iA Financial Corporation Inc. (IAG) Earnings Call Transcript & Summary

[Foreign Language], and a warm welcome. [Interpreted] Good morning, everyone. I'm Jacques Martin, President -- Chairman of the Board of Directors of iA and Industrial Alliance Insurance and Financial Services. I salute all participants, shareholders, participating policyholders, partners, employees who have joined us today via webcast. I would also like to acknowledge the virtual presence of the directors and several officers of both companies. Thank you for being there. It will be my pleasure to guide you through the terms and conditions of this joint meeting of iA Financial Corporation-Industrial Alliance Insurance and Financial Services held for the first time in a completely virtual way. And I'd like to share some technical information -- technical and administrative information necessary for the smooth running of this meeting. Notice of the meeting has been duly given. The minimum number of shareholders and participating policyholders required to constitute a quorum for this meeting has been reached. I declare this meeting open. I bring to your attention, the agenda for today's meeting, which is available on the right-hand window of your screen. Simultaneous translation and all slides will be provided over both our English and French webcast. You can choose to listen to the webcast in either French or English by clicking on the Language button, shown on the right-hand corner of your screen. You may also submit your questions in both languages. [Interpreted] I strongly suggest that you give your questions to the lower left of this screen so that we can deal with them at the best opportunity during the assembly. During this period, we will answer these general questions that have not been answered during the assembly. In order to access dialogue box, you must activate the full-screen mode of your computer before submitting your question and indicate if this contains a proposal that is to be voted upon or more general issue that will be answered at the end of this assembly. Just like a assembly where everybody is present, we ask you to identify yourself when you make your comments. I would also ask you to formulate one question at a time, and your questions must deal with company affairs and not be of personal nature. Questions will be read by the Corporate Secretary, Ms. Jennifer Dibblee. We have a certain number of questions. If we have many questions that are similar, she will read them and we will answer the questions. Those people who have ordinary shares or those with participation will be able to vote online on the subjects that concern them by way of the web platform. If you wish to vote during the assembly, you must have opened a session with the control number that has 14 or 15 numbers that you received from Computershare before the meeting. People who assist at the guests may not vote. At each time to use the vote, we'll give you additional information. So I ask you to pay attention to the information on your screen and Page 15. This document as well as other documents linked with this assembly are available online on the Internet site, the company's Internet site at section Relation with Investors and by way of the web platform. The recording of this assembly will be available after the assembly on the Internet -- company's Internet site. I remind you that since January 1, 2019, iA Financial Corporation has assumed the role of parent company of the group and is the sole holder of common shares of Industrial Alliance Insurance and Financial Services, which I will now name Ai Insurance (sic) [ iA Insurance ]. The executive officers, members of the Board of Directors and members of the Board committees of the 2 corporations are the same. The meeting will therefore be held concurrently for both companies. Today, via the webcast platform, I'm accompanied by Mr. Denis Ricard, President and Chief Executive Officer; and Jennifer Dibblee, Corporate Secretary; Mr. Steve Gilbert and Ms. Claire Girard of Computershare will act as scrutineers for this meeting. After sharing with you my comments and thoughts on the exceptional situation we are all experiencing at this time, we'll have the pleasure of hearing from Denis Ricard, President and Chief Executive Officer of the company, and we'll continue with the formal part of the meeting. As mentioned in my introduction, this assembly will be, for the first time, a completely virtual one. Considering the unprecedented public health crisis related to COVID-19 and the importance of the -- the health risk for health and safety of our shareholders and our policyholders with participation, our employees and other interested parties, we had to give up the concept of a general public meeting, just like other companies and banks, et cetera, like other companies in Québec and Canada. We place great importance on frank and open constant discussion with you in a spirit of good governance, of which we are proud. Significant efforts have been made to ensure full participation in this webcast. Barring exceptional circumstances, such as we are currently experiencing, it is our intention to revert to the usual in-person meeting format next year. The magnitude and severity of the COVID-19 pandemic will go down in history. There is no doubt about that. On behalf of iA Financial Corporation, I would like to offer our deepest condolences to all those who have lost a loved one during this crisis. I would be remiss if I did not mention the heroic and important work of all the health care workers in different countries and all other essential service workers. This is how we recognize -- builds resilience. Of the COVID-19 outbreak in this part of the United States. We have been living in confinement for some time now and are seeing the unforgiving effects of this pandemic. However, in any crisis, positive points arise. One positive point that stands out is the level of social mobilization. People and business around the world have been working hard in different ways. In a few moments, Denis Ricard, President and Chief Executive Officer, will present the key initiatives and measures put in place at iA Commercial Group to deal with this unprecedented pandemic. [Interpreted] But first, let me take a few moments to share with you the Board's main findings filings for 2019. The company's growth and financial strength have been driven by responsible choices, guided by a long-term vision. The year 2019 started with strength with the creation of iA Financial Corporation. After having passed all the regulatory steps and obtained the approval of the shareholders, iA Financial Corporation became the parent company of the iA Group as of January 1, 2019. In 2019, the company demonstrated strong momentum in growth creation. It demonstrated great efficiency and determination at all times in pursuing its deployment in the United States as well as in conducting its business in Canada. Our strength has never been stronger. In 2019, we paid out a dividend to common shareholders that was 11% higher than in 2018. I also want to point out that the share performance has been remarkable. I would also like to note that since the last shareholder meeting, we welcome Ginette Maille to the Board of Directors. The Board welcomes an experienced Director with their knowledge and experience to carry out the Board mandate. These director are up for election, which will take place a little later. [Interpreted] On behalf of the directors, I would like to congratulate and thank the members of senior management and all employees who are the lifeblood of the organization. In all context, but particularly in the current health crisis, they are constantly making every effort to ensure its success. Thank you also to our customers, shareholders and policyholders for your support and trust. We will now turn the floor over to Denis Ricard, who will present his comments to shareholders and participating policyholders.

