Industrial Alliance Reports Second Quarter Results - Strong operating performance across all businesses - Dividend to common shareholders increased by 7%

  • Q2 earnings up 25% to $142.2 million ($1.40 EPS)
  • Annualized ROE of 15.8%
  • AUA/AUM up 7% YoY to $112.9 billion
  • BVPS up 11% YoY to $36.11
  • Solvency ratio of 223%
  • Quarterly dividend increased to $0.30 per share


A full discussion of our results is available at under About iA, in the Investor Relations section.


QUEBEC CITY, July 30, 2015 /CNW Telbec/ - For the second quarter ended June 30, 2015, Industrial Alliance Insurance and Financial Services Inc. (TSX: IAG) reports net income attributed to common shareholders of $142.2 million, up 25% over the previous year. Diluted earnings per common share (EPS) rose to $1.40 from $1.13 a year ago, the annualized return on shareholders' equity was 15.8%, and the solvency ratio at quarter-end was 223%.

Yvon Charest, President and Chief Executive Officer commented, "This quarter was without a doubt among our best on record. Profit exceeded our guidance by a generous margin and business growth showed good momentum. We are pleased to highlight the continued momentum in our retail insurance sales, as well as our seg fund business that continues to gain market share across Canada. Our balance sheet remains solid and we have significant capital to support our internal and external growth initiatives."

René Chabot, Executive Vice-President, CFO and Chief Actuary added, "We are encouraged by the operating performance of all our businesses in the second quarter. In particular, our Individual Insurance sector had an outstanding quarter with favourable mortality, morbidity and policyholder experience, lower strain on new business and lower expenses. Other gains came from our auto and home subsidiary, our car dealer business, our hedging program and a tax recovery. With the excellent profit contribution and the increase in long-term interest rates during the quarter, our solvency ratio at quarter‑end is comfortably above our guidance and we have the flexibility to act on growth opportunities."



Second quarter

Year-to-date at June 30

(In millions of dollars, unless otherwise indicated)







Net income attributed to shareholders







Less: preferred share dividends







Less: premium on preferred share redemption


Net income attributed to common shareholders







Earnings per common share (diluted)







Return on common shareholders' equity 1



160 bps



10 bps

June 30, 2015

March 31, 2015

December 31, 2014

June 30, 2014

Solvency ratio





Book value per share





Assets under management and administration





Net impaired investments as a % of total investments





1 Annualized for the quarter. Trailing twelve months for the year to date.



Profitability - For the second quarter ended June 30, 2015, Industrial Alliance reports net income attributed to common shareholders of $142.2 million, an increase of 25%  over the previous year. Diluted earnings per share of $1.40  compare with $1.13 in the same quarter a year ago. The annualized shareholders' return on equity was 15.8% versus 14.2% a year earlier, well above the guidance of 11.0% to 12.5% provided by management to the financial markets for 2015.

The key elements that explain profitability follow. All figures are after taxes unless otherwise indicated.

Expected profit on in-force increased by 15% to $132.5 million pre-tax over the same quarter last year, which is attributed mainly to the retail insurance and wealth management sectors. In addition, Industrial Alliance realized a net experience gain of $25.7 million pre-tax ($0.18 EPS) for the quarter. A detailed analysis of gains and losses follows.

Individual Insurance reported a net experience gain of $0.09 per share ($9.5 million). Favourable mortality ($0.08 EPS) and other experience gains including morbidity, policyholder experience and expenses ($0.06 EPS) were partially offset by a loss of $0.05 EPS related to the drop in equity markets during the quarter.

Individual Wealth Management had an experience gain of $0.08 per share ($8.2 million) attributed to its dynamic hedging program for the segregated fund guarantee.

Group Insurance reported an experience gain of $0.01 per share ($1.1 million) related to lower claims in the P&C business of its Dealers Services division.

Group Savings and Retirement results were in line with expectations for the quarter.

Strain - In the Individual Insurance sector, strain on new business amounted to $15.2 million pre-tax, or 25% of sales, compared with guidance of 30% for the quarter. Management estimates that the lower strain ratio, which is attributed to higher sales and a favourable product mix, represented a gain of $0.02 per share.

Income on capital - Total income on capital of $20.2 million pre-tax compares with $13.6 million in the previous quarter. The increase in the second quarter is mainly attributed to an improved performance by IA Auto and Home after a particularly difficult first quarter.

Income taxes - The Company realized a tax recovery of $0.17 per share in the quarter related principally to tax‑exempt investment income under its status as a multinational insurer.

Business Growth - Premiums and deposits of $1.9 billion were up 11% over the previous year mainly attributed to higher wealth management gross inflows in both the individual and group sectors. Total assets under management and administration of $112.9 billion were up by 7% over the last twelve months but receded by 2% in the second quarter as a result of the drop in equity markets.

