Ia Financial Corporation Inc. · TSX:IAG
Ia Financial — Q4 2023 Earnings Presentation
46 slides from Ia Financial's earnings presentation, Feb 21, 2024
Slide 1: Fourth Quarter 2023 Conference Call
Fourth Quarter 2023 Conference Call Presenters: Denis Ricard, President and CEO Éric Jobin, EVP, CFO and Chief Actuary February 21, 2024
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 (hereinafter referred to individually in this section as the “Company”) report their financial results and statements in accordance with International Financial Reporting Standards (“IFRS”). They also publish certai
Slide 4: Table of Contents
TABLE OF CONTENTS 2 Forward-looking statements APPENDICES 3 Non-IFRS and add. measures 23 Book value 35 Insurance, Canada (cont.) 8 Q4/2023 key results 24 Dividend 36 Wealth Management 9 Sales 25 Capital deployment priorities 37 Wealth Management (cont.) 10 Sales (cont.) 26 Results by segment 38 US
Slide 5: Agenda
AGENDA ▪ Key results ▪ Business growth Denis Ricard ▪ Financial targets President and CEO ▪ 2023 in a nutshell ▪ 2024 outlook ▪ Profitability ▪ Financial strength Éric Jobin ▪ Assumption changes and EVP, CFO and Chief Actuary management actions ▪ Questions & Answers 5
Slide 6: Denis Ricard
Denis Ricard President and CEO 6
Slide 7: Presenters and executive team
Denis Ricard Stephan Bourbonnais President and CEO EVP, Wealth Management Éric Jobin Renée Laflamme EVP, Chief Financial EVP, Individual Insurance, Officer and Chief Actuary Savings and Retirement Mike Stickney EVP, Chief Growth Officer Pierre Miron US Operations, Co-Head EVP, Chief Growth Officer o
Slide 8: Q4/2023 Key Results
Q4/2023 KEY RESULTS Core ROE aligned with the Company’s medium-term target of 15%+ Robust capital position, supported by continued organic capital generation Q1/24 dividend increased by 7% to $0.82 per share $2.34 Core EPS† 14.4% 2 Core ROE† $9.31 in 2023, up 4% YoY1 Aligned with 15%+ medium-term gu
Slide 9: Q4/2023 Business Growth – Insurance, Canada
Q4/2023 BUSINESS GROWTH – Insurance, Canada INDIVIDUAL INSURANCE GROUP INSURANCE HIGHLIGHTS (sales† in $M) Employee Plans and Special Markets (premiums and deposits2,† in $M) Individual Insurance 95 95 • Another good performance which compares to a 470 487 strong quarter a year earlier • #1 in numbe
Slide 10: Q4/2023 Business Growth – Wealth Management
Q4/2023 BUSINESS GROWTH – Wealth Management INDIVIDUAL SEGREGATED FUNDS INDIVIDUAL MUTUAL FUNDS † (gross sales in $M) (gross sales† in $M) HIGHLIGHTS 837 702 393 Individual Wealth 350 +19% +12% • Positive combined net sales of $83M for YoY YoY 2023 amid challenging macroeconomic environment for the
Slide 11: Q4/2023 Business Growth – US Operations
Q4/2023 BUSINESS GROWTH – US Operations HIGHLIGHTS INDIVIDUAL INSURANCE DEALER SERVICES Individual Insurance † (sales in US$M) (sales† in US$M) • Record year in terms of sales confirming strong growth potential in the US life 44 insurance market 241 • Strong performance of distribution channels 37 2
Slide 12: Financial Targets Summary
FINANCIAL TARGETS SUMMARY 2021 2022 2023 Medium-term IFRS 17 and guidance IFRS 4 IFRS 4 IFRS 17 and IFRS 9 IFRS 91 Core EPS YoY growth +17% +6% N/A 4% 10%+ annual average growth 2 Core ROE 14.2% 14.2% 14.4% 14.4% 15%+ Solvency ratio3 134% 126%4 154%5 145% 120% operating target Organic capital genera
Slide 13: 2023 in a Nutshell
