Third quarter 2015 Conference Call Presenters: Yvon Charest, President and CEO René Chabot, EVP, CFO and Chief Actuary November 4, 2015 1
Q3 Highlights A solid quarter despite challenging equity markets ► Expected profit up 14% YoY to $136.4 million ► Net income attributed to common shareholders of $113.1 million, up 24% YoY Profit ► Q3 reported EPS of $1.11 ► Above guidance [$1.00-$1.10] ► Core EPS of $1.10 driven by favourable policyholder experience ► Strain at 24% of sales (better than 30% guidance) ► Strong: Individual Insurance, seg funds and iA Auto and Home Business ► Good: Dealer Services and Special Market Solutions Growth ► Mutual funds remain a challenge ► Small QoQ decline in AUA/AUM due to market decline and lower fund inflows ► Solvency ratio of 225% Financial ► Book value per share of $36.45, up 10% YoY Strength ► Post Q3 acquisitions: CTL Corporation and FIN‐XO Securities 2
Sales Highlights Retail insurance has been gaining momentum Third quarter Year-to-date at September 30 ($Million, unless otherwise indicated) 2015 2014 Variation 2015 2014 Variation ► Individual Insurance 1 Canada 43.1 37.0 16% 124.7 113.8 10% United States 20.7 14.1 47% 55.9 40.1 39% Total 63.8 51.1 25% 180.6 153.9 17% ► Individual Wealth Management Segregated funds - net sales 80.5 68.5 +12.0 340.1 200.0 +140.1 Mutual funds - net sales (315.7) (11.1) -304.6 (747.8) (51.3) - 696.5 Total - net sales (235.2) 57.4 -292.6 (407.7) 148.7 - 556.4 ► Group Insurance Employee Plans 12.9 45.6 (72%) 53.5 62.7 (15%) Dealer Services 165.5 155.7 6% 422.2 407.7 4% Special Markets Solutions 41.9 40.6 3% 131.2 126.3 4% Total 220.3 241.9 (9%) 606.9 596.7 2% ► Group Savings and Retirement 246.0 258.2 (5%) 839.2 758.6 11% ► IA Auto and Home 66.7 63.1 6% 195.1 185.3 5% 3 1 Excess premiums for Q1-2014 were revised downwards by $9.5M due to a correction related to large policies.
Asset Growth Slower due to market decline and lower fund inflows AUM/AUA Assets Under Management and Administration (assets under management and administration, in $B) September ($Billion, unless YoY 30, 2015 otherwise indicated) 111.2 109.5 Assets under management 98.8 General fund 32.6 7% 34.0 32.7 83.5 29.3 Segregated funds 19.1 3% 73.6 23.9 Mutual funds 10.5 (12%) AUA 21.9 Other 15.0 3% Subtotal 77.2 2% 76.8 77.2 69.5 Assets under 59.6 34.0 8% AUM 51.7 administration Total 111.2 4% 2011 2012 2013 2014 Q3/2015 4
Premiums and Deposits Reflect weaker inflows in wealth sectors Net premiums, premium equivalents and deposits (in $B) Q3/2015 $Million YoY Individual Insurance 395.8 7% 7.5 7.4 7.4 7.0 6.9 Individual Wealth 699.9 (8%) 1.8 1.8 Management Q4 5.7 1.7 1.7 Group Insurance 353.6 (1%) 1.6 1.8 1.8 Q3 1.6 1.7 Group Savings and 240.3 (5%) Retirement 1.9 1.7 1.9 Q2 1.7 1.6 General Insurance 73.2 (2%) Q1 2.1 2.1 2.0 2.0 1.9 TOTAL 1,762.8 (3%) 2011 2012 2013 2014 2015 5 Note: The figures do not always add up exactly due to rounding differences.
Q3 Profit Strong growth in earnings and book value per share Third quarter Year-to-date at September 30 ($Million, unless otherwise indicated) 2015 2014 Variation 2015 2014 Variation Net income attributed to shareholders 117.6 98.5 +19% 378.1 309.2 +22% Less: preferred shareholder dividends 4.5 7.0 -36% 13.9 21.2 -34% Less: premium on the redemption of preferred — — — 4.0 — — shares Net income attributed to common shareholders 113.1 91.5 +24% 360.2 288.0 +25% Earnings per common share (EPS) (diluted) $ 1.11 $ 0.91 +$ 0.20 $ 3.54 $ 2.86 +$ 0.68 Return on common shareholders' equity (ROE) 1 12.3% 11.2% +110 bps 13.5% 12.1% +140 bps Book value per share $36.45 $33.00 +10% $36.45 $33.00 +10% 6 1 Annualized for the quarter and trailing 12 months for the year to date.
Q3 Results vs. Guidance All metrics compare favourably Guidance Reported Comments EPS $1.11 Above guidance $1.00 to $1.10 ROE 12.3% Top of guidance 11.0% to 12.5% Strain 24% Better than expected 30% Effective tax rate 19% Middle of guidance 18% to 20% 221% after CTL Corp. Solvency ratio 225% 175% to 200% acquisition 25% to 35% Payout ratio 27% Within guidance (mid-range) 7
Q3 EPS is $1.11 (Consensus 1 is $0.95) Market impact more than offset by favourable experience Q3 items of note (gains and losses) Market impact -11 ¢ Favourable experience +12 ¢ Individual Special Group Dealer Insurance Markets Savings Services +9 ¢ +3¢ Strain +2 ¢ +2¢ +2¢ Hedging Individual Market -3 ¢ Wealth -4 ¢ -8 ¢ (UL -7 ¢ & MERs -1 ¢ ) 8 1 Consensus as of October 27, 2015.
