Ia Financial Corporation Inc. · TSX:IAG
Ia Financial — Q1 2024 Earnings Presentation
44 slides from Ia Financial's earnings presentation, May 9, 2024
Slide 1: First Quarter 2024 Conference Call
First Quarter 2024 Conference Call Presenters: Denis Ricard, President and CEO Éric Jobin, EVP, CFO and Chief Actuary May 9, 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 22 Book value 34 Insurance, Canada (cont.) 8 Q1/2024 key results 23 Dividend 35 Wealth Management 9 Sales - Insurance, Canada 24 Capital deployment priorities 36 Wealth Management (cont.) 10 Sales - Wealth Managem
Slide 5: Agenda
AGENDA ▪ Key results Denis Ricard ▪ Financial targets President and CEO ▪ Business growth ▪ 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 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, Ch
Slide 8: Q1/2024 Key Results
Q1/2024 KEY RESULTS Core EPS up 17% YoY with core ROE progressing toward medium-term target of 15%+ Strong business growth momentum, with very good sales results Robust capital position, supported by continued organic capital generation $2.44 Core EPS† 14.6% 1 Core ROE† Up 17% YoY Close to 15%+ medi
Slide 9: Q1/2024 Business Growth – Insurance, Canada
Q1/2024 BUSINESS GROWTH – Insurance, Canada HIGHLIGHTS INDIVIDUAL INSURANCE GROUP INSURANCE (sales† in $M) Employee Plans and Special Markets Individual Insurance 2,† (premiums and deposits in $M) • Similar to a solid quarter a year earlier 89 89 • #1 in number of individual insurance policies issue
Slide 10: Q1/2024 Business Growth – Wealth Management
Q1/2024 BUSINESS GROWTH – Wealth Management INDIVIDUAL SEGREGATED FUNDS INDIVIDUAL MUTUAL FUNDS † (gross sales in $M) (gross sales† in $M) 1,278 HIGHLIGHTS 1,033 Individual Wealth 479 486 +24% +1% • Positive combined net sales of $414M for YoY YoY the quarter reflecting increased investor confidence
Slide 11: Q1/2024 Business Growth – US Operations
Q1/2024 BUSINESS GROWTH – US Operations HIGHLIGHTS INDIVIDUAL INSURANCE DEALER SERVICES Individual Insurance † (sales in US$M) (sales† in US$M) • Strong sales growth performance momentarily tempered by a timing issue related to the recognition of new sales 41 42 248 • Customized portfolio of product
Slide 12: Financial Targets Summary
FINANCIAL TARGETS SUMMARY 1 Medium-term 2022 2023 Q1/2024 guidance Core EPS YoY growth 6.5% 5.2% 17.3% 10%+ annual average growth 2 Core ROE 14.2% 14.4% 14.6% 15%+ Solvency ratio3 126% 145% 142% 120% operating target $550M $600M $600M+ Organic capital generation (Q1/22: $100M) (Q1/23: $125M) $130M i
Slide 13: Éric Jobin
Éric Jobin EVP, Chief Financial Officer and Chief Actuary 13
Slide 14: Q1/2024 Profitability and Financial Strength
Q1/2024 PROFITABILITY AND FINANCIAL STRENGTH Q1/2024 Q1/2023 YoY HIGHLIGHTS Profitability Core EPS up 17% YoY and core ROE1 of 14.6% • Expected insurance earnings: +9% YoY Core EPS $2.44 $2.08 +17% • Core insurance service result: +21% YoY Core earnings $243M $217M +12% • Core net investment result:
Slide 15: Q1/2024 Performance – Operating business segments
Q1/2024 PERFORMANCE – Operating business segments INSURANCE, WEALTH US CANADA MANAGEMENT OPERATIONS Core earnings ($M) Core earnings ($M) Core earnings ($M) 92 95 19 17 74 +24% +46% +12% 65 YoY YoY YoY Q1/23 Q1/24 Q1/23 Q1/24 Q1/23 Q1/24 Strong contribution from seg funds and annuities US Individual
Slide 16: Q1/2024 Performance – Investment and Corporate
Q1/2024 PERFORMANCE – Investment and Corporate INVESTMENT Core net investment result of $109M (core earnings before taxes and other expenses) CORE EARNINGS RECONCILIATION Core earnings ($M) • Unfavourable impact of decline in interest rates during the fourth quarter of 2023 ($M, unless otherwise ind
Slide 17: Robust Capital Position
ROBUST CAPITAL POSITION Supported by ongoing organic capital generation Capital available Q1/2024 MOVEMENTS Solvency ratio1 for deployment2 Solvency ratio1 (end of period) Beginning of quarter 145% $1.6B 145% 142% Core earnings net of dividends 2.0% $161M Organic CSM growth (excl. seg funds) 0.5% $3
Slide 18: Operational Efficiency Initiatives
