Great-West Lifeco reports second quarter 2009 results



    
    TSX: GWO

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

    WINNIPEG, Aug. 6, 2009 /CNW/ - Great-West Lifeco Inc. (Lifeco) has
reported net income attributable to common shareholders of $413 million for
the three months ended June 30, 2009, compared to $564 million in 2008. On a
per common share basis, this represents $0.437 per common share for the three
months ended June 30, 2009, compared to $0.630 per common share for 2008.
    For the six months ended June 30, 2009, net income attributable to common
shareholders was $739 million, compared to $1,057 million a year ago. On a per
common share basis, this represents $0.783 per common share for the six months
ended June 30, 2009, compared to $1.230 per common share for 2008.
    Net income of $564 million for the three months ended June 30, 2008 and
$1,057 million for the six months ended June 30, 2008 represents adjusted net
income from continuing operations and, as such, excludes certain items as
described in the United States section of this Release. Net income
attributable to common shareholders, as reported, was $1,213 million, or
$1.356 per common share for the three months ended June 30, 2008, and $1,867
million, or $2.088 per common share for the six months ended June 30, 2008.
    Although conditions have generally improved in 2009, the 2009 results
compared to 2008 reflect the weaker global equity and credit market
environment that has existed since 2007. A decline in the value of publicly
traded and other investment securities through June 30, 2009, compared to
2008, has lowered the market value of assets invested in the Company's
segregated and mutual funds. Accordingly, the Company realized lower
investment management fee income. In the quarter, compared to 2008, this
negatively impacted net income attributable to common shareholders by $64
million, or $0.07 per common share, and additionally, by $12 million, or $0.01
per common share as a result of increased actuarial liabilities. However, as
was also the case at March 31, 2009, Great-West Life did not need to establish
actuarial reserves with respect to segregated fund guarantees at June 30,
2009.
    At June 30, 2009, the Company increased provisions for future credit
losses in actuarial liabilities by $506 million, both as a result of credit
rating downgrade activity in the quarter as well as for basis changes
pertaining to the methodology used by the Company to calculate the provisions.
These basis changes were generally conforming in nature in order to harmonize
practices across the Company's three operating segments. The total increase in
provisions of $506 million negatively impacted net income attributable to
common shareholders by $250 million, or $0.27 per common share after adjusting
for pass-through features and minority interests. The Company also recorded
investment impairment charges in connection with certain holdings. These
impairment charges totaled $6 million, which negatively impacted net income
attributable to common shareholders by $4 million.
    In the quarter, a reduction in excess interest rate mismatch reserves
contributed $203 million to net income attributable to common shareholders, or
$0.22 per common share, and a mark-to-market adjustment on two series of
preferred shares negatively impacted net income attributable to common
shareholders by $30 million, or $0.03 per common share.
    At June 30, 2009, consolidated invested assets were $105.0 billion. The
gross book value of impaired investments at that date was $354 million,
against which the Company had recorded cumulative impairment provisions of
$256 million. In addition, at June 30, 2009, the total provision for future
credit losses in actuarial liabilities was in excess of $2.5 billion.
    Consolidated assets under administration at June 30, 2009 were $441.9
billion, unchanged from December 31, 2008.

    
    Highlights

    -   The Company has maintained its quarterly common dividend at $0.3075
        per common share payable September 30, 2009. Dividends paid on
        common shares for the six months ended June 30, 2009 were 5% higher
        than a year ago.
    -   The Company's capital position remains very strong. Lifeco's
        Canadian operating subsidiary, Great-West Life, reported a Minimum
        Continuing Capital and Surplus (MCCSR) ratio of 205% at June 30,
        2009, which did not include any benefit from the $1,230 million of
        common and preferred share capital that was raised by Lifeco in the
        fourth quarter of 2008.
    -   While the Company has increased its provisions for future credit
        losses, actual investment impairment charges for the quarter, at $4
        million after-tax, were nominal.
    -   Adjusted return on common shareholders' equity was 14.2% for the
        twelve months ended June 30, 2009.
    

    OPERATING RESULTS

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

    CANADA

    Net income attributable to common shareholders for the second quarter of
2009 was $217 million compared to $275 million in 2008. For the six months
ended June 30, 2009, net income attributable to common shareholders was $425
million compared to $524 million in 2008.
    Investment impairment charges and provisions for future credit losses
negatively impacted net income attributable to common shareholders by $3
million in the quarter, while a reduction in excess interest rate mismatch
reserves contributed $6 million. Results in the Canada Corporate account were
also negatively impacted by a $30 million mark-to-market adjustment on two
series of preferred shares.
    Total sales for the six months ended June 30, 2009 were $4,217 million
compared to $4,424 million in 2008, with the results reflecting lower sales of
segregated fund and mutual fund products. Sales of protection products
increased over the six months ended June 30, 2008, however, with Individual
Life sales up 8%. Sales of Group insurance products decreased 12% over 2008.
    Total assets under administration at June 30, 2009 were $108.2 billion,
compared to $103.9 billion at December 31, 2008.

    UNITED STATES

    Net income attributable to common shareholders for the second quarter of
2009 was $49 million compared to $108 million in 2008. For the six months
ended June 30, 2009, net income attributable to common shareholders was $124
million compared to $184 million in 2008.
    Investment impairment charges and provisions for future credit losses
negatively impacted net income attributable to common shareholders by $48
million in the quarter, while a reduction in excess interest rate mismatch
reserves contributed $29 million.
    Net income of $108 million for the second quarter of 2008 excludes the
gain on sale of GWL&A's health care business of $649 million. Net income of
$184 million for the six months ended June 30, 2008 also excludes income from
discontinued operations of $43 million as well as two non-recurring items that
contributed $118 million to earnings during the first quarter of 2008.
    Total sales for the six months ended June 30, 2009 were $14.4 billion
compared to $24.0 billion in 2008.
    Total assets under administration at June 30, 2009 were $264.0 billion
compared to $271.1 billion at December 31, 2008. Included in assets under
administration at June 30, 2009 were $119.2 billion of mutual fund and
institutional account assets managed by Putnam, compared to $129.0 billion at
December 31, 2008.

    EUROPE

    Net income attributable to common shareholders for the second quarter of
2009 was $149 million compared to $187 million for the second quarter of 2008.
For the six months ended June 30, 2009, net income attributable to common
shareholders was $197 million compared to $362 million in 2008.
    Investment impairment charges and provisions for future credit losses
negatively impacted net income attributable to common shareholders by $203
million in the quarter, while a reduction in excess interest rate mismatch
reserves contributed $168 million.
    Total sales for the six months ended June 30, 2009 were $2,171 million
compared to $2,269 million in 2008.
    Total assets under administration at June 30, 2009 were $69.6 billion,
compared to $67.0 billion at December 31, 2008.

    CORPORATE

    Corporate net income for Lifeco attributable to common shareholders was a
charge of $2 million for the second quarter of 2009 and a charge of $7 million
for the six months ended June 30, 2009, compared to a charge of $6 million for
the second quarter of 2008 and a charge of $13 million for the six months
ended June 30, 2008.

    QUARTERLY DIVIDENDS

    At its meeting today, the Board of Directors approved a quarterly
dividend of $0.3075 per share on the common shares of the Company payable
September 30, 2009 to shareholders of record at the close of business
September 2, 2009.

