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, 2010 were $381 million or $0.51 per share, compared with $252 million or $0.32 per share in the corresponding period in 2009.

The increase in operating earnings reflects the increase in the contribution from the Corporation's subsidiaries and Parjointco.

For the first quarter of 2010, other items were a positive contribution of $8 million or $0.01 per share, compared with a net 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 earnings recorded by Pargesa as discussed below.

Net earnings, including other items, for the three-month period ended March 31, 2010 were $389 million or $0.52 per share, compared with $195 million or $0.24 per share in the first quarter of 2009.

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

Great-West Lifeco Inc.

Great-West Lifeco reported net income attributable to common shareholders of $441 million for the three months ended March 31, 2010, compared with $326 million in the corresponding period of 2009.

Lifeco's contribution to Power Financial's operating earnings was $304 million for the three-month period ended March 31, 2010, compared with $224 million for the corresponding period of 2009.

IGM Financial Inc.

IGM Financial reported net income for the three-month period ended March 31, 2010 of $179 million, compared with net income of $134 million in the corresponding period of 2009.

For the three months ended March 31, 2010, the contribution from IGM to Power Financial's operating earnings was $101 million, compared with $68 million in the corresponding period of 2009.

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 SF8 million in the three-month period ended March 31, 2010, compared with an operating loss of SF69 million in the corresponding period in 2009. Expressed in Canadian dollars, the contribution from the investment at equity to Power Financial's operating earnings was a charge of $3 million for the three-month period ended March 31, 2010, compared with a charge of $20 million in the corresponding period in 2009.

Pargesa reported non-recurring earnings of SF22 million in the first quarter of 2010, compared with a non-recurring charge of SF196 million in the first quarter of 2009. The charge in the first quarter of 2009 consisted of the adjustment of the carrying value of Pernod Ricard and Iberdrola to their market value.

As a result, Pargesa reported net earnings of SF14 million in the first quarter of 2010, compared with net loss of SF265 million in the same period of 2009.

    
    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 23, 2010  August 15, 2010  To be determined in
                                                    accordance with the
                                                    articles of the
                                                    Corporation
    -------------------------------------------------------------------------
    Series C        July 9, 2010   July 31, 2010    32.50 cents
    -------------------------------------------------------------------------
    Series D        July 9, 2010   July 31, 2010    34.375 cents
    -------------------------------------------------------------------------
    Series E        July 9, 2010   July 31, 2010    32.8125 cents
    -------------------------------------------------------------------------
    Series F        July 9, 2010   July 31, 2010    36.875 cents
    -------------------------------------------------------------------------
    Series H        July 9, 2010   July 31, 2010    35.9375 cents
    -------------------------------------------------------------------------
    Series I        July 9, 2010   July 31, 2010    37.50 cents
    -------------------------------------------------------------------------
    Series J        July 9, 2010   July 31, 2010    29.375 cents
    -------------------------------------------------------------------------
    Series K        July 9, 2010   July 31, 2010    30.9375 cents
    -------------------------------------------------------------------------
    Series L        July 9, 2010   July 31, 2010    31.875 cents
    -------------------------------------------------------------------------
    Series M        July 9, 2010   July 31, 2010    37.50 cents
    -------------------------------------------------------------------------
    Series O        July 9, 2010   July 31, 2010    36.25 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 30, 2010 to shareholders of record June 30, 2010.

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 the reader is 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".

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 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 to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements. Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances, including that the foregoing list of factors, collectively, are not expected to have a material impact on the Corporation and its subsidiaries. While the Corporation considers these assumptions to be reasonable based on information currently available to management, they may prove to be incorrect.

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 about 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 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.

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

    
                         POWER FINANCIAL CORPORATION

                         CONSOLIDATED BALANCE SHEETS

    -------------------------------------------------------------------------
                                                      March 31,
                                                          2010   December 31,
    (in millions of Canadian dollars)               (unaudited)         2009
    -------------------------------------------------------------------------
    Assets
    Cash and cash equivalents                            5,003         4,855
    -------------------------------------------------------------------------
    Investments
      Shares                                             6,482         6,392
      Bonds                                             66,949        67,388
      Mortgages and other loans                         16,950        17,356
      Loans to policyholders                             6,824         6,957
      Real estate                                        2,973         3,101
    -------------------------------------------------------------------------
                                                       100,178       101,194
    Funds held by ceding insurers                       10,130        10,839
    Investment at equity                                 2,444         2,675
    Intangible assets                                    4,299         4,366
    Goodwill                                             8,661         8,655
    Future income taxes                                  1,168         1,268
    Other assets                                         6,584         6,379
    -------------------------------------------------------------------------
                                                       138,467       140,231
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Policy liabilities
      Actuarial liabilities                             96,759        98,059
      Other                                              4,582         4,592
    Deposits and certificates                              902           907
    Funds held under reinsurance contracts                 319           186
    Debentures and other borrowings                      6,047         5,967
    Preferred shares of the Corporation                    300           300
    Preferred shares of subsidiaries                         -           203
    Capital trust securities and debentures                538           540
    Future income taxes                                  1,161         1,098
    Other liabilities                                    6,079         6,294
    -------------------------------------------------------------------------
                                                       116,687       118,146
    -------------------------------------------------------------------------

