Ia Financial Corporation Inc. · TSX:IAG
Ia Financial — NBF 11th Annual Quebec Conference 2021
36 slides from Ia Financial's conference presentation, Jun 16, 2021
Slide 1: Guiding to solid growth
Guiding to solid growth NBF 11th Annual Quebec Conference June 16, 2021 PRESENT AND STRONG. More than ever.
Slide 2: Our purpose and mission
iA Financial Group Foundation $7.4B market is one of the largest insurance 1892 cap. and wealth management groups in Canada, with operations in the United States IAG on TSX $69.22 IPO in 2000 stock price OUR PURPOSE To assure that our clients feel confident and secure about their future 4M+ $76.23 a
Slide 3: Table of Contents
4 Solid growth targets Q1/2021 Results TABLE 5 Strategic axes 18 Key results OF 6 Core EPS & core ROE targets 19 Results vs. guidance 7 Road to reach earnings targets 20 Q1/2021 sales CONTENTS 8 Diversified business mix 21 Q1/2021 sales (cont.) 9 Key strengths Appendices 10 Growth drivers 23 Busines
Slide 4: Staying on course with our long-term vision
Staying on course with our long-term vision • Vision based on four strategic axes Solid growth • Diversified business mix and strategic investment in digital targets STRATEGY • Strong core results in 2020: EPS up 9% YoY and ROE of 13.3% Committed to 10%+ core EPS EARNINGS • Great start to 20211: Cor
Slide 5: Our strategic axes
OUR STRATEGIC AXES AMBITION To be a North American financial institution operating in sectors deemed GROWTH strategically important where we can be a leader in the mass/mid market CLIENT To be the company that best meets client expectations, in partnership with our distributors EXPERIENCE EMPLOYEE T
Slide 6: Strong earnings targets built on solid track record
Strong earnings targets built on solid track record Core EPS Core ROE (diluted) (diluted) 2023 target 10%+ 13%-15% growth on 2021 target average 12.5%-14% per year 13.6% 13.1% 13.3% MID- GUIDANCE $7.90 MID- $7.12 GUIDANCE $6.55 TRACK RECORD RECORD RECORD TRACK RECORD 10.4% 12.8% 2015-2020 2015 -2020
Slide 7: The road to reach earnings targets
THE ROAD TO REACH EARNINGS TARGETS Organic growth 6% A strong base from expected profit on in-force and business diversification + 2%+ Organic growth initiatives Supported by digital initiatives1 ≥ 10%+ + Distribution Core EPS growth on average 1%+ Supported by digital initiatives1 per year + Capita
Slide 8: Diversified business mix
Diversified business mix driven by Shared purpose / Strong vision / High ambition Businesses at the Businesses targeted foundation for strong of iA’s operations Individual Retail expansion Insurance distribution (Canada) ▪ iA is already a leader and seeks ▪ iA is seeking to become a leader to streng
Slide 9: Our key strengths for success
PROFITABLE GROWTH Our key strengths for success Diversified Committed Focused on Digital business mix distribution markets where smart choices with synergies networks we can lead Organic growth Growing Ongoing Targeted with pricing capital-light capital acquisitions discipline businesses generation
Slide 10: Main growth drivers
MAIN GROWTH DRIVERS ▪ Keep improving digital tools to remain at the leading-edge SALES ▪ Leverage full range of products & continue to be proactive based on client needs ▪ Reinforce strategy in building relationship with distributors and attract new agents ▪ Optimize synergies between business units
Slide 11: US Dealer Services
Business growth US ▪ Growth through new dealer enrolment and increased sales from existing accounts: Dealer Well-balanced business mix: ~50/50 between new and used cars ▪ IAS integration is progressing well: Starting to reap the benefits of the synergies between IAS and DAC Services ▪ Increased impo
Slide 12: Capital allocation
CAPITAL ALLOCATION Focused on growth Organic growth Investing in digital evolution to propel growth Acquisitions Ready to conclude bolt-on acquisitions to strengthen strategic positioning Dividends Increases to resume within our target range, when permitted by regulators NCIB $ To resume when permit
Slide 13: Strong and flexible balance sheet to support growth
Strong and flexible balance sheet to support growth Solvency ratio of 128%, comfortably above iA’s target level of 110% to 116% Ratios Leverage ratio of 24.3%, providing financial flexibility (March 31, 2021) Coverage ratio of 14.0x Distinctive Embedded in reserving process, iA’s distinctive market
Slide 14: Managing with a long-term perspective
Managing with a long-term perspective to optimize future value creation • High-quality and diversified portfolio $42.5B • 72% of total portfolio are bonds, with more than half being governmental INVESTMENT • Low direct exposure to equity market PORTFOLIO • Oil & gas assets = 3% of total portfolio, w
Slide 15: Strong and steady record of value creation
Strong and steady record of value creation Book value per share IAG book value IAG and dividends paid per share CAGR1 +421% (at year-end) 1-year +9% 5-year +9% 10-year +8% Best performance Since 2000 +10% Peers of Canadian lifecos +231% 0% March 31, June 30, 2004 2005 2006 2007 2008 2009 2010 2011 2
Slide 16: Superior record of share price growth
Superior record of share price growth +1,304% Total return May 31, (Share price growth 2021 with dividend reinvested, at year-end) Best performance of Canadian lifecos 0% IPO1 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 16 1 Feb. 3, 2000,
Slide 17: Q1/2021 results
Q1/2021 results PRESENT AND STRONG. More than ever.
