Great-West Lifeco reports second quarter 2008 results and dividend increase



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

    TSX:GWO

    WINNIPEG, July 30, 2008 /CNW/ - Great-West Lifeco Inc. (Lifeco) has
reported net income attributable to common shareholders of $1,213 million for
the three months ended June 30, 2008, up 123% compared to net income of
$544 million reported a year ago. On a per share basis, this represents $1.356
per common share for the three months ended June 30, 2008, an increase of 122%
compared to $0.610 per common share for 2007.
    For the six months ended June 30, 2008, net income attributable to common
shareholders was $1,867 million compared to $1,058 million reported a year
ago. On a per share basis, this represents $2.088 per common share for the six
months ended June 30, 2008, an increase of 76% compared to $1.186 per common
share for 2007.
    The 2008 results include three non-recurring items that totaled
$767 million after-tax, or $0.858 per common share, as described in the United
States section of this Release. Excluding these items, adjusted net income
attributable to common shareholders was $564 million for the three months
ended June 30, 2008, up 4% over 2007. On a per share basis, this represents
$0.630 per common share for the three months ended June 30, 2008 compared to
$0.610 per common share for 2007.
    Compared to the second quarter of 2007, the increase in the foreign
exchange value of the Canadian dollar opposite the Company's major operating
currencies has negatively impacted net income in the quarter by approximately
$0.028 per common share, or $25 million. On a constant currency basis,
adjusted net income attributable to common shareholders increased 8% over
2007.

    
    Highlights

    -   Quarterly dividends declared were $0.3075 per common share, an
        increase of 1.5 cents per common share, or 5.1%, payable September
        30, 2008. Dividends paid on common shares for the six months ended
        June 30, 2008 were 15% higher than a year ago.
    -   On April 1, Lifeco announced it had completed the sale of its U.S.
        Healthcare business. On June 26, an affiliated Delaware Limited
        Partnership issued $500 million of Subordinated Debentures. The
        proceeds from these two transactions were used to repay in full an
        outstanding bank bridge facility and, in part, an outstanding bank
        term loan.
    -   Adjusted return on common shareholders' equity was 21.4% for the
        twelve months ended June 30, 2008.
    

    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 second quarter of
2008 was $275 million compared to $257 million in 2007, an increase of 7%.
    For the six months ended June 30, 2008, net income attributable to common
shareholders was $524 million compared to $482 million in 2007, an increase of
9%. Individual Insurance & Investment Products earnings at $371 million were
up 16% while Group Insurance earnings of $191 million were up 7%. Earnings in
the Corporate segment were $20 million lower than 2007 due to the
mark-to-market adjustment of two series of Lifeco preferred shares.
    Total sales for the six months ended June 30, 2008 were $4,424 million
compared to $5,033 million in 2007, a decrease of 12%. The decrease reflects
strong segregated and mutual fund sales in 2007 that were not repeated because
of a weak market environment in 2008.
    Total assets under administration at June 30, 2008 were $102.1 billion,
compared to $101.0 billion at December 31, 2007.

    UNITED STATES

    Net income attributable to common shareholders for the second quarter of
2008 increased to $757 million from $136 million for the second quarter of
2007. For the six months ended June 30, 2008, net income attributable to
common shareholders was $994 million compared to $278 million in 2007.
    In the six months ended June 30, 2008, three non-recurring items
contributed approximately $767 million to earnings. During the second quarter
of 2008, the Company realized an after tax gain of $649 million in connection
with the sale of its U.S. healthcare business. During the first quarter of
2008, an after tax gain of approximately $176 million was realized 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. This gain was partly mitigated by an increase in policy reserves of
approximately $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.
    Net income for the quarter includes nil in 2008 and $54 million in 2007
in connection with Lifeco's U.S. healthcare business, which had been
designated as discontinued operations prior to completion of its sale.
    Compared to the second quarter of 2007, the increase in the foreign
exchange value of the Canadian dollar opposite the United States dollar has
negatively impacted net income in the quarter by approximately $0.010 per
common share, or $9 million. On a constant currency basis, adjusted net income
attributable to common shareholders decreased 13% over 2007.
    Total sales for the six months ended June 30, 2008 were $26.5 billion
compared to $2.8 billion in 2007. Putnam's asset management business is
included in the 2008 results.
    Total assets under administration at June 30, 2008 were $216.6 billion
compared to $231.4 billion at December 31, 2007. Included in assets under
administration were $169.8 billion of mutual fund and institutional account
assets managed by Putnam.

    EUROPE

    Net income attributable to common shareholders for the second quarter of
2008 was $187 million compared to $153 million for the second quarter of 2007,
an increase of 22%. For the six months ended June 30, 2008, net income
attributable to common shareholders was $362 million compared to $300 million
in 2007, an increase of 21%.
    Compared to the second quarter of 2007, the increase in the foreign
exchange value of the Canadian dollar opposite the Company's major operating
currencies has reduced net income in the quarter by approximately $0.018 per
common share, or $16 million. On a constant currency basis, net income
attributable to common shareholders increased 32% over 2007.
    Total sales for the six months ended June 30, 2008 were $2,269 million
compared to $3,425 million in 2007, a decrease of 34%. Sales of savings and
pension products have been hampered by the continuing effect of financial
market volatility.
    Total assets under administration at June 30, 2008 were $74.1 billion,
compared to $61.7 billion at December 31, 2007.

    CORPORATE

    Corporate net income for Lifeco attributable to common shareholders was a
charge of $6 million for the second quarter and a charge of $13 million for
the six months ended June 30, 2008 compared to a charge of $2 million for the
second quarter and a charge of $2 million for the six months ended June 30,
2007.

    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
September 30, 2008 to shareholders of record at the close of business
September 2, 2008.
    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; and
    -   Series I First Preferred Shares of $0.28125 per share;
        all payable September 30, 2008 to shareholders of record at the close
        of business September 2, 2008.
    

    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 more than $392 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, and possible future Company action is also a
forward-looking statement. 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 listed in other
filings with securities regulators, including factors set out under "Risk
Management and Control Practices" in the Company's 2007 Annual Management's
Discussion and Analysis, which, along with other filings, is 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", "earnings
before adjustments", "net income on a 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 second quarter conference call will be held
Wednesday, July 30 at 3:00 p.m. (Eastern). The call can be accessed through
www.greatwestlifeco.com or by phone at:

    
    -   Participants in the Toronto area: 416-406-6419
    -   Participants from North America: 1-888-575-8232
    -   Participants from Overseas: Dial international access code first,
        then 800-9559-6849
    

    A replay of the call will be available from July 30 until August 6, 2008,
and can be accessed by calling 1-800-408-3053 or 416-695-5800 in Toronto
(passcode: 3266277 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         For the six months
                              ended June 30               ended June 30
                        --------------------------  -------------------------
                                             %                          %
                          2008      2007   Change    2008      2007   Change
    -------------------------------------------------------------------------
    Premiums and deposits:
    Life insurance,
     guaranteed
     annuities and
     insured health
     products           $  4,523  $  4,010    13%  $ 21,313  $  9,352   128%
    Self-funded premium
     equivalents (ASO
     contracts)              627       562    12%     1,212     1,130     7%
    Segregated funds
     deposits:
      Individual products  1,771     2,352   -25%     3,789     5,053   -25%
      Group products       1,444     1,428     1%     2,985     3,144    -5%
    Proprietary mutual
     funds deposits(1)    10,051       203      -    18,895       423      -
                        --------------------------  -------------------------
    Total premiums and
     deposits             18,416     8,555   115%    48,194    19,102   152%
                        --------------------------  -------------------------

    Fee and other income     806       554    45%     1,603     1,107    45%
    Paid or credited
     to policyholders      3,484     2,550    37%    19,768     7,891   151%

    Net income - common
     shareholders
      Continuing
       operations -
       adjusted(3)           564       490    15%     1,057       948    11%
      Discontinued
       operations -
       adjusted(2)             -        54      -        43       110   -61%
                        --------------------------  -------------------------
      Net income -
       adjusted(3)           564       544     4%     1,100     1,058     4%
      Adjustments after
       tax(3)                649         -      -       767         -      -
      Net income           1,213       544   123%     1,867     1,058    76%

