Great-West Lifeco reports third quarter 2008 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, Oct. 30, 2008 /CNW/ - Great-West Lifeco Inc. (Lifeco) has
reported net income attributable to common shareholders of $436 million for
the three months ended September 30, 2008, compared to net income of
$461 million reported a year ago. On a per share basis, this represents
$0.487 per common share for the three months ended September 30, 2008,
compared to $0.516 per common share for 2007.
    The results in the third quarter were impacted by an after-tax charge for
asset impairment of $96 million ($0.107 per common share), and an after-tax
charge of $19 million ($0.02 per common share) incurred in connection with the
liquidation of the Putnam Prime Money Market fund.
    For the nine months ended September 30, 2008, net income attributable to
common shareholders was $2,303 million compared to $1,519 million reported a
year ago. On a per share basis, this represents $2.575 per common share for
the nine months ended September 30, 2008, compared to $1.703 per common share
for 2007. The 2008 nine month results also include three non-recurring items
that totaled $767 million after-tax, or $0.858 per common share, as described
in the United States section of this Release.

    
    Highlights
    -   On October 22, Lifeco's subsidiary, Great-West Life announced that it
        had entered into an agreement with Fidelity Investments Canada ULC.
        Under this transaction, Fidelity will transition its Canadian group
        retirement and savings plan recordkeeping business to Great-West
        Life, representing $2.2 billion in assets under administration.
    -   Sales in Canada of Individual and Group Insurance products were up
        over 2007.
    -   Adjusted return on common shareholders' equity was 21.4% for the
        twelve months ended September 30, 2008.
    -   Great-West Life's Minimum Continuing Capital and Surplus (MCCSR)
        ratio at September 30, 2008 was 203%, at the upper end of the
        Company's target range.
    -   Quarterly dividends declared were $0.3075 per common share payable
        December 31, 2008. Dividends paid on common shares for the nine
        months ended September 30, 2008 were 14% higher than a year ago.
    

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

    CANADA

    Net income attributable to common shareholders for the third quarter of
2008 was $251 million compared to $245 million in 2007, an increase of 2%.
    The third quarter 2008 results include an after-tax charge for asset
impairment of $12 million.
    For the nine months ended September 30, 2008, net income attributable to
common shareholders was $775 million compared to $727 million in 2007, an
increase of 7%. Individual Insurance & Investment Products earnings at
$553 million were up 18% while Group Insurance earnings of $295 million were
up 5%.
    Total sales for the nine months ended September 30, 2008 were $6,148
million compared to $7,072 million in 2007, a decrease of 13%, with the
results reflecting lower sales of segregated fund and mutual fund products.
However, Individual and Group insurance product sales increased.
    Total assets under administration at September 30, 2008 were
$96.5 billion, compared to $100.8 billion at December 31, 2007.

    UNITED STATES

    Net income attributable to common shareholders for the third quarter of
2008 was $43 million compared to $150 million in 2007, a decrease of 71%. Net
income for the quarter was nil in 2008 and $50 million in 2007 in connection
with Lifeco's U.S. healthcare business, which had been designated as
discontinued operations prior to completion of its sale on April 1, 2008.
    The third quarter 2008 results include an after-tax charge for asset
impairment of $30 million, and an after-tax charge of $19 million in
connection with the liquidation of Putnam's Prime Money Market fund.
    For the nine months ended September 30, 2008, net income attributable to
common shareholders was $1,037 million compared to $428 million in 2007.
    In the nine months ended September 30, 2008, three non-recurring items
contributed approximately $767 million to earnings. During the second quarter
of 2008, the Company realized an after-tax gain of $649 million in connection
with the sale of its U.S. healthcare business. During the first quarter of
2008, an after-tax gain of approximately $176 million was realized in
connection with the termination of a long-standing assumption reinsurance
agreement under which GWL&A had reinsured a block of U.S. participating
policies. This gain was partly mitigated by an increase in policy reserves of
approximately $58 million, after-tax, to provide for an increase in overhead
costs expected to be absorbed as a result of the sale of Great-West
Healthcare.
    Total sales for the nine months ended September 30, 2008 were
$26.5 billion compared to $10.1 billion in 2007. Putnam's asset management
business is included in the 2008 results.
    Total assets under administration at September 30, 2008 were $191.2
billion compared to $231.4 billion at December 31, 2007. Included in assets
under administration at September 30, 2008 were $144.8 billion of mutual fund
and institutional account assets managed by Putnam, compared to $184.2 billion
at December 31, 2007.

    EUROPE

    Net income attributable to common shareholders for the third quarter of
2008 was $140 million compared to $161 million for the third quarter of 2007,
a decrease of 13%.
    The third quarter 2008 results include an after-tax charge for asset
impairment of $54 million.
    For the nine months ended September 30, 2008, net income attributable to
common shareholders was $502 million compared to $461 million in 2007, an
increase of 9%.
    Total sales for the nine months ended September 30, 2008 were
$3,655 million compared to $5,029 million in 2007, a decrease of 27%.
    Total assets under administration at September 30, 2008 were
$68.7 billion, compared to $61.7 billion at December 31, 2007.

    CORPORATE

    Corporate net income for Lifeco attributable to common shareholders was 
$2 million for the third quarter and a charge of $11 million for the nine
months ended September 30, 2008 compared to a charge of $95 million for the
third quarter and a charge of $97 million for the nine months ended
September 30, 2007.

    QUARTERLY DIVIDENDS

    At its meeting today, the Board of Directors approved a quarterly
dividend of $0.3075 per share on the common shares of the Company payable
December 31, 2008 to shareholders of record at the close of business
December 3, 2008.
    In addition, the Directors approved quarterly dividends on:

    
    -   Series D First Preferred Shares of $0.293750 per share;
    -   Series E First Preferred Shares of $0.30 per share;
    -   Series F First Preferred Shares of $0.36875 per share;
    -   Series G First Preferred Shares of $0.325 per share;
    -   Series H First Preferred Shares of $0.30313 per share; and
    -   Series I First Preferred Shares of $0.28125 per share;
    all payable December 31, 2008 to shareholders of record at the close
    of business December 3, 2008.
    

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

    GREAT-WEST LIFECO

    Great-West Lifeco Inc. (TSX:GWO) is a financial services holding company
with interests in the life insurance, health insurance, retirement savings,
investment management and reinsurance businesses. The Company has operations
in Canada, the United States, Europe and Asia through The Great-West Life
Assurance Company, London Life Insurance Company, The Canada Life Assurance
Company, Great-West Life & Annuity Insurance Company and Putnam Investments,
LLC. Lifeco and its companies have more than $356 billion in assets under
administration and are members of the Power Financial Corporation group of
companies.

    Cautionary note regarding Forward-Looking Information

    This release contains some forward-looking statements about the Company,
including its business operations, strategy and expected financial performance
and condition. Forward-looking statements include statements that are
predictive in nature, depend upon or refer to future events or conditions, or
include words such as "expects", "anticipates", "intends", "plans",
"believes", "estimates" or negative versions thereof and similar expressions.
In addition, any statement that may be made concerning future financial
performance (including revenues, earnings or growth rates), ongoing business
strategies or prospects, possible future Company action including statements
made by the Company with respect to the expected benefits of acquisitions or
divestitures are also forward-looking statements. Forward-looking statements
are based on current expectations and projections about future events and are
inherently subject to, among other things, risks, uncertainties and
assumptions about the Company, economic factors and the financial services
industry generally, including the insurance and mutual fund industries. They
are not guarantees of future performance, and actual events and results could
differ materially from those expressed or implied by forward-looking
statements made by the Company due to, but not limited to, important factors
such as sales levels, premium income, fee income, expense levels, mortality
experience, morbidity experience, policy lapse rates and taxes, as well as
general economic, political and market factors in North America and
internationally, interest and foreign exchange rates, global equity and
capital markets, business competition, technological change, changes in
government regulations, unexpected judicial or regulatory proceedings,
catastrophic events, and the Company's ability to complete strategic
transactions and integrate acquisitions. The reader is cautioned that the
foregoing list of important factors is not exhaustive, and there may be other
factors, including factors set out under "Risk Management and Control
Practices" in the Company's 2007 Annual Management's Discussion and Analysis
and any listed in other filings with securities regulators, which are
available for review at www.sedar.com. The reader is also cautioned to
consider these and other factors carefully and to not place undue reliance on
forward-looking statements. Other than as specifically required by applicable
law, the Company has no intention to update any forward-looking statements
whether as a result of new information, future events or otherwise.

