Industrial Alliance Continues its Momentum: profit, return and business
growth up sharply in the second quarter of 2010

QUEBEC CITY, July 27 /CNW Telbec/ - Industrial Alliance Insurance and Financial Services Inc. ("Industrial Alliance" or "the Company") ended the second quarter of 2010 with net income to common shareholders of $57.7 million, compared to $32.1 million for the second quarter of 2009. If the temporary impact of the asymmetric evolution between the fair value of the debt instruments and that of the underlying assets is excluded, net income to common shareholders amounted to $58.4 million on regular operations, compared with $51.4 million in the second quarter of 2009. This result translates into diluted earnings per common share of $0.69 ($0.64 in the second quarter of 2009) and a return on common shareholders' equity of 11.7% on an annualized basis and 12.8% for the last twelve months (12.1% and 1.3% respectively in the second quarter of 2009 and for the twelve months ended June 30, 2009).

The higher profit for the quarter was driven primarily by the overall improvement in economic conditions in Canada and the stock market upswing over the last year, despite the downturn in the last few months.

Top-line growth in the second quarter of 2010 was very strong, continuing the momentum of the previous quarters. Premiums and deposits amounted to $1.6 billion, a record for a second quarter and a year-over-year increase of 33%, and value of new business was up 28% to reach $35.9 million in the second quarter. This growth comes primarily from the Individual Wealth Management sector, which benefited from extremely strong segregated fund and mutual fund sales (respective year-over-year increases of 98% and 113%).

"These excellent results once again demonstrate the Company's vitality and the strength of our business model," said Yvon Charest, President and Chief Executive Officer. "Despite the weakness of the economic recovery and stock market volatility, our return for the last twelve months is within our 12% to 14% target range, and we didn't post any credit losses. Top-line growth continues to be very strong. Financial strength is also very good. And we took a big step in our US market development strategy by concluding the acquisition of American-Amicable."

    
    -------------------------------------------------------------------------
    Profitability Highlights
    -------------------------------------------------------------------------
                         Second quarter          Year-to-date as at June 30
    (In millions
     of dollars,
     unless
     otherwise                          Varia-                        Varia-
     indicated)      2010      2009      tion      2010      2009      tion
    -------------------------------------------------------------------------
    Net income
     to common
     shareholders    57.7      32.1        80%    118.0      78.3        51%
    Less: gain
     (loss)
     resulting
     from the
     variation
     in the fair
     value of debt
     instruments
     and
     underlying
     assets
     (after taxes)   (0.7)    (19.3)        -       0.4     (11.8)        -
    -------------------------------------------------------------------------
    Net income
     to common
     shareholders
     on regular
     operations      58.4      51.4        14%    117.6      90.1        31%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per
     common share
     (diluted)      $0.68     $0.40     $0.28     $1.44     $0.97     $0.47
    Earnings per
     common share
     (diluted)
     on regular
     operations     $0.69     $0.64     $0.05     $1.45     $1.12     $0.33
    -------------------------------------------------------------------------
                    Second quarter annualized       Trailing twelve months
    -------------------------------------------------------------------------
    Return on
     common
     shareholders'
     equity          11.5%      7.6%        -      13.1%      1.1%        -
    Return on
     common
     shareholders'
     equity on
     regular
     operations      11.7%     12.1%        -      12.8%      1.3%        -
    -------------------------------------------------------------------------
    

Highlights

Following are the highlights of the second quarter (all of the Company's results are explained in more detail in the Management's Discussion and Analysis that follows this news release).

Profitability - Following are the main factors that explain the second quarter profitability:

    
    - The overall improvement in economic conditions and the stock market
      recovery in the last year increased the expected profit on in-force
      business to $91.5 million in the second quarter, up 15% year over year.
      The increase was driven primarily by the Individual Wealth Management
      sector, where the expected profit on in-force business almost doubled,
      thanks to an 18% increase in funds under management over the last year.

    - The stock market downturn in the last quarter slowed earnings growth
      during the period. It is estimated that if the stock markets had
      maintained a regular growth rate (about 7% for 2010), net income to
      common shareholders would have been approximately $4.1 million higher
      ($0.05 per common share).

    - New business strain in the Individual Insurance sector was higher than
      expected, primarily due to strong sales. Individual Insurance strain
      was 17% higher year-over-year, amounting to $26.4 million, on top-line
      growth of 27%. This strain should be recovered in the form of profits
      over time, as the assumptions used for pricing materialize.

    - The auto and home insurance subsidiary had a second consecutive
      excellent quarter, with a $3.0 million net profit in the second quarter
      of 2010, compared to $2.9 million in the first quarter of 2010 and
      $1.4 million in the second quarter of 2009.

    - The redemption by the IA Clarington subsidiary of a commission
      financing agreement resulted in expenses of $1.0 million after taxes.
      This redemption should help to improve profitability somewhat in the
      next few quarters.

    - The Company did not suffer any credit losses and obtained good
      experience results in the Group Insurance sector for the third
      consecutive quarter.
    

The Company posted a $0.7 million loss after taxes ($0.01 per common share) in the second quarter resulting from the unfavourable evolution of the difference between the fair value of the debt instruments and that of the underlying assets ($19.3 million loss after taxes in the second quarter of 2009, or $0.24 per common share). This loss results from the unfavourable evolution of risk premiums during the quarter. This loss is, by definition, temporary, and does not affect the Company's earning power.

Business growth - Top-line growth was very strong in the second quarter. Year-over-year, premiums and deposits reached a record high for the third consecutive quarter, totalling $1.6 billion in the second quarter, a 33% increase compared to the second quarter of 2009. At $35.9 million, value of new business grew 28% in the second quarter compared to the same period last year.

As with the previous quarters, strong top-line growth was mainly driven by the stock market recovery in the last year, which carried gross sales in the Individual Wealth Management sector to $894.6 million, an 89% increase year over year, and net sales to $414.5 million, almost four times more than in the second quarter of 2009. According to industry data, Industrial Alliance was ranked second in Canada in terms of net segregated fund sales after the first two quarters of 2010, with a 25.4% market share, and fourth in terms of net mutual fund sales.

Sales in the Individual Insurance sector were also very good, reaching $43.1 million in the second quarter of 2010, a year-over-year increase of 27%. Sales were up in almost all markets, all product categories, all distribution networks and all regions.

    
    -------------------------------------------------------------------------
    Business Growth Highlights
    -------------------------------------------------------------------------
                         Second quarter          Year-to-date as at June 30
    (In millions
     of dollars,
     unless
     otherwise                          Varia-                        Varia-
     indicated)      2010      2009      tion      2010      2009      tion
    -------------------------------------------------------------------------
    Premiums and
     deposits     1,592.5   1,197.3        33%  3,399.1   2,435.8        40%
    Value of
     new business    35.9      28.1        28%     74.6      56.5        32%
    -------------------------------------------------------------------------
                             June 30,    March 31, December 31,     June 30,
                                2010         2010         2009         2009
    -------------------------------------------------------------------------
    Assets under
     management
     and under
     administration         59,880.8     60,687.7     58,406.6     53,958.1
    -------------------------------------------------------------------------
    

Solvency - The Company ended the second quarter with a solvency ratio of 224%, which is slightly higher than the ratio of 223% recorded as at March 31, 2010 and above the Company's 175% to 200% target range. During the quarter, the solvency ratio benefited from reduced capital requirements related to the reduction in market value of stock market securities. However, the solvency ratio suffered slight downward pressure, primarily due to higher capital requirements related to the increase in market value of bonds, resulting from the decrease in long-term interest rates during the quarter.

The acquisition of American-Amicable Holding, Inc., which was completed on July 20, 2010, reduced the solvency ratio to 215% on a pro forma basis as at June 30, 2010. This ratio is above the Company's target range.

    
    -------------------------------------------------------------------------
    Financial Strength Highlights
    -------------------------------------------------------------------------
    (In millions of
     dollars, unless         June 30,    March 31, December 31,     June 30,
     otherwise indicated)       2010         2010         2009         2009
    -------------------------------------------------------------------------
    Solvency ratio               224%         223%         208%         202%
    Net impaired investments     9.8         13.3         13.0         14.2
    Net impaired investments
     as a % of total
     investments                0.06%        0.08%        0.08%        0.09%
    -------------------------------------------------------------------------
    

Quality of investments - The overall quality of the investment portfolio remained very good in the second quarter - and even improved in several respects - despite concerns about the strength of the economic recovery and market upheavals.

In terms of credit, no new securities defaulted during the second quarter, and no new provisions were posted in the books. Net impaired investments decreased during the quarter, from $13.3 million as at March 31, 2010 to $9.8 million as at June 30, 2010, which represents just 0.06% of total investments (0.08% as at March 31, 2010). This decrease primarily results from the favourable settlement of a conventional mortgage loan in the US. Settlement of this loan helped to reduce the delinquency rate of the mortgage loan portfolio, from 0.34% as at March 31, 2010 to 0.22% as at June 30, 2010.

With respect to events that made headlines during the quarter, the Company has very little direct exposure to securities issued by certain European countries that are currently going through a crisis in their public finances. Industrial Alliance also has very little direct exposure to securities that have received the most media attention in the last two years.

Dividend - The Company's good profitability and financial strength have enabled the Board of Directors to announce the payment of a quarterly dividend of $0.2450 per common share. This dividend is the same as the one announced in the last quarter. It corresponds to a payout ratio of 35.5% of earnings, which is slightly above the Company's 25% to 35% target range. The Company expects the dividend payout ratio to remain in the upper part of the target range in 2010.

Conclusion of the American-Amicable acquisition - On July 20, 2010, Industrial Alliance announced the conclusion of the acquisition of all outstanding shares of American-Amicable Holding, Inc. (American-Amicable). The transaction was announced on April 28, 2010. American-Amicable will operate as part of the Company's wholly-owned US subsidiary IA American Life Insurance Company. This acquisition is an important step in the Company's development strategy in the US, as it gives Industrial Alliance immediate scale and presence on the US market.

American-Amicable is a life and health insurance company that primarily markets traditional life insurance products to individuals. The cost of the transaction amounted to US$145.3 million, including excess capital of $45 million, and was financed from cash on hand. The acquisition is expected to be immediately accretive to Industrial Alliance's earnings by $0.05 per share on an annual basis.

Sensitivity analysis - The Company took advantage of the publication of its second quarter results to update its sensitivity analyses. The results of these analyses show that the leeway the Company has to absorb potential market downturns remains very high. Hence, the provisions for future policy benefits will not have to be strengthened for the stocks matched to the long-term liabilities as long as the S&P/TSX index remains above 9,400 points. The solvency ratio will remain above 175% as long as the S&P/TSX index remains above 7,300 points (7,650 if the acquisition of American-Amicable is taken into account) and will remain above 150% as long as the S&P/TSX index remains above 5,750 points (6,150 if the acquisition of American-Amicable is taken into account).

    
    MANAGEMENT'S DISCUSSION AND ANALYSIS
    FOR THE SECOND QUARTER OF 2010
    and for the six-month period ended June 30, 2010

    July 27, 2010

    Industrial Alliance Continues its Momentum:
    profit, return and business growth
    up sharply in the second quarter of 2010
    

ECONOMIC AND FINANCIAL ENVIRONMENT IN THE SECOND QUARTER OF 2010

The results for Industrial Alliance Insurance and Financial Services Inc. ("Industrial Alliance" or "the Company") are partially attributable to the prevailing economic and financial environment. In this respect, after going through one of the worst financial crises in its history, the Canadian economy continued to show signs of recovery in the second quarter. However, winds of uncertainty have begun to blow through the global economies in the last few months due to the public finance crisis in certain European countries and the fragility of the economic recovery in certain countries.

Thus, after strong growth since the peak of the financial crisis, in addition to showing signs of volatility, the stock markets dropped in the second quarter, with the S&P/TSX index losing 6.2% of its value. However, the Canadian stock market remained positive year over year, gaining 8.9% between June 30, 2009 and June 30, 2010. Long-term interest rates also declined in the last few months and remain at historically low levels.