2023 IN A NUTSHELL CONTINUED SOLID PROFITABILITY ▪ Seamless transition to IFRS 17 and IFRS 9 – Book value per share and EPS level maintained at transition ▪ 14.4% core ROE – Aligned with medium-term target of 15%+ ▪ Core EPS of $9.31, 4% higher than 2022 result and well positioned for further growth
Slide 14: 2024 Outlook
2024 OUTLOOK INSURANCE, CANADA ▪ Sales: Momentum from leadership position, high-performing distribution networks and digital tools ▪ Earnings: Expecting strong growth from sales, well-positioned assumptions and pricing WEALTH MANAGEMENT ▪ AUM: Maintain seg fund leadership and leverage very strong sa
Slide 15: Éric Jobin
Éric Jobin EVP, Chief Financial Officer and Chief Actuary 15
Slide 16: Q4/2023 Profitability and Financial Strength
Q4/2023 PROFITABILITY AND FINANCIAL STRENGTH Q4/2023 Q4/20221 YoY HIGHLIGHTS Profitability Core ROE2 of 14.4% and EPS of $2.34 Core EPS $2.34 $2.40 5 (3%) • Expected insurance earnings: +8% YoY • Core insurance service result: (6%) YoY Core earnings $236M $254M (7%) • Core net investment result: +18
Slide 17: Q4/2023 Performance – Operating business segments
Q4/2023 PERFORMANCE – Operating business segments INSURANCE, WEALTH US CANADA MANAGEMENT OPERATIONS Core earnings ($M) Core earnings ($M) Core earnings ($M) 110 91 27 26 Q4/22 restated 78 70 +30% -4% result includes $22M post-tax of YoY YoY mostly unusual gain amid IFRS 17 and -29% IFRS 9 transition
Slide 18: Q4/2023 Performance – Investment and Corporate
Q4/2023 PERFORMANCE – Investment and Corporate INVESTMENT +18% YoY in core net investment result CORE EARNINGS RECONCILIATION Core earnings ($M) Items of note: • Favourable impact of investment portfolio ($M, unless otherwise indicated) Q4/2023 2023 95 88 optimization • Favourable impact of higher i
Slide 19: Robust Capital Position
ROBUST CAPITAL POSITION Supported by ongoing organic capital generation Capital available Q4/2023 MOVEMENTS Solvency ratio1 for deployment2 Solvency ratio1 (end of period) Beginning of quarter 145% $1.6B 145% 145% Core earnings net of dividends 2.5% $159M 134% Organic CSM growth (excl. seg funds) 0.
Slide 20: Assumption Review and Management Actions
ASSUMPTION REVIEW AND MANAGEMENT ACTIONS Slightly negative total impact of $14M pre-tax in Q4/23 and positive impact for the full year Total Impact on Impact on Impact on ($M pre-tax) impact1 P&L CSM RA • Morbidity: Favourable assumption review Mortality & morbidity 44 (13) 66 (9) • Mortality: Sligh
Slide 21: Question & Answer Session
Question & Answer Session Da to
Slide 22: Appendices
APPENDICES a tO
Slide 23: Book Value per Share
BOOK VALUE PER SHARE $66.90 at December 31, 2023 P/BV ratio of 1.35 at December 31, 2023 8.0% growth in 2023, excluding impact of $461M IFRS 17 share buybacks (NCIB) IFRS 4 IFRS 9 CAGR March 31, 20001 $8.44 1-year +6% 5-year +7% 10-year +8% Since 2000 +10% IPO 2000 2001 2002 2003 2004 2005 2006 2007
Slide 24: Dividend to Common Shareholders
DIVIDEND TO COMMON SHAREHOLDERS Dividend increased $0.80 by 7% to 82¢ per share payable in Q1/2024 $0.70 $0.60 $0.50 $0.40 Largest dividend increase (+29%) among Canadian lifecos following the lifting of regulatory $0.30 restrictions in November 2021 Steady increases $0.20 every 3 quarters First lif
Slide 25: Growth-Driven Strategy Focused on Strong Shareholder Value
