Nine-month operating earnings increase 19.3% - Dividend increased



    Readers are referred to the Forward-looking Statements and Non-GAAP
    Financial Measures sections at the end of this release.

    MONTREAL, Nov. 8 /CNW Telbec/ - Power Financial Corporation's operating
earnings for the nine-month period ended September 30, 2007 were
$1,583 million or $2.16 per share, compared with $1,330 million or $1.81 per
share in the corresponding period in 2006. This represents a 19.3% increase on
a per share basis.
    Growth in operating earnings reflects primarily growth in the
contribution from the Corporation's subsidiaries as well as from its
affiliate, which also benefited from a favourable timing difference in
dividend income compared with the previous year.
    Other income was a charge of $71 million or $0.10 per share for the
nine-month period ended September 30, 2007, reflecting primarily the
Corporation's share of a provision recorded by Great-West Lifeco in the third
quarter. Other items not included in operating earnings in 2006 were $351
million or $0.50 per share, reflecting primarily the Corporation's share, in
the amount of $356 million, of the gain recorded by Groupe Bruxelles Lambert
from the sale of its 25.1% interest in Bertelsmann AG.
    Net earnings, including other income, for the nine-month period ended
September 30, 2007 were $1,512 million or $2.06 per share, compared with
$1,681 million or $2.31 per share in the same period in 2006.

    THIRD-QUARTER RESULTS
    ---------------------

    For the quarter ended September 30, 2007, operating earnings of the
Corporation were $531 million or $0.73 per share, compared with $439 million
or $0.60 per share in the third quarter of 2006. This represents an increase
of 21.7% on a per share basis.
    Other items for the third quarter of 2007 were a charge of $74 million or
$0.11 per share reflecting primarily the impact of the provision recorded by
Great-West Lifeco. For the corresponding period in 2006, other items were
$356 million or $0.50 per share, representing Power Financial's share of the
gain recorded by GBL from the sale of its interest in Bertelsmann.
    Net earnings for the quarter were $457 million or $0.62 per share in
2007, compared with $795 million or $1.10 per share in 2006.

    SUBSIDIARIES' AND AFFILIATE'S RESULTS
    -------------------------------------

    Great-West Lifeco Inc.

    Great-West Lifeco reported adjusted net income attributable to common
shareholders of $1,616 million for the nine months ended September 30, 2007,
compared with net income of $1,384 million reported a year ago. This
represents $1.812 per common share for the nine months ended September 30,
2007, an increase of 17%, compared with $1.554 per common share for 2006.
Adjusted net income attributable to common shareholders in 2007 excludes a
provision for certain Canadian retirement plans of $97 million after tax,
recorded in the third quarter. Net income attributable to common shareholders
after this provision was $1,519 million or $1.703 per common share for the
nine months ended September 30, 2007.
    For the three months ended September 30, 2007, adjusted net income
attributable to common shareholders was $558 million, compared with net income
of $477 million reported a year ago. This represents $0.625 per common share
for the three months ended September 30, 2007, an increase of 16%, compared
with $0.537 per common share for the corresponding period in 2006. Net income
attributable to common shareholders for the quarter ended September 30, 2007
after the provision for certain Canadian retirement plans was $461 million or
$0.516 per share.

    IGM Financial Inc.

    IGM Financial reported net income for the nine months ended September 30,
2007 of $645 million, compared with adjusted net income of $563 million in
2006. Earnings per share were $2.41 in 2007, compared with adjusted earnings
per share of $2.11 in 2006, an increase of 14.2%.
    Adjusted net income and earnings per share for the nine-month period
ended September 30, 2006 excluded a non-cash income tax benefit recorded in
the second quarter. Net income for the nine-month period ended September 30,
2006 without adjustment was $577 million and earnings per share on this basis
were $2.16.
    For the three-month period ended September 30, 2007, IGM reported net
income of $218 million, compared with net income of $191 million in 2006.
Earnings per share for the three months ended September 30, 2007 were $0.82,
compared with earnings per share of $0.72 in the corresponding period in 2006,
which represents an increase of 13.9%.

    Pargesa Holding SA

    Parjointco N.V. holds Power Financial's interest in Pargesa Holding SA.
Pargesa reported operating earnings of SF537 million in the nine-month period
in 2007, compared with SF402 million for the corresponding period in 2006. For
the three month period ended September 30, 2007, Pargesa's operating earnings
were SF126 million, compared with SF57 million in the corresponding period in
2006. Pargesa's operating earnings in the nine-month and three-month periods
in 2007 include Pargesa's share of the interim dividend from Total SA in the
amount of SF75 million, whereas the interim dividend for 2006 was recorded in
the fourth quarter. Expressed in dollars, the contribution from the European
affiliate to Power Financial's operating earnings was $128 million and
$30 million, respectively, in the nine-month and three month periods in 2007,
compared with $94 million and $12 million, respectively, in the corresponding
periods in 2006.
    The contribution to other income was $3 million and nil in the nine month
and three month periods in 2007, respectively, compared with $343 million and
$356 million, respectively, for the nine-month and three month periods ended
September 30, 2006. The figures for 2006 included an amount of $356 million
representing the Corporation's share of the gain recorded by GBL from the sale
of its interest in Bertelsmann.

    PREFERRED SHARE DIVIDENDS
    -------------------------

    The Board of Directors today declared quarterly dividends on the
Corporation's preferred shares, as follows:

    
    -------------------------------------------------------------------------
    Type of shares  Record Date       Payment Date       Amount
    -------------------------------------------------------------------------
    Series A        January 25, 2008  February 15, 2008  To be determined
                                                         In accordance with
                                                         the articles of the
                                                         Corporation
    -------------------------------------------------------------------------
    Series C        January 10, 2008  January 31, 2008   32.50 cents
    -------------------------------------------------------------------------
    Series D        January 10, 2008  January 31, 2008   34.375 cents
    -------------------------------------------------------------------------
    Series E        January 10, 2008  January 31, 2008   32.8125 cents
    -------------------------------------------------------------------------
    Series F        January 10, 2008  January 31, 2008   36.875 cents
    -------------------------------------------------------------------------
    Series H        January 10, 2008  January 31, 2008   35.9375 cents
    -------------------------------------------------------------------------
    Series I        January 10, 2008  January 31, 2008   37.50 cents
    -------------------------------------------------------------------------
    Series J        January 10, 2008  January 31, 2008   29.375 cents
    -------------------------------------------------------------------------
    Series K        January 10, 2008  January 31, 2008   30.9375 cents
    -------------------------------------------------------------------------
    Series L        January 10, 2008  January 31, 2008   31.875 cents
    -------------------------------------------------------------------------

    COMMON SHARE DIVIDEND
    ---------------------

    The Board of Directors also declared a quarterly dividend of 31.25 cents
per share on the Corporation's common shares payable February 1, 2008 to
shareholders of record December 28, 2007. This represents an increase of
2.25 cents over the previous quarterly dividend of 29 cents.