Industrial Alliance benefited from the overall improvement in economic conditions in Canada and the stock market upswing in the last year, even though profit growth was somewhat slowed by the stock market downturn in the second quarter. Nevertheless, the Company posted very satisfying results for the second quarter, both in terms of business growth and profitability.

The excellent results for the quarter once again demonstrate the Company's vitality and the strength of its business model. Despite the weakness of the economic recovery and stock market volatility, the Company's return for the last twelve months is within its 12% to 14% target range, and the Company didn't post any credit losses. Top-line growth continues to be very strong. Financial strength is also very good. And the Company took a big step in its US market development strategy by concluding the acquisition of American-Amicable.

PROFITABILITY

The Company ended the second quarter of 2010 with net income to common shareholders of $57.7 million, compared to $32.1 million for the second quarter of 2009. If the temporary impact of the asymmetric evolution between the fair value of the debt instruments and that of the underlying assets is excluded, net income to common shareholders amounted to $58.4 million on regular operations, compared with $51.4 million in the second quarter of 2009. This result translates into diluted earnings per common share of $0.69 ($0.64 in the second quarter of 2009) and a return on common shareholders' equity of 11.7% on an annualized basis and 12.8% for the last twelve months (12.1% and 1.3% respectively in the second quarter of 2009 and for the twelve months ended June 30, 2009).

    
    -------------------------------------------------------------------------
    Profitability
    -------------------------------------------------------------------------
                         Second quarter          Year-to-date as at June 30
    -------------------------------------------------------------------------
    (In millions
     of dollars,
     unless
     otherwise                          Varia-                        Varia-
     indicated)      2010      2009      tion      2010      2009      tion
    -------------------------------------------------------------------------
    Net income
     to common
     shareholders    57.7      32.1        80%    118.0      78.3        51%
    Less: gain
     (loss)
     resulting
     from the
     variation
     in the fair
     value of debt
     instruments
     and
     underlying
     assets
     (after taxes)   (0.7)    (19.3)        -       0.4     (11.8)        -
    -------------------------------------------------------------------------
    Net income
     to common
     shareholders
     on regular
     operations      58.4      51.4        14%    117.6      90.1        31%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per
     common share
     (diluted)      $0.68     $0.40     $0.28     $1.44     $0.97     $0.47
    Earnings per
     common share
     (diluted)
     on regular
     operations     $0.69     $0.64     $0.05     $1.45     $1.12     $0.33
    -------------------------------------------------------------------------
                    Second quarter annualized       Trailing twelve months
    -------------------------------------------------------------------------
    Return on
     common
     shareholders'
     equity          11.5%      7.6%        -      13.1%      1.1%        -
    Return on
     common
     shareholders'
     equity on
     regular
     operations      11.7%     12.1%        -      12.8%      1.3%        -
    -------------------------------------------------------------------------
    

Following are the main factors that explain the profitability for the quarter:

    
    - The overall improvement in economic conditions and the stock market
      recovery in the last year increased the expected profit on in-force
      business to $91.5 million in the second quarter, up 15% year over year.
      The increase was driven primarily by the Individual Wealth Management
      sector, where the expected profit on in-force business almost doubled,
      thanks to an 18% increase in funds under management over the last year.

    - The stock market downturn in the last quarter slowed earnings growth
      during the period. It is estimated that if the stock markets had
      maintained a regular growth rate (about 7% for 2010), net income to
      common shareholders would have been approximately $4.1 million higher
      ($0.05 per common share).

    - New business strain in the Individual Insurance sector was higher than
      expected, primarily due to strong sales. Individual Insurance strain
      was 17% higher year-over-year, amounting to $26.4 million, on top-line
      growth of 27%. This strain should be recovered in the form of profits
      over time, as the assumptions used for pricing materialize.

    - The auto and home insurance subsidiary had a second consecutive
      excellent quarter, with a $3.0 million net profit in the second quarter
      of 2010, compared to $2.9 million in the first quarter of 2010 and
      $1.4 million in the second quarter of 2009.

    - The redemption by the IA Clarington subsidiary of a commission
      financing agreement resulted in expenses of $1.0 million after taxes.
      This redemption should help to improve profitability somewhat in the
      next few quarters.

    - The Company did not suffer any credit losses and obtained good
      experience results in the Group Insurance sector for the third
      consecutive quarter.
    

The Company posted a $0.7 million loss after taxes ($0.01 per common share) in the second quarter resulting from the unfavourable evolution of the difference between the fair value of the debt instruments and that of the underlying assets ($19.3 million loss after taxes in the second quarter of 2009, or $0.24 per common share). This loss results from the unfavourable evolution of risk premiums during the quarter. This loss is, by definition, temporary, and does not affect the Company's earning power.

All lines of business except Individual Insurance obtained a higher operating profit year over year in the second quarter. Individual Wealth Management benefited from the stock market upswing in the last year and extremely strong sales of segregated funds and mutual funds. Group Insurance benefited from good experience results. Group Pensions took advantage of the overall improvement in the economic environment. Individual Insurance was the only sector where the operating profit decreased, primarily due to the stock market downturn during the quarter.

    
    -------------------------------------------------------------------------
    Operating Profit by Line of Business
    -------------------------------------------------------------------------
                         Second quarter          Year-to-date as at June 30
    (In millions
     of dollars,
     unless
     otherwise                          Varia-                        Varia-
     indicated)      2010      2009      tion       2010      2009      tion
    -------------------------------------------------------------------------
    Individual
     Insurance       20.9      32.3       (35%)    48.1      58.1       (17%)
    Individual
     Wealth
     Management      20.9      11.2        87%     43.2      17.4       148%
    Group Insurance  12.7       7.8        63%     23.4      13.4        75%
    Group Pensions    4.2       2.8        50%      9.2       6.4        44%
    -------------------------------------------------------------------------
    Total            58.7      54.1         9%    123.9      95.3        30%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

SOURCES OF EARNINGS

Following is an analysis of the Company's profitability for the second quarter of 2010 according to the sources of earnings.

    
    -------------------------------------------------------------------------
    Sources of Earnings
    -------------------------------------------------------------------------
                                                             Year-to-date
                                 Second quarter             as at June 30
    (In millions of
     dollars)                   2010         2009         2010         2009
    -------------------------------------------------------------------------
    Operating profit
      Expected profit on
       in-force                 91.5         79.6        177.8        153.6
      Experience gains
       (losses)                 (6.2)        (1.5)        (2.2)       (12.6)
      Gain (strain) on sales   (26.6)       (24.0)       (51.7)       (45.7)
      Changes in assumptions     0.0          0.0          0.0          0.0
    -------------------------------------------------------------------------
      Subtotal                  58.7         54.1        123.9         95.3
    Income on capital
      Investment income         26.0         17.7         46.0         34.3
      Gains on assets
       available for sale        2.1          2.0          3.7          2.5
    -------------------------------------------------------------------------
      Subtotal                  28.1         19.7         49.7         36.8
    Income taxes               (22.4)       (19.4)       (45.0)       (35.4)
    -------------------------------------------------------------------------
    Net income to
     shareholders on
     regular operations         64.4         54.4        128.6         96.7
    Less: dividends on
     preferred shares            6.0          3.0         11.0          6.6
    -------------------------------------------------------------------------
    Net income to common
     shareholders on
     regular operations         58.4         51.4        117.6         90.1
    Plus: gain (loss)
     resulting from the
     variation in the
     fair value of debt
     instruments and
     underlying assets
     (after taxes)              (0.7)       (19.3)         0.4        (11.8)
    -------------------------------------------------------------------------
    Net income to common
     shareholders               57.7         32.1        118.0         78.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Expected profit on in-force - The expected profit on in-force amounted to $91.5 million for the second quarter of 2010, a year-over-year increase of 15%. The increase mainly affected the Individual Wealth Management sector and is primarily explained by the stock market upswing in the last year (the S&P/TSX index averaged 11,882 points in the second quarter, up 20% year over year). The expected profit on in-force is down for the Group Insurance sector. The Company expects profitability in this sector to continue to suffer the effects of the economic slowdown in 2010. The increase in the expected profit on in-force is consistent with the guidance that the Company gave to the financial markets when it published its fourth quarter 2009 results.

Experience gains (losses) - The Company recorded $6.2 million in experience losses in the second quarter of 2010. These losses are primarily explained by the stock market downturn during the quarter, which reduced the Company's profit by $5.8 million ($4.1 million after taxes), by $1.3 million in expenses ($1.0 million after taxes), following the redemption by the IA Clarington subsidiary of a commission financing agreement, and by lower than expected revenues for certain distribution subsidiaries. These losses were partially offset by experience gains in the Group Insurance sector, resulting primarily from favourable experience for long-term disability insurance.

Gain (strain) on sales - New business strain was $26.6 million in the second quarter of 2010, which is 11% higher than the same period last year. The strain comes almost entirely from the Individual Insurance sector and is primarily explained by the strong growth of sales in this sector in the second quarter (27% higher year over year).

If the Individual Insurance sector alone is taken into account, strain, expressed as a percentage of sales (measured in terms of first-year annualized premiums), amounted to 61% in the second quarter (67% in the second quarter of 2009). This rate exceeds the Company's 50% to 55% mid-term target range.

Income on capital - Income on capital amounted to $28.1 million in the second quarter of 2010, which is 43% higher than in the second quarter of 2009. Other than normal growth of investment income, this increase is explained by the following two factors:

    
    - The very good profitability of the auto and home insurance subsidiary.
      This subsidiary realized a pre-tax profit of $4.3 million in the second
      quarter of 2010 ($3.0 million after taxes), compared to $2.1 million in
      the second quarter of 2009 ($1.9 million after taxes).

    - Additional revenues of some $2.0 million ($1.5 million after taxes)
      following capital issuances by the Company in the last few quarters.
      The Company also realized $2.1 million in gains in the second quarter
      from the sale of financial securities matched to equity.
    

Income taxes - Income taxes totalled $22.4 million for the second quarter of 2010, which is $3.0 million higher than the second quarter of 2009. This increase essentially results from an increase in profit for the period. The effective tax rate amounted to 25.8% in the second quarter of 2010 (26.3% in the second quarter of 2009), which is in line with the Company's expectations of approximately 26% to 27% in the medium term.

Other item - The Company posted a $0.7 million loss after taxes ($0.01 per common share) in the second quarter resulting from the unfavourable evolution of the difference between the fair value of the debt instruments and that of the underlying assets ($19.3 million loss after taxes in the second quarter of 2009, or $0.24 per common share). This loss is, by definition, temporary, and does not affect the Company's earning power. This loss results from the unfavourable evolution of risk premiums during the quarter.

Debt instruments that were part of the Company's balance sheet when the new accounting standards on financial instruments took effect on January 1, 2007, were classified as "held for trading." For these debt instruments, any difference between the variation in the fair value of the debt instruments and that of the corresponding assets must be recognized immediately on the income statement, which creates a temporary volatility effect on the results. However, the impact of this volatility will be eliminated on January 1, 2011, since the Company expects to use the transition to the new international financial reporting standards (IFRS) to reclassify its debentures currently classified "held for trading."

SENSITIVITY ANALYSIS

The Company took advantage of the publication of its second quarter results to update its sensitivity analyses. The results of these analyses vary from one quarter to another according to numerous factors, including changes in the economic and financial environment and the normal evolution of the Company's business. Additional sensitivity analyses were performed after the end of the quarter to take into account the acquisition of American-Amicable Holding, Inc., concluded on July 20, 2010. The results of these analyses show that the leeway the Company has to absorb potential market downturns remains very high.

    
    - Stocks matched to the long-term liabilities - The Company believes that
      it will not have to strengthen its provisions for future policy
      benefits for stocks matched to long-term liabilities as long as the
      S&P/TSX index remains above about 9,400 points.

    - Solvency ratio - The Company believes that the solvency ratio will stay
      above 175% as long as the S&P/TSX index remains above 7,300 points
      (7,650 if the acquisition of American-Amicable is taken into account)
      and will remain above 150% as long as the index remains above
      5,750 points (6,150 if the acquisition of American-Amicable is taken
      into account).
    

All other sensitivity analyses remain virtually unchanged compared to the first quarter 2010 update.

