Great-West Lifeco reports third quarter 2007 results



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

    TSX:GWO

    WINNIPEG, Nov. 1, 2007 /CNW/ - Great-West Lifeco Inc. (Lifeco) has
reported adjusted net income attributable to common shareholders of $558
million for the three months ended September 30, 2007, up 17% compared to net
income of $477 million reported a year ago. On a per share basis, this
represents $0.625 per common share for the three months ended September 30,
2007 compared to $0.537 per common share for 2006. Adjusted net income
excludes a provision for certain Canadian retirement plans of $97 million
after tax. Net income attributable to common shareholders for the quarter
after this provision was $461 million or $0.516 per common share.
    For the nine months ended September 30, 2007 adjusted net income
attributable to common shareholders was $1,616 million compared to
$1,384 million reported a year ago. On a per share basis, this represents
$1.812 per common share for the nine months ended September 30, 2007, an
increase of 17% compared to $1.554 per common share for 2006. Net income
attributable to common shareholders after the provision for certain Canadian
retirement plans was $1,519 million or $1.703 per common share for the nine
months ended September 30, 2007.
    Lifeco reported earnings growth in all reporting segments, with
significant growth in the Company's European and United States segments.

    
    Highlights

    -   Quarterly dividends declared were $0.2750 per common share payable
        December 31, 2007. Dividends paid on common shares for the nine
        months ended September 30, 2007 were 14% higher than a year ago.
    -   The acquisition of Putnam Investments, LLC closed on August 3, 2007.
        Lifeco third quarter results include the results of Putnam from that
        date. Putnam contributed approximately $0.017 per common share to
        adjusted net income for the quarter.
    -   Fully diluted adjusted earnings per common share for the third
        quarter of 2007 increased 17% compared to a year ago. Fully diluted
        adjusted earnings per common share excludes a provision for certain
        Canadian retirement plans of $0.108 per common share.
    -   Adjusted return on common shareholders' equity was 22.1% for the
        twelve months ended September 30, 2007.
    

    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,
together with Lifeco's corporate results.

    CANADA

    Net income attributable to common shareholders for the third quarter of
2007 was $245 million compared to $221 million in 2006, an increase of 11%.
    For the nine months ended September 30, 2007, net income attributable to
common shareholders was up 9% to $727 million from $670 million for the nine
months ended September 30, 2006. Individual Insurance & Investment Products
earnings at $468 million were up 8% while Group Insurance earnings of
$281 million were up 10%.
    Total sales for the nine months ended September 30, 2007 were
$7.1 billion, compared to $6.0 billion in 2006, an increase of 18%.
    Total assets under administration at September 30, 2007 were
$101.5 billion, compared to $96.6 billion at December 31, 2006.

    UNITED STATES

    Net income attributable to common shareholders for the third quarter of
2007 increased 23% to $150 million from $122 million for the third quarter of
2006. For the nine months ended September 30, 2007, net income attributable to
common shareholders was up 12% to $428 million from $383 million for the nine
months ended September 30, 2006.
    Total sales for the nine months ended September 30, 2007 were
$4.7 billion, compared to $3.1 billion in 2006, an increase of 52%.
    Total assets under administration at September 30, 2007 were
$238.9 billion, compared to $48.2 billion at December 31, 2006. Included in
assets under administration were $191 billion of mutual fund and institutional
account assets managed by Putnam.

    EUROPE

    Net income attributable to common shareholders for the third quarter of
2007 increased 25% to $161 million from $129 million for the third quarter of
2006. For the nine months ended September 30, 2007, net income attributable to
common shareholders was up 37% to $461 million from $336 million for the nine
months ended September 30, 2006.
    Total sales for the nine months ended September 30, 2007 were
$5.0 billion, compared to $4.1 billion in 2006, an increase of 23%.
    Total assets under administration at September 30, 2007 were
$62.7 billion, compared to $67.8 billion at December 31, 2006.

    CORPORATE

    Corporate net income for Lifeco attributable to common shareholders was a
charge of $95 million for the third quarter of 2007 and a charge of
$97 million for the nine months ended September 30, 2007 compared to net
income of $5 million for the third quarter and a charge of $5 million for the
nine months of 2006. The 2007 results include a $97 million after tax
provision for certain Canadian retirement plans.

    QUARTERLY DIVIDENDS

    At its meeting today, the Board of Directors approved a quarterly
dividend of $0.2750 per share on the common shares of the Company payable
December 31, 2007 to shareholders of record at the close of business
December 3, 2007.

    
    In addition, the Directors approved quarterly dividends on:

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

    all payable December 31, 2007 to shareholders of record at the close of
business December 3, 2007.
    

    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 over $400 billion in assets under
administration. Great-West Lifeco is a member of the Power Financial
Corporation group of companies.

    Cautionary note regarding Forward-Looking Information

    This release contains some forward-looking statements about the Company,
including its business operations, strategy and expected financial performance
and condition. Forward-looking statements include statements that are
predictive in nature, depend upon or refer to future events or conditions, or
include words such as "expects," "anticipates," "intends," "plans,"
"believes," "estimates" or negative versions thereof and similar expressions.
In addition, any statement that may be made concerning future financial
performance (including revenues, earnings or growth rates), ongoing business
strategies or prospects, and possible future Company action is also a
forward-looking statement. Forward-looking statements are based on current
expectations and projections about future events and are inherently subject
to, among other things, risks, uncertainties and assumptions about the
Company, economic factors and the financial services industry generally,
including the insurance and mutual fund industries. They are not guarantees of
future performance, and actual events and results could differ materially from
those expressed or implied by forward-looking statements made by the Company
due to, but not limited to, important factors such as sales levels, premium
income, fee income, expense levels, mortality experience, morbidity
experience, policy lapse rates and taxes, as well as general economic,
political and market factors in North America and internationally, interest
and foreign exchange rates, global equity and capital markets, business
competition, technological change, changes in government regulations,
unexpected judicial or regulatory proceedings, catastrophic events, and the
Company's ability to complete strategic transactions and integrate
acquisitions. The reader is cautioned that the foregoing list of important
factors is not exhaustive, and there may be other factors listed in other
filings with securities regulators, including factors set out under "Risk
Management and Control Practices" in the Company's 2006 Annual Management's
Discussion and Analysis, which, along with other filings, is available for
review at www.sedar.com. The reader is also cautioned to consider these and
other factors carefully and to not place undue reliance on forward-looking
statements. Other than as specifically required by applicable law, the Company
has no intention to update any forward-looking statements whether as a result
of new information, future events or otherwise.

    Cautionary note regarding Non-GAAP Financial Measures

    This release contains some non-GAAP financial measures. Terms by which
non-GAAP financial measures are identified include but are not limited to
"earnings before restructuring charges", "adjusted net income", "earnings
before adjustments", "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 third quarter analyst teleconference will be held
Friday, November 2 at 8:30 a.m. (Eastern). The call can be accessed through
www.greatwestlifeco.com or by phone at:

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

    A replay of the call will be available from November 2 until November 9,
2007, and can be accessed by calling 1-800-408-3053 or 416-695-5800 in Toronto
(passcode: 3217096 followed by the number sign).
    Additional information relating to Lifeco, including the most recent
interim unaudited financial statements, interim Management's Discussion and
Analysis (MD&A), and CEO/CFO certificates will be filed on SEDAR at
www.sedar.com.


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

                             For the three months       For the nine months
                              ended September 30        ended September 30
                          -------------------------- ------------------------
                                               %                         %
                            2007      2006   Change   2007      2006   Change
    -------------------------------------------------------------------------
      Premiums:
      Life insurance,
       guaranteed
       annuities and
       insured health
       products           $  3,879  $  4,332  -10%  $ 13,758  $ 12,471   10%
      Self-funded premium
       equivalents
       (ASO contracts)       1,732     1,732     -     5,539     5,537     -
      Segregated funds
       deposits:
      Individual products    2,195     1,836   20%     7,248     6,005   21%
      Group products         1,184     1,120    6%     4,328     3,841   13%
      Proprietary mutual
       funds deposits(1)       209       127   65%       632       451   40%
                          -------------------------- ------------------------
      Total premiums and
       deposits              9,199     9,147    1%    31,505    28,305   11%
                          -------------------------- ------------------------

      Fee and other income     921       658   40%     2,434     1,982   23%
      Paid or credited to
       policyholders         4,678     4,871   -4%    13,026    13,831   -6%

      Net income - common
       shareholders before
       adjustments             558       477   17%     1,616     1,384   17%
      Adjustments after
       tax(2)                   97         -     -        97         -     -
      Net income - common
       shareholders            461       477   -3%     1,519     1,384   10%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Per common share
      Basic earnings
       before adjustments $  0.625  $  0.537   16%  $  1.812  $  1.554   17%
      Adjustments after
       tax(2)                0.109         -     -     0.109         -     -
      Basic earnings         0.516     0.537   -4%     1.703     1.554   10%
      Dividends paid         0.275     0.240   15%     0.785    0.6875   14%
      Book value                                       10.78     10.49    3%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Return on common
     shareholders' equity
     (12 months):
      Net income before
       adjustments(2)                                  22.1%     20.7%
      Net income                                       21.2%     20.7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    At September 30
      Total assets                                  $118,772  $116,039    2%
      Segregated funds net assets                     90,838    81,484   11%
      Proprietary mutual funds net assets            193,426     1,687     -
                                                   --------------------------
      Total assets under administration             $403,036  $199,210  102%
                                                   --------------------------
                                                   --------------------------
      Share capital and surplus                     $ 10,715  $ 10,450    3%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Does not include Putnam Investments, LLC mutual funds deposits.