    Forward-looking Statements
    --------------------------

    Certain statements in this News Release, other than statements of
historical fact, are forward-looking statements based on certain assumptions
and reflect the Corporation's, its subsidiaries' or affiliate's current
expectations. These statements may include, without limitation, statements
regarding the operations, business, financial condition, priorities, ongoing
objectives, strategies and outlook of the Corporation's, its subsidiaries' or
affiliate for the current fiscal year and subsequent periods. 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", "plans", "believes", "estimates", "intends", "targets",
"projects", "forecasts" or negative versions thereof and other similar
expressions, or future or conditional verbs such as "may", "will", "should",
"would" and "could".
    This information is based upon certain material factors or assumptions
that were applied in drawing a conclusion or making a forecast or projection
as reflected in the forward-looking statements, including the perception of
historical trends, current conditions and expected future developments, as
well as other factors that are believed to be appropriate in the
circumstances.
    By its nature, this information is subject to inherent risks and
uncertainties that may be general or specific. A variety of material factors,
many of which are beyond the Corporation's, its subsidiaries' and affiliate's
control, affect the operations, performance and results of the Corporation,
its subsidiaries and affiliate, and their business, and could cause actual
results to differ materially from current expectations of estimated or
anticipated events or results. These factors include, but are not limited to:
the impact or unanticipated impact of general economic, political and market
factors in North America and internationally, interest and foreign exchange
rates, global equity and capital markets, management of market liquidity and
funding risks, changes in accounting policies and methods used to report
financial condition, including uncertainties associated with critical
accounting assumptions and estimates, the effect of applying future accounting
changes, business competition, technological change, changes in government
regulation and legislation, changes in tax laws, unexpected judicial or
regulatory proceedings, catastrophic events, the Corporation's, its
subsidiaries' or affiliate's ability to complete strategic transactions and
integrate acquisitions, and the Corporation's, its subsidiaries' or
affiliate's success in anticipating and managing the foregoing risks.
    The reader is cautioned that the foregoing list of factors is not
exhaustive of the factors that may affect any of the Corporation's, its
subsidiaries' and affiliate's forward-looking statements. The reader is also
cautioned to consider these and other factors carefully and not to put undue
reliance on forward-looking statements.
    Other than as specifically required by law, the Corporation undertakes no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made, or to reflect
the occurrence of unanticipated events, whether as a result of new
information, future events or results, or otherwise.
    Additional information about the risks and uncertainties of the
Corporation's business is provided in its disclosure materials, including its
most recent Management Discussion and Analysis of Operating Results and Annual
Information Form, filed with the securities regulatory authorities in Canada,
available at www.sedar.com.

    Non-GAAP Financial Measures
    ---------------------------

    In analysing the financial results of the Corporation and consistent with
the presentation in previous years, net earnings are subdivided into the
following components:

       -  operating earnings; and
       -  other items, which includes, but is not limited to, the impact on
          the Corporation's net earnings of "Other income" as presented in
          the Corporation's consolidated statements of earnings (net of
          income tax and non controlling interests, if any).

    Management has used these performance measures for many years in its
presentation and analysis of the financial performance of Power Financial, and
believes that they provide additional meaningful information to readers in
their analysis of the results of the Corporation.
    "Operating earnings" excludes the after-tax impact of any item that
management considers to be of a non recurring nature or that could make the
period-over-period comparison of results from operations less meaningful, and
also excludes the Corporation's share of any such item presented in a
comparable manner by Lifeco or IGM. Operating earnings and operating earnings
per share are non-GAAP financial measures that do not have a standard meaning
and may not be comparable to similar measures used by other entities.


    Attachments: Financial Information (unaudited)


                         Power Financial Corporation

                         CONSOLIDATED BALANCE SHEETS

    -------------------------------------------------------------------------
                                                   September 30, December 31,
                                                           2007         2006
    (in millions of dollars)                         (unaudited)
    -------------------------------------------------------------------------
    Assets
    Cash and cash equivalents                             4,858        5,138
    -------------------------------------------------------------------------
    Investments (Note 4)
      Shares                                              6,476        4,602
      Bonds                                              66,284       65,246
      Mortgages and other loans                          16,279       15,823
      Loans to policyholders                              6,259        6,776
      Real estate                                         2,329        2,218
    -------------------------------------------------------------------------
                                                         97,627       94,665

    Funds held by ceding insurers                         1,553       12,371
    Investment in affiliates, at equity                   3,528        2,137
    Intangible assets                                     2,740        2,615
    Goodwill (Note 2)                                    11,454        8,342
    Future income taxes                                     744          455
    Other assets (Note 5)                                 7,663        4,763
    -------------------------------------------------------------------------
                                                        130,167      130,486
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Policy liabilities
      Actuarial liabilities                              86,425       89,490
      Other                                               4,336        4,488
    Deposits and certificates                               806          778
    Funds held under reinsurance contracts                1,950        1,822
    Debentures and other borrowings (Note 6)              6,886        3,430
    Preferred shares of the Corporation (Note 9)            300          300
    Preferred shares of subsidiaries                      1,367        1,325
    Capital trust securities and debentures (Note 7)        640          646
    Future income taxes                                     829          853
    Other liabilities                                     6,856        8,719
    -------------------------------------------------------------------------
                                                        110,395      111,851
    -------------------------------------------------------------------------
    Non-controlling interests (Note 8)                    7,389        7,213
    -------------------------------------------------------------------------
    Shareholders' Equity
    Stated capital (Note 9)
      Perpetual preferred shares                          1,400        1,400
      Common shares                                         594          593
    Contributed surplus                                      65           56
    Retained earnings                                    10,211        9,621
    Accumulated other comprehensive income
     (loss) (Note 10)                                       113         (248)
    -------------------------------------------------------------------------
                                                         12,383       11,422
    -------------------------------------------------------------------------
                                                        130,167      130,486
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                     CONSOLIDATED STATEMENTS OF EARNINGS

