* Q4 EPS C$0.83 vs loss C$1.37/shr yr-ago
* Tops analysts' forecast for EPS C$0.69
* Maintains dividend, says growth back on track
* Shares surge 4.1 pct
(Recasts with analyst, CEO comment)
By Andrea Hopkins
TORONTO, Feb 12 Industrial Alliance Insurance
and Financial Services (IAG.TO) reported a record quarterly
profit on Friday, reversing big losses a year earlier and
sending shares 4.1 percent higher.
Canada's fourth-largest life insurer bucked the largely
disappointing showing of its bigger lifeco peers earlier in the
week, reporting stronger-than-expected sales and stock market
gains that boosted its large investment portfolio.
The strong profit and optimistic outlook provided by the
company for 2010 prompted one analyst to speculate that IAG may
lead the pack in increasing payout to shareholders for the
first time since the financial crisis began in 2008.
"With a 29 percent payout ratio, IAG maybe the first lifeco
to raise its dividend some time in 2010," BMO Capital Markets
analyst John Reucassel said in a research note.
Reucassel pointed to IAG's 27 percent increase in premiums
and deposits in the quarter, mainly driven by growth in the
sale of wealth management products -- mutual funds and
segregated funds -- as proof of its momentum.
"We believe that IAG is capitalizing on new sales
opportunities, as (Manulife) and (Sun Life) have pulled back
somewhat from this market," Reucassel said.
Manulife Financial Corp (MFC.TO), North America's largest
life insurer, and Sun Life Financial Inc (SLF.TO), Canada's No.
3, reported weaker-than-expected results on Thursday, despite
an increase in profit.
Winnipeg-based rival Great West Lifeco (GWO.TO) saw profit
drop, but earnings were in line with expectations.
Quebec-based IAG's net income came in at C$67.4 million
($64.2 million), or 83 Canadian cents a share, in the fourth
quarter. That was up from a loss of C$110.2 million, or C$1.37
a share, in the same period a year earlier, when the company
increased provisions as the value of its financial investments
The latest results surpassed analysts' average estimates
for earnings of 69 Canadian cents a share, according to Thomson
Shares pf IAG rose 4.1 percent to C$33.48 in late afternoon
trade on the Toronto Stock Exchange, defying a broader
downtrend in Canadian financials. Manulife was off 2.0 percent,
while Sun Life ebbed 1.3 percent.
IAG Chief Executive Yvon Charest said he was pleased with
the record profit after the company suffered during the
financial crisis, when declines in financial markets sideswiped
the big investment portfolios of insurance companies.
In the fourth quarter, sales of individual wealth
management products rose 68 percent, boosted by stock market
gains, while assets under management and administration rose 18
percent for the year to C$58.4 billion, the company said.
"From a business growth perspective, momentum is back,"
Charest told analysts on a conference call.
Return on equity, a key measure of profitability, rose to
14.9 percent in the quarter and was at 11.9 percent in 2009 as
a whole, up from just 4.0 percent in 2008.
The company maintained its dividend and said the outlook
for 2010 was good.
It expects return on equity to be between 12 percent and 14
percent, which translates to earnings per share of about C$2.75
to C$3.25. That target range is up from 2009's per share profit
target of between C$2.50 and C$3.00.
IAG said it is maintaining its 25 percent to 35 percent
target range for the dividend payout ratio, and expects it to
be in the "upper part" of the range in 2010.
(Reporting by Andrea Hopkins; editing by Rob Wilson)