Great-West Lifeco reports first quarter 2009 results



    
    TSX:GWO

    Readers are referred to the cautionary note regarding Forward-Looking
    Information and Non-GAAP Financial Measures at the end of this Release.
    

    TORONTO, May 7 /CNW/ - Great-West Lifeco Inc. (Lifeco) has reported net
income attributable to common shareholders of $326 million for the three
months ended March 31, 2009, compared to $493 million in 2008. On a per common
share basis, this represents $0.345 per common share for the three months
ended March 31, 2009, compared to $0.552 per common share for 2008.
    Earnings of $493 million in 2008 represents adjusted net income from
continuing operations and, as such, excludes income from discontinued
operations of $43 million, or $0.048 per common share as well as two
non-recurring items that totaled $118 million, after-tax, or $0.132 per common
share, as described in the United States section of this Release. Including
these amounts, net income attributable to common shareholders for the three
months ended March 31, 2008, as reported, was $654 million, or $0.732 per
common share.
    The 2009 results reflect the weaker global equity and credit market
conditions that were present in the quarter. A decline in the value of
publicly traded and other investment securities through March 31, 2009 has
lowered the market value of assets invested in the Company's segregated and
mutual funds. Accordingly, the Company realized lower investment management
fee income. This negatively impacted net income attributable to common
shareholders by $89 million, or $0.09 per common share, and additionally, by
$25 million, or $0.03 per common share as a result of increased actuarial
liabilities. However, Great-West Life did not need to establish actuarial
reserves with respect to segregated fund guarantees at March 31, 2009.
    In the quarter, the Company increased provisions for future credit losses
in actuarial liabilities by $202 million, mainly as a result of credit rating
downgrades of investments held by the Company. This negatively impacted
earnings by $138 million, or $0.15 per common share. The Company also recorded
asset impairment charges in connection with certain financial, auto and
commercial mortgage holdings. These impairment charges totaled $27 million,
which negatively impacted earnings by $19 million, or $0.02 per common share.
    At March 31, 2009, consolidated invested assets were $103.6 billion. The
gross book value of impaired investments at that date was $351 million,
against which the Company had recorded cumulative impairment provisions of
$255 million. In addition, at March 31, 2009, the total provision for future
credit losses in actuarial liabilities was in excess of $2.0 billion.

    Highlights

    
    -   The Company has maintained its quarterly common dividend at $0.3075
        per common share payable June 30, 2009. Dividends paid on common
        shares for the three months ended March 31, 2009 were 5% higher than
        a year ago.
    -   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 205% at March 31, 2009, which
        did not include any benefit from the $1,230 million of common and
        preferred share capital that was raised by Lifeco in the fourth
        quarter of 2008.
    -   The Company and its major operating subsidiaries continue to hold
        strong credit ratings. The Company's ratings were affirmed with a
        stable outlook by A.M. Best on January 22nd, Moody's Investors
        Service and Standard and Poor's Ratings Services on February 12th and
        Fitch Ratings on April 20th. The ratings affirmations are significant
        in light of the current economic environment.
    -   In the quarter, PanAgora, a subsidiary of Putnam Investments, sold
        its equity investment in Union PanAgora Asset Management GmbH. The
        transaction resulted in an after-tax gain to Putnam of $41 million
        (US$33 million), or $0.04 per common share.
    -   Adjusted return on common shareholders' equity was 16.2% for the
        twelve months ended March 31, 2009.
    

    OPERATING RESULTS

    Consolidated net income for Lifeco is comprised of the net income 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 income attributable to common shareholders for the first quarter of
2009 was $208 million compared to $249 million in 2008. Individual Insurance &
Investment Products net income was $127 million compared to $175 million in
2008, Group Insurance net income was $93 million compared to $100 million in
2008, and Corporate net income was a charge of $12 million compared to a
charge of $26 million in 2008.
    Asset impairment charges and provisions for future credit losses
negatively impacted net income attributable to common shareholders by $2
million in the quarter.
    Total sales for the three months ended March 31, 2009 were $1,785 million
compared to $2,297 million in 2008, with the results reflecting lower sales of
segregated fund and mutual fund products. Sales of protection products
increased over the first quarter of 2008, however, with Individual Life sales
up 9%. Sales of Group insurance products decreased 15% over 2008.
    Total assets under administration at March 31, 2009 were $92.5 billion,
compared to $93.4 billion at December 31, 2008.

    UNITED STATES

    Net income attributable to common shareholders for the first quarter of
2009 was $75 million compared to $76 million in 2008.
    Asset impairment charges and provisions for future credit losses
negatively impacted net income attributable to common shareholders by $21
million in the quarter. The results also include an after-tax gain of $41
million (US$33 million) realized by Putnam Investments LLC in connection with
the sale of its equity investment in Union PanAgora Asset Management GmbH.
    The $76 million in 2008 represents adjusted net income from continuing
operations and, as such excludes income from discontinued operations of $43
million as well as two non-recurring items that contributed $118 million to
earnings. The Company realized a gain of $176 million after-tax in connection
with the termination of a long-standing assumption reinsurance agreement under
which GWL&A had reinsured a block of U.S. participating policies. The Company
also increased policy reserves by $58 million after-tax to provide for an
increase in overhead costs expected to be absorbed as a result of the sale of
Great-West Healthcare.
    Total sales for the three months ended March 31, 2009 were $8.2 billion
compared to $15.2 billion in 2008.
    Total assets under administration at March 31, 2009 were $176.1 billion
compared to $178.7 billion at December 31, 2008. Included in assets under
administration at March 31, 2009 were $124.2 billion of mutual fund and
institutional account assets managed by Putnam, compared to $129.0 billion at
December 31, 2008.

    EUROPE

    Net income attributable to common shareholders for the first quarter of
2009 was $48 million compared to $175 million for the first quarter of 2008.
    Asset impairment charges and provisions for future credit losses
negatively impacted net income attributable to common shareholders by $134
million in the quarter.
    Total sales for the three months ended March 31, 2009 were $795 million
compared to $1,204 million in 2008.
    Total assets under administration at March 31, 2009 were $64.2 billion,
compared to $66.8 billion at December 31, 2008.

    CORPORATE

    Corporate net income for Lifeco attributable to common shareholders was a
charge of $5 million for the first quarter of 2009 compared to a charge of $7
million for the first quarter of 2008.

    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, 2009 to shareholders of record at the close of business June 2, 2009.

    
    In addition, the Directors approved quarterly dividends on:
    -   Series D First Preferred Shares of $0.293750 per share;
    -   Series E First Preferred Shares of $0.30 per share;
    -   Series F First Preferred Shares of $0.36875 per share;
    -   Series G First Preferred Shares of $0.325 per share;
    -   Series H First Preferred Shares of $0.30313 per share;
    -   Series I First Preferred Shares of $0.28125 per share; and
    -   Series J First Preferred Shares of $0.3750 per share
    all payable June 30, 2009 to shareholders of record at the close of
    business June 2, 2009.
    

    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 nearly $333 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 Company action 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 and taxes, as well as
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, 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" in the Company's 2008 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 to not 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-GAAP Financial Measures

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

    
    Further information

    Selected financial information is attached.

