Investor Presentation

Investor

Presentation

Yvon Charest

President and CEO

René Chabot

EVP and Chief Actuary

Denis Ricard

EVP, Business Development

A New Look for Industrial Alliance

2014 In a Nutshell

Performance

Return

Solidity

Growth



ROE of 12.4% in 2014



2 dividend hikes totalling 14%



$3.97 EPS in 2014, exceeding

guidance for 3rd year in a row



Solvency ratio of 216%, with capital

available for deployment ($750M)

Guidance has grown annually by over 11%

Earnings Growth

Elements that could drive

2015 earnings...

… to top of guidance:

►

Lower strain due to better product mix

Employee Plans improvement

►

US profit growth

_{Favorable experience}

… to bottom of guidance:

►

_{A stock market downturn combined}

with a drop in interest rates

►

Adverse experience

Earnings per common share

Limited to total of $100M per 10 bps variation (IRR & URR)

Interest Rate Exposure

Exposure

_{±10 bps variation}

Sensitivity to a

Reflected in earnings

IRR

±$35M

Following iA year-end assumption review

URR

±$59M

Expecting more stability

Key rate to watch

At 12/31/2014

In reserves

At 03/04/2015

Canada 30-year

2.34%

2.14%

2.11%

If rates go down...

►

First -20 bps reflected in reserve

2.14%

►

Mismatch provision of 23 bps

1.91%

►

Investment gains

??

Investment Gains Through Management Actions

Investment Gains

(After-tax)

_{Asset Liability Management (ALM)}



Optimizes cash flows within silos to reduce re-investment risk



_{Tools: inter-segment notes, bond forwards, swaps, etc.}



Reduces the level of mismatch provisions in the reserves



Results in a reduction of the IRR proxy

Yield Enhancement (YE)



_{Increases the return of portfolio backing LT liabilities}



Tools: real estate, private placements, corporate bonds, etc.

The Bottom Line



Intra-year interest rate fluctuations do not create a reserving

16%

11%

58%

5%

10%

2014 Net Income by Segment

Individual

Insurance

Individual

Wealth

Management

Group Savings

and Retirement

Group

Insurance

Mutual Funds

&

Broker Dealers

Seg. Funds,

GIC & Insured

Annuities

Life

(US)

Life &

Disability

(Canada)

$106.2M

$26.8M

$17.8M

$249.6M

$400.4 million

Maintaining Our Successful Growth Strategy

Opportunistic

in underserved markets

Selective competition

by market and geography

Market leadership

with few competitors

Head-on competition

with all players, in all

markets and geographies



Individual Insurance (US)



Individual Adjustable Disability



Group Ins. Employee Plans



Group Savings and Ret.



Auto & Home (Qc)



Group Ins. Dealer Services



Special Market Solutions



Individual Insurance (CAN)



Individual Wealth Mgmt

Invest in expertise

and infrastructure

Leverage group

relationships and

competencies

Niche markets deliver

superior returns

Improved balance between top and bottom lines

Individual Insurance

($Million, unless

otherwise indicated)

2014

2013

2012

2011

Top Line

Sales (target premium)

225.5

234.3

243.3

209.4

Premiums

1,495.1

1,425.2

1,339.3

1,248.2

Market Share

_9.2%

_11.5%

_12.0%

_10.6%

Bottom Line

Operating profit

(pretax)

184.5

201.0

123.8

94.7

Focus now on top-line initiatives

Individual Insurance

►

Represents 58% of net income

►

_{Q4 sales pick up with +9% YoY growth}

_{Brokers rebuilding pipeline for 10/8}

replacement product

►

Rates decreased on other products to

revitalize sales

►

_{Sales growing in US and for individual}

disability product in Canada

Business targeted for growth

Individual Wealth Management – Seg Funds

Comments

►

Represents 16% of net income

Gross sales up 37% over 2013

_{Positive net sales of $289M,}

while industry is negative

►

_{New cross-Canada distribution}

strategy gaining traction

►

New income-for-life series

(GMWB-like) introduced in Nov./14

_{Market share for assets at 10.9%,}

Business targeted for growth

Individual Wealth Management – Mutual Funds

Comments

►

Represents 11% of net income

Gross sales down 16% over 2013

_{Net redemptions mainly}

due to Laurentian Bank channel

_{3 new funds launched in 2014 to}

address gaps in product line

Focus on increasing contribution

from iA affiliates

►

_{Ranks 17}

_{for assets in Canada}

Business Profile 2014

Top Line

AUM

$11.8B

Gross sales

$1.9B

Net sales

($119M)

