Ia Financial Corporation Inc. · TSX:IAG
Ia Financial — Q1 2016 Earnings Presentation
31 slides from Ia Financial's earnings presentation, May 5, 2016
Slide 1: First quarter 2016 Conference Call
First quarter 2016 Conference Call Presenters: Yvon Charest, President and CEO René Chabot, EVP, CFO and Chief Actuary May 5, 2016 1
Slide 2: Q1 Highlights
Q1 Highlights Delivering on our 2016 plan ► Reported EPS of $0.96 above mid-guidance ($0.90-$1.00 EPS) ► Key drivers of 2016 plan above expectations: strain and insurance businesses Profit ► New-business strain of 17% beats Q1 guidance (+$0.01) ► 4th consecutive quarter of P/H gains in insurance bus
Slide 3: Sales Highlights
Sales Highlights Retail insurance operations maintain strong momentum First quarter ($Million, unless otherwise indicated) 2016 2015 Variation ► Individual Insurance Canada 42.0 38.1 10% United States 23.4 17.0 38% Total 65.4 55.1 19% ► Individual Wealth Management Segregated funds - net sales 142.6
Slide 4: Q1 Earnings
Q1 Earnings EPS aligned with guidance ($Million, unless First quarter otherwise indicated) 2016 2015 Variation Net income attributed to shareholders 102.4 114.4 (10%) Less: preferred shareholder dividends 4.1 5.5 2 (25%) Less: premium on redemption of pref. shares — 4.0 --- Net income attributed to
Slide 5: Q1 Earnings: items of note
Q1 Earnings Continuing favourable P/H experience from insurance operations Q1 items of note (gains and losses) Income Market related Experience on capital +4¢ +3¢ +3¢ Employee +2¢ Dealer Plans Investment Individual Services income Insurance -1¢ MER UL Hedging -4¢ -6¢ 5
Slide 6: Experience (other than market related)
Experience (other than market related) Key drivers of 2016 plan are above expectations Experience gains (losses) (EPS impact in cents) 2016 2015 2014 2015 2014 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Individual 2 9 9 14 (4) 5 (5) 2 (4) 28 (2) Insurance Group Insurance 7 (2) 5 1 (3) (1) (4) (7) (4) 1 (16) Individ
Slide 7: Management's View of Core
Management's View of Core $0.98 EPS for Q1, above mid-guidance Q1 CORE EPS Q4 Reported EPS $0.96 $1.00 $0.98 Items greater than ±4¢ ► Hedging +$0.02 CONSENSUS1 iA Q4 Core EPS $0.98 7 1 Core consensus as of April 27, 2016
Slide 8: Q1 Results vs. Guidance
Q1 Results vs. Guidance Delivering on our 2016 plan Guidance Reported Reported above mid-guidance EPS $0.90 to $1.00 $0.96 Core EPS of $0.98 ROE 11.0% to 12.5% 10.5% Seasonality impact 20% for Q1 Better than expected, Strain 17% reflects favourable sales mix 15% for 2016 Effective tax rate 18% to 20
Slide 9: A Flexible Balance Sheet
A Flexible Balance Sheet Half of decrease in solvency ratio is seg fund related March 31 December 31 March 31 Agency Rating 2016 2015 2015 Solvency 205% 213% 211% S&P A+ (Strong) ratio Leverage 24.4% 24.3% 25.4% A.M. Best A+ (Superior) ratio Coverage 8.6x 8.2x 7.8x DBRS A (high) ratio 9
Slide 10: Steady Value Creation for Shareholders
Steady Value Creation for Shareholders Q1/2016 Book Value Per Share $36.48 (end of period) CAGR 1-year +4% 5-year +7% $9.36 10-year +8% Since 2000 +9% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 10
Slide 11: Hedging Experience
