Canada NewsWire
QUEBEC CITY, Feb. 16, 2022
2021 results above guidance and robust financial position leading to an increased ROE¤ target for 2022
The results presented below are for iA Financial Corporation Inc. ("iA Financial Corporation" or the "Company"), the holding company that owns 100% of the common shares of Industrial Alliance Insurance and Financial Services Inc. ("iA Insurance"). The results for iA Insurance are presented in a separate section on page 6 of this document. |
This news release presents non-IFRS measures used by the Company when evaluating its results and measuring its performance. These non-IFRS measures are not standardized financial measures and are not included in the financial statements. These measures are: return on common shareholders' equity (ROE), core earnings per common share (core EPS), core ROE, different payout ratios, organic capital generation, potential capital deployment, different measures of business growth, components or measures of capital, solvency, sources of earnings, sensitivities and car loan portfolio. See the "Non-IFRS and Additional Financial Measures" section at the end of this document for relevant information about such measures. |
FOURTH QUARTER HIGHLIGHTS – iA Financial Corporation
QUEBEC CITY, Feb. 16, 2022 /CNW/ - For the fourth quarter ended December 31, 2021, iA Financial Corporation (TSX: IAG) reports net income attributed to common shareholders of $209 million, diluted earnings per common share (EPS) of $1.94 and return on common shareholders' equity (ROE) for the trailing twelve months of 13.2%. Core EPS¤ was $2.01 and core ROE¤ for the trailing twelve months was 14.2%. Premiums and deposits¤ amounted to $4.2 billion during the quarter, up 6% from the same quarter in 2020, for a total of more than $16.6 billion in 2021, up 18% from 2020. Assets under management and administration¤ ended the year at $221.2 billion, an increase of 3% during the quarter and 12% in 2021.
"2021 is certainly one of the strongest years in the Company's history, with record business growth in several business units and core ROE above guidance at 14.2%," commented Denis Ricard, President and CEO of iA Financial Group. "Today, driven by this momentum, we are very pleased to increase the core ROE target range for 2022 to 13% to 15%, one year earlier than previously announced. In 2021, the Company's book value grew by 12%, and this solid value creation is largely due to the superior client experience provided by our dedicated employees and distributors. I am very proud of them and their continuous achievements and I want to thank them for that."
"Solid profitability was achieved in the fourth quarter, with 16% growth in core expected profit on in-force. As a result, 2021 ended with both core EPS and core ROE exceeding guidance," added Jacques Potvin, Executive Vice-President, CFO and Chief Actuary. "Building on this performance, we concluded 2021 with a robust capital position, strong organic capital generation and well‑positioned actuarial reserves. As a result, we feel confident as we continue to prepare for the transition to IFRS 17."
Earnings Highlights | Fourth quarter | Year-to-date at December 31 | ||||
2021 | 2020 | Variation | 2021 | 2020 | Variation | |
Net income attributed to shareholders (in millions) | $214 | $177 | 21% | $852 | $633 | 35% |
Less: dividends on preferred shares issued by a subsidiary (in millions) | $5 | $5 | — | $22 | $22 | — |
Net income attributed to common shareholders (in millions) | $209 | $172 | 22% | $830 | $611 | 36% |
Weighted average number of common shares (in millions, diluted) | 108.0 | 107.3 | 1% | 107.8 | 107.2 | 1% |
Earnings per common share (diluted) | $1.94 | $1.60 | 21% | $7.70 | $5.70 | 35% |
Core earnings per common share (diluted)1,¤ | $2.01 | $1.73 | 16% | $8.31 | $7.12 | 17% |
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1 | On a trailing twelve month basis. |
2 | Book value per common share is a financial measure calculated by dividing the common shareholders' equity by the number of common shares outstanding at the end of the period; all components of this measure are IFRS measures. |
Other Financial Highlights | December 31, 2021 | September 30, 2021 | December 31, 2020 |
Return on common shareholders' equity¤ | 13.2 % | 12.8 % | 10.6% |
Core return on common shareholders' equity1,¤ | 14.2 % | 14.0 % | 13.3 % |
Solvency ratio¤ | 134% | 131% | 130% |
Book value per share2 | $62.01 | $60.82 | $55.52 |
Assets under management and administration¤ (in billions) | $221.2 | $214.5 | $197.5 |
¤ | This item is a non-IFRS measure; see the "Non-IFRS and Additional Financial Measures" section in this document for relevant information about such measures. |
The results of iA Financial Corporation for the fourth quarter of 2021 are presented on a consolidated basis with those of its subsidiaries, including iA Insurance. Unless otherwise indicated, the results presented in this document are compared with those from the corresponding period last year.
Profitability – For the fourth quarter ended December 31, 2021, iA Financial Corporation reports diluted earnings per common share (EPS) of $1.94 compared to $1.60 for the same quarter of 2020. Diluted core EPS¤ for the fourth quarter of 2021 was $2.01, a year-over-year increase of 16% and within market guidance of $1.95 to $2.10.
The table below reconciles the Company's reported and core earnings. Core earnings is a non-IFRS measure that represents management's view of the Company's capacity to generate sustainable earnings.
