'It's a top priority,' says president and CEO at Monday's investor event
iA Financial Group is optimistic that disciplined organic growth and strategic capital deployment will push their return on equity (ROE) target from 15 per cent to 17 per cent by 2027.
“It’s a top priority,” said Denis Ricard iA’s president and CEO. “There’s no constraint of capital. You can grow the business organically as you want,” he said.
At their 2025 investor event on Monday under the theme, “Ready for more, the iA way,” the company’s executives laid out plans to meet their ROE target, while focusing on scaling core operations, optimizing the firm’s US expansion, leveraging the balance sheet strength and M&A activity.
"We've had targets for earnings per share (EPS) growth over the last 10 years to deliver 10 per cent-plus. We've delivered on the plus,” Ricard said.
“We've delivered an average of 12 per cent in EPS growth and we have delivered on our promises. We've increased the ROE year after year, thanks to the choices we made mixing businesses and products, technological development, investments, and acquisitions. Now we are prepared to move it even further, up to 17 per cent,” he added.
A big part of that growth story is iA’s ability to generate and reinvest capital efficiently. The company is now producing $650 million in organic capital per year, giving them significant room to expand without overextending its balance sheet.
"We are in a great spot because we now have $1.4 billion of capital to deploy," highlighted Ricard. "This is going to fuel, and it is fuelling the ROE expansion for iA going forward."
At the centre of iA’s growth strategy is strong performance in its core Canadian businesses, which continue to generate high-margin, capital-efficient revenue for the company.
After all, fundamental operations in Canada are delivering most of the improvement, approximately 75 per cent, while the US division delivers around 25 per cent, noted Eric Jobin, CFO and chief actuary at iA.
“Three years from now, we will have $2.5 billion of capital deployable. That capital deployable has the potential to deliver more than 17 per cent,” he said. “A billion dollars being deployed [per year] increases the ROE by 1 per cent.”
Jobin was also quick to point to iA’s products, which offer low guarantees for most of the organization’s lines of business.
“They come in with very low capital requirement, very high profitability. We are building on the organic capital generation,” he explained.
While iA’s Canadian operations currently yield around 18 per cent ROE, the company’s US business is still lagging at 8 per cent. Closing that is a major piece of their overall ROE target of 17 per cent.
"By improving the US business and continuing to strengthen the Canadian side, we will achieve the 17-plus per cent," Ricard said. "Forget about the plus. The plus comes from disciplined capital deployment. We're not going to do stupid things. It's not in our DNA, but it's part of our strategy.”
A key driver of their US strategy is iA’s insurance business, notably through its American Amicable and Vericity acquisitions.
"In the US, we see significant growth opportunities, and we are leveraging the great success of American Amicable," Ricard highlighted. "With the acquisition of Vericity in the US, we now issue more policies per year there than in Canada, where we are number one.”
Additionally, one of iA’s biggest strengths is its distribution model, which “provides resilience for IA’s business model.”
"People don’t know their needs. You need someone to make them understand that if something happens in their life, in terms of protection, in case of death or disability, there's a need for protection. That's why distribution is so important. That's why broadening the scope of distribution is a factor of success for us,” said Ricard.
Consequently, iA’s technology investment, roughly $250 million to $400 million annually, is enabling the firm to improve processes and develop sophisticated tools for iA’s advisors and clients, noted Pierre Miron, iA’s EVP and chief growth officer, Canadian operations.
"We've accelerated IT investment in our lines of business because we needed an upgrade on the foundation," Jobin noted, noting the upgrade came with a big increase in the budget and resulted in an increase in expenses.
“We do these investments like we do acquisitions; we have a standalone business case that shows the cost and expected benefits for each of them, and we have a targeted return,” he added.
While organic growth is the primary focus, iA isn’t ruling out acquisitions that fit within its existing framework. But Ricard made it clear they won’t chase deals at just any price.
“None of our competitors have such a well-diversified business mix, and it has made us resilient through the economic cycle in the past,” said Ricard.
"We have been very successful in doing acquisitions since 2000, we’ve done 70 of them. We know how to do this. But acquisitions have to reinforce one of the five elements of the iA way.”
