FINANCIAL INFORMATION PACKAGE

Transcription

1 FINANCIAL INFORMATION PACKAGE FOR THE FIRST QUARTER OF 2009 As at March 3, 2009 A PARTNER YOU CAN TRUST. SRM-58A(9) (09-04)

2 TABLE OF CONTENTS PAGE HIGHLIGHTS PROFITABILITY 3 SPECIFIED ITEMS 4 SOURCES OF EARNINGS BY LINE OF BUSINESS 5 BUSINESS GROWTH 7 INVESTED ASSETS 9 SOLVENCY AND CAPITALIZATION 2 EMBEDDED VALUE 3 SHARE INFORMATION 5 OTHER INFORMATION 6 CONSOLIDATED FINANCIAL STATEMENTS 7 GLOSSARY 2 Certain prior period amounts have been reclassified to conform to current period presentation.

3 HIGHLIGHTS Three months ended March 3 Twelve months ended December 3 (in millions of dollars, unless otherwise indicated) Variation 2008 PROFITABILITY Net income attributed to shareholders (2%) 7.9 Less: preferred shareholders dividends % 5.8 Net income available to common shareholders (25%) 66. Return on common shareholders' equity Quarter annualized.2% 4.5% (330 bps) --- Trailing 2 months 3.0% 4.8% % Earnings per common share Basic $0.58 $0.77 ($0.9) $0.82 Diluted $0.58 $0.76 ($0.8) $0.82 BUSINESS GROWTH Sales by line of business Individual Insurance (7%) 46.9 Individual Wealth Management 2 General fund % Segregated funds (25%) 85.7 Mutual funds (38%),26.2 Total (26%) 2,422.4 Group Insurance 3 Employee plans (2%) 92.9 Creditor insurance (22%) 94.2 Special Markets Group (SMG) % 2.9 Group Pensions %,4.9 Premiums and deposits by line of business Individual Insurance % Individual Wealth Management (26%) 2,422.4 Group Insurance % Group Pensions %,4.9 General Insurance % 28.4 Total,238.5,48.4 (3%) 5,542.9 Assets under management/administration 49, ,326.5 (%) 49,472.2 Individual Insurance sales (new business) are defined as first-year annualized premiums. 2 Individual Wealth Management sales (new business) are defined as follows: premiums for the general fund and for segregated funds, and deposits for mutual funds. 3 Group Insurance sales (new business) are defined as follows: first-year annualized premiums for Employee Plans, including premium equivalents (administrative services only contracts); gross premiums (premiums before reinsurance) for Creditor Insurance; and premiums for Special Markets Group. 4 Group Pensions sales (new business) are defined as premiums. March 3, 2009 (First Quarter) Page

4 HIGHLIGHTS (continued) (in millions of dollars, unless otherwise indicated) March 3, 2009 December 3, 2008 March 3, 2008 QUALITY OF INVESTMENTS Impaired investments and provisions (excluding insured loans) Net impaired investments Net impaired investments as a % of total investments 0.06% 0.06% 0.2% Provisions Provisions as a % of gross impaired investments 38.5% 37.5% 34.8% Bonds Rated BB and lower 0.26% 0.23% 0.% Delinquency rate 0.0% 0.0% 0.0% Mortgages Delinquency rate 0.26% 0.26% 0.33% Proportion of delinquent loans that are insured 9.9% 20.7% 2.6% Real estate: occupancy rate 94.2% 94.0% 96.2% SOLVENCY RATIO 204% 99% 88% March 3, 2009 (First Quarter) Page 2

5 PROFITABILITY 2009 (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Annual Annual Net income Net income (loss) 50.6 (08.7) Less: net income (loss) attributed to participating policyholders (.7) Net income (loss) attributed to shareholders 49.8 (08.7) Less: preferred shareholders dividends Net income (loss) available to common shareholders 46.2 (0.2) Earnings (loss) per common share Basic $0.58 ($.37) $0.64 $0.79 $0.77 $0.79 $0.74 $0.78 $0.72 $0.82 $3.02 Diluted $0.58 ($.37) $0.63 $0.78 $0.76 $0.78 $0.73 $0.77 $0.72 $0.82 $2.99 Return on common shareholders' equity Quarter annualized 2.2% (25.8%).5% 4.4% 4.5% 5.2% 4.5% 5.6% 4.9% Trailing 2 months 3.0% 4.0% 3.9% 4.6% 4.8% 5.% 5.2% 5.4% 5.7% 4.0% 5.% Net income (loss) available to common shareholders by line of business Individual Insurance 30.2 (0.4) (26.9) 06.3 Individual Wealth Management Group Insurance Group Pensions 4.5 (3.8) (6.9) 8.5 Total 46.2 (0.2) In the first quarter of 2007, the ROE was calculated using the equity as of January, March 3, 2009 (First Quarter) Page 3