Reported Earnings and Core Earnings Reconciliation | ||||||||
(in millions of dollars after tax unless otherwise indicated) | Fourth quarter | Year-to-date at December 31 | ||||||
Earnings | EPS (diluted basis) | Earnings | EPS (diluted basis) | |||||
2021 | 2021 | 2020 | Variation | 2021 | 2021 | 2020 | Variation | |
Reported earnings | 209 | $1.94 | $1.60 | 21% | 830 | $7.70 | $5.70 | 35% |
Core earnings remove from reported earnings the impacts of the following items¤: | ||||||||
Market-related impacts that differ from management's best estimate assumptions | (8) | ($0.08) | ($0.09) | (22) | ($0.21) | $0.49 | ||
Assumption changes and management actions | (2) | ($0.02) | ($0.04) | (2) | ($0.02) | ($0.04) | ||
Charges or proceeds related to acquisition or disposition of a | (3) | ($0.03) | $0.05 | 11 | $0.10 | ($0.01) | ||
Amortization of acquisition-related finite life intangible assets | 15 | $0.14 | $0.12 | 56 | $0.52 | $0.42 | ||
Non-core pension expense | 6 | $0.06 | $0.05 | 23 | $0.22 | $0.19 | ||
Other specified unusual gains and losses | — | — | $0.04 | — | — | $0.37 | ||
Core earnings¤ | 217 | $2.01 | $1.73 | 16% | 896 | $8.31 | $7.12 | 17% |
The following items presented in the "Sources of Earnings¤" section of the Company's Financial Information Package explain the differences between management's expectations and reported earnings for the three-month period ended December 31, 2021. This information contains non-IFRS measures. All figures are after tax unless otherwise indicated.
The Company reported net income attributed to common shareholders of $209 million for the fourth quarter of 2021. This result, as analyzed according to sources of earnings, can be explained as follows:
Year-end assumption review – Changes in the actuarial assumptions used to calculate net insurance contract liabilities (for non‑participating business) had a positive net impact on operating profit of $2 million before tax (+$0.02 EPS). This includes the adjustment of the additional mortality and policyholder behaviour provisions put in place for the uncertainty created by the pandemic. Other adjustments include relatively minor reserve strengthening for mortality, policyholder behaviour and expenses. Also, small reserve releases were recorded due to the impact of model refinements and adjustments to economic assumptions. More details on the year-end assumption review are provided in the 2021 Management's Discussion and Analysis.
Expected profit on in-force¤ – At $247 million pre-tax, expected profit on in-force (EPIF) for the fourth quarter of 2021 was up 16% or $34 million year over year. This quarter, a strong increase in EPIF was recorded in all five lines of business, mainly due to organic growth, including high net fund entries and the favourable impact of financial markets in the wealth sectors.
¤ | This item is a non-IFRS measure; see the "Non-IFRS and Additional Financial Measures" section in this document for relevant information about such measures. |
Experience gains (losses)¤ versus expected profit – For the fourth quarter of 2021, the Company reports a total net experience gain of $0.10 EPS ($10 million) versus management expectations. The following experience results are worthy of note:
Impact of new business (strain)¤ in Individual Insurance and US Operations – New business for the two business lines generated a charge at issue of $8 million pre‑tax, or 6% of sales for the quarter. This result is within the ‑5% to 10% target range but above expectations, representing a loss of $0.04 EPS. This is due to the favourable impact of the higher-than-expected sales volume (+ $0.02 EPS) being more than offset by higher expenses (‑$0.06 EPS), as mentioned above.
Income on capital¤ – Net income earned on the Company's surplus funds, which includes income from the iA Auto and Home affiliate (iAAH), was $25 million before tax for the fourth quarter, representing a gain of $0.02 EPS versus management expectations. At iAAH, experience was once again more favourable than expected due to a lower claims ratio, mostly for home protections (+ $0.04 EPS), though this was largely offset by a software writedown (-$0.03 EPS). In addition, investment income on surplus was higher than expected (+$0.03 EPS) and amortization of intangible assets was also slightly higher than expected (-$0.01 EPS). Finally, the increase in book value of the Surex minor shareholders' sell option during the quarter generated a $0.01 EPS loss as the Surex acquisition was not included in the 2021 budget.
¤ | This item is a non-IFRS measure; see the "Non-IFRS and Additional Financial Measures" section in this document for relevant information about such measures. |
Income taxes¤ – The effective tax rate for the quarter was above the 20% to 22% guidance range, at 22.7%. As a result, the tax charge was higher than expected (-$0.04 EPS), essentially due to tax adjustments related to prior years.
Business growth – The Company ended the fourth quarter of 2021 with solid sales results. In Canada, the Company continues to strengthen its market-leading position in all three "Foundation"[3] businesses of Individual Insurance, Individual Wealth Management and Dealer Services. In addition to its "Support"3 of branding and synergies with other businesses, Special Markets experienced strong growth, exceeding pre-pandemic sales levels, while iA Auto and Home continued to have good sales growth. Furthermore, the acquisition of Surex.com on November 2, 2021 will allow the Company to deploy synergies across Canada, while providing a digital distribution platform. Lastly, in the U.S., good performances were recorded in the "Expansion"3 businesses of Individual Insurance and Dealer Services. Thus, the pursuit of business growth mainly in capital-light products has continued.
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3 At the Investor Event held on March 10, 2021, the Company presented its business mix under three main categories: Foundation, Support and Expansion. For more information, please refer to the Company's website at http://ia.ca/investorrelations under Events and presentations/2021 Investor Event, on page 10 of the presentation. |
¤ | This item is a non-IFRS measure; see the "Non-IFRS and Additional Financial Measures" section in this document for relevant information about such measures. |
Financial position – At December 31, 2021, the solvency ratio¤ was 134%, compared with 131% at September 30, 2021 and 130% a year earlier. The Company's solvency ratio remained well above the 110% to 116% target range throughout 2021. The increase of three percentage points during the fourth quarter stems from the contribution of organic capital generation¤ and the positive impact of management actions and investment strategies, partly offset by the impact of market-related variations and the Surex acquisition announced in November 2021. Once the $250 million debenture redemption announced on January 20, 2022 is completed, it will reduce the Company's solvency ratio by about three percentage points, for a pro forma ratio of 131% at December 31, 2021. The leverage ratio at December 31, 2021 was 22.7%, compared to 23.1% at September 30, 2021.
