Ia Financial Corporation Inc. · TSX:IAG
Ia Financial — Q3 2015 Earnings Presentation
33 slides from Ia Financial's earnings presentation, Nov 4, 2015
Slide 1: Third quarter 2015 Conference Call
Third quarter 2015 Conference Call Presenters: Yvon Charest, President and CEO René Chabot, EVP, CFO and Chief Actuary November 4, 2015 1
Slide 2: Q3 Highlights
Q3 Highlights A solid quarter despite challenging equity markets ► Expected profit up 14% YoY to $136.4 million ► Net income attributed to common shareholders of $113.1 million, up 24% YoY Profit ► Q3 reported EPS of $1.11 ► Above guidance [$1.00-$1.10] ► Core EPS of $1.10 driven by favourable polic
Slide 3: Sales Highlights
Sales Highlights Retail insurance has been gaining momentum Third quarter Year-to-date at September 30 ($Million, unless otherwise indicated) 2015 2014 Variation 2015 2014 Variation ► Individual Insurance Canada 43.1 37.0 16% 124.7 113.8 1 10% United States 20.7 14.1 47% 55.9 40.1 39% Total 63.8 51.
Slide 4: Asset Growth
Asset Growth Slower due to market decline and lower fund inflows AUM/AUA Assets Under Management and Administration (assets under management and administration, in $B) ($Billion, unless September otherwise indicated) YoY 30, 2015 109.5 111.2 Assets under management 98.8 32.7 34.0 General fund 32.6 7
Slide 5: Premiums and Deposits
Premiums and Deposits Reflect weaker inflows in wealth sectors Net premiums, premium equivalents and deposits (in $B) Q3/2015 $Million YoY Individual Insurance 395.8 7% 7.4 7.5 7.4 7.0 6.9 Individual Wealth 1.8 1.8 699.9 (8%) Management Q4 1.7 1.7 5.7 Group Insurance 353.6 (1%) 1.6 1.8 1.8 Q3 1.6 1.
Slide 6: Q3 Profit
Q3 Profit Strong growth in earnings and book value per share Third quarter Year-to-date at September 30 ($Million, unless otherwise indicated) 2015 2014 Variation 2015 2014 Variation Net income attributed to shareholders 117.6 98.5 +19% 378.1 309.2 +22% Less: preferred shareholder dividends 4.5 7.0
Slide 7: Q3 Results vs. Guidance
Q3 Results vs. Guidance All metrics compare favourably Guidance Reported Comments EPS $1.00 to $1.10 $1.11 Above guidance ROE 11.0% to 12.5% 12.3% Top of guidance Strain 30% 24% Better than expected Effective tax rate 18% to 20% 19% Middle of guidance 221% after CTL Corp. Solvency ratio 175% to 200%
Slide 8: Q3 EPS is $1.11 (Consensus is $0.95)
Q3 EPS is $1.11 (Consensus1 is $0.95) Market impact more than offset by favourable experience Q3 items of note (gains and losses) Market impact -11¢ Favourable experience +12¢ Special Individual Group Dealer Insurance Markets Savings Services +9¢ Strain +2¢ +2¢ +2¢ +3¢ Hedging Individual Market -3¢
Slide 9: Q3 Adjusted EPS
Q3 Adjusted EPS Management's view of core is $1.10 Q3 EPS $1.10 Q3 Reported EPS $1.11 $1.04 Items greater than ±4¢ ► Market loss +$0.04 CONSENSUS1 (core) ► Individual Insurance ($0.05) iA ADJUSTED Q3 Adjusted EPS $1.10 9 1 Core consensus, adjusted for market impact, as of October 27, 2015.
