Mr. Denis Ricard reports

IA FINANCIAL GROUP REPORTS THIRD QUARTER RESULTS

For the third quarter ended Sept. 30, 2023, iA Financial Corp. Inc. recorded core diluted earnings per common share (EPS) of $2.50, 10-per-cent higher than the 2022 third quarter result. Core return on common shareholder equity (ROE) for the trailing 12 months was 14.8 per cent, close to the company's medium-term target of 15 per cent plus. On a reported basis, which includes the impact of volatile items (primarily short-term macroeconomic variations), quarterly net income attributed to common shareholders was $55-million, EPS was 54 cents and ROE for the trailing 12 months was 10.6 per cent. The solvency ratio of 145 per cent at Sept. 30, 2023, is well above the company's operating target of 120 per cent.

Third quarter highlights -- iA Financial

• Core EPS of $2.50, up 10 per cent compared with Q3 2022 result, and trailing-12-month core ROE of 14.8 per cent, close to medium-term target;
• Reported EPS of 54 cents compared with one cent in Q3 2022 and trailing-12-month ROE of 10.6 per cent;
• Strong business growth, including record sales in United States individual insurance, leading to a solid 17-per-cent YoY (year-over-year) increase in premiums and deposits;
• Robust solvency ratio of 145 per cent, with organic capital generation of $165-million and $1.6-billion of deployable capital at Sept. 30, 2023;
• Book value per common share reaching $65.25 at Sept. 30, 2023, up 4 per cent in the first nine months of 2023;
• Acquisition of Vericity to further grow in the U.S. life insurance market and diversify distribution with a digital agency.

"Business growth momentum in the third quarter was driven by our ability to generate new business and maintain lasting relationships with our clients, resulting in a strong 17-per-cent increase in premiums and deposits. We also achieved good profitability in most of our business units, leading to a core EPS increase in line with our medium-term target," commented Denis Ricard, president and chief executive officer of iA Financial Group. "Particularly noteworthy were the very good results of our U.S. individual insurance division, a solid growth story that testifies to the potential of this market as we continue to expand in the U.S."

"Good core profitability in Q3 is largely attributable to strong results in the core insurance and non-insurance businesses, both of which increased by 10 per cent year on year, supported by favourable disability results and lower mortality claims," added Eric Jobin, executive vice-president, chief financial officer and chief actuary. "Our financial position remains strong and flexible, with organic capital generation of $165-million during the quarter. We are on track to achieve our full-year target of over $600-million to fuel organic growth, digital transformation and future acquisitions."

Reported and core earnings

The company recorded core earnings of $256-million in the third quarter of 2023, which compares with $241-million in the same quarter of 2022. Core diluted earnings per common share (EPS) of $2.50 in the third quarter is 10 per cent higher than the $2.27 restated result under IFRS 9 and IFRS 17 for the same period in 2022. Core return on common shareholder equity (ROE) for the trailing 12 months was 14.8 per cent at Sept. 30, 2023, close to the company's medium-term target of 15 per cent plus. Core earnings is a non-IFRS (international financial reporting standards) measure that represents management's view of the company's continuing capacity to generate earnings.

On a reported basis, which includes the impact of volatile items (primarily short-term macroeconomic variations), quarterly net income attributed to common shareholders was $55-million, compared with $1-million in the third quarter of 2022, EPS was 54 cents and ROE for the trailing 12 months was 10.6 per cent at Sept. 30, 2023.

An analysis of these results is presented in the sections as shown in the attached table.

Core earnings by business segment

Assets under management and administration

Assets under management and administration ended the third quarter at $205.6-billion, up 7 per cent from the previous year and down 3 per cent during the quarter amid unfavourable market conditions.

Net premiums, premium equivalents and deposits

Net premiums, premium equivalents and deposits totalled nearly $3.9-billion in the third quarter, an increase of 17 per cent compared with the same period a year ago. All business units contributed to this strong performance, in particular those in the wealth management segment.

Financial position

At Sept. 30, 2023, the solvency ratio was 145 per cent, compared with 154 per cent at the end of the previous quarter and 130 per cent a year earlier. This result is well above the company's operating target of 120 per cent. The nine-percentage-point decrease during the third quarter is mainly due to the $400-million debenture redemption (mentioned herein), the $93-million in share buybacks (NCIB) and unfavourable macroeconomic variations. These items were partly offset by the positive contribution of organic capital generation. The acquisition announced on Oct. 3, 2023, of Vericity, a United States life insurance carrier and digital agency, is expected to reduce the company's solvency ratio by three percentage points at closing, which is anticipated in the first half of 2024. Therefore, on a pro forma basis at Sept. 30, 2023, the solvency ratio is 142 per cent. The company's financial leverage ratio at Sept. 30, 2023, was 14.7 per cent.

Organic capital generation and capital available for deployment -- The company organically generated $165-million in additional capital, for a total of $440-million during the first nine months of the year, and is therefore on track to achieve the company's organic capital generation target of $600-million-plus in 2023, as indicated at the investor session held on March 28, 2023. At Sept. 30, 2023, the capital available for deployment is assessed at $1.6-billion.

Book value -- The book value per common share was $65.25 at Sept. 30, 2023, up 4 per cent year over year and relatively stable, with a slight 14-cent decrease during the quarter.

