The President of Industrial Alliance Shares Some Reflections on the Financial Crisis at the Company's Annual General Meeting

    QUEBEC CITY, May 6 /CNW Telbec/ - Yvon Charest, President and CEO of
Industrial Alliance Insurance and Financial Services Inc., shared some
personal reflections on the current financial crisis at the company's annual
general meeting. After discussing characteristics of the crisis that most
impressed him, Mr. Charest proposed a number of ways for public authorities to
envisage solutions for preventing a similar crisis.

    Characteristics of the crisis

    Without attempting to make an exhaustive analysis of the crisis, Mr.
Charest nevertheless gave some overall impressions by presenting some of the
main characteristics of the crisis. In his opinion, the crisis has several
unique characteristics:

    - A value crisis - The crisis underwent several transformations: it
      started as a traditional bubble in the United States real estate
      market, transformed into a financial crisis, metamorphosed into an
      economic crisis, and became, in certain respects, a value crisis. As
      such, it caused us to call into question our beliefs, our doctrines and
      our ways of doing things.
    - A baby boomer crisis - The crisis was man-made: it's the result of
      recent financial inventions and public policies set up over the past
      few decades, with our support in many cases. It's the crisis of a
      generation, that of the baby boomers.
    - An unpredictable crisis - The crisis was, to a certain point,
      unpredictable: the majority of experts and qualified leaders, including
      those in charge of the economy, didn't see it coming, even if all the
      ingredients that led to the crisis were set into place under their very
    - The first globalization crisis - The crisis is the first of the
      globalization era: it covers the entire planet and shows that
      globalization, despite it beneficial effects, can have a flip side.
    - A crisis of excess - The crisis can be characterized as one of excess:
      an excess of low interest rates, which stimulate spending instead of
      saving, and encourage households to take more risks than they would
      normally take; an excess of deregulation, especially of financial
      institutions, while the securitization at the origin of the crisis
      occurred outside of any regulatory framework; excess household debt;
      and an excess of compensation for a number of corporate executives.
    - Failure of self-regulatory safeguards for the economy - The crisis
      demonstrated the limits of self-regulatory safeguards for the economy.
      Without appropriate regulation as a counterbalance to private
      interests, the economy doesn't necessarily balance itself out, rapidly
      and harmoniously.

    Possible solutions

    To prevent another crisis such as the one we're experiencing from
happening again, Mr. Charest proposed possible solutions, such as:

    - Concerted action among governments to supervise financial institutions
      on an international level, so that poorly-regulated institutions in one
      country do not "contaminate" other countries.
    - Regulation of all financial activities, both on and off balance sheet.
    - Much tougher capital requirements in countries where they are not tough
      enough. In Canada, for every dollar of capital, banks can have 20
      dollars of assets. Leverage of 1 for 20. In the US, this leverage could
      go from 1 for 45 for certain types of institutions, and in Great
      Britain, up to 1 for 60.
    - Anti-cyclical capital requirements, which would allow companies to
      build safety cushions in times of prosperity and to use them in times
      of crisis.
    - A reconsideration of accounting at fair market value, which doesn't
      take into account the long-term nature of a life insurance company's
      commitments, and which creates useless fluctuations in company results,
      which have nothing whatsoever to do with their earning power.
    - A reconsideration of the conversion to International Financial
      Reporting Standards, which risk exacerbating problems caused by
      accounting at fair market value and also risk creating even greater
      fluctuations in company results.
    - Improved disclosure and transparency, so that everyone, sellers and
      buyers on financial markets, has the same information on complex
      financial products.
    - Concerted action on an international level to fight against tax havens.
    - A thorough examination of executive compensation, which is excessive in
      some cases, which is not always tied to risk, and which should take
      into account internal fairness in a company, as well as fairness
      between peers.

    Mr. Charest concluded his speech with a comment on the public's reaction
to the current crisis. "When I saw the public outcry over executive
compensation at AIG, I realized the full extent of the power wielded by the
people. In times of crisis, I have the impression that public outrage is
powerful motivation for governments to take action. However, anger distracts
from clear thinking and detracts from sound decision making. If we don't want
the public, through its outrage, to impose solutions on us, it's best that we
ourselves put solutions in place. And the sooner the better."

    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 across Canada, as well as in the Western
United States. Industrial Alliance contributes to the financial wellbeing of
over three million Canadians, employs more than 3,400 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,;

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