17% YoY increase in core EPS, strong business growth and
robust capital position
The results presented
below are for iA Financial Corporation Inc. ("iA Financial
Corporation" or the "Company"), the holding company that owns 100%
of the common shares of
Industrial Alliance Insurance and Financial Services Inc. ("iA
Insurance"). The results for iA Insurance are presented in a
separate section on page 7 of this document.
|
FIRST QUARTER HIGHLIGHTS – iA Financial
Corporation
- Core EPS† of $2.44, up
17% YoY, and trailing-12-month core ROE† of 14.6%, close
to medium-term target of 15%+
- Book value per common share reaching $68.93 at March 31,
2024, up 8% over 12 months (excluding share buyback
impact)
- Strong sales momentum, leading to solid 11% YoY increase in
assets (AUM and AUA)† and 8% YoY increase in premiums
and deposits
- Robust solvency ratio† of 142%, with organic capital
generation of $130M in Q1 and
$1.5B of deployable
capital† at March 31,
2024
- 40%+ reduction in core earnings sensitivity to interest rate
variations as at March 31, 2024
- NCIB program amended in May to increase the maximum number of
common shares that may be purchased and cancelled to
8%1
QUEBEC
CITY, May 9, 2024 /CNW/ - For the first quarter
ended March 31, 2024, iA
Financial Corporation (TSX: IAG) recorded core diluted earnings per
common share (EPS)† of $2.44, which is 17%
higher than the same period in 2023. Core return on common
shareholders' equity (ROE)† for the trailing twelve
months was 14.6%, close to the Company's medium-term target of
15%+. On a reported basis, which includes the impact of volatile
items (primarily short-term macroeconomic variations), first
quarter net income attributed to common shareholders
was $233 million, EPS was $2.34 and ROE†
for the trailing twelve months was 10.9%. The solvency
ratio† of 142% at March 31, 2024 is well
above the Company's operating target of 120%.
"2024 got off to a strong start in terms of profitability and
business growth, demonstrating the dynamism of our business units.
Segregated fund sales, which reached almost $1.3 billion, were particularly noteworthy, and
testify to the strength of our leading position in Canada," commented Denis Ricard, President and CEO of
iA Financial Group. "As we continue to invest in growing all
our businesses, our robust capital position, fuelled by ongoing
strong organic capital generation, allows us to increase the
maximum number of repurchases authorized under our share buyback
program. We can thus create and return value to our shareholders
while pursuing acquisition opportunities in an active and
disciplined way."
"Profitability was very good in the first quarter, with a 17%
core EPS increase over 12 months, driven by solid wealth management
results, lower claims at iA Auto and Home and favourable mortality
experience," added Éric Jobin, Executive Vice‑President, CFO
and Chief Actuary. "We have also successfully reduced the
sensitivity of our core results to interest rate variations by
almost half through model refinements, such as making the
accounting approach for certain liabilities more consistent with
the approach used for assets. With these improvements, our core
results will better represent our underlying recurring earning
power and, combined with our recent operational efficiency
initiatives, position us well for the quarters ahead."
Earnings
Highlights
|
First
quarter
|
2024
|
2023
|
Variation
|
Net income attributed
to shareholders (in millions)
|
$234
|
$273
|
(14 %)
|
Less: dividends on
preferred shares issued by a subsidiary (in millions)
|
($1)
|
($3)
|
|
Net income attributed
to common shareholders (in millions)
|
$233
|
$270
|
(14 %)
|
Weighted average number
of common shares (in millions, diluted)
|
99.5
|
104.5
|
(5 %)
|
Earnings per common
share (diluted)
|
$2.34
|
$2.58
|
(9 %)
|
Core
earnings†
|
243
|
217
|
12 %
|
Core earnings per
common share (diluted)†
|
$2.44
|
$2.08
|
17 %
|
_______________________________________
|
1
|
Please refer to the
separate press release issued on May 9, 2024 for more
details.
|
|
|
†
|
This item is a non-IFRS
measure; see the "Non-IFRS and Additional Financial Measures"
section in this document for relevant information about such
measures.
|
Other Financial
Highlights
|
March 31, 2024
|
December 31,
2023
|
March 31, 2023
|
Return on common
shareholders' equity†
|
10.9 %
|
11.6 %
|
9.0 %
|
Core return on common
shareholders' equity†
|
14.6 %
|
14.4 %
|
14.6 %
|
Solvency
ratio†
|
142 %
|
145 %
|
149 %
|
Book value per
share2
|
$68.93
|
$66.90
|
$64.69
|
Assets under management
and administration† (in
billions)
|
$229.3
|
$218.9
|
$207.1
|
______________________________________
|
2
|
Book value per common
share is a financial measure calculated by dividing the common
shareholders' equity by the number of common shares outstanding at
the end of the period; all components of this measure are IFRS
measures.
|
|
|
†
|
This item is a non-IFRS
measure; see the "Non-IFRS and Additional Financial Measures"
section in this document for relevant information about such
measures.
|
Unless otherwise indicated, the results presented in this
document are in Canadian dollars and are compared with those from
the corresponding period last year.
