Dominion Bond Rating Service today upgraded the ratings of IGM Financial Inc., following the completion of its regular annual review of the company.

The upgrade reflects continued improvement in the firm’s financial flexibility and strong cash generation, it noted.

“The ratings are supported by IGM’s leadership position in the industry, with $96 billion of mutual fund assets under management,” DBRS said. “IGM is able to effectively compete against large competitors such as Canadian banks, which are emphasizing mutual funds and financial planning services in their branches. Certain banks have had very good mutual fund sales success in recent months. IGM’s net mutual fund sales have also shown strong improvement recently, partly due to the broad product shelf as well as favourable access to product distribution.”

Over the past few years, IGM has been gradually improving its capital position, DBRS adds. Debt/capital has improved to 24%, and EBITDA was $1.3 billion in 2005 and has remained relatively stable for the past four years.

“The outlook for the industry, and for IGM, is favourable, given demographics and good equity market returns in recent years, which helps improve investor confidence,” DBRS noted. “As the industry continues to consolidate, DBRS expects IGM to make acquisitions as opportunities arise, to add distribution, and to further scale.”