SLIDE 1
1
2
Table of Contents 3 14 Q3/2017 highlights Balance sheet 25 - - PowerPoint PPT Presentation
Table of Contents 3 14 Q3/2017 highlights Balance sheet 25 - - PowerPoint PPT Presentation
Third Quarter 2017 Conference Call Presenters: Yvon Charest, President and CEO Ren Chabot, EVP, CFO and Chief Actuary November 8, 2017 1 Table of Contents 3 14 Q3/2017 highlights Balance sheet 25 Hedging experience 4 15 Acquisitions
SLIDE 2
SLIDE 3
3
Profit Financial Strength Business Growth
Excellent third quarter
Q3/2017 Highlights
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
- Solvency ratio of 213% (~205% post-DAC closing)
- Book value per share of $43.27: +12% YoY and +2% QoQ
- Dividend increase of 9% (+$0.03) to $0.38/common share, payable in Q4
- Reported EPS of $1.35 and trailing-12-month ROE of 12.5%; both at top of guidance
- Policyholder experience generally in line in all sectors despite loss of $0.04 for lapse
- Income on capital: Gain on real estate and good quarter for iA Auto and Home
- Growth continues for gross and net fund sales
- Solid growth in Group Insurance with a contribution from all divisions
- Recent acquisitions in US and Canada expand financial services network
SLIDE 4
4
HollisWealth DAC
Strategic Acquisitions To Fuel Growth and Geographic Expansion
- Completed on August 4, 2017
- $33B AUA transferred
- 99% advisor retention
- Creates one of the largest non-bank advisory networks in Canada
- Announced on September 21, 2017
- US-based Dealers Assurance Company and Southwest Reinsure, Inc.
- Manufactures vehicle service contracts (extended warranties)
- Distribution through a network of new and used car dealers across the US
- Provides access to larger market opportunity in the US → See next slide
SLIDE 5
5
DAC Leverages Our Expertise in Extended Warranties
An excellent opportunity to tap into the larger US market
Canadian warranty market: ~$1.5B US warranty market: ~$15B
iA 2016 direct premiums: $197 million DAC 2016 direct premiums: ~$300 million
Very fragmented with significant opportunity for growth and consolidation DAC acquisition more than doubles the scale
- f iA's vehicle warranty business
10X the size
- f the Canadian market
All figures are expressed in Canadian dollars and converted on a current exchange rate basis.
SLIDE 6
6
Asset Growth: HollisWealth Brings $33B in AUA
Assets Under Management and Administration
($Billion, unless
- therwise indicated)
September 30 QoQ YoY 2017 Assets under management General fund 37.1 0% 0% Segregated funds 23.2 1% 8% Mutual funds 11.4 1% 9% Other 15.1 (10%) (8%) Subtotal 86.9 (1%) 2% Assets under administration 77.9 77% 91% Total 164.8 25% 31%
AUM/AUA
(assets under management and administration, end of period, $Billion) 2013 2014 2015 2016 Q3/2017 69.5 76.8 78.9 84.8 86.9 29.3 98.8 32.7 109.5 36.9 115.8 41.4 126.2 77.9 164.8 AUA AUM
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information. The figures do not always add up exactly due to rounding differences.