This news release presents non-IFRS measures used by the
Company when evaluating its results and measuring its performance.
These non-IFRS measures are not standardized financial measures and
are not included in the financial statements. Some of these
measures have no IFRS equivalents. For relevant information about
non-IFRS measures used in this document, including information
about the Company's core earnings,† see the "Non-IFRS
and Additional Financial Measures" section in the Management's
Discussion and Analysis for the period ended
March 31, 2024, which is hereby incorporated by
reference, and is available for review at
sedarplus.ca or on iA Financial Group's website
at ia.ca.
ANALYSIS OF EARNINGS
Reported and core earnings
The Company recorded core earnings†
of $243 million in the first quarter of 2024, which
compares to $217 million for the first quarter of 2023. Core
diluted earnings per common share (EPS)† of $2.44 in the first quarter is 17% higher than the
result for the same period in 2023. Core return on common
shareholders' equity (ROE)† for the trailing twelve
months was 14.6% at March 31, 2024, close to the
Company's medium-term target of 15%+.
On a reported basis, which includes the impact of volatile items
(primarily short-term macroeconomic variations), quarterly net
income attributed to common shareholders was $233 million and
compares with $270 million in the first quarter of 2023. EPS
was $2.34 and ROE for the trailing twelve months was 10.9% at
March 31, 2024.
An analysis of these results is presented in the following
sections.
Earnings
|
(In millions of
dollars, unless otherwise indicated)
|
First
quarter
|
2024
|
2023
|
Variation
|
Net income to common
shareholders
|
233
|
270
|
(14 %)
|
Earnings per common
share (EPS) (diluted)
|
$2.34
|
$2.58
|
(9 %)
|
Core
earnings
|
243
|
217
|
12 %
|
Core EPS
(diluted)
|
$2.44
|
$2.08
|
17 %
|
Return on common
shareholders' equity (ROE)†
|
March 31, 2024
|
December 31,
2023
|
March 31, 2023
|
Reported ROE (trailing
twelve months)
|
10.9 %
|
11.6 %
|
9.0 %
|
Core ROE†
(trailing twelve months)
|
14.6 %
|
14.4 %
|
14.6 %
|
Reported earnings and core
earnings reconciliation
The following table presents net income to common shareholders
and the adjustments, divided into six categories, that account for
the difference between reported and core earnings.
Core earnings of $243 million in
the first quarter is derived from net income to common shareholders
of $233 million and a total
adjustment of $10 million from:
- the favourable market-related impacts that differ from
management's best estimate assumptions and that total $9 million, as the impact of favourable equity
variations was partially offset by investment property value
adjustments;
- the favourable impact of an assumption change resulting from
the update of credit assumptions used to develop the interest rate
scale (this recurring update is expected to be carried out in the
first quarter of each year under IFRS 17) ($5 million);
- the impact of acquisition-related intangible assets of
$17 million;
- $3 million for the charge for the
Surex minority shareholders' sell option and for expenses related
to the Vericity acquisition; and
- the impact of non-core pension expense of $4 million.
Reported earnings
and core earnings reconciliation
|
(In millions of
dollars, unless otherwise indicated)
|
First
quarter
|
2024
|
2023
|
Variation
|
Net income to common
shareholders
|
233
|
270
|
(14 %)
|
Core earnings
adjustments (post tax)
|
|
|
|
Market-related
impacts
|
(9)
|
(70)
|
|
Assumption changes and
management actions
|
(5)
|
—
|
|
Charges or proceeds
related to acquisition or disposition of a business,
including acquisition,
integration and restructuring costs
|
3
|
1
|
|
Amortization of
acquisition-related finite life intangible assets
|
17
|
16
|
|
Non-core pension
expense
|
4
|
—
|
|
Other specified
unusual gains and losses
|
—
|
—
|
|
Total
|
10
|
(53)
|
|
Core
earnings
|
243
|
217
|
12 %
|
Core earnings by business segment
The first quarter core earnings result of $243 million is described in the following
paragraphs by business segment.