Capital generation¤ – The Company organically generated approximately $150 million in additional capital during the fourth quarter and $450 million in 2021, widely exceeding the $275 million to $325 million target range for the year.
Book value4 – The book value per common share was $62.01 at December 31, 2021, up 2% from the previous quarter and up 12% over twelve months.
Dividend paid during the fourth quarter of 2021 – As regulators lifted their restrictions on dividend increases in November 2021, the Company's quarterly dividend was increased by 29%, and $0.6250 per share was paid to common shareholders in the fourth quarter of 2021.
Dividend payable during the first quarter of 2022 – The Board of Directors approved a quarterly dividend of $0.6250 per share, the same as in the fourth quarter of 2021, on the outstanding common shares of iA Financial Corporation. This dividend is payable on March 15, 2022 to the shareholders of record at March 4, 2022.
Dividend payout ratio¤ – In November of 2021, the Company raised the dividend payout ratio target range to 25% to 35% of core earnings, with the target being the mid-point (30%). This target was previously based on reported earnings.
Establishment of a Normal Course Issuer Bid – As regulators lifted their restrictions on buybacks in November 2021, the Company reinstated its NCIB program in December 2021. Under this regime, the Company can redeem up to 5,382,503 common shares, representing approximately 5% of the outstanding common shares, between December 6, 2021 and December 5, 2022. During the fourth quarter, 112,500 common shares were redeemed and cancelled under this program.
Dividend Reinvestment and Share Purchase Plan – Registered shareholders wishing to enrol in iA Financial Corporation's Dividend Reinvestment and Share Purchase Plan (DRIP) so as to be eligible to reinvest the next dividend payable on March 15, 2022 must ensure that the duly completed form is delivered to Computershare no later than 4:00 p.m. on February 25, 2022. Enrolment information is provided on iA Financial Group's website at http://ia.ca/investorrelations, under the Dividends section. Common shares issued under iA Financial Corporation's DRIP will be purchased on the secondary market and no discount will be applicable.
Acquisition of a majority stake in the online general insurance broker Surex – On November 2, iA Financial Group announced the acquisition of 70% of the shares of two Canadian companies specializing in insurance technology: Surexdirect.com Ltd. and Surexdirect.com (Ontario) Ltd. (collectively "Surex"). As a leading player in digital property and casualty (P&C) insurance distribution in Canada, Surex combines online self-serve capabilities with experienced advisors. This acquisition allows iA Financial Group to better serve its distribution networks across Canada and, at the same time, to improve the client experience by offering a broader range of financial products. This transaction is financed from cash on hand.
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4 Book value per common share is a financial measure calculated by dividing the common shareholders' equity by the number of common shares outstanding at the end of the period; all components of this measure are IFRS measures. |
Signing of a real estate asset management partnership – On October 19, iA Financial Group and Canderel announced the signing of an agreement in the real estate investment sector. The agreement confirms that Canderel has been selected as iA Financial Group's strategic partner and as such will be responsible for the operational management (operations and leasing) and maintenance of iA's real estate assets in Quebec. The agreement covers the operations of 16 properties—five in Montreal and 11 in Quebec City—and took effect January 1, 2022.
Disposal of PPI Benefits Inc. and Agile Benefits Inc. – On October 1, 2021, PPI Management Inc., a subsidiary of the Company, sold its wholly owned subsidiary, PPI Benefits Inc. (including Agile Benefits Inc.) to AGA Benefits Solutions. The sale reflects the decision of PPI Management Inc. to focus on its core business of individual insurance and support for independent advisors. A gain of $12 million before taxes ($0.09 EPS) was recognized for this transaction in the fourth quarter of 2021.
Litigation – iA Insurance was involved in litigation with a third party, Ituna Investment LP, which was seeking to use insurance contracts for purposes unrelated to insurance. On November 4, 2021, the Supreme Court of Canada released its decision that it had refused to hear the appeal. The decision of the Saskatchewan Court of Appeal of March 10, 2021, which was favourable to iA, is thus confirmed, putting an end to the litigation.
Subsequent to the fourth quarter of 2021:
Outlook for 2022 – Market guidance for iA Financial Corporation
¤ | This item is a non-IFRS measure; see the "Non-IFRS and Additional Financial Measures" section in this document for relevant information about such measures. |
Transition to IFRS 17 and IFRS 9 and outlook for 2023 – The Company's management is already making decisions and taking actions based on the new IFRS 17 and IFRS 9 accounting standards that will come into effect on January 1, 2023. Due to its strong and flexible balance sheet under IFRS 4 and its well-positioned actuarial assumptions, management considers that the Company is in a favourable position for the transition to the new accounting standards. Based on currently available information, impacts ranging from near-neutral to favourable are expected for the following key measures: 1) Core EPS, 2) Core EPS growth, 3) Core ROE, 4) Book value, 5) Solvency ratio and 6) Capital available for deployment. Core earnings will continue to be the best indicator of the Company's ability to generate sustainable revenues, eliminating the short-term volatility that may result from the de-linking between assets and liabilities under the new accounting regime. Finally, it is important to note that this outlook is preliminary as the following elements are not finalized or remain uncertain: the tax treatment of the contractual service margin (CSM) at transition, the changes that will be made to the formula for calculating the solvency ratio and the evolution of the macroeconomic environment until transition.
