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

Hello to all, and a warm welcome. My name is Jacques Martin, and I am Chairman of the Board of iA Financial Corporation, Industrial Alliance Insurance and Financial Services. I would like to welcome all participants, shareholders, participating policyholders, partners and employees who have joined us by way of webcast. I would also like to highlight the virtual presence of the directors and several officers of both companies. Thank you for being here. I will -- it will be my pleasure to guide you through the procedures of this joint meeting of iA Financial Corporation and Industrial Alliance Insurance and Financial Services held for the second consecutive year in a completely virtual format. While we would have liked to be present with you this year, the current health situation dictates a prudent approach to proactively and responsibly address the public health impact of COVID-19 and to limit the health and safety risks to our shareholders, employees, community and any other shareholders or stakeholders interested in attending our meeting. I will chair the meeting from my home. I will be accompanied by Mr. Denis Ricard, President and Chief Executive Officer; and Ms. Jennifer Dibblee, Corporate Secretary, both located in Québec City, via webcast platform. I would like to point out that the broadcast of this meeting is carried out in compliance with public health directives and that all sanitary measures are respected in order to protect the health of the persons involved, including the wearing of masks and physical distancing of 2 meters. First of all, I would like to share with you some technical administrative information necessary to this session. Notice of the meeting was duly given. The number of shareholders and participating policyholders required to constitute a quorum for this meeting is present. I call this meeting to order. I'll bring to your attention, the agenda for today's meeting, which is available on your screen. Rules of conduct for this meeting, covering voting procedures and questions or comments have been posted on our website and are available through this webcast. Voting will be conducted mainly in French, but simultaneous translation will -- and our slide 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 their language button shown on the top right-hand corner of your screen. You may also submit your questions in both languages. [Foreign Language] Thanks to the improvements brought to the assembly, you can ask your questions by -- in writing or by telephone. We encourage you to submit your questions or your comments right now as soon as we can -- so we can deal with them when possible during the webcast. So I would like to explain how things will function. [Operator Instructions] Please note that there will be a question period during the consideration of each of the proposals submitted to a vote of shareholders and participating policyholders as well as at the end of the meeting. The purpose of the final question period is to receive your comments and to answer any general questions that may not have been answered during the meeting. [Operator Instructions] We want everyone who wants to ask a question to have the opportunity to do so. [Operator Instructions] Your questions should be about the business of the company and should not be of a personal nature. Questions and comments received through the dialogue box on this webcast will be read by Corporate Secretary, Ms. Jennifer Dibblee. If we have a number of questions that deal with the same or similar topics, Ms. Dibblee will summarize those questions, and we will respond to them. Persons who own shares of common stock and holders of eligible participating policies, that is to say, policies issued or assumed prior to June 13, 2019, will be able to vote online on matters that affect them via the webcast platform. Proxies such -- of such shareholders and participating policyholders will also be able to vote online. If you wish to vote at the meeting, you must have logged into the webcast using the 15 or 4-digit control number you obtained from Computershare prior to the meeting. Persons attending the virtual meeting as guests may not vote. At the time of each vote, we will provide you with additional instructions. I would now like to draw your attention to the forward-looking statements that appear on your screen and on Page 14 of the annual report. This document as well as other documents related to the meeting are available online on the company's website in the Investor Relations section and via the webcast platform. The video recording of this meeting will also be available after the meeting on the company's website for replay. I would like to 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 refer to effectively immediately as iA Insurance. The senior officers, members of the Board of Directors and Board committees of the 2 companies are the same. The meeting will, therefore, be held concurrently for both companies. Mr. Steve Gilbert and Ms. Patricia Favron of Computershare will act as scrutineers for this meeting. After sharing with you my comments and reflections on the past year, we will have the pleasure of hearing from Denis Ricard, President and Chief Executive Officer of the company, and will continue with the formal part of the meeting. How can we review the year 2020 without talking about the COVID-19 pandemic? This global health crisis has caused every individual and every organization to discover more than ever the strength of the resilience and the importance of pulling their resources. Since the beginning of the pandemic, the Board of Directors has strongly supported the management and staff of iA Financial Group in their ongoing efforts to mitigate the unforgiving effects of this crisis. On behalf of iA Financial Group, all the directors and myself, I would like to offer our deepest condolences to all those who have lost a loved one since the beginning of the pandemic. In spite of the unfortunate context, it is clear that each and every one of us is capable of achieving the best by unifying our efforts. President and Chief Executive Officer will present the key initiatives and measures put in place at iA Financial Group to deal with this unprecedented pandemic. But before he does, I'd like to take a few minutes to share with you the Board of Director key observation for 2020. The Board found that the result for 2020 eloquently showed their resilience and soundness of iA Financial Group business model. Sales growth has been very strong in almost all business line, as you will be able to see in details in a few minutes. iA Financial Group finished the 2020 year with the net income attributed to common shareholder of $611 million and maintained a strong solvency ratio above our target. [Foreign Language] In regards to sustainable -- in respect to sustainable development, the Board of Directors is very supportive of iA Financial Group's goal to reduce GHG emissions per employee by 20% by 2025. The company has achieved significant sustainability milestones in 2020 and will be moving forward with new initiatives in the coming years. For example, work is underway to achieve disclosure that will be aligned with the recommendations of the Climate Disclosure Task Force, better known as CDTF. Sustainability is a true commitment of directors, management and employees. During 2020, 2 directors informed us of their decision not to seek a new mandate. They are Mrs. Agathe Côté and Mr. Claude Lamoureux. Mrs. Côté has used her knowledge of the economic and financial fields to advance the work of the investment in Audit Committees. Mr. Lamoureux' extensive experience in the financial field was a major asset for the Board and for the Investment and Governance and Ethics Committee. I would like to thank them on behalf of myself and the Board of Directors for their dedication and valuable participation in our activities. In closing, I would like to thank the management and all employees of iA Financial Group for the tremendous work they accomplished throughout the year and in the particularly difficult context we are experiencing. Shareholders and policyholders, I thank you sincerely for your trust and support. I will now turn the floor over to Denis Ricard, who will present his observations and comments.