Core earnings by
business segment
|
(In millions of
dollars, unless otherwise indicated)
|
Q1/2024
|
Q4/2023
|
Variation
|
Q1/2023
|
Variation
|
Insurance,
Canada
|
92
|
78
|
18 %
|
74
|
24 %
|
Wealth
Management
|
95
|
91
|
4 %
|
65
|
46 %
|
US
Operations
|
19
|
26
|
(27 %)
|
17
|
12 %
|
Investment
|
86
|
95
|
(9 %)
|
108
|
(20 %)
|
Corporate
|
(49)
|
(54)
|
(9 %)
|
(47)
|
4 %
|
Total
|
243
|
236
|
3 %
|
217
|
12 %
|
Insurance, Canada –
This operating business segment includes all Canadian insurance
activities offering a wide range of life, health, auto and home
insurance coverage, as well as vehicle warranties, to individuals
and groups. First quarter core earnings for this business segment
were $92 million, which is 24% higher
than the result for the same period in 2023. The expected insurance
earnings recorded was 3% higher than a year ago and the impact of
new insurance business was slightly higher than a year ago as a
result of new sales and the renewal period for some groups in Group
Insurance. Strong core insurance experience gains were recorded
during the quarter as a result of: 1) lower auto and home
protection claims at iA Auto and Home due to a mild winter, but
also due to the favourable impact of premium increases implemented
in 2023; 2) favourable mortality experience in individual and group
insurance; and 3) all other main experience results being near
expectations. Core non-insurance activities were slightly lower
than in the same period of 2023, mainly due to a non-recurring gain
recorded in the first quarter of 2023.
Wealth Management – This operating business segment
includes all the Company's wealth management activities offering a
wide range of savings and retirement solutions to individuals and
groups. In this business segment, core earnings of $95 million
for the first quarter were much higher than the result of
$65 million a year earlier. This solid performance is the
result of a 32% year‑over‑year increase for both the core insurance
service result for segregated funds and the core non-insurance
activities. This growth is partly due to the increase in the CSM
recognized for services provided due to favourable macroeconomic
variations and strong net sales over the last 12 months. Also, a
solid performance once again was recorded from the distribution
affiliates, arising mainly from higher net commissions and better
margins. Lastly, core other expenses were lower than a year
ago.
US Operations – This operating business segment
includes all the Company's U.S. activities offering individuals a
range of life insurance and vehicle warranty products. First
quarter core earnings for this business segment were $19 million and are higher
than $17 million for the same period in 2023. The
favourable impact of lower core other expenses and lower taxes was
partly offset by more onerous contracts in Individual
Insurance and, in Dealer Services, a slightly less profitable
business mix and the impact of lower 2023 sales. Looking forward,
management actions to improve profitability, including rate
adjustments and a reduction in the number of employees at the
beginning of the second quarter, should lead to a gradual
improvement in results for Dealer Services.
† This
item is a non-IFRS measure; see the "Non-IFRS and Additional
Financial Measures" section in this document for relevant
information about such measures.
|
Investment – This accounting segment includes the
Company's investment and financing activities, except for the
investment activities of the wealth distribution affiliates. In
this business segment, core earnings of $86 million for the first quarter compare
to $108 million a year earlier and $95
million the previous quarter. The decrease is essentially
the result of the decline in interest rates during the fourth
quarter of 2023. Recall that the core net investment result for a
given quarter is dependent on the yield curve at the beginning of
the quarter. Looking forward, the core net investment result should
be more stable following actions implemented mainly during the
first quarter of 2024 to reduce sensitivity to variations in
interest rates, as well as credit spreads. These actions include
model refinements to improve consistency of assets and liabilities
when rates change. By being more stable, core earnings will better
reflect the Company's robust underlying operating performance.
Please refer to the Risk Management and Sensitivities –
Update section in the Management's Discussion and Analysis as
at March 31, 2024 for the updated
sensitivities. Lastly, credit experience was slightly
unfavourable (-$1 million pre-tax) mainly due to
more downgrades than upgrades in the bond portfolio.
Corporate – This accounting segment reports all
expenses that are not allocated to other segments, such as expenses
for certain corporate functions. These expenses include, among
other things, investments in the digital transformation and the
enhanced employee experience to support talent retention, M&A
prospecting activities, digital data and security projects and
regulatory compliance projects. During the first quarter of 2024,
this segment recorded after-tax expenses of $49 million, which compares with $47 million
in the first quarter of 2023. This quarter's result, which is lower
than $54 million in the previous
quarter as a result of recent expense management initiatives, is
derived from core other expenses before taxes of $66 million, which is in line with the 2024
quarterly expectation of $65 million
plus or minus $5 million.
CSM (contractual service margin) – The contractual
service margin, or CSM, is an IFRS 17 metric that gives an
indication of future profits and that is factored as available
capital in the calculation of the solvency ratio.3
However, this metric is not comprehensive as it does not consider
required capital, non‑insurance business, PAA4 insurance
business or the risk adjustment, which is also a metric of future
profit. The organic CSM movement is a component of organic
capital generation, a more comprehensive metric, and represents the
ongoing CSM value creation calculated before the impact of items
that add undue volatility to the total CSM, such as macroeconomic
variations. In the first quarter, the CSM increased organically
by $51 million. This result was supported by the positive
impact of new insurance business of $158
million in the first quarter and the organic financial
growth of $75 million. These
favourable items were partially offset by CSM recognized for
services provided of $164 million.