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Per common share
      Basic earnings -
       adjusted(3)      $  0.630  $  0.610     3%  $  1.230  $  1.186     4%
      Adjustments after
       tax(3)              0.726         -      -     0.858         -      -
      Basic earnings       1.356     0.610   122%     2.088     1.186    76%
      Dividends paid      0.2925     0.255    15%     0.585     0.510    15%
      Book value                                      12.68     11.02    15%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Return on common
     shareholders'
     equity (12 months):
      Net income -
       adjusted(3)                                    21.4%     21.5%
      Net income                                      27.1%     21.5%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    At June 30
      Total assets                                 $131,289  $117,056    12%
      Segregated funds
       net assets                                    89,144    92,224    -3%
      Proprietary mutual
       funds net assets                             172,348     2,252      -
                                                    -------------------------
      Total assets under
       administration                              $392,781  $211,532    86%
                                                    -------------------------
                                                    -------------------------
      Share capital and
       surplus                                     $ 12,438  $ 10,934    14%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes Putnam Investments, LLC mutual funds deposits.
    (2) Represents the operating results of Great-West Life & Annuity
        Insurance Company's (GWL&A), an indirect wholly-owned subsidiary of
        Lifeco, health care business, which was sold effective April 1, 2008.
        Does not include the gain on sale of the health care business
        (see 3 (c) below).
    (3) During the six months ended June 30, 2008, net income attributable to
        common shareholders was increased by $767 after tax or $0.858 per
        common share ($649 after tax or $0.726 per common share for the
        three months ended June 30, 2008) 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 for the six months ended June 30, 2008
            and nil for the three months ended June 30, 2008) as described in
            Note 8 to the interim consolidated financial statements;
        (b) Reserve strengthening in GWL&A's continuing operations (($58)
            after tax or ($0.065) per common share for the six months ended
            June 30, 2008 and nil for the three months ended June 30, 2008)
            as described in Note 2 to the interim consolidated financial
            statements;
        (c) A gain realized in connection with the sale of GWL&A's health
            care business ($649 after tax or $0.726 per common share for the
            six months ended June 30, 2008 and $649 after tax or $0.726 per
            common share for the three months ended June 30, 2008) as
            described in Note 2 to the interim 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 for 2008 is restated also excluding third
        quarter 2007 non-recurring items.



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


                                  For the three months    For the six months
                                      ended June 30         ended June 30
                                  --------------------- ---------------------
                                     2008       2007       2008       2007
                                  ---------- ---------- ---------- ----------
    Income
      Premium income (note 15)    $   4,523  $   4,010  $  21,313  $   9,352
      Net investment income
       (note 4)
        Regular net investment
         income                       1,648      1,465      3,000      2,859
        Changes in fair value on
         held for trading assets     (1,595)    (1,927)    (2,535)    (2,344)
                                  ---------- ---------- ---------- ----------
      Total net investment income        53       (462)       465        515
      Fee and other income              806        554      1,603      1,107
                                  ---------- ---------- ---------- ----------
                                      5,382      4,102     23,381     10,974
                                  ---------- ---------- ---------- ----------

    Benefits and expenses
      Policyholder benefits           4,434      3,540      8,123      8,740
      Policyholder dividends and
       experience refunds               331        305        678        470
      Change in actuarial
       liabilities (note 15)         (1,281)    (1,295)    10,967     (1,319)
                                  ---------- ---------- ---------- ----------
      Total paid or credited to
       policyholders                  3,484      2,550     19,768      7,891

      Commissions                       330        336        652        676
      Operating expenses                646        428      1,294        885
      Premium taxes                      42         51         94        108
      Financing charges (note 6)         77         53        183        104
      Amortization of finite
       life intangible assets            10          6         20         14
                                  ---------- ---------- ---------- ----------
    Net income from continuing
     operations before income taxes     793        678      1,370      1,296

    Income taxes  - current             220        182        340        306
                  - future              (32)       (51)       (43)       (62)
                                  ---------- ---------- ---------- ----------
    Net income from continuing
     operations before
     non-controlling interests          605        547      1,073      1,052

    Non-controlling interests
     (note 8)                            27         43       (130)        76
                                  ---------- ---------- ---------- ----------
    Net income from continuing
     operations                         578        504      1,203        976

    Net income from discontinued
     operations (note 2)                649         54        692        110
                                  ---------- ---------- ---------- ----------
    Net income                        1,227        558      1,895      1,086

    Perpetual preferred share
     dividends                           14         14         28         28
                                  ---------- ---------- ---------- ----------
    Net income - common
     shareholders                 $   1,213  $     544  $   1,867  $   1,058
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------
    Earnings per common share
     (note 13)

      Basic                       $   1.356  $   0.610  $   2.088  $   1.186
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------
      Diluted                     $   1.350  $   0.606  $   2.078  $   1.177
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------



                   CONSOLIDATED BALANCE SHEETS (unaudited)
                               (in $ millions)

                                              June 30, December 31, June 30,
                                                2008       2007       2007
                                             ---------- ---------- ----------
    Assets

    Bonds (note 4)                           $  64,611  $  65,069  $  69,246
    Mortgage loans (note 4)                     16,903     15,869     15,172
    Stocks (note 4)                              6,860      6,543      5,866
    Real estate (note 4)                         2,914      2,547      2,207
    Loans to policyholders                       6,618      6,317      6,496
    Cash and cash equivalents                    3,267      3,650      4,109
    Funds held by ceding insurers               13,676      1,512      1,720
    Assets of operation held for sale (note 2)       -        697        747
    Goodwill                                     6,315      6,295      5,383
    Intangible assets                            3,985      3,917      1,530
    Other assets                                 6,140      5,972      4,580
                                             ---------- ---------- ----------
    Total assets                             $ 131,289  $ 118,388  $ 117,056
                                             ---------- ---------- ----------
                                             ---------- ---------- ----------
    Liabilities

    Policy liabilities
      Actuarial liabilities                  $ 100,462  $  87,681  $  87,690
      Provision for claims                       1,325      1,315      1,154
      Provision for policyholder dividends         616        600        562
      Provision for experience rating refunds      228        310        185
      Policyholder funds                         2,294      2,160      2,148
                                             ---------- ---------- ----------
                                               104,925     92,066     91,739

    Debentures and other debt
     instruments (note 7)                        3,774      5,241      3,014
    Funds held under reinsurance contracts         162        164      1,944
    Other liabilities                            5,505      5,211      3,891
    Liabilities of operations held for
     sale (note 2)                                   -        428        567
    Repurchase agreements                          577        344        957
    Deferred net realized gains                    175        179        176
                                             ---------- ---------- ----------
                                               115,118    103,633    102,288

    Preferred shares (note 9)                      794        786        813
    Capital trust securities and debentures        640        639        638
    Non-controlling interests
      Participating account surplus in
       subsidiaries                              1,961      2,103      2,021
      Preferred shares issued by subsidiaries      157        157        209
      Perpetual preferred shares issued by
       subsidiaries                                151        152        153
      Non-controlling interests in capital
       stock and surplus                            30         10          -

    Share capital and surplus

    Share capital (note 9)
      Perpetual preferred shares                 1,099      1,099      1,099
      Common shares                              4,718      4,709      4,688
    Accumulated surplus                          7,948      6,599      6,093
    Accumulated other comprehensive income      (1,367)    (1,533)      (977)
    Contributed surplus                             40         34         31
                                             ---------- ---------- ----------
                                                12,438     10,908     10,934
                                             ---------- ---------- ----------
    Liabilities, share capital and surplus   $ 131,289  $ 118,388  $ 117,056
                                             ---------- ---------- ----------
                                             ---------- ---------- ----------



