A recovering stock market and “good mortality experience” in most lines of business helped Industrial Alliance Insurance and Financial Services Inc. post net income for the second quarter of 2003 of $34.7 million, a gain of 12% over the same period last year.

The Quebec City-based company said last year’s result included a $2.2-million special gain from the favourable outcome of a long-outstanding lawsuit. Excluding this gain, net income was 21% over last year.

“We have never ended a quarter in such a good financial position,” president and CEO Yvon Charest said in a news release. “The profitability for the quarter slightly exceeds the company’s target range, and the recent issue of $150 million of innovative Tier 1 capital, which was very well received by the financial markets, pushed the solvency ratio above 200%, the highest level ever reached by the company. Today, we have all the financial flexibility to energetically pursue our growth strategy.”

Per-share earnings on a diluted basis were 88¢ vs 82¢ in 2002 (76¢ excluding the special gain). The return on equity was 15.1% on an annualized basis and 13.6% for the past 12 months. “These rates are in line with the profitability parameters targeted by the company, which is seeking to obtain a return of between 13% and 15%,” the company said.

For the six months ended June 30, shareholder net income totalled $63.1 million vs $39.0 million for the same period in 2002 ($58.4 million, excluding the provision taken for Teleglobe in the first quarter of last year).

Premium income fell 3% over last year to $519.4 million for the second quarter, but at $1.4 billion since the beginning of the year, is up 4% over the first half of 2002.

Industrial Alliance credited the good persistency rate and strong first-quarter sales for helping to offset a slowdown in sales in the second quarter. However, owing in part to the upswing in the stock markets, assets under management and under administration have grown by 7% since the beginning of the year and by 12% in the last year, reaching $17.9 billion.

All lines of business did very well in the second quarter, Industrial Alliance said. “Experience was favourable in all sectors, including individual annuities, which benefited from the stock market upturn. The good results are also a reflection of strong business growth over the last few years.”