    (2) In the quarter, net income attributable to common shareholders was
        reduced by $97 after-tax as a result of a provision for certain
        Canadian retirement plans. Net income, basic earnings per common
        share and return on common shareholders' equity are presented before
        adjustments, as a non-GAAP financial measure of earnings performance.



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

                                   For the three months  For the nine months
                                    ended September 30    ended September 30
                                  ---------------------  --------------------
                                     2007        2006       2007       2006
                                  ----------  ---------  ---------  ---------
                                  (note 1(a))           (note 1(a))
    Income
      Premium income               $  3,879   $  4,332   $ 13,758   $ 12,471
      Net investment income (note 5)
        Regular net investment
         income                       1,418      1,577      4,323      4,416
        Changes in fair value on
         held for trading assets        426          -     (1,921)         -
                                  ----------  ---------  ---------  ---------
      Total net investment income     1,844      1,577      2,402      4,416
      Fee and other income              921        658      2,434      1,982
                                  ----------  ---------  ---------  ---------
                                      6,644      6,567     18,594     18,869
                                  ----------  ---------  ---------  ---------

    Benefits and expenses
      Policyholder benefits           3,444     3,460      12,632     10,942
      Policyholder dividends and
       experience refunds               322       300         794        865
      Change in actuarial
       liabilities                      912     1,111        (400)     2,024
                                  ----------  ---------  ---------  ---------
      Total paid or credited to
       policyholders                  4,678     4,871      13,026     13,831

      Commissions                       348       325       1,100        999
      Operating expenses                857       532       2,012      1,635
      Premium taxes                      69        67         191        193
      Financing charges (note 6)         81        54         185        152
      Amortization of finite
       life intangible assets            10         5          25         14
                                  ----------  ---------  ---------  ---------
    Net income before income taxes      601       713       2,055      2,045

    Income taxes   - current             67       198         421        425
                   - future              11       (12)        (51)        66
                                  ----------  ---------  ---------  ---------
    Net income before non-
     controlling interests              523       527       1,685      1,554
    Non-controlling interests
     (note 11)                           48        36         124        132
                                  ----------  ---------  ---------  ---------
    Net income                          475       491       1,561      1,422
    Perpetual preferred share
     dividends                           14        14          42         38
                                  ----------  ---------  ---------  ---------
    Net income - common
     shareholders                  $    461   $   477   $   1,519   $  1,384
                                  ----------  ---------  ---------  ---------
                                  ----------  ---------  ---------  ---------
    Earnings per common share
     (note 15)
      Basic                        $  0.516   $ 0.537   $   1.703   $  1.554
                                  ----------  ---------  ---------  ---------
                                  ----------  ---------  ---------  ---------
      Diluted                      $  0.513   $ 0.532   $   1.690   $  1.542
                                  ----------  ---------  ---------  ---------
                                  ----------  ---------  ---------  ---------


                   CONSOLIDATED BALANCE SHEETS (unaudited)
                               (in $ millions)

                                    September 30,  December 31, September 30,
                                        2007          2006          2006
                                    ------------- ------------- -------------
                                     (note 1(a))
    Assets

    Bonds (note 4)                  $     66,284  $     65,246  $     62,558
    Mortgage loans  (note 4)              15,682        15,334        15,113
    Stocks (note 4)                        6,512         4,766         4,271
    Real estate (note 4)                   2,327         2,216         2,050
    Loans to policyholders                 6,259         6,776         6,692
    Cash and cash equivalents              2,977         3,083         3,267
    Funds held by ceding insurers          1,553        12,371        11,596
    Goodwill                               8,517         5,444         5,325
    Intangible assets                      1,712         1,575         1,450
    Other assets (note 7)                  6,949         3,717         3,717
                                    ------------- ------------- -------------
    Total assets                    $    118,772  $    120,528  $    116,039
                                    ------------- ------------- -------------
                                    ------------- ------------- -------------

    Liabilities

    Policy liabilities
      Actuarial liabilities         $     86,425  $     89,490  $     82,672
      Provision for claims                 1,322         1,266         1,140
      Provision for policyholder
       dividends                             581           568           559
      Provision for experience
       rating refunds                        260           452           439
      Policyholder funds                   2,173         2,202         2,071
                                    ------------- ------------- -------------
                                          90,761        93,978        86,881
    Debentures and other debt
     instruments (note 8)                  5,336         1,980         1,953
    Funds held under reinsurance
     contracts                             1,950         1,822         3,433
    Other liabilities (note 9)             5,489         4,167         5,908
    Repurchase agreements                    491           997         1,072
    Deferred net realized gains              168         2,821         2,726
                                    ------------- ------------- -------------
                                         104,195       105,765       101,973

    Preferred shares (note 12)               798           756           760
    Capital trust securities and
     debentures (note 10)                    640           646           647
    Non-controlling interests
     (note 11)
      Participating account
       surplus in subsidiaries             2,063         1,884         1,845
      Preferred shares issued
       by subsidiaries                       209           209           209
      Perpetual preferred shares
       issued by subsidiaries                152           154           155

    Share capital and surplus

    Share capital (note 12)
      Perpetual preferred shares           1,099         1,099         1,099
      Common shares                        4,691         4,676         4,673
    Accumulated surplus                    6,308         5,858         5,590
    Accumulated other comprehensive
     income                               (1,415)         (547)         (938)
    Contributed surplus                       32            28            26
                                    ------------- ------------- -------------
                                          10,715        11,114        10,450
                                    ------------- ------------- -------------
                                    ------------- ------------- -------------
    Total liabilities, share
     capital and surplus            $    118,772  $    120,528  $    116,039
                                    ------------- ------------- -------------
                                    ------------- ------------- -------------


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

                                                     For the nine months
                                                      ended September 30
                                                 ----------------------------
                                                      2007          2006
                                                 -------------- -------------

    Accumulated surplus
    Balance, beginning of year                    $      5,858  $      4,860
    Change in accounting policy (note 1(a))               (368)            -
    Net income                                           1,561         1,422
    Common share cancellation excess                         -           (36)
    Share issue costs - preferred shares                     -            (5)
    Dividends to shareholders
      Perpetual preferred shareholders                     (42)          (38)
      Common shareholders                                 (701)         (613)
                                                 -------------- -------------
    Balance, end of period                        $      6,308  $      5,590
                                                 -------------- -------------
                                                 -------------- -------------

    Accumulated other comprehensive income,
     net of income taxes (note 16)
    Balance, beginning of year                    $       (547) $       (849)
    Change in accounting policy (note 1(a))                257             -
    Other comprehensive income                          (1,125)          (89)
                                                 -------------- -------------
    Balance, end of period                        $     (1,415) $       (938)
                                                 -------------- -------------
                                                 -------------- -------------

    Contributed surplus
    Balance, beginning of year                    $         28  $         19
    Stock option expense
      Current year expense (note 13)                         4             8
      Exercised                                              -            (1)
                                                 -------------- -------------
    Balance, end of period                        $         32  $         26
                                                 -------------- -------------
                                                 -------------- -------------


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

                                   For the three months  For the nine months
                                    ended September 30    ended September 30
                                  ---------------------  --------------------
                                     2007        2006       2007       2006
                                  ---------   ---------  ---------  ---------
                                 (note 1(a))            (note 1(a))