    Great-West Lifeco's first quarter conference call will be held Thursday,
May 7 at 3:00 p.m. (Eastern). The call can be accessed through
www.greatwestlifeco.com or by phone at:

    -   Participants in the Toronto area: 416-340-2220
    -   Participants from North America: 1-866-226-1798
    -   Participants from Overseas: Dial international access code first,
        then 800-2787-2090
    

    A replay of the call will be available from May 7 to May 14, 2009, and
can be accessed by calling 1-800-408-3053 or 416-695-5800 in Toronto
(passcode: 4003482 followed by the number sign).
    Additional information relating to Lifeco, including the most recent
interim unaudited 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 $ millions except per share amounts)


                                                  For the three months
                                                     ended March 31,
                                          -----------------------------------
                                              2009        2008     % Change
    -------------------------------------------------------------------------
    Premiums and deposits:
    Life insurance, guaranteed annuities
     and insured health products          $    4,709  $   16,790        -72%
    Self funded premium equivalents
     (ASO contracts)                             618         585          6%
    Segregated funds deposits:
      Individual products                      1,258       2,018        -38%
      Group products                           2,696       1,541         75%
    Proprietary mutual funds deposits(1)       5,280       8,519        -38%
                                          -----------------------------------
    Total premiums and deposits               14,561      29,453        -51%
                                          -----------------------------------

    Fee and other income                         680         797        -15%
    Paid or credited to policyholders          3,366      16,296        -79%

    Net income - common shareholders
      Continuing operations - adjusted(3)        326         493        -34%
      Discontinued operations - adjusted(2)        -          43           -
                                          -----------------------------------
      Net income - adjusted(3)                   326         536        -39%
      Adjustments after tax(3)                     -         118           -
                                          -----------------------------------
      Net income                                 326         654        -50%
    -------------------------------------------------------------------------
    Per common share
      Basic earnings - adjusted(3)        $    0.345  $    0.600        -43%
      Adjustments after tax(3)                     -       0.132           -
      Basic earnings                           0.345       0.732        -53%
      Dividends paid                          0.3075      0.2925          5%
      Book value                               12.68       11.80          7%
    -------------------------------------------------------------------------
    Return on common shareholders'
     equity (12 months):
      Net income adjusted(3)                   16.2%       21.1%
      Net income                                9.3%       21.3%
    -------------------------------------------------------------------------
    At March 31
      Total assets                        $  129,596  $  133,557         -3%
      Segregated funds net assets             76,903      89,092        -14%
      Proprietary mutual funds net assets    126,377     167,812        -25%
                                          -----------------------------------
      Total assets under administration   $  332,876  $  390,461        -15%
                                          -----------------------------------
                                          -----------------------------------
      Share capital and surplus(4)        $   13,299  $   11,651         14%
    -------------------------------------------------------------------------
    (1) Includes Putnam Investments, LLC mutual funds and institutional
        deposits, excluding Prime Money Market Fund net deposits.
    (2) Represents the operating results of GWL&A's health care business,
        which was sold effective April 1, 2008.
    (3) During the first quarter of 2008, net income attributable to common
        shareholders was increased by $118 or $0.132 per common share as a
        result of the following items in the Company's United States segment:
        (a) A gain realized in connection with the termination of a long-
            standing assumption reinsurance agreement ($176 after-tax or
            $0.197 per common share) as described in Note 14 to the 2008
            Annual Consolidated Financial Statements.
        (b) Reserve strengthening in GWL&A's continuing operations ($(58)
            after-tax or ($0.065) per common share) as described in Note 2 to
            the 2008 Annual Consolidated Financial Statements.
        Net income, basic earnings per common share and return on common
        shareholders' equity are presented on an adjusted basis, as a non-
        GAAP financial measure of earnings performance. Return on common
        shareholders' equity is restated excluding non recurring-items from
        prior periods.
    (4) Excludes Putnam Prime Money Market Fund.



              SUMMARIES OF CONSOLIDATED OPERATIONS (unaudited)
                  (in $ millions except per share amounts)


                                                        For the three months
                                                           ended March 31,
                                                      -----------------------
                                                          2009        2008
                                                      -----------------------
    Income
      Premium income                                  $    4,709  $   16,790
      Net investment income (note 4)
        Regular net investment income                      1,511       1,352
        Changes in fair value on held for
         trading assets                                   (1,967)       (940)
                                                      -----------------------
      Total net investment income                           (456)        412
      Fee and other income                                   680         797
                                                      -----------------------
                                                           4,933      17,999
                                                      -----------------------
    Benefits and expenses
      Policyholder benefits                                4,609       3,689
      Policyholder dividends and experience refunds          398         347
      Change in actuarial liabilities                     (1,641)     12,260
                                                      -----------------------
      Total paid or credited to policyholders              3,366      16,296

      Commissions                                            307         322
      Operating expenses                                     663         637
      Premium taxes                                           55          52
      Financing charges (note 6)                              75         106
      Amortization of finite life intangible assets           22          21
                                                      -----------------------
    Net income from continuing operations
     before income taxes                                     445         565
    Income taxes - current                                    82         120
                 - future                                     (4)        (23)
                                                      -----------------------
    Net income from continuing operations before
     non-controlling interests                               367         468
    Non-controlling interests                                 24        (157)
                                                      -----------------------
    Net income from continuing operations                    343         625
    Net income from discontinued operations (note 2)           -          43
                                                      -----------------------
    Net income                                               343         668
    Perpetual preferred share dividends                       17          14
                                                      -----------------------
    Net income - common shareholders                  $      326  $      654
                                                      -----------------------
                                                      -----------------------
    Earnings per common share (note 12)
      Basic                                           $    0.345  $    0.732
                                                      -----------------------
                                                      -----------------------
      Diluted                                         $    0.345  $    0.728
                                                      -----------------------
                                                      -----------------------



                   CONSOLIDATED BALANCE SHEETS (unaudited)
                               (in $ millions)


                                           March 31,  December 31,  March 31,
                                             2009         2008        2008
                                          -----------------------------------
    Assets
    Bonds (note 4)                        $   66,715  $   66,554  $   66,935
    Mortgage loans (note 4)                   17,312      17,444      16,358
    Stocks (note 4)                            5,459       5,394       6,415
    Real estate (note 4)                       3,257       3,188       2,691
    Loans to policyholders                     7,842       7,622       6,521
    Cash and cash equivalents                  2,979       2,850       3,416
    Funds held by ceding insurers             10,820      11,447      14,393
    Assets of operation held for
     sale (note 2)                                 -           -         670
    Goodwill                                   5,431       5,425       6,325
    Intangible assets                          3,582       3,523       4,160
    Other assets                               6,199       6,627       5,673
                                          -----------------------------------
    Total assets                          $  129,596  $  130,074  $  133,557
                                          -----------------------------------
                                          -----------------------------------

    Liabilities
    Policy liabilities
      Actuarial liabilities               $   97,245  $   97,895  $  102,012
      Provision for claims                     1,432       1,466       1,340
      Provision for policyholder
       dividends                                 651         630         622
      Provision for experience rating
       refunds                                   233         310         218
      Policyholder funds                       2,449       2,326       2,292
                                          -----------------------------------
                                             102,010     102,627     106,484

    Debentures and other debt instruments      3,960       3,821       5,155
    Funds held under reinsurance contracts       191         192         169
    Other liabilities                          5,594       5,969       5,129
    Liabilities of operations held for
     sale (note 2)                                 -           -         396
    Repurchase agreements                        521         334         689
    Deferred net realized gains                  153         161         180
                                          -----------------------------------
                                             112,429     113,104     118,202

    Preferred shares (note 8)                    748         752         797
    Capital trust securities and
     debentures (note 7)                         755         658         636
    Non-controlling interests
      Participating account surplus
       in subsidiaries                         2,022       2,012       1,952
      Preferred shares issued by
       subsidiaries                              157         157         157
      Perpetual preferred shares issued
       by subsidiaries                           148         150         151
      Non-controlling interests in
       capital stock and surplus                  38          13          11

    Share capital and surplus
    Share capital (note 8)
      Perpetual preferred shares               1,328       1,329       1,099
      Common shares                            5,737       5,736       4,714
    Accumulated surplus                        6,941       6,906       6,992
    Accumulated other comprehensive loss        (754)       (787)     (1,190)
    Contributed surplus                           47          44          36
                                          -----------------------------------
                                              13,299      13,228      11,651
                                          -----------------------------------
    Total liabilities, share capital
     and surplus                          $  129,596  $  130,074  $  133,557
                                          -----------------------------------
                                          -----------------------------------



               CONSOLIDATED STATEMENTS OF SURPLUS (unaudited)
                               (in $ millions)


                                                        For the three months
                                                           ended March 31,
                                                      -----------------------
                                                          2009        2008
                                                      -----------------------
    Accumulated surplus
    Balance, beginning of year                        $    6,906  $    6,599
    Net income                                               343         668
    Dividends to shareholders
      Perpetual preferred shareholders                       (17)        (14)
      Common shareholders                                   (291)       (261)
                                                      -----------------------
    Balance, end of period                            $    6,941  $    6,992
                                                      -----------------------
                                                      -----------------------

    Accumulated other comprehensive loss,
     net of income taxes (note 13)
    Balance, beginning of year                        $     (787) $   (1,533)
    Other comprehensive income                                33         343
                                                      -----------------------
    Balance, end of period                            $     (754) $   (1,190)
                                                      -----------------------
                                                      -----------------------

    Contributed surplus
    Balance, beginning of year                        $       44  $       34
    Stock option expense
      Current year expense (note 10)                           3           2
                                                      -----------------------
    Balance, end of period                            $       47  $       36
                                                      -----------------------
                                                      -----------------------