    -------------------------------------------------------------------------
    (unaudited)(in millions     Three months ended         Nine months ended
    of dollars, except per         September 30              September 30
    share amounts)               2007         2006         2007         2006
    -------------------------------------------------------------------------
    Revenues
      Premium income            3,879        4,332       13,758       12,471
      Net investment
       income
        Regular net
         investment income      1,441        1,612        4,417        4,512
        Changes in fair
         value on held for
         trading assets           426            -       (1,921)           -
                             ------------------------------------------------
                                1,867        1,612        2,496        4,512
        Fee income              1,596        1,235        4,418        3,711
    -------------------------------------------------------------------------
                                7,342        7,179       20,672       20,694
    Expenses
      Policyholder
       benefits, dividends
       and experience
       refunds, and change
       in actuarial liabi-
       lities                   4,678      4,871         13,026       13,831
      Commissions                 574        519          1,767        1,577
      Operating expenses        1,105        752          2,737        2,308
      Financing charges
       (Note 11)                  115         88            287          254
    -------------------------------------------------------------------------
                                6,472      6,230         17,817       17,970
    -------------------------------------------------------------------------
                                  870        949          2,855        2,724
    Share of earnings of
      affiliates                   30         12            128           94
    Other income (charges),
     net (Note 12)                 (3)       356              -          343
    -------------------------------------------------------------------------
    Earnings before income
     taxes and non-
     controlling interests        897      1,317          2,983        3,161
    Income taxes                  174        274            658          727
    Non-controlling
     interests (Note 8)           266        248            813          753
    -------------------------------------------------------------------------
    Net earnings                  457        795          1,512        1,681
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per common
     share (Note 13)
      Basic                      0.62       1.10           2.06         2.31
    -------------------------------------------------------------------------
      Diluted                    0.62       1.10           2.05         2.30
    -------------------------------------------------------------------------


               CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

    -------------------------------------------------------------------------
    (unaudited)                 Three months ended         Nine months ended
    (in millions                   September 30              September 30
     of dollars                  2007         2006         2007         2006
    -------------------------------------------------------------------------

    Net earnings                  457          795        1,512        1,681
    -------------------------------------------------------------------------
    Other comprehensive
     income (loss)
      Net unrealized gains
       (losses) on available-
       for-sale assets
        Unrealized gains
         (losses)                (288)           -          (61)           -
        Income tax on
         unrealized gains
         (losses)                   2            -           24            -
        Reclassification
         of realized (gains)
         losses to net earnings   (16)           -         (120)           -
        Income tax on
         reclassification
         of realized (gains)
         losses to net
         earnings                   3            -           28            -
    -------------------------------------------------------------------------
                                 (299)           -         (129)           -
    -------------------------------------------------------------------------
    Net unrealized gains
     (losses) on cash
     flow hedges
      Unrealized gains
       (losses)                    48            -           (9)           -
      Income tax on
       unrealized gains
       (losses)                   (17)           -            4            -
      Reclassification
       of realized
       (gains) losses to
       net earnings                55            -           95            -
      Income tax on
       reclassification
       of realized (gains)
       losses to net
       earnings                   (19)           -          (26)           -
    -------------------------------------------------------------------------
                                   67            -           64            -
    -------------------------------------------------------------------------
    Net unrealized gains
     (losses) on foreign
     currency translation        (584)          19       (1,341)         (51)
    -------------------------------------------------------------------------
    Other comprehensive
     income (loss) before
     non-controlling
     interests                   (816)          19       (1,406)         (51)
    Non-controlling interests     144           (8)         392           24
    -------------------------------------------------------------------------
    Other comprehensive
     income (loss)               (672)          11       (1,014)         (27)
    -------------------------------------------------------------------------
    Comprehensive income
     (loss)                      (215)         806          498        1,654
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


         CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

    -------------------------------------------------------------------------
    Nine months ended September 30                         2007         2006
    (unaudited) (in millions of dollars)
    -------------------------------------------------------------------------

    Stated capital - Perpetual preferred shares
    Perpetual preferred shares, beginning of year         1,400        1,200
    Issue of perpetual preferred shares                       -          200
    -------------------------------------------------------------------------
     Perpetual preferred shares,
      end of period                                       1,400        1,400
    -------------------------------------------------------------------------

    Stated capital - Common shares
    Common shares, beginning of year                        593          593
    Issue of common shares under stock option plan            1            -
    -------------------------------------------------------------------------
    Common shares, end of period                             594          593
    -------------------------------------------------------------------------

    Contributed surplus
    Contributed surplus, beginning of year                   56           38
    Stock options expense                                    13           19
    Non-controlling interests                                (4)          (5)
    -------------------------------------------------------------------------
    Contributed surplus, end of period                       65           52
    -------------------------------------------------------------------------

    Retained earnings
    Retained earnings, beginning of year
      As previously reported                              9,621        8,249
      Change in accounting policy (Note 1)                 (272)           -
    -------------------------------------------------------------------------
    As restated                                           9,349        8,249
      Net earnings                                        1,512        1,681
      Dividends to shareholders
        Perpetual preferred shares                          (56)         (51)
        Common shares                                      (597)        (516)
      Other                                                   3           (8)
    -------------------------------------------------------------------------
    Retained earnings, end of period                     10,211        9,355
    -------------------------------------------------------------------------
    Accumulated other comprehensive income
     (loss) (Note 10)
    Accumulated other comprehensive income
     (loss), beginning of year                             (248)        (682)
    Change in accounting policy (Note 1)                  1,375            -
    Other comprehensive income (loss)                    (1,014)         (27)
    -------------------------------------------------------------------------
    Accumulated other comprehensive income (loss),
     end of period                                          113         (709)
    -------------------------------------------------------------------------
    Total Shareholders' Equity                           12,383       10,691
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
    (unaudited)                    September 30              September 30
    (in millions of dollars)     2007         2006         2007         2006
    -------------------------------------------------------------------------

