Mortage Portfolio Breakdown – Single-family (1 to 4 units)

Discussion regarding the potential impact on residential mortgage loans in the event of an economic downturn

iA Financial Group ("iA") originates and underwrites predominantly "Prime" or "A" single-family mortgages consisting of residential properties of  to four dwelling units. For classification purposes, "Prime" or "A" describes mortgages originated under lending criteria traditionally applied by Canadian chartered banks, and generally includes mortgages that secure principal amounts not exceeding 80% of the value of the related mortgaged property [or 95% in cases where the mortgages are insured by qualified mortgage insurers such as Canada Mortgage and Housing Corporation ("CMHC"), Genworth Financial Mortgage Insurance Company Canada ("Genworth") or Canada Guaranty Mortgage Insurance Company ("Canada Guaranty")].

Our mortgage loans have a history of low arrears that is a reflection of a iA’s rigorous underwriting criteria. Moreover, single-family residential mortgages are sourced from a market comprised of large urban areas across Canada and are strategically distributed throughout iA’s internal network as well as externally.

Despite the elements discussed above, a decline in the general economic condition can have a material adverse effect on the creditworthiness of a borrower and increase default rates. iA’s stress testing of its portfolio and contingency plan, if such scenario were to occur, is, in our view, an element that would mitigate some of the adverse effects incurred by the company.