Also, an experience loss of $18 million was recorded as
favourable mortality experience was more than offset by
unfavourable policyholder behaviour in a number of business units,
several small unfavourable items and the impact of slightly reduced
MERs granted to some clients due to the increase in their total
segregated fund assets, as net deposits in the first quarter were
higher than expected. The net favourable non-organic CSM movement
of $183 million during the first quarter was mainly due
to the positive impacts of macroeconomic variations, the assumption
review and management actions and currency variations. As
a result, the total CSM increased by $234 million
during the quarter to stand at $6,159 million at
March 31, 2024, an increase of 7% over the last
twelve months.
An analysis of results according to the financial statements
and additional analysis are presented in the Management's
Discussion and Analysis as at March 31,
2024. They supplement the information presented above by
providing additional indicators for assessing financial
performance.
Business growth – Total assets under
management and administration† increased by 11% year
over year, amounting to $229.3 billion at
March 31, 2024, and premiums† and deposits of
$4.9 billion were up 8% compared
to the same period last year.
In Insurance, Canada, the
Company maintained a leading position in the Canadian individual
insurance market for number of policies sold,5 and all
business units posted good sales growth, in particular iA Auto and
Home, Employee Plans and Special Markets. In Individual Wealth
Management, the Company recorded total net fund inflows of
$414 million and ranked first for
both gross and net sales of segregated funds in the first
quarter.6 Sales of insured annuities and other savings
products remained elevated, although clients began increasing their
allocation in products such as segregated funds which have higher
expected profit margins for the Company. Also, Group Savings and
Retirement recorded a solid performance in the first quarter, with
sales up 18% over the same period a year ago. In US Operations, the
Dealer Services business unit showed good 8% sales†
growth, notably supported by improving vehicle inventories and
lower vehicle prices, and Individual Insurance sales were up year
over year.
________________________________________
|
3
|
The CSM, excluding the
CSM for segregated funds, counts as Tier 1 capital in the solvency
ratio calculation.
|
4
|
Premium Allocation
Approach.
|
5
|
According to the latest
Canadian data published by LIMRA.
|
6
|
Source: Investor
Economics, February 2024.
|
|
|
†
|
This item is a non-IFRS
measure; see the "Non-IFRS and Additional Financial Measures"
section in this document for relevant information about such
measures.
|
INSURANCE, CANADA
- In Individual Insurance, first quarter sales†
totalled $89 million, similar to a
solid quarter a year earlier. The Company maintained a leading
position in the Canadian market for the number of policies
issued.7 Sales growth for participating life and living
benefit products was particularly strong. The Company's extensive
distribution networks, the performance of its digital tools as well
as its comprehensive and distinctive range of products continued to
be key growth drivers.
- In Group Insurance, first quarter sales† of
$30 million in Employee Plans were up
43% compared to the same period last year, reflecting an increase
in the volume of quoting activities. Moreover, premiums8
increased by 6% year over year, benefiting from sales and good
retention of in-force business. Special Markets sales†
were up 16% year over year, reaching $106
million, driven particularly by strong sales growth in
Critical Illness products.
- For Dealer Services, total sales† ended the
first quarter at $148 million, up 3%
over the same period last year. This growth was supported by strong
sales† of Guaranteed Asset Protection (GAP) and
ancillary products. In spite of the rather challenging environment
that continues to impact vehicle affordability, the Company has
experienced sustained sales growth thanks to its leading position
in Canada, its broad and
comprehensive product mix and its extensive distribution network,
among other things.
- At iA Auto and Home, direct written premiums†
reached $114 million for the quarter,
a robust increase of 16% from a year earlier due to strong growth
in sales and higher premiums.
WEALTH MANAGEMENT
- In Individual Wealth Management, segregated funds
started the year strong with gross sales† of nearly
$1.3 billion, up 24% year over year,
and net sales† of $557
million. The Company maintained its position as the industry
leader in gross and net segregated fund sales† in the
first quarter, as per the most recent industry data.9
This solid result was driven by the strength of its distribution
networks, the performance of its digital tools, and by increasing
investor confidence in the financial markets. Increased insured
annuities and other savings products generated sales† of
$581 million in the first quarter, a
very good performance that compares to a record quarter a year
earlier, although clients began increasing their allocation in
products such as segregated funds which have higher expected profit
margins for the Company. As for mutual funds, the Company recorded
gross sales† of $486
million for the quarter, up 1% year over year, along with
net outflows of $143 million against
the backdrop of continuing industry-wide challenges.
- Group Savings and Retirement sales† were up
18% year over year at $918 million
for the first quarter, a solid performance driven by strong
accumulation product sales.
US OPERATIONS
- In Individual Insurance, sales† of
US$42 million in the first quarter
were up 2% from a year earlier, supported by the unit's
distribution channels and product range. The growth pace appears to
be slightly lower due to a temporary timing issue related to the
recognition of new sales.
- In Dealer Services, first quarter sales†
amounted to US$248 million, up 8%
over the same period last year. While reduced consumer
affordability continued to hamper industry vehicle sales, improved
inventories and lower vehicles prices have led to renewed emphasis
on ancillary product sales.