Hedging Experience Hedging program overall positive since inception 22 quarters: Hedging impact on EPS (¢) 13 positives, 4 neutrals and 5 negatives (since hedging program inception) Average quarterly gain of 2 cents EPS 11 8 7 6 6 6 5 4 4 4 1 2 2 0 0 0 0 (3) (4) (5) (6) (12) Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 12: Individual Insurance Strain on New Business
Individual Insurance Strain on New Business 1¢ EPS gain: Better than expected (Q1 at 17% vs 20% guidance) 2016 2015 2014 ($Million, unless otherwise indicated) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q11 Sales 65.4 73.7 63.8 61.7 55.1 62.1 51.1 55.5 47.3 Strain 11.3 14.4 15.2 15.2 21.3 16.0 17.3 12.7 12.7 Strain (%
Slide 13: Income On Capital
Income On Capital Q1/16 in line with iAAH seasonality and new investment 2016 2015 2014 ($Million, pre-tax) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Investment 33.5 33.7 27.7 28.4 32.6 29.8 29.3 27.2 26.7 income Financing & (11.8) (10.6) (10.0) (9.9) (8.8) (6.8) (6.7) (7.4) (7.1) Intangibles1 Sub Total 21.7 23.1
Slide 14: Effective Tax Rate (ETR)
Effective Tax Rate (ETR) In line with earnings seasonality 2016 2015 2014 ($Million,unless otherwise indicated) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Operating 108.3 (20.7) 122.5 142.5 102.7 78.8 92.2 109.2 93.2 income Income on 14.8 20.2 23.5 20.2 13.6 28.1 27.3 19.9 16.1 capital Pre-tax 123.1 (0.5) 146.0 162
Slide 15: Market Sensitivity
Market Sensitivity (end of period) Q1/2016 Q4/2015 Q1/2015 S&P/TSX composite index 13,494 13,010 14,902 IAG solvency ratio 205% 213% 211% Sensitivities Stock Level of S&P/TSX before matching provisions require 9,600 pts 9,500 pts 10,100 pts long-term strengthening for future ( -29% ) ( -27% ) ( -32%
Slide 16: Interest Rate Sensitivity
Interest Rate Sensitivity (end of period) Q1/2016 Q4/2015 Q1/2015 1 Potential after-tax impact IRR on reserves of a 10 bps ($27 million) ($31 million) ($35 million) decrease in IRR Potential after-tax impact URR on reserves of a 10 bps ($59 million) ($60 million) ($62 million) decrease in URR Potent
Slide 17: S&P/TSX Thresholds for Q2/2016 Gain/Loss
S&P/TSX Thresholds for Q2/2016 Gain/Loss Potential impact Earning TSX threshold Threshold is on Q2/2016 driver: for gain or loss: compared to: net income of a ±10% variation vs. threshold: Actual TSX value Revenues on 1 at the end of 13,680 ±$8.1 million UL policy funds Q2/2016 Actual average value3
Slide 18: Asset Growth
Asset Growth Assets Under Management AUM/AUA and Administration (assets under management and March 31 ($Billion, unless administration, in $B) otherwise indicated) YoY 2016 115.8 117.7 117.6 109.5 Assets under management 98.8 36.9 37.5 32.7 General fund 34.4 3% 83.5 29.3 Segregated funds 20.0 1% AUA
Slide 19: Premiums and Deposits
Premiums and Deposits Net premiums, premium equivalents and deposits (in $B) Q1/2016 $Million YoY 7.5 7.7 Individual Insurance 411.2 7% 7.4 7.4 6.9 2.0 Individual Wealth 1.8 1.8 797.9 (17%) Management Q4 1.7 Group Insurance 352.0 5% 1.6 1.8 1.8 Q3 1.7 Group Savings and 327.8 34% Retirement 1.9 1.7 1
Slide 20: Capital Position
Capital Position Half of decrease is related to seg funds Solvency Ratio (%, end of period) 217 217 Key changes 209 213 during the quarter 205 200% Target ► -4% Macroeconomic variations 175% ► -4% Seg fund portfolio 2012 2013 2014 2015 Q1/16 20
