Ia Financial Corporation Inc. · TSX:IAG
Ia Financial — Q1 2023 Earnings Presentation
44 slides from Ia Financial's earnings presentation, May 10, 2023
Slide 1: First Quarter 2023 Conference Call
First Quarter 2023 Conference Call Presenters: Denis Ricard, President and CEO Michael L. Stickney, EVP and CGO Jacques Potvin, EVP, CFO and Chief Actuary May 10, 2023
Slide 2: Forward-looking statements
Forward-looking statements – This document may contain statements relating to strategies used by iA Financial Group or statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “may”, “will”, “could”, “should”, “would”, “suspect
Slide 3: Non-IFRS and Additional Financial Measures
Non-IFRS and Additional Financial Measures iA Financial Corporation and iA Insurance report their financial results and statements in accordance with International Financial Reporting Standards (“IFRS”). They also publish certain financial measures or ratios that are not based on IFRS (“non-IFRS”).
Slide 4: Table of Contents
TABLE OF CONTENTS 2 Forward-looking statements APPENDICES 3 Non-IFRS and add. measures 24 Book value 37 Premiums and deposits 8 Transition to IFRS 9 and 17 25 Dividend 38 Assets (AUM/AUA) 9 Q1/2023 key results 26 Result by segment 39 Solvency ratio 10 Strategic update 27 CSM evolution 40 ESG ambitio
Slide 5: Key results and strategic update
Key results and strategic update Denis Ricard, President and CEO Business growth Michael L. Stickney, EVP and CGO Profitability & Financial strength Jacques Potvin, EVP, CFO and Chief Actuary Questions & Answers 5
Slide 6: Denis Ricard
Denis Ricard President and CEO 6
Slide 7: Executive team
Alain Bergeron EVP, Chief Investment Officer Denis Ricard President and CEO Renée Laflamme EVP, Individual Insurance, Savings and Retirement Mike Stickney EVP, Chief Growth Officer Stephan Bourbonnais EVP, Wealth Management Jacques Potvin EVP, Chief Financial Officer and Chief Actuary Sean O’Brien E
Slide 8: Q1/23 results confirm favourable transition for iA
FIRST DISCLOSURE UNDER IFRS 9 and 17 Q1/23 results confirm favourable transition for iA Business model enhanced with much more capital available for growth $1.8B available for deployment† as at March 31, 2023 Higher core ROE target of 15%+ and guiding to solid core EPS growth in 2023 Driven by incre
Slide 9: Q1/2023 Key Results
Q1/2023 KEY RESULTS Dividend increase reflects higher earnings power under IFRS 17 Robust financial position and continued organic capital generation Record quarterly net income to common shareholders of $270M Core EPS† 2 Core ROE† $2.08 +16% YoY vs. Q1/22 IFRS 4 14.6% 15%+ medium-term guidance +7%
Slide 10: Growth-driven strategy focused on strong shareholder value
GROWTH-DRIVEN STRATEGY FOCUSED ON STRONG SHAREHOLDER VALUE Capital deployment Capital available $1.8B for deployment (March 31, 2023) priorities 1 Profitable organic growth Investing in digital evolution to propel growth 2 Disciplined acquisitions RECENT INITIATIVES To strengthen strategic positioni
Slide 11: Michael L. Stickney
Michael L. Stickney EVP and CGO 11
Slide 12: Q1/23 Business Growth – Insurance, Canada
Q1/23 BUSINESS GROWTH – Insurance, Canada INDIVIDUAL INSURANCE GROUP INSURANCE HIGHLIGHTS † (sales in $M) Employee Plans and Special Markets (net premiums† in $M) Individual Insurance • Compares to a very strong quarter a year earlier, 101 370 407 89 Q1/2023 result is up 53% from Q1/2021 -12% +10% •
