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DBRS Morningstar highlights iA’s rebound

By Charles Mathieu | August 26 2020 08:47AM

Photo: Freepik

After having regained ground lost in the first quarter due to the COVID-19 pandemic, iA Financial Group has kept its financial solvency A (high) and issuer rating a (low), assigned by DBRS Morningstar. The firm’s growth outlooks remain stable.

On July 31, the rating agency published a comment on the insurer’s Q2 results; net income of $182.7 million was reported for this period.

Sales and rising income

“The recovery in net income brings the Company's profitability back to a level similar to Q2 2019,” DBRS Morningstar points out.

The rating agency adds that sales in most sectors, coupled with “lower market volatility and higher equity market prices compared to the prior quarter,” and
favourable policyholder experience” stabilized the firm’s income.

DBRS Morningstar comments the insurer on its “resiliency in generating sales despite higher operational challenges faced by the Company’s distribution networks in the current environment.”

Impaired investments minor

The quality of the iA portfolio is noteworthy. DBRS Morningstar pointed to stable loss ratios on car loans and mortgages. Yet losses on the insurer’s investments climbed by $36.4 million, which represents only 0.08% of its total investment portfolio, the agency said.

“The Company maintains a conservative and diversified invested assets portfolio of a high credit quality, positioning it well to cope with the adverse operating environment,” DBRS Morningstar says.

Financial leverage

The agency also noted that iA Financial Group “maintains good financial flexibility,” with a leverage (or debt) ratio of 25.6% on June 30.

Lower solvency

The solvency ratio of iA Financial Group’s holding company was 124% at Q2 2020, DBRS Morningstar adds, “which was well above regulatory requirements.”

The ratio “declined quarter-over-quarter” as the corporation completed the acquisition of IAS Parent Holdings in May, the rating agency said. However it “remained stable through the market volatility in Q2 2020.”

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