Industrial Alliance Q4 earnings and business growth outperform record year

Industrial Alliance Insurance and Financial Services Inc. ended the fourth quarter with net income to common shareholders of $67.4 million, representing diluted earnings per share of $0.80 and a return on common shareholders’ equity of 12.7% on an annualized basis.

Business growth maintained strong momentum for the fifth consecutive quarter. Premiums and deposits increased 15% year over year to reach a new high of almost $1.8 billion, driven by strong sales in the Individual Insurance and Wealth Management sectors. Net sales of segregated and mutual funds gained 66% in the fourth quarter, putting Industrial Alliance in 1^st place for net sales of segregated funds and 7^th for net sales of mutual funds in 2010. At December 31, 2010, assets under management and administration of $66.9 billion also reached a new high under the effect of the strong increase in premiums and deposits, net fund entries in most sectors and stock market growth.

“We are clearly pleased by the exceptional top-line performance in the fourth quarter,” stated Yvon Charest, President and Chief Executive Officer, in a statement. “Our ongoing business initiatives to expand our distribution networks and geographic presence, together with the continued strength of the stock markets, came together in the recent quarter and allowed us to surpass our best year on record in 2007 for both growth and profitability.”

“2010 was a great success in terms of growth but long-term interest rates were a challenge,’ added Mr. Charest. “As part of our year-end review and consistent with our long-term, prudent approach to managing our actuarial reserves, we made adjustments to certain valuation assumptions and put in place a series of management initiatives to alleviate the drop in interest rates. On the reserving side, we lowered our URR by 20 basis points to 3.7% at the end of 2010, below the allowed maximum of 4.0%, and recognized a 47 basis point decrease in our IRR.  Our management actions focused on initiatives to reduce re-investment risk, improve asset-liability matching and increase long-term returns.”

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