For its final quarter ended September 30, 2024, iA Financial Group announced net earnings attributable to common shareholders of $283 million. This represents an increase of 415% compared with the net income of $55 million recorded in the third quarter of last year.

The company reported a 17% year-on-year increase in diluted earnings per common share (EPS) from core operations. Core EPS increased by 8% over the third quarter of 2023, to $277 million.

In the press release accompanying the results, President and CEO, Denis Ricard, commented on the strong growth. He stated that the “disciplined execution of our growth-driven strategy resulted in a 25% year-over-year increase in premiums and deposits in the third quarter, driven by robust sales and the acquisitions of Vericity and the Prosperity blocks of business.”

In addition, Ricard emphasizes the “particularly strong” sales in segregated funds and individual insurance, both in Canada and the United States.

On the conference call with analysts held on November 6, Ricard commented on the increase in earnings during the third quarter. “I have not used the word exceptional, because exceptional would mean that it's not repeatable,” he said. 

He added that, for the time being, the company is maintaining its annual target return on equity (ROE) to common shareholders at 15%. As at September 30, 2024, annualized ROE stood at 16.9%.

For his part, Éric Jobin, Executive Vice-President, CFO and Chief Actuary, stated in the company’s press release that EPS growth “is mainly due to higher expected insurance earnings, resulting from solid growth in premiums and deposits, as well as in assets, including those from recent acquisitions.” 

By sector  

iA Financial Group reported net income attributable to common shareholders of $95 million in the third quarter of 2024 for its Canadian insurance operations. This represents a 2% decrease compared to the $97 million reported for the same quarter in 2023.

This segment includes life insurance products, as well as vehicle warranties and home and auto general insurance. Earnings from core business amounted to $106 million, up 16% over the previous year.

The company attributes this performance to the favorable impact of price increases in various business units over the past 12 months. With respect to core insurance experience, losses of $6 million were recorded, notably in connection with claims associated with the heavy rains of August 9, 2024, which affected iA Auto and Home. This factor was partially offset by a drop in vehicle thefts and favourable weather conditions during the rest of the summer.

In Wealth Management, net income attributable to common shareholders was $99 million for the third quarter, compared with $73 million for the third quarter of the previous year. This is an increase of 36%.

The company attributes this result mainly to the good performance of financial markets and to the expected earnings on segregated-fund insurance business. Mortality experience was also favorable.

In the U.S. business segment, net income attributed to common shareholders amounted to $21 million in the third quarter of 2024, compared with the $24 million reported a year earlier. This represents a decline of 13%.

With regard to the computer breakdown that paralyzed CDK Global at the end of June 2024, the company states in its management report that this event had a negligible effect on sales in the last quarter. This firm is a supplier to the U.S. Dealer Services unit.

Net income attributable to common shareholders from investment income amounted to $114 million in the third quarter of 2024, whereas the company reported a loss of $76 million for the same period in 2023.

Impact of transactions  

The company reported record sales of US$68 million in individual insurance in the U.S. market, highlighting the contribution of sales made through the acquisition of Vericity.

On August 7, 2024, the company announced the acquisition of two blocks of business from Prosperity Life Group. This insurer, which underwrites life, annuity and health insurance products, also contributed to sales growth in the U.S. business segment. 

On August 6, 2024, iA Private Wealth Management completed the acquisition of Laurentian Bank Securities' full-service retail brokerage division. This division manages over $2 billion in assets. Approximately 15,000 client accounts were transferred and 25 advisors joined the iA network.

Other highlights  

Total assets under management and administration amounted to $249.7 billion at September 30, 2024, compared with $205 billion a year earlier.

Net premiums, or premium equivalents and deposits, were up $999 million or 25% over the same period to $4.9 billion in the third quarter of 2024, compared to $3.92 billion in the same period last year.

According to the company's management report, all business units contributed to this growth, particularly the Wealth Management segment, which includes both individual and group business. This segment accounted for 63% of the company's net premium volume in the most recent quarter, but contributed 76% of the volume growth for the same period.

Solvency and capital deployment 

Alongside its results, iA also announced the renewal of its share buyback program. The company aims to repurchase approximately 4.7 million shares, representing approximately 5% of its issued common shares as of October 31, 2024. Some 1.4 million shares were repurchased under this program during the third quarter, at a cost of $123 million.

The company generated $180 million in excess capital in the third quarter, for a total of $485 million for the first nine months of the year. The minimum target of $600 million in excess capital for the full year 2024 will probably be exceeded, says the company.

The company's solvency ratio stood at 140% at September 30, 2024, compared with an operating target of 120%. The same ratio stood at 145% on September 30, 2023. The capital available to deploy the company's growth is estimated at over one billion dollars.

At the conference with financial analysts held on November 6, several questions were asked about the impact of the changes proposed by the Autorité des marchés financiers to its Capital Adequacy Requirements Guideline – Life and Health Insurance (CARLI).

If this guideline is adopted as published, iA Financial Group will no longer be subject to the intervention target ratios, although it will still have to meet the minimum ratios.

This would give the company an additional $700 million in available capital to deploy its activities, with no material effect on the solvency ratio. Analysts were keen to know what the company's management intended to do with this capital injection. The new guideline will come into effect in January 2025.

“Among other changes, the proposed CARLI guideline includes revisions related to the regulatory capital requirements for segregated fund guarantees. In this regard, a transition period is authorized for the first two quarters of 2025 when insurers can apply the previous version of the guideline. Analyses will be performed in anticipation of this transition period to assess the impacts of these other changes, which are expected to be more limited than those resulting from the removal of intervention target ratios mentioned above,” stated the company in its management report. 

Denis Ricard explains that, compared with other public life and health insurance companies, the most mature of which have a market value in excess of $40 billion, iA Financial Group has a market value of around $10.5 billion. The company's management aims to double this value within a few years.

To achieve this, the company intends to continue generating greater shareholder value through dividends, share buybacks and business growth, both organically and through acquisitions, he concludes.