Mr. Yvon Charest reports

INDUSTRIAL ALLIANCE REPORTS SECOND QUARTER RESULTS - STRONG OPERATING PERFORMANCE ACROSS ALL BUSINESSES - DIVIDEND TO COMMON SHAREHOLDERS INCREASED BY 7%

For the second quarter ended June 30, 2015, Industrial Alliance Insurance and Financial Services Inc. earned net income attributed to common shareholders of $142.2-million, up 25 per cent over the previous year. Diluted earnings per common share (EPS) rose to $1.40 from $1.13 a year ago; the annualized return on shareholders equity was 15.8 per cent; and the solvency ratio at quarter-end was 223 per cent.

Yvon Charest, president and chief executive officer, commented: "This quarter was without a doubt among our best on record. Profit exceeded our guidance by a generous margin and business growth showed good momentum. We are pleased to highlight the continued momentum in our retail insurance sales, as well as our seg fund business that continues to gain market share across Canada. Our balance sheet remains solid, and we have significant capital to support our internal and external growth initiatives."

Rene Chabot, executive vice-president, chief financial officer and chief actuary, added: "We are encouraged by the operating performance of all our businesses in the second quarter. In particular, our individual insurance sector had an outstanding quarter, with favourable mortality, morbidity and policyholder experience, lower strain on new business, and lower expenses. Other gains came from our auto and home subsidiary, our car dealer business, our hedging program and a tax recovery. With the excellent profit contribution and the increase in long-term interest rates during the quarter, our solvency ratio at quarter-end is comfortably above our guidance, and we have the flexibility to act on growth opportunities."

                                        FINANCIAL HIGHLIGHTS
                         (in millions of dollars unless otherwise indicated)

                                                   Second quarter    Year to date at June 30,    
                                                      2015   2014              2015     2014    

Net income attributed to shareholders               $146.1 $120.7            $260.5   $210.7
Less preferred share dividends                         3.9    7.1               9.4     14.2 
Less premium on preferred share redemption              --     --               4.0       --
Net income attributed to common shareholders         142.2  113.6             247.1    196.5
Earnings per common share (diluted)                  $1.40  $1.13             $2.43    $1.96
Return on common shareholders equity (1)              15.8%  14.2%             13.1%    13.0%

                                                   June 30, 2015  March 31, 2015  Dec. 31, 2014  June 30, 2014

Solvency ratio                                               223%            211%           209%           215%
Book value per share                                      $36.11          $34.94         $33.83         $32.47
Assets under management and administration ($B)           $112.9          $114.7         $109.5         $105.4
Net impaired investments as a % of total investments        0.07%           0.07%          0.07%          0.07%

(1) Annualized for the quarter. Trailing 12 months for the year to date.

Second quarter highlights

Profitability

For the second quarter ended June 30, 2015, Industrial Alliance reports net income attributed to common shareholders of $142.2-million, an increase of 25 per cent over the previous year. Diluted earnings per share of $1.40 compare with $1.13 in the same quarter a year ago. The annualized shareholders return on equity was 15.8 per cent versus 14.2 per cent a year earlier, well above the guidance of 11 per cent to 12.5 per cent provided by management to the financial markets for 2015.

The key elements that explain profitability follow. All figures are after taxes unless otherwise indicated.

Expected profit on in-force increased by 15 per cent to $132.5-million pretax over the same quarter last year, which is attributed mainly to the retail insurance and wealth management sectors. In addition, Industrial Alliance realized a net experience gain of $25.7-million pretax (18-cent earnings per share) for the quarter. A detailed analysis of gains and losses follows.

Individual insurance reported a net experience gain of nine cents per share ($9.5-million). Favourable mortality (eight-cent EPS) and other experience gains including morbidity, policyholder experience and expenses (six-cent EPS) were partially offset by a loss of five cents per share related to the drop in equity markets during the quarter.

Individual wealth management had an experience gain of eight cents per share ($8.2-million) attributed to its dynamic hedging program for the segregated fund guarantee.

Group insurance reported an experience gain of one cent per share ($1.1-million) related to lower claims in the property and casualty business of its dealers services division.

Group savings and retirement results were in line with expectations for the quarter.

Strain

In the individual insurance sector, strain on new business amounted to $15.2-million pretax, or 25 per cent of sales, compared with guidance of 30 per cent for the quarter. Management estimates that the lower strain ratio, which is attributed to higher sales and a favourable product mix, represented a gain of two cents per share.

Income on capital

Total income on capital of $20.2-million pretax compares with $13.6-million in the previous quarter. The increase in the second quarter is mainly attributed to an improved performance by IA Auto and Home after a particularly difficult first quarter.

Income taxes

The company realized a tax recovery of 17 cents per share in the quarter related principally to tax-exempt investment income under its status as a multinational insurer.

