Industrial Alliance Announces an Offering of $250 million of Subordinated Debentures and the Redemption of all Outstanding 5.13% Subordinated Debentures due 2019

Not for distribution to U.S. newswire services or for dissemination in the United States.

QUEBEC CITY, May 13, 2014 /CNW Telbec/ - Industrial Alliance Insurance and Financial Services Inc. ("Industrial Alliance" or the "Company") announced today that it intends to issue $250 million principal amount of fixed/floating subordinated debentures (the "Debentures") due May 16, 2024 (the "Offering"). Subject to prior regulatory approval, Industrial Alliance may redeem the Debentures, in whole or in part, on or after May 16, 2019.

The Offering is being done on a best efforts agency basis by a syndicate of agents co-led by TD Securities Inc. and RBC Capital Markets.

The Offering is made under the short form base shelf prospectus dated April 10, 2013, which provides for the issue of up to $1 billion principal amount of securities. Complete details of the Offering are set out in the prospectus supplement dated May 13, 2014, which will be filed with the Canadian securities regulatory authorities and will be available on SEDAR at www.sedar.com.

The Offering is expected to close on or about May 16, 2014. The net proceeds will be added to the Company's general funds and will be used for general corporate purposes (including, with the prior approval of the Autorité des marchés financiers which has been obtained, the redemption, at par, of Industrial Alliance's outstanding $150 million principal amount of 5.13% subordinated debentures due June 30, 2019 (the "5.13% Debentures"), which Industrial Alliance currently intends to effect on June 30, 2014 (the "5.13% Debenture Redemption")). 

Following the closing of the Offering, Industrial Alliance intends to issue a redemption notice to redeem the 5.13% Debentures. Upon the 5.13% Debenture Redemption, Industrial Alliance will pay to the holders of 5.13% Debentures the redemption price, plus all accrued and unpaid interest thereon up to the redemption date, for a total of $1,025.65 per $1,000 principal amount of 5.13% Debentures, less any taxes required to be withheld or deducted.

On a pro forma basis, after giving effect to the Offering and the 5.13% Debenture Redemption, the Company estimates that, as at March 31, 2014: (i) its debt ratio would increase from 11.7% to 13.7% if only its outstanding debentures are considered "debt"; (ii) its debt ratio would increase from 25.2% to 26.9% if its outstanding debentures and preferred shares are considered "debt"; and (iii) its solvency ratio would increase by 5 percentage points to 217%.

Notice

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

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

The 5.13% Debenture Redemption will be made pursuant to a notice of redemption under the indenture governing the 5.13% Debentures.

Forward-looking Statements

This press release 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 other 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; 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.

Additional information about the material factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found under "Risk Factors" in Industrial Alliance's most recent annual information form, in Industrial Alliance's most recent management's discussion and analysis under "Risk Management", in the "Management of Risks Associated with Financial Instruments" and "Insurance Contract Liabilities" notes to Industrial Alliance's most recent audited consolidated financial statements, and elsewhere in Industrial Alliance's filings with Canadian securities regulators, which are available for review at www.sedar.com.

The forward-looking statements in this news release reflect the Company's expectations as of the date of this document. 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 document or to reflect the occurrence of unanticipated events, except as required by law.

About Industrial Alliance

Founded in 1892, Industrial Alliance Insurance and Financial Services Inc. operates throughout Canada as well as in the United States. The Company offers life and health insurance products, mutual and segregated funds, savings and retirement plans, securities, auto and home insurance, mortgage and car loans and other financial products and services for both individuals and groups. Ranked among the top four life and health insurance companies in Canada, Industrial Alliance is one of Canada's largest public companies and trades on the Toronto Stock Exchange under the ticker symbol IAG.

SOURCE: Industrial Alliance Insurance and Financial Services Inc.

Investor Relations, Grace Pollock, Office: 418 780-5945, Email: [email protected], Website: www.inalco.com