08:24:42 EDT Fri 29 Mar 2024
Enter Symbol
or Name
USA
CA



Industrial Alliance Insurance and Financial S
Symbol IAG
Shares Issued 106,557,610
Close 2017-11-07 C$ 58.56
Market Cap C$ 6,240,013,642
Recent Sedar Documents

Industrial Alliance earns $144.9-million in Q3 2017

2017-11-08 09:01 ET - News Release

Mr. Yvon Charest reports

INDUSTRIAL ALLIANCE REPORTS EXCELLENT THIRD QUARTER RESULTS

For the third quarter ended Sept. 30, 2017, Industrial Alliance Insurance and Financial Services Inc. had net income attributed to common shareholders of $144.9-million, diluted earnings per common share of $1.35 and return on shareholders' equity for the last 12 months of 12.5 per cent.

"This quarter marked some important milestones in the expansion of our financial services network," said Yvon Charest, president and chief executive officer of Industrial Alliance. "We completed our acquisition of HollisWealth that firmly establishes iA Financial Group among the largest independent wealth management advisory firms in Canada. In the U.S., we expanded our geographic footprint and entered a second business segment by acquiring a manufacturer and distributor of extended warranties for vehicles. With these strategic initiatives and the momentum in our existing insurance and wealth management operations, we are laying a strong foundation for continued value creation in terms of book value and dividend growth."

"I am pleased with our third quarter that finished at the top of our EPS guidance," added Rene Chabot, executive vice-president, chief financial officer and chief actuary. "With the exception of specific items like the HollisWealth integration costs and the hedging gain, all lines of business delivered close to expectations. In addition, we had a strong contribution from income on capital, especially iA Auto and Home that had a strong quarter after a challenging start to the year."

                           EARNINGS AND OTHER FINANCIAL HIGHLIGHTS

                                                                   Third quarter      Year-to-date
                                                                  2017      2016      2017    2016

Net income attributed to shareholders (in-millions)              $148.7   $148.5    $394.8  $394.5
Less dividends attributed to preferred shares (in-millions)        $3.8     $4.1     $12.1   $12.3
Net income attributed to common shareholders (in-millions)       $144.9   $144.4    $382.7  $382.2
Earnings per common share (diluted)                               $1.35    $1.40     $3.57   $3.71
Core earnings per common share (diluted)                          $1.35    $1.28     $3.61   $3.53

Third quarter highlights

Profitability

For the third quarter ended Sept. 30, 2017, Industrial Alliance Insurance and Financial Services reports net income to common shareholders of $144.9-million versus $144.4-million for the same period in 2016 and diluted earnings per share (EPS) of $1.35 versus $1.40 in the third quarter of 2016. In the third quarter of 2016, the company benefited from market-related and policyholder experience gains that contributed 21 cents to earnings per share.

Diluted core EPS of $1.35 for the third quarter represents an increase of 5 per cent over the same period a year earlier.

Dividend

The board of directors approved a quarterly dividend of 38 cents per share on the company's outstanding common shares. This represents an increase of three cents per share, or 9 per cent, over the dividend paid in the preceding quarter. This dividend is payable on Dec. 15, 2017, to shareholders of record at Nov. 24, 2017.

Dividend reinvestment and share purchase plan

Registered shareholders wishing to enroll in the company's dividend reinvestment and share purchase plan (DRIP) so as to be eligible to reinvest the next dividend payable on Dec. 15, 2017, must ensure that the duly completed form is delivered to Computershare no later than 4 p.m. on Nov. 17, 2017. Enrolment information is provided on the company's website in the investor relations/dividends section. Common shares issued under the company's DRIP will be purchased on the secondary market and no discount will be applicable.

Macroeconomic protection

The company continues to maintain significant protection against declines in equity markets and long-term interest rates. At Sept. 30, 2017:

  • It can absorb a decrease of 25 per cent in the S&P/TSX index before having to strengthen reserves for future policyholder benefits.
  • It can absorb a decrease of 46 per cent in the S&P/TSX index before the solvency ratio drops below 175 per cent, and a decrease of 59 per cent before the solvency ratio drops below 150 per cent.
  • The full-year impact on net income attributed to common shareholders of a sudden 10-per-cent decrease in the stock markets would be $30-million.
  • The impact on net income attributed to common shareholders of a 10-basis-point decrease in the initial reinvestment rate (IRR) would be $15-million; the impact of a similar decrease in the ultimate reinvestment rate (URR) would be $61-million. As disclosed at year-end, both the IRR and URR are currently well protected in the actuarial reserves which could help to absorb potential movements in these rates.

Market guidance for 2017

  • Earnings per common share: target range of $4.65 to $5.05;
  • Return on common shareholders' equity (ROE): target range of 11.0 per cent to 12.5 per cent;
  • Solvency ratio: target range of 175 per cent to 200 per cent;
  • Dividend payout ratio: payout range of 25 per cent to 35 per cent with the target being the midpoint;
  • Effective tax rate: target range of 20 per cent to 22 per cent;
  • Strain on new business: annual target of 6 per cent of individual insurance sales with quarterly range of 0 per cent to 15 per cent.

Guidance for ROE and earnings per common share excludes any potential reserve strengthening in 2017.

Conference call

Management will hold a conference call to present the company's results on Wednesday, Nov. 8, 2017, at 2 p.m. ET. The toll-free dial-in number is 1-800-708-3128. A replay of the conference call will be available for a one-week period, starting at 4:30 p.m. on Wednesday, Nov. 8, 2017. To access the conference call replay, dial 1-800-558-5253 (toll-free) and enter access code 21858133. A webcast of the conference call (listen-only mode) will also be available on the company's website.

About Industrial Alliance Insurance and Financial Services Inc.

Industrial Alliance is one of the largest insurance and wealth management companies in Canada, with operations in the United States.

We seek Safe Harbor.

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