Thank you, Jacques, and good morning, everybody. We are meeting for the second year in a row in a virtual annual meeting. I sincerely thank you for being here. We're all facing a daunting pandemic together. Each individual and every organization has faced enormous challenges, and there will be more. The unprecedented global immunization blitz gives us hope that the better days -- that better days are ahead and that we will finally win this battle against a microscopic and ferocious enemy. On behalf of all iA Financial Group employees and myself, I would like to offer our best thoughts to those who have lost a loved one or have been struck by illness. Our thoughts also go out to those who hold the fort in health network or who, in their own way, provide support to others. Solidarity is a strong testimony that life is stronger than anything. At iA Financial Group, our priority at all times has been and continues to be the health and well-being of our employees, distributors and customers as well as supporting our communities. The various measures implemented in 2020 by iA Financial Group, specifically for the pandemic, totaled $11.4 million. In mid-March 2020, we quickly took steps that led to the telecommuting for the vast majority of our 7,000 employees. We also ensure the security of our offices for those who need to be there as part of the continuity. In addition, we have provided our employees with a variety of support measures, including the allocation of 5 additional wellness leave days, an allowance for the purchase of ergonomic equipment at home, a monthly allowance for telecommuting Internet expenses, an allowance of $400 for the purchase of sports equipment and virtual conferences to help them get through the crisis. This was in addition to services already available to employees, including telemedicine and the employee and family assistance program. To our millions of customers across North America, we have offered a variety of relief measures to support those experiencing financial hardship directly attributable to the pandemic in different areas or for different types of coverage, including individual life insurance products, residential mortgages and car loans. In Group Insurance, our clients on short-term disability, following a diagnosis of COVID-19, received immediate coverage with no waiting period. A temporary 60% reduction in dental premiums was also offered as well as continued coverage for members temporarily laid off by their employer when requested by the planned administrator. Our AI (sic) [ iA ] Auto and House subsidiary has offered all of its customers a rebate equal to 20% of their monthly auto premium for the months of April, May and June 2020. We have also been committed since March 2020 to addressing the unprecedented impact of the pandemic on communities. We have enhanced our giving in the areas of health and social community, specifically targeting organizations with urgent needs due to the situation. In total, in 2020, close to $2.5 million was donated to fight pandemic, including the 2 COVID-19 emergency funds of various hospital and health research center foundations as well as to food banks in several Canadian provinces. We also led a mental health offensive and donated $300,000 to organizations working in the field of mental health prevention across Canada. In order to give organizations oxygen, we honored all of our donation commitments for benefit events, even though they had to be canceled in 2020. In April 26 -- on April 26, we announced that iA Financial Group had joined a dozen Québec City companies to offer a vaccination center in the national capital. The population as well as the employees of the participating companies and their immediate family members will have access to this new vaccination center, which will be located in the Port of Quebec's cruise terminal. In total, it's expected that this hub will be able to vaccine approximately 25,000 people from the end of May until September. By actively participating in the vast vaccination campaign, we are adding another component to the support of our employees and our community. Pandemic, we have maintained our strategic access. First, growth. I want to highlight the strong organic growth of most iA Financial Group business lines. This growth was significant for both sales and profit. Second, client experience. We made significant strides in advancing our client experience with the continued development of our 360 client view as well as our contact center infrastructure. Third, employee experience. iA Financial Group stands out because of its commitment to encourage employee development, particularly through internal mobility, and we want our people to develop their talents by taking on challenges and getting out of their comfort zone. We've maintained these opportunities for employee growth despite the pandemic. Fourth, operating efficiency. This strategic axis is supported by continued major investments in information technology and a strong lean management philosophy. Sustainable development in environmental, social and governance concerns is another important component of our strategy. [Foreign Language] Let's look at the financial highlights of the past year. In 2020, sales growth was very strong, and the vast majority despite the pandemic. Individual Insurance sales totaled $223 million, a significant increase of 19% year-over-year. In Individual Wealth Management, sales were over $6 billion, representing significant year-over-year growth of 29%. In Group Insurance, 2020 sales reached $136 million in the employee benefits division, a dramatic jump of 177%. In the Canadian dealer services division, sales totaled nearly $972 million in 2020, down 5%. Sales in the specialty markets division totaled $205 million in 2020, down 25% from 2019. This decrease was primarily due to the individual travel insurance sales, which were negatively impacted by the COVID-19 pandemic. In group savings and retirement, sales growth was strong, increasing 49% year-over-year to more than $3 billion. Finally, our iA Auto and Home subsidiary posted sales of $395 million in 2020, an increase of 13%. On the U.S. business side, the good momentum continued in both divisions. In the Individual Insurance division, sales totaled 100 million -- USD 127 million, up by 28% over 2019. Meanwhile, sales grew 60% year-over-year in the dealer services division to total 100 -- USD 719 million. Total premiums and deposits increased 24% when compared to 2019 results to total nearly $14 billion. Assets under management and administration, meanwhile, increased by 4% to $197 billion as of December 31, 2020. This success is based on the breadth and diversity of our distribution networks, the wide range and relevance of our products, and the effectiveness of the technological tools made available to representatives, customers and employees. Growth through acquisition. I want to highlight that on January 10, 2020, iA Financial Group acquired 3 Canadian companies, which specialize in automobile warranties: WGI Service Plan Division Inc., WGI Manufacturing Inc. and Lubrico Warranty Inc. The objective of this acquisition was to further the growth strategy that makes us a major player in the Canadian automobile environment. Then on May 22, 2020, we acquired U.S. company, IAS Parent Holding, Inc. and its subsidiaries, IAS, is a major independent supplier of solution in the U.S. automobile warranty market. The company offers a very wide range of automobile warranties and related services and software sold through one of the largest and diversified distribution network in the industry. By integrating IAS into our existing operations, iA Financial Group has become one of the biggest automobile warranty platforms in the United States. Now let's talk about profitability. Despite the difficulties experienced in 2020, iA Financial Group has grown -- has shown great resiliency by generating a net return of $611 million attributable to common shareholders. Diluted earnings per share -- per common share was $5.70 for 2020 compared to $6.40 a year earlier. Earnings growth has slowed, primarily because of financial market volatility in the first quarter of 2020, which was the beginning of the COVID-19 pandemic in North America. Moreover, in addition to the annual review of actuarial assumptions, additional risk management initiatives were implemented. These include new reinsurance agreements and additional reserve protection measures in order to absorb potential negative impacts likely to result from the pandemic in the coming years. We have even put in place the elements necessary to record healthy earnings growth in 2021. In terms of capitalization throughout 2020, we've maintained our solvency ratio above our target range of 110% to 116%, which is the company's objective. This speaks to our desire to give our clients peace of mind. As at December 31, 2020, the solvency ratio was 130% despite the substantial deployment of nearly $1 billion for the acquisition of IAS Parent Holdings, Inc. and its subsidiaries. In February 2020, iA Financial group increased its quarterly dividend per common share from $0.45 to $0.49. As a result, the dividend for 2020 totaled $1.94 per common share compared to $1.77 per common share in 2019, an increase of 10%. Note that regulators have given instructions to not increase dividends to common shareholders during the pandemic. Thus, since February 13, 2020, the dividend has not increased. [Foreign Language] This morning, we released our financial results for the first quarter. Here are some highlights for the beginning of the year. iA Financial Group ended the first quarter of 2021 with net income attributed to shareholders of more than $172 million, representing -- so base activities is $1.79, situating itself at the higher target range given for indication for the financial markets. The solvency ratio remains well above the company's target range at 128%. In terms of business growth, assets under management and administration were at over $201 billion as of March 31, an increase of 15% year-over-year. Premiums and deposits totaled $4.4 billion, an increase of 25% for the same period in 2020. In addition, book value per share was at $56.95 as of March 31, representing an increase of 9% over the past 12 months, demonstrating our ability to create value. In the first quarter of this year, sales were very good in practically all sectors of activity, pursuing their momentum for the -- until the end of 2020. The DBRS Morningstar has increased Jago Financial's credit ratings on the basis of a risk -- improved risk profile. We held a virtual event for investors. The theme of this public event was guiding to solid growth. We presented 2 key short- and medium-term financial objectives. First, grow core EPS by at least 10% on average per year during the coming years. Remember, the target range for this measure is $7.60 to $8.20 per share for 2021. And second, increase the target for core return on common shareholders' equity, the ROE, to 13% to 15% by 2023, with the target range for 2021 being between 12.5% and 14%. [Foreign Language] I would like now to talk about sustainable development. We have taken some very significant steps in this area over the past few years. In December -- on December 13, 2019, iA Financial Group announced its commitment to offset its greenhouse gas emissions, or if you prefer GHGs. And that's become a carbon-neutral company as early as 2020. This is now a reality. Our certification as a carbon-neutral company certifies that all of our GHG emissions in 2020, which could not be eliminated by the reduction measures that we have put in place, have been calculated and offset. In addition, we have committed to reducing our GHG emissions by 20% per employee by 2025. This is an ambitious commitment that demonstrates the importance we place on reducing our environmental footprint and contributing to this huge global effort to make the world a better place for future generations. During 2020, we achieved an important milestone in our sustainability strategy by selecting the framework that guides disclosure in our sustainability report. We have chosen the SASB, Sustainability Accounting Standards Board, framework. Adopting this robust framework allows us to identify, measure, manage and better communicate relevant sustainability information to stakeholders. Another note, I bring to your attention that our 2019 Annual Meeting, shareholders had assets to consider the integration of environmental, social and governance criteria in executive compensation. On January 1, 2021, iA Financial Group introduced an ESG component in the variable compensation of senior executives in the determination of the annual bonus paid to us. The ESG component that has been selected is the client recommendation index. This is a measurement that takes into consideration customer satisfaction and fits perfectly with the company's [Foreign Language], which is to ensure that our customers feel confident and secure about their future. Also this year, we launched a comprehensive internal diversity and inclusion initiative, which includes meeting targets for the representation of women in senior management positions across the company. These targets are as followed: By 2025 to achieve greater gender equity in iA Financial Group senior management by having a ratio of women to men between 40% and 60%. Currently, women hold 25% of senior management positions. Secondly, now and in the future, we will appoint women to senior management positions at iA Financial Group in the range of 40% to 60%. As for other types of diversity, our working group has developed action plans for 2021, including to increase awareness of the importance of diversity and inclusion among our employees, implement training throughout iA Financial Groups on unconscious bias in how to break or eliminate it and to collect data and analyze the composition of our workforce with the help of an external firm specializing in diversity and inclusion. Now more than ever, we are determined to maintain solid business growth, continually protect our strong financial position, continue building on the strengths of our distribution, our big strength, meet our clients' high expectations and achieve our ambitions. With our resilient business model, our sustainability to generate earnings, our strong business growth and solid financial foundation, we're confident in the future. In closing, I would like to sincerely thank all iA Financial Group employees for their sense of duty, their constant commitment, their professionalism and their exemplary resilience since the beginning of the pandemic. Thank you very much. I'll give the floor back to Jacques Martin.