6 SPECIFIED ITEMS (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Annual Annual Impact on net income to common shareholders Impact of credit Permanent loss in value on investments (0.7) (2.2) (8.6) (0.8) --- Provision on investments (3.6) (3.6) --- Decrease in value of the non-bank-sponsored ABCP --- (0.6) (7.3) (0.6) (7.3) Impact of stock market downturn Decrease in income on UL policies (.3) (5.7) (4.) (9.8) --- Lower than expected management fees (3.9) (7.5) (4.6) --- (.8) (23.9) --- Lower than expected income on capital (0.6) (2.3) (2.3) (4.6) --- Other Net variation in the fair value of the debentures and the underlying assets (.6) (.7) 2.7 (0.) (0.3) Changes in assumptions --- (38.2) (0.7) (38.2) (0.7) Total.0 (66.5) (0.7). (3.4) (2.4) (4.6) (0.) (0.3) (79.5) (7.4) Impact on earnings per common share Impact of credit Permanent loss in value on investments ($0.0) ($0.03) ($0.) ($0.4) --- Provision on investments ($0.04) ($0.04) --- Decrease in value of the non-bank-sponsored ABCP --- ($0.3) ($0.09) ($0.3) ($0.09) Impact of stock market downturn Decrease in income on UL policies ($0.0) ($0.07) ($0.05) ($0.2) --- Lower than expected management fees ($0.05) ($0.22) ($0.06) --- ($0.02) ($0.3) --- Lower than expected income on capital ($0.0) ($0.03) ($0.02) ($0.05) --- Other Net variation in the fair value of the debentures and the underlying assets $0.0 $ $0.0 ($0.02) ($0.02) $0.03 ($0.00) ($0.00) $0.09 $0.0 Changes in assumptions --- ($.7) ($0.0) ($.7) ($0.0) Total $0.02 ($2.07) ($0.3) $0.0 ($0.04) ($0.03) ($0.06) ($0.00) ($0.00) ($2.23) ($0.09) Impact by line of business Individual Insurance (.5) (38.5) (4.) (.2) (7.3) (42.6) (8.5) Individual Wealth Management (3.6) (8.3) (4.2) --- (.8) (0.6) (24.3) (0.6) Group Insurance 0.0 (0.7) (0.8) (.5). Group Pensions (0.) (2.9) (0.9) (3.6) (7.4) --- Income on capital (9.3). (.6) (.7) 2.7 (0.) (0.3) (8.) 0.6 Total.0 (68.7) (9.3) (2.5) (3.4) (2.4) (4.6) (0.) (0.3) (93.9) (7.4) Weighted average number of common shares (in millions) Basic Diluted Estimated impact of stock market downturn as compared to the net earnings that the Company would have earned under normal market conditions. March 3, 2009 (First Quarter) Page 4

7 SOURCES OF EARNINGS BY LINE OF BUSINESS 2009 (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Annual Annual Individual Insurance Operating profit (loss) Expected profit on in-force Experience gain (loss) (.9) (25.5) (5.5) (2.5) (0.7) 0.7 (8.7) (0.9) 0.0 (34.2) (8.9) Gain (strain) on sales (20.8) (2.7) (2.0) (9.8) (9.) (22.5) (20.6) (22.3) (7.6) (8.6) (83.0) Changes in assumptions 0.0 (75.6) (.6) (75.6) (.6) Total 25.8 (7.6) (9.0) 9.0 Income on capital Income taxes (9.8) 47.0 (8.5) (0.4) (0.3) (2.) (8.5) (0.2) (.4) 7.8 (42.2) Net income (loss) attributed to shareholders, adjusted 27.6 (5.4) (3.7) 06.0 Less: preferred shareholders dividends Net income (loss) available to common shareholders, adjusted 25.4 (5.4) (3.7) 06.0 Other items (.0) (.) (0.2) Net income (loss) available to common shareholders 30.2 (0.4) (26.9) 06.3 Individual Wealth Management Operating profit Expected profit on in-force Experience gain (loss) (4.6) (23.4) (6.9) 0.0 (.8) (0.) (32.) 6. Gain (strain) on sales (.) (0.3) (.) (.3) (.0) (.) (.5) (0.8) (.2) (3.7) (4.6) Changes in assumptions 0.0 (.9) (0.9) (.9) (0.9) Total Income on capital Income taxes (2.4) (.2) (7.3) (8.6) (6.5) (8.6) (8.8) (9.) (7.7) (23.6) (34.2) Net income attributed to shareholders, adjusted Less: preferred shareholders dividends Net income available to common shareholders, adjusted Other items (0.) (0.) 0.3 (0.) Net income available to common shareholders Group Insurance Operating profit Expected profit on in-force Experience gain (loss) (4.6) (5.5) (0.) 0.3 (3.0) (2.7) (8.3) 0.4 Gain (strain) on sales Changes in assumptions 0.0 (.0) (.0).5 Total Income on capital Income taxes (2.7) (.2) (3.9) (5.5) (.3) (4.0) (4.8) (5.3) (3.7) (.9) (7.8) Net income attributed to shareholders, adjusted Less: preferred shareholders dividends Net income available to common shareholders, adjusted Other items (0.3) (0.3) (0.).4 0. Net income available to common shareholders "Other items" include the net variation in the fair value of the debentures and the underlying assets, after tax. March 3, 2009 (First Quarter) Page 5

8 SOURCES OF EARNINGS BY LINE OF BUSINESS (continued) 2009 (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Annual Annual Group Pensions Operating profit (loss) Expected profit on in-force Experience gain (loss) 0.0 (9.5) (2.8) (5.2) (0.3) (7.8).7 Gain (strain) on sales 0.2 (0.4) (.3) (.) 0. (0.2) (0.5) (0.8) (0.6) (2.7) (2.) Changes in assumptions 0.0 (6.7) (6.7) 0.0 Total 3.6 (2.5) 0.9 (.4) (7.5) 5.8 Income on capital Income taxes (.) 5.5 (0.2) 0.0 (.5) (2.) (.5) (.4) (.6) 3.8 (6.6) Net income (loss) attributed to shareholders, adjusted 3.7 (4.6) (7.7) 8.4 Less: preferred shareholders dividends Net income (loss) available to common shareholders, adjusted 3.7 (4.6) (7.7) 8.4 Other items (0.2) (0.2) Net income (loss) available to common shareholders 4.5 (3.8) (6.9) 8.5 Total company Operating profit (loss) Expected profit on in-force Experience gain (loss) (.) (63.9) (5.3) (7.4) (5.8) 0. (6.5) (92.4) (0.7) Gain (strain) on sales (2.7) (22.4) (23.4) (22.2) (20.0) (23.8) (22.6) (23.9) (9.4) (88.0) (89.7) Changes in assumptions 0.0 (95.2) (.0) (95.2) (.0) Total 4.2 (8.4) Income on capital Investment income Realized gains (losses) on assets available-for-sale (2.9) Total Income taxes (6.0) 50. (9.9) (24.5) (9.6) (26.8) (23.6) (26.0) (24.4) (3.9) (00.8) Net income (loss) attributed to shareholders, adjusted 42.3 (6.5) Less: preferred shareholders dividends Net income (loss) available to common shareholders, adjusted 38.7 (8.0) Other items (.6) (.7) 2.7 (0.) (0.3) Net income (loss) available to common shareholders 46.2 (0.2) "Other items" include the net variation in the fair value of the debentures and the underlying assets, after tax. March 3, 2009 (First Quarter) Page 6

