Industrial Alliance Insurance and Financial Services Inc. ended the first quarter of 2008 with 7% increase in net income available to common shareholders.

Net income during the quarter was $61.7 million compared with $57.9 million for the year-ago period.

That into diluted earnings per common share of 76¢, compared with 72¢ in the first quarter of 2007.

Return on equity to common shareholders during the quarter was 14.4%, which is in the middle of the company’s 13% to 15% target range.

The income for the quarter takes into account a temporary accounting loss of $1.6 million (2¢ a share) resulting from the asymmetric evolution of the market value of debt instruments and the underlying assets.

Industrial Alliance says this shortfall will be recovered by the time the debt instruments mature and does not affect the quality of the company’s results.

Excluding this item, net income for the quarter totalled $63.3 million, which is 9% higher than the same period the previous year. Earnings per common share amounted to 78¢ and the return on equity to common shareholders was 14.8%.

In terms of business growth, the three insurance product sectors (Individual Insurance, Group Insurance and General Insurance) continued to grow during the quarter, while growth in the savings and investment product sectors was impeded by the stock market decline and volatility.

The company recorded its first decrease in premiums and deposits in four years, with premiums and deposits totalling $1.4 billion in the first quarter of 2008, down 16% compared to the same period last year.

“We are pleased that we can continue to grow income close to our low double-digit guidance, despite an uncertain economic environment,” stated Yvon Charest, president and CEO.