         SUMMARIES OF CONSOLIDATED COMPREHENSIVE INCOME (unaudited)
                               (in $ millions)


                                                        For the three months
                                                           ended March 31,
                                                      -----------------------
                                                          2009        2008
                                                      -----------------------

    Net income                                        $      343  $      668

    Other comprehensive income (loss),
     net of income taxes
      Unrealized foreign exchange gains (losses)
       on translation of foreign operations                  182         456
      Unrealized gains (losses) on available
       for sale assets                                      (100)        (49)
      Realized (gains) losses on available for
       sale assets                                           (12)        (10)
      Unrealized gains (losses) on cash flow hedges          (53)        (46)
      Realized (gains) losses on cash flow hedges             12           -
      Non-controlling interests                                4          (8)
                                                      -----------------------
                                                              33         343
                                                      -----------------------
    Comprehensive income                              $      376  $    1,011
                                                      -----------------------
                                                      -----------------------

    Income tax (expense) benefit included in other comprehensive income

                                                        For the three months
                                                           ended March 31,
                                                      -----------------------
                                                          2009        2008
                                                      -----------------------

      Unrealized gains (losses) on available
       for sale assets                                $       27  $       22
      Realized (gains) losses on available
        for sale assets                                        3           3
      Unrealized gains (losses) on cash flow hedges           29          25
      Realized (gains) losses on cash flow hedges             (7)          -
      Non controlling interests                                -           2
                                                      -----------------------
                                                      $       52  $       52
                                                      -----------------------
                                                      -----------------------



              CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
                               (in $ millions)


                                                        For the three months
                                                           ended March 31,
                                                      -----------------------
                                                          2009        2008
                                                      -----------------------

    Operations
      Net income                                      $      343  $      668
      Adjustments:
        Change in policy liabilities                      (1,589)       (238)
        Change in funds held by ceding insurers              144         (18)
        Change in funds held under reinsurance
         contracts                                            (8)         (1)
        Change in current income taxes payable              (107)       (171)
        Future income tax expense                             (4)        (23)
        Changes in fair value of financial
         instruments                                       1,968         951
        Other                                                  8        (385)
                                                      -----------------------
        Cash flows from operations                           755         783

    Financing Activities
      Issue of common shares                                   1           5
      Repayments on credit facility                            -        (235)
      Increase in line of credit in subsidiary               100          80
      Repayment of debentures and other debt
       instruments                                            (2)         (2)
      Dividends paid                                        (308)       (275)
                                                      -----------------------
                                                            (209)       (427)

    Investment Activities
      Bond sales and maturities                            4,997       4,644
      Mortgage loan repayments                               419         376
      Stock sales                                            622         389
      Real estate sales                                        7         100
      Change in loans to policyholders                       (46)        (37)
      Change in repurchase agreements                        184         369
      Investment in bonds                                 (5,579)     (5,342)
      Investment in mortgage loans                          (190)       (712)
      Investment in stocks                                  (793)       (448)
      Investment in real estate                              (65)       (100)
                                                      -----------------------
                                                            (444)       (761)

    Effect of changes in exchange rates on cash
     and cash equivalents                                     27         168

    Increase (decrease) in cash and cash equivalents         129        (237)

    Cash and cash equivalents from continuing and
     discontinued operations, beginning of year            2,850       3,676
                                                      -----------------------

    Cash and cash equivalents from continuing and
     discontinued operations, end of period                2,979       3,439

    Cash and cash equivalents from discontinued
     operations, end of period                                 -         (23)
                                                      -----------------------

    Cash and cash equivalents from continuing
     operations, end of period                        $    2,979  $    3,416
                                                      -----------------------
                                                      -----------------------



    Notes to Consolidated Financial Statements (unaudited)

    (in $ millions except per share amounts)

    1.  Basis of Presentation and Summary of Accounting Policies

        The interim unaudited consolidated financial statements of Great-West
        Lifeco Inc. (Lifeco or the Company) at March 31, 2009 have been
        prepared in accordance with Canadian generally accepted accounting
        principles, using the same accounting policies and methods of
        computation followed in the consolidated financial statements for the
        year ended December 31, 2008 except as noted below. These interim
        consolidated financial statements should be read in conjunction with
        the consolidated financial statements and notes thereto in the
        Company's annual report dated December 31, 2008.

        The preparation of financial statements in conformity with Canadian
        generally accepted accounting principles requires management to make
        estimates and assumptions that affect the reported amounts of assets
        and liabilities and disclosure of contingent assets and liabilities
        at the balance sheet date and the reported amounts of revenues and
        expenses during the reporting period. The valuation of actuarial
        liabilities, certain financial assets and liabilities, goodwill and
        indefinite life intangible assets, income taxes and pension plans and
        other post retirement benefits are the most significant components of
        the Company's financial statements subject to management estimates.

        The year to date results of the Company reflect management's
        judgments regarding the impact of prevailing global credit, equity
        and foreign exchange market conditions. Financial instrument carrying
        values currently reflect the illiquidity of the markets and the
        liquidity premiums embedded in the market pricing methods the Company
        relies upon.

        The estimation of actuarial liabilities relies upon investment credit
        ratings. The Company's practice is to use third party independent
        credit ratings where available. Credit rating changes may lag
        developments in the current environment. Subsequent credit rating
        adjustments will impact actuarial liabilities.

        In addition to the Company's direct investments in certain financial
        institutions, the Company has contractual business relationships with
        these financial institutions. Given the current uncertainty
        associated with these entities, normal business conditions do not
        prevail and the Company's contractual business relationships may be
        impacted.

        Given the uncertainty surrounding the continued volatility in these
        markets, and the general lack of liquidity in financial markets, the
        actual financial results could differ from those estimates.

        (a) Changes in Accounting Policy

            Goodwill and Intangible Assets
            ------------------------------
            Effective January 1, 2009, the Company adopted the Canadian
            Institute of Chartered Accountants (CICA) Handbook Section 3064,
            Goodwill and Intangible Assets. This section replaces existing
            Section 3062, Goodwill and Other Intangible Assets, and Section
            3450, Research and Development Costs. This section establishes
            new standards for the recognition and measurement of intangible
            assets, but does not affect the accounting for goodwill. As a
            result of the adoption of the new requirements software costs
            previously included in other assets have been reclassified to
            intangible assets and amortization on software costs previously
            included in operating expenses has been reclassified to
            amortization of finite life intangible assets.

        (b) Comparative Figures

            Certain of the 2008 amounts presented for comparative purposes
            have been reclassified to conform to the presentation adopted in
            the current year as a result of the reclassifications in
            note 1(a) and certain other reclassifications. On the
            Consolidated Balance Sheets these reclassifications resulted in a
            decrease to other assets of $320, an increase to intangible
            assets of $137 and a decrease to policyholder liabilities of $183
            at March 31, 2008 and a decrease to other assets of $151 at
            December 31, 2008 with a corresponding increase to intangible
            assets. On the Summaries of Consolidated Operations these
            reclassifications resulted in a decrease to operating expenses of
            $11 with a corresponding increase to the amortization of finite
            life intangible assets and an increase in total paid or credited
            to policyholders of $12 with a corresponding decrease in income
            tax expense for the three months ended March 31, 2008.

    2.  Acquisitions and Disposals

        (a) On April 1, 2008, Great-West Life & Annuity Insurance Company
            completed the sale of its health care business. For the three
            months ended March 31, 2008, after tax net income of the health
            care business presented as discontinued operations on the
            Summaries of Consolidated Operations is comprised of the
            following:

            Income
              Premium income                                      $      224
              Net investment income                                       11
              Fee and other income                                       164
                                                                  -----------
                                                                         399
                                                                  -----------
            Benefits and expenses
              Paid or credited to policyholders and
               beneficiaries including policyholder
               dividends and experience refunds                          191
              Other                                                      145
                                                                  -----------
            Net income from discontinued operations
             before income taxes                                          63
            Income taxes                                                  20
                                                                  -----------
            Net income from discontinued operations               $       43
                                                                  -----------
                                                                  -----------

            At March 31, 2008, on the Consolidated Balance Sheets assets and
            liabilities of operations held for sale are comprised of the
            following:

            Assets
            Bonds                                                 $      184
            Cash and cash equivalents                                     23
            Goodwill                                                      49
            Intangible assets                                             11
            Other assets                                                 403
                                                                  -----------
            Assets of operations held for sale                    $      670
                                                                  -----------
                                                                  -----------

            Liabilities
            Policy liabilities                                    $      231
            Other liabilities                                            165
                                                                  -----------
            Liabilities of operations held for sale               $      396
                                                                  -----------
                                                                  -----------

        (b) On January 19, 2009, PanAgora, a subsidiary of Putnam LLC, sold
            its equity investment in Union PanAgora Asset Management GmbH to
            Union Asset Management, gross proceeds received of approximately
            U.S. $77 resulted in a gain to Putnam LLC of approximately U.S.
            $33 after taxes and minority interests.