SLIDE 7
7
Sales
Individual Insurance on pause
($Million, unless otherwise indicated)
Third quarter Year-to-date at September 30 2017 2016 Variation 2017 2016 Variation
► Individual Insurance Canada 46.7 50.3 (7%) 141.2 140.7 0% United States 21.9 24.7 (11%) 72.0 72.6 (1%) Total 68.6 75.0 (9%) 213.2 213.3 0% ► Individual Wealth Management Segregated funds - net sales 113.3 71.6 41.7 408.0 267.6 140.4 Mutual funds - net sales 21.6 (69.1) 90.7 298.5 (481.6) 780.1 Total - net sales 134.9 2.5 132.4 706.5 (214.0) 920.5 ► Group Insurance Employee Plans 35.5 13.2 169% 100.3 48.3 108% Dealer Services (Creditor Insurance and P&C) 186.4 165.3 13% 486.8 430.6 13% Special Markets Solutions 54.1 42.9 26% 152.1 134.3 13% Total 276.0 221.4 25% 739.2 613.2 21% ► Group Savings and Retirement 309.2 455.1 (32%) 1,210.4 1,114.2 9% ► iA Auto and Home 82.5 74.9 10% 244.6 219.2 12%
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
SLIDE 8
8
Q3/2017 Results
Almost perfect score
Guidance Q3/2017 results EPS
$1.25 to $1.35
Reported: $1.35 At top of guidance Core1: $1.35
ROE
(trailing twelve months)
11.0% to 12.5%
Reported: 12.5% Within guidance Core: 11.8%
Strain
Quarterly range from 0% to 15%
5% Within guidance
Effective tax rate
20% to 22%
23% Slightly higher than guidance
Solvency ratio
175% to 200%
213% ~205% post-DAC
Payout ratio
25% to 35%
(mid-range)
26% Within guidance
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information. 1 See "Reported EPS and Core EPS Reconciliation" in this slide package.
SLIDE 9
9
9M/2017 Results
A strong year
Guidance 9M/2017 results EPS
$3.40 to $3.70
Reported: $3.57 Above mid-guidance Core1: $3.61
ROE
(trailing twelve months)
11.0% to 12.5%
Reported: 12.5% Within guidance Core: 11.8%
Strain
Quarterly range from 0% to 15%
5% Better than 6% annual target
Effective tax rate
20% to 22%
22% At top of guidance
Solvency ratio
175% to 200%
213% ~205% post-DAC
Payout ratio
25% to 35%
(mid-range)
29% Within guidance
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information. 1 See "Reported EPS and Core EPS Reconciliation" in this slide package.
SLIDE 10
10
EPS impact in cents
Market- related Policyholder experience iAAH Strain Investment income
- n capital
Taxes HollisWealth integration
- 2¢
- 1¢
- 2¢
- 3¢
+3¢ +1¢ +4¢
All within range of normal fluctuation (±4¢)
Q3 Items of Note
(details on next slide)
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
SLIDE 11
11
Policyholder Experience (excluding market impact and HollisWealth integration)
Very clean quarter
EPS impact in cents
2017 2016 2015 2016 Annual 2015 Annual Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Individual Insurance 1 (1) (15) 16 7 4 2 9 9 14 (4) 29 28 Group Insurance (1) (4) (1) (9) 1 7 (2) 5 1 (3) (1) 1 Individual Wealth Management (1) 2 3 4 3 (7) (4) 2 7 (9) Group Savings and Retirement (1) 1 1 (2) 1 2 (1) 2 1 1 2 Total (2) (2) (12) 5 12 10 9 (1) 12 15 (4) 36 22 iAAH
(in income on capital)
1 (4) (3) (3) (3) (1) (3) 1 (6) (7) (8)
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
SLIDE 12
12
Q3 Core EPS2 Q3 Reported EPS
$1.27 $1.35 $1.28 $1.35
Exceeding market expectations
Management’s View on EPS
iA result Analyst consensus1 Q3 Reported EPS $1.35
Adjusted for:
HollisWealth integration +$0.03 Market-related gains
- $0.03
Q3 Core EPS2 $1.35
1.28 YoY growth
5% iA result Analyst consensus1
1 Consensus as of November 7, 2017. 2 See "Reported EPS and Core EPS Reconciliation" in this slide package.
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
SLIDE 13
13
Solvency Ratio
(%, end of period)
Q4/15 Q4/16 Q1/17 Q2/17 Q3/17
213 225 222 220 213
Capital Position
Still above target range even with last two acquisitions
Key changes during the quarter
►
- 13%
HollisWealth acquisition ►
+4%
Macroeconomics ►
+2%
Profit and others 200% 175%
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
Target
DAC acquisition will have an estimated impact of
- 8 percentage points
SLIDE 14
14
A Flexible Balance Sheet
September 30 June 30 December 31 September 30 2017 2017 2016 2016
Solvency ratio
213% 220% 225% 218%
Leverage ratio
22.8% 23.2% 23.8% 28.7%
Coverage ratio
12.7x 12.5x 12.8x 10.3x
Agency Rating
S&P A+ A.M. Best A+ (Superior) DBRS A (high)
With capacity to fund our growth
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
~205% post-DAC
SLIDE 15
15
2017 Year-End Assumption Review
Company believes that the update is expected to have minimal impact on earnings
Impact
Mortality & Morbidity
+
Annual assumption review New CIA mortality improvement table
Policyholder behaviour
- -
Lapse assumption update from internal studies considering recent experience
Economic assumptions
+
IRR is comfortably positioned 3.1% URR is 10 bps ahead of the newly prescribed rate (3.2%) Investment gains from actively managed asset portfolio
Expenses & Other Near-neutral Total Minimal impact
The final results, which are subject to completion of the Company’s year-end review, will be reported on February 15, 2018 as part of the fourth quarter disclosure.
SLIDE 16
16
Growth in Dividend to Common Shareholders
9% dividend increase
$0.40 $0.35 $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $0.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Steady increases every 3rd quarter First lifeco in Canada to resume dividend increases after the financial crisis
Dividend payable in Q4/17 increased to 38¢ per share
SLIDE 17
17 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Focused on Value Creation
Book Value per Share
(end of period)
$9.36
CAGR
1-year +12% 5-year +10% 10-year +8% Since 2000 +10%
2.17 2.22 1.72 1.61 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
Price / Book value per share September 30, 2017 BVPS = $43.27 Price/BVPS = 1.31x
SLIDE 18
18
Individual Insurance Strain on New Business
$0.01 EPS loss in Q3 on lower sales
($Million, unless otherwise indicated)
2017 2016 2015 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Sales
68.6 74.8 69.8 93.4 75.0 72.9 65.4 73.7 63.8 61.7 55.1
Strain
3.3 2.5 4.4 5.1 8.8 9.3 11.3 14.4 15.2 15.2 21.3
Strain (%)
5% 3% 6% 5% 12% 13% 17% 20% 24% 25% 39%
Annual total
5% 11% 26%
Well positioned to meet 2017 target of 6%
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
SLIDE 19
19
Income on Capital
Gain on sale of real estate in investment income and good quarter at iAAH
($Million, pre-tax)
2017 Quarterly Run Rate 2017 2016 2015 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Investment income
33.0 39.1 35.3 39.1 29.4 32.1 33.5 33.5 33.7 27.7 28.4 32.6
Financing and intangibles
(14.0) (13.8) (12.6) (12.3) (15.4) (12.8) (12.0) (11.8) (10.6) (10.0) (9.9) (8.8)
Subtotal
19.0 25.3 22.7 26.8 14.0 19.3 21.5 21.7 23.1 17.7 18.5 23.8
iA Auto and Home
0.5
with seasonality
6.5 (6.4) (11.0) (1.8) 1.3 (4.0) (6.9) (2.9) 5.8 1.7 (10.2)
Total
19.5 31.8 16.3 15.8 12.2 20.6 17.5 14.8 20.2 23.5 20.2 13.6
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
SLIDE 20
20
Effective Tax Rate (ETR)
Higher than guidance in Q3, but on target for year to date
