Power Financial Corporation - First quarter financial results and dividends



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

    MONTREAL, May 12 /CNW Telbec/ - Power Financial Corporation's operating
earnings for the three-month period ended March 31, 2009 were $252 million or
$0.32 per share, compared with $491 million or $0.67 per share in the
corresponding period in 2008.
    The decrease in operating earnings reflects primarily the decrease in the
contribution from the Corporation's subsidiaries and Parjointco.
    Other items were a charge of $57 million or $0.08 per share in the first
quarter of 2009 and consisted of Power Financial's share of non-operating
results recorded by Pargesa, as discussed below. For the first quarter of
2008, other items were earnings of $95 million or $0.13 per share and
consisted of Power Financial's share of non-operating earnings recorded by
Lifeco and Pargesa.
    Net earnings, including other items, for the three-month period ended
March 31, 2009 were $195 million or $0.24 per share, compared with $586
million or $0.80 per share in the first quarter of 2008.

    RESULTS OF SUBSIDIARIES AND PARJOINTCO
    --------------------------------------

    Great-West Lifeco Inc.

    Great-West Lifeco reported net income attributable to common shareholders
of $326 million for the three months ended March 31, 2009, compared with $654
million in the corresponding period of 2008.
    The 2008 results include two non-recurring items that totalled $118
million after tax. A gain of approximately $176 million was realized in
connection with the termination of a long-standing assumption reinsurance
agreement under which Great-West Life & Annuity Insurance Company had
reinsured a block of U.S. participating policies. This gain was partly
mitigated by an increase in policy reserves to provide for an increase in
overhead costs expected to be absorbed as a result of the sale of Great-West
Healthcare. Excluding these items, adjusted net income attributable to common
shareholders was $536 million for the three months ended March 31, 2008.
    Lifeco's contribution to Power Financial's operating earnings was $224
million for the three-month period ended March 31, 2009, compared with $377
million for the corresponding period of 2008.

    IGM Financial Inc.

    IGM Financial reported net income for the three-month period ended March
31, 2009 of $134 million, compared with net income of $211 million in the
corresponding period of 2008.
    For the three-month period ended March 31, 2009, the contribution from
IGM to Power Financial Corporation's operating earnings was $68 million,
compared with $119 million in the corresponding period of 2008.

    Parjointco N.V.

    Power Financial holds a 50% interest in Parjointco N.V., which in turn
holds a 54.1% interest in Pargesa Holding SA. Pargesa reported an operating
loss of SF69 million in the three-month period ended March 31, 2009, compared
with earnings of SF75 million for the corresponding period in 2008. The
decrease is due to lower contribution from Imerys and Lafarge as well as a
negative change in the fair value of the GBL trading portfolio. Expressed in
Canadian dollars, the contribution from the investment at equity to Power
Financial's operating earnings was negative $20 million for the three-month
period ended March 31, 2009, compared with a positive contribution of $17
million for the corresponding period in 2008.
    Non-operating results were a charge of SF196 million in the first quarter
2009, which essentially consisted of the charge resulting from the adjustment
of the carrying value of Pernod Ricard and Iberdrola to their market value at
March 31, 2009. This compared with non-recurring earnings of SF58 million in
2008. As a result, the net loss reported by Pargesa was SF265 million in the
first quarter 2009, compared with net earnings of SF133 million in the same
period of 2008.

