Nine-month operating earnings increase 33.1%



    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 Corporation of Canada's operating
earnings for the nine-month period ended September 30, 2007 were
$1,149 million or $2.47 per share, compared with $866 million or $1.85 per
share in the corresponding period of 2006. This represents a 33.1% increase on
a per share basis.
    Growth in operating earnings reflects an increase of 19% in the
contribution from Power Financial, as well as a significant increase in income
from investments, generated primarily by the Corporation's operations as a
Qualified Foreign Institutional Investor in China, its portfolio of investment
funds in North America, its interest in Sagard 1 Fund in Europe and dividends
received from its investment in Citic Pacific.
    Other income was a charge of $36 million or $0.08 per share for the
nine-month period in 2007, reflecting primarily the Corporation's share of a
$97 million after tax provision recorded in the third quarter by Great-West
Lifeco for certain Canadian retirement plans, as well as other items. Other
income was $238 million or $0.53 per share in 2006, primarily composed of the
Corporation's share, in the amount of $236 million, of the gain resulting from
the sale by Groupe Bruxelles Lambert of its 25.1% interest in Bertelsmann AG.
    Net earnings for the nine months ended September 30, 2007 were
$1,113 million or $2.39 per share, compared with $1,104 million or $2.38 per
share in the same period of 2006.

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

    For the quarter ended September 30, 2007, operating earnings of the
Corporation were $392 million or $0.84 per share, compared with $273 million
or $0.58 per share in the third quarter of 2006. This represents an increase
of 44.6% on a per share basis.
    Other items for the third quarter of 2007 were a charge of $38 million or
$0.08 per share reflecting primarily the impact of the provision recorded by
Great-West Lifeco as described above. For the corresponding period in 2006,
other items were $236 million or $0.52 per share, representing essentially the
Corporation's share of the gain recorded by GBL from the sale of its interest
in Bertelsmann.
    Net earnings for the quarter were $354 million or $0.76 per share in
2007, compared with $509 million or $1.10 per share in 2006.

    RESULTS OF POWER FINANCIAL CORPORATION
    --------------------------------------

    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 Power Financial'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 Power
Financial'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 Power Financial'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.
    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.
    For the quarter ended September 30, 2007, operating earnings of Power
Financial 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.

    
    DIVIDENDS ON PREFERRED SHARES
    ------------------------------

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

    -------------------------------------------------------------------------
    Type of shares   Record Date        Payment Date       Amount
    -------------------------------------------------------------------------
    1986 Series      December 21, 2007  January 15, 2008   To be determined
                                                           in accordance
                                                           with the articles
                                                           of the Corporation
    -------------------------------------------------------------------------
    Series A         December 21, 2007  January 15, 2008   35 cents
    -------------------------------------------------------------------------
    Series B         December 21, 2007  January 15, 2008   33.4375 cents
    -------------------------------------------------------------------------
    Series C         December 21, 2007  January 15, 2008   36.25 cents
    -------------------------------------------------------------------------
    Series D         December 21, 2007  January 15, 2008   31.25 cents
    -------------------------------------------------------------------------

    DIVIDENDS ON PARTICIPATING SHARES
    ---------------------------------

    The Board of Directors also declared a quarterly dividend of 24.125 cents
on the Participating Preferred and Subordinate Voting Shares of the
Corporation, payable December 31, 2007 to shareholders of record December 10,
2007.

    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 or its subsidiaries' or affiliates' current
expectations. These statements may include, without limitation, statements
regarding the operations, business, financial condition, priorities, ongoing
objectives, strategies and outlook of Power Corporation, its subsidiaries or
affiliates 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 affiliates'
control, affect the operations, performance and results of the Corporation's,
its subsidiaries and affiliates, 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 affiliates' ability to complete strategic transactions and
integrate acquisitions, and the Corporation's or its subsidiaries' or its
affiliates' 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 affiliates' 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's 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 Corporation,
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 its subsidiaries. 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 Corporation of Canada

                         CONSOLIDATED BALANCE SHEETS

    -------------------------------------------------------------------------
                                                  September 30,  December 31,
                                                          2007          2006
    (in millions of dollars)                        (unaudited)
    -------------------------------------------------------------------------