Thank you, Denis. Let us now proceed to the filing of the documents that must be received by this assembly. For iA Financial Corporation, the financial statements for the year ended December 31, 2020, together with the independent auditor's report, are part of the 2020 annual report that is being tabled at this meeting. They have been sent to shareholders who requested them within the statutory deadlines. In addition, a link is available on the webcast platform to access them. For iA Insurance, whose sole holder of common stock is iA Financial Corporation, the financial statements for the year ended 31st of December 2020, including the appointed actuaries report and the independent auditor's report, are being tabled at this meeting. A link is also available on the webcast platform to access these financial statements. I declare that these documents have been received by the meeting and request that the Secretary include the originals or copies in the record of this meeting. We now move on to the formal part of the meeting. Since this meeting is being conducted entirely virtually, and in order to facilitate the voting process, I have asked the Corporate Secretary, Mrs. Jennifer Dibblee, to submit to the vote of the shareholders and participating policyholders the majority of the proposals on the agenda, subject to one proposal submitted by a shareholder. Mrs. Dibblee is a shareholder of iA Financial Corporation and has been duly appointed by a participating policyholder of iA Insurance to represent him -- to represent her for this purpose. I will call upon her at the appropriate time. With the enhancements to our virtual meeting this year, a representative of MEDAC, [Foreign Language], will be able to present and comment by telephone on proposal submitted to the company as a shareholder. I now invite Mrs. Dibblee to explain the voting process.

