The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from CNW Group

Industrial Alliance Announces Fourth Quarter Results

Friday, February 18, 2011

Industrial Alliance Announces Fourth Quarter Results10:30 EST Friday, February 18, 2011Earnings and Business Growth Outperform Record YearQUEBEC CITY, Feb. 18 /CNW Telbec/ - Industrial Alliance Insurance and Financial Services Inc. ("Industrial Alliance" or "the Company") announces its results for the fourth quarter ended December 31, 2010.  A detailed discussion of the fourth quarter results is provided in this release, while documents related to the full-year results are available on the Company's website at www.inalco.com.Industrial Alliance ended the fourth quarter with net income to common shareholders of $67.4 million, representing diluted earnings per share of $0.80 and a return on common shareholders' equity of 12.7% on an annualized basis. These results reflect adjustments related to the year-end review of actuarial assumptions and income taxes.Business growth maintained strong momentum for the fifth consecutive quarter. Premiums and deposits increased 15% year over year to reach a new high of almost $1.8 billion, driven by strong sales in the Individual Insurance and Wealth Management sectors. Net sales of segregated and mutual funds gained 66% in the fourth quarter, putting Industrial Alliance in 1st place for net sales of segregated funds and 7th for net sales of mutual funds in 2010. At December 31, 2010, assets under management and administration of $66.9 billion also reached a new high under the effect of the strong increase in premiums and deposits, net fund entries in most sectors and stock market growth."We are clearly pleased by the exceptional top-line performance in the fourth quarter," stated Yvon Charest, President and Chief Executive Officer. "Our ongoing business initiatives to expand our distribution networks and geographic presence, together with the continued strength of the stock markets, came together in the recent quarter and allowed us to surpass our best year on record in 2007 for both growth and profitability.""2010 was a great success in terms of growth but long-term interest rates were a challenge,' added Mr. Charest. "As part of our year-end review and consistent with our long-term, prudent approach to managing our actuarial reserves, we made adjustments to certain valuation assumptions and put in place a series of management initiatives to alleviate the drop in interest rates. On the reserving side, we lowered our URR by 20 basis points to 3.7% at the end of 2010, below the allowed maximum of 4.0%, and recognized a 47 basis point decrease in our IRR.  Our management actions focused on initiatives to reduce re-investment risk, improve asset-liability matching and increase long-term returns.""In line with our business model, all of these measures were taken without compromising our underlying fundamentals," concluded Mr. Charest. "Not only did we maintain the quality of our investment portfolio and our dividend to common shareholders, but our earnings per share, return on shareholders' equity and solvency ratio all finished well within our target range for 2010." Highlights Fourth quarterYear(In millions of dollars, unless otherwise indicated)2010200920102009Net income to common shareholders67.467.4250.8205.8Earnings per common share (diluted)$0.80$0.83$2.99$2.55Return on common shareholders' equity12.7%14.9%12.6%11.9%Premiums and deposits1,781.91,546.86,621.25,231.2 December 31, 2010   September 30, 2010   December 31, 2009Assets under management and administration66,879.064,051.458,406.6Solvency ratio205%211%208%Net impaired investments22.816.013.0Net impaired investments as a % of total investments0.12%0.09%0.08%    Fourth Quarter HighlightsYear-end review of assumptions and income taxes - The Company completed its usual year-end review of actuarial assumptions and  income tax position. The combined effect of these two analyses increased net income by $2.1 million ($0.03 per common share). This increase is the net result of a pre-tax reserve strengthening of $11.3 million ($8.4 million after taxes) and a $10.5 million reduction in income taxes. The latter is explained by a reduction in future income taxes and, to a lesser extent, tax recoveries.As part of its year-end review, the Company strengthened its reserves and changed certain valuation assumptions used in the calculation of its actuarial reserves.The Company recognized a 47 basis point decrease in its initial reinvestment rate (IRR), which declined 62 basis points in the first nine months of 2010, before regaining 15 points in the last quarter.The Company reduced its ultimate reinvestment rate (URR) by 20 basis points, from 3.9% at the end of 2009 to 3.7% at the end of 2010, to reflect the downward trend in long-term interest rates. According to the Canadian Institute of Actuaries, the maximum URR allowed at the end of 2010 was 4.0%, and assuming that interest rates remain at their December 31, 2010 level, declines to 3.8% at the end of 2011 and 3.6% at the end of 2012. This means that the Company would not have to strengthen its reserves for the URR before 2012.In addition to strengthening its reserves for the IRR and URR, the Company took a number of management actions impacting assets totalling $1.0 billion to alleviate the drop in interest rates. They include:Continued development of its inter-segment note program to allow for the exchange of cash flows among activity sectors. This exchange offers the possibility of investment for a longer term and at higher rates, as well as reducing re-investment risk, mainly for the Individual Insurance sector.Following an in-depth review of the Company's commitments, some assets were repositioned and the maturity of certain investments was deferred to better match the liabilities that they back. These changes are particularly advantageous for the Individual Insurance sector.Forward price agreements were concluded with certain financial institutions in order to protect reinvestment rates for fixed income securities that mature in the future.Assets were re-allocated so that the proportion of stocks backing long-term liabilities increased by 3% (from 15% to 18%).The Company adopted a new mortality table published for individual insurance in 2010 and updated its mortality assumptions based on experience in the Individual Insurance sector. As part of its year-end review, the Company also updated its longevity assumptions for annuitants in Group Pensions and Individual Wealth Management.The Company expects that it would be able to absorb a 21% decline in equity markets and that provisions for future policy benefits would not have to be strengthened as long as the S&P/TSX remains above 10,600 points.Fair value of debt instruments - The asymmetric evolution of the market value of debt instruments and the underlying assets generated a loss of $0.6 million in the fourth quarter. Excluding this loss, the Company ended the fourth quarter with net income to common shareholders of $68.0 million, diluted earnings per common share