iA Financial Group garnered net income attributed to its common shareholder of $217 million ($M) in the third quarter of 2021, unchanged from the same quarter in 2020.
The company released these financial results on Nov. 3, for the quarter ended September 30, 2021. Diluted earnings per common share (EPS) were $2.01. Return on common equity (ROE) was 12.8 per cent for the last 12 months. Core EPS is $2.23 and core ROE was 14.0 per cent for the last 12 months.
CEO Denis Ricard comments that“Equally impressive is our U.S. dealer services division, a high growth potential segment, where sales increased despite the low vehicle inventory environment.”
Chief Financial Officer and Chief Actuary Jacques Potvin notes that “Current profitability is solidly supported by our robust capital position and by very favourable policyholder experience since the beginning of 2021.”
Potvin adds that the annual organic capital generation target has already been met during the third quarter of the fiscal year. In Q3, the company organically generated approximately $150 million in additional capital, exceeding the annual target range of $275 to $325 million.
At $244 million pre-tax, expected profit on in-force in Q3 2021 was up 8 per cent or $19 million from the same quarter in 2020. Last year, the IAS acquisition in U.S. Operations added $6 million to earnings. After adjusting for this amount, expected earnings growth in Q3 2021 was 14 per cent for the U.S. Operations sector and 12 per cent for the company as a whole.
The solvency ratio for the entire group was 131 per cent as of Sept. 30, 2021, compared with 125 per cent a year earlier.
In keeping with regulators’ instructions not to increase dividends on common shares due to the pandemic, the Board of Directors has approved a quarterly dividend of $0.4850 per outstanding common share of iA Financial Corporation. This dividend, payable on Dec. 15, 2021 to all shareholders of record at Nov. 19, 2021, is the same as that paid in the previous quarter.
After nine months
After the first nine months of fiscal 2021, core earnings totalled $679 million, representing diluted earnings per common share of $6.31, up 17 per cent over the same period in 2020.
The sale of PPI Management's group insurance division to AGA Group Insurance was completed on Oct. 1. A gain of $12 million before taxes will be recognized for this transaction in Q4 2021.
iA Financial Group also highlights the signing of a real estate investment agreement with Canderel on October 19. Canderel thus becomes the strategic partner responsible for the operations and leasing of iA’s real estate assets in Quebec. The agreement, which covers the operations of 11 properties in Quebec City and five in Montreal, will take effect on Jan. 1, 2022.
iA Insurance's Q3 2021 results of $216 million in net income are down 3 per cent compared to the same quarter in 2020.
The solvency ratio was 121 per cent at Sept. 30, 2021, compared to 120 per cent at Q2 2021 and 124 per cent at Sept. 30, 2020. This ratio remains above the target range of 110 per cent to 116 per cent for iA Assurance.
Premiums and deposits maintained their upward momentum, with 4 per cent growth compared with the same quarter in 2020. For the first nine months of the year, the increase is 23 per cent compared with the same period in 2020. This growth was powered in particular by the performance of the individual wealth management segment.
Segregated fund gross sales totaled $1.15 billion, up 58 per cent from Q3 2020, for net sales of $839 million. Mutual fund gross sales were $660 million (+21 per cent), with net sales of $261 million. Guaranteed product sales totalled $213 million, up slightly from 2020.
In individual insurance, sales surged by 28 per cent in Q3 2021 versus the same quarter last year. The insurer attributes this performance to the combination of three elements: the strength of its distribution networks, its broad range of competitively priced products and the excellent performance of its digital tools. What’s more, the company issued 162,917 policies in nine months, representing a 16 per cent increase year over year.
In the Dealer Services division, sales were $300 million, down from $310 million in Q2 2020. This was due to lower auto sales in Canada as a result of inventory shortages. In contrast, on the U.S. side of the business, the same dealer services division saw a 33 per cent increase in sales in Q3, despite the same vehicle supply chain disruptions.
The iA Auto and Home subsidiary also reported a 7 per cent increase in written premiums in the third quarter of 2021, at $118 million.