Q3 Adjusted EPS Management's view of core is $1.10 Q3 EPS Q3 Reported EPS $1.11 $1.10 $1.04 Items greater than ±4¢ +$0.04 ► Market loss CONSENSUS 1 (core) ($0.05) ► Individual Insurance iA ADJUSTED Q3 Adjusted EPS $1.10 9 1 Core consensus, adjusted for market impact, as of October 27, 2015.
Strong Capital Position CTL acquisition will decrease ratio by 4 percentage points Solvency Ratio (%, end of period) Key changes 225 223 217 217 during the quarter 211 209 200% Target +1% Profit ► 175% +1% Interest rates ► 2012 2013 2014 Q1/15 Q2/15 Q3/15 10
Shareholder Value Creation: +10% LTM Q3/15 Book Value Per Share $36.45 (end of period) CAGR 1-year +10% 5-year +8% $9.36 Since 2000 +10% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 11
Balance Sheet Flexibility Significant capital to support growth initiatives September 30 June 30 December 31 September 30 2015 2015 2014 2014 Solvency ratio 225% 223% 209% 215% Leverage ratio 24.5% 24.7% 23.7% 25.9% Coverage ratio 9.5x 8.9x 7.9x 8.1x 12
Individual Wealth Management Operating profit and margin by segment OPERATING PROFIT ASSETS YTD Sept. 30, 2015 as of Sept. 30, 2015 % YoY Profit $M $B of total growth margin Segregated & 67.4 18% 13.1 2% 51 bps general funds 1 Mutual funds 42.9 12% 14.1 (9%) 30 bps Distribution 16.4 4% 34.0 8% 5 bps affiliates (AUA) Individual Wealth 126.7 34% 61.2 2% 21 bps Management TOTAL 367.7 100% 111.2 4% --- 13 1 Includes other AUM of 3.6 billion (please refer to the Rolling nine quarters financial information package )
CTL Corporation Acquisition ► Largest privately‐owned consumer vehicle finance company in Canada About ► Non traditional credit lender with a loan portfolio of more than $100 million CTL ► Distribution through a network of car dealers located across Canada. ► Relatively few national non-prime operators in Canada (only two Canadian banks) ► Provides iA with immediate national platform in non-prime auto finance ► Diversified portfolio by product and geography What ► Immediately accretive; expected to contribute full-year earnings of $0.04 per share we like ► Provides more robust systems for our prime loan business ► Funding for new loan origination will come from iA ► Immediate synergies and cross-selling opportunities ► Credit risk: earnout period and design are a hedge because based on profitability Risks ► Portfolio represents less than 0.3% of iA's total invested assets 14
CTL Corporation Acquisition Builds on our service offer for car dealers Full-service offer to car dealers IA Auto Dealer Services division and Home Creditor Car Car P&C insurance financing insurance NEW Already the Still high growth Referral Full spectrum leader potential program of credit-risk offering High growth potential 15
Individual Insurance Strain on New Business Better than 30% guidance due to sales level and product mix 2015 2014 2013 2012 ($Million,unless otherwise indicated) Q1 1 Q3 Q2 Q1 Q4 Q3 Q2 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Sales 63.8 61.7 55.1 62.1 51.1 55.5 47.3 57.2 54.1 57.2 65.8 69.2 58.5 62.2 53.4 Strain 15.2 15.2 21.3 16.0 17.3 12.7 12.7 6.1 10.7 12.4 20.0 15.7 21.9 27.6 30.4 Strain (%) 24% 25% 39% 26% 34% 23% 27% 11% 20% 22% 30% 23% 37% 44% 57% Annual total 29% 27% 21% 39% Gain of 2 cents EPS in Q3/15 16 1 Excess premiums for January and February 2014 were revised downwards by $9.5M due to a correction related to large policies.
Income On Capital A better quarter for iAAH 2015 2014 2013 2012 ($Million, pre-tax) Q1 1 Q3 Q2 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Investment 27.7 28.4 32.6 29.8 29.3 27.2 26.7 26.0 29.9 37.3 32.1 39.3 23.7 31.9 31.0 income Financing & 3 Intangibles 2 (10.0) (9.9) (8.8) (6.8) (6.7) (7.4) (7.1) (7.0) (5.9) (17.8) (10.4) (9.4) (9.6) (9.5) (9.5) Sub Total 17.7 18.5 23.8 23.0 22.6 19.8 19.6 19.0 24.0 19.5 21.7 29.9 14.1 22.4 21.5 IA Auto and 5.8 1.7 (10.2) 5.1 4.7 0.1 (3.5) (1.5) 0.8 3.5 (3.1) 1.6 4.0 3.7 1.7 Home Total 23.5 20.2 13.6 28.1 27.3 19.9 16.1 17.5 24.8 23.0 18.6 31.5 18.1 26.1 23.2 3 Annual total 57.3 91.4 83.9 98.9 1 Q1/2015: ($1.4M) has been reallocated from Investment income to Financing & Intangibles, starting in Q1/15 2 Starting in Q1/15, includes higher financing costs related to debt issuance, offset by preferred share redemption in Q1/15 17 3 Includes debt buyback penalty of $9.3M in Q2/13
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