Industrial Alliance Renews its Growth and Profitability Objectives at a Conference for Investors and Analysts

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TORONTO, June 29, 2004 – Industrial Alliance Insurance and Financial Services Inc. (Toronto Stock Exchange; IAG) took advantage of its first investor and analyst conference, which was held this morning in Toronto, to renew the Company’s two major objectives, which are to obtain a return on equity between 13% and 15% and to achieve a business growth rate that is five percentage points higher than that of the industry.

“Our good top line momentum in all business segments combined with our disciplined approach to pricing make us confident that we can continue to produce high and consistent ROE, while at the same time building the business to maximize long-term shareholder value,” declared Yvon Charest, President and Chief Executive Officer. “Industrial Alliance has built substantial value over the years that has yet to be recognized in the income statement, thanks to its limited use of reinsurance, its conservative seg funds guarantee reserve, its high quality investment portfolio, its fair amount of excess capital and its consistently clean track record overall.”

Mr. Charest reiterated that the Company’s business philosophy relies on two fundamental principles: to be entrepreneurial on the top line and conservative on the bottom line. This philosophy has enabled the Company to deliver solid results over the last five years, with premiums growing at an average rate of 14% per year and earnings per share by 16% per year, while achieving its ROE target.

Mr. Charest emphasized that the cornerstone of Industrial Alliance’s success is its capacity to manage a multi-channel distribution network. “In our industry,” Mr. Charest explained, “the role of the representative is paramount and it is through distribution that the Company has chosen to distinguish itself in the marketplace.” Industrial Alliance strives to be better than its competitors in the following four areas: building and managing multi-channel distribution; actively supporting distributors in building their business; providing them with innovative products; and providing the marketing support they need to achieve their own success. “The expertise that we have developed over the years in managing our network cannot be easily copied,” Mr. Charest added. “Industrial Alliance has specialized people to manage its different networks and all our efforts are focused on building long-lasting partnerships with our distributors.”

Business Growth

In terms of business growth, Industrial Alliance, which operates in four lines of business, is looking to the future with confidence and optimism.

First, in the retail sectors, which are the Individual Insurance and Individual Annuities sectors, Industrial Alliance already has a leading position in Canada, having consistently maintained market shares of over 10% in individual insurance sales and segregated fund net sales in the last few years. The Company’s strategy in these sectors focuses on three main elements: grow the traditional life networks, those being the Career, MGA and National Accounts networks; expand into the wealth management sector, where the Company has made several acquisitions over the last few years, mainly in the mutual funds and securities markets; and leverage its various distribution networks so that the Company can sell its own manufactured life and wealth management products.

“We have positioned ourselves to have a fully integrated line of financial products so that we can benefit from the high growth potential in the wealth management market and at the same time benefit from the convergence in distribution, as more and more representatives have more than one licence,” stated Normand P�pin, Executive Vice-President.

In the Group Insurance and Group Pensions sectors, whose products are designed for groups and businesses, Industrial Alliance is already a major player in Quebec, particularly among small- and medium-sized businesses. In the last few years, the Company has merged the operations of its various companies and opened new sales offices in the Atlantic provinces, Ontario and Western Canada. The goal of this strategy is to improve productivity and to capitalize on the potential of the market outside of Quebec by leveraging the Company’s expertise in Quebec, where it is an industry leader. “We are establishing Industrial Alliance in the group markets as a Company with Canada-wide service capabilities,” explained Mr. P�pin. “Our goal is to become as big a player outside Quebec in the group markets as we are in the retail markets, where we already sell more than half of our life products outside the province.”


With respect to profitability, Mr. Charest noted that Industrial Alliance has always adopted a prudent management philosophy. “Our goal is to build long-term shareholder value, while limiting risk,” stated Mr. Charest. “The value of the Company can be assessed in different ways, but in our view, embedded value is still one of the best ways to measure an insurance company’s worth.” Industrial Alliance’s embedded value was $1.9 billion as at December 31, 2003, almost double the Company’s book value, the highest embedded value/book value ratio among life insurance companies in Canada.

Mr. Charest also took advantage of the conference to disclose additional information regarding the Company’s strategy with respect to reinsurance. Generally speaking, Industrial Alliance uses less reinsurance than its competitors in the Individual Insurance sector. “This strategy, which penalizes short-term earnings, should lead to higher and more stable future earnings,” indicated Mr. Charest. “We believe that shareholders are well-served with a strategy that focuses on maximizing long-term shareholder value.”

Mr. Charest also explained that Industrial Alliance currently has some $150 to $200 million in excess capital. This capital could be used for different purposes: finance acquisitions, if opportunities arise, increase the dividend, whose level will be reviewed by the end of the year, or buy back shares.

To Listen to a Replay of the Conference

A replay of the conference will be available on the Web for a period of 90 days starting today. The link to access the conference replay, with synchronized slides, is found on the Company’s website at , in the Investor Relations section, under Events and Presentations/2004 Investor and Analyst Conference. The replay is also available by phone by dialling 1-800-558-5253 (access code 21197120).

About the Industrial Alliance Group

The Industrial Alliance Group is among the most solid financial institutions in the country, where it is an industry leader in the insurance and financial services sector. The Group has operations across Canada through Industrial Alliance (Quebec City), National Life (Toronto) and Industrial Alliance Pacific (Vancouver). The fifth largest life and health insurance company in Canada, the Industrial Alliance Group insures more than 1.7 million Canadians, employs over 2,400 people and manages and administers over $20.5 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.