The Company's outlook for 2022, including the market guidance provided, constitutes forward-looking information within the meaning of securities laws. Although the Company believes that its outlook for 2022 is reasonable, such statements involve risks and uncertainties and undue reliance should not be placed on such statements. Factors that could cause actual results to differ materially from expectations include, but are not limited to: insurance, market, credit, liquidity, strategic and operational risks. In addition, certain material factors or assumptions are applied in preparing the Company's outlook for 2022, including but not limited to: accuracy of accounting policies and best estimate actuarial and economic assumptions used by the Company; a business growth rate similar to previous years; no unexpected material changes in the economic, competitive, insurance, legal or regulatory environment; risks and conditions; and the Company's recent performance and results, as discussed elsewhere in this document. The Company's outlook for 2022 serves to provide shareholders, market analysts, investors, and other stakeholders with a basis for adjusting their expectations with regards to the Company's performance throughout the year and may not be appropriate for other purposes. Additional information about risk factors and assumptions applied may be found in the "Forward-looking Statements" section of this document.
FOURTH QUARTER HIGHLIGHTS – iA Insurance
Profitability – In the fourth quarter of 2021, iA Insurance recorded net income attributed to its sole common shareholder, iA Financial Corporation, of $202 million, compared to $182 million a year earlier.
Financial position – The solvency ratio¤ of iA Insurance was 127% at December 31, 2021, compared with 121% at the end of the previous quarter and 122% a year earlier. This is above iA Insurance's target range of 110% to 116%. The increase of six percentage points in the fourth quarter was mainly attributable to the contribution of organic capital generation¤ and the positive impact of management actions and investment strategies, as the impact of market-related variations was slightly negative. When the $250 million debenture redemption announced on January 20, 2022 is completed, it will reduce iA Insurance's solvency ratio by about three percentage points, for a pro forma ratio of 124% at December 31, 2021.
Dividend – iA Insurance paid no dividend in the fourth quarter of 2021. For the first quarter of 2022, the Board of Directors of iA Insurance approved no dividend to its sole common shareholder, iA Financial Corporation. As a result, no dividend should be paid by iA Insurance to iA Financial Corporation during the first quarter of 2022.
iA Insurance | ||||||
Earnings Highlights | Fourth quarter | Year-to-date at December 31 | ||||
(In millions of dollars, unless otherwise indicated) | 2021 | 2020 | Variation | 2021 | 2020 | Variation |
Net income attributed to shareholders | 207 | 187 | 11% | 843 | 660 | 28% |
Less: dividends on preferred shares | 5 | 5 | — | 22 | 22 | — |
Net income attributed to common shareholder | 202 | 182 | 11% | 821 | 638 | 29% |
Other Financial Highlights | |||
(In millions of dollars, unless otherwise indicated) | December 31, 2021 | September 30, 2021 | December 31, 2020 |
Total capital¤ | 6,584 | 6,372 | 5,888 |
Solvency ratio¤ | 127% | 121% | 122% |
¤ | This item is a non-IFRS measure; see the "Non-IFRS and Additional Financial Measures" section in this document for relevant information about such measures. |
GENERAL INFORMATION
Non-IFRS and Additional Financial Measures
iA Financial Corporation and iA Insurance (hereinafter referred to individually in this section as the "Company") report their financial results and statements in accordance with International Financial Reporting Standards ("IFRS"). They also publish certain financial measures or ratios that are not based on IFRS ("non-IFRS"). A financial measure is considered a non-IFRS measure for Canadian securities law purposes if it is presented other than in accordance with the generally accepted accounting principles ("GAAP") used for the company's audited financial statements. The Company uses non-IFRS measures when evaluating its results and measuring its performance. The Company believes that non-IFRS measures provide additional information to better understand its financial results and assess its growth and earnings potential, and that they facilitate comparison of the quarterly and full year results of the Company's ongoing operations. Since non-IFRS measures do not have standardized definitions and meaning, they may differ from the non-IFRS financial measures used by other institutions and should not be viewed as an alternative to measures of financial performance determined in accordance with IFRS. The Company strongly encourages investors to review its financial statements and other publicly filed reports in their entirety and not to rely on any single financial measure. These non-IFRS measures are often accompanied by and reconciled with IFRS financial measures. For certain non‑IFRS measures, there are no directly comparable amounts under IFRS.
Regulation 52-112 respecting Non-GAAP and Other Financial Measures Disclosure from the Canadian Securities Administrators ("Regulation 52‑112") establishes disclosure requirements that apply, respectively, to each of the following categories of non-IFRS measures used by iA Financial Group:
Below is a description of the non-IFRS financial measures, non-IFRS ratios and supplementary financial measures used by the Company. Additional information is provided, along with a description of the reconciliation to the closest IFRS measure, where applicable.