Slide 13: Q1/23 Business Growth – Wealth Management
Q1/23 BUSINESS GROWTH – Wealth Management INDIVIDUAL SEGREGATED FUNDS INDIVIDUAL MUTUAL FUNDS † (gross sales in $M) (gross sales† in $M) HIGHLIGHTS 1,500 Individual Wealth 1,032 691 -31% -31% • Net fund entries of $280M during the 479 quarter YoY YoY • #1 in Canada in gross and net sales1 of seg fun
Slide 14: Q1/23 Business Growth – US Operations
Q1/23 BUSINESS GROWTH – US Operations HIGHLIGHTS INDIVIDUAL INSURANCE DEALER SERVICES † (sales in US$M) (sales† in US$M) Individual Insurance • Strong sales driven by overall good performance in all niche target markets 42 243 • Customized portfolio of products sold in 230 select markets through ind
Slide 15: Jacques Potvin
Jacques Potvin EVP, Chief Financial Officer and Chief Actuary 15
Slide 16: Q1/2023 Profitability and Financial Strength
Q1/2023 PROFITABILITY AND FINANCIAL STRENGTH Q1/2023 Q1/20221 YoY HIGHLIGHTS Profitability Strong earnings results Core earnings $217M $210M 3% • 16% core EPS growth vs. Q1/22 IFRS 4, in line with core EPS growth target for 2023 Core EPS $2.08 $1.94 7% 2 • Record quarterly net income, from: Core ROE
Slide 17: Q1/2023 Drivers of Earnings
Q1/2023 DRIVERS OF EARNINGS† ($M, unless otherwise indicated) Q1/2023 Q1/20221 YoY HIGHLIGHTS • Solid growth in expected insurance earnings, arising DRIVERS OF EARNINGS - CORE - CONSOLIDATED primarily from last-12-month strong business growth Core insurance service result • Strong sales and retentio
Slide 18: Q1/2023 Performance – Operating business segments
Q1/2023 PERFORMANCE – Operating business segments INSURANCE, WEALTH US CANADA MANAGEMENT OPERATIONS Core earnings ($M) Core earnings ($M) Core earnings ($M) 74 65 36 63 59 +17% +10% (53%) YoY YoY YoY 17 1 Q1/22 1 Q1/23 Q1/22 1 Q1/23 Q1/22 Q1/23 ▪ 11% growth in expected insurance earnings, ▪ Very goo
Slide 19: Q1/2023 Performance – Investment and Corporate
Q1/2023 PERFORMANCE – Investment and Corporate INVESTMENT CORPORATE Record quarterly net income to common Core earnings ($M) Core earnings ($M) shareholders of $270M 108 Driven by: 84 +29% • Strong core insurance service result, YoY • Solid core net investment result, and -32 • Q1 market-related imp
Slide 20: Robust Capital Position
ROBUST CAPITAL POSITION Supported by ongoing organic capital generation Capital available Q1/2023 MOVEMENTS Solvency ratio1 for deployment2 Solvency ratio1 (end of period) Beginning of quarter3 126% $350M Core earnings net of dividends 2.0% $147M 149% Organic CSM growth (excl. seg funds) 1.0% $50M 1
Slide 21: Financial Targets Summary
FINANCIAL TARGETS SUMMARY 2020 2021 2022 Q1/2023 Medium-term guidance IFRS 4 IFRS 4 IFRS 4 IFRS 9/171 IFRS 9/17 +7% +9% +17% +6% vs. Q1/22 IFRS 17 10%+ Core EPS YoY growth N/A 7% annual average growth vs. 2019 vs. 2020 vs. 2021 +16% vs. Q1/22 IFRS 4 2 Core ROE 13.3% 14.2% 14.2% 14.5% 14.6% 15%+ Solv
Slide 22: Question & Answer Session
Question & Answer Session iA@ 22 Financtal Group
Slide 23: Appendices
APPENDICES 23
Slide 24: Book Value per Share
BOOK VALUE PER SHARE P/BV ratio of 1.32 at March 31, 2023 $64.69 at March 31, 2023 CAGR 1-year +5% 5-year +8% 10-year +8% IFRS IFRS 4 9/17 Since 2000 +9% March 31, 20001 $8.44 IPO 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2.17
Slide 25: Dividend to Common Shareholders