    Net income                     $    475   $    491   $  1,561   $  1,422

    Other comprehensive income
     (loss), net of income taxes
      Unrealized foreign exchange
       gains (losses) on translation
       of foreign operations, net
       of tax of $0 and $0 in 2007
       ($0 and $0 in 2006)             (512)        31     (1,100)      (103)
      Unrealized gains (losses) on
       available for sale assets,
       net of tax of $0 and $26 in
       2007 ($0 and $0 in 2006)          22          -        (76)         -
      Unrealized gains (losses)
       on cash flow hedges, net
       of tax of $(17) and $4 in
       2007 ($0 and $0 in 2006)          31          -         (7)         -
      Reclassification of realized
       gains (losses) on available
       for sale assets, net of tax
       of $3 and $15 in 2007 ($0
       and $0 in 2006), to
       net income                        (6)         -        (29)         -
      Reclassification of realized
       gains (losses) on cash
       flow hedges, net of tax of
       $(19) and $(19) in 2007 ($0
       and $0 in 2006), to net
       investment in self-sustaining
       foreign operations                36          -         36          -
      Non-controlling interests
       (note 11)                         (9)         -         51         14
                                  ----------  ---------  ---------  ---------
                                       (438)        31     (1,125)       (89)
                                  ----------  ---------  ---------  ---------
    Comprehensive income           $     37   $    522   $    436  $   1,333
                                  ----------  ---------  ---------  ---------
                                  ----------  ---------  ---------  ---------


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

                                   For the three months  For the nine months
                                    ended September 30    ended September 30
                                  ---------------------  --------------------
                                     2007        2006       2007       2006
                                  ----------  ---------  ---------  ---------
    Operations
      Net income                   $    475   $    491   $  1,561   $  1,422
      Adjustments:
        Change in policy liabilities    929      1,172       (619)     1,575
        Change in funds held by
         ceding insurers                168         40        609        471
        Change in funds held under
         reinsurance contracts          (26)      (524)        24       (621)
        Change in current income
         taxes payable                 (129)        50       (159)       (24)
        Future income tax expense        11        (12)       (51)        66
        Changes in fair value of
         financial instruments         (441)         -      1,892          -
        Other                           (10)       131       (828)       206
                                  ----------  ---------  ---------  ---------
    Cash flows from operations          977      1,348      2,429      3,095

    Financing Activities
      Issue of common shares              3          3         15         20
      Issue of preferred shares           -          -          -        300
      Purchased and cancelled
       common shares                      -        (13)         -        (43)
      Purchased and cancelled
       preferred shares                  (1)       (18)        (1)       (30)
      Issue of subordinated
       debentures in subsidiary           -          -      1,000        336
      Drawdown on credit facility     2,454          -      2,454          -
      Repayment of subordinated
       debentures in subsidiary           -       (250)         -       (250)
      Repayment of debentures and
       other debt instruments           (98)         -         (1)       (22)
      Share issue costs                   -          1          -         (5)
      Dividends paid                   (260)      (228)      (743)      (651)
                                  ----------  ---------  ---------  ---------
                                      2,098       (505)     2,724       (345)

    Investment Activities
      Bond sales and maturities       7,059      7,351     18,878     20,683
      Mortgage loan repayments          458        523      1,429      1,434
      Stock sales                       396        421      1,173        977
      Real estate sales                  32        129         66        174
      Change in loans to
       policyholders                     (7)       (19)      (167)      (239)
      Change in repurchase
       agreements                      (317)        14       (584)       132
      Acquisition of businesses      (4,155)         -     (4,155)         -
      Disposal of business                6          -          6          -
      Investment in bonds            (5,777)    (7,586)   (17,082)   (22,091)
      Investment in mortgage loans   (1,207)      (847)    (2,491)    (2,052)
      Investment in stocks             (359)      (380)    (1,595)    (1,018)
      Investment in real estate        (244)      (399)      (440)      (515)
                                  ----------  ---------  ---------  ---------
                                     (4,115)      (793)    (4,962)    (2,515)

    Effect of changes in exchange
     rates on cash and cash
     equivalents                       (115)        31       (297)        71

    Increase (decrease) in cash
     and cash equivalents            (1,155)        81       (106)       306

    Cash and cash equivalents,
     beginning of period              4,132      3,186      3,083      2,961
                                  ----------  ---------  ---------  ---------
    Cash and cash equivalents,
     end of period                 $  2,977   $  3,267   $  2,977   $  3,267
                                  ----------  ---------  ---------  ---------
                                  ----------  ---------  ---------  ---------


    -------------------------------------------------------------------------
    Notes to Interim 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 September 30, 2007 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, 2006 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, 2006.

        (a) Financial Instruments

            Effective January 1, 2007, the Company adopted the Canadian
            Institute of Chartered Accountants (CICA) Handbook Section 4211,
            Life Insurance Enterprises; Section 3855, Financial Instruments -
            Recognition and Measurement; Section 3865, Hedges; Section 1530,
            Comprehensive Income.

            In addition to the adoption of the CICA standards, the Company
            adopted The Office of the Superintendent of Financial
            Institutions Canada Guideline D-10, Accounting for Financial
            Instruments Designated as "Held for Trading" (Fair Value Option)
            (OSFI D-10), which provides additional guidance to certain
            federally regulated financial institutions, including life
            insurance companies.

            Under the new guidance, all financial assets, including
            derivatives, must be classified as available for sale, held for
            trading, held to maturity, or loans and receivables. All
            financial liabilities, including derivatives, must be classified
            as held for trading or other. All financial instruments
            classified as available for sale or held for trading are
            recognized at fair value on the Consolidated Balance Sheets while
            financial instruments classified as loans and receivables or
            other will continue to be measured at amortized cost using the
            effective interest rate method. The standards allow the Company
            to designate certain financial instruments, on initial
            recognition, as held for trading. This option has been limited by
            the requirements of OSFI D-10.

            Changes in the fair value of financial instruments classified as
            held for trading are reported in net income. Unrealized gains or
            losses on financial instruments classified as available for sale
            are reported in other comprehensive income until they are
            realized by the Company.

            The new guidance introduces the concept of consolidated other
            comprehensive income, which tracks unrealized gains and losses
            experienced by the Company on certain investments and derivative
            instruments, and the currency translation account movement.
            Consolidated other comprehensive income together with
            consolidated net income provides the financial statement reader
            with consolidated comprehensive income. Consolidated
            comprehensive income is the total of all realized and unrealized
            income, expenses, gains and losses related to the Consolidated
            Balance Sheets including currency translation gains and losses on
            foreign subsidiary operations.

            Unless otherwise stated below, financial assets and liabilities
            will remain on the Consolidated Balance Sheets at amortized cost.

            Certain investments, primarily investments actively traded in a
            public market, and certain financial liabilities are measured at
            their fair value. Investments backing actuarial liabilities,
            investments backing participating account surplus in The Canada
            Life Assurance Company (Canada Life), and preferred shares
            classified as liabilities are designated as held for trading
            using the fair value option. Changes in the fair value of these
            investments flow through net income. This impact is largely
            offset by corresponding changes in the actuarial liabilities
            which also flow through net income. Investments backing
            shareholder capital and surplus, with the exception of the
            investments backing participating account surplus in Canada Life,
            are classified as available for sale. Unrealized gains and losses
            on these investments flow through other comprehensive income
            until they are realized. Certain investment portfolios are
            classified as held for trading as a reflection of their
            underlying nature. Changes in the fair value of these investments
            flow through net income. There has been no change to the
            Company's method of accounting for real estate or loans.

            Derivative instruments, previously off-balance sheet, are
            recognized at their market value in the Consolidated Balance
            Sheets (note 7 and 9). Changes in the fair value of derivatives
            are recognized in net income except for derivatives designated as
            effective cash flow hedges.

            Derivatives embedded in financial instruments, or other
            contracts, which are not closely related to the host financial
            instrument, or contract, must be bifurcated and recognized
            independently. The change in accounting policy related to
            embedded derivatives did not have a significant impact on the
            financial statements of the Company.

            Three types of hedging relationships are permitted under the new
            guidance: fair value hedges, cash flow hedges, and hedges of net
            investments in self-sustaining foreign operations. Changes in
            fair value hedges are recognized in net income. The effective
            portion of cash flow hedges and hedges of net investments in
            self-sustaining foreign operations is offset through other
            comprehensive income until the variability in cash flows being
            hedged is recognized in net income.

            Trade-date accounting will be used to account for all regular-way
            purchase or sale of investments traded on a public market and
            derivative instruments. Settlement-date accounting will be used
            to account for all regular-way purchase or sale of investments
            not traded on a public market.

            Transaction costs for financial assets and liabilities classified
            or designated as held for trading will be recognized immediately
            in net income. Transaction costs for financial assets classified
            as available for sale or loans and receivables will be added to
            the value of the instrument at acquisition and be taken into net
            income using the effective interest rate method. Transaction
            costs for financial liabilities classified as other than held for
            trading will be recognized immediately in net income.

