Ia Financial Corporation Inc. · TSX:IAG
Ia Financial — Non-Deal Roadshow (November 2015)
33 slides from Ia Financial's roadshow presentation, November 2015
Slide 1: Building a Strong Future
Building a Strong Future Yvon Charest President and Chief Executive Officer René Chabot Executive Vice-President, CFO and Chief Actuary November 2015 1
Slide 2: Nine-Month 2015 Results
Nine-Month 2015 Results Highlighted by strong underlying operating performance ► Core earnings at top of guidance provided to investors Profit ► Favourable policyholder experience for retail and group insurance ► Lower strain ratio reflects continuous improvement initiative ► Robust sales momentum i
Slide 3: 2015 Year to Date Is Strong
2015 Year to Date Is Strong Earnings in line to exceed full-year guidance FY Guidance 9M Reported Assessment Earnings $3.80-$4.20 EPS $3.54 EPS Ahead of guidance due to experience 13.5% and tax gains ROE 11.0% to 12.5% Trailing 12 months Improving trend due Strain 30% 29% to product mix Ahead at 221
Slide 4: Estimated 2015 Core EPS
Estimated 2015 Core EPS Management’s expectation is $4.21 ► Actual 9M/15 $3.54 ► Mid-guidance Q4/151 $1.05 Reported EPS $4.59 Items of note Exceptional ► Extraordinary tax gain (Q1 & Q2/15) -36¢ items ► Premium paid on pref. shares redemption (Q1/15) +4¢ ► Hedging gains -4¢ Items greater ► Equity ma
Slide 5: Individual Insurance Strain
Individual Insurance Strain Continuous improvement initiative is yielding results Strain (as a % of sales) 2015 YTD Ahead of 2015 guidance 53% ► Product mix is favourable ► Management initiatives in the US provide benefit 39% Q4/2015 and 2016 27% 29% Work in progress 21% 20% ► New reinsurance treaty
Slide 6: Group Insurance
Group Insurance Year-over-year improvement for Employee Plans is encouraging Operating profit (in $M) 9M/15 profit ► Employee Plans 47 48 48 Generating most of the 44 YoY increase 39 +127% 37 37 YoY ► Dealer Services In line 26 23 23 ► Special Markets Solutions In line 2006 2007 2008 2009 2010 2011
Slide 7: Segregated Funds Are Outpacing Industry
Segregated Funds Are Outpacing Industry Assets of $12.0B at Sept. 30, 2015 (excludes group assets) Gross Sales Net Sales (in $B) (in $M) ► Ranked 1st in net sales for 9M/2015 in Canada 1.4 340 ► Renewed momentum 1.2 generated by new 289 distribution and marketing strategy 1.0 (89) 2013 2014 9M/15 20
Slide 8: Performance of Key Business Segments
Performance of Key Business Segments By contribution to operating profit % of total Business Segment operating profit1 ► Life insurance 52% ► Segregated funds 15% ► Mutual funds & private wealth management 12% ► Distribution affiliates 5% ► Group insurance & savings 16% 8 1 Last twelve months operat
Slide 9: Q3 LTM ROE – Many Businesses Above Target Range
Q3 LTM ROE – Many Businesses Above Target Range Overall: 13.5% iA Insurance: 12.1% iA Wealth: 17.6% 45% Bubble size = contribution to net income 26% 21% 19% 19% 18% 17% 13% 12% ROE target range: 11.0% to 12.5% 3% 1% 9
Slide 10: Preferred Distribution Partner Network
Preferred Distribution Partner Network Recent acquisitions reflect continued focus on adding distribution % of sales via Business segment Sales force dedicated channels1,2 1,900 career agents Life insurance 58% 700 dedicated MGAs (Canada) • Other MGAs 1,900 career agents Adjustable disability
Slide 11: Top-line by Line of Business
Top-line by Line of Business Overall generally favourable trend Sales YoY Line of Business Assessment (9M/2015) variation ► Retail Life Insurance Canada $125M +10% Very positive US $56M +39% Very positive INSURANCE ► Group Insurance Employee plans $54M -15% Improving Dealer Services $422M +4
Slide 12: Dominant Retail Positions in Canada
Dominant Retail Positions in Canada A strong performer in competitive markets Life insurance #2 ► Number of policies sold (9M/2015) INSURANCE Adjustable disability 23% ► Market share for new business (9M/15) Creditor insurance (car dealers) Top 2 ► Market share Segregated funds #1 ► Net sales (9M/15
Slide 13: iA Insurance Businesses
iA Insurance Businesses Still opportunity for profit and ROE improvement Total net premiums Net income iA Insurance ($M) ($M) Q3 LTM ROE 12.1% 2,950 279 ► Includes individual life and adjustable disability, auto & home 2,299 and group businesses ► Two key profit initiatives: improve 169 Employee Pla
Slide 14: iA Insurance
iA Insurance Growing each business to its full potential Net premiums1 YoY Strategic Focus Segment variation (9M/2015) Life (Canada) $974M +1% ► Adding new products and distribution Retail Insurance Adjustable $38M +11% ► Expanding outside Quebec Disability Life (US) $156M +31% ► Building strong foo
Slide 15: iA Wealth Businesses
iA Wealth Businesses Continue to improve profit by moving AUA to AUM AUM and AUA Net income iA Wealth ($B) ($M) Q3 LTM ROE 17.6% 72.3 128 ► Includes manufacturing and distribution businesses for retail and group wealth ► Canada’s 2nd largest non-bank 92 advice channel: > 2,800 client- 49.2 facing ad
