All lines of business deliver revenue and earnings growth
Net income attributed to common shareholders of $79.7 million
Diluted and adjusted EPS of $0.85
Return on shareholders' equity of 12.0%
Solvency ratio of 237% at March 31st
Premiums and deposits of $2.1 billion
Assets under management and administration of $87.5 billion
Book value per share of $28.67
A full discussion of our first-quarter results is available at www.inalco.com under Investor Relations/Financial Reports.
QUEBEC CITY, May 9, 2013 /CNW Telbec/ - For the quarter ended March 31,
2013, Industrial Alliance Insurance and Financial Services Inc. (TSX:
IAG) reports net income attributed to common shareholders of $79.7
million versus $62.2 million a year earlier. Diluted earnings per
share, adjusted for the dilutive impact of the Company's innovative
Tier 1 debt instruments (IATS) and reflecting the equity issue
completed on February 27, 2013, amounted to $0.85 compared with $0.69 a
year earlier. Premiums and deposits exceeded the $2 billion mark, the
highest in the Company's history.
"Our first quarter performance was solid on all metrics," commented Yvon
Charest, President and Chief Executive Officer. "Industrial Alliance
set another record for both premiums and deposits as well as net
earnings from continuing operations. In terms of financial flexibility,
our solvency ratio remains extremely strong and our leverage ratio
shows meaningful improvement as a result of our recent capital
"All our lines of business delivered experience gains in the quarter
together with higher sales," added René Chabot, Senior Vice-President
and Appointed Actuary. "In Individual Insurance, our strain-to-new
business ratio was above our target level but with the new price
increase introduced at the end of March, we are in line to achieve our
average of 25% for the full year."
(In millions of dollars, unless otherwise indicated)
Net income attributed to shareholders
Less: preferred share dividends
Net income attributed to common shareholders
Earnings per common share (diluted)
Earnings per common share (diluted and adjusted2)
Return on common shareholders' equity3
March 31, 2013
December 31, 2012
March 31, 2012
Book value per share
Assets under management and administration
Net impaired investments
Net impaired investments as a % of total investments
1 Restated for comparability following the amendment to IAS-19 (Employee
Benefits) effective January 1, 2013.
2 Excludes the dilutive impact of the innovative Tier 1 debt instruments
3 Annualized for the quarter.
FIRST QUARTER HIGHLIGHTS
Profitability - Industrial Alliance reports net income attributed to common
shareholders of $79.7 million, an increase of 28% from one year ago.
Diluted and adjusted earnings per share amounted to $0.85 ($0.69 in
2012), and the annualized return on common shareholders' equity was
12.0% (11.0% in 2012). The 2012 figures have been restated for
comparability following the amendment to IAS-19 for employee benefits
effective January 1, 2013.
The key elements that explain profitability follow. All figures are
after taxes unless otherwise indicated.
Individual Insurance had a net experience gain of $0.02 per share ($2.0 million). Equity
market growth provided a benefit of $0.04 per share ($4.3 million) on
Universal Life policies. Unfavourable mortality represented $0.02 per
share ($1.9 million).
Individual Wealth Management had a net experience gain of $0.11 per share ($9.8 million). The dynamic
hedging program for the segregated funds guarantee provided a benefit
of $0.11 per share ($10.3 million), and equity market growth had a
positive impact on fund management fees of $0.02 per share ($1.4
million). Higher commissions and expenses related to higher fund sales
accounted for an experience loss of $0.02 per share ($1.9 million).
Group Insurance reported a net experience gain of $0.01 per share ($1.4 million). Dealer
Services provided $0.02 per share ($2.7 million) and Special Markets
Solutions added $0.01 per share ($0.6 million). This was offset by a
loss of $0.02 per share ($1.7 million) by Employee Plans for dental and
health claims. Disability was in line with expectations.
Group Savings and Retirement contributed $0.01 per share ($0.8 million) related to investment income
gains and favourable annuitant behavior.
Strain - In the Individual Insurance sector, the strain-to-new business ratio was 30% in the first quarter, which is
above the expectation for the full year. The first quarter ratio is
explained by the 2012 year-end assumption changes together with
seasonally higher expenses. Management estimates that the higher
percentage reduced first quarter earnings by $0.03 per share ($2.8
Management reiterates that strain should represent approximately 25% of
Individual Insurance sales in 2013 as new pricing implemented at the
end of March becomes reflected in sales.
Income on capital - Total income on capital was $18.6 million pre-tax in the first
quarter versus $23.2 million a year earlier. The year-over-year
decrease is mainly due to the seasonally in-line contribution from IA
Auto and Home (loss of $3.1 million pre-tax) compared with the first
quarter of 2012 (gain of $1.7 million pre-tax).
