Industrial Alliance Publishes its 2008 Management's Discussion and Analysis and Financial Statements, and Discloses its Embedded Value



    The Company declares a dividend of $0.2450 per common share

    QUEBEC CITY, Feb. 13 /CNW Telbec/ - Industrial Alliance Insurance and
Financial Services Inc. ("Industrial Alliance" or "the Company") published its
Management's Discussion and Analysis and financial statements today for the
year ended December 31, 2008. The primary aspects of the Company's financial
results were disclosed in a news release on January 26, 2009, and the
financial results published today are consistent with those results. The
Management's Discussion and Analysis and financial statements are available on
the Company's website (www.inalco.com) and have also been filed on the SEDAR
site (www.sedar.com).

    Declaration of Dividend

    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 March 16, 2009
to the common shareholders of record as at February 24, 2009.
    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 March 31, 2009 to the preferred shareholders of record
as at February 27, 2009.
    The board of directors has declared the payment of a quarterly dividend
of $0.5391 per non-cumulative class A preferred share series C. The dividend
is payable in cash on March 31, 2009 to the preferred shareholders of record
as at February 27, 2009.
    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.

    Embedded Value

    The Company disclosed its embedded value for 2008. As at December 31,
2008, Industrial Alliance's embedded value was $2,510 million, or $31.26 per
common share. This is down 7.2% from the value calculated as at December 31,
2007, before the payment of dividends to common shareholders, and down 9.9%
after the payment of these dividends. The decrease in embedded value can
primarily be explained by the stock market downturn in 2008 (the S&P/TSX index
of the Toronto Stock Exchange lost 35% of its value) and by the reduction in
interest rates.
    Recurring items, which are those over which the Company has a certain
amount of control, increased the embedded value by 11.2% in 2008. Since the
Company began calculating its embedded value, recurring items have always
grown embedded value by low double digits.
    Embedded value was affected by several non-recurring items in 2008. These
items led to a $6.66 decrease in embedded value per common share (or 19.1%).
The most significant non-recurring item was the stock market downturn, which
reduced embedded value per common share by $5.35 (or 15.3%).
    The year-end changes in assumptions regarding the provisions for future
policy benefits, combined with a reduction in the discount rate (from 7.25% to
6.50%) and the return on shareholders' equity used to calculate embedded value
(from 4.25% to 3.50%), led to a decrease in embedded value per common share of
$0.70 (or 2.0%).
    The Company continues to stand out through its capacity to generate
profitable new business. The value of new sales reached $1.53 per common share
in 2008, which helped to increase embedded value by 4.4%. The embedded value
of new business is particularly significant, as it allows for a judgment to be
made on the profitability of the products and services offered by the Company.
    The embedded value/book value ratio decreased slightly, from 1.66x as at
December 31, 2007 to 1.54x as at December 31, 2008.

    
    -------------------------------------------------------------------------
    Embedded Value
    -------------------------------------------------------------------------
                                                                    Embedded
                                                  Contribution         Value
                                        Embedded   to embedded    per common
                                           value         value         share
                                       ($Million)           (%)           ($)

    Embedded value as at December 31,
     2007                                  2,787             -         34.92
    Recurring items
      Expected growth of embedded value      188           6.8          2.36
      New sales                              123           4.4          1.53
    -------------------------------------------------------------------------
      Subtotal                               311          11.2          3.89
    Non-recurring items
      Experience gains (losses) -
       related to the equity markets        (427)        (15.3)        (5.35)
      Experience gains (losses) - other      (37)         (1.4)        (0.47)
      Changes in assumptions (including
       the discount rate and the return
       on shareholders' equity)              (56)         (2.0)        (0.70)
      Changes to the solvency requirements    66           2.4          0.83
      Acquisitions                           (67)         (2.4)        (0.84)
      Decrease in value of non-bank ABCP     (11)         (0.4)        (0.13)
    -------------------------------------------------------------------------
      Subtotal                              (532)        (19.1)        (6.66)
    Changes in the capital structure          19           0.7          0.05
    -------------------------------------------------------------------------
    Total variation in embedded value
     in 2008                                (202)         (7.2)        (2.72)
    -------------------------------------------------------------------------
    Embedded value as at December 31,
     2008, before dividends                2,585             -         32.20
    Dividends paid to common
     shareholders                            (75)         (2.7)        (0.94)
    -------------------------------------------------------------------------
    Embedded value as at December 31,
     2008                                  2,510          (9.9)        31.26
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    To calculate embedded value, the Company uses a number of assumptions
that reflect the current financial environment and that are consistent with
the best estimates used by the appointed actuary in evaluating the provisions
for future policy benefits. One of these assumptions is the risk premium. Like
in past years, to calculate the embedded value as at December 31, 2008, the
Company used a risk premium of 3%. Given the current financial environment and
the importance that risk premium has gained in the economy, the Company used
an additional test this year to measure the impact of a 3% increase in the
risk premium. This test shows that a 3% increase in the risk premium would
lead to a 29% or $735 million decrease in embedded value ($9.15 per common
share). Embedded value would then amount to $1,775 million, or $22.11 per
common share.