($Million, unless
- therwise indicated)
2017 2016 2015 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Operating income
162.5 148.6 129.4 180.4 165.6 157.7 108.3 (20.7) 122.5 142.5 102.7
Income on capital
31.8 16.3 15.8 12.2 20.6 17.5 14.8 20.2 23.5 20.2 13.6
Pre-tax income
194.3 164.9 145.2 192.6 186.2 175.2 123.1 (0.5) 146.0 162.7 116.3
Income taxes
45.6 33.2 30.8 33.4 37.7 31.6 20.7 (8.8) 28.4 16.6 1.9
ETR
23% 20% 21% 17% 20% 18% 17% NM 19% 10% 2%
NM: Not meaningful
21.7% YTD
SLIDE 21
21
Equity Market Sensitivity
(End of period)
Q3/2017 Q2/2017 Q4/2016 Q3/2016
S&P/TSX index 15,635 pts 15,182 pts 15,288 pts 14,726 pts iA solvency ratio 213% 220% 225% 218%
Sensitivities
Stocks matching long-term liabilities
Level of S&P/TSX before reserves require strengthening for future policy benefits
11,700 pts 11,400 pts 11,400 pts 10,000 pts
Variation
- 25%
- 25%
- 25%
- 32%
Solvency ratio
Level of S&P/TSX at which solvency ratio would be 175%
8,400 pts 7,800 pts 7,400 pts 7,300 pts
Variation
- 46%
- 49%
- 52%
- 50%
Level of S&P/TSX at which solvency ratio would be 150%
6,400 pts 5,800 pts 5,600 pts 5,800 pts
Variation
- 59%
- 62%
- 63%
- 61%
Net income
Full-year potential impact of a sudden 10% decrease in equity markets
- $30M
- $29M
- $28M
- $29M
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
SLIDE 22
22
Interest Rate Sensitivity
(End of period)
Q3/2017 Q2/2017 Q4/2016 Q3/2016
IRR
► IRR = Initial Reinvestment Rate ► Assumption is a direct function of current long-term rate ► 75 bps protection as of Dec. 31, 2016 ► Impact on net income of a hypothetical 10 bps decrease in IRR
- $15M
- $23M
- $24M
- $25M
URR
► URR = Ultimate Reinvestment Rate ► Maximum assumption is prescribed by CIA; currently at 3.30% ► iA is positioned at 3.1%, 10 bps ahead of the newly prescribed rate (3.2%) ► Impact on net income of a hypothetical 10 bps decrease in URR
- $61M
- $65M
- $62M
- $66M
Both the IRR and URR are currently well protected in the actuarial reserves
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
SLIDE 23
23
S&P/TSX Thresholds for Q4/2017 Gain/Loss
Earnings driver TSX threshold for gain or loss Threshold compared with: Potential impact
- n Q4/2017
net income of a ±10% variation
- vs. threshold
Revenues on UL policy funds 15,850 Actual TSX value at the end of ±$9.4M Q4/2017 MERs collected on investment funds 15,742 Actual average value3
- f TSX during
±$5.1M Q4/2017
1 Expected closing value of TSX at the end of Q4/2017. 2 Expected average value of TSX during Q4/2017. 3 Average of all trading day closing values.
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
2 1
SLIDE 24
24
Reported EPS and Core EPS1 Reconciliation
(On a diluted basis)
Third quarter Year-to-date at September 30 2017 2016 Variation 2017 2016 Variation EPS
$1.35 $1.40 (4%) $3.57 $3.71 (4%) Adjusted for: Specific items: Tax on premiums — — $0.04 — HollisWealth integration $0.03 — $0.06 — Income tax gains and losses — — — ($0.03) Market-related gains and losses ($0.03) ($0.09) ($0.17) ($0.09) Policyholder experience gains and losses in excess of $0.04 EPS — ($0.03) $0.11 ($0.06)
Core EPS1
$1.35 $1.28 5% $3.61 $3.53 2%
1 Diluted core earnings per common share (core EPS) is a non-IFRS measure and represents management’s view of the Company’s capacity to generate sustainable earnings. The
Company believes that this measure provides additional information to better understand the Company’s financial results and assess its growth and earnings potential, and that it facilitates comparison of the quarterly and full-year results of the Company’s ongoing operations. Since non-IFRS financial 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. See "Non-IFRS Financial Information" at the end of this document for further information.
