17% YoY increase in core EPS, strong business growth and robust capital position
The results presented below are for iA Financial Corporation Inc. ("iA Financial Corporation" or the "Company"), the holding company that owns 100% of the common shares of
Industrial Alliance Insurance and Financial Services Inc. ("iA Insurance"). The results for iA Insurance are presented in a separate section on page 7 of this document.
FIRST QUARTER HIGHLIGHTS – iA Financial Corporation
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 at March 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† at March 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%1QUEBEC CITY, May 9, 2024 /CNW/ - For the first quarter ended March 31, 2024, iA Financial Corporation (TSX:IAG) recorded core diluted earnings per common share (EPS)† of $2.44, which is 17% higher than the same period in 2023. Core return on common shareholders' equity (ROE)† for the trailing twelve months was 14.6%, close to the Company's medium-term target of 15%+. On a reported basis, which includes the impact of volatile items (primarily short-term macroeconomic variations), first quarter net income attributed to common shareholders was $233 million, EPS was $2.34 and ROE† for the trailing twelve months was 10.9%. The solvency ratio† of 142% at March 31, 2024 is well above the Company's operating target of 120%.
"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 $1.3 billion, were particularly noteworthy, and testify to the strength of our leading position in Canada," commented Denis Ricard, President and CEO of iA Financial Group. "As we continue to invest in growing all our businesses, our robust capital position, fuelled by ongoing strong organic capital generation, allows us to increase the maximum number of repurchases authorized under our share buyback program. We can thus create and return value to our shareholders while pursuing acquisition opportunities in an active and disciplined way."
"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)
$234
$273
(14 %)
Less: dividends on preferred shares issued by a subsidiary (in millions)
($1)
($3)
Net income attributed to common shareholders (in millions)
$233
$270
(14 %)
Weighted average number of common shares (in millions, diluted)
99.5
104.5
(5 %)
Earnings per common share (diluted)
$2.34
$2.58
(9 %)
Core earnings†
243
217
12 %
Core earnings per common share (diluted)†
$2.44
$2.08
17 %
_______________________________________
1
Please refer to the separate press release issued on May 9, 2024 for more details.
†
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
March 31, 2024
December 31, 2023
March 31, 2023
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
$68.93
$66.90
$64.69
Assets under management and administration† (in billions)
$229.3
$218.9
$207.1
______________________________________
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 March 31, 2024, which is hereby incorporated by reference, and is available for review at sedarplus.ca or on iA Financial Group's website at ia.ca.
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 $2.44 in the first quarter is 17% higher than the result for the same period in 2023. Core return on common shareholders' equity (ROE)† for the trailing twelve months was 14.6% at March 31, 2024, close to the Company's medium-term target of 15%+.
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 March 31, 2024.
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)
$2.34
$2.58
(9 %)
Core earnings
243
217
12 %
Core EPS (diluted)
$2.44
$2.08
17 %
Return on common shareholders' equity (ROE)†
March 31, 2024
December 31, 2023
March 31, 2023
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 $243 million in the first quarter is derived from net income to common shareholders of $233 million and a total adjustment of $10 million from:
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 the Surex 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 $243 million is described in the following paragraphs by business segment.
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