    Normal Course Issuer Bid

    With the approval of the Toronto Stock Exchange, the Board of Directors
of Industrial Alliance Insurance and Financial Services Inc. has authorized
the Company to purchase in the normal course of its activities, from February
18, 2009 to February 17, 2010, up to 3,900,000 common shares, representing
approximately 4.86% of its 80,330,771 common shares issued and outstanding on
February 11, 2009.
    Under this authorization, the purchases will be made at market prices
through the facility of the Toronto Stock Exchange in accordance with its
rules and policies. The common shares thereby purchased will be cancelled.
    The average daily trading volume of the Company's common shares was
283,604 on the TSX over the last six completed calendar months (the ADTV).
Accordingly, since the Company is entitled to purchase up to 25% of the ADTV
on any trading day, it can purchase 70,901 common shares per day.
    Industrial Alliance believes that the purchase of its common shares would
represent an effective use of its funds and would be in the best interests of
the Company and its shareholders.
    The Company may, subject to obtaining the prior written approval of the
Exchange, enter into derivative transactions in the normal course of business,
including forward contracts, pursuant to which it may acquire its common
shares.
    Under normal circumstances, the Company uses its normal course issuer bid
to eliminate any dilutive effect caused by the issuance of common shares as
part of the stock option plan or when business is acquired. However, the
Company does not plan to buy back its shares to eliminate the dilutive effect
caused by the issuance of common shares as part of the stock option plan until
the financial situation in Canada becomes more stable.
    Shareholders may obtain a free copy of the documents filed with the
Exchange concerning this Bid by writing to the Corporate Secretary of
Industrial Alliance.

    Buy-Back of Shares

    Under the current normal course issuer bid, which began on February 15,
2008 and will end on February 14, 2009, so far the Company has purchased
134,350 common shares at an average price of $35.96 per share, for a total
amount of approximately $4.8 million. The common shares thus purchased were
cancelled.
    These purchases were made to eliminate the dilutive effect of the common
shares issued in 2008 as part of the Company's stock option plan and the
acquisition of Excellence Life Insurance Company (the acquisition of
Excellence was completed on January 31, 2008).
    The Company does not expect to make any further purchases in the days
remaining before expiry of the current normal course issuer bid.

    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 - 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,
as indicated above, are not subject to GAAP.

    Forward-Looking Statements

    This news release may contain forward-looking statements about the
operations, objectives and strategies of Industrial Alliance, as well as its
financial situation and performance. The forward-looking nature of these
statements can generally, though not always, be identified by the use of words
such as "may," "expect," "anticipate," "intend," "believe," "estimate,"
"feel," "continue," or other similar expressions, in the affirmative, negative
or conditional. Unless otherwise indicated, any forward-looking information
that presents prospective results of operations, financial position or cash
flows was approved by management on the date of this news release.
    Forward-looking statements entail risks and uncertainties that may cause
the actual results, performance or achievements of Industrial Alliance to
differ materially from the future results, performance or achievements
expressed or implied by the forward-looking statements. Factors that could
cause the Company's actual results to differ from expected results include
changes in government regulations or tax laws, competition, technological
changes, global capital market activity, interest rates, changes in
demographic data, changes in consumer behaviour and demand for the Company's
products and services, catastrophic events, and general economic conditions in
Canada or elsewhere in the world. A description of significant factors that
could affect forward-looking statements is contained in the Management's
Discussion and Analysis section of the Company's most recent annual report.
    This list is not exhaustive of the factors that may affect any of
Industrial Alliance's forward-looking statements. These and other factors must
be examined carefully and readers should not place undue reliance on
Industrial Alliance's forward-looking statements. Where the forward-looking
statements are presented as guidance regarding the future financial results of
Industrial Alliance, they are provided to help investors understand the impact
on earnings of the Company's current plans and objectives. The Company may
also provide objectives from time to time. An objective should be interpreted
as a statement of management's goals in managing the Company, and not
necessarily as a forecast that the objective will be met.
    Industrial Alliance is not obligated to revise or update these
forward-looking statements to reflect events, circumstances or situations that
occur after the date of this news release, whether or not foreseeable, except
as required by applicable securities legislation.

    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 Company's products and services are
offered on both an individual and group basis. The fourth largest life and
health insurance company in Canada, Industrial Alliance is at the head of a
large financial group, which has operations across Canada as well as in the
Western United States. Industrial Alliance contributes to the financial
well-being of over 3 million Canadians, employs more than 3.300 people and
manages and administers over $49 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.




For further information:

For further information: Jacques Carrière, Vice-President, Investor
Relations, Office: (418) 684-5275, cell: (418) 576-3624,
jacques.carriere@inalco.com; www.inalco.com


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