_______________________________________
|
7
|
According to the latest
Canadian data published by LIMRA.
|
8
|
Net premiums, premiums
equivalents and deposits.
|
9
|
Source: Investor
Economics, February 2024.
|
ASSETS UNDER MANAGEMENT AND ADMINISTRATION
Assets under management and administration† ended the
first quarter at $229.3 billion, up
11% over the 12-month period, and up 5% during the quarter,
mainly driven by favourable market conditions and solid net fund
inflows, in particular from segregated funds.
NET PREMIUMS, PREMIUM EQUIVALENTS AND DEPOSITS
Net premiums, premium equivalents and deposits†
totalled $4.9 billion in the first
quarter, a solid increase of 8% over the same period last year. All
business units contributed to this strong performance, particularly
Individual Wealth Management.
FINANCIAL POSITION
The solvency ratio† was 142% at
March 31, 2024, compared with 145% at the end of the
previous quarter, and 149% a year earlier. This result is well
above the Company's operating target of 120%. The decrease during
the first quarter is mainly due to the unfavourable impacts of
macroeconomic variations and other non-organic items. As for the
positive contribution of organic capital generation of $130 million, it was more than enough to cover
the capital deployment, which is essentially the $115 million in share buybacks (NCIB). The
acquisition announced on October 3,
2023 of Vericity, a U.S. life insurance carrier and digital
agency, is expected to reduce the Company's solvency ratio by three
percentage points at closing, which is anticipated in the second
quarter of 2024. Therefore, on a pro-forma basis at
March 31, 2024, the solvency ratio is
139%. The Company's financial leverage ratio at March 31, 2024 was 14.3%.10
_________________________________________
|
10
|
Calculated as:
Debentures, preferred shares issued by a subsidiary and other
equity instruments/(Capital structure + post-tax contractual
service margin (CSM)†).
|
Organic capital generation and capital available for
deployment† – The Company
organically generated approximately $130 million in
additional capital during the first quarter. This is in line with
projections to exceed the minimum target of $600 million in 2024. At
March 31, 2024, the capital available for deployment was
assessed at $1.5 billion, before the acquisition of
Vericity to be completed in the near future.
Book value – The book value per common share
was $68.93 at
March 31, 2024, up 3% during the quarter and 7% year over
year. Excluding the impact of the NCIB, the increase over the last
twelve months is 8%.
Normal Course Issuer Bid – In the first
quarter of 2024, the Company redeemed and cancelled 1,316,276
outstanding common shares for a total value of $115 million under the NCIB program. A total
of 2,298,992 shares, or approximately 2.3% of the issued
and outstanding common shares as at October 31, 2023,
were redeemed between November 14,
2023 and March 31, 2024.
Dividend – The Company paid a quarterly
dividend of $0.8200 to common
shareholders in the first quarter of 2024. The Board of
Directors approved a quarterly dividend of $0.8200 per share payable during the second
quarter of 2024, the same as in the first quarter, on the
outstanding common shares of iA Financial Corporation. This
dividend is payable on June 17, 2024 to the shareholders
of record at May 24, 2024.
Dividend Reinvestment and Share
Purchase Plan – Registered shareholders wishing to
enrol in iA Financial Corporation's Dividend Reinvestment and Share
Purchase Plan (DRIP) so as to be eligible to reinvest the next
dividend payable on June 17, 2024 must ensure that the
duly completed form is delivered to Computershare no later than
4:00 p.m. on May 16, 2024.
Enrolment information is provided on iA Financial Group's website
at http://ia.ca/investorrelations, under the Dividends
section. Common shares issued under iA Financial Corporation's
DRIP will be purchased on the secondary market and no discount will
be applicable.
Appointments – Two new members
joined the Board of Directors.
- On January 9, 2024, iA Financial
Group announced the appointment of Alka
Gautam to the Board of Directors of iA Financial Corporation
Inc., effective January 17, 2024. Ms.
Gautam has more than 20 years of experience in the reinsurance and
insurance industry.
- On November 9, 2023, iA Financial
Group announced the appointment of Martin
Gagnon to the Board of Directors of iA Financial Corporation
Inc. and of Industrial Alliance Insurance and Financial Services
Inc., effective January 17, 2024. Mr.
Gagnon has over 25 years of experience in banking, asset management
and brokerage firms.
Awards – On February 13, 2024, Denis
Ricard was honoured for the third year in a row as the
winner in the "Life and health insurers" category in the Top of
Quebec's Financial Industry
Leaders awards organized annually by the newspaper Finance et
Investissement. Stéphan Bourbonnais was the winner in the
"Full-service brokerage firms" category.
Credit ratings – During the first
quarter, the S&P Global and DBRS Morningstar agencies confirmed
with a stable outlook all ratings of iA Financial Corporation
and its related entities, including Industrial Alliance Insurance
and Financial Services Inc.
