Ia Financial Corporation Inc. · TSX:IAG
Ia Financial — CIBC 18th Annual Eastern Institutional Investor Conference 2019
26 slides from Ia Financial's conference presentation, Sep 26, 2019
Slide 1: Sustainable Growth: Moving forward with our strategy
SUSTAINABLE GROWTH Moving forward with our strategy Denis Ricard, President and CEO Jacques Potvin, EVP, CFO and Chief Actuary CIBC 18th Annual Eastern Institutional Investor Conference Montreal, September 26, 2019
Slide 2: Table of contents
Table of contents 3 Solid fundamentals 11 19 Investment portfolio Canadian market 4 12 Acquisitions 20 Dividend EPS guidance 5 Earnings visibility 13 Capital position 21 Sustainability 6 H1/2019 highlights 14 Recent financing 22 2019 guidance 7 US strategy 15 Technology 23 Investor relations 8 Reser
Slide 3: Solid fundamentals to sustain our growth
Solid fundamentals to sustain our growth EARNINGS VISIBILITY BUSINESS GROWTH BALANCE SHEET • Known to deliver on targets • Sustaining outperformance through • Healthy, strong and balanced • Committed to 10%+ annual EPS diversified activities • Flexible with low debt ratio growth • Distribution
Slide 4: Steadily delivering on growing targets
Steadily delivering on growing targets Committed to minimum 10% annual EPS growth EPS Guidance (diluted) $6.15 $5.60 $5.05 $5.75 $4.60 $5.20 $4.20 $4.65 $3.80 $4.20 $3.40 $3.80 $3.10 $3.40 +10% Target $3.00 range $2.50 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Reported EPS $3.22 $3.57 $3.97
Slide 5: Earnings visibility with various profit improvement initiatives
Earnings visibility with various profit improvement initiatives Multiple levers to reach or exceed our 10% EPS growth target 3% 1% 2% + + + ≥ 6% profit distribution acquisitions 10% organic improvement (US and annual growth a core distribution) EPS growth in all lines of function business and NCIB 2
Slide 6: H1/2019 highlights - A very good first half of the year
H1/2019 highlights - A very good first half of the year EPS at top of guidance - Growing assets and P&D – Solid capital position • Reported EPS of $3.09 and trailing-12-month ROE of 12.6%1 • Core EPS of $2.89, at top of $2.70-$2.90 guidance • Expected profit up 11% YoY and experience gains in all fi
Slide 7: US strategy – Moving toward a meaningful business
US strategy – Moving toward a meaningful business Strong momentum for top and bottom lines, in both divisions Operating Profit Individual Insurance Sales Dealer Services Sales (CAD$M) (CAD$M) (CAD$M) 535 50 115 486 105 43 95 95 299 28 25 59 21 +19% +13% +17% YoY YoY YoY N/A N/A 2016 2017 2018 H1/19
Slide 8: Key reserve assumptions are well positioned
Key reserve assumptions are well positioned Recent favourable P/H experience bodes well for 2019 Policyholder 2018 year-end assumption review experience H1/19 2018 2017 2016 2015 2014 (excluding market impact) No material issue in 2018 (EPS impact in cents1) URR is 15 bps ahead of the promulgated ra
Slide 9: Decreasing interest rates
Decreasing interest rates Expecting minimal impact on 2019 profitability • Year-end impact on reserves: o IRR: Reduced exposure → $12M/10 bps variation (June 30, 2019) Main impacts → H1/19 management actions sufficient to cover YTD IRR reduction on earnings o URR: Already using new CIA promulgated r
Slide 10: Sustaining outperformance through business growth
Sustaining outperformance through business growth Solid execution during H1/2019 • Individual insurance: 1st in number of policies sold Insurance • Dealer services: One of top 2 providers in Canada & 5% YoY sales growth in Canada • Special markets solutions: 11% YoY sales growth • iA Auto and Home:
Slide 11: Canadian market is not mature for iA
Canadian market is not mature for iA Growing our Canadian franchise faster than peers Net Income Growth 2016-2018 Sales/Net Premium Ratio (Canadian lines of business1) Canadian Individual Insurance 10% (last six quarters as at June 30, 2019) 12% 8% Big 3 iA -8% Big 3 iA 11 1 Reported net income to c
Slide 12: Growing through acquisitions is a priority