9 BUSINESS GROWTH 2009 (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Annual Annual Revenues Premiums General fund , ,463.7 Segregated funds ,66.6,565.6 Total 989.4,006.6,4.,42.4, ,030.7,77.4 4,28.7 4,029.3 Net investment income Investment income Amortization of realized and unrealized gains on real estate Realized gains (losses) on assets available-for-sale (2.9) Variations in the market value of assets held-for-trading (54.4) (20.5) (495.0) (49.6) (93.9) 53.2 (596.0) 25.9 Change in provision for losses (0.) (5.0) (0.) (0.) (5.2) 0.2 Total 60.2 (43.9) (393.7) (79.9) 70.3 (88.0) Fees and other income Total revenues,30.7, ,33.9,289.2,332.6,62.4,042.5,434. 4,465. 4,97.6 Premiums and deposits by line of business Individual Insurance Individual Wealth Management , ,2.9 Group Insurance Group Pensions , General Insurance Total,238.5,22.0,374.8,528.6,48.4,37.5,30.8,52.8, , ,826.2 Individual Insurance Sales Premiums Individual Wealth Management Sales 3 General fund Segregated funds Mutual funds ,26.2,796.9 Total , ,2.9 Net investment fund sales Segregated funds Mutual funds 57.8 (7.3) Total ,377.8 Assets under management General fund,665.4,627.9,583.,565.8,590.8,584.4,588.0,638.,692.2,627.9,584.4 Segregated funds 5,578. 5,562. 6,247. 6,943. 6, , ,73. 6,66.3 6, ,562. 6,695.9 Mutual funds 5,08.8 5, ,86.7 6, ,66.3 6, , , , , ,834.7 Total 2, , ,06.9 5,397. 4, ,5.0 5,30. 5,43.4 4, , ,5.0 2 Individual Insurance sales (new business) are defined as first-year annualized premiums. 3 Individual Wealth Management sales (new business) are defined as follows: premiums for the general fund and for segregated funds, and deposits for mutual funds. March 3, 2009 (First Quarter) Page 7

10 BUSINESS GROWTH (continued) 2009 (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Annual Annual Group Insurance Sales 2 Employee plans Creditor Insurance Special Markets Group (SMG) Premiums and premium equivalents Employee plans Creditor Insurance Special Markets Group (SMG) Total premiums Premium equivalents Total , Group Pensions Sales 3 Accumulation contracts General fund 7.4 (.2) Segregated funds Total Insured annuities (general fund) Total , Assets under management Accumulation contracts General fund Segregated funds 3, ,26.3 3, , , , , ,35.9 3,98.5 3,26.3 3,379.5 Other Total 3,469. 3, , , , , ,5.0 3,490. 3, , ,560.6 Insured annuities (general fund) 2, , ,60.0 2, ,56.4 2, , ,507. 2, , ,556.6 Total 6,4. 6,40.2 6, ,38.0 6,086. 6,7.2 6, , ,87.2 6,40.2 6,7.2 Distribution of premiums and deposits by region Atlantic provinces 4.% 3.9% 4.3% 4.7% 5.7% 4.8% 6.0% 7.4% 4.8% 4.7% 5.8% Quebec 48.% 43.6% 37.9% 44.5% 44.9% 46.5% 40.7% 40.0% 44.0% 42.8% 43.% Ontario 26.9% 30.4% 38.8% 28.2% 30.4% 28.8% 3.4% 33.5% 28.3% 3.8% 30.9% Western provinces 9.4% 20.7% 7.8% 2.7% 8.0% 8.5% 20.7% 7.8% 9.6% 9.6% 9.% Outside Canada.5%.4%.2% 0.9%.0%.4%.2%.3% 3.3%.%.% Total 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% Assets under management/administration Assets under management General fund 5, ,45.2 5, , ,33.6 5,04.3 4, , , ,45.2 5,04.3 Segregated funds 8, , , ,65.8 0,53.8 0,20.9 0,70. 0,05.6 9, , ,20.9 Mutual funds 5, , , ,90.8 6, , ,02.2 6,90.6 6, , ,846.9 Other Total 30, ,23.8 3, , , , , , , , ,792.7 Assets under administration 9,34.7 9, , ,74.2 7, ,68.9 8, , , , ,68.9 Total 49, , , , , ,4.6 50, , , , ,4.6 2 Group Insurance sales (new business) are defined as follows: first-year annualized premiums for Employee Plans, including premium equivalents (administrative services only contracts); gross premiums (premiums before reinsurance) for Creditor Insurance; and premiums for Special Markets Group. 3 Group Pensions sales (new business) are defined as premiums. March 3, 2009 (First Quarter) Page 8