    Assets
    Cash and cash equivalents                            5,660         5,785
    -------------------------------------------------------------------------
    Investments (Note 4)
      Shares                                             8,007         5,598
      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
    -------------------------------------------------------------------------
                                                        99,158        95,661
    Funds held by ceding insurers                        1,553        12,371
    Investment in affiliates, at equity                  3,564         2,182
    Intangible assets                                    2,867         2,745
    Goodwill (Note 2)                                   11,567         8,454
    Future income taxes                                    696           471
    Other assets (Note 5)                                7,980         5,083
    -------------------------------------------------------------------------
                                                       133,045       132,752
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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)             6,979         3,513
    Preferred shares of subsidiaries                     1,667         1,625
    Capital trust securities and debentures (Note 7)       640           646
    Future income taxes                                    887           909
    Other liabilities                                    7,085         8,897
    -------------------------------------------------------------------------
                                                       110,775       112,168
    -------------------------------------------------------------------------
    Non-controlling interests (Note 8)                  12,488        11,983
    -------------------------------------------------------------------------

    Shareholders' Equity
    Stated capital (Note 9)
      Non-participating shares                             795           795
      Participating shares                                 473           442
    Contributed surplus                                     74            59
    Retained earnings                                    8,074         7,480
    Accumulated other comprehensive
     income (loss) (Note 10)                               366          (175)
    -------------------------------------------------------------------------
                                                         9,782         8,601
    -------------------------------------------------------------------------
                                                       133,045       132,752
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                     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                    1,537       1,632       4,699       4,596
        Change in fair value on
         held for trading assets     426           -      (1,921)          -
                                 --------------------------------------------
                                   1,963       1,632       2,778       4,596

      Fees and media income        1,696       1,324       4,736       3,995
    -------------------------------------------------------------------------
                                   7,538       7,288      21,272      21,062
    -------------------------------------------------------------------------
    Expenses
      Policyholder benefits,
       dividends and experience
       refunds, and change in
       actuarial liabilities       4,678       4,871      13,026      13,831
      Commissions                    574         519       1,767       1,577
      Operating expenses           1,228         862       3,131       2,644
      Financing charges (Note 11)    118          90         294         258
    -------------------------------------------------------------------------
                                   6,598       6,342      18,218      18,310
    -------------------------------------------------------------------------
                                     940         946       3,054       2,752
    Share of earnings of
     affiliates                       26           9         113          84
    Other income (charges),
     net (Note 12)                     8         356          11         348
    -------------------------------------------------------------------------
    Earnings before income taxes
     and non-controlling
     interests                       974       1,311       3,178       3,184
    Income taxes                     187         274         704         728
    Non-controlling
     interests (Note 8)              433         528       1,361       1,352
    -------------------------------------------------------------------------
    Net earnings                     354         509       1,113       1,104
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per participating
     share (Note 13)
      Basic                         0.76        1.10        2.39        2.38
    -------------------------------------------------------------------------
      Diluted                       0.75        1.09        2.36        2.36
    -------------------------------------------------------------------------


               CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

    Net earnings                     354         509       1,113       1,104
    -------------------------------------------------------------------------

    Other comprehensive
     income (loss)

      Net unrealized gains
       (losses) on available-for-
       sale assets
        Unrealized gains (losses)    (86)          -         371           -
        Income tax on unrealized
         gains (losses)              (38)          -         (60)          -
        Reclassification of
         realized (gains) losses
         to net earnings            (103)          -        (273)          -
        Income tax on
         reclassification of
         realized (gains) losses
         to net earnings              21           -          58           -
    -------------------------------------------------------------------------
                                    (206)          -          96           -
    -------------------------------------------------------------------------

      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         (583)         14      (1,338)        (34)
    -------------------------------------------------------------------------

    Other comprehensive
     income (loss) before
     non-controlling interests      (722)         14      (1,178)        (34)
    Non-controlling interests        370          (4)        734           9
    -------------------------------------------------------------------------
    Other comprehensive
     income (loss)                  (352)         10        (444)        (25)
    -------------------------------------------------------------------------

    Comprehensive income               2         519         669       1,079
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


         CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

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

    Stated capital - Non-participating shares
    Non-participating shares, beginning of year            795           795
    Issue of non-participating shares                        -             -
    -------------------------------------------------------------------------
    Non-participating shares, end of period                795           795
    -------------------------------------------------------------------------

