Ia Financial Corporation Inc. · TSX:IAG
Ia Financial — Q3 2024 Earnings Presentation
45 slides from Ia Financial's earnings presentation, Nov 6, 2024
Slide 1: Third Quarter 2024 Conference Call
Third Quarter 2024 Conference Call Presenters: Denis Ricard, President and CEO Éric Jobin, EVP, CFO and Chief Actuary November 6, 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 (hereinafter referred to as the “Company”) reports its financial results and statements in accordance with International Financial Reporting Standards (“IFRS”). The Company also publishes certain financial measures or ratios that ar
Slide 4: Table of Contents
TABLE OF CONTENTS 2 Forward-looking statements APPENDICES 3 Non-IFRS and add. measures 22 Book value 33 Insurance, Canada 8 Q3/2024 key results 23 Dividend 34 Insurance, Canada (cont.) 9 Sales - Insurance, Canada 24 Operational efficiency initiatives 35 Wealth Management 10 Sales - Wealth Management
Slide 5: Agenda
AGENDA ▪ Key results Denis Ricard ▪ Business growth President and CEO ▪ Financial targets ▪ Profitability Éric Jobin ▪ Financial strength EVP, CFO and Chief Actuary ▪ Questions & Answers 5
Slide 6: Denis Ricard
Denis Ricard President and CEO 6
Slide 7: Present on the Call
PRESENT ON THE CALL Denis Ricard Éric Jobin President and CEO EVP, Chief Financial Officer and Chief Actuary Alain Bergeron Stephan Bourbonnais EVP, Chief Investment Officer EVP, Wealth Management Renée Laflamme Pierre Miron EVP, Individual Insurance, EVP, Chief Growth Officer Savings and Retirement
Slide 8: Q3/2024 Profitable Growth Key Results
Q3/2024 — PROFITABLE GROWTH KEY RESULTS $2.93 Core EPS†† 17% YoY growth ROE expansion Q3 annualized ROE of 16.9% Q3 annualized core ROE†† of 16.6% $2.99 EPS Higher than core EPS†† Meeting medium-term Continued strong sales performance 15.3% Core ROE3,4,†† target in Canada and the US Highest result s
Slide 9: Q3/2024 Business Growth – Insurance, Canada
Q3/2024 BUSINESS GROWTH – Insurance, Canada HIGHLIGHTS INDIVIDUAL INSURANCE GROUP INSURANCE (sales1 in $M) Employee Plans and Special Markets Individual Insurance (premiums and deposits1,2 in $M) • Solid performance reflecting the strength of all our distribution networks, the excellent performance
Slide 10: Q3/2024 Business Growth – Wealth Management
Q3/2024 BUSINESS GROWTH – Wealth Management INDIVIDUAL SEGREGATED FUNDS INDIVIDUAL MUTUAL FUNDS (gross sales in $M) (gross sales in $M) 1,333 HIGHLIGHTS 882 385 Individual Wealth +51% 289 +33% • Solid seg. fund inflows of $781M for Q3 YoY YoY reflecting the strength of our distribution networks and
Slide 11: Q3/2024 Business Growth – US Operations
Q3/2024 BUSINESS GROWTH – US Operations HIGHLIGHTS INDIVIDUAL INSURANCE DEALER SERVICES Individual Insurance 1 (sales in US$M) (sales in US$M) • Record sales, driven by good results in the final expense and middle/family markets and the addition of sales from the Vericity acquisition 68 286 • Custom
Slide 12: Financial Targets Summary
FINANCIAL TARGETS SUMMARY 2024 (9 months) Medium-term guidance3 Core EPS†† YoY growth 16.5% 10%+ annual average growth Core ROE††,1 15.3% 15%+ Solvency ratio2 140% 120% operating target Organic capital generation $485M $600M+ in 2024 Core dividend payout ratio†† 30% 25% to 35% 1 Presented on a trail
Slide 13: Growth-Driven Strategy – Capital Deployment Priorities
GROWTH-DRIVEN STRATEGY – FOCUSED ON SHAREHOLDER VALUE Capital deployment priorities Recent initiatives 1 Profitable organic growth • Supporting strong business growth and digital transformation Investing in digital evolution • New sales generating ROE above 15% to propel growth $1.0B 2 30+ acquisiti
Slide 14: Éric Jobin
Éric Jobin EVP, Chief Financial Officer and Chief Actuary 14
Slide 15: Q3/2024 Profitability and Financial Strength
Q3/2024 PROFITABILITY AND FINANCIAL STRENGTH Q3/2024 Q3/2023 YoY HIGHLIGHTS Profitability ROE expansion Core EPS†† (diluted) $2.93 $2.50 +17% • Q3 annualized ROE of 16.9% EPS (diluted) $2.99 $0.54 +454% †† • Q3 annualized core ROE of 16.6% Core earnings† $277M $256M +8% Strong increase in insurance
Slide 16: Q3/2024 Performance – Operating Business Segments
Q3/2024 PERFORMANCE – Operating business segments INSURANCE, CANADA WEALTH MANAGEMENT US OPERATIONS Q3/2024 ($M) Q3/2024 ($M) Q3/2024 ($M) 106 106 31 95 99 21 +20% +16% +36% +29% -13% -3% YoY YoY YoY YoY YoY YoY Net income 2 Core earnings† Net income 2 Core earnings† Net income2 Core earnings† Stron
Slide 17: Q3/2024 Performance – Investment and Corporate
Q3/2024 PERFORMANCE – Investment and Corporate INVESTMENT NET INCOME1 AND CORE EARNINGS† RECONCILIATION Q3 net investment result2 Q3/2024 ($M) (before taxes) is 119% higher QoQ Q3 core net investment result2 ($M, unless otherwise indicated) Q3/2024 Q3/2023 114 (before taxes) is 3% higher QoQ 80 Good
Slide 18: Robust Capital Position
ROBUST CAPITAL POSITION Supported by ongoing organic capital generation Capital available 1 Q3/2024 MOVEMENTS Solvency ratio1 Solvency ratio for deployment3,4,6 (end of period) Beginning of quarter 141% $1.1B Core earnings† net of dividends 2.5% $200M 145% 142% 141% 140% 8 Organic CSM growth (excl.