    
    -------------------------------------------------------------------------
    Sensitivity Analysis
    -------------------------------------------------------------------------
                                                                   Including
                                                                    American-
                                                 As at June 30,     Amicable
                                                          2010   acquisition
    -------------------------------------------------------------------------
    Stocks matched     Level of S&P/TSX index     9,400 points  9,400 points
     to the long-term  requiring a strengthening
     liabilities       of the provisions for
                       future policy benefits
                       for stocks matched to
                       long-term liabilities
    -------------------------------------------------------------------------
    Solvency ratio     Level of S&P/TSX index     7,300 points  7,650 points
                       for the solvency ratio
                       to be at 175%
                       Level of S&P/TSX index     5,750 points  6,150 points
                       for the solvency ratio
                       to be at 150%
    -------------------------------------------------------------------------
    Net income         Impact on the net income   ($18 million) ($18 million)
                       of a sudden 10% decrease
                       in the stock markets
                       (impact for a complete
                       year)
    -------------------------------------------------------------------------
    Ultimate           Impact on the net income   ($42 million) ($44 million)
     reinvestment      of a 10 basis point
     rate (URR)        decrease in the URR
    -------------------------------------------------------------------------
    Initial            Impact on the net income   ($24 million) ($25 million)
     reinvestment      of a 10 basis point
     rate (IRR)        decrease in the IRR
    -------------------------------------------------------------------------
    

BUSINESS GROWTH

Top-line growth in the second quarter of 2010 was very strong, continuing the momentum of the previous two quarters. Year over year, premiums and deposits and value of new business grew by 33% and 28% respectively. This third consecutive quarter of strong growth was driven primarily by the overall improvement in economic conditions and the stock market upswing over the last year. Following are the highlights of the second quarter.

Premiums and Deposits

For the third consecutive quarter, premiums and deposits obtained record year-over-year highs, totalling $1.6 billion in the second quarter of 2010, a 33% increase over 2009. As with previous quarters, growth was primarily driven by the Individual Wealth Management sector, thanks to the stock market recovery and exceptional net sales in the last year. The Individual Insurance and General Insurance sectors also did well, each obtaining their best growth rates to date.

The results for the first two quarters are on track to surpass the Company's record year in 2007. After two quarters, premiums and deposits reached a new high of $3.4 billion in 2010, a 40% increase year over year, and 6% higher than the first two quarters of 2007.

    
    -------------------------------------------------------------------------
    Premiums and Deposits
    -------------------------------------------------------------------------
                         Second quarter          Year-to-date as at June 30
    (In millions
     of dollars,
     unless
     otherwise                          Varia-                        Varia-
     indicated)      2010      2009      tion      2010      2009      tion
    -------------------------------------------------------------------------
    Individual
     Insurance      267.9     231.8        16%    536.6     458.4        17%
    Individual
     Wealth
     Management     894.6     473.8        89%  1,977.2   1,062.8        86%
    Group
     Insurance      260.3     237.8         9%    494.5     470.4         5%
    Group
     Pensions       130.2     219.9       (41%)   313.9     377.5       (17%)
    General
     Insurance       39.5      34.0        16%     76.9      66.7        15%
    -------------------------------------------------------------------------
    Total         1,592.5   1,197.3        33%  3,399.1   2,435.8        40%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Sales by Line of Business

Following are the second quarter sales highlights by line of business. Sales are defined as new fund entries during the period. Refer to note 1 at the end of this report for the definition of sales for each line of business.

Individual Insurance - The Individual Insurance sector continued on the previous quarter's momentum, with $43.1 million in sales, up 27% year over year. Sales continued to be strong for traditional insurance protection (measured according to minimum premiums), as was the case throughout the financial crisis, and more than doubled for the "savings" component of Universal Life policies (measured by excess premiums), a sign that investor confidence is gradually returning to the stock markets. The number of policies sold continues to grow steadily (6% in the second quarter and 7% for the year to date), which shows the stability and depth of the Company's distribution networks.

Individual Wealth Management - For the third consecutive quarter, sales of Individual Wealth Management products reached a new year-over-year quarterly high, thanks to the market recovery in the last year and exceptional net sales. Gross sales were $894.6 million, an 89% increase year over year. The Individual Wealth Management sector also benefited from continued growth in sales of the Ecoflextra guaranteed minimum withdrawal benefit and from IA Clarington's successful launch of a closed end fund in April.

Net sales were also strong, increasing from $108.5 million in the second quarter of 2009 to $414.5 million in the second quarter of 2010, almost four times more. This performance enabled the Company to continue to grow its market shares. According to industry data, Industrial Alliance was ranked second in Canada in terms of net segregated fund sales after the first two quarters of 2010, with a 25.4% market share (fourth in 2009, with 10.1% of the market). For mutual funds, the Company is ranked fourth in terms of net sales in the first half of 2010. This result is well ahead of the Company's seventeenth place ranking in the industry in terms of assets (as at June 30, 2010).

Group Insurance: Employee Plans - Sales in this sector continue to reflect the lingering effects of the recent economic crisis that has affected business opportunities. As a result, second quarter sales amount to $13.9 million, down 34% year over year. On a positive note, the Company did well in terms of profitability, with good experience results for the third consecutive quarter.

Group Insurance: Creditor Insurance - Growth resumed in the Creditor Insurance sector, ending the second quarter with $50.8 million in sales, a 20% increase year over year. This increase is substantially higher than that of car sales, which were up 5% in Canada in the second quarter. Sales in this sector rely on car sales, since the products are distributed primarily through car dealers.

Group Insurance: Special Markets Group (SMG) - After holding its ground throughout the financial crisis, SMG had its first quarter of double-digit growth, with $28.3 million in sales, up 14% over last year. The overall improvement of economic conditions contributed to this result. This sector specializes in certain insurance markets that are not well served by traditional insurance carriers.

Group Pensions - The Group Pensions sector ended the second quarter with sales of $130.2 million, down 41% year over year. Sales in this sector can fluctuate considerably from one quarter to another due to the size of the mandates granted.

    
    -------------------------------------------------------------------------
    Sales(1)
    -------------------------------------------------------------------------
                         Second quarter          Year-to-date as at June 30
    (In millions
     of dollars,
     unless
     otherwise                          Varia-                        Varia-
     indicated)      2010      2009      tion      2010     2009       tion
    -------------------------------------------------------------------------
    Individual
     Insurance
      Minimum
       premiums      34.7      30.1        15%     64.7     56.4         15%
      Excess
       premiums       8.4       3.8       121%     18.2      9.0        102%
    -------------------------------------------------------------------------
      Total          43.1      33.9        27%     82.9     65.4         27%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Individual
     Wealth
     Management
      General fund  123.9     101.2        22%    239.9     223.4         7%
      Segregated
       funds        291.4     147.2        98%    723.6     364.9        98%
      Mutual
       funds(2)     479.3     225.4       113%  1,013.7     474.5       114%
    -------------------------------------------------------------------------
      Total         894.6     473.8        89%  1,977.2   1,062.8        86%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Group Insurance
      Employee
       Plans         13.9      21.1       (34%)    35.5      45.5       (22%)
      Creditor
       Insurance     50.8      42.4        20%     81.1      71.7        13%
      Special
       Markets
       (SMG)         28.3      24.8        14%     57.2      53.5         7%
    Group Pensions  130.2     219.9       (41%)   313.9     377.5       (17%)
    -------------------------------------------------------------------------
    

Assets Under Management and Under Administration

Strong premium growth and positive net fund entries in most activity sectors weren't quite enough to offset the stock market downturn, such that assets under management and under administration (AUM/AUA) were down 1% in the second quarter, totalling $59.9 billion as at June 30, 2010. However, AUM/AUA were up 3% for the year to date and up 11% year over year.

    
    -------------------------------------------------------------------------
    Assets Under Management and Under Administration
    -------------------------------------------------------------------------
    (In millions of          June 30,    March 31, December 31,     June 30,
     dollars)                   2010         2010         2009         2009
    -------------------------------------------------------------------------
    Assets under management
      General fund          18,623.6     18,206.0     17,626.5     16,222.5
      Segregated funds      11,669.7     11,935.1     11,450.3     10,091.3
      Mutual funds           7,019.4      7,056.4      6,615.7      5,756.4
      Other                    527.0        542.1        563.3        640.7
    -------------------------------------------------------------------------
      Subtotal              37,869.7     37,739.6     36,255.8     32,710.9
    Assets under
     administration         22,011.1     22,948.1     22,150.8     21,247.2
    -------------------------------------------------------------------------
    Total                   59,880.8     60,687.7     58,406.6     53,958.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Value of New Business

Value of New Business (VNB) reached $35.9 million ($0.43 per common share) in the second quarter of 2010, a year-over-year increase of 28%. The increase is primarily attributable to excellent sales in the Individual Wealth Management sector.

The Value of New Business is based on three components: the level of sales, profit margins and changes in the discount rate. As the following table shows, VNB grew by $10.9 million in the second quarter due to the substantial increase in sales, mainly of segregated and mutual funds, but individual insurance as well. This increase was partially offset by a $2.4 million decrease in profit margins, mainly due to changes to the valuation assumptions at the end of 2009. Finally, VNB was negatively impacted by $0.7 million resulting from the increase in the discount rate, net of changes in interest rates and expected stock market returns (the discount rate was increased from 6.50% in 2009 to 7.25% in 2010).

    
    -------------------------------------------------------------------------
    Value of New Business by Component
    -------------------------------------------------------------------------
    (In millions of dollars)                                   Year-to-date
                                                        Second        as at
                                                       quarter      June 30
    -------------------------------------------------------------------------
    Value of new business in 2009                         28.1         56.5
    Increase (decrease) in sales                          10.9         26.4
    Improvement (deterioration) of profit margins         (2.4)        (6.4)
    Increase in discount rate                             (0.7)        (1.9)
    -------------------------------------------------------------------------
    Value of new business in 2010                         35.9         74.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

FINANCIAL STRENGTH

Following are the financial strength highlights for the second quarter.

Solvency

The Company ended the second quarter with a solvency ratio of 224%, which is slightly higher than the ratio of 223% recorded as at March 31, 2010 and above the Company's 175% to 200% target range.

During the quarter, the solvency ratio benefited from reduced capital requirements related to the reduction in market value of stock market securities. However, the solvency ratio suffered slight downward pressure, primarily due to higher capital requirements related to the increase in market value of bonds, resulting from the decrease in long-term interest rates during the quarter.

Following the acquisition of American-Amicable Holding, Inc., which was completed on July 20, 2010, the solvency ratio on a pro forma basis as at June 30, 2010 amounted to 215%, which is still above the Company's target range (see below for more details on this acquisition).

    
    -------------------------------------------------------------------------
    Solvency
    -------------------------------------------------------------------------
    (In millions of
     dollars, unless         June 30,    March 31, December 31,     June 30,
     otherwise indicated)       2010         2010         2009         2009
    -------------------------------------------------------------------------
    Available capital
      Tier 1                 2,260.9      2,209.6      1,961.9      1,793.6
      Tier 2                   340.0        348.0        343.1        306.0
    -------------------------------------------------------------------------
      Total                  2,600.9      2,557.6      2,305.0      2,099.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Required capital         1,159.7      1,149.1      1,107.2      1,041.2
    Solvency ratio               224%         223%         208%         202%
    -------------------------------------------------------------------------
    

Capitalization

The Company's capital totalled $3,003.6 million as at June 30, 2010, which is 2% ($53.8 million) higher than March 31, 2010. This growth is primarily explained by the increase in retained earnings (resulting from the income for the quarter reduced by the dividends paid to common shareholders).