Slide 10: Strong Capital Position
Strong Capital Position CTL acquisition will decrease ratio by 4 percentage points Solvency Ratio (%, end of period) 223 225 Key changes 217 217 209 211 during the quarter 200% Target ► +1% Profit 175% ► +1% Interest rates 2012 2013 2014 Q1/15 Q2/15 Q3/15 10
Slide 11: Shareholder Value Creation: +10% LTM
Shareholder Value Creation: +10% LTM Q3/15 Book Value Per Share $36.45 (end of period) CAGR 1-year +10% 5-year +8% $9.36 Since 2000 +10% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 11
Slide 12: Balance Sheet Flexibility
Balance Sheet Flexibility Significant capital to support growth initiatives September 30 June 30 December 31 September 30 2015 2015 2014 2014 Solvency ratio 225% 223% 209% 215% Leverage ratio 24.5% 24.7% 23.7% 25.9% Coverage ratio 9.5x 8.9x 7.9x 8.1x 12
Slide 13: Individual Wealth Management
Individual Wealth Management Operating profit and margin by segment OPERATING PROFIT ASSETS YTD Sept. 30, 2015 as of Sept. 30, 2015 % YoY Profit $M $B of total growth margin Segregated & 67.4 18% 13.1 2% 51 bps general funds 1 Mutual funds 42.9 12% 14.1 (9%) 30 bps Distribution 16.4 4% 34.0 8% 5 bps
Slide 14: CTL Corporation Acquisition
CTL Corporation Acquisition ► Largest privately‐owned consumer vehicle finance company in Canada About ► Non traditional credit lender with a loan portfolio of more than $100 million CTL ► Distribution through a network of car dealers located across Canada. ► Relatively few national non-prime operat
Slide 15: CTL Corporation Acquisition
CTL Corporation Acquisition Builds on our service offer for car dealers Full-service offer to car dealers IA Auto Dealer Services division and Home Creditor Car Car P&C insurance financing insurance Already the Still high growth NEW Referral leader potential Full spectrum program of credit-risk offe
Slide 16: Individual Insurance Strain on New Business
Individual Insurance Strain on New Business Better than 30% guidance due to sales level and product mix 2015 2014 2013 2012 ($Million,unless otherwise indicated) Q3 Q2 Q1 Q4 Q3 Q2 Q11 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Sales 63.8 61.7 55.1 62.1 51.1 55.5 47.3 57.2 54.1 57.2 65.8 69.2 58.5 62.2 53.4 Strain 15.2
Slide 17: Income On Capital
Income On Capital A better quarter for iAAH 2015 2014 2013 2012 ($Million, pre-tax) Q3 Q2 Q11 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Investment 27.7 28.4 32.6 29.8 29.3 27.2 26.7 26.0 29.9 37.3 32.1 39.3 23.7 31.9 31.0 income Financing & (10.0) (9.9) (8.8) (6.8) (6.7) (7.4) (7.1) (7.0) (5.9) (17.8)3 (1
Slide 18: Effective Tax Rate (ETR)
Effective Tax Rate (ETR) Within guidance ($Million,unless 2015 2014 2013 2012 otherwise indicated) Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Operating 122.5 142.5 102.7 78.8 92.2 109.2 93.2 104.9 124.5 82.8 90.3 56.8 72.8 53.8 55.5 income Income on 23.5 20.2 13.6 28.1 27.3 19.9 16.1 17.5 24.8 23.