    
    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          July 24, 2009   August 15, 2009   To be determined
                                                        In accordance with
                                                        the articles of the
                                                        Corporation
    -------------------------------------------------------------------------
    Series C          July 10, 2009   July 31, 2009     32.50 cents
    -------------------------------------------------------------------------
    Series D          July 10, 2009   July 31, 2009     34.375 cents
    -------------------------------------------------------------------------
    Series E          July 10, 2009   July 31, 2009     32.8125 cents
    -------------------------------------------------------------------------
    Series F          July 10, 2009   July 31, 2009     36.875 cents
    -------------------------------------------------------------------------
    Series H          July 10, 2009   July 31, 2009     35.9375 cents
    -------------------------------------------------------------------------
    Series I          July 10, 2009   July 31, 2009     37.50 cents
    -------------------------------------------------------------------------
    Series J          July 10, 2009   July 31, 2009     29.375 cents
    -------------------------------------------------------------------------
    Series K          July 10, 2009   July 31, 2009     30.9375 cents
    -------------------------------------------------------------------------
    Series L          July 10, 2009   July 31, 2009     31.875 cents
    -------------------------------------------------------------------------
    Series M          July 10, 2009   July 31, 2009     37.50 cents
    -------------------------------------------------------------------------

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

    The Board of Directors also declared a quarterly dividend of 35 cents per
share on the Corporation's common shares payable July 31, 2009 to shareholders
of record June 30, 2009.
    For purposes of the Income Tax Act (Canada) and any similar provincial
legislation, all of the above dividends of the Corporation's preferred and
common shares are eligible dividends.

    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 and its subsidiaries' current expectations.
Forward-looking statements are provided for the purposes of assisting the
reader in understanding the Corporation's financial position and results of
operations as at and for the periods ended on certain dates and to present
information about management's current expectations and plans relating to the
future and readers are cautioned that such statements may not be appropriate
for other purposes. These statements may include, without limitation,
statements regarding the operations, business, financial condition, expected
financial results, performance, prospects, opportunities, priorities, targets,
goals, ongoing objectives, strategies and outlook of the Corporation and its
subsidiaries, as well as the outlook for North American and international
economies, 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", "seeks", "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 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 and which give rise to the
possibility that expectations, forecasts, predictions, projections or
conclusions will not prove to be accurate, that assumptions may not be correct
and that objectives, strategic goals and priorities will not be achieved. A
variety of material factors, many of which are beyond the Corporation's and
its subsidiaries' control, affect the operations, performance and results of
the Corporation and its subsidiaries, and their businesses, 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 (including adoption of International Financial Reporting
Standards), business competition, operational and reputational risks,
technological change, changes in government regulation and legislation,
changes in tax laws, unexpected judicial or regulatory proceedings,
catastrophic events, the Corporation's and its subsidiaries' ability to
complete strategic transactions, integrate acquisitions and implement other
growth strategies, and the Corporation's and its subsidiaries' success in
anticipating and managing the foregoing factors.
    The reader is cautioned that the foregoing list of factors is not
exhaustive of the factors that may affect the Corporation's and its
subsidiaries' forward-looking statements. The reader is also cautioned to
consider these and other factors, uncertainties and potential events 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 include 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 include the Corporation's share of any such item
      presented in a comparable manner by Lifeco or IGM.

    Management has used these financial 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.
    As a consequence of the announcement by Lifeco of the signing of a
definitive agreement by GWL&A to sell its healthcare insurance business, the
results from Lifeco's U.S. healthcare insurance business are presented in the
consolidated financial statements as "discontinued operations" in accordance
with GAAP. Power Financial's share of these results is included in operating
earnings
    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

    -------------------------------------------------------------------------
                                                          March 31  December
                                                              2009        31
    (in millions of Canadian dollars)                   (unaudited)     2008
    -------------------------------------------------------------------------
    Assets
    Cash and cash equivalents                                4,823     4,689
    -------------------------------------------------------------------------
    Investments
      Shares                                                 5,388     5,359
      Bonds                                                 67,563    66,801
      Mortgages and other loans                             17,997    18,034
      Loans to policyholders                                 7,842     7,622
      Real estate                                            3,259     3,190
    -------------------------------------------------------------------------
                                                           102,049   101,006
    Funds held by ceding insurers                           10,820    11,447
    Investment at equity                                     2,376     2,814
    Intangible assets                                        4,715     4,659
    Goodwill                                                 8,632     8,613
    Future income taxes                                      1,828     1,766
    Other assets                                             6,012     6,524
    -------------------------------------------------------------------------
                                                           141,255   141,518
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Policy liabilities
      Actuarial liabilities                                 97,245    97,895
      Other                                                  4,765     4,732
    Deposits and certificates                                1,045       959
    Funds held under reinsurance contracts                     191       192
    Debentures and other borrowings                          5,797     5,658
    Preferred shares of the Corporation                        300       300
    Preferred shares of subsidiaries                         1,265     1,269
    Capital trust securities and debentures                    755       658
    Future income taxes                                        803       768
    Other liabilities                                        7,613     7,254
    -------------------------------------------------------------------------
                                                           119,779   119,685
    -------------------------------------------------------------------------

