The head of

Canadian insurer

and money manager

iA Financial Corp.

is hunting for a

multibillion-dollar acquisition

after the firm reached a record valuation at the beginning of the year.

Smaller deals are no longer enough to make a difference, chief executive Denis Ricard said. “I said to the board, ‘You should expect something bigger, if possible, going forward.’ A couple of billion would be something that probably would make sense.”

Quebec City-based iA Financial targets the mass market rather than high-net-worth clients. It sells individual

insurance policies

in North America and has other lines of business, including vehicle extended warranties,

wealth-management

distribution and segregated funds.

U.S. life insurance businesses are now at the top of his target list, Ricard said about his deal search. “In each and everything that we’re doing, we try to think, OK, can we do it differently?” he said. “So in the individual insurance space, we’re trying to identify niche markets that are different.”

The firm can deploy roughly $1.4 billion in excess capital immediately and generated nearly $700 million in cash flow in 2025, giving it capacity to pursue a sizable transaction without issuing shares, Ricard said, adding that the company will also consider acquisitions outside of Canada and the U.S.

The company — formerly known as Industrial Alliance — acquired wealth management firm

RF Capital Group Inc.

last year for around $600 million, pushing its total assets under management and administration to $341 billion as of Dec. 31. That was its second-largest purchase ever, trailing its 2020 deal for IAS Parent Holdings Inc., a U.S. provider of vehicle warranties, for US$720 million.

In January, iA Financial’s market capitalization reached a record $16.7 billion, but the shares have dropped about 18 per cent since, mainly due to disappointing fourth-quarter results.

Shares of North American wealth managers and insurance brokers have been hammered recently as new artificial intelligence tools come to market, creating a perceived threat to traditional business models.

“We believe in the value of advice,” Ricard said when asked about the risk to his business. “People don’t wake up in the morning saying, ‘I’m going to buy life insurance’ or ‘I’m going to prepare for retirement.’ You might know some people that do that, but they’re weird people.”

Hiring more advisers leads to proportional sales gains, he said. AI tools are useful for boosting productivity for advisory teams and supporting clients’ needs, he said, noting that iA Financial spends $400 million a year on technology and invests in venture capital funds so it can see emerging trends.

Among those trends is the rise of financial advice that’s delivered through digital channels. Canadian online investment firm

Wealthsimple Financial Corp.

, founded in 2014, reached over $100 billion in assets as young adults flock to its commission-free trading platform.

Ricard drew parallels between concerns about disruption from digital upstarts like Wealthsimple and the current AI fears. “Been there, done that,” he said, casting doubt on the online platform’s profitability. “It’s a shiny new object. I’ve been in the business enough to see a lot of shiny objects.”

With assistance from Melissa Shin and Stephanie Hughes.

Bloomberg.com

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