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Donnerstag, 16.02.2017 15:00 von PR Newswire | Aufrufe: 46

Industrial Alliance Delivers Excellent Fourth Quarter and 2016 Results - Quarterly dividend to common shareholders increased by 9%

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Canada NewsWire

QUEBEC CITY, Feb. 16, 2017

(TSX: IAG)

Q4-2016 Highlights

Diluted EPS of $1.48 exceeds Q4 guidance ($1.10-$1.20 EPS)
Favourable impact of year-end assumption review (+$0.22 EPS)
Continued favourable policyholder experience (+$0.05 EPS)
New business strain ratio at all-time low of 5% (+$0.01 EPS)
Retail insurance continues to deliver strong growth (+27% YoY)
Net mutual fund flows become positive in Q4
Solvency ratio of 225% (211% post-HollisWealth acquisition)
Book value per share up 6% (11% YoY)
Quarterly dividend increased by 3 cents to $0.35 per common share

QUEBEC CITY, Feb. 16, 2017 /CNW Telbec/ - For the fourth quarter ended December 31, 2016, Industrial Alliance Insurance and Financial Services Inc. (TSX:IAG) reports net income attributed to common shareholders of $155.0 million and diluted earnings per common share (EPS) of $1.48. These results compare with net income of $4.2 million and EPS of $0.04 in the same quarter of 2015 that included a reserve strengthening of $1.05 per share. A discussion of the twelve-month 2016 results is provided in the Management's Discussion and Analysis filed on SEDAR today.

"2016 was clearly an excellent year for Industrial Alliance and for our shareholders," commented Yvon Charest, President and Chief Executive Officer. "I want to highlight the outstanding results of our retail insurance operations both in Canada and the US, the industry-leading growth of our segregated fund business, and the successful turnaround in gross and net sales by our mutual fund business. Aside from organic growth, we are also excited by the expansion of our wealth management platform through the acquisition of HollisWealth in early December. The combination of the two groups propels us to the top of non-bank mutual fund distribution in Canada in terms of geographic footprint and assets under administration."

"As for shareholder value creation, I am pleased to report that book value per share grew by 11% in 2016 and that we are announcing an increase in our dividend on common shares. As we celebrate our 125th anniversary this year, we are extremely enthusiastic about the opportunities for continued growth and development as a leading financial services organization."

"Our earnings in 2016 reflect another year of strong policyholder experience, a significant turnaround in profit from Employee Plans and, like the last four years, lower strain on new business in our retail insurance operations in both Canada and the US," commented René Chabot, Executive Vice-President, CFO and Chief Actuary. "As part of our year-end assumption review, we have strengthened our URR assumption by 20 basis points and maintained significant protection against potential declines in equity markets and long-term interest rates."

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"It is is our custom at this time to introduce our earnings guidance for the next year. In 2017, we are expecting to deliver EPS in the range of $4.65 to $5.05. Along with the usual organic growth, we are anticipating strain of 6% for the full year, continued improvement from Employee Plans, profit growth from mutual funds and a better performance in Dealer Services especially for car loans. At year-end our solvency ratio was 225% and our balance sheet retains ample flexibility to support our growth."

Highlights
	Fourth quarter			Year-to-date at December 31
(In millions of dollars, unless otherwise indicated)	2016	2015²	Variation	2016	2015²	Variation
Net income attributed to shareholders	159.2	8.3	NM	553.7	386.4	43%
Less: dividends attributed to preferred shares	4.2	4.1	2%	16.5	18.0	(8%)
Less: redemption premium on preferred shares	—	—	NM	—	4.0	—
Net income attributed to common shareholders	155.0	4.2	NM	537.2	364.4	47%
Earnings per common share (diluted)	$1.48	$0.04	$1.44	$5.19	$3.57	$1.62
Return on common shareholders' equity ¹	14.9%	0.4%	NM	13.2%	10.2%	300 bps