SLIDE 25
25
Generally a win: Average gain of $0.02 EPS/quarter
Hedging impact on EPS (¢)
(since hedging program inception)
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
1 (5) (4) 5 4 4 11 7 6 6 2 6 2 (12) 8 (3) 4 (6) 10 4 9 4 5
(1)
Hedging Experience
2010 2011 2012 2013 2014 2015 2016 2017
SLIDE 26
26
Net premiums, premium equivalents and deposits ($Billion)
Premiums and Deposits
Q3/2017 $Million YoY
Individual Insurance 435.9 7% Individual Wealth Management 954.3 21% Group Insurance 419.2 13% Group Savings and Retirement 302.7 (32%) General Insurance 72.1 14% TOTAL 2,184.2 5%
2013 2014 2015 2016 2017
2.1 2.1 2.0 1.9 2.8 1.9 1.7 1.9 1.9 2.4 1.6 1.8 1.8 2.1 2.2
7.4
1.8
7.4
1.8
7.4
2.0
7.7
2.3
8.2 Q4 Q3 Q2 Q1 7.5
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information. The figures do not always add up exactly due to rounding differences.
SLIDE 27
27
Individual Insurance
($Million, unless otherwise indicated)
Third quarter Year-to-date at September 30
2017 2016 Variation 2017 2016 Variation
Sales1 Canada - Minimum premiums2
40.5 46.7 (13%) 124.0 123.8 0%
Canada - Excess premiums3
6.2 3.6 72% 17.2 16.9 2%
Canada - Total
46.7 50.3 (7%) 141.2 140.7 0%
US
21.9 24.7 (11%) 72.0 72.6 (1%)
Total
68.6 75.0 (9%) 213.2 213.3 0%
Premiums
435.9 407.9 7% 1,317.0 1,232.3 7%
Number of policies (Canada)
30,436 31,345 (3%) 89,516 84,632 6%
1 First-year annualized premiums. 2 Insurance component. 3 Savings component.
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
SLIDE 28
28
Individual Wealth Management
($Million, unless otherwise indicated)
Third quarter Year-to-date at September 30 2017 2016 Variation 2017 2016 Variation
Gross sales1 General fund 69.3 83.9 (17%) 240.5 227.4 6% Segregated funds 423.2 370.2 14% 1,431.5 1,176.4 22% Mutual funds 461.8 336.9 37% 1,805.7 938.9 92% Total 954.3 791.0 21% 3,477.7 2,342.7 48% Net sales Segregated funds 113.3 71.6 41.7 408.0 267.6 140.4 Mutual funds 21.6 (69.1) 90.7 298.5 (481.6) 780.1 Total 134.9 2.5 132.4 706.5 (214.0) 920.5
($Million, unless otherwise indicated)
September 30 Q3 YTD 1-year 2017 variation variation variation
Assets under management General fund 1,213.2 (1%) 2% 3% Segregated funds 13,963.2 1% 5% 6% Mutual funds 11,446.0 1% 5% 9% Other 4,131.9 2% 3% 7% Total 30,754.3 1% 4% 7% Assets under administration 76,421.5 74% 85% 88% Total AUM/AUA 107,175.8 44% 51% 54%