Income taxes - The Company reported a tax gain of $0.02 per share ($2.2 million) in
the first quarter. The benefit is mostly attributed to a tax recovery
in the US, resulting in an effective tax rate of 19%.
Business Growth - Assets under management and administration reached a new high of $87.5
billion at March 31st, up 5% over the last quarter and 15% year over
year. Premiums and deposits grew by 12%, also reaching a new quarterly high of
$2.1 billion. An outstanding contribution was made by the wealth
management and individual insurance lines of business.
Sales of Individual Insurance products grew by 23%, reaching $65.8
million in the first quarter, driven by a very strong performance from
the Canadian operations.
Individual Wealth Management gross sales gathered momentum in the first
quarter, reflecting strong demand for mutual funds. Gross sales of all
funds totalled $1.1 billion, up 9% over the previous year. Net sales of
mutual funds more than doubled to $318.6 million. Segregated funds had
net sales of $36.9 million.
In Group Insurance, sales of creditor insurance and P&C products (Dealer
Services) continued to grow with a year over year increase of 5% to
$94.8 million. Special Market Solutions gained momentum, with sales
increasing 23% to $48.3 million. Employee Plans had an exceptionally
strong quarter, with sales improving by 49% to $29.3 million.
Group Savings and Retirement reported sales of $251.6 million, an
increase of 54% over the previous year.
Capital - At March 31, 2013, the solvency ratio was 237% compared with 217% at
December 31, 2012. The key elements contributing to the increase
include regulatory capital relief for lapse effective January 1st and
the equity issue of $237 million in February. On April 1, 2013, the
Company redeemed all its 8.25% subordinated debt with a nominal value
of $100 million and will redeem on or about June 30, 2013 all the
5.714% Industrial Alliance Trust Securities - Series A (IATS) with a
nominal value of $150 million. Following these buybacks, the solvency
ratio stands at 221% and the Company's leverage ratio improves to 29%
from 36% at December 31, 2012.
Quality of Investments - At March 31, 2013, both net impaired investments (0.04% of total
investments) and the real estate occupancy rate (95%) remained
unchanged from the last two quarters. The proportion of bonds rated BB
and lower increased slightly to 0.11%.
Dividend - The Board of Directors declared a quarterly dividend of $0.245 per
common share, which corresponds to a payout of 29% of net income
attributed to common shareholders. This dividend is payable on June 17,
2013 to shareholders of record as at May 24, 2013.
Registered shareholders wishing to enroll in the Company's Dividend
Reinvestment and Share Purchase Plan so as to be eligible to reinvest
the June 17th dividend must ensure that the duly completed form is
delivered to Computershare no later than 4:00 p.m. on May 16, 2013.
Enrollment information is provided on the Company's website at www.inalco.com under Investor Relations/Dividends.
Macroeconomic sensitivity - Following the update of its sensitivity analysis at March 31, 2013:
The Company can absorb a decrease of about 16% (14% at December 31,
2012) in the S&P/TSX index before having to strengthen reserves for
The Company can absorb a decrease of 40% (35% at December 31, 2012) in
the S&P/TSX index before the solvency ratio drops below 175% and a
decrease of 51% (46% at December 31, 2012) before the solvency ratio
drops below 150%.
The full-year impact on net income attributed to common shareholders of
a sudden 10% decrease in the stock markets is $24 million ($23 million
at December 31, 2012).
The impact on net income attributed to common shareholders of a 10 basis
point decrease in the initial and ultimate re-investment rates totals
$80 million versus $89 million a year ago, attributed to ongoing
improvement in the matching of asset-liability cash flows.
Market Guidance for 2013
Earnings per common share: target range of $3.00 to $3.40.
Return on common shareholders' equity (ROE): target range of 10.5% to
Solvency ratio: target range of 175% to 200%
Dividend payout ratio: medium-term payout range of 25% to 35%
Effective tax rate: target range of 21% to 24%
Guidance for ROE and earnings per common share excludes any potential
reserve strengthening in 2013.
Non-IFRS Financial Information
The Company reports its financial results in accordance with
International Financial Reporting Standards(IFRS). It also publishes
certain non-IFRS financial measures that do not have an IFRS
equivalent, including sales, value of new business, embedded value and
solvency ratio, or which have an IFRS equivalent such as data on
operating profit and income taxes on earnings presented in the sources
of earnings table. The Company also uses non-IFRS adjusted data in
relation to net income, earnings per share and return on equity. These
non-IFRS financial measures are always accompanied by and reconciled
with IFRS financial measures. The Company believes that these non-IFRS
financial measures provide investors and analysts with additional
information to better understand the Company's financial results as
well as assess its growth and earnings potential. Since non-IFRS
financial measures do not have a standardized definition, they may
differ from the non-IFRS financial measures used by other institutions.