Slide 19: Question & Answer Session
Question & Answer Session tan rou
Slide 20: Investor Event February 24, 2025
INVESTOR EVENT l February 24, 2025 l Toronto 20
Slide 21: Appendices
APPENDICES 21
Slide 22: Book Value per Share
1 BOOK VALUE PER SHARE $71.63 at September 30, 2024 P/BV ratio of 1.56 at September 30, 2024 CAGR 1-year +10% 5-year +7% IFRS 17 IFRS 4 10-year +8% IFRS 9 Since 2000 +9% March 31, 20002 $8.44 IPO 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Slide 23: Dividend to Common Shareholders
DIVIDEND TO COMMON SHAREHOLDERS $0.90 Dividend of 90¢ per share payable in Q4/2024 $0.80 $0.70 $0.60 $0.50 $0.40 Largest dividend increase (+29%) $0.30 among Canadian lifecos following the lifting of regulatory restrictions in November 2021 $0.20 Steady increases every 3 quarters First lifeco in Can
Slide 24: Operational Efficiency Initiatives
OPERATIONAL 2024 corporate expenses1 on target EFFICIENCY INITIATIVES First 3 quarters of 2024 in line with quarterly targeted run rate of $65M ± $5M for core other expenses 2022+ Corporate segment Q1/24 Q2/24 Q3/24 In-depth top-down review of projects ($ million) Other expenses $67 $68 $61 Core oth
Slide 25: Core Reconciliation
Q3/2024 RECONCILIATION OF EARNINGS ACCORDING TO THE DOE 1 Insurance, Wealth ($M, unless otherwise indicated) US Operations Investment Corporate TOTAL Canada Management YoY Expected insurance earnings 154 91 53 — — 298 19% Impact of new insurance business (7) — (2) — — (9) + Core insurance experience
Slide 26: Q3/2024 Drivers of Earnings
Q3/2024 DRIVERS OF EARNINGS Third quarter Year-to-date at September 30 ($M, unless otherwise indicated) 2024 2023 YoY 2024 2023 YoY CORE EARNINGS† ACCORDING TO THE DRIVERS OF EARNINGS1 - CONSOLIDATED Core insurance service result Risk adjustment release 73 61 20% 206 179 15% CSM recognized for servi
Slide 27: Market-Related Impacts
MARKET-RELATED IMPACTS METHODOLOGY1 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 28: Investment Portfolio
INVESTMENT PORTFOLIO Resilient portfolio composed of high-quality assets and diversified exposures Bonds - Corporates - BB and lower: 0.4% Investment properties: 4% ü Fixed income ALM1-oriented portfolio Mortgages - Insured: 2% ▪ see further details on slide 29 Bonds - Corporates - Mortgages - Unins
Slide 29: $31.3B Bond Portfolio
$31.3B 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 19.4% Governments 27.1% • 69% are corporate bonds and 31% are government & Utilities 25.9% mu
Slide 30: High-Quality Investment Properties & Mortgages Portfolios
HIGH-QUALITY INVESTMENT PROPERTIES & MORTGAGES PORTFOLIOS $1.6B INVESTMENT PROPERTIES $1.3B MORTGAGES ▪ Capital-efficient investment properties ▪ Disciplined underwriting process ▪ Average lease terms remaining of ~9 years 1 Combined portfolios ▪ Large portion rented to governments ▪ 66% of mortgage
Slide 31: Immediate Sensitivities
IMMEDIATE SENSITIVITIES For more information on sensitivities, please refer to the quarterly and annual Management’s Discussion IMMEDIATE IMPACT and Analysis (MD&A) as well as the “Forward-looking statements” section in this document Equity Equity Net income 1 OCI3 and Solvency ratio CSM OCI only3 a
Slide 32: Core Earnings Sensitivities
CORE EARNINGS SENSITIVITIES † REVENUES & EXPENSES DIRECTLY IMPACT ON IMPACTED BY THE LEVEL OF FUTURE QUARTER as at Sept. 30, 2024 Segment Variation CORE EARNINGS1,† Description of shock EQUITY MARKETS AND INTEREST $M post-tax RATES +5% 0.5 Immediate +5% change in market values Investment ▪ Expected
Slide 33: Insurance, Canada
INSURANCE, CANADA Third quarter Year-to-date at September 30 ($M, unless otherwise indicated) 2024 2023 Variation 2024 2023 Variation Individual Insurance Sales1 Minimum premiums2 89 84 6% 256 245 4% Excess premiums3 14 12 17% 34 29 17% Total 103 96 7% 290 274 6% Gross premiums 675 621 9% 1,969 1,83
Slide 34: Insurance, Canada (cont.)
