Ia Financial Corporation Inc. · TSX:IAG
Ia Financial — Industrial Alliance Insurance and Financial Services — Investor Day (June 2010)
21 slides from Ia Financial's investor day presentation, Jun 15, 2010
Slide 1: On Solid Ground for Continued Growth: Strategic Review
On Solid Ground for Continued Growth Industrial Alliance I Investor t Day D 2010 Toronto, June 15, 2010 A partner you can trust. 1 Strategic Review Yvon Charest FSA, FCIA President and Chief Executive Officer A partner you can trust. 2 Industrial Alliance Investor Day 2010 Strategic Review On Solid
Slide 2: Agenda and Key Questions We Want to Address Today
Agenda 8:30 to 8:35 Welcome Jacques Carrière, VP, Investor Relations 8:35 to 9:15 Strategic Review Yvon Charest, President and CEO 9:15 to 9:45 Business Growth Normand Pépin, Executive VP, Retail Sectors 9:45 to 10:15 U.S. Operations Mike Stickney, President, IA American 10:15 to 10:30 Break 10:30 t
Slide 3: Agenda: Strategic Review; Investor Day Theme and Key Messages
Agenda Strategic Review > Investor Day y Theme and Key y Messages g > Industrial Alliance in a Nutshell > Key Risks and Mitigating Measures > Key Business Growth Initiatives > Q1/2010 Highlights and Guidance > Conclusion 5 Investor Day Theme and Key Messages Strategic Review 6 Industrial Alliance In
Slide 4: Key Messages: On Solid Ground for Continued Growth
Key Messages On Solid Ground for Continued Growth > IA came out of the crisis with its business model intact > Good financial strength and flexibility to fund growth, absorb stock market downturns and meet new capital requirements > Low downside risk to credit impairment > Reserves contain margins t
Slide 5: Strengths and Key Success Factors
Strengths > Know-how in managing distribution networks > Entrepreneurial E t i l culture lt th thatt accentuates t t differentiating diff ti ti factors and performance > Dedicated, experienced and stable management team > Developing talent in-house > Retention of talented professionals > Capacity C
Slide 6: Industrial Alliance in a Nutshell: A Large Financial Institution
Industrial Alliance in a Nutshell Strategic Review 11 A Large Financial Institution Key Facts > Creation 1892 > Rank 4th (life and health insurance) > Market capitalization $2.9 billion (June 8, 2010) > Assets (AUA/AUM) $60.7 billion (March 31, 2010) > Premiums and deposits $5.2 billion (2009) > Age
Slide 7: An Insurance and Wealth Management Group; Four Lines of Business
An Insurance and Wealth Management Group Operating Company Life and Health Insurance and Financial Services and Parent Company 99.9% 98.0% 100% IA IA PACIFIC EXCELLENCE AMERICAN Financial Wealth Management General Insurance Services Brokerage 100% 100% 100% 100% IA IA IA AUTO AND MRA CLARINGTON SECU
Slide 8: Good Diversification of Operations; Canada-Wide Sales Expansion
Good Diversification of Operations 2009 Adjusted Operating Profit1 Sector Key Message $125.8 M 55% Individual • Long-time industry leader with Insurance successful growth and profit profile $49.3 M 22% Individual Wealth • Fast-growing potential due to Management internal growth and acquisitions $53.
Slide 9: Key Risks and Mapping of Risks
Key Risks and Mitigating Measures Strategic Review 17 Key Risks Mapping of Risks > Equity market • Seg fund guarantee • Stocks backing long-term liabilities > Interest rates • URR • IRR > Actuarial • Mortality • Lapse > Investment portfolio • Credit • Goodwill > Capital • Solvency 18 Industrial Alli
Slide 10: Key Risk Mitigating Measures
Key Risk Mitigating Measures > Seg fund • Traditional seg funds: less risky than peers (Differentiating factor) guarantee • GMWB: new generation to be launched for next RRSP season anddh hedging d i tto bbegin i iin 2010 > Stocks backing • Small percentage of stocks backing long-term liabilities lon
Slide 11: Key Risk Mitigating Measures (cont.)