[Interpreted] Thank you, Jacques, and hello, everyone. A year ago when we met at our annual meeting, who would have said that a year later, the world would be hit with one of the worst health and economic crises in history. Since the beginning of 2020, around the world, COVID-19 has had multiple impacts: death, family tragedies, social and physical distance, containment, job loss, the unknown uncertainty and insecurity. I'm very sensitive to the difficulties experienced by our various stakeholders. Our world has changed radically and will no longer be what it was before COVID-19. So much so, that we now speak of a new normal in our personal, professional, economic and social lives. There is one thing, however, that will never ever change. It is the resilience and determination of us as individuals, of our government and public health authorities and of all the organizations that have come together in solidarity to defeat this virus. From the very beginning, at iA Financial Group, we have been committed to contributing tirelessly in every possible way to this immense social mobilization. We have spared no effort to ensure the health and safety of our 7,495 employees and to try to reduce the spread of the virus in the community. In mid-March, we quickly took steps for telework for virtually all of our employees and to assure the security of our offices for those who need to go there as part of business continuity. This allowed us to continue all of our operations without interruption and thus, continue to meet customer needs. Allow me to thank all employees of iA Financial Group, who work with energy and conviction to ensure the quality of service that our clients and partners have a right to expect from an organization like ours. Hats off to you. We know that this crisis has hit many of our clients hard. In the first few weeks, we put in place various relief measures to support our customers who are experiencing financial difficulties directly attributable to this pandemic. These include the deferral of individual and group life insurance premium payments, 20% discount on auto insurance premiums, 60% reduction in dental insurance premiums, the deferral of residential mortgage payments and auto loan payments. In addition, we are committed to participating in the fight against COVID-19 and its unprecedented effects on our communities. As a result, we have increased our donations in the health, social and community sectors with a particular focus on organizations with urgent needs as a result of the situation. To date, close to 2 million additional dollars in funding has been provided to fight COVID-19, including to the emergency funds of various hospital and health research center foundations across the country. This is in addition to our regular donation program. Finally, we provided direct assistance to food banks in several Canadian provinces as food banks were unable to keep up with the increased demand during the crisis. We wanted to take a quick and additional step to support their essential mission. This is a fight that is far from over. We will continue to support our employees, our clients and our communities until victory is achieved against the common enemy, that is COVID-19. Today is the annual meeting of shareholders and participating policyholders made virtual because of these circumstances. I'd like to take the next 5 minutes -- the next few minutes, present the company main achievements in 2019. Last year, we saw remarkable growth in most segments. Here are the few highlights. Premiums and deposits were up 10% for a total of $11 billion. This is a result of new sales and high retention of in-force business. Gross aggregated fund sales reached a historic peak with growth of 19% compared to 2018, and we are still first in Canada in net sales. Our business in the U.S. continues to grow. Individual insurance sales grew by 22% and dealer services sales grew by 20%. Moreover, we pursued our growth strategy via acquisition. We are committed to spending CAD 1.1 billion, mainly to acquire a major interest in the U.S. vehicle warranty market. On December 4, 2019, we entered into an agreement to purchase the American company, IAS Parent Holdings, Inc. and its subsidiaries, the biggest acquisition in our history. IAS Parent Holdings operates in the U.S. vehicle warranty market, where it provides an extensive portfolio of products and services sold through a broad and diverse distribution network. The transaction is expected to close at the end of the second quarter of this year. In January 2020, we acquired 3 Canadian companies that also specialize in services to dealers. All of these acquisitions are in line with our growth strategy and will allow us to become a leader in the Canadian and U.S. vehicle warranty market. With respect to profitability and financial strength, the year's financial indicators were all green at the end of 2019. Net income attributed to common shareholders grew by 12%. The earnings per share, EPS, $6.40, for the year is above the target range set in early 2019. As of December 31, 2019, our solvency ratio was comfortably above the target range of 110% to 116% that we retain as an objective. Our capital position is highly satisfactory and extremely solid. This outstanding performance has been recognized by the market. In 2019, our share price posted one of the best performances in the financial sector with growth of 64%. [Interpreted] In all, 2019 was a great year, and 2020 was also a great year until COVID-19 became a global pandemic in early March. Within a few weeks, stock markets fell by more than 22%, with a volatility unprecedented since 1928, just before the Great Depression. Economic activity came to near halt as social distancing was established and most governments suspended nonessential services. In general, business growth was sustained in the first quarter, but the impact of the crisis on profits was considerable. We lost $0.80 per share in the first quarter due to macroeconomic changes, the majority of which were related to the aggressive hedging program. I should add that if our segregated fund guarantees had not been hedged, the impact on earnings would have been even greater. On a cumulative basis, our hedging program had realized a net gain since its launch in 2010. The bottom line for the first quarter is that the reported earnings were $0.36 per share on a diluted basis. On basic basis, excluding unusual and onetime items such as the sharp decline in equity markets, earnings from our core operations were $1.41 per share within the target range of $1.40 to $1.55, reflecting the underlying strength of our business. In early January, we presented our 2020 plan to our Board of Directors. With the event of COVID-19, the plan is rather irrelevant. So this morning, we presented our revised 2020 plan to our Board of Directors. We have 2 objectives: to maintain the financial strength of iA Financial Group and to show how our lines of business are positioned to read the full benefit of the economic recovery when it comes, be it late 2020 or sometime in 2021. Today, I can assure you that iA Financial Group is in excellent health with this financial strength to maintain our commitments to all our stakeholders. I also assure you that we will get through this pandemic and we will come through stronger as a group and better positioned to take advantage of future opportunities. As a publicly traded company, we make choices to serve the best interest of all our stakeholders, including our clients and advisers, our employees who are the bedrock of our organization, as we have seen throughout this crisis, our communities and our investors. [Interpreted] In addition to the support we have provided to our customers, employees and communities during this crisis, I would like to talk to you about 2 broader initiatives of which we are particularly proud and which demonstrate our commitment to sustainable development around the world. In the past year, we completed the process of becoming a signatory to the United Nations Principles for Responsible Investment. This means that all of our portfolio managers, without exception, are committed to integrate environmental, social and government criteria into their investment decisions. At the end of 2019, we announced that iA Financial Group will be carbon neutral by 2020. In addition to taking initiatives to reduce our greenhouse gas emissions, we will purchase carbon offset credits. In closing, I would like to emphasize that the current COVID-19 crisis is short term and will be solved when a vaccine is developed to limit the spread. We need to stay the course. Our primary goal is -- will always remain to create long-term value for all our stakeholders. We are working on this every day. Thank you, and I will now give the floor back to Jacques Martin.

