Institutional Presentation March was one of our best years ever. Jovian acquisition adds private wealth management expertise

Transcription

1 Industrial Alliance Yvon Charest President and Chief Executive Officer 1 Institutional Presentation March 2014 Introduction 2013 was one of our best years ever Solid top-line momentum Capital-light businesses continued to deliver Jovian acquisition adds private wealth management expertise EPS and ROE exceeded expectations Reserves and capital can withstand a sizeable equity market drop First dividend id d increase (+6%) since 2008 crisis i (announced Feb. 13) Post year-end, AM Best upgrade from A (Excellent) to A+ (Superior) 2

2 IA Exceeded Expectations in 2013 Book value up 12% IAG total stock return of 53% Profitability (EPS) $3.00 Guidance $3.40 $3.57 ROE 10.5% 12.0% 12.6% Solvency ratio 175% 200% 217% 3 EPS Gaining Momentum In line to meet 2015 objective $4.00 $3.57 $2.93 $3.22 $2.55 $0.82 $ Restated for comparability following adoption of IFRS-10 and amendment to IAS-19 effective January 1, 2013.

3 High-Quality Balance Sheet With improved financial flexibility Debt Ratio (Debentures and preferred shares /Capital structure, t as of Dec. 31 st ) Agency Rating Outlook 36% 1 S&P A+ (Strong) Stable A.M. Best A+ (Superior) Stable DBRS IC-2 Stable 26% A.M. Best upgraded IA on February 27 th, Restated for comparability following adoption of IFRS-10 and amendment to IAS-19 effective January 1, Equity Market Protection Significant improvement over last year Full year impact of a sudden 25% decrease in S&P/TSX on net income Decrease in S&P/TSX before reserves need strengthening th (as of December 31 st ) Proportion of seg fund guarantees at risk that are hedged d % -$93M -14% 32% -$283M -23% Dec.12 Feb.14 6

4 Solvency Ratio Better positioned to withstand macroeconomic bumps Interest rates (IRR) TSX level TSX variation +0.20% 1 At Dec. 31/ % 020% 1 16, % 237% 234% 230% 15, % 223% 219% 216% 13,600 At Dec. 31/13 220% 217% 214% 12,900-5% 223% 219% 216% 12,300-10% 224% 220% 217% 11,600-15% 215% 212% 209% 10,900-20% 208% 205% 202% 10,900-25% 204% 201% 199% 7 1 Intra-year variations in the solvency ratio for the IRR (+/-) reflect the market impact only. Reserve adjustments are reflected at the time of the year-end assumption review. Solid Top-line Momentum AUA/AUM approaching $100B AUM/AUA 1 (assets under management and admin., in $B) P&D (net premiums, premium equiv. and deposits, in $M) AUM AUA ,231 6,751 7,009 6,904 7, has been restated for comparability following adoption of IFRS-10 and amendment to IAS-19 effective January 1, A change in inter-fund eliminations in 2013 led to a retroactive adjustment for 2010, 2011 and 2012.

5 Individual Insurance Sales were more profitable in 2013 Sales Operating profit (before change in assumptions, in $M) Restated for comparability following adoption of IFRS-10 and amendment to IAS-19 effective January 1, Individual Wealth Management Jovian added $3.8B to AUM Fund inflows, equity markets and hedging program helped profit Assets under management (in $B) 27 Operating profit (before change in assumptions, in $M) A change in inter-fund eliminations in 2013 led to a retroactive adjustment for 2010, 2011 and Restated for comparability following adoption of IFRS-10 and amendment to IAS-19 effective January 1, 2013.