    Non-controlling interests                            8,986         8,878
    -------------------------------------------------------------------------
    Shareholders' Equity
    Stated capital
      Perpetual preferred shares                         1,725         1,725
      Common shares                                        610           605
    Contributed surplus                                    101           102
    Retained earnings                                   11,282        11,165
    Accumulated other comprehensive income (loss)         (924)         (390)
    -------------------------------------------------------------------------
                                                        12,794        13,207
    -------------------------------------------------------------------------
                                                       138,467       140,231
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                     CONSOLIDATED STATEMENTS OF EARNINGS

    -------------------------------------------------------------------------
    Three months ended March 31
    (unaudited) (in millions of Canadian dollars,
     except per share amounts)                            2010          2009
    -------------------------------------------------------------------------
    Revenues
    Premium income                                       4,610         4,709
    Net investment income
      Regular net investment income                      1,439         1,545
      Change in fair value on held-for-trading assets    1,502        (1,976)
    -------------------------------------------------------------------------
                                                         2,941          (431)
    Fee income                                           1,323         1,170
    -------------------------------------------------------------------------
                                                         8,874         5,448
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits, dividends and experience
     refunds, and change in actuarial liabilities        6,571         3,366
    Commissions                                            553           479
    Operating expenses                                     892           912
    Financing charges                                      104           110
    -------------------------------------------------------------------------
                                                         8,120         4,867
    -------------------------------------------------------------------------
                                                           754           581
    Share of earnings (losses) of investment at equity      (3)          (20)
    Other income (charges), net                              8           (57)
    -------------------------------------------------------------------------
    Earnings before income taxes and non-controlling
     interests                                             759           504
    Income taxes                                           151           130
    Non-controlling interests                              219           179
    -------------------------------------------------------------------------
    Net earnings                                           389           195
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per common share
      - Basic                                             0.52          0.24
    -------------------------------------------------------------------------
      - Diluted                                           0.52          0.24
    -------------------------------------------------------------------------


                            SEGMENTED INFORMATION

                        INFORMATION ON PROFIT MEASURE

    -------------------------------------------------------------------------
    Three months ended                               Par-
     March 31, 2010           Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income             4,610         -         -         -     4,610
    Net investment income
      Regular net investment
       income                  1,422        38         -       (21)    1,439
      Change in fair value
       on held-for-trading
       assets                  1,502         -         -         -     1,502
    -------------------------------------------------------------------------
                               2,924        38         -       (21)    2,941
    Fee income                   736       611         -       (24)    1,323
    -------------------------------------------------------------------------
                               8,270       649         -       (45)    8,874
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and
     experience refunds,
     and change in
     actuarial liabilities     6,571         -         -         -     6,571
    Commissions                  363       215         -       (25)      553
    Operating expenses           718       161         -        13       892
    Financing charges             69        27         -         8       104
    -------------------------------------------------------------------------
                               7,721       403         -        (4)    8,120
    -------------------------------------------------------------------------
                                 549       246         -       (41)      754
    Share of earnings
     (losses) of investment
     at equity                     -         -        (3)        -        (3)
    Other income (charges),
     net                           -         -         8         -         8
    -------------------------------------------------------------------------
    Earnings before income
     taxes and
     non-controlling
     interests                   549       246         5       (41)      759
    Income taxes                  86        65         -         -       151
    Non-controlling
     interests                   159        80         -       (20)      219
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    304       101         5       (21)      389
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    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        62         -       (28)    1,545
      Change in fair value
       on held-for-trading
       assets                 (1,967)       (9)        -         -    (1,976)
    -------------------------------------------------------------------------
                                (456)       53         -       (28)     (431)
    Fee income                   680       510         -       (20)    1,170
    -------------------------------------------------------------------------
                               4,933       563         -       (48)    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        27         -         8       110
    -------------------------------------------------------------------------
                               4,488       378         -         1     4,867
    -------------------------------------------------------------------------
                                 445       185         -       (49)      581
    Share of earnings
     (losses) of investment
     at equity                     -         -       (20)        -       (20)
    Other income (charges),
     net                           -         -       (57)        -       (57)
    -------------------------------------------------------------------------
    Earnings 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 net
     earnings                    224        68       (77)      (20)      195
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

SOURCE Power Financial Corporation

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


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