    Operating activities
      Net earnings                457          795        1,512        1,681
      Non-cash charges
      (credits)
        Increase (decrease)
         in policy liabilities    929        1,172         (619)       1,575
        Decrease (increase)
         in funds held by
         ceding insurers          168           40          609          471
        Increase (decrease)
         in funds held under
         reinsurance contracts    (26)        (524)          24         (621)
        Amortization and
         depreciation              27           23           79           72
        Future income taxes         2          (15)         (47)          60
        Non-controlling
         interests                266          248          813          753
        Other                    (348)        (325)       2,205         (488)
      Change in non-cash
       working capital           (296)         115       (1,627)          14
    -------------------------------------------------------------------------
                                1,179        1,529        2,949        3,517
    -------------------------------------------------------------------------

    Financing activities
      Dividends paid
        By subsidiaries to
         non-controlling
         interests               (122)        (108)        (354)        (309)
        Perpetual preferred
         shares                   (18)         (16)         (56)         (49)
        Common shares            (205)        (176)        (582)        (504)
    -------------------------------------------------------------------------
                                 (345)        (300)        (992)        (862)
      Issue of common
       shares                       -            -            1            -
      Issue of perpetual
       preferred shares             -          200            -          200
      Issue of common shares
       by subsidiaries              4            7           29           31
      Repurchase of common
       shares by subsidiaries     (15)         (19)         (64)         (56)
      Issue of preferred
       shares by a subsidiary       -            -            -          300
      Repurchase of preferred
       shares by a subsidiary      (1)         (18)          (1)         (30)
      Issue of debentures and
       other borrowings         2,580            -        3,704          336
      Repayment of debentures
       and other borrowings      (124)        (250)        (151)        (422)
      Other                        27           47           28           17
    -------------------------------------------------------------------------
                                2,126         (333)       2,554         (486)
    -------------------------------------------------------------------------

    Investment activities
      Bond sales and
       maturities               7,059        7,351       18,878       20,683
      Mortgage loan
       repayments                 458          523        1,429        1,434
      Sales of shares             459          477        1,285        1,118
      Real estate sales            32          129           66          174
      Proceeds from
       securitizations            427          386        1,085        1,019
      Change in loans
       to policyholders            (7)         (19)        (167)        (239)
      Change in repurchase
       agreements                (317)          14         (584)         132
      Acquisition of
       businesses              (4,155)           -       (4,155)           -
      Acquisition of
       intangible assets            -         (141)           -         (141)
      Investment in bonds      (5,777)      (7,586)     (17,082)     (22,091)
      Investment in mortgage
       loans                   (1,627)      (1,268)      (3,682)      (3,163)
      Investment in shares       (601)        (396)      (2,114)      (1,084)
      Investment in real
       estate                    (244)        (399)        (440)        (515)
      Other                         2           (8)          (5)         (17)
    -------------------------------------------------------------------------
                               (4,291)        (937)      (5,486)      (2,690)
    -------------------------------------------------------------------------
    Effect of changes
     in exchange rates
     on cash and cash
     equivalents                 (115)          31         (297)          71
    Increase (decrease)
     in cash and cash
     equivalents               (1,101)         290         (280)         412
    Cash and cash
     equivalents,
     beginning of
     period                     5,959        4,764        5,138        4,642
    -------------------------------------------------------------------------
    Cash and cash
     equivalents,
     end of period              4,858        5,054        4,858        5,054
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                         Power Financial Corporation

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             SEPTEMBER 30, 2007
       ALL TABULAR AMOUNTS ARE IN MILLIONS OF CANADIAN DOLLARS UNLESS
                               OTHERWISE NOTED.


                  NOTE 1    SIGNIFICANT ACCOUNTING POLICIES

    The interim unaudited consolidated financial statements of Power
    Financial Corporation at September 30, 2007 have been prepared in
    accordance with generally accepted accounting principles in Canada
    (GAAP). Interim unaudited consolidated financial statements should be
    read in conjunction with the audited consolidated financial statements
    and notes thereto for the year ended December 31, 2006. These interim
    unaudited consolidated financial statements do not include all
    disclosures required for annual financial statements.

    The interim unaudited consolidated financial statements have been
    prepared using the same accounting policies described in Note 1 of the
    Corporation's consolidated financial statements for the year ended
    December 31, 2006, except for the adoption of the new rules on Financial
    Instruments as described below.

    A) CHANGES IN ACCOUNTING POLICIES - FINANCIAL INSTRUMENTS

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

    Under these new standards, all financial assets, including derivatives,
    must be classified as available for sale, held for trading, held to
    maturity, or loans and receivables. All financial liabilities, including
    derivatives, must be classified as held for trading or other. All
    financial instruments classified as available for sale or held for
    trading are recognized at fair value on the Consolidated Balance Sheet
    while financial instruments classified as loans and receivables or other
    will continue to be measured at amortized cost using the effective
    interest rate method. The standards allow the Corporation to designate
    certain financial instruments, on initial recognition, as held for
    trading.

    Changes in the fair value of financial instruments classified as held for
    trading are reported in net earnings. Unrealized gains or losses on
    financial instruments classified as available for sale are reported in
    other comprehensive income until they are realized by the Corporation or
    until the assets are other than temporarily impaired, at which time they
    are recorded in the Consolidated Statements of Earnings.

    The Consolidated Statements of Comprehensive Income have been included in
    the Corporation's financial statements. The Consolidated Statements of
    Changes in Shareholders' Equity have replaced the Consolidated Statements
    of Retained Earnings in the Corporation's financial statements.
    Unrealized gains and losses on financial assets classified as available
    for sale, the effective portion of changes in the fair value of cash flow
    hedging instruments and unrealized foreign currency translation gains and
    losses are recorded in the Consolidated Statements of Comprehensive
    Income on a net of tax basis. Other comprehensive income amounts arising
    from using the equity method to account for the Corporation's investment
    in its affiliate are recorded in the Consolidated Statements of
    Comprehensive Income. Accumulated other comprehensive income forms part
    of Shareholders' equity.

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

    The remainder of the Corporation's investments in shares was designated
    as available for sale. The loans portfolio was designated as loans and
    receivables and is carried at amortized cost.

    Derivative instruments, previously off-balance sheet, are recognized at
    their market value in the Consolidated Balance Sheet. Changes in the fair
    value of derivatives are recognized in net earnings except for
    derivatives designated as effective cash flow hedges.

