iA Financial Group reported net income attributed to common shareholders of $206 million for Q2 2024, representing a 5 per cent increase compared to $196 million in the same quarter of 2023.
The company also posted a 15 per cent year-over-year increase in core diluted earnings per share (EPS). EPS from core activities rose by 8 per cent to $267 million compared to the same period in 2023.
In the earnings release, Denis Ricard, President and CEO of iA Financial Group, emphasized that "business growth was strong across all sectors, contributing to a 15% increase in premiums and deposits." He particularly underlined the robust sales of individual insurance and segregated funds in Canada, as well as record sales in the United States.
In addition to strong organic growth, Ricard highlighted recent acquisitions in U.S. insurance, and Canadian wealth management distribution, which he described as “high-growth sectors.”
The company’s share buyback program continued, totaling $287 million in Q2 2024, with over 5.6 million shares repurchased between Nov. 14, 2023, and June 30, 2024.
iA Financial Group generated $175 million in excess capital in the second quarter, bringing the total to $305 million for the first half of 2024. The company maintains its minimum target of $600 million for the full year, according to Éric Jobin, Executive Vice-President, CFO and Chief Actuary.
Favorable market conditions
Jobin noted that in addition to continued sales momentum, this performance was “was notably driven by favourable insurance experience for a third consecutive quarter,” as well as strong wealth management results, fewer claims at iA Auto and Home, and favorable mortality experience.
The company’s solvency ratio stood at 141 per cent as of June 30, 2024, well above its operating target of 120 per cent. Available capital for growth is estimated at $1.1 billion.
Completed transactions
Following the end of Q2 2024, iA Financial Group announced the acquisition of two blocks of business from Prosperity Life Group, an Arizona-based insurer, with the transaction confirmed on August 7, 2024. These blocks include over 115,000 policies and more than $100 million in annual premiums. Additionally, iA products will now be available through Prosperity’s distribution network, which includes 15,000 representatives, two-thirds of whom are already contracted with iA’s subsidiary, American-Amicable Life Insurance Company.
Another acquisition, the $170 million purchase of Vericity, was finalized on June 28, 2024, after being announced on October 3, 2023.
In wealth management, iA Private Wealth concluded an agreement to acquire Laurentian Bank Securities’ full-service retail brokerage division, representing over $2 billion in assets. The deal closed on August 2, 2024, without significantly impacting iA’s solvency ratio.
Sector performance
In Canadian insurance, which includes life insurance, vehicle warranties, and property and casualty insurance, iA Financial Group posted a core earnings increase of 16 per cent to $106 million in Q2 2024, up from $91 million in Q2 2023. The company reported $11 million in core earnings gains, driven by sustained favorable mortality experience in individual and group insurance, as well as lower claims in auto and home insurance.
In wealth management, core earnings reached $98 million in Q2 2024, a 29 per cent increase from $76 million in Q2 2023. This performance was attributed to a 25 per cent year-over-year increase in core earnings from segregated fund insurance activities and a 29 per cent rise in non-insurance activities. The strong performance of financial markets continues to have a positive impact on the sector’s profitability, the company noted.
In the U.S. operations, core earnings for Q2 2024 amounted to $22 million, down from $26 million in Q2 2023. During the August 7 analyst call, management explained that the Dealer Services segment was disrupted by an IT outage at CDK Global, following two cybersecurity breaches. This platform is used by about 30 per cent of iA's dealership clients in this segment, according to Sean O’Brien, Executive Vice-President, Chief Growth Officer, U.S. operations. The outage lasted from June 19 to July 4, 2024.
Investment income increased by 6 per cent year-over-year, rising from $81 million in Q2 2023 to $86 million in the same period of 2024.
Ricard reiterated during the analyst call that it would take at least two more quarters to assess the progress of the U.S. subsidiary's efforts in the dealer services segment.
The Corporate segment slightly reduced its loss to $50 million in Q2 2024, compared to a $52 million loss in Q2 2023.
Other key figures
Assets under management and administration stood at $235.4 billion as of June 30, 2024, a 12 per cent increase from $210.2 billion a year earlier. Net premiums, premium equivalents and deposits, rose by $641 million or 15 per cent year-over-year, reaching $4.9 billion in Q2 2024, compared to $4.2 billion a year earlier.
All units contributed to this growth, particularly the wealth management segment, which accounted for 64 per cent of the company's net premium volume. Net premiums in this segment grew by $482 million to $3.1 billion in Q2 2024, compared to $2.7 billion a year earlier. The individual wealth management sub-segment significantly contributed to this increase, with a $434 million rise in the last quarter.