    Cautionary note regarding Non-GAAP Financial Measures

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

    Further information

    Selected financial information is attached.

    Great-West Lifeco's third quarter conference call will be held
Thursday, October 30 at 3:00 p.m. (Eastern). The call can be accessed through
www.greatwestlifeco.com or by phone at:

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

    A replay of the call will be available from October 30 to November 6,
2008, and can be accessed by calling 1-800-408-3053 or 416-695-5800 in Toronto
(passcode: 3272682 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
                          ------------------------- -------------------------
                                               %                         %
                             2008      2007  Change    2008      2007  Change
    -------------------------------------------------------------------------
      Premiums and
       deposits:
      Life insurance,
       guaranteed
       annuities and
       insured health
       products           $  3,912  $  3,637    8%  $ 25,225  $ 12,989   94%
      Self-funded premium
       equivalents (ASO
       contracts)              583       533    9%     1,795     1,663    8%
      Segregated funds
       deposits:
        Individual products  1,982     2,195  -10%     5,771     7,248  -20%
        Group products       1,140     1,184   -4%     4,125     4,328   -5%
      Proprietary mutual
       funds deposits(1)    (2,571)    6,010     -    16,324     6,433     -
                          ------------------------- -------------------------
      Total premiums and
       deposits              5,046    13,559  -63%    53,240    32,661   63%
                          ------------------------- -------------------------

      Fee and other income     778       735    6%     2,381     1,842   29%
      Paid or credited to
       policyholders         2,173     4,458  -51%    21,959    12,282   79%

      Net income - common
       shareholders(4)
        Continuing
         operations -
         adjusted(3)           436       508  -14%     1,493     1,456    3%
        Discontinued
         operations -
         adjusted (2)            -        50     -        43       160  -73%
                          ------------------------- -------------------------
        Net income -
         adjusted(3)           436       558  -22%     1,536     1,616   -5%
        Adjustments after
         tax(3)                  -       (97)    -       767       (97)    -
        Net income             436       461   -5%     2,303     1,519   52%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Per common share
      Basic earnings -
       adjusted(3)        $  0.487  $  0.625  -22%  $  1.717  $  1.812   -5%
      Adjustments after
       tax(3)                    -    (0.109)    -     0.858    (0.109)    -
      Basic earnings         0.487     0.516   -6%     2.575     1.703   51%
      Dividends paid        0.3075     0.275   12%    0.8925     0.785   14%
      Book value                                       12.70     10.78   18%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Return on common
     shareholders'
     equity (12 months):
      Net income -
       adjusted(3)                                     21.4%     22.1%
      Net income                                       27.1%     21.2%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    At September 30
      Total assets                                  $127,339  $118,596    7%
      Segregated funds
       net assets                                     81,916    90,838  -10%
      Proprietary mutual
       funds net assets                              147,165   193,426  -24%
                                                   --------------------------
      Total assets under
       administration                               $356,420  $402,860  -12%
                                                   --------------------------
                                                   --------------------------
      Share capital and
       surplus                                      $ 12,474  $ 10,715   16%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes Putnam Investments, LLC mutual funds deposits.

    (2) Represents the operating results of Great-West Life & Annuity
        Insurance Company's (GWL&A), an indirect wholly-owned subsidiary of
        Lifeco, health care business, which was sold effective, April 1,
        2008. Does not include the gain on sale of the health care business
        (see 3 (c) below).

    (3) During the nine months ended September 30, 2008, net income
        attributable to common shareholders was increased by $767 after tax
        or $0.858 per common share (nil for the three months ended
        September 30, 2008) as a result of the following items in the
        Company's United States segment:

        (a) A gain realized in connection with the termination of a long
            standing assumption reinsurance agreement ($176 after tax or
            $0.197 per common share for the nine months ended September 30,
            2008 and nil for the three months ended September 30, 2008) as
            described in Note 8 to the interim consolidated financial
            statements;
        (b) Reserve strengthening in GWL&A's continuing operations ($(58)
            after tax or $(0.065) per common share for the nine months ended
            September 30, 2008 and nil for the three months ended
            September 30, 2008) as described in Note 2 to the interim
            consolidated financial statements;
        (c) A gain realized in connection with the sale of GWL&A's health
            care business ($649 after tax or $0.726 per common share for the
            nine months ended September 30, 2008 and nil for the three months
            ended September 30, 2008) as described in Note 2 to the interim
            consolidated financial statements.

        During the nine months ended September 30, 2007, 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 on an adjusted basis, as a non-
        GAAP financial measure of earnings performance. Return on common
        shareholders' equity for 2008 is restated also excluding third
        quarter 2007 non-recurring items.

    (4) Net income for the three months ended September 30, 2008 includes
        asset impairment charges of $96 after tax and costs of $19 associated
        with the transfer of Putnam's Prime Money Market Fund to Federated
        Investors, Inc.



               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
                                  --------------------- ---------------------
                                     2008       2007       2008       2007
                                  ---------- ---------- ---------- ----------
    Income
      Premium income (note 15)    $   3,912  $   3,637  $  25,225  $  12,989
      Net investment income
       (note 4)
        Regular net investment
         income                       1,539      1,402      4,539      4,261
        Changes in fair value on
         held for trading assets     (2,258)       425     (4,793)    (1,919)
                                  ---------- ---------- ---------- ----------
      Total net investment income      (719)     1,827       (254)     2,342
      Fee and other income              778        735      2,381      1,842
                                  ---------- ---------- ---------- ----------
                                      3,971      6,199     27,352     17,173
                                  ---------- ---------- ---------- ----------

    Benefits and expenses
      Policyholder benefits           3,732      3,238     11,855     11,978
      Policyholder dividends
       and experience refunds           338        324      1,016        794
      Change in actuarial
       liabilities (note 15)         (1,897)       896      9,088       (490)
                                  ---------- ---------- ---------- ----------
      Total paid or credited
       to policyholders               2,173      4,458     21,959     12,282

      Commissions                       341        316        993        992
      Operating expenses                662        728      1,956      1,613
      Premium taxes                      60         60        154        168
      Financing charges (note 6)         76         81        259        185
      Amortization of finite
       life intangible assets            10         10         30         24
                                  ---------- ---------- ---------- ----------
    Net income from continuing
     operations before income taxes     649        546      2,001      1,909

    Income taxes - current               95         46        435        352
                 - future                92         27         31         32
                                  ---------- ---------- ---------- ----------
    Net income from continuing
     operations before
     non-controlling interests          462        473      1,535      1,525

    Non-controlling interests
     (note 8)                            12         48       (118)       124
                                  ---------- ---------- ---------- ----------
    Net income from continuing
     operations                         450        425      1,653      1,401

    Net income from discontinued
     operations (note 2)                  -         50        692        160
                                  ---------- ---------- ---------- ----------
    Net income                          450        475      2,345      1,561

    Perpetual preferred share
     dividends                           14         14         42         42
                                  ---------- ---------- ---------- ----------
    Net income - common
     shareholders                 $     436  $     461  $   2,303  $   1,519
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------
    Earnings per common share
     (note 13)

      Basic                       $   0.487  $   0.516  $   2.575  $   1.703
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------
      Diluted                     $   0.485  $   0.513  $   2.563  $   1.690
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------



                   CONSOLIDATED BALANCE SHEETS (unaudited)
                               (in $ millions)

                                    September 30,  December 31, September 30,
                                        2008           2007         2007
                                    ------------- ------------- -------------

    Assets

    Bonds (note 4)                  $     62,010  $     65,069  $     66,088
    Mortgage loans (note 4)               17,159        15,869        15,682
    Stocks (note 4)                        6,054         6,543         6,512
    Real estate (note 4)                   3,230         2,547         2,327
    Loans to policyholders                 6,814         6,317         6,259
    Cash and cash equivalents              3,333         3,650         2,957
    Funds held by ceding insurers         12,527         1,512         1,553
    Assets of operation held for
     sale (note 2)                             -           697           680
    Goodwill                               6,355         6,295         8,465
    Intangible assets                      4,060         3,917         1,702
    Other assets                           5,797         5,778         6,371
                                    ------------- ------------- -------------
    Total assets                    $    127,339  $    118,194  $    118,596
                                    ------------- ------------- -------------
                                    ------------- ------------- -------------

