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Industrial-Alliance's Results for the First Quarter of 2000

Profit and Premium Income on the Rise

Quebec City,

News Release

Industrial-Alliance Life Insurance Company ended the first quarter of 2000 with a net profit for the shareholders of $20.2 million, for a rate of return on common shareholders´ equity of 13.23% and income per common share of $0.54. Insurance and annuities premiums reached $621.8 million, an increase of 18.3% compared to 1999.

Charest, President and Chief Operating Officer. "We are aware of the challenges we face as a public company and we believe we will be able to meet our shareholders´ expectations, both in terms of profitability and growth."

Profit
The net profit was $20.2 million, compared with $11.0 million for the first quarter of 1999 (all 1999 data are presented on a pro forma basis to make them comparable to those of 2000). This excellent profit is mainly explained by higher returns on investments and favourable results in the Individual Insurance, Individual Annuities and Group Pensions sectors.

All lines of business contributed to the profit, except for Group Insurance which, after a decade of superior profitability, suffered its first losses last year. The Company reacted quickly, however, by gradually adjusting its contract renewal rates to reflect the technical results.

Return
The net profit for the first quarter corresponds to an annualized rate of return of 13.23% on common shareholders´ equity, compared with 8.04% for the corresponding period in 1999. This rate is in the upper end of the range targeted by the Company (12% to 14%).

The net income per common share is $0.54. In comparison, the pro forma net income per common share for the four quarters of 1999, excluding unusual items, reached $0.29 for the first quarter, $0.52 for the second, $0.51 for the third and $0.52 for the fourth, for an average of $0.46 per quarter.

Business growth
With respect to business growth, insurance and annuities premium reached $621.8 million in the first quarter. Premiums from life and health insurance products grew 13.9% compared to the same period in 1999, while those of savings and retirement plans increased 25.2%. These plans account for close to 60% of premium income.

Individual insurance sales – Individual insurance sales totalled $27.0 million (first-year annualized premiums), up 9.3%. With a network made up of over 14,000 representatives, the Industrial-Alliance Group was ranked second in Canada, in 1999, in terms of new sales.

Group insurance sales - In group insurance, sales reached $19.1 million in the creditor insurance market, 8.5% higher than in 1999. The company is a leader in Canada in the creditor insurance market for automobile dealers, since the purchase of Seaboard in 1999. In the more volatile employee plans market, first-year annualized premiums reached $10.6 million, down $3.9 million compared to the first quarter of 1999.

Individual annuities sales - In individual annuities, the Company collected $265.9 million in premiums, up 53.0% over the same period last year. The RRSP season was exceptional this year. The Company introduced four new investment funds at the beginning of the year, which were very popular, and a number of clients who chose to receive the benefits of demutualization in cash decided to contribute the amount they were allotted to their RRSP.

Group pensions sales - Premiums in the group pensions sector reached $124.0 million, 9.9% lower than last year. This decrease is mainly explained by the fact that last year the governments terminated the Program for Older Worker Adjustment (POWA), where Industrial-Alliance was a major player in Canada. If we do not take this program into account, premiums would have been 11.6% higher.

Assets under management
Assets under management reached $13.4 billion as at March 31, 2000, an increase of 9.1% in the last 12 months. However, the asset composition, between general funds and segregated funds, underwent a major modification during the quarter. In fact, a major client, with whom the Company has been associated for over 40 years, transferred $1.4 billion from the general funds to segregated funds.

Quality of investments
The quality of investments remains excellent. Non-performing assets as a percentage of investments reached 0.24% as at March 31, 2000, down from March 31, 1999 (0.39%) and December 31, 1999 (0.26%). No bonds are in default and the arrears rate of the mortgage loans portfolio is 0.38%, compared to 0.51% as at March 31, 1999 and 0.28% as at December 31, 1999. The increase over the last three months is essentially attributable to a decrease in mortgage assets, a consequence of the previously mentioned transfer between the general funds and segregated funds.

Capitalization
As at March 31, 2000, equity reached $708.9 million, up 11.7% compared to March 31, 1999 on a pro forma basis. As at March 31, 2000, the Company´s book value per common share was $16.87. The capitalization ratio, as measured by the minimum continuing capital and surplus requirements, was 184.9% for Industrial-Alliance as at March 31, 2000, an increase of 5.9 percentage points compared to March 31, 1999. This ratio greatly exceeds the regulatory authorities´ requirements.

Because of demutualization and the initial public offering (IPO), the presentation of equity has changed considerably. Thus, the amounts raised during the IPO, including the over-allotment option, are entered as the value of common shares. The surplus at the end of 1999 was reduced by amounts that remain the property of the participating policyholders of Industrial-Alliance´s subsidiaries and the amounts paid to policyholders who chose to receive the benefits of demutualization in cash. The balance was transferred to shareholders´ equity as retained earnings, reduced by demutualization expenses. Finally, the participating preferred shares were converted to common shares, which were also included in the shareholders´ equity.

Also, on January 1, 2000, in accordance with the new accounting standards concerning the presentation of commitments for employee future benefits, the Company chose to immediately recognize the value of commitments with respect to retirees as well as the portion of commitments related to past service. Hence, a $21.3 million adjustment was made to the retained earnings to take this item into account.

With the strength of over 100 years of experience, the Industrial-Alliance Group is made up of, in life and health insurance, National Life of Canada, whose head office is located in Toronto, North West Life of Canada, whose head office is in Vancouver, and Industrial-Alliance, the Group´s parent company, whose head office is in Quebec City. In general insurance, Industrial-Alliance is co-owner of Industrial-Alliance Auto and Home. The seventh largest life and health insurance organization in Canada, the Group has operations 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.

Selected consolidated financial information for Industrial-Alliance Life Insurance Company for the three months ending March 31, 2000.

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Information:
Jacques Carrière
Senior Director, Public Affairs
(418) 684-5275
(418) 576-3624 (cell.)