[Interpreted] Thank you, Denis. Let us now turn to the tabling of documents to be received by this meeting. For iA Financial Corporation, the financial statements for the year ended December 31, 2019, together with the independent auditor's report, are part of the 2019 report that is being tabled at this meeting. They have been sent to shareholders who requested them within the statutory deadlines. iA Insurance, whose sole holder of common shares as iA Financial Corporation, the financial statements for the year ended December 31, 2019, including report of the appointed actuary and the report of the independent auditor are tabled at this meeting. In addition, a summary of the participating account management policy for policies issued or assumed prior to June 13, 2019, is attached to the participating policyholder disclosure document. A link is available on the webcast platform to access the full policy. This policy is being tabled at this meeting pursuant to the Insurers Act. I declare these materials received by the meeting and I request that the secretary include the originals or copies of the record for this meeting. We now move to the formal part of the meeting. Given that this meeting is taking place entirely virtually and in order to facilitate the voting process, I have asked the Corporate Secretary, Ms. Jennifer Dibblee, to submit the proposal on the agenda to the vote of the shareholders and participating policyholders. Ms. Dibblee is a shareholder of iA Financial Corporation and has been duly mandated by a participating policyholder of AI Insurance to represent her for this purpose. I will call upon her at the appropriate time. I would now ask her to explain the voting procedures.