    3.  Restructuring Costs

        The following details the amount and status of the Putnam LLC
        restructuring program costs:

                                           Expected     Amounts     Amounts
                                             total     utilized-   utilized-
                                             costs        2007        2008
                                          -----------------------------------

        Compensation costs                $      133  $      (27) $      (76)
        Exiting and consolidating
         operations                               22          (6)         (5)
        Eliminating duplicate systems             29          (1)          -
                                          -----------------------------------
                                          $      184  $      (34) $      (81)
                                          -----------------------------------
                                          -----------------------------------

        Accrued on acquisition            $      154  $      (34) $      (81)
        Expense as incurred                       30           -           -
                                          -----------------------------------
                                          $      184  $      (34) $      (81)
                                          -----------------------------------
                                          -----------------------------------

                                                      Changes in
                                            Amounts     foreign     Balance
                                           utilized-   exchange    March 31,
                                              2009       rates        2009
                                          -----------------------------------

        Compensation costs                $       (4) $        4  $       30
        Exiting and consolidating
         operations                                -           3          14
        Eliminating duplicate systems              -           6          34
                                          -----------------------------------
                                          $       (4) $       13  $       78
                                          -----------------------------------
                                          -----------------------------------

        Accrued on acquisition            $       (4) $        7  $       42
        Expense as incurred                        -           6          36
                                          -----------------------------------
                                          $       (4) $       13  $       78
                                          -----------------------------------
                                          -----------------------------------

    4.  Portfolio Investments

        (a) Carrying values and estimated market values of portfolio
            investments are as follows:


                            March 31, 2009
                  -----------------------------------
                     Carrying Value & Market Value
                  -----------------------------------
                                Held for trading(1)
                   Available  -----------------------
                    for sale  Designated  Classified
                  -----------------------------------

    Bonds
    - government  $    3,134  $   16,010  $    1,112
    - corporate        2,290      33,561         869
                  -----------------------------------
                       5,424      49,571       1,981
                  -----------------------------------

    Mortgage loans
    - residential          -           -           -
    - non-
      residential          -           -           -
                  -----------------------------------
                           -           -           -
                  -----------------------------------

    Stocks             1,418       3,712           -

    Real estate            -           -           -
                  -----------------------------------
                  $    6,842  $   53,283  $    1,981
                  -----------------------------------
                  -----------------------------------


                                           March 31, 2009
                  -----------------------------------------------------------
                                   Amortized Cost                    Total
                  -----------------------------------------------------------
                    Carrying      Market    Carrying      Market
                       Value       Value  Value Non-  Value Non-
                   Loans and   Loans and   financial   financial    Carrying
                 receivables receivables instruments instruments       value
                  -----------------------------------------------------------

    Bonds
    - government  $    1,820  $    1,827  $        -  $        -  $   22,076
    - corporate        7,919       7,601           -           -      44,639
                  -----------------------------------------------------------
                       9,739       9,428           -           -      66,715
                  -----------------------------------------------------------

    Mortgage loans
    - residential      6,838       7,008           -           -       6,838
    - non-
      residential     10,474      10,301           -           -      10,474
                  -----------------------------------------------------------
                      17,312      17,309           -           -      17,312
                  -----------------------------------------------------------

    Stocks                 -           -         329         276       5,459

    Real estate            -           -       3,257       2,993       3,257
                  -----------------------------------------------------------
                  $   27,051  $   26,737  $    3,586  $    3,269  $   92,743
                  -----------------------------------------------------------
                  -----------------------------------------------------------



                           December 31, 2008
                  -----------------------------------
                     Carrying Value & Market Value
                  -----------------------------------
                                Held for trading(1)
                   Available  -----------------------
                    for sale  Designated  Classified
                  -----------------------------------

    Bonds
    - government  $    3,594  $   16,197  $      836
    - corporate        2,051      33,319         849
                  -----------------------------------
                       5,645      49,516       1,685
                  -----------------------------------

    Mortgage loans
    - residential          -           -           -
    - non-
      residential          -           -           -
                  -----------------------------------
                           -           -           -
                  -----------------------------------

    Stocks             1,411       3,653           -

    Real estate            -           -           -
                  -----------------------------------
                  $    7,056  $   53,169  $    1,685
                  -----------------------------------
                  -----------------------------------


                                         December 31, 2008
                  -----------------------------------------------------------
                                   Amortized Cost                    Total
                  -----------------------------------------------------------
                    Carrying      Market    Carrying      Market
                       Value       Value  Value Non-  Value Non-
                   Loans and   Loans and   financial   financial    Carrying
                 receivables receivables instruments instruments       value
                  -----------------------------------------------------------

    Bonds
    - government  $    1,877  $    1,879  $        -  $        -  $   22,504
    - corporate        7,831       7,371           -           -      44,050
                  -----------------------------------------------------------
                       9,708       9,250           -           -      66,554
                  -----------------------------------------------------------

    Mortgage loans
    - residential      6,986       7,157           -           -       6,986
    - non-
      residential     10,458      10,414           -           -      10,458
                  -----------------------------------------------------------
                      17,444      17,571           -           -      17,444
                  -----------------------------------------------------------

    Stocks                 -           -         330         326       5,394

    Real estate            -           -       3,188       3,053       3,188
                  -----------------------------------------------------------
                  $   27,152  $   26,821  $    3,518  $    3,379  $   92,580
                  -----------------------------------------------------------
                  -----------------------------------------------------------



                             March 31, 2008
                  -----------------------------------
                     Carrying Value & Market Value
                  -----------------------------------
                                Held for trading(1)
                   Available  -----------------------
                    for sale  Designated  Classified
                  -----------------------------------

    Bonds
    - government  $    1,779  $   15,655  $      645
    - corporate        3,033      36,018       1,053
                  -----------------------------------
                       4,812      51,673       1,698
                  -----------------------------------

    Mortgage loans
    - residential          -           -           -
    - non-
      residential          -           -           -
                  -----------------------------------
                           -           -           -
                  -----------------------------------

    Stocks             1,426       4,666           -

    Real estate            -           -           -
                  -----------------------------------
                  $    6,238  $   56,339  $    1,698
                  -----------------------------------
                  -----------------------------------


                                           March 31, 2008
                  -----------------------------------------------------------
                                   Amortized Cost                    Total
                  -----------------------------------------------------------
                    Carrying      Market    Carrying      Market
                       Value       Value  Value Non-  Value Non-
                   Loans and   Loans and   financial   financial    Carrying
                 receivables receivables instruments instruments       value
                  -----------------------------------------------------------

    Bonds
    - government  $    1,711  $    1,866  $        -  $        -  $   19,790
    - corporate        7,041       7,226           -           -      47,145
                  -----------------------------------------------------------
                       8,752       9,092           -           -      66,935
                  -----------------------------------------------------------

    Mortgage loans
    - residential      7,061       7,271           -           -       7,061
    - non-
      residential      9,297       9,405           -           -       9,297
                  -----------------------------------------------------------
                      16,358      16,676           -           -      16,358
                  -----------------------------------------------------------

    Stocks                 -           -         323         416       6,415

    Real estate            -           -       2,691       2,940       2,691
                  -----------------------------------------------------------
                  $   25,110  $   25,768  $    3,014  $    3,356  $   92,399
                  -----------------------------------------------------------
                  -----------------------------------------------------------

    (1) Investments can be held for trading in two ways: designated as held
        for trading at the option of management; or, classified as held for
        trading if they are actively traded for the purpose of earning
        investment income.