11 INVESTED ASSETS (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Value and distribution of investments Book value of investment portfolio 4,55.9 4, , , ,36.7 4,24.3 3, , ,735.5 Distribution of investments by financial instrument category Available-for-sale 9.9% 0.0% 9.2% 9.5% 8.8% 8.7% 8.2% 8.5% 7.9% Held-for-trading 50.9% 5.3% 53.4% 54.8% 57.8% 58.6% 59.9% 60.% 6.4% Loans and receivables 34.7% 34.2% 33.6% 32.% 29.8% 27.8% 27.0% 26.6% 26.% Real estate 4.4% 4.4% 3.7% 3.5% 3.5% 3.4% 3.5% 3.5% 3.5% Other 0.% 0.% 0.% 0.% 0.%.5%.4%.3%.% Total 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% Distribution of investments by asset category Bonds 55.7% 55.2% 53.2% 54.4% 57.3% 57.2% 57.6% 59.3% 6.4% Mortgages 24.% 24.3% 23.9% 23.2% 2.0% 20.5% 9.7% 9.3% 8.3% Stocks 9.2% 9.3%.2% 2.7%.9% 2.4% 2.3% 2.4%.9% Real estate 4.4% 4.4% 3.7% 3.4% 3.5% 3.4% 3.5% 3.5% 3.5% Other 6.6% 6.8% 8.0% 6.3% 6.3% 6.5% 6.9% 5.5% 4.9% Total 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% Distribution of investments by region Atlantic provinces 3.9% 3.9% 4.% 4.% 4.% 4.% 4.0% 4.0% 3.9% Quebec 48.% 48.6% 46.5% 47.0% 48.5% 48.% 5.7% 49.6% 50.0% Ontario 20.8% 20.5% 2.% 20.8% 20.2% 20.6% 9.2% 20.0% 20.0% Western provinces 7.8% 7.5% 8.% 7.6% 7.% 6.8% 5.5% 5.8% 5.8% Outside Canada 9.4% 9.5% 0.2% 0.5% 0.% 0.4% 9.6% 0.6% 0.3% Total 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% Impaired investments and provisions Gross impaired investments (excluding insured loans) Less: impact of financial instrument as at January, Gross impaired investments after financial instrument impact Net impaired investments (excluding insured loans) Bonds Mortgages Real estate acquired to settle loans Total Provisions for losses At beginning of period Increase for the period Decrease for the period 0.0 (0.) (3.7) (3.5) 0.0 (0.6) Transfer of provisions to investments (.8) Impact of financial instrument as at January, (78.0) At end of period Provisions for losses by type of investment Bonds Mortgages Real estate acquired to settle loans Total Net impaired investments as a % of total investments 0.06% 0.06% 0.06% 0.% 0.2% 0.08% 0.08% 0.07% 0.06% Provisions as a % of gross impaired investments 38.5% 37.5% 37.0% 35.6% 34.8% 43.6% 44.7% 50.4% 52.9% March 3, 2009 (First Quarter) Page 9

12 INVESTED ASSETS (continued) 2009 (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Bonds Book value of the bond portfolio 8,3.8 7, , , , ,27.2 7, ,23.6 8,428.0 Distribution of bonds by financial instrument category Available-for-sale 4.2% 4.7% 3.7% 3.7% 2.%.8% 0.7%.% 9.5% Held-for-trading 75.0% 74.7% 75.3% 76.2% 78.3% 78.8% 79.8% 79.8% 8.% Loans and receivables 0.8% 0.6%.0% 0.% 9.6% 9.4% 9.5% 9.% 9.4% Total 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% Distribution by credit rating Rating - AAA.06%.80% 2.9%.90% 2.7% 3.70% 3.30% 3.90% 4.7% Rating - AA 7.04% 8.24% 9.58% 20.25% 9.90% 9.80% 9.30% 8.70% 7.9% Rating - A 64.97% 63.06% 6.08% 60.95% 6.0% 60.53% 6.20% 6.57% 6.70% Rating - BBB 6.67% 6.67% 7.0% 6.82% 6.8% 5.86% 5.90% 5.54% 6.2% Rating - BB and lower 0.26% 0.23% 0.05% 0.08% 0.% 0.% 0.30% 0.29% 0.28% Total 00.00% 00.00% 00.00% 00.00% 00.00% 00.00% 00.00% 00.00% 00.00% Distribution by category of issuer Governments 60.2% 6.% 57.% 57.7% 59.4% 59.7% 60.6% 6.% 6.5% Municipalities.4%.4%.5%.8%.8%.8%.8%.6%.6% Corporates - Public issues 22.7% 2.6% 24.5% 24.3% 23.4% 23.4% 23.0% 23.6% 23.7% Corporates - Private issues 5.7% 5.9% 6.9% 6.2% 5.4% 5.% 4.6% 3.7% 3.2% Total 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% Other quality measures Delinquency rate 0.0% 0.0% 0.0% 0.0% 0.0% 0.02% 0.02% 0.02% 0.0% Mortgages Book value of the mortgage portfolio 3, ,508. 3, ,35.6 3,09.2 2, , , ,57.2 Distribution of mortgages by financial instrument category Loans and receivables 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% Distribution by type of property Residential 9.3% 9.4% 9.7% 20.% 2.2% 2.6% 22.8% 22.3% 2.% Multi-residential 66.7% 66.5% 66.2% 65.2% 62.2% 60.2% 60.5% 60.0% 60.0% Non-residential 4.0% 4.% 4.% 4.7% 6.6% 8.2% 6.7% 7.7% 8.9% Total 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% Distribution by type of loan Insured 72.5% 7.3% 72.4% 7.7% 69.5% 65.0% 65.5% 63.2% 6.5% Conventional 27.5% 28.7% 27.6% 28.3% 30.5% 35.0% 34.5% 36.8% 38.5% Total 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% Other quality measures Delinquency rate 2 Insured loans 0.07% 0.08% 0.09% 0.4% 0.0% 0.0% 0.% 0.2% 0.% Conventional loans 0.76% 0.72% 0.87% 0.8% 0.86% 0.27% 0.32% 0.0% 0.00% Total 0.26% 0.26% 0.3% 0.33% 0.33% 0.6% 0.8% 0.% 0.07% Proportion of delinquent loans that are insured 9.9% 20.7% 22.0% 30.8% 2.6% 4.0% 39.6% 66.8% 99.4% Delinquency rate, including real estate acquired to settle loans 0.28% 0.28% 0.3% 0.67% 0.72% 0.55% 0.59% 0.52% 0.49% Proportion of conventional restructured loans 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 2 The delinquency rate is calculated according to mortgage loans in default over the value of the portfolio. March 3, 2009 (First Quarter) Page 0

