Great-West Lifeco reports first quarter 2011 results

TSX:GWO

Readers are referred to the cautionary notes regarding Forward-Looking Information and Non-IFRS Financial Measures at the end of this release. All figures are expressed in Canadian dollars.

WINNIPEG, May 5, 2011 /CNW/ - Great-West Lifeco Inc. (Lifeco) has reported net earnings attributable to common shareholders of $415 million for the three months ended March 31, 2011, compared to $428 million in 2010. On a per share basis, this represents $0.438 per common share for the three months ended March 31, 2011, compared to $0.452 per common share for 2010.

Included in net earnings for the first quarter was the establishment of catastrophe provisions, relating to the earthquake events in Japan and New Zealand, which negatively impacted earnings by $75 million or $0.08 per common share.

Consolidated assets under administration at March 31, 2011 were $495.2 billion, up $8.2 billion from December 31, 2010.

    <<
    Highlights

    -   The Company successfully completed the transition to International
        Financial Reporting Standards (IFRS) as issued by the International
        Accounting Standards Board. Prior period results have been restated
        to reflect the adoption of IFRS effective January 1, 2010.

    -   Sales in Canada of individual insurance products in the quarter were
        8% higher than 2010, with sales of participating whole life insurance
        up 15% and sales of universal life insurance up 18% over 2010.

    -   In the United States, Financial Services launched its new Hybrid
        Business Owned Life Insurance (BOLI) product in the first quarter.
        This product, which combines both General Account and Separate
        Account product features, is being marketed to community banks
        purchasing life insurance to help finance the cost of employee
        benefits. Hybrid BOLI products have captured an increasing share of
        sales recently, and adding this product to the Company's portfolio
        should result in additional sales in 2011.

    -   Putnam net asset inflows for the three months ended March 31, 2011
        were US$1.8 billion, compared to net outflows of US$0.1 billion over
        the same period a year ago.

    -   In Europe, Insurance and Annuities sales increased by $18 million
        from the first quarter of 2010 and by $51 million or 5% in constant
        currency.

    -   Return on common shareholders' equity was 16.4% based on operating
        earnings.

    -   The Company declared a quarterly common dividend of $0.3075 per
        common share payable June 30, 2011, unchanged from the previous
        quarter.

    -   The Company's capital position remains very strong. Lifeco's Canadian
        operating subsidiary, Great-West Life, reported a Minimum Continuing
        Capital and Surplus (MCCSR) ratio of 200% at March 31, 2011.
    >>

SEGMENTED OPERATING RESULTS

Consolidated net earnings for Lifeco comprise the net earnings of The Great-West Life Assurance Company (Great-West Life), Canada Life Financial Corporation (CLFC), London Life Insurance Company (London Life), Great-West Life & Annuity Insurance Company (GWL&A), and Putnam Investments, LLC (Putnam), together with Lifeco's corporate results.

CANADA

Net earnings attributable to common shareholders for the first quarter of 2011 were up 3% to $245 million compared to $237 million in the first quarter of 2010 reflecting earnings growth from Individual Insurance and Wealth Management.

Total sales for the three months ended March 31, 2011 were $2.5 billion compared to $2.7 billion in 2010. Sales of individual insurance were up 8% and sales of proprietary mutual funds increased 22% while group retirement investment only sales and group large case sales decreased by $125 million and $60 million respectively reflecting the volatility of sales in the large case market.

Total assets under administration at March 31, 2011 were $128.2 billion, compared to $126.9 billion at December 31, 2010.

UNITED STATES

Net earnings attributable to common shareholders for the first quarter of 2011 were $88 million compared to $65 million in the first quarter of 2010. First quarter results include higher investment income on surplus assets and the realization of a deferred tax asset of $9 million relating to prior years. In-quarter earnings from Putnam were a negative $13 million compared to a negative $15 million a year ago. The change in Putnam earnings was primarily due to a mix shift in revenue and reduced operating expenses.

As a result of currency movement, net earnings were negatively impacted by $4 million compared to the first quarter of 2010.

Total sales for the three months ended March 31, 2011 were $11.0 billion compared to $11.6 billion in 2010. The decrease is primarily due to one large plan sale in the Financial Services public non-profit market of $3.2 billion in the first quarter of 2010. This decrease was offset by improved sales in the Putnam segment of $2.9 billion compared to the same period in 2010. These improvements are primarily due to an increase in sales as a result of improved economic conditions and performance, and the introduction of new products.