Thank you, Mr. Chairman. Today, iA Financial Shareholders and iA Insurance participating policyholders who are eligible to vote or their proxies will be able to vote online. To the extent you have already voted by proxy or voting instruction form, your vote has already been counted and you do not need to vote again unless you want to change your previous vote. I remind you that only persons who own common shares or their proxies are 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 participating policyholders. Under the Québec Insurers Act, 1/3 of the directors of an insurance company must be elected by eligible participating policyholders. Eligible participating policyholders or their proxies will not vote on other proposals relating to iA Insurance and will have no voting rights with respect to iA Financial. For more information, for iA Financial Corporation, shareholders or their proxies will be asked to vote on the following: the election of directors; the appointment of the external auditor; an advisory resolution on the company's approach to executive compensation; a resolution concerning amendments to the bylaws; and a shareholder proposal regarding the external auditor. For iA Insurance, eligible participating policyholders will be asked to vote for the election of 1/3 of the elect of the directors. iA Financial Corporation as a sole holder of common shares of iA Insurance is entitled to vote on the election of 2/3 of the directors and on the appointment of the external auditor. It has already exercised his vote by means of a written resolution that was transmitted to the Chairman of the meeting. Each proposal will appear in the sequence provided on the agenda. For each proposal, you will need to cast your vote by selecting one of the options displayed on the right side of your screen, either for, against or abstain as appropriate. Your vote will be automatically counted by our scrutineer and cannot be changed after the vote is closed. If you do not select any options, your vote will not be recorded. Preliminary results will be announced at the end of the meeting. Final results will be announced later on, on the company's website.