13 INVESTED ASSETS (continued) 2009 (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Stocks Book value of the stock portfolio,332.4,340.2,588.3,840.4,708.3,764.2,7.7,690.4,635.9 Distribution of stocks by financial instrument category Available-for-sale 2.4% 9.2% 7.0% 6.4% 5.6% 5.6% 6.9% 5.8% 7.0% Held-for-trading 78.6% 80.8% 83.0% 83.6% 84.4% 84.4% 83.% 84.2% 83.0% Total 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% Distribution of stocks by category Common 7.2% 8.8% 2 5.4% 4.3% 5.9% 5.7% 5.5% 5.5% 5.9% Preferred 2.2% 0.3% 8.8% 7.7% 8.% 8.% 8.5% 8.6% 9.5% Market indices 3.7% 26.0% 25.% 25.6% 25.9% 25.6% 25.8% 25.9% 25.5% Investment fund units and other 38.9% 44.9% % 62.4% 60.% 60.6% 60.2% 60.0% 59.% Total 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% 00.0% Real estate Book value of the real estate portfolio Market value of the real estate portfolio Market value/book value 28.6% 29.4% 25.4% 27.4% 28.0% 29.5% 20.% 7.4% 8.4% Occupancy rate 94.2% 94.0% 94.0% 96.5% 96.2% 95.5% 95.% 94.9% 95.0% Other Provision for potential loss on fixed-income securities contained in the policy liabilities The variation is explained by the fact that some investments matching the savings portion of the UL policies have been transferred from the investment fund units to the common stock. The company's risk profile is unchanged. March 3, 2009 (First Quarter) Page

14 SOLVENCY AND CAPITALIZATION (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Solvency ratio Available capital Tier Common shares Preferred shares Innovative instruments in Tier capital Retained earnings,54.4,27.7,260.,230.3,85.3,48.3,5.4,072.4,024.7 Other Gross Tier capital 2, ,076. 2,08.0 2,070. 2,026.9,959.4,929.3,890.5,844.3 Less: Goodwill and other intangible assets Adjustment for negative reserves Other Net Tier capital,744.3,726.0,758.4,744.2,709.,685.6,655.,64.2,568.0 Tier 2 Limited life instruments allowed (subordinated debt) (Tier 2B) Other (Tier 2C) Total Tier 2 capital allowed Total Tier and Tier 2 capital 2,080.0, ,005.9,90.8,87.5,849.5,820.3,784.5,747.2 Less: deductions and adjustments (total of Tier and Tier 2) Total available capital 2,033.9,92.4,960.3,853.4,827.,806.2,773.6,733.4,699.6 Required capital Asset default risk and market risk Insurance risks Interest rate risks Total of required capital , Solvency ratio 204% 99% 200% 85% 88% 93% 97% 97% 97% Capital structure Debentures Participating policyholders' account Equity Common shares Preferred shares Contributed surplus Retained earnings,54.4,27.7,260.,230.3,85.3,48.3,5.4,072.4,024.7 Accumulated other comprehensive income (53.4) (54.3) (32.5) (2.4) 0.5 (3.8) Total,886.,857.9,92.4,899.7,865.7,799.7,774.4,738.4,699.5 Total capital structure 2, , , ,245. 2,28.9 2,33.6 2,08.4 2, ,046.6 Debt measures Debentures/capital structure 9.9% 7.0% 7.2% 4.2% 4.8% 4.5% 4.6% 5.% 5.8% Debentures and preferred shares/capital structure 29.3% 26.8% 22.5% 9.8% 20.4% 20.4% 20.5% 2.% 2.9% Coverage ratio (in number of times) Credit ratings Standard & Poor's DBRS A.M. Best Financial Strength/Outlook A+ (Strong)/Negative IC-2/Stable A (Excellent)/Stable Subordinated Debentures A A a - Innovative Tier Capital A- A (low)yn bbb+ Preferred Shares A- Pfd-2 (High)n bbb+ 2 Debentures: linear amortization over the five-year period preceding the maturity of the debentures. 3 The coverage ratio, which is expressed as a number of times, is obtained by dividing pre-tax income, for the last twelve months, before financing expenses, by financing expenses. March 3, 2009 (First Quarter) Page 2