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.
Management will hold a conference call to present the Company's results
on Thursday, May 9, 2013 at 11:30 a.m. (ET). To access the conference
call, dial 1 800 408-6335 (toll-free). A replay of the conference call
will be available for a one-week period, starting at 2:00 p.m. on
Thursday, May 9, 2013. To access the conference call replay, dial
1 800 558-5253 (toll-free) and enter access code 21653328. A webcast of
the conference call (in listen only mode) will be available on the
Industrial Alliance website at www.inalco.com.
Documents Related to the Financial Results
A detailed discussion of the Company's first quarter results is provided
in the MD&A, financial statements and accompanying notes as well as our
supplemental information package, all of which are available on the
Industrial Alliance website at www.inalco.com under Investor Relations / Financial Reports and on SEDAR at www.sedar.com.
Annual General Meeting of Shareholders
Industrial Alliance is holding its Annual General Meeting of
Shareholders this afternoon at 2:00 p.m. at the Quebec City Convention
Centre located at 1000 René-Lévesque Boulevard East in Québec City.
Media will have the opportunity to meet with Chairman of the Board John
LeBoutillier as well as President and Chief Executive Officer Yvon
Charest immediately after the AGM at approximately 3:30 p.m. A
videocast of the meeting as well as a copy of the management
presentation will be available on the Industrial Alliance website at www.inalco.com.
This press release may contain statements relating to strategies used by
Industrial Alliance or statements that are predictive in nature, that
depend upon or refer to future events or conditions, or that include
words such as "may", "will", "could", "should", "would", "suspect",
"expect", "anticipate", "intend", "plan", "believe", "estimate", and
"continue" (or the negative thereof), as well as words such as
"objective" or "goal" or other similar words or expressions. Such
statements constitute forward-looking statements within the meaning of
securities laws. Forward-looking statements include, but are not
limited to, information concerning the Company's possible or assumed
future operating results. These statements are not historical facts;
they represent only the Company's expectations, estimates and
projections regarding future events.
Although Industrial Alliance believes that the expectations reflected in
such forward-looking statements are reasonable, such statements involve
risks and uncertainties, and undue reliance should not be placed on
such statements. Certain material factors or assumptions are applied in
making forward-looking statements, and actual results may differ
materially from those expressed or implied in such statements. Factors
that could cause actual results to differ materially from expectations
include, but are not limited to: general business and economic
conditions; level of competition and consolidation; changes in laws and
regulations including tax laws; liquidity of Industrial Alliance
including the availability of financing to meet existing financial
commitments on their expected maturity dates when required; accuracy of
information received from counterparties and the ability of
counterparties to meet their obligations; accuracy of accounting
policies and actuarial methods used by Industrial Alliance; insurance
risks including mortality, morbidity, longevity and policyholder
behaviour including the occurrence of natural or man-made disasters,
pandemic diseases and acts of terrorism.
Additional information about the material factors that could cause
actual results to differ materially from expectations and about
material factors or assumptions applied in making forward-looking
statements may be found in the "Risk Management" section of the 2012
Management's Discussion and Analysis and in the "Management of Risks
Associated with Financial Instruments" note to Industrial Alliance's
consolidated financial statements, and elsewhere in Industrial
Alliance's filings with Canadian securities regulators, which are
available for review at www.sedar.com.
The forward-looking statements in this news release reflect the
Company's expectations as of the date of this press release. Industrial
Alliance does not undertake to update or release any revisions to these
forward-looking statements to reflect events or circumstances after the
date of this document or to reflect the occurrence of unanticipated
events, except as required by law.
About Industrial Alliance
Founded in 1892, Industrial Alliance Insurance and Financial Services
Inc. is a life and health insurance company with operations in all
regions of Canada as well as in the United States. The Company offers a
wide range of life and health insurance products, savings and
retirement plans, RRSPs, mutual and segregated funds, securities, auto
and home insurance, mortgage loans and other financial products and
services for both individuals and groups. The fourth largest life and
health insurance company in Canada, Industrial Alliance contributes to
the financial wellbeing of over three million Canadians, employs 4,300
people and has assets under management and administration of more than
$87 billion. Industrial Alliance stock is listed on the Toronto Stock
Exchange under the ticker symbol IAG.
SOURCE: Industrial Alliance Insurance and Financial Services Inc.
For further information:
Office: 418 780-5945