Net sales excluding LBC

_$272M

Bottom Line

Net income

$44.0M

NET SALES

($Million)

2014

2013

2012

2011

2010

2009

2008

Segregated funds

289

(89)

309

769

925

476

323

Mutual funds

(excluding LBC)

272

999

460

502

668

214

223

Total net fund sales

(excluding LBC)

561

911

768

1 271

1 593

690

546

Fee-earning assets

(end of period)

23,659

22,222 18,837 17,237 16,919 13,806 10,826

Important driver of profitability

Wealth Assets Growing at Healthy Pace

GMWB popularity

Year 2014

Premiums

Growth

Sales

Gr

o

u

p

I

n

su

rance

Employee Plans

$914.2M

+18%

Competes selectively by market & geography

Dealer Services

$535.8M

+2%

_{A niche market with few competitors}

Special Markets

$179.8M

+5%

A niche market for specialized life products

R

et

ai

l I

n

su

rance

iA Auto & Home

$233.4M

+8%

_{Competes selectively by geography (Qc only)}

Individual Disability

$45.8M

+17%

_{High growth potential outside Quebec}

Life (US)

$154.6M

+21%

Large player in underserved market

--- AUM ---

W

ea

lth

Group Savings

$11.3B

+10%

_{Leverages iA wealth infrastructure}

In selective, niche or underserved markets

Meaningful capital for deployment with good downside protection

Balance Sheet Flexibility

Significant Capacity to Weather Market Downturns

At

Dec. 31, 2014

At

Sept. 30, 2014

At

Dec. 31, 2013

_Stocks

matching

long-term

liabilities

Level of S&P/TSX before

provisions require strengthening

for future policy benefits

9,900 points

(-32%)

11,100 points

(-26%)

10,500 points

(-23%)

Solvency

ratio

Level of S&P/TSX at which

solvency ratio is 175%

8,900 points

(-39%)

8,800 points

(-41%)

8,700 points

(-36%)

Level of S&P/TSX at which

solvency ratio is 150%

7,100 points

(-51%)

6,900 points

(-54%)

7,000 points

(-48%)

Sensitivity to Rates Capped at $100M/10 bps

At

Dec. 31, 2014

At

Sept. 30, 2014

At

Dec. 31, 2013

►

IRR

Impact on net income of a

_{10 bps decrease in IRR}

($35 million)

($25 million)

($20 million)

►

URR

Impact on net income of a

_{10 bps decrease in URR}

($59 million)

($66 million)

($59 million)

Strong Track Record of Value Creation

$9.36

Contact

Grace Pollock

Tel. 418-780-5945

[email protected]

Reporting Dates

Q1/15 – May 7, 2015

Q2/15 – July 30, 2015

Q3/15 – November 4, 2015

Q4/15 – February 11, 2016

For information on our earnings releases, conference calls and related disclosure

documents, consult the Investor Relations section of our website at www.ia.ca.

Non-IFRS Financial Information

Industrial Alliance Insurance and Financial Services Inc. reports its financial results in accordance with

International Financial Reporting Standards (IFRS). It also publishes certain non-IFRS financial measures that

do not have an IFRS equivalent, including sales, value of new business, embedded value 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 always 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

Forward-Looking Statements

This document may contain statements relating to strategies used by 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”, “could”, “should”, “would”, “suspect”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate”, and “continue” (or the negative thereof), as well as words such as “objective” or “goal” or other similar words or expressions. Such statements constitute forward-looking statements within the meaning of securities laws. Forward-looking statements include, but are not limited to, information concerning the Company’s possible or assumed future operating results. These statements are not historical facts; they 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; level of competition and consolidation; changes in laws and regulations including tax laws; liquidity of Industrial Alliance including the availability of financing to meet existing financial commitments 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.

Additional information about the 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 the “Risk Management” section of 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.

The forward-looking statements in this document reflect the Company’s expectations as of the date of this document. Industrial Alliance does not undertake to update or release any revisions to these forward-looking statements to reflect events or