15 EMBEDDED VALUE (in millions of dollars, unless otherwise indicated) Embedded value Twelve months ended December 3, 2008 Contribution to growth Embedded value per share Embedded value Twelve months ended December 3, 2007 Contribution to growth Embedded value per share Embedded value Twelve months ended December 3, 2006 Contribution to growth Embedded value Total value 2, , , Value per common share $ $ $30.64 Embedded value/book value ratio (in number of times) Embedded value added Recurring items Expected increase in embedded value % $ % $ % $.86 New sales % $ % $ % $.9 Total 3.2% $ % $ % $3.05 Non-recurring items Experience gains or losses Related to equity markets (427) (5.3%) ($5.35) (6) (0.3%) ($0.08) 5 2.4% $0.64 Other (37) (.4%) ($0.47) % $ % $.30 Changes in assumptions (56) (2.0%) ($0.70) 7 0.3% $0.09 (4) (0.7%) ($0.8) Change to the solvency requirements % $ Acquisitions (67) (2.4%) ($0.84) (8) (0.4%) ($0.0) Provision for ABCP () (0.4%) ($0.3) (7) (0.3%) ($0.09) Impact of accounting standards on financial instrument (8) (0.8%) ($0.23) Total (532) (9.%) ($6.66) 2 4.9% $ % $.43 Capital movements 9 0.7% $0.05 (7) (0.3%) ($0.05) 6 0.3% ($0.02) Total before dividends paid to common shareholders (202) (7.2%) ($2.72) % $ % $4.46 Common shareholders' dividends (75) (2.7%) ($0.94) (6) (2.5%) ($0.76) (48) (2.2%) ($0.60) Total of the embedded value added (277) (9.9%) ($3.66) % $ % $3.86 Embedded value per share Embedded value by component Shareholders' equity Book value,634,675,487 Market value adjustment () 0 37 Goodwill (447) (365) (365) Total,86,30,59 Present value of future operating profits,786,967,773 Present value of capital cost (462) (490) (484) Embedded value 2,50 2,787 2,448 Acquisitions are Excellence, United Family Life, Sarbit and Dundee in 2008 and FundTrade Financial Corporation in March 3, 2009 (First Quarter) Page 3

16 EMBEDDED VALUE (continued) Twelve months ended Twelve months ended Twelve months ended December 3, 2008 December 3, 2007 December 3, 2006 Economic and Capital assumptions Discount rate 6.50% 7.25% 7.25% Risk premium 3.0% 3.0% 3.0% Return on shareholders' equity 3.50% 4.25% 4.25% Inflation rate.5%.5%.5% Solvency ratio 50% 50% 50% Sensitivity analysis Impact on embedded value Risk premium: +% (%) (0%) (9%) Risk premium: -% 2% 2% % Risk premium: +3% (29%) Solvency ratio: from 50% to 75% (3%) (3%) (3%) Tax rate: -% % % % Mortality improvement: if none (9%) (9%) (8%) Economic assumptions: +% 2 8% 7% 7% Stock market downturn: -0% (5%) n/d n/d (in millions of dollars, unless otherwise indicated) d) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Annual Annual Embedded value of new sales Total value Value per common share (in dollars) $0.35 $0.34 $0.37 $0.4 $0.40 $0.36 $0.34 $0.38 $0.44 $.53 $.5 The solvency ratio is calculated in accordance with capital adequacy requirements. 2 Assuming a % increase in interest rates (including the return on shareholders' equity) and a % increase in the discount rate (no change to the risk premium). March 3, 2009 (First Quarter) Page 4

17 SHARE INFORMATION (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Annual Annual Common shares Share price High $25.64 $34.64 $38.49 $40.93 $42.64 $43.75 $40.83 $39.76 $37.44 $42.64 $43.75 Low $3.75 $9.50 $32.00 $34.0 $32.4 $38.00 $36.3 $34.90 $34.25 $9.50 $34.25 Close $9.83 $23.3 $33.80 $34.25 $37.88 $42.58 $39.00 $39.50 $35.5 $23.3 $42.58 Number of common shares outstanding (in millions) At beginning of period Common shares issued Common shares repurchased and cancelled (0.) 0.0 (0.2) (0.4) (0.3) (0.4) At end of period Value of common shares repurchased (buybacks) Weighted average number of common shares (in millions) Basic Diluted Dividends Common dividends paid Dividends paid per common share $0.245 $0.245 $0.245 $0.225 $0.225 $0.200 $0.200 $0.80 $0.80 $0.940 $0.760 Dividend payout ratio 42% nm 38% 28% 29% 25% 27% 23% 25% 5% 25% Dividend yield (annualized) 2 4.9% 4.2% 2.9% 2.6% 2.4%.9% 2.%.8% 2.0% 4.0%.8% Stock options Number of stock options outstanding (in millions) At beginning i of period Options issued Options exercised or forfeited (0.) (0.) (0.) (0.2) (0.2) (0.3) At end of period Valuation Price-to-earnings multiple (trailing 2 months) 3 (in number of times) Market capitalization,593.0, ,75. 2, , , ,29.0 3,68.2 2,844.4, ,399.6 Book value per outstanding common share $20.70 $20.35 $22.25 $22. $2.69 $20.98 $20.56 $20.2 $9.66 $20.35 $20.98 Market value to book value ratio (in number of times) Total payout ratio (trailing 2 months) 4 57% 30% 4% 38% 36% 32% 24% 23% 4% 30% 32% Capital yield (trailing 2 months) 5 5.0% 4.6% 3.6% 3.4% 2.9% 2.3%.8%.7% 3.4% 4.6% 2.3% Total return on common shares (trailing 2 months) 6 (45.%) (43.0%) (.0%) (.%) 8.9% 9.9% 24.5% 25.9% 2.8% (43.0%) 9.9% Preferred shares Number of preferred shares outstanding (in thousands) Series B 5, , , , , , , , , , ,000.0 Series C 7 3, , , Value of preferred shares Series B Series C Dividends paid per preferred share Series B $ $ $ $ $ $ $ $ $ $.500 $.500 Series C $ Dividend payout ratio: dividend per common share paid in the period divided by the basic earnings per common share in the period. 2 Dividend yield: annualized dividend per common share paid in the period divided by the closing price of the common share at the end of the period. 3 Price-to-earnings multiple: closing price of the common share at the end of the period divided by the basic earnings per common share for the last twelve months. 4 Total payout ratio: sum of common dividends paid and common shares repurchased (buybacks) over the last twelve months divided by the net income available to common shareholders over the last twelve months. 5 Capital yield: sum of common dividends paid and common shares repurchased (buybacks) over the last twelve months divided by the market capitalization at the end of the period. 6 Total return on common shares: sum of the dividend per common share paid over the last twelve months and the common share appreciation or depreciation over the same period divided by the closing price of the common share at the end of the period preceding the last twelve months. 7 On November 25, 2008, the Company issued 4,000,000 class A - Series C preferred shares for an amount of $00 million. As at March 3, 2009 the Company held 5,000 shares in treasury for an amount of $.3 million. March 3, 2009 (First Quarter) Page 5