Key Risk Mitigating Measures (cont.) > Credit • Limited downside due to conservative credit profile > Goodwill G d ill • Acquisitions A i iti conservatively ti l priced i d • No writedowns required > Solvency • Proactive management actions (since 2008) > Issue of $600 M in capital since 2008, includ
Slide 12: Key Business Growth Objectives and Opportunities
Key Business Growth Objectives 1. Wealth management Expand 2 Distribution 2. Di t ib ti networks t k G Grow 3. Geographic diversification Accelerate 4. U.S. market Build 5. New markets Penetrate 6 Top line synergies 6. Maximize Performance-driven organization 23 Business Growth Opportunities Recent
Slide 13: Expanding Distribution; Accelerating U.S. Growth Strategy
Business Growth Opportunities (cont.) Expanding Distribution > Career network • Objective: grow network by 3%/year (in Quebec only) (5-year CAGR: 4%) > MGAs and • Expanding product line National Accounts > Affiliated distributors • Close to 3,000 reps (Investia, FundEX • Recent acquisitions: AEGON,
Slide 14: Compelling Rationale for A-A Transaction
Compelling Rationale for A-A Transaction A Low-Risk and Manageable Acquisition > Small company p y > Operates in IA core business: life insurance > Reasonable price; immediately accretive > Provides immediate scale and presence > Provides multi-state distribution network > Provides experienced manag
Slide 15: Acquisition Criteria
Acquisition Criteria > EPS • Accretive no later than second year > ROE • Between 12%-14% (level can vary according to strategic intent) > Appraisal Value1 • Accretive 21 acquisitions since 2000 (16 wealth management; 5 life insurance). Acquisitions: small, strategic, well integrated and accretive. 2
Slide 16: Top Line Growth: Premiums and Deposits; Value of New Business
Top Line Growth: Last Two Quarters Better than Record Year in 2007 Premiums and Deposits (P&D) ($Million) 5,826 5,543 , 5 231 5,231 4,991 1,317 1,221 > Record level in Q4/09 1,203 1,547 Q4 > Up 27% YoY 3,584 1,302 > Exceeds record in 2007 1,375 873 999 1,249 Q3 1,513 876 1,308 1,529 Q2 1,197 837 1,8
Slide 17: Earnings Almost Back to Pre-Crisis Levels; 2010 EPS and ROE Targets
Earnings Almost Back to Pre-Crisis Levels Net Income to Common Shareholders1 ROE: 12.7%, within ($Million) 12-14% guidance 64.8 63.3 62.3 62.2 62.1 58.2 59.0 59.2 56.4 50.9 51.4 38.7 (118.0) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2008 2009 2010 Since turning around in Q2/09, earnings have been
Slide 18: Dividend Payout Sustainable and Within Guidance
Dividend Payout Sustainable and Within Guidance Dividend stable at 61% ¢ 24.5¢/common share throughout crisis 42% 33% 33% 29% Payout target Mid-term: 25-35% 2010: 30-35% Q1 Q2 Q3 Q4 Q1 2009 2010 35 Conclusion Strategic Review 36 Industrial Alliance Investor Day 2010 Strategic Review On Solid Ground
Slide 19: IA Business Model is Intact; On Solid Ground for Continued Growth
IA Business Model is Intact Quality Should Provide Long-Term Superior Value > Company managed conservatively and for the long term > Conservatism embedded in Company culture: reserves, capital, investment, pricing > Balance sheet not squeezed to improve short term earnings > Focus on profitable sale
Slide 20: Ten Years on the TSX
Ten Years on the TSX Stock Performance IPO: February 3, 2000 (From Feb. Feb 3, 3 2000 to Feb Feb. 2 2, 2010) 309% Breakthroughs > Entered wealth management sector > Expanded across Canada > Penetrated new market segments A strong first decade. 31% Strong fundamentals provides solid foundation for co
Slide 21: On Solid Ground for Continued Growth
On Solid Ground for Continued Growth Industrial Alliance I Investor t Day D 2010 Toronto, June 15, 2010 A partner you can trust. 41 Industrial Alliance Investor Day 2010 Strategic Review On Solid Ground for Continued Growth Yvon Charest Industrial Alliance Insurance and Financial Services Inc. Presi
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