Thank you, Jennifer. We will now proceed to the election of directors. By resolution of the Board, the number of directors for the ensuing year was set at 13. This number has been determined, taking into account the articles of incorporation, bylaws and policy on the composition and renewal of the Board of Directors. 10 of the 13 Director nominees were elected at our 2020 annual meeting and are renominating this year for a 1-year term. Last November, the Board welcomed Mr. Mario Albert to its ranks. Mr. Albert held the position of Executive Vice President and Head of Systems Modernization for the group insurance sector at La Capitale from 2017 until his retirement in 2020. He previously held several management positions in private, public and para public organizations in Québec. In particular, he worked at the Autorité des marchés financiers, where he was Superintendent of Distribution and later President and Chief Executive Officer. We are also pleased to announce the nomination of 2 new members, Suzanne Rancourt and William F. Chinery. Suzanne Rancourt is a Corporate Director with over 30 years of consulting and management experience in the finance and information technology sectors. She was Vice President, internal audit and enterprise risk at CGI from 2006 to 2,016. Ms. Rancourt holds a bachelor's degree in business administration from the Université du Québec à Montréal as well as a certification from the Institute of Corporate Directors. She is a certified professional accountant. William F. Chinery is a Corporate Director. Until early 2013, he was President and Chief Executive Officer of BlackRock Asset Management Canada. Mr. Chinery is a fellow of the Society of Actuaries and the Canadian Institute of Actuaries. He holds an honorary degree in mathematics from the University of Waterloo and is certified by the Institute of Corporate Directors. I invite you to consult the circular for more details on the biographies of these new candidates. As indicated in the proxy statement and the March 9, 2021, participating policyholder document, the directors you see on the slide and whom I will name shortly are recommended to you: Mario Albert; William F. Chinery; Benoit Daignault; Nicolas Darveau-Garneau; Emma K. Griffin; Ginette Maillé; Monique Mercier; Danielle G. Morin; Marc Poulin; Suzanne Rancourt; Denis Ricard; Louis Têtu; and myself. Let us begin with the election of the 13 directors of iA Financial Corporation. Only holders of common shares of this company may participate in this election. I invite Mrs. Jennifer Dibblee to propose the election of the directors of iA Financial Corporation.

Mr. Chairman, I move the election of Mario Albert, William F. Chinery, Benoit Daignault, Nicolas Darveau-Garneau, Emma K. Griffin, Ginette Maillé, Jacques Martin, Monique Mercier, Danielle G. Morin, Marc Poulin, Suzanne Rancourt, Denis Ricard and Louis Têtu.

Thank you, Jennifer. Do we have any questions or comments from the floor on this topic before we vote?

No, Mr. Chairman, we did not receive any questions or comments through the webcast. .

I will validate with the operator. Do we have any questions or comments via the phone line?

No questions or comments.

Thank you. We will now proceed to voting. You will see a voting page. For each of the directors on the right side of your screen, there is a few seconds per director for you to cast your votes. If you own shares of iA Financial Corporation common stock, you may vote on this proposal. . [Voting]

Mario Albert, William F. Chinery, Benoit Daignault, Nicolas Darveau-Garneau, Emma K. Griffin, Ginette Maillé, Jacques Martin, Monique Mercier, Danielle G. Morin, Marc Poulin, Suzanne Rancourt, Denis Ricard and Louis Têtu. Let's continue now with election of iA Insurance directors elected by participating policyholders. Under the Insurers Act, 5 directors will be elected by the participating policyholders and 8 will be elected by the sole holder of common shares, iA Financial Corporation. I invite Mrs. Dibblee to nominate the election of the 5 directors of iA Insurance to be elected by the participating policyholders.

Mr. Chairman, having been duly mandated by a participating policyholder, I move the election of Mario Albert, Ginette Maillé, Monique Mercier, Danielle G. Morin and Louis Têtu.

Thank you, Jennifer. Do we have any questions in connection with the election of iA Insurance directors by participating policyholders?

No, we did not receive any questions or comments through the webcast.

I will validate with the operator. Operator, do we have any questions or comments via the phone line?

No. No questions or comments.

Thank you. We will now proceed to voting. You will see a voting page for each of the directors on the right side of your screen. There will be a few seconds per director for you to cast your vote. If you are a participating policyholder, you may vote on this proposal. [Voting]

Mario Albert, Ginette Maillé, Monique Mercier, Danielle G. Morin, Louis Têtu. We now proceed to the election of the 8 directors of iA Insurance to be elected by its sole holder of common shares. For this purpose, a written resolution has already been adopted by iA Financial Corporation, the sole shareholder of iA Insurance by which the following directors have been elected. William F. Chinery, Benoit Daignault, Nicolas Darveau-Garneau, Emma K. Griffin, Marc Poulin, Suzanne Rancourt, Denis Ricard and myself. A copy of the resolution passed by the sole holder of common shares of iA Insurance will be filed with the minutes of the meeting. The shareholders and participating policyholders do not vote on this item. Jennifer, do we have any questions or comments in connection with the election of directors of iA Insurance by its sole holder of common stock?

No, we did not receive any questions or comments through the webcast.

I will validate with the operator. Do we have any questions or comments via the phone line?

No. No questions or comments.

Thank you. We will now proceed to vote on the appointment of the external auditor of iA Finance Corporation for the current fiscal year. I would like to take this opportunity to acknowledge a virtual presence of the representatives of the external auditor, Deloitte, via our webcasting platform. Mrs. [ Sophie Forte ] and [indiscernible], thank you for being here. I invite Mr. Dibblee to propose the appointment of the external auditor for iA Financial Corporation.