Business growth

Premiums and deposits of $1.9-billion were up 11 per cent over the previous year, mainly attributed to higher wealth management gross in-flows in both the individual and group sectors. Total assets under management and administration of $112.9-billion were up by 7 per cent over the last 12 months, but receded by 2 per cent in the second quarter as a result of the drop in equity markets.

In retail insurance, business growth continued to maintain good momentum for the third quarter in a row. Total sales of $61.7-million (up 11 per cent) reflect growth in minimum premiums in Canada (up 6 per cent) and the United States (up 30 per cent). Sales in the company's adjustable disability business, which is continuing its successful rollout to new markets across Canada, were up by 13 per cent.

In retail wealth management, gross sales of segregated funds increased to $366.5-million (up 25 per cent), reflecting the continuing deployment of the company's cross-Canada distribution strategy; net inflows more than doubled to $88.8-million in the quarter. Gross inflows of mutual funds amounted to $383-million (down 11 per cent) and outflows were $165.1-million for the quarter.

The group insurance sector had an excellent quarter with total sales of $222.7-million (up 13 per cent); employee plans had growth of $25.3-million (up 212 per cent), reflecting the addition of several new groups to its in-force. Special markets solutions also had a strong quarter with sales of $41.8-million (up 11 per cent). In dealer services, sales totalled $56.4-million (up 21 per cent) in property and casualty products, and $99.2-million (down 6 per cent) in creditor insurance for an overall increase of 2 per cent.

In group savings and retirement, sales were $342.3-million, 66 per cent higher than the previous year, reflecting several fund transfers in its capital accumulation segment.

Capital

At June 30, 2015, the solvency ratio was 223 per cent compared with 211 per cent at the end of the previous quarter. The improvement reflects the increase in interest rates during the quarter (up 8 per cent), the higher contribution from second quarter earnings (up 3 per cent) and the decrease in equity markets (up 1 per cent).

Dividend

The board of directors increased the quarterly dividend by 7 per cent to 30 cents per share on the company's outstanding common shares. This dividend is payable on Sept. 15, 2015, to shareholders of record at Aug. 21, 2015.

Dividend reinvestmentand share purchase

Registered shareholders wishing to enroll in the company's dividend reinvestment and share purchase plan so as to be eligible to reinvest the next dividend payable on Sept. 15, 2015, must ensure that the duly completed form is delivered to Computershare no later than 4 p.m. on Aug. 14, 2015. Enrolment information is provided on the company's website under "about iA" in the investor relations/dividends section.

Market guidance for 2015

• Earnings per common share: target range of $3.80 to $4.20;
• Return on common shareholders equity: target range of 11 per cent to 12.5 per cent;
• Solvency ratio: target range of 175 per cent to 200 per cent;
• Dividend payout ratio: payout range of 25 per cent to 35 per cent, with the target being the midpoint;
• Effective tax rate: target range of 18 per cent to 20 per cent;
• Strain on new business: 30 per cent plus or minus 5 per cent of sales.

Guidance for return on equity and earnings per common share excludes any potential reserve strengthening in 2015.

General information

Non-IFRS (international financial reporting standards) financial information

The company reports its financial results in accordance with IFRS. It also publishes certain non-IFRS financial measures that do not have an IFRS equivalent, including sales, value of new business and solvency ratio, or which have an IFRS equivalent such as data on operating profit and income taxes on earnings presented in the sources of earnings table. The company also uses non-IFRS adjusted data in relation to net income, earnings per share and return on equity. These non-IFRS financial measures are often accompanied by and reconciled with IFRS financial measures. The company believes that these non-IFRS financial measures provide investors and analysts with additional information to better understand the company's financial results, as well as assess its growth and earnings potential. Since non-IFRS financial measures do not have a standardized definition, they may differ from the non-IFRS financial measures used by other institutions. The company strongly encourages investors to review its financial statements and other publicly filed reports in their entirety, and not to rely on any single financial measure.

Conference call

Management will hold a conference call to present the company's results on Thursday, July 30, 2015, at 2 p.m. (Eastern Time). To listen in on the conference call, dial 1-800-738-1032 (toll-free). A replay of the conference call will also be available for a one-week period starting at 4:30 p.m. on July 30, 2015. To listen to the conference call replay, dial 1-800-558-5253 (toll-free) and enter access code 21769436. A webcast of the conference call (in listen-only mode) will also be available on the Industrial Alliance website.

Documents related to the financial results

For a detailed discussion of the company's second quarter results, investors are invited to consult the management discuss and analysis for the quarter ended June 30, 2015, related consolidated financial statements and accompanying notes, as well as the supplemental information package, all of which are available on the Industrial Alliance website under "about iA" in the investor relations section, and on SEDAR.

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