Q1 Highlights Delivering on our 2016 plan Reported EPS of $0.96 - - PowerPoint PPT Presentation

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First quarter 2016

Conference Call Presenters: Yvon Charest, President and CEO René Chabot, EVP, CFO and Chief Actuary

May 5, 2016

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Delivering on our 2016 plan

Q1 Highlights

Profit Business Growth Financial Strength

► Reported EPS of $0.96 above mid-guidance ($0.90-$1.00 EPS) ► Key drivers of 2016 plan above expectations: strain and insurance businesses ► New-business strain of 17% beats Q1 guidance (+$0.01) ► 4th consecutive quarter of P/H gains in insurance businesses (+$0.09) ► Retail insurance maintains strong momentum in Canada and U.S. (+19%) ► iA moves into first position for net seg fund sales in Canada ► Group Insurance segments, Group Savings and iAAH report good growth ► Mutual fund business reports performance improvements in key funds and good start for new products launched in Q1 as part of action plan to redress gross sales ► Quarterly dividend increased by $0.02 to $0.32 per share ► Change in solvency ratio to 205% reflects Q1 macroeconomics and seg funds ► BVPS of $36.48: -1% QoQ due to pension fund charge in OCI

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Sales Highlights

Retail insurance operations maintain strong momentum

($Million, unless otherwise indicated)

First quarter 2016 2015 Variation

► Individual Insurance Canada 42.0 38.1 10% United States 23.4 17.0 38% Total 65.4 55.1 19% ► Individual Wealth Management Segregated funds - net sales 142.6 170.8 (28.2) Mutual funds - net sales (291.2) (267.0) (24.2) Total - net sales (148.6) (96.2) (52.4) ► Group Insurance Employee Plans 18.0 15.3 18% Dealer Services 105.7 101.1 5% Special Markets Solutions 50.8 47.5 7% Total 174.5 163.9 6% ► Group Savings and Retirement 333.9 250.9 33% ► IA Auto and Home 52.7 46.9 12%

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EPS aligned with guidance

($Million, unless

• therwise indicated)

First quarter

2016 2015 Variation Net income attributed to shareholders 102.4 114.4 (10%) Less: preferred shareholder dividends 4.1 5.5 (25%) Less: premium on redemption of pref. shares — 4.0

• Net income attributed to common shareholders

98.3 104.9 (6%) Earnings per common share (EPS) (diluted) $ 0.96 $ 1.03 ($0.07) Return on common shareholders' equity (ROE)1 10.5% 12.1% (160 bps) Book value per share $36.48 $34.94 4%

Q1 Earnings

1 Annualized 2 $5M in Financial Statements due to rounding 3 Non-IFRS, adjusted for tax recovery ($0.19) and premium for redemption of preferred shares ($0.04) in Q1/2015

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Results adjusted for significant items3

Net income attributed to common shareholders 98.3 89.8 +9% Earnings per common share (EPS) (diluted) $ 0.96 $ 0.88 $0.08 Return on common shareholders' equity (ROE)1 10.5% 10.4% 10 bps

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Q1 items of note

(gains and losses)

• 1¢
• 4¢
• 6¢

+2¢ +3¢ +4¢ +3¢ Market related

Q1 Earnings

Continuing favourable P/H experience from insurance operations

Employee Plans Investment income Hedging Individual Insurance Dealer Services UL

Experience

MER

Income

• n capital

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Experience gains (losses)

(EPS impact in cents)

Experience (other than market related)

Key drivers of 2016 plan are above expectations

2016 2015 2014 2015 2014 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

Individual Insurance 2 9 9 14 (4) 5 (5) 2 (4) 28 (2) Group Insurance 7 (2) 5 1 (3) (1) (4) (7) (4) 1 (16) Individual Wealth Management (7) (2) 2 (5) 1 1 (7) (3) Group Savings and Retirement (1) 2 1 (1) 1 2 iAAH (3) 1 (6) 3 (1) (8) 2 Total 9 (4) 14 16 (10) (2) (6) (4) (7) 16 (19)

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$1.00 $0.98

$0.98 EPS for Q1, above mid-guidance

1 Core consensus as of April 27, 2016

Management's View of Core

Q1 CORE EPS

iA CONSENSUS1 Q4 Reported EPS $0.96

Items greater than ±4¢ ► Hedging +$0.02

Q4 Core EPS $0.98

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Q1 Results vs. Guidance

Delivering on our 2016 plan

Guidance Reported EPS

$0.90 to $1.00

$0.96 Reported above mid-guidance Core EPS of $0.98

ROE

11.0% to 12.5%

10.5% Seasonality impact

Strain

20% for Q1 15% for 2016

17% Better than expected, reflects favourable sales mix

Effective tax rate

18% to 20%

17% In line with seasonality

Solvency ratio

175% to 200%

205% Macroeconomics and seg fund portfolio

Payout ratio

25% to 35%

31% Within guidance

(mid-range)