Slide 19: Market Sensitivity
Market Sensitivity (end of period) Q3/2015 Q2/2015 Q3/2014 S&P/TSX composite index 13,307 14,553 14,961 IAG solvency ratio 225% 223% 215% Sensitivities Stock Level of S&P/TSX before matching provisions require 10,100 pts 10,100 pts 11,100 pts long-term strengthening for future ( -24% ) ( -31% ) ( -2
Slide 20: Interest Rate Sensitivity
Interest Rate Sensitivity (end of period) Q3/2015 Q2/2015 Q3/2014 After-tax impact on IRR reserves of a 10 bps ($32 million) ($31 million) ($25 million) decrease in IRR After-tax impact on URR reserves of a 10 bps ($57 million) ($58 million) ($66 million) decrease in URR After-tax impact on Total re
Slide 21: S&P/TSX Thresholds for Q4/15 Gain/Loss
S&P/TSX Thresholds for Q4/15 Gain/Loss Impact on Q4/15 Earning TSX threshold for Threshold is net income of driver: gain or loss: compared to: a ±10% variation vs. threshold: Actual TSX value Revenues on at the end of 13,4901 ±$8.2 million UL policy funds Q4/15 Actual average value3 MERs collected o
Slide 22: Individual Insurance
Individual Insurance 1 Third quarter Year-to-date at September 30 Sales ($Million, unless otherwise indicated) 2015 2014 Variation 2015 2014 Variation Canada - Minimum premiums2 37.8 32.6 16% 112.0 100.3 12% Canada - Excess premiums3,4 5.3 4.4 20% 12.7 13.5 (6%) Canada - Total Canada 43.1 37.0 16% 1
Slide 23: Individual Wealth Management
Individual Wealth Management Sales Third quarter Year-to-date at September 30 ($Million, unless otherwise indicated) 2015 2014 Variation 2015 2014 Variation Gross sales1 General fund 28.0 25.1 12% 101.1 87.7 15% Segregated funds 358.2 320.3 12% 1,214.4 1,013.7 20% Mutual funds 313.7 411.4 (24%) 1,13
Slide 24: Group Insurance
Group Insurance Year-to-date at Third quarter ($Million, unless otherwise indicated) September 30 2015 2014 Variation 2015 2014 Variation Sales1 Employee Plans 12.9 45.6 (72%) 53.5 62.7 (15%) Dealer Services - Creditor Insurance 109.1 112.5 (3%) 273.7 288.1 (5%) Dealer Services - P&C Insurance 56.4
Slide 25: Group Savings and Retirement
Group Savings and Retirement Third quarter Year-to-date at September 30 Sales1 ($Million, unless otherwise indicated) 2015 2014 Variation 2015 2014 Variation Accumulation products 226.9 201.1 13% 739.8 601.4 23% Insured annuities 1.8 39.9 (95%) 21.3 120.2 (82%) Deposits2 17.3 17.2 1% 78.1 37.0 111%
Slide 26: Investment Portfolio
Investment Portfolio Continues to be of highest quality September 30 June 30 December 31 September 30 2015 2015 2014 2014 IMPAIRED INVESTMENTS AND PROVISIONS Gross impaired investments $32.3M $25.0M $22.5M $22.0M Provisions for losses $5.3M $4.0M $3.8M $3.5M Net impaired investments $27.0M $21.0M $1
Slide 27: Healthy Balance Sheet
Healthy Balance Sheet With flexibility to support growth initiatives Debt Ratio (Debentures and preferred shares / Capital structure) (end of period) Agency Rating Outlook 35.9% S&P A+ (Strong) Stable A+ 25.8% A.M. Best Stable (Superior) 24.5% 23.7% DBRS IC-2 Stable 2012 2013 2014 Q3/2015 27
Slide 28: Value of New Business
Value of New Business Value of New Business ($Million) Value of New Business by component 181.5 163.6 164.0 Q3/2014 38.8 153.1 45.2 Q4 36.0 39.3 Increase (decrease) in sales (0.5) 44.9 40.7 Q3 38.6 38.8 100.4 Variation in profit margins 1.1 38.4 31.9 Changes in economic 44.3 (7.5) Q2 42.7 42.6 assum
Slide 29: 2015 Guidance
2015 Guidance EPS1 ROE1 11.0% to 12.5% Q1 $0.85 to $0.95 Strain 30% Q2 $0.95 to $1.05 Effective 18% to 20% tax rate Q3 $1.00 to $1.10 Q4 $1.00 to $1.10 Solvency 175% to 200% ratio 2015 $3.80 to $4.20 Payout 25% to 35% ratio (mid-range) 29 1 No reserve strengthening considered in EPS and ROE guidance
Slide 30: Investor Relations
Investor Relations Contact Grace Pollock Tel. 418-780-5945 grace.pollock@ia.ca Next Reporting Date Q4 – February 11, 2016 For information on our earnings releases, conference calls and related disclosure documents, consult the Investor Relations section of our website at www.ia.ca. 30
Slide 31: Non-IFRS Financial Information
Non-IFRS Financial Information Industrial Alliance Insurance and Financial Services Inc. 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, va
Slide 32: Forward-Looking Statements
Forward-Looking Statements This document may contain statements relating to strategies used by Industrial Alliance 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”, “expec
Slide 33: iA Financial Group
IAM Financial Group INVESTED IN YOU.