Desjardins Financial Security today reported the best ever first quarter in the company’s history.

Net earnings for the provider of life and health insurance and retirement savings products rose from $30.4 million in the first quarter of 2006 to $49.8 million on March 31, 2007, for a 63.5% increase.

Operating income reached new heights at $68.1 million, an improvement of $24 million. DFS attributes the strong quarterly performance mainly to improved disability claims experience, return on investment and administrative spending growth kept below income growth.

Insurance premium income stood at $580.5 million, up $60.1 million. This brings total insurance, annuity and other premium income to $783.7 million for the period.

Insurance sales grew by 94.8% and totalled $98 million, $47.7 million more than on March 31, 2006.

Assets under management and administration stood at $22.3 billion, for a $2.3 billion increase since the beginning of the year.

DFS continues to contribute solidly to the profitability of its parent company, Desjardins Group. From January to March 2007, Desjardins Group accumulated combined surplus earnings before patronage dividends of $265 million. The portion of DFS’ net earnings attributable to its ultimate shareholders, the Desjardins caisses, stood at $48 million, an improvement of $19.6 million. Return on shareholder equity was 21.6%, compared to 16.3% in the first quarter of 2006, and remains one of the best in the financial services industry.

Alban d’Amours, president and CEO of Desjardins Group, and also CEO of DFS, said he was very satisfied with the company’s performance in the first quarter of 2007. “Results like these, in a market as competitive as the Canadian life and health insurance market, are remarkable in themselves and a tribute to the quality of our insurance subsidiary’s management team. Already well-established in Quebec, Desjardins Financial Security is perfectly positioned to pursue its development elsewhere in Canada, where it wants to double its market shares by the end of 2008,” he said in a news release.

Richard Fortier, president and COO of DFS, was particularly pleased with the company’s strong group and business insurance sales growth. “The visibility we gained when we acquired the Government of Labrador and Newfoundland public service employees group insurance contract in 2006 has helped us sign major new contracts not only outside Quebec, where sales have increased by close to 70% in the first quarter, but also in Quebec, where we have more than tripled our sales over the same period.”

In the first three months of 2007, net earnings for the group insurance line of business, including group and business insurance plans and plans offered through financial institutions, like the Desjardins caisses, stood at $31.8 million, compared to $18.9 million in 2006. In group and business insurance, sales have more than doubled compared to the first quarter of 2006, increasing from $42 million to $88.7 million. Premiums totalled $339.0M, for an improvement of $49.2 million. These excellent results are due to the acquisition of new groups of 1,000 or more members, and the natural growth of existing groups. Premiums from plans offered through financial institutions, especially credit insurance plans, stood at $117 million, for a $5.1 million increase.

Individual insurance net earnings totalled $12.9 million, compared to $10.4 million in the first three months of 2006. The 16% increase in Vision coverages sold through financial security advisors assigned to the caisses is primarily responsible for the 4.1% gain in gross premium volume, which stood at $116.4 million for the period. Sales totalled $9.3 million, a $1 million improvement due mainly to a solid performance outside Quebec. Lastly, the premium volume for products sold by direct distribution stood at $21.5 million, representing a $1.7 million increase over the first quarter of 2006.

In Savings, net earnings for the first three months of 2007 stood at $5.1 million, compared to $1.2 million in 2006. Overall sales, which totalled $368 million, were down by $19.8 million over 2006. Mutual fund sales stood at $226.8 million, compared to $162.4 million a year earlier. In individual savings, Millennia sales had an excellent start to the year, crossing the $50 million mark, for an 18.4% increase over 2006 figures. The Millennia III family of segregated funds was expanded and now includes four new Millennia III Franklin Templeton/QuotentiaI funds. These new funds were responsible for generating 30.7% of the quarter’s sales. At $85.3 million, total sales of individual savings products were down $8.6 million from 2006. Group retirement savings sales totalled $55.9 million, a drop of $75.6 million from the first quarter of 2006, during which major contracts were signed and sales stood at $131.5 million.