¹ Annualized for the quarter. Trailing twelve months for the year to date.
² 2015 results reflect a reserve strengthening of $1.05 per share.
NM: Not meaningful


	December 31, 2016		September 30, 2016		December 31, 2015
Solvency ratio	225%¹		218%		213%
Book value per share	$40.97		$38.63		$36.76
Assets under management and administration	$126.2B		$126.2B		$115.8B
Net impaired investments as a % of investment portfolio	0.08%		0.04%		0.05%

¹ After giving effect to the announced acquisition of HollisWealth in the third quarter of 2017, the solvency ratio would be 211%.

FOURTH QUARTER HIGHLIGHTS

Profitability - For the fourth quarter ended December 31, 2016, Industrial Alliance Insurance and Financial Services Inc. reports net income attributed to common shareholders of $155.0 million, diluted earnings per common share (EPS) of $1.48, and annualized return on shareholders' equity (ROE) of 14.9% , all of which exceed management's guidance for the quarter. This compares with net income attributed to common shareholders of $4.2 million, EPS of $0.04 and annualized ROE of 0.4% in the same quarter a year ago. The 2015 results include a reserve strengthening of $1.05.

The key elements that explain profitability follow. All figures are after taxes unless otherwise indicated.

Expected profit on in-force increased by 13% to $145.8 million pre-tax over the same quarter last year and is attributed mainly to the retail and group insurance sectors. In addition, the Company reported gains of $0.36 per share, of which $0.22 is related to its year-end assumption review, $0.05 to favourable policyholder experience, $0.02 to market-related items, $0.01 to lower strain and $0.06 to income taxes. A detailed analysis of gains and losses follows.

Year-end assumption review - The Company released a net amount of $23.2 million or $0.22 per share from its actuarial reserves. Favourable results from the annual mortality update and actions taken during the year to improve investment yields and asset‑liability matching were used primarily to strengthen interest rate reinvestment assumptions. The initial reinvestment rate (IRR), based on the long-term rate at December 31, 2016, is set at 2.35% to which a protection of 75 basis points is added. The ultimate reinvestment rate (URR) was strengthened by 20 basis points and is set at 3.10%. The URR currently prescribed by the Canadian Institute of Actuaries is 3.30%.

Individual Insurance reported a total experience gain of $0.19 per share ($19.0 million) explained by favourable mortality and morbidity ($0.08 EPS), higher excess-premium deposits ($0.06 EPS) and market appreciation ($0.03 EPS) related to Universal Life policies, and miscellaneous items ($0.02 EPS).

Individual Wealth Management had an experience loss of $0.01 per share ($1.2 million) related to the dynamic hedging program for segregated fund guarantees.

Group Insurance reported an experience loss of $0.09 per share ($9.0 million). Employee Plans experienced a higher incidence of long-term disability and dental claims ($0.06 EPS). Dealer Services had higher claims for creditor insurance ($0.01 EPS), as well as lower interest income on car loan originations together with losses on older car loans in the portfolio ($0.02 EPS).

Group Savings and Retirement reported a loss of $0.02 per share ($2.0 million) related to unfavourable longevity and higher expenses.

Strain - In the Individual Insurance sector, strain on new business amounted to $5.1 million pre-tax, or 5% of sales for the quarter, compared with annual guidance of 15%. Management estimates that the lower strain ratio, which is attributed mainly to the higher sales volume in the quarter, represented a gain of $0.01 per share. Strain can vary on a quarterly basis because of seasonality as well as sales mix and volume.

Income on Capital - Total income on capital of $12.2 million pre-tax represents a decrease of $0.06 per share. The decrease is explained by higher financing expenses related to the debt issue in September and lower results at iA Auto and Home.

Income Taxes - The Company realized a gain of $0.06 per share related principally to tax-exempt investment income. The effective tax rate was 17% compared with the Company's guidance of 18%-20%.

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