Normal course issuer bid -- In the third quarter of 2023, the company redeemed and cancelled 1,074,366 outstanding common shares for a total value of $93-million under the NCIB program. Under the current NCIB regime, the company can redeem up to 5,265,045 common shares, representing approximately 5 per cent of the outstanding common shares, between Nov. 14, 2022, and Nov. 13, 2023. A total of 4,021,820 shares, or approximately 3.8 per cent of the issued and outstanding common shares as at Nov. 1, 2022, were redeemed between Nov. 14, 2022 and Sept. 30, 2023.

Dividend -- The company paid a quarterly dividend of 76.50 cents to common shareholders in the third quarter of 2023. The board of directors approved a quarterly dividend of 76.50 cents per share for the fourth quarter of 2023, the same as in the third quarter, on the outstanding common shares of iA Financial Corp. This dividend is payable on Dec. 15, 2023, to the shareholders of record at Nov. 17, 2023.

Dividend reinvestment and share purchase plan -- Registered shareholders wishing to enrol in iA Financial's dividend reinvestment and share purchase plan (DRIP) so as to be eligible to reinvest the next dividend payable on Dec. 15, 2023, must ensure that the duly completed form is delivered to Computershare no later than 4 p.m. on Nov. 10, 2023. Enrolment information is provided on iA Financial Group's website, under the dividends section. Common shares issued under iA Financial's DRIP will be purchased on the secondary market and no discount will be applicable.

Capital redemption -- On Sept. 15, 2023, iA Insurance completed the redemption of its 3.30 per cent subordinated debentures due Sept. 15, 2028, which represent an aggregate principal amount of $400-million.

Appointment -- On Sept. 5, 2023, iA Financial Group announced the appointment of Catherine Milum as president and chief executive officer of iA Clarington Investments. Ms. Milum succeeds Adam Elliott, who is now president of iA Private Wealth. Also, changes to the executive committee announced on May 10, 2023, became effective on Aug. 21, 2023. Please refer to the May 10, 2023, news release for more information.

Annual actuarial assumption review -- The annual review of actuarial assumptions has begun and will be finalized in the coming weeks. The final results will be reported on Feb. 20, 2024, with the fourth quarter 2023 earnings release.

Philanthropic contest -- On Sept. 12, 2023, the seventh edition of the company's philanthropic contest was launched. A total of $500,000 in donations will be shared by charities working in the health, environment, education and social services sectors. The winners will be announced between Dec. 11 and Dec. 14.

Outlook

Medium-term guidance for iA Financial, as disclosed on March 28, 2023:

• Core earnings per common share: target of 10-per-cent-plus annual average growth;
• Core return on common shareholder equity (ROE): target of 15 per cent plus;
• Solvency ratio operating target: target of 120 per cent;
• Organic capital generation: target of $600-plus-million in 2023;
• Dividend payout ratio based on core earnings: target range of 25 per cent to 35 per cent.

The company's outlook, including the market guidance provided, constitutes forward-looking information within the meaning of securities laws. Although the company believes that its outlook 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.

Third quarter highlights -- iA Insurance

Profitability -- In the third quarter of 2023, iA Insurance recorded net income attributed to its sole common shareholder, iA Financial, of $75-million compared with $43-million a year earlier.

Financial position -- The solvency ratio of iA Insurance was 140 per cent at Sept. 30, 2023, compared with 146 per cent at the end of the previous quarter and 124 per cent a year earlier. The six-percentage-point decrease in the third quarter is mainly due to the $400-million debenture redemption (mentioned herein) and unfavourable macroeconomic variations. These items were partly offset by the positive contribution of organic capital generation.

Dividend -- iA Insurance paid no dividend in the third quarter of 2023. For the fourth quarter of 2023, the board of directors of iA Insurance approved the declaration of a dividend of $200-million to its sole common shareholder, iA Financial. As a result, a dividend of $200-million should be paid, in whole or in part, by iA Insurance to iA Financial during the fourth quarter of 2023.

Capital redemption -- On Sept. 15, 2023, iA Insurance completed the redemption of its 3.30 per cent subordinated debentures due Sept. 15, 2028, which represent an aggregate principal amount of $400-million.

Appointment -- On Sept. 5, 2023, iA Financial Group announced the appointment of Catherine Milum as president and chief executive officer of iA Clarington Investments. Ms. Milum succeeds Adam Elliott, who is now president of iA Private Wealth. Also, changes to the executive committee announced on May 10, 2023, became effective on Aug. 21, 2023. Please refer to the May 10, 2023, news release for more information.

Annual actuarial assumption review -- The annual review of actuarial assumptions has begun and will be finalized in the coming weeks. The final results will be reported on Feb. 20, 2024, with the fourth quarter 2023 earnings release.

Conference call

Management will hold a conference call to present iA Financial Group's third quarter results on Wednesday, Nov. 8, 2023, at 10 a.m. ET. The dial-in number is 416-764-8651 or 1-888-390-0620 (toll-free within North America). A replay of the conference call will be available for a one-week period, starting at 2:30 p.m. on Wednesday, Nov. 8, 2023. To access the conference call replay, dial 1-888-390-0541 (toll-free) and enter access code 089988 followed by the pound key. A webcast of the conference call (listen-only mode) will also be available on the iA Financial Group website.

About iA Financial Corp. Inc.

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).

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