            On January 1, 2007, transition adjustments were made to certain
            existing financial instruments to adjust their carrying value to
            market, to recognize derivative financial instruments on the
            balance sheet, to eliminate the recognition of deferred realized
            gains with corresponding adjustments to actuarial liabilities and
            opening accumulated surplus.

            The following table summarizes the adjustments made to adopt the
            new standards:

                                          December 31,              Adjusted
                                              2006      Opening    January 1,
                                          as reported adjustments     2007
                                         ------------ ----------- -----------
                                          (note 1(d))
            Assets

            Bonds                          $  65,246   $ (65,246)  $       -
              Classified as available
               for sale                            -       5,675       5,675
              Classified as held for trading       -      48,799      48,799
              Designated as held for trading       -       1,650       1,650
              Loans and receivables                -      10,035      10,035
                                         ------------ ----------- -----------
                                              65,246         913      66,159

            Mortgage loans                    15,334         (46)     15,288

            Stocks                             4,766      (4,460)        306
              Classified as available
               for sale                            -         904         904
              Classified as held for trading       -       4,210       4,210
                                         ------------ ----------- -----------
                                               4,766         654       5,420

            All other assets                  35,182         (43)     35,139
                                         ------------ ----------- -----------
            Total assets                   $ 120,528   $   1,478   $ 122,006
                                         ------------ ----------- -----------
                                         ------------ ----------- -----------
            Liabilities

            Policy liabilities             $  93,978   $   3,896   $  97,874
            Funds held under reinsurance
             contracts                         1,822         121       1,943
            Deferred net realized gains        2,821      (2,628)        193
            Preferred share liability
             (Series D and E)                    756          71         827
            All other liabilities              7,790           -       7,790
                                         ------------ ----------- -----------
                                             107,167       1,460     108,627

            Non-controlling interests
              Participating account
               surplus in subsidiaries         1,884         129       2,013
              Other non-controlling
               interests                         363           -         363

            Share capital and surplus

            Share capital                      5,775           -       5,775

            Shareholder surplus
              Accumulated surplus              5,858        (368)      5,490
              Accumulated other
               comprehensive income                -        (290)       (290)
              Contributed surplus                 28           -          28
              Currency translation account      (547)        547           -
                                         ------------ ----------- -----------
                                              11,114        (111)     11,003
                                         ------------ ----------- -----------
            Total liabilities, share
             capital and surplus           $ 120,528   $   1,478   $ 122,006
                                         ------------ ----------- -----------
                                         ------------ ----------- -----------


        (b) Determining Variable Interest Entities

            The Company adopted the Emerging Issues Committee (EIC) of the
            CICA EIC-163, Determining the Variability to be Considered in
            Applying AcG-15 on January 1, 2007. EIC-163 provides additional
            guidance on consolidation of variable interest entities.

        (c) New Accounting Requirements

            Capital Disclosures
            -------------------
            Effective January 1, 2008, the Company will be required to comply
            with CICA Handbook Section 1535, Capital Disclosures. The section
            establishes standards for disclosing information that enables
            users of financial statements to evaluate the entity's
            objectives, policies and processes for managing capital. The new
            requirements are for disclosure only and will not impact
            financial results of the Company.

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

        (d) Comparative Figures

            Certain of the 2006 amounts presented for comparative purposes
            have been reclassified to conform to the presentation adopted in
            the current year. This reclassification has resulted in an
            increase to total assets of $65 at December 31, 2006 and $71 at
            September 30, 2006, with a corresponding increase in total
            liabilities.

            Comparative figures have not been restated to conform with the
            new Financial Instruments accounting policies adopted January 1,
            2007. CICA guidance explicitly prevents restatement of
            comparative information under the new standards.

    2.  Acquisitions

        (a) Putnam Investments Trust

            On August 3, 2007, Lifeco acquired the asset management business
            of Putnam Investments Trust (Putnam), and The Great-West Life
            Assurance Company (Great-West Life) and Canada Life acquired
            Putnam's 25% interest in T.H. Lee Partners (T.H. Lee) (see note 4
            (c)), from Marsh & MacLennan Companies Inc. representing an
            aggregate transaction value of approximately $4.2 billion
            including transaction costs.

            Financing of the transaction is described in note 8.


            The initial allocation of the purchase price is summarized as
            follows:

            Value of assets acquired:
            Cash and certificates of deposit                       $      74
            Stocks                                                       441
            Other assets                                               1,830
                                                                 ------------
                                                                   $   2,345
                                                                 ------------

            Value of liabilities assumed:
            Other liabilities                                          1,535
            Non-controlling interests                                      2
                                                                 ------------
                                                                       1,537
                                                                 ------------
            Fair value of net assets acquired                      $     808
                                                                 ------------
                                                                 ------------

            Total purchase consideration:
            Cash                                                   $   4,143
            Transaction and related costs, net of income taxes            91
                                                                 ------------
                                                                       4,234
                                                                 ------------

            Goodwill and intangible assets on acquisition(1)       $   3,426
                                                                 ------------
                                                                 ------------

            (1) The initial allocation of the purchase price to intangible
                assets acquired should be completed in the fourth quarter of
                2007.

            The amounts assigned to the assets acquired and liabilities
            assumed and associated goodwill and intangible assets may be
            adjusted when the allocation process has been finalized. Included
            in other liabilities assumed are accruals for Putnam costs of
            $108 related to planned restructuring and exit activities
            involving operations and systems, compensation costs and
            facilities (refer to note 3).

            Results of Putnam are included in the Summary of Consolidated
            Operations from the date of acquisition. Putnam offers investment
            management products and services, mainly in the United States.

        (b) Crown Life Insurance Company (Crown Life)

            On July 5, 2007, Canada Life acquired all of the outstanding
            common shares of Crown Life for cash consideration of $118,
            including transaction costs. The acquisition was pursuant to the
            terms of the 1999 acquisition of the majority of the insurance
            operations of Crown Life by Canada Life.

            The acquisition resulted in an initial increase in invested
            assets of $459, an increase in other assets of $25, an increase
            in policyholder liabilities of $338, an increase in other
            liabilities of $58, a decrease in non-controlling interests of
            $11 and estimated goodwill of $19. The amounts assigned to the
            assets acquired and liabilities assumed and associated goodwill
            may be adjusted when the allocation process has been finalized.

            Results of Crown Life are included in the Summary of Consolidated
            Operations from the date of acquisition.


        (c) Benefits Management Corporation

            On May 31, 2007, Great-West Life & Annuity Insurance Company
            (GWL&A) acquired an 80% equity interest in Benefits Management
            Corporation (BMC). The assets acquired, liabilities assumed and
            the Company's equity interest in the results of BMC's operations
            have been included in its consolidated financial statements since
            that date. The acquisition will add approximately 90,000 members
            to the Company's medical membership. BMC's principal subsidiary,
            Allegiance Benefit Management, Inc., is a Montana-based third-
            party administrator of employee health plans.

            The value of identifiable intangible assets acquired reflects the
            estimated fair value of the Company's interest in BMC's customer
            base at the time of acquisition. The value of the identifiable
            intangible assets will be amortized in relation to the expected
            economic benefits of the business acquired. If actual experience
            differs from expectations, the amortization will be adjusted to
            reflect actual experience.

    3.  Restructuring Costs

        Following the acquisition of Putnam on August 3, 2007, the Company
        developed a plan to restructure certain operations of Putnam. The
        Company expects the restructuring to be substantially complete by the
        end of 2008. Costs of $123 (U.S. $117) are expected to be incurred as
        a result and consist primarily of restructuring activities involving
        operations and systems, compensation costs and facilities. The costs
        include approximately $108 (U.S $103) that was recognized as part of
        the purchase equation of Putnam. Costs of approximately $15
        (U.S. $14) will be charged to income as incurred.