    
    -------------------------------------------------------------------------
    Capitalization
    -------------------------------------------------------------------------
     (In millions of         June 30,    March 31, December 31,     June 30,
       dollars)                 2010         2010         2009         2009
    -------------------------------------------------------------------------
    Equity
      Common shares            647.1        643.6        545.7        541.2
      Preferred shares         425.0        425.0        325.0        225.0
      Retained earnings      1,330.4      1,293.2      1,254.8      1,166.8
      Contributed surplus       22.7         22.2         21.6         21.0
      Accumulated other
       comprehensive income     25.6         18.1         10.5        (10.0)
    -------------------------------------------------------------------------
      Subtotal               2,450.8      2,402.1      2,157.6      1,944.0
    Debentures                 525.9        521.3        519.8        514.0
    Participating
     policyholders' account     26.9         26.4         25.7         28.1
    -------------------------------------------------------------------------
    Total                    3,003.6      2,949.8      2,703.1      2,486.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Financial Leverage

The increase in the Company's capital slightly reduced the debt ratios, from 17.7% as at March 31, 2010 to 17.5% as at June 30, 2010, if the debentures alone are considered in the debt items, and from 32.1% as at March 31, 2010 to 31.7% as at June 30, 2010 if the preferred shares are added. These ratios are in line with credit agency requirements for Industrial Alliance.

    
    -------------------------------------------------------------------------
    Debt Ratio
    -------------------------------------------------------------------------
                             June 30,    March 31, December 31,     June 30,
                                2010         2010         2009         2009
    -------------------------------------------------------------------------
    Debentures/capital          17.5%        17.7%        19.2%        20.7%
    Debentures + preferred
     shares/capital             31.7%        32.1%        31.3%        29.7%
    -------------------------------------------------------------------------
    

Book Value per Common Share and Market Capitalization

Industrial Alliance's book value per common share continued to grow in the second quarter, reaching a new record high of $24.20 as at June 30, 2010, up 2% compared to March 31, 2010. This growth was primarily driven by the increase in retained earnings (resulting from the income for the quarter reduced by the dividends paid to common shareholders).

The Company's market capitalization amounted to $2,919.7 million as at June 30, 2010, down very slightly from March 31, 2010. This change is comparable to that of Industrial Alliance's stock price, which decreased from $35.00 as at March 31, 2010 to $34.90 as at June 30, 2010.

The Company had 83,659,871 issued and outstanding common shares as at June 30, 2010, compared to 83,491,771 as at March 31, 2010. The increase during the quarter comes from the issuance of 168,100 common shares following the exercise of options under the Company's stock option plan.

    
    -------------------------------------------------------------------------
    Book Value per Common Share and Market Capitalization
    -------------------------------------------------------------------------
    (In millions of
     dollars, unless         June 30,    March 31, December 31,     June 30,
     otherwise indicated)       2010         2010         2009         2009
    -------------------------------------------------------------------------
    Book value per common
     share                    $24.20       $23.68       $22.77       $21.41
    Market capitalization    2,919.7      2,922.2      2,592.5      2,068.7
    -------------------------------------------------------------------------
    

QUALITY OF INVESTMENTS

There were few changes to the composition and quality of the Company's investments in the second quarter. The majority of the portfolio is made up of fixed-income securities and the overall quality remains very high. Following are the highlights of the second quarter.

Composition of Investments

The Company's investment portfolio is composed of various categories of assets, the main ones being bonds, mortgage loans, stocks and real estate. The total value of the portfolio grew by $408.3 million in the second quarter, from $17,005.3 million as at March 31, 2010 to $17,413.6 million as at June 30, 2010, an increase of 2%. Most of this increase is attributable to net purchases of new bonds and growth in the fair market value of these securities, a result of the drop in interest rates during the quarter.

Except for a slight increase in the proportion of bonds (0.8 percentage points), a result of the investment activities for these securities, and the impact of the previously mentioned interest rates, the distribution of investments by asset category did not change significantly in the second quarter. The stock portfolio decreased slightly (0.9 percentage points), as the market value of these securities were affected by the stock market downturn in the second quarter.

    
    -------------------------------------------------------------------------
    Composition of Investments
    -------------------------------------------------------------------------
    (In millions of
     dollars, unless         June 30,    March 31, December 31,     June 30,
     otherwise indicated)       2010         2010         2009         2009
    -------------------------------------------------------------------------
    Book value of
     investments            17,413.6     17,005.3     16,490.2     15,151.7
    Distribution of
     investments by asset
     category
      Bonds                     59.3%        58.5%        57.1%        55.7%
      Mortgage loans            19.0%        19.6%        20.6%        22.8%
      Stocks                    10.7%        11.6%        11.5%        10.6%
      Real estate                3.8%         3.8%         3.9%         4.2%
      Other                      7.2%         6.5%         6.9%         6.7%
    -------------------------------------------------------------------------
      Total                    100.0%       100.0%       100.0%       100.0%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Quality of Investments

Despite concerns about the strength of the economic recovery and market volatility, the overall quality of the Company's investment portfolio remained at a very high level, and even improved in several respects.

    
    -------------------------------------------------------------------------
    Quality of Investments
    -------------------------------------------------------------------------
    (In millions of
     dollars, unless        June 30,     March 31, December 31,     June 30,
     otherwise indicated)      2010          2010         2009         2009
    -------------------------------------------------------------------------
    Net impaired investments    9.8          13.3         13.0         14.2
    Net impaired investments
     as a % of total
     investments               0.06%         0.08%        0.08%        0.09%
    Bonds - Proportion rated
     BB or lower               0.18%         0.21%        0.07%        0.15%
    Mortgage loans -
     Delinquency rate          0.22%         0.34%        0.36%        0.30%
    Real estate - Occupancy
     rate                      94.2%         93.9%        94.4%        94.2%
    -------------------------------------------------------------------------

    - In terms of credit, no new bonds defaulted during the quarter and no
      new provisions were posted in the books.

    - Net impaired investments decreased during the quarter, from
      $13.3 million as at March 31, 2010 to $9.8 million as at June 30, 2010,
      representing just 0.06% of total investments (0.08% as at March 31,
      2010). This decrease primarily results from the favourable settlement
      of a conventional mortgage loan in the US, which helped reduce the
      delinquency rate of the mortgage loan portfolio, from 0.34% as at
      March 31, 2010 to 0.22% as at June 30, 2010.

    - The overall quality of the bond portfolio remains very high. The
      proportion of bonds rated BB or lower decreased from 0.21% as at
      March 31, 2010 to 0.18% as at June 30, 2010. This decrease is primarily
      attributable to the sale of a bond during the quarter.

    - The real estate occupancy rate improved slightly during the quarter
      (94.2% as at June 30, 2010 compared to 93.9% as at March 31, 2010) and
      the market value of the real estate portfolio is still much higher than
      the book value (the market to book value ratio was 125.5% as at
      June 30, 2010 compared to 126.3% as at March 31, 2010).

    - The Company received $1.4 million in repayments of principal for the
      notes resulting from non-bank sponsored asset-backed commercial paper
      (ABCP) in the second quarter (total repayments of $3.6 million for the
      year to date). Industrial Alliance's exposure to ABCP was reduced to
      $87.4 million as at June 30, 2010 (compared to $88.8 million as at
      March 31, 2010). The overall devaluation due to credit risk taken for
      the ABCP amounted to $35.6 million as at June 30, 2010, which is equal
      to 40.7% of the nominal value of the ABCP held. The Company believes
      that this devaluation is appropriate under the current market
      conditions.

    - With respect to events that made headlines during the quarter, the
      Company has very little direct exposure to securities issued by certain
      European countries that are currently going through a crisis in their
      public finances. Industrial Alliance also has very little direct
      exposure to securities that have received the most media attention in
      the last two years. The Company has no investments in the US subprime
      mortgage loan market, no investments in US automobile manufacturers, no
      investments in monolines, and a $22.6 million investment in the
      securities of UK financial institutions (the Company no longer holds
      capital notes in UK companies following the sale of a bond during the
      quarter).
    

Finally, still in terms of investment quality, the following two statistics on institutional fixed-income securities continued to improve during the quarter:

    
    - Unrealized losses on corporate fixed income securities classified as
      "available for sale" amounted to $9.5 million as at June 30, 2010,
      compared to $11.3 million as at March 31, 2010.

    - The nominal value of bonds whose market value has been 20% or more
      lower than the nominal value for six or more months amounted to
      $34.0 million as at June 30, 2010, the same level as at March 31, 2010.
      This figure, which increased during the financial crisis, reached a
      high of $111.5 million as at June 30, 2009, to subsequently decrease as
      the financial crisis abated. The unrealized losses on these bonds
      (measured according to the difference between the market value and the
      nominal value) continued to decrease in the second quarter of 2010,
      from $9.0 million as at March 31, 2010 to $8.7 million as at June 30,
      2010. Most of these securities are classified as "held for trading."
    

CREDIT RATINGS

There are no events to report concerning the credit ratings assigned to Industrial Alliance. All of the Company's credit ratings remained stable in the second quarter. In fact, Industrial Alliance's credit ratings remained stable throughout the financial crisis that began in the fall of 2008, which attests to the Company's capacity to absorb the effects of financial market upheaval and to properly manage risk under such conditions.

    
    -------------------------------------------------------------------------
    Industrial Alliance Credit Ratings as at July 26, 2010
    -------------------------------------------------------------------------
    Agency       Type of Evaluation                 Rating          Outlook
    -------------------------------------------------------------------------
    Standard     Financial Strength                 A+ (Strong)     Negative
     & Poor's    Subordinated Debentures            A               -
                 Industrial Alliance Trust
                  Securities (IATS) (global scale)  A-              -
                 Preferred Shares (global scale)    A-              -
    -------------------------------------------------------------------------
    A.M. Best    Financial Strength                 A (Excellent)   Stable
                 Issuer Credit Rating               a+              Stable
                 Subordinated Debentures            a-              -
                 Industrial Alliance Trust
                  Securities (IATS)                 bbb+            -
                 Preferred Shares                   bbb+            -
    -------------------------------------------------------------------------
    DBRS         Claims Paying Ability              IC-2            Stable
                 Subordinated Debentures            A               Stable
                 Industrial Alliance Trust
                  Securities (IATS)                 A (low)yn       Stable
                 Preferred Shares                   Pfd-2 (high)n   Stable
    -------------------------------------------------------------------------
    

SUBSEQUENT EVENTS

The Company concluded an acquisition in the US after the end of the second quarter and took an additional step toward the acquisition of a small US life insurance portfolio.

Conclusion of the Acquisition of American-Amicable Life Insurance Company in the US

On July 20, 2010, Industrial Alliance announced that it had concluded the acquisition of all outstanding shares of American-Amicable Holding, Inc. (American-Amicable). The transaction was announced on April 28, 2010. American-Amicable will operate as part of the Company's wholly-owned US subsidiary IA American Life Insurance Company (IA American). This acquisition is an important step in the Company's development strategy in the US, as it gives Industrial Alliance immediate scale and presence on the US market.

American-Amicable is a life and health insurance company that primarily markets traditional life insurance products to individuals. It is licensed to sell life insurance in 49 states and territories, and its products are marketed through a national distribution network of more than 6,000 independent agents. IA American, which now has more than 8,200 agents country-wide, will maintain both the American-Amicable platform in Waco, Texas and the IA American base in Scottsdale, Arizona.

The cost of the transaction amounted to US$145.3 million, including excess capital of $45 million, and was financed from cash on hand. It is expected to be immediately accretive to Industrial Alliance's earnings by $0.05 per common share on an annual basis. With the closing, the Company's solvency ratio as at June 30, 2010 decreased from 224% to 215% on a pro forma basis.

American-Amicable employs about 115 people, has more than 211,500 policies and $7.1 billion in in-force insurance. For the year ended December 31, 2009, total premiums amounted to $86 million and total assets amounted to $687 million. New business written over the last five years has averaged almost $24 million, representing a compound annual growth rate of 13% in its current markets. American-Amicable's balance sheet is debt-free and its portfolio is invested primarily in low-risk, fixed income securities. On March 2, 2010, its financial strength ratings were upgraded to A- (Excellent) by A.M. Best.

Approval to Acquire Golden State Mutual in the US

On July 19, 2010, through its IA American Life Insurance Company subsidiary, Industrial Alliance obtained approval from the Superior Court of Los Angeles (California) to acquire the individual life insurance portfolio of Golden State Mutual Life Insurance Company (Golden State Mutual). This approval is subject to a 60-day appeal period.

Golden State Mutual was placed under the protection of the state of California in September 2009 and in March 2010, Industrial Alliance signed a letter of intent to acquire its in-force block of business. The Company believes the transaction could be completed in the third quarter of 2010.