DIVIDEND TO COMMON SHAREHOLDERS $0.75 Dividend increased by 13% $0.70 to 76.5¢ per share $0.65 payable in Q2/2023 $0.60 $0.55 $0.50 $0.45 $0.40 Largest dividend increase (+29%) $0.35 among Canadian lifecos $0.30 following the lifting of regulatory restrictions in November 2021 $0.25 Steady increases
Slide 26: Core Reconciliation
Q1/2023 CORE DOE AND CORE RECONCILIATION BY SEGMENT Insurance, Wealth ($M, unless otherwise indicated) US Operations Investment Corporate TOTAL Canada Management YoY Expected insurance earnings 125 66 39 — — 230 11% Impact of new insurance business (11) — (3) — — (14) DRIVERS OF EARNINGS + Core insu
Slide 27: CSM Movement Analysis
CSM MOVEMENT ANALYSIS† ($M, unless otherwise indicated) Q1/2023 Q1/2022 YoY CSM - Beginning of period 5,574 5,507 1% Q1/23 highlights CSM growth was supported by: Organic CSM movement1 Impact of new insurance business 168 203 • Favourable impact of management actions, which reflects improved profit
Slide 28: Investment Portfolio
INVESTMENT PORTFOLIO Resilient portfolio composed of high-quality assets and diversified exposures Bonds - Corporates - Fixed income ALM1-oriented portfolio BB and lower: 1% Real estate: 5% ▪ Portfolio comprised of 68% in bonds with average credit rating between A and A+ Mortgages - Insured: 3% Bond
Slide 29: Well-Diversified Bond Portfolio
WELL-DIVERSIFIED BOND PORTFOLIO High-quality, conservative portfolio Bond portfolio by credit rating Bond portfolio by category Consumer - Financial: 14% Non-cyclical: 7% Utilities: 21% Consumer - A: 39% BBB: 23% Cyclical: 2% 68% of total portfolio BB and $27.8B Energy: 7% lower: 1% AAA: 8% AA: 29%
Slide 30: Immediate Sensitivities under IFRS 17
IMMEDIATE SENSITIVITIES UNDER IFRS 17 For more information on sensitivities, please refer to the “Risk Management” sections of the quarterly and IMMEDIATE IMPACT annual Management’s Discussion and Analysis (MD&A) Net income Equity Solvency ratio CSM (non-core) as at March 31, 2023 $M post-tax $M pos
Slide 31: Core Earnings Sensitivities
CORE EARNINGS SENSITIVITIES REVENUES & EXPENSES DIRECTLY IMPACTED BY THE LEVEL OF EQUITY MARKETS AND INTEREST RATES IMPACT ON as at March 31, 2023 Variation FUTURE QUARTER Description of shock ▪ Expected return on non-fixed income (NFI) CORE EARNINGS1 asset investments $M post-tax ▪ CSM recognition
Slide 32: Insurance, Canada
INSURANCE, CANADA First quarter ($M, unless otherwise indicated) 2023 2022 Variation 2021 Variation 2023 vs. 2022 2023 vs. 2021 Individual Insurance Sales1 Minimum premiums2 82 92 (11%) 54 52% Excess premiums3 7 9 (22%) 4 75% Total 89 101 (12%) 58 53% Gross premiums 593 581 2% 518 14% Net premiums 4
Slide 33: Insurance, Canada (cont.)
INSURANCE, CANADA (cont.) First quarter ($M, unless otherwise indicated) 2023 2022 Variation Group Insurance Employee Plans Sales - New business during the year 21 11 91% Net premiums 325 303 7% Premium equivalents and deposits 60 47 28% Special Markets Sales - Gross premiums 91 74 23% Net premiums
Slide 34: Wealth Management
WEALTH MANAGEMENT First quarter ($M, unless otherwise indicated) 2023 2022 Variation Individual Wealth Management Sales - Gross Sales Segregated funds 1,032 1,500 (31%) Mutual funds† 479 691 (31%) Insured annuities and other savings products 716 239 200% Total 2,227 2,430 (8%) Sales - Net sales Segr
Slide 35: Wealth Management (cont.)