    
    In addition, the Directors approved quarterly dividends on:

    -   Series D First Preferred Shares of $0.293750 per share;
    -   Series E First Preferred Shares of $0.30 per share;
    -   Series F First Preferred Shares of $0.36875 per share;
    -   Series G First Preferred Shares of $0.325 per share;
    -   Series H First Preferred Shares of $0.30313 per share;
    -   Series I First Preferred Shares of $0.28125 per share; and
    -   Series J First Preferred Shares of $0.3750 per share

    all payable September 30, 2009 to shareholders of record at the close of
business September 2, 2009.
    

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

    GREAT-WEST LIFECO

    Great-West Lifeco Inc. (TSX:GWO) is a financial services holding company
with interests in the life insurance, health insurance, retirement savings,
investment management and reinsurance businesses. The Company has operations
in Canada, the United States, Europe and Asia through The Great-West Life
Assurance Company, London Life Insurance Company, The Canada Life Assurance
Company, Great-West Life & Annuity Insurance Company and Putnam Investments,
LLC. Lifeco and its companies have nearly $442 billion in assets under
administration and are members of the Power Financial Corporation group of
companies.

    Cautionary note regarding Forward-Looking Information

    This release contains some forward-looking statements about the Company,
including its business operations, strategy and expected financial performance
and condition. Forward-looking statements include statements that are
predictive in nature, depend upon or refer to future events or conditions, or
include words such as "expects", "anticipates", "intends", "plans",
"believes", "estimates" or negative versions thereof and similar expressions.
In addition, any statement that may be made concerning future financial
performance (including revenues, earnings or growth rates), ongoing business
strategies or prospects, possible future Company action including statements
made by the Company with respect to the expected benefits of acquisitions or
divestitures are also forward-looking statements. Forward-looking statements
are based on current expectations and projections about future events and are
inherently subject to, among other things, risks, uncertainties and
assumptions about the Company, economic factors and the financial services
industry generally, including the insurance and mutual fund industries. They
are not guarantees of future performance, and actual events and results could
differ materially from those expressed or implied by forward-looking
statements made by the Company due to, but not limited to, important factors
such as sales levels, premium income, fee income, expense levels, mortality
experience, morbidity experience, policy lapse rates and taxes, as well as
general economic, political and market factors in North America and
internationally, interest and foreign exchange rates, global equity and
capital markets, business competition, technological change, changes in
government regulations, unexpected judicial or regulatory proceedings,
catastrophic events, and the Company's ability to complete strategic
transactions and integrate acquisitions. The reader is cautioned that the
foregoing list of important factors is not exhaustive, and there may be other
factors, including factors set out under "Risk Management and Control
Practices" in the Company's 2008 Annual Management's Discussion and Analysis
and any listed in other filings with securities regulators, which are
available for review at www.sedar.com. The reader is also cautioned to
consider these and other factors carefully and to not place undue reliance on
forward-looking statements. Other than as specifically required by applicable
law, the Company has no intention to update any forward-looking statements
whether as a result of new information, future events or otherwise.

    Cautionary note regarding Non-GAAP Financial Measures

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

    
    Further information
    Selected financial information is attached.

    Great-West Lifeco's second quarter conference call will be held Thursday,
August 6 at 3:00 p.m. (Eastern). The call can be accessed through
www.greatwestlifeco.com or by phone at:

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

    A replay of the call will be available from August 6 to August 13, 2009,
and can be accessed by calling 1-800-408-3053 or 416-695-5800 in Toronto
(passcode: 4003483 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)

                               As at or for the                For the
                              three months ended           six months ended
                       ------------------------------------------------------
                         June 30,  March 31,   June 30,   June 30,   June 30,
                           2009       2009       2008       2009       2008
    -------------------------------------------------------------------------
    Premiums and deposits:
    Life insurance,
     guaranteed
     annuities
     and insured
     health products   $   4,664  $   4,709  $   4,523  $   9,373  $  21,313
    Self-funded
     premium
     equivalents
     (ASO contracts)         639        618        627      1,257      1,212
    Segregated
     funds deposits:
      Individual
       products            1,699      1,258      1,771      2,957      3,789
      Group products       1,823      2,696      1,444      4,519      2,985
    Proprietary mutual
     funds and
     institutional
     deposits(1)           5,140      5,280      7,896     10,420     16,415
                       ------------------------------------------------------
    Total premiums
     and deposits         13,965     14,561     16,261     28,526     45,714
                       ------------------------------------------------------

    Fee and other
     income                  666        680        806      1,346      1,603
    Paid or credited
     to policyholders      7,473      3,366      3,490     10,839     19,786

    Net income-common
     shareholders
      Continuing
       operations
       - adjusted(3)         413        326        564        739      1,057
      Discontinued
       operations
       - adjusted(2)           -          -          -          -         43
                       ------------------------------------------------------
      Net income
       - adjusted(3)         413        326        564        739      1,100
      Adjustments
       after tax(3)            -          -        649          -        767
                       ------------------------------------------------------
      Net income             413        326      1,213        739      1,867
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Per common share
      Basic earnings
       - adjusted(3)   $   0.437  $   0.345  $   0.630  $   0.783  $   1.230
      Adjustments
       after tax(3)            -          -      0.726          -      0.858
      Basic earnings       0.437      0.345      1.356      0.783      2.088
      Dividends paid      0.3075     0.3075     0.2925     0.6150     0.5850
      Book value           12.65      12.68      12.68
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Return on common
     shareholders'
     equity (12 months):
      Net income
       - adjusted(3)       14.2%      16.2%      21.4%
      Net income            2.3%       9.3%      27.1%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Total assets     $ 131,644  $ 129,596  $ 131,113
      Segregated funds
       net assets         83,192     76,903     89,144
      Proprietary mutual
       funds and
       institutional
       net assets(4)     121,729    126,377    162,181
                       -------------------------------
      Total assets
       under management  336,565    332,876    382,438
      Other assets
       under
       administration(5) 105,341    103,816    111,890
                       -------------------------------
      Total assets
       under
       administration  $ 441,906  $ 436,692  $ 494,328
                       -------------------------------
                       -------------------------------
      Share capital
       and surplus     $  13,270  $  13,299  $  12,438
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes Putnam Investments, LLC mutual funds and institutional
        deposits, excluding Prime Money Market Fund net deposits.
    (2) Represents the operating results of GWL&A's health care business,
        which was sold effective April 1, 2008. Does not include the gain on
        sale of the health care business.
    (3) 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, and reflect the
        following items in 2008:

                                                              Refer to Annual
                                           Per common share       Financial
                           Net         ------------------------   Statement
                         income        In quarter  Year-to-date     Notes
                         ----------------------------------------------------
        Q1: Gain on
             termination
             of
             reinsurance
             agreement    $ 176            $     -     $ 0.197      Note 14
            Reserve
             strengthening
             in GWL&A       (58)  $ 118          -      (0.065)     Note 2
        Q2: Gain on
             sale of
             GWL&A's health
             care business  649     649      0.726       0.726      Note 2
                                 -----------------------------
                                  $ 767    $ 0.726     $ 0.858
                                 -----------------------------
                                 -----------------------------

        Return on common shareholders' equity is restated excluding non-
        recurring items from prior periods.