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


                                                         For the six months
                                                            ended June 30
                                                        ---------------------
                                                           2008       2007
                                                        ---------- ----------
    Accumulated surplus
    Balance, beginning of year                          $   6,599  $   5,858
    Change in accounting policy                                 -       (368)
    Net income                                              1,895      1,086
    Repatriation of Canada Life seed capital from
     participating policyholder account (note 8)                5          -
    Dividends to shareholders
      Perpetual preferred shareholders                        (28)       (28)
      Common shareholders                                    (523)      (455)
                                                        ---------- ----------
    Balance, end of period                              $   7,948  $   6,093
                                                        ---------- ----------
                                                        ---------- ----------
    Accumulated other comprehensive income,
     net of income taxes (note 14)
    Balance, beginning of year                          $  (1,533) $    (547)
    Change in accounting policy                                 -        257
    Other comprehensive income                                166       (687)
                                                        ---------- ----------
    Balance, end of period                              $  (1,367) $    (977)
                                                        ---------- ----------
                                                        ---------- ----------
    Contributed surplus
    Balance, beginning of year                          $      34  $      28
    Stock option expense
      Current year expense (note 11)                            6          3
                                                        ---------- ----------
    Balance, end of period                              $      40  $      31
                                                        ---------- ----------
                                                        ---------- ----------



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

                                  For the three months    For the six months
                                      ended June 30         ended June 30
                                  --------------------- ---------------------
                                     2008       2007       2008       2007
                                  ---------- ---------- ---------- ----------

    Net income                    $   1,227  $     558  $   1,895  $   1,086

    Other comprehensive income
     (loss), net of income taxes
      Unrealized foreign exchange
       gains (losses) on
       translation of foreign
       operations                       (94)      (513)       362       (588)
      Unrealized gains (losses) on
       available for sale assets       (108)       (83)      (157)       (98)
      Reclassification of realized
       (gains) losses on available
       for sale assets                  (18)        (2)       (28)       (23)
      Unrealized gains (losses) on
       cash flow hedges                  36        (38)       (10)       (38)
      Non-controlling interests           7         60         (1)        60
                                  ---------- ---------- ---------- ----------
                                       (177)      (576)       166       (687)
                                  ---------- ---------- ---------- ----------
    Comprehensive income          $   1,050  $     (18) $   2,061  $     399
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------


    Income tax (expense) benefit
     included in other
     comprehensive income

                                  For the three months    For the six months
                                      ended June 30         ended June 30
                                  --------------------- ---------------------
                                     2008       2007       2008       2007
                                  ---------- ---------- ---------- ----------
      Unrealized foreign exchange
       gains (losses) on
       translation of foreign
       operations                 $       -  $       -  $       -  $       -
      Unrealized gains (losses) on
       available for sale assets         34         22         56         26
      Reclassification of realized
       (gains) losses on available
       for sale assets                    6          5          9         12
      Unrealized gains (losses) on
       cash flow hedges                 (19)        21          6         21
      Non-controlling interests          (2)        (4)         -         (4)
                                  ---------- ---------- ---------- ----------
                                  $      19  $      44  $      71  $      55
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------



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

                                  For the three months    For the six months
                                      ended June 30         ended June 30
                                  --------------------- ---------------------
                                     2008       2007       2008       2007
                                  ---------- ---------- ---------- ----------

    Operations
      Net income                  $   1,227  $     558  $   1,895  $   1,086
      Adjustments:
        Change in policy
         liabilities                 (1,218)    (1,496)    (1,468)    (1,548)
        Change in funds held by
         ceding insurers                519        153        501        441
        Change in funds held under
         reinsurance contracts           (5)        24         (6)        50
        Change in current income
         taxes payable                  460         14        289        (30)
        Future income tax expense       (32)       (51)       (43)       (62)
        Gain on disposal of
         business, after tax
         (note 2)                      (649)         -       (649)         -
        Changes in fair value of
         financial instruments        1,592      1,918      2,543      2,333
        Other                          (970)       154     (1,355)      (818)
                                  ---------- ---------- ---------- ----------
    Cash flows from operations          924      1,274      1,707      1,452

    Financing Activities
      Issue of common shares              4          1          9         12
      Partial repayment of five
       year term facility in
       subsidiary                      (198)         -       (198)         -
      Issue of subordinated
       debentures in subsidiary         500      1,000        500      1,000
      Issue of short term
       commercial paper                   -        124          -        124
      Repayments of credit facility  (1,651)         -     (1,886)         -
      Increase in (repayment of)
       line of credit in subsidiary     (10)         -         70          -
      Increase in (repayment of)
       debentures and other debt
       instruments                        5        (18)         3        (27)
      Dividends paid                   (276)      (242)      (551)      (483)
                                  ---------- ---------- ---------- ----------
                                     (1,626)       865     (2,053)       626

    Investment Activities
      Bond sales and maturities       4,164      5,287      8,808     11,819
      Mortgage loan repayments          541        502        917        971
      Stock sales                       609        424        998        777
      Real estate sales                  98         15        198         34
      Change in loans to
       policyholders                   (137)      (126)      (174)      (160)
      Change in repurchase
       agreements                       (94)       160        275       (267)
      Disposal of business (note 2)   1,344          -      1,344          -
      Investment in bonds            (3,628)    (5,362)    (8,970)   (11,305)
      Investment in mortgage loans   (1,125)      (690)    (1,837)    (1,284)
      Investment in stocks             (915)      (664)    (1,363)    (1,236)
      Investment in real estate        (300)       (83)      (400)      (196)
                                  ---------- ---------- ---------- ----------
                                        557       (537)      (204)      (847)

    Effect of changes in exchange
     rates on cash and cash
     equivalents                        (27)      (166)       141       (182)

    Increase (decrease) in cash
     and cash equivalents              (172)     1,436       (409)     1,049

    Cash and cash equivalents from
     continuing and discontinued
     operations, beginning of period  3,439      2,696      3,676      3,083

    Cash and cash equivalents from
     discontinued operations,
     end of period                        -        (23)         -        (23)
                                  ---------- ---------- ---------- ----------
    Cash and cash equivalents,
     end of period                $   3,267  $   4,109  $   3,267  $   4,109
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------



    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 June 30, 2008 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, 2007 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, 2007.

        (a) Changes in Accounting Policy

            Capital Disclosures
            -------------------
            Effective January 1, 2008, the Company adopted the Canadian
            Institute of Chartered Accountants (CICA) Handbook Section 1535,
            Capital Disclosures. The section establishes standards for
            disclosing information that enables users of financial statements
            to evaluate the entity's objectives, policies and processes for
            managing capital. The new requirements are for disclosure only
            and did not impact the financial results of the Company.

            Financial Instrument Disclosure and Presentation
            ------------------------------------------------
            Effective January 1, 2008, the Company adopted the CICA Handbook
            Section 3862, Financial Instruments - Disclosures, and Section
            3863, Financial Instruments - Presentation. These sections
            replace existing Section 3861, Financial Instruments - Disclosure
            and Presentation. Presentation standards are carried forward
            unchanged. Disclosure standards are enhanced and expanded to
            complement the changes in accounting policy adopted in accordance
            with Section 3855, Financial Instruments - Recognition and
            Measurement during 2007.

        (b) Comparative Figures

            Certain of the 2007 amounts presented for comparative purposes
            have been reclassified to conform with the presentation adopted
            in the current year.

    2.  Disposals

        On April 1, 2008, Lifeco announced that Great-West Life & Annuity
        Insurance Company (GWL&A) has completed the sale of its health care
        business, Great-West Healthcare. As part of the transaction GWL&A has
        received U.S. $1.5 billion in gross proceeds, and approximately
        U.S. $750 million representing the amount of equity invested in the
        health care business was made available for other purposes. The sale
        proceeds and the equity invested were applied to outstanding short
        term credit facilities and a term loan (refer to note 7).

        As a result of the sale a net gain of $1,025 ($649 after tax) was
        recorded in net income from discontinued operations on the Summary of
        Consolidated Operations. The gain is net of a charge of $329
        ($208 after tax) as a result of costs associated with the sale. In
        accordance with CICA Handbook Section 3475, Disposal of Long-lived
        Assets and Discontinued Operations the operating results and assets
        and liabilities of the health care business have been presented as
        discontinued operations in the financial statements of the Company.