Founded in 1925, Golden State Mutual markets its products to retail clients. It has about 121,000 polices. In 2009, Golden State Mutual had premiums totalling US$10 million and invested assets of $70 million at the end of 2009.

DECLARATION OF DIVIDEND

The Company's good profitability and financial strength have enabled the Board of Directors to announce the payment of a quarterly dividend of $0.2450 per common share. This dividend is the same as the one announced in the last quarter. It corresponds to a payout ratio of 35.5% of earnings, which is slightly above the Company's 25% to 35% target range. The Company expects the dividend payout ratio to remain in the upper part of the target range in 2010.

Following are the amounts and dates of payment and closing of registers for the Company's common shares and the various categories of its preferred shares.

The Board of Directors has declared the payment of a quarterly dividend of $0.2450 per common share. The dividend is payable in cash on September 15, 2010, to the common shareholders of record as at August 20, 2010.

The Board of Directors has declared the payment of a quarterly dividend of $0.2875 per non-cumulative class A preferred share series B. The dividend is payable in cash on September 30, 2010, to the preferred shareholders of record as at August 27, 2010.

The Board of Directors has declared the payment of a quarterly dividend of $0.3875 per non-cumulative class A preferred share series C. The dividend is payable in cash on September 30, 2010, to the preferred shareholders of record as at August 27, 2010.

The Board of Directors has declared the payment of a quarterly dividend of $0.3750 per non-cumulative class A preferred share series E. The dividend is payable in cash on September 30, 2010, to the preferred shareholders of record as at August 27, 2010.

The Board of Directors has declared the payment of a quarterly dividend of $0.36875 per non-cumulative class A preferred share series F. The dividend is payable in cash on September 30, 2010, to the preferred shareholders of record as at August 27, 2010.

For the purposes of the enhanced dividend tax credit rules contained in the Income Tax Act (Canada) and any corresponding provincial and territorial tax legislation, all dividends paid by Industrial Alliance on its common and preferred shares since January 1, 2006 are considered to be eligible dividends. Unless otherwise indicated, all dividends paid by the Company are now eligible dividends for the purposes of such rules.

ADDITIONAL COMMENTS ON THE FINANCIAL RESULTS

Following is the presentation of the Company's second quarter 2010 financial results according to the financial statements.

Revenues

Revenues are composed of three items in the financial statements: premiums (which include the amounts invested by insureds in the Company's segregated funds, but exclude those invested by clients in mutual funds), net investment income and fees and other revenues. Revenues totalled $1.5 billion for the second quarter, which represents a 5% decrease compared to the same period the previous year, whereas for the six-month period ended June 30, 2010, revenues increased by 20%. The factors that contributed to these variations are explained below.

    
    -------------------------------------------------------------------------
    Revenues
    -------------------------------------------------------------------------
                         Second quarter          Year-to-date as at June 30
    (In millions
     of dollars,
     unless
     otherwise                          Varia-                        Varia-
     indicated)      2010      2009      tion      2010      2009      tion
    -------------------------------------------------------------------------
    Premiums      1,113.2     971.9        15%  2,385.4   1,961.3        22%
    Net invest-
    ment income     306.3     545.7       (44%)   686.5     605.9        13%
    Fees and
     other
     revenues       108.3      90.0        20%    213.3     171.1        25%
    -------------------------------------------------------------------------
    Total         1,527.8   1,607.6        (5%) 3,285.2   2,738.3        20%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Premiums totalled $1.1 billion in the second quarter of 2010, a 15% increase year over year, whereas for the first six months, premiums totalled $2.4 billion, a 22% increase year over year. These increases are primarily explained by strong sales growth in the Individual Wealth Management sector.

If mutual fund deposits are added to the premiums, premiums and deposits totalled $1.6 billion in the second quarter of 2010, up 33% year over year. This growth reflects a 113% increase in mutual fund deposits in the second quarter of 2010 compared to the same period last year. For the six-month period ended June 30, 2010, premiums and deposits were up 40%, driven by strong growth of mutual fund and segregated fund sales compared to the same period in 2009.

    
    -------------------------------------------------------------------------
    Premiums and Deposits
    -------------------------------------------------------------------------
                         Second quarter          Year-to-date as at June 30
    (In millions
     of dollars,
     unless
     otherwise                          Varia-                        Varia-
     indicated)      2010      2009      tion      2010      2009      tion
    -------------------------------------------------------------------------
    Premiums
      General
       fund         703.6     628.1        12%  1,379.0   1,258.7        10%
      Segregated
       funds        409.6     343.8        19%  1,006.4     702.6        43%
    -------------------------------------------------------------------------
      Subtotal    1,113.2     971.9        15%  2,385.4   1,961.3        22%
    Deposits -
     mutual
     funds          479.3     225.4       113%  1,013.7     474.5       114%
    -------------------------------------------------------------------------
    Total         1,592.5   1,197.3        33%  3,399.1   2,435.8        40%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

The main items that make up net investment income are: investment income as such (including interest income, dividends and net income from rental properties), the amortization of realized and unrealized gains and losses on real estate, realized gains and losses on the disposition of assets available for sale and variations in the market value of assets held for trading.

Since the adoption of the new accounting standards concerning financial instruments at the beginning of 2007, assets held for trading (other than real estate) have been accounted for at their market value. This accounting approach may lead to significant volatility of the net investment income from period to period since variations in the market value of these assets now directly influence net investment income rather than being amortized on the income statement, as was the case in the past. However, a large portion of these variations in market value are offset by corresponding variations in the provisions for future policy benefits, such that their impact on net income is largely mitigated.

Net investment income amounted to $306.3 million in the second quarter of 2010, compared to $545.7 million in the second quarter of 2009. The difference between these two amounts (a $239.4 million decrease) is primarily attributable to the decrease in the market value of the stock portfolio, a consequence of the stock market downturn. It is important to note that the majority of stocks and bonds are classified as held for trading and used as assets underlying the provisions for future policy benefits. For this reason, the impact of the decrease in net investment income on the results is largely neutralized by a corresponding increase in the provisions for future policy benefits.

For the first six months of 2010, net investment income was $80.6 million higher than the same period last year. This increase is primarily attributable to the good market performance in the first quarter of the year.

The table below provides an overview of the composition of net investment income.

    
    -------------------------------------------------------------------------
    Net Investment Income
    -------------------------------------------------------------------------
                                                             Year-to-date
                                  Second quarter            as at June 30
    (In millions of
     dollars)                   2010         2009         2010         2009
    -------------------------------------------------------------------------
    Investment income          120.8        158.1        270.2        267.1
    Amortization of
     realized and
     unrealized gains
     (losses) on real
     estate                      4.6          4.9          9.3         10.0
    Gains (losses)
     realized on assets
     available for sale          2.1          2.0          4.5          2.5
    Variation in the
     market value of
     assets held for
     trading                   178.8        382.9        402.4        328.5
    Change in provisions
     for losses                    -         (2.2)         0.1         (2.2)
    -------------------------------------------------------------------------
    Total                      306.3        545.7        686.5        605.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Fees and other revenues represent fees earned from the management of investment funds (segregated funds and mutual funds), revenues from administrative services only (ASO) contracts and fees from the Company's brokerage subsidiaries. Year over year, fees and other revenues increased by $18.3 million in the second quarter and by $42.2 million for the first six months. These increases were driven by the growth of average investment fund assets under management. Even though the stock markets declined in the second quarter of 2010, average investment fund assets were higher than last year, which is explained by good sales growth in the last few quarters and by the fact that the S&P/TSX Index grew 9% between June 30, 2009 and June 30, 2010.

Policy Benefits and Expenses

Policy benefits and expenses totalled $1.4 billion in the second quarter of 2010, a year-over-year decrease of $119.7 million, whereas for the first six months they totalled $3.1 billion, a year-over-year increase of $487.3 million. Policy benefits and expenses are made up of the items shown in the table below.

    
    -------------------------------------------------------------------------
    Policy Benefits and Expenses
    -------------------------------------------------------------------------
                                                             Year-to-date
                                 Second quarter             as at June 30
    (In millions of
     dollars)                   2010         2009         2010         2009
    -------------------------------------------------------------------------
    Variation in
     provisions for
     future policy
     benefits                  275.5        488.4        584.7        544.8
    Payments to
     policyholders and
     beneficiaries             504.9        497.4      1,050.7        973.5
    Net transfer to
     segregated funds          351.7        282.0        870.9        569.8
    Commissions                155.1        127.6        297.4        249.2
    General expenses           110.2        101.5        215.1        193.9
    Other                       43.4         63.6         89.7         90.0
    -------------------------------------------------------------------------
    Total                    1,440.8      1,560.5      3,108.5      2,621.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Provisions for future policy benefits grew by $275.5 million in the second quarter of 2010, compared to a $488.4 million increase in the second quarter of 2009, which represents a $212.9 million expense decrease for this item on the income statement. This decrease reflects the decrease in the market value of the underlying assets and largely offsets the decrease in investment income related to these assets. For the first six months of 2010, the expense related to the variation in the provisions for future policy benefits increased by $39.9 million compared to the same period last year.

The variation in provisions for future policy benefits evolves according to several factors, including the increase in premiums (upward impact on the provisions for future policy benefits), the return on the underlying assets (increase), claims incurred (decrease) and the net transfer to segregated funds (decrease). Since the new accounting standards concerning financial instruments took effect at the beginning of 2007, the variation in the market value of the assets underlying the provisions for future policy benefits (increase or decrease) must be added to this list of factors. The impact of the new accounting standards on the variation in provisions for future policy benefits has very little impact on net income, however, given that a corresponding variation in net investment income is recorded on the income statement, as explained above.

Payments to policyholders and beneficiaries in the second quarter of 2010 amounted to $504.9 million, a $7.5 million year over year increase. For the first six months of 2010, payments to policyholders and beneficiaries increased by $77.2 million. This increase reflects the normal evolution of business and the increase in the in-force block of business. Payments to policyholders and beneficiaries include benefits paid due to death, disability, illness or contract terminations, as well as annuity payments.

Year over year, net transfers to segregated funds increased by $69.7 million in the second quarter and by $301.1 million in the first six months. These increases are primarily explained by higher segregated fund sales in the Individual Wealth Management sector compared to last year. Net transfers to segregated funds are made up of amounts withdrawn from the general fund to be invested in segregated funds, less any amounts transferred from segregated funds to the general fund. Net transfers to segregated funds can vary from one period to another depending on the demand from clients, who at times favour general fund products, which usually offer guaranteed returns, and at other times are more attracted by segregated fund products, whose return fluctuates with the markets. Also, in a sector like Group Pensions, segregated fund deposits can fluctuate substantially from one quarter to another according to the size of the mandates granted by certain groups.

Year over year, commissions increased by $27.5 million in the second quarter and by $48.2 million in the first six months. The increase in commissions mainly results from higher sales in the Individual Insurance and Individual Wealth Management sectors. Commissions correspond to the remuneration of financial advisors for new sales and certain in-force contracts.

Year over year, general expenses increased by $8.7 million in the second quarter and by $21.2 million in the first six months. These increases are primarily explained by business growth, which led to an increase in payroll and an increase in expenses for medical exams and investigations, as well as an increase in the retirement plan expense. The auto and home insurance subsidiary's advertising campaign in the first quarter of 2010 also contributed to the increase in expenses.

Financial Results for the Last Eight Quarters

The following table presents a summary of Industrial Alliance's financial results for the last eight quarters.

