Ia Financial Corporation Inc. · TSX:IAG
Ia Financial — NBF 12th Annual Quebec Conference (June 2022)
40 slides from Ia Financial's conference presentation, Jun 9, 2022
Slide 1: Guiding to solid growth
Guiding to solid growth NBF 12th Annual Quebec Conference Investor presentation June 9, 2022 PRESENT AND STRONG. More than ever.
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: Our purpose, our mission, IAG on TSX
iA Financial Group Foundation $8.2B market is one of the largest insurance 1892 cap. and wealth management groups in Canada, with operations in the United States IAG on TSX $76.01 IPO in 2000 stock price OUR PURPOSE To assure that our clients feel confident and secure about their future 4M+ $85.25 a
Slide 5: Table of contents
6 2021-2022-2023 Appendices 7 Book value 23 Profit growth since IPO 8 Core EPS and ROE 24 Q1/22 results vs. guidance 9 Organic capital generation 25 Road to reach earnings targets 10 Capital allocation 26 P&D and AUA/AUM 11 Growth drivers 27 Strong balance sheet 12 Diversified business mix 28 Solven
Slide 6: 2021 – One of the strongest years in IAG history
2021 – One of the strongest years in IAG history ▪ Very strong sales momentum – iA sold 1 in 4 ind. insurance policies in Canada ▪ Core EPS and core ROE above guidance and robust capital position ▪ Shareholder value creation: Book value up 12%, dividend up 29% and NCIB Superior employee, client and
Slide 7: Book value – Strong and steady record of value creation
BOOK VALUE – Strong and steady record of value creation IFRS 9 & 17 expected impact on book value: near-neutral to favourable Book value per share IAG book value IAG and dividends paid per share CAGR1 +465% (at year-end) 1-year +7% 5-year +8% 10-year +9% Best performance Since 2000 Peers +9% of Cana
Slide 8: Strong earnings targets built on solid track record
Strong earnings targets built on solid track record Core EPS† Core ROE† (diluted) (diluted) 10%+ growth on 2022 target average 13%-15% per year 14.2% $9.00 13.1% 13.3% MID- $8.31 GUIDANCE $7.12 $6.55 TRACK RECORD TRACK RECORD 11.4% 13.2% 2015-2021 2017-2021 6-year 5-year CAGR average 2019 2020 2021
Slide 9: Strong and ongoing organic capital generation
Strong and ongoing organic capital generation resulting from reduced risk profile Organic capital generation† 525 (~$M) 2022 490 TARGET Organic capital generation growth drivers 450 looking forward • Pricing discipline to improve return on equity • Increase capital-light proportion of new business •
Slide 10: Capital allocation – Focused on growth
CAPITAL ALLOCATION – FOCUSED ON GROWTH Potential capital deployment† of ~$700M, as at March 31, 2022 Organic growth Investing in digital evolution to propel growth Acquisitions To strengthen strategic positioning Dividends 25%-35% payout ratio target range Based on core earnings NCIB $ Active progra
Slide 11: Main growth drivers
MAIN GROWTH DRIVERS SALES EARNINGS Our key actions for success Leverage full range Build on our Remain at the Optimize synergies of products to extensive leading edge of between meet relationships digital tools business units clients’ needs with distributors Continue growing Digital and Lean Develop
Slide 12: Diversified business mix
DIVERSIFIED BUSINESS MIX Foundation Expansion Long-established businesses High-growth distinctive in which iA excels and is businesses in which iA already a leader seeks to become a leader Individual Retail Insurance distribution ▪ iA is seeking to become a leader ▪ iA is already a leader and seeks
Slide 13: Becoming a leader in businesses targeted for strong expansion
Already a leader in foundation businesses Expansion businesses Becoming a leader in businesses targeted Individual Insurance • #1 in number of policies sold for strong expansion Individual Insurance (Canada) • Targeting mid/mass market (US) • #1 in gross and net seg fund sales Individual Wealth • On
Slide 14: Q1/22 Sales – Continued momentum to start the year
