Mr. Edward Kohlberg of A.M. Best reports

A.M. BEST ASSIGNS ISSUE CREDIT RATING TO INDUSTRIAL ALLIANCE INSURANCE AND FINANCIAL SERVICES INC.'S NEW SUBORDINATED DEBENTURES

A.M. Best has assigned a long-term issue credit rating of "a" to the recently issued $400-million 3.3-per-cent subordinated debentures due Sept. 15, 2028, of Industrial Alliance Insurance and Financial Services Inc. The outlook assigned to this credit rating is stable, which is consistent with the outlook for the existing ratings of IA and its core operating insurance subsidiaries. (For further details, please see A.M. Best's press release dated Feb. 24, 2016.)

The proceeds from the debt offering will be added to IA's capital base and be utilized for general corporate purposes, including, subject to the prior approval of the Autorite des marches financiers, the redemption of IA's outstanding $250-million 4.75-per-cent subordinated debentures due Dec. 21, 2021. IA intends to redeem the subordinated debentures on Dec. 14, 2016. A.M. Best notes that IA's overall financial leverage is expected to remain below 30 per cent, while interest coverage is expected to remain above five times. Both measures are within A.M. Best's guidelines for IA's current rating level.

The rating recognizes IA's solid absolute and risk-adjusted capitalizations, consistent profitability, product diversification, and growth in assets under management. At the second quarter of 2016, IA reported solid operating earnings, while maintaining adequate risk-adjusted capital ratios. Premium growth for the period was led by strong retail insurance sales in Canada and the United States. Additionally, the company saw improvement in its new business strain ratio. A.M. Best will continue to monitor the impact of the current macroeconomic environment, including the low-interest-rate environment on IA's earnings and risk-adjusted capital.