        (b) Included in portfolio investments are the following:

            (i)  Impaired investments

                                                     March 31, 2009
                                          -----------------------------------
                                             Gross                  Carrying
                                             amount    Impairment    amount
                                          -----------------------------------
                 Impaired amounts by type
                   Held for trading(1)    $      162  $     (145) $       17
                   Available for sale             16         (16)          -
                   Loans and receivables         158         (80)         78
                                          -----------------------------------
                 Total                    $      336  $     (241) $       95
                                          -----------------------------------
                                          -----------------------------------


                                                    December 31, 2008
                                          -----------------------------------
                                             Gross                  Carrying
                                             amount    Impairment    amount
                                          -----------------------------------
                 Impaired amounts by type
                   Held for trading(1)    $      160  $     (138) $       22
                   Available for sale             18         (17)          1
                   Loans and receivables          93         (60)         33
                                          -----------------------------------
                 Total                    $      271  $     (215) $       56
                                          -----------------------------------
                                          -----------------------------------


                                                     March 31, 2008
                                          -----------------------------------
                                             Gross                  Carrying
                                             amount    Impairment    amount
                                          -----------------------------------
                 Impaired amounts by type
                   Held for trading(1)    $        -  $        -  $        -
                   Available for sale              -           -           -
                   Loans and receivables          28         (49)        (21)
                                          -----------------------------------
                 Total                    $       28  $      (49) $      (21)
                                          -----------------------------------
                                          -----------------------------------

            (1)  Excludes amounts in funds held by ceding insurers of $15 and
                 impairment of ($14) at March 31, 2009 and $15 and ($11),
                 respectively at December 31, 2008.


            (ii) The allowance for credit losses and changes in the allowance
                 for credit losses related to investments classified as loans
                 and receivables are as follows:


                           For the three months       For the three months
                           ended March 31, 2009       ended March 31, 2008
                        -----------------------------------------------------
                                 Mortgage                   Mortgage
                          Bonds    loans    Total    Bonds    loans    Total
                        -----------------------------------------------------
    Balance, beginning
     of year            $    31  $    29  $    60  $    34  $    19  $    53
    Net provision
     (recovery) for
     credit losses-
     in year                 12        7       19        -        -        -
    Write-offs, net
     of recoveries            -       (1)      (1)      (6)       -       (6)
    Other (including
     foreign exchange
     rate changes)            1        1        2        1        1        2
                        -----------------------------------------------------
    Balance, end of
     period             $    44  $    36  $    80  $    29  $    20  $    49
                        -----------------------------------------------------
                        -----------------------------------------------------

        (c) Net investment income is comprised of the following:


    For the three
     months ended               Mortgage             Real
     March 31, 2009      Bonds    loans    Stocks   estate   Other    Total
    -------------------------------------------------------------------------

    Regular net
     investment income:
      Investment income
       earned           $ 1,064  $   235  $    44  $    45  $    70  $ 1,458
      Net realized
       gains (losses)
       (available for
        sale)                16        -       (1)       -        -       15
      Net realized
       gains (losses)
       (other
        classifications)     (3)       4       76        -        -       77
      Amortization of
       net realized/
       unrealized gains
       (non-financial
        instruments)          -        -        -       (4)       -       (4)
      Net (provision)
       recovery for
       credit losses
       (loans and
        receivables)        (12)      (7)       -        -        -      (19)
      Other income
       and expenses           -        -        -        -      (16)     (16)
                        -----------------------------------------------------
                          1,065      232      119       41       54    1,511
    Changes in fair
     value on held
     for trading assets:
      Net realized/
       unrealized gains
       (losses)
       (classified held
        for trading)          9        -        -        -        -        9
      Net realized/
       unrealized gains
       (losses)
       (designated held
        for trading)     (1,794)       -     (175)       -       (7)  (1,976)
                        -----------------------------------------------------
                         (1,785)       -     (175)       -       (7)  (1,967)
                        -----------------------------------------------------
    Net investment
     income             $  (720) $   232  $   (56) $    41  $    47  $  (456)
                        -----------------------------------------------------
                        -----------------------------------------------------



    For the three
     months ended               Mortgage             Real
     March 31, 2008      Bonds    loans    Stocks   estate   Other    Total
    -------------------------------------------------------------------------

    Regular net
     investment income:
      Investment income
       earned           $   890  $   228  $    45  $    35  $   128  $ 1,326
      Net realized
       gains (losses)
       (available for
        sale)                13        -        -        -        -       13
      Net realized
       gains (losses)
       (other
        classifications)      6        6        5        -        -       17
      Amortization of
       net realized/
       unrealized gains
       (non-financial
        instruments)          -        -        -       11        -       11
      Other income and
       expenses               -        -        -        -      (15)     (15)
                        -----------------------------------------------------
                            909      234       50       46      113    1,352
    Changes in fair
     value on held for
     trading assets:
      Net realized/
       unrealized gains
       (losses)
       (classified held
        for trading)         21        -        -        -        -       21
      Net realized/
       unrealized gains
       (losses)
       (designated held
        for trading)       (683)       -     (242)       -      (36)    (961)
                        -----------------------------------------------------
                           (662)       -     (242)       -      (36)    (940)
                        -----------------------------------------------------
    Net investment
     income             $   247  $   234  $  (192) $    46  $    77  $   412
                        -----------------------------------------------------
                        -----------------------------------------------------

            Investment income earned is comprised of income from investments
            that are classified or designated as held for trading, classified
            as available for sale and classified as loans and receivables.

    5.  Financial Instrument Risk Management

        The Company has policies relating to the identification, measurement,
        monitoring, mitigating, and controlling of risks associated with
        financial instruments. The key risks related to financial instruments
        are credit risk, liquidity risk and market risk (currency, interest
        rate and equity). The following sections describe how the Company
        manages each of these risks.

        (a) Credit Risk

            Credit risk is the risk of financial loss resulting from the
            failure of debtors making payments when due. The following
            policies and procedures are in place to manage this risk:

            -  Investment guidelines are in place that require only the
               purchase of investment-grade assets and minimize undue
               concentration of assets in any single geographic area,
               industry and company.
            -  Investment guidelines specify minimum and maximum limits for
               each asset class. Credit ratings are determined by recognized
               external credit rating agencies and/or internal credit review.
            -  Investment guidelines also specify collateral requirements.
            -  Portfolios are monitored continuously, and reviewed regularly
               with the Boards of Directors or the Investment Committees of
               the Boards of Directors.
            -  Credit risk associated with derivative instruments is
               evaluated quarterly based on conditions that existed at the
               balance sheet date, using practices that are at least as
               conservative as those recommended by regulators.
            -  The Company is exposed to credit risk relating to premiums due
               from policyholders during the grace period specified by the
               insurance policy or until the policy is paid up or terminated.
               Commissions paid to agents and brokers are netted against
               amounts receivable, if any.
            -  Reinsurance is placed with counterparties that have a good
               credit rating and concentration of credit risk is managed by
               following policy guidelines set each year by the Board of
               Directors. Management continuously monitors and performs an
               assessment of creditworthiness of reinsurers.

         (i)   Maximum Exposure to Credit Risk

               The following table summarizes the Company's maximum exposure
               to credit risk related to financial instruments. The maximum
               credit exposure is the carrying value of the asset net of any
               allowances for losses.

                                           March 31,  December 31,  March 31,
                                             2009         2008        2008
                                          -----------------------------------

               Cash and cash equivalents  $    2,979  $    2,850  $    3,416
                 Bonds
                   Held for trading           51,552      51,201      53,371
                   Available for sale          5,424       5,645       4,812
                   Amortized cost              9,739       9,708       8,752
               Mortgage loans                 17,312      17,444      16,358
               Loans to policyholders          7,842       7,622       6,521
               Other financial assets         13,969      15,004      17,783
               Derivative assets                 484         677         710
                                          -----------------------------------
               Total balance sheet
                maximum credit exposure   $  109,301  $  110,151  $  111,723
                                          -----------------------------------
                                          -----------------------------------

               Credit risk is also mitigated by entering into collateral
               agreements. The amount and type of collateral required depends
               on an assessment of the credit risk of the counterparty.
               Guidelines are implemented regarding the acceptability of
               types of collateral and the valuation parameters. Management
               monitors the value of the collateral, requests additional
               collateral when needed and performs an impairment valuation
               when applicable.

         (ii)  Concentration of Credit Risk

               Concentrations of credit risk arise from exposures to a single
               debtor, a group of related debtors or groups of debtors that
               have similar credit risk characteristics in that they operate
               in the same geographic region or in similar industries. The
               characteristics are similar in that changes in economic or
               political environments may impact their ability to meet
               obligations as they come due.

