Source: The Canadian Press

Industrial Alliance Insurance and Financial Services Inc., Canada’s fourth-biggest insurer, said Friday it has acquired the life insurance policies of California-based Golden State Mutual for US$11 million.

The transaction was carried out through Quebec-based Industrial’s wholly owned U.S. subsidiary, IA American Life Insurance Co., based in Scottsdale, Ariz..

The Golden State block of business involves 120,000 life policies with a face amount of almost US$500 million. For the year ended Dec. 31, 2009, total premiums amounted to US$9 million and invested assets were US$70 million, Industrial Alliance said in a news release Friday.

“The acquisition, which will not bring additional goodwill to the balance sheet, is expected to generate a return on shareholders’ equity consistent with the company’s target guidance of 12 to 14%,” the Quebec company said.

Golden State Mutual was formerly the largest minority owned life insurance company in California, providing traditional life insurance products to mid-market customers in 17 states. GSM was placed into conservation on Sept. 30, 2009, when its capital position dropped below minimum thresholds required by California law.

Industrial Alliance (TSX:IAG), which employs more than 3,500 people and manages some C$60 billion in assets, offers a wide range of life and health insurance products along with savings and retirement plans, RRSPs, mutual and segregated funds, securities, auto and home insurance, mortgage loans and other financial products and services.

It ranks behind Manulife Financial (TSX:MFC), Great-West Lifeco (TSX:GW) and Sun Life Financial (TSX:SLF) among Canada’s largest life insurers.

The company’s stock was up 89 cents at $31.95 at midday Friday on the Toronto Stock Exchange.