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

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

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

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

    -------------------------------------------------------------------------
                                       December 31,   Change in    January 1,
                                              2006   accounting         2007
                                       As reported       policy     Adjusted
    -------------------------------------------------------------------------

    Assets
    Cash and cash equivalents                5,138            -        5,138
    -------------------------------------------------------------------------
    Investments
      Shares                                 4,602          757        5,359
      Bonds                                 65,246        1,016       66,262
      Mortgages and other loans             15,823          (46)      15,777
      Loans to policyholders                 6,776            -        6,776
      Real estate                            2,218            -        2,218
    -------------------------------------------------------------------------
                                            94,665        1,727       96,392
    Investment in affiliates, at equity      2,137        1,157        3,294
    All other assets                        28,546         (150)      28,396
    -------------------------------------------------------------------------
                                           130,486        2,734      133,220
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Policy liabilities
      Actuarial liabilities                 89,490        3,896       93,386
      Other                                  4,488            -        4,488
    Debentures and other borrowings          3,430            -        3,430
    Preferred shares of the Corporation        300            -          300
    Preferred shares of subsidiaries         1,325           71        1,396
    Capital trust securities and debentures    646            -          646
    Future income taxes                        853           10          863
    All other liabilities                   11,319       (2,464)       8,855
    -------------------------------------------------------------------------
                                           111,851        1,513      113,364
    -------------------------------------------------------------------------
    Non-controlling interests                7,213          118        7,331
    -------------------------------------------------------------------------

    Shareholders' Equity
    Stated capital
      Perpetual preferred shares             1,400            -        1,400
      Common shares                            593            -          593
    Contributed surplus                         56            -           56
    Retained earnings                        9,621         (272)       9,349
    Accumulated other comprehensive income       -        1,127        1,127
    Foreign currency translation adjustments  (248)         248            -
    -------------------------------------------------------------------------
                                            11,422        1,103       12,525
    -------------------------------------------------------------------------
                                           130,486        2,734      133,220
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    B) FUTURE ACCOUNTING CHANGES

    Capital Disclosures
    -------------------

    Effective January 1, 2008, the Corporation will be required to comply
    with CICA Handbook Section 1535, Capital Disclosures. The section
    establishes standards for disclosing information that enables users of
    financial statements to evaluate the entity's objectives, policies and
    processes for managing capital.

    Financial Instruments Disclosure and Presentation
    -------------------------------------------------

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

    These new requirements are for disclosure only and will not impact
    financial results of the Corporation.

    C) COMPARATIVE FIGURES

    Certain of the 2006 amounts presented for comparative purposes have been
    reclassified to conform to the presentation adopted in the current year.

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

                           NOTE 2    ACQUISITIONS

    (a) Putnam Investments Trust

    On August 3, 2007, Lifeco acquired the asset management business of
    Putnam Investments Trust (Putnam), and The Great-West Life Assurance
    Company (Great-West Life) and Canada Life acquired Putnam's 25% interest
    in T.H. Lee Partners (T.H. Lee), from Marsh & MacLennan Companies Inc.
    representing an aggregate transaction value of approximately $4.2 billion
    including transaction costs. Financing of the transaction is described in
    Note 6. The Corporation's interest in T.H. Lee is included in "Investment
    in affiliates, at equity".

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

    Value of assets acquired:
      Cash and certificates of deposit                                    74
      Shares                                                             441
      Other assets                                                     1,830
                                                                  -----------
                                                                       2,345
                                                                  -----------
    Value of liabilities assumed:
      Other liabilities                                                1,535
      Non-controlling interests                                            2
                                                                  -----------
                                                                       1,537
                                                                  -----------
    Fair value of net assets acquired                                    808
                                                                  -----------
                                                                  -----------

    Total purchase consideration:
      Cash                                                             4,143
      Transaction and related costs, net of income taxes                  91
                                                                  -----------
                                                                       4,234
                                                                  -----------
    Goodwill and intangible assets on acquisition(1)                   3,426
                                                                  -----------
                                                                  -----------

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

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

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

    (b) Crown Life Insurance Company

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

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

    Results of Crown Life are included in the Consolidated Statements of
    Earnings from the date of acquisition.

    (c) Benefits Management Corporation

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

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

                        NOTE 3    RESTRUCTURING COSTS

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

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

                                                     Changes in
                             Expected      Amounts      foreign      Balance
                                total     utilized     exchange    September
                                costs       - 2007        rates     30, 2007
                            -----------  -----------  -----------  ----------
    Compensation costs            100          (23)          (4)          73
    Exiting and
     consolidating operations      13            -           (1)          12
    Eliminating
    duplicate systems              10            -            -           10
                            -----------  -----------  -----------  ----------
                                  123          (23)          (5)          95
                            -----------  -----------  -----------  ----------
                            -----------  -----------  -----------  ----------
    Accrued on acquisition        108          (23)          (4)          81
    Expense as incurred            15            -           (1)          14
                            -----------  -----------  -----------  ----------
                                  123          (23)          (5)          95
                            -----------  -----------  -----------  ----------
                            -----------  -----------  -----------  ----------


                            NOTE 4    INVESTMENTS

                                    September 30, 2007
                ---------------------------------------------------
                                                             Total  December
                     Market value         Amortized cost                  31,
                --------------------- ------------------- ---------
                                         Loans       Non-
                                          and  financial
                 Available  Held for     recei-   instru-
                  for sale   trading    vables     ments                2006
              --------------------------------------------------  -----------
    Shares           2,085     4,391         -         -     6,476     4,602
    Bonds            4,341    53,010     8,933         -    66,284    65,246
    Mortgages and
     other loans         -         -    16,279         -    16,279    15,823
    Loans to
     policyholders       -         -     6,259         -     6,259     6,776
    Real estate          -         -         -     2,329     2,329     2,218
    -------------------------------------------------------------------------
                     6,426    57,401    31,471     2,329    97,627    94,665
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                           NOTE 5    OTHER ASSETS