of $0.80 and a return on common shareholders' equity of 12.8% on an annualized basis, which is near the middle of the Company's 12% to 14% target range. This is the last quarter in which debt asymmetry will impact earnings as these debt instruments will be accounted for at cost, rather than fair value, under the IFRS standards taking effect on January 1, 2011.Dividend - The Board of Directors announces the payment of a quarterly dividend of $0.2450 per common share, the same level as the last nine quarters. This corresponds to a payout ratio of 31% of net earnings, which is in the middle of the Company's 25% to 35% target range for the medium term.Business growth - Top-line growth in the fourth quarter of 2010 continued the momentum of the last four quarters.Premiums and deposits reached a new high for the fifth consecutive quarter, totalling almost $1.8 billion, up 15% over the same period last year, and the Value of New Business increased 49% to $53.8 million. The primary contributors were Individual Insurance and Individual Wealth Management, driven by strong sales and growth of the stock markets.In the Individual Insurance sector, sales reached a record level of $57.8 million, up 41% over the previous year. Sales of minimum premiums (basic life insurance) grew 25% to $46.6 million and sales of excess premiums (savings component) grew 211% to $11.2 million in the quarter.In the Individual Wealth Management sector, sales reached a new year-over-year high of $1.0 billion, up 34% over the same quarter last year. Net sales of $536.7 million were up 66% in the fourth quarter, allowing the Company to gain market share. Industrial Alliance ranked 1st for net segregated fund sales with a market share of 44.5% in the fourth quarter (4th in 2009 with 10.1%), and 7th for net sales of mutual funds in 2010 on a 17th place asset ranking.In the Group Insurance sector, sales in the Creditor Insurance and Special Markets Group sectors continued to grow for a third consecutive quarter, while sales of Employee Plans were down in the fourth quarter .In the Group Pensions sector, recurring premiums and assets under management were up in the fourth quarter, while new fund sales and net fund entries were down.Assets under management and administration reached a new high of $66.9 billion at December 31, 2010, up 4% over September 30, 2010 and 15% over the previous year.  The value of all main components increased under the effect of a strong increase in premiums, net fund entries in most sectors and stock market growth.Solvency - At December 31, 2010, the solvency ratio was 205% compared with 211% at September 30, 2010. The decrease is explained primarily by the increase in the proportion of stocks backing the reserve (from 15% to 18%) in the fourth quarter as part of a series of management actions taken in 2010 to alleviate the reduction in long interest rates, as well as the increase in the market value of stocks that lead to higher capital requirements. The solvency ratio of 205% is above the Company's 175% to 200% target range.Quality of investments - The overall quality of our investment portfolio remains very high. Items of note in the fourth quarter are as follows:At December 31, 2010, impaired loans represented 0.12% of total investments (0.09% at September 30, 2010 and 0.08% at December 31, 2009). Net impaired investments increased to $22.8 million at December 31, 2010 from $16.0 million at September 30, 2010 as a result of the addition of three US conventional mortgage loans on multi-residential properties.The delinquency rate of the mortgage loan portfolio increased to 0.47% at December 31, 2010 from 0.30% at September 30, 2010, primarily because of the three US conventional mortgage loans mentioned above.The proportion of bonds rated BB and lower decreased to 0.12% during the fourth quarter from 0.15% as at September 30, 2010, essentially attributable to the sale of corporate bonds rated BB and lower. Additionally, two private placements were added to the list of bonds rated BB and lower following a downgrade in the quarter.The nominal value of the ABCP decreased by $27.5 million in the fourth quarter to $54.8 million as at December 31, 2010. This decrease primarily results from $1.4 million in repayments of principal at par and the sale of certain notes for $25.8 million during the fourth quarter.Embedded value -As at December 31, 2010, Industrial Alliance's embedded value reached a new high of $3.5 billion or $41.56 per common share, a year-over-year increase of 20.1% before the payment of dividends to common shareholders and 17.4% after the payment of these dividends. The embedded value/book value ratio was 1.63x compared with 1.62x as at December 31, 2009.Over half of the 2010 increase (12.2% or $4.43 per common share) is explained by recurring items over which the Company has control, that is, the normal growth of the in-force business block  (6.5% or $2.41 per common share) and the value of new business (5.7% or $2.02 per common share). Non-recurring items, including equity market and other experience gains as well as changes in capital structure, accounted for the remaining increase of 7.9% ($1.16 per common share).Acquisitions - The Company announced two acquisitions in the fourth quarter, and a third subsequent to quarter-end. The first was National Warranties MRWV Limited, which sells extended warranties primarily through used car dealers in the province of Quebec (October 1, 2010) and the second was the acquisition of all the remaining issued and outstanding shares of The Excellence Life Insurance Company such that the Company is now the 100% owner (December 3, 2010). Subsequent to quarter-end, on February 14, 2011, the Company announced the acquisition of three privately-owned and related entities (V.A.G. Inc., Communications & Références Multi Assurance Direct inc. and Produits récréatifs Accès Inc.) in the province of Québec that collectively distribute creditor insurance and replacement warranty products through a network of new and used car dealers in Québec.Market guidance for 2011 - Updated guidance for 2011 is as follows:Return on common shareholders' equity (ROE): maintain the 12% to 14% target.Earnings per common share: new target range of $3.05 to $3.60 (up from the $2.75 to $3.25 range given for 2010).Solvency ratio: maintain the 175% to 200% target range.Dividend payout ratio: maintain the 25% to 35% medium-term target range. However, the Company expects the ratio to be in the middle of this range in 2011 (down from the upper part of the range in 2010).Effective tax rate: maintain the target range of 26% to 27%.Sensitivity analysis - The Company updated its sensitivity analyses as at December 31, 2010. The Company's ability to absorb potential stock market downturns remains very high. The provisions for future policy benefits will not have to be strengthened for stocks matching long-term liabilities as long as the S&P/TSX index remains above about 10,600 points. The solvency ratio will remain above 175% as long as the S&P/TSX index remains above about 9,300 points and above 150% as long as the index remains above about 7,700 points. (Refer to the "Sensitivity Analysis" in "Other Comments on the Fourth Quarter 2010 Results" for further information.)Update on International Financial Reporting Standards (IFRS) - The Company will adopt IFRS on January 1, 2011 and will produce its first financial statements using IFRS in the first quarter ending March 31, 2011.  