    (4) Excludes Putnam Prime Money Market Fund.
    (5) Other assets under administration includes both retail and
        institutional assets in which the Company only performs
        administrative or recordkeeping type services for the end client. In
        general, fee income is based on the type of services performed per
        client and does not fluctuate with asset levels.



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


                                    For the three months  For the six months
                                        ended June 30,        ended June 30,
                                  -------------------------------------------
                                     2009       2008       2009       2008
                                  -------------------------------------------
    Income
      Premium income              $   4,664  $   4,523  $   9,373  $  21,313
      Net investment
       income (note 4)
        Regular net
         investment income            1,616      1,648      3,127      3,000
        Changes in fair value on
         held for trading assets      2,272     (1,595)       305     (2,535)
                                  -------------------------------------------
      Total net investment income     3,888         53      3,432        465
      Fee and other income              666        806      1,346      1,603
                                  -------------------------------------------
                                      9,218      5,382     14,151     23,381
                                  -------------------------------------------
    Benefits and expenses
      Policyholder benefits           4,126      4,434      8,735      8,123
      Policyholder dividends and
       experience refunds               371        331        769        678
      Change in actuarial
       liabilities                    2,976     (1,275)     1,335     10,985
                                  -------------------------------------------
      Total paid or credited
       to policyholders               7,473      3,490     10,839     19,786

      Commissions                       353        330        660        652
      Operating expenses                628        634      1,291      1,271
      Premium taxes                      68         42        123         94
      Financing charges (note 6)        106         77        181        183
      Amortization of finite life
       intangible assets                 25         22         47         43
                                  -------------------------------------------

    Net income from continuing
     operations before
     income taxes                       565        787      1,010      1,352
    Income taxes - current               21        220        103        340
                 - future               101        (38)        97        (61)
                                  -------------------------------------------
    Net income from continuing
     operations before
     non-controlling interests          443        605        810      1,073
    Non-controlling interests            12         27         36       (130)
                                  -------------------------------------------
    Net income from continuing
     operations                         431        578        774      1,203
    Net income from discontinued
     operations (note 2)                  -        649          -        692
                                  -------------------------------------------
    Net income                          431      1,227        774      1,895
    Perpetual preferred
     share dividends                     18         14         35         28
                                  -------------------------------------------
    Net income - common
     shareholders                 $     413  $   1,213  $     739  $   1,867
                                  -------------------------------------------
                                  -------------------------------------------

    Earnings per common
     share (note 13)
      Basic                       $   0.437  $   1.356  $   0.783  $   2.088
                                  -------------------------------------------
                                  -------------------------------------------
      Diluted                     $   0.437  $   1.350  $   0.782  $   2.078
                                  -------------------------------------------
                                  -------------------------------------------



                   CONSOLIDATED BALANCE SHEETS (unaudited)
                               (in $ millions)

                                	          June 30, December 31, June 30,
                                                2009       2008       2008
                                             --------------------------------
    Assets
    Bonds (note 4)                           $  67,376   $ 66,554   $ 64,611
    Mortgage loans (note 4)                     17,349     17,444     16,903
    Stocks (note 4)                              6,093      5,394      6,860
    Real estate (note 4)                         3,378      3,188      2,914
    Loans to policyholders                       7,416      7,622      6,618
    Cash and cash equivalents                    3,357      2,850      3,267
    Funds held by ceding insurers               11,761     11,447     13,676
    Goodwill                                     5,418      5,425      6,315
    Intangible assets                            3,426      3,523      4,114
    Other assets                                 6,070      6,627      5,835
                                             --------------------------------
    Total assets                             $ 131,644  $ 130,074  $ 131,113
                                             --------------------------------
                                             --------------------------------

    Liabilities
    Policy liabilities
      Actuarial liabilities                  $ 100,127  $  97,895  $ 100,286
      Provision for claims                       1,352      1,466      1,325
      Provision for policyholder dividends         636        630        616
      Provision for experience rating refunds      286        310        228
      Policyholder funds                         2,409      2,326      2,294
                                             --------------------------------
                                               104,810    102,627    104,749

    Debentures and other debt
     instruments (note 7)                        3,903      3,821      3,774
    Funds held under reinsurance contracts         169        192        162
    Other liabilities                            5,202      5,969      5,505
    Repurchase agreements                          203        334        577
    Deferred net realized gains                    150        161        175
                                             --------------------------------
                                               114,437    113,104    114,942

    Preferred shares (note 9)                      779        752        794
    Capital trust securities and
     debentures (note 8)                           786        658        640
    Non-controlling interests
      Participating account surplus
       in subsidiaries                           2,018      2,012      1,961
      Preferred shares issued by subsidiaries      157        157        157
      Perpetual preferred shares issued
       by subsidiaries                             149        150        151
      Non-controlling interests in capital
       stock and surplus                            48         13         30

    Share capital and surplus
    Share capital (note 9)
      Perpetual preferred shares                 1,327      1,329      1,099
      Common shares                              5,741      5,736      4,718
    Accumulated surplus                          7,064      6,906      7,948
    Accumulated other comprehensive
     loss (note 14)                               (911)      (787)    (1,367)
    Contributed surplus                             49         44         40
                                             --------------------------------
                                                13,270     13,228     12,438
                                             --------------------------------
    Total liabilities, share capital
     and surplus                             $ 131,644  $ 130,074  $ 131,113
                                             --------------------------------
                                             --------------------------------



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

                                                          For the six months
                                                             ended June 30,
                                                        ---------------------
                                                           2009       2008
                                                        ---------------------
    Accumulated surplus
    Balance, beginning of year                          $   6,906  $   6,599
    Net income                                                774      1,895
    Repatriation of Canada Life seed capital from
     participating policyholder account                         -          5
    Dividends to shareholders
      Perpetual preferred shareholders                        (35)       (28)
      Common shareholders                                    (581)      (523)
                                                        ---------------------
    Balance, end of period                              $   7,064  $   7,948
                                                        ---------------------
                                                        ---------------------

    Accumulated other comprehensive loss,
     net of income taxes (note 14)
    Balance, beginning of year                          $    (787) $  (1,533)
    Other comprehensive income (loss)                        (124)       166
                                                        ---------------------
    Balance, end of period                              $    (911) $  (1,367)
                                                        ---------------------
                                                        ---------------------

    Contributed surplus
    Balance, beginning of year                          $      44  $      34
    Stock option expense
      Current period expense (note 11)                          5          6
                                                        ---------------------
    Balance, end of period                              $      49  $      40
                                                        ---------------------
                                                        ---------------------



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

                                  For the three months   For the six months
                                      ended June 30,        ended June 30,
                                  -------------------------------------------
                                     2009       2008       2009       2008
                                  -------------------------------------------


    Net income                    $     431  $   1,227  $     774  $   1,895

    Other comprehensive income
     (loss), net of income taxes
      Unrealized foreign exchange
       gains (losses) on
       translation of foreign
       operations                      (312)       (94)      (130)       362
      Unrealized gains (losses)
       on available for
       sale assets                       71       (108)       (29)      (157)
      Realized (gains) losses on
       available for sale assets        (17)       (18)       (29)       (28)
      Unrealized gains (losses)
       on cash flow hedges              111         36         58        (10)
      Realized (gains) losses
       on cash flow hedges              (22)         -        (10)         -
      Non-controlling interests          12          7         16         (1)
                                  -------------------------------------------
                                       (157)      (177)      (124)       166
                                  -------------------------------------------
    Comprehensive income          $     274  $   1,050  $     650  $   2,061
                                  -------------------------------------------
                                  -------------------------------------------