Total assets under administration at March 31, 2011 were $300.2 billion compared to $294.1 billion at December 31, 2010. Included in assets under administration at March 31, 2011 were $176.8 billion of assets under management, consisting of $123.4 billion of mutual fund and institutional account assets managed by Putnam and $53.4 billion of general account, separate account and proprietary mutual fund assets managed by Financial Services.

EUROPE

Net earnings attributable to common shareholders for the first quarter of 2011 were $86 million compared to $130 million in the first quarter of 2010. In-quarter results include the establishment of catastrophe provisions relating to the earthquake events in Japan and New Zealand with an after tax shareholder earnings impact of $75 million.

As a result of currency movement, net earnings were negatively impacted by $2 million compared to the first quarter of 2010.

Total sales for the three months ended March 31, 2011 were $1.1 billion, compared to $1.1 billion in 2010. Sales increased by 5% in local currency, however, this was mostly offset by the negative effect of currency movement upon translation of sales in Canadian currency.

Total assets under administration at March 31, 2011 were $66.8 billion, compared to $66.0 billion at December 31, 2010.

CORPORATE

Corporate net earnings for Lifeco attributable to common shareholders was a net loss of $4 million for the first quarter compared to a net loss of $4 million in the first quarter of 2010.

MANAGEMENT APPOINTMENTS

At Great-West Lifeco's annual meeting, held today in Winnipeg, it was announced that William L. Acton, President and Chief Executive Officer, Canada Life Capital Corporation, had indicated his intention to retire following 36 years of distinguished service. In recent years, Bill has been responsible for the Company's Europe and Reinsurance operations, which have shown strong growth and profitability under his leadership. The following Management appointments were announced at the annual meeting:

    <<
    -   Arshil Jamal, formerly Executive Vice-President, Capital Management
        at Lifeco and Executive Vice-President, Chief Actuary at Great-West
        Life, London Life and Canada Life, is appointed President and Chief
        Operating Officer, Europe at Great-West Lifeco, Great-West Life,
        London Life and Canada Life.
    -   Garry MacNicholas, formerly Senior Vice-President, Reinsurance, is
        appointed Senior Vice-President Capital Management at Great-West
        Lifeco and Senior Vice-President, Chief Actuary at Great-West Life,
        London Life and Canada Life.
    >>

QUARTERLY DIVIDENDS

At its meeting today, the Board of Directors approved a quarterly dividend of $0.3075 per share on the common shares of the Company payable June 30, 2011 to shareholders of record at the close of business June 2, 2011.

    <<
    In addition, the Directors approved quarterly dividends on:
    -   Series F First Preferred Shares of $0.36875 per share;
    -   Series G First Preferred Shares of $0.3250 per share;
    -   Series H First Preferred Shares of $0.30313 per share;
    -   Series I First Preferred Shares of $0.28125 per share;
    -   Series J First Preferred Shares of $0.3750 per share;
    -   Series L First Preferred Shares of $0.353125 per share;
    -   Series M First Preferred Shares of $0.36250 per share; and
    -   Series N First Preferred Shares of $0.228125 per share
    all payable June 30, 2011 to shareholders of record at the close of
    business June 2, 2011.
    >>

For purposes of the Income Tax Act (Canada), and any similar provincial legislation, the dividends referred to above are eligible dividends.

GREAT-WEST LIFECO

Great-West Lifeco Inc. (TSX:GWO) is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses. The Company has operations in Canada, the United States, Europe and Asia through The Great-West Life Assurance Company, London Life Insurance Company, The Canada Life Assurance Company, Great-West Life & Annuity Insurance Company and Putnam Investments, LLC. Lifeco and its companies have $495 billion in assets under administration and are members of the Power Financial Corporation group of companies.

Cautionary note regarding Forward-Looking Information

This release contains some forward-looking statements about the Company, including its business operations, strategy and expected financial performance and condition. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "intends", "plans", "believes", "estimates" or negative versions thereof and similar expressions. In addition, any statement that may be made concerning future financial performance (including revenues, earnings or growth rates), ongoing business strategies or prospects, possible future action by the Company including statements made by the Company with respect to the expected benefits of acquisitions or divestitures are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Company, economic factors and the financial services industry generally, including the insurance and mutual fund industries. They are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the Company due to, but not limited to, important factors such as sales levels, premium income, fee income, expense levels, mortality experience, morbidity experience, policy lapse rates, taxes, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, changes in accounting policies and the effect of applying future accounting changes (including adoption of International Financial Reporting Standards), unexpected judicial or regulatory proceedings, catastrophic events, and the Company's ability to complete strategic transactions and integrate acquisitions. The reader is cautioned that the foregoing list of important factors is not exhaustive, and there may be other factors, including factors set out under "Risk Management and Control Practices" and "Summary of Critical Accounting Estimates" in the Company's 2010 Annual Management's Discussion and Analysis and any listed in other filings with securities regulators, which are available for review at www.sedar.com. The reader is also cautioned to consider these and other factors carefully and not to place undue reliance on forward-looking statements. Other than as specifically required by applicable law, the Company has no intention to update any forward-looking statements whether as a result of new information, future events or otherwise.