INSURANCE, CANADA (cont.) Third quarter Year-to-date at September 30 ($M, unless otherwise indicated) 2024 2023 Variation 2024 2023 Variation Group Insurance Employee Plans Sales - New business during the year 18 10 80% 73 44 66% Net premiums 358 330 8% 1,048 981 7% Premium equivalents and deposits
Slide 35: Wealth Management
WEALTH MANAGEMENT Third quarter Year-to-date at September 30 ($M, unless otherwise indicated) 2024 2023 Variation 2024 2023 Variation Individual Wealth Management Sales - Gross sales Segregated funds 1,333 882 51% 3,881 2,744 41% Mutual funds 385 289 33% 1,339 1,138 18% Insured annuities and other s
Slide 36: Wealth Management (cont.)
WEALTH MANAGEMENT (cont.) Third quarter Year-to-date at September 30 ($M, unless otherwise indicated) 2024 2023 Variation 2024 2023 Variation Group Savings and Retirement Sales - Gross sales Accumulation contracts Other accumulation contracts 30 23 30% 113 60 88% Segregated funds 559 430 30% 1,857 1
Slide 37: US Operations
US OPERATIONS Third quarter Year-to-date at September 30 ($M, unless otherwise indicated) 2024 2023 Variation 2024 2023 Variation Individual Insurance Sales ($US) 68 44 55% 159 128 24% Sales ($CAN) 92 58 59% 216 171 26% Net premiums ($CAN) 266 161 65% 618 473 31% Dealer Services Sales ($US) 286 248
Slide 38: Net Premiums, Premium Equivalents and Deposits
NET PREMIUMS, PREMIUMS EQUIVALENTS AND DEPOSITS Net premiums, premium equivalents and deposits ($M, unless otherwise indicated) Q3/2024 YoY ($B) Insurance, Canada 16.6 16.8 Individual Insurance 543 9% 15.4 14.7 Group Insurance 508 10% 14.0 4.2 4.1 4.0 Dealer Services 171 2% 11.4 3.9 4.9 iA Auto and
Slide 39: Asset Growth
ASSET GROWTH Total AUM and AUA (assets under management and assets under administration, end of period, $B) Assets under management and assets under administration 249.7 September 30 ($B, unless otherwise indicated) QoQ YoY 2024 221.2 218.9 Assets under management 197.5 197.4 189.4 125.7 General fun
Slide 40: CSM Movement Analysis
1 CSM MOVEMENT ANALYSIS ($M, unless otherwise indicated) Q3/2024 Q3/2023 YoY CSM - Beginning of period 6,471 5,740 Q3/2024 highlights Organic CSM movement Impact of new insurance business 187 134 40% Organic CSM increase of $100M Organic financial growth 83 59 41% • Strong 40% increase of impact of
Slide 41: Investor Relations
INVESTOR RELATIONS Contact Marie-Annick Bonneau Tel.: 418-931-0142 VP-Investor-Relations@ia.ca Next Reporting Dates Q4/2024 - February 18, 2025 after market close Conference call on February 19, 2025 Q1/2025 - May 8, 2025 Conference call on May 8, 2025 Q2/2025 - August 5, 2025 after market close Con
Slide 42: Footnotes for Key Results and Capital Position
Footnotes for slide 8 on Key Results 1 Capital available for deployment is a supplementary financial measure. Refer to the “Non-IFRS and Additional Financial Measures” section of this document and the Q3/2024 Management's Discussion and Analysis for more information. 2 According to the proposed revi
Slide 43: Acronyms
ACRONYMS 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: Acronyms (cont.)
ACRONYMS (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: 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.