    Income tax (expense) benefit included in other comprehensive income

                                  For the three months   For the six months
                                      ended June 30,        ended June 30,
                                  -------------------------------------------
                                     2009       2008       2009       2008
                                  -------------------------------------------

      Unrealized foreign exchange
       gains (losses) on
       translation of foreign
       operations                 $      (1) $       -  $      (1) $       -
      Unrealized gains (losses)
       on available for
       sale assets                      (33)        34         (6)        56
      Realized (gains) losses on
       available for sale assets          3          6          6          9
      Unrealized gains (losses)
       on cash flow hedges              (60)       (19)       (31)         6
      Realized (gains) losses
       on cash flow hedges               12          -          5          -
      Non-controlling interests           -         (2)         -          -
                                  -------------------------------------------
                                  $     (79) $      19  $     (27) $      71
                                  -------------------------------------------
                                  -------------------------------------------


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

                                  For the three months   For the six months
                                      ended June 30,        ended June 30,
                                  -------------------------------------------
                                     2009       2008       2009       2008
                                  -------------------------------------------

    Operations
      Net income                  $     431  $   1,227  $     774  $   1,895
      Adjustments:
        Change in policy
         liabilities                  2,817     (1,212)     1,228     (1,450)
        Change in funds held
         by ceding insurers              66        519        210        501
        Change in funds held under
         reinsurance contracts           (3)        (5)       (11)        (6)
        Change in current
         income taxes payable          (100)       460       (207)       289
        Future income tax expense       101        (38)        97        (61)
        Gain on disposal of
         business, after
         tax (note 2)                     -       (649)         -       (649)
        Changes in fair value of
         financial instruments       (2,241)     1,592       (273)     2,543
        Other                            (4)      (970)         4     (1,355)
                                  -------------------------------------------
      Cash flows from operations      1,067        924      1,822      1,707

    Financing Activities
      Issue of common shares              4          4          5          9
      Partial repayment of five
       year term facility
       in subsidiary                      -       (198)         -       (198)
      Issue of subordinated
       debentures in subsidiary           -        500          -        500
      Repayments on credit facility       -     (1,651)         -     (1,886)
      Increase in (repayment of)
       line of credit in subsidiary      82        (10)       182         70
      Increase in (repayment of)
       debentures and other
       debt instruments                 (30)         5        (32)         3
      Dividends paid                   (308)      (276)      (616)      (551)
                                  -------------------------------------------
                                       (252)    (1,626)      (461)    (2,053)

    Investment Activities
      Bond sales and maturities       5,440      4,164     10,437      8,808
      Mortgage loan repayments          374        541        793        917
      Stock sales                       655        609      1,277        998
      Real estate sales                   1         98          8        198
      Change in loans to
       policyholders                     (9)      (137)       (55)      (174)
      Change in repurchase
       agreements                      (257)       (94)       (73)       275
      Disposal of business (note 2)       -      1,344          -      1,344
      Investment in bonds            (5,501)    (3,628)   (11,080)    (8,970)
      Investment in mortgage loans     (491)    (1,125)      (681)    (1,837)
      Investment in stocks             (643)      (915)    (1,436)    (1,363)
      Investment in real estate         (20)      (300)       (85)      (400)
                                  -------------------------------------------
                                       (451)       557       (895)      (204)

    Effect of changes in exchange
     rates on cash and
     cash equivalents                    14        (27)        41        141

    Increase (decrease) in cash
     and cash equivalents               378       (172)       507       (409)

    Cash and cash equivalents
     from continuing operations,
     beginning of period              2,979      3,439      2,850      3,676
                                  -------------------------------------------

    Cash and cash equivalents
     from continuing operations,
     end of period                $   3,357  $   3,267  $   3,357  $   3,267
                                  -------------------------------------------
                                  -------------------------------------------


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

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

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

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

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

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

        (a) Changes in Accounting Policy

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

        (b) Comparative Figures

            Certain of the 2008 amounts presented for comparative purposes
            have been reclassified to conform to the presentation adopted in
            the current year as a result of the reclassifications in note
            1(a) and certain other reclassifications. On the Consolidated
            Balance Sheets these reclassifications resulted in a decrease to
            other assets of $305, an increase to intangible assets of $129
            and a decrease to policyholder liabilities of $176 at June 30,
            2008 and a decrease to other assets of $151 at December 31, 2008
            with a corresponding increase to intangible assets. On the
            Summaries of Consolidated Operations these reclassifications
            resulted in a decrease to operating expenses of $23 with a
            corresponding increase to the amortization of finite life
            intangible assets and an increase in total paid or credited to
            policyholders of $18 with a corresponding decrease in income tax
            expense for the six months ended June 30, 2008.

    2.  Acquisitions and Disposals

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


                                                        For the     For the
                                                     three months  six months
                                                         ended       ended
                                                        June 30,    June 30,
                                                     ------------------------
                                                           2008       2008
                                                     ------------------------
        Income
          Premium income                                $     (40) $     184
          Net investment income                                 -         11
          Fee and other income                                  -        164
                                                     ------------------------
                                                              (40)       359
                                                     ------------------------
          Gain on sale                                      1,025      1,025
                                                     ------------------------
                                                              985      1,384
                                                     ------------------------
        Benefits and expenses
          Paid or credited to policyholders and
           beneficiaries including policyholder
           dividends and experience refunds                   (40)       151
          Other                                                 -        145
                                                     ------------------------
        Net income from discontinued operations
         before income taxes                                1,025      1,088
        Income taxes                                          376        396
                                                     ------------------------
        Net income from discontinued operations         $     649  $     692
                                                     ------------------------
                                                     ------------------------

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

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

    3.  Restructuring Costs

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

                                                            Changes
                                                                 in
                       Expected  Amounts  Amounts  Amounts  foreign  Balance
                          total utilized utilized utilized exchange  June 30,
                          costs   - 2007   - 2008   - 2009    rates     2009
                       ------------------------------------------------------

        Compensation
         costs           $  133   $  (27)  $  (76)  $  (15)  $    3   $   18
        Exiting and
         consolidating
         operations          22       (6)      (5)       -        -       11
        Eliminating
         duplicate
         systems             29       (1)       -        -        3       31
                       ------------------------------------------------------
                         $  184   $  (34)  $  (81)  $  (15)  $    6   $   60
                       ------------------------------------------------------
                       ------------------------------------------------------

        Accrued on
         acquisition     $  154   $  (34)  $  (81)  $  (15)  $    3   $   27
        Expense as
         incurred            30        -        -        -        3       33
                       ------------------------------------------------------
                         $  184   $  (34)  $  (81)  $  (15)  $    6   $   60
                       ------------------------------------------------------
                       ------------------------------------------------------

    4.  Portfolio Investments

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

                                June 30, 2009
                     -----------------------------------
                        Carrying Value & Market Value
                     -----------------------------------
                                 Held for trading(1)
                      Available ------------------------
                       for sale  Designated  Classified
                     -----------------------------------
        Bonds
        - government   $   3,375  $  14,693  $   1,305
        - corporate        1,858     35,674        956
                     -----------------------------------
                           5,233     50,367      2,261
                     -----------------------------------

