Industrial Alliance Insurance and Financial Services Inc. today reported a modest 2% increase in profit for the second quarter ended June 20.

Net income for the quarter was US$63.4 million, compared with US$62.1 million the year ago period. Earnings per share for the quarter were 78¢, compared with 77¢ in the year ago period.

The company said net income was constrained by higher than expected death claims in the individual insurance sector, abnormally high auto and home insurance claims due to poor weather, and a $5 million provision for a bond investment that defaulted, the company said. After-tax, the loss on the bond default amounted to $3.6 million, or 4¢ a share.

Premiums and mutual fund deposits inched up to $1.53 billion in quarter, from $1.51 billion a year earlier.

Mutual fund sales fell 16% due to unstable markets, the company said. Industrial Alliance sells and manages the IA Clarington family of mutual funds.

Industrial Alliance also boosted its quarterly dividend by 2¢, or 9% to 24.5¢ a share.