- Core EPS: $2.75, up by 15% year-over-year.
- Trailing 12 months Core ROE: 15%.
- Premiums and Deposits: Up 15% year-over-year.
- Assets Under Management Administration: Up 12% over 12 months.
- Solvency Ratio: 141%.
- Book Value per Share: $69.92, increased by over 9% excluding share buybacks.
- Individual Insurance Sales (Canada): $98 million, up 10% year-over-year.
- Group Insurance Sales: $510 million, up 10% year-over-year.
- Dealer Services Sales (Canada): $194 million, up 2% year-over-year.
- iA Auto and Home Sales: $188 million, up 15% year-over-year.
- Net Fund Inflows (Wealth Management): More than $400 million.
- Gross Sales of Seg Funds: Nearly $1.3 billion, up 53% year-over-year.
- Mutual Fund Sales: $468 million, up 26% year-over-year.
- Group Savings and Retirement Sales: $858 million, up 6% year-over-year.
- Individual Insurance Sales (US): $49 million, up 14% year-over-year.
- Dealer Services Sales (US): $279 million, up 13% year-over-year.
- Core EPS Growth (Year-to-Date): 16% compared to the same period in 2023.
- Organic Capital Generation (Year-to-Date): $305 million.
- Deployable Capital: $1.1 billion as of June 30, 2024.
- Core ROE (Annualized): 15.9%.
- Insurance Canada Earnings: $106 million, up 16% year-over-year.
- Wealth Management Core Earnings: $98 million, up 29% year-over-year.
- Investment Earnings: $113 million, higher than the previous quarter.
- Net Income to Common Shareholders: $206 million in Q2.
- Capital Generation (Q2): $175 million.
- Leverage Ratio: 16.4% as of June 30, 2024.
Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- iA Financial Corp Inc (IAFNF, Financial) reported a record core EPS of $2.75, up by 15% year-over-year.
- The company achieved a trailing 12 months core ROE of 15%, meeting mid-term targets.
- Strong business growth in both Canada and the US, with premiums and deposits up 15% year-over-year.
- Robust capital position with a solvency ratio of 141%, supported by strong organic capital generation.
- Successful acquisitions, including Vericity and two blocks of life insurance business from Prosperity Life Group, expected to be accretive in the future.
Negative Points
- Dealer services division faced growth challenges due to the macroeconomic environment and a temporary outage at CDK Global.
- US dealer services experienced negative claims experience and inflation pressures on repair costs.
- Higher lapses in the US final expense insurance products, impacting profitability.
- Investment property value adjustments negatively impacted net income.
- Mutual fund sales faced challenges with higher redemptions, leading to net outflows.
Q & A Highlights
Q: US dealer services sales improved sequentially. What was the impact of the CDK outage? Was it material to that sales number?
A: Sean O'Brien, Executive Vice-President and Chief Growth Officer US Operations: The CDK outage did have an impact, but it was not huge. About 30% of our dealers are on that platform, but sales quickly bounced back in the following month.
Q: What are the expectations for US dealer services sales going forward?
A: Denis Ricard, Chief Executive Officer: We are focusing on organic growth and profitable sales. While we see positive trends, we remain prudent and need a couple more quarters to confirm sustained improvement.
Q: Can you explain the negative lapse experience in the US insurance business?
A: Eric Jobin, Executive Vice-President, CFO and Chief Actuary: The negative lapse experience is related to early duration lapses, particularly in the final expense products.
Q: What is causing the negative claims experience in the US dealer services?
A: Eric Jobin, Executive Vice-President, CFO and Chief Actuary: Inflation and the increasing complexity of vehicle technology are driving up repair costs. We are adjusting our pricing to reflect these changes.
Q: What is the outlook for the US dealer services business profitability?
A: Denis Ricard, Chief Executive Officer: While we see some positive signs, it is too early to declare an inflection point. We are focusing on organic growth and making necessary adjustments to improve profitability.
Q: What is the expected investment income outlook?
A: Eric Jobin, Executive Vice-President, CFO and Chief Actuary: The expected investment income is influenced by various factors, including interest rate changes and capital deployment activities. We expect it to stabilize based on current market conditions.
Q: What is the impact of the Vericity and Prosperity Life acquisitions on core earnings?
A: Eric Jobin, Executive Vice-President, CFO and Chief Actuary: Vericity will be dilutive to core earnings in the first year but accretive thereafter. Prosperity Life is expected to be accretive in the first year.
Q: What is the outlook for iA auto and home insurance?
A: Eric Jobin, Executive Vice-President, CFO and Chief Actuary: The positive experience is expected to continue due to favorable weather and reduced auto theft. We will update our loss ratio expectations at the end of the year.
Q: What is the sustainable growth rate for individual insurance sales in Canada?
A: Renée Laflamme, Executive Vice President - Individual Insurance, Savings and Retirement: We aim for long-term growth of around 8%, supported by our strong distribution network and product offerings.
Q: What is the outlook for mutual fund net sales?
A: Stephan Bourbonnais, Executive Vice President - Wealth Management: We are focusing on generating gross sales and improving net sales through our distribution channels and key account initiatives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
