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Industrial Alliance Announces Sale of its U.S. Annuity Business

Quebec City,

News Release

Industrial Alliance Insurance and Financial Services Inc. (“Industrial Alliance” or the “Company”) announces today that it has concluded an agreement to sell by way of indemnity reinsurance and assumption reinsurance, all its U.S. fixed annuities and accumulation riders to Security Benefit Life Insurance Company and to Equitrust Life Insurance Company, two affiliates of U.S.-based Guggenheim Partners. The transaction, which represents approximately US$800 million in contract liabilities and related assets, was carried out through the U.S. branch and the U.S. subsidiaries of Industrial Alliance. The assets subject to the agreement have been transferred, except for a portion that is temporarily kept by the ceding entities on a funds withheld basis.

This transaction will have a favourable impact on the capital of Industrial Alliance. Based on preliminary management estimates, it is expected to increase the solvency ratio by eight percentage points. The transaction is subject to the regulatory approvals in the U.S.

This announcement reflects the Company’s strategic decision to focus its resources in the U.S. on the continued development of its life insurance business. Since the acquisition of the American-Amicable platform in 2010, the Company has successfully expanded its distribution network, built market share in new territories and in 2011 achieved year-over-year organic growth of 26% in its life business. Going forward, its plan is to scale up the U.S. life business, reduce unit costs and increase its contribution to the overall profitability of Industrial Alliance.

Based in Scottsdale, AZ and Waco, TX, the Company’s U.S. subsidiaries are focused on the low-to-middle income market for simplified life insurance products ? a high-growth and under-served niche. The U.S. subsidiaries of Industrial Alliance are licensed in 49 states and territories, offer a wide range of products including Whole Life, Term and Universal Life policies, and have distribution relationships with more than 5,100 independent agents.

Forward-looking Statements
This news release may contain statements relating to strategies used by Industrial Alliance or statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “may”, “will”, “could”, “should”, “would”, “suspect”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate”, and “continue” (or the negative thereof), as well as words such as “objective” or “goal” or other similar words or expressions. Such statements constitute forward looking statements within the meaning of securities laws. Forward looking statements include, but are not limited to, information concerning the Company’s possible or assumed future operating results. These statements are not historical facts; they represent only the Company’s expectations, estimates and projections regarding future events.

Although Industrial Alliance believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Factors that could cause actual results to differ materially from expectations include, but are not limited to: general business and economic conditions; level of competition and consolidation; changes in laws and regulations including tax laws; liquidity of Industrial Alliance including the availability of financing to meet existing financial commitments on their expected maturity dates when required; accuracy of information received from counterparties and the ability of counterparties to meet their obligations; accuracy of accounting policies and actuarial methods used by Industrial Alliance; insurance risks including mortality, morbidity, longevity and policyholder behaviour including the occurrence of natural or man-made disasters, pandemic diseases and acts of terrorism.

Additional information about the material factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the “Risk Management” section of the 2011 Management’s Discussion and Analysis and in the “Management of Risks Associated with Financial Instruments” note to Industrial Alliance’s consolidated financial statements, and elsewhere in Industrial Alliance’s filings with Canadian securities regulators, which are available for review at

The forward-looking statements in this news release reflect the Company’s expectations as of the date of this document. Industrial Alliance does not undertake to update or release any revisions to these forward looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, except as required by law.

About Industrial Alliance
Founded in 1892, Industrial Alliance Insurance and Financial Services Inc. is a life and health insurance company with operations in all regions of Canada as well as in the United States. The Company offers a wide range of life and health insurance products, savings and retirement plans, RRSPs, mutual and segregated funds, securities, auto and home insurance, mortgage loans and other financial products and services for both individuals and groups. The fourth largest life and health insurance company in Canada, Industrial Alliance contributes to the financial wellbeing of over three million Canadians, employs 4,200 people and manages and administers more than $75 billion in assets. Industrial Alliance stock is listed on the Toronto Stock Exchange under the ticker symbol IAG.

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Information: Investor Relations
Michel Naud
Office: 418 684-5000, ext. 4137