In retail insurance, business growth continued to maintain good momentum for the third quarter in a row. Total sales of $61.7 million (+11%) reflect growth in minimum premiums in Canada (+6%) and the US (+30%). Sales in our adjustable disability business, which is continuing its successful rollout to new markets across Canada, were up by 13%.

In retail wealth management, gross sales of segregated funds increased to $366.5 million (+25%) reflecting the ongoing deployment of our cross-Canada distribution strategy; net inflows more than doubled to $88.8 million in the quarter. Gross inflows of mutual funds amounted to $383.0 million (-11%) and outflows were $165.1 million for the quarter.

The group insurance sector had an excellent quarter with total sales of $222.7 million (+13%), Employee Plans had growth of $25.3 million (+212%) reflecting the addition of several new groups to its in-force. Special Markets Solutions also had a strong quarter with sales of $41.8 million (+11%). In Dealer Services, sales totalled $56.4 million (+21%) in P&C products and $99.2 million (-6%) in creditor insurance for an overall increase of 2%.

In Group Savings and Retirement, sales were $342.3 million, 66% higher than the previous year, reflecting several fund transfers in its capital accumulation segment.

Capital - At June 30, 2015, the solvency ratio was 223% compared with 211% at the end of the previous quarter. The improvement reflects the increase in interest rates during the quarter (+8%), the higher contribution from second‑quarter earnings (+3%) and the decrease in equity markets (+1%).

Dividend - The Board of Directors increased the quarterly dividend by 7% to 30 cents per share on the Company's outstanding common shares. This dividend is payable on September 15, 2015 to shareholders of record at August 21, 2015.

Dividend Reinvestment and Share Purchase - Registered shareholders wishing to enroll in the Company's Dividend Reinvestment and Share Purchase Plan so as to be eligible to reinvest the next dividend payable on September 15, 2015 must ensure that the duly completed form is delivered to Computershare no later than 4:00 p.m. on August 14, 2015. Enrollment information is provided on the Company's website at under About iA, in the Investor Relations/Dividends section.

Market Guidance for 2015

  • Earnings per common share: target range of $3.80 to $4.20
  • Return on common shareholders' equity (ROE): target range of 11.0% to 12.5%
  • Solvency ratio: target range of 175% to 200%
  • Dividend payout ratio: payout range of 25% to 35% with the target being the mid-point
  • Effective tax rate: target range of 18% to 20%
  • Strain on new business: 30% ±5% of sales

Guidance for ROE and earnings per common share excludes any potential reserve strengthening in 2015.


Non-IFRS Financial Information
The Company reports its financial results in accordance with International Financial Reporting Standards (IFRS). It also publishes certain non-IFRS financial measures that do not have an IFRS equivalent, including sales, value of new business and solvency ratio, or which have an IFRS equivalent such as data on operating profit and income taxes on earnings presented in the sources of earnings table. The Company also uses non-IFRS adjusted data in relation to net income, earnings per share and return on equity. These non-IFRS financial measures are often accompanied by and reconciled with IFRS financial measures. The Company believes that these non-IFRS financial measures provide investors and analysts with additional information to better understand the Company's financial results as well as assess its growth and earnings potential. Since non-IFRS financial measures do not have a standardized definition, they may differ from the non-IFRS 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.

Conference Call
Management will hold a conference call to present the Company's results on Thursday, July 30, 2015, at 2:00 p.m. (ET). To listen in on the conference call, dial 1-800-738-1032 (toll-free). A replay of the conference call will also be available for a one‑week period, starting at 4:30 p.m. on July 30, 2015. To listen to the conference call replay, dial 1‑800‑558‑5253 (toll-free) and enter access code 21769436. A webcast of the conference call (in listen only mode) will also be available on the Industrial Alliance website at

Documents Related to the Financial Results
For a detailed discussion of the Company's second quarter results, investors are invited to consult the MD&A for the quarter ended June 30, 2015, related consolidated financial statements and accompanying notes as well as our supplemental information package, all of which are available on the Industrial Alliance website at under About iA, in the Investor Relations section and on SEDAR at

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 in the "Risk Management" section of the 2014 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

The forward-looking statements in this news release reflect the Company's expectations as of the date of this press release. 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 iA Financial Group
Founded in 1892, iA Financial Group offers life and health insurance products, savings and retirement plans, RRSPs, mutual and segregated funds, securities, auto and home insurance, mortgages and car loans and other financial products and services for both individuals and groups. It is one of the four largest life and health insurance companies in Canada and one of the largest publicly-traded companies in the country. iA Financial Group stock is listed on the Toronto Stock Exchange under the ticker symbol IAG.


SOURCE Industrial Alliance Insurance and Financial Services Inc.

For further information: Investor Relations : Grace Pollock, Office: 418 780-5945, Email:; Media Relations : Pierre Picard, Office: 418 684-5000, ext. 1660, Email:


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