[Interpreted] Thank you, Mr. Chairman. Today, shareholders of iA Financial Corporation and participating policyholders of iA Insurance are eligible to vote or their proxy holders will be able to do so online. To the extent that you have already voted by means of a proxy form or voting instruction form, your vote has already been counted and you do not have to do so again unless you wish to cancel your previous vote. I remind you that only persons who own common shares or their proxy holders have the right to vote -- or entitled to vote on the matters to be presented today with the exception of the election of 1/3 of the directors of iA Insurance, who will be elected by the holders of participating policies. Indeed, under the Québec Insurance Act, 1/3 of the directors of insurance company must be elected by participating policyholders. These participating policyholders or their proxies will not vote on any other proposal relating to iA Insurance and will have no voting rights with respect to iA Financial Corporation. For further details or more specifics for iA Financial Corporation, shareholders or their proxies will be asked to vote on the following items: the election of directors, appointment of external auditor, the shareholder proposals set out in the 2020 proxy circular. They will also be asked to participate in an advisory and nonbinding vote on a resolution regarding executive compensation. For iA Insurance, with the exception of the election of 1/3 of the directors elected by the holders of participating policies, only the sole holder of common shares is entitled to vote on the following items: the election of 2/3 of the directors, the appointment of the external auditor. Each proposal will appear in the foreseen second -- sequence on the agenda for each proposal. You must exercise your vote by selecting one of the options that are displayed on the right of your screen, either for, against or abstention according to the case. Your vote will be automatically counted by our scrutineers and will not be able to be modified after the vote. If you do not select an option, your vote will not be recorded and will be considered as being an abstention. Preliminary results will be announced at the end of the meeting. Final results will be released later on the company's website.

[Interpreted] Thank you, Jennifer. We'll now proceed to the election of the administrators. I am pleased to welcome a new Director since the last annual meeting. It is Ms. Ginette Maille. Ms. Maille has more than 30 years of financial, operational, strategic experience with large private and publicly traded companies operating nationally and internationally. Through her vast experience, this director contributes greatly to the Board's activities. For more information, her biography appears on Pages 15 and following of the calendar. By resolution of the Board, the number of directors for this period has been set to 12. This number was determined, taking into account the articles, bylaws and policies regarding the composition and renewal of the Board of Directors, as indicated in the proxy circular and the participating policy document, dated March 9, 2020. The directors you see on this slide, and I will be pointing at this time or recommend to you. Agathe Cote, Benoit Daignault, Nicolas Darveau-Garneau, Emma K. Griffin, Claude Lamoureux, Ginette Maille, Monique Mercier, Danielle G. Morin, Marc Poulin, Denis Ricard, Louis Tetu and myself. So let's start with the election of the 12 directors of iA Financial Corporation. Only holders of common shares of this company may participate in this election. I invite Ms. Jennifer Dibblee to propose the election of the directors of iA Financial Corporation.

[Interpreted] Mr. Chairman, I move the election of Agathe Cote, Benoit Daignault, Nicolas Darveau-Garneau, Emma K. Griffin, Claude Lamoureux, Ginette Maille, Jacques Martin, Monique Mercier, Danielle G. Morin, Marc Poulin, Denis Ricard and Louis Tetu.

[Interpreted] Thank you, Jennifer. Do we have any questions or comments from participants on this topic before we proceed to the vote?

[Interpreted] No questions or comments have been received, Mr. Chairman.

[Interpreted] We will now proceed to the vote. You will see on the right-hand side of the screen, a voting page for each of the directors. There will be a delay of a few seconds per administrator before you can cast your vote. If you hold common shares of iA Financial Corporation, you can vote on this proposal. Agathe Cote, Benoit Daignault, Nicolas Darveau-Garneau, Emma K. Griffin, Claude Lamoureux, Ginette Maille, Jacques Martin, Monique Mercier, Danielle G. Morin, Marc Poulin, Denis Ricard, Louis Tetu. [Voting]

[Interpreted] Let's continue with the election of iA Assurance directors elected by participating policyholders. Under the Insurance Act, 4 directors will be elected by the holders of participating policies and 8 will be elected by the sole holder of common shares iA Financial Corporation. I invite Ms. Dibblee to propose the election of the 4 directors of iA Insurance to be elected by the holders of participating policies.

[Interpreted] Mr. President, Mr. Chairman, having duly mandated by holder of participating policies, I move the election of Agathe Cote, Claude Lamoureux, Danielle G. Morin and Louis Tetu.

[Interpreted] Thank you, Jennifer. Do we have any questions related to the election of iA Insurance directors by participating policyholders?

[Interpreted] No, Mr. Chairman, we have received no questions or comments.

[Interpreted] Thank you. We will now proceed to the vote. You will see on the right-hand side of your screen a voting page for each of the directors. There is a delay of a few seconds for each administrator to cast their vote. If you are a participating policyholder, you can vote on this proposal. Agathe Cote, Claude Lamoureux, Danielle G. Morin and Louis Tetu. [Voting]

[Interpreted] We will now proceed with election of the 8 directors of iA Insurance to be elected by its sole holder of common shares. For this purpose, a written resolution was adopted by iA Financial Corporation, the sole and only shareholder of iA Assurance, by which the following directors were elected. Benoit Daignault, Nicolas Darveau-Garneau, Emma K. Griffin, Ginette Maille, Monique Mercier, Marc Poulin, Denis Ricard and myself. A copy of the resolution adopted by the sole holder of common shares of iA Insurance will be filed with the minutes of the meeting. Jennifer, do we have any questions or comments in connection with the election of directors of iA Insurance to be elected by its sole holder of common shares?