    -------------------------------------------------------------------------
                                                      September     December
                                                             30,          31,
                                                           2007         2006
    -------------------------------------------------------------------------
    Dividends, interest and other receivables             2,895        1,984
    Premium in course of collection                         587          566
    Deferred selling commissions                          1,002          974
    Fixed assets, net of accumulated depreciation           433          338
    Accrued benefit asset                                   243          232
    Derivative financial instruments                        888            -
    Other                                                 1,615          669
    -------------------------------------------------------------------------
                                                          7,663        4,763
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                  NOTE 6    DEBENTURES AND OTHER BORROWINGS

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

      IGM Financial Inc.
        Credit facility at a rate equal to
         Canadian Bankers' Acceptance rate plus 0.375%      100            -
      Great-West Lifeco Inc.
        Commercial paper and other short-term debt
         instruments with interest rates
         from 5.2% to 5.5%                                   97          110
        Credit facility at a rate equal to Canadian
         Bankers' Acceptance rate plus 0.25%              1,233            -
        Credit facility at a rate equal to LIBOR
         rate plus 0.25% (US$1,221 million)               1,221            -
        Revolving credit in respect of reinsurance
         business with interest rates of 6.0%
         maturing within one year                             1            1
    -------------------------------------------------------------------------
    Total short term                                      2,652          111
    -------------------------------------------------------------------------
    Long term
      Power Financial Corporation
        6.90% debentures, due March 11, 2033                250          250
      IGM Financial Inc.
        6.75% debentures 2001 Series, due May 9, 2011       450          450
        6.58% debentures 2003 Series, due March 7, 2018     150          150
        6.65% debentures 1997 Series, due
         December 13, 2027                                  125          125
        7.45% debentures 2001 Series, due May 9, 2031       150          150
        7.00% debentures 2002 Series, due
         December 31, 2032                                  175          175
        7.11% debentures 2003 Series, due March 7, 2033     150          150
      Great-West Lifeco Inc.
        Subordinated debentures due December 11, 2013
         bearing a fixed rate of 5.80% until 2008 and,
         thereafter, at a rate equal to the Canadian
         90-day Bankers'Acceptance rate
         plus 1%, unsecured                                 203          204
        6.75% debentures due August 10, 2015, unsecured     200          200
        6.14% debentures due March 21, 2018, unsecured      200          200
        6.40% subordinated debentures due
         December 11, 2028, unsecured                       100          101
        6.74% debentures due November 24, 2031, unsecured   200          200
        6.67% debentures due March 21, 2033, unsecured      400          400
        6.625% deferrable debentures due
         November 15, 2034, unsecured (US$174 million)      174          205
        7.153% subordinated debentures due
         May 16, 2046, unsecured (US$300 million)           300          351
        Subordinated debentures due
         June 21, 2067 bearing an interest rate of 5.691%
         until 2017 and, thereafter, at a rate equal
         to the Canadian 90-day Bankers' Acceptance
         rate plus 1.49%, unsecured                       1,000            -
         Notes payable with interest rate of 8.0%             7            8
    -------------------------------------------------------------------------
    Total long term                                       4,234        3,319
    -------------------------------------------------------------------------
                                                          6,886        3,430
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

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

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

              NOTE 7    CAPITAL TRUST SECURITIES AND DEBENTURES

    -------------------------------------------------------------------------
                                                      September     December
                                                             30,          31,
                                                           2007         2006
    -------------------------------------------------------------------------
    Capital trust debentures
      5.995% senior debentures due
       December 31, 2052, unsecured (GWLCT)                 350          350
      6.679% senior debentures due
       June 30, 2052, unsecured (CLCT)                      300          300
      7.529% senior debentures due
       June 30, 2052, unsecured (CLCT)                      150          150
    -------------------------------------------------------------------------
                                                            800          800

    Acquisition-related fair market value adjustment         28           31
    Trust securities held by consolidated
     group as temporary investments                        (188)        (185)
    -------------------------------------------------------------------------
                                                            640          646
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

                       NOTE 8 non-controlling interests

    -------------------------------------------------------------------------
                                                      September     December
                                                             30,          31,
                                                           2007         2006
    -------------------------------------------------------------------------
    Non-controlling interests include
      Participating policyholders                         2,063        1,884
      Preferred shareholders (perpetual) of subsidiaries  1,251        1,253
      Common shareholders of subsidiaries                 4,075        4,076
    -------------------------------------------------------------------------
                                                          7,389        7,213
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                Three months ended        Nine months ended
                                    September 30              September 30
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Earnings attributable to
     non-controlling
     interests include
      Earnings attributable to
       participating
       policyholders               43           31          110          118
      Dividends to preferred
       shareholders (perpetual)
       of subsidiaries             19           19           56           52
      Earnings attributable to
       common shareholders
       of subsidiaries            204          198          647          583
    -------------------------------------------------------------------------
                                  266          248          813          753
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                NOTE 9    CAPITAL STOCK AND STOCK OPTION PLAN

                                   STATED CAPITAL

                                     AUTHORIZED

    Unlimited number of first preferred shares, issuable in series, of second
    preferred shares, issuable in series and of common shares.

    Issued and Outstanding

    -------------------------------------------------------------------------
                              September 30, 2007         December 31, 2006
                            Number of       Stated    Number of       Stated
                               shares      capital       shares      capital
    -------------------------------------------------------------------------

    Preferred Shares
    (classified as
     liabilities)
    Series C First
     Preferred Shares       6,000,000          150    6,000,000          150
    Series J First
     Preferred Shares       6,000,000          150    6,000,000          150
    -------------------------------------------------------------------------
                                               300                       300
    -------------------------------------------------------------------------
    Perpetual Preferred Shares
    Series A First
     Preferred Shares       4,000,000          100    4,000,000          100
    Series D First
     Preferred Shares       6,000,000          150    6,000,000          150
    Series E First
     Preferred Shares       8,000,000          200    8,000,000          200
    Series F First
     Preferred Shares       6,000,000          150    6,000,000          150
    Series H First
     Preferred Shares       6,000,000          150    6,000,000          150
    Series I First
     Preferred Shares       8,000,000          200    8,000,000          200
    Series K First
     Preferred Shares      10,000,000          250   10,000,000          250
    Series L First
     Preferred Shares       8,000,000          200    8,000,000          200
    -------------------------------------------------------------------------
                                             1,400                     1,400
    -------------------------------------------------------------------------

    Common shares         704,893,680          594  704,813,680          593
    -------------------------------------------------------------------------


                           STOCK-BASED COMPENSATION

    During the nine months ended September 30, 2007 and 2006, no options were
    granted under the Corporation's stock option plan. Compensation expense
    relating to the stock options granted by the Corporation and its
    subsidiaries amounted to $4 million in the third quarter of 2007
    ($7 million in 2006) and $13 million for the nine months ended
    September 30, 2007 ($19 million in 2006).