    Liabilities

    Policy liabilities
      Actuarial liabilities         $     96,723  $     87,487  $     86,171
      Provision for claims                 1,368         1,315         1,238
      Provision for policyholder
       dividends                             638           600           581
      Provision for experience
       rating refunds                        272           310           225
      Policyholder funds                   2,244         2,160         2,084
                                    ------------- ------------- -------------
                                         101,245        91,872        90,299

    Debentures and other debt
     instruments (note 7)                  3,852         5,241         5,336
    Funds held under reinsurance
     contracts                               164           164         1,950
    Other liabilities                      5,251         5,211         5,277
    Liabilities of operations
     held for sale (note 2)                    -           428           498
    Repurchase agreements                    445           344           491
    Deferred net realized gains              160           179           168
                                    ------------- ------------- -------------
                                         111,117       103,439       104,019

    Preferred shares (note 9)                795           786           798
    Capital trust securities and
     debentures                              642           639           640
    Non-controlling interests
      Participating account surplus
       in subsidiaries                     1,970         2,103         2,063
      Preferred shares issued by
       subsidiaries                          157           157           209
      Perpetual preferred shares
       issued by subsidiaries                150           152           152
      Non-controlling interests in
       capital stock and surplus              34            10             -

    Share capital and surplus

    Share capital (note 9)
      Perpetual preferred shares           1,099         1,099         1,099
      Common shares                        4,733         4,709         4,691
    Accumulated surplus                    8,109         6,599         6,308
    Accumulated other comprehensive
     income                               (1,509)       (1,533)       (1,415)
    Contributed surplus                       42            34            32
                                    ------------- ------------- -------------
                                          12,474        10,908        10,715
                                    ------------- ------------- -------------
    Liabilities, share capital
     and surplus                    $    127,339  $    118,194  $    118,596
                                    ------------- ------------- -------------
                                    ------------- ------------- -------------



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


                                                         For the nine months
                                                          ended September 30
                                                        ---------------------
                                                           2008       2007
                                                        ---------- ----------
    Accumulated surplus
    Balance, beginning of year                          $   6,599  $   5,858
    Change in accounting policy                                 -       (368)
    Net income                                              2,345      1,561
    Repatriation of Canada Life seed capital from
     participating policyholder account (note 8)                5          -
    Dividends to shareholders
      Perpetual preferred shareholders                        (42)       (42)
      Common shareholders                                    (798)      (701)
                                                        ---------- ----------
    Balance, end of period                              $   8,109  $   6,308
                                                        ---------- ----------
                                                        ---------- ----------

    Accumulated other comprehensive income,
     net of income taxes (note 14)
    Balance, beginning of year                          $  (1,533) $    (547)
    Change in accounting policy                                 -        257
    Other comprehensive income                                 24     (1,125)
                                                        ---------- ----------
    Balance, end of period                              $  (1,509) $  (1,415)
                                                        ---------- ----------
                                                        ---------- ----------

    Contributed surplus
    Balance, beginning of year                          $      34  $      28
    Stock option expense
      Current year expense (note 11)                            8          4
                                                        ---------- ----------
    Balance, end of period                              $      42  $      32
                                                        ---------- ----------
                                                        ---------- ----------



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


                                   For the three months  For the nine months
                                    ended September 30    ended September 30
                                  --------------------- ---------------------
                                     2008       2007       2008       2007
                                  ---------- ---------- ---------- ----------

    Net income                    $     450  $     475  $   2,345  $   1,561

    Other comprehensive income
     (loss), net of income taxes
      Unrealized foreign exchange
       gains (losses) on
       translation of foreign
       operations                       (36)      (512)       326     (1,100)
      Unrealized gains (losses) on
       available for sale assets        (38)        22       (195)       (76)
      Realized (gains) losses on
       available for sale assets         (6)        (6)       (34)       (29)
      Unrealized gains (losses)
       on cash flow hedges              (61)        31        (71)        (7)
      Realized (gains) losses on
       cash flow hedges                  (1)        36         (1)        36
      Non-controlling interests           -         (9)        (1)        51
                                  ---------- ---------- ---------- ----------
                                       (142)      (438)        24     (1,125)
                                  ---------- ---------- ---------- ----------
    Comprehensive income          $     308  $      37  $   2,369  $     436
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------


    Income tax (expense) benefit
     included in other
     comprehensive income

                                   For the three months  For the nine months
                                    ended September 30    ended September 30
                                  --------------------- ---------------------
                                     2008       2007       2008       2007
                                  ---------- ---------- ---------- ----------

      Unrealized foreign exchange
       gains (losses) on
       translation of foreign
       operations                 $       -  $       -  $       -  $       -
      Unrealized gains (losses) on
       available for sale assets         25          -         81         26
      Realized (gains) losses on
       available for sale assets          3          3         12         15
      Unrealized gains (losses)
       on cash flow hedges               33        (17)        39          4
      Realized (gains) losses on
       cash flow hedges                   1        (19)         1        (19)
      Non-controlling interests          (3)        (1)        (3)        (5)
                                  ---------- ---------- ---------- ----------
                                  $      59  $     (34) $     130  $      21
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------



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


                                   For the three months  For the nine months
                                    ended September 30    ended September 30
                                  --------------------- ---------------------
                                     2008       2007       2008       2007
                                  ---------- ---------- ---------- ----------

    Operations
      Net income                  $     450  $     475  $   2,345  $   1,561
      Adjustments:
        Change in policy
         liabilities                 (3,134)       910     (4,584)      (703)
        Change in funds held by
         ceding insurers              1,605        168      2,106        609
        Change in funds held under
         reinsurance contracts           (6)       (26)       (12)        24
        Change in current income
         taxes payable                 (333)      (129)       (44)      (159)
        Future income tax expense        92         27         31         32
        Gain on disposal of
         business, after tax
         (note 2)                         -          -       (649)         -
        Changes in fair value of
         financial instruments        2,259       (441)     4,802      1,892
        Other                          (208)        (7)    (1,563)      (827)
                                  ---------- ---------- ---------- ----------
    Cash flows from operations          725        977      2,432      2,429

    Financing Activities
      Issue of common shares             15          3         24         15
      Partial repayment of five
       year term facility in
       subsidiary                         -          -       (198)         -
      Purchased and cancelled
       common shares                      -         (1)         -         (1)
      Issue of subordinated
       debentures in subsidiary           -          -        500      1,000
      Issue of short term
       commercial paper                   -       (124)         -          -
      Drawdown on credit facility         -      2,454          -      2,454
      Repayments of credit facility       -          -     (1,886)         -
      Increase in (repayment of)
       line of credit in subsidiary      73          -        143          -
      Increase in (repayment of)
       debentures and other debt
       instruments                      (33)        26        (30)        (1)
      Dividends paid                   (289)      (260)      (840)      (743)
                                  ---------- ---------- ---------- ----------
                                       (234)     2,098     (2,287)     2,724

    Investment Activities
      Bond sales and maturities       5,166      7,059     13,974     18,878
      Mortgage loan repayments          524        458      1,441      1,429
      Stock sales                       729        396      1,727      1,173
      Real estate sales                   -         32        198         66
      Change in loans to
       policyholders                    (28)        (7)      (202)      (167)
      Change in repurchase
       agreements                       (90)      (317)       185       (584)
      Acquisition of business             -     (4,155)         -     (4,155)
      Disposal of business (note 2)       -          6      1,344          6
      Investment in bonds            (4,617)    (5,777)   (13,587)   (17,082)
      Investment in mortgage loans     (907)    (1,207)    (2,744)    (2,491)
      Investment in stocks             (635)      (359)    (1,998)    (1,595)
      Investment in real estate        (452)      (244)      (852)      (440)
                                  ---------- ---------- ---------- ----------
                                       (310)    (4,115)      (514)    (4,962)

    Effect of changes in exchange
     rates on cash and cash
     equivalents                       (115)      (115)        26       (297)

    Increase (decrease) in cash
     and cash equivalents                66     (1,155)      (343)      (106)

    Cash and cash equivalents from
     continuing and discontinued
     operations, beginning
     of period                        3,267      4,132      3,676      3,083

    Cash and cash equivalents from
     discontinued operations,
     end of period                        -        (20)         -        (20)
                                  ---------- ---------- ---------- ----------
    Cash and cash equivalents,
     end of period                $   3,333  $   2,957  $   3,333  $   2,957
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------



    Notes to Consolidated Financial Statements (unaudited)
    (in $ millions except per share amounts)

    1.  Basis of Presentation and Summary of Accounting Policies

        The interim unaudited consolidated financial statements of Great-West
        Lifeco Inc. (Lifeco or the Company) at September 30, 2008 have been
        prepared in accordance with Canadian generally accepted accounting
        principles, using the same accounting policies and methods of
        computation followed in the consolidated financial statements for the
        year ended December 31, 2007 except as noted below. These interim
        consolidated financial statements should be read in conjunction with
        the consolidated financial statements and notes thereto in the
        Company's annual report dated December 31, 2007.

