For the first time in its history, Industrial Alliance generated over 50% of its sales outside Quebec, in all sectors. While the insurer plans to continue expanding in the rest of Canada, it is now exploring ways to cultivate markets in the United States, over the medium and long term.
Building business outside Quebec is the insurer’s main objective for its wealth management sector, Yvon Charest, Industrial Alliance president and CEO told The Insurance Journal. “About 43% of our business is in Quebec, but the population of this province represents only 23% of Canada. This means our penetration rate in the rest of the country can improve. Our development potential is greater in the rest of Canada than in Quebec,” he explains.
Mr. Charest is also interested in the U.S. Having sized up this market for the last 18 months, Industrial Alliance sees a bright future for some niche products.
The teachers’ market is the insurer’s niche of choice. Industrial Alliance already has assets of $220 million in this sector south of the border in pension plans and life insurance products. The second promising niche is individual insurance for people with modest incomes, a sector in which Industrial Alliance already dominates sales in Quebec.
“The American market represents only 3% of our sales for now, but we see good potential there. Our U.S. activities are run from Vancouver, but we have begun to shift some elements to Phoenix, Arizona to shore up our U.S. operations,” Mr. Charest says.
He says that Industrial Alliance is ready to invest $250 million over five years to woo the American market. By comparison, Industrial Alliance channelled $400 million into growing its wealth management business there. The insurer considers this sector a priority, Mr. Charest notes.
He adds that he would seriously consider making an acquisition in the U.S. if the opportunity arises.
Commenting on the company’s financial results, Mr. Charest says that 2006 was a good year for the insurer.
Industrial Alliance ended the year with net earnings for shareholders of $227 million, a 72% increase from the $132.5 million in 2005. The most spectacular growth was seen in the wealth management sector, which reported a 60% increase in new sales, for total assets of $13 billion. The sharp rise is mainly fuelled by the integration of Clarington, acquired in 2005.
In individual insurance, Industrial Alliance reported growth of 9%, similar to the market average of 10%. In group insurance, growth stands at 8%.