Non-IFRS measures published by iA Financial Group are:
a. | market-related impacts that differ from management's best estimate assumptions, which include impacts of returns on equity markets and changes in interest rates related to (i) management fees collected on assets under management or administration (MERs), (ii) universal life policies, (iii) the level of assets backing long-term liabilities, and (iv) the dynamic hedging program for segregated fund guarantees; | |||||
b. | assumption changes and management actions; | |||||
c. | charges or proceeds related to acquisition or disposition of a business, including acquisition, integration and restructuring costs; | |||||
d. | amortization of acquisition-related finite life intangible assets; | |||||
e. | non-core pension expense, that represents the difference between the asset return (interest income on plan assets) calculated using the expected return on plan assets and the IFRS prescribed pension plan discount rate; and | |||||
f. | specified items which management believes are not representative of the performance of the Company, including (i) material legal settlements and provisions, (ii) unusual income tax gains and losses, (iii) material impairment charges related to goodwill and intangible assets, and (iv) other specified unusual gains and losses. | |||||
Note: This core earnings definition is applicable as of January 1, 2021. However, the core results for prior periods that are presented for comparison purposes have also been calculated according to this definition. |
a. | Operating profit, which is the sum of the following components of the sources of earnings analysis: expected profit on in-force, experience gains and losses, impact of new business and changes in assumptions and management actions. | |||||
b. | Expected profit on in-force, which represents the portion of the consolidated net income on business in force at the start of the reporting period that was expected to be realized based on the achievement of best‑estimate assumptions. | |||||
c. | Experience gains or losses, which represent the difference between reported income and the income that would have been reported if all assumptions made at the start of the period had materialized. | |||||
d. | Impact of new business, or strain, which represents the point-of-sale impact on net income of writing new business during the period. The expected profit realized in the years after a policy is issued should cover the strain incurred at the time of issue. | |||||
e. | Changes in assumptions and management actions, which is the impact on pre-tax net income resulting from changes in actuarial methods and assumptions or other management actions. Changes in assumptions result from the Company ensuring the adequacy of its provisions given the existing economic and financial environment as well as the Company's own experience in terms of mortality, morbidity, lapse rates, unit costs and other factors. Management actions represent the impact of actions apart from the normal operation of the business, including but not limited to changes in methodology, model refinement and impacts of acquisitions, mergers and divestitures. | |||||
f. | Income on capital, which represents the income derived from investments in which the Company's capital is invested, minus any expenses incurred to generate that income. The Company also includes financing expenses from debentures, amortization of intangible assets related to acquisitions and the results of the iA Auto and Home (iAAH) subsidiary in this item. | |||||
g. | Income taxes, which represent the value of amounts payable under the tax laws and include tax payable and deferred income taxes. A life insurer's investment income taxes and premium taxes are not included in these amounts. Income taxes are considered to be an expense for the purpose of calculating the operating profit. |
a. | Deposits refer to amounts received from clients under an investment contract. Deposits are not reflected in the Company's income statements. | |||||
b. | Premium equivalents refer to amounts related to service contracts or services where the Company is primarily an administrator but could become an insurer if a specific event were to happen. These amounts are not accounted for in "Net premiums". |
a. | Individual Insurance minimum and excess premium sales are defined as first-year annualized premiums. The net premiums presented in the Consolidated Financial Statements include fund entries on both in-force contracts and new business written during the period and are reduced by premiums ceded to reinsurers. | |||||
b. | Individual Wealth Management gross mutual fund sales are defined as deposits and include primary market sales of ETFs. | |||||
c. | Individual Wealth Management net mutual fund sales correspond to net fund entries and are defined as Individual Wealth Management gross mutual fund sales less withdrawals and transfers. | |||||
d. | Group Insurance Employee Plans sales are defined as first-year annualized premiums, including premium equivalents (Administrative Services Only). | |||||
e. | US Operations Individual Insurance sales are defined as first-year annualized premiums. | |||||
f. | Group Insurance Special Markets sales are defined as fund entries on both in-force contracts and new business written during the period. | |||||
g. | Group Insurance Dealer Services P&C sales are defined as direct written premiums (before reinsurance). | |||||
h. | Group Savings and Retirement sales of accumulation contracts and insured annuities include gross premiums (before reinsurance) and premium equivalents, or deposits. | |||||
i. | US Operations Dealer Services sales are defined as direct written premiums (before reinsurance) and premium equivalents. | |||||
j. | General Insurance sales are defined as direct written premiums. |
Forward-looking Statements
Documents Related to the Financial Results
For a detailed discussion of iA Financial Corporation's and iA Insurance's fourth quarter results, investors are invited to consult the Management's Discussion and Analysis for the quarter ended December 31, 2021, the related financial statements and accompanying notes and the Financial Information Package for each company, all of which are available on the iA Financial Group website at ia.ca under About iA, in the Investor Relations/Financial Reports section and on SEDAR at sedar.com.
Conference Call
Management will hold a conference call to present iA Financial Group's fourth quarter results on Thursday, February 17, 2022 at 2:00 p.m. (ET). The dial-in number is 416-981-9004 or 1-800-954-1052 (toll-free within North America). A replay of the conference call will be available for a one-week period, starting at 4:30 p.m. on Thursday, February 17, 2022. To access the conference call replay, dial 1‑800‑558‑5253 (toll‑free) and enter access code 21999623. A webcast of the conference call (listen-only mode) will also be available on the iA Financial Group website at ia.ca.
About iA Financial Group
iA Financial Group is one of the largest insurance and wealth management groups in Canada, with operations in the United States. Founded in 1892, it is an important Canadian public company and is listed on the Toronto Stock Exchange under the ticker symbols IAG (common shares) and IAF (preferred shares).
iA Financial Group is a business name and trademark of iA Financial Corporation Inc. and Industrial Alliance Insurance and Financial Services Inc.
