Surging equity markets helped Industrial Alliance Insurance and Financial Services Inc. post a 17% increase in net income in the third quarter, the company said Wednesday.

Net income to common shareholders was $60.1 million, or 74¢ a share, for the quarter ended September 30, compared with $51.2 million, or 63¢ a share, a year ago.

Return on equity for the quarter climbed to 13.7% on an annualized basis, up from 11.5% in the third quarter of 2008. This return is in the upper end of the 12% to 14% range targeted by the company for 2009, Industrial Alliance says.

Industrial Alliance says profitability for the quarter was stimulated by the stock market upswing and by a $1.1 million gain after taxes resulting from the favourable evolution of the difference between the market value of the debt instruments and that of the underlying assets.

Profit was also affected by a $1.2 million after-tax shortfall resulting from lower sales in the Creditor Insurance sector. Industrial Alliance did not post any credit losses during the quarter and did not have to strengthen its provisions for future policy benefits, the company says.

“Our strict management during the crisis and the general improvement in market conditions are paying off,” says Yvon Charest, president and CEO.

Sales jumped 18% in the Individual Insurance sector in the third quarter, compared to the same period last year, and the downward trend that has prevailed in the Individual Wealth Management sector since the financial crisis began has been reversed, with a 2% increase in sales in the third quarter.

Premiums and deposits totalled $1.2 billion in the third quarter, 9% lower than the same period last year. Industrial Alliance says the decrease is solely attributed to the Group Pensions sector, since premiums and deposits are either stable or increasing in all other sectors.

The strong stock market upswing during the quarter and positive net fund entries in all lines of business increased assets under management and under administration to a new high of $56.7 billion as at September 30, 2009, up 5% for the quarter and 15% for the year-to-date. All asset components increased, particularly segregated funds and mutual funds, Industrial Alliance says.

IE