferred Shares with a stated capital of $46 million and $89 million for a total cost of $32 million and $63 million, respectively. The remaining $14 million and $26 million were recorded to contributed surplus for the three and six months ended June 30, 2023, respectively.

The 23Q3 Quarterly Report will be released 2023-11-2.

A poster on Financial Wisdom Forum, Thurman, has compiled the following numbers of the purchases to date (from a compilation of SEDI data), which I have not checked myself and present ‘as is’:

Symbol — Shares — Ave Price — Value
————————————————————
BCE.PR.A — 572,200 — $17.32 — $9,910,708.22
BCE.PR.B — 512,800 — $18.07 — $9,266,588.32
BCE.PR.C — 140,400 — $17.62 — $2,473,157.89
BCE.PR.D — 379,800 — $18.14 — $6,889,956.77
BCE.PR.E — 402,600 — $18.26 — $7,351,276.91
BCE.PR.F — 318,500 — $16.11 — $5,130,032.47
BCE.PR.G — 329,600 — $15.22 — $5,015,858.45
BCE.PR.H — 131,100 — $18.14 — $2,378,615.73
BCE.PR.I — 163,500 — $15.22 — $2,488,032.64
BCE.PR.J — 181,900 — $18.25 — $3,319,493.14
BCE.PR.K — 687,600 — $14.26 — $9,801,749.70
BCE.PR.L — 35,100 — $16.29 — $571,917.03
BCE.PR.M — 174,500 — $14.76 — $2,576,196.17
BCE.PR.N — 11,700 — $17.21 — $201,380.98
BCE.PR.Q — 638,200 — $20.73 — $13,231,363.82
BCE.PR.R — 98,200 — $14.82 — $1,455,565.46
BCE.PR.S — 59,400 — $18.11 — $1,075,488.32
BCE.PR.T — 452,600 — $18.16 — $8,221,445.70
BCE.PR.Y — 241,500 — $18.01 — $4,349,190.73
BCE.PR.Z — 191,850 — $19.11 — $3,666,577.96

Grand Total — 5,723,050 — $17.36 — $99,374,596.41

DBRS Limited (DBRS Morningstar) has announced that it:

upgraded the Issuer Rating of Intact Financial Corporation (Intact or the Company) to A (high) from “A” and also upgraded the Financial Strength Rating (FSR) of its main operating insurance subsidiaries to AA from AA (low). The FSRs of Intact’s UK-based subsidiary RSA Insurance Group Limited and its operating entities were also upgraded to AA from AA (low). The Issuer Rating on RSA Insurance Group Limited was upgraded to A (high) from “A”. The trends on all ratings were changed to Stable from Positive.

KEY CREDIT RATING CONSIDERATIONS
The rating upgrades reflect the Company’s strong financial performance and growth in premiums, as well as recent acquisitions that have enhanced the franchise through increased product and revenue diversification while deepening market shares.

The ratings and Stable trends reflect Intact’s well-designed and executed enterprise-wide risk management processes and focus on advanced data analytics and loss modeling that is evident in industry-leading combined ratios that support earnings generation. Additionally, regulatory capital levels are consistently above regulatory targets providing a considerable capital cushion to deal with market stress events or similar adverse developments. The ratings and trends also consider Intact retaining more risk given higher reinsurance costs and higher leverage following the acquisitions.

CREDIT RATING DRIVERS
Given the recent upgrade, a further ratings upgrade is unlikely. However, over the longer term, strong earnings growth supported by industry-leading underwriting profitability while maintaining adequate capital ratios would result in an upgrade. Conversely, the Company would be downgraded if it experiences a persistent material decline in underwriting results or weakening in regulatory capital buffers combined with a sustained deterioration in financial leverage.

CREDIT RATING RATIONALE
Intact is the largest provider of P&C insurance in Canada and is now a top three player in the UK commercial insurance market as a result of its most recent acquisition of Direct Line’s brokered commercial lines in September 2023. Over the past couple of years, the Company has substantially strengthened its market position and diversification in terms of its product lines, geographies, and distribution channels while increasing its potential for growth in the global commercial and specialty insurance, primarily through the RSA Insurance Group Plc (RSA) acquisition.

The Company’s risk profile reflects its strong risk-management framework including its efficient and successful integration of RSA as well as prior acquisitions. De-risking actions taken in 2022 and 2023 including selling the Denmark and the Middle East operations in 2022, exiting the auto lines business in the UK in early in 2023, decreasing its exposure to earthquake risk in Canada and through a pension buy-in transaction related to the UK pension liabilities, are viewed positively while reduced reinsurance coverage may expose the Company to more underwriting earnings volatility in the future. Notwithstanding this, the Company has demonstrated considerable sophistication in underwriting and in capital and investment portfolio management through various periods of market stresses. Reinsurance coverage sufficiently protects against the risks that could most adversely impact capital. Intact also has a strong risk appetite to expand its offerings of cyber risk insurance which comes with lots of opportunities as it is one of the fastest growing insurance business lines. It also presents the Company with challenges related to systemic risk exposure that are being prudently assessed and managed at the enterprise level.

Intact’s earnings ability reflects its strong underwriting and pricing discipline across its business segments and geographies, combined with solid revenue generation capabilities from related businesses (i.e., brokerage ownerships and property restoration services) and investments. Over the past several years, the Company has doubled its direct written premium volume, primarily as a result of the 2021 RSA acquisition but also through organic growth. The Company’s net earnings are strong and resilient with a three-year weighted return on equity (ROE) of 16%.

The Company’s high proportion of marketable bonds and equities and access to external sources of liquidity in various jurisdiction where Intact operates are viewed positively as they help mitigate liquidity risk. Intact’s liquidity stress testing capabilities and its focus on loss modeling and data analytics further enhance its liquidity risk management.

Intact maintains regulatory capital ratios with appropriate buffers across its regulated entities allowing the Company to handle reasonably adverse events. At 32%, Intact’s financial leverage is slightly above its target level of 30% but is expected to decline throughout 2024. On the other hand, the annual fixed charge coverage ratios have been high over the past three years, supported by Intact’s consistently strong earnings. Higher interest rates since mid-2022 have contributed significantly and positively to its investment income but are also making it more expensive to service debt going forward.

Affected issues are: IFC.PR.A, IFC.PR.C, IFC.PR.E, IFC.PR.F, IFC.PR.G, IFC.PR.I and IFC.PR.K.