[Interpreted] We received no comment or questions.

[Interpreted] Let us now vote on the appointment of the external auditor of iA Financial Corporation for the current financial year. I would take this opportunity to acknowledge the presence of the representatives of the external auditor via virtual platform, Ms. Sophie Fortin, audit partner; and Mr. Richard Simard, lead client service partner. Thank you for being here. I invite Ms. Dibblee to propose the appointment of the external auditor of iA Financial Corporation.

[Interpreted] Mr. Chairman, I move that Deloitte be appointed external auditors of iA Financial Corporation for the current fiscal year and that their compensation be fixed by the Board of Directors.

[Interpreted] Thank you, Jennifer. Do we have any questions or comments on this subject before we proceed to the vote?

[Interpreted] No, Mr. Chairman. We've received no question or comment.

[Interpreted] If you are a holder of common shares, you may now vote. [Voting]

[Interpreted] Let's now vote on the appointment of external auditor of iA Assurance by sole holder of common shares for the current financial year. To this end, a written resolution has been passed by the sole holder of common shares and Deloitte has been duly appointed as iA Insurance's external auditors. A copy of this resolution will be filed with the minutes of this meeting. Jennifer, do we have any questions or comments on this matter before we move on to the next item?

[Interpreted] No question has been received, Mr. Chairman.

[Interpreted] So the iA Financial Corporation circular describes the compensation of the senior executives of this company. This compensation must be competitive, balanced and thoughtful. Our approach to compensation, which is rigorous and ongoing, also takes into account the open dialogue we have had for many years with you, our shareholders. Beginning with the 2010 annual meeting, we're asking shareholders to participate in an advisory vote on executive compensation. I invite Ms. Dibblee to propose advisory vote on executive compensation.

[Interpreted] Mr. Chairman, I move that the resolution described on Pages 6 and 7 of the management proxy circular dated March 9, 2020, relating to the advisory vote on executive compensation be adopted.

[Interpreted] Thank you, Jennifer. Do we have any questions or comments on this subject before we proceed to the vote?

[Interpreted] No questions or comments have been received, Mr. Chairman.

[Interpreted] We shall now proceed to vote. Only the shareholders of iA Financial Corporation can vote on this proposal. [Voting]

[Interpreted] The last item on the agenda concerns shareholder proposals. Shareholders had the opportunity to read these proposals in Appendix B, Pages 97 and following of the French version of the March 9, 2020 circular. 3 proposals were submitted by Johanne Elsener and Helene Dufresne, both shareholders of the company. Since they cannot be present in person to present these proposals, due to the virtual format of this meeting, we have agreed with them that the proposals will be presented on their behalf. To be adopt -- in order to be adopted, each of the proposals must receive the support of a simple majority of the votes of the holders of common shares. I invite Caroline Gilbert, a member of the corporation's legal services team, to read the text provided by Ms. Elsener and Ms. Dufresne in support of proposals 1, 2 and 3. This will be followed by brief commentary by Denis Ricard to inform you of the company's position with respect to these proposals.