        After tax net income of the health care business presented as
        discontinued operations on the Summary of Consolidated Operations is
        comprised of the following:

                                  For the three months   For the six months
                                      ended June 30         ended June 30
                                  --------------------- ---------------------
                                     2008       2007       2008       2007
                                  ---------- ---------- ---------- ----------
        Income
          Premium income           $    (40)  $    256   $    184   $    527
          Net investment income           -         18         11         43
          Fee and other income            -        195        164        406
                                  ---------- ---------- ---------- ----------
                                        (40)       469        359        976
                                  ---------- ---------- ---------- ----------
        Gain on sale                  1,025          -      1,025          -
                                  ---------- ---------- ---------- ----------
                                        985        469      1,384        976
                                  ---------- ---------- ---------- ----------
        Benefits and expenses
          Paid or credited to
           policyholders and
           beneficiaries including
           policyholder dividends
           and experience refunds       (40)       214        151        457
          Other                           -        178        145        361
                                  ---------- ---------- ---------- ----------
        Net income from
         discontinued operations
         before income taxes          1,025         77      1,088        158
        Income taxes                    376         23        396         48
                                  ---------- ---------- ---------- ----------
        Net income from
         discontinued operations   $    649   $     54   $    692   $    110
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------

        As a result of the sale of its health care business, GWL&A recognized
        a charge of $58 after-tax relating to the strengthening of reserves
        in its continuing operations.

        On the Consolidated Balance Sheets assets and liabilities of
        operations held for sale are comprised of the following:

                                                        December 31, June 30,
                                                            2007       2007
                                                        ---------- ----------
        Assets

        Bonds                                            $    241   $    210
        Cash and cash equivalents                              26         23
        Goodwill                                               47         56
        Intangible assets                                      11         11
        Other assets                                          372        447
                                                        ---------- ----------
        Assets of operations held for sale               $    697   $    747
                                                        ---------- ----------
                                                        ---------- ----------
        Liabilities

        Policy liabilities                               $    248   $    302
        Other liabilities                                     180        247
        Repurchase agreements                                   -         18
                                                        ---------- ----------
        Liabilities of operations held for sale          $    428   $    567
                                                        ---------- ----------
                                                        ---------- ----------

        As of April 1, 2008 all of the assets and liabilities of operations
        held for sale have been sold.

    3.  Restructuring Costs

        Following the acquisition of Putnam Investments, LLC (Putnam) on
        August 3, 2007, the Company developed a plan to restructure and exit
        certain operations of Putnam. The Company expects the restructuring
        to be substantially complete by the end of 2009. Costs of $184
        (U.S. $175) are expected to be incurred as a result by the U.S.
        operating segment and consist primarily of restructuring and exit
        activities involving operations and systems, compensation and
        facilities costs. Accrued restructuring costs are included in other
        liabilities in the Consolidated Balance Sheets and restructuring
        charges are included in the Summary of Consolidated Operations. The
        costs include approximately $154 (U.S $146) that was recognized as
        part of the purchase equation of Putnam and costs of approximately
        $30 (U.S. $29) will be charged to income as incurred.

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

                                                          Changes
                                                               in
                        Expected    Amounts    Amounts    foreign    Balance
                           total   utilized   utilized   exchange    June 30,
                           costs     - 2007     - 2008      rates       2008
                        ---------  ---------  ---------  ---------  ---------
        Compensation
         costs           $   133    $   (27)   $   (32)   $    (6)   $    68
        Exiting and
         consolidating
         operations           22         (6)         -          -         16
        Eliminating
         duplicate
         systems              29         (1)         -          -         28
                        ---------  ---------  ---------  ---------  ---------
                         $   184    $   (34)   $   (32)   $    (6)    $  112
                        ---------  ---------  ---------  ---------  ---------
                        ---------  ---------  ---------  ---------  ---------
        Accrued on
         acquisition     $   154    $   (34)   $   (32)   $    (6)    $   82
        Expense as
         incurred             30          -          -          -         30
                        ---------  ---------  ---------  ---------  ---------
                         $   184    $   (34)   $   (32)   $    (6)    $  112
                        ---------  ---------  ---------  ---------  ---------
                        ---------  ---------  ---------  ---------  ---------


    4. Portfolio Investments

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

                             June 30, 2008
                  -----------------------------------
                     Carrying Value & Market Value
                  -----------------------------------
                              Held for trading(1)
                   Available ------------------------
                    for sale  Designated  Classified
                  ----------- ----------- -----------
    Bonds
    - government     $ 1,746     $16,252     $   376
    - corporate        2,367      34,019       1,158
                  ----------- ----------- -----------
                       4,113      50,271       1,534
                  ----------- ----------- -----------
    Mortgage loans
    - residential          -           -           -
    - non-
       residential         -           -           -
                  ----------- ----------- -----------
                           -           -           -
                  ----------- ----------- -----------
    Stocks             1,395       5,139           -
    Real estate            -           -           -
                  ----------- ----------- -----------
                     $ 5,508     $55,410     $ 1,534
                  ----------- ----------- -----------
                  ----------- ----------- -----------


                                          June 30, 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     $ 1,696     $ 1,748     $     -     $     -     $20,070
    - corporate        6,997       6,976           -           -      44,541
                  ----------- ----------- ----------- ----------- -----------
                       8,693       8,724           -           -      64,611
                  ----------- ----------- ----------- ----------- -----------
    Mortgage loans
    - residential      6,989       7,030           -           -       6,989
    - non-
       residential     9,914       9,686           -           -       9,914
                  ----------- ----------- ----------- ----------- -----------
                      16,903      16,716           -           -      16,903
                  ----------- ----------- ----------- ----------- -----------
    Stocks                 -           -         326         389       6,860
    Real estate            -           -       2,914       3,117       2,914
                  ----------- ----------- ----------- ----------- -----------
                     $25,596     $25,440     $ 3,240     $ 3,506     $91,288
                  ----------- ----------- ----------- ----------- -----------
                  ----------- ----------- ----------- ----------- -----------


                           December 31, 2007
                  -----------------------------------
                     Carrying Value & Market Value
                  -----------------------------------
                                Held for trading(1)
                   Available ------------------------
                    for sale  Designated  Classified
                  ----------- ----------- -----------
    Bonds
    - government     $ 1,541     $16,554     $   635
    - corporate        2,504      34,030       1,005
                  ----------- ----------- -----------
                       4,045      50,584       1,640
                  ----------- ----------- -----------
    Mortgage loans
    - residential          -           -           -
    - non-
       residential         -           -           -
                  ----------- ----------- -----------
                           -           -           -
                  ----------- ----------- -----------
    Stocks             1,432       4,791           -
    Real estate            -           -           -
                  ----------- ----------- -----------
                     $ 5,477     $55,375     $ 1,640
                  ----------- ----------- -----------
                  ----------- ----------- -----------


                                       December 31, 2007
                  -----------------------------------------------------------
                                   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     $ 1,775     $ 1,877     $     -     $     -     $20,505
    - corporate        7,025       7,130           -           -      44,564
                  ----------- ----------- ----------- ----------- -----------
                       8,800       9,007           -           -      65,069
                  ----------- ----------- ----------- ----------- -----------
    Mortgage loans
    - residential      7,121       7,127           -           -       7,121
    - non-
       residential     8,748       8,879           -           -       8,748
                  ----------- ----------- ----------- ----------- -----------
                      15,869      16,006           -           -      15,869
                  ----------- ----------- ----------- ----------- -----------
    Stocks                 -           -         320         461       6,543
    Real estate            -           -       2,547       2,844       2,547
                  ----------- ----------- ----------- ----------- -----------
                     $24,669     $25,013     $ 2,867     $ 3,305     $90,028
                  ----------- ----------- ----------- ----------- -----------
                  ----------- ----------- ----------- ----------- -----------


                             June 30, 2007
                  -----------------------------------
                      Carrying Value & Market Value
                  -----------------------------------
                                Held for trading(1)
                   Available ------------------------
                    for sale  Designated  Classified
                  ----------- ----------- -----------
    Bonds
    - government     $ 1,751     $18,769     $   908
    - corporate        3,196      34,638         684
                  ----------- ----------- -----------
                       4,947      53,407       1,592
                  ----------- ----------- -----------
    Mortgage loans
    - residential          -           -           -
    - non-
       residential         -           -           -
                  ----------- ----------- -----------
                           -           -           -
                  ----------- ----------- -----------
    Stocks               844       4,709           -
    Real estate            -           -           -
                  ----------- ----------- -----------
                     $ 5,791     $58,116      $1,592
                  ----------- ----------- -----------
                  ----------- ----------- -----------