        (a) Changes in Accounting Policy

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

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

        (b) Comparative Figures

            Certain of the 2007 amounts presented for comparative purposes
            have been reclassified to conform to the presentation adopted in
            the current year. This reclassification has resulted in a
            decrease in other assets of $194 at December 31, 2007 and $176 at
            September 30, 2007 with a corresponding change in policy
            liabilities on the Consolidated Balance Sheets. On the Summary of
            Consolidated Operations this reclassification resulted in a
            decrease in total paid or credited to policyholders of $84 for
            the nine months ended September 30, 2007 and $17 for the three
            months ended September 30, 2007 with a corresponding increase in
            income tax expense.

        (c) Measurement Uncertainty

            The preparation of financial statements in conformity with
            Canadian generally accepted accounting principles requires
            management to make estimates and assumptions that affect the
            reported amounts of assets and liabilities and disclosure of
            contingent assets and liabilities at the balance sheet date and
            the reported amounts of revenues and expenses during the
            reporting period. The year to date results of the Company reflect
            management's judgments regarding the impact of prevailing global
            credit, equity and foreign exchange market conditions. Financial
            instrument carrying values necessarily reflect the illiquidity of
            the markets and the liquidity premiums embedded in the market
            pricing methods the Company relies upon.

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

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

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

    2.  Disposals

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

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

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

                                   For the three months  For the nine months
                                    ended September 30    ended September 30
                                  --------------------- ---------------------
                                     2008       2007       2008       2007
                                  ---------- ---------- ---------- ----------

        Income
          Premium income          $       -  $     242  $     184  $     769
          Net investment income           -         17         11         60
          Fee and other income            -        186        164        592
                                  ---------- ---------- ---------- ----------
                                          -        445        359      1,421
                                  ---------- ---------- ---------- ----------
          Gain on sale                    -          -      1,025          -
                                  ---------- ---------- ---------- ----------
                                          -        445      1,384      1,421
                                  ---------- ---------- ---------- ----------

        Benefits and expenses
          Paid or credited to
           policyholders and
           beneficiaries including
           policyholder dividends
           and experience refunds         -        203        151        660
          Other                           -        170        145        531
                                  ---------- ---------- ---------- ----------
        Net income from
         discontinued operations
         before income taxes              -         72      1,088        230
        Income taxes                      -         22        396         70
                                  ---------- ---------- ---------- ----------
        Net income from
         discontinued operations  $       -  $      50  $     692  $     160
                                  ---------- ---------- ---------- ----------
                                  ---------- ---------- ---------- ----------

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

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

                                                   December 31, September 30,
                                                       2007         2007
                                                  ------------- -------------
        Assets

        Bonds                                     $        241  $        196
        Cash and cash equivalents                           26            20
        Goodwill                                            47            52
        Intangible assets                                   11            10
        Other assets                                       372           402
                                                  ------------- -------------
        Assets of operations held for sale        $        697  $        680
                                                  ------------- -------------
                                                  ------------- -------------
        Liabilities

        Policy liabilities                        $        248  $        286
        Other liabilities                                  180           212
                                                  ------------- -------------
        Liabilities of operations held for sale   $        428  $        498
                                                  ------------- -------------
                                                  ------------- -------------

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

    3.  Restructuring Costs

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

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

                                                       Changes in
                        Expected    Amounts    Amounts    foreign    Balance
                           total   utilized   utilized   exchange  September
                           costs     - 2007     - 2008      rates   30, 2008
                        ---------  ---------  ---------  ---------  ---------
        Compensation
         costs           $   133    $   (27)   $   (53)   $    (4)   $    49
        Exiting and
         consolidating
         operations           22         (6)        (1)         -         15
        Eliminating
         duplicate
         systems              29         (1)         -          -         28
                        ---------  ---------  ---------  ---------  ---------
                         $   184    $   (34)   $   (54)   $    (4)   $    92
                        ---------  ---------  ---------  ---------  ---------
                        ---------  ---------  ---------  ---------  ---------
        Accrued on
         acquisition     $   154    $   (34)   $   (54)   $    (4)   $    62
        Expense as
         incurred             30          -          -          -         30
                        ---------  ---------  ---------  ---------  ---------
                         $   184    $   (34)   $   (54)   $    (4)   $    92
                        ---------  ---------  ---------  ---------  ---------
                        ---------  ---------  ---------  ---------  ---------

    4.  Portfolio Investments

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

                          September 30, 2008
                  -----------------------------------
                     Carrying Value & Market Value
                  -----------------------------------
                                Held for trading(1)
                   Available  -----------------------
                    for sale  Designated  Classified
                  ----------- ----------- -----------
    Bonds
    - government   $   1,866   $  14,971   $     516
    - corporate        2,100      32,470       1,089
                  ----------- ----------- -----------
                       3,966      47,441       1,605
                  ----------- ----------- -----------
    Mortgage loans
    - residential          -           -           -
    - non-
      residential          -           -           -
                  ----------- ----------- -----------
                           -           -           -
                  ----------- ----------- -----------
    Stocks             1,348       4,377           -
    Real estate            -           -           -
                  ----------- ----------- -----------
                   $   5,314   $  51,818   $   1,605
                  ----------- ----------- -----------
                  ----------- ----------- -----------

                                        September 30, 2008
                  -----------------------------------------------------------
                                   Amortized Cost                    Total
                  ----------------------------------------------- -----------
                    Carrying      Market    Carrying      Market
                       Value       Value  Value Non-  Value Non-
                   Loans and   Loans and   financial   financial    Carrying
                 receivables receivables instruments instruments       value
                  ----------- ----------- ----------- ----------- -----------
    Bonds
    - government   $   1,716   $   1,757   $       -   $       -   $  19,069
    - corporate        7,282       7,096           -           -      42,941
                  ----------- ----------- ----------- ----------- -----------
                       8,998       8,853           -           -      62,010
                  ----------- ----------- ----------- ----------- -----------
    Mortgage loans
    - residential      6,992       7,021           -           -       6,992
    - non-
      residential     10,167       9,983           -           -      10,167
                  ----------- ----------- ----------- ----------- -----------
                      17,159      17,004           -           -      17,159
                  ----------- ----------- ----------- ----------- -----------
    Stocks                 -           -         329         354       6,054
    Real estate            -           -       3,230       3,334       3,230
                  ----------- ----------- ----------- ----------- -----------
                   $  26,157   $  25,857   $   3,559   $   3,688   $  88,453
                  ----------- ----------- ----------- ----------- -----------
                  ----------- ----------- ----------- ----------- -----------


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

                                        December 31, 2007
                  -----------------------------------------------------------
                                   Amortized Cost                    Total
                  ----------------------------------------------- -----------
                    Carrying      Market    Carrying      Market
                       Value       Value  Value Non-  Value Non-
                   Loans and   Loans and   financial   financial    Carrying
                 receivables receivables instruments instruments       value
                  ----------- ----------- ----------- ----------- -----------
    Bonds
    - government   $   1,775   $   1,877   $       -   $       -   $  20,505
    - corporate        7,025       7,130           -           -      44,564
                  ----------- ----------- ----------- ----------- -----------
                       8,800       9,007           -           -      65,069
                  ----------- ----------- ----------- ----------- -----------
    Mortgage loans
    - residential      7,121       7,127           -           -       7,121
    - non-
      residential      8,748       8,879           -           -       8,748
                  ----------- ----------- ----------- ----------- -----------
                      15,869      16,006           -           -      15,869
                  ----------- ----------- ----------- ----------- -----------
    Stocks                 -           -         320         461       6,543
    Real estate            -           -       2,547       2,844       2,547
                  ----------- ----------- ----------- ----------- -----------
                   $  24,669   $  25,013   $   2,867   $   3,305   $  90,028
                  ----------- ----------- ----------- ----------- -----------
                  ----------- ----------- ----------- ----------- -----------