    Options were outstanding at September 30, 2007 to purchase, until
    May 11, 2015, up to an aggregate of 8,345,000 common shares, at various
    prices from $13.13125 to $32.235 per share. During the nine months ended
    September 30, 2007, 80,000 (nil in 2006) common shares were issued under
    the Corporation's plan for an aggregate consideration of $1 million
    (nil in 2006).

              NOTE 10    ACCUMULATED OTHER COMPREHENSIVE INCOME

                               Unrealized gains (losses), on
    -------------------------------------------------------------

                            Available-                  Foreign
    Nine months ended        for-sale    Cash flow     currency
     September 30, 2007        assets       hedges  translation        Total
    -------------------------------------------------------------------------
    Balance, beginning of year      -            -         (248)        (248)
                              -----------------------------------------------

    Change in accounting
     olicy (Note 1)             1,620          (43)           -        1,577
    Income taxes                 (120)           8            -         (112)
                              -----------------------------------------------
                                1,500          (35)           -        1,465
                              -----------------------------------------------
    Non-controlling interests    (105)          15            -          (90)
    -------------------------------------------------------------------------
    Net change in
     accounting policy          1,395          (20)           -        1,375
    -------------------------------------------------------------------------

    Other comprehensive
     income (loss)               (181)          86       (1,341)      (1,436)
    Income taxes                   52          (22)           -           30
                              -----------------------------------------------
                                 (129)          64       (1,341)      (1,406)
                              -----------------------------------------------
    Non-controlling interests      46          (23)         369          392
    -------------------------------------------------------------------------
                                  (83)          41         (972)      (1,014)
    -------------------------------------------------------------------------

    Balance, end of period      1,312           21       (1,220)         113
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                               Unrealized gains (losses), on
    -------------------------------------------------------------

                            Available-                  Foreign
    Nine months ended        for-sale    Cash flow     currency
     September 30, 2006        assets       hedges  translation        Total
    -------------------------------------------------------------------------
    Balance, beginning
     of year                        -            -         (682)        (682)
                              -----------------------------------------------

    Other comprehensive
     income (loss)                  -            -          (51)         (51)
    Income taxes                    -            -            -            -
                              -----------------------------------------------
                                    -            -          (51)         (51)
                              -----------------------------------------------
    Non-controlling interests       -            -           24           24
    -------------------------------------------------------------------------
                                    -            -          (27)         (27)
    -------------------------------------------------------------------------

    Balance, end of period          -            -         (709)        (709)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                         NOTE 11    FINANCING CHARGES

    Financing charges include interest on debentures and other borrowings,
    together with distributions and interest on capital trust securities and
    debentures, and dividends on preferred shares classified as liabilities.

    -------------------------------------------------------------------------
                                 Three months ended        Nine months ended
                                    September 30              September 30
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Interest on debentures
     and other borrowings          94           57          206          164
    Preferred share dividends      18           18           54           55
    Unrealized gains on
     preferred shares classified
     as held for trading          (15)           -          (29)           -
    Subordinated debenture
     issue costs                    -            -           13            -
    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)
    Other                           9            4           15            7
    -------------------------------------------------------------------------
                                  115           88          287          254
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                   NOTE 12    OTHER INCOME (CHARGES), NET

    -------------------------------------------------------------------------
                                 Three months ended        Nine months ended
                                    September 30              September 30
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Share of Pargesa's
     non-operating earnings         -          356            3          343
    Other                          (3)           -           (3)           -
    -------------------------------------------------------------------------
                                   (3)         356            -          343
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The share of Pargesa's non-operating earnings for the nine-month and
    three-month periods of 2006 includes an amount of $356 million which
    represents the Corporation's share of the gain resulting from the
    disposal by Groupe Bruxelles Lambert of its 25.1% equity interest in
    Bertelsmann AG.

                        NOTE 13    EARNINGS PER SHARE

    The following is a reconciliation of the numerators and the denominators
    of the basic and diluted earnings per common share computations:

    -------------------------------------------------------------------------
                                 Three months ended        Nine months ended
                                    September 30              September 30
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Net earnings                  457          795        1,512        1,681
    Dividends on perpetual
     preferred shares             (19)         (19)         (56)         (51)
    -------------------------------------------------------------------------
    Net earnings available
     to common shareholders       438          776        1,456        1,630
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted number of
     common shares
     outstanding (millions)
      - Basic                   704.9        704.8        704.9        704.8
    Exercise of stock options     8.3          8.4          8.3          8.4
    Shares assumed to be
     repurchased with proceeds
     from exercise of
     stock options               (4.3)        (5.3)        (4.4)        (5.3)
    -------------------------------------------------------------------------
    Weighted number of common
     shares outstanding
    (millions)
      - Diluted                 708.9        707.9        708.8        707.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


         NOTE 14    PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS

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

    -------------------------------------------------------------------------
                                 Three months ended        Nine months ended
                                    September 30              September 30
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Pension plans                  13           21           40           66
    Other post-retirement
     benefits                       5            6           18           19
    -------------------------------------------------------------------------
                                   18           27           58           85
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The total benefit costs exclude the pension provision described in
    Note 17.

                         NOTE 15    SECURITIZATIONS

    During the third quarter of 2007, IGM Financial Inc. (IGM) securitized
    $431 million ($390 million in 2006) of residential mortgages through
    sales to bank-sponsored commercial paper conduits and received net cash
    proceeds of $427 million ($386 million in 2006). IGM's retained interest
    in the securitized loans was valued at $8 million ($10 million in 2006).
    A pre-tax gain on sale of $0 million ($4 million in 2006) was recognized
    and reported in net investment income in the Consolidated Statements of
    Earnings.

    During the nine months ended September 30, 2007, IGM securitized
    $1,096  million ($1,026 million in 2006) of residential mortgages through
    sales to bank-sponsored commercial paper conduits and received net cash
    proceeds of $1,085 million ($1,019 million in 2006). IGM's retained
    interest in the securitized loans was valued at $21 million ($17 million
    in 2006). A pre-tax gain on sale of $2 million ($1 million in 2006) was
    recognized and reported in net investment income in the Consolidated
    Statements of Earnings.