Consolidated Income Statements | ||||||
Quarters ended | Twelve months ended | |||||
(In millions of Canadian dollars, unless otherwise indicated) | 2021 | 2020 | 2021 | 2020 | ||
Revenues | ||||||
Premiums | ||||||
Gross premiums | 3,621 | 3,371 | 14,199 | 12,132 | ||
Premiums ceded | (268) | (291) | (1,035) | (936) | ||
Net premiums | 3,353 | 3,080 | 13,164 | 11,196 | ||
Investment income | ||||||
Interest and other investment income | 511 | 332 | 1,624 | 1,439 | ||
Change in fair value of investments | 1,556 | 642 | (1,418) | 3,229 | ||
2,067 | 974 | 206 | 4,668 | |||
Other revenues | 557 | 464 | 2,116 | 1,775 | ||
5,977 | 4,518 | 15,486 | 17,639 | |||
Policy benefits and expenses | ||||||
Gross benefits and claims on contracts | 1,870 | 1,570 | 7,731 | 5,871 | ||
Ceded benefits and claims on contracts | (228) | (173) | (740) | (581) | ||
Net transfer to segregated funds | 1,004 | 1,038 | 3,278 | 2,872 | ||
Increase (decrease) in insurance contract liabilities | 1,890 | 1,494 | (45) | 5,760 | ||
Increase (decrease) in investment contract liabilities | 5 | 9 | (1) | 34 | ||
Decrease (increase) in reinsurance assets | (19) | (625) | (76) | (737) | ||
4,522 | 3,313 | 10,147 | 13,219 | |||
Commissions | 594 | 484 | 2,180 | 1,788 | ||
General expenses | 514 | 465 | 1,823 | 1,668 | ||
Premium and other taxes | 36 | 35 | 141 | 129 | ||
Financing charges | 19 | 18 | 77 | 73 | ||
5,685 | 4,315 | 14,368 | 16,877 | |||
Income before income taxes | 292 | 203 | 1,118 | 762 | ||
Income taxes | 68 | 31 | 259 | 130 | ||
Net income | 224 | 172 | 859 | 632 | ||
Net income attributed to participating policyholders | 10 | (5) | 7 | (1) | ||
Net income attributed to shareholders | 214 | 177 | 852 | 633 | ||
Dividends on preferred shares issued by a subsidiary | 5 | 5 | 22 | 22 | ||
Net income attributed to common shareholders | 209 | 172 | 830 | 611 | ||
Earnings per common share (in dollars) | ||||||
Basic | 1.95 | 1.61 | 7.73 | 5.71 | ||
Diluted | 1.94 | 1.60 | 7.70 | 5.70 | ||
Weighted average number of shares outstanding (in millions of units) | ||||||
Basic | 108 | 107 | 107 | 107 | ||
Diluted | 108 | 107 | 108 | 107 | ||
Dividends per common share (in dollars) | 0.63 | 0.49 | 2.08 | 1.94 |
Consolidated Statements of Financial Position | ||||
As at December 31 | ||||
(in millions of Canadian dollars) | 2021 | 2020 | ||
Assets | ||||
Investments | ||||
Cash and short-term investments | 1,546 | 1,949 | ||
Bonds | 32,893 | 32,099 | ||
Stocks | 3,906 | 3,286 | ||
Mortgages and other loans | 2,922 | 2,801 | ||
Derivative financial instruments | 917 | 1,652 | ||
Policy loans | 1,040 | 881 | ||
Other invested assets | 557 | 563 | ||
Investment properties | 1,870 | 1,916 | ||
45,651 | 45,147 | |||
Other assets | 3,850 | 3,261 | ||
Reinsurance assets | 2,210 | 1,981 | ||
Fixed assets | 369 | 390 | ||
Deferred income tax assets | 27 | 38 | ||
Intangible assets | 1,708 | 1,621 | ||
Goodwill | 1,267 | 1,224 | ||
General fund assets | 55,082 | 53,662 | ||
Segregated funds net assets | 39,577 | 32,804 | ||
Total assets | 94,659 | 86,466 | ||
Liabilities | ||||
Insurance contract liabilities | 36,540 | 36,527 | ||
Investment contract liabilities | 577 | 575 | ||
Derivative financial instruments | 526 | 569 | ||
Other liabilities | 8,303 | 7,647 | ||
Deferred income tax liabilities | 441 | 382 | ||
Debentures | 1,450 | 1,449 | ||
General fund liabilities | 47,837 | 47,149 | ||
Liabilities related to segregated funds net assets | 39,577 | 32,804 | ||
Total liabilities | 87,414 | 79,953 | ||
Equity | ||||
Share capital and contributed surplus | 1,723 | 1,694 | ||
Preferred shares issued by a subsidiary | 525 | 525 | ||
Retained earnings and accumulated other comprehensive income | 4,949 | 4,253 | ||
Participating policyholders' accounts | 48 | 41 | ||
7,245 | 6,513 | |||
Total liabilities and equity | 94,659 | 86,466 |
Segmented Income Statements | |||||||
The following tables present a summary of income by sector of activities: | |||||||
Quarter ended December 31, 2021 | |||||||
Individual | Group | ||||||
(in millions of dollars) | Insurance | Wealth | Insurance | Savings | US | Other | Total |
Revenues | |||||||
Net premiums | 461 | 1,478 | 461 | 614 | 243 | 96 | 3,353 |
Investment income | 1,813 | 8 | 45 | 131 | 17 | 53 | 2,067 |