For a full discussion of the transition to IFRS, refer to the 2010 Management's Discussion and Analysis available on the Company's website at www.inalco.com or on SEDAR at www.sedar.com.OTHER COMMENTS ON THE FOURTH QUARTER 2010 RESULTS ECONOMIC AND FINANCIAL ENVIRONMENT IN THE FOURTH QUARTER OF 2010The results of Industrial Alliance depend in part on the prevailing economic and financial environment. In this respect, the business environment continued to gain strength in the fourth quarter on the tail of the recent financial crisis. After the first nine months of 2010 during which the Company's initial reinvestment rate (IRR) dropped by 62 basis points and stock markets were marked by volatility, the fourth quarter proved to be more favourable. The Company's IRR regained 15 basis points and the S&P/TSX index rose almost 9% in the fourth quarter. The improved economic and financial environment in the fourth quarter enabled Industrial Alliance to record one of its strongest quarters ever in its Individual Insurance and Wealth Management sectors.PROFITABILITY Industrial Alliance ended the fourth quarter of 2010 with net income to common shareholders of $67.4 million, or $68.0 million adjusted for the change in the fair value of debt instruments and underlying assets. This translates into diluted earnings per common share of $0.80, and a return on common shareholders' equity of 12.7% on an annualized basis. Profitability Fourth quarterYear(In millions of dollars, unless otherwise indicated)   2010200920102009Net income to common shareholders67.467.4250.8205.8Earnings per common share (diluted)$0.80$0.83$2.99$2.55Return on common shareholders' equity   12.7%   14.9%   12.6%   11.9%     Fourth quarter profitability benefited from excellent experience gains:Stock market growth generated a pre-tax experience gain of $5.0 million ($3.6 million after tax or $0.04 per share), which is reflected in the experience gains for the Individual Insurance and Individual Wealth Management Sectors. The S&P/TSX index closed the quarter at 13,443 points and averaged 12,900 points during the quarter.Individual Insurance recorded pre-tax experience gains of $2.6 million. In addition to stock market gains (on universal life policy funds), further contribution came from the US business, which now includes American-Amicable. Changes in valuation assumptions led to a $2.2 million increase in reserves. In 2009, $68.6 million in reserves were released.Individual Wealth Management obtained a pre-tax experience gain of $8.6 million in the fourth quarter, resulting mainly from strength in the stock market and the growth of net sales. An additional gain came from the increase in the value of bond funds and the redemption of IA Clarington's commission financing contract in the second quarter of 2010. Changes in valuation assumptions in this sector led to a reserve strengthening of $6.8 million in the fourth quarter, compared to $16.9 million a year earlier.Group Insurance recorded a pre-tax experience gain of $4.6 million in the fourth quarter, resulting from favourable experience in life and accidental death insurance for the Creditor Insurance and Special Markets Group sectors and overall favourable experience in Employee Plans.Changes in valuation assumptions at the end of 2010 had no impact on the Group Pensions operating profit. The reserve strengthening for increased longevity of annuitants was offset by a release of reserves after assets were repositioned to improve matching and investment return. This is contrary to last year when changes in assumptions led to the reserves being strengthened by $51.9 million to recognize increased longevity of annuitants. The company reinsured 60% of the longevity risk for its insured annuities block in the third quarter of 2010.Individual Insurance strain - Individual insurance strain increased from $23.7 million in the third quarter to $32.0 million in the fourth, reflecting strong sales growth in the fourth quarter. Strain as a percent increased from 52% in the third quarter to 55% in the fourth.Effective tax rate - The effective tax rate was 13.8% in the fourth quarter (versus 26% in the first three quarters), reflecting the decrease in income taxes recorded in the fourth quarter of 2010. A year ago, the effective tax rate was 27.4% in the fourth quarter.Fair value of debt instruments -The asymmetric evolution of the market value of debt instruments and the underlying assets generated a loss of $0.6 million in the fourth quarter of 2010. This is the last quarter in which debt asymmetry will impact earnings as these debt instruments will be accounted for at cost, rather than fair value, under the IFRS standards taking effect on January 1, 2011.If this loss is excluded, the Company ended the fourth quarter with net income to common shareholders of $68.0 million. This translates into diluted earnings per common share of $0.80 and a return on common shareholders' equity of 12.8% on an annualized basis, which is near the middle of the Company's 12% to 14% target range. Profitability on Regular Operations   Fourth quarter  Year(In millions of dollars, unless otherwise indicated)20102009    20102009Net income to common shareholders67.467.4250.8205.8Less: gain (loss) resulting from the variation in the fair value of debt instruments and underlying assets (after taxes)  (0.6)5.30.5(5.4)Net income to common shareholders on regular operations68.062.1  250.3  211.2Earnings per common share (diluted) on regular operations$0.80$0.77$2.98$2.62Return on common shareholders' equity on regular operations12.8%13.7%12.6%12.2%Profit by line of business - All lines of business made a positive contribution to the operating profit in 2010 as demonstrated in the table below. In the fourth quarter, Individual Insurance and Individual Wealth Management generated 34% and 42% of the total, respectively. Sources of Earnings    Fourth quarter  Year(In millions of dollars)20102009    2010   2009Operating profit     Individual Insurance21.2104.399.8194.4 Individual Wealth Management25.8(0.7)92.832.4 Group Insurance10.812.246.836.8 Group Pensions4.0(45.9)17.3(35.9) Total61.869.9256.7227.7Income on capital23.921.498.179.7Income taxes(11.8)(25.0)(81.6)(82.4)Net income to shareholders on regular operations73.966.3 273.2 225.0Less: dividends on preferred shares5.94.222.913.8Net income to common shareholders on regular operations68.062.1250.3211.2Plus: gain (loss) resulting from the variation in the fair value of debt instruments and underlying assets (after taxes)  (0.6)5.30.5(5.4)Net income to common shareholders67.467.4250.8205.8Full-year 2010 Profitability- Net income to common shareholders for the full twelve months of 2010 increased 22% to $250.8 