               The following table provides details of the carrying value of
               bonds by industry sector and geographic distribution:

                                           March 31,  December 31,  March 31,
                                             2009         2008        2008
                                          -----------------------------------
               Bonds issued or
                guaranteed by:
                 Canadian federal
                  government              $    2,228  $    1,867  $    1,654
                 Canadian provincial
                  and municipal
                  governments                  6,151       6,029       6,009
                 U.S. Treasury and
                  other U.S. agencies          5,017       4,968       4,075
                 Other foreign governments     6,691       6,854       7,376
                 Government related            2,000       1,563       2,287
                 Sovereign                     1,671       1,739       2,081
                 Asset-backed securities       7,077       7,243       8,304
                 Residential mortgage
                  backed securities            1,201       1,156         215
                 Banks                         4,489       5,070       6,192
                 Other financial
                  institutions                 3,431       3,602       4,491
                 Basic materials                 937         870         673
                 Communications                1,327       1,220       1,244
                 Consumer products             4,362       4,104       4,131
                 Industrial products/
                  services                     1,623       1,985       1,527
                 Natural resources             2,062       1,813       1,889
                 Real estate                   1,687       1,645       1,805
                 Transportation                2,624       2,497       2,564
                 Utilities                     7,416       7,068       6,540
                 Miscellaneous                 1,977       1,866       1,389
                                          -----------------------------------
               Total long term bonds          63,971      63,159      64,446
               Short term bonds                2,744       3,395       2,489
                                          -----------------------------------
                                          $   66,715  $   66,554  $   66,935
                                          -----------------------------------
                                          -----------------------------------
               Canada                     $   26,040  $   26,231  $   25,241
               United States                  18,751      17,703      16,771
               Europe/Reinsurance             21,924      22,620      24,923
                                          -----------------------------------
                                          $   66,715  $   66,554  $   66,935
                                          -----------------------------------
                                          -----------------------------------

               The following table provides details of the carrying value of
               mortgage loans by geographic location:

                                              March 31, 2009
                              -----------------------------------------------
                                 Single      Multi-
                                 family      family
                              residential residential  Commercial     Total
                              -----------------------------------------------

               Canada         $    1,813  $    4,409  $    6,134  $   12,356
               United States           -         580       1,610       2,190
               Europe/
                Reinsurance            -          36       2,730       2,766
                              -----------------------------------------------
               Total mortgage
                loans         $    1,813  $    5,025  $   10,474  $   17,312
                              -----------------------------------------------
                              -----------------------------------------------


                                             December 31, 2008
                              -----------------------------------------------
                                 Single      Multi-
                                 family      family
                              residential residential  Commercial     Total
                              -----------------------------------------------

               Canada         $    1,850  $    4,524  $    6,144  $   12,518
               United States           -         576       1,581       2,157
               Europe/
                Reinsurance            -          36       2,733       2,769
                              -----------------------------------------------
               Total mortgage
                loans         $    1,850  $    5,136  $   10,458  $   17,444
                              -----------------------------------------------
                              -----------------------------------------------


                                               March 31, 2008
                              -----------------------------------------------
                                 Single      Multi-
                                 family      family
                              residential residential  Commercial     Total
                              -----------------------------------------------

               Canada         $    1,791  $    4,712  $    5,441  $   11,944
               United States           -         527       1,211       1,738
               Europe/
                Reinsurance            -          31       2,645       2,676
                              -----------------------------------------------
               Total mortgage
                loans         $    1,791  $    5,270  $    9,297  $   16,358
                              -----------------------------------------------
                              -----------------------------------------------

         (iii) Asset Quality

               Bond Portfolio Quality

                                           March 31,  December 31,  March 31,
                                             2009         2008        2008
                                          -----------------------------------

               AAA                        $   24,668  $   25,138  $   28,518
               AA                             10,555      10,765      10,716
               A                              18,284      18,030      16,965
               BBB                             9,889       8,809       7,799
               BB and lower                      575         417         448
                                          -----------------------------------
                                              63,971      63,159      64,446
               Short term bonds                2,744       3,395       2,489
                                          -----------------------------------
               Total bonds                $   66,715  $   66,554  $   66,935
                                          -----------------------------------
                                          -----------------------------------

               Derivative Portfolio Quality

                                           March 31,  December 31,  March 31,
                                             2009         2008        2008
                                          -----------------------------------

               Over-the-counter contracts
                (counterparty ratings):
               AAA                        $        6  $       19  $        2
               AA                                135         165         460
               A                                 343         468         249
                                          -----------------------------------
               Total                      $      484  $      652  $      711
                                          -----------------------------------
                                          -----------------------------------

         (iv)  Loans Past Due, But Not Impaired

               Loans that are past due but not considered impaired are loans
               for which scheduled payments have not been received, but
               management has reasonable assurance of timely collection of
               the full amount of principal and interest due. The following
               table provides carrying values of the loans past due, but not
               impaired:

                                           March 31,  December 31,  March 31,
                                             2009         2008        2008
                                          -----------------------------------

               Less than 30 days          $       61  $       50  $       91
               30 - 90 days                       34           4           1
               90 days and greater                 3           1           1
                                          -----------------------------------
               Total                      $       98  $       55  $       93
                                          -----------------------------------
                                          -----------------------------------

        (b) Liquidity Risk

            Liquidity risk is the risk that the Company will not be able to
            meet all cash outflow obligations as they come due. The following
            policies and procedures are in place to manage this risk:

            -  The Company closely manages operating liquidity through cash
               flow matching of assets and liabilities.
            -  Management monitors the use of lines of credit on a regular
               basis, and assesses the ongoing availability of these and
               alternative forms of operating credit.
            -  Management closely monitors the solvency and capital positions
               of its principal subsidiaries opposite liquidity requirements
               at the holding company. Additional liquidity is available
               through established lines of credit and the Company's
               demonstrated ability to access capital markets for funds. The
               Company maintains a $200 million committed line of credit with
               a Canadian chartered bank.

        (c) Market Risk

            Market risk is the risk that the fair value or future cash flows
            of a financial instrument will fluctuate as a result of changes
            in market factors. Market factors include three types of risks:
            currency risk, interest rate risk and equity risk.

            (i)   Currency Risk

                  Currency risk relates to the Company operating in different
                  currencies and converting non-Canadian earnings at
                  different points in time at different foreign exchange
                  levels when adverse changes in foreign currency exchange
                  rates occur. The following policies and procedures are in
                  place to mitigate the Company's exposure to currency risk.

                  -  The Company uses financial measures such as constant
                     currency calculations to monitor the effect of currency
                     translation fluctuations.
                  -  Investments are normally made in the same currency as
                     the liabilities supported by those investments.
                  -  Foreign currency assets acquired to back liabilities are
                     normally converted back to the currency of the liability
                     using foreign exchange contracts.
                  -  A 10% weakening of the Canadian dollar against foreign
                     currencies would be expected to increase non-
                     participating actuarial liabilities by the same amount
                     as the supporting assets. A 10% strengthening of the
                     Canadian dollar against foreign currencies would be
                     expected to decrease non-participating actuarial
                     liabilities by the same amount as the supporting assets.

            (ii)  Interest Rate Risk

                  Interest rate risk exists if asset and liability cash flows
                  are not closely matched and interest rates change causing a
                  difference in value between the asset and liability. The
                  following policies and procedures are in place to mitigate
                  the Company's exposure to interest rate risk.

                  -  The Company utilizes a formal process for managing the
                     matching of assets and liabilities. This involves
                     grouping general fund assets and liabilities into
                     segments. Assets in each segment are managed in relation
                     to the liabilities in the segment.
                  -  Interest rate risk is managed by investing in assets
                     that are suitable for the products sold.
                  -  For products with fixed and highly predictable benefit
                     payments, investments are made in fixed income assets
                     that closely match the liability product cash flows.
                     Protection against interest rate change is achieved as
                     any change in the fair market value of the assets will
                     be offset by a similar change in the fair market value
                     of the liabilities.
                  -  For products with less predictable timing of benefit
                     payments, investments are made in fixed income assets
                     with cash flows of a shorter duration than the
                     anticipated timing of benefit payments, or equities as
                     described below.
                  -  The risk associated with the mismatch in portfolio
                     duration and cash flow, asset prepayment exposure and
                     the pace of asset acquisition are quantified and
                     reviewed regularly.

