Industrial Alliance Insurance and Financial Services has surpassed the three largest insurers in Canada in terms of market value creation, both in terms of the book value of its shares as well as in the growth of the share price.
On several occasions analysts from credit rating firms have increased Industrial Alliance's sensitivity to economic changes because of its high concentration in the Canadian insurance and wealth management markets. In its financial results, the company also reported a 10% or $23 million variation in profits due to a sudden drop in the stock markets.
Market uncertainty has not stopped Industrial Alliance from becoming a champion of long-term value creation in comparison to the three largest insurers such as Great-West Life, Manulife Financial and Sun Life Financial. These three insurers derive a significant portion of their revenues from international markets.
In a speech to The International Finance Club of Montreal on May 30th, Industrial Alliance's CEO Yvon Charest revealed that the company's book value per share had grown by 185% between 2005 and 2013. It grew at an annual rate of 10% in that time, he adds. During the same period, the book value of its three peers grew by 110%.
Since it went public in February 2000, Industrial Alliance has also seen a better stock market performance than its peers. The share price had increased by 398% as of 31 December 2012, compared to an average of 191% for the three largest insurers in Canada, and 140% for the S&P/TSX Index.