                                     June 30, 2007
                  -----------------------------------------------------------
                                   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     $ 1,977     $ 2,134     $     -     $     -     $23,405
    - corporate        7,323       7,227           -           -      45,841
                  ----------- ----------- ----------- ----------- -----------
                       9,300       9,361           -           -      69,246
                  ----------- ----------- ----------- ----------- -----------
    Mortgage loans
    - residential      7,230       7,385           -           -       7,230
    - non-
       residential     7,942       7,735           -           -       7,942
                  ----------- ----------- ----------- ----------- -----------
                      15,172      15,120           -           -      15,172
                  ----------- ----------- ----------- ----------- -----------
    Stocks                 -           -         313         476       5,866
    Real estate            -           -       2,207       2,710       2,207
                  ----------- ----------- ----------- ----------- -----------
                     $24,472     $24,481      $2,520      $3,186     $92,491
                  ----------- ----------- ----------- ----------- -----------
                  ----------- ----------- ----------- ----------- -----------

    (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)  Non-performing loans:

                                             June 30,  December 31,  June 30,
                                               2008        2007        2007
                                          ----------- ----------- -----------
                 Bonds                     $      47   $      33   $      66
                 Mortgage loans                    7           9          12
                                          ----------- ----------- -----------
                                           $      54   $      42   $      78
                                          ----------- ----------- -----------
                                          ----------- ----------- -----------

                 Non-performing loans include non-accrual loans and
                 foreclosed real estate held for sale. Bond and mortgage
                 investments are reviewed on a loan by loan basis to
                 determine non-performing status. Loans are classified as
                 non-accrual when they are deemed to have an other than
                 temporary impairment as a result of:

                 (1) payments are 90 days or more in arrears, except in those
                     cases where, in the opinion of management, there is
                     justification to continue to accrue interest; or
                 (2) the Company no longer has reasonable assurance of timely
                     collection of the full amount of the principal and
                     interest due; or
                 (3) modified/restructured loans are not performing in
                     accordance with the contract.

                 Where appropriate, provisions are established or write-offs
                 made to adjust the carrying value to the net realizable
                 amount. Wherever possible the fair value of collateral
                 underlying the loans or observable market price is used to
                 establish net realizable value. For non-performing available
                 for sale loans, recorded at fair value, the accumulated loss
                 recorded in accumulated other comprehensive income is
                 reclassified to net investment income. Once an impairment
                 loss on an available for sale asset is recorded to income it
                 is not reversed.

            (ii) Changes in the allowance for credit losses are as follows:

                                 For the six months      For the six months
                                ended June 30, 2008     ended June 30, 2007
                              ----------------------- -----------------------
                                     Mortgage                Mortgage
                               Bonds   Loans   Total   Bonds   Loans   Total
                              ------- ------- ------- ------- ------- -------
    Balance, beginning of
     year                     $   34  $   19  $   53  $   44  $   30  $   74
    Net provision (recoveries)
     for credit losses -
     in year                       -      (2)     (2)     (1)     (4)     (5)
    Write-offs, net of
     recoveries                   (6)      2      (4)      -      (2)     (2)
    Other (including foreign
     exchange rate changes)        1       -       1      (4)     (3)     (7)
                              ------- ------- ------- ------- ------- -------
    Balance, end of period    $   29  $   19  $   48  $   39  $   21  $   60
                              ------- ------- ------- ------- ------- -------
                              ------- ------- ------- ------- ------- -------


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

    For the three months             Mortgage          Real
     ended June 30, 2008       Bonds   loans  Stocks  estate   Other   Total
    ------------------------- ------- ------- ------- ------- ------- -------

    Regular net
     investment income:
      Investment income
       earned                 $1,097  $  236  $   73  $   42  $  159  $1,607
      Net realized gains
       (losses) (available
       for sale)                  32       -      (1)     -        -      31
      Net realized gains
       (losses) (other
       classifications)            9       5       1      -        -      15
      Amortization of net
       realized/unrealized
       gains (non-financial
       instruments)                -       -       -      9        -       9
      Net recovery of credit
       losses                      2       -       -      -        -       2
      Other income and
       expenses                    -       -       -      -      (16)    (16)
                              ------- ------- ------- ------- ------- -------
                               1,140     241      73     51      143   1,648

    Changes in fair value
     on held for trading
     assets:
      Net realized/unrealized
       gains (losses)
       (classified held for
       trading)                  (20)      -       -       -       -     (20)
      Net realized/unrealized
       gains (losses)
      (designated held for
       trading)               (1,882)      -     169       -     138  (1,575)
                              ------- ------- ------- ------- ------- -------
                              (1,902)      -     169       -     138  (1,595)
                              ------- ------- ------- ------- ------- -------
    Net investment income     $ (762) $  241  $  242  $   51  $  281  $   53
                              ------- ------- ------- ------- ------- -------
                              ------- ------- ------- ------- ------- -------


    For the three months             Mortgage          Real
     ended June 30, 2007       Bonds   loans  Stocks  estate   Other   Total
    ------------------------- ------- ------- ------- ------- ------- -------
    Regular net
     investment income:
      Investment income
       earned                 $  948  $  223  $   45  $   26  $  191  $1,433
      Net realized gains
       (losses) (available
       for sale)                   7       -       -       -       -       7
    Net realized gains
     (losses) (other
     classifications)             11       9       -       -       -      20
    Recovery of credit losses      1       4       -       -       -       5
    Amortization of deferred
     net realized gains            -       -       -      18       -      18
    Other income and expenses      -       -       -       -     (18)    (18)
                              ------- ------- ------- ------- ------- -------
                                 967     236      45      44     173   1,465

    Changes in fair value on
     held for trading assets:
    Net realized/ unrealized
     gains (losses)
     (classified held for
     trading)                    (18)       -      -       -       -     (18)
    Net realized/ unrealized
     gains (losses)
     (designated held for
     trading)                 (1,962)       -    133       -     (80) (1,909)
                              ------- ------- ------- ------- ------- -------
                              (1,980)       -    133       -     (80) (1,927)
                              ------- ------- ------- ------- ------- -------
    Net investment income    $(1,013) $   236  $ 178  $   44  $   93  $ (462)
                              ------- ------- ------- ------- ------- -------
                              ------- ------- ------- ------- ------- -------


    For the six months               Mortgage          Real
     ended June 30, 2008       Bonds   loans  Stocks  estate   Other   Total
    ------------------------- ------- ------- ------- ------- ------- -------
    Regular net investment
     income:
    Investment income earned  $1,987  $  464  $  118  $   77  $  287  $2,933
    Net realized gains
     (losses) (available
     for sale)                    45       -      (1)      -       -      44
    Net realized gains
     (losses) (other
     classifications)             15      11       6       -       -      32
    Amortization of net
     realized/unrealized
     gains (non-financial
     instruments)                  -       -       -      20       -      20
    Net recovery of credit
     losses                        2       -       -       -       -       2
    Other income and expenses      -       -       -       -     (31)    (31)
                              ------- ------- ------- ------- ------- -------
                               2,049     475     123      97     256   3,000

    Changes in fair value on
     held for trading assets:
    Net realized/unrealized
     gains (losses)
    (classified held for
     trading)                      1       -       -       -       -       1
    Net realized/unrealized
     gains (losses)
    (designated held for
     trading)                 (2,565)      -     (73)      -     102  (2,536)
                              ------- ------- ------- ------- ------- -------
                              (2,564)      -     (73)      -     102  (2,535)
                              ------- ------- ------- ------- ------- -------

    Net investment income     $ (515) $  475  $   50  $   97  $  358  $  465
                              ------- ------- ------- ------- ------- -------
                              ------- ------- ------- ------- ------- -------



    For the six months               Mortgage          Real
     ended June 30, 2007       Bonds   loans  Stocks  estate   Other   Total
    ------------------------- ------- ------- ------- ------- ------- -------
    Regular net investment
     income:
    Investment income earned  $1,879  $  447  $   88  $   61  $  315  $2,790
    Net realized gains
     (losses) (available
     for sale)                    32       -       3       -       -      35
    Net realized gains
     (losses) (other
     classifications)             13      15       -       -       -      28
    Recovery of credit losses      1       4       -       -       -       5
    Amortization of deferred
     net realized gains            -       -       -      37       -      37
    Other income and expenses      -       -       -       -     (36)    (36)
                              ------- ------- ------- ------- ------- -------
                               1,925     466      91      98     279   2,859

    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)                 (2,443)      -     212       -     (92) (2,323)
                              ------- ------- ------- ------- ------- -------
                              (2,464)      -     212       -     (92) (2,344)
                              ------- ------- ------- ------- ------- -------
    Net investment income     $ (539) $  466  $  303  $   98  $  187  $  515
                              ------- ------- ------- ------- ------- -------
                              ------- ------- ------- ------- ------- -------


           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 on a current exposure method, 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.