[Interpreted] Mr. Chairman, we, Johanne Elsener and Helene Dufresne, both shareholders of Industrial Alliance, would like to begin by congratulations on financial results for 2019. I we would like to submit 3 shareholder proposals that we believe will be -- will benefit Industrial Alliance's financial future. Our first proposal is related to the optimal assessment of the financial risk of climate change. According to a recent survey by the Canadian Institute of Actuaries released in March 2019, climate change was rated as the highest current and emerging risk by more than 250 actuaries. Results for emerging medical studies show that climate change will have a negative impact, not only on material goods, but also on people because of the risk of climate change is closely linked to the risk of air pollution. Indeed, they are both caused by fossil fuels. According to the International Actuaries Associations' climate change and mortality report published in 2017, air pollution is currently the leading environmental cause of premature death. According to Health Canada study published in 2019, air pollution is associated with more than 3,800 premature deaths annually in Québec and more than 14,600 in Canada. Air pollution predisposes people to respiratory infectious diseases. According to recent medical data, air pollution appears to be a risk factor for COVID-19. Moreover, according to Jeremy Rifkin, author of the global Green New Deal and adviser of several governments, an economic shift towards a green economy would mean that billions of dollars could be tied up in conventional fossil fuel infrastructure. For this reason, the International Association of Insurance Supervisors believes it is imperative that all insurers consider their exposure to climate risk, regardless of size, specialty, domicile or geographic scope of their market and seek to build resilience to these risks where appropriate. For example, Sun Life Financial Incorporated has included an environmental risk analysis in its 2018 annual report. The report reads: Performance may be adversely affected if we do not adequately prepare for the direct or indirect negative impacts of environmental events and development. A transition to a low-carbon economy could affect public and private fixed income asset value. Existing portfolio investments in coal, oil sand producers and related industries such as railways and pipelines, may pose economic and headline risk as a result of the observed transition away from carbon-intensive industries related to changing climate. [Interpreted] In order to better manage the financial risk related to climate change, we propose that Industrial Alliance analyze climate change risk, and report the results of its analysis in the Risk Management section on 2020 annual report. Refusing to assess this risk means adopting a policy of burying our heads in the sand in the face of a globally recognized risk that could affect our portfolios in the medium term. Our second proposal is related to the need to establish quantified objectives for reducing environmental impacts in order to achieve tangible and substantial results. We believe that Industrial Alliance should be able to compare itself from 1 year to the next. The advantage of quantified objective is also to provide the means to achieve these objectives. It is then possible for the Board to audit the targets and better understand the disincentives and incentives. In the absence of quantified and measurable objectives, it is difficult to influence the way things are done at the operational level as the work is done in isolation, not on an overall plan that affects all the company's business sectors. When consulting the documents filed on the website on April 21, 2020, the available version of the sustainable development policy specified that the next revision of the document was to be on February 14, 2019. Everything indicates this document was not revised as required. In addition, the latest Industrial Alliance sustainable development report available on the site covered the year 2018. No report was available for year 2019. A lack of management commitment linked to unclear adjectives may be responsible for this type of delay. At the opposite end, the Alliance Group uses a method with measurable and time defined objectives. So this insurance company has set for itself the following objectives: reducing by 30% the energy consumption per employee from now until 2010 -- 2020, a reduction about 30% of CO2 emissions per employee from now until 2020 with the baseline of 2010. It will completely eliminate the commercial models based on coal from our investments before 2040. That method has made Alliance Group be classified as #1 on the Dow Jones Sustainability Index for the second year in a row. Our long work experience in the pharmaceutical industry and entertaining industry has learned us that objectives with numbers are the most likely to generate optimal results. Therefore, we propose that the Industrial Alliance should adopt targets with clearly identified targets for reducing environmental impacts and its sustainable development policy. Clear performance objectives are of prime importance for the future return to shareholders. Our third proposal is linked with the need to integrate 1 or several advisers -- sustainable development advisers and the Sustainable Development Committee. The Industrial Alliance is evoking its carbon neutral aspect, but the commitment to compensate is a permission to continue to pollute, which is not the best solution to reduce financial risk linked to the negative impacts of climate change and air pollution to goods and persons. In the sustainable development reports of 2018, which is the one that was available during the website survey of April 21, 2020, the performance indicators that were retained seem to be deficient and the results report are marginal and several environmental issues are not even evoked. When reading the documents available, it seems that the Sustainable Development Committee is made up of Industrial Alliance employees, none of whom has any sound training in sustainable development. A blind person leading people who don't see much is likely to lead nowhere. It would be appropriate that a sustainable development expert internally or externally should sit permanently on that Sustainable Development Committee. Such an expert will allow us to reduce the multiple deficiencies noted in the 2018 Sustainability Development Report. We also questioned the place of the Sustainable Development Committee with the Board. If the 2 are disconnected, the files do not travel as fast, and all the reasons are good, so as not to achieve the objectives. A sustainable development consultant could help realign responsibilities and accountabilities and better identify easily low-hanging fruits that would be tokens of success to then address those that are more difficult to achieve. That will require more efforts but will mobilize all levels of the company. This is why we propose to integrate 1 or several sustainable development consultants into the Sustainable Development Committee. Depriving ourselves or going without that valuable expertise is putting at risk the shareholders' portfolio. And Mr. President, this concludes the reading of the text by Ms. Elsener and Ms. Dufresne.

[Interpreted] Thank you, Caroline, for reading this text. Before moving on to the vote, I would now leave the floor to Denis Ricard, who will share the company's position regarding these proposals. Denis?

