Industrial Alliance Announces Acquisition of U.S. Life Insurance Company – Texas-based American-Amicable Group Expands Platform for Growth in the U.S.

Industrial Alliance Announces Acquisition of U.S. Life Insurance Company - Texas-based American-Amicable Group Expands Platform for Growth in the U.S. Market

Industrial Alliance Insurance and Financial Services Inc. ("Industrial Alliance" or "the Company") announced 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.