An upswing in the stock market helped Industrial Alliance Insurance and Financial Services Inc. (TSX:IAG) earn record net income to common shareholders of $67.4 million in the fourth quarter of 2009, the company announced on Friday.

This result translates into diluted earnings per common share of 83¢ and a return on common shareholders’ equity of 14.9% on an annualized basis.

The results mark a significant improvement from the same quarter in 2008, when the company reported a loss of $110.2 million. The company had strengthened its provisions for future policy benefits to take into account the sharp drop in the stock markets and interest rates, which resulted in a loss for the quarter.

Profit for the fourth quarter was stimulated by the stock market upswing and by the favourable evolution of the difference between the fair value of debt instruments and the underlying assets, but was somewhat affected by a modest credit loss, Industrial Alliance said.

In terms of business growth, premiums and deposits increased by 27% in the fourth quarter compared to the same period in 2008, amounting to $1.5 billion. The increase was mainly driven by sales of segregated funds and mutual funds, which grew by 83% during the quarter thanks to strong stock market performance.

Sales in the individual wealth management sector grew 68% in the fourth quarter, compared to the same period in 2008, to reach $756.2 million. This was partly driven by the increasing popularity of the Ecoflextra guaranteed minimum withdrawal benefit, Industrial Alliance said.

The individual insurance segment saw sales slip 3% to $41 million from the same quarter last year. While sales of traditional insurance products rose, the Universal Life policy savings market suffered a decline as consumers displayed reluctance to invest their savings in these policies.

“We are extremely satisfied with these results,” stated Yvon Charest, president and CEO. “Strict risk management, close monitoring of investments, strong capitalization, and a focused, balanced and realistic strategy for growth all contributed to these excellent results.”

Charest noted that the company’s income quickly returned to its pre-crisis level, and business growth is back on track. The company’s solvency ratio is above its target range, and the leeway it has available to absorb potential market downturns remains high, he added.

Charest also pointed out that the company continued to build for the future by completing two acquisitions in the fourth quarter, and by establishing a local management team in the U.S.

The company’s board of directors announced the payment of a quarterly dividend of 24.5¢ per common share, the same as last quarter.

IE