Power Financial Corporation reports 2011 First Quarter Financial Results and Dividends

Readers are referred to the sections entitled "Forward-looking Statements" and "Non-IFRS Financial Measures" at the end of this release. The Corporation's financial results are reported under International Financial Reporting Standards (IFRS) and all comparative figures have been restated accordingly.

MONTREAL, May 12 /CNW Telbec/ - Power Financial Corporation's operating earnings for the three-month period ended March 31, 2011 were $398 million or $0.52 per share, compared with $380 million or $0.50 per share in the corresponding period in 2010. Included in operating earnings for the first quarter of 2011 was the establishment of provisions, as previously disclosed by Great-West Lifeco Inc. (Lifeco), relating to earthquake events in Japan and New Zealand, which negatively impacted Lifeco's net earnings by $75 million. Power Financial's share of these provisions represented $53 million or $0.07 per share.

For the first quarter of 2011, other items were a charge of $2 million, compared with a positive contribution of $6 million in the first quarter of 2010, and consisted, for both periods, of Power Financial's share of non-operating earnings recorded by Pargesa Holding SA (Pargesa).

As a result, net earnings attributable to common shareholders including other items for the three-month period ended March 31, 2011 were $370 million or $0.52 per share, compared with $363 million or $0.51 per share in the first quarter of 2010.

RESULTS OF SUBSIDIARIES AND PARJOINTCO

Great-West Lifeco Inc.
Lifeco reported net and operating earnings attributable to common shareholders of $415 million (which include the provisions of $75 million as mentioned above) or $0.438 per share for the three months ended March 31, 2011, compared with $428 million or $0.452 per share in the corresponding period of 2010.

Lifeco's contribution to Power Financial's operating earnings was $284 million for the three-month period ended March 31, 2011, compared with $295 million in the same period in 2010.

IGM Financial Inc.
IGM Financial Inc. (IGM) reported net and operating earnings available to common shareholders for the three-month period ended March 31, 2011 of $212 million or $0.81 per share, compared with $192 million or $0.73 per share in the corresponding period of 2010.

For the three months ended March 31, 2011, the contribution from IGM to Power Financial's operating earnings was $121 million, compared with $108 million in the same period in 2010.

Parjointco N.V.
Power Financial holds a 50% interest in Parjointco N.V., which in turn holds a 54.1% interest in Pargesa. Pargesa reported operating earnings of SF14 million in the three-month period ended March 31, 2011, compared with an operating loss of SF8 million in the corresponding period of 2010. Expressed in Canadian dollars, the contribution from Pargesa to Power Financial's operating earnings was $4 million for the three-month period ended March 31, 2011, compared with a charge of $2 million in the same period in 2010.

DIVIDENDS ON PREFERRED SHARES

The Board of Directors today declared quarterly dividends on the Corporation's preferred shares, as follows:

Type of shares Record Date Payment Date Amount
Series A July 25, 2011 August 15, 2011 To be determined in accordance
with the articles of the Corporation
Series D July 8, 2011 July 31, 2011 34.375¢
Series E July 8, 2011 July 31, 2011 32.8125¢
Series F July 8, 2011 July 31, 2011 36.875¢
Series H July 8, 2011 July 31, 2011 35.9375¢
Series I July 8, 2011 July 31, 2011 37.50¢
Series K July 8, 2011 July 31, 2011 30.9375¢
Series L July 8, 2011 July 31, 2011 31.875¢
Series M July 8, 2011 July 31, 2011 37.50¢
Series O July 8, 2011 July 31, 2011 36.25¢
Series P July 8, 2011 July 31, 2011 27.50¢

DIVIDEND ON COMMON SHARES

The Board of Directors also declared a quarterly dividend of 35 cents per share on the Corporation's common shares payable August 1, 2011 to shareholders of record June 30, 2011.

For purposes of the Income Tax Act (Canada) and any similar provincial legislation, all of the above dividends on the Corporation's preferred and common shares are eligible dividends.