million, representing diluted earnings per share of $2.99 ($2.55 in 2009) and a return on common shareholders' equity of 12.6% (11.9% in 2009). These results are within the 2010 guidance of $2.75 to $3.25 for earnings per share and 12% to 14% for return on common shareholders' equity. Excluding a gain of $0.5 million from debt asymmetry, adjusted net income to common shareholders was $250.3 million ($2.98 per share) and the return on common shareholders' equity was 12.6%.Refer to the 2010 Management's Discussion and Analysis available on the Company's website at www.inalco.com or on SEDAR at www.sedar.com for a full discussion of the year-end results.SENSITIVITY ANALYSISThe Company updates its sensitivity analyses in the fourth quarter of each year. The results of these analyses subsequently vary from one quarter to another according to numerous factors, including changes in the economic and financial environment and the normal evolution of the Company's business. The results of the most recent analyses, which take into account the changes made to the provisions for future policy benefits following the year-end review of valuation assumptions, show that the Company's capacity to absorb potential market downturns remains very high.Stocks matched to long-term liabilities - The Company will not have to strengthen its provisions for future policy benefits for stocks matched to long-term liabilities as long as the S&P/TSX index remains above about 10,600 points. The Company is thus in a position to absorb a decrease of 21% in the S&P/TSX index (versus its level of 13,443 points as at December 31, 2010) before having to strengthen its provisions for future policy benefits for stocks matched to long-term liabilities.Solvency ratio - The solvency ratio will remain above 175% as long as the S&P/TSX index stays above about 9,300 points and will remain above 150% as long as the index stays above about 7,700 points. This means that the Company is able to absorb a decrease of about 31% in the S&P/TSX index, compared to the December 31, 2010 level, before its solvency ratio drops to 175% and a decrease of 43% before its solvency ratio drops to 150% (the minimum required by the regulatory authorities).Net income - The Company estimates that if, on average, the stock markets were to remain at a level 10% lower (or higher) than its expectations for a full year (the Company generally expects the S&P/TSX index to grow about 7% annually), the net income to common shareholders would be about $20 million lower (or higher) than expected. Note that on a quarter-to-quarter basis, the impact on net income will depend on the average level of the stock market index during the quarter and its closing level at the end of the quarter.Ultimate reinvestment rate ("URR") - The Company believes that a 10 basis point decrease (or increase) in the ultimate reinvestment rate would require the provisions for future policy benefits to be strengthened (or would allow them to be released) by some $49 million after taxes.Initial reinvestment rate("IRR") - The Company believes that a 10 basis point decrease (or increase) in the initial reinvestment rate would require the provisions for future policy benefits to be strengthened (or would allow them to be released) by some $28 million after taxes. Sensitivity Analysis  Stocks matched to long-term liabilitiesLevel of S&P/TSX index requiring a strengthening of the provisions for future policy benefits for stocks matched to long-term liabilities   10,600 pointsSolvency ratioLevel of S&P/TSX index for the solvency ratio to be at 175%9,300 points Level of S&P/TSX index for the solvency ratio to be at 150%7,700 pointsNet incomeImpact on the net income of a sudden 10% decrease in the stock markets (impact for a complete year)($20 million)Ultimate reinvestment rate (URR)Impact on the net income of a 10 basis point decrease in the URR($49 million)Initial reinvestment rate (IRR)Impact on the net income of a 10 basis point decrease in the IRR($28 million)Premiums and DepositsYear over year, premiums and deposits reached a new high for the fifth consecutive quarter, totalling almost $1.8 billion, up 15% over the same period last year. The main contributors this quarter were Individual Insurance and Individual Wealth Management, driven by excellent sales and growth of the stock market Premiums and Deposits Fourth quarterYear(In millions of dollars, unless otherwise indicated)  20102009   Variation20102009   VariationIndividual Insurance301.6241.425%1,125.6938.420%Individual Wealth Management1,012.4756.234%3,676.32,350.056%Group Insurance265.7244.19%1,035.2962.48%Group Pensions159.3267.4(40%)622.5839.8(26%)General insurance42.937.714%161.6140.615%Total1,781.9   1,546.815%6,621.2   5,231.227%       Sales by Line of BusinessIndividual Insurance - Continuing on its momentum from previous quarters, the Individual Insurance sector had a record quarter, with $57.8 million in sales, up 41% year over year. Sales continued to be strong for minimum premiums, with a 25% increase year over year, while excess premiums increased by 211% during the same period.Individual Wealth Management - For the fifth consecutive quarter, sales of Individual Wealth Management products reached a new year-over-year high, reflecting the market recovery and strength of our distribution networks. Sales reached $1.0 billion, a 34% increase over the same period last year. The sector also benefited from continued growth in sales of the Ecoflextra GMWB product. A new version of Ecoflextra, called IAG Savings and Retirement Plan,waslaunched at the beginning of 2011 to coincide with the RRSP season. The dynamic hedging operations that began in October 2010 will also cover this product.For the sixth straight quarter, net sales of $536.7 million in the quarter were up sharply over the previous year, such that IA and IA Clarington continue to gain market share. IA ranked 1st in terms of net segregated fund sales for the fourth quarter with a 44.5% market share, moving the company to first place for 2010 with a 37.2% market share (4th in 2009 with 10.1%). For mutual funds, IA Clarington ranked 7th in terms of net sales for 2010, despite a ranking of 17th in terms of assets.Group Insurance: Employee Plans - After an excellent third quarter, fourth quarter sales were down 22% year over year, amounting to $13.2 million. By region, sales were good in Quebec, totalling $9.1 million or 69% of total sales. For the full year, sales are comparable with the same period in 2009.Group Insurance: Creditor Insurance - Creditor insurance sales continued on the momentum of the previous two quarters, totalling $44.7 million, a year over year increase of 29%. Sales are up 20% for the year, outpacing car sales that grew 6.6%.Group Insurance: Special Markets Group (SMG) - After a strong recovery in growth in the second and third quarters, SMG had another good sales performance in the fourth. Sales amounted to $36.6 million, exceeding the all-time high of $31.2 million in the fourth quarter of 2008. The fourth quarter 2010 result is 17% higher than last year. As with the