Industrial Alliance Insurance and Financial Services Inc.
TSX : IAG

Industrial Alliance Insurance and Financial Services Inc.

November 17, 2008 10:09 ET

Industrial Alliance Preferred Share Issue

QUEBEC CITY, QUEBEC--(Marketwire - Nov. 17, 2008) -

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

Industrial Alliance Insurance and Financial Services Inc. (TSX:IAG)("Industrial Alliance" or the "Company") has today entered into an agreement with a syndicate of underwriters led by Scotia Capital Inc. under which the underwriters have agreed to buy, on a bought deal basis, 4,000,000 Non-Cumulative 5-Year Rate Reset Class A Preferred Shares Series C (the "Series C Preferred Shares") from Industrial Alliance for sale to the public at a price of $25.00 per Series C Preferred Share, representing aggregate gross proceeds of $100 million.

Industrial Alliance has granted an option to the underwriters, exercisable by the underwriters at any time up to 48 hours prior to closing of the offering, to purchase up to an additional 600,000 Series C Preferred Shares, representing $15 million at the Issue Price.

Holders of the Series C Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend of $0.3875 per Series C Preferred Share, yielding 6.20% per annum, as and when declared by the Board of Directors of the Company, for an initial period ending December 31, 2013. On December 31, 2013 and on December 31 every five years thereafter, the dividend rate will reset to be equal to the then current five-year Government of Canada bond yield plus 3.38%. Holders of the Series C Preferred Shares will have the right to convert their shares into Non-Cumulative Floating Rate Class A Preferred Shares Series D (the "Series D Preferred Shares"), subject to certain conditions and the Company's right to redeem the Series C Preferred Shares as described below, on December 31, 2013 and on December 31 every five years thereafter.

Holders of the Series D Preferred Shares will be entitled to receive a quarterly non-cumulative floating rate dividend, as and when declared by the Board of Directors of the Company, equal to the 90-day Government of Canada Treasury Bill Rate plus 3.38%. Holders of the Series D Preferred Shares will have the right to convert their shares into Series C Preferred Shares, subject to certain conditions and the Company's right to redeem the Series D Preferred Shares as described below, on December 31, 2018 and on December 31 every five years thereafter.

The Series C Preferred Shares will not be redeemable by Industrial Alliance prior to December 31, 2013. On December 31, 2013 and on December 31 every five years thereafter, Industrial Alliance may, subject to certain conditions (including regulatory approval), redeem all or any part of the Series C 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 D 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 December 31, 2018 and on December 31 every five years thereafter or $25.50 together with all declared and unpaid dividends in the case of redemptions on any other date after December 31, 2013.

The Series C Preferred Share offering is expected to close on or about November 25, 2008. The net proceeds will be used for general corporate purposes and will be added to Industrial Alliance's capital base.

According to pro forma data as at September 30, 2008, a $100 million preferred share issue will increase Industrial Alliance's solvency ratio from 200% to 210% and a $115 million issue will increase it from 200% to 212%.

Notice

The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

Forward-Looking Statements

This news release may contain forward-looking statements about the operations, objectives and strategies of Industrial Alliance, as well as its financial situation and performance. The forward-looking nature of these statements can generally, though not always, be identified by the use of words such as "may," "expect," "anticipate," "intend," "believe," "estimate," "feel," "continue," or other similar expressions, in the affirmative, negative or conditional. Unless otherwise indicated, any forward-looking information that presents prospective results of operations, financial position or cash flows was approved by management on the date of this news release. Forward-looking statements entail risks and uncertainties that may cause the actual results, performance or achievements of Industrial Alliance to differ materially from the future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause the Company's actual results to differ from expected results include changes in government regulations or tax laws, competition, technological changes, global capital market activity, interest rates, changes in demographic data, changes in consumer behaviour and demand for the Company's products and services, catastrophic events, and general economic conditions in Canada or elsewhere in the world. A description of significant factors that could affect forward-looking statements is contained in the Management's Discussion and Analysis section of the Company's most recent annual report. This list is not exhaustive of the factors that may affect any of Industrial Alliance's forward-looking statements. These and other factors must be examined carefully and readers should not place undue reliance on Industrial Alliance's forward-looking statements. Where the forward-looking statements are presented as guidance regarding the future financial results of Industrial Alliance, they are provided to help investors understand the impact on earnings of the Company's current plans and objectives. The Company may also provide objectives from time to time. An objective should be interpreted as a statement of management's goals in managing the Company, and not necessarily as a forecast that the objective will be met. Industrial Alliance is not obligated to revise or update these forward-looking statements to reflect events, circumstances or situations that occur after the date of this news release, whether foreseeable or not, except as required by applicable securities legislation.

About Industrial Alliance

Founded 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 across Canada as well as in the Western United States. Industrial Alliance contributes to the financial wellbeing of over 3 million Canadians, employs more than 3,300 people and manages and administers over $50 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.

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