GROWTH-DRIVEN STRATEGY FOCUSED ON STRONG SHAREHOLDER VALUE Capital deployment Capital available $1.6B for deployment1 (December 31, 2023) priorities 1 Profitable organic growth Investing in digital evolution to propel growth RECENT INITIATIVES 2 Disciplined acquisitions • Dividend increase by 7% to
Slide 26: Core Reconciliation
Q4/2023 CORE DOE AND CORE RECONCILIATION BY SEGMENT Core and reported EPS gradually converging Insurance, Wealth ($M, unless otherwise indicated) US Operations Investment Corporate TOTAL Canada Management YoY Expected insurance earnings 145 73 38 — — 256 8% Impact of new insurance business (26) — (2
Slide 27: Q4/2023 Drivers of Earnings
Q4/2023 DRIVERS OF EARNINGS† Fourth quarter Year-to-date at December 31 ($M, unless otherwise indicated) 2023 20221 YoY 2023 20221 YoY DRIVERS OF EARNINGS - CORE - CONSOLIDATED Core insurance service result Risk adjustment release 61 57 7% 240 228 5% CSM recognized for services provided 157 139 13%
Slide 28: Market-Related Impacts
MARKET-RELATED IMPACTS METHODOLOGY 1 Quarterly non-core market-related impacts are the difference between: Reported net investment result, which is the actual IFRS result, and Core net investment result, which is based on management expectations MANAGEMENT EXPECTATIONS FOR CORE NET INVESTMENT RESULT
Slide 29: Investment Portfolio
INVESTMENT PORTFOLIO Resilient portfolio composed of high-quality assets and diversified exposures Bonds - Corporates - BB and lower: 0.5% Investment properties: 4% Mortgages - Insured: 3% ü Fixed income ALM1-oriented portfolio ▪ see further details on slide 30 Bonds - Corporates - Mortgages - Unins
Slide 30: $29.9B Bond Portfolio
$29.9B BOND PORTFOLIO High-quality and conservative portfolio Distribution by industry sector Distribution by category of issuer (Corporate bonds) BOND PORTFOLIO IS 70% OF TOTAL PORTFOLIO Financial services 20% Governments 30% • 67% are corporate bonds and 33% are government & Utilities 28% municipa
Slide 31: High-Quality Investment Properties & Mortgages Portfolios
HIGH-QUALITY INVESTMENT PROPERTIES & MORTGAGES PORTFOLIOS $1.6B INVESTMENT PROPERTIES $1.4B MORTGAGES ▪ Capital-efficient investment properties ▪ Disciplined underwriting process 1 ▪ Average lease terms remaining of ~9 years Combined portfolios ▪ Large portion rented to governments ▪ 68% of mortgage
Slide 32: Immediate Sensitivities Under IFRS 17
IMMEDIATE SENSITIVITIES UNDER IFRS 17 For more information on sensitivities, please refer to the quarterly and annual Management’s IMMEDIATE IMPACT Discussion and Analysis (MD&A) Net income Equity Solvency ratio CSM (non-core) as at December 31, 2023 $M post-tax $M post-tax Percentage points $M pre-
Slide 33: Core Earnings Sensitivities
CORE EARNINGS SENSITIVITIES REVENUES & EXPENSES DIRECTLY IMPACTED BY THE LEVEL OF EQUITY MARKETS AND INTEREST RATES IMPACT ON as at Dec. 31, 2023 Variation FUTURE QUARTER Description of shock ▪ Expected return on non-fixed income (NFI) CORE EARNINGS1 asset investments $M post-tax ▪ CSM recognition i
Slide 34: Insurance, Canada
INSURANCE, CANADA Fourth quarter Year-to-date at December 31 ($M, unless otherwise indicated) 2023 2022 Variation 2023 2022 Variation Individual Insurance Sales1 Minimum premiums2 83 87 (5%) 328 352 (7%) Excess premiums3 12 8 50% 41 35 17% Total 95 95 —% 369 387 (5%) Gross premiums 649 596 9% 2,479
Slide 35: Insurance, Canada (cont.)
