iA Financial Group Reports First Quarter Results And Amends its Normal Course Issuer Bid

17% YoY increase in core EPS, strong business growth and robust capital position

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%¹

QUEBEC 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."

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.

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.

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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