    Stated capital - Participating shares
    Participating shares, beginning of year                442           417
    Issue of participating shares under stock option
     plan                                                   31            25
    -------------------------------------------------------------------------
    Participating shares, end of period                    473           442
    -------------------------------------------------------------------------

    Contributed surplus
    Contributed surplus, beginning of year                  59            37
    Stock options expense                                   21            25
    Non-controlling interests                               (6)           (9)
    -------------------------------------------------------------------------
    Contributed surplus, end of period                      74            53
    -------------------------------------------------------------------------

    Retained earnings
    Retained earnings, beginning of year
      As previously reported                             7,480         6,478
      Change in accounting policy (Note 1)                (181)            -
    -------------------------------------------------------------------------
    As restated                                          7,299         6,478
      Net earnings                                       1,113         1,104
      Dividends to shareholders
        Non-participating shares                           (32)          (32)
        Participating shares                              (309)         (254)
      Other                                                  3            (5)
    -------------------------------------------------------------------------
    Retained earnings, end of period                     8,074         7,291
    -------------------------------------------------------------------------

    Accumulated other comprehensive
     income (loss) (Note 10)
    Accumulated other comprehensive income (loss),
     beginning of year                                    (175)         (468)
    Change in accounting policy (Note 1)                   985             -
    Other comprehensive income (loss)                     (444)          (25)
    -------------------------------------------------------------------------
    Accumulated other comprehensive income (loss),
     end of period                                         366          (493)
    -------------------------------------------------------------------------

    Total Shareholders' Equity                           9,782         8,088
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                    CONSOLIDATED STATEMENTS OF CASH FLOWS

    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
    (unaudited) (in millions          September 30            September 30
     of dollars)                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Operating activities
      Net earnings                   354         509       1,113       1,104
      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                 33          28          94          83
        Future income taxes            4         (15)        (49)         57
        Non-controlling interests    433         528       1,361       1,352
        Other                       (416)       (379)      2,103        (485)
      Change in non-cash working
       capital                      (279)        196      (1,578)         43
    -------------------------------------------------------------------------
                                   1,200       1,555       3,058       3,579
    -------------------------------------------------------------------------
    Financing activities
      Dividends paid
        By subsidiaries to
         non-controlling
         interests                  (209)       (183)       (606)       (527)
        Non-participating shares     (11)        (11)        (32)        (31)
        Participating shares        (109)        (89)       (308)       (254)
    -------------------------------------------------------------------------
                                    (329)       (283)       (946)       (812)
      Issue of subordinated
       voting shares                   -          10          31          25
      Issue of common shares by
       subsidiaries                    4           7          30          31
      Repurchase of common shares
       by subsidiaries               (15)        (19)        (64)        (56)
      Issue of preferred shares
       by a subsidiary                 -         200           -         500
      Repurchase of preferred
       shares by a subsidiary         (1)        (18)         (1)        (30)
      Issue of debentures and
       other borrowings            2,590           -       3,727         336
      Repayment of debentures and
       other borrowings             (132)       (250)       (164)       (422)
      Other                           30          41          30          17
    -------------------------------------------------------------------------
                                   2,147        (312)      2,643        (411)
    -------------------------------------------------------------------------
    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                612         492       1,571       1,165
      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   (4,159)          -      (4,159)          -
      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          (691)       (417)     (2,446)     (1,192)
      Investment in real estate     (244)       (399)       (440)       (515)
      Other                           15         (11)          2         (20)
    -------------------------------------------------------------------------
                                  (4,219)       (946)     (5,529)     (2,754)
    -------------------------------------------------------------------------
    Effect of changes in exchange
     rates on cash and cash
     equivalents                    (115)         31        (297)         71
    Increase (decrease) in cash
     and cash equivalents           (987)        328        (125)        485
    Cash and cash equivalents,
     beginning of period           6,647       5,489       5,785       5,332
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                 5,660       5,817       5,660       5,817
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                         Power Corporation of Canada