INSURANCE, CANADA (cont.) Fourth quarter Year-to-date at December 31 ($M, unless otherwise indicated) 2023 2022 Variation 2023 2022 Variation Group Insurance Employee Plans Sales - New business during the year 6 18 (67%) 50 46 9% Net premiums 331 326 2% 1,312 1,263 4% Premium equivalents and deposit
Slide 36: Wealth Management
WEALTH MANAGEMENT Fourth quarter Year-to-date at December 31 ($M, unless otherwise indicated) 2023 2022 Variation 2023 2022 Variation Individual Wealth Management Sales - Gross sales Segregated funds 837 702 19% 3,581 3,908 (8%) Mutual funds† 393 350 12% 1,531 1,722 (11%) Insured annuities and other
Slide 37: Wealth Management (cont.)
WEALTH MANAGEMENT (cont.) Fourth quarter Year-to-date at December 31 ($M, unless otherwise indicated) 2023 2022 Variation 2023 2022 Variation Group Savings and Retirement Sales - Gross sales Accumulation contracts† Other accumulation contracts 23 21 10% 83 77 8% Segregated funds 482 542 (11%) 1,847
Slide 38: US Operations
US OPERATIONS Fourth quarter Year-to-date at December 31 ($M, unless otherwise indicated) 2023 2022 Variation 2023 2022 Variation Individual Insurance† Sales ($US) 44 37 19% 172 143 20% Sales ($CAN) 60 49 22% 231 185 25% Net premiums ($CAN) 170 149 14% 643 548 17% Dealer Services† Sales ($US) 227 24
Slide 39: Premiums and Deposits
PREMIUMS AND DEPOSITS Net premiums, premium equivalents and deposits† ($M, unless otherwise indicated) Q4/2023 YoY ($B) 16.6 16.6 Insurance, Canada 15.4 Q4 Individual Insurance 511 8% 14.0 4.2 4.1 3.9 Group Insurance 487 4% 11.4 3.9 Dealer Services 1 136 17% 10.4 9.8 4.1 3.9 Q3 iA Auto and Home1 122
Slide 40: Asset Growth
ASSET GROWTH AUM/AUA (assets under management and Assets under management and administration administration†, end of period, $B) 221.2 218.9 December 31 ($B, unless otherwise indicated) QoQ YoY 197.5 197.4 2023 189.4 168.8 Assets under management 109.7 108.3 95.8 General fund1 52.0 8% 10% 89.2 97.7
Slide 41: CSM Movement Analysis
CSM MOVEMENT ANALYSIS† Q4/23 highlights ($M, unless otherwise indicated) Q4/2023 Q4/2022 YoY Organic CSM increase of $72M • $63M organic financial growth3 CSM - Beginning of period 5,781 5,680 • Higher CSM recognized in P&L for services provided Organic CSM movement1 • $18M experience gains mainly d
Slide 42: 2023 CSM Movement Analysis
2023 CSM MOVEMENT ANALYSIS† ($M, unless otherwise indicated) Insurance, Canada Wealth US Management Operations Total 2023 highlights CSM - Beginning of period Organic CSM increase of $259M 3,016 2,014 544 5,574 (as at December 31, 2022) • $597M impact of new business and $253M in organic financial g
Slide 43: Glossary
GLOSSARY Acronym Term Additional information ACL Allowance for credit losses Amount defined by IFRS 9 that adjusts the carrying amount of an asset for estimated future credit losses. AMF Autorité des marchés financiers Body mandated by the Government of Quebec to regulate Quebec insurers, including
Slide 44: Glossary (cont.)
GLOSSARY (cont.) Acronym Term Additional information IFRS International Financial Reporting Standards Set of accounting standards mandatory for Canadian publicly-owned companies. MD&A Management’s Discussion and Analysis - NCIB Normal course issuer bid - NFI Non-fixed income Asset class notably incl
Slide 45: Investor Relations
INVESTOR RELATIONS Contact Marie-Annick Bonneau Tel.: 418-931-0142 Marie-Annick.Bonneau@ia.ca Next Reporting Dates Q1/2024 - May 9, 2024 Conference call on May 9, 2024 Q2/2024 - August 6, 2024 after market close Conference call on August 7, 2024 Q3/2024 - November 5, 2024 after market close Conferen
Slide 46: iA Financial Group trademark notice
iA Financial Group is a business name and trademark of iA Financial Corporation Inc. and Industrial Alliance Insurance and Financial Services Inc.