Forward-Looking Statements

Certain statements in this News Release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Corporation's current expectations, or with respect to disclosure regarding the Corporation's public subsidiaries, reflects such subsidiaries' disclosed current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Corporation's financial performance, financial position or cash flows as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and the reader is cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the Corporation and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods. 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", "plans", "believes", "estimates", "seeks", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could".

By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, many of which are beyond the Corporation's and its subsidiaries' control, affect the operations, performance and results of the Corporation and its subsidiaries and their businesses, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, management of market liquidity and funding risks, changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates), the effect of applying future accounting changes, business competition, operational and reputational risks, technological change, changes in government regulation and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Corporation's and its subsidiaries' ability to complete strategic transactions, integrate acquisitions and implement other growth strategies, and the Corporation's and its subsidiaries' success in anticipating and managing the foregoing factors. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including that the foregoing list of factors, collectively, are not expected to have a material impact on the Corporation and its subsidiaries. While the Corporation considers these assumptions to be reasonable based on information currently available to management, they may prove to be incorrect.

Other than as specifically required by law, the Corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Additional information about the risks and uncertainties about the Corporation's business is provided in its disclosure materials, including its most recent Management's Discussion and Analysis and Annual Information Form, filed with the securities regulatory authorities in Canada, available at www.sedar.com.

Non-IFRS Financial Measures

In analysing the financial results of the Corporation and consistent with the presentation in previous years, net earnings are subdivided into the following components:

  • operating earnings; and
  • other items, which include the after-tax impact of any item that management considers to be of a non-recurring nature or that could make the period-over-period comparison of results from operations less meaningful, and also include the Corporation's share of any such item presented in a comparable manner by Lifeco or IGM.

Management has used these financial measures for many years in its presentation and analysis of the financial performance of Power Financial, and believes that they provide additional meaningful information to readers in their analysis of the results of the Corporation.

Operating earnings and operating earnings per share are non-IFRS financial measures that do not have a standard meaning and may not be comparable to similar measures used by other entities.

Attachments:       Financial Information

CONSOLIDATED BALANCE SHEETS
             
(unaudited)
[in millions of Canadian dollars]
March 31,
2011
  December 31,
2010
  January 1,
2010
 
Assets            
Cash and cash equivalents 3,940   3,656   4,855  
Investments            
  Bonds 72,284   73,582   67,388  
  Mortgages and other loans 20,607   20,209   20,613  
  Shares 6,743   6,415   6,392  
  Investment properties 3,102   2,959   2,615  
  102,736   103,165   97,008  
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  
Investment in associates 2,628   2,448   2,829  
Deferred tax assets 1,186   1,214   1,300  
Other assets 6,888   7,210   7,065  
Intangible assets 4,201   4,231   4,359  
Goodwill 8,741   8,713   8,655  
Segregated funds for the risk of unit holders 97,280   94,827   87,495  
Total Assets 246,685   244,680   234,307  
             
Liabilities            
Insurance contract liabilities 107,281   107,367   104,988  
Investment contract liabilities 747   791   841  
Deposits and certificates 818   835   907  
Funds held under reinsurance contracts 146   149   331  
Obligation to securitization entities 3,528   3,505   3,310  
Debentures and other borrowings 6,396   6,313   5,931  
Capital trust securities and debentures 535   535   540  
Preferred shares of the Corporation -   -   300  
Preferred shares of subsidiaries -   -   199  
Deferred tax liabilities 1,075   1,136   1,018  
Other liabilities 6,958   7,484   6,872  
Insurance and investment contracts on account of unit holders 97,280   94,827   87,495  
Total Liabilities 224,764   222,942   212,732  
             
Equity            
Stated capital            
  Perpetual preferred shares 2,005   2,005   1,725  
  Common shares 636   636   605  
Retained earnings 10,139   10,007   9,547  
Reserves 290   211   990  
Total shareholders' equity 13,070   12,859   12,867  
Non-controlling interests 8,851   8,879   8,708  
Total Equity 21,921   21,738   21,575  
Total Liabilities and Equity 246,685   244,680   234,307  