        The following details the amount and status of restructuring program
        costs for the period ended September 30, 2007:

                                                        Changes in
                                   Expected    Amounts   foreign     Balance
                                    total     utilized   exchange  September
                                    costs      - 2007     rates     30, 2007
                                  ----------  ---------  ---------  ---------
        Compensation costs         $    100   $    (23)  $     (4)  $     73
        Exiting and consolidating
         operations                      13          -         (1)        12
        Eliminating duplicate
         systems                         10          -          -         10
                                  ----------  ---------  ---------  ---------
                                   $    123   $    (23)  $     (5)  $     95
                                  ----------  ---------  ---------  ---------
                                  ----------  ---------  ---------  ---------

        Accrued on acquisition     $    108   $    (23)  $     (4)  $     81
        Expense as incurred              15          -         (1)        14
                                  ----------  ---------  ---------  ---------
                                   $    123   $    (23)  $     (5)  $     95
                                  ----------  ---------  ---------  ---------
                                  ----------  ---------  ---------  ---------


    4.  Portfolio Investments

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

                                                September 30, 2007
                                  -------------------------------------------
                                                                    Amortized
                                             Market Value             Cost
                                  --------------------------------  ---------

                                              Held for trading(1)     Loans
                                  Available  ---------------------     and
                                     for        Desig-    Class-     receiv-
                                     sale       nated     ified       ables
                                  ----------  ---------  ---------  ---------
            Bonds
            - government           $  1,741   $ 17,341   $    691   $  1,815
            - corporate               2,600     34,106        872      7,118
                                  ----------  ---------  ---------  ---------
                                      4,341     51,447      1,563      8,933
                                  ----------  ---------  ---------  ---------

            Mortgage loans
            - residential                 -          -          -      7,198
            - non-residential             -          -          -      8,484
                                  ----------  ---------  ---------  ---------
                                          -          -          -     15,682
                                  ----------  ---------  ---------  ---------

            Stocks                    1,459      4,391          -          -

            Real estate                   -          -          -          -
                                  ----------  ---------  ---------  ---------

                                   $  5,800   $ 55,838   $  1,563   $ 24,615
                                  ----------  ---------  ---------  ---------
                                  ----------  ---------  ---------  ---------


                                    September 30, 2007
                                  ---------------------  December   September
                                  Amortized                 31,        30,
                                    Cost        Total      2006       2006
                                  ----------  ---------  ---------  ---------
                                     Non-
                                  financial
                                   instru-               Carrying   Carrying
                                    ments                  value      value
                                  ----------  ---------  ---------  ---------
            Bonds
            - government           $      -   $ 21,588   $ 22,069   $ 22,594
            - corporate                   -     44,696     43,177     39,964
                                  ----------  ---------  ---------  ---------
                                          -     66,284     65,246     62,558
                                  ----------  ---------  ---------  ---------

            Mortgage loans
            - residential                 -      7,198      7,342      7,186
            - non-residential             -      8,484      7,992      7,927
                                  ----------  ---------  ---------  ---------
                                          -     15,682     15,334     15,113
                                  ----------  ---------  ---------  ---------

            Stocks                      662      6,512      4,766      4,271

            Real estate               2,327      2,327      2,216      2,050
                                  ----------  ---------  ---------  ---------

                                   $  2,989   $ 90,805   $ 87,562   $ 83,992
                                  ----------  ---------  ---------  ---------
                                  ----------  ---------  ---------  ---------

            (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) Stocks include the Company's investment in an affiliated company,
            IGM Financial Inc. (IGM), a member of the Power Financial
            Corporation group of companies, over which it exerts significant
            influence but does not control. As a result of changes in
            circumstances, the investment is accounted for using the equity
            method of accounting as at January 1, 2007. The portfolio method
            of accounting was used to account for the Company's investment in
            IGM in prior years.

                                              September   December  September
                                                  30,        31,        30,
                                                 2007       2006       2006
                                              ---------  ---------  ---------

            Carrying value, beginning of
             year                             $    306   $    276   $    276
            Equity method earnings                  22          -          -
            Dividends                              (12)         -          -
            Portfolio method earnings                -         30         22
                                              ---------  ---------  ---------

            Carrying value, end of period     $    316   $    306   $    298
                                              ---------  ---------  ---------
                                              ---------  ---------  ---------

            Share of equity, end of period    $    144   $    133   $    129
                                              ---------  ---------  ---------
                                              ---------  ---------  ---------

            Fair value, end of period         $    484   $    452   $    433
                                              ---------  ---------  ---------
                                              ---------  ---------  ---------

            The Company owns 9,205,972 shares of IGM at September 30, 2007
            (9,205,933 at December 31, 2006; 9,205,627 at September 30, 2006)
            representing a 3.48% ownership interest (3.48% at December 31,
            2006; 3.48% at September 30, 2006).

        (c) Stocks include the Company's 25% investment in T.H. Lee. The
            Company's investment in T.H. Lee is accounted for using the
            equity method of accounting. At September 30, 2007, the carrying
            value of this investment included in stocks on the Consolidated
            Balance Sheets was as follows:

                                                                    September
                                                                        30,
                                                                       2007
                                                                    ---------

            Carrying value, beginning of year                       $      -
            Acquisition of T.H. Lee interests                            388
            Net investment income                                          1
            Amortization of underlying intangible assets                  (5)
            Foreign currency translation adjustments                     (38)
                                                                    ---------

            Carrying value, end of period                           $    346
                                                                    ---------
                                                                    ---------

    5.  Net Investment Income

        Net investment income is comprised of the following:

    For the three
    months ended
    September 30,            Mortgage              Real
    2007            Bonds     loans     Stocks    estate    Other     Total
    -------------  --------  --------  --------  --------  --------  --------

    Regular net
     investment
     income:
      Investment
       income
       earned      $   939   $   224   $    47   $    36   $   154   $ 1,400
      Net realized
       gains (losses)
        (available
         for sale)       5         -         3         -         -         8
      Net realized
       gains
       (losses)
       (other
        classifi-
        cations)         3         4         -         -         -         7
      Recovery of
       credit losses     2         -         -         -         -         2
      Amortization of
       deferred net
       realized gains    -         -         -        19         -        19
      Other income
       and expenses      -         -         -         -       (18)      (18)
                   --------  --------  --------  --------  --------  --------
                       949       228        50        55       136     1,418

    Changes in fair
     value on held
     for trading
     assets:
      Net realized/
       unrealized
       gains
       (losses)
        (classified
         held for
         trading)       48         -         -         -         -        48
      Net realized/
       unrealized
       gains (losses)
        (designated
         held for
         trading)      390         -        19         -       (31)      378
                   --------  --------  --------  --------  --------  --------
                       438         -        19         -       (31)      426
                   --------  --------  --------  --------  --------  --------

    Net investment
     income        $ 1,387   $   228   $    69   $    55   $   105   $ 1,844
                   --------  --------  --------  --------  --------  --------
                   --------  --------  --------  --------  --------  --------


    For the three
    months ended
    September 30,            Mortgage              Real
    2006            Bonds     loans     Stocks    estate    Other     Total
    -------------  --------  --------  --------  --------  --------  --------

    Investment
     income earned $ 1,009   $   219   $    33   $    29   $   153   $ 1,443
    Amortization
     of net
     realized
     and
     unrealized
     gains              61        11        61        17         -       150
    Recovery of
     credit losses       2         -         -         -         -         2
    Investment
     expenses            -         -         -        -        (18)      (18)
                   --------  --------  --------  --------  --------  --------

    Net investment
     income        $ 1,072   $   230   $    94   $   46    $   135   $ 1,577
                   --------  --------  --------  --------  --------  --------
                   --------  --------  --------  --------  --------  --------


    For the nine
    months ended
    September 30,            Mortgage              Real
    2007            Bonds     loans     Stocks    estate    Other     Total
    -------------  --------  --------  --------  --------  --------  --------

    Regular net
     investment
     income:
      Investment
       income
       earned      $ 2,814   $   672   $   135   $    97   $   518   $ 4,236
      Net realized
       gains
       (losses)
        (available
         for sale)      37         -         6         -         -        43
      Net realized
       gains
       (losses)
        (other
         classifi-
         cations)       16        19         -         -         -        35
      Recovery of
       credit
       losses            3         4         -         -         -         7
      Amortization
       of deferred
       net realized
       gains             -         -         -        56         -        56
      Other income
       and expenses      -         -         -         -       (54)      (54)
                   --------  --------  --------  --------  --------  --------
                     2,870       695       141       153       464     4,323

    Changes in fair
     value on held
     for trading
     assets:
      Net realized/
       unrealized
       gains
       (losses)
        (classified
         held for
         trading)       27         -         -         -         -        27
      Net realized/
       unrealized
       gains
       (losses)
        (designated
         held for
         trading)   (2,056)        -       231         -      (123)   (1,948)
                   --------  --------  --------  --------  --------  --------
                    (2,029)        -       231         -      (123)   (1,921)
                   --------  --------  --------  --------  --------  --------

    Net investment
     income        $   841   $   695   $   372   $   153   $   341   $ 2,402
                   --------  --------  --------  --------  --------  --------
                   --------  --------  --------  --------  --------  --------


    For the nine
    months ended
    September 30,            Mortgage              Real
    2006            Bonds     loans     Stocks    estate    Other     Total
    -------------  --------  --------  --------  --------  --------  --------