                  Projected cash flows from the current assets and
                  liabilities are used in the Canadian Asset Liability Method
                  (CALM) to determine actuarial liabilities. Cash flows from
                  assets are reduced to provide for potential asset default
                  losses. Testing under several interest rate scenarios
                  (including increasing and decreasing rates) is done to
                  assess reinvestment risk.

                  One way of measuring the interest rate risk associated with
                  this assumption is to determine the effect on the present
                  value of the projected net asset and liability cash flows
                  of the non-participating business of the Company of an
                  immediate and permanent 1% increase and 1% decrease in
                  interest rates at each future duration. These interest rate
                  changes will impact the projected cash flows.

                  -  The effect of an immediate and permanent 1% increase in
                     interest rates at each future duration would be to
                     decrease the present value of these net projected cash
                     flows by approximately $11.
                  -  The effect of an immediate and permanent 1% decrease in
                     interest rates at each future duration would be to
                     decrease the present value of these net projected cash
                     flows by approximately $169.

            (iii) Equity Risk

                  Equity risk is the uncertainty associated with the
                  valuation of assets arising from changes in equity markets.
                  To mitigate price risk, the Company has investment policy
                  guidelines in place that provide for prudent investment in
                  equity markets within clearly defined limits.

                  Some policy liabilities are supported by equities
                  (including real estate), for example segregated fund
                  products and products with long-tail liabilities. Generally
                  these liabilities will fluctuate in line with equity market
                  values. There will be additional impacts on these
                  liabilities as equity market values fluctuate. A 10%
                  increase in equity markets would be expected to
                  additionally decrease non-participating actuarial
                  liabilities by approximately $38. A 10% decrease in equity
                  markets would be expected to additionally increase non-
                  participating actuarial liabilities by approximately $184.

    6.  Financing Charges

        Financing charges consist of the following:

                                                        For the three months
                                                           ended March 31,
                                                      -----------------------
                                                          2009        2008
                                                      -----------------------

        Interest on long-term debentures and
         other debt instruments                       $       53  $       75
        Dividends on preferred shares classified
         as liabilities                                        9           9
        Unrealized losses (gains) on preferred
         shares classified as held for trading                 1          11
        Other                                                  2           2
        Interest on capital trust debentures                  12          12
        Distributions on capital trust securities
         held by consolidated group as temporary
         investments                                          (2)         (3)
                                                      -----------------------
        Total                                         $       75  $      106
                                                      -----------------------
                                                      -----------------------

    7.  Capital Trust Securities and Debentures

        During the first quarter of 2009, the Company disposed of $95
        principal amount of capital trust securities held by the consolidated
        group as temporary investments.

    8.  Share Capital

        (a) Preferred Shares

            The Company recognized the surrender of Series E First Preferred
            shares with a carrying value of $5 and Series F First Preferred
            shares with a carrying value of $1.

            The Company has designated outstanding Preferred Shares Series D
            and Series E as held for trading on the Consolidated Balance
            Sheets with changes in fair value reported in the Summaries of
            Consolidated Operations. During the three months ended March 31,
            2009 the Company recognized unrealized gains (losses) of $4 for
            Series D and $(5) for Series E (for the three months ended
            March 31, 2008, $1 for Series D and $(12) for Series E). The
            redemption price at maturity is $25 per share plus accrued
            dividends.

        (b) Common Shares

            Issued and outstanding

                                March 31, 2009          December 31, 2008
                          ---------------------------------------------------
                                        Carrying                  Carrying
                             Number       value        Number       value
                          ---------------------------------------------------
    Common shares:
    Balance, beginning
     of year              943,882,505  $     5,736  893,761,639  $     4,709
    Issued from treasury            -            -   48,200,000        1,000
    Issued under stock
     option plan              143,215            1    1,920,866           27
                          ---------------------------------------------------
    Balance, end of
     period               944,025,720  $     5,737  943,882,505  $     5,736
                          ---------------------------------------------------
                          ---------------------------------------------------

                               March 31, 2008
                          -------------------------
                                        Carrying
                             Number       value
                          -------------------------
    Common shares:
    Balance, beginning
     of year              893,761,639  $     4,709
    Issued from treasury            -            -
    Issued under stock
     option plan              358,243            5
                          -------------------------
    Balance, end of
     period               894,119,882  $     4,714
                          -------------------------
                          -------------------------

    9.  Capital Management

        At the holding company level, the Company monitors the amount of
        consolidated capital available, and the amounts deployed in its
        various operating subsidiaries. The amount of capital deployed in any
        particular company or country is dependent upon local regulatory
        requirements as well as the Company's internal assessment of capital
        requirements in the context of its operational risks and
        requirements, and strategic plans.

        Since the timing of available funds cannot always be matched
        precisely to commitments, imbalances may arise when demands for funds
        exceed those on hand. Also, a demand for funds may arise as a result
        of the Company taking advantage of current investment opportunities.
        The sources of the funds that may be required in such situations
        include bank financing and the issuance of debentures and equity
        securities.

        The Company's practice is to maintain the capitalization of its
        regulated operating subsidiaries at a level that will exceed the
        relevant minimum regulatory capital requirements in the jurisdictions
        in which they operate.

        In Canada, the Office of the Superintendent of the Financial
        Institutions (OSFI) has established a capital adequacy measurement
        for life insurance companies incorporated under the Insurance
        Companies Act (Canada) and their subsidiaries, known as the Minimum
        Continuing Capital and Surplus Requirements (MCCSR).

        For Canadian regulatory reporting purposes, capital is defined by
        OSFI in its MCCSR guideline. The following table provides the MCCSR
        information and ratios for Great-West Life:

                                           March 31,  December 31,  March 31,
                                             2009         2008        2008
                                          -----------------------------------
        Capital Available:
        Tier 1 Capital
          Common shares(1)                $    6,116  $    6,116  $    6,116
          Shareholder surplus                  5,607       5,604       4,921
          Qualifying non-controlling
           interests                             149         150         151
          Innovative instruments                 743         648         634
          Other Tier 1 Capital Elements        1,434       1,513       1,621
                                          -----------------------------------
          Gross Tier 1 Capital                14,049      14,031      13,443

        Deductions from Tier 1:
          Goodwill & intangible assets
           in excess of limit                  5,670       5,673       5,708
          Other deductions                     1,907       1,697       1,347
                                          -----------------------------------
        Net Tier 1 Capital                     6,472       6,661       6,388
        Adjustment to Net Tier 1 Capital         (46)          -           -
                                          -----------------------------------
        Net Tier 1 Capital                     6,426       6,661       6,388
                                          -----------------------------------

        Tier 2 Capital
          Tier 2A                                329         345         447
          Tier 2B allowed                        300         300         501
          Tier 2C                              1,759       1,550       1,322
          Tier 2 Deductions                      (46)          -           -
                                          -----------------------------------
        Tier 2 Capital Allowed                 2,342       2,195       2,270
                                          -----------------------------------

        Total Tier 1 and Tier 2 Capital        8,768       8,856       8,658
        Less: Deductions/Adjustments               -         124         124
                                          -----------------------------------
        Total Available Capital           $    8,768  $    8,732  $    8,534
                                          -----------------------------------
                                          -----------------------------------

        Capital Required:
          Assets Default & market risk    $    1,650  $    1,510  $    1,487
          Insurance Risks                      1,822       1,800       1,735
          Interest Rate Risks                    790         803       1,026
          Other                                    6          50         (57)
                                          -----------------------------------
        Total Capital Required            $    4,268  $    4,163  $    4,191
                                          -----------------------------------
                                          -----------------------------------
        MCCSR ratios:
        Tier 1                                  151%        160%        152%
                                          -----------------------------------
                                          -----------------------------------
        Total                                   205%        210%        204%
                                          -----------------------------------
                                          -----------------------------------

        (1) The $1,230 of common and preferred share capital that was raised
            by the Company in the fourth quarter of 2008 remained at the
            holding company as at March 31, 2009.


        In the United States, GWL&A is subject to comprehensive state and
        federal regulation and supervision throughout the United States. The
        National Association of Insurance Commissioners (NAIC) has adopted
        risk-based capital rules and other financial ratios for U.S. life
        insurance companies. At the end of 2008 the risk-based capital (RBC)
        ratio for GWL&A was 381%, in excess of that required by NAIC.

        As at March 31, 2009 and 2008 the Company maintained capital levels
        above the minimum local requirements in its other foreign operations.

