The CEO of Industrial Alliance Presents his Vision of the Financial Services Sector
Yvon Charest, President and Chief Executive Officer of Industrial Alliance Insurance and Financial Services, was invited to give a speech today to the Chambre de commerce et d’industrie du Québec métropolitain, which has just named Industrial Alliance the visionary company of the year for 2001. Mr. Charest took advantage of the occasion to discuss developments in the Company over the last few years and its growth strategy for the upcoming year, as well as to present his view of the financial services sector.
Three strategic objectives reached
First of all, Mr. Charest recalled that Industrial Alliance had successfully completed the three main objectives it had set for itself over the past few years:
- To diversify its activities geographically. By region, Industrial Alliance now draws about half of its income from operations outside of Quebec;
- To diversify its range of financial products. By product, Industrial Alliance now also draws about half of its income from savings and investment products;
- To modernize its legal structure. Industrial Alliance successfully completed its conversion from a mutual company to a stock company in February 2000.
"And that is where Industrial Alliance stands today," remarked Mr. Charest. "From an essentially Quebec company to a Canada-wide company. From an insurance company to a financial institution. And from a mutual company to a stock company."
Mega-mergers or strategic agreements?
Two weeks before the new ownership regulations affecting federally chartered financial institution come into effect, and just after the announcement of an agreement between Sun Life and Clarica to combine their operations, Mr. Charest warned against drawing hasty conclusions to the effect that medium-sized institutions would no longer be able to compete with large ones.
Mr. Charest explained that over the past few years it hasn’t been the major insurers that have been the most active in terms of acquisitions, but the mid-sized insurers. And even more interesting is that consolidation has not taken the form of mergers and acquisitions so much as it has taken the form of strategic agreements, favouring "piecemeal" agreements between institutions of all sizes. This is one of the areas that Industrial Alliance has been pursuing over the past few years. "For example, we manufacture and administer TD Bank life insurance products and Laurentian Bank creditor insurance products. And just yesterday, we announced an important agreement with the National Bank, through which we will administer the group pension plans distributed by National Bank Trust," Mr. Charest pointed out.
Mr. Charest doesn’t hide his preference for these strategic agreements, which allow companies of all sizes to increase their efficiency and their product line, over mega-mergers. "I believe that the consumer will benefit from much healthier competition if the market is made up of a large number of institutions, of varying sizes, each with their own strategies." For Mr. Charest, "success is measured more in terms of dynamism and the ability to innovate and adapt rather than in terms of the size of a company."
Industrial Alliance ownership regulations
With respect to ownership regulations, Mr. Charest mentioned that Industrial Alliance isn’t affected by changes being made to the federal legislation since it is a Quebec chartered company. The ownership regulations that govern Industrial Alliance are defined by a private bill and stipulate that no shareholder may own more than 10% of the company’s stock – with no time limit. "Our action plan, which we have tirelessly repeated to our shareholders since February 2000, is to pursue the Company´s development," stated Mr. Charest. "This ownership regulation gives us the flexibility, at all times, to decide our own future, in the best interests of our shareholders."
Industrial Alliance’s growth strategy
Looking into the future, Mr. Charest reminded everyone that when the company demutualized, the Board of Directors gave Industrial Alliance a clear mandate: pursue, indeed accelerate, its growth both on an organic level and through acquisitions, and to continue to expand its financial services operations, related to those of life and health insurance.
Thus, over the next year, in addition to intensive development in the individual and group life and health insurance sectors and wealth management, the company expects to emphasize new niche markets, including:
- Greatly expanding its range of savings and investment products, by focusing, among other things, on the distribution of mutual funds, to complement segregated funds;
- Developing a full-service securities brokerage operation;
- Actively participating in the Canadian Payments Association. This participation will allow company clients to access their funds through automatic tellers using a debit card;
- Accelerating the development of Industrial Alliance Trust Company, an Industrial Alliance subsidiary created last year.
About Industrial Alliance
The seventh largest life and health insurance company in the country, the Industrial Alliance Group operates across Canada through Industrial Alliance (Quebec) and its subsidiaries, including IA Pacific Life (Vancouver) and National Life (Toronto). The Group insures over 1.5 million Canadians and employs more than 2,000 people. It has $14.7 billion in assets.
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Vice-President, Investor Relations