6 Individual Wealth Management IA is one of Canada s largest non-bank advice providers Mutual fund manufacturer with leading portfolio managers A broad selection of investment solutions Stable source of growth and earnings Distribution subsidiaries Total asset growth of 13% in 2013 Over 2700 representatives and advisors Offer a full range of financial products and services 11 Mutual fund brokerage Mutual fund brokerage Securities brokerage Jovian Capital Acquisition Added $6.4B to AUA/AUM in 2013 Provides immediate scale in private client and high net worth segment Jovian brings credible, well-established and geographically diverse platforms Additional scale and presence for IA s IIROC operations MGI Securities adds 50% scale and expands our cross-canada presence ETF manager provides new opportunity Hahn provides a relatively low-risk opportunity to test the growing ETF market with an advice-compatible, compatible higher margin solution INVESTMENT STEWARDS Leon Frazer & Associates Investment counsel 12

7 Group Insurance Employee Plan Division Looking for profitability to improve further in 2014 Sales sales growth confirms soundness of recent action plan Disability experience on track Focus extended to groups with 50 to 2,000 employees Technology and superior client service are key success drivers Group Insurance Special Markets Solutions Strong and stable contributor over the long term Gross Sales sales growth: +11% Serves niche insurance markets underserved by traditional group carriers Provides AD&D coverage, travel insurance, term life insurance and other special products

8 Group Insurance Dealer Services Division Already ahead of our $500M sales goal for 2015 Car loans and extended warranties are growing Creditor insurance sales P&C (warranties) sales IA Auto & Home Insurance Outpacing annual industry growth of 2% Sales (Direct premiums, in $M) Ranked # 1b by J.D. JD Power & Ass. in client satisfaction for home insurance in Quebec Focus on strengthening ties with IA Career network and Dealer Services 2013 profit hurt by catastrophic events

9 Group Savings and Retirement Ready to offer pooled registered pension plan in Quebec and eventually in rest of Canada Sales Operating profit (before change in assumptions, in $M) 1, Restated for comparability following adoption of IFRS-10 and amendment to IAS-19 effective January 1, Guidance EPS 1 Strain ROE 1 Effective tax rate Q1 Q2 Q3 Q4 $0.75 to $0.85 $0.85 to $0.95 $0.90 to $1.00 $0.90 to $ % 25% 25% 20% Additional quarterly strain variation of -10% to +5% due to product mix 11.0% to 12.5% 18% to 22% 2014 $3.40 to $ % Solvency ratio: 175% to 200% Payout ratio: 25% to 35% (mid-range) 18 1 No reserve strengthening considered in EPS and ROE guidance.

10 What s coming in 2014 Focus will remain on business growth Ensure profitable growth for retail insurance in Canada and US Improve seg fund sales via product and sales management Maintain momentum for all other products Continue to decrease the sensitivity of capital to equity markets Working on credit for hedging from regulator Reallocate assets backing LT liabilities between fixed income securities and common stocks (in conjunction with ASB) Capital deployment will continue 19 Non-IFRS Financial Information Industrial Alliance Insurance and Financial Services Inc. reports its financial results in accordance with International Financial Reporting Standards (IFRS). It also publishes certain non-ifrs financial i measures that t do not have an IFRS equivalent, including sales, value of new business, embedded value and solvency ratio, or which have an IFRS equivalent such as data on operating profit and income taxes on earnings presented in the sources of earnings table. The Company also uses non-ifrs adjusted data in relation to net income, earnings per share and return on equity. These non-ifrs financial measures are always accompanied by and reconciled with IFRS financial measures. The Company believes that these non-ifrs financial measures provide investors and analysts with additional information to better understand the Company s financial results as well as assess its growth and earnings potential. Since non-ifrs financial measures do not have a standardized definition, they may differ from the non-ifrs financial measures used by other institutions. 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. 20

11 Forward-Looking Statements 21 This document may contain statements relating to strategies used by Industrial Alliance 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 Industrial Alliance 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 Industrial Alliance 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 Industrial Alliance; 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 and in the Management of Risks Associated with Financial Instruments note to Industrial Alliance s consolidated financial statements, and elsewhere in Industrial Alliance s filings with Canadian securities regulators, which are available for review at The forward-looking statements in this document reflect the Company s expectations as of the date of this document. Industrial Alliance does not undertake to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, except as required by law. Industrial Alliance Yvon Charest President and Chief Executive Officer 22 Institutional Presentation March 2014