Cautionary note regarding Non-IFRS Financial Measures

This release contains some non-IFRS financial measures. Terms by which non-IFRS financial measures are identified include but are not limited to "operating earnings", "constant currency basis", "premiums and deposits", "sales", and other similar expressions. Non-IFRS financial measures are used to provide management and investors with additional measures of performance. However, non-IFRS financial measures do not have standard meanings prescribed by IFRS and are not directly comparable to similar measures used by other companies. Please refer to the appropriate reconciliations of these non-IFRS financial measures to measures prescribed by IFRS.

Further information

Selected financial information is attached.

Great-West Lifeco's first quarter conference call and audio webcast will be held Thursday, May 5, 2011 at 3:30 p.m. (EST). The call and webcast can be accessed through www.greatwestlifeco.com or by phone at:

    <<
    -   Participants in the Toronto area: 416-340-8018
    -   Participants from North America: 1-866-223-7781
    -   Participants from Overseas: Dial international access code first,
        then 800-6578-9898
    >>

A replay of the call will be available from May 5 to May 12, 2011, and can be accessed by calling 1-800-408-3053 or 416-695-5800 in Toronto (passcode: 1367585 followed by the pound key). The archived webcast will be available on www.greatwestlifeco.com from approximately 7:00 p.m. (ET) on May 5, 2011 until May 4, 2012.

Additional information relating to Lifeco, including the most recent interim unaudited consolidated financial statements, interim Management's Discussion and Analysis (MD&A), and CEO/CFO certificates will be filed on SEDAR at www.sedar.com.

    <<
                       FINANCIAL HIGHLIGHTS (unaudited)
              (in Canadian $ millions except per share amounts)

                                        As at or for the three months ended
                                       --------------------------------------
                                         March 31   December 31    March 31
                                            2011         2010         2010
    -------------------------------------------------------------------------
    Premiums and deposits:
    Life insurance, guaranteed annuities
     and insured health products        $   4,295    $   4,610    $   4,610
    Self-funded premium equivalents
     (ASO contracts)                          670          654          645
    Segregated funds deposits:
      Individual products                   1,905        2,158        1,790
      Group products                        1,493        1,385        1,730
    Proprietary mutual funds and
     institutional deposits                 9,083        6,667        6,191
                                       --------------------------------------
    Total premiums and deposits            17,446       15,474       14,966
                                       --------------------------------------
    Fee and other income                      720          713          724
    Paid or credited to policyholders       4,579        3,578        6,632

    Net earnings - common shareholders        415          480          428
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Per common share
      Basic earnings                    $   0.438    $   0.506    $   0.452
      Dividends paid                       0.3075       0.3075       0.3075
      Book value                            11.56        11.52        11.29
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Return on common shareholders'
     equity (12 months):
      Operating earnings                    16.4%        16.7%          n/a
      Net earnings                          14.7%        14.8%          n/a
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Total assets                      $ 231,327    $ 229,405    $ 217,336
      Proprietary mutual funds and
       institutional net assets           129,470      126,053      125,667
                                       --------------------------------------
      Total assets under management       360,797      355,458      343,003
      Other assets under administration   134,412      131,528      123,327
                                       --------------------------------------
      Total assets under administration $ 495,209    $ 486,986    $ 466,330
                                       --------------------------------------
                                       --------------------------------------
    Total equity                        $  14,997    $  14,989    $  14,760
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Company uses operating earnings, a non-IFRS financial measure, which
    excludes the impact of the provision described in note 25 to the
    Company's December 31, 2010 consolidated financial statements.



               CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
              (in Canadian $ millions except per share amounts)

                                              For the three months ended
                                       --------------------------------------
                                         March 31   December 31    March 31
                                            2011         2010         2010
                                       --------------------------------------
    Income
      Premium income
        Gross premiums written          $   4,941    $   5,313    $   5,248
        Ceded premiums                       (646)        (703)        (638)
                                       --------------------------------------
      Total net premiums                    4,295        4,610        4,610
                                       --------------------------------------
      Net investment income
        Regular net investment income       1,427        1,464        1,417
        Changes in fair value through
         profit or loss                      (187)      (1,540)       1,576
                                       --------------------------------------
      Total net investment income           1,240          (76)       2,993
      Fee and other income                    720          713          724
                                       --------------------------------------
                                            6,255        5,247        8,327
                                       --------------------------------------
    Benefits and expenses
      Policyholder benefits                 4,090        4,037        3,888
      Policyholder dividends and
       experience refunds                     353          350          383
      Change in insurance and investment
       contract liabilities                   136         (809)       2,361
                                       --------------------------------------
      Total paid or credited to
       policyholders                        4,579        3,578        6,632

      Commissions                             377          413          363
      Operating expenses                      645          568          630
      Premium taxes                            56           58           65
      Financing charges                        72           73           74
      Amortization of finite life
       intangible assets                       23           23           23
                                       --------------------------------------

    Earnings before income taxes              503          534          540
    Income taxes                               69           46           90
                                       --------------------------------------
    Net earnings before non-controlling
     interests                                434          488          450
    Attributable to non-controlling
     interests                                 (5)         (14)           2
                                       --------------------------------------
    Net earnings                              439          502          448
    Perpetual preferred share dividends        24           22           20
                                       --------------------------------------
    Net earnings - common shareholders  $     415    $     480    $     428
                                       --------------------------------------
                                       --------------------------------------
    Earnings per common share
      Basic                             $   0.438    $   0.506    $   0.452
                                       --------------------------------------
                                       --------------------------------------
      Diluted                           $   0.436    $   0.503    $   0.450
                                       --------------------------------------
                                       --------------------------------------



                   CONSOLIDATED BALANCE SHEETS (unaudited)
                           (in Canadian $ millions)

                                         March 31   December 31    January 1
                                            2011         2010         2010
                                       --------------------------------------
    Assets
    Cash and cash equivalents           $   2,070    $   1,840    $   3,427
    Bonds                                  71,096       72,203       66,147
    Mortgage loans                         16,437       16,115       16,684
    Stocks                                  7,036        6,700        6,442
    Investment properties                   3,100        2,957        2,613
    Loans to policyholders                  6,734        6,827        6,957
    Funds held by ceding insurers           9,776        9,856       10,984
    Reinsurance assets                      2,575        2,533        2,800
    Goodwill                                5,395        5,397        5,406
    Intangible assets                       3,079        3,108        3,238
    Other assets                            5,645        5,905        5,745
    Deferred tax assets                     1,104        1,137        1,193
    Segregated funds for the risk of
     unit holders                          97,280       94,827       87,495
                                       --------------------------------------

    Total assets                        $ 231,327    $ 229,405    $ 219,131
                                       --------------------------------------
                                       --------------------------------------

    Liabilities
    Insurance contract liabilities      $ 107,281    $ 107,367    $ 104,988
    Investment contract liabilities           747          791          841
    Debentures and other debt
     instruments                            4,371        4,288        4,106
    Funds held under reinsurance
     contracts                                146          149          331
    Other liabilities                       4,284        4,662        4,647
    Deferred tax liabilities                  693          755          623
    Repurchase agreements                     993        1,042          532
    Capital trust securities                  535          535          540
    Preferred shares                            -            -          199
    Investment and insurance contracts
     on account of unit holders            97,280       94,827       87,495
                                       --------------------------------------
    Total liabilities                     216,330      214,416      204,302

    Equity
    Non-controlling interests
      Participating account surplus in
       subsidiaries                         2,033        2,050        2,050
      Preferred shares issued by
       subsidiaries                             -            -          157
      Perpetual preferred shares issued
       by subsidiaries                          -            -          147
      Non-controlling interests in
       capital stock                           93          112           63
    Shareholders' equity
      Share capital
        Perpetual preferred shares          1,897        1,897        1,497
        Common shares                       5,816        5,802        5,751
      Accumulated surplus                   5,625        5,501        5,062
      Accumulated other comprehensive
       income (loss)                         (562)        (467)          19
      Contributed surplus                      95           94           83
                                       --------------------------------------
    Total equity                           14,997       14,989       14,829
                                       --------------------------------------
    Total liabilities and equity        $ 231,327    $ 229,405    $ 219,131
                                       --------------------------------------
                                       --------------------------------------


    Segmented Information (unaudited)

    During the year, the Company established a capital allocation model to
    better measure the performance of the operating segments. The segmented
    information below including the comparative figures reflects the impact
    of the capital allocation model implemented.