Slide 16: iA Wealth Businesses
iA Wealth Businesses Many initiatives to build out platform and sales Assets YoY Segment (Sept 30, 2015) Strategic Focus variation ► Benefiting from Canada-wide Seg funds $12.0B +0.3B$ wholesaling team ► Increasing product depth ► Growing AUM with iA affiliates AUM Mutual funds $10.5B -1.4B$ ► New p
Slide 17: Individual Wealth Management
Individual Wealth Management Operating profit and margin by segment OPERATING AVERAGE (Last twelve months PROFIT1 ASSETS OPERATING as of Sept. 30, 2015) PROFIT % of MARGIN $M $B total Segregated & 72.7 16% 13.0 56 bps general funds Mutual funds 56.3 12% 14.82 38 bps Distribution 21.7 5% 32.7 7 bps a
Slide 18: Balance Sheet Flexibility
Balance Sheet Flexibility ~$800M in excess and available capital for deployment At (end of Sept. 30, Target Agency Rating Outlook period) 2015 Solvency 221% A+ (post-CTL 175-200% S&P Stable ratio acquisition) (Strong) Leverage A+ 24.5% < 35% A.M. Best Stable ratio (Superior) Coverage 9.5x > 5x DBRS
Slide 19: Targeted Acquisition Strategy
Targeted Acquisition Strategy To build on our position as a diversified financial services player HIGH Retail wealth manufacturing and distribution US Dealer Services Auto and home insurance Group businesses Life insurance LOW Institutional wealth management 19
Slide 20: A Leader in Value Creation
A Leader in Value Creation Growth in book value per share Book value per share (end of period) iA +152% Big 3 +53% Sept. 301 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1.8 1.7 1.9 2.0 1.1 1.4 1.5 1.0 1.1 1.5 1.3 1.1 iA price/book value per share 20 1 As of June 30, 2015 for one of t
Slide 21: Supplementary Information
Supplementary Information 21
Slide 22: Individual Insurance
Individual Insurance A dominant position in a core business segment Sales1 (in $M) ► Distribution includes 1,900 career agents and 700 dedicated MGAs in Canada ► Sales growing rapidly in Canada 216 and US, as well as for individual disability product in Canada 187 181 +17% YoY ► Market share of 8.9%
Slide 23: US Individual Insurance
US Individual Insurance Heading for a record year Sales 56 +39% (in C$M) 54 YoY 1 of top 5 insurers in our niche # 1 carrier of 10 key IMOs ► Strong foothold established in 2010 with acquisition of American-Amicable ► Distribution via Independent Marketing Organizations (IMOs) ► Target segment is gr
Slide 24: Individual Insurance – Adjustable Disability
Individual Insurance – Adjustable Disability A dominant position with 23% market share for new business Sales (in $M) 11.2 ► Leveraging iA distribution network 9.8 +21% YoY ► High potential for growth across Canada ► 90% of premiums are adjustable ► Low capital requirements 5.3 Rest of Canada Quebec
Slide 25: Group Insurance – Employee Plans
Group Insurance – Employee Plans Goal is to be the leader among 2nd tier players Sales (Direct premiums, in $M) ► Enhance market positioning without undermining recent profit initiatives ► Continuing our geographic expansion in Canada ► Traditionally a high-ROE business for iA 72 70 54 2010 2011 201
Slide 26: Group Insurance – Dealer Services
Group Insurance – Dealer Services One of top 2 players in Canada for creditor insurance Sales ► Maximize product shelf (in $M) and penetration 536 ► 3,200 exclusive car dealers across Canada and growing 422 +4% YoY ► Focused on one-stop shopping for dealers 261 Creditor Insurance P&C Warranties 2010
Slide 27: Group Insurance – Special Markets Solutions
Group Insurance – Special Markets Solutions Market leader with few competitors Sales (in $M) 180 ► Over 725 distribution partners Canada-wide ► Niche insurance markets +4% underserved by traditional 133 131 YoY group carriers ► Capital-light, short-term guarantees 2010 2011 2012 2013 2014 9M/15 27
Slide 28: Group Savings and Retirement
Group Savings and Retirement A good year for accumulation contracts Accumulation Assets under Contract Sales Management (in $M) (in $B) ► Business growth focus is on accumulation contracts 895 11.4 ► 4th in Canada in H1 2015 for 11.3 812 sale of new accumulation 740 product plans (versus 6th in 10.2
Slide 29: iA Auto and Home
iA Auto and Home Still room for growth in Canada’s most profitable market Sales (Direct premiums, in $M) ► Growing faster than industry in Canada’s most profitable 233 market : Québec +6% ► Leveraging iA’s dedicated 195 YoY distribution network together with direct sales force 155 ► Direct selling a
Slide 30: Investor Relations
Investor Relations Contact Grace Pollock Tel. 418-780-5945 grace.pollock@ia.ca Reporting Dates Q4/2015 – February 11, 2016 Q1/2016 – May 5, 2016 Q2/2016 – August 4, 2016 Investor Day – June 14, 2016 For information on our earnings releases, conference calls and related disclosure documents, consult
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
IAB Financial Group INVESTED IN YOU.
iA Financial Group — Non-Deal Roadshow (November 2015) on 6ix