Industrial Alliance Insurance and Financial Services Inc. has signed an agreement to acquire a Texas-based life insurance company for $145 million in cash, the company said Wednesday.

The transaction to buy all of the outstanding shares of American-Amicable Holding, Inc. will be carried out through Industrial Alliances U.S. subsidiary IA American Life Insurance Co.

The acquisition is expected to be immediately accretive to earnings by $0.05 per share on an annual basis, Industrial Alliance said.

“This agreement with American-Amicable is an important milestone in our U.S. growth strategy,” said Yvon Charest, president and CEO of Industrial Alliance. “Building on our local operations in Scottsdale, Arizona, it provides us with the scale and presence to accelerate our U.S. growth plan.”

“With 100 years in the business, American-Amicable brings a stable stream of revenues and profits, a low-risk investment portfolio, a well-developed distribution network and an experienced management team,” Charest explained. “Its life insurance products target the middle-income market which is under-served and offers significant growth opportunities.”

“Strategically and operationally, this is an excellent fit for both American-Amicable and Industrial Alliance,” added Mike Stickney, president of IA American.

Founded in 1910, American-Amicable is based in Waco, Texas and employs about 115 persons. It operates through four Texas-domiciled subsidiaries: Pioneer Security Life Insurance Company, American-Amicable Life Insurance Company of Texas, Pioneer American Insurance Company and Occidental Life Insurance Company of North Carolina.

American-Amicable markets primarily traditional life insurance products to mid-market customers in the individual and final expense markets. It is licensed to sell life insurance in 49 states and territories, and its products are marketed through a national distribution network of more than 6000 independent agents. American-Amicable has a strong presence in the South, Southwest and Southeast portions of the U.S., with its primary markets being Texas, Puerto Rico, California, Illinois, Alabama and North Carolina.

American-Amicable currently has $7.1 billion of life insurance in force covering a policy base of more than 211,500. For the year ended December 31, 2009, total premiums amounted to $86 million and total assets were $687 million. New business written over the last five years has averaged almost $24 million, representing a compound annual growth rate of 13% in their current markets. American-Amicable’s balance sheet is debt-free and its portfolio is invested in primarily low-risk, fixed income securities. On March 2, 2010, its financial strength ratings were upgraded to A- (Excellent) by A.M. Best.

Subsequent to closing, American-Amicable will become a wholly-owned subsidiary of IA American. IA American intends to maintain the American-Amicable platform in Waco, Texas as well as the existing IA American presence in Scottsdale, Arizona.

The agreement with American-Amicable is subject to regulatory approvals and expected to close in the summer of 2010.

IE