18 OTHER INFORMATION (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Annual Annual General expenses General expenses General expenses as a % of premiums and deposits 7.46% 7.44% 6.80% 6.4% 5.65% 6.72% 5.98% 5.49% 4.96% 6.47% 5.72% Human resources Number of employees Life insurance companies 2,687 2,644 2,637 2,632 2,527 2,38 2,294 2,297 2,2 2,644 2,38 General insurance company Other Total 3,449 3,427 3,354 3,35 3,68 2,947 2,948 2,947 2,848 3,427 2,947 Number of Career representatives,556,597,546,55,548,608,533,520,520,597,608 Other Gross life insurance in-force (in billions of dollars) March 3, 2009 (First Quarter) Page 6

19 CONSOLIDATED FINANCIAL STATEMENTS INCOME STATEMENTS (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Annual Annual Revenues Premiums 989.4,006.6,4.,42.4, ,030.7,77.4 4,28.7 4,029.3 Net investment income 60.2 (43.9) (393.7) (79.9) 70.3 (88.0) Fees and other revenues Total,30.7, ,33.9,289.2,332.6,62.4,042.5,434. 4,465. 4,97.6 Policy benefits and expenses Payments to policyholders and beneficiaries ,950.,737.7 Net transfer to segregated funds ,346.9,456.9 Dividends, experience refunds and interest on amounts on deposit Change in provisions for future policy benefits (35.2) (87.7) Commissions Premium and other taxes General expenses Financing expenses (3.0) (.) 0.2 (4.) (.5) (5.3) 4.2 (4.) 3.3 Total,060.7, ,223.2,205.7,282.4, , , ,659.0 Income before income taxes 70.0 (56.7) Income taxes (9.4) 48.0 (20.5) (25.0) (9.3) 2.7 (25.6) (26.) (24.4) (6.8) (63.4) Net income 50.6 (08.7) Less: net income (loss) attributed to participating policyholders (.7) Net income (loss) attributed to shareholders 49.8 (08.7) Less: preferred shareholders dividends Net income (loss) available to common shareholders 46.2 (0.2) March 3, 2009 (First Quarter) Page 7

20 CONSOLIDATED FINANCIAL STATEMENTS COMPREHENSIVE INCOME 2009 (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Annual Annual Comprehensive income statement Net income 50.6 (08.7) Other comprehensive income, net of income tax: Available-for-sale Unrealized gains (losses) arising during the period Bonds 4.9 (.2) (9.6) (0.7) (0.2) --- (33.7) (9.6) Stocks (3.8) (6.2) (7.0) 0.4 (3.3) (4.2) (.2) (0.) 2.9 (26.) (2.6) Other 0.3 (.5) (0.3) --- (.3) (0.) Reclassification adjustment for (gains) losses included in the net income Bonds (.4) (.2) (0.2) (0.4) (.0) (0.5) (.5) (2.8) (2.0) Stocks 0.4 (.6) (.9) (.7) (0.8) (.5) (.3) (.5) --- (6.0) (4.3) Reclassification adjustment for (gains) losses included in the net income related to permanent impairment Bonds Stocks Change in unrealized gains (losses) on assets available-for-sale. (30.) (24.5) (2.4) 2.7 (5.7) (2.2) (2.).4 (64.3) (8.6) Currency translation account Unrealized gains (losses) on foreign currency translation (0.5).6 (0.4) (6.2) (6.6) Foreign currency hedging (.2) (.6) (.6) --- Total other comprehensive income 0.9 (2.8) (20.) (2.9) 4.3 (6.) (8.4) (2.).4 (50.5) (25.2) Comprehensive income 5.5 (30.5) Comprehensive income attributed to shareholders 50.7 (30.5) Comprehensive income attributed to participating policyholders (.7) DETAIL OF THE ACCUMULATED OTHER COMPREHENSIVE INCOME 2009 (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Annual Annual Accumulated other comprehensive income (loss) Balance at beginning of period (54.3) (32.5) (2.4) 0.5 (3.8) (3.8) --- Impact of the new accounting standards Total other comprehensive income 0.9 (2.8) (20.) (2.9) 4.3 (6.) (8.4) (2.).4 (50.5) (25.2) Balance at end of period (53.4) (54.3) (32.5) (2.4) 0.5 (3.8) (54.3) (3.8) Sources of accumulated other comprehensive income (loss) Bonds (33.2) (37.4) (26.0) (0.2) 0.9 (5.9) (5.8) (6.0) 4.2 (37.4) (5.9) Stocks (9.4) (6.0) (6.0) 5.5 Other (.0) (.3) (0.) (0.2) 0. (.3) --- Currency translation account (7.9) (2.3) (.8) (3.4) (3.0) (6.8) (6.8) 0.4 (3.4) Total (53.4) (54.3) (32.5) (2.4) 0.5 (3.8) (54.3) (3.8) March 3, 2009 (First Quarter) Page 8