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

        Stocks             1,391      4,373          -

        Real estate            -          -          -
                     -----------------------------------
                       $   6,624  $  54,740  $   2,261
                     -----------------------------------
                     -----------------------------------


                                              June 30, 2009
                    ---------------------------------------------------------
                                     Amortized Cost                     Total
                    ---------------------------------------------------------
                        Carrying      Market    Carrying      Market
                           Value       Value  Value Non-  Value Non-
                       Loans and   Loans and   financial   financial Carrying
                     receivables receivables instruments instruments    value
                    ---------------------------------------------------------
        Bonds
        - government   $   1,668  $   1,813  $       -  $       -  $  21,041
        - corporate        7,847      7,724          -          -     46,335
                    ---------------------------------------------------------
                           9,515      9,537          -          -     67,376
                    ---------------------------------------------------------

        Mortgage loans
        - residential      6,659      6,744          -          -      6,659
        - non-
           residential    10,690     10,351          -          -     10,690
                    ---------------------------------------------------------
                          17,349     17,095          -          -     17,349
                    ---------------------------------------------------------

        Stocks                 -          -        329        378      6,093

        Real estate            -          -      3,378      3,044      3,378
                    ---------------------------------------------------------
                       $  26,864  $  26,632  $   3,707  $   3,422  $  94,196
                    ---------------------------------------------------------
                    ---------------------------------------------------------



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

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

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

        Stocks             1,411      3,653          -

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


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

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

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

        Stocks                 -          -        330        326      5,394

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


                                June 30, 2008
                     -----------------------------------
                        Carrying Value & Market Value
                     -----------------------------------
                                 Held for trading(1)
                      Available ------------------------
                       for sale  Designated  Classified
                     -----------------------------------
        Bonds
        - government   $   1,722  $  15,128  $     376
        - corporate        2,391     35,143      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   $   1,640  $   1,688  $       -  $       -  $  18,866
        - corporate        7,053      7,036          -          -     45,745
                    ---------------------------------------------------------
                           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
                    ---------------------------------------------------------
                    ---------------------------------------------------------

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

           (b) Included in portfolio investments are the following:

               (i) Impaired investments

                                                      June 30, 2009
                                             --------------------------------
                                               Gross                Carrying
                                               amount   Impairment   amount
                                             --------------------------------
                   Impaired amounts by type
                     Held for trading(1)     $     164  $    (142) $      22
                     Available for sale             16        (16)         -
                     Loans and receivables         158        (85)        73
                                             --------------------------------
                   Total                     $     338  $    (243) $      95
                                             --------------------------------
                                             --------------------------------


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


                                                      June 30, 2008
                                             --------------------------------
                                               Gross                Carrying
                                               amount   Impairment   amount
                                             --------------------------------
                   Impaired amounts by type
                     Held for trading(1)     $       1  $       -  $       1
                     Available for sale              -          -          -
                     Loans and receivables          53        (48)         5
                                             --------------------------------
                   Total                     $      54  $     (48) $       6
                                             --------------------------------
                                             --------------------------------

                   (1) Excludes amounts in funds held by ceding insurers of
                       $16 and impairment of ($13) at June 30, 2009 and $15
                       and ($11), respectively at December 31, 2008.

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


                                 For the six months      For the six months
                                ended June 30, 2009     ended June 30, 2008
                              -----------------------------------------------
                                     Mortgage                Mortgage
                               Bonds   loans   Total   Bonds   loans   Total
                              -----------------------------------------------
    Balance, beginning of
     year                     $   31  $   29  $   60  $   34  $   19  $   53
    Net provision (recovery)
     for credit losses -
     in year                      16      14      30       -      (2)     (2)
    Write-offs, net of
     recoveries                   (1)     (2)     (3)     (6)      2      (4)
    Other (including foreign
     exchange rate changes)       (2)      -      (2)      1       -       1
                              -----------------------------------------------
    Balance, end of period    $   44  $   41  $   85  $   29  $   19  $   48
                              -----------------------------------------------
                              -----------------------------------------------

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

    For the three months             Mortgage          Real
     ended June 30, 2009       Bonds   loans  Stocks  estate   Other   Total
    -------------------------------------------------------------------------
    Regular net
     investment income:
      Investment income
       earned                 $1,043  $  228  $   44  $   48  $  254  $1,617
      Net realized gains
       (losses)
       (available for sale)       19       -       1       -       -      20
      Net realized gains
       (losses)
       (other classifications)     4       2       7       -       -      13
      Amortization of net
       realized/unrealized
       gains  (non-financial
       instruments)                -       -       -      (6)      -      (6)
      Net (provision) recovery
       for credit losses
       (loans and receivables)    (4)     (7)      -       -       -     (11)
      Other income and
       expenses                    -       -       -       -     (17)    (17)
                              -----------------------------------------------
                               1,062     223      52      42     237   1,616

    Changes in fair value
     on held for trading
     assets:
      Net realized/unrealized
       gains (losses)
       (classified held for
       trading)                   (9)      -       -       -       -      (9)
      Net realized/unrealized
       gains  (losses)
       (designated held for
       trading)                1,749       -     627       -     (95)  2,281
                              -----------------------------------------------
                               1,740       -     627       -     (95)  2,272
                              -----------------------------------------------
    Net investment income     $2,802  $  223  $  679  $   42  $  142  $3,888
                              -----------------------------------------------
                              -----------------------------------------------



    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 (provision) recovery
       for credit losses
       (loans and receivables)     -       2       -       -       -       2
      Other income and
       expenses                    -       -       -       -     (16)    (16)
                              -----------------------------------------------
                               1,138     243      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     $ (764) $  243  $  242  $   51  $  281  $   53
                              -----------------------------------------------
                              -----------------------------------------------



    For the six months               Mortgage          Real
     ended June 30, 2009       Bonds   loans  Stocks  estate   Other   Total
    -------------------------------------------------------------------------
    Regular net
     investment income:
      Investment income
       earned                 $2,107  $  463  $   88  $   93  $  324  $3,075
      Net realized gains
       (losses)
       (available for sale)       35       -       -       -       -      35
      Net realized gains
       (losses)
       (other classifications)     1       6      83       -       -      90
      Amortization of net
       realized/unrealized
       gains  (non-financial
       instruments)                -       -       -     (10)      -     (10)
      Net (provision) recovery
       for credit losses
       (loans and receivables)   (16)    (14)      -       -       -     (30)
      Other income and
       expenses                    -       -       -       -     (33)    (33)
                              -----------------------------------------------
                               2,127     455     171      83     291   3,127

    Changes in fair value
     on held for trading
     assets:
      Net realized/unrealized
       gains (losses)
       (classified held for
       trading)                    -       -       -       -       -       -
      Net realized/unrealized
       gains  (losses)
       (designated held for
       trading)                  (45)      -     452       -    (102)    305
                              -----------------------------------------------
                                 (45)      -     452       -    (102)    305
                              -----------------------------------------------
    Net investment income     $2,082  $  455  $  623  $   83  $  189  $3,432
                              -----------------------------------------------
                              -----------------------------------------------


    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 (provision) recovery
       for credit losses
       (loans and receivables)     -       2       -       -       -       2
      Other income and
       expenses                    -       -       -       -     (31)    (31)
                              -----------------------------------------------
                               2,047     477     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     $ (517) $  477  $   50  $   97  $  358  $  465
                              -----------------------------------------------
                              -----------------------------------------------