    Consolidated Earnings
    For the three months ended March 31, 2011

                                    United               Lifeco
                         Canada     States     Europe   Corporate     Total
                       ------------------------------------------------------
    Income:
      Premium income   $   2,279  $     752  $   1,264  $       -  $   4,295
      Net investment
       income
        Regular net
         investment
         income              616        328        481          2      1,427
        Changes in
         fair value
         through
         profit or
         loss                (64)        31       (154)         -       (187)
                       ------------------------------------------------------
      Total net
       investment
       income                552        359        327          2      1,240
      Fee and other
       income                276        314        130          -        720
                       ------------------------------------------------------
    Total income           3,107      1,425      1,721          2      6,255
                       ------------------------------------------------------
    Benefits and
     expenses:
       Paid or
       credited to
       policyholders       2,181        950      1,448          -      4,579
      Other                  615        335        125          3      1,078
      Financing charges       34         33          5          -         72
      Amortization of
       finite life
       intangible
       assets                 10         11          2          -         23
                       ------------------------------------------------------
    Earnings before
     income taxes            267         96        141         (1)       503

    Income taxes              22          9         38          -         69
                       ------------------------------------------------------
    Net earnings
     before
     non-controlling
     interests               245         87        103         (1)       434

    Non-controlling
     interests                 -         (2)        (3)         -         (5)
                       ------------------------------------------------------
    Net earnings             245         89        106         (1)       439

    Perpetual preferred
     share dividends          19          -          5          -         24
                       ------------------------------------------------------
    Net earnings before
     capital allocation      226         89        101         (1)       415

    Impact of capital
     allocation               19         (1)       (15)        (3)         -
                       ------------------------------------------------------
    Net earnings -
     common
     shareholders      $     245  $      88  $      86  $      (4) $     415
                       ------------------------------------------------------
                       ------------------------------------------------------



    For the three months ended March 31, 2010

                                    United               Lifeco
                         Canada     States     Europe   Corporate     Total
                       ------------------------------------------------------
    Income:
      Premium income   $    2,268 $     826  $   1,516  $       -  $   4,610
      Net investment
       income
        Regular net
         investment
         income               605       331        480          1      1,417
        Changes in
         fair value
         through
         profit or
         loss                 423       301        852          -      1,576
                       ------------------------------------------------------
      Total net
       investment
       income               1,028       632      1,332          1      2,993
      Fee and other
       income                 256       317        151          -        724
                       ------------------------------------------------------
    Total income            3,552     1,775      2,999          1      8,327
                       ------------------------------------------------------

    Benefits and
     expenses:
      Paid or
       credited to
       policyholders        2,681     1,299      2,652          -      6,632
      Other                   557       343        158          -      1,058
      Financing charges        36        35          3          -         74
      Amortization of
       finite life
       intangible
       assets                   9        12          2          -         23
                       ------------------------------------------------------
    Earnings before
     income taxes             269        86        184          1        540

    Income taxes               39        20         30          1         90
                       ------------------------------------------------------
    Net earnings
     before
     non-controlling
     interests                230        66        154          -        450

    Non-controlling
     interests                 (2)        1          3          -          2
                       ------------------------------------------------------
    Net earnings              232        65        151          -        448

    Perpetual preferred
     share dividends           17         -          3          -         20
                       ------------------------------------------------------
    Net earnings before
     capital allocation       215        65        148          -        428
    Impact of capital
     allocation                22         -        (18)        (4)         -
                       ------------------------------------------------------
    Net earnings -
     common
     shareholders      $      237 $      65  $     130  $      (4) $     428
                       ------------------------------------------------------
                       ------------------------------------------------------
    >>

SOURCE Great-West Lifeco Inc.

For further information: Marlene Klassen, APR Assistant Vice-President, Communication Services, (204) 946-7705


FORFAITS PERSONNALISÉS

Jetez un coup d’œil sur nos forfaits personnalisés ou créez le vôtre selon vos besoins de communication particuliers.

Commencez dès aujourd'hui .

ADHÉSION À CNW

Remplissez un formulaire d'adhésion à CNW ou communiquez avec nous au 1-877-269-7890.

RENSEIGNEZ-VOUS SUR LES SERVICES DE CNW

Demandez plus d'informations sur les produits et services de CNW ou communiquez avec nous au 1‑877-269-7890.