                       NOTE 16   SEGMENTED INFORMATION

    Information on Profit Measure
    -------------------------------------------------------------------------
    Three months ended                                 Par-
     September 30, 2007           Lifeco      IGM  jointco    Other    Total
    -------------------------------------------------------------------------
    Revenues
      Premium income               3,879        -        -        -    3,879
      Net investment income        1,844       44        -      (21)   1,867
      Fee income                     921      687        -      (12)   1,596
    -------------------------------------------------------------------------
                                   6,644      731        -      (33)   7,342
    -------------------------------------------------------------------------
    Expenses
      Policyholder benefits,
       dividends and experience
       refunds, and change in
       actuarial liabilities       4,678        -        -        -    4,678
      Commissions                    348      238        -      (12)     574
      Operating expenses             936      155        -       14    1,105
      Financing charges               81       22        -       12      115
    -------------------------------------------------------------------------
                                   6,043      415        -       14    6,472
    -------------------------------------------------------------------------
                                     601      316        -      (47)     870
    Share of earnings of affiliates    -        -       30        -       30
    Other income (charges), net        -        -        -       (3)      (3)
    -------------------------------------------------------------------------
    Earnings before income taxes
     and non-controlling interests   601      316       30      (50)     897
    Income taxes                      78       96        -        -      174
    Non-controlling interests        199       99        -      (32)     266
    -------------------------------------------------------------------------
    Contribution to consolidated
     net earnings                    324      121       30      (18)     457
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Information on Profit Measure
    -------------------------------------------------------------------------
    Three months ended                                 Par-
     September 30, 2006           Lifeco      IGM  jointco    Other    Total
    -------------------------------------------------------------------------
    Revenues
     Premium income                4,332        -        -        -    4,332
     Net investment income         1,577       55        -      (20)   1,612
     Fee income                      658      588        -      (11)   1,235
    -------------------------------------------------------------------------
                                   6,567      643        -      (31)   7,179
    -------------------------------------------------------------------------
    Expenses
      Policyholder benefits,
       dividends and experience
       refunds, and change in
       actuarial liabilities       4,871        -        -        -    4,871
      Commissions                    325      206        -      (12)     519
      Operating expenses             604      134        -       14      752
      Financing charges               54       22        -       12       88
    -------------------------------------------------------------------------
                                   5,854      362        -       14    6,230
    -------------------------------------------------------------------------
                                     713      281        -      (45)     949
    Share of earnings of affiliates    -        -       12        -       12
    Other income (charges), net        -        -      356        -      356
    -------------------------------------------------------------------------
    Earnings before income taxes
     and non-controlling interests   713      281      368      (45)   1,317
    Income taxes                     186       89        -       (1)     274
    Non-controlling interests        191       84        -      (27)     248
    -------------------------------------------------------------------------
    Contribution to
     consolidated net earnings       336      108      368      (17)     795
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Information on Profit Measure
    -------------------------------------------------------------------------
    Nine months ended                                  Par-
     September 30, 2007           Lifeco      IGM  jointco    Other    Total
    -------------------------------------------------------------------------
    Revenues
      Premium income              13,758        -        -        -   13,758
      Net investment income        2,402      152        -      (58)   2,496
      Fee income                   2,434    2,022        -      (38)   4,418
    -------------------------------------------------------------------------
                                  18,594    2,174        -      (96)  20,672
    -------------------------------------------------------------------------
    Expenses
      Policyholder benefits,
       dividends and experience
       refunds, and change in
       actuarial liabilities      13,026        -        -        -   13,026
      Commissions                  1,100      706        -      (39)   1,767
      Operating expenses           2,228      466        -       43    2,737
      Financing charges              185       66        -       36      287
    -------------------------------------------------------------------------
                                  16,539    1,238        -       40   17,817
    -------------------------------------------------------------------------
                                   2,055      936        -     (136)   2,855
    Share of earnings
     of affiliates                     -        -      128        -      128
    Other income (charges), net        -        -        3       (3)       -
    -------------------------------------------------------------------------
    Earnings before income taxes
     and non-controlling
     interests                     2,055      936      131     (139)   2,983
    Income taxes                     370      288        -        -      658
    Non-controlling interests        614      288        -      (89)     813
    -------------------------------------------------------------------------
    Contribution to consolidated
     net earnings                  1,071      360      131      (50)   1,512
    -------------------------------------------------------------------------


    Information on Profit Measure
    -------------------------------------------------------------------------
    Nine months ended                                  Par-
     September 30, 2006           Lifeco      IGM  jointco    Other    Total
    -------------------------------------------------------------------------
    Revenues
      Premium income              12,471        -        -        -   12,471
      Net investment income        4,416      162        -      (66)   4,512
      Fee income                   1,982    1,764        -      (35)   3,711
    -------------------------------------------------------------------------
                                  18,869    1,926        -     (101)  20,694
    -------------------------------------------------------------------------
    Expenses
      Policyholder benefits,
       dividends and experience
       refunds, and change in
       actuarial liabilities      13,831        -        -        -   13,831
      Commissions                    999      614        -      (36)   1,577
      Operating expenses           1,842      425        -       41    2,308
      Financing charges              152       66        -       36      254
    -------------------------------------------------------------------------
                                  16,824    1,105        -       41   17,970
    -------------------------------------------------------------------------
                                   2,045      821        -     (142)   2,724
    Share of earnings
     of affiliates                     -        -       94        -       94
    Other income (charges), net        -        -      343        -      343
    -------------------------------------------------------------------------
    Earnings before income taxes
     and non-controlling
     interests                     2,045      821      437     (142)   3,161
    Income taxes                     491      242        -       (6)     727
    Non-controlling interests        580      256        -      (83)     753
    -------------------------------------------------------------------------
    Contribution to
     consolidated net earnings       974      323      437      (53)   1,681
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


           NOTE 17   CONTINGENT LIABILITIES (material changes since
                              December 31,2006)

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




For further information:

For further information: Mr. Edward Johnson, Senior Vice-President,
General Counsel and Secretary, (514) 286-7400


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