Q2 - 2016 An Outstanding Quarter Reported EPS of $1.35: 17% above - PowerPoint PPT Presentation

Second Quarter 2016 Conference Call Presenters: Yvon Charest, President and CEO René Chabot, EVP, CFO and Chief Actuary August 4, 2016 1

Q2 - 2016 An Outstanding Quarter ► Reported EPS of $1.35: 17% above top of guidance ($1.05-$1.15 EPS) ► Core EPS of $1.26: up 10.5% YoY with high quality of earnings Profit ► Favourable policyholder experience from all sectors (+$0.10 EPS) ► New-business strain of 13% better than guidance of 15% (+$0.01 EPS) ► Market-related gain for hedging (+$0.10 EPS) and MERs (+$0.01 EPS) ► Retail insurance maintains strong momentum in both Canada and US (+18%) Business ► iA seg funds #1 in Canada for net sales while industry is in net redemptions Growth ► Mutual funds: YoY improvement in net outflows and fund performance ► Assets under management and administration up 4% in Q2 and 8% YoY ► Solvency ratio of 199% reflects Q2 macroeconomics (-6%) Financial ► Book value per share of $37.60: +4% YoY and +3% QoQ Strength ► Quarterly dividend of $0.32 per common share 2

Sales Highlights Strong quarter for retail insurance... mutual funds looking up Second quarter Year-to-date at June 30 ($Million, unless otherwise indicated) 2016 2015 Variation 2016 2015 Variation ► Individual Insurance Canada 48.4 43.5 11% 90.4 81.6 11% United States 24.5 18.2 35% 47.9 35.2 36% Total 72.9 61.7 18% 138.3 116.8 18% ► Individual Wealth Management Segregated funds - net sales 53.4 88.8 (35.4) 196.0 259.6 (63.6) Mutual funds - net sales (121.3) (165.1) 43.8 (412.5) (432.1) 19.6 Total - net sales (67.9) (76.3) 8.4 (216.5) (172.5) ( 44.0 ) ► Group Insurance Employee Plans 17.1 25.3 (32%) 35.1 40.6 (14%) Dealer Services 159.6 155.6 3% 265.3 256.7 3% Special Markets Solutions 40.6 41.8 (3%) 91.4 89.3 2% Total 217.3 222.7 (2%) 391.8 386.6 1% ► Group Savings and Retirement 325.2 342.3 (5%) 659.1 593.2 11% ► iA Auto and Home 91.6 81.5 12% 144.3 128.4 12% 3

Q2 Earnings Another strong Q2 Second quarter Year-to-date at June 30 ($Million, unless otherwise indicated) 2016 2015 Variation 2016 2015 Variation Net income attributed to shareholders 143.6 146.1 (2%) 246.0 260.5 (6%) Less: preferred shareholder dividends 4.1 3.9 +5% 8.2 9.4 (13%) Less: premium on redemption of pref. — — — — 4.0 — shares Net income attributed to common 139.5 142.2 (2%) 237.8 247.1 (4%) shareholders Earnings per common share (EPS) � $1.35 $1.40 ( $0.05) $2.31 $2.43 ($0.12) (diluted) Return on common shareholders' 14.7% 15.8% (110 bps) 9.4% 13.1% (370 bps) equity (ROE) 1 Book value per share $37.60 $36.11 4% $37.60 $36.11 4% 4 1 Annualized for the quarter and trailing 12 months for the year to date.

Q2 Earnings High quality with favourable P/H experience in all lines of business Q2 items of note (gains and losses) MER +1 ¢ Hedging +10¢ +4¢ Group Savings +3¢ +3¢ Group Individual Individual Insurance Insurance +2¢ Wealth +1¢ +1¢ +1¢ Market Income Strain Taxes Experience Gains Related on Capital 5

Policyholder Experience A strong H1/16, with gains in all lines of business 2016 2015 Experience H1 H1 2015 by line of business 2016 2015 (EPS impact in cents) Q2 Q1 Q4 Q3 Q2 Q1 Individual Insurance 4 2 9 9 14 (4) 28 6 10 Group Insurance 1 7 (2) 5 1 (3) 1 8 (2) Individual Wealth 3 0 (7) (2) 0 2 (7) 3 2 Management Group Savings 2 0 (1) 2 0 1 2 2 1 and Retirement Total 10 9 (1) 14 15 (4) 24 19 11 iAAH (Income on capital) (1) 0 (3) 0 1 (6) (8) (1) (5) 6

Management's View of Core $1.26 EPS for Q2, above guidance and consensus Q2 CORE EPS Q2 Reported EPS $1.35 $1.26 Exceptional items ► Taxes ($0.03) $1.07 Items greater than ±4¢ ► Hedging ($0.06) CONSENSUS 1 iA Q2 Core EPS $1.26 10.5% growth in core EPS vs Q2/2015 ($1.14 ) 7 1 Core consensus as of July 29, 2016.