Q1/22 SALES – Continued momentum to start the year First quarter Foundation ($M, unless otherwise indicated) • Very strong sales growth in Individual YoY Insurance 2022 2021 variation • Record segregated fund inflows of ► Individual Insurance 101 58 74% more than $1.0B in Q1 • Positive net sales for
Slide 15: Shift to capital-light products
Shift to capital-light products Supports a higher ROE % of new sales in low-guarantee products Segregated Funds Expansion in capital- 96% light businesses in the last decade, such as 76% 80% Dealer Services, Wealth Favours organic Management and capital generation 56% Distribution, has contributed t
Slide 16: Individual Wealth Management
Individual Wealth – Net income Individual Wealth – Net fund entries† Wealth ($M) ($B) 12.5% 227 11.6% 4.5 10-yr 10-yr management 70 CAGR 1.5 CAGR businesses 2011 2021 2011 2021 Group Segregated Mutual Distribution Savings and funds funds affiliates Retirement Individual Wealth Management #1 in the
Slide 17: US Dealer Services
US DEALER SERVICES iA is a US leader in a large and highly fragmented industry, ripe for further consolidation High growth potential for iA through organic expansion and bolt-on acquisitions Leveraging full suite of products and services and optimizing synergies Resilient sales outpacing US vehicle
Slide 18: IFRS 17 & 9 transition outlook
IFRS 17 and IFRS 9 IFRS 17 TRAINING VIDEO transition outlook Available on ia.ca Expected impact at Jan 1, 2023 from near-neutral Q1/22 EVOLUTION ADDED CONFIDENCE to favourable for: IN OUR TRANSITION OUTLOOK Core EPS level ECONOMIC ENVIRONMENT: Renewed outlook Non-finalized or uncertain items • Preli
Slide 19: ESG ambition
ESG ambition To contribute to sustainable growth and wellbeing for our clients, employees, partners, investors and communities Our targets • Reduction of our GHG emissions by 20% per employee by 2025 • Now and in the future, achieve increased gender equity of between 40% and 60% in iA Financial Grou
Slide 20: 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) • Publication of Responsible • Continue to be carbon neutral by • Diversity and Inclusion program, • Best governan
Slide 21: Industry leader for share price growth
Industry leader for share price growth Total return (Share price growth with dividend reinvested, +1,277% at year-end) Best performance of Canadian lifecos May 31, 2022 0% IPO1 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 21 1 Feb. 3,
Slide 22: Appendices
Appendices Ag
Slide 23: Impressive profit growth since IPO in 2000
Impressive profit growth since IPO in 2000 Net income attributed to common shareholders 830 ($M) 687 10%+ 613 611 21-year 537 CAGR 516 400 350 364 304 251 253 223 242 206 137 155 132 103 97 103 66 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 202
Slide 24: Q1/2022 results vs. guidance
Q1/2022 RESULTS VS. GUIDANCE All metrics in-line or better than guidance, with the exception of core EPS 2022 guidance Q1/2022 result Core EPS1† $1.85 to $2.00 in Q1 $1.79 Core ROE1† (trailing 12 months) 13.0% to 15.0% 14.1% Impact of new business† (strain) -5% to 10% 7% Solvency ratio† 110% to 116%
Slide 25: 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 + Capit
Slide 26: Proven strategy, continued momentum
Proven strategy, continued momentum Net premiums, premium AUM/AUA† equivalents and deposits† (Assets under management and administration, end of period, $B) ($B) 16.6 +15% +12% 221.2 +9% 5-year +12% 5-year 10-year CAGR 10-year CAGR CAGR CAGR 7.0 73.4 26 † This item is a non-IFRS measure; see the “No
Slide 27: Strong balance sheet
STRONG BALANCE SHEET Ratios Leverage ratio of 23.4% and coverage ratio† of 15.6x (March 31, 2022)† Distinctive Embedded in reserving process, iA’s distinctive macroeconomic protections decrease net income and solvency macroeconomic ratio† volatility and support iA’s 110% to 116% solvency ratio targe
