Industrial Alliance Insurance and Financial Services Inc. today reported an increase in profit for the third quarter ended September 30.

Net income for the quarter was of $59.1 million, an 8% increase over the same period last year. On a per shares basis, earnings were 73¢, up 5¢ compared to the same period last year.

Return on equity for the quarter was of 14.5%, on an annualized basis.

Industrial Alliance says the he good performance for the quarter is primarily due to the strong business growth recorded in all lines of business, strict management of profit margins on individual insurance products and a substantial increase in income on capital.

The increase in income on capital follows from “the favourable evolution of the market values of the company’s debt instrument liabilities and the supporting assets, following the realignment of risk premiums in the financial markets over the last few months.” This increased the company’s net income by $2.7 million during the quarter, or 3¢ per common share.

However, Industrial Alliance says quarterly was affected by a 15% decrease in the estimated fair market value of the $104.million in non-bank-sponsored asset-backed commercial paper (ABCP) to which the company is exposed.

This reduction in value, of which one third has been absorbed by the provisions for future policy benefits, reduces the company’s net income by $7.3 million for the quarter, 9¢ per common share.

“The fair market value of ABCP was estimated taking into account current market conditions, including the temporary absence of liquidity, a possible deterioration in the quality of the underlying assets, and fees related to the restructuring process that ABCP is currently undergoing,” Industrial Alliance says.

Record mutual fund entries for the quarter carried premiums and deposits to $1.3 billion in the third quarter, which is 30% higher than the same period last year.

“We have decided to exercise caution and reduce the value of our commercial paper right now to be able to continue concentrating on what has always been our strong point, namely business growth, particularly this quarter,” says Yvon Charest, president and CEO.

“We continue to gain market share in all lines of business. Mutual fund sales jumped 75% during the quarter and retail segregated fund sales have grown 21%. After two quarters of decreases, individual insurance sales have rebounded, with an 11% increase. Group Insurance Employee Plans obtained record sales this quarter. And fund entries have more than tripled in the Group Pensions insured annuities segment. In total, new sales increased the value of new business by 39% during the quarter, our best result so far,” Charest adds.