CONSOLIDATED STATEMENTS OF EARNINGS
         
Three months ended March 31
(unaudited) [in millions of Canadian dollars, except per share amounts]
2011   2010  
         
Revenues        
Premium income        
  Gross premiums written 4,941   5,248  
  Ceded premiums (646)   (638)  
Total net premiums 4,295   4,610  
Net investment income        
  Regular net investment income 1,455   1,449  
  Change in fair value (191)   1,576  
  1,264   3,025  
Fee income 1,369   1,311  
Total revenues 6,928   8,946  
         
Expenses        
Policyholder benefits 4,090   3,888  
Policyholder dividends and experience refunds 353   383  
Change in insurance and investment contract liabilities 136   2,361  
  4,579   6,632  
Commissions 585   552  
Operating expenses 906   890  
Financing charges 107   109  
Total expenses 6,177   8,183  
  751   763  
Share of earnings of investment in associates 2   4  
Earnings before income taxes 753   767  
Income taxes 137   160  
Net earnings before non-controlling interests 616   607  
Attributable to non-controlling interests (220)   (221)  
Net earnings attributable to shareholders 396   386  
Perpetual preferred share dividends (26)   (23)  
Net earnings attributable to common shareholders 370   363  
         
Earnings per common share        
  - Basic 0.52   0.51  
  - Diluted 0.52   0.51  



SEGMENTED INFORMATION
INFORMATION ON PROFIT MEASURE
Three months ended March 31, 2011 Lifeco   IGM   Parjointco   Other   Total  
Revenues                      
Premium income 4,295   -   -   -   4,295  
Net investment income                      
  Regular net investment income 1,427   49   -   (21)   1,455  
  Change in fair value (187)   (4)   -   -   (191)  
  1,240   45   -   (21)   1,264  
Fee income 720   675   -   (26)   1,369  
  6,255   720       (47)   6,928  
Expenses                      
Policyholder benefits, dividends and
experience refunds, and change in
insurance and investment contract liabilities
4,579   -   -   -   4,579  
Commissions 377   234   -   (26)   585  
Operating expenses 724   169   -   13   906  
Financing charges 72   30   -   5   107  
  5,752   433   -   (8)   6,177  
  503   287   -   (39)   751  
Share of earnings of investment in associates -   -   2   -   2  
Earnings before income taxes 503   287   2   (39)   753  
Income taxes 69   73   -   (5)   137  
Contribution to net earnings
before non-controlling interests
434   214   2   (34)   616  
Attributable to non-controlling interests (150)   (93)   -   23   (220)  
Contribution to net earnings attributable to shareholders 284   121   2   (11)   396  
 
Three months ended March 31, 2010 Lifeco   IGM   Parjointco   Other   Total  
Revenues                    
Premium income 4,610   -   -   -   4,610  
Net investment income                    
  Regular net investment income 1,417   53   -   (21)   1,449  
  Change in fair value 1,576   -   -   -   1,576  
  2,993   53   -   (21)   3,025  
Fee income 724   611   -   (24)   1,311  
  8,327   664   -   (45)   8,946  
Expenses                    
Policyholder benefits, dividends and
experience refunds, and change in
insurance and investment contract liabilities
6,632   -   -   -   6,632  
Commissions 363   214   -   (25)   552  
Operating expenses 718   159   -   13   890  
Financing charges 74   27   -   8   109  
  7,787   400   -   (4)   8,183  
  540   264   -   (41)   763  
Share of earnings of investment in associates -   -   4   -   4  
Earnings before income taxes 540   264   4   (41)   767  
Income taxes 90   70   -   -   160  
Contribution to net earnings
before non-controlling interests
450   194   4   (41)   607  
Attributable to non-controlling interests (155)   (86)   -   20   (221)  
Contribution to net earnings attributable to shareholders 295   108   4   (21)   386  

SOURCE POWER FINANCIAL CORPORATION

For further information:

Mr. Edward Johnson
Senior Vice-President,
General Counsel and Secretary
514-286-7400

Profil de l'entreprise

POWER FINANCIAL CORPORATION

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