                                                                    June 30,
                                                                      2008
                                                                  -----------
               Cash and cash equivalents                          $    3,267
               Bonds
                 Held for trading                                     51,805
                 Available for sale                                    4,113
                 Amortized cost                                        8,693
               Mortgage loans                                         16,903
               Loans to policyholders                                  6,618
               Other financial assets                                 16,941
               Derivative assets                                         871
                                                                  -----------
               Total balance sheet maximum credit exposure        $  109,211
                                                                  -----------
                                                                  -----------

               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:

                                                                    June 30,
                                                                      2008
                                                                  -----------
               Bonds issued or guaranteed by:
                 Canadian federal government                      $    1,503
                 Canadian provincial and municipal governments         4,567
                 U.S. Treasury and other U.S. agencies                 2,778
                 Other foreign governments                             6,387
                 Government related                                    2,473
                 Sovereign                                             2,001
                 Asset-backed securities                               7,906
                 Residential mortgage backed securities                3,180
                 Banks                                                 5,779
                 Other financial institutions                          5,337
                 Basic Materials                                         172
                 Industrial products/services & technology             1,438
                 Utilities & communication                             7,853
                 Consumer products                                     3,985
                 Natural resources                                     2,181
                 Real estate                                           1,694
                 Transportation & media                                2,417
                 Miscellaneous                                         1,183
                                                                  -----------
               Total corporate                                        62,834
               Short term bonds                                        1,777
                                                                  -----------
                                                                  $   64,611
                                                                  -----------
                                                                  -----------
               Canada                                             $   24,410
               United States                                          15,927
               Europe/Reinsurance                                     24,274
                                                                  -----------
                                                                  $   64,611
                                                                  -----------
                                                                  -----------

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

                                              June 30, 2008
                              -----------------------------------------------
                                Single      Multi-
                                family      family
                              residential residential Commercial      Total
                              ----------- ----------- ----------- -----------
               Canada         $    1,823  $    4,634  $    5,880  $   12,337
               United States           -         502       1,211       1,713
               Europe/
                Reinsurance            -          30       2,823       2,853
                              ----------- ----------- ----------- -----------

               Total
                mortgages     $    1,823  $    5,166  $    9,914  $   16,903
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

         (iii) Asset Quality


               Bond Portfolio Quality

                                                                    June 30,
                                                                      2008
                                                                  -----------
               AAA                                                $   24,888
               AA                                                     12,024
               A                                                      17,676
               BBB                                                     7,749
               BB and lower                                              497
                                                                  -----------
                                                                      62,834
               Short term bonds                                        1,777
                                                                  -----------
               Total bonds                                        $   64,611
                                                                  -----------
                                                                  -----------

               Derivative Portfolio Quality

                                                                    June 30,
                                                                      2008
                                                                  -----------
               Over-the-counter contracts (counterparty ratings):
               AA                                                 $      564
               A                                                         307
                                                                  -----------
               Total                                              $      871
                                                                  -----------
                                                                  -----------

               Derivative instruments are either exchange traded or over-the-
               counter contracts negotiated between counterparties. At
               June 30, 2008, the Company held assets of $7 pledged as
               collateral for derivative contracts. The assets pledged
               consist of cash, cash equivalents and short-term securities.

        (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 line 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.

            In the normal course of business the Company enters into
            contracts that give rise to commitments of future minimum
            payments that impact short-term and long-term liquidity. The
            following table summarizes the principal repayment schedule of
            certain of the Company's financial liabilities.

                                       Payments due by period
                      -------------------------------------------------------
                                                                        over
                       Total  1 year 2 years 3 years 4 years 5 years 5 years
                      -------------------------------------------------------
    Debentures and
     other debt
     instruments      $3,772  $  174  $    1  $    1  $    1  $  511  $3,084
    Preferred share
     liabilities         756       -       -       -       -     557     199
    Capital trust
     debentures(1)       800       -       -       -       -       -     800
                      -------------------------------------------------------
                      $5,328  $  174  $    1  $    1  $    1  $1,068  $4,083
                      -------------------------------------------------------
                      -------------------------------------------------------

    (1) Payments due have not been reduced to reflect the Company held
        capital trust securities of $175 principal amount ($187 carrying
        value).

        (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% increase in foreign currency rates would be expected
                 to have minimal impact on non-participating actuarial
                 liabilities. A 10% decrease in foreign currency rates would
                 be expected to have minimal impact on non-participating
                 actuarial liabilities.

           (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
              business of the Company of an immediate 1% increase or an
              immediate 1% decrease in the level of interest rates. 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 $69.

              -  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 $88.

           (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, 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 $58. A 10% decrease in equity markets would be
              expected to additionally increase non-participating actuarial
              liabilities by approximately $59.

    6. Financing Charges

       Financing charges consist of the following:

                                                For the three    For the six
                                                months ended     months ended
                                                   June 30         June 30
                                                -------------   -------------
                                                2008    2007    2008    2007
                                                -----   -----   -----   -----
       Interest on long-term debentures and
        other debt instruments                  $ 51    $ 32    $126    $ 62
       Preferred share dividends                   9       9      18      18
       Unrealized gains on preferred shares
        classified as held for trading            (3)    (12)      8     (14)
       Subordinated debenture issue costs          5      13       5      13
       Other                                       5       1       7       6
       Interest on capital trust debentures       12      12      24      24
       Distributions on capital trust
        securities held by consolidated group
        as temporary investments                  (2)     (2)     (5)     (5)
                                                -----   -----   -----   -----
       Total                                    $ 77    $ 53    $183    $104
                                                -----   -----   -----   -----
                                                -----   -----   -----   -----

    7. Debentures and Other Debt Instruments

       On June 26, 2008, the Company issued $500 of 7.127% Subordinated
       Debentures through its wholly-owned subsidiary Great-West Lifeco
       Finance (Delaware) LP II. The subordinated debentures are due June 26,
       2068 and bear an interest rate of 7.127% until June 26, 2018. After
       June 26, 2018, the subordinated debentures will bear an interest rate
       of the Canadian 90-day bankers' acceptance rate plus 3.78%. Subject to
       a Replacement Capital Covenant, the subordinated debentures may be
       redeemed by the Company at the principal amount plus any unpaid and
       accrued interest after June 26, 2018.

       On March 19, 2008, the Company repaid $235 on its one year credit
       facility with a Canadian chartered bank. On April 18, 2008 the Company
       repaid $730 Canadian and U.S. $345 on this facility and on June 26,
       2008, the Company repaid the remaining $268 Canadian and U.S. $302 on
       this facility. The balance outstanding on this credit facility at
       December 31, 2007 was $1,873 ($1,233 Canadian and U.S. $647), and at
       June 30, 2008 the credit facility had been fully repaid.

       During the second quarter of 2008, Putnam Acquisition Financing LLC
       also repaid U.S. $196 of the U.S. $500 five year term facility.

       On January 24, 2008, a subsidiary of Putnam LLC executed a demand
       promissory note in the amount of U.S. $150 with a Canadian Chartered
       Bank. On January 24, 2008, Putnam LLC drew U.S. $150 on the note. On
       March 26, 2008, a subsidiary of Putnam LLC executed a U.S. $200
       revolving credit facility with a Canadian Chartered Bank and used
       proceeds from the facility to repay the U.S. $150 demand promissory
       note. There was U.S. $70 outstanding under the facility at June 30,
       2008.

    8. Non-Controlling Interests

       On demutualization, $50 of seed capital was transferred from the
       shareholder account to the participating policyholder account of The
       Canada Life Assurance Company (Canada Life). In accordance with the
       Conversion Proposal of Canada Life, the seed capital amount, together
       with a reasonable rate of return, may be transferred back to the
       shareholder account if the seed capital is no longer required to
       support the new participating policies.