    
    -------------------------------------------------------------------------
    Selected Financial Information
    -------------------------------------------------------------------------
    (In millions
     of dollars,
     unless
     otherwise
     indicated)   Q2/2010   Q1/2010   Q4/2009   Q3/2009   Q2/2009   Q1/2009
    -------------------------------------------------------------------------
    Revenues      1,527.8   1,757.4   1,383.2   1,692.8   1,607.6   1,130.7
    Net income
      Net income
       (net loss)
       to common
       share-
       holders       57.7      60.3      67.4      60.1      32.1      46.2
      Less: gain
       (loss)
       resulting
       from the
       variation
       in the
       fair value
       of debt
       instru-
       ments and
       underlying
       assets
       (after
       taxes)        (0.7)      1.1       5.3       1.1     (19.3)      7.5
    -------------------------------------------------------------------------
      Net income
       (net loss)
       to common
       share-
       holders on
       regular
       operations    58.4      59.2      62.1      59.0      51.4      38.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per
     common share
      Basic         $0.69     $0.74     $0.84     $0.75     $0.40     $0.58
      Diluted       $0.68     $0.73     $0.83     $0.74     $0.40     $0.58
    Earnings per
     common share
     on regular
     operations
      Basic         $0.70     $0.73     $0.77     $0.74     $0.64     $0.48
      Diluted       $0.69     $0.72     $0.77     $0.73     $0.64     $0.48
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Selected Financial Information
    -------------------------------------------------------------------------
    (In millions
     of dollars,
     unless
     otherwise
     indicated)                                           Q4/2008   Q3/2008
    -------------------------------------------------------------------------
    Revenues                                              1,043.9     818.1
    Net income
      Net income
       (net loss)
       to common
       share-
       holders                                             (110.2)     51.2
      Less: gain
       (loss)
       resulting
       from the
       variation
       in the
       fair value
       of debt
       instru-
       ments and
       underlying
       assets
       (after
       taxes)                                                 7.8       0.3
    -------------------------------------------------------------------------
      Net income
       (net loss)
       to common
       share-
       holders on
       regular
       operations                                          (118.0)     50.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per
     common share
      Basic                                                ($1.37)    $0.64
      Diluted                                              ($1.37)    $0.63
    Earnings per
     common share
     on regular
     operations
      Basic                                                ($1.47)    $0.63
      Diluted                                              ($1.46)    $0.63
    -------------------------------------------------------------------------
    

Cash Flows

Operating activities provided cash flows of $222.9 million in the second quarter, a year-over-year increase of $34.4 million. This increase reflects the normal evolution of business and variations in other assets and liabilities. A large part of the decrease in expenses associated with the variation in provisions for future policy benefits during the quarter was offset by a variation in the fair value of securities designated as "held for trading."

Investment activities used cash flows of $32.8 million in the second quarter of 2010, compared with $139.9 million in the second quarter of 2009, which represents a difference of $107.1 million. This difference primarily results from lower net purchases of bonds and stocks compared to the second quarter of 2009.

Financing activities used cash flows of $23.7 million in the second quarter of 2010, which is $0.3 million higher than the same period last year. Dividends on common and preferred shares were up over the second quarter of 2009, primarily due to new share issues in the first quarter of 2010. However, the increase was partially offset by the addition of capital which resulted from the common shares issued in the second quarter of 2010 (following the exercise of options under the Company's stock option plan).

Cash flows were up $83.9 million for the first six months of 2010, compared to a $17.7 million increase for the same period in 2009, which represents a $66.2 million difference. This difference essentially reflects changes in the normal course of operating, investment and financing activities during these periods.

    
    -------------------------------------------------------------------------
    Cash Flows
    -------------------------------------------------------------------------
                                                          Year-to-date
                               Second quarter            as at June 30
    (In millions of
     dollars)                   2010         2009         2010         2009
    -------------------------------------------------------------------------
    Cash flows related
     to the following
     activities:
      Operating                222.9        188.5        330.1        323.0
      Investment               (32.8)      (139.9)      (391.6)      (354.5)
      Financing                (23.7)       (23.4)       144.6         52.0
    Currency gain (loss)
     on cash and cash
     equivalents                 0.5         (3.5)         0.8         (2.8)
    -------------------------------------------------------------------------
    Increase (decrease)
     in cash and cash
     equivalents               166.9         21.7         83.9         17.7
    Cash and cash
     equivalents at
     beginning of period       298.9        254.5        381.9        258.5
    -------------------------------------------------------------------------
    Cash and cash
     equivalents at end
     of period                 465.8        276.2        465.8        276.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Liquidity

The Company's main source of capital is fund entries related to operations, particularly premiums, net investment income and management fees and other revenues. This capital is primarily used to pay benefits to policyholders and beneficiaries, dividends to participating policyholders, commissions, operating expenses, interest charges and dividends to shareholders. Cash flows from operating activities are generally applied to payments that will have to be made at a later date, including the payment of dividends to shareholders. The Company maintains a prudent level of liquidity in order to honour its commitments by holding a good proportion of marketable securities and by strictly managing cash flows and matching.

Given the quality of its investment portfolio, and despite the financial market volatility, the Company does not expect its liquidity level to become insufficient in the near future. Due to the nature of its operations and its matching policy, the Company regularly finds itself in a positive cash flow position. This means that fund entries are regularly higher than fund disbursements.

The Company maintains a high level of liquidity. In an extreme scenario where the Company would have to redeem all of its redeemable contracts, easily convertible assets, which represent sources of liquidity, would cover two times the liquidity needed. Hence, according to this extreme scenario, the liquidity ratio totalled 200% as at June 30, 2010 (196% as at March 31, 2010 and 190% as at December 31, 2009).

Moreover, given the difficult liquidity conditions that prevailed in the financial markets at the end of 2008 and the beginning of 2009, the Company carried out additional simulations to take into account a lower level of liquidity for certain asset categories that are normally considered very liquid. According to the most demanding scenario considered in these simulations, which assumes that it would become totally impossible to liquidate bonds other than government bonds and preferred shares, the liquidity ratio amounted to 153% as at June 30, 2010 (150% as at March 31, 2010 and 145% as at December 31, 2009).

Moreover, as at June 30, 2010, the Company had operating lines of credit totalling $66.9 million (the same amount as at March 31, 2010 and December 31, 2009). As at June 30, 2010, the Company had not used any of the lines of credit. The purpose of these lines of credit is to facilitate financing of the Company's operations and meet its temporary working capital requirements.

Derivative Financial Instruments

The Company holds derivative contracts whose cash flow exchanges are calculated using a nominal reference amount of $987.2 million as at June 30, 2010, ($990.6 million as at March 31, 2010 and $1,091.9 million as at December 31, 2009). These contracts primarily aim to alleviate risks associated with interest rate, currency and stock market fluctuations. These contracts are primarily used for matching Universal Life policies.

The current credit risk related to derivative contracts, which corresponds to the amounts payable to the Company by the different counterparties as at June 30, 2010, is $11.6 million. This amount fluctuates from one period to another according to changes in the interest rates and equity markets. For example, it was $14.4 million as at March 31, 2010 and $12.5 million as at December 31, 2009.

The future credit risk related to these contracts, which corresponds to the amount that the counterparties could potentially owe the Company according to different market scenarios, was $34.7 million as at June 30, 2010 ($35.1 million as at March 31, 2010 and $42.4 million as at December 31, 2009).

On the nominal amount of $987.2 million, 96% of the Company's credit risk for derivative financial instruments as at June 30, 2010 was related to financial institutions whose lowest credit rating was AA low, the rest being related to institutions whose credit rating was A strong.

Related Party Transactions

There were no material related party transactions to report in the second quarter of 2010.

Accounting Policies and Main Accounting Estimates

The second quarter unaudited interim consolidated financial statements have been prepared according to Canadian generally accepted accounting principles (GAAP). Note 2 to the 2009 audited consolidated financial statements on pages 89 to 95 of the 2009 Annual Report contains the main accounting policies used by the Company.

These accounting policies require that management make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as at the date of the consolidated financial statements, and the reported amounts of revenues, policy benefits, and expenses during the period. Actual results could differ from management's best estimates. The most significant estimates are related to the determination of policy liabilities, employee future benefits, the fair values of invested assets and the goodwill and intangible assets depreciation test.

No changes were made to the accounting policies used by the Company for the period.

International Financial Reporting Standards (IFRS)

The Company will adopt IFRS on January 1, 2011 and will produce its first financial statements using IFRS in the first quarter of 2011. These statements will have to comply with IAS 34, "Interim Financial Reporting," which requires the presentation of corresponding comparative financial reporting in 2010. In addition, the interim financial statements will have to include an opening balance sheet as at January 1, 2010.

In order to be ready for the transition to IFRS, the Company has established a transition plan containing three phases: 1) determination of risks; 2) implementation of new standards; and 3) conversion.

The transition plan for meeting IFRS requirements is on schedule, which ensures that the Company will be able to meet IFRS requirements. Phase 3, which is the conversion phase, is currently under way. The Company is preparing its opening balance sheet as well as its balance sheet and income statement for the first quarter of 2010 according to IFRS based on the preliminary choices it has made. During the period it will continue to monitor the parallel accounting of financial data, continue to evaluate the financial consequences and impacts of the conversion to IFRS, and complete the design of the financial statements and the notes to the financial statements according to IFRS requirements. It will also evaluate the effect of the new accounting standards on disclosure controls and procedures and internal control over financial reporting and make the necessary changes. The adoption of IFRS will not lead to any significant changes to the Company's information systems. The training and communication plans will continue throughout the year.

The project managers regularly take stock of progress in the transition plan and convey key elements of the analyses to the project steering committee, management, the Audit Committee and the Board of Directors.

IFRS1 - "First-time Adoption of International Financial Reporting Standards"

To establish the opening balance sheet, the Company made choices based on IFRS 1, "First-time Adoption of International Financial Reporting Standards." Even though the Company has not yet made its final decisions, it currently expects to take advantage of the following exemptions.

    
    -------------------------------------------------------------------------
    Business combinations    The Company will not restate acquisitions that
                             were made prior to the transition date due to
                             the complexity involved in obtaining historical
                             values and, consequently, will apply the
                             standard for business combinations
                             prospectively. This choice will not have any
                             impact on the Company's data.
    -------------------------------------------------------------------------
    Currency translation     The Company expects to reset the currency
     account                 translation gains and losses in self-sustaining
                             foreign operations, net of hedging activities,
                             to zero, which will result in an increase of
                             about $4 million in accumulated other
                             comprehensive income, and a decrease in retained
                             earnings for the same amount.
    -------------------------------------------------------------------------
    Fair value or amortized  The Company expects to use the fair value as
     cost used as presumed   presumed cost for real estate held for
     cost: real estate held  investment, which will lead to an increase of
     for investment and      about $82 million in the value of these assets.
     own-use properties      However, since all of this real estate is
                             matched to the provisions for future policy
                             benefits, it will not have any impact on
                             retained earnings.

                             For own-use properties, the Company expects to
                             use the amortized cost as presumed cost. This
                             will lead to a reduction in retained earnings of
                             about $13 million before taxes.
    -------------------------------------------------------------------------
    Reclassification of      The Company expects to use reclassification of
     financial instruments   financial assets and liabilities for certain
                             debentures and their underlying assets. This
                             choice will lead to a reduction of $11 million
                             before taxes in the book value of debentures
                             and, consequently, an $11 million increase in
                             retained earnings. The assets matching these
                             debentures will be reclassified from "designated
                             as held for trading" to "available for sale."
                             This will lead to a decrease of $9 million
                             before taxes in retained earnings and an
                             increase in the accumulated other comprehensive
                             income for the same amount. Use of this
                             transition rule will eliminate the effect of
                             volatility created in the Company's results by
                             the accounting asymmetry that currently exists
                             between these debentures and their underlying
                             assets.
    -------------------------------------------------------------------------
    

Major Differences Between IFRS and GAAP

To date, the Company has determined the following major differences between IFRS and GAAP. The differences are presented in two categories: accounting differences and reporting differences.

    
    -------------------------------------------------------------------------
    Accounting Differences
    -------------------------------------------------------------------------
    Classification of        For an insurer, one of the important aspects of
     contracts               the transition plan is the classification of
                             insurance contracts according to the definition
                             in IFRS 4, "Insurance Contracts." Since the
                             Company has classified the majority of its
                             contracts as insurance contracts, the Company
                             does not expect a material impact on its
                             results. Also, according to IFRS 4, which will
                             take effect on the changeover date, the Company
                             will continue to evaluate its provisions for
                             future policy benefits according to the Canadian
                             Asset-Liability Method (CALM). According to this
                             method, the evaluation of provisions for future
                             policy benefits is based on the book value of
                             the matched assets, which corresponds to the
                             current accounting method.