21 CONSOLIDATED FINANCIAL STATEMENTS BALANCE SHEETS - GENERAL FUND ASSETS 2009 (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Invested assets Bonds 8,3.8 7, , , , ,27.2 7, ,23.6 8,428.0 Mortgages 3, ,508. 3, ,35.6 3,09.2 2, , , ,57.2 Stocks,332.4,340.2,588.3,840.4,708.3,764.2,7.7,690.4,635.9 Real estate Policy loans Cash and cash equivalents Other invested assets Total 4,55.9 4, , , ,36.7 4,24.3 3, , ,735.5 Goodwill and other intangible assets Other assets General fund assets 5, ,45.2 5, , ,33.6 5,04.3 4, , ,623.0 March 3, 2009 (First Quarter) Page 9

22 CONSOLIDATED FINANCIAL STATEMENTS BALANCE SHEETS - GENERAL FUND LIABILITIES AND EQUITY 2009 (in millions of dollars, unless otherwise indicated) Q Q4 Q3 Q2 Q Q4 Q3 Q2 Q Policy liabilities Provisions for future policy benefits,909.5,853.,562.6,889.2,832.,704.7,400.4,29.7,369.4 Provisions for dividends to policyholders and experience rating refunds Benefits payable and provision for unreported claims Policyholders' amounts on deposit Total 2, ,249.9, , , ,087.5,759.7,655.,753.5 Deferred net realized gains Related to actuarial liabilities Related to equity Total Other liabilities Mortgage debt Future income tax liability Other Total Subordinated debentures Participating policyholders' account Equity Share capital Common shares Preferred shares Total Contributed surplus Retained earnings,54.4,27.7,260.,230.3,85.3,48.3,5.4,072.4,024.7 Accumulated other comprehension income (53.4) (54.3) (32.5) (2.4) 0.5 (3.8) Total,886.,857.9,92.4,899.7,865.7,799.7,774.4,738.4,699.5 General fund liabilities and equity 5, ,45.2 5, , ,33.6 5,04.3 4, , ,623.0 March 3, 2009 (First Quarter) Page 20

23 GLOSSARY Administrative services only (ASO) contract A group insurance contract administered by the Company on behalf of the client. Under this type of contract, the Company earns fees for its administrative services but the client assumes all risks inherent to the contract. Assets under administration All assets with respect to which the Company acts only as an intermediary between a client and an external fund manager. Assets under management All assets with respect to which the Company establishes a contract with a client and makes investment decisions for amounts deposited in this contract. Assets under management generally fall under one of the three following fund categories: the Company s general fund, segregated funds or mutual funds. Capital structure Total of Company equity, the participating policyholders account and subordinated debentures. Coverage ratio A ratio that is expressed as a number of times and obtained by dividing pre-tax income, before financing expenses, by financial expenses. Debt to capital ratio A ratio that is expressed as a percentage and obtained by dividing the subordinated debentures and other debts (Industrial Alliance Trust Securities - IATS) by the capital structure. Deposits In the term premiums and deposits, deposits represent the amounts of money that the Company receives under a mutual fund contract. Dividend per common share Dividend paid by the Company to its common shareholders in a given period. Dividend per preferred share Dividend paid by the Company to its preferred shareholders in a given period. Earnings per common share (EPS) A measure of the Company's profitability, calculated by dividing the consolidated net income available to common shareholders by the weighted average number of outstanding common shares for the period, excluding common shares held in treasury. Impaired investments Bonds and mortgage loans that are three or more months in arrears and other investment securities in default. Market capitalization Market measure of the Company obtained by multiplying the share price by the number of issued and outstanding common shares. OCI Other comprehensive income. Premiums Amounts of money that insureds or annuitants pay to the Company to be insured or purchase an annuity. Premiums include amounts for both new and existing business, net of premiums ceded to a reinsurer. Premiums correspond to the amounts posted under Premiums in the financial statements. The amounts paid into segregated funds are considered as premiums for the purposes of Industrial Alliance s consolidated financial statements. Premium equivalents Amounts of money paid by a client to the Company for administrative services rendered by the Company under an administrative services only (ASO) contract. March 3, 2009 (First Quarter) Page 2

24 Return on common shareholders equity (ROE) Ratio, expressed as a percentage, obtained by dividing the consolidated net income available to common shareholders by the average common shareholders equity for the period, excluding common shares held in treasury. Since January, 2007, the currency translation account has been included in the accumulated other comprehensive income. Sales Depending on the business sector in question, sales are defined as follows: Individual Insurance: First-year annualized premiums Individual Wealth Management: Premiums for the general fund and segregated funds and deposits for mutual funds. Group Insurance: Employee Plans: First-year annualized premiums, including premium equivalents (administrative services only contracts) Creditor Insurance: Gross premiums (premiums before reinsurance) Special Markets Group (SMG): Premiums Group Pensions: Premiums Share price Price of the Company's share, as traded on the Toronto Stock Exchange. Solvency ratio Measure of the Company s solvency founded on risks and prescribed by regulatory authorities to determine if an insurance company is sufficiently capitalized in comparison to the minimum set by the regulator. March 3, 2009 (First Quarter) Page 22