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ai Group financial details its ambitions to maintain the growth of its net profit

by

Alain Thériault

13 May 2019 13:30

Denis Ricard | Photo : Denis Méthot

The CEO ofiA financial Group, Denis Ricard, has announced that it wants to grow its net profit by 10% per year. During a press conference in the margins of its annual meeting held on may 9 last year in Quebec city, the Journal of insurance has inquired of its strategy to 2019.

“We can have a growth in earnings per share of 6 % without too much force. It is about the organic growth that we achieve year after year. We asked ourselves what we would go from 6% to 10 % growth in earnings per share, or more “, was illustrated by Mr. Ricard.

In addition to the organic growth of 6 %, iA seeks an additional contribution of 2% from acquisitions and 1 % from distribution activities. It also seeks a contribution of 3% thanks to the improvement of the profitability of all lines of business.

The insurer is committed to this growth of 10 % until 2022, the date of entry into force of the IFRS 17 of the insurance contracts. To date (first quarter of 2019), ai has managed to grow earnings per share 10% per year since 2012.

PPI reports

Denis Ricard intends to focus on the distribution of earnings per share. For its part, the recent acquisition of PPI reports already. Mr. Ricard has revealed that the general agent has contributed to the earnings per share to the tune of 4 cents, in the last 9 months of the year 2018. The company uses diluted earnings per share in its presentations on its growth. It was 5.59 $ in 2018.

The p & c returns to profitability

The profitability has been at an appointment for iA auto and home Insurance (iAAH) in 2018. Its combined ratio, which is the sum of the rates of the operating expenses and the loss ratio fell below the threshold of 100% for the first time since 2014. It stood at 95.8 per cent for the year 2018. In its annual report, the insurer explains that they have increased the rates for the subsidiary home and auto insurance performs a return to profitability.

Because of this strategy, the premium growth has however been lower in 2018 than in previous years.

Priority in the United States

Denis Ricard has also expressed its intention to prioritise the expansion of its us operations. These activities contributed to the operating profit to the tune of 8 %, has revealed to Denis Ricard. He would like to increase this share to 20 % in a horizon of five years. Denis Ricard also sees potential acquisitions in the United States. The insurer has also acquired in January, Dealers Assurance Company (DAC) and Southwest Reinsure.

To impose on the United States, iA products nestled. “We don’t want to fight against the great ones of this world. We have found niches. A niche, a niche in the United States, this represents important business for a canadian insurer, ” he said.

The offer of individual insurance including life insurance for final expenses, or for the elderly who have health problems. The supply of dealer services includes property and casualty insurance products that include extended warranties. These are insurance products that cover short periods and are therefore not long-term commitments, ” said Mr. Ricard. “These cases are not dependent on the capital markets “, he adds.

A force in individual insurance

Forced to fight against the giants that are Canada Life, Sun Life Financial and Manulife, ai draws its pin from the game in individual insurance through the market of the middle class. This niche allows it to be positioned first in the market of individual life insurance in Canada, in terms of the number of policies sold. Mr. Ricard stated that these numbers come from LIMRA. This result is possible because ” Industrial Alliance is a company that is present in the families, whereas our competitors are in the search of large fonts “, explained the CEO of iA. “We have a police force and five in Canada,” he added.

In terms of new premiums, Mr. Ricard has revealed that iA rose to the fourth spot in the canadian market for individual life insurance. “This represents approximately 12 % of the market,” he said. We are in the average policy, sold by a distributor who also is in the community. The average premium of our policies oscillates around a little more than $ 1,000 per year, while for our competitors, it may be 3 500 $. “

The insurer includes life insurance, critical illness and disability in the section sales of individual life insurance.

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