Other revenues | 49 | 474 | 20 | 32 | 106 | (124) | 557 |
2,323 | 1,960 | 526 | 777 | 366 | 25 | 5,977 | |
Operating expenses | |||||||
Gross benefits and claims on contracts | 282 | 658 | 308 | 435 | 165 | 22 | 1,870 |
Ceded benefits and claims on contracts | (133) | — | (12) | (6) | (104) | 27 | (228) |
Net transfer to segregated funds | — | 823 | — | 181 | — | — | 1,004 |
Increase (decrease) in insurance contract liabilities | 1,755 | (27) | 21 | 147 | (11) | 5 | 1,890 |
Increase (decrease) in investment contract liabilities | — | — | 5 | — | — | — | 5 |
Decrease (increase) in reinsurance assets | (57) | — | 3 | 10 | 30 | (5) | (19) |
Commissions, general and other expenses | 303 | 434 | 177 | 40 | 249 | (59) | 1,144 |
Financing charges | 2 | — | 8 | — | 1 | 8 | 19 |
2,152 | 1,888 | 510 | 807 | 330 | (2) | 5,685 | |
Income before income taxes and allocation of other activities | 171 | 72 | 16 | (30) | 36 | 27 | 292 |
Allocation of other activities | 27 | 2 | 1 | 2 | (5) | (27) | — |
Income before income taxes | 198 | 74 | 17 | (28) | 31 | — | 292 |
Income taxes | 45 | 20 | 4 | (7) | 6 | — | 68 |
Net income | 153 | 54 | 13 | (21) | 25 | — | 224 |
Net income attributed to participating policyholders | 10 | — | — | — | — | — | 10 |
Net income attributed to shareholders | 143 | 54 | 13 | (21) | 25 | — | 214 |
Quarter ended December 21, 2020 | |||||||
Individual | Group | ||||||
(in millions of dollars) | Insurance | Wealth Management | Insurance | Savings and | US | Other | Total |
Revenues | |||||||
Net premiums | 422 | 1,131 | 399 | 863 | 176 | 89 | 3,080 |
Investment income | 854 | (74) | 45 | 87 | 30 | 32 | 974 |
Other revenues | 34 | 385 | 18 | 27 | 48 | (48) | 464 |
1,310 | 1,442 | 462 | 977 | 254 | 73 | 4,518 | |
Operating expenses | |||||||
Gross benefits and claims on contracts | 208 | 511 | 283 | 398 | 161 | 9 | 1,570 |
Ceded benefits and claims on contracts | (73) | — | (15) | (6) | (106) | 27 | (173) |
Net transfer to segregated funds | — | 550 | — | 488 | — | — | 1,038 |
Increase (decrease) in insurance contract liabilities | 1,402 | (27) | 13 | 51 | 68 | (13) | 1,494 |
Increase (decrease) in investment contract liabilities | — | — | 9 | — | — | — | 9 |
Decrease (increase) in reinsurance assets | (588) | — | (5) | — | (45) | 13 | (625) |
Commissions, general and other expenses | 259 | 359 | 158 | 33 | 168 | 7 | 984 |
Financing charges | 1 | — | 9 | — | — | 8 | 18 |
1,209 | 1,393 | 452 | 964 | 246 | 51 | 4,315 | |
Income before income taxes and allocation of other activities | 101 | 49 | 10 | 13 | 8 | 22 | 203 |
Allocation of other activities | 19 | 4 | (1) | 2 | (2) | (22) | — |
Income before income taxes | 120 | 53 | 9 | 15 | 6 | — | 203 |
Income taxes | 24 | 16 | — | 4 | (13) | — | 31 |
Net income | 96 | 37 | 9 | 11 | 19 | — | 172 |
Net income attributed to participating policyholders | (5) | — | — | — | — | — | (5) |
Net income attributed to shareholders | 101 | 37 | 9 | 11 | 19 | — | 177 |
Segmented Income Statements (continued) | |||||||
The following tables present a summary of income by sector of activities: | |||||||
Twelve months ended December 31, 2021 | |||||||
Individual | Group | ||||||
(in millions of dollars) | Insurance | Wealth Management | Insurance | Savings and Retirement | US Operations | Other | Total |
Revenues | |||||||
Net premiums | 1,758 | 5,709 | 1,728 | 2,746 | 828 | 395 | 13,164 |
Investment income | 56 | (149) | 114 | 29 | (16) | 172 | 206 |
Other revenues | 142 | 1,780 | 77 | 118 | 351 | (352) | 2,116 |
1,956 | 7,340 | 1,919 | 2,893 | 1,163 | 215 | 15,486 | |
Operating expenses | |||||||
Gross benefits and claims on contracts | 951 | 2,432 | 1,205 | 2,451 | 631 | 61 | 7,731 |
Ceded benefits and claims on contracts | (369) | — | (50) | (24) | (406) | 109 | (740) |
Net transfer to segregated funds | — | 3,312 | — | (34) | — | — | 3,278 |
Increase (decrease) in insurance contract liabilities | 23 | (319) | 2 | 356 | (113) | 6 | (45) |
Increase (decrease) in investment contract liabilities | — | — | (1) | — | — | — | (1) |
Decrease (increase) in reinsurance assets | (176) | — | 3 | 14 | 89 | (6) | (76) |
Commissions, general and other expenses | 1,040 | 1,618 | 622 | 140 | 832 | (108) | 4,144 |
Financing charges | 9 | 2 | 33 | — | 2 | 31 | 77 |