    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
    Corporation of Canada 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 affiliates 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                  5,785           -       5,785
    -------------------------------------------------------------------------
    Investments
      Shares                                   5,598         844       6,442
      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
    -------------------------------------------------------------------------
                                              95,661       1,814      97,475
    Investment in affiliates, at equity        2,182       1,157       3,339
    All other assets                          29,124        (150)     28,974
    -------------------------------------------------------------------------
                                             132,752       2,821     135,573
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Policy liabilities
      Actuarial liabilities                   89,490       3,896      93,386
      Other                                    4,488           -       4,488
    Debentures and other borrowings            3,513           -       3,513
    Preferred shares of subsidiaries           1,625          71       1,696
    Capital trust securities and
     debentures                                  646           -         646
    Future income taxes                          909          25         934
    All other liabilities                     11,497      (2,464)      9,033
    -------------------------------------------------------------------------
                                             112,168       1,528     113,696
    -------------------------------------------------------------------------

    Non-controlling interests                 11,983         489      12,472
    -------------------------------------------------------------------------
    Shareholders' Equity
    Stated capital
      Non-participating shares                   795           -         795
      Participating shares                       442           -         442
    Contributed surplus                           59           -          59
    Retained earnings                          7,480        (181)      7,299
    Accumulated other comprehensive
     income                                        -         810         810
    Foreign currency translation
     adjustments                                (175)        175           -
    -------------------------------------------------------------------------
                                               8,601         804       9,405
    -------------------------------------------------------------------------
                                             132,752       2,821     135,573
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    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
                                             Amounts     foreign     Balance
                                Expected  Utilized -    exchange   September
                             total 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
                 --------------------------------------------------
                                                                    December
                     Market value        Amortized cost     Total         31,
                 -------------------- ------------------- ---------
                                                     Non-
                                         Loans     finan-
                                           and      cial
                 Available  Held for     recei-   instru-
                  for sale   trading    vables     ments                2006
                 -------------------------------------------------- ---------

    Shares           3,616     4,391         -         -     8,007     5,598
    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
    -------------------------------------------------------------------------
                     7,957    57,401    31,471     2,329    99,158    95,661
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                             NOTE 5 OTHER ASSETS

    -------------------------------------------------------------------------
                                                  September 30,  December 31,
                                                          2007          2006
    -------------------------------------------------------------------------
    Dividends, interest and other receivables            2,951         2,061
    Premium in course of collection                        587           566
    Deferred selling commission                          1,002           974
    Fixed assets, net of accumulated depreciation          597           514
    Accrued benefit asset                                  312           281
    Derivative financial instruments                       893             -
    Other                                                1,638           687
    -------------------------------------------------------------------------
                                                         7,980         5,083
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                   NOTE 6 DEBENTURES AND OTHER BORROWINGS

    -------------------------------------------------------------------------
                                                  September 30,  December 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 of 8.0%                  7             8
      Other
        Term loan at prime plus a premium varying
         between 1.0% and 1.75% or Bankers'
        Acceptance plus a premium varying between
         2.0% and 2.75% due May 13, 2013                    60            50
        Bank loan at prime plus a premium varying
         between 0.375% to 1.5%, or Bankers'
         Acceptance plus a premium varying
         between 1.375% and 2.5% due May 13, 2010           33            33
    -------------------------------------------------------------------------
    Total long term                                      4,327         3,402
    -------------------------------------------------------------------------
                                                         6,979         3,513
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    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 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 30,  December 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 byCanada 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 30,  December 31,
                                                          2007          2006
    -------------------------------------------------------------------------
    Non-controlling interests include
      Participating policyholders                        2,063         1,884
      Preferred shareholders (perpetual) of
       subsidiaries                                      2,651         2,653
      Common shareholders of subsidiaries                7,774         7,446
    -------------------------------------------------------------------------
                                                        12,488        11,983
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                  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                   37          38         112         103
      Earnings attributable to
       common shareholders of
       subsidiaries                  353         459       1,139       1,131
    -------------------------------------------------------------------------
                                     433         528       1,361       1,352
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                 NOTE 9 CAPITAL STOCK AND STOCK OPTION PLAN
                               STATED CAPITAL

