Desjardins Financial Security insurance premiums up substantially in first half of 2008

2008 Second Quarter Results

Insurance premium volume growth of 10.7%
Group and business insurance premiums up $97.5 million
Individual savings sales increase by $24.5 million
Net income of $95.6 million
Return on shareholder equity of 24.2%

Lévis, August 27, 2008 - At the end of the first six months of 2008, Desjardins Financial Security's net income stood at $95.6 million. The Desjardins Group subsidiary specializing in life and health insurance and retirement savings continues to post significant insurance premium income growth. It increased 10.7 per cent for a total of $1,243.6 million compared to $1,123.3 million in the first half of 2007. Driven by the company's sustained development efforts over the past few years, this growth has been especially strong outside Quebec where it totalled $424.4 million for a 19.9 per cent increase. Insurance sales stood at $108.9 million.

The share of Desjardins Financial Security's net income payable to its Desjardins caisse shareholders totalled $90.0 million. Return on shareholder equity was 24.2 per cent and remains one of the best in the financial services industry. Assets under management and administration stood at $22.1 billion.

The restructuring of investments held in asset-backed commercial paper (ABCP) that started last April has permitted Desjardins Financial Security to maintain provisions at levels relatively comparable to those of March 31, 2008, and to contain losses in the last quarter, unlike the previous three consecutive quarters. Nonetheless, the deterioration in net income due to the ABCP situation during the first half of 2008 stood at $12.2 million.

2008 second quarter results

For the period of April 1 to June 30, 2008, net income was $59.3 million compared to $68.4 million in 2007. Insurance sales totalled $57.8 million versus $51.1 million for the first quarter of the year. In Quebec, gross insurance premiums rose by $25.6 million or 6.1 per cent over 2007. In the other provinces, gross insurance premiums increased to $30.5 million or 16.8 per cent, a substantial increase compared to the second quarter of 2007.

Investment product sales were especially good in the second quarter of 2008, totalling $49.9 million for an increase of $14.8 million over the same period last year. Strong demand for Helios, the new Guaranteed Investment Fund Contract and its Guaranteed Minimum Withdrawal Benefit, was largely responsible for this increase.

"Our life and health insurance subsidiary continues to perform well in all its different markets, particularly outside Quebec where insurance premium income is up by almost 20 per cent, resulting in one of the best returns on shareholder equity in the industry. Overall, it continues to contribute to the growth and profitability of Desjardins Group." said Ms. Monique Leroux, chair of the Board, president and CEO of Desjardins Group and also CEO of Desjardins Financial Security.

Mr. Richard Fortier, president and COO of Desjardins Financial Security, said he is satisfied with the company's results since the beginning of the year. "Despite recent difficult economic conditions, Desjardins Financial Security continues to meet the growing needs of its clients and to gain more ground in an extremely competitive insurance market."

Sector results

As of June 30, 2008, the volume of gross premiums in group insurance from groups, businesses and plans sold in financial institutions, including the Desjardins caisses, stood at $1,062.7 million, for an increase of $114.5 million or 12.1 per cent over the same period last year. Sales totalled $88.2 million.

In individual insurance, sales recorded by the financial security advisors at the Desjardins caisses, the financial centre network of SFL Partner of Desjardins Financial Security and Desjardins Financial Security Independent Network totalled $20.7 million, which is comparable to June 2007. Gross premiums were $239.7 million, for a $9.3 million improvement over last year.

Savings sales totalled $526.4 million and group retirement savings sales reached $67.3 million. As of June 30, 2008, individual savings sales amounted to $167.0 million for a $24.5 million increase over the first six months of 2007. Mutual fund sales stood at $292.1 million.

About Desjardins Financial Security

Desjardins Financial Security, a subsidiary of Desjardins Group, the largest integrated cooperative financial group in Canada, specializes in individual and group life and health insurance, as well as retirement savings products and services. Every day, over 5 million Canadians rely on Desjardins Financial Security to ensure their financial security. Desjardins Financial Security employs over 3,900 people and administers over $22.0 billion in assets from offices in several cities across the country, including Vancouver, Calgary, Winnipeg, Toronto, Ottawa, Montréal, Québec, Lévis, Halifax and St. John's. For more information please visit www.desjardinsfinancialsecurity.com

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Information:
Sarah Twomey
Communications Advisor
Tel.: 416-926-2700, extension 2015
Toll free: 1-877-906-5551, extension 2015
Virtual newsroom http://www.desjardinsfinancialsecurity.com/press