                          September 30, 2007
                  -----------------------------------
                     Carrying Value & Market Value
                  -----------------------------------
                                Held for trading(1)
                   Available  -----------------------
                    for sale  Designated  Classified
                  ----------- ----------- -----------
    Bonds
    - government   $   1,647   $  17,253   $     691
    - corporate        2,594      34,098         872
                  ----------- ----------- -----------
                       4,241      51,351       1,563
                  ----------- ----------- -----------
    Mortgage loans
    - residential          -           -           -
    - non-
      residential          -           -           -
                  ----------- ----------- -----------
                           -           -           -
                  ----------- ----------- -----------
    Stocks             1,459       4,737           -
    Real estate            -           -           -
                  ----------- ----------- -----------
                   $   5,700   $  56,088   $   1,563
                  ----------- ----------- -----------
                  ----------- ----------- -----------

                                        September 30, 2007
                  -----------------------------------------------------------
                                   Amortized Cost                    Total
                  ----------------------------------------------- -----------
                    Carrying      Market    Carrying      Market
                       Value       Value  Value Non-  Value Non-
                   Loans and   Loans and   financial   financial    Carrying
                 receivables receivables instruments instruments       value
                  ----------- ----------- ----------- ----------- -----------
    Bonds
    - government   $   1,815   $   2,010   $       -   $       -   $  21,406
    - corporate        7,118       7,290           -           -      44,682
                  ----------- ----------- ----------- ----------- -----------
                       8,933       9,300           -           -      66,088
                  ----------- ----------- ----------- ----------- -----------
    Mortgage loans
    - residential      7,198       7,293           -           -       7,198
    - non-
      residential      8,484       8,459           -           -       8,484
                  ----------- ----------- ----------- ----------- -----------
                      15,682      15,752           -           -      15,682
                  ----------- ----------- ----------- ----------- -----------
    Stocks                 -           -         316         484       6,512
    Real estate            -           -       2,327       2,789       2,327
                  ----------- ----------- ----------- ----------- -----------
                   $  24,615   $  25,052   $   2,643   $   3,273   $  90,609
                  ----------- ----------- ----------- ----------- -----------
                  ----------- ----------- ----------- ----------- -----------

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


        (b) Included in portfolio investments are the following:

            (i)  Non-performing loans:

                                    September 30,  December 31, September 30,
                                        2008           2007         2007
                                    ------------- ------------- -------------

                 Bonds              $         70  $         33  $         54
                 Mortgage loans                8             9            10
                                    ------------- ------------- -------------
                                    $         78  $         42  $         64
                                    ------------- ------------- -------------
                                    ------------- ------------- -------------

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

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

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

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

                                       For the                 For the
                                  nine months ended       nine months ended
                                 September 30, 2008      September 30, 2007
                              ----------------------- -----------------------
                                     Mortgage                Mortgage
                               Bonds   Loans   Total   Bonds   Loans   Total
                              ------- ------- ------- ------- ------- -------
    Balance, beginning of
     year                     $   34  $   19  $   53  $   44  $   30  $   74
    Net provision (recoveries)
     for credit losses -
     in year                       1      (2)     (1)     (2)      -      (2)
    Write-offs, net of
     recoveries                   (6)      2      (4)     (3)     (4)     (7)
    Other (including foreign
     exchange rate changes)        1       1       2      (3)     (6)     (9)
                              ------- ------- ------- ------- ------- -------
    Balance, end of period    $   30  $   20  $   50  $   36  $   20  $   56
                              ------- ------- ------- ------- ------- -------
                              ------- ------- ------- ------- ------- -------


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

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

    Regular net
     investment income:
      Investment income
       earned                 $1,079  $  241  $   28  $   46  $  132  $1,526
      Net realized gains
       (losses) (available
       for sale)                   5       -      (3)      -       -       2
      Net realized gains
       (losses) (other
       classifications)           14      12      (6)      -       -      20
      Amortization of net
       realized/unrealized
       gains (non-financial
       instruments)                -       -       -       8       -       8
      Net (provision)
       recovery of credit
       losses (loans and
       receivables)               (3)      2       -       -       -      (1)
      Other income and
       expenses                    -       -       -       -     (16)    (16)
                              ------- ------- ------- ------- ------- -------
                               1,095     255      19      54     116   1,539

    Changes in fair value on
     held for trading assets:
      Net realized/unrealized
       gains (losses)
       (classified held for
       trading)                    -       -       -       -       -       -
      Net realized/unrealized
       gains (losses)
       (designated held for
       trading)               (1,464)      -    (660)      -    (134) (2,258)
                              ------- ------- ------- ------- ------- -------
                              (1,464)      -    (660)      -    (134) (2,258)
                              ------- ------- ------- ------- ------- -------
    Net investment income     $ (369) $  255  $ (641) $   54  $  (18) $ (719)
                              ------- ------- ------- ------- ------- -------
                              ------- ------- ------- ------- ------- -------


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

    Regular net
     investment income:
      Investment income
       earned                 $  946  $  224  $   47  $   36  $  135  $1,388
      Net realized gains
       (losses) (available
       for sale)                   1       -       3       -       -       4
      Net realized gains
       (losses) (other
       classifications)            3       4       -       -       -       7
      Net impairment
       recoveries                  2       -       -       -       -       2
      Amortization of
       deferred net
       realized gains              -       -       -      19       -      19
      Other income and
       expenses                    -       -       -       -     (18)    (18)
                              ------- ------- ------- ------- ------- -------
                                 952     228      50      55     117   1,402

    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)                  389       -      19       -     (31)    377
                              ------- ------- ------- ------- ------- -------
                                 437       -      19       -     (31)    425
                              ------- ------- ------- ------- ------- -------
    Net investment income     $1,389  $  228  $   69  $   55  $   86  $1,827
                              ------- ------- ------- ------- ------- -------
                              ------- ------- ------- ------- ------- -------


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

    Regular net
     investment income:
      Investment income
       earned                 $3,066  $  705  $  146  $  123  $  419  $4,459
      Net realized gains
       (losses) (available
       for sale)                  50       -      (4)      -       -      46
      Net realized gains
       (losses) (other
       classifications)           29      23       -       -       -      52
      Amortization of net
       realized/unrealized
       gains (non-financial
       instruments)                -       -       -      28       -      28
      Net (provision) recovery
       of credit losses
       (loans and receivables)    (1)      2       -       -       -       1
      Other income and
       expenses                    -       -       -       -     (47)    (47)
                              ------- ------- ------- ------- ------- -------
                               3,144     730     142     151     372   4,539

    Changes in fair value on
     held for trading assets:
      Net realized/unrealized
       gains (losses)
       (classified held for
       trading)                    1       -       -       -       -       1
      Net realized/unrealized
       gains (losses)
       (designated held for
       trading)               (4,029)      -    (733)      -     (32) (4,794)
                              ------- ------- ------- ------- ------- -------
                              (4,028)      -    (733)      -     (32) (4,793)
                              ------- ------- ------- ------- ------- -------
    Net investment income     $ (884) $  730  $ (591) $  151  $  340  $ (254)
                              ------- ------- ------- ------- ------- -------
                              ------- ------- ------- ------- ------- -------


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

    Regular net
     investment income:
      Investment income
       earned                 $2,825  $  671  $  135  $   97  $  450  $4,178
      Net realized gains
       (losses) (available
       for sale)                  33       -       6       -       -      39
      Net realized gains
       (losses) (other
       classifications)           16      19       -       -       -      35
      Net impairment
       recoveries                  3       4       -       -       -       7
      Amortization of
       deferred net
       realized gains              -       -       -      56       -      56
      Other income and
       expenses                    -       -       -       -     (54)    (54)
                              ------- ------- ------- ------- ------- -------
                               2,877     694     141     153     396   4,261