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A Flexible Balance Sheet

March 31 December 31 March 31 2016 2015 2015

Solvency ratio

205% 213% 211%

Leverage ratio

24.4% 24.3% 25.4%

Coverage ratio

8.6x 8.2x 7.8x

Agency Rating

S&P A+ (Strong) A.M. Best A+ (Superior) DBRS A (high)

Half of decrease in solvency ratio is seg fund related

10 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Steady Value Creation for Shareholders

Book Value Per Share

(end of period)

$9.36 Q1/2016 $36.48 CAGR 1-year +4% 5-year +7% 10-year +8% Since 2000 +9%

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Hedging program overall positive since inception

Hedging impact on EPS (¢)

(since hedging program inception)

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

1 (5) (4) 5 4 4 11 7 6 6 2 6 2 (12) 8 (3) 4

(6)

Hedging Experience

2010 2011 2012 2013 2014 2015 2016 22 quarters: 13 positives, 4 neutrals and 5 negatives Average quarterly gain of 2 cents EPS

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Individual Insurance Strain on New Business

1¢ EPS gain: Better than expected (Q1 at 17% vs 20% guidance)

($Million, unless otherwise indicated)

2016 2015 2014 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q11

Sales

65.4 73.7 63.8 61.7 55.1 62.1 51.1 55.5 47.3

Strain

11.3 14.4 15.2 15.2 21.3 16.0 17.3 12.7 12.7

Strain (%)

17% 20% 24% 25% 39% 26% 34% 23% 27%

Annual total

17% 26% 27%

1 Excess premiums for January and February 2014 were revised downwards by $9.5M due to a correction related to large policies.

YoY improvement because of : 1) existing reinsurance treaty renegotiated, 2) underwriting changes in the US and 3) more profitable sales mix

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Income On Capital

Q1/16 in line with iAAH seasonality and new investment

($Million, pre-tax)

2016 2015 2014 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

Investment income

33.5 33.7 27.7 28.4 32.6 29.8 29.3 27.2 26.7

Financing & Intangibles1

(11.8) (10.6) (10.0) (9.9) (8.8) (6.8) (6.7) (7.4) (7.1)

Sub Total

21.7 23.1 17.7 18.5 23.8 23.0 22.6 19.8 19.6

IA Auto and Home

(6.9) (2.9) 5.8 1.7 (10.2) 5.1 4.7 0.1 (3.5)

Total

14.8 20.2 23.5 20.2 13.6 28.1 27.3 19.9 16.1

1 As of Q1/2015, includes higher financing costs related to debt issuance, offset by preferred share redemption.

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Effective Tax Rate (ETR)

In line with earnings seasonality

($Million,unless

• therwise indicated)

2016 2015 2014 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

Operating income

108.3 (20.7) 122.5 142.5 102.7 78.8 92.2 109.2 93.2

Income on capital

14.8 20.2 23.5 20.2 13.6 28.1 27.3 19.9 16.1

Pre-tax income

123.1 (0.5) 146.0 162.7 116.3 106.9 119.5 129.1 109.3

Income taxes

20.7 (8.8) 28.4 16.6 1.9 (16.8) 21.0 8.4 19.3

ETR

17% nm 19% 10% 2% nm 18% 7% 18%

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Market Sensitivity

(end of period)

Q1/2016 Q4/2015 Q1/2015

S&P/TSX composite index 13,494 13,010 14,902 IAG solvency ratio 205% 213% 211%

Sensitivities

Stock matching long-term liabilities

Level of S&P/TSX before provisions require strengthening for future policy benefits

9,600 pts 9,500 pts 10,100 pts ( -29% ) ( -27% ) ( -32% ) Solvency ratio

Level of S&P/TSX at which solvency ratio is 175%

8,200 pts 7,900 pts 8,400 pts ( -39% ) ( -39% ) ( -44% )

Level of S&P/TSX at which solvency ratio is 150%

6,500 pts 6,100 pts 6,800 pts ( -52% ) ( -53% ) ( -54% ) Net income

Full year potential impact of a sudden 10% decrease in stock markets

($27 million) ($28 million) ($30 million)

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Interest Rate Sensitivity

(end of period)

Q1/2016 Q4/2015 Q1/2015 IRR1

Potential after-tax impact

• n reserves of a 10 bps

decrease in IRR ($27 million) ($31 million) ($35 million)

URR

Potential after-tax impact

• n reserves of a 10 bps

decrease in URR ($59 million) ($60 million) ($62 million)

Total

Potential after-tax impact

• n reserves of a 10 bps

decrease in URR and IRR ($86 million) ($91 million) ($97 million)

1 New standards of practice were introduced in 2014. Since then, IRR sensitivity is mostly dependent on the variation of Canadian long term rates.