rest of 2010, the overall improvement in economic conditions contributed to this record result.Group Pensions - The Group Pensions sector ended the fourth quarter with sales of $175.9 million, down 34% from 2009. Net fund entries and new plan sales in the accumulation products segment were lower than the fourth quarter of 2009. Recurring premiums, the core of this sector, grew 17% in the fourth quarter, and assets under management were up by 3.4% in the quarter and 8.8% for the year. In insured annuities, the Company continues to emphasize the attainment of profit margins over business growth. Sales Fourth quarterYear(In millions of dollars, unless otherwise indicated)2010   2009   Variation20102009   VariationIndividual Insurance       Minimum premiums46.637.425%150.9126.419% Excess premiums11.23.6211%35.720.772% Total57.841.041%186.6147.127%Individual Wealth Management       General fund93.592.02%441.1404.39% Segregated funds485.0308.157%1,488.0866.272% Mutual funds433.9356.122%1,747.21,079.562% Total1,012.4756.234%   3,676.3   2,350.056%Group Insurance       Employee Plans13.217.0(22%)72.275.0(4%) Creditor Insurance44.734.629%183.3152.420% Special Markets (SMG)36.631.217%124.2113.210%Group Pensions175.9267.4(34%)713.5914.6(22%)       Note - Sales (new business) are defined as follows for each sector: Individual Insurance: first-year annualized premiums; Individual Wealth Management: premiums for the general fund and segregated funds and deposits for mutual funds; Group Insurance: first-year annualized premiums for Employee Plans, including premium equivalents (Administrative Services Only (ASO) contracts), gross premiums (premiums before reinsurance) for Creditor Insurance and premiums for Special Markets Group (SMG); Group Pensions: premiums.Assets Under Management and AdministrationAssets under management and administration (AUM/AUA) reached a record high of $66.9 billion as at December 31, 2010, a 4% increase over September 30, 2010. The value of all main asset components increased during the quarter under the effect of a strong increase in premiums, net fund entries in most sectors and the stock market upswing. AUM/AUA grew 14.5% in 2010, comparable to the TSX index, which grew 14.4% during the same period. Assets Under Management and Administration(In millions of dollars, unless otherwise indicated)  December 31,2010  September 30, 2010  December 31, 2009Q4  variation1 year  variationAssets under management      General fund20,101.119,996.317,626.51%14% Segregated funds13,572.512,711.511,450.37%19% Mutual funds8,135.77,586.76,615.77%23% Other498.0520.0563.3(4%)(12%) Subtotal42,307.340,814.536,255.84%17%Assets under administration24,571.723,236.922,150.86%11%Total66,879.064,051.458,406.64%15%      Value of New BusinessValue of new business (VNB) was $53.8 million ($0.64 per common share) in the fourth quarter of 2010, a 49% increase over the same period last year. The increase is explained by several factors, including sales growth in the Group Insurance and Individual Wealth Management sectors and increased profitability of certain products in the Individual Insurance sector together with the added contribution of American-Amicable. For the full year, VNB was up 40%, primarily driven by sales growth in the retail and Group Insurance sectors.VNB varies according to three components: sales, profit margins and changes in the discount rate, net of changes in interest rates and expected stock market return. As the table below shows, in the fourth quarter, the "sales" component of VNB increased by $16.9 million, primarily due to the substantial increase in sales in the retail sectors and in Group Insurance. The higher profitability came primarily from increased premiums on universal life quick pay options. The increase in the discount rate at the end of 2009, net of the impact of the increase in interest rates and stock market returns, reduced VNB by $1.6 million. Value of New Business by Component(In millions of dollars)Fourth quarterYear-to-date as   at December 31Value of new business in 200936.2121.4Increase (decrease) in sales16.952.6Modification of profit margins2.30.1Increase in the discount rate(1.6)(4.3)Value of new business in 2010    53.8169.8   FINANCIAL STRENGTHSolvencyThe company ended the fourth quarter of 2010 with a solvency ratio of 205%, compared with 211% as at September 30, 2010. This ratio is above the company's 175% to 200% target range.During the quarter, the solvency ratio underwent downward pressure, mainly due to a change in the company's investment policy. The company increased the stock proportion of the assets backing the reserve by 3%, as part of a series of management actions taken in 2010 to alleviate the impact of the reduction in interest rates in the last year. The increase in the market value of stocks during the quarter also led to higher capital requirements, while the decline in the market value of bonds (resulting from the increase in long-term interest rates during the quarter) led to a slight decrease in capital requirements. Solvency(In millions of dollars, unless otherwise indicated)   December 31, 2010   September 30, 2010   December 31, 2009Available capital    Tier 12,303.82,276.01,961.9 Tier 2348.3350.4343.1 Total2,652.12,626.42,305.0Required capital1,296.21,243.61,107.2Solvency ratio205%211%208%    CapitalizationThe company's capital totalled $3,114.4 million as at December 31, 2010, which represents a 1% ($32.0 million) increase compared to September 30, 2010. This is explained by the increase in retained earnings (income for the quarter less payments of dividends to common shareholders). Capitalization(In millions of dollars)December 31, 2010  September 30, 2010  December 31, 2009Equity    Common shares652.5647.5545.7 Preferred shares425.0425.0325.0 Retained earnings1,422.01,375.31,254.8 Contributed surplus23.323.321.6 Accumulated other comprehensive income38.354.610.5 Subtotal2,561.12,525.72,157.6Debentures526.4529.3519.8Participating policyholders' account26.927.425.7Total3,114.43,082.42,703.1   Financial LeverageThe increase in  capital slightly reduced the debt ratio, from 17.2% as at September 30, 2010 to 16.9% as at December 31, 2010, if the debentures alone are considered in the debt items, and from 31.0% as at September 30, 2010 to 30.5% as at December 31, 2010 if the preferred shares are added to the debt items. These ratios satisfy rating agency requirements for a company with credit ratings like Industrial Alliance. Debt Ratio December 31, 2010   September 30, 2010   December 31, 2009Debentures/capital16.9%17.2%19.2%Debentures + preferred shares/capital   30.5%31.0%31.3%    Book Value per Common Share and Market Capitalization Industrial Alliance's book value continued to grow in the fourth quarter of 2010, continuing the upward trend that started in the first quarter of 2009 (after decreasing significantly in the fourth quarter of 2008). The book value per common share reached a high of $25.49 as at December 31, 2010, up 2% compared to the value as at September 30, 2010.Market capitalization amounted to $3,087.9 million as at December 