Ia Financial Corporation Inc. · TSX:IAG
Ia Financial — Non-Deal Roadshow (November 2019)
27 slides from Ia Financial's roadshow presentation, Nov 27, 2019
Slide 1: Sustainable Growth
SUSTAINABLE GROWTH Moving forward with our strategy Denis Ricard President and CEO Jacques Potvin EVP, CFO and Chief Actuary Corporate presentation November 27, 2019
Slide 2: Table of contents
Table of contents 3 Solid fundamentals 11 Capital sensitivity 19 Sustainability 4 EPS guidance 12 Capital deployment 20 Share price and book value 5 Earnings visibility 13 Acquisitions 21 Book value vs. peers 6 9M/2019 highlights 14 Interest rates 22 Dividend 7 Business growth 15 Reserves 23 2019 gu
Slide 3: Solid fundamentals to sustain our growth
Solid fundamentals to sustain our growth EARNINGS VISIBILITY BUSINESS GROWTH BALANCE SHEET • Known to deliver on targets • Sustaining outperformance through • Healthy, strong and balanced • Committed to 10%+ annual EPS diversified activities • Flexible with low debt ratio growth • Distribution
Slide 4: Steadily delivering on growing targets
Steadily delivering on growing targets Committed to minimum 10% annual EPS growth EPS Guidance (diluted) $6.15 $5.60 $5.05 $5.75 $4.60 $5.20 $4.20 $4.65 $3.80 $4.20 $3.40 $3.80 $3.10 $3.40 +10% Target $3.00 range $2.50 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Reported EPS $3.22 $3.57 $3.97
Slide 5: Earnings visibility with various profit improvement initiatives
Earnings visibility with various profit improvement initiatives Multiple levers to reach or exceed our 10% EPS growth target 3% 1% 2% + + + ≥ 6% profit distribution acquisitions 10% organic improvement (US and annual growth a core distribution) EPS growth in all lines of function business and NCIB 2
Slide 6: 9M/2019 highlights – A very good year so far
9M/2019 highlights – A very good year so far EPS at top of guidance – Growing assets and P&D – Solid capital position • Reported EPS of $4.81 and trailing-12-month ROE of 12.7%1 • Core EPS of $4.66, above $4.25-$4.55 guidance • Expected profit up 12% YoY and total policyholder experience is positive
Slide 7: Sustaining outperformance through business growth
Sustaining outperformance through business growth Solid execution during 9M/2019 • Individual Insurance: 1st in number of policies sold • Dealer Services: One of top 2 providers in Canada & 8% YoY sales growth Insurance • Special Markets Solutions: 10% YoY sales growth • iA Auto and Home: 8% YoY sal
Slide 8: Canadian market is not mature for iA
Canadian market is not mature for iA Growing our Canadian franchise faster than peers Net Income Growth 2016-2018 Sales/Net Premium Ratio (Canadian lines of business1) Canadian Individual Insurance (last seven quarters as at Sept. 30, 2019) 10% 12% 8% Big 3 iA -8% Big 3 iA 8 1 Reported net income to
Slide 9: US strategy – Moving toward a meaningful business
US strategy – Moving toward a meaningful business Steadily and successfully growing on two fronts Operating Profit 2 divisions in the US (CAD$M) 50 Individual Insurance Dealer Services 38 Simplified life insurance Extended warranties (mostly final expense and and other ancillary products 21 +13% sim
Slide 10: Flexible balance sheet and better-than-ever capital position
Flexible balance sheet and better-than-ever capital position Strong capital generation: Profit is the best source of capital Target range of 110%-116% Solvency ratio 134% Appropriate for iA’s risk profile Leverage ratio 22.4% Low ratio brings flexibility Organic generation ~$235M In line with annual
Slide 11: Solvency ratio variations since new capital regime inception
Solvency ratio variations since new capital regime inception Impact from macro variations is minimal despite macro volatility 134% 126% 127% 122% 124% 120% 120% 119% Macro Macro Macro Macro Macro Macro Macro impact impact impact impact impact impact impact --- -0.5% --- +1% -1.5% --- --- (markets) (
Slide 12: Capital deployment
Capital deployment Preference for growing through acquisitions Capital for Total potential by increasing leverage ratio and reducing solvency ~$1.3B deployment ratio, in accordance with regulatory constraints • Individual Insurance Acquisitions US businesses • Dealer Services MAIN • Becoming a meani
Slide 13: Acquisitions – iA has a disciplined and step approach