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S&P/TSX Thresholds for Q2/2016 Gain/Loss

Earning driver: TSX threshold for gain or loss: Threshold is compared to: Potential impact

• n Q2/2016

net income of a ±10% variation

• vs. threshold:

Revenues on UL policy funds 13,680 Actual TSX value at the end of ±$8.1 million Q2/2016 MERs collected on investment funds 13,587 Actual average value3

• f TSX during

±$4.7 million Q2/2016

1 Expected closing value of TSX at the end of Q2/2016. 2 Expected average value of TSX during Q2/2016. 3 Average of all trading day closing values.

2 1

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Asset Growth

Assets Under Management and Administration

($Billion, unless

• therwise indicated)

March 31 YoY 2016 Assets under management General fund 34.4 3% Segregated funds 20.0 1% Mutual funds 10.1 (14%) Other 15.6 6% Subtotal 80.1 0% Assets under administration 37.5 8% Total 117.7 3%

AUM/AUA

(assets under management and administration, in $B) 2012 2013 2014 2015 Q1/16 59.6 69.5 76.8 78.9 80.1 23.9 83.5 29.3 98.8 32.7 109.5 36.9 115.8 37.5 117.6 AUA AUM

Note: The figures do not always add up exactly due to rounding differences.

117.7

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Premiums and Deposits

Net premiums, premium equivalents and deposits (in $B)

Q1/2016 $Million YoY

Individual Insurance 411.2 7% Individual Wealth Management 797.9 (17%) Group Insurance 352.0 5% Group Savings and Retirement 327.8 34% General Insurance 59.7 11% TOTAL 1,948.6 (2%)

Note: The figures do not always add up exactly due to rounding differences.

2012 2013 2014 2015 2016

1.9 2.1 2.1 2.0 1.9

1.9

1.6 1.9 1.7 1.9 1.7 1.6 1.8 1.8 1.7

6.9

1.8

7.4

1.8

7.4

2.0

7.7 Q4 Q3 Q2 Q1

7.5

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Target

Capital Position

Half of decrease is related to seg funds

Solvency Ratio

(%, end of period)

Key changes during the quarter

►

• 4%

Macroeconomic variations ►

• 4%

Seg fund portfolio

2012 2013 2014 2015 Q1/16 217 217 209 213 205

200% 175%

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Individual Insurance

Sales1

($Million, unless otherwise indicated)

First quarter

2016 2015 Variation

Canada - Minimum premiums2

33.9 35.7 (5%)

Canada - Excess premiums3

8.1 2.4 238%

Canada - Total

42.0 38.1 10%

US

23.4 17.0 38%

Total

65.4 55.1 19%

Premiums

411.2 383.3 7%

Number of policies (Canada)

24,386 24,398 —%

1 First-year annualized premiums. 2 Insurance component. 3 Savings component.

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Individual Wealth Management

Sales

($Million, unless otherwise indicated)

First quarter 2016 2015 Variation

Gross sales1 General fund 58.5 41.1 42% Segregated funds 454.1 489.7 (7%) Mutual funds 285.3 435.7 (35%) Total 797.9 966.5 (17%) Net sales Segregated funds 142.6 170.8 (28.2) Mutual funds (291.2) (267.0) (24.2) Total (148.6) (96.2) (52.4)

($Million, unless otherwise indicated)

March 31 First quarter 1-year 2016 variation variation

Assets under management General fund 1,085.6 —% (6%) Segregated funds 12,398.3 1% (1%) Mutual funds 10,144.2 (3%) (14%) Other (T.E., Leon Frazer and Forstrong (Hahn)) 3,707.6 —% (1%) Total 27,335.7 (1%) (6%) Assets under administration 37,508.9 2% 7% Total AUM/AUA 64,844.6 1% 1%

1 Defined as net premiums for general and segregated funds, and deposits for mutual funds

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Group Insurance

($Million, unless otherwise indicated)

First quarter

2016 2015 Variation Sales1 Employee Plans 18.0 15.3 18% Dealer Services - Creditor Insurance 66.2 65.4 1% Dealer Services - P&C Insurance 39.5 35.7 11% Dealer Services - Total 105.7 101.1 5% Special Markets Solutions 50.8 47.5 7% Total Group Insurance 174.5 163.9 6% Premiums and equivalents Premiums2 321.5 306.0 5% Service contracts (ASO) 12.7 11.8 8% Investment contracts 17.8 18.5 (4%) Total 352.0 336.3 5%

1 Employee Plans: first-year annualized premiums (including premium equivalents), Dealer Services (Creditor): gross premiums (before

reinsurance and cancellations), Dealer Services (P&C): direct written premiums, Special Markets Solutions: premiums before reinsurance.