2023 annual documents publication – On
March 28, 2024, iA Financial Group
released its Annual Report, Proxy Circular, Annual Information Form
and Sustainability Report. The latter outlines, among other things,
the Company's environmental, social and governance initiatives and
achievements for 2023, as well as projects and objectives for the
year to come. Highlights of the Sustainability Report include:
- Completion of its first materiality assessment to consult with
stakeholders
- Update of the climate strategy, with two new targets for
reducing GHG emissions by 2035 that are more specific and adapted
to iA's reality
- Results of the first voluntary self-identification campaign
completed by 73% of iA's employees in Canada
- Talent Development and Employee Experience program
- Contributions totalling $9.4
million to various aid organizations in Canada and the
United States.
Subsequent to the first quarter:
- Acquisition of assets of Laurentian Bank Securities'
retail full-service investment broker division – On
April 4, 2024, iA Financial Group's
subsidiary, iA Private Wealth (iAPW), agreed to acquire the retail
full-service investment broker division of Laurentian Bank
Securities Inc., which represents over $2
billion in assets. The transaction is expected to close by
the end of the third quarter, pending regulatory approvals, and is
not expected to have a material impact on iA Financial Group's
solvency ratio.
- Annual Meeting – The Annual Shareholder Meeting of iA
Financial Corporation Inc. will be held virtually on Thursday, May 9, 2024.
- Normal Course Issuer Bid – The Company has obtained the
necessary approvals to increase the maximum number of shares that
can be repurchased under its share buyback program by 3%, thereby
raising this maximum from 5% to 8%. Please refer to the
May 9, 2024 news release for more
information.
- Executive Committee – On May 9,
2024, the Company announced changes to its Executive
Committee. Please refer to the May 9,
2024 news release for more information.
OUTLOOK
Medium-term guidance for iA Financial
Corporation
- Core earnings per common share: target of 10%+ annual average
growth
- Core return on common shareholders' equity (ROE): target of
15%+
- Solvency ratio operating target: target of 120%
- Organic capital generation: target of $600+ million in
2024
- Dividend payout ratio based on core earnings: target range of
25% to 35%
The Company's outlook, including the market guidance provided,
constitutes forward-looking information within the meaning of
securities laws. Although the Company believes that its outlook is
reasonable, such statements involve risks and uncertainties and
undue reliance should not be placed on such statements. Factors
that could cause actual results to differ materially from
expectations include, but are not limited to: insurance, market,
credit, liquidity, strategic, operational and regulatory risks. In
addition, certain material factors or assumptions are applied in
preparing the Company's outlook, including but not limited to:
accuracy of estimates, assumptions and judgments under applicable
accounting policies, and no material change in accounting standards
and policies applicable to the Company; no material variation in
interest rates; no significant changes to the Company's effective
tax rate; no material changes in the level of the Company's
regulatory capital requirements; availability of options for
deployment of excess capital; credit experience, mortality,
morbidity, longevity and policyholder behaviour being in line with
actuarial experience studies; investment returns being in line with
the Company's expectations and consistent with historical trends;
different business growth rates per business unit; no unexpected
changes in the economic, competitive, insurance, legal or
regulatory environment or actions by regulatory authorities that
could have a material impact on the business or operations of iA
Financial Group or its business partners; no unexpected change in
the number of shares outstanding; and the non-materialization of
risks or other factors mentioned or discussed elsewhere in this
document. The Company's outlook serves to provide shareholders,
market analysts, investors, and other stakeholders with a basis for
adjusting their expectations with regard to the Company's
performance throughout the year and may not be appropriate for
other purposes. Additional information about risk factors and
assumptions applied may be found in the "Forward-looking
Statements" section of this document.
FIRST QUARTER HIGHLIGHTS – iA Insurance
Profitability – In the first quarter of
2024, iA Insurance recorded net income attributed to its sole
common shareholder, iA Financial Corporation,
of $260 million compared to $273 million in the
first quarter of 2023. An analysis of results according to the
financial statements and additional analysis are presented in the
Management's Discussion and Analysis as at
March 31, 2024.
Financial position – The solvency
ratio of iA Insurance was 138% at March 31, 2024,
compared with 139% at the end of the previous quarter and
145% a year earlier. The variation in the first quarter is
mainly due to a dividend payment to iA Insurance's sole common
shareholder and the unfavourable impacts of macroeconomic and other
non-organic variations. These items were partly offset by the
positive contribution of organic capital generation.