    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)               (2,054)      -     231       -    (123) (1,946)
                              ------- ------- ------- ------- ------- -------
                              (2,027)      -     231       -    (123) (1,919)
                              ------- ------- ------- ------- ------- -------
    Net investment income     $  850  $  694  $  372  $  153  $  273  $2,342
                              ------- ------- ------- ------- ------- -------
                              ------- ------- ------- ------- ------- -------


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

    5.  Financial Instrument Risk Management

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

        (a) Credit Risk

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

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



      (i)  Maximum Exposure to Credit Risk

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

                                                                September 30,
                                                                     2008
                                                                -------------
              Cash and cash equivalents                          $     3,333
              Bonds
                  Held for trading                                    49,046
                  Available for sale                                   3,966
                  Amortized cost                                       8,998
              Mortgage loans                                          17,159
              Loans to policyholders                                   6,814
              Other financial assets                                  15,863
              Derivative assets                                          605
                                                                -------------
              Total balance sheet maximum credit exposure        $   105,784
                                                                -------------
                                                                -------------

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

         (ii) Concentration of Credit Risk

              Concentrations of credit risk arise from exposures to a single
              debtor, a group of related debtors or groups of debtors that
              have similar credit risk characteristics in that they operate
              in the same geographic region or in similar industries. The
              characteristics are similar in that changes in economic or
              political environments may impact their ability to meet
              obligations as they come due. The following table provides
              details of the carrying value of bonds by industry sector and
              geographic distribution:

                                                                September 30,
                                                                     2008
                                                                -------------
              Bonds issued or guaranteed by:
               Canadian federal government                       $     1,409
               Canadian provincial and municipal governments           5,611
               U.S. Treasury and other U.S. agencies                   4,102
               Other foreign governments                               6,030
               Government related                                      1,560
               Sovereign                                               1,888
               Asset-backed securities                                 7,304
               Residential mortgage backed securities                  1,002
               Banks                                                   4,897
               Other financial institutions                            4,899
               Basic Materials                                           793
               Communications                                          1,162
               Consumer products                                       3,780
               Industrial products/services                            1,489
               Natural resources                                       1,754
               Real estate                                             1,629
               Transportation                                          2,438
               Utilities                                               6,602
               Miscellaneous                                           1,651
                                                                -------------
              Total long term bonds                                   60,000
              Short term bonds                                         2,010
                                                                -------------
                                                                 $    62,010
                                                                -------------
                                                                -------------
              Canada                                             $    24,085
              United States                                           15,811
              Europe/Reinsurance                                      22,114
                                                                -------------
                                                                 $    62,010
                                                                -------------
                                                                -------------

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

                                            September 30, 2008
                              -----------------------------------------------
                                Single      Multi-
                                family      family
                              residential residential Commercial      Total
                              ----------- ----------- ----------- -----------
              Canada          $    1,836  $    4,606  $    6,007  $   12,449
              United States            -         519       1,259       1,778
              Europe/
               Reinsurance             -          31       2,901       2,932
                              ----------- ----------- ----------- -----------
              Total
               mortgages      $    1,836  $    5,156  $   10,167  $   17,159
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

        (iii) Asset Quality

              Bond Portfolio Quality

                                                                September 30,
                                                                     2008
                                                                -------------
              AAA                                                   $ 23,523
              AA                                                      11,331
              A                                                       16,968
              BBB                                                      7,729
              BB and lower                                               449
                                                                -------------
                                                                      60,000
              Short term bonds                                         2,010
                                                                -------------
              Total bonds                                        $    62,010
                                                                -------------
                                                                -------------

              Derivative Portfolio Quality

                                                                September 30,
                                                                     2008
                                                                -------------
              Over-the-counter contracts (counterparty ratings):
              AAA                                                $         2
              AA                                                         333
              A                                                          270
                                                                -------------
              Total                                              $       605
                                                                -------------
                                                                -------------

              Derivative instruments are either exchange traded or over-the-
              counter contracts negotiated between counterparties. At
              September 30, 2008, the Company held assets of $6 pledged as
              collateral for derivative contracts. The assets pledged consist
              of cash, cash equivalents and short-term securities.

        (b) Liquidity Risk

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

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

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

                                       Payments due by period
                      -------------------------------------------------------
                                                                        over
                       Total  1 year 2 years 3 years 4 years 5 years 5 years
                      -------------------------------------------------------
    Debentures and
     other debt
     instruments      $3,851  $  221  $    1  $    1  $  323  $  201  $3,104

    Preferred share
     liabilities         756       -       -       -       -     557     199

    Capital trust
     debentures (1)      800       -       -       -       -       -     800
                      -------------------------------------------------------
                      $5,407  $  221  $    1  $    1  $  323  $  758  $4,103
                      -------------------------------------------------------
                      -------------------------------------------------------

    (1) Payments due have not been reduced to reflect the Company held
        capital trust securities of $175 principal amount ($183 carrying
        value).

        (c) Market Risk

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

           (i) Currency Risk

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

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

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

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

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

         (ii) Interest Rate Risk

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

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

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

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

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

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

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

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

              -  The effect of an immediate and permanent 1% increase in
                 interest rates at each future duration would be to decrease
                 the present value of these net projected cash flows by
                 approximately $89.

              -  The effect of an immediate and permanent 1% decrease in
                 interest rates at each future duration would be to decrease
                 the present value of these net projected cash flows by
                 approximately $90.

        (iii) Equity Risk

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

              Some policy liabilities are supported by equities, for example
              segregated fund products and products with long-tail
              liabilities. Generally these liabilities will fluctuate in line
              with equity market values. There will be additional impacts on
              these liabilities as equity market values fluctuate. A 10%
              increase in equity markets would be expected to additionally
              decrease non-participating actuarial liabilities by
              approximately $58. A 10% decrease in equity markets would be
              expected to additionally increase non-participating actuarial
              liabilities by approximately $102.

        6. Financing Charges

           Financing charges consist of the following:

                                               For the three    For the nine
                                                months ended    months ended
                                                September 30    September 30
                                                -------------   -------------
                                                2008    2007    2008    2007
                                               ------  ------  ------  ------
           Interest on long-term debentures
            and other debt instruments          $ 47    $ 69    $173    $131
           Preferred share dividends               9       9      27      27
           Unrealized gains on preferred
            shares classified as held
            for trading                            1     (15)      9     (29)
           Subordinated debenture issue costs      -       -       5      13
           Other                                  10       9      17      15
           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                                $ 76    $ 81    $259    $185
                                               ------  ------  ------  ------
                                               ------  ------  ------  ------

        7. Debentures and Other Debt Instruments

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

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

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

           On January 24, 2008, a subsidiary of Putnam LLC executed a demand
           promissory note in the amount of U.S. $150 with a Canadian
           Chartered Bank. On January 24, 2008, Putnam LLC drew U.S. $150 on
           the note. On March 26, 2008, a subsidiary of Putnam LLC executed a
           U.S. $200 revolving credit facility with a Canadian Chartered Bank
           and used proceeds from the facility to repay the U.S. $150
           demand promissory note. There was U.S. $140 outstanding under the
           facility at September 30, 2008.

        8. Non-Controlling Interests

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

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

           During the first quarter of 2008, non-controlling interests
           decreased by approximately $176 in connection with the termination
           of a long-standing assumption reinsurance agreement under which
           GWL&A had reinsured a block of U.S. participating policies.

        9. Share Capital

        (a) Preferred Shares

            The Company has designated outstanding Preferred Shares Series D
            and Series E as held for trading on the Consolidated Balance
            Sheets with changes in fair value reported in the Summary of
            Consolidated Operations. During the nine months ended
            September 30, 2008 the Company recognized unrealized gains
            (losses) of $3 for Series D and $(12) for Series E (for the nine
            months ended September 30, 2007, $10 for Series D and $19 for
            Series E). The redemption price at maturity is $25 per share plus
            accrued dividends.