        The Company is both a user and a provider of reinsurance, including
        both traditional reinsurance, which is undertaken primarily to
        mitigate against assumed insurance risks, and financial or finite
        reinsurance, under which the amount of insurance risk passed to the
        reinsurer or its reinsureds may be more limited.

        The capitalization of the Company and its operating subsidiaries will
        also take into account the views expressed by the various credit
        rating agencies that provide financial strength and other ratings to
        the Company.

        The Company has also established policies and procedures designed to
        identify, measure and report all material risks. Management is
        responsible for establishing capital management procedures for
        implementing and monitoring the capital plan. The Board of Directors
        reviews and approves all capital transactions undertaken by
        management.

    10. Stock Based Compensation

        No options were granted under the Company's stock option plan for the
        three months ended March 31, 2009, (110,000 options were granted
        during the first quarter of 2008). The weighted fair value of options
        granted during the three months ended March 31, 2008 were $3.13 per
        option. Compensation expense of $3 after-tax has been recognized in
        the Summaries of Consolidated Operations for the three months ended
        March 31, 2009 ($2 after-tax for the three months ended March 31,
        2008).

    11. Pension Plans and Other Post-Retirement Benefits

        The total benefit costs included in operating expenses are as
        follows:

                                                       For the three months
                                                          ended March 31,
                                                    -------------------------
                                                        2009         2008
                                                    -------------------------

        Pension benefits                            $        16  $        12
        Other benefits                                        3            3
                                                    -------------------------
        Total                                       $        19  $        15
                                                    -------------------------
                                                    -------------------------

    12. Earnings per Common Share

        The following table provides the reconciliation between basic and
        diluted earnings per common share:

                                                       For the three months
                                                          ended March 31,
                                                    -------------------------
                                                        2009         2008
                                                    -------------------------
        Earnings
        Net income from continuing operations       $       343  $       625
        Net income from discontinued operations               -           43
                                                    -------------------------
        Net income                                  $       343  $       668
        Perpetual preferred share dividends                  17           14
                                                    -------------------------
        Net income-common shareholders              $       326  $       654
                                                    -------------------------
                                                    -------------------------

        Number of common shares
        Average number of common shares
         outstanding                                943,916,502  893,862,214

        Add:
          Potential exercise of outstanding
           stock options                                303,303    4,838,672
                                                    -------------------------
        Average number of common shares
         outstanding - diluted basis                944,219,805  898,700,886
                                                    -------------------------
                                                    -------------------------

        Basic earnings per common share
          From continuing operations                $     0.345  $     0.684
          From discontinued operations                        -        0.048
                                                    -------------------------
                                                    $     0.345  $     0.732
                                                    -------------------------
                                                    -------------------------

        Diluted earnings per common share
          From continuing operations                $     0.345  $     0.680
          From discontinuing operations                       -        0.048
                                                    -------------------------
                                                    $     0.345  $     0.728
                                                    -------------------------
                                                    -------------------------

    13. Accumulated Other Comprehensive Loss


                            For the three months ended March 31, 2009
                -------------------------------------------------------------
                 Unrealized    Unreal-
                    foreign      ized    Unreal-
                   exchange     gains      ized
                      gains   (losses)    gains
                (losses) on        on   (losses)                Non-
                translation available        on             control-
                 of foreign  for sale cash flow                ling    Share-
                 operations    assets    hedges     Total  interest   holder
                  -----------------------------------------------------------
    Balance,
     beginning
     of year      $   (605) $    (36) $   (197) $   (838) $     51  $   (787)

    Other
     comprehensive
     loss              182      (142)      (63)      (23)        4       (19)
    Income tax           -        30        22        52         -        52
                  -----------------------------------------------------------
                       182      (112)      (41)       29         4        33
                  -----------------------------------------------------------
    Balance, end
     of period    $   (423) $   (148) $   (238) $   (809) $     55  $   (754)
                  -----------------------------------------------------------
                  -----------------------------------------------------------


                            For the three months ended March 31, 2008
                -------------------------------------------------------------
                 Unrealized    Unreal-
                    foreign      ized    Unreal-
                   exchange     gains      ized
                      gains   (losses)    gains
                (losses) on        on   (losses)                Non-
                translation available        on             control-
                 of foreign  for sale cash flow                ling    Share-
                 operations    assets    hedges     Total  interest   holder
                  -----------------------------------------------------------
    Balance,
     beginning
     of year      $ (1,801) $    174  $     13  $ (1,614) $     81  $ (1,533)
    Other
     comprehensive
     loss              456       (84)      (71)      301       (10)      291
    Income tax           -        25        25        50         2        52
                  -----------------------------------------------------------
                       456       (59)      (46)      351        (8)      343
                  -----------------------------------------------------------
    Balance, end
     of period    $ (1,345) $    115  $    (33) $ (1,263) $     73  $ (1,190)
                  -----------------------------------------------------------
                  -----------------------------------------------------------

    14. Contingent Liability (changes since December 31, 2008 annual report)

        A subsidiary of the Company has resolved a reinsurance treaty dispute
        that was subject to retrocession coverage within the amount of the
        established actuarial provision.

    15. Segmented Information

        Consolidated Operations
        For the three months ended March 31, 2009

                                    United               Lifeco
                         Canada     States     Europe   Corporate    Total
                       ------------------------------------------------------
    Income:
    Premium income     $   2,074  $     955  $   1,680  $       -  $   4,709
    Net investment
     income
      Regular net
       investment income     547        442        521          1      1,511
      Changes in fair
       value on held for
       trading assets       (322)      (221)    (1,424)         -     (1,967)
                       ------------------------------------------------------
    Total net
     investment income       225        221       (903)         1       (456)
    Fee and other
     income                  222        283        175          -        680
                       ------------------------------------------------------
    Total income           2,521      1,459        952          1      4,933
                       ------------------------------------------------------
    Benefits and
     expenses:
      Paid or credited
       to policyholders    1,683        944        739          -      3,366
      Other                  531        389        177          3      1,100
      Amortization of
       finite life
       intangible assets       7         14          1          -         22
                       ------------------------------------------------------
    Net income from
     continuing
     operations before
     income taxes            300        112         35         (2)       445
    Income taxes              62         32        (16)         -         78
                       ------------------------------------------------------
    Net income before
     non-controlling
     interests               238         80         51         (2)       367
    Non-controlling
     interests                19          5          -          -         24
                       ------------------------------------------------------
    Net Income               219         75         51         (2)       343
    Perpetual preferred
     share dividends          11          -          3          3         17
                       ------------------------------------------------------
    Net income-common -
     shareholders      $     208  $      75  $      48  $      (5) $     326
                       ------------------------------------------------------
                       ------------------------------------------------------


    For the three months ended March 31, 2008

                                    United               Lifeco
                         Canada     States     Europe   Corporate    Total
                       ------------------------------------------------------
    Income:
    Premium income     $   1,977  $     853  $  13,960  $       -  $  16,790
    Net investment
     income
      Regular net
       investment income     624        316        419         (7)     1,352
      Changes in fair
       value on held
       for trading
       assets                (88)      (220)      (632)         -       (940)
                       ------------------------------------------------------
    Total net
     investment income       536         96       (213)        (7)       412
    Fee and other
     income                  265        378        154          -        797
                       ------------------------------------------------------
    Total income           2,778      1,327     13,901         (7)    17,999
                       ------------------------------------------------------
    Benefits and
     expenses:
      Paid or credited
       to policyholders    1,880        914     13,502          -     16,296
      Other                  543        388        185          1      1,117
      Amortization of
       finite life
       intangible assets       7         13          1          -         21
                       ------------------------------------------------------
    Net income from
     continuing
     operations before
     income taxes            348         12        213         (8)       565
    Income taxes              69         (7)        36         (1)        97
                       ------------------------------------------------------
    Net income before
     non-controlling
     interests               279         19        177         (7)       468
    Non-controlling
     interests                19       (175)        (1)         -       (157)
                       ------------------------------------------------------
    Net income from
     continuing
     operations              260        194        178         (7)       625
    Net income from
     discontinued
     operations                -         43          -          -         43
                       ------------------------------------------------------
    Net Income               260        237        178         (7)       668
    Perpetual preferred
     share dividends          11          -          3          -         14
                       ------------------------------------------------------
    Net income-common -
     shareholders      $     249  $     237  $     175  $      (7) $     654
                       ------------------------------------------------------
                       ------------------------------------------------------
    





For further information:

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


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