    Investment
     income earned $ 2,818   $   650   $    98   $    83   $   359   $ 4,008
    Amortization
     of net
     realized and
     unrealized
     gains             185        35       185        46         -       451
    Recovery of
     credit losses       8         1         -         -         -         9
    Investment
     expenses            -         -         -         -       (52)      (52)
                   --------  --------  --------  --------  --------  --------

    Net investment
     income        $ 3,011   $   686   $   283   $   129   $   307   $ 4,416
                   --------  --------  --------  --------  --------  --------
                   --------  --------  --------  --------  --------  --------

    6.  Financing Charges

        Financing charges consist of the following:

                                         For the three       For the nine
                                         months ended        months ended
                                         September 30        September 30
                                       ------------------  ------------------
                                         2007      2006      2007      2006
                                       --------  --------  --------  --------

        Interest on long-term
         debentures and other debt
         instruments                   $    69   $    32   $   131   $    89
        Preferred share dividends            9         9        27        28
        Unrealized gains on preferred
         shares classified as held for
         trading                           (15)        -       (29)        -
        Subordinated debenture issue
         costs                               -         -        13         -
        Other                                9         4        15         7
        Interest on capital trust
         debentures                         13        13        37        37
        Distributions on capital
         trust securities held by
         consolidated group as
         temporary investments              (4)       (4)       (9)       (9)
                                       --------  --------  --------  --------
        Total                          $    81   $    54   $   185   $   152
                                       --------  --------  --------  --------
                                       --------  --------  --------  --------

        Financing charges include amounts related to the Putnam acquisition
        as described in note 8.

    7.  Other Assets

        Other assets consist of the following:

                                             September   December  September
                                              30, 2007   31, 2006   30, 2006
                                             ---------- ---------- ----------

        Premiums in course of collection      $    587   $    566   $    565
        Interest due and accrued                 1,153      1,009      1,059
        Derivative financial instruments
         (note 1(a))                               972          -          -
        Other investment receivables               372          -          -
        Future income taxes                        661        369        375
        Fixed assets                               357        263        255
        Prepaid expenses                           340         64         73
        Accounts receivable                      1,145        758        650
        Accrued pension asset                      198        189        192
        Trading account assets                     371          -          -
        Other                                      793        499        548
                                             ---------- ---------- ----------
                                              $  6,949   $  3,717   $  3,717
                                             ---------- ---------- ----------
                                             ---------- ---------- ----------

    8.  Debentures and Other Debt Instruments

        Debentures and other debt instruments consist of the following:

                                             September   December  September
                                              30, 2007   31, 2006   30, 2006
                                             ---------- ---------- ----------
        Short term
          Commercial paper and other short
           term debt instruments with
           interest rates from 5.2% to 5.5%
           (5.2% to 5.3% in 2006)             $    97     $   110   $    106
          Credit facility at rate equal to
           the Canadian Bankers' Acceptance
           rate plus 0.25%                      1,233           -          -
          Credit facility at rate equal to
           LIBOR rate plus 0.25% (U.S. $1,221)  1,221           -          -
          Revolving credit in respect of
           reinsurance business with interest
           rates of 6.0% maturing within one
           year (6.0% in 2006)                      1           1          2
                                             ---------- ---------- ----------

        Total short term                        2,552         111        108
        Long term
          Operating:
            Note payable with interest rate
             of 8.0%                                7           8          8
          Capital:
            Lifeco
              6.75% Debentures due August 10,
               2015, unsecured                    200         200        200
              6.14% Debentures due March 21,
               2018, unsecured                    200         200        200
              6.74% Debentures due November 24,
               2031, unsecured                    200         200        200
              6.67% Debentures due March 21,
               2033, unsecured                    400         400        400
                                             ---------- ---------- ----------

                                                1,000       1,000      1,000
            Canada Life
              Subordinated debentures due
               December 11, 2013 bearing a
               fixed rate of 5.8% until 2008
               and, thereafter, at a rate equal
               to the Canadian 90-day Bankers'
               Acceptance rate plus 1%,
               unsecured                          200         200        200
              6.40% Subordinated debentures due
               December 11, 2028, unsecured       100         100        100
              Acquisition related fair market
               value adjustment                     3           5          5
                                             ---------- ---------- ----------

                                                  303         305        305
            Great-West Life & Annuity Insurance
             Capital, LP
              6.625% Deferrable debentures due
               November 15, 2034, unsecured
               (U.S.$174)                         174         205        196

            Great-West Life & Annuity Insurance
             Capital, LP II
              7.153% Subordinated debentures due
               May 16, 2046, unsecured (U.S.$300) 300         351        336

            Great-West Lifeco Finance
             (Delaware) LP
              Subordinated debentures due June
               21, 2067 bearing an interest
               rate of 5.691% until 2017 and,
               thereafter, at a rate equal to
               the Canadian 90-day Bankers'
               Acceptance rate plus 1.49%,
               unsecured                        1,000           -          -
                                             ---------- ---------- ----------

        Total long term                         2,784       1,869      1,845
                                             ---------- ---------- ----------

        Total debentures and other debt
         instruments                          $ 5,336     $ 1,980    $ 1,953
                                             ---------- ---------- ----------
                                             ---------- ---------- ----------


        As part of the financing of the acquisition of Putnam, Lifeco entered
        into a credit agreement with a Canadian chartered bank (see note 2).
        The credit agreement provides a one year facility, extendible at the
        Company's option for an additional six months, of up to $3,000,
        fundable in Canadian or U.S. dollars. On August 2, 2007, the Company
        drew $1,233 and U.S. $1,571 against the facility. The facility
        provided the Company with the option to convert up to U.S. $500 to a
        five year term loan which option the Company has exercised against
        the U.S. drawings of the facility on October 18, 2007. The balance
        outstanding under this facility at September 30, 2007 was $2,454
        ($1,233 Canadian and U.S. $1,221).

        On June 20, 2007, Lifeco borrowed $124 under an existing revolving
        line of credit facility with a Canadian chartered bank. On August 2,
        2007, Lifeco fully repaid the balance of $124.

        During the second quarter of 2007, the Company issued $1.0 billion of
        5.691% Subordinated Debentures through its wholly-owned subsidiary
        Great-West Lifeco Finance (Delaware) LP. The subordinated debentures
        are due June 21, 2067 and bear an interest rate of 5.691% until
        June 21, 2017. After June 21, 2017, the subordinated debentures will
        bear an interest rate of the three month bankers' acceptance rate
        plus 1.49%. The subordinated debentures may be redeemed by the
        Company at the principal amount plus any unpaid and accrued interest
        after June 21, 2017.

    9.  Other Liabilities

        Other liabilities consist of the following:

                                             September   December  September
                                              30, 2007   31, 2006   30, 2006
                                             ---------- ---------- ----------

        Current income taxes                  $    257   $    246   $    306
        Accounts payable                         1,119        459        400
        Liability for restructuring costs
         (note 3)                                   81          -          -
        Post-retirement benefits provision         667        520        519
        Bank overdraft                             412        446        424
        Future income taxes                        334        369        314
        Derivative financial instruments
         (note 1(a))                                84         16          9
        Security purchase payable                    -          -      1,568
        Other                                    2,535      2,111      2,368
                                             ---------- ---------- ----------
                                              $  5,489   $  4,167   $  5,908
                                             ---------- ---------- ----------
                                             ---------- ---------- ----------

    10. Capital Trust Securities and Debentures

                                             September   December  September
                                              30, 2007   31, 2006   30, 2006
                                             ---------- ---------- ----------
        Capital trust debentures:
          5.995% Senior debentures due
           December 31, 2052, unsecured
           (GWLCT)                                 350        350        350
          6.679% Senior debentures due
           June 30, 2052, unsecured (CLCT)         300        300        300
          7.529% Senior debentures due
           June 30, 2052, unsecured (CLCT)         150        150        150
                                             ---------- ---------- ----------

                                                   800        800        800
        Acquisition related fair market value
         adjustment                                 28         31         32
        Trust securities held by consolidated
         group as temporary investments           (188)      (185)      (185)
                                             ---------- ---------- ----------

        Total                                 $    640   $    646   $    647
                                             ---------- ---------- ----------
                                             ---------- ---------- ----------

        Great-West Life Capital Trust (GWLCT), a trust established by Great-
        West Life, had issued $350 of capital trust securities, the proceeds
        of which were used by GWLCT to purchase Great-West Life senior
        debentures in the amount of $350, and Canada Life Capital Trust
        (CLCT), a trust established by Canada Life, had issued $450 of
        capital trust securities, the proceeds of which were used by CLCT to
        purchase Canada Life senior debentures in the amount of $450.

