QUEBEC CITY, April 28 /PRNewswire-FirstCall/ - Industrial
Alliance Insurance and Financial Services Inc. ("Industrial
Alliance" or "the Company") announced today the signing of an
agreement to acquire all the outstanding shares of
American-Amicable Holding, Inc. ("American-Amicable") for a cash
consideration of approximately $145
million including estimated excess capital of $45 million (all amounts in Canadian dollars).
The transaction, which will be carried out through the Company's
wholly-owned U.S. subsidiary IA American Life Insurance Company
("IA American"), will be financed from cash on hand. The
acquisition is expected to be immediately accretive to earnings by
$0.05 per share on an annual basis.
Post-transaction the Company's solvency ratio will be 217% compared
with 226% on a pro forma basis as at December 31, 2009 following share issues in
February 2010. The agreement with
American-Amicable is subject to the usual regulatory approvals and
expected to close in the summer of 2010.
"This agreement with American-Amicable is an important milestone
in our U.S. growth strategy," said Yvon
Charest, President and Chief Executive Officer of Industrial
Alliance. "Building on our local operations in Scottsdale, Arizona, it provides us with the
scale and presence to accelerate our U.S. growth plan. With 100
years in the business, American-Amicable brings a stable stream of
revenues and profits, a low-risk investment portfolio, a
well-developed distribution network and an experienced management
team. Its life insurance products target the middle-income market
which is under-served and offers significant growth
opportunities."
"Strategically and operationally, this is an excellent fit for
both American-Amicable and Industrial Alliance," added Mike Stickney, President of IA American. "It
brings together two organizations with long track records of
profitable growth that share philosophies of prudent risk
management and cost efficiency. We look forward to working with
Lanny Peavy and his senior
management team as we continue to expand our footprint in the
U.S."
Broader Platform for Growth in the U.S.
Upon completion, the acquisition of American-Amicable by
Industrial Alliance will significantly increase the Company's scale
and presence in the U.S. Founded in 1910, American-Amicable is
based in Waco, Texas and employs
about 115 persons. It operates through four Texas-domiciled subsidiaries: Pioneer Security
Life Insurance Company, American-Amicable Life Insurance Company of
Texas, Pioneer American Insurance
Company and Occidental Life Insurance Company of North Carolina.
"We are pleased with the commitment that Industrial Alliance has
made to our community by maintaining a strong corporate presence
and offering continued employment to all our staff," said
Lanny Peavy, President of
American-Amicable. "We will do our utmost to assure a smooth
transition going forward, not only for our employees but also for
the many distributors and policyholders who have been our valued
partners for so many years."
American-Amicable markets primarily traditional life insurance
products to mid-market customers in the individual and final
expense markets. It is licensed to sell life insurance in 49 states
and territories, and its products are marketed through a national
distribution network of more than 6000 independent agents.
American-Amicable has a strong presence in the South, Southwest and
Southeast portions of the U.S., with its primary markets being
Texas, Puerto Rico, California, Illinois, Alabama and North
Carolina.
American-Amicable currently has $7.1
billion of life insurance in force covering a policy base of
more than 211,500. For the year ended December 31, 2009, total premiums amounted to
$86 million and total assets were
$687 million. New business written
over the last five years has averaged almost $24 million, representing a compound annual
growth rate of 13% in their current markets. American-Amicable's
balance sheet is debt-free and its portfolio is invested in
primarily low-risk, fixed income securities. On March 2, 2010, its financial strength ratings
were upgraded to A- (Excellent) by A.M. Best.
Subsequent to closing, American-Amicable will become a
wholly-owned subsidiary of IA American. IA American intends to
maintain the American-Amicable platform in Waco, Texas as well as the existing IA
American presence in Scottsdale,
Arizona.
Oppenheimer & Co. Inc. acted as financial advisor to
American-Amicable Holding, Inc. on this transaction.
Caution Regarding Forward-looking Statements
This news release may contain statements relating to strategies
of 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", "objective" and "continue" (or the negative thereof) or
similar words or expressions. Such statements are forward-looking
statements within the meaning of securities laws. Forward-looking
statements include, without limitation, the information concerning
possible or assumed future results of operations of the Company.
These statements are not historical facts but instead 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 (including but not
limited to performance of equity markets, interest rate
fluctuations, currency rates, investment losses and defaults,
movements in credit spreads, market liquidity and creditworthiness
of guarantors and counterparties); level of competition and
consolidation; changes in laws and regulations including tax laws;
liquidity of Industrial Alliance including the availability of
financing to satisfy existing financial liabilities 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; failure of
information systems and Internet-enabled technology; breaches of
computer security and privacy; dependence on third-party
relationships including outsourcing arrangements; ability to
maintain Industrial Alliance's reputation; regulatory
investigations and proceedings and private legal proceedings and
class actions relating to practices in the mutual fund, insurance,
annuity and financial product distribution industries; the ability
to adapt products and services to the changing market; the ability
to implement effective hedging strategies; the ability to attract
and retain key executives; the ability to complete acquisitions
including the availability of equity and debt financing when
required for this purpose; the ability to execute strategic plans;
the disruption of or changes to key elements of Industrial
Alliance's or public infrastructure systems; and environmental
concerns. Additional information about 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 Industrial Alliance's
most recent Annual report, namely under the "Risk Management"
section in the 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 www.sedar.com.
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 news release 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 that 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. The fourth largest life and health insurance
company in Canada, Industrial
Alliance is at the head of a large financial group, which has
operations in all regions of Canada, as well as in the United States. Industrial Alliance
contributes to the financial wellbeing of over three million
Canadians, employs more than 3,400 people and manages and
administers over $58 billion in
assets. Industrial Alliance stock is listed on the Toronto Stock
Exchange under the ticker symbol IAG. Industrial Alliance is among
the 100 largest public companies in Canada.
SOURCE INDUSTRIAL ALLIANCE INSURANCE AND FINANCIAL SERVICES
INC.