Slide 18: Q1/2021 Key results
Q1/2021 Sustained growth momentum Strong results from all sectors, KEY RESULTS most notably iAAH, US Dealer Services and car loans Core EPS Core ROE P&D $1.79 13.6% $4.4B +20% YoY Top of guidance +25% YoY AUM/AUA Solvency ratio Book value $201.3B 128% $56.95 +15% YoY Above target +9% YoY 18 This sli
Slide 19: Q1/2021 results vs. guidance
Q1/2021 results vs. guidance All within or better than target, with the exception of the effective tax rate 2021 guidance Q1/2021 results Core EPS1 $1.70 to $1.85 in Q1 $1.79 Core ROE1 (trailing 12 months) 12.5% to 14.0% 13.6% Impact of new business (strain) -5% to 10% 5% Solvency ratio 110% to 116%
Slide 20: Q1/2021: Solid sales results
Q1/2021: Solid sales results Starting 2021 with solid results across all lines of business First quarter ($M, unless otherwise indicated) 2021 2020 Variation Continued momentum from: ► Individual Insurance 58.1 45.2 29% ▪ Strong and diversified distribution networks ▪ High-performance digital tools
Slide 21: Q1/2021: Solid sales results (cont.)
Q1/2021: Solid sales results (cont.) Starting 2021 with solid results across all lines of business First quarter ($M, unless otherwise indicated) 2021 2020 Variation ► Individual Wealth Management General fund - sales 228.7 205.7 11% Sales continue to be excellent #1 in the industry (gross and net s
Slide 22: Appendices
APPENDICES PRESENT AND STRONG. More than ever.
Slide 23: Solid long-term business growth
Solid long-term business growth Net premiums, premium AUM/AUA equivalents and deposits (Assets under management and administration, end of period, $B) ($B) +13% 14.1 +11% 197.5 +8% 5-year +11% 5-year 10-year CAGR CAGR 10-year CAGR CAGR 6.8 69.3 23
Slide 24: iA's distinctive financial market protection
iA’s distinctive financial market protection Available capital Differentiator (solvency ratio) PROTECTIONS • Protection of ~$575M after-tax Additional stock market protection ▪ Worth more than 8 percentage points of solvency ratio in actuarial reserves ▪ In the form of a margin, it increases/decreas
Slide 25: Strong, improved and ongoing organic capital generation
Strong, improved and ongoing organic capital generation resulting from our reduced risk profile 325 Organic capital generation ($M) = Core net income to common shareholders ~ 280 − Dividends paid to common shareholders − Required capital increase in normal course of business ~ 250 ~ 245 275 Organic
Slide 26: Additional protections in reserves for pandemic uncertainty
Additional protections in reserves for pandemic uncertainty Better-than-expected mortality experience and untouched lapse provision (amounts in millions of dollars Intitial value Current value are expressed before taxes) Evolution during Q1 at Dec. 31, 2020 at March 31, 2021 Expected excess mortalit
Slide 27: Low interest rate environment
Low interest rate environment IRR sensitivity eliminated leading to low impact on earnings IRR: Initial Reinvestment Rate Impact at year-end on reserves Impact on net income of IRR changes has been eliminated when decreasing IRR and URR assumptions Earnings URR: Ultimate Reinvestment Rate → Usually
Slide 28: Credit ratings
Credit ratings iA Financial Industrial Alliance Credit rating Corporation Inc. Insurance and agency Financial Services Inc. Outlook ISSUER RATING FINANCIAL STRENGTH Standard & Poor’s A AA- Stable DBRS Morningstar A AA (low) Stable Upgraded in 2021 based on improved risk profile A.M. Best N/A A+ (Sup
Slide 29: ESG – Building for the long term
ESG – Building for the long term ENVIRONMENTAL ◦ iA Financial Group has been carbon neutral since the beginning of 2020 ◦ Commitment to reduce our GHG emissions by 20% per employee by 2025 ◦ $80.5 million invested in renewable energy in 2020 ◦ Majority of our 40+ properties in Canada are BOMA BEST o
Slide 30: Core earnings definition
Core earnings definition Straightforward definition to better compare recurring operating performance Core earnings excludes: ▪ market-related impacts ▪ assumption changes and management actions ▪ gains or losses on acquisition or disposition of a business, including acquisition, integration and res
Slide 31: 2021 guidance
2021 guidance Core EPS Core ROE 12.5% to 14.0% Q1 $1.70 to $1.85 Q2 $1.95 to $2.10 Impact of new 2% annual target Q3 $2.00 to $2.15 business (strain) (quarterly range from -5% to 10%) Q4 $1.95 to $2.10 Solvency 110% to 116% 2021 $7.60 to $8.20 ratio Capital $275M to $325M generation Non-core items E
Slide 32: Investor Relations
Investor Relations Contact Marie-Annick Bonneau Tel.: 418-684-5000, ext. 104287 Marie-Annick.Bonneau@ia.ca Next Reporting Dates Q2/2021 - July 29, 2021 Q3/2021 - November 3, 2021 Q4/2021 - February 17, 2022 For information on our earnings releases, conference calls and related disclosure documents,
Slide 33: Non-IFRS financial information
Non-IFRS financial information iA Financial Corporation reports its financial results and statements in accordance with International Financial Reporting Standards (IFRS). It also publishes certain financial measures that are not based on IFRS (non-IFRS). A financial measure is considered a non-IFRS
Slide 34: Non-IFRS financial information (cont.)
Non-IFRS financial information (cont.) Core earnings (loss) and financial measures based on core earnings (loss), including core EPS and core ROE, are non-IFRS financial measures used to better understand the capacity of the Company to generate sustainable earnings. Core earnings (loss) remove from
Slide 35: Forward-looking statements
Forward-looking statements This presentation may contain statements relating to strategies used by iA Financial Corporation or statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “may,” “could,” “should,” “would,” “suspect
Slide 36: Financial Group
Financial Group
iA Financial Group — NBF 11th Annual Quebec Conference 2021 on 6ix