OPERATIONAL Q1/24 corporate expenses on target EFFICIENCY INITIATIVES Corporate core other expenses 2022+ ($M pre-tax) In-depth top-down review of projects 72 70 66 62 2023-2024 57 Completion of regulatory projects (IFRS transition and Expecting 2024 corporate expenses Quebec’s Law 25 on privacy) an
Slide 19: Sensitivity Reduction to Interest Rate Variations
SENSITIVITY REDUCTION Q1/24 INTEREST RATE TO INTEREST RATE SENSITIVITY REDUCTION ACTIONS VARIATIONS OBJECTIVES • For core earnings to be a better representation of the underlying recurring earning power IMPACT OF INTEREST RATE VARIATIONS ON FUTURE QUARTER CORE EARNINGS1 ($M post-tax) ACHIEVED THROUG
Slide 20: Question & Answer Session
Question & Answer Session 20
Slide 21: Appendices
APPENDICES Din Gro
Slide 22: Book Value per Share
BOOK VALUE PER SHARE $68.93 at March 31, 2024 P/BV ratio of 1.22 at March 31, 2024 CAGR 1-year +7% 8.3% YoY growth 5-year +7% excluding the impact of share buybacks (NCIB) IFRS 4 IFRS 17 10-year +8% IFRS 9 Since 2000 +9% March 31, 20001 $8.44 IPO 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201
Slide 23: Dividend to Common Shareholders
DIVIDEND TO COMMON SHAREHOLDERS Dividend of 82¢ per share $0.80 payable in Q2/2024 $0.70 $0.60 $0.50 $0.40 Largest dividend increase (+29%) among Canadian lifecos $0.30 following the lifting of regulatory restrictions in November 2021 $0.20 Steady increases every 3 quarters First lifeco in Canada to
Slide 24: Capital Deployment Priorities
GROWTH-DRIVEN STRATEGY FOCUSED ON STRONG SHAREHOLDER VALUE Capital deployment priorities Recent initiatives $1.5B 1 Profitable organic growth • Digital transformation progressing well on many levels Investing in digital evolution • Support of sales growth for all business units to propel growth 2 Ca
Slide 25: Core Reconciliation
Q1/2024 CORE DOE AND CORE RECONCILIATION BY SEGMENT Insurance, Wealth ($M, unless otherwise indicated) US Operations Investment Corporate TOTAL Canada Management YoY Expected insurance earnings 129 83 39 — — 251 9% Impact of new insurance business (12) (1) (5) — — (18) DRIVERS OF EARNINGS + Core ins
Slide 26: Q1/2024 Drivers of Earnings
Q1/2024 DRIVERS OF EARNINGS† First quarter ($M, unless otherwise indicated) 2024 2023 YoY DRIVERS OF EARNINGS - CORE - CONSOLIDATED Core insurance service result Risk adjustment release 66 59 12% CSM recognized for services provided 164 147 12% + Expected earnings on PAA insurance business 21 24 (13
Slide 27: 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 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: 3% ▪ see further details on slide 29 Bonds - Corporates - Mortgages - Unins
Slide 29: Bond Portfolio
$29.5B BOND PORTFOLIO High-quality and conservative portfolio Distribution by industry sector Distribution by category of issuer (Corporate bonds) BOND PORTFOLIO IS 71% OF TOTAL PORTFOLIO Financial services 19% Governments 28% • 69% are corporate bonds and 31% are government & Utilities 27% municipa
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 1 ▪ Average lease terms remaining of ~9 years Combined portfolios ▪ Large portion rented to governments ▪ 67% of mortgage
Slide 31: Immediate Sensitivities Under IFRS 17
IMMEDIATE SENSITIVITIES UNDER IFRS 17 For more information on sensitivities, please refer to IMMEDIATE IMPACT the quarterly and annual Management’s Discussion and Analysis (MD&A) Equity Net income Equity OCI and Solvency ratio CSM (non-core) OCI only as at March 31, 2024 net income $M post-tax $M po
Slide 32: Core Earnings Sensitivities
CORE EARNINGS SENSITIVITIES REVENUES & EXPENSES DIRECTLY IMPACTED BY THE LEVEL OF EQUITY MARKETS AND INTEREST RATES IMPACT ON as at March 31, 2024 Variation FUTURE QUARTER Description of shock ▪ Expected return on non-fixed income (NFI) CORE EARNINGS1 asset investments $M post-tax ▪ CSM recognition
Slide 33: Insurance, Canada
INSURANCE, CANADA First quarter ($M, unless otherwise indicated) 2024 2023 Variation Individual Insurance Sales1 Minimum premiums2 80 82 (2%) Excess premiums3 9 7 29% Total 89 89 —% Gross premiums 635 593 7% Net premiums 516 483 7% Number of policies issued Life insurance only 37,164 37,968 (2%) Lif
Slide 34: Insurance, Canada (cont.)
