Industrial Alliance Insurance and Financial Services Inc. will take an additional provision of $64.9 million ($43.4 million after tax) to cover possible losses on its investment in failed hedge fund firm Norshield.

The firm announced its decision late Friday in light of the observations contained in the report tabled last week at the Ontario Superior Court of Justice by Norshield’s receiver RSM Richter Inc.

This provision, added to that of $13 million ($8.7 million after tax) announced on November 2, which brings the company’s total provision in Norshield to $77.9 million, which represents its entire investment in Norshield.

“As we announced in our news release of November 2, 2005, none of our clients will lose money in this affair,” stated Yvon Charest, president and CEO of Industrial Alliance. “Long before the Richter report was tabled, we made sure that we protected the interests of our clients by transferring all amounts invested in Norshield funds to other funds, thereby substituting for them as investor in Norshield funds.”

This provision does not in any way alter the financial solidity and flexibility that Industrial Alliance benefits from, it said. Its excess capital totals $160 million, compared with about $200 million at the end of the third quarter.

In the last few months, the company has also tightened its selection criteria for external fund managers, it repoprts. “We now require direct access at all times to the portfolio securities deposited with the custodian,” explained Charest, “unless the fund managers are highly renowned institutions or have affiliations with large financial institutions. We are confident that these steps will enable us to prevent this type of situation from happening again.”

“The posting of a maximum provision for Norshield, the protection that we have provided to our clients, as well as the new selection criteria that we have implemented for choosing external managers are reflections of a responsible and prudent company,” Charest concluded. “We have always made it a point of honour to manage the company conscientiously and we intend to continue ensuring the same management discipline in the future.”

http://www.newswire.ca/en/releases/archive/November2005/18/c7306.html