A.M. Best Assigns Debt Rating to Industrial Alliance Insurance and Financial Services Inc.’s New Preferred Share Offering

A.M. Best Co. has assigned a debt rating of “bbb+” to CAD 100 million 6.00% non-cumulative preferred shares of Industrial Alliance Insurance and Financial Services Inc. (IA) (Quebec, Quebec) (TSX: IAG). The assigned outlook is stable.

The preferred shares have been issued under a prospectus supplement to IA’s short form base shelf prospectus dated April 30, 2009 and will not be redeemable by IA prior to December 31, 2014. Subject to regulatory approval, on or after December 31, 2014, IA may, on no less than 30 or more than 60 days’ notice, redeem the preferred shares in whole or in part, at IA’s option, by the payment in cash with all declared and unpaid dividends up to but excluding the date fixed for redemption. The proceeds from the preferred shares offering will be used for general corporate purposes and add to IA’s capital base. These preferred shares qualify as Tier 1 capital for regulatory purposes. Following the transaction, debt-to-capital levels will remain within the guidelines for the current rating, and interest coverage will continue to be strong, with fixed charge coverage expected to be in excess of five times.

In recent years, IA has grown its assets under management and administration through internal growth and acquisitions. In addition, IA offers a diversified product portfolio through a number of distribution channels, including a favorable position in the brokerage and fund management community. IA has leveraged its distribution capacity and product diversification to maintain overall sales and premium growth in its core individual, group and wealth management lines. IA’s expanded business profile, continued profitable growth in its core operations, diversified product portfolio and continued growth in capital will enable it to maintain solid capital levels and strong cash flow.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

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