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

    5.  Financial Instrument Risk Management

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

        (a) Credit Risk

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

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

          (i) Maximum Exposure to Credit Risk

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


                                           June 30, December 31,     June 30,
                                              2009         2008         2008
                                         ------------------------------------
              Cash and cash equivalents  $   3,357  $     2,850  $     3,267
              Bonds
                Held for trading            52,628       51,201       51,805
                Available for sale           5,233        5,645        4,113
                Amortized cost               9,515        9,708        8,693
              Mortgage loans                17,349       17,444       16,903
              Loans to policyholders         7,416        7,622        6,618
              Other financial assets        15,139       15,004       16,941
              Derivative assets                450          677          871
                                         -----------------------------------
              Total balance sheet maximum
               credit exposure           $ 111,087    $ 110,151    $ 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, December 31,     June 30,
                                              2009         2008         2008
                                         ------------------------------------

    Bonds issued or guaranteed by:
      Canadian federal government        $   1,941    $   1,867    $   1,503
      Canadian provincial and
       municipal governments                 6,097        6,029        5,755
      U.S. Treasury and other
       U.S. agencies                         4,248        4,968        4,252
      Other foreign governments              6,647        6,854        6,840
      Government related                     2,173        1,563        2,155
      Sovereign                              1,645        1,739        1,991
      Asset-backed securities                7,055        7,243        7,430
      Residential mortgage
       backed securities                     1,118        1,156        1,005
      Banks                                  5,014        5,070        6,249
      Other financial institutions           3,770        3,602        4,246
      Basic materials                          966          870          713
      Communications                         1,377        1,220        1,266
      Consumer products                      4,533        4,104        4,013
      Industrial products/services           1,513        1,985        1,534
      Natural resources                      2,227        1,813        1,827
      Real estate                            1,832        1,645        1,684
      Transportations                        2,675        2,497        2,489
      Utilities                              7,927        7,068        6,472
      Miscellaneous                          2,125        1,866        1,410
                                         ------------------------------------
    Total long term bonds                   64,883       63,159       62,834
    Short term bonds                         2,493        3,395        1,777
                                         ------------------------------------
                                         $  67,376    $  66,554    $  64,611
                                         ------------------------------------
                                         ------------------------------------
    Canada                               $  26,438    $  26,231    $  24,410
    United States                           17,827       17,703       15,927
    Europe/Reinsurance                      23,111       22,620       24,274
                                         ------------------------------------
                                         $  67,376    $  66,554    $  64,611
                                         ------------------------------------
                                         ------------------------------------


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

                                             June 30, 2009
                          ---------------------------------------------------
                               Single       Multi-
                               family       family
                          residential  residential   Commercial        Total
                          ---------------------------------------------------

    Canada                $     1,784  $     4,301  $     6,189   $   12,274
    United States                   -          542        1,594        2,136
    Europe/Reinsurance              -           32        2,907        2,939
                          ---------------------------------------------------
    Total mortgage loans  $     1,784  $     4,875  $    10,690   $   17,349
                          ---------------------------------------------------
                          ---------------------------------------------------


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

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


                                              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 mortgage loans  $     1,823  $     5,166  $     9,914  $    16,903
                          ---------------------------------------------------
                          ---------------------------------------------------

    (iii) Asset Quality

    Bond Portfolio Quality

                                           June 30, December 31,     June 30,
                                              2009         2008         2008
                                         ------------------------------------

    AAA                                  $  23,255  $    25,138  $    24,888
    AA                                      10,960       10,765       12,024
    A                                       19,319       18,030       17,676
    BBB                                     10,517        8,809        7,749
    BB and lower                               832          417          497
                                         ------------------------------------
                                            64,883       63,159       62,834
    Short term bonds                         2,493        3,395        1,777
                                         ------------------------------------
    Total bonds                          $  67,376  $    66,554  $    64,611
                                         ------------------------------------
                                         ------------------------------------


    Derivative Portfolio Quality
                                           June 30, December 31,     June 30,
                                              2009         2008         2008
                                         ------------------------------------
    Over-the-counter contracts
     (counterparty ratings):
    AAA                                  $       3  $        19  $         -
    AA                                         219          165          564
    A                                          274          468          307
                                         ------------------------------------
    Total                                $     496  $       652  $       871
                                         ------------------------------------
                                         ------------------------------------


    (iv)Loans Past Due, But Not Impaired

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

                                           June 30, December 31,     June 30,
                                              2009         2008         2008
                                         ------------------------------------

    Less than 30 days                    $       9  $        50  $       108
    30 - 90 days                                11            4            1
    90 days and greater                          3            1            1
                                         ------------------------------------
    Total                                $      23  $        55  $       110
                                         ------------------------------------
                                         ------------------------------------

        (b) Liquidity Risk

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

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

        (c) Market Risk

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

        (i) Currency Risk

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

           -  The Company uses financial measures such as constant currency
              calculations to monitor the effect of currency translation
              fluctuations.

           -  Investments are normally made in the same currency as the
              liabilities supported by those investments.

           -  Foreign currency assets acquired to back liabilities are
              normally converted back to the currency of the liability using
              foreign exchange contracts.

           -  A 10% weakening of the Canadian dollar against foreign
              currencies would be expected to increase non-participating
              actuarial liabilities, which would be offset by a similar
              amount in the supporting assets. A 10% strengthening of the
              Canadian dollar against foreign currencies would be expected to
              decrease non-participating actuarial liabilities, which would
              be offset by a similar amount in the supporting assets.

        (ii) Interest Rate Risk

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

           -  The Company utilizes a formal process for managing the matching
              of assets and liabilities. This involves grouping general fund
              assets and liabilities into segments. Assets in each segment
              are managed in relation to the liabilities in the segment.

           -  Interest rate risk is managed by investing in assets that are
              suitable for the products sold.

           -  For products with fixed and highly predictable benefit
              payments, investments are made in fixed income assets that
              closely match the liability product cash flows. Protection
              against interest rate change is achieved as any change in the
              fair market value of the assets will be offset by a similar
              change in the fair market value of the liabilitie

           -  For products with less predictable timing of benefit payments,
              investments are made in fixed income assets with cash flows of
              a shorter duration than the anticipated timing of benefit
              payments, or equities as described below.

           -  The risk associated with the mismatch in portfolio duration and
              cash flow, asset prepayment exposure and the pace of asset
              acquisition are quantified and reviewed regularly.

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

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

           -  The effect of an immediate and permanent 1% increase in
              interest rates at each future duration would be to decrease the
              present value of these net projected cash flows by
              approximately $93.

           -  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 $52.


    (iii) Equity Risk

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

           Some policy liabilities are supported by equities (including real
           estate), for example segregated fund products and products with
           long-tail liabilities. Generally these liabilities will fluctuate
           in line with equity market values. There will be additional
           impacts on these liabilities as equity market values fluctuate. A
           10% increase in equity markets would be expected to additionally
           decrease non-participating actuarial liabilities by approximately
           $21. A 10% decrease in equity markets would be expected to
           additionally increase non-participating actuarial liabilities by
           approximately $193.