WEALTH MANAGEMENT (cont.) First quarter ($M, unless otherwise indicated) 2023 2022 Variation Group Savings and Retirement Sales - Gross sales Accumulation contracts† Other accumulation contracts 18 21 (14%) Segregated funds 528 579 (9%) Total 546 600 (9%) Insured annuities (general fund)† 241 25 864
Slide 36: US Operations
US OPERATIONS First quarter ($M, unless otherwise indicated) 2023 2022 Variation Individual Insurance† Sales ($US) 42 33 27% Sales ($CAN) 57 42 36% Net premiums ($CAN) 154 135 14% Dealer Services† Sales ($US) 230 243 (5%) Sales ($CAN) 311 307 1% Net premiums ($CAN) 102 93 10% Premium equivalents ($C
Slide 37: Premiums and Deposits
PREMIUMS AND DEPOSITS Net premiums, premium equivalents and deposits† ($M, unless otherwise indicated) Q1/2023 YoY ($B) 16.6 Insurance, Canada 15.3 Individual Insurance 483 1% 14.0 4.2 3.9 Group Insurance 468 12% 11.4 3.9 Dealer Services 103 30% 10.4 Q4 9.8 4.1 iA Auto and Home 93 (27%) 3.1 3.3 2.6
Slide 38: Asset Growth
ASSET GROWTH AUM/AUA (assets under management and Assets under management and administration administration†, end of period, $B) 221.2 207.8 March 31 ($B, unless otherwise indicated) QoQ YoY 197.5 198.1 2023 189.4 168.8 Assets under management 109.7 102.9 General fund1 49.7 4% (1%) 95.8 97.7 89.2 Se
Slide 39: Solvency Ratio
SOLVENCY RATIO iA Financial Corporation Inc. (%, end of period) 149 137 134 133 134 132 130 130 131 130 130 126 127 128 126 124 124 125 120 122 119 120% operating target Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 IFRS
Slide 40: ESG ambition
ESG ambition To contribute to sustainable growth and wellbeing for our clients, employees, partners, investors and communities Our main targets • Reduction of our GHG emissions by 20% per employee by 2025 (from a 2019 baseline) • Now and in the future, between 40% and 60% of iA Financial Group Senio
Slide 41: Concrete Actions for a Sustainable Future
CONCRETE ACTIONS FOR A SUSTAINABLE FUTURE ENVIRONMENT SOCIAL GOVERNANCE OUR CONTRIBUTION TO SUSTAINABLE FINANCE • Signatory of United Nations Principles for Responsible Investment (PRI) • ESG committee roles and responsibilities have been formalized and Sustainable • Climate Change Position Statemen
Slide 42: Credit Ratings
CREDIT RATINGS iA Financial Industrial Alliance Insurance Corporation Inc. and Financial Services Inc. Credit rating agency Outlook Issuer rating Financial strength Standard & Poor’s A AA- Stable DBRS Morningstar A AA (low) Stable A.M. Best N/A A+ (Superior) Stable 42
Slide 43: Investor Relations
INVESTOR RELATIONS Contact Marie-Annick Bonneau Tel.: 418-931-0142 Marie-Annick.Bonneau@ia.ca Next Reporting Dates Q2/2023 - August 3, 2023 after market close Conference call on August 4, 2023 at 8AM Q3/2023 - November 7, 2023 after market close Conference call on November 8, 2023 at 11AM Q4/2023 -
Slide 44: iA Financial Group trademark notice
iA Financial Group is a business name and trademark of iA Financial Corporation Inc. and Industrial Alliance Insurance and Financial Services Inc.