Q2 Results vs. Guidance Clearly a strong beat Guidance Reported Reported and core ($1.26) EPS $1.35 $1.05 to $1.15 above guidance Reported and core (13.7%) ROE 14.7% 11.0% to 12.5% above guidance (quarter annualized) Lower than target on higher sales Strain 13% 15% ± 5% in Canada and US At low end of guidance Effective tax rate 18% 18% to 20% because of 2015 true-ups Down because of macro- Solvency ratio 199% 175% to 200% economics but at top of guidance 25% to 35% At low end of guidance due to Payout ratio 24% strong profitability in the quarter (mid-range) 8

YTD Results vs Guidance Well ahead on our 2016 guidance Guidance Reported Reported and core ($2.24) EPS $1.95 to $2.15 $2.31 above guidance 12.1% on core basis, ROE 11.0% to 12.5% 9.4% at top of guidance (trailing 12 months) Strain 15% ± 5% 15% In line with annual target Effective tax rate 18% to 20% 18% At low end of guidance Solvency ratio 175% to 200% 199% At top of guidance 25% to 35% Payout ratio 27% Within guidance (mid-range) 9

A Flexible Balance Sheet Decrease in solvency ratio is related to macroeconomic changes June 30 March 31 December 31 June 30 Agency Rating 2016 2016 2015 2015 Solvency 199% 205% 213% 223% S&P A+ (Strong) ratio Leverage 23.8% 24.4% 24.3% 24.7% A.M. Best A+ (Superior) ratio Coverage 9.5x 8.6x 8.2x 8.9x DBRS A (high) ratio 10

Macroeconomic Protection Reflecting investment gains and LT interest rates at June 30, 2016 Interest rates Stock markets (at end of period) (at end of period) Intra-year variations don’t matter, Higher protection, management has time to act lifted by market growth 43 bps 30% 27% 29 bps Can. rates at 1.73% at quarter-end 2015 June 2016 2015 June 2016 11

Steady Value Creation for Shareholders Q2/2016 $37.60 Book Value Per Share (end of period) CAGR 1-year +4% 5-year +7% 10-year +8% $9.36 Since 2000 +9% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 12

Individual Insurance Strain on New Business +$0.01 EPS in Q2 on higher sales volume in Canada and US 2016 2015 2014 ($Million, unless otherwise indicated) Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Sales 72.9 65.4 73.7 63.8 61.7 55.1 62.1 51.1 55.5 47.3 Strain 9.3 11.3 14.4 15.2 15.2 21.3 16.0 17.3 12.7 12.7 Strain (%) 13% 17% 20% 24% 25% 39% 26% 34% 23% 27% Annual total 15% 26% 27% H1/2016 is 3 percentage points ahead of guidance 13

Income On Capital Higher investment income offset by adverse experience at iAAH 2016 2015 2014 2016 ($Million, pre-tax) Run Rate Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Investment 30.0 33.5 33.5 33.7 27.7 28.4 32.6 29.8 29.3 27.2 26.7 income Financing & (12.0) (12.0) (11.8) (10.6) (10.0) (9.9) (8.8) (6.8) (6.7) (7.4) (7.1) Intangibles Subtotal 18.0 21.5 21.7 23.1 17.7 18.5 23.8 23.0 22.6 19.8 19.6 iA Auto (0.5) (4.0) (6.9) (2.9) 5.8 1.7 (10.2) 5.1 4.7 0.1 (3.5) with and Home seasonality Total 17.5 17.5 14.8 20.2 23.5 20.2 13.6 28.1 27.3 19.9 16.1 14

Effective Tax Rate (ETR) Low end of guidance because of true-ups 2016 2015 2014 ($Million,unless otherwise indicated) Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Operating 157.7 108.3 (20.7) 122.5 142.5 102.7 78.8 92.2 109.2 93.2 income Income on 17.5 14.8 20.2 23.5 20.2 13.6 28.1 27.3 19.9 16.1 capital Pre-tax 175.2 123.1 (0.5) 146.0 162.7 116.3 106.9 119.5 129.1 109.3 income Income 31.6 20.7 (8.8) 28.4 16.6 1.9 (16.8) 21.0 8.4 19.3 taxes ETR 18% 17% NM 19% 10% 2% NM 18% 7% 18% 15 NM: not meaningful

Hedging Experience Positive impact for the year to date Average gain of $0.02 EPS/quarter Hedging impact on EPS ( ¢ ) over 23 quarters (since hedging program inception) 11 10 8 7 6 6 6 5 4 4 4 2 2 1 0 0 0 0 (3) (5) (4) (6) (12) Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012 2013 2014 2015 2016 16

Capital Position Decrease is related to macroeconomic variations Solvency Ratio (%, end of period) Key changes 217 217 213 during the quarter 209 205 200% 199 Target ► -5% Interest rates 175% ► -1% Equity markets 2012 2013 2014 2015 Q1/16 Q2/16 17

Market Sensitivity Q2/2016 Q1/2016 Q4/2015 Q2/2015 (end of period) S&P/TSX composite index 14,065 13,494 13,010 14,553 IAG solvency ratio 199% 205% 213% 223% Sensitivities Stock Level of S&P/TSX before 9,800 pts 9,600 pts 9,500 pts 10,100 pts matching provisions require long-term strengthening for future ( -30% ) ( -29% ) ( -27% ) ( -31% ) policy benefits liabilities 8,600 pts 8,200 pts 7,900 pts 7,800 pts Level of S&P/TSX at which solvency ratio is 175% ( -39% ) ( -39% ) ( -39% ) ( -46% ) Solvency ratio 6,800 pts 6,500 pts 6,100 pts 6,100 pts Level of S&P/TSX at which solvency ratio is 150% ( -52% ) ( -52% ) ( -53% ) ( -58% ) Full-year potential impact of Net income ($28 million) ($27 million) ($28 million) ($29 million) a sudden 10% decrease in stock markets 18