- Core EPS: Increased by 17% year-over-year to $2.93 per share.
- EPS: Reported at $2.99.
- Core ROE: Trailing 12-month core ROE of 15.3%, with Q3 annualized core ROE at 16.6%.
- Premiums and Deposits: Increased by 25% year-over-year.
- Assets Under Management and Administration: Increased by 22% year-over-year.
- Solvency Ratio: 140%.
- Book Value Per Share: $71.63, a 10% increase over 12 months.
- Individual Insurance Sales (Canada): $103 million, up 7% year-over-year.
- Group Insurance Sales (Canada): Increased by 21% year-over-year, with premiums and deposits at $508 million.
- Dealer Services Sales (Canada): $197 million, up 2% year-over-year.
- iA Auto & Home Direct Written Premiums: $164 million, a 15% increase year-over-year.
- Wealth Management Net Fund Flows: Over $600 million.
- Gross Sales of 6 Funds: More than $1.3 billion, a 51% increase year-over-year.
- Mutual Fund Sales: $385 million, up 33% year-over-year.
- Group Savings and Retirement Sales: $900 million, up 62% year-over-year.
- Individual Insurance Sales (US): USD68 million, a 55% increase year-over-year.
- Dealer Services Sales (US): USD286 million, up 15% year-over-year.
- Organic Capital Generation: $180 million in Q3, $485 million year-to-date.
- Capital Available for Deployment: $1 billion as of September 30, 2024.
- Dividend Increase: 10% increase announced.
- Share Buyback Program: Renewed to buy back up to 5% of outstanding shares.
Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Core EPS increased by 17% year-over-year to a record $2.93 per share, indicating strong profitability.
- The company achieved a trailing 12-month core ROE of 15.3%, surpassing its midterm target.
- Robust sales growth was observed across nearly all business units, with a 25% increase in premiums and deposits and a 22% rise in assets under management and administration.
- The Solvency ratio of 140% demonstrates a strong capital position, supported by organic capital generation of $180 million in Q3.
- iA Financial Corp Inc (IAFNF, Financial) announced a 10% increase in dividends and renewed its NCIB program, reflecting a commitment to returning value to shareholders.
Negative Points
- The challenging macroeconomic environment continues to impact vehicle affordability in Canada, affecting Dealer Services sales growth.
- Mutual fund inflows were lower than outflows, despite a 33% year-over-year increase in sales.
- The US operations experienced a less favorable business mix, impacting core noninsurance activities.
- The company faces ongoing challenges with inflation in auto parts affecting claims in the US extended vehicle warranty business.
- Core other expenses increased due to the addition of Vericity's expenses, impacting overall profitability.
Q & A Highlights
Q: Can you discuss the sustainability of the 16.6% annualized core ROE? Is there anything unusual that makes this result unsustainable?
A: Denis Ricard, President and CEO, stated that the results are strong and not exceptional, meaning they are repeatable. The company has made numerous initiatives over the last decade, such as diversifying product and business mix and disciplined acquisitions, which contribute to a balanced approach and improved shareholder value. There are no current concerns that would prevent generating similar ROE going forward.
Q: With the increase in capital available for deployment, does this change your capital deployment priorities?
A: Denis Ricard explained that the priorities remain the same: focusing on organic growth with ROE above 15%, disciplined acquisitions, dividends, and opportunistic share buybacks. The approach is balanced, similar to last year, and aims to increase shareholder value.
Q: Can you explain the regulatory change that increases your capital available for deployment by $700 million?
A: Eric Jobin, CFO and Chief Actuary, clarified that the change involves harmonizing with federal regulations, allowing a lower capital requirement for holding companies compared to operating companies. This alignment frees up additional capital for deployment.
Q: How do recent acquisitions like Vericity and Prosperity impact your core earnings, and is this expected to continue?
A: Eric Jobin noted that the acquisitions have positively impacted core earnings, with a noticeable increase in expected insurance earnings. While it's early, the results are favorable, and there is potential for continued positive impact.
Q: Regarding the US dealer services, what are the key drivers for the expected gradual profit improvement?
A: Eric Jobin mentioned that improvements are expected over the next 12 to 24 months through repricing and management actions. Denis Ricard added that more details will be provided at the upcoming investor day, focusing on strategies and initiatives to enhance profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
