Industrial Alliance Insurance and Financial Services Inc. (TSX:IAG) has signed an agreement with MD Physician Services Inc. to acquire the individual life insurance portfolio of MD Life Insurance Co, the companies said Friday.

MD Life sells life insurance and annuity products to Canadian physicians. It is 55% owned by MD Physician Services, a company owned by the Canadian Medical Association, and 45% by Industrial Alliance.

The acquired life insurance portfolio contains over 8,600 policies and riders, which generated $62 million in premium income in 2008, corresponding to actuarial liabilities of $307 million as at Dec. 31, 2008, Industrial Alliance says.

The acquired policies are already administered by Industrial Alliance.

Under the agreement, MD Life will continue to manufacture the Group Annuity policy MD Stable Income Fund. The fund will continue to be distributed by MD Insurance Agency Ltd., a subsidiary of MD Physician Services, and be managed by Industrial Alliance. The agreement also provides for MD Insurance Agency to offer Canadian physicians the full line of Industrial Alliance insurance and annuity products, including life insurance, health insurance and segregated funds.

“This represents a new milestone in the partnership that we have built with the Canadian Medical Association for over forty years,” says Yvon Charest, president and CEO of Industrial Alliance.

“While this agreement allows us to continue to offer our life and health insurance and annuity products to Canadian physicians, it gives us the opportunity to recoup an entire business block of policies that we were already administering in our core life insurance line of business,” he says.

Brian Peters, president and CEO of MD Physician Services says the “deal strengthens our competitive position in our insurance offering and supports our strategy of being Canada’s leading advisor to physicians.”

“This agreement will benefit our clients and representatives, since they will now have access to the full line of Industrial Alliance’s life and health insurance and annuity products, with the same quality service levels.”

The deal is subject to governance, regulatory and ministerial approvals, the companies say.

MD Physician Services specializes in wealth and practice management and has more than $24 billion in assets under management.

Industrial Alliance is the fourth-largest life and health insurance company in Canada, with more than 3,400 employees and $56 billion in assets.

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