    11. Non-Controlling Interests

        The Company controlled a 100% equity interest in Great-West Life,
        London Life Insurance Company (London Life), Canada Life and GWL&A at
        September 30, 2007 and September 30, 2006 and Putnam at September 30,
        2007.

        (a) The non-controlling interests of Great-West Life, London Life,
            Canada Life, GWL&A and their subsidiaries reflected in the
            Summary of Consolidated Operations are as follows:

                                         For the three       For the nine
                                         months ended        months ended
                                         September 30        September 30
                                       ------------------  ------------------
                                         2007      2006      2007      2006
                                       --------  --------  --------  --------
            Participating account
              Net income attributable
               to participating account
               before policyholder
               dividends
                Great-West Life        $    24   $    29   $    85   $    88
                London Life                191       170       537       522
                Canada Life                 62        47       167       139
                GWL&A                       19        26        93        95
                                       --------  --------  --------  --------
                                           296       272       882       844

              Policyholder dividends
                Great-West Life            (28)      (27)      (82)      (78)
                London Life               (155)     (145)     (450)     (425)
                Canada Life                (54)      (45)     (157)     (135)
                GWL&A                      (16)      (24)      (83)      (88)
                                       --------  --------  --------  --------
                                          (253)     (241)     (772)     (726)
                                       --------  --------  --------  --------
              Net income - participating
               account                      43        31       110       118
                                       --------  --------  --------  --------

            Preferred shareholder
             dividends of subsidiaries       5         5        14        14
                                       --------  --------  --------  --------

            Total                      $    48   $    36   $   124   $   132
                                       --------  --------  --------  --------
                                       --------  --------  --------  --------

        (b) The carrying value of non-controlling interests consist of the
            following:

                                             September   December  September
                                              30, 2007   31, 2006   30, 2006
                                             ---------- ---------- ----------

            Participating account surplus:
              Great-West Life                 $    410    $   370    $   382
              London Life                        1,437      1,275      1,243
              Canada Life                           29         35         29
              GWL&A                                187        204        191
                                             ---------- ---------- ----------

                                              $  2,063    $ 1,884    $ 1,845
                                             ---------- ---------- ----------
                                             ---------- ---------- ----------

            Preferred shares issued by
             subsidiaries:
              Great-West Life Series L,
               5.20% Non-Cumulative           $     52    $    52    $    52
              Great-West Life Series O,
               5.55% Non-Cumulative                157        157        157
                                             ---------- ---------- ----------

                                              $    209    $   209    $   209
                                             ---------- ---------- ----------
                                             ---------- ---------- ----------

            Perpetual preferred shares issued
             by subsidiaries:
              CLFC Series B, 6.25%
               Non-Cumulative                 $    145    $   145    $   145
              Acquisition related fair
               market value adjustment               7          9         10
                                             ---------- ---------- ----------

                                              $    152    $   154    $   155
                                             ---------- ---------- ----------
                                             ---------- ---------- ----------


            On October 31, 2007, Great-West Life redeemed all 2,093,032 Non-
            Cumulative Preferred Shares, Series L for cash redemption price
            of $25.00 per share.

        (c) The non-controlling interests of Great-West Life, London Life,
            Canada Life, GWL&A and their subsidiaries reflected in Other
            Comprehensive Income are as follows:

                                         For the three       For the nine
                                         months ended        months ended
                                         September 30        September 30
                                       ------------------  ------------------
                                         2007      2006      2007      2006
                                       --------  --------  --------  --------

            Participating account
            Other comprehensive income
             attributable to
             participating account
              Great-West Life          $     -   $     -   $    (5)  $     -
              London Life                   20         -       (14)       (5)
              Canada Life                    -         -         -         -
              GWL&A                        (11)        -       (32)       (9)
                                       --------  --------  --------  --------
            Other comprehensive income
              - participating account  $     9   $     -   $   (51)  $   (14)
                                       --------  --------  --------  --------
                                       --------  --------  --------  --------

    12. Share Capital

        Authorized
        Unlimited First Preferred Shares, Class A Preferred Shares and Second
        Preferred Shares, Unlimited Common Shares

        Issued and outstanding

                September 30, 2007   December 31, 2006    September 30, 2006
               -------------------- -------------------- --------------------
                           Carrying              Stated               Stated
                  Number     value     Number     value     Number     value
               ------------ ------- ------------ ------- ------------ -------
    Classified as
     liabilities
    Preferred
     shares:
    Designated as
     held for
     trading(1)

    Series D,
     4.70%
     Non-
      Cumulative
      First
       Preferred
       Shares    7,938,500  $  204    7,978,900  $  199    7,978,900  $  199
    Series E,
     4.80%
     Non-
      Cumulative
      First
       Preferred
       Shares   22,282,215     594   22,282,215     557   22,422,215     561
               ------------ ------- ------------ ------- ------------ -------

                30,220,715  $  798   30,261,115  $  756   30,401,115  $  760
               ------------ ------- ------------ ------- ------------ -------
               ------------ ------- ------------ ------- ------------ -------

    Classified
     as equity
    Perpetual
     preferred
     shares:
    Series F,
     5.90%
     Non-
      Cumulative
      First
       Preferred
       Shares    7,957,001  $  199    7,957,001  $  199    7,957,001  $  199
    Series G,
     5.20%
     Non-
      Cumulative
      First
       Preferred
       Shares   12,000,000     300   12,000,000     300   12,000,000     300
    Series H,
     4.85%
     Non-
      Cumulative
      First
       Preferred
       Shares   12,000,000     300   12,000,000     300   12,000,000     300
    Series I,
     4.50%
     Non-
      Cumulative
      First
       Preferred
       Shares   12,000,000     300   12,000,000     300   12,000,000     300
               ------------ ------- ------------ ------- ------------ -------

                43,957,001  $1,099   43,957,001  $1,099   43,957,001  $1,099
               ------------ ------- ------------ ------- ------------ -------
               ------------ ------- ------------ ------- ------------ -------

    Common
     shares:
    Balance,
     beginning
     of year   891,151,789  $4,676  890,689,076  $4,660  890,689,076  $4,660
    Purchased
     and
     cancelled
     under
      Normal
       Course
       Issuer
       Bid              -        -   (1,847,300)     (9)  (1,511,300)     (7)
    Issued under
     Stock Option
     Plan       1,308,508       15    2,310,013      25    1,911,667      20
               ------------ ------- ------------ ------- ------------ -------

    Balance,
     end of
     period    892,460,297  $4,691  891,151,789  $4,676  891,089,443  $4,673
               ------------ ------- ------------ ------- ------------ -------
               ------------ ------- ------------ ------- ------------ -------

        (1) The Company has elected to designate the outstanding Preferred
            Shares Series D and Series E, as held for trading resulting in an
            increase of $71 in the carrying value effective January 1, 2007
            (see note 1(a)). The effect of the change at September 30, 2007
            is an increase of $42 (Series D - $5, Series E -$37). The
            redemption price at maturity is $25.00 per share plus accrued
            dividends.

    13. Stock Based Compensation

        164,000 options were granted under the Company's stock option plan
        during the third quarter of 2007 and 1,749,000 options were granted
        during the first quarter of 2007 (no options were granted during the
        first or third quarter of 2006 and 50,000 options were granted during
        the second quarter of 2006). The weighted-average fair value of
        options granted during the nine months ended September 30, 2007 were
        $7.41 per option ($5.48 per option during the nine months ended
        September 30, 2006). Compensation expense of $4 after tax has been
        recognized in the Summary of Consolidated Operations for the nine
        months ended September 30, 2007 ($8 after tax for the nine months
        ended September 30, 2006).

    14. Pension Plans and Other Post-Retirement Benefits

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

                                         For the three       For the nine
                                         months ended        months ended
                                         September 30        September 30
                                       ------------------  ------------------
                                         2007      2006      2007      2006
                                       --------  --------  --------  --------

        Pension benefits               $    11   $    18   $    33   $    57
        Other benefits                       4         5        14        16
                                       --------  --------  --------  --------

        Total                          $    15   $    23   $    47   $    73
                                       --------  --------  --------  --------
                                       --------  --------  --------  --------

        Total benefit costs exclude the pension provision described in note
        17.