Growing through acquisitions is a priority US businesses and distribution in Canada are top priorities • HollisWealth: iA is now one of the largest non-bank distribution networks Recent • DAC: Moving toward a meaningful business in the US acquisitions < • PPI and ABEX: iA is now the leader in indepe
Slide 13: Flexible balance sheet and better than ever capital position
Flexible balance sheet and better than ever capital position Acquisitions are top priority for capital deployment Capital • ~$145M in organic generation, in line with annual plan generation (H1/2019) • ~$360M in capital relief from investment strategies to manage macroeconomic risks • Leverage ratio
Slide 14: Recent debt financing
Recent debt financing First issuance for iA Financial Corporation (holding) RATIONALE Pro forma (as at June 30, 2019) Reported Sept. 2019 $400M debt issue • Used for general corporate purposes • Supports iA’s growth ambitions Solvency ratio 127% 133% • Good market conditions Debt ratio1 18.1% 22.8%
Slide 15: Business drives technology
Business drives technology Digital investments must create value Focus: • Improving customer experience • Supporting distribution and value of advice • Improving organizational efficiency Client Enablers for key digital initiatives: • Systems and technologies • Operating models and partnerships
Slide 16: Credit ratings
Credit ratings Standard & Poor's ratings raised one notch in July 2019 Upgrade rationale: iA Financial Industrial Alliance Insurance Business risk profile is strong and Corporation Inc. and Financial Services Inc. improving Operating performance in the top Credit rating Credit rating Financial a
Slide 17: Share price and book value
Share 70.000 price $ and book value Low price to book value ratio 60.000 $ $59.913 50.000 $ IAG Share Price $49.704 Historical CAGR: 10.9% 40.000 $ 30.000 $ 20.000 $ Book Value Per Share $8.441 10.000 $ Historical CAGR: 9.7% $7.8752 - $ At year-end 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2
Slide 18: iA shareholder value creation vs. peers
iA shareholder value creation vs. peers iAG Book Value Per Share +348% and Dividends Paid (end of period) Peers +198% June 30, June 30, 2019 2004 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 18 Note: June 30, 2004 has been chosen as the earliest comparable start
Slide 19: $38.0B investment portfolio
$38.0B investment portfolio Well-diversified and high-quality Data as at June 30, 2019 Distribution of Investment Portfolio IMPAIRED INVESTMENTS AND PROVISIONS Gross impaired investments $23.9M Provisions for impaired investments $11.1M Corporate bonds 31% Net impaired investments $12.8M Net impaire
Slide 20: Dividend to common shareholders
Dividend to common shareholders Dividend of 45¢ per share payable in Q3/19 Steady increases every 3rd quarter First lifeco in Canada to resume dividend increases after the financial crisis 20
Slide 21: Sustainability: Building for the long term
Sustainability: Building for the long term Our guidelines Committed to incorporate ESG factors into our investment decisions Signatory of United Nations PRI 1. Ensure the financial wellbeing of our clients 2. Effectively manage risks 3. Follow high standards of governance Scoring 95% for quality of
Slide 22: 2019 guidance
2019 guidance iA Financial Corporation EPS1 ROE1 11.0% to 12.5% 6% annual target Q1 $1.25 to $1.35 Strain (quarterly range from 0% to 15%) Q2 $1.45 to $1.55 Solvency 110% to 116% ratio Q3 $1.55 to $1.65 Q4 $1.50 to $1.60 Effective 20% to 22% tax rate 2019 $5.75 to $6.15 Payout 25% to 35% ratio (mid-
Slide 23: Investor Relations
Investor Relations Contact Marie-Annick Bonneau Tel.: 418-684-5000, ext. 104287 Marie-Annick.Bonneau@ia.ca Next Reporting Dates Q3/2019 - November 6, 2019 Q4/2019 - February 13, 2020 Q1/2020 - May 7, 2020 Q2/2020 - July 30, 2020 Q3/2020 - November 4, 2020 For information on our earnings releases, co
Slide 24: 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 25: Forward-looking statements
Forward-looking statements This presentation 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”, “suspe
Slide 26: iA Financial Group
IAB Financial Group
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