Dividend – The Board of Directors of iA
Insurance approved a quarterly dividend of $0.2875 per Non-Cumulative Class A Preferred
Share – Series B. In the first quarter of 2024, iA Insurance paid a
dividend of $150 million and the
remaining balance of the unpaid dividend to its sole common
shareholder, iA Financial Corporation. For the second quarter
of 2024, the Board of Directors of iA Insurance approved the
declaration of a dividend of $300 million to its sole
common shareholder, iA Financial Corporation. As a result, a
dividend of $300 million should be
paid, in whole or in part, by iA Insurance to iA Financial
Corporation during the second quarter of 2024.
iA
Insurance
|
|
|
|
Earnings
Highlights
|
First
quarter
|
(In millions of
dollars, unless otherwise indicated)
|
2024
|
2023
|
Variation
|
Net income attributed
to shareholders
|
261
|
276
|
(5 %)
|
Less: dividends on
preferred shares
|
(1)
|
(3)
|
|
Net income attributed
to common shareholder
|
260
|
273
|
(5 %)
|
Other Financial
Highlights
|
(In millions of
dollars, unless otherwise indicated)
|
March 31, 2024
|
December 31,
2023
|
March 31, 2023
|
Total
capital†
|
6,362
|
6,190
|
6,484
|
Solvency
ratio†
|
138 %
|
139 %
|
145 %
|
Appointment – On November 9, 2023, iA Financial Group announced
the appointment of Martin Gagnon to
the Board of Directors of iA Financial Corporation Inc. and of
Industrial Alliance Insurance and Financial Services Inc.,
effective January 17, 2024.
Mr. Gagnon has over 25 years of experience in banking, asset
management and brokerage firms.
Credit ratings – During the first quarter, the
S&P Global and DBRS Morningstar agencies confirmed with a
stable outlook all ratings of iA Financial Corporation and its
related entities, including Industrial Alliance Insurance and
Financial Services Inc.
2023 annual documents publication – On
March 28, 2024, iA Financial Group
released its Annual Report, Proxy Circular, Annual Information Form
and Sustainability Report and iA Insurance also released its
Policyholder Document.
Subsequent to the first quarter:
Acquisition of assets of Laurentian Bank Securities' retail
full-service investment broker division – On
April 4, 2024, iA Financial
Group's subsidiary, iA Private Wealth (iAPW), agreed to acquire the
retail full-service investment broker division of Laurentian Bank
Securities Inc., which represents over $2
billion in assets. The transaction is expected to close by
the end of the third quarter, pending regulatory approvals, and is
not expected to have a material impact on iA Financial Group's
solvency ratio.
Annual Meeting – iA Insurance's annual meeting
will be held virtually on Thursday, May 9, 2024.
Executive Committee – On May 9, 2024, iA Insurance announced changes to
its Executive Committee. Please refer to the May 9, 2024 news release for more
information.
GENERAL INFORMATION
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"). A
financial measure is considered a non-IFRS measure for Canadian
securities law purposes if it is presented other than in accordance
with the generally accepted accounting principles ("GAAP") used for
the Company's audited financial statements. The Company uses
non-IFRS measures when evaluating its results and measuring its
performance. The Company believes that non-IFRS measures provide
additional information to better understand its financial results
and assess its growth and earnings potential, and that they
facilitate comparison of the quarterly and full year results of the
Company's ongoing operations. Since non-IFRS measures do not have
standardized definitions and meaning, they may differ from the
non-IFRS financial measures used by other institutions and should
not be viewed as an alternative to measures of financial
performance determined in accordance with IFRS. The Company
strongly encourages investors to review its financial statements
and other publicly filed reports in their entirety and not to rely
on any single financial measure. These non-IFRS measures are often
accompanied by and reconciled with IFRS financial measures. For
certain non-IFRS measures, there are no directly comparable amounts
under IFRS. This document presents non-IFRS measures used by the
Company when evaluating its results and measuring its
performance.
For relevant information about non-IFRS measures used in this
document, see the "Non-IFRS and Additional Financial Measures"
section in the Management's Discussion and Analysis for the period
ended March 31, 2024, which is hereby incorporated by
reference and is available for review at sedarplus.ca or on iA
Financial Group's website at ia.ca.
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", "expect", "anticipate", "intend", "plan", "believe",
"estimate", and "continue" (or the negative thereof), as well as
words such as "objective", "goal", "guidance", "outlook" and
"forecast", or other similar words or expressions. Such statements
constitute forward-looking statements within the meaning of
securities laws. In this document, forward-looking statements
include, but are not limited to, information concerning possible or
assumed future operating results. These statements are not
historical facts; they represent only expectations, estimates and
projections regarding future events and are subject to change.
Although iA Financial Group believes that the expectations
reflected in such forward-looking statements are reasonable, such
statements involve risks and uncertainties, and undue reliance
should not be placed on such statements. In addition, certain
material factors or assumptions are applied in making
forward-looking statements, and actual results may differ
materially from those expressed or implied in such statements.
