17% YoY increase in core EPS, strong business growth and robust capital position
The results presented below are for iA |
FIRST QUARTER HIGHLIGHTS –
- 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 atMarch 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† atMarch 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
"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
"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) | (14 %) | ||
Less: dividends on preferred shares issued by a subsidiary (in millions) | ( | ( | |
Net income attributed to common shareholders (in millions) | (14 %) | ||
Weighted average number of common shares (in millions, diluted) | 99.5 | 104.5 | (5 %) |
Earnings per common share (diluted) | (9 %) | ||
Core earnings† | 243 | 217 | 12 % |
Core earnings per common share (diluted)† | 17 % |
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1 | Please refer to the separate press release issued on |
† | 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 | |||
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 | |||
Assets under management and administration† (in billions) |
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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
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
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
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) | (9 %) | ||
Core earnings | 243 | 217 | 12 % |
Core EPS (diluted) | 17 % |
Return on common shareholders' equity (ROE)† | |||
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
- 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 theSurex 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
Core earnings by business segment | |||||
(In millions of dollars, unless otherwise indicated) | Q1/2024 | Q4/2023 | Variation | Q1/2023 | Variation |
Insurance, | 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,
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
† 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
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
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
An analysis of results according to the financial statements and additional analysis are presented in the Management's Discussion and Analysis as at
Business growth – Total assets under management and administration† increased by 11% year over year, amounting to $229.3 billion at
In Insurance,
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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, |
† | 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,
- 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 inCanada , 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† ofUS$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, |
ASSETS UNDER MANAGEMENT AND ADMINISTRATION
Assets under management and administration† ended the first quarter at
NET PREMIUMS, PREMIUM EQUIVALENTS AND DEPOSITS
Net premiums, premium equivalents and deposits† totalled
FINANCIAL POSITION
The solvency ratio† was 142% at
_________________________________________ | |
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
Book value – The book value per common share was
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
Dividend – The Company paid a quarterly dividend of
Dividend Reinvestment and Share Purchase Plan – Registered shareholders wishing to enrol in
Appointments – Two new members joined the Board of Directors.
- On
January 9, 2024 , iAFinancial Group announced the appointment ofAlka Gautam to the Board of Directors of iAFinancial Corporation Inc. , effectiveJanuary 17, 2024 .Ms. Gautam has more than 20 years of experience in the reinsurance and insurance industry. - On
November 9, 2023 , iAFinancial Group announced the appointment ofMartin Gagnon to the Board of Directors of iAFinancial Corporation Inc. and ofIndustrial Alliance Insurance and Financial Services Inc. , effectiveJanuary 17, 2024 .Mr. Gagnon has over 25 years of experience in banking, asset management and brokerage firms.
Awards – On
Credit ratings – During the first quarter, the
2023 annual documents publication – On
- 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 inCanada andthe United States .
Subsequent to the first quarter:
- Acquisition of assets of
Laurentian Bank Securities' retail full-service investment broker division – OnApril 4, 2024 , iAFinancial Group's subsidiary, iA Private Wealth (iAPW), agreed to acquire the retail full-service investment broker division ofLaurentian 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 iAFinancial Group's solvency ratio. - Annual Meeting – The Annual Shareholder Meeting of iA
Financial Corporation Inc. will be held virtually onThursday, 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 theMay 9, 2024 news release for more information.
OUTLOOK
Medium-term guidance for
- 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
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
Financial position – The solvency ratio of iA Insurance was 138% at
Dividend – The Board of Directors of iA Insurance approved a quarterly dividend of
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) | |||
Total capital† | 6,362 | 6,190 | 6,484 |
Solvency ratio† | 138 % | 139 % | 145 % |
Appointment – On
Credit ratings – During the first quarter, the
2023 annual documents publication – On
Subsequent to the first quarter:
Acquisition of assets of
Annual Meeting – iA Insurance's annual meeting will be held virtually on
Executive Committee – On
GENERAL INFORMATION
Non-IFRS and Additional Financial Measures
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
Forward-Looking Statements
This document may contain statements relating to strategies used by iA
Although iA
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
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
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
The forward-looking statements in this document reflect iA
Documents Related to the Financial Results
For a detailed discussion of
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Annual Meeting
iA Financial Group is holding its Annual Meeting virtually at
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