TORONTO (Reuters) - First-quarter profit rose 6.6 percent at Industrial Alliance Insurance and Financial Services Inc (IAG.TO), as lower expenses and tax gains made up for a drop in premiums and deposits, the company said on Wednesday.
Industrial Alliance, which sells life insurance and manages mutual funds, said net income available to common shareholders was C$61.7 million, or 76 Canadian cents a share, in the three months ended March 31.
That compared with C$57.9 million, or 72 Canadian cents a share, in the same 2007 period.
Adjusted earnings per share were 78 Canadian cents, just shy of the 79 Canadian cents expected by analysts.
“Overall, a reasonable quarter in the context of the operating environment,” said BMO Capital Markets analyst John Reucassel, who noted that good results in individual insurance were offset by weaker results in wealth management.
Industrial Alliance paid US$33 million on May 1 to Assurant Inc (AIZ.N) to buy an Assurant subsidiary, United Family Life Insurance Co. It is a shell company, closed to new business, with licenses to operate in 49 U.S. states.
“It’s our intention to rebrand the company IA American Life Insurance Company,” Industrial Alliance Chief Executive Yvon Charest said on a conference call.
He reiterated that Industrial Alliance, which currently does very little business in the United States, is taking a prudent, step-by-step approach to U.S. expansion. It has a small office in Phoenix, Arizona.
The Quebec City-based company’s U.S. focus will be on selling annuities for school teachers, and life insurance for middle-income earners, Charest said.
Return on equity was 14.4 percent in the quarter, while revenue dropped to C$1.29 billion from C$1.43 billion.
Premiums and mutual fund deposits fell 16 percent to C$1.42 billion in the first quarter.
It was the first decrease in premiums and deposits in four years, Charest noted. While the insurance sector did well, the wealth management side of the business suffered from market volatility, he said on the call.
Industrial Alliance sells and manages the IA Clarington family of mutual funds, and is the fourth-biggest publicly traded life insurer in Canada.
The shares fell C$1.48, or 3.8 percent, to C$37.92 on the Toronto Stock Exchangeon on Wednesday. The stock is down about 11 percent so far this year.
Reporting by Lynne Olver and Cameron French; editing by Rob Wilson