1 Defined as net premiums for general and segregated funds and deposits for mutual funds.
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
SLIDE 29
29
Group Insurance
($Million, unless otherwise indicated)
Third quarter Year-to-date at September 30
2017 2016 Variation 2017 2016 Variation Sales1 Employee Plans 35.5 13.2 169% 100.3 48.3 108% Dealer Services - Creditor Insurance2 120.3 109.7 10% 302.4 277.5 9% P&C Insurance 66.1 55.6 19% 184.4 153.1 20% Total 186.4 165.3 13% 486.8 430.6 13% Special Markets Solutions 54.1 42.9 26% 152.1 134.3 13% Total Group Insurance 276.0 221.4 25% 739.2 613.2 21% Car loans (Dealer Services) Loan originations 64.9 100.6 (35%) 216.4 297.2 (27%) Finance receivables 562.3 467.4 20% 562.3 467.4 20% Premiums and equivalents Premiums 391.3 341.8 14% 1,095.5 1,007.9 9% Service contracts (ASO) 13.0 10.3 26% 40.0 34.2 17% Investment contracts 14.9 17.9 (17%) 44.5 54.7 (19%) Total 419.2 370.0 13% 1,180.0 1,096.8 8%
1 Employee Plans: first-year annualized premiums (including premium equivalents), Dealer Services (Creditor): gross premiums (before reinsurance and cancellations), Dealer Services (P&C): direct written premiums,
Special Markets Solutions: premiums before reinsurance. 2 Includes all creditor insurance business sold by the Company. This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
SLIDE 30
30
Group Savings and Retirement
Funds under management
September 30, 2017 Q3 YTD 1-year variation variation variation Accumulation products 10,302.1 1% 8% 9% Insured annuities 3,183.4 (3%) 0% (4%) Total 13,485.5 0% 6% 5%
Sales1
($Million, unless otherwise indicated)
Third quarter Year-to-date at September 30 2017 2016 Variation 2017 2016 Variation Accumulation products 297.6 420.3 (29%) 1,095.0 985.9 11% Insured annuities 1.6 0.3 433% 76.3 79.6 (4%) Deposits2 10.0 34.5 (71%) 39.1 48.7 (20%) Total 309.2 455.1 (32%) 1,210.4 1,114.2 9%
1 Sales are defined as gross premiums (before reinsurance) and deposits. 2 Deposits include GICs held in trust and institutional management contracts.
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
SLIDE 31
31
Quality of Investment Portfolio
September 30 June 30 December 31 September 30 2017 2017 2016 2016 IMPAIRED INVESTMENTS AND PROVISIONS Gross impaired investments $31.1M $31.5M $29.0M $17.8M Provisions for impaired investments $5.6M $5.6M $5.6M $5.1M Net impaired investments $25.5M $25.9M $23.4M $12.7M Net impaired investments as a % of investment portfolio 0.08% 0.08% 0.08% 0.04% Provisions as a % of gross impaired investments 18.0% 17.8% 19.3% 28.7% BONDS – Proportion rated BB or lower 0.85% 0.66% 0.76% 0.66% MORTGAGES – Delinquency rate 0.34% 0.37% 0.27% 0.27% REAL ESTATE – Occupancy rate on investment properties 89.0% 92.0% 90.2% 89.4% CAR LOANS - Average credit loss rate (trailing twelve months)1 3.1% 3.2% 3.5% 3.5%
1 Represents total credit losses (prime and non-prime) for the prior twelve months divided by the average finance receivables over the same period.
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information.
SLIDE 32
32
2017 Guidance
EPS1
Q1 $1.00 to $1.10 Q2 $1.15 to $1.25 Q3 $1.25 to $1.35 Q4 $1.25 to $1.35 2017 $4.65 to $5.05 ROE1 11.0% to 12.5% Strain 6% annual target
(quarterly range from 0% to 15%)
Effective tax rate 20% to 22% Solvency ratio 175% to 200% Payout ratio 25% to 35%
(mid-range)
This slide presents non-IFRS financial measures. See "Non-IFRS Financial Information" at the end of this document for further information. 1 No reserve strengthening considered in EPS and ROE guidance.
SLIDE 33
33
Investor Relations
Contact Grace Pollock Tel.: 418-780-5945 grace.pollock@ia.ca Next Reporting Dates Q4/2017 - February 15, 2018 Q1/2018 - May 10, 2018 Q2/2018 - August 2, 2018 Q3/2018 - November 7, 2018 For information on our earnings releases, conference calls and related disclosure documents, consult the Investor Relations section of our website at ia.ca.
No Offer or Solicitation to Purchase
This presentation does not, and is not intended to, constitute or form part of, and should not be construed as, an offer or invitation for the sale or purchase
- f, or a solicitation of an offer to purchase, subscribe for or otherwise acquire, any securities, businesses and/or assets of any entity, nor shall it or any
part of it be relied upon in connection with or act as any inducement to enter into any contract or commitment or investment decision whatsoever.
