(December 14 – 12:50 ET) – Industrial Alliance Life Insurance Co established a Canadian first for a life and health insurance company by disclosing its embedded value today. The disclosure was made in Toronto, during a presentation to the financial analysts of various securities brokerage firms.

Embedded value is a new concept in North America. It measures, on the valuation date, the value of a life and health insurance company’s in-force business, excluding the value of the new sales occurring after that date.

At Industrial Alliance, this value reached $1,170 million as at December 31, 1999, the initial valuation date. The company also estimated the embedded value as at September 30, 2000. According to the methodology used, the company’s embedded value would have reached $1,288 million as at September 30, which is equal to $34.28 per common share.

According to the company, in Europe, where the concept is increasing in popularity, the shares of insurance companies generally are traded at a multiple of their embedded value to take into consideration the value of future new business. This is known as the appraisal value.

Appraisal value gives a more comprehensive evaluation of life insurance companies. For example, Industrial Alliance has estimated the value of its new business for the 12-month period ending September 30, at $57 million, or $1.52 per common share.

Embedded value, as with the appraisal value, completes the more traditional methods for evaluating companies, such as the market to book value ratio, earnings per share and return on equity, to name the most well known.

“Today we are taking one step further in terms of disclosure,” declared Yvon Charest, president and Chief Executive Officer. “By publishing the company’s embedded value — before the end of the year, as promised — we are aiming to be as transparent as possible with investors and we are offering them an additional tool so that they can more accurately assess the value of the company.
-IE Staff