       During the second quarter of 2008, $5 of seed capital related to the
       Canadian open block of the participating policyholder account,
       together with accrued interest of $3 after tax, was transferred from
       the participating policyholder account to the shareholder account. The
       repatriation (exclusive of interest) resulted in an increase in
       shareholder surplus of $5 and a decrease in participating policyholder
       surplus of $5. $28 of seed capital has been repaid to date.

       During the first quarter of 2008, non-controlling interests decreased
       by approximately $176 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.

    9. Share Capital

    (a) Preferred Shares

       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 Summary of Consolidated
       Operations. During the six months ended June 30, 2008 the Company
       recognized unrealized gains (losses) of $1 for Series D and $(9) for
       Series E (for the six months ended June 30, 2007, $9 for Series D and
       $5 for Series E). The redemption price at maturity is $25 per share
       plus accrued dividends.

    (b) Common Shares

    Issued and outstanding

                             June 30, 2008             December 31, 2007
                       --------------------------  --------------------------
                                       Carrying                    Carrying
                          Number         Value        Number         Value
                       ------------  ------------  ------------  ------------
    Common shares:
    Balance, beginning
     of year           893,761,639  $      4,709   891,151,789  $      4,676
    Issued under Stock
     Option Plan           659,660             9     2,609,850            33
                       ------------  ------------  ------------  ------------
    Balance, end of
     period            894,421,299  $      4,718   893,761,639  $      4,709
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------


    Issued and outstanding

                             June 30, 2007
                       --------------------------
                                       Carrying
                          Number         Value
                       ------------  ------------
    Common shares:
    Balance, beginning
     of year           891,151,789  $      4,676
    Issued under Stock
     Option Plan         1,082,557            12
                       ------------  ------------
    Balance, end of
     period            892,234,346  $      4,688
                       ------------  ------------
                       ------------  ------------


    10. 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.

        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 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 The Great-West Life Assurance Company
        (Great-West Life):

                                               June 30, December 31, June 30,
                                                 2008       2007       2007
                                               --------   --------   --------
        Capital Available:
        Tier 1 Capital

          Common shares                        $ 6,116    $ 6,116    $ 6,116

          Shareholder surplus                    5,211      4,672      4,319
          Qualifying non-controlling
           interests                               151        152        153

          Innovative instruments                   636        636        633
          Other Tier 1 Capital Elements          1,597      1,337      1,541
                                               --------   --------   --------
          Gross Tier 1 Capital                  13,711     12,913     12,762

        Deductions from Tier 1:
          Goodwill & intangible assets in
           excess of limit                       5,702      5,724      5,710
          Other deductions                       1,321      1,219      1,237
                                               --------   --------   --------
        Net Tier 1 Capital                       6,688      5,970      5,815

        Tier 2 Capital
          Tier 2A                                  310        456        561
          Tier 2B allowed                          501        502        502

          Tier 2C                                1,285      1,262      1,226
                                               --------   --------   --------

        Tier 2 Capital Allowed                   2,096      2,220      2,289

        Total Tier 1 and Tier 2 Capital          8,784      8,190      8,104
        Less: Deductions/Adjustments               120        101        205
                                               --------   --------   --------
        Total Available Capital                $ 8,664    $ 8,089    $ 7,899

        Capital Required:
          Assets Default & market risk         $ 1,549    $ 1,457    $ 1,328
          Insurance Risks                        1,707      1,675      1,702
          Interest Rate Risks                    1,008        888        872
          Other                                    (38)       (76)      (115)
                                               --------   --------   --------
        Total Capital Required                 $ 4,226    $ 3,944    $ 3,787

        MCCSR ratios:
        Tier 1                                     158%       151%       154%
                                               --------   --------   --------
                                               --------   --------   --------
        Total                                      205%       205%       209%
                                               --------   --------   --------
                                               --------   --------   --------

        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 2007 the risk-based capital (RBC)
        ratio for GWL&A was 594%, well in excess of that required by NAIC.

        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.

    11. Stock Based Compensation

        3,115,000 options were granted under the Company's stock option plan
        during the second quarter of 2008 and 110,000 options were granted
        during the first quarter of 2008 (1,749,000 options were granted
        during the first quarter of 2007, and no options were granted during
        the second quarter of 2007). The weighted fair value of options
        granted during the six months ended June 30, 2008 were $3.27 per
        option ($7.49 per option during the six months ended June 30, 2007).
        Compensation expense of $6 after-tax has been recognized in the
        Summary of Consolidated Operations for the six months ended June 30,
        2008 ($3 after-tax for the six months ended June 30, 2007).

    12. Pension Plans and Other Post-Retirement Benefits

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

                                                For the three    For the six
                                                months ended     months ended
                                                   June 30         June 30
                                                -------------   -------------
                                                2008    2007    2008    2007
                                                -----   -----   -----   -----
        Pension benefits                        $ 21    $ 12    $ 34    $ 24
        Other benefits                             4       5       7      10
                                                -----   -----   -----   -----
        Total                                   $ 25    $ 17    $ 41    $ 34
                                                -----   -----   -----   -----
                                                -----   -----   -----   -----

    13. Earning per Common Share

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

                             For the three                For the six
                             months ended                 months ended
                                June 30                     June 30
                       --------------------------  --------------------------
                           2008          2007          2008          2007
                      ------------- ------------- ------------- -------------
    (a) Earnings
      Net income from
       continuing
       operations     $        578  $        504  $      1,203  $        976
      Net income from
       discontinued
       operations              649            54           692           110
                      ------------- ------------- ------------- -------------
      Net income      $      1,227  $        558  $      1,895  $      1,086
      Perpetual
       preferred
       share
       dividends                14            14            28            28
                      ------------- ------------- ------------- -------------
      Net income -
       common
       shareholders   $      1,213  $        544  $      1,867  $      1,058
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    (b) Number of
     common shares
      Average number
       of common
       shares
       outstanding     894,282,925   892,170,991   894,072,570   891,871,142
      Add:
        - Potential
         exercise of
         outstanding
         stock
         options         4,279,498     6,612,015     4,458,404     6,818,203
                      ------------- ------------- ------------- -------------
      Average number
       of common
       shares
       outstanding
       - diluted
       basis           898,562,423   898,783,006   898,530,974   898,689,345
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

      Basic earnings
       per common
       share
        From continu-
         ing
         operations   $      0.630  $      0.549  $      1.314  $      1.063
        From dis-
         continued
         operations          0.726         0.061         0.774         0.123
                      ------------- ------------- ------------- -------------
                      $      1.356  $      0.610  $      2.088  $      1.186
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------
      Diluted
       earnings per
       common share
        From continu-
         ing
         operations   $      0.627  $      0.546  $      1.308  $      1.055
        From dis-
         continued
         operations          0.723         0.060         0.770         0.122
                      ------------- ------------- ------------- -------------

                      $      1.350  $      0.606  $      2.078  $      1.177
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------


    14. Accumulated Other Comprehensive Income


                            For the six months ended June 30, 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
     income            362      (250)      (16)       96         1        95
    Income tax           -        65         6        71         -        71
                  --------- --------- --------- --------- --------- ---------
                       362      (185)      (10)      167         1       166
                  --------- --------- --------- --------- --------- ---------
    Balance, end
     of period    $ (1,439) $    (11) $      3  $ (1,447) $    (80) $ (1,367)
                  --------- --------- --------- --------- --------- ---------
                  --------- --------- --------- --------- --------- ---------


                            For the six months ended June 30, 2007
               --------------------------------------------------------------
                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         $   (591) $      -  $      -  $   (591) $    (44) $   (547)
    Opening
     transition
     adjustment          -       379         -       379        19       360
    Income tax           -      (108)        -      (108)       (5)     (103)
                  --------- --------- --------- --------- --------- ---------
                         -       271         -       271        14       257
    Other
     comprehensive
     income           (588)     (159)      (59)     (806)      (64)     (742)
    Income tax           -        38        21        59         4        55
                  --------- --------- --------- --------- --------- ---------
                      (588)     (121)      (38)     (747)      (60)     (687)
                  --------- --------- --------- --------- --------- ---------
    Balance, end
     of period    $ (1,179) $    150  $    (38) $ (1,067) $    (90) $   (977)
                  --------- --------- --------- --------- --------- ---------
                  --------- --------- --------- --------- --------- ---------


    15. Reinsurance Transaction

        On February 14, 2008, the Company's indirect wholly-owned Irish
        reinsurance subsidiary, Canada Life International Re Limited, signed
        an agreement with Standard Life Assurance Limited, a U.K. based
        provider of life, pension and investment products, to assume by way
        of indemnity reinsurance, a large block of U.K. payout annuities. The
        reinsurance transaction increased premium income, paid or credited to
        policyholders, funds held by ceding insurers and policy liabilities
        by 12.5 billion.