    -------------------------------------------------------------------------
                                                  September 30,  December 31,
                                                          2007          2006
    -------------------------------------------------------------------------
    Non-Participating Shares
    Cumulative Redeemable First Preferred Shares,
     1986 Series
      Authorized - Unlimited number of shares
      Issued - 899,878 shares                               45            45
    Series A First Preferred Shares
      Authorized and issued - 6,000,000 shares             150           150
    Series B First Preferred Shares
      Authorized and issued - 8,000,000 shares             200           200
    Series C First Preferred Shares
      Authorized and issued - 6,000,000 shares             150           150
    Series D First Preferred Shares
      Authorized and issued - 10,000,000 shares            250           250
    -------------------------------------------------------------------------
                                                           795           795
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Participating Shares
    Participating Preferred Shares
      Authorized - Unlimited number of shares
      Issued - 48,854,772 shares                            27            27
    Subordinate Voting Shares
      Authorized - Unlimited number of shares
      Issued - 404,876,082 (2006 -
       402,606,144) shares                                 446           415
    -------------------------------------------------------------------------
                                                           473           442
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                           STOCK-BASED COMPENSATION

    During the first quarter of 2007, 1,209,075 options were granted under
    the Corporation's stock option plan (no options were granted in the first
    quarter of 2006). During the second quarter of 2006, 1,342,075 options
    were granted under the Corporation's stock option plan (no options were
    granted in the second quarter of 2007). During the third quarters of 2007
    and 2006, no options were granted.

    The fair value of these options was estimated using the Black-Scholes
    option-pricing model with the following assumptions:

    -------------------------------------------------------------------------
                                                          2007          2006
    -------------------------------------------------------------------------
    Dividend yield                                         2.1%          2.3%
    Expected volatility                                   15.5%         19.0%
    Risk-free interest rate                                4.0%          4.3%
    Expected life (years)                                    7             7
    Fair value per option granted ($/option)             $7.11         $7.29
    -------------------------------------------------------------------------


    Compensation expense relating to the stock options granted by the
    Corporation and its subsidiaries amounted to $7 million in the third
    quarter of 2007 ($9 million in 2006) and $21 million for the nine months
    ended September 30, 2007 ($25 million in 2006).

    Options were outstanding at September 30, 2007 to purchase, until
    March 25, 2017, 11,133,972 subordinate voting shares at various prices
    from $11.3625 to $37.07. During the nine months ended September 30, 2007,
    2,269,938 subordinate voting shares (2,336,450 in 2006) were issued under
    the Corporation's plan for an aggregate consideration of $31 million
    ($25 million in 2006).


               NOTE 10 ACCUMULATED OTHER COMPREHENSIVE INCOME

                                Unrealized gains (losses), on
    -------------------------------------------------------------
                                                         Foreign
                               Available-               currency
    Nine months ended           for-sale   Cash flow     transla-
     September 30, 2007           assets      hedges        tion       Total
    -------------------------------------------------------------------------

    Balance, beginning of year         -           -        (175)       (175)
                               ----------------------------------------------

    Change in accounting
     policy (Note 1)               1,708         (43)          -       1,665
    Income taxes                    (135)          8           -        (127)
                               ----------------------------------------------
                                   1,573         (35)          -       1,538
                               ----------------------------------------------
    Non-controlling interests       (574)         21           -        (553)
    -------------------------------------------------------------------------
    Net change in accounting
     policy                          999         (14)          -         985
    -------------------------------------------------------------------------

    Other comprehensive
     income (loss)                    98          86      (1,338)     (1,154)
    Income taxes                      (2)        (22)          -         (24)
                               ----------------------------------------------
                                      96          64      (1,338)     (1,178)
                               ----------------------------------------------
    Non-controlling interests         75         (36)        695         734
    -------------------------------------------------------------------------
                                     171          28        (643)       (444)
    -------------------------------------------------------------------------

    Balance, end of period         1,170          14        (818)        366
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                Unrealized gains (losses), on
    -------------------------------------------------------------
                                                         Foreign
                               Available-               currency
    Nine months ended           for-sale   Cash flow     transla-
     September 30, 2006           assets      hedges        tion       Total
    -------------------------------------------------------------------------

    Balance, beginning of year         -           -        (468)       (468)
                               ----------------------------------------------

    Other comprehensive
     income (loss)                     -           -         (34)        (34)
    Income taxes                       -           -           -           -
                               ----------------------------------------------
                                       -           -         (34)        (34)
                               ----------------------------------------------
    Non-controlling interests          -           -           9           9
    -------------------------------------------------------------------------
                                       -           -         (25)        (25)
    -------------------------------------------------------------------------

    Balance, end of period             -           -        (493)       (493)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                          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                 97          58         212         167
    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           5          16           8
    -------------------------------------------------------------------------
                                     118          90         294         258
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                     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                              8           -           8           5
    -------------------------------------------------------------------------
                                       8         356          11         348
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 Power Financial 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 participating share computations:

    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                      September 30            September 30
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Net earnings                     354         509       1,113       1,104
    Dividends on non-participating
     shares                          (11)        (11)        (32)        (32)
    -------------------------------------------------------------------------
    Net earnings available to
     participating shareholders      343         498       1,081       1,072
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted number of
     participating shares
     outstanding (millions)
      - Basic                      453.7       450.9       453.3       450.3
    Exercise of stock options       11.1         9.7        11.1         9.7
    Shares assumed to be
     repurchased with proceeds
     from exercise of stock
     options                        (6.5)       (5.2)       (6.7)       (5.2)
    -------------------------------------------------------------------------
    Weighted number of
     participating shares
     outstanding (millions)
      - Diluted                    458.3       455.4       457.7       454.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


           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                     15          22          46          71
    Other post-retirement benefits     6           6          21          22
    -------------------------------------------------------------------------
                                      21          28          67          93
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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         -        75     1,963
      Fees and media income      921       687         -        88     1,696
    -------------------------------------------------------------------------
                               6,644       731         -       163     7,538
    -------------------------------------------------------------------------
    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         -       137     1,228
      Financing charges           81        22         -        15       118
    -------------------------------------------------------------------------
                               6,043       415         -       140     6,598
    -------------------------------------------------------------------------
                                 601       316         -        23       940
    Share of earnings of
     affiliates                    -         -        30        (4)       26
    Other income (charges),
     net                           -         -         -         8         8
    -------------------------------------------------------------------------
    Earnings before income
     taxes and non-
     controlling interests       601       316        30        27       974
    Income taxes                  78        96         -        13       187
    Non-controlling interests    308       140        10       (25)      433
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    215        80        20        39       354
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    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         -         -     1,632
      Fees and media income      658       588         -        78     1,324
    -------------------------------------------------------------------------
                               6,567       643         -        78     7,288
    -------------------------------------------------------------------------
    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         -       124       862
      Financing charges           54        22         -        14        90
    -------------------------------------------------------------------------
                               5,854       362         -       126     6,342
    -------------------------------------------------------------------------
                                 713       281         -       (48)      946
    Share of earnings of
     affiliates                    -         -        12        (3)        9
    Other income (charges),
     net                           -         -       356         -       356
    -------------------------------------------------------------------------
    Earnings before income
     taxes and non-
     controlling interests       713       281       368       (51)    1,311
    Income taxes                 186        89         -        (1)      274
    Non-controlling interests    303       121       124       (20)      528
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    224        71       244       (30)      509
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    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         -       224     2,778
      Fees and media income    2,434     2,022         -       280     4,736
    -------------------------------------------------------------------------
                              18,594     2,174         -       504    21,272
    -------------------------------------------------------------------------
    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         -       437     3,131
      Financing charges          185        66         -        43       294
    -------------------------------------------------------------------------
                              16,539     1,238         -       441    18,218
    -------------------------------------------------------------------------
                               2,055       936         -        63     3,054
    Share of earnings of
     affiliates                    -         -       128       (15)      113
    Other income (charges),
     net                           -         -         3         8        11
    -------------------------------------------------------------------------
    Earnings before income
     taxes and non-
     controlling interests     2,055       936       131        56     3,178
    Income taxes                 370       288         -        46       704
    Non-controlling interests    974       409        44       (66)    1,361
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    711       239        87        76     1,113
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    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         -        18     4,596
      Fees and media income    1,982     1,764         -       249     3,995
    -------------------------------------------------------------------------
                              18,869     1,926         -       267    21,062
    -------------------------------------------------------------------------
    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         -       377     2,644
      Financing charges          152        66         -        40       258
    -------------------------------------------------------------------------
                              16,824     1,105         -       381    18,310
    -------------------------------------------------------------------------
                               2,045       821         -      (114)    2,752
    Share of earnings of
     affiliates                    -         -        94       (10)       84
    Other income (charges),
     net                           -         -       343         5       348
    -------------------------------------------------------------------------
    Earnings before income
     taxes and non-
     controlling interests     2,045       821       437      (119)    3,184
    Income taxes                 491       242         -        (5)      728
    Non-controlling interests    907       365       147       (67)    1,352
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    647       214       290       (47)    1,104
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


           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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