31, 2010, a 17% increase from September 30, 2010. The increase in the quarter reflects the increase in the stock price, from $31.60 as at September 30, 2010 to $36.81 as at December 31, 2010.The Company had 83,887,771 issued and outstanding common shares as at December 31, 2010 compared with 80,511,771 issued and outstanding common shares as at December 31, 2009. The increase during the year comes from the issuance of 2,950,000 common shares in February 2010 and the issuance of 426,000 common shares following the exercise of options under the Company's stock option plan. Book Value per Common Share and Market Capitalization(In millions of dollars, unless otherwise indicated)   December 31, 2010   September 30, 2010   December 31, 2009Book value per common share$25.49$25.02$22.77Market capitalization3,087.92,644.32,592.5    QUALITY OF INVESTMENTS  Quality of Investments (In millions of dollars, unless otherwise indicated)   December 31, 2010   September 30, 2010   December 31, 2009Net impaired investments22.816.013.0Impaired investments as a % of total investments0.12%0.09%0.08%Bonds - Proportion rated BB and lower0.12%0.15%0.07%Mortgage loans - Delinquency rate0.47%0.30%0.36%Real estate - Occupancy rate93.8%93.6%94.4%    The overall quality of our investment portfolio remains very high. Items of note in the fourth quarter are as follows:In terms of quality, three US conventional mortgage loans on multiresidential properties were added to impaired investments in the fourth quarter. These three loans increased net impaired investments from $16.0 million as at September 31, 2010 to $22.8 million as at December 31, 2010. Despite this increase, the total amount of impaired loans represents just 0.12 % of total investments (0.09% as at September 30, 2010 and 0.08% as at December 31, 2009).The proportion of bonds rated BB and lower decreased from 0.15% as at September 30, 2010 to 0.12% as at December 31, 2010. This decrease is mainly attributable to the sale of corporate bonds rated BB and lower during the quarter. Additionally, two private placements were added to the list of bonds rated BB and lower following a downgrade in the quarter.The delinquency rate of the mortgage loan portfolio increased from 0.30% as at September 30, 2010 to 0.47% as at December 31, 2010. The increase primarily results from three conventional mortgage loans on properties in the US as mentioned above.The real estate occupancy rate increased slightly during the quarter from 93.6% as at September 30, 2010 to 93.8% as at December 31, 2010. The market value of the real estate portfolio still greatly exceeds the book value (the market/book value ratio was 122.6% as at December 31, 2010 compared to 124.6% as at September 30, 2010).The nominal value of the ABCP decreased by $27.5 million in the fourth quarter, from $82.3 million as at September 30, 2010 to $54.8 million as at December 31, 2010. This decrease primarily results from $1.4 million in repayments of principal at par and the sale of certain notes for $25.8 million. The notes were sold at a price equal to the price posted in our books when the ABCP restructuring took place in January 2009, allowing us to obtain a 5.5% return. The overall devaluation taken for ABCP due to credit risk, including the impact of the acquisition of the life insurance portfolio of  MD Life on December 31, 2009, amounted to $23.8 million as at December 31, 2010, which is equivalent to 43.4% of the nominal value of the ABCP held.Exposure to countries in the headlines continues to be limited to a $5.0 million investment in a Spanish province and a $1 million private placement in a company located in the same country. Exposure to other sectors that have experienced difficulties in the last few years is limited to a $22.6 million investment in the securities of United Kingdom financial institutions and $21.3 million investment in a bond guaranteed by a property leased almost entirely to Air Canada.The following items concern the change in value of certain securities in the investment portfolio during the fourth quarter:Unrealized losses on corporate fixed income securities classified "available for sale" decreased during the quarter, amounting to $2.9 million as at December 31, 2010, which represents just 0.1% of equity, from $5.4 million as at September 30, 2010.The nominal value of bonds whose market value is 20% or more lower than the nominal value for six or more months (just three securities) amounted to $16.5 million as at December 31, 2010, which represents 0.6% of equity (compared to $21.5 million or 0.9% of equity as at September 30, 2010). The unrealized losses on these securities (measured according to the difference between the market value and the nominal value) increased in the fourth quarter of 2010 from $4.7 million at September 30, 2010 to $6.2 million as at December 31, 2010. Unrealized losses are still below the $8.7 million level as at June 30, 2010.Composition of Investments The Company's investment portfolio is mainly composed of bonds, mortgage loans, stocks and real estate. There was no significant change to the distribution of investments by asset category in the fourth quarter. The total value of investments has increased by 14% since December 31, 2009 primarily attributable to the appreciation of the stock and bond portfolios portfolio,as a result of generally favourable market conditions. Investments(In millions of dollars, unless otherwise indicated)   December 31, 2010   September 30, 2010   December 31, 2009Book value of investments18,828.718,658.916,490.2Distribution of investments by asset category    Bonds59.1%59.9%57.1% Mortgage loans17.7%17.8%20.6% Stocks12.3%11.2%11.5% Real estate3.8%3.6%3.9% Other7.1%7.5%6.9% Total100.0%100.0%100.0%     CREDIT RATINGSThere were no changes to the credit ratings assigned to Industrial Alliance in the fourth quarter of 2010. Industrial Alliance Credit Ratings AgencyType of EvaluationRatingOutlookStandard & Poor's   Financial StrengthA+ (Strong)Stable Issuer Credit RatingA+ (Strong)Stable Subordinated DebenturesA-- Industrial Alliance Trust Securities (IATS) (global scale)    A--- Preferred Shares (global scale)A---A.M. BestFinancial StrengthA (Excellent)Stable Issuer Credit Ratinga+Stable Subordinated Debenturesa-Stable Industrial Alliance Trust Securities (IATS)bbb+Stable Preferred Sharesbbb+StableDBRSClaims Paying AbilityIC-2Stable Subordinated DebenturesAStable Industrial Alliance Trust Securities (IATS)A (low)ynStable Preferred SharesPfd-2 (high)n   Stable    EMBEDDED VALUEAs at December 31, 2010, Industrial Alliance's embedded value reached a new high of $3.5 billion or $41.56 per common share, a year-over-year increase of 20.1% before the payment of dividends to common shareholders and 17.4% after the payment of these dividends. The embedded value/book value ratio was 1.63x compared with 1.62x as at December 31, 2009.Over half of the 2010 increase (12.2% or $4.43 per common share) is explained by recurring items over which the Company has control, that is, the normal growth of the in-force business block  (6.5% or $2.41 per common