Ia Financial Corporation Inc. · TSX:IAG
Ia Financial — NBF 20th Annual Financial Services Conference (March 2022)
48 slides from Ia Financial's conference presentation, Mar 23, 2022
Slide 1: Guiding to solid growth
Guiding to solid growth NBF 20th Annual Financial Services Conference Investor presentation March 23, 2022 PRESENT AND STRONG. More than ever.
Slide 2: 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 3: iA Financial Group at a glance
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 $76.52 IPO in 2000 stock price OUR PURPOSE To assure that our clients feel confident and secure about their future 4M+ $85.25 a
Slide 4: Table of Contents
5 Long-term economic vision Appendices TABLE 6 Outlook 26 2021 key results OF 7 Solid track record 27 Profit growth since IPO 8 Road to reach earnings targets 28 2021 results vs. guidance CONTENTS 9 Capital allocation 29-30 2021 solid sales results 10 Strong balance sheet 31-32 IFRS 17 – CSM evoluti
Slide 5: iA's track record reflects long-term economic vision
iA’s track record reflects long-term economic vision Core EPS†,1 ($) Book value2 ($) At year-end 62.01 Key success factors 8.31 2015-21 2015-21 CAGR CAGR › Strong organic growth and 4.34 11.4% 36.76 9.1% strategic acquisitions › Business mix strength 2015 2016 2017 2018 2019 2020 2021 2015 2016 2017
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 134% solvency ratio ▪ Shareholder value creation: Book value up 12%, dividend up 29% and NCIB Superior employee, client a
Slide 7: 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 8: 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 9: Capital allocation
CAPITAL ALLOCATION Focused on growth 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 $ Up to 5% of outstanding shares 9
Slide 10: Strong balance sheet
Strong balance sheet Solvency 134% (as at Dec. 31, 2021) ratio† Low sensitivity to macroeconomic variations Distinctive Total macroeconomic protections embedded in reserving process are worth more than $900M (as at Dec. 31, 2021) macroeconomic Protections that are not recognized in regulatory capita
Slide 11: Strong and ongoing organic capital generation
Strong and ongoing organic capital generation resulting from reduced risk profile Organic capital generation† ($M) 525 = Core net income to common shareholders ~ 490 − Dividends paid to common shareholders Organic capital − Required capital increase in normal course of business 450 generation driver
Slide 12: 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 80% last decade, such as 76% Dealer Services, Wealth Favours organic Management and capital generation 56% Distribution, has contributed t
Slide 13: 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 13 † This item is a non-IFRS measure; see the “No
Slide 14: Growth drivers: our key actions for success
MAIN GROWTH DRIVERS Our key actions for success SALES Leverage full Build on our Optimize Remain at the range of products extensive synergies leading edge of to meet relationships between digital tools clients’ needs with distributors business units EARNINGS Continue growing Digital and Lean Acceler
Slide 15: 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 ▪ iA is already a leader and seeks Insurance distribution to strengthen position (Canada) ▪ i
Slide 16: Business mix diversification
Business mix diversification Growing contribution of Expansion business units Operating profit1,† $1,073M 12% SUPPORT +13% 11-year CAGR 23% EXPANSION $283M 23% FOUNDATION 65% 4% 73% 2010 2021 1 Operating profit includes iA Auto and Home and is before assumption changes and management actions. 16 † T
Slide 17: Becoming a leader in businesses targeted for strong expansion
Already a leader in foundation businesses Expansion businesses Becoming a leader in businesses targeted Individual • Individual Insurance #1 in number of policies sold for strong expansion Insurance (Canada) • Targeting mid/mass market (US) • #1 in net seg fund sales Individual Wealth • One of Canad
Slide 18: Individual Wealth Management
Individual Wealth – Net income Individual Wealth – Net fund entries† ($M) ($B) Wealth 12.5% 10-yr 227 11.6% 10-yr 4.5 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 19: US Expansion
US EXPANSION Proportion of total core net income from US Operations Individual Insurance Dealer Services — First acquisition in — 2018: Began leveraging 20% 2008 our expertise in this — Entry into the US new US segment market in our core — Leading position by 15% area of expertise acquiring IAS in 2
Slide 20: IFRS 17 and IFRS 9 – Transition outlook (2023)
IFRS 17 and IFRS 9 – Transition outlook (2023) iA is in a favourable position, mostly thanks to a strong and flexible balance sheet under IFRS 4 From near-neutral to favourable ▪Core EPS† level ▪Book value impacts expected1 on following KPIs ▪Core EPS† growth ▪Solvency ratio† at IFRS 9 and IFRS 17 t
Slide 21: IFRS 17 – Contractual Service Margin (CSM) is a key metric
IFRS 17 – Contractual Service Margin (CSM) is a key metric CSM is not all “free profit” and should be considered with Risk Adjustment (RA) Balance Sheet1 IFRS 17 CONCEPTUAL CONSTRUCT Equity Equity Expected future revenues to cover non-attributable expenses (Similar to IFRS 17 Current Estimate) Expec
Slide 22: iA's evolution over the last decade