SLIDE 34
34
iA Financial Group reports its financial results and statements in accordance with International Financial Reporting Standards (IFRS). It also publishes certain financial measures that are not based
- n 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 used for the Company’s audited financial statements. These non-IFRS financial measures are often accompanied by and reconciled with IFRS financial measures. For certain non-IFRS financial measures, there are no directly comparable amounts under IFRS. The Company believes that these non-IFRS financial measures provide additional information to better understand the Company’s 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 financial 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. Non-IFRS financial measures published by the Company include, but are not limited to: return on common shareholders’ equity (ROE), core earnings per common share (core EPS), core return
- n common shareholders’ equity (core ROE), sales, net sales, assets under management (AUM), assets under administration (AUA), premium equivalents, deposits, sources of earnings measures
(expected profit on in-force, experience gains and losses, strain on sales, changes in assumptions, management actions and income on capital), capital, solvency ratio, interest rate and equity market sensitivities, loan originations, finance receivables and average credit loss rate on car loans. The analysis of profitability according to the sources of earnings presents sources of IFRS income in compliance with the guideline issued by the Office of the Superintendent of Financial Institutions and developed in co-operation with the Canadian Institute of Actuaries. This analysis is intended to be a supplement to the disclosure required by IFRS and to facilitate the understanding of the financial position of the Company by both existing and prospective stakeholders to better form a view as to the quality, potential volatility and sustainability of earnings. It provides an analysis
- f the difference between actual income and the income that would have been reported had all assumptions at the start of the reporting period materialized during the reporting period. It sets
- ut the following measures: expected profit on in‑force business (representing the portion of the consolidated net income on business in force at the start of the reporting period that was
expected to be realized based on the achievement of best‑estimate assumptions); experience gains and losses (representing gains and losses that are due to differences between the actual experience during the reporting period and the best-estimate assumptions at the start of the reporting period); impact of new business (representing the point-of-sale impact on net income of writing new business during the period); changes in assumptions, management actions and income on capital (representing the net income earned on the Company’s surplus funds). Sales is a non-IFRS measure used to assess the Company's ability to generate new business. They are defined as fund entries on new business written during the period. Net premiums, which are part of the revenues presented in the financial statements, include both fund entries from new business written and in-force contracts. Assets under management and administration is a non-IFRS measure used to assess the Company's ability to generate fees, particularly for investment funds and funds under administration. A detailed analysis of revenues by sector is presented in the “Results According to the Company's Unaudited Interim Condensed Consolidated Financial Statements for the Three- and Nine-Month Periods Ended September 30, 2017 and 2016” section
- f the Management's Discussion and Analysis.
Core earnings per common share is a non-IFRS measure used to better understand the capacity of the Company to generate sustainable earnings. Management’s estimate of core earnings per common share excludes: 1) specific items, including but not limited to year-end assumption changes and unusual income tax gains and losses; 2) market gains and losses related to universal life policies, investment funds (MERs) and the dynamic hedging program for segregated fund guarantees; 3) gains and losses in excess of $0.04 per share, on a quarterly basis, for strain on Individual Insurance sales, for policyholder experience by business segment (Individual Insurance, Individual Wealth Management, Group Insurance, Group Savings and Retirement and iA Auto and Home), for current income tax gains and losses and for investment income on capital.
Non-IFRS Financial Information
SLIDE 35
35
Forward-Looking Statements
This presentation 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 or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or 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 for the year 2016 and in the “Management of Risks Associated with Financial Instruments” note to iA Financial Group's audited consolidated financial statements for the year ended December 31, 2016, and elsewhere in iA Financial Group's filings with Canadian securities regulators, which are available for review at sedar.com. The forward-looking statements in this presentation reflect the Company’s expectations as of the date of this presentation. 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 presentation or to reflect the
- ccurrence of unanticipated events, except as required by law.
SLIDE 36
36