Acquisitions boost first quarter fund sales at Industrial Alliance

par Sophie Boltz | June 26 2000 01:40PM

Fund distributors acquired by Industrial Alliance in 2009 quickly proved their value, driving mutual fund assets 40% higher between Jan. 1, 2009 and March 31, 2010.

"It's our best first quarter ever in terms of business growth," Yvon Charest, President and CEO of Industrial Alliance confirms.

Mutual fund assets of Industrial Alliance ballooned from $5 billion in December 2008 to $7 billion in Q1, 2010. "There's real momentum in wealth management sales," Mr. Charest said in an interview with The Insurance and Investment Journal. "In the first quarter we were at seventh place in terms of net mutual fund sales in Canada, and ranked seventeenth in terms of assets." 

Last year, Industrial Alliance acquired Inhance Investment Management, a subsidiary of socially responsible funds from Vancouver City Savings Credit Union. It also took over several smaller firms. All the same, Mr. Charest attributes the asset growth to internal factors. "We generated net sales of mutual funds of $400 million in the last twelve months. This asset growth did not cost us a cent; it was fuelled by the growth in net sales and in the markets."

The insurer plans to continue its thrust by sticking to its strategy of small scale, affordable acquisitions. "We did not want to channel all our energies into a large acquisition. We were aiming for several base hits rather than a home run," he says.

The Quebec City-based insurer reported a 31% rise in net income in Q1 2010 compared with the same quarter a year earlier. "Our performance was good before, during and after the crisis. This means that our product line is quite attractive regardless of the economic environment," Mr. Charest points out.

He adds that Industrial Alliance wants to develop more. To attain this objective, it is positioning itself on several fronts.

Notably, it is focusing on augmenting its distribution and career networks. Although the company has a network of managing general agents over 12,000 advisors strong, and a career network of more than 1600 representatives, it is aiming higher. "We want to increase the number of advisors in the career network. We are targeting growth of 3% per year. We're satisfied up to now because we are in line with this objective, with an average of 3% to 4% per year," Mr. Charest added.

Industrial Alliance is also developing strategic agreements to distribute its products; partners include Laurentian Bank and Credit Union. "This will add stability to our sales growth," he explained. "We want to be known by more independent advisors." This also ties in with the company's keen interest in mutual funds.

Acquisitions in insurance and mutual funds alike, is also part of the insurer's strategy. Industrial Alliance is still on the lookout for mutual fund manufacturers and distributors, along with smaller insurers, "even if there aren't many left," Mr. Charest admits.

All the same, choosing which company to acquire is not a snap decision. "Our last two quarters were record setters. When we perform that well, we cannot just bank on acquisitions that will prove worthwhile. We're looking for mutual fund manufacturers, but not at any price," he explained.

The company also aims to extend its market. "We do 45% of our business in Quebec, 29% in Ontario and 20% in western Canada, 5% in the Atlantic provinces and 2% in the rest of Canada. We hope to develop western Canada and Ontario more because of their potential," he said.

Industrial Alliance is also considering geographical diversification outside of Canada. Specifically, the company plans to step up its presence in the U.S. market. "We chose this country for several reasons. First, it is the largest market in the world. We also targeted the U.S. because it contains more specialized markets than large concentrations of markets held by the giants. Also, we are close to this market geographically and we already have operations there," Mr. Charest explained.

In Canada, Industrial Alliance is eyeing a niche it had pretty much ignored: business insurance. "When the name Industrial Alliance will be better known outside Quebec, we can seek out larger companies. We don't have a specific action plan for 2010. It'll be an evolution rather than a revolution."