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Industrial Alliance Insurance and Financial Services Inc. reported Tuesday that its profit was nearly halved in the second quarter to $32.1-million as premiums and deposits slipped 22 per cent.

The Quebec City-based insurer earned 40 cents per diluted share for the period ended June 30, compared to 78 cents, or $63.4-million in the same period in 2008.

Excluding a $19.3-million after-tax writedown in the value of debt instruments and underlying assets, net income from regular operations was $51.4-million, down from $62.3-million in the year-ago period.

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Industrial Alliance said the reduction in market value of debt instruments and corresponding assets doesn't affect its earning power because their values will be reversed as the debt instruments approach maturity.

Profitability in the quarter was stimulated by a $5.6-million upswing by gains in the stock market. However, the gain was offset by a $1.5-million provision for two investments and an increase in group insurance claims.

Premiums and deposits totalled $1.2-billion, down 22 per cent on the year. Assets under management and under administration rose 9 per cent to a record $54.1-billion.

President and chief executive officer Yvon Charest said he was very satisfied with the results.

"In general, the results continue to show a great deal of resilience to the current economic and financial environment," he said, noting the company's dividend was maintained and assets reached a record high.

"Even though sales are not as steady as last year, they are comparable to and even better than industry results."

Despite encouraging signs of an economic recovery, Industrial Alliance said it will continue to focus on its financial strength and position itself to take advantage of growth opportunities when markets stabilize.

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Growth hasn't yet returned to normal despite the market upswing during the quarter. Consumers are waiting for stronger signs of a recovery before beginning to buy financial products again, especially those related to the stock markets .

Creditor insurance through car dealers also continues to feel the impact of the decrease in automobile sales.

However, traditional family insurance continue to do well and group insurance employee plans have recovered thanks to new customers.

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