    Non-controlling interests                                8,468     8,414
    -------------------------------------------------------------------------
    Shareholders' Equity
    Stated capital
      Perpetual preferred shares                             1,575     1,575
      Common shares                                            605       595
    Contributed surplus                                         95        91
    Retained earnings                                       10,736    10,811
    Accumulated other comprehensive income (loss)               (3)      347
    -------------------------------------------------------------------------
                                                            13,008    13,419
    -------------------------------------------------------------------------
                                                           141,255   141,518
    -------------------------------------------------------------------------


                     CONSOLIDATED STATEMENTS OF EARNINGS

    -------------------------------------------------------------------------
    Three months ended
    (unaudited) (in millions of
     Canadian dollars, except per       March 31,  December 31,     March 31,
     share amounts)                         2009          2008          2008
    -------------------------------------------------------------------------
    Revenues
    Premium income                         4,709         4,782        16,790
    Net investment income
      Regular net investment income        1,545         1,469         1,396
      Change in fair value on
       held-for-trading assets            (1,976)         (368)         (940)
    -------------------------------------------------------------------------
                                            (431)        1,101           456
    Fee income                             1,170         1,252         1,435
    -------------------------------------------------------------------------
                                           5,448         7,135        18,681
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits, dividends
     and experience refunds, and change
     in actuarial liabilities              3,366         4,815        16,284
    Commissions                              479           526           541
    Operating expenses                       912           918           898
    Financing charges                        110            74           141
    -------------------------------------------------------------------------
                                           4,867         6,333        17,864
    -------------------------------------------------------------------------
                                             581           802           817
    Share of earnings (losses) of
     investment at equity                    (20)            2            17
    Other income (charges), net              (57)       (2,414)            9
    -------------------------------------------------------------------------
    Earnings from continuing operations
     before income taxes and
     non-controlling interests               504        (1,610)          843
    Income taxes                             130          (693)          188
    Non-controlling interests                179          (144)          100
    -------------------------------------------------------------------------
    Earnings from continuing operations      195          (773)          555
    Earnings from discontinued
     operations                                -             -            31
    -------------------------------------------------------------------------
    Net earnings                             195          (773)          586
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per common share
      - Basic                               0.24         (1.12)         0.80
    -------------------------------------------------------------------------
      - Diluted                             0.24         (1.12)         0.80
    -------------------------------------------------------------------------


                            SEGMENTED INFORMATION

                        INFORMATION ON PROFIT MEASURE

    -------------------------------------------------------------------------
    Three months ended                               Par-
     March 31, 2009           Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income             4,709         -         -         -     4,709
    Net investment income
      Regular net investment
       income                  1,511        58         -       (24)    1,545
      Change in fair value
       on held-for-trading
       assets                 (1,967)       (9)        -         -    (1,976)
    -------------------------------------------------------------------------
                                (456)       49         -       (24)     (431)
    Fee income                   680       510         -       (20)    1,170
    -------------------------------------------------------------------------
                               4,933       559         -       (44)    5,448
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and experience
     refunds, and change in
     actuarial liabilities     3,366         -         -         -     3,366
    Commissions                  307       192         -       (20)      479
    Operating expenses           740       159         -        13       912
    Financing charges             75        23         -        12       110
    -------------------------------------------------------------------------
                               4,488       374         -         5     4,867
    -------------------------------------------------------------------------
                                 445       185         -       (49)      581
    Share of earnings (losses)
     of investment at equity       -         -       (20)        -       (20)
    Other income (charges),
     net                           -         -       (57)        -       (57)
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before
     income taxes and
     non-controlling
     interests                   445       185       (77)      (49)      504
    Income taxes                  78        52         -         -       130
    Non-controlling interests    143        65         -       (29)      179
    -------------------------------------------------------------------------
    Contribution to
     consolidated earnings
     from continuing
     operations                  224        68       (77)      (20)      195
    Contribution to
     consolidated earnings
     from discontinued
     operations                    -         -         -         -         -
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    224        68       (77)      (20)      195
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                            SEGMENTED INFORMATION