Material factors and risks that could cause actual results to
differ materially from expectations include, but are not limited
to: insurance, market, credit, liquidity, strategic, operational
and regulatory risks, such as: general business and economic
conditions; level of inflation; level of competition and
consolidation; changes in laws and regulations, including tax laws
and changes made to capital and liquidity guidelines; actions by
regulatory authorities that may affect the business or operations
of iA Financial Group or its business partners; risks associated
with the regional or global political and social environment; risks
related to climate change including the transition to a low-carbon
economy and iA Financial Group's ability to satisfy
stakeholder expectations on environmental, social and governance
issues; information technology, data and information security
risks, including cyber risks; fraud risk; risks
related to human resources; hedging strategy risks;
iA Financial Group liquidity risk, including the availability
of financing to meet financial commitments at expected maturity
dates; risk of incorrect design, implementation or use of a model;
accuracy of information received from counterparties and the
ability of counterparties to meet their obligations; and the
occurrence of natural or man‑made disasters, international
conflicts, pandemic diseases (such as the COVID-19 pandemic) and
acts of terrorism.
Material factors and assumptions used in the preparation of
financial outlooks include, but are not limited to: accuracy of
estimates, assumptions and judgments under applicable accounting
policies, and no material change in accounting standards and
policies applicable to the Company; no material variation in
interest rates; no significant changes to the Company's effective
tax rate; no material changes in the level of the Company's
regulatory capital requirements; availability of options for
deployment of excess capital; credit experience, mortality,
morbidity, longevity and policyholder behaviour being in line with
actuarial experience studies; investment returns being in line with
the Company's expectations and consistent with historical trends;
different business growth rates per business unit; no unexpected
changes in the economic, competitive, insurance, legal or
regulatory environment or actions by regulatory authorities that
could have a material impact on the business or operations of
iA Financial Group or its business partners; no unexpected
change in the number of shares outstanding; and the
non‑materialization of risks or other factors mentioned or
discussed elsewhere in this document or found in the "Risk
Management" section of the Company's Management's Discussion and
Analysis for 2023 that could influence the Company's performance or
results.
Economic and financial instability in a context of geopolitical
tensions – Unfavourable economic conditions and financial
instability are causing some concern, including interest rate hikes
by central banks to fight inflation. The war in Ukraine, the Hamas-Israel conflict and tension
in China are also causing
instability in global markets. These events, among others, could
lead to reduced consumer and investor confidence, significant
financial volatility and more limited growth opportunities, as well
as testing the Company's ability to anticipate and mitigate
headwinds in its markets and could negatively affect the Company's
financial outlook, results and operations.
Additional information about the material factors that could
cause actual results to differ materially from expectations and
about material factors or assumptions applied in making
forward-looking statements may be found in the "Risk Management"
section of the Management's Discussion and Analysis for 2023, the
"Management of Risks Associated with Financial Instruments" note to
the audited consolidated financial statements for the year ended
December 31, 2023 and elsewhere in iA
Financial Group's filings with the Canadian Securities
Administrators, which are available for review at sedarplus.ca.
The forward-looking statements in this document reflect iA
Financial Group's expectations as of the date of this document.
iA Financial Group does not undertake to update or release any
revisions to these forward‑looking statements to reflect events or
circumstances after the date of this document or to reflect the
occurrence of unanticipated events, except as required by law.
Documents Related to the Financial Results
For a detailed discussion of iA Financial Corporation's and iA
Insurance's first quarter results, investors are invited to consult
the Management's Discussion and Analysis for the quarter ended
March 31, 2024, the related financial statements and
accompanying notes and the Financial Information Package for each
company, all of which are available on the iA Financial Group
website at ia.ca under About iA, in the Investor
Relations/Financial Reports section and on SEDAR+ at
sedarplus.ca.
Conference Call
Management will hold a conference call to present iA Financial
Group's first quarter results on Thursday, May 9, 2024
at 11:30 a.m. (ET). To listen to the conference
call, choose one of the options below:
- Live Webcast: Click here (https://app.webinar.net/YaXyDYmDWL5) or
go to the iA Financial Group website, at ia.ca under
About iA, in the Investor Relations section under the
Events and Presentations tab.
|
- By phone: Click here (https://emportal.ink/3vlBsKw)
and enter your phone number to receive a phone call that will
instantly connect you to the conference call. You can also dial
416-764-8651 or 1-888-390‑0620 (toll-free in North America) fifteen minutes before the
conference call is scheduled to take place and an operator will
connect you.
Annual Meeting
iA Financial Group is holding its Annual Meeting virtually
at 2:00 p.m. (ET) on Thursday, May 9,
2024, at the following web address:
https://www.icastpro.ca/eia240509. A webcast of the meeting as well
as a copy of management's presentation will be available on the
Company's website at ia.ca under About iA, in the
Investor Relations/Events and Presentations section.
About iA Financial Group
iA Financial Group is one of the largest insurance and wealth
management groups in Canada, with
operations in the United States.
Founded in 1892, it is an important Canadian public company and is
listed on the Toronto Stock Exchange under the ticker symbols IAG
(common shares) and IAF (preferred shares).
iA Financial Group is a business name and trademark of
iA Financial Corporation Inc. and Industrial Alliance
Insurance and Financial Services Inc.
SOURCE iA Financial Group