iA Financial Corporation Inc.

Good morning, ladies and gentlemen, and welcome to the Industrial Alliance 2024 second quarter results conference call. At this time, all lines are in lesson only mode. Following the presentation, we'll conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, August 7, 2024. I would now like to turn the conference over to Marie-Annick Bonneau. Please go ahead.

Good morning, everyone, and welcome to our 2024 second quarter conference call. All our Q2 documents, including press release, slides for this conference call, supplementary information package, and quarterly MD&A are posted in the investor relations section of our website at ia.ca. The conference call is open to the financial community, the media, and the public. I remind you that the question period is reserved for financial analysts. A recording of this call will be available for one week starting this evening. The archived webcast will be available for 90 days, and a transcript will be available on our website in the next week. I draw your attention to the forward-looking statements information on slide two, as well as the non-IFRS and additional financial measures information on slide three. Also, please note that a detailed discussion of the company's risk is provided in our 2023 MD&A available on CDAR and on our website, with an update in our Q224 MD&A release yesterday. I will now turn the call over to Denis Ricard, President and CEO.

Good morning, everyone, and thank you for being with us on the call today. As usual, I will start by introducing everyone attending on behalf of IE. First, Eric Jobin, Chief Financial Officer and Chief Actuary. Alain Bergeron, Chief Investment Officer. Stéphane Bourbonnet, responsible for Wealth Management Operations. René Laflamme, in charge of Individual Insurance Savings and Retirement. Pierre Miron, Chief Growth Officer of our Canadian Operations and responsible for Dealer Services Canada and IE Auto and Home. Sean O'Brien, Chief Growth Officer of our U.S. operations. And finally, Louis-Philippe Pouliot, in charge of our group businesses. We are pleased to report solid second quarter results on all fronts. Our Q2 performance is a tangible demonstration of the value we are creating by implementing our growth strategy with discipline and care. By leveraging our distinctive strengths, such as our extensive distribution networks and diversified portfolio activities, and by deploying capital, we achieved strong sales momentum, record core EPS, substantial organic capital generation, and core ROE expansion. Now to the results, starting with slide 8 for an overview of main financial KPIs. Core EPS of $2.75, up by 15% year-over-year, reached a record level. Trailing 12-months core OOE of 15% is already meeting our mid-term target thanks to strong earnings growth and capital deployment initiatives. Business growth continues to be very strong in Canada and in the U.S., with virtually all units recording good sales growth. As a result, we concluded the quarter with premiums and deposits up 15% year-over-year and assets under management and administration up 12% over 12 months. Our capital position remained robust with a solvency ratio of 141%, supported by continued strong organic capital generation and good risk management practices. Our book value per share which stood at $69.92 at June 30th, increased by over 9% when we exclude the impact of share buybacks. Now to slide 9 to look at second quarter business growth for Insurance Canada, which recorded another solid quarter with all business units posting strong sales results. In individual insurance, We continue to lead the Canadian mass-made market in number of policies sold, with strong sales of $98 million during the second quarter, up 10% over last year. This result is attributable to the performance of our distribution networks, our advanced digital tools, and our comprehensive range of products. In group insurance, sales increased by 26% year-over-year, along with good retention, leading to premiums and deposits at $510 million, which is 10% higher than a year ago. In the dealer services division, second quarter sales of $194 million were up 2% year-over-year. This is a good result as growth was tempered by the macroeconomic environment that continued to impact vehicle affordability. and by the temporary outage at CDK Global, a dealership software provider, which occurred from June 19 to July 4. Finally, IOTO and HOME also recorded very strong sales, with direct written premium in the second quarter reaching $188 million, a solid increase of 15% over the same period last year. This result was supported by good retention of in-force business, strong new sales, and the impact of premium increases implemented recently. in 2023. Turning to slide 10 to comment on sales results for wealth management, which posted, again, very solid results, notably with net fund inflows of more than $400 million. Growth sales of SEC funds reached nearly $1.3 billion, up 53% year over year, and net inflows of $608 million were generated during the second quarter. With this solid performance, which demonstrates the strength of our distribution networks, IE continues to rank first in both growth and net SEC fund sales. Mutual fund sales of $468 million were up 26% year-over-year, though inflows were lower than outflows as the mutual fund industry continued to be challenged. In addition, Although investor optimism about financial markets and asset classes offering higher return potential than guaranteed investments favored SEC fund sales, sales of insured annuities and other savings products remain elevated, reaching $541 million. This is good performance that compares to a very strong quarter a year earlier. Finally, group savings and retirement posted solid sales of $858 million in the second quarter, up 6% year-over-year. Now looking at slide 11 regarding our sales results in the U.S. In individual insurance, we achieved record sales of $49 million U.S., an increase of 14% year-over-year, reflecting good performance in all our markets. The continued high activity in this business unit along with the recent acquisitions of Vericity and two existing blocks of insurance business from Prosperity Life Group, illustrate our ability to achieve strong growth in the U.S. life insurance market. In dealer services, second quarter sales amounted to $279 million, up 13% over the same quarter the previous year. Dealers continue to place greater emphasis on F&I product sales, while vehicle inventories are increasing and profit margin on vehicle sales tend to decrease. Meanwhile, as in Canada, sales were tempered by the macroeconomic environment, which continues to impact vehicle affordability, and by the temporary outage at CDK Global. Moving to slide 12, where year-to-date results compare favorably with all our midterm targets. More specifically, core APS has increased by 16% compared with the same period in 2023 and is well above the targeted 10% plus annual average growth. Core ROE met our midterm target of 15% plus. Our solvency ratio of 141% is significantly higher than our operating target. Our good profitability contributed to the generation of $305 million in organic capital, having so far generated more capital than in the same period last year. Lastly, our dividend payout ratio is well within target. Turning to slide 13 to discuss our capital deployment priorities and recent initiatives. At June 30, 2024, we had 1.1 – sorry – We had $1.1 billion in deployable capital following an active second quarter in terms of capital deployment, mainly through share buybacks and acquisitions. To create additional value for our shareholders, our focus continues to be profitable organic growth with new sales having an ROE above 15%, as well as disciplined acquisitions. We recently announced the closing of the Varicity acquisition and the acquisition of two blocks of life insurance business from Prosperity Life Group in the U.S. life market. In Canada, we also completed the acquisition of the Laurentian Bank Securities assets in the wealth management sector. Going forward, in addition to growth initiatives, we will continue to steadily increase our dividends and to buy back shares. In conclusion, we enter the second half of the year confident in the resilience of our diversified business model and in our continued ability to create value and increase profitability. I will now hand it over to Eric, who will comment on the second quarter profitability and capital strength. Following Eric's comment, we will take questions. Eric.