iA Financial Group Announces Offering of $350 million of Limited Recourse Capital Notes

iA Financial Corporation Inc. (TSX: IAG) (the “Company”) announced today that it intends to issue $350 million aggregate principal amount of 6.921% Limited Recourse Capital Notes Series 2024-1 (Subordinated Indebtedness) (the “Notes”) due September 30, 2084 (the “Offering”).

The Offering is expected to close on or about June 25, 2024. The Company intends to use the net proceeds from the sale of the Notes for general corporate purposes, which may include investments in subsidiaries and repayment of indebtedness.

The Notes will mature on September 30, 2084. Interest on the Notes at the rate of 6.921% per annum will be payable in semi-annual installments in arrears on March 31 and September 30 in each year, commencing on September 30, 2024 and continuing until September 30, 2029. Starting on September 30, 2029 and on every fifth anniversary of such date thereafter until September 30, 2079 (each such date an “Interest Reset Date”), the interest rate on the Notes will be reset at an interest rate per annum equal to the prevailing 5-year Government of Canada Yield on the business day prior to such Interest Reset Date, plus 3.600%.

In connection with the issuance of the Notes, the Company will issue 350,000 Non-Cumulative 5-Year Rate Reset Class A Preferred Shares, Series B (the “Series B Shares”). These shares will be held by Computershare Trust Company of Canada, as trustee of iA Financial Corporation LRCN Trust (the “Limited Recourse Trust”). In the event of a non-payment of interest or of the principal amount on the Notes when due, the recourse of each holder of Notes shall be limited to that holder’s pro rata share of the assets of the Limited Recourse Trust, which assets will consist of the Series B Shares, except in certain limited circumstances.

Subject to the prior approval of the Autorité des marchés financiers, the Company may redeem the Notes during the period from August 31 to and including September 30, commencing in 2029 and every five years thereafter, in whole or in part, on not less than 10 days’ and not more than 60 days’ prior written notice from the Company, at a redemption price which is equal to the aggregate of the principal amount of the Notes to be redeemed and any accrued and unpaid interest on such Notes up to, but excluding, the date of the redemption. The Offering is being done on a best efforts agency basis by a syndicate of agents co-led by CIBC Capital Markets, National Bank Financial Markets and RBC Capital Markets. The Notes will be offered in each of the provinces of Canada under a shelf prospectus supplement (the “Prospectus Supplement”) to the Company’s short form base shelf prospectus dated April 25, 2024 (the “Shelf Prospectus”).

Access to the Prospectus Supplement, the Shelf Prospectus and any amendments to the documents is provided in accordance with securities legislation relating to procedures for providing access to a shelf prospectus supplement, a base shelf prospectus and any amendment to the documents. The Shelf Prospectus is, and the Prospectus Supplement will be (within two business days), accessible on SEDAR+ at www.sedarplus.com.

An electronic or paper copy of the Prospectus Supplement, the Shelf Prospectus and any amendment to the documents may be obtained, without charge, from CIBC Capital Markets by contacting mailbox.cibcdebtsyndication@cibc.com, from National Bank Financial Inc. by contacting syndicate@nbc.ca or RBC Dominion Securities Inc. by contacting torontosyndicate@rbccm.com, by providing the contact with an email address or address, as applicable.

Notice
This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any securities in any jurisdiction in which such offering, solicitation or sale would be unlawful.

The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or the securities laws of any state of the United States of America, and may not be offered, sold or delivered, directly or indirectly, within the United States, its territories, its possessions and other areas subject to its jurisdiction or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the U.S. Securities Act), except in certain transactions exempt from, or not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. This press release does not constitute an offer to sell or a solicitation of an offer to buy any of these securities within the United States.

Forward-Looking Statements
This document may contain statements relating to strategies used by iA Financial Group or statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “may”, “will”, “could”, “should”, “would”, “suspect”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate”, and “continue” (or the negative thereof), as well as words such as “objective”, “goal”, “guidance”, “outlook” and “forecast”, or other similar words or expressions. Such statements constitute forward-looking statements within the meaning of securities laws. In this document, forward-looking statements include, but are not limited to, information concerning the closing of the Offering and the use of proceeds therefrom. These statements are not historical facts; they represent only expectations, estimates and projections regarding future events and are subject to change.

Although iA Financial Group believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. In addition, certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Material factors and risks that could cause actual results to differ materially from expectations include, but are not limited to: general business and economic conditions; level of competition and consolidation and ability to adapt products and services to market or customer changes; information technology, data protection, governance and management, including privacy breach, and information security risks, including cyber risks; level of inflation; performance and volatility of equity markets; interest rate fluctuations; hedging strategy risks; accuracy of information received from counterparties and the ability of counterparties to meet their obligations; unexpected changes in pricing or reserving assumptions; the occurrence of natural or man-made disasters, international conflicts, pandemic diseases (such as the COVID-19 pandemic) and acts of terrorism; iA Financial Group liquidity risk, including the availability of funding to meet financial liabilities as they come due; mismanagement or dependance on third-party relationships in a supply chain context; ability to attract, develop and retain key employees; risk of inappropriate design, implementation or use of complex models; fraud risk; changes in laws and regulations, including tax laws; contractual and legal disputes; actions by regulatory authorities that may affect the business or operations of iA Financial Group or its business partners; changes made to capital and liquidity guidelines; risks associated with the regional or global political and social environment; and climate-related risks including extreme weather events or longer-term climate changes and the transition to a low-carbon economy, iA Financial Group’s ability to satisfy stakeholder expectations on environmental, social and governance issues; and downgrades in the financial strength or credit ratings of iA Financial Corporation or its subsidiaries.

Material factors and assumptions used in the preparation of financial outlooks include, but are not limited to: accuracy of estimates, assumptions and judgments under applicable accounting policies, and no material change in accounting standards and policies applicable to the Company; no material variation in interest rates; no significant changes to the Company’s effective tax rate; no material changes in the level of the Company’s regulatory capital requirements; availability of options for deployment of excess capital; credit experience, mortality, morbidity, longevity and policyholder behaviour being in line with actuarial experience studies; investment returns being in line with the Company’s expectations and consistent with historical trends; different business growth rates per business unit; no unexpected changes in the economic, competitive, insurance, legal or regulatory environment or actions by regulatory authorities that could have a material impact on the business or operations of iA Financial Group or its business partners; no unexpected change in the number of shares outstanding; and the non-materialization of risks or other factors mentioned or discussed elsewhere in this document or found in the “Risk Management” section of the Company’s Management’s Discussion and Analysis for 2023 that could influence the Company’s performance or results.

Economic and financial uncertainty in a context of geopolitical tensions – Unfavourable economic conditions and financial instability are causing some concern, with persistent inflation, further deterioration in the credit market due to high-rate environment, rising defaults and declining realizable value, and higher unemployment. The war in Ukraine, the Israeli-Hamas conflict spreading to other regions, and the strategic competition between the United States and China are also causing instability in global markets. In addition, 2024 is a record year for elections in 50 countries, including the United States. These events, among others, could lead to reduced consumer and investor confidence, significant financial volatility and more limited growth opportunities, consequently potentially affecting the Company’s financial outlook, results and operations.

Additional information about the material factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the “Risk Management” section of the Management’s Discussion and Analysis for 2023, the “Management of Risks Associated with Financial Instruments” note to the audited consolidated financial statements for the year ended December 31, 2023 and elsewhere in iA Financial Group’s filings with the Canadian Securities Administrators, which are available for review at www.sedarplus.com.

The forward-looking statements in this document reflect iA Financial Group’s expectations as of the date of this document. iA Financial Group does not undertake to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, except as required by law.