Mr. Chairman, I move that Deloitte be appointed as the external auditor of iA Financial Corporation for the current fiscal year and that its remuneration be fixed by the Board of Directors.

Thank you, Jennifer. Do we have any questions or comments on this topic before we vote?

No, we did not receive any questions or comments to the webcast. Operator, do we have any questions or comments via the phone line?

No questions or comments.

Thank you. If you're a holder of common shares, you may now vote. [Voting]

Let us now proceed to vote on the appointment of the external auditor of iA Insurance by its sole holder of common shares for the current fiscal year. To this end, a written resolution was adopted by the sole holder of common shares, and Deloitte was duly appointed as external auditor of iA Insurance. A copy of this resolution will be filed with the minutes of the meeting. The shareholders and participating policyholders do not vote on this item. Mr. Dibblee, do we have any questions or comments on that before we move on to the next item?

No questions or comments through the webcast. Operator, do we have any questions or comments through the phone line?

No. No questions or comments.

Thank you. Since the 2010 annual meeting, we have asked shareholders to participate in an advisory resolution on the company's approach to executive compensation. The Board of Directors considers this vote to be an important part of its engagement process with shareholders. The compensation of the executive -- the executives of this company described in the company's management proxy circular on Pages 80 and following in French and on Pages 77 and following in English. However, I would like to highlight some important elements. . IA Financial Group has always focused on a performance-based approach and competitive imperatives. It is also important to maintain a compensation package that is attractive, balanced and thoughtful while remaining responsive to shareholders. At our annual meeting last year, shareholders asked us to consider the integration of environmental, social and governance criteria into executive compensation. [Foreign Language] After having done a detailed analysis of ESG practices in our reference market, we decided to act on this request. We are, therefore, pleased to confirm that an ESG component was introduced this year in the variable compensation of senior executives in the form of the annual bonus paid to them. The ESG component that was selected is the customer recommendation index, CRI. It is a measure that takes into account customer satisfaction and fits perfectly with the company's values and purpose. The CRI is highly correlated with customer satisfaction and thus becomes a very relevant unit of measurement in the social and governance aspects of sustainable development. It could be used as a multiplier to increase or decrease the amount of bonuses. In doing so, the company has ensured an additional link between executive compensation and the importance of customer satisfaction. This addition is also in line with the most recent trends in compensation management and is in line with the Board's concerns. I now invite Mr. Dibblee to move the advisory resolution on executive compensation.

Mr. Chairman, I move that the resolution described on Pages 7 and 8 of the proxy circular dated March 9, 2021, relating to the advisory note on the company's approach to executive compensation be adopted.

Thank you, Jennifer. Do we have any questions or comments on this before we vote?

No, we did not receive any questions or comments through the webcast. I will check with the operator. Do we have any questions or comments?

No. No questions or comments.

Thank you. We will now proceed with the vote. Only iA Financial shareholders may vote on this proposal. [Voting]

On February 11, 2021, the Board of Directors adopted amendments to the company's bylaws. The main amendment of which is to permit the holding of virtual meetings as permitted by the Québec Business Corporations Act. You will find the details of these amendments in Schedule B of the proxy circular dated March 9, 2021. I call upon Mr. Dibblee to move the resolution for amendments to the bylaws of the corporation.

Mr. Chairman, I move that the amendments to the iA Financial Corporation bylaws described in Appendix B to the proxy statement dated March 9, 2021, be adopted.

Thank you, Jennifer. Do we have any questions or comments on this before we vote?

No, we did not receive any questions or comments through the webcast. I will validate with the operator. Do we have any questions or comments via the phone line?

No. No questions or comments. .

Thank you. We will now proceed with vote. Only iA financial shareholders may vote on this proposal. . [Voting]

The last item on the agenda concerns 3 shareholder proposals. Shareholders have had the opportunity to read these proposals and Schedule C of the proxy circular dated March 9, 2021. These 3 proposals were submitted by MEDAC. Following discussions with the company, MEDAC agreed not to submit to a vote Proposals #1 and #2, dealing with the company's purpose and virtual meetings, respectively. At the request of MEDAC, these proposals as well as iA Financial's response to them are nevertheless presented in our circular dated March 9, 2021, in Schedule C on Pages 133 and following of the French version and on Pages 128 and following of the English version. On these same pages, you will find MEDAC's Proposal #3 on the external auditor for consideration and vote at this meeting. You will also find the response and position of iA Financial Corporation. In order to be adopted, this proposal must receive the support of a simple majority of the votes cast by the holders of common shares. We are pleased to have with us on the phone, Mr. Jean Chambers, a representative of MEDAC on the phone today to present Proposal #3. Following the shareholder vote on this proposal, I will invite Mr. Chambers to comment briefly on the other 2 proposals submitted by MEDAC, which, as agreed, will not be presented for a vote. Mr. Chambers, I now invite you to present your proposal.

Hello, Mr. Chairman, can you hear me well?

Yes. Very well. Thank you.

