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Industrial-Alliance Issues 21.6 Million Shares at $15.75 per Share

Its Initial Public Offering Reaches $340 Million

Quebec City,

News Release

In conjunction with its initial public offering, Industrial-Alliance Life Insurance Company announced today that it has signed an underwriting agreement with a syndicate of eleven brokerage firms – underwriters –, led by Nesbitt Burns Inc. Under the terms of this agreement, the underwriters have agreed to purchase 21.6 million common shares of Industrial-Alliance at $15.75 per share, for a total amount of $340 million. The shares of Industrial-Alliance will begin trading today under the symbol “IAG.W” on a when-issued basis on the Toronto Stock Exchange.

This information is contained in a supplement to the final prospectus filed yesterday to all provincial securities commissions in Canada. The Company expects to complete its initial public offering (IPO) on February 10. The closing of this IPO will open the door to the issuance of the letters patent of conversion, which will mark the end of Industrial-Alliance’s demutualization process, officially making it a capital stock company.

“In one week, on the closing of this share issuance, Industrial-Alliance will enter a new era,” declared Raymond Garneau, Chairman of the Board and Chief Executive Officer. “This new status as a capital stock company will open the door to the capital markets, which will give us all the leeway we need to pursue our development. I am very happy to see the conclusion of this ambitious project, which was completed in record time.”

Over 130,000 shareholders
The proceeds of the sale of the 21.6 million shares will be used to make payments to the policyholders who will receive a cash amount as part of the demutualization process. Taking into account policyholders who chose to keep their shares, a total of 35.1 million of Industrial-Alliance shares will be outstanding, for an initial market capitalization of more than $550 million, making the company one of the 200 largest companies listed on the Toronto Stock Exchange. Industrial-Alliance will then have over 130,000 shareholders, the majority of which are policyholders.

The underwriters will have the option to purchase up to 2.5 million additional common shares to cover over-allotments. This option can be exercised within 60 days after the closing of the initial public offering. The proceeds of the additional share issuance would go to Industrial-Alliance and would be used, among other things, to pay the costs of demutualization.

Other than Nesbitt Burns Inc., the lead underwriter, the underwriters syndicate also includes Merrill Lynch Canada Inc., as senior co-manager, and RBC Dominion Securities Inc., Scotia Capital Inc., National Bank Financial Inc. and TD Securities Inc., as co-managers. The syndicate is completed by: CIBC World Markets Inc., Griffiths McBurney & Partners, HSBC Securities (Canada) Inc., Newcrest Capital Inc. and Fox-Pitt, Kelton Inc.

Distribution to the eligible policyholders
Industrial-Alliance will begin mailing the share ownership statements and cheques starting the week of February 28. The cash amounts that will be remitted to the eligible policyholders will be established according to the initial offering price ($15.75) and the number of shares allotted to them. As you will recall, last November 8, the policyholders voted 96.4% in favour of Industrial-Alliance’s conversion into a capital stock company.

The Industrial-Alliance Group is the seventh largest life and health insurance company in Canada. Building on more than a century of experience, the Group operates throughout Canada and offers a wide range of life and health insurance products, savings and retirement plans, RRSPs, investment funds, mortgage loans and other financial products.

This news release shall not constitute an offer to sell, or the solicitation of an offer to buy the common shares in any jurisdiction. Industrial-Alliance common shares have not been and will not be registered under the United States Securities Act of 1933, and may not be offered or sold in the United States without obtaining exemption from the requirements of such Act.

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Jacques Carrière
Senior Director, Public Affairs
(418) 684-5275