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Press release from CNW Group

Industrial Alliance Announces Preferred Share Issue

Thursday, May 24, 2012

Industrial Alliance Announces Preferred Share Issue10:23 EDT Thursday, May 24, 2012/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES./QUEBEC CITY, May 24, 2012 /CNW Telbec/ - Industrial Alliance Insurance and Financial Services Inc. ("Industrial Alliance" or the "Company") has today entered into an agreement with a syndicate of underwriters co-led by Scotiabank and RBC Capital Markets under which the underwriters have agreed to buy, on a bought deal basis, 6,000,000 Non-Cumulative 5-Year Rate Reset Class A Preferred Shares Series G (the "Series G Preferred Shares") from Industrial Alliance for sale to the public at a price of $25.00 per Series G Preferred Share, representing aggregate gross proceeds of $150 million.This share offering is expected to close on or about June 1, 2012, subject to certain conditions, including Toronto Stock Exchange and other customary regulatory approvals. The net proceeds of this offering will be used for general corporate purposes and will be added to Industrial Alliance's capital base.Holders of the Series G Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend of $0.26875 per Series G Preferred Share, yielding 4.30% per annum, as and when declared by the Board of Directors of Industrial Alliance, for the initial period up to but excluding June 30, 2017. On June 30, 2017 and on June 30 every five years thereafter, the dividend rate will reset to be equal to the then current five-year Government of Canada bond yield plus 2.85%. Holders of the Series G Preferred Shares will have the right, at their option, to convert their shares into Non-Cumulative Floating Rate Class A Preferred Shares Series H (the "Series H Preferred Shares"), subject to certain conditions and the Company's right to redeem the Series G Preferred Shares as described below, on June 30, 2017 and on June 30 every five years thereafter.Holders of the Series H Preferred Shares will be entitled to receive a quarterly non-cumulative floating rate dividend, as and when declared by the Board of Directors of Industrial Alliance, equal to the 90-day Government of Canada Treasury Bill Rate plus 2.85%. Holders of the Series H Preferred Shares will have the right, at their option, to convert their shares into Series G Preferred Shares, subject to certain conditions and the Company's right to redeem the Series H Preferred Shares as described below, on June 30, 2022 and on June 30 every five years thereafter.The Series G Preferred Shares will not be redeemable by Industrial Alliance prior to June 30, 2017. On June 30, 2017 and on June 30 every five years thereafter, Industrial Alliance may, subject to certain conditions (including regulatory approval), redeem all or any part of the Series G Preferred Shares at a cash redemption price per share of $25.00 together with all declared and unpaid dividends. The Company may redeem all or any part of the Series H Preferred Shares at a cash redemption price per share of $25.00 together with all declared and unpaid dividends in the case of redemptions on June 30, 2022 and on June 30 every five years thereafter or $25.50 together with all declared and unpaid dividends in the case of redemptions on any other date after June 30, 2017.On a pro forma basis, after giving effect to this Series G Preferred Shares issue, the Company estimates that, as at March 31, 2012, its solvency ratio would increase by 9 percentage points, from 186% to 195%.The offering will be made pursuant to a prospectus supplement to Industrial Alliance's short form base shelf prospectus dated April 29, 2011. Complete details of the offering will be set out in the prospectus supplement, which will be filed with the Canadian securities regulatory authorities and will be available on SEDAR at www.sedar.com.NoticeThe securities offered 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.Forward-Looking StatementsThis 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 2011Management'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 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 AllianceFounded in 1892, Industrial Alliance Insurance and Financial Services Inc. is a life and health insurance company with operations in all regions of Canada as well as in the United States. The Company 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 for both individuals and groups. The fourth largest life and health insurance company in Canada, Industrial Alliance contributes to the financial wellbeing of over three million Canadians, employs 4,200 people and manages and administers more than $75 billion in assets. Industrial Alliance stock is listed on the Toronto Stock Exchange under the ticker symbol IAG.For further information: Investor Relations Grace Pollock Office: 418 780-5945 Email: grace.pollock@inalco.com Website: www.inalco.com