On May 27, 2020 iA Financial Group committed to sell its residential mortgage loan portfolio, announced the company at the same time that it announced its most recent quarterly results, adding that “this commitment is not reflected in the second quarter 2020 financial statements.”
Subject to necessary approvals, the transaction should be concluded on Sept. 1, 2020, iA said. Has the insurer found a buyer?
Yes it has, Pierre Picard, public relations manager at iA Financial Group told the Insurance Portal. The company will sell part of its portfolio to National Bank, and the rest has already been transferred to MCAP, one of Canada’s largest independent mortgage finance companies.
“iA Financial Group’s residential mortgage loan portfolio comprised two components,” Pierre Picard explains. “One component involved administering the mortgage loan portfolio of the firm TDSI. We transferred this mandate to MCAP on July 18. This is therefore a portfolio transfer, and not a sale as such. The other component of the iA Financial Group residential mortgage loan portfolio will be sold to National Bank on September 1.”
A small portfolio
“The sale reflects management’s decision to exit the residential mortgage market and focus on the multi-residential and non-residential markets,” iA says.
The company will now focus exclusively on commercial mortgage loans. “This choice follows our decision to prioritize investments in key business sectors for iA Financial Group. Residential mortgage loans represent a very small sector for the business, whose market share in this area is minimal,” Picard says.
Stopping ongoing activities
iA announced its intention to sell its residential mortgage loan portfolio in September 2019.
From that point, iA gradually phased out its residential mortgage loan operations. “The first step was to stop accepting new loans. Current contracts were still being honoured, and customer service remained available,” Picard says.
iA Financial Group has now reached the last step of the winding down of residential mortgage loan operations, Picard continues. For the company, this step consists of progressively transferring all of its residential mortage loans to National Bank and MCAP, which are “institutions as solid and trustworthy as iA Financial Group”, he says.
What about the customers and employees?
About 12,000 customers hold residential mortgage loans with iA. This transfer “won’t change much at all” for them, Picard adds. “We are handling all the processes linked to file transfers. Payments (capital and interest) and rates will not change for the duration of the term. Of course, payments for variable mortgage rates will continue to be adjusted.
Internally, about 80 employees are affected by this reorganization, Picard says. He points out that their positions will be eliminated in phases until the sector is completely closed in fall 2020. “We aim to redeploy as many employees as possible within the organization. This process has been under way for months. Employees can receive personalized support during this transition period,” says.
