First-quarter earnings down 14 per cent for iA Financial Group

For its first quarter ended March 31, 2024, iA Financial Group reported net income to common shareholders of $233 million. This is a decrease of 14 per cent compared to the $270 million net income posted for the first quarter of 2023.

However, the company posted a 17 per cent year-over-year increase in core diluted earnings per common share (EPS). 

Core EPS rose 12 per cent year-over-year to $243 million compared to the same quarter of 2023. The company has been carrying out share buybacks over the past 12 months.

In the press release accompanying the results, President and CEO Denis Ricard underlined segregated fund sales, which reached nearly $1.3 billion in the first quarter of 2024.

He added that the company's capital position even allows it to increase the maximum number of shares it intends to acquire under its buyback program. The maximum number of shares that can be repurchased has been increased from 5 per cent to 8 per cent of outstanding shares.

The company generated some $130 million in excess capital in the first quarter, and is targeting $600 million for the full year 2024. It still has access to $1.5 billion in capital to buy back shares or make acquisitions.

Progress  

According to Éric Jobin, Executive Vice-President, CFO and Chief Actuary, this quarterly result was "driven by solid wealth management results, lower claims at iA Auto and Home and favourable mortality experience."

He added, “We have also successfully reduced the sensitivity of our core results to interest rate variations by almost half through model refinements, such as making the accounting approach for certain liabilities more consistent with the approach used for assets.” 

By segment  

For insurance operations in Canada, which includes a broad range of life and health insurance products, as well as vehicle warranties and auto and home insurance, iA Financial Group reported core earnings of $92 million for the first quarter of 2024.

This is an increase of 24 per cent over the $74 million recorded in the first quarter of 2023. This reflects the impact of new sales and the renewal periods for certain group insurance groups, the company stated in its management report.

In Wealth Management, core earnings reached $95 million in the first quarter of 2024, compared with $65 million in the same quarter of 2023, an increase of 46 per cent. Growth in segregated-fund insurance business accounted for much of this increase.

Investment income generated surpluses were down 20 per cent year-over-year, while core earnings fell from $108 million in the first quarter of 2023 to $86 million for the same period this year. The company is promising greater stability in this result due to the changes explained above by Éric Jobin.

For the U.S. business, core earnings reached $19 million in the first quarter of 2024, compared with the $17 million reported in the same quarter of 2023.

Regarding the outlook for this sector, the company points out that measures have been adopted to improve profitability, including rate adjustments and a reduction in the number of employees at the beginning of the second quarter.

At the analysts' conference, Denis Ricard said that it will take a couple of quarters before the company sees the results of these efforts for Dealer Services.

The Corporate segment recorded after-tax expenses of $49 million in the first quarter of 2024, compared with $47 million in the same quarter of 2023.

Highlights  

Total assets under management and administration increased by 11 per cent year-over-year to $229.3 billion at the end of the first quarter of 2024.

Net premiums, premium equivalents and deposits, were up by $374 million or 8 per cent over the same period, reaching $4.9 billion in the first quarter of 2024, compared with $4.5 billion a year earlier.

All business units contributed to this performance, says the company, particularly the Wealth Management segment, which accounts for two-thirds of the company's total net premiums.

For this segment, net premiums rose by $254 million to $3.3 billion in the first quarter of 2024, compared with $3 billion a year earlier. The Group Savings and Retirement sub-segment reported an 18 per cent year-over-year increase in net premiums.

Appointments 

The company took advantage of its annual shareholders' meeting on May 9 to announce a number of appointments, which take effect May 29, 2024.

They announced the departure of Michael Stickney, Executive Vice-President, Chief Growth Officer US Operations, Co-Head of Acquisitions. Present at the conference with financial analysts, Stickney is retiring after 25 years with the company.

He will be replaced by Sean O'Brien as Chief Growth Officer US Operations. Already a member of the Executive Committee, he joined the company in 2015 and has nearly 30 years' experience in leading and growing businesses in the financial sector. He previously held the position of Executive Vice-President, Group Benefits and Retirement Solutions.

Part of Mike Stickney’s previous responsibilities were also to co-head acquisitions. This mandate that will now be solely entrusted to Denis Berthiaume who is now iA’s Executive Vice-President, Strategy, Performance, Mergers and Acquisitions. (Berthiaume held the position of Executive Vice-President, Strategy and Performance and Co-Head of Acquisitions since August 2023). 

Louis-Philippe Pouliot has been appointed Executive Vice-President, Group Benefits and Retirement Solutions. An actuary, Pouliot has been with iA since 2008. He will join the iA Financial Group Executive Committee.