                             For the few contracts that will be classified as
                             investment contracts, no more premium income or
                             variation in the provisions for future policy
                             benefits will be posted on the income statement
                             for these contracts and, consequently, there
                             will no longer be an impact on the Company's net
                             income. The amounts for these contracts will be
                             posted directly as amounts on deposit under
                             liabilities on the balance sheet. This
                             represents about 1% of the Company's total
                             premium income. Under liabilities, these
                             contracts will either be measured at fair value
                             or at amortized cost, as chosen by the Company.
                             If they are measured at amortized cost, the
                             assets matching these liabilities will be
                             classified as available for sale according to
                             IFRS in order to reduce the matching spread.

                             A few other contracts, which are currently
                             accounted for as service contracts, will be
                             classified as insurance contracts. These
                             contracts will continue to generate the posting
                             of revenue on the income statement, but this
                             revenue will be reported under premiums rather
                             than other revenues. This represents about 1% of
                             the premium income.
    -------------------------------------------------------------------------
    Real estate held for     According to Canadian GAAP as it applies to life
     investment              and health insurance companies, the value of
                             real estate held for investment is carried at
                             the moving average market method, whereby the
                             carrying value is adjusted towards fair value at
                             a rate of 3% per quarter of unrealized gains and
                             losses.

                             According to IAS 40, "Investment Property," for
                             real estate the Company classifies as investment
                             property, the Company must choose between the
                             cost model and the fair value model. The Company
                             plans to use the fair value model and report a
                             higher value in its balance sheet for this real
                             estate than currently posted according to
                             Canadian GAAP. However, since this real estate
                             is used to match the provisions for future
                             policy benefits in the matching process, any
                             variation in the fair value will be offset by a
                             corresponding adjustment in the provisions for
                             future policy benefits, such that there will be
                             no impact on the Company's net income.
    -------------------------------------------------------------------------
    Own-use property         According to Canadian GAAP, the value of own-use
                             property is carried at the moving average market
                             method. Under IFRS, IAS 16, "Property, Plant and
                             Equipment," property that a corporation holds
                             for its own use may be valued at cost or using a
                             revaluation model, and a depreciation expense
                             for use of such property must be posted. The
                             Company intends to use the cost method to
                             evaluate its own-use property.
    -------------------------------------------------------------------------
    Earnings per share       According to GAAP, even though the Company's
     (EPS)                   IATS debentures can be converted into common
                             shares, they have no dilutive effect on the EPS
                             calculation, since they meet certain specific
                             criteria. However, since these criteria will no
                             longer exist under IFRS, these securities must
                             be considered as dilutive, which will have an
                             additional dilutive effect on the diluted EPS.
    -------------------------------------------------------------------------
    Employee future          The Company is currently reviewing the impact of
     benefits                the different choices for accounting employee
                             future benefits, both for the opening balance
                             sheet and the accounting policy to adopt. This
                             could result in a significant impact on the
                             Company's opening balance sheet.
    -------------------------------------------------------------------------
    Goodwill                 Goodwill depreciation tests will cover more
                             detailed items, namely "cash generating units"
                             according to IFRS, rather than operating units
                             according to GAAP. The Company doesn't expect
                             any write-offs in this respect on its opening
                             balance sheet.
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Reporting Differences
    -------------------------------------------------------------------------
    Segregated fund assets   While segregated fund assets and liabilities are
     and liabilities         currently reported separately from general fund
                             assets and liabilities, under IFRS they will be
                             included in the total general fund, but
                             presented on a separate line. This will add
                             about $11 billion to the general fund assets and
                             liabilities as at December 31, 2009.
    -------------------------------------------------------------------------
    Reinsurance              Reinsurance amounts are currently presented on a
                             net basis. Under IFRS, they will have to be
                             presented on a gross basis, which will have an
                             impact on certain asset and liability balances,
                             as well as certain items on the income
                             statement, but will not have an impact on the
                             net income.
    -------------------------------------------------------------------------
    Pension fund assets      According to GAAP, the pension fund is presented
                             in the financial statements at its net value
                             (liabilities minus assets). According to IFRS,
                             since the Company's pension fund assets do not
                             meet the eligibility criteria to continue this
                             presentation, the Company will have to report
                             these assets directly in the asset section,
                             without offsetting the liabilities. This will
                             increase the general fund assets and liabilities
                             by about $470 million.
    -------------------------------------------------------------------------
    Investment income and    For purposes of presentation on the income
     general expenses        statement, investment expenses are currently
                             presented as a deduction from investment income
                             in order to determine the net investment income.
                             This offsetting will no longer be allowed under
                             IFRS, which will result in an increase in
                             investment income and an increase in general
                             expenses, but will have no impact on net income.
    -------------------------------------------------------------------------
    Other income and         Commissions paid to fund brokers can no longer
     commission expenses     be offset against commission income, which will
                             increase other income and automatically increase
                             the commission expense. It will have no impact
                             on net income.
    -------------------------------------------------------------------------
    Derivatives              While it was possible to offset assets and
                             liabilities resulting from derivative products
                             under GAAP, under IFRS the Company will have to
                             present them separately. This will have no
                             impact on net income.
    -------------------------------------------------------------------------
    

The analyses performed as part of the transition to IFRS also take into account the tax aspects and incidence on the Company's regulatory capital. In this respect, the regulatory authorities will allow companies to take advantage of an option to gradually amortize the impact resulting from linear conversion over a period of two years, from the January 1, 2011 conversion date to December 31, 2012. Companies that take advantage of this option will have to do so on the conversion date and the choice will be irrevocable. Companies will also have to indicate in the notes to the financial statements that they made this choice and specify what their regulatory capital would correspond to without this choice.

The Company also monitors and analyzes changes made to IFRS given that these changes could influence the preliminary decisions. Changes are expected for financial instruments, among others. Phase I of IFRS 9, "Financial Instruments," was published in November 2009 and will take effect on January 1, 2013. Early adoption is possible, but is not authorized by the regulatory authorities.

Among the recently published Exposure Drafts, the following are of note: "Employee Benefits" (Exposure Draft published in April, dealing more specifically with defined benefit pension plans), "Provisions, Contingent Liabilities and Contingent Assets," and phase II of IFRS 9 "Financial Instruments." The Company is currently analyzing these Exposure Drafts and their impact on the Company. These Exposure Drafts should not take effect before 2013.

Significant modifications to come include phase II of IFRS 4, "Insurance Contracts," which covers the valuation and recognition of insurance contracts. This standard is currently being developed and should not take effect prior to 2013.

WARNING AND GENERAL INFORMATION

Internal Control Over Financial Reporting

No changes were made in the Company's internal control over financial reporting during the interim period ended June 30, 2010, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Non-GAAP Financial Measures

The Company reports its financial results in accordance with generally accepted accounting principles (GAAP). It also occasionally uses certain non-GAAP financial measures - adjusted data or data on regular operations - mainly concerning the profit, earnings per share and return on equity. These non-GAAP financial measures are always clearly indicated, and are always accompanied by and reconciled with GAAP financial measures. The Company believes that these non-GAAP financial measures provide investors and analysts with useful information so that they can better understand the financial results and perform a better analysis of the Company's growth and profitability potential. These non-GAAP financial measures provide a different way of assessing various aspects of the Company's operations and may facilitate the comparison of results from one period to another. Since non-GAAP financial measures do not have a standardized definition, they may differ from the non-GAAP financial measures used by other institutions. The Company strongly encourages investors to review its financial statements and other publicly-filed reports in their entirety and not to rely on any single financial measure. The data related to the solvency ratio, embedded value and the value of new business, as well as adjusted data or data on regular operations, as indicated above, are not subject to GAAP.

Forward-Looking Statements

This Management's Discussion and Analysis may contain statements relating to strategies used by Industrial Alliance 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" or "goal" or similar words or expressions. Such statements constitute forward-looking statements within the meaning of securities laws. Forward-looking statements include, but are not limited to, information concerning the Company's possible or assumed future operating results. These statements are not historical facts; they represent only the Company's expectations, estimates and projections regarding future events.

Although Industrial Alliance 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. 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. Factors that could cause actual results to differ materially from expectations include, but are not limited to: general business and economic conditions (including but not limited to performance of equity markets, interest rate fluctuations, currency rates, investment losses and defaults, movements in credit spreads, market liquidity and creditworthiness of guarantors and counterparties); level of competition and consolidation; changes in laws and regulations including tax laws; liquidity of Industrial Alliance including the availability of financing to meet existing financial commitments on their expected maturity dates when required; accuracy of information received from counterparties and the ability of counterparties to meet their obligations; accuracy of accounting policies and actuarial methods used by Industrial Alliance; insurance risks including mortality, morbidity, longevity and policyholder behaviour including the occurrence of natural or man-made disasters, pandemic diseases and acts of terrorism; failure of information systems and Internet-enabled technology; breaches of computer security and privacy; dependence on third-party relationships including outsourcing arrangements; ability to maintain Industrial Alliance's reputation; regulatory investigations and proceedings and private legal proceedings and class actions relating to practices in the mutual fund, insurance, annuity and financial product distribution industries; the ability to adapt products and services to the changing market; the ability to implement effective hedging strategies; the ability to attract and retain key executives; the ability to complete acquisitions including the availability of equity and debt financing when required for this purpose; the ability to execute strategic plans; the disruption of or changes to key elements of Industrial Alliance's or public infrastructure systems; and environmental concerns. Additional information about 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 Industrial Alliance's most recent annual report, under the "Risk Management" section of the Management's Discussion and Analysis and in the "Management of Risks Associated with Financial Instruments" note to Industrial Alliance's consolidated financial statements, and elsewhere in Industrial Alliance's filings with Canadian securities regulators, which are available for review at www.sedar.com.

Industrial Alliance does not undertake to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Management's Discussion and Analysis or to reflect the occurrence of unanticipated events, except as required by law.

Documents Related to the Financial Results

All documents related to Industrial Alliance's financial results are available on the Company's website at www.inalco.com, in the Investor Relations section, under Financial Reports. More information about the Company can also be found on the SEDAR website at www.sedar.com, as well as in the Company's Annual Information Form, which can be found on the Company website or the SEDAR website.

Conference Call

Management will hold a conference call to present the Company's results on Tuesday, July 27, 2010 at 4:00 p.m. (ET). To listen in on the conference call, dial 1 800 731-2911 (toll-free). A replay of the conference call will also be available for a one-week period, starting at 7:00 p.m. on Tuesday, July 27, 2010. To listen to the conference call replay, dial 1 800 558-5253 (toll-free) and enter access code 21474250. A webcast of the conference call (in listen only mode) will also be available on the Industrial Alliance website at www.inalco.com, as well as on the CNW website at www.cnw.ca.

About Industrial Alliance

Founded in 1892, Industrial Alliance Insurance and Financial Services Inc. is a life and health insurance company that offers a wide range of life and health insurance products, savings and retirement plans, RRSPs, mutual and segregated funds, securities, auto and home insurance, mortgage loans and other financial products and services. The fourth largest life and health insurance company in Canada, Industrial Alliance is at the head of a large financial group, which has operations in all regions of Canada, as well as in the United States. Industrial Alliance contributes to the financial wellbeing of over three million Canadians, employs more than 3,500 people and manages and administers some $60 billion in assets. Industrial Alliance stock is listed on the Toronto Stock Exchange under the ticker symbol IAG. Industrial Alliance is among the 100 largest public companies in Canada.

    
    Notes
    -----
    1) Sales (new business) are defined as follows for each sector:
       Individual Insurance: first-year annualized premiums; Individual
       Wealth Management: premiums for the general fund and segregated funds
       and deposits for mutual funds; Group Insurance: first-year annualized
       premiums for Employee Plans, including premium equivalents
       (Administrative Services Only (ASO) contracts), gross premiums
       (premiums before reinsurance) for Creditor Insurance and premiums for
       Special Markets Group (SMG); Group Pensions: premiums.

    2) Mutual fund sales include the closed end fund issued by IA Clarington
       Investments Inc. in April 2010.
    
