Standard & Poor’s Ratings Services has affirmed its ratings on Industrial Alliance Insurance and Financial Services Inc, including the ‘A+’ counterparty and financial strength ratings and the ‘P-2(High)’ Canadian national scale and ‘BBB+’ global scale preferred share ratings. S&P says the outlook for Industrial Alliance is stable.

The ratings agency says the financial strength rating on Industrial Alliance reflects its strength as one of Canada’s major individual life insurers, its very strong capitalization, sound earnings, and strong asset quality.

S&P notes that Industrial Alliance is currently ranked sixth in the Canadian marketplace, with a strong market position in key business segments. It has a good business base in individual life, where it ranked second in Canada for new sales during 2002. As well, the company has a good position in individual and group savings products. These business lines account for more than 75% of Industrial Alliance’s premium revenue, and more than 85% of net income.

The rating’s agency say Industrial Alliance’s strong multichannel distribution networks (career and independent) are well supported by fully integrated information technology platforms.

As well, the company’s operating performance and assets under management have shown favorable trends in the past five years. Industrial Alliance generated an adjusted net income of $99 million during the first nine months of 2003, a 14% increase from the same period last year (when adjusted for extraordinary items). S&P considers the company’s return on common shareholders’ equity of 14.1% for the 12 months ended September 2003 to be strong.

In terms of downside risk, S&P says the very competitive business environment and further consolidation in the insurance and wealth management industry will continue to challenge Industrial-Alliance’s asset growth and margins. Sales distribution channels are expected to come under increased pressure as alternate channels are created.

The stable outlook reflects Standard & Poor?s expectation that the company will continue to maintain its strong operating performance, and increase its earnings in its life and health insurance, and retirement and savings business lines. The ratings agency says expects Industrial Alliance to maintain its positive topline growth momentum and its fixed-charge coverage ratio of at least five times for 2004.