As the Chairman said, my name is Jean Chambers. I am here on behalf of MEDAC, [Foreign Language]. I wanted to mention that this year is the 25th anniversary of this organization and, in fact, founded in December '95 by Mr. Yves Michaud. We have sent to all businesses where we're shareholders a proposal to group together the values that we defend -- that we've defended over all these years, a proposal -- so I'll have -- that I'll talk to you about later. We have also submitted 2 other proposals this year, including one that is up for voting by shareholders. The proposal, as the Chairman said, is #3, a new external auditor. You can see that on Pages 138 and 139 in the French version. It is proposed that the Board of Directors calls upon a new external auditor given that Deloitte has been there since 1940, a little bit longer than myself, and I'm a baby boomer. The arguments presented by the company were absolutely valid, and we could just want to never change auditors. Furthermore, we are of the opinion that we must change from time to time. This is a practice that is healthy and desirable despite the cons. Last year, this proposal was made, and we had a result of 6.28% of shareholders who had agreed with our proposal. It is -- we can believe that the shareholders want to get -- take a new look at the respect of accounting principles that are generally recognized. This proposal aims to look at the risks that are linked to institutional familiarity, which may compromise the independence of audit firms who have long-term clients. The current rules that impose a rotation of partners who are only looking at institutional familiarity, and this formula could allow to improve the quality of the audit, thanks to increased monitoring on the auditor's part, on the Audit Committee. And it would lead to greater transparency when it comes to the monitoring of the audit and changes in the culture of the firms. We prefer a call for tenders, excluding the current auditor, so as to -- so during the call for tenders, after this period, the auditor could be more complacent with management because he may think that his mandate would not be renewed. This is what I had to say concerning this proposal.

Thank you, Mr. Chambers. I'm sorry. No problem. I would like to take this opportunity to congratulate MEDAC on the celebration of its 25th anniversary. Jennifer, do we have any questions or comments on this proposal before we vote?

We did not receive any questions or comments through the webcast. I will validate with the operator. Do we have any questions on this proposal?

No. No questions or comments.

Thank you. I remind you that the company suggests to vote against the proposal, as mentioned in the circular. We can now vote on Proposal #3. Only a financial can vote on this proposal -- shareholders, sorry. Please note that if you have voted in advance of the meeting and you do not wish to change your vote, you do not need to take any action. . [Voting]

Thank you. The vote is now closed. Mr. Chambers, I'll now invite you to comment on the other 2 proposals submitted by MEDAC that were withdrawn from the vote.

Thank you. Mr. Chairman. Proposal number was on the [indiscernible] of the commitment. It was proposed that the Board of Directors and management specify the [indiscernible] Industrial Alliance as an organization, and the Board of Director has the mandate to ensure the follow-up of the deployment of policies, commitments and initiatives put in place to criticize this new strategic orientation, notably in terms of health, environment, human resources and relationship with stakeholders. As I mentioned earlier, this proposal was sent to all companies who settle figures -- the securities are in our portfolio. So it's not a proposal that specifically targets Industrial Alliance, though a proposal that seems that -- whose objective is to change culture in general and the improvement of practices in terms of proper governance of companies. Not only do we ask that the company give itself a company's [indiscernible] what Industrial has already done, but we wish that the responsibility to ensure the -- and follow-up of the [indiscernible] of companies be formally added to the Governance Committee's mandate as well as the Boards who has all responsibilities. As it's possible to read, the company commits to bring this specifics in its mandate for the governance and ethics between -- until the end -- before the end of [ 2020 ], 135 of the circular. In response to our answer, we've convened that -- of a common agreement to not have this vote. We are happy of the discussions and the proposal of the result that we obtained. Thank you. For Proposal #2, this virtual assembly and shareholder rights, it was proposed that the Board of Directors adopt a modality -- specific modalities regarding shareholder virtual meetings. We have decided not to vote on this proposal so that -- because the company has made a verbal expression by all shareholders and the Board obtained -- I'm sorry, the principal on the bases of which what is possible to do in a normal assembly in person. In other words, a virtual assembly should allow all that is possible to do in a personal live event to be done virtually. Mr. President -- Mr. Chairman, thank you for your time and encouragement to maintain dialogue year after year, not only with us, but also with all shareholders. And I would just like to say something, we're very happy about your program in regards to diversity and personnel and also participation of women on the Board of Directors and administration. Thank you very much.

Thank you, Mr. Chambers, for your constructive comments and respectful exchanges with the society on governance matters.

We are now at the question period. [Operator Instructions] Denis Ricard, Mrs. Jennifer Dibblee and I, as appropriate, will answer the questions. Questions received from attendees that were not addressed or could not be answered during the meeting and that comply with the rules of conduct with the -- will be posted rather, along with our responses on the company's website shortly after the meeting, with the exception of questions that are specific to a shareholder or policyholder. Jennifer, do we have any questions or comments?

Yes, Mr. Chairman, we have received a question on the web platform from a shareholder, Mr. [indiscernible]. So the new law on insurer specifies -- I'm sorry, important elements in regards to policy -- participation. The preceding version did not have stipulations that required characteristics -- required [indiscernible]. So the new law specifically makes reference to the rest of participation to -- with benefits. So can you tell us how you've considered a list of shareholder policies with participation to vote on 6 May, 2021 and indicate the number of policyholders identified during the construction of this?

