Slumping markets hit iA profit despite strong sales

Volatile markets hurt Quebec City–based iA Financial Corp.’s investment fund income, dragging down the individual insurance and wealth management divisions and leading to a quarterly loss.

IA reported net income attributable to common shareholders of $151 million in the first quarter of 2022, down 13% from the same period last year. In Q4 of 2021, the firm reported net income attributed to common shareholders of $209 million.

Earnings per common share were $1.40, down 13% from the first quarter of 2021.

In an earnings release on Thursday, the firm said market volatility had a negative impact on universal life insurance policies, contributing to a $16-million loss for the individual insurance business.

Markets also hit the individual wealth management business, which reported an $8-million loss for the quarter ended March 31. Part of the loss was due to lower investment fund income, the firm said.

However, iA noted positive news when it came to fund sales.

“Our sales, most notably in individual insurance and segregated funds, have been strong since the beginning of the year, building on the momentum of 2021,” iA president and CEO Denis Ricard said in the release. 

“Partly due to the success of our participating products, we continue to increase the proportion of capital-light products, which accounted for more than 85% of new individual insurance sales in the first quarter.”

Individual insurance sales totalled $101 million in the quarter, a “significant” year-over-year increase, the firm said (the figure was not provided in the previous quarterly release).

The 58,362 policies issued during the first three months of the year marked a 13% increase from Q1 2021, the firm said.

In wealth management, gross sales of $1.5 billion were up 9% from a year ago, while net sales topped $1 billion, according to the release.

Mutual fund gross sales totalled $691 million for the quarter with net inflows of $83 million. Guaranteed product sales increased 4% year over year to $239 million, iA said.

Assets under management and administration ended the first quarter at $213.9 billion, up 6% from $201.2 billion a year earlier but down from $221.2 billion at the end of 2021.

Premiums and deposits totalled more than $4.4 billion for the first quarter, close to the record achieved for the same period in 2021, iA said, and up slightly from $4.2 billion the previous quarter.

Despite the market volatility this year, Ricard was upbeat about the macroeconomic environment. “[R]ising long-term rates should be a clear positive for long-term shareholder value,” he said.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.