[Interpreted] Thank you, Jacques. Regarding the change related to climate change and the determination of numbered objectives for environmental impact reductions, in the last few weeks, we had discussions with Ms. Johanne Elsener and Helene Dufresne, the proposing shareholders as well as with several other shareholders. We wanted to discuss directly with our shareholders on these 2 specific topics to better understand their concerns and expectations. A frank and open dialogue has greatly enriched our thinking in this process and led us today to change our positioning and recommend to our shareholders to vote for 2 of these 3 proposals by shareholders. We agree with the spirit of proposal #1 on climate change risk. We, therefore, recommend voting for this proposal since we agree with additional disclosure on our climate risk analysis. However, we reserve the right to make this additional disclosure in a separate document from the MD&A. According to the regulations, the annual MD&A must include material information. For this reason, currently, only the company's material risks are specifically disclosed in the annual MD&A. The conclusion of the numerous analyses conducted by the corporation is that the risk related to climate change does not represent a risk that would have a material impact on our financial forecasts. Instead, we have opted for the moment to explain our analysis of climate change risk in our 2019 sustainability report. This document was made public yesterday on our website, ia.ca. I should point out here that our annual sustainability report card is usually released earlier, in April at the latest. This year, it was published later than usual due to the exceptional situation we are experiencing as a result of the COVID-19 pandemic. In our sustainability development report card for 2019, we already provide advanced disclosure on our climate change risk analysis, and we are committed to continuing and improving this disclosure next year. It is also the same type of reflection and consultation that leads us to recommend that our shareholders should also vote for proposal #2, which deals with the setting of quantified objectives for reducing environmental impacts. In this regard, our sustainable development policy already provides for our intention to set sustainable development targets. Moreover, we took important steps in 2019 by becoming a signatory to the United Nations Principles for Responsible Investment and committing to becoming a carbon-neutral company by 2020. These 2 commitments come with major disclosure obligations. As an organization, we are clearly at the stage of determining the specific elements of our strategic sustainability framework for which we will establish targets, measurement and evaluation criteria as early as 2020. Beginning next year, we will report our results against these targets and criteria annually in our Sustainability Report Card. With respect to proposal #3, we maintain our recommendation to vote against as we already use several sustainable development consulting firms.

[Interpreted] Thank you, Denis. Do we have any questions or comments on any of these proposals before we vote on proposals 1, 2 and 3?

[Interpreted] Yes, Mr. President. Mr. Chair, we have a comment from 1 shareholder. The representatives of the MÉDAC recommend to state their support to proposals #1 and 2.

[Interpreted] Thank you, Jennifer. For the reasons that Denis Ricard has just mentioned, I would like to remind you that the company recommends voting for proposals 1 and 2. For the reasons mentioned in Schedule B of circular, the company recommends voting against proposal #3. We can now proceed with the vote on shareholder proposals 1, 2 and 3. Only shareholders of iA Financial Corporation can vote on these proposals. [Voting]

[Interpreted] We're now at question period. If you haven't already done so, I invite you to submit your questions using the box at the bottom left of the page. As mentioned in the introduction, I ask you to identify yourself, ask 1 question at a time and be brief in your comments so that everyone can be heard. Denis Ricard, Jennifer Dibblee and myself, as the case may be, will answer questions. If we do not have time to answer all questions relating to the affairs of the corporation and you have duly identified yourself, a representative of the company will contact you to answer your question. Jennifer, do we have any questions or comments?

[Interpreted] Yes, Mr. Chair. We do have a question from shareholder, Mr. Yvon Sauvageau from Québec City, who is asking, you have carried out several changes on the nature of the activities as a corporation and on the structure of the organization. But we've never got a clear overall picture of the underlying orientations. The annual report mentions the development of a plan that will set the main general sectoral and general orientations and directions for the next 4 years, but remains silent about the content of those. For the nth time, financial reports state that the corporation is evaluating the incidence of the new IFRS norms for the emission of insurance contracts, but remains silent about the results of that evaluation -- during the evaluation. Can you tell us how far you intend to transform the corporation from a mortality-based and mobility-based risk management model to a warranty and auto credit risk management base?

[Interpreted] I will answer the question. Thank you, Yvon, for your question. Well, listen, in all the public opportunities at which I spoke since we tabled the plan at the Board, there are clear things we expressed to the Board. Of course, we didn't go to all the details of the plan. But one of the important elements of that plan is that in the sectors of activity in which we're having -- we're doing business, we want to be a leader. And you can define a leader in different ways. But let's say that we try to define this for discussion purposes as being one of the top 3 in a given sector. We know that in Canada, we are, in personal individual insurance, the unchallenged leader. For example, we are the company that sells the most insurance policies in Canada. And 1 policy out of 5 being issued from our group. In wealth management, also, we are also a leader. And recently, we looked at our growth opportunities, there are various ways of doing it. We can do this organically. Of course, we continue to work in the 2 niches that I mentioned, but we also looked at the automobile warranties with vehicle warranties with all the services offered to car dealers because in Canada. We are a leader. But it's not -- in Canada, it is not a business that is such that we could call this a third pillar in terms of size because it represents only 6% to 8% of the company's holding. So we looked south of the border, and we decided that we had very interesting opportunities on that side to really become a North American leader in services to vehicle dealers -- or mobile dealers. So in this direction, yes, there is a diversification of our activities. We're now present in 3 large sectors, including the automotive sector. But I think it would be right to say that the automotive sector, the vehicle warranty sector, will not go beyond the insurance or wealth management sectors. Of course, if there are opportunities on that side, we will continue to grow. But it is becoming quickly a major sector for the organization.

[Interpreted] Mr. Chair, we have another question. A second question again from Mr. Yvon Sauvageau, our shareholder from Québec City. Mr. Sauvageau specifies here that recently, the Premier of Québec has reiterated his intention to present this bring -- a bill related to setting up target benefit pension plans. This was made in the context that he was saying that Québec companies had no appetite for any retirement benefit plans. I imagine that as part of the consultations on those 2 topics, the corporation was consulted directly or through advisory actuaries. Can you tell us whether the corporation has appetite for transformation of its employees pension plan into a target benefit plan?