Acquisitions – iA has a disciplined and step approach Vehicle dealer services business is a good example Entered US Acquiring know-how since 1999 Adding scale organically and through acquisitions market with 7 acquisitions (˜$300M) over the last 20 years DAC acquisition Warranties Full-service
Slide 14: Interest rates
Interest rates Working to eliminate earnings sensitivity to IRR variations before IFRS-17 Low interest rate impacts Negative impact on net income of 10 bps decrease in initial reinvestment rate (IRR) (at end of period, $M) • Impact at year-end on reserves; 35 usually offset by management IRR sensiti
Slide 15: Key reserve assumptions are well positioned
Key reserve assumptions are well positioned Recent favourable P/H experience bodes well for 2019 assumption review Policyholder 2018 year-end assumption review experience 9M/19 2018 2017 2016 2015 2014 (excluding market impact) No material issue in 2018 (EPS impact in cents1) URR is 15 bps ahead of
Slide 16: Distribution as a business in Canada
Distribution as a business in Canada An integral part of our profit growth strategy Owning distribution is a strategic advantage Leveraging our knowledge and expertise; our know-how spans the full distribution spectrum Our platform can support the integration of multiple acquisitions The backbon
Slide 17: Business drives technology
Business drives technology Digital investments must create value Focus: • Improving customer experience • Supporting distribution and value of advice • Improving organizational efficiency Client Enablers for key digital initiatives: • Systems and technologies • Operating models and partnerships
Slide 18: $39.9B investment portfolio
$39.9B investment portfolio Well-diversified and high-quality Data as at Sept. 30, 2019 Distribution of Investment Portfolio IMPAIRED INVESTMENTS AND PROVISIONS Gross impaired investments $24.0M Provisions for impaired investments $11.1M Corporate bonds 31% Net impaired investments $12.9M Net impair
Slide 19: Sustainability: Building for the long term
Sustainability: Building for the long term Our guidelines Committed to incorporate ESG factors into our investment decisions Signatory of United Nations PRI 1. Ensure the financial wellbeing of our clients 2. Effectively manage risks 3. Follow high standards of governance Scoring 95% for quality of
Slide 20: Share price and book value
Share price and book value Low price-to-book ratio $67.423 IAG Share Price Historical CAGR: 11.5% $50.794 Book Value Per Share $8.44 1 Historical CAGR: 9.6% $7.8752 At year-end 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20193 Price/ 2.17 2.22 1.72
Slide 21: iA shareholder value creation vs. peers
iA shareholder value creation vs. peers iAG Book Value Per Share +359% and Dividends Paid (end of period) Peers +202% Sept. 30, June 30, 2019 20041 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 21 1 Chosen as the earliest comparable start date.
Slide 22: Dividend to common shareholders
Dividend to common shareholders Dividend of 45¢ per share payable in Q4/19 Steady increases every 3rd quarter First lifeco in Canada to resume dividend increases after the financial crisis 22
Slide 23: 2019 guidance
2019 guidance iA Financial Corporation EPS1 ROE1 11.0% to 12.5% 6% annual target Q1 $1.25 to $1.35 Strain (quarterly range from 0% to 15%) Q2 $1.45 to $1.55 Solvency 110% to 116% ratio Q3 $1.55 to $1.65 Q4 $1.50 to $1.60 Effective 20% to 22% tax rate 2019 $5.75 to $6.15 Payout 25% to 35% ratio (mid-
Slide 24: Investor Relations
Investor Relations Contact Marie-Annick Bonneau Tel.: 418-684-5000, ext. 104287 Marie-Annick.Bonneau@ia.ca Next Reporting Dates Q4/2019 - February 13, 2020 Q1/2020 - May 7, 2020 Q2/2020 - July 30, 2020 Q3/2020 - November 4, 2020 For information on our earnings releases, conference calls and related
Slide 25: Non-IFRS financial information
Non-IFRS financial information iA Financial Corporation reports its financial results and statements in accordance with International Financial Reporting Standards (IFRS). It also publishes certain financial measures that are not based on IFRS (non-IFRS). A financial measure is considered a non-IFRS
Slide 26: Forward-looking statements
Forward-looking statements This presentation 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”, “suspe
Slide 27: Invested in you.
INVESTED IN YOU.