        (b) Common Shares

            Issued and outstanding

                           September 30, 2008          December 31, 2007
                       --------------------------  --------------------------
                                       Carrying                    Carrying
                          Number         Value        Number         Value
                       ------------  ------------  ------------  ------------
    Common shares:
    Balance, beginning
     of year           893,761,639  $      4,709   891,151,789  $      4,676
    Issued under Stock
     Option Plan         1,759,600            24     2,609,850            33
                       ------------  ------------  ------------  ------------
    Balance, end of
     period            895,521,239  $      4,733   893,761,639  $      4,709
                       ------------  ------------  ------------  ------------
                       ------------  ------------  ------------  ------------

                           September 30, 2007
                      --------------------------
                                       Carrying
                          Number         Value
                      ------------  ------------
    Common shares:
    Balance, beginning
     of year           891,151,789  $     4,676
    Issued under Stock
     Option Plan         1,308,508           15
                      ------------  ------------
    Balance, end of
     period            892,460,297        4,691
                      ------------  ------------
                      ------------  ------------

        10. Capital Management

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

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

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

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


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

          Common shares                   $ 6,116      $ 6,116       $ 6,116
          Shareholder surplus               5,394        4,672         4,441
          Qualifying non-controlling
           interests                          150          152           153
          Innovative instruments              637          636           635
          Other Tier 1 Capital
           Elements                         1,372        1,337         1,347
                                     ------------- ------------ -------------
          Gross Tier 1 Capital             13,669       12,913        12,692

        Deductions from Tier 1:
            Goodwill & intangible
             assets in excess of limit      5,689        5,724         5,722
            Other deductions                1,355        1,219         1,229
                                     ------------- ------------ -------------
        Net Tier 1 Capital                  6,625        5,970         5,741

        Tier 2 Capital
          Tier 2A                             273          456           568
          Tier 2B allowed                     500          502           502
          Tier 2C                           1,324        1,262         1,224
                                     ------------- ------------ -------------

        Tier 2 Capital Allowed              2,097        2,220         2,294

        Total Tier 1 and Tier 2 Capital     8,722        8,190         8,035
        Less: Deductions/Adjustments          127          101           189
                                     ------------- ------------ -------------
        Total Available Capital           $ 8,595      $ 8,089       $ 7,846

        Capital Required:
          Assets Default & market risk    $ 1,581      $ 1,457       $ 1,406
          Insurance Risks                   1,711        1,675         1,669
          Interest Rate Risks                 961          888           864
          Other                               (19)         (76)          (95)
                                     ------------- ------------ -------------
        Total Capital Required            $ 4,234      $ 3,944       $ 3,844

        MCCSR ratios:
        Tier 1                                156%         151%          149%
                                     ------------- ------------ -------------
                                     ------------- ------------ -------------
        Total                                 203%         205%          204%
                                     ------------- ------------ -------------
                                     ------------- ------------ -------------

           In the United States, GWL&A is subject to comprehensive state and
           federal regulation and supervision throughout the United States.
           The National Association of Insurance Commissioners (NAIC) has
           adopted risk-based capital rules and other financial ratios for
           U.S. life insurance companies. At the end of 2007 the risk-based
           capital (RBC) ratio for GWL&A was 594%, well in excess of that
           required by NAIC.

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

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

        11. Stock Based Compensation

            933,270 options were granted under the Company's stock option
            plan during the third quarter of 2008, 110,000 options were
            granted during the first quarter of 2008 and 3,115,000 options
            were granted during the second quarter of 2008 (1,749,000 options
            were granted during the first quarter of 2007,164,000 options
            were granted during the third quarter of 2007 and no options were
            granted during the second quarter of 2007). The weighted fair
            value of options granted during the nine months ended
            September 30, 2008 were $3.11 per option ($7.41 per option during
            the nine months ended September 30, 2007). Compensation expense
            of $8 after-tax has been recognized in the Summary of
            Consolidated Operations for the nine months ended September 30,
            2008 ($4 after-tax for the nine months ended September 30, 2007).

        12. Pension Plans and Other Post-Retirement Benefits

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

                                For the three months     For the nine months
                                  ended September 30      ended September 30
                                ---------------------   ---------------------
                                     2008       2007         2008       2007
                                   --------   --------    --------   --------
            Pension benefits       $   10     $   11      $    44    $    35
            Other benefits              3          4           10         14
                                   --------   --------    --------   --------
            Total                  $   13     $   15      $    54    $    49
                                   --------   --------    --------   --------
                                   --------   --------    --------   --------

        13. Earning per Common Share

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

                            For the three months        For the six months
                             ended September 30         ended September 30
                          ------------------------- -------------------------
                                2008       2007          2008        2007
                           ------------ ------------ ----------- ------------
        (a) Earnings

          Net income
           from
           continuing
           operations     $        450  $       425  $     1,653  $    1,401

          Net income
           from
           discontinued
           operations                -           50          692         160
                           ------------ ------------ ------------ -----------

          Net income      $        450  $       475  $     2,345  $    1,561
          Perpetual
           preferred
           share
           dividends                14           14           42          42
                           ------------ ------------ ------------ -----------

         Net income
          - common
          shareholders    $        436  $       461  $     2,303  $    1,519
                           ------------ ------------ ------------ -----------
                           ------------ ------------ ------------ -----------

        (b) Number of
             common shares

          Average number
           of common
           shares
           outstanding     894,580,690  892,296,169  894,243,179 892,014,374
          Add:
            - Potential
             exercise of
             outstanding
             stock
             options         3,981,236    6,619,468    4,349,332   6,769,406
                           ------------ ------------ ------------ -----------
          Average number
           of common
           shares
           outstanding
           - diluted
           basis           898,561,926  898,915,637  898,592,511  898,783,780
                           ------------ ------------ ------------ -----------
                           ------------ ------------ ------------ -----------

          Basic earnings
           per common
           share
            From
             continuing
             operations   $      0.487  $     0.460  $     1.801 $     1.523
          From
           discontinued
           operations                -        0.056        0.774       0.180
                           ------------ ------------ ------------ -----------
                          $      0.487  $     0.516  $     2.575 $     1.703
                           ------------ ------------ ------------ -----------
                           ------------ ------------ ------------ -----------

          Diluted
           earnings
           per common
           share
            From
             continuing
             operations   $      0.485  $     0.457  $     1.793 $     1.512
            From
             discontinued
             operations              -        0.056        0.770       0.178
                           ------------ ------------ ------------ -----------
                          $      0.485  $     0.513  $     2.563 $     1.690
                           ------------ ------------ ------------ -----------
                           ------------ ------------ ------------ -----------


        14. Accumulated Other Comprehensive Income


                       For the nine months ended September 30, 2008
              --------------------------------------------------------------
                Unrealized    Unreal-
                   foreign      ized    Unreal-
                  exchange     gains      ized
                     gains   (losses)    gains
               (losses) on        on   (losses)                Non-
               translation available        on             control-
                of foreign  for sale cash flow                ling     Share-
                operations    assets    hedges     Total  interest    holder
                  --------- --------- --------- --------- --------- ---------

    Balance,
     beginning of
     year         $ (1,801) $    174  $     13  $ (1,614) $    (81) $ (1,533)
    Other
     comprehensive
     income            326      (322)     (112)     (108)       (2)     (106)
    Income tax           -        93        40       133         3       130
                  --------- --------- --------- --------- --------- ---------
                       326      (229)      (72)       25         1        24
                  --------- --------- --------- --------- --------- ---------
    Balance, end
     of period    $ (1,475) $    (55) $    (59) $ (1,589) $    (80) $ (1,509)
                  --------- --------- --------- --------- --------- ---------
                  --------- --------- --------- --------- --------- ---------



                          For the nine months ended September 30, 2007
               --------------------------------------------------------------
                Unrealized    Unreal-
                   foreign      ized    Unreal-
                  exchange     gains      ized
                     gains   (losses)    gains
               (losses) on        on   (losses)                Non-
               translation available        on             control-
                of foreign  for sale cash flow                ling     Share-
                operations    assets    hedges     Total  interest    holder
                  --------- --------- --------- --------- --------- ---------
    Balance,
     beginning of
     year         $   (591) $      -  $      -  $   (591) $    (44) $   (547)
    Opening
     transition
     adjustment          -       379         -       379        19       360
    Income tax           -      (108)        -      (108)       (5)     (103)
                  --------- --------- --------- --------- --------- ---------
                         -       271         -       271        14       257
    Other
     comprehensive
     income         (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)
                  --------- --------- --------- --------- --------- ---------
                  --------- --------- --------- --------- --------- ---------

        15. Reinsurance and Other Transactions

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

           (b) During the quarter, the Company's indirect wholly-owned UK
               subsidiary, Canada Life Limited, entered into two agreements
               with two financial institutions to provide long-term mortality
               exposure management on an in-force block of payout annuity
               business representing $2.8 billion of actuarial liabilities.
               These agreements exchange variable annuitant payments for a
               schedule of fixed payments. One of the agreements has no end
               date while the other matures in 40 years.