[Interpreted] I will answer that question. I realize that I did not answer the whole of the first question. Yvon, you asked a question about the IFRS, the new international standards. We didn't give any specific information on those new standards, of the IFRS, for a simple reason. There are still a number of those rules. Those new standards remain unknown. There's still a lot of work that has to be done, not just by us, but by the industry as a whole. To such an extent that USA, which is the entity that governs these new standards, has decided to postpone by 1 year the implementation of those new standards. And we'll see what happens with the COVID crisis now. But I think there's no organization at this point that is able to assess the impact of these new international standards. I'll come back to the question about the pension plans. Thank you for drawing my attention to that. Honestly, it was not on my radar screen, this question of target benefit plans. You know that the social benefits of our employees, our fringe benefits, are things that we look at in a regular way. And the next time we do a reassessment of the various compensation plans and the whole compensation situation, I'm glad to see that -- possibly, changes might happen there. This is something that could be part of the list of the things we will look at. And I'm sure that if the Québec government takes -- goes to the pains of including this in a bill, we will analyze this very seriously to see if it's interesting for us to put this in place or not.

[Interpreted] Mr. President, you have a third question now from Ms. Johanne Elsener, a shareholder from Québec City. She's asking us. In the large social crisis of the past centuries, such as the dismantling of the USSR around 1990, the life expectation dropped by 10 years in men and a bit less in women because of the economic depression that followed that crisis, according to a public health specialist. This could happen in the United States soon since they have the COVID crisis, the economic crisis in a number of years now because of their very often insufficient social security net. Do we have evaluated this economic and health risk for the American market?

[Interpreted] Thank you for the question. Let me explain something in a broader sense. iA Financial Group and the Industrial Alliance in particular and iA Insurance is a regulated company. We have -- we're accountable to regulation authorities. We have professionals internally who are financial specialists or risk management specialists. We have a risk management manager about climate change, for example, risk assessment. We have several people who are looking at this on a regular basis. We even have a risk management manager who evaluates all those risks with teams internally. Annually, we prepare all kinds of unfavorable scenarios, let's call them that way. Some people could call them doom and gloom scenarios. Sometimes very bad scenarios are studied. And it's funny you asked the question because this morning, at the Board, their bad scenarios were presented. What could be the impact of the coronavirus on the organization? And of course, an important deterioration of health and economic in the economy was part of the discussion. So that's my long answer. The short answer is, yes, we do these types of analyses, and we can certify that the financial soundness of the organization is very strong. And if there was a significant deterioration of the health and economic aspects, the feasibility of the organization will be reviewed.

[Interpreted] Mr. Chair, we had a comment received from a shareholder, Mr. Georges Smith, who congratulates everybody for the holding at this meeting, the successful meeting. The management committee thanks Mr. Smith for his nice comments. We have no other question or comment, Mr. President.

[Interpreted] Thank you, Jennifer. Since we have no more questions, we will now move on to disclose the results of the votes. The scrutineers had time to compile the votes. And we will communicate to you the preliminary results. The final results of the votes will be published shortly on the website of ia.ca and on SEDAR, the website of the Canadian securities authorities. I would like to invite Ms. Dibblee to communicate to us the preliminary results for each of the positions.

[Interpreted] Thank you, Mr. President. According to the Scrutineers' report, I inform you that for iA Financial Corporation, all 12 candidates for the position of Director, as named in the circular, were elected with at least 96% votes in favor. For iA Insurance, all 4 candidates for the position of Director, as named in the information document to participating policyholders, were elected with at least 90% of the votes in favor. Deloitte was reconducted in its function as an external auditor for both corporations with 93% of the votes in favor. The advisory resolution on the approach of iA Financial Corporation in terms of their compensation of senior management, executive compensation was adopted with 92% of the votes in favor. The proposals #1 and 2 from the shareholders received at least 60% of the votes in favor. And Proposal #3 was defeated with 92% of the votes against. The detailed financial -- final results will be published on the website of iA Financial Corporation at the address ia.ca and on SEDAR.

[Interpreted] Thank you, Jennifer. It is important for us to remain on the listen and to -- listen to the concerns of our shareholders. As mentioned earlier, the corporation has already been acting on proposals #1 and 2. The support of shareholders on those proposals confirms to us that we have to continue our work on this in 2020. Ladies and gentlemen, this completes our Annual General Meeting. In closing, I want to sincerely thank all those who took part in this virtual joint meeting of iA Financial Corporation and iA Insurance. I also want to thank Denis, who accompanied me throughout the process. To all of you, take good care of yourself, your health and your family's health. The assembly is now adjourned and closed. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]