Solid Fundamentals Yvon Charest, President and CEO René Chabot, EVP, CFO and Chief Actuary Fixed Income Presentation Toronto, September 6, 2017 1
Table of Contents 3 Solid fundamentals 11 Premiums and deposits 4 H1 results 12 Mutual fund net sales 5 Strain management 13 AUM/AUA 6 Other profit improvement 14 Acquisitions 7 Lapse assumption review 15 Balance sheet 8 EPS growth 16 Dividend growth 9 Competitive position 17 Book value 10 H1 growth by line of business 2
Solid Fundamentals Delivering on our short- and long-term earnings targets Robust business growth across all lines of business + HollisWealth acquisition Strong capital management to sustain long-term value creation 3
Half-time Earnings Solidly on Track Meeting our short-term objectives H1/2017 results Guidance Reported Core EPS $2.22 $2.26 $2.15 to $2.35 (diluted) ROE 12.9% 11.8% 11.0% to 12.5% (trailing twelve months) 5% Strain Annual target of 6% 206% post-HollisWealth Solvency ratio 175% to 200% 4 This slide presents non-IFRS and core financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
Strain Management Improves Profit at Issue of New Business Without reducing future earnings Strain (% sales) 53% 38% 27% 26% 21% 11% 6% 2011 2012 2013 2014 2015 2016 2017 target Strain ($M) -111 -96 -49 -59 -66 -35 (impact on earnings) 5 This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
Other Profit Improvement Employee Plans back on track, iA Auto and Home being addressed ► Overall profit better than expected in 2016, and 2017 is off to a good start Employee Plans ► Next target: Back to pre-crisis profit levels ($15-20M/year) and above-guidance ROE ► Two premium increases in 2017; traction expected in 2018 iA Auto and Home ► White-labeling initiatives : 3-year investment with breakeven expected in 2018 6
Update of Lapse Assumption is Manageable (based on information at June 30, 2017) - Reserve strengthening for lapse assumption + New CIA mortality improvement table + Interest rate assumptions: • URR is 10 bps ahead of the curve at 3.1% (vs. 3.2% prescribed) • IRR is comfortably positioned and any rate increase would be favourable + Investment gains from actively managed asset portfolio = Near-neutral impact on bottom line 7
Achieving Our Long-term Growth Aspirations Core EPS consistently within or above guidance EPS Guidance 5.05 ($, diluted) 4.60 4.20 4.65 3.80 4.20 3.40 3.80 3.10 3.40 10% 3.00 annual 2.50 EPS growth 2012 2013 2014 2015 2016 2017 2018 2019 8
A Strong Competitive Position In our largest business segments 1 Segregated funds (net sales) • 3rd for assets 1 Adjustable disability (sales) 1 Individual insurance policies (total of life, critical illness and disability policies sold) Mutual fund distribution (non-bank) Top 2 Car dealer services (creditor insurance sales and non bank auto loans) Top 2 9
Top-line Trend Is Robust For Both Insurance and Wealth H1/17 YoY Sales ► Retail Life Insurance $95M +5% Canada Continued growth in both Canadian and US operations US $50M +5% INSURANCE ► Group Insurance Employee plans $65M +85% Strongest H1 sales for Employee Plans in the last 5 years Dealer Services $300M +13% Strong growth in extended warranties Special Markets Solutions $98M +7% Steady growth $162M +12% ► iA Auto and Home Strategic partnerships continue to fuel top-line ► Retail Wealth Management WEALTH Seg funds (net sales) $295M +$99M Industry leader for net sales Mutual funds (net sales) $277M +$689M Turning the corner ► Group Savings & Retirement $901M +37% Strong growth in accumulation products 10 This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
A Recent Growth Spurt for Premiums and Deposits With strong contributions from individual and group wealth Net premiums, premium equivalents and deposits ($Billion) H1/2017 $M YoY Individual Insurance 881.1 7% 8.2 Individual Wealth 7.7 2,523.4 63% 7.5 7.4 Management Group Insurance 760.8 5% 5.2 Group Savings and 887.9 37% Retirement General Insurance 135.6 12% TOTAL 5,188.8 34% 2013 2014 2015 2016 H1/2017 11 This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
Mutual Fund Net Sales Turning the Corner And building scale in distribution ($ Million) 200 77 77 58 (11) (68) (69) (98) (121) (165) (248) (267) (291) (316) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 2017 12 This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
Assets Reflect Expansion of iA Distribution Network HollisWealth will support momentum AUM/AUA in wealth management (assets under management and administration at end of period, $Billion) AUA 132.2 126.2 ($Billion, at June 30, 2017) 115.8 109.5 44.0 98.8 41.4 36.9 32.7 29.3 AUA 77 88.2 84.8 78.9 76.8 69.5 AUM 44 iA iA + HW 2013 2014 2015 2016 Q2/2017 13 This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
Acquisition Wish List A specific desire to expand our footprint in the US market HIGH US Retail distribution Retail wealth management Auto and home insurance Dealer Services Group businesses Life insurance Institutional wealth management LOW 14
A Strong and Flexible Balance Sheet To support long-term value creation Solvency Ratio Debt Ratio Coverage Ratio (%, end of period) (Debentures and pref. shares/capital, (number of times) %, end of period) 12.8 225 12.5 24.3 23.8 23.7 213 209 23.2 206 ~ Post HollisWealth acquisition 8.2 7.9 Better than Above 6x minimum Above 175%-200% target 25%-35% target 2014 2015 2016 Q2/17 2014 2015 2016 Q2/17 2014 2015 2016 Q2/17 15 This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
Dividend to Common Shareholders 43% increase since 2013 $0.40 Payout ratio guidance Payout ratio guidance $0.35 is 25% to 35% is 25% to 35% $0.30 35¢/share $0.25 paid in Q2/17 $0.20 First lifeco in Canada to increase dividend after $0.15 the financial crisis $0.10 $0.05 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 16
Shareholder Value Creation Understated in current price-to-book valuation iA Book Value Per Share BVPS CAGR + 275 % and Dividends Paid 1-year +12% (end of period) 5-year +10% 10-year +8% Peers Since 2000 +10% +163% June 30, 2004 0% Q2/17 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1.80 1.74 1.94 2.03 1.15 1.41 1.49 1.00 1.14 1.53 1.31 1.20 1.30 1.33 IAG Price / Book value per share 17
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