    16. Segmented Information
        Consolidated Operations
        For the three months ended June 30, 2008

                                        United             Lifeco
                              Canada    States    Europe  Corporate    Total
                            --------- --------- --------- --------- ---------
    Income:
      Premium income        $  2,072  $    473  $  1,978  $      -  $  4,523
      Net investment income
        Regular net
         investment income       640       330       676         2     1,648
        Changes in fair
         value on held for
         trading assets          (80)     (387)   (1,128)        -    (1,595)
                            --------- --------- --------- --------- ---------
      Total net investment
       income                    560       (57)     (452)        2        53
      Fee and other income       277       376       153         -       806
                            --------- --------- --------- --------- ---------
    Total income               2,909       792     1,679         2     5,382
                            --------- --------- --------- --------- ---------
    Benefits and expenses:
      Paid or credited to
       policyholders           1,916       276     1,292         -     3,484
      Other                      579       366       143         7     1,095
      Amortization of finite
       life intangible
       assets                      3         6         1         -        10
                            --------- --------- --------- --------- ---------
    Net operating income
     before income taxes         411       144       243        (5)      793
    Income taxes                 101        36        50         1       188
                            --------- --------- --------- --------- ---------
    Net income before non-
     controlling interests       310       108       193        (6)      605
    Non-controlling interests     25         -         2         -        27
                            --------- --------- --------- --------- ---------
    Net income from
     continuing operations       285       108       191        (6)      578
    Net income from
     discontinued operations       -       649         -         -       649
                            --------- --------- --------- --------- ---------
    Net Income                   285       757       191        (6)    1,227
    Perpetual preferred
     share dividends              10         -         4         -        14
                            --------- --------- --------- --------- ---------
    Net income - common
     shareholders           $    275  $    757  $    187  $     (6) $  1,213
                            --------- --------- --------- --------- ---------
                            --------- --------- --------- --------- ---------



    For the three months ended June 30, 2007

                                        United             Lifeco
                              Canada    States    Europe  Corporate    Total
                            --------- --------- --------- --------- ---------
    Income:
      Premium income        $  1,888  $    417  $  1,705  $      -  $  4,010
      Net investment income
        Regular net
         investment income       621       337       496        11     1,465
        Changes in fair
         value on held for
         trading assets         (643)     (225)   (1,059)        -    (1,927)
                            --------- --------- --------- --------- ---------
      Total net investment
       income                    (22)      112      (563)       11      (462)
      Fee and other income       254       131       169         -       554
                            --------- --------- --------- --------- ---------
    Total income               2,120       660     1,311        11     4,102
                            --------- --------- --------- --------- ---------
    Benefits and expenses:
      Paid or credited to
       policyholders           1,222       395       933         -     2,550
      Other                      519       142       192        15       868
      Amortization of
       finite life
       intangible assets           3         2         1         -         6
                            --------- --------- --------- --------- ---------
    Net operating income
    before income taxes          376       121       185        (4)      678
    Income taxes                  75        37        21        (2)      131
                            --------- --------- --------- --------- ---------
    Net income before
     non-controlling
     interests                   301        84       164        (2)      547
    Non-controlling
     interests                    34         2         7         -        43
                            --------- --------- --------- --------- ---------
    Net income from
     continuing operations       267        82       157        (2)      504
    Net income from
     discontinued
     operations                    -        54         -         -        54
                            --------- --------- --------- --------- ---------
    Net income                   267       136       157        (2)      558
    Perpetual preferred
     share dividends              10         -         4         -        14
                            --------- --------- --------- --------- ---------
    Net income - common
     shareholders           $    257  $    136  $    153  $     (2) $    544
                            --------- --------- --------- --------- ---------
                            --------- --------- --------- --------- ---------



    For the six months ended June 30, 2008

                                        United             Lifeco
                              Canada    States    Europe  Corporate    Total
                            --------- --------- --------- --------- ---------
    Income:
      Premium income        $  4,049  $  1,326  $ 15,938  $      -  $ 21,313
      Net investment income
        Regular net
         investment income     1,264       646     1,095        (5)    3,000
        Changes in fair value
         on held for trading
         assets                 (168)     (607)   (1,760)        -    (2,535)
                            --------- --------- --------- --------- ---------
      Total net investment
       income                  1,096        39      (665)       (5)      465
      Fee and other income       542       754       307         -     1,603
                            --------- --------- --------- --------- ---------
    Total income               5,687     2,119    15,580        (5)   23,381
                            --------- --------- --------- --------- ---------
    Benefits and expenses:
      Paid or credited to
       policyholders           3,784     1,190    14,794         -    19,768
      Other                    1,125       762       328         8     2,223
      Amortization of finite
       life intangible
       assets                      7        11         2         -        20
                            --------- --------- --------- --------- ---------
    Net operating income
    before income taxes          771       156       456       (13)    1,370
    Income taxes                 182        29        86         -       297
                            --------- --------- --------- --------- ---------
    Net income before non-
     controlling interests       589       127       370       (13)    1,073
    Non-controlling
     interests                    44      (175)        1         -      (130)
                            --------- --------- --------- --------- ---------
    Net income from
     continuing operations       545       302       369       (13)    1,203
    Net income from
     discontinued operations       -       692         -         -       692
                            --------- --------- --------- --------- ---------
    Net Income                   545       994       369       (13)    1,895
    Perpetual preferred
     share dividends              21         -         7         -        28
                            --------- --------- --------- --------- ---------
    Net income - common
     shareholders           $    524  $    994  $    362  $    (13) $  1,867
                            --------- --------- --------- --------- ---------
                            --------- --------- --------- --------- ---------



    For the six months ended June 30, 2007

                                        United             Lifeco
                              Canada    States    Europe  Corporate    Total
                            --------- --------- --------- --------- ---------
    Income:
      Premium income        $  3,693  $  1,020  $  4,639  $      -  $  9,352
      Net investment income
        Regular net
         investment income     1,246       694       907        12     2,859
        Changes in fair
         value on held for
         trading assets         (674)     (188)   (1,482)        -    (2,344)
                            --------- --------- --------- --------- ---------
      Total net investment
       income                    572       506      (575)       12       515
      Fee and other income       509       267       331         -     1,107
                            --------- --------- --------- --------- ---------
    Total income               4,774     1,793     4,395        12    10,974
                            --------- --------- --------- --------- ---------
    Benefits and expenses:
      Paid or credited to
       policyholders           2,990     1,241     3,660         -     7,891
      Other                    1,097       297       363        16     1,773
    Amortization of finite
     life intangible assets        7         5         2         -        14
                            --------- --------- --------- --------- ---------
    Net operating income
    before income taxes          680       250       370        (4)    1,296
    Income taxes                 119        74        53        (2)      244
                            --------- --------- --------- --------- ---------
    Net income before
     non-controlling
     interests                   561       176       317        (2)    1,052
    Non-controlling
     interests                    58         8        10         -        76
                            --------- --------- --------- --------- ---------
    Net income - from
     continuing operations       503       168       307        (2)      976
    Net income from
     discontinued operations       -       110         -         -       110
                            --------- --------- --------- --------- ---------
    Net income                   503       278       307        (2)    1,086
    Perpetual preferred
     share dividends              21         -         7         -        28
                            --------- --------- --------- --------- ---------
    Net income - common
     shareholders           $    482  $    278  $    300  $     (2) $  1,058
                            --------- --------- --------- --------- ---------
                            --------- --------- --------- --------- ---------
    




For further information:

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


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890