    
    CONSOLIDATED INCOME STATEMENTS
    -------------------------------------------------------------------------

    (in millions of
     dollars, unless             Quarters ended           Six months ended
     otherwise indicated)            June 30                   June 30

                                2010         2009         2010         2009
                                   $            $            $            $
                                                 (unaudited)

    Revenues
    Premiums                   1,113          972        2,385        1,961
    Net investment
     income                      307          546          687          606
    Fees and other
     revenues                    108           90          213          171
    -------------------------------------------------------------------------
                               1,528        1,608        3,285        2,738

    Policy benefits
     and expenses
    Payments to
     policyholders and
     beneficiaries               505          498        1,051          974
    Net transfer to
     segregated funds            352          282          871          570
    Dividends,
     experience rating
     refunds and
     interest on
     amounts on
     deposit                      12            2           32           16
    Change in provisions
     for future policy
     benefits                    276          489          585          545
    -------------------------------------------------------------------------
                               1,145        1,271        2,539        2,105

    Commissions                  155          127          297          249
    Premium and other
     taxes                        19           16           36           31
    General expenses             110          102          215          194
    Financing expenses            12           45           21           42
    -------------------------------------------------------------------------
                               1,441        1,561        3,108        2,621

    Income before
     income taxes                 87           47          177          117
    Less: income taxes            23           12           47           31
    -------------------------------------------------------------------------
    Net income                    64           35          130           86
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Less: net income
     attributed to
     participating
     policyholders                 -            -            1            1
    -------------------------------------------------------------------------
    Net income
     attributed to
     shareholders                 64           35          129           85
    -------------------------------------------------------------------------
    Less: preferred
     share dividends               6            3           11            7
    -------------------------------------------------------------------------
    Net income
     available to
     common
     shareholders                 58           32          118           78
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per common
     share (in dollars)
      basic                     0.69         0.40         1.46         0.98
      diluted                   0.68         0.40         1.44         0.97


    CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------

                                            As at        As at        As at
                                          June 30  December 31      June 30
    (in millions of dollars)                 2010         2009         2009
                                                $            $            $
                                       (unaudited)               (unaudited)

    Assets
    Invested assets
    Bonds                                  10,324        9,410        8,440
    Mortgages                               3,311        3,405        3,452
    Stocks                                  1,860        1,896        1,602
    Real estate                               659          649          639
    Policy loans                              421          381          367
    Cash and cash equivalents                 466          382          276
    Other invested assets                     373          367          376
    -------------------------------------------------------------------------
                                           17,414       16,490       15,152
    Other assets                              720          646          601
    Intangible assets                         374          375          358
    Goodwill                                  116          116          112
    -------------------------------------------------------------------------

    Total general fund assets              18,624       17,627       16,223
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Segregated funds net assets            11,700       11,450       10,091
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Policy liabilities
    Provisions for future policy
     benefits                              13,987       13,392       12,371
    Provisions for dividends to
     policyholders and experience
     rating refunds                            38           60           35
    Benefits payable and provision
     for unreported claims                    152          139          172
    Policyholders' amounts on deposit         240          212          204
    -------------------------------------------------------------------------
                                           14,417       13,803       12,782

    Other liabilities                         827          772          628
    Future income tax                         368          339          318
    Net deferred gains                          8            9            9
    Debentures                                526          520          514
    Participating policyholders'
     account                                   27           26           28
    -------------------------------------------------------------------------
                                           16,173       15,469       14,279
    -------------------------------------------------------------------------

    Equity
    Share capital                           1,072          871          766
    Contributed surplus                        23           22           21
    Retained earnings and accumulated
     other comprehensive income             1,356        1,265        1,157
    -------------------------------------------------------------------------
                                            2,451        2,158        1,944
    -------------------------------------------------------------------------

    Total general fund liabilities
     and equity                            18,624       17,627       16,223
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Segregated funds liabilities           11,700       11,450       10,091
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

SEGMENTED INFORMATION

-------------------------------------------------------------------------

The Company operates principally in one dominant industry segment, the life and health insurance industry, and offers individual and group life and health insurance products, savings and retirement plans, and segregated funds. The Company also operates mutual fund, securities brokerage and trust businesses. These businesses are principally related to the Individual Wealth Management segment and are included in that segment with the Individual Annuities. The Company operates mainly in Canada and the operations outside Canada are not significant.

    
    Segmented Income Statements
     (in millions
      of dollars)         Quarters ended June 30, 2010 (unaudited)

                      Individual           Group
                             Wealth                         Other
                 Life and    Manage- Life and                acti-
                   Health      ment    Health  Pensions  vities*    Total
                        $         $         $         $         $         $

    Revenues
    Premiums          268       415       260       130        40     1,113
    Net
     investment
     income           173        32        28        72         2       307
    Fees and
     other
     revenues           9        90         2         9        (2)      108
    -------------------------------------------------------------------------
                      450       537       290       211        40     1,528
    -------------------------------------------------------------------------
    Operating
     expenses
    Cost of
     commitments
     to policy-
     holders          293       102       200       174        24       793
    Net transfer
     to segre-
     gated funds        -       331         -        21         -       352
    Commissions,
     general and
     other
     expenses         117        84        74         9        12       296
    -------------------------------------------------------------------------
                      410       517       274       204        36     1,441
    -------------------------------------------------------------------------
    Income before
     income taxes      40        20        16         7         4        87
    Less: income
     taxes             11         4         5         2         1        23
    -------------------------------------------------------------------------
    Net income
     before
     allocation
     of other
     activities        29        16        11         5         3        64
    Allocation of
     other
     activities         2         -         1         -        (3)        -
    -------------------------------------------------------------------------
    Net income         31        16        12         5         -        64
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Attributed to
     shareholders      31        16        12         5         -        64
    Attributed to
     participating
     policyholders      -         -         -         -         -         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    (in millions
     of dollars)             Quarters ended June 30, 2009 (unaudited)

                      Individual           Group
                             Wealth                         Other
                 Life and    Manage- Life and                acti-
                   Health      ment    Health  Pensions  vities*    Total
                        $         $         $         $         $         $
    Revenues
    Premiums          231       248       237       221        35       972
    Net
     investment
     income           384        33        27       100         2       546
    Fees and
     other
     revenues           3        73         3         7         4        90
    -------------------------------------------------------------------------
                      618       354       267       328        41     1,608
    -------------------------------------------------------------------------
    Operating
     expenses
    Cost of
     commitments
     to policy-
     holders          474        89       186       216        24       989
    Net transfer
     to segregated
     funds              -       186         -        96         -       282
    Commissions,
     general and
     other expenses   119        68        75        14        14       290
    -------------------------------------------------------------------------
                      593       343       261       326        38     1,561
    -------------------------------------------------------------------------
    Income before
     income taxes      25        11         6         2         3        47
    Less: income
     taxes              5         3         2         1         1        12
    -------------------------------------------------------------------------
    Net income
     before
     allocation
     of other
     activities        20         8         4         1         2        35
    Allocation
     of other
     activities         2         -         -         -        (2)        -
    -------------------------------------------------------------------------
    Net income         22         8         4         1         -        35
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Attributed to
     shareholders      22         8         4         1         -        35
    Attributed to
     participating
     policyholders      -         -         -         -         -         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    * Includes other segments and intercompany eliminations.


    (in millions
     of dollars)          Six months ended June 30, 2010 (unaudited)
                      Individual           Group
                             Wealth                         Other
                 Life and    Manage- Life and                acti-
                   Health      ment    Health  Pensions  vities*    Total
                        $         $         $         $         $         $
    Revenues
    Premiums          537       963       494       314        77     2,385
    Net
     investment
     income           438        63        49       133         4       687
    Fees and
     other
     revenues          10       180         5        18         -       213
    -------------------------------------------------------------------------
                      985     1,206       548       465        81     3,285
    -------------------------------------------------------------------------
    Operating
     expenses
    Cost of
     commitments to
     policyholders    691       192       380       358        47     1,668
    Net transfer
     to segregated
     funds              -       795         -        76         -       871
    Commissions,
     general and
     other
     expenses         213       173       140        18        25       569
    -------------------------------------------------------------------------
                      904     1,160       520       452        72     3,108
    -------------------------------------------------------------------------
    Income before
     income taxes      81        46        28        13         9       177
    Less: income
     taxes             21        12         8         3         3        47
    -------------------------------------------------------------------------
    Net income
     before
     allocation
     of other
     activities        60        34        20        10         6       130
    Allocation
     of other
     activities         5         -         1         -        (6)        -
    -------------------------------------------------------------------------
    Net income         65        34        21        10         -       130
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Attributed to
     shareholders      64        34        21        10         -       129
    Attributed to
     participating
     policyholders      1         -         -         -         -         1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    (in millions
     of dollars)         Six months ended June 30, 2009 (unaudited)
                      Individual           Group
                             Wealth                         Other
                 Life and    Manage- Life and                acti-
                   Health      ment    Health  Pensions  vities*    Total
                        $         $         $         $         $         $
    Revenues
    Premiums          458       588       470       378        67     1,961
    Net
     investment
     income           366        56        45       136         3       606
    Fees and
     other
     revenues           7       140         5        14         5       171
    -------------------------------------------------------------------------
                      831       784       520       528        75     2,738
    -------------------------------------------------------------------------
    Operating
     expenses
    Cost of
     commitments
     to policy-
     holders          559       200       368       358        50     1,535
    Net transfer
     to segregated
     funds              -       427         -       143         -       570
    Commissions,
     general and
     other
     expenses         201       137       136        19        23       516
    -------------------------------------------------------------------------
                      760       764       504       520        73     2,621
    -------------------------------------------------------------------------
    Income before
     income taxes      71        20        16         8         2       117
    Less: income
     taxes             17         6         5         2         1        31
    -------------------------------------------------------------------------
    Net income
     before
     allocation
     of other
     activities        54        14        11         6         1        86
    Allocation
     of other
     activities         1         -         -         -        (1)        -
    -------------------------------------------------------------------------
    Net income         55        14        11         6         -        86
    -------------------------------------------------------------------------
    Attributed to
     shareholders      54        14        11         6         -        85
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Attributed to
     participating
     policyholders      1         -         -         -         -         1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    * Includes other segments and intercompany eliminations.


    Segmented General Fund Assets
    (in millions
     of dollars)                 As at June 30, 2010 (unaudited)
                      Individual           Group
                             Wealth                         Other
                 Life and    Manage- Life and                acti-
                   Health      ment    Health  Pensions  vities*    Total
                        $         $         $         $         $         $
    Assets
    Invested
     assets         9,969     2,249     1,595     3,224       377    17,414
    Other
     assets           289       209        88        48        86       720
    Intangible
     assets            52       318         2         2         -       374
    Goodwill           55        41        20         -         -       116
    -------------------------------------------------------------------------
    Total          10,365     2,817     1,705     3,274       463    18,624
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    (in millions
     of dollars)                   As at December 31, 2009
                      Individual           Group
                             Wealth                         Other
                 Life and    Manage- Life and                acti-
                   Health      ment    Health  Pensions  vities*    Total
                        $         $         $         $         $         $
    Assets
    Invested
     assets         9,274     2,128     1,607     3,128       353    16,490
    Other
     assets           242       178        99        42        85       646
    Intangible
     assets            49       322         3         1         -       375
    Goodwill           55        41        20         -         -       116
    -------------------------------------------------------------------------
    Total           9,620     2,669     1,729     3,171       438    17,627
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    (in millions
     of dollars)                As at June 30, 2009 (unaudited)
                      Individual           Group
                             Wealth                         Other
                 Life and    Manage- Life and                acti-
                   Health      ment    Health  Pensions  vities*    Total
                        $         $         $         $         $         $
    Assets
    Invested
     assets         8,346      1,949    1,541     3,041       275    15,152
    Other assets      205       168        90        37       101       601
    Intangible
     assets            44       310         2         2         -       358
    Goodwill           46        46        20         -         -       112
    -------------------------------------------------------------------------
    Total           8,641     2,473     1,653     3,080       376    16,223
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    * Includes other segments and intercompany eliminations.
    


For further information: For further information: Jacques Carrière, Vice-President, Investor Relations, Office: 418 684-5275, Cellular: 418 576-3624, Email: jacques.carriere@inalco.com, Website: www.inalco.com


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