Industrial Alliance Announces an Issue of $225 Million of Common Shares and Its Intention to Redeem Regulatory Capital Securities

QUEBEC CITY, QUEBEC--(Marketwire - Feb. 19, 2013) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Industrial Alliance Insurance and Financial Services Inc. ("Industrial Alliance" or the "Company") (TSX:IAG) has today entered into an agreement with a syndicate of underwriters co-led by National Bank Financial Inc. and BMO Capital Markets, pursuant to which the underwriters have agreed to purchase, on a bought deal basis, 6,000,000 Common Shares (the "Common Shares") from Industrial Alliance for sale to the public at a price of $37.50 per Common Share, representing aggregate gross proceeds of $225 million.

The Company has also granted the underwriters an option to buy up to an additional $25 million of the Common Shares at the same price per share to cover over-allotments, if any.

This share offering is expected to close on or about February 27, 2013, subject to certain conditions including approval from the Toronto Stock Exchange. The net proceeds of approximately $216 million, after deducting underwriting commissions and before issuance costs, will be used to redeem all of the outstanding 8.25% subordinated debentures due March 27, 2019 (the "Subordinated Debentures") with a nominal value of $100 million and to redeem all of the Industrial Alliance Trust Securities ("IATS") - Series A (the "IATS - Series A") with a nominal value of $150 million. Following closing of this offering, Industrial Alliance intends to issue a redemption notice to redeem the Subordinated Debentures on or about March 29, 2013 and to issue the necessary notice to redeem the IATS - Series A on June 30, 2013. The Subordinated Debentures and the IATS - Series A will be redeemed for a consideration determined in accordance with their respective terms.

According to the Company's financial information as at December 31, 2012, an issue of $225 million of Common Shares, if the abovementioned redemptions are taken into account, would reduce the debt ratio from 18.5% to 12.4% if only the debentures and the IATS are considered debt, and from 35.2% to 29.3% if preferred shares are also considered debt. The solvency ratio, which stood at 217% as at December 31, 2012 (230% as at January 1, 2013), would decline by about two percentage points, but would remain unchanged if the full $25 million over-allotment option were exercised. The Company maintains its guidance for 2013 provided on February 15, 2013.

The offering will be made pursuant to a prospectus supplement to Industrial Alliance's short form base shelf prospectus dated April 29, 2011. Full 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.

Notice

The 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 Statements

This 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 2012 Management'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 Alliance

Founded 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 4,300 people and manages and administers more than $83 billion in assets. Industrial Alliance stock is listed on the Toronto Stock Exchange under the ticker symbol IAG.