Slide 21: Individual Insurance
Individual Insurance 1 First quarter Sales ($Million, unless otherwise indicated) 2016 2015 Variation Canada - Minimum premiums2 33.9 35.7 (5%) Canada - Excess premiums3 8.1 2.4 238% Canada - Total 42.0 38.1 10% US 23.4 17.0 38% Total 65.4 55.1 19% Premiums 411.2 383.3 7% Number of policies (Canada)
Slide 22: Individual Wealth Management
Individual Wealth Management Sales First quarter ($Million, unless otherwise indicated) 2016 2015 Variation Gross sales1 General fund 58.5 41.1 42% Segregated funds 454.1 489.7 (7%) Mutual funds 285.3 435.7 (35%) Total 797.9 966.5 (17%) Net sales Segregated funds 142.6 170.8 (28.2) Mutual funds (291
Slide 23: Group Insurance
Group Insurance First quarter ($Million, unless otherwise indicated) 2016 2015 Variation Sales1 Employee Plans 18.0 15.3 18% Dealer Services - Creditor Insurance 66.2 65.4 1% Dealer Services - P&C Insurance 39.5 35.7 11% Dealer Services - Total 105.7 101.1 5% Special Markets Solutions 50.8 47.5 7% T
Slide 24: Group Savings and Retirement
Group Savings and Retirement First quarter Sales1 ($Million, unless otherwise indicated) 2016 2015 Variation Accumulation products 264.8 206.6 28% Insured annuities 59.2 1.3 not4,454% meaningful Deposits2 9.9 43.0 (77%) Total 333.9 250.9 33% Q1 1-year Funds under management March 31, 2016 variation
Slide 25: Investment Portfolio
Investment Portfolio Continues to be of highest quality March 31 December 31 March 31 2016 2015 2015 IMPAIRED INVESTMENTS AND PROVISIONS Gross impaired investments $17.5M $19.7M $24.6M Provisions for losses $4.8M $5.5M $4.0M Net impaired investments $12.7M $14.2M $20.6M Net impaired investments as a
Slide 26: Value of New Business
Value of New Business Value of New Business ($Million) Year-over-year change by component 181.5 164.0 Q1/2015 31.0 153.1 45.2 Q4 39.3 135.5 Decrease in sales (1.0) 44.9 40.7 35.1 Q3 38.8 Variation in profit margins 2.3 38.4 31.9 Changes in economic 44.3 (3.6) Q2 42.6 assumptions 33.4 37.5 Q1/2016 28
Slide 27: 2016 Guidance
2016 Guidance EPS1 ROE1 11.0% to 12.5% Q1 $0.90 to $1.00 Strain 15% ± 5% Q2 $1.05 to $1.15 Effective 18% to 20% tax rate Q3 $1.15 to $1.25 Q4 $1.10 to $1.20 Solvency 175% to 200% ratio 2016 $4.20 to $4.60 Payout 25% to 35% ratio (mid-range) 27 1 No reserve strengthening considered in EPS and ROE gui
Slide 28: Investor Relations
Investor Relations Contact Grace Pollock Tel. 418-780-5945 grace.pollock@ia.ca Investor Day June 14, 2016 Next Reporting Dates Q2 – August 4, 2016 Q3 – November 2, 2016 Q4 – February 16, 2017 For information on our earnings releases, conference calls and related disclosure documents, consult the Inv
Slide 29: Non-IFRS Financial Information
Non-IFRS Financial Information iA Financial Group reports its financial results in accordance with International Financial Reporting Standards (IFRS). It also publishes certain non-IFRS financial measures that do not have an IFRS equivalent, including sales, value of new business and solvency ratio,
Slide 30: 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”, “could”, “should”, “would”, “suspect”, “expect
Slide 31: iA Financial Group
IAM Financial Group INVESTED IN YOU.