        16. Segmented Information

            Consolidated Operations
            For the three months ended September 30, 2008

                                        United             Lifeco
                              Canada    States    Europe  Corporate    Total
                            --------- --------- --------- --------- ---------
        Income:
        Premium income      $  1,949   $    479  $  1,484   $    -  $  3,912
        Net investment
         income
          Regular net
           investment income     609        331       597        2     1,539
         Changes in fair
          value on held for
          trading assets      (1,392)      (398)     (468)       -    (2,258)
                            --------- --------- --------- --------- ---------
        Total net investment
         income                 (783)       (67)      129        2      (719)
        Fee and other income     262        353       163        -       778
                            --------- --------- --------- --------- ---------
        Total income           1,428        765     1,776        2     3,971
                            --------- --------- --------- --------- ---------
        Benefits and expenses:
         Paid or credited to
         policyholders           436        343     1,394        -     2,173
        Other                    533        391       214        1     1,139
        Amortization of
         finite life
         intangible assets         4          5         1        -        10
                            --------- --------- --------- --------- ---------
        Net operating income
         before income taxes     455         26       167        1       649
        Income taxes             187        (17)       18       (1)      187
                            --------- --------- --------- --------- ---------
        Net income before
         non-controlling
         interests               268         43       149        2       462
        Non-controlling
         interests                 6          -         6        -        12
                            --------- --------- --------- --------- ---------
        Net income from
         continuing
         operations              262         43       143        2       450
        Net income from
         discontinued
         operations                -          -         -        -         -
                            --------- --------- --------- --------- ---------

        Net Income               262         43       143        2       450
        Perpetual
         preferred
         share
         dividends                11          -         3        -        14
                            --------- --------- --------- --------- ---------
        Net income
         - common
         shareholders       $    251   $     43  $    140   $    2  $    436
                            --------- --------- --------- --------- ---------
                            --------- --------- --------- --------- ---------


    For the three months ended September 30, 2007

                                        United             Lifeco
                              Canada    States    Europe  Corporate    Total
                            --------- --------- --------- --------- ---------
        Income:
        Premium income      $  1,771   $    454  $  1,412   $    -  $  3,637
        Net investment
         income
          Regular net
           investment income     619        333       445        5     1,402
          Changes in fair
           value on held for
           trading assets         18         98       309        -       425
                            --------- --------- --------- --------- ---------
        Total net investment
         income                  637        431       754        5     1,827
        Fee and other income     254        320       161        -       735
                            --------- --------- --------- --------- ---------
        Total income           2,662      1,205     2,327        5     6,199
                            --------- --------- --------- --------- ---------
        Benefits and expenses:
          Paid or credited to
          policyholders        1,800        721     1,937        -     4,458
          Other                  510        332       198      145     1,185
          Amortization of finite
           life intangible
           assets                  3         6          1        -        10
                            --------- --------- --------- --------- ---------
        Net operating income
         before income taxes     349       146        191     (140)      546
        Income taxes              60        35         23      (45)       73
                            --------- --------- --------- --------- ---------
        Net income before
         non-controlling
         interests               289       111        168      (95)      473
        Non-controlling
         interests                33        11          4        -        48
                            --------- --------- --------- --------- ---------
        Net income from
         continuing
         operations              256       100        164      (95)      425
        Net income from
         discontinued
         operations                -        50          -        -        50
                            --------- --------- --------- --------- ---------
        Net income               256       150        164      (95)      475
        Perpetual preferred
         share dividends          11         -          3        -        14
                            --------- --------- --------- --------- ---------
        Net income - common
         shareholders       $    245   $   150   $    161   $  (95) $    461
                            --------- --------- --------- --------- ---------
                            --------- --------- --------- --------- ---------



    For the nine months ended September 30, 2008

                                         United             Lifeco
                              Canada     States    Europe  Corporate   Total
                            ---------  --------- ---------  ------- ---------
    Income:
      Premium income        $  5,998   $  1,805  $ 17,422   $    -  $ 25,225
      Net investment income
        Regular net
         investment income     1,873        977     1,692       (3)    4,539
        Changes in fair
         value on held for
         trading assets       (1,560)    (1,005)   (2,228)       -    (4,793)
                            ---------  --------- ---------  ------- ---------
      Total net investment
       income                    313        (28)     (536)      (3)     (254)
      Fee and other income       804      1,107       470        -     2,381
                            ---------  --------- ---------  ------- ---------

    Total income               7,115      2,884    17,356       (3)   27,352
                            ---------  --------- ---------  ------- ---------
    Benefits and expenses:
      Paid or credited to
       policyholders           4,238      1,533    16,188        -    21,959
      Other                    1,658      1,153       542        9     3,362
      Amortization of finite
       life intangible assets     11         16         3        -        30
                            ---------  --------- ---------  ------- ---------
    Net operating income
     before income taxes       1,208        182       623      (12)    2,001

    Income taxes                 351         12       104       (1)      466
                            ---------  --------- ---------  ------- ---------

    Net income before non-
     controlling interests       857        170       519      (11)    1,535

    Non-controlling
     interests                    50       (175)        7        -      (118)
                            ---------  --------- ---------  ------- ---------
    Net income from
     continuing operations       807        345       512      (11)    1,653
    Net income from
     discontinued
     operations                    -        692         -        -       692
                            ---------  --------- ---------  ------- ---------
    Net Income                   807      1,037       512      (11)    2,345

    Perpetual preferred
     share dividends              32          -        10        -        42
                            ---------  --------- ---------  ------- ---------
    Net income - common
     shareholders           $    775   $  1,037  $    502   $  (11) $  2,303
                            ---------  --------- ---------  ------- ---------
                            ---------  --------- ---------  ------- ---------



    For the nine months ended September 30, 2007

                                         United             Lifeco
                              Canada     States    Europe  Corporate   Total
                            ---------  --------- ---------  ------- ---------
    Income:
      Premium income        $  5,464   $  1,474  $  6,051   $    -  $ 12,989
      Net investment income
        Regular net
         investment income     1,865      1,027     1,352       17     4,261
        Changes in fair
         value on held for
         trading assets         (656)       (90)   (1,173)       -    (1,919)
                            ---------  --------- ---------  ------- ---------
      Total net investment
       income                  1,209        937       179       17     2,342
      Fee and other income       763        587       492        -     1,842
                            ---------  --------- ---------  ------- ---------
    Total income               7,436      2,998     6,722       17    17,173
                            ---------  --------- ---------  ------- ---------
    Benefits and expenses:
      Paid or credited to
       policyholders           4,724      1,962     5,596        -    12,282
      Other                    1,607        629       561      161     2,958
      Amortization of
       finite life
       intangible assets          10         11         3        -        24
                            ---------  --------- ---------  ------- ---------
    Net operating income
     before income taxes       1,095        396       562     (144)    1,909

    Income taxes                 245        109        77      (47)      384
                            ---------  --------- ---------  ------- ---------

    Net income before non-
     controlling interests       850        287       485      (97)    1,525

    Non-controlling
     interests                    91         19        14        -       124
                            ---------  --------- ---------  ------- ---------
    Net income - from
     continuing operations       759        268       471      (97)    1,401

    Net income from
     discontinued operations       -        160         -        -       160
                            ---------  --------- ---------  ------- ---------
    Net income                   759        428       471      (97)    1,561

    Perpetual preferred
     share dividends              32          -        10        -        42
                            ---------  --------- ---------  ------- ---------
    Net income - common
     shareholders           $    727   $    428  $    461   $  (97) $  1,519
                            ---------  --------- ---------  ------- ---------
                            ---------  --------- ---------  ------- ---------

    17. Subsequent Event

        On October 22, 2008, Great-West Life announced that it has entered
        into an agreement with Fidelity Investments Canada ULC (Fidelity)
        whereby Fidelity will transition its Canadian group retirement and
        savings plan record-keeping business to Great-West Life, representing
        $2.2 billion in assets under administration. The financial statements
        of the Company do not include the assets, liabilities, deposits and
        withdrawals or claims payments related to this business, however the
        Company will earn fee and other income from it.
    





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