INSURANCE, CANADA (cont.) First quarter ($M, unless otherwise indicated) 2024 2023 Variation Group Insurance Employee Plans Sales - New business during the year 30 21 43% Net premiums 339 325 4% Premium equivalents and deposits 69 60 15% Special Markets Sales - Gross premiums 106 91 16% Net premiums
Slide 35: Wealth Management
WEALTH MANAGEMENT First quarter ($M, unless otherwise indicated) 2024 2023 Variation Individual Wealth Management Sales - Gross sales Segregated funds 1,278 1,033 24% Mutual funds† 486 479 1% Insured annuities and other savings products 581 718 (19%) Total 2,345 2,230 5% Sales - Net sales Segregated
Slide 36: Wealth Management (cont.)
WEALTH MANAGEMENT (cont.) First quarter ($M, unless otherwise indicated) 2024 2023 Variation Group Savings and Retirement Sales - Gross sales Accumulation contracts† Other accumulation contracts 29 18 61% Segregated funds 774 528 47% Total 803 546 47% Insured annuities (general fund) 1,2,† 115 233 (
Slide 37: US Operations
US OPERATIONS First quarter ($M, unless otherwise indicated) 2024 2023 Variation Individual Insurance† Sales ($US) 42 41 2% Sales ($CAN) 56 56 —% Net premiums ($CAN) 173 154 12% Dealer Services† Sales ($US) 248 230 8% Sales ($CAN) 334 311 7% Net premiums ($CAN ) 110 120 (8%) Premium equivalents ($CA
Slide 38: Premiums and Deposits
PREMIUMS AND DEPOSITS Net premiums, premium equivalents and deposits† ($M, unless otherwise indicated) Q1/2024 YoY ($B) Insurance, Canada 16.6 16.8 Individual Insurance 516 7% 15.4 Group Insurance 506 8% 14.0 4.2 4.1 4.0 Dealer Services 128 10% 11.4 3.9 iA Auto and Home1 124 17% 10.4 4.1 3.9 Q4 3.1
Slide 39: Asset Growth
ASSET GROWTH AUM/AUA (assets under management and administration†, end of period, $B) 229.3 Assets under management and administration 221.2 218.9 March 31 197.5 197.4 ($B, unless otherwise indicated) QoQ YoY 189.4 2024 Assets under management 114.5 109.7 108.3 95.8 97.7 General fund1 52.2 —% 7% AUA
Slide 40: CSM Movement Analysis
CSM MOVEMENT ANALYSIS† Q1/2024 highlights ($M, unless otherwise indicated) Q1/2024 Q1/2023 YoY Organic CSM1 increase of $51M • $75M organic financial growth CSM - Beginning of period 5,925 5,574 • Higher CSM recognized in P&L for services provided Organic CSM movement1 • $18M experience losses mainl
Slide 41: 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 42: 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 43: Investor Relations
INVESTOR RELATIONS Contact Marie-Annick Bonneau Tel.: 418-931-0142 Marie-Annick.Bonneau@ia.ca Next Reporting Dates Q2/2024 - August 6, 2024 after market close Conference call on August 7, 2024 Q3/2024 - November 5, 2024 after market close Conference call on November 6, 2024 Q4/2024 - February 18, 20
Slide 44: 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.