    6.  Financing Charges

    Financing charges consist of the following:

                                    For the three months  For the six months
                                        ended June 30,        ended June 30,
                                  -------------------------------------------
                                     2009       2008       2009       2008
                                  -------------------------------------------

        Operating charges:
          Interest on long-term
           debentures and other
           debt instruments        $      1   $      1   $      2   $      3

        Financial charges:
          Interest on long-term
           debentures and other
           debt instruments              52         53        104        126
        Dividends on preferred
         shares classified as
         liabilities                      9          9         18         18
        Unrealized losses (gains)
         on preferred shares
         classified as held for
         trading                         31         (3)        32          8
        Subordinated debenture
         issue costs                      -          5          -          5
        Other                             2          2          4          4
        Interest on capital
         trust debentures                12         12         24         24
        Distributions on capital
         trust securities held
         by consolidated group as
         temporary investments           (1)        (2)        (3)        (5)
                                  -------------------------------------------
                                        105         76        179        180
                                  -------------------------------------------
        Total                      $    106   $     77   $    181   $    183
                                  -------------------------------------------
                                  -------------------------------------------

    7.  Debentures and Other Debt Instruments

        On June 22, 2009, Putnam LLC executed a new revolving credit facility
        agreement with a Canadian chartered bank for $500, an increase of
        $300 from the previous agreement. At June 30, 2009, a subsidiary of
        Putnam LLC had drawn US $270 (US $120 at December 31, 2008) on this
        credit facility.

    8.  Capital Trust Securities and Debentures

        During the six months ended June 30, 2009, the Company disposed of
        $138 principal amount of capital trust securities held by the
        consolidated group as temporary investments.

    9.  Share Capital

        (a)   Preferred Shares

              The Company recognized the surrender of Series E First
              Preferred shares with a carrying value of $5 and Series F First
              Preferred shares with a carrying value of $2

              The Company has designated outstanding Preferred Shares Series
              D and Series E as held for trading on the Consolidated Balance
              Sheets with changes in fair value reported in the Summaries of
              Consolidated Operations. During the six months ended June 30,
              2009 the Company recognized unrealized gains (losses) of $(6)
              for Series D and $(26) for Series E (for the six months ended
              June 30, 2008, $1 for Series D and $(9) for Series E). The
              redemption price at maturity is $25 per share plus accrued
              dividends.

        (b)   Common Shares

        Issued and outstanding

                   June 30, 2009      December 31, 2008      June 30, 2008
               --------------------------------------------------------------
                           Carrying             Carrying             Carrying
                   Number    value      Number    value      Number    value
               --------------------------------------------------------------
    Common
     shares:
    Balance,
     beginning
     of year    943,882,505 $5,736   893,761,639 $4,709   893,761,639 $4,709
    Issued from
     treasury             -      -    48,200,000  1,000             -      -
    Issued under
     stock
     option plan    410,951      5     1,920,866     27       659,660      9
               --------------------------------------------------------------
    Balance,
     end of
     period     944,293,456 $5,741   943,882,505 $5,736   894,421,299 $4,718
               --------------------------------------------------------------
               --------------------------------------------------------------

    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.

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

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

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


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

                                           June 30, December 31,     June 30,
                                              2009         2008         2008
                                         ------------------------------------

    Capital Available:
    Tier 1 Capital
      Common shares(1)                   $   6,116    $   6,116    $   6,116
      Shareholder surplus                    5,740        5,604        5,211
      Qualifying non-controlling
       interests                               148          150          151
      Innovative instruments                   779          648          636
      Other Tier 1 Capital Elements          1,519        1,513        1,597
                                         ------------------------------------
      Gross Tier 1 Capital                  14,302       14,031       13,711

    Deductions from Tier 1:
      Goodwill & intangible assets in
       excess of limit                       5,666        5,673        5,702
      Other deductions                       1,528        1,697        1,321
                                         ------------------------------------
    Net Tier 1 Capital                       7,108        6,661        6,688
    Adjustment to Net Tier 1 Capital           (44)           -            -
                                         ------------------------------------
    Net Tier 1 Capital                       7,064        6,661        6,688
                                         ------------------------------------

    Tier 2 Capital
      Tier 2A                                  356          345          310
      Tier 2B allowed                          300          300          501
      Tier 2C                                1,476        1,550        1,285
      Tier 2 Deductions                        (44)           -            -
                                         ------------------------------------
    Tier 2 Capital Allowed                   2,088        2,195        2,096
                                         ------------------------------------

    Total Tier 1 and Tier 2 Capital          9,152        8,856        8,784
    Less: Deductions/Adjustments                 -          124          120
                                         ------------------------------------
    Total Available Capital              $   9,152    $   8,732    $   8,664
                                         ------------------------------------
                                         ------------------------------------

    Capital Required:
      Assets Default & market risk       $   1,757    $   1,510    $   1,549
      Insurance Risks                        1,861        1,800        1,707
      Interest Rate Risks                      832          803        1,008
      Other                                     14           50          (38)
                                         ------------------------------------
    Total Capital Required               $   4,464    $   4,163    $   4,226
                                         ------------------------------------
                                         ------------------------------------
    MCCSR ratios:
    Tier 1                                    158%         160%         158%
                                         ------------------------------------
                                         ------------------------------------
    Total                                     205%         210%         205%
                                         ------------------------------------
                                         ------------------------------------

        (1) The $1,230 of common and preferred share capital that was raised
            by the Company in the fourth quarter of 2008 remained at the
            holding company as at June 30, 2009.

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

        As at June 30, 2009 and 2008 the Company maintained capital levels
        above the minimum local requirements in its other foreign operations.

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

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

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

    11. Stock Based Compensation

        No options were granted under the Company's stock option plan during
        the first and second quarter of 2009 (110,000 options were granted
        during the first quarter of 2008, and 3,115,000 options were granted
        during the second quarter of 2008). The weighted average fair value
        of options granted was $3.27 per option during the six months ended
        June 30, 2008. Compensation expense of $5 after-tax has been
        recognized in the Summaries of Consolidated Operations for the six
        months ended June 30, 2009 ($6 after-tax for the six months ended
        June 30, 2008).

    12. Pension Plans and Other Post-Retirement Benefits

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

                                    For the three months  For the six months
                                        ended June 30,        ended June 30,
                                  -------------------------------------------
                                     2009       2008       2009       2008
                                  -------------------------------------------

        Pension benefits               $ 20       $ 22       $ 36       $ 34
        Other benefits                    3          4          6          7
                                  -------------------------------------------
        Total                          $ 23       $ 26       $ 42       $ 41
                                  -------------------------------------------
                                  -------------------------------------------

    13. Earnings per Common Share

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

                            For the three months       For the six months
                               ended June 30,            ended June 30,
                          ---------------------------------------------------
                                 2009         2008         2009         2008
                          ---------------------------------------------------
    Earnings
    Net income from
     continuing
     operations           $       431  $       578  $       774  $     1,203
    Net income from
     discontinued
     operations                     -          649            -          692
                          ---------------------------------------------------
    Net income            $       431  $     1,227  $       774  $     1,895
    Perpetual preferred
     share dividends               18           14           35           28
                          ---------------------------------------------------
    Net income - common
     shareholders         $       413  $     1,213  $       739  $     1,867
                          ---------------------------------------------------
                          ---------------------------------------------------