iA’s evolution over the last decade SUSTAINED BUSINESS GROWTH IMPROVED VALUE CREATION MOMENTUM RISK PROFILE ✓ 10% CAGR since IPO for: ✓ Strengthened Canadian leading ✓ Derisking for low interest rate - Net income position in: environment - Book value - Individual Insurance Through important shift to
Slide 23: Industry leader for share price growth
Industry leader for share price growth +1,485% Total return (Share price growth with dividend reinvested, Mar. 21, at year-end) 2022 Best performance of Canadian lifecos 0% IPO1 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 23 1 Feb. 3,
Slide 24: Strong and steady record of value creation
Strong and steady record of value creation IAG Book value per share IAG book value +467% and dividends paid per share CAGR1 (at year-end) 1-year +12% 5-year +9% 10-year +9% Best performance Since 2000 +10% Peers of Canadian lifecos +258% Dec. 31, 2021 0% June 30, 2004 2005 2006 2007 2008 2009 2010 2
Slide 25: Appendices
Appendices Financial
Slide 26: 2021 Key results
2021 Sustained growth momentum Solid profitability, continued very strong sales momentum, KEY RESULTS robust financial position and value creation for shareholders Core ROE† P&D† Core EPS † $8.31 14.2% At top of 2021 $16.6B +17% YoY +18% YoY guidance AUM/AUA† Solvency ratio† Book value1 $221.2B 134%
Slide 27: Impressive profit growth since IPO in 2000
Impressive profit growth since IPO in 2000 Net income attributed to common shareholders 830 ($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 28: 2021 results vs. guidance
2021 results vs. guidance Results compare favourably with guidance – Core ROE above guidance in 2021 2021 guidance 2021 result Core EPS1, † $7.60 to $8.20 in 2021 $8.31 Core ROE1, † (trailing 12 months) 12.5% to 14.0% 14.2% Impact of new business† (strain) -5% to 10% 3% Solvency ratio† 110% to 116%
Slide 29: 2021: Solid sales results
2021: Solid sales results Continued momentum throughout a very strong year ($M, unless otherwise indicated) 2021 2020 Variation Continued momentum and leading position in the mass/mid market from: ▪ Strong and diversified distribution networks ► Individual Insurance 286 223 28% ▪ High-performance di
Slide 30: 2021: Solid sales results (cont.)
2021: Solid sales results (cont.) Continued momentum throughout a very strong year ($M, unless otherwise indicated) 2021 2020 Variation ► Individual Wealth Management General fund - sales 891 836 7% Momentum continued with sales reaching $891M in 2021 #1 in the industry in 2021 – Net sales nearly do
Slide 31: IFRS 17 – CSM is a key metric
IFRS 17 – Contractual Service Margin (CSM) is a key metric Core earnings† to be aligned with IFRS 17 reported earnings Not part of reported Included in reported CSM evolution or core earnings and core earnings over a period1 + Interest accretion +/– Changes – in estimates Amortization to P&L + New b
Slide 32: IFRS 17 – CSM is a key metric
IFRS 17 – Contractual Service Margin (CSM) is a key metric CSM creation from new business: an important component of organic capital generation† Impacting No impact on CSM evolution capital generation capital generation2 over a period1 + Interest accretion +/– Changes – in estimates Amortization to
Slide 33: 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% 130% 130% 131% 126% 127% acquisition 128% 124% 124% 125% Macro Macro Macro Macro Macro Macro Macro Macro Macro Macro Macro Macro impact impact im
Slide 34: Dividend to common shareholders
Dividend to common shareholders Dividend of 62.5¢ per share payable in Q1/2022 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 35: Shaping the iA ecosystem of the future
Shaping the iA ecosystem of the future Digital initiatives to contribute Continuity of digital strategy goes beyond IT: Growth to 1%+ of annual core EPS growth An integrated approach based on our four strategic axes Deepening a 360 client view Client • Provide a high-level client/advisor experience
Slide 36: ESG ambition
ESG ambition ENVI To contribute to sustainable growth and wellbeing for Reduction of our GHG emissions RON our clients, employees, partners, investors and communities MENT by 20% per employee by 2025 Now and in the future, achieve gender equity of SO CIAL between 40% and 60% in iA Financial Group se
Slide 37: ESG — A cohesive, mobilizing vision
ESG — A cohesive, mobilizing vision • Carbon neutral since the beginning of 2020 ENVI • Focused on initiatives aimed at reducing our GHG emissions RON • $80.5 million of new investments in renewable energy in 2020 MENT • Majority of our 40+ properties in Canada are BOMA BEST or LEED certified • Part
Slide 38: 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 38
Slide 39: Investor Relations
Investor Relations Contact Marie-Annick Bonneau Tel.: 418-684-5000, ext. 104287 Marie-Annick.Bonneau@ia.ca Next Reporting Dates Q1/2022 - May 12, 2022 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,
Slide 40: 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 41: 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 42: 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 43: 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 44: 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 45: 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 46: 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 47: 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 48: 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.
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