1,478 | 7,045 | 1,814 | 2,903 | 1,035 | 93 | 14,368 | |
Income before income taxes and allocation of other activities | 478 | 295 | 105 | (10) | 128 | 122 | 1,118 |
Allocation of other activities | 105 | 21 | 5 | 10 | (19) | (122) | — |
Income before income taxes | 583 | 316 | 110 | — | 109 | — | 1,118 |
Income taxes | 122 | 86 | 31 | — | 20 | — | 259 |
Net income | 461 | 230 | 79 | — | 89 | — | 859 |
Net income attributed to participating policyholders | 7 | — | — | — | — | — | 7 |
Net income attributed to shareholders | 454 | 230 | 79 | — | 89 | — | 852 |
Twelve months ended December 21, 2020 | |||||||
Individual | Group | ||||||
(in millions of dollars) | Insurance | Wealth | Insurance | Savings | US | Other | Total |
Revenues | |||||||
Net premiums | 1,625 | 3,916 | 1,603 | 3,018 | 694 | 340 | 11,196 |
Investment income | 3,592 | 149 | 194 | 387 | 192 | 154 | 4,668 |
Other revenues | 118 | 1,501 | 72 | 105 | 176 | (197) | 1,775 |
5,335 | 5,566 | 1,869 | 3,510 | 1,062 | 297 | 17,639 | |
Operating expenses | |||||||
Gross benefits and claims on contracts | 813 | 1,887 | 1,146 | 1,397 | 589 | 39 | 5,871 |
Ceded benefits and claims on contracts | (251) |
— | (63) | (26) | (351) | 110 | (581) |
Net transfer to segregated funds | — | 1,779 | — | 1,093 | — | — | 2,872 |
Increase (decrease) in insurance contract liabilities | 4,168 | 392 | 62 | 889 | 265 | (16) | 5,760 |
Increase (decrease) in investment contract liabilities | — |
— | 34 | — | — | — | 34 |
Decrease (increase) in reinsurance assets | (664) |
— | 2 | 3 | (94) | 16 | (737) |
Commissions, general and other expenses | 928 | 1,355 | 579 | 115 | 597 | 11 | 3,585 |
Financing charges | 12 | 2 | 33 | — | 1 | 25 | 73 |
5,006 | 5,415 | 1,793 | 3,471 | 1,007 | 185 | 16,877 | |
Income before income taxes and allocation of other activities | 329 | 151 | 76 | 39 | 55 | 112 | 762 |
Allocation of other activities | 88 | 15 | 1 | 5 | 3 | (112) | — |
Income before income taxes | 417 | 166 | 77 | 44 | 58 | — | 762 |
Income taxes | 67 | 42 | 15 | 9 | (3) | — | 130 |
Net income | 350 | 124 | 62 | 35 | 61 | — | 632 |
Net income attributed to participating policyholders | (1) | — | — | — | — | — | (1) |
Net income attributed to shareholders | 351 | 124 | 62 | 35 | 61 | — | 633 |
Segmented Assets and Liabilities | |||||||
The following tables present a summary of the segmented assets and liabilities by sector of activities: | |||||||
As at December 31, 2021 | |||||||
Individual | Group | ||||||
(in millions of dollars) | Insurance | Wealth | Insurance | Savings | US | Other | Total |
Assets | |||||||
Invested assets | 25,761 | 1,859 | 2,082 | 5,214 | 1,473 | 9,262 | 45,651 |
Segregated funds net assets | — | 24,722 | — | 14,855 | — | — | 39,577 |
Reinsurance assets | 144 | — | 171 | 116 | 2,049 | (270) | 2,210 |
Other | 100 | 1,201 | — | — | 108 | 5,812 | 7,221 |
Total assets | 26,005 | 27,782 | 2,253 | 20,185 | 3,630 | 14,804 | 94,659 |
Liabilities | |||||||
Insurance contract liabilities and | 25,761 | 1,924 | 2,268 | 5,392 | 1,878 | (106) | 37,117 |
Liabilities related to segregated funds net assets | — | 24,722 | — | 14,855 | — | — | 39,577 |
Other | 398 | 44 | 3 | 33 | — | 10,242 | 10,720 |
Total liabilities | 26,159 | 26,690 | 2,271 | 20,280 | 1,878 | 10,136 | 87,414 |
As at December 31, 2020 | |||||||
Individual | Group | ||||||
(in millions of dollars) | Insurance | Wealth | Insurance | Savings | US | Other | Total |
Assets | |||||||
Invested assets | 25,922 | 2,145 | 1,969 | 4,949 | 1,347 | 8,815 | 45,147 |
Segregated funds net assets | — | 19,240 | — | 13,564 | — | — | 32,804 |
Reinsurance assets | (36) | — | 222 | 130 | 1,805 | (140) | 1,981 |
Other | 109 | 1,096 | — | — | 74 | 5,255 | 6,534 |
Total assets | 25,995 | 22,481 | 2,191 | 18,643 | 3,226 | 13,930 | 86,466 |
Liabilities | |||||||
Insurance contract liabilities and | 25,661 | 2,246 | 2,272 | 5,030 | 2,003 | (110) | 37,102 |
Liabilities related to segregated funds net assets | — | 19,240 | — | 13,564 | — | — | 32,804 |
Other | 441 | 47 | 3 | 8 | — | 9,548 | 10,047 |
Total liabilities | 26,102 | 21,533 | 2,275 | 18,602 | 2,003 | 9,438 | 79,953 |
SOURCE iA Financial Group
View original content: http://www.newswire.ca/en/releases/archive/February2022/16/c3198.html