                        INFORMATION ON PROFIT MEASURE

    -------------------------------------------------------------------------
    Three months ended                               Par-
     December 31, 2008        Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income             4,782         -         -         -     4,782
    Net investment income
      Regular net investment
       income                  1,423        36         -        10     1,469
      Change in fair value
       on held-for-trading
       assets                   (368)        -         -         -      (368)
    -------------------------------------------------------------------------
                               1,055        36         -        10     1,101
    Fee income                   743       549         -       (40)    1,252
    -------------------------------------------------------------------------
                               6,580       585         -       (30)    7,135
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and experience
     refunds, and change in
     actuarial liabilities     4,815         -         -         -     4,815
    Commissions                  360       206         -       (40)      526
    Operating expenses           746       163         -         9       918
    Financing charges             37        25         -        12        74
    -------------------------------------------------------------------------
                               5,958       394         -       (19)    6,333
    -------------------------------------------------------------------------
                                 622       191         -       (11)      802
    Share of earnings (losses)
     of investment at equity       -         -         2         -         2
    Other income (charges),
     net                      (2,248)        -      (376)      210    (2,414)
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before
     income taxes and
     non-controlling
     interests                (1,626)      191      (374)      199    (1,610)
    Income taxes                (744)       51         -         -      (693)
    Non-controlling interests   (244)       95         -         5      (144)
    -------------------------------------------------------------------------
    Contribution to
     consolidated earnings
     from continuing
     operations                 (638)       45      (374)      194      (773)
    Contribution to
     consolidated earnings
     from discontinued
     operations                    -         -         -         -         -
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                   (638)       45      (374)      194      (773)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                            SEGMENTED INFORMATION

                        INFORMATION ON PROFIT MEASURE

    -------------------------------------------------------------------------
    Three months ended                               Par-
     March 31, 2008           Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income            16,790         -         -         -    16,790
    Net investment income
      Regular net investment
       income                  1,352        61         -       (17)    1,396
      Change in fair value
       on held-for-trading
       assets                   (940)        -         -         -      (940)
    -------------------------------------------------------------------------
                                 412        61         -       (17)      456
    Fee income                   797       654         -       (16)    1,435
    -------------------------------------------------------------------------
                              17,999       715         -       (33)   18,681
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and experience
     refunds, and change in
     actuarial liabilities    16,284         -         -         -    16,284
    Commissions                  322       235         -       (16)      541
    Operating expenses           710       167         -        21       898
    Financing charges            106        22         -        13       141
    -------------------------------------------------------------------------
                              17,422       424         -        18    17,864
    -------------------------------------------------------------------------
                                 577       291         -       (51)      817
    Share of earnings
     (losses) of investment
     at equity                     -         -        17         -        17
    Other income (charges),
     net                           -         -         9         -         9
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before
     income taxes and
     non-controlling
     interests                   577       291        26       (51)      843
    Income taxes                 109        79         -         -       188
    Non-controlling
     interests                    39        90         -       (29)      100
    -------------------------------------------------------------------------
    Contribution to
     consolidated earnings
     from continuing
     operations                  429       122        26       (22)      555
    Contribution to
     consolidated earnings
     from discontinued
     operations                   31         -         -         -        31
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    460       122        26       (22)      586
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

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


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890