    Number of common shares
    Average number of
     common shares
     outstanding          944,194,975  894,282,925  944,056,508  894,072,570
    Add:
      - Potential
        exercise of
        outstanding
        stock options       1,332,473    4,279,498      812,929    4,458,404
                          ---------------------------------------------------
    Average number of
     common shares
     outstanding -
     diluted basis        945,527,448  898,562,423  944,869,437  898,530,974
                          ---------------------------------------------------
                          ---------------------------------------------------

    Basic earnings per
     common share
      From continuing
       operations         $     0.437  $     0.630  $     0.783  $     1.314
      From discontinued
       operations                   -        0.726            -        0.774
                          ---------------------------------------------------
                          $     0.437  $     1.356  $     0.783  $     2.088
                          ---------------------------------------------------
                          ---------------------------------------------------

    Diluted earnings
     per common share
      From continuing
       operations         $     0.437  $     0.627  $     0.782  $     1.308
      From discontinuing
       operations                   -        0.723            -        0.770
                          ---------------------------------------------------
                          $     0.437  $     1.350  $     0.782  $     2.078
                          ---------------------------------------------------
                          ---------------------------------------------------

    14. Accumulated Other Comprehensive Loss


                            For the six months ended June 30, 2009
                -------------------------------------------------------------
                Unrealized
                   foreign   Unreal-
                  exchange      ized   Unreal-
                     gains     gains      ized
                   (losses)  (losses)    gains
                 on trans-        on   (losses)               Non-
                 lation of available   on cash              contr-
                   foreign  for sale      flow              olling    Share-
                operations    assets    hedges     Total  interest    holder
                -------------------------------------------------------------
    Balance,
     beginning of
     year           $ (605)    $ (36)   $ (197)   $ (838)     $ 51   $  (787)

    Other
     comprehensive
     loss             (129)      (58)       74      (113)       16      (97)
    Income tax          (1)        -       (26)      (27)        -      (27)
                -------------------------------------------------------------
                      (130)      (58)       48      (140)       16     (124)
                -------------------------------------------------------------

    Balance, end
     of period      $ (735)    $ (94)   $ (149)   $ (978)     $ 67   $ (911)
                -------------------------------------------------------------
                -------------------------------------------------------------



                            For the six months ended June 30, 2008
                -------------------------------------------------------------
                Unrealized
                   foreign   Unreal-
                  exchange      ized   Unreal-
                     gains     gains      ized
                   (losses)  (losses)    gains
                 on trans-        on   (losses)               Non-
                 lation of available   on cash              contr-
                   foreign  for sale      flow              olling    Share-
                operations    assets    hedges     Total  interest    holder
                -------------------------------------------------------------
    Balance,
     beginning
     of year      $ (1,801)    $ 174      $ 13  $ (1,614)     $ 81  $ (1,533)

    Other
     comprehensive
     loss              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)
                -------------------------------------------------------------
                -------------------------------------------------------------

    15. Contingent Liabilities (changes since December 31, 2008 annual
        report)

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

        The trial of the class proceedings in Ontario regarding the
        participation of the London Life Insurance Company and The Great-West
        Life Assurance Company (Great-West Life) participating accounts in
        the financing of the acquisition of London Insurance Group Inc. in
        1997 by Great-West Life is currently set to commence in September
        2009.

    16. Segmented Information

    Consolidated Operations
    For the three months ended June 30, 2009

                                     United                Lifeco
                          Canada     States     Europe  Corporate      Total
                       ------------------------------------------------------
    Income:
    Premium income     $   2,243  $     609  $   1,812  $       -  $   4,664
    Net investment
     income
      Regular net
       investment
       income                741        357        512           6     1,616
      Changes in fair
       value on held
       for trading
       assets                805        546        921           -     2,272
                       ------------------------------------------------------
    Total net
     investment
     income                1,546        903      1,433           6     3,888
    Fee and other
     income                  229        291        146           -       666
                       ------------------------------------------------------
    Total income           4,018      1,803      3,391           6     9,218
                       ------------------------------------------------------

    Benefits and
     expenses:
    Paid or credited
     to policyholders      3,085      1,363      3,025           -     7,473
    Other                    585        367        199           4     1,155
    Amortization of
     finite life
     intangible assets         8         15          2           -        25
                       ------------------------------------------------------

    Net income from
     continuing operations
     before income taxes     340         58        165           2       565

    Income taxes             101          8         13           -       122
                       ------------------------------------------------------

    Net income before
     non-controlling
     interests               239         50        152           2       443

    Non-controlling
     interests                12          1         (1)          -        12
                       ------------------------------------------------------

    Net Income               227         49        153           2       431

    Perpetual
     preferred share
     dividends                10          -          4           4        18
                       ------------------------------------------------------

    Net income -
     common
     shareholders      $    217  $       49  $     149  $       (2) $    413
                       ------------------------------------------------------
                       ------------------------------------------------------


    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      1,922        276      1,292          -      3,490
    Other                    575        358        143          7      1,083
    Amortization of
     finite life
     intangible assets         7         14          1          -         22
                       ------------------------------------------------------
    Net income from
     continuing operations
     before income taxes     405        144        243         (5)       787

    Income taxes              95         36         50          1        182
                       ------------------------------------------------------

    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 six months ended June 30, 2009

                                     United                Lifeco
                          Canada     States     Europe  Corporate      Total
                       ------------------------------------------------------
    Income:
    Premium income     $   4,317  $   1,564  $   3,492  $       -  $   9,373
    Net investment
     income
      Regular net
       investment
       income              1,288        799      1,033          7      3,127
      Changes in fair
       value on held for
       trading assets        483        325       (503)         -        305
                       ------------------------------------------------------
    Total net
     investment
     income                1,771      1,124        530          7      3,432
    Fee and other income     451        574        321          -      1,346
                       ------------------------------------------------------
    Total income           6,539      3,262      4,343          7     14,151
                       ------------------------------------------------------

    Benefits and
     expenses:
    Paid or credited
     to policyholders      4,768      2,307      3,764          -     10,839
    Other                  1,116        756        376          7      2,255
    Amortization of
     finite life
     intangible assets        15         29          3          -         47
                       ------------------------------------------------------
    Net income from
     continuing operations
    before income taxes      640        170        200          -      1,010

    Income taxes             163         40         (3)         -        200
                       ------------------------------------------------------

    Net income before
     non-controlling
     interests               477        130        203          -        810

    Non-controlling
     interests                31          6         (1)         -         36
                       ------------------------------------------------------

    Net income from
     continuing operations   446        124        204          -        774
    Net income from
     discontinued
     operations                -          -          -          -          -
                       ------------------------------------------------------

    Net Income               446        124        204          -        774

    Perpetual preferred
     share dividends          21          -          7          7         35
                       ------------------------------------------------------

    Net income -
     common
     shareholders          $ 425      $ 124      $ 197       $ (7)     $ 739
                       ------------------------------------------------------
                       ------------------------------------------------------


      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      3,802      1,190     14,794          -     19,786
    Other                  1,118        746        328          8      2,200
    Amortization of
     finite life
     intangible assets        14         27          2          -         43
                       ------------------------------------------------------
    Net income from
     continuing
     operations
     before income
     taxes                   753        156        456        (13)     1,352

    Income taxes             164         29         86          -        279
                       ------------------------------------------------------

    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
                       ------------------------------------------------------
                       ------------------------------------------------------
    





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Communication Services, (204) 946-7705


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