2 Adjusted retroactively in Q4-2015 to include P&C premiums which were previously included in General insurance.

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Group Savings and Retirement

Funds under management

March 31, 2016 Q1 1-year variation variation Accumulation products 8,677.0 2% 3% Insured annuities 3,274.5 2% —% Total 11,951.5 2% 2%

Sales1

($Million, unless otherwise indicated)

First quarter 2016 2015 Variation Accumulation products 264.8 206.6 28% Insured annuities 59.2 1.3 4,454% Deposits2 9.9 43.0 (77%) Total 333.9 250.9 33%

1 Sales are defined as gross premiums (before reinsurance) and deposits. 2 Deposits include GICs held in trust and institutional management contracts.

not meaningful

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Investment Portfolio

Continues to be of highest quality

March 31 December 31 March 31 2016 2015 2015 IMPAIRED INVESTMENTS AND PROVISIONS Gross impaired investments $17.5M $19.7M $24.6M Provisions for losses $4.8M $5.5M $4.0M Net impaired investments $12.7M $14.2M $20.6M Net impaired investments as a % of total investments 0.04% 0.05% 0.07% Provisions as a % of gross impaired investments 27.4% 27.9% 16.2% BONDS Proportion rated BB or lower 0.65% 0.66% 0.66% Delinquency rate 0.00% 0.00% 0.00% MORTGAGE LOANS – Delinquency rate 0.27% 0.29% 0.48% REAL ESTATE – Occupancy rate on investment properties 89.6% 90.1% 90.2%

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Value of New Business

Year-over-year change by component

Q1/2015 31.0

Decrease in sales (1.0) Variation in profit margins 2.3 Changes in economic assumptions (3.6)

Q1/2016 28.7

Value of New Business

($Million)

2012 2013 2014 2015 2016

36.4 51.3 43.3 31.0 28.7 33.4 44.3 42.6 37.5 38.4 40.7 38.8 31.9 44.9 153.1 45.2 181.5 39.3 164.0 35.1 135.5

Q4 Q3 Q2 Q1

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2016 Guidance

EPS1 Q1 $0.90 to $1.00 Q2 $1.05 to $1.15 Q3 $1.15 to $1.25 Q4 $1.10 to $1.20 2016 $4.20 to $4.60 ROE1 11.0% to 12.5% Strain 15% ± 5% Effective tax rate 18% to 20% Solvency ratio 175% to 200% Payout ratio 25% to 35%

(mid-range)

1 No reserve strengthening considered in EPS and ROE guidance.

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Investor Relations

Contact Grace Pollock

• Tel. 418-780-5945

grace.pollock@ia.ca Investor Day June 14, 2016 Next Reporting Dates Q2 – August 4, 2016 Q3 – November 2, 2016 Q4 – February 16, 2017 For information on our earnings releases, conference calls and related disclosure documents, consult the Investor Relations section of our website at www.ia.ca.

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Non-IFRS Financial Information

iA Financial Group 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, value of new business and solvency ratio, or which have an IFRS equivalent such as data on operating profit and income taxes on earnings presented in the sources of earnings table. The Company also uses non-IFRS adjusted data in relation to net income, earnings per share and return

• n equity. These non-IFRS financial measures are often accompanied by and reconciled with IFRS financial measures.

The Company believes that these non-IFRS financial measures provide investors and analysts with additional information to better understand the Company’s financial results as well as assess its growth and earnings potential. Since non-IFRS financial measures do not have a standardized definition, they may differ from the non-IFRS financial measures used by other institutions. 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.

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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”, “could”, “should”, “would”, “suspect”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate”, and “continue” (or the negative thereof), as well as words such as “objective” or “goal” or other similar words or expressions. Such statements constitute forward-looking statements within the meaning of securities laws. Forward-looking statements include, but are not limited to, information concerning the Company’s possible or assumed future operating results. These statements are not historical facts; they represent only the Company’s expectations, estimates and projections regarding future events. 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. Certain material factors

• r assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed
• r implied in such statements. Factors that could cause actual results to differ materially from expectations include, but are not

limited to: general business and economic conditions; level of competition and consolidation; changes in laws and regulations including tax laws; liquidity of iA Financial Group including the availability of financing to meet existing financial commitments on their expected maturity dates when required; accuracy of information received from counterparties and the ability of counterparties to meet their obligations; accuracy of accounting policies and actuarial methods used by iA Financial Group; insurance risks including mortality, morbidity, longevity and policyholder behaviour including the occurrence of natural or man- made disasters, pandemic diseases and acts of terrorism. 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 and in the “Management of Risks Associated with Financial Instruments” note to iA Financial Group’s consolidated financial statements, and elsewhere in iA Financial Group’s filings with Canadian securities regulators, which are available for review at www.sedar.com. The forward-looking statements in this document reflect the Company’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.

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