share) and the value of new business (5.7% or $2.02 per common share). Non-recurring items, including equity market and other experience gains as well as changes in capital structure, accounted for the remaining increase of 7.9% ($1.16 per common share).The changes in assumptions made to the provisions for future policy benefits at the end of 2010 and the decrease in the discount rate (from 7.25% to 6.50%) and the risk-free rate for purposes of calculating the embedded value (from 4.25% to 3.50%) did not have a significant impact on embedded value in 2010. These changes in assumptions aim to reflect changes in the current economic environment in which the Company operates. Embedded Value EmbeddedvalueContribution to   embedded value   Embedded value per common share  ($Million)(%)($)Embedded value as at December 31, 20092,969    -- 36.89 Recurring items       Expected growth of embedded value194 6.5 2.41  New sales170 5.7 2.02 Subtotal364 12.2 4.43 Non-recurring items       Experience gains (losses) - related to the equity markets69 2.3 0.86  Experience gains (losses) - other93 3.1 1.15  Changes in assumptions and management actions(3) (0.1) (0.04)  Acquisitions(31) (1.0) (0.38)  Subtotal128 4.3 1.59 Changes in capital structure106 3.6 (0.43) Embedded value as at December 31, 2010, before dividends   3,567 20.1 42.48 Dividends paid to common shareholders(81) (2.7) (0.92) Embedded value as at December 31, 20103,486 17.4 41.56       BUY-BACK OF SHARESUnder the last normal course issuer bid, which began on February 18, 2010 and ended on February 17, 2011, the Corporation did not purchase any common shares. At this time, the Company has not renewed its normal course issuer bid with the Toronto Stock Exchange.DECLARATION OF DIVIDENDThe Company's good profitability and financial strength have enabled the Board of Directors to announce the payment of a quarterly dividend of $0.2450 per common share. This dividend corresponds to a payout ratio of 31% of earnings, which is within the Company's 25% to 35% medium-term target range.Following are the amounts and dates of payment and closing of registers for the Company's common shares and the various categories of its preferred shares.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 15, 2011, to the common shareholders of record as at March 2, 2011.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, 2011, to the preferred shareholders of record as at March 2, 2011.The Board of Directors has declared the payment of a quarterly dividend of $0.3875 per non-cumulative class A preferred share series C. The dividend is payable in cash on March 31, 2011, to the preferred shareholders of record as at March 2, 2011.The Board of Directors has declared the payment of a quarterly dividend of $0.3750 per non-cumulative class A preferred share series E. The dividend is payable in cash on March 31, 2011, to the preferred shareholders of record as at March 2, 2011.The Board of Directors has declared the payment of a quarterly dividend of $0.36875 per non-cumulative class A preferred share series F. The dividend is payable in cash on March 31, 2011, to the preferred shareholders of record as at March 2, 2011.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.WARNING AND GENERAL INFORMATIONInternal Control Over Financial ReportingNo changes were made in the Company's internal control over financial reporting during the interim period ended December 31, 2010, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.Non-GAAP Financial MeasuresThe Company reports its financial results in accordance with generally accepted accounting principles (GAAP). However, it also occasionally publishes certain non-GAAP financial measures which either do not have any GAAP equivalent, including sales, value of new business, embedded value and solvency ratio, or which have a GAAP equivalent and which can be compared with GAAP measures, such as data on the operating profit and income taxes on the earnings presented in the sources of earnings table. The Company also occasionally uses certain non-GAAP financial measures - adjusted data or data on regular operations - 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.Forward-Looking StatementsThis Management's Discussion and Analysis 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 (including but not limited to performance of equity markets, interest rate fluctuations, currency rates, investment losses and defaults, movements in credit spreads, market liquidity and creditworthiness of guarantors and counterparties); 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; failure of information systems and Internet-enabled technology; breaches of computer security and privacy; dependence on third-party relationships including outsourcing arrangements; ability to maintain Industrial Alliance's reputation; regulatory investigations and proceedings and private legal proceedings and class actions relating to practices in the mutual fund, insurance, annuity and financial product distribution industries; the ability to adapt products and services to the changing market; the ability to implement effective hedging strategies; the ability to attract and retain key executives; the ability to complete acquisitions including the availability of equity and debt financing when required for this purpose; the ability to execute strategic plans; the disruption of or changes to key elements of Industrial Alliance's or public infrastructure systems; and environmental concerns. Additional information about 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 Industrial Alliance's 2010 Management's Discussion and Analysis under the "Risk Management" section 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 www.sedar.com.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 Management's Discussion and Analysis or to reflect the occurrence of unanticipated events, except as required by law.Documents Related to the Financial ResultsAll documents related to Industrial Alliance's financial results are available on the Company's website at www.inalco.com, in the Investor Relations section, under Financial Reports. More information about the Company can also be found on the SEDAR website at www.sedar.com, as well as in the Company's Annual Information Form, which can be found on the Company website or the SEDAR website.Conference CallManagement will hold a conference call to present the Company's results on Friday, February 18, 2011 at 2:00 p.m. (ET). To listen in on the conference call, dial 1 800 745-8951 (toll-free). A replay of the conference call will also be available for a one-week period, starting at 4:30 p.m. on Friday, February 18, 2011. To listen to the conference call replay, dial 1 800 558-5253 (toll-free) and enter access code 21495880. A webcast of the conference call (in listen only mode) will also be available on the Industrial Alliance website at www.inalco.com, as well as at www.cnw.ca.About Industrial AllianceFounded 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 in all regions of Canada, as well as in the United States. Industrial Alliance contributes to the financial wellbeing of over three million Canadians, employs more than 3,700 people and manages and administers approximately $67 billion in assets. Industrial Alliance stock is listed on the Toronto Stock Exchange under the ticker symbol IAG.   