    15. Earnings Per Common Share

                           For the three months       For the nine months
                             ended September 30        ended September 30
                          ------------------------- -------------------------
                              2007         2006         2007         2006
                          ------------ ------------ ------------ ------------
        a) Earnings

           Net income -
            common
            shareholders  $       461  $       477  $    1,519   $     1,384
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

        b) Number of
            common shares

           Average number
            of common
            shares
            outstanding   892,296,169  891,036,927  892,014,374  891,036,927
           Add:

             - Potential
                exercise of
                outstanding
                stock
                options     6,619,468    6,523,709    6,769,405    6,523,709
                          ------------ ------------ ------------ ------------

           Average
            number
            of common
            shares
            outstanding
            - diluted
            basis         898,915,637  897,560,636  898,783,779  897,560,636
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

        Earnings per
         common share

           Basic          $     0.516  $     0.537  $     1.703  $     1.554
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

           Diluted        $     0.513  $     0.532  $     1.690  $     1.542
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    16. Accumulated Other Comprehensive Income

                           For the nine months ended September 30, 2007
                 ------------------------------------------------------------
                 Unrealized Unrealized
                  foreign     gains
                  exchange   (losses) Unrealized
                   gains        on      gains
                (losses) on  available (losses)
                 translation   for      on cash             Non-
                 of foreign    sale      flow           controlling  Share-
                 operations   assets    hedges    Total   interest   holder
                 ---------- --------- --------- --------- --------- ---------


    Balance,
     beginning
     of year      $   (591) $      -  $      -  $   (591) $    (14) $   (605)

    Opening
     transition
     adjustment          -       379         -       379        40       419
    Income tax           -      (108)        -      (108)        4      (104)
                 ---------- --------- --------- --------- --------- ---------
                         -       271         -       271        44       315

    Other
     comprehensive
     income         (1,100)     (146)       44    (1,202)       56    (1,146)
    Income tax           -        41       (15)       26        (5)       21
                 ---------- --------- --------- --------- --------- ---------
                    (1,100)     (105)       29    (1,176)       51    (1,125)

                 ---------- --------- --------- --------- --------- ---------
    Balance, end
     of period    $ (1,691) $    166  $     29  $ (1,496) $     81  $ (1,415)
                 ---------- --------- --------- --------- --------- ---------
                 ---------- --------- --------- --------- --------- ---------

    17. Contingent Liabilities (material changes since December 31, 2006)

        In the third quarter, 2007 Great-West Life and Canada Life
        established provisions for certain Canadian retirement plans in the
        amount of $97 after-tax. Actual results could differ from these
        estimates.


    18. Segmented Information
        Consolidated Operations
        For the three months ended September 30, 2007

                                        United              Lifeco
                             Canada     States    Europe  Corporate   Total
                            --------- --------- --------- --------- ---------
    Income:
      Premium income        $  1,771  $    696  $  1,412  $      -  $  3,879
      Net investment income
        Regular net
         investment income       619       349       445         5     1,418
        Changes in fair
         value on held for
         trading assets           18        99       309         -       426
                            --------- --------- --------- --------- ---------
      Total net investment
       income                    637       448       754         5     1,844
      Fee and other income       254       506       161         -       921
                            --------- --------- --------- --------- ---------

    Total income               2,662     1,650     2,327         5     6,644
                            --------- --------- --------- --------- ---------

    Benefits and expenses:
      Paid or credited
       to policyholders        1,817       924     1,937         -     4,678
      Other                      510       502       198       145     1,355
      Amortization of finite
       life intangible assets      3         6         1         -        10
                            --------- --------- --------- --------- ---------

    Net operating income
     before income taxes         332       218       191      (140)      601

    Income taxes                  43        57        23       (45)       78
                            --------- --------- --------- --------- ---------

    Net income before
     non-controlling
     interests                   289       161       168       (95)      523

    Non-controlling interests     33        11         4         -        48
                            --------- --------- --------- --------- ---------

    Net income -
     shareholders                256       150       164       (95)      475

    Perpetual preferred
     share dividends              11         -         3         -        14
                            --------- --------- --------- --------- ---------

    Net income - common
     shareholders           $    245  $    150  $    161  $    (95) $    461
                            --------- --------- --------- --------- ---------
                            --------- --------- --------- --------- ---------



    For the three months ended September 30, 2006

                                        United              Lifeco
                             Canada     States    Europe  Corporate   Total
                            --------- --------- --------- --------- ---------
    Income:
      Premium income        $  1,563  $  1,261  $  1,508  $      -  $  4,332
      Net investment income      695       339       516        27     1,577
      Fee and other income       220       283       155         -       658
                            --------- --------- --------- --------- ---------

    Total income               2,478     1,883     2,179        27     6,567
                            --------- --------- --------- --------- ---------

    Benefits and expenses:
      Paid or credited to
       policyholders           1,614     1,420     1,837         -     4,871
      Other                      509       287       181         1       978
      Amortization of finite
       life intangible assets      4         -         1         -         5
                            --------- --------- --------- --------- ---------

    Net operating income
     before income taxes         351       176       160        26       713

    Income taxes                  89        52        24        21       186
                            --------- --------- --------- --------- ---------

    Net income before
     non-controlling
     interests                   262       124       136         5       527

    Non-controlling interests     30         2         4         -        36
                            --------- --------- --------- --------- ---------

    Net income -
     shareholders                232       122       132         5       491

    Perpetual preferred
     share dividends              11         -         3         -        14
                            --------- --------- --------- --------- ---------

    Net income -
     common shareholders    $    221  $    122  $    129  $      5  $    477
                            --------- --------- --------- --------- ---------
                            --------- --------- --------- --------- ---------



    For the nine months ended September 30, 2007

                                        United              Lifeco
                             Canada     States    Europe  Corporate   Total
                            --------- --------- --------- --------- ---------
    Income:
      Premium income        $  5,464  $  2,243  $  6,051  $      -  $ 13,758
      Net investment income
        Regular net
         investment income     1,865     1,089     1,352        17     4,323
        Changes in fair
         value on held for
         trading assets         (656)     (92)    (1,173)        -    (1,921)
                            --------- --------- --------- --------- ---------
      Total net investment
       income                  1,209       997       179        17     2,402
      Fee and other income       763     1,179       492         -     2,434
                            --------- --------- --------- --------- ---------

    Total income               7,436     4,419     6,722        17    18,594
                            --------- --------- --------- --------- ---------

    Benefits and expenses:
      Paid or credited
       to policyholders        4,807     2,622     5,597         -    13,026
      Other                    1,607     1,159       561       161     3,488
      Amortization of finite
       life intangible assets     10        12         3         -        25
                            --------- --------- --------- --------- ---------

    Net operating income
     before income taxes       1,012       626       561      (144)    2,055

    Income taxes                 162       179        76       (47)      370
                            --------- --------- --------- --------- ---------

    Net income before
     non-controlling
     interests                   850       447       485       (97)    1,685

    Non-controlling interests     91        19        14         -       124
                            --------- --------- --------- --------- ---------

    Net income -
     shareholders                759       428       471       (97)    1,561

    Perpetual preferred
     share dividends              32         -        10         -        42
                            --------- --------- --------- --------- ---------

    Net income -
     common shareholders    $    727  $    428  $    461  $    (97) $  1,519
                            --------- --------- --------- --------- ---------
                            --------- --------- --------- --------- ---------




     For the nine months ended September 30, 2006

                                        United              Lifeco
                             Canada     States    Europe  Corporate   Total
                            --------- --------- --------- --------- ---------
    Income:
      Premium income        $  4,774  $  2,630  $  5,067  $      -  $ 12,471
      Net investment income    2,065     1,011     1,313        27     4,416
      Fee and other income       659       870       453         -     1,982
                            --------- --------- --------- --------- ---------

    Total income               7,498     4,511     6,833        27    18,869
                            --------- --------- --------- --------- ---------

    Benefits and expenses:
      Paid or credited
       to policyholders        4,759     3,101     5,971         -    13,831
      Other                    1,656       862       458         3     2,979
      Amortization of finite
       life intangible assets     11         -         3         -        14
                            --------- --------- --------- --------- ---------

    Net operating income
     before income taxes       1,072       548       401        24     2,045

    Income taxes                 262       157        43        29       491
                            --------- --------- --------- --------- ---------

    Net income before
     non-controlling
     interests                   810       391       358        (5)    1,554

    Non-controlling
     interests                   108         8        16         -       132
                            --------- --------- --------- --------- ---------

    Net income -
     shareholders                702       383       342        (5)    1,422

    Perpetual preferred
     share dividends              32         -         6         -        38
                            --------- --------- --------- --------- ---------

    Net income -
     common shareholders    $    670  $    383  $    336  $     (5) $  1,384
                            --------- --------- --------- --------- ---------
                            --------- --------- --------- --------- ---------
    





For further information:

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


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