There have been changes to the law in 2019. The law determined that policies -- participants mid or after June 2019 will no longer have a right to vote for this 1/3 of shareholders and -- but this right has been maintained for policies emitted before the state. That is for this reason that I -- insurance always has 1/3 of its administrators elected by this. So this year, the number of policies with participation is 57,979 policyholders with participation. And by -- with this list, the law insurers is respected, and it was -- the list was made with those who only have right to participate with benefits from the past.

A second question on the same subject by the same shareholder, Mr. [indiscernible], the subcommittee audit -- sorry. The new law on insurers emphasize that the minimum number of 100 policyholders with participation is required to allow policyholders to vote. In the spirit of the new law, would it not be equitable to require quorum -- minimum quorum of 100 shareholders with participation to exercise this collective right.

I remind you that the internal rules foresee that quorum is 2 shareholders -- policyholders, rather. And it's always our intention to maintain this number and not modify quorum for the annual assembly and for the vote by policyholders.

Well, the third question by the same shareholder. Mr. [indiscernible], and I will read. The audit subcommittee has been reporting for many years that it is regularly watching the progress of work aligned the modification of standard IFRS 17, no more. During Investors Day of March 10, 2020, representatives of the company answered on the subject that IFRS 17 is coming, but we will be ready. But there's never been anything written or any public messages on the nature of the necessary preparation to integrate the standard, which we've only mentioned its existence. I am of -- I believe that we should speak more on the subject in the frame of this Annual Shareholders Meeting as today. But as it is not the case, how can you justify this lack of information? So I'll pass the microphone to our CEO.

Thank you for your question. I'm sorry, this microphone is not -- it's a file that we've held at arm's length for many years. As you know, it's one that affects all the insurance interest in Canada since the -- was decided that we were using international accounting methods. It's a major project. It's a project that involved tens of millions of dollars for -- and for the whole industry, it will be the hundreds of millions of dollars. So what we have to understand is that currently, there's a lot of energy to -- first of all, to properly understand the standards that have been established, it's not easy. It's complex. Companies have to make a lot of choices. There are options to be -- there are many implications. And we must also, at the same time, expect that regulatory authorities modify the number -- capital number. So this is work that's ongoing. We are participating to surveys by regulatory authorities in Québec, notably, but also there are federal charter companies that do the [indiscernible]. There are also financial tax authorities that have to make certain modifications to the mathematical provisions because we know that's what will be affected. So there's a whole group of pieces that will be put together. So that means there's a lot of unknowns remaining, and I challenge you even to show you -- me any company in Canada that's able currently to forecast with certainty that what could be the impacts for the company. So it's an enormous project for which what we have said so far. We think that because we manage our things in a conservative way that we will be able to, during the transition to the new standards, to have a relatively positive image of our financial position. That's the first thing we said. The second thing is we commit to, you can call it, training with financial analysts and the financial community, in general, as we did back during the last changes, the accounting standards because we have this reputation in the market to be very transparent and to do training with the financial community. So it's very clear that it will require a lot of training because it's extremely complex. So what I would say, we're on the right path. And it's clear that when you listen to conference calls over the next quarters, the closer we get to the critical period, which I'll say is January 1, 2022, even if it's been -- it's only live as in 2023 to do a comparative base in 2022. So closer we get to those dates, there are things that will clarify notably with tax and regulatory authorities, those are kind of the choices that need to be made and arrive to the right proper results.

That completes the questions we've received via the webcast platform. I will now check with the operator. Have we received any questions by way of the telephone line? .

No. No question or comment.

Thank you. This completes questions, Mr. Chairman, as much for the webcast, as much as for the phone line.

Thank you, Jennifer. Since we have no more questions, we will go to the results of the votes. So the scrutineers had time to tabulate the votes and I would invite Mrs. Dibblee to provide us with the preliminary results for each of the votes.

Thank you, Mr. Chairman. According to the report of the scrutineers, I inform you that for iA Financial Corporation, the 13 nominees for the Office of Director, as named in the circular, were elected with at least 90% of votes in favor. For iA Insurance, the 5 nominees for director, as named in the participating policy information statement, were elected with at least 93% of votes in favor. Deloitte was reappointed as external auditor for both companies with at least 93% of the votes in favor. The advisory resolution on iA Financial Corporation's approach to executive compensation was adopted with more than 88% of votes in favor. The amendments to the bylaws of the corporation were adopted with at least 90% of votes in favor. And shareholder Proposal #3 regarding the external auditor was rejected with at least 93% of the votes against. Detailed financial or final, rather, results will be published on iA Financial's website at ia.ca and also available on SEDAR, S-E-D-A-R, the website of the Canadian securities regulatory authorities.

Thank you, Jennifer. It's important for us to remain responsive to the concerns of our shareholders. We thank shareholders and policyholders for exercising the right to vote. Ladies and gentlemen, this completes our annual meeting. In closing, I would like to sincerely thank management and all employees for the incredible strength, determination and perseverance you have demonstrated over the past year. Inspired by your resilience, the company is stronger than ever. I would also like to thank all those who participated in the virtual and joint meeting of iA Financial Corporation and iA Insurance without forgetting Denis Ricard and Jennifer Dibblee, who accompanied me throughout this meeting. Thank you for your trust and support. To all of you, take care of yourself, your health and your family. The meeting is now adjourned. [Statements in English on this transcript were spoken by an interpreter present on the live call.]