CONSOLIDATED INCOME STATEMENTS     (in millions of dollars, unless otherwise indicated)    Quarters endedDecember 31   Twelve months ended December 31 2010200920102009 $$$$ (unaudited)  Revenues    Premiums1,3481,1914,8744,152Net investment income154991,4451,302Fees and other revenues12594450361 1,6271,3846,7695,815Policy benefits and expenses    Payments to policyholders and beneficiaries5594962,1021,928Net transfer to segregated funds5264541,7791,299Dividends, experience rating refunds and interest on amounts on deposit    16166656Change in provisions for future policy benefits104651,2571,194 1,2051,0315,2044,477Commissions202145661528Premium and other taxes16167163General expenses125108448400Financing expenses443764 1,5521,3046,4215,532Income before income taxes7580348283Less: income taxes1107364Net income7470275219Less: net income attributed to participating policyholders---(2)1(1)Net income attributed to shareholders7472274220Less: preferred share dividends642314Net income available to common shareholders6868251206Earnings per common share (in dollars)     basic0.800.843.022.56 diluted0.800.832.992.55   CONSOLIDATED BALANCE SHEETS     (in millions of dollars)As at December 312010   As at December 312009 $$ (unaudited) Assets  Invested assets  Bonds11,1209,410Mortgages3,3343,405Stocks2,3191,896Real estate712649Policy loans469381Cash and cash equivalents527382Other invested assets348367 18,82916,490Other assets735658Intangible assets385375Goodwill153116Total general fund assets20,10217,639Segregated funds net assets13,57311,450Liabilities  Policy liabilities  Provisions for future policy benefits15,22213,392Provisions for dividends to policyholders and experience rating refunds5660Benefits payable and provision for unreported claims152139Policyholders' amounts on deposit245212 15,67513,803Other liabilities946784Future income tax358339Deferred net realized gains89Debentures526520Participating policyholders' account2726 17,54015,481Equity  Share capital1,078871Contributed surplus2322Retained earnings and accumulated other comprehensive income1,4611,265 2,5622,158Total general fund liabilities and equity20,10217,639Segregated funds liabilities13,57311,450   Twelve months ended December 31, 2010 and 2009(in millions of dollars, unless otherwise indicated)Segmented InformationThe Company operates principally in one dominant industry segment, the life and health insurance industry, and offers individual and group life and health insurance products, savings and retirement plans, and segregated funds. The Company also operates mutual fund, securities brokerage and trust businesses. These businesses are principally related to the Individual Wealth Management segment and are included in that segment with the Individual Annuities. The Company operates mainly in Canada and the operations outside Canada are not significant.  Segmented General Fund Assets  Quarter ended December31, 2010 IndividualGroup   Life andHealthWealth    Management    Life andHealth    PensionsOther     activities*      Total $$$$$$Revenues      Premiums302579265159431,348Net investment income124(6)929(2)154Fees and other revenues31053104125 429678277198451,627Operating expenses      Cost of commitments to policyholders2512718818429679Net transfer to segregated funds---526---------526Commissions, general and other expenses14610178913347 397654266193421,552Income before income taxes3224115375Less: income taxes(3)31001Net income before allocation of other activities    3521105374Allocation of other activities2---10(3)---Net income3721115---74Attributed to shareholders3721115---74Attributed to participating policyholders------------------     Quarter ended December 31, 2009 IndividualGroup   Life andHealthWealthManagementLife andHealthPensionsOtheractivitiesTotal $$$$$$Revenues      Premiums241401245267371,191Net investment income28221235299Fees and other revenues(5)8537494 264508260309431,384Operating expenses      Cost of commitments to policyholders657717623524577Net transfer to segregated funds---344---110---454Commissions, general and other expenses1018467813273 166505243353371,304Income before income taxes98317(44)680Less: income taxes1913(15)210Net income before allocation of other activities79214(29)470Allocation of other activities4---------(4)---Net income83214(29)---70Attributed to shareholders85214(29)---72Attributed to participating policyholders(2)------------(2)     Twelve months ended December 31, 2010 IndividualGroup   Life andHealthWealthManagementLife andHealthPensionsOtheractivities*Total $$$$$$Revenues      Premiums1,1261,9291,0356221624,874Net investment income1,002968925531,445Fees and other revenues1838111355450 2,1462,4061,1359121706,769Operating expenses      Cost of commitments to policyholders1,5063217867081043,425Net transfer to segregated funds---1,633---146---1,779Commissions, general and other expenses47935729635501,217 1,9852,3111,0828891546,421Income before income taxes16195532316348Less: income taxes2922125573Net income before allocation of other activities13273411811275Allocation of other activities9---11(11)---Net income141734219---275Attributed to shareholders140734219---274Attributed to participating policyholders1------------1     Twelve months ended December 31, 2009 IndividualGroup   Life andHealthWealthManagementLife andHealthPensionsOtheractivities*Total $$$$$$Revenues      Premiums9381,2719638401404,152Net investment income8381128925761,302Fees and other revenues530492914361 1,7811,6871,0611,1261605,815Operating expenses      Cost of commitments to policyholders1,165357739821963,178Net transfer to segregated funds---999---300---1,299Commissions, general and other expenses40429027535511,055 1,5691,6461,0141,1561475,532Income before income taxes2124147(30)13283Less: income taxes471212(12)564Net income before allocation of other activities1652935(18)8219Allocation of other activities8---------(8)---Net income1732935(18)---219Attributed to shareholders1742935(18)---220Attributed to participating policyholders(1)------------(1)    Segmented General Fund Assets  As at December 31, 2010 IndividualGroup   Life andHealthWealthManagementLife andHealthPensionsOtheractivities*Total $$$$$$Assets      Invested assets11,3492,2171,6653,20139718,829Other assets318192934488735Intangible assets62318221385Goodwill793920---15153Total11,8082,7661,7803,24750120,102     As at December 31, 2009 IndividualGroup   Life andHealthWealthManagementLife andHealth PensionsOtheractivities*Total $$$$$$Assets      Invested assets9,2742,1281,6073,12835316,490Other assets249179994784658Intangible assets4932231---375Goodwill554120------116Total9,6272,6701,7293,17643717,639* Includes other segments and intercompany eliminations.For further information: Grace Pollock Director, Investor Relations Office: 418 780-5945 Email: grace.pollock@inalco.com Website: www.inalco.com