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Yvon Charest, CEO of Industrial Alliance, said a series of actions taken last year aimed at securing core earnings power have strengthened the company’s capital position. (Francis Vachon For The Globe and Mail)
Yvon Charest, CEO of Industrial Alliance, said a series of actions taken last year aimed at securing core earnings power have strengthened the company’s capital position. (Francis Vachon For The Globe and Mail)

Industrial Alliance caps record year with $73.8-million Q4 profit Add to ...

Industrial Alliance Insurance and Financial Services Inc. capped a record year in 2012 by swinging to a profit available to common shareholders of $73.8-million in the fourth quarter, the first period since it sold its U.S. annuities business.

The Quebec City-based insurance giant earned 78 cents per share for the period ended Dec. 31, compared with a loss of 90 cents per share the previous year when net losses reached $81.2-million. Revenues decreased 24 per cent to $1.76-billion, including $1.2-billion for net premiums.

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Adjusting for a number of one-time items, including a nearly $20-million strengthening of reserves and the sale of the U.S. business, diluted earnings were $1.03 per share, compared with 78 cents a year ago.

For the full year, Industrial Alliance said its net income attributable to common shareholders tripled to reach a record $311.9-million, or $3.31 per share, up from $103.3-million or $1.18 per share in 2011.

Excluding the gain on the sale of its U.S. annuity business in the third quarter and year-end assumption changes, net income from continuing operations grew nearly 16 per cent to $295.7-million or $3.26 per share. That compared with $255.6-million or $2.95 per share a year ago.

Total annual revenues fell to $7.5-billion. Net premiums were flat at nearly $5-billion, but investment income decreased more than 31 per cent to $1.5-billion, partially offset by an increase in other revenues to $934-million.

Industrial Alliance CEO Yvon Charest described 2012 as “extremely gratifying” as net income grew on improvements in its retail insurance business in Canada and the United States, along with the wealth management operations.

“In terms of business growth, strong momentum continues across the organization,” he said in a news release, noting that retail insurance sales grew 16 per cent despite two price increases last year in Canada.

The U.S. operations accounted for 18 per cent of total company life sales, up from 15 per cent in 2011.

Mr. Charest said a series of actions taken last year aimed at securing core earnings power had strengthened the company’s capital position. “With a solvency ratio of 230 per cent, we have the room to absorb significant macroeconomic shocks, as well as the flexibility to consider growth opportunities.”

Industrial Alliance said it gained $3.6-million from the improvement in the stock market, while the individual insurance segment added $5.3-million.

Group insurance lost $3.5-million, primarily related to unfavourable group life and health experience, while long-term disability was in line with expectations.

Total pre-tax income on capital grew to $31.3-million in the fourth quarter, primarily due to gains on the sale of a block of mortgages, offset by lower gains on assets available for sale and a weaker contribution from IA Auto and Home.

Assets under management and administration grew 14 per cent from last year to $83.3-billion at year-end.

Premiums and deposits were stable at $1.8-billion in the fourth quarter, while individual insurance sales grew eight per cent to $69.2-million.

Individual Wealth Management gross sales increased to $762.1-million, driven by a more than doubling of mutual fund sales to $173.4-million.

Group insurance sales increased 20 per cent to $108.2-million, while employee plans increase to $7.9-million.

Founded in 1892, Industrial Alliance is the fourth-largest life and health insurance company in Canada, with more than three million customers and 4,300 employees. It manages and administers more than $83-billion in assets.

Founded in 1892, Industrial Alliance is the fourth-largest life and health insurance company in Canada, with more than three million customers and 4,300 employees. It manages and administers more than $83-billion in assets.

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