Slide 28: Solvency ratio variations
SOLVENCY RATIO† VARIATIONS Impact from macro variations has been relatively minimal despite macro volatility High macro volatility 137% 134% 133% IAS 134% 132% acquisition 130% 130% 131% 127% 128% 124% 124% 125% Macro Macro Macro Macro Macro Macro Macro Macro Macro Macro Macro Macro impact impact im
Slide 29: Dividend to common shareholders
DIVIDEND TO COMMON SHAREHOLDERS Dividend of 62.5¢ per share payable in Q2/2022 Largest dividend increase (+29%) among Canadian lifecos following the lifting of regulatory restrictions in November 2021 Steady increases every 3 quarters First lifeco in Canada to resume dividend increases after the fin
Slide 30: 2022 guidance
2022 GUIDANCE As disclosed on February 16, 2022 Core EPS† Core ROE† 13.0% to 15.0% Q1 $1.85 to $2.00 Q2 $2.20 to $2.35 Impact of new 0% annual target Q3 $2.30 to $2.45 business (strain)† (quarterly range from -5% to 10%) Q4 $2.35 to $2.50 Solvency 110% to 116% 2022 $8.70 to $9.30 ratio† Non-core ite
Slide 31: 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 31
Slide 32: Investor Relations
Investor Relations Contact Marie-Annick Bonneau Tel.: 418-684-5000, ext. 104287 Marie-Annick.Bonneau@ia.ca Next Reporting Dates Q2/2022 - July 28, 2022 Q3/2022 - November 8, 2022 Q4/2022 - February 14, 2023 Q1/2023 - May 10, 2023 Q2/2023 - August 1, 2023 Q3/2023 - November 7, 2023 For information on
Slide 33: 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 34: Non-IFRS and Additional Financial Measures (cont.)
Non-IFRS and Additional Financial Measures (cont.) • Core earnings: ◦ Category under Regulation 52-112: Non-IFRS financial measures that constitute historical information. ◦ Definition: Removes from reported earnings (loss) the impacts of the following items that create volatility in the Company’s r
Slide 35: Non-IFRS and Additional Financial Measures (cont.)
Non-IFRS and Additional Financial Measures (cont.) • Core return on common shareholders’ equity (core ROE): ◦ Category under Regulation 52-112: Non-IFRS ratio. ◦ Definition: A ratio, expressed as a percentage, obtained by dividing the consolidated core earnings by the average common shareholders’ eq
Slide 36: Non-IFRS and Additional Financial Measures (cont.)
Non-IFRS and Additional Financial Measures (cont.) • Car loan measure – Loan originations: ◦ Category under Regulation 52-112: Supplementary financial measures. ◦ Definition: New car loans disbursed during a period. ◦ Purpose: Used to assess the Company’s ability to generate new business in the car
Slide 37: Non-IFRS and Additional Financial Measures (cont.)
Non-IFRS and Additional Financial Measures (cont.) • Organic capital generation: ◦ Category under Regulation 52-112: Supplementary financial measure. ◦ Definition: Excess capital generated in the normal course of business, excluding the impact of the macroeconomic environment, where excess capital i
Slide 38: Non-IFRS and Additional Financial Measures (cont.)
Non-IFRS and Additional Financial Measures (cont.) • Individual Wealth Management mutual funds deposits, Group Savings and Retirement deposits, US Operations Dealer Services premium equivalents and Group Insurance Employee Plans ASO, Investment contracts and premium equivalents and deposits: ◦ Categ
Slide 39: Non-IFRS and Additional Financial Measures (cont.)
Non-IFRS and Additional Financial Measures (cont.) • Financial leverage measure – Debentures + Preferred Shares issued by a subsidiary/Capital: ◦ Category under Regulation 52-112: Supplementary financial measures. ◦ Definition: Calculated by dividing the total debentures plus preferred shares issued
Slide 40: iA Financial Group is a business name and trademark
iA Financial Group is a business name and trademark of iA Financial Corporation Inc. and Industrial Alliance Insurance and Financial Services Inc.
iA Financial Group — NBF 12th Annual Quebec Conference (June 2022) on 6ix