Power Financial Corporation - Six-month results and dividend



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

    WINNIPEG, July 31 /CNW Telbec/ - Power Financial Corporation's operating
earnings for the six-month period ended June 30, 2008 were $1,081 million or
$1.48 per share, compared with $1,052 million or $1.43 per share in the
corresponding period in 2007. This represents a 3.0% increase on a per share
basis.
    Growth in operating earnings reflects primarily growth in the
contribution from the Corporation's subsidiaries and Parjointco.
    Other income for the six-month period ended June 30, 2008 was
$572 million or $0.81 per share and consisted of Power Financial's share of
non-operating earnings recorded by Great-West Lifeco, discussed below, as well
as by Pargesa. Net earnings, including other income, for the six-month period
ended June 30, 2008 were $1,653 million or $2.29 per share, compared with
$1,055 million or $1.44 per share in 2007.

    SECOND-QUARTER RESULTS
    ----------------------

    For the quarter ended June 30, 2008, operating earnings of the
Corporation were $590 million or $0.81 per share, compared with $570 million
or $0.78 per share in the second quarter of 2007. This represents an increase
of 4.0% on a per share basis.
    Earnings were impacted by the increase in the foreign exchange value of
the Canadian dollar compared with Great-West Lifeco's major operating
currencies. Based upon Lifeco's growth in earnings on a constant currency
basis, Power Financial's operating earnings on a per share basis for the
quarter would have increased by 7.3%.
    Other items for the second quarter of 2008 were $477 million or $0.68 per
share, compared with $3 million or $0.01 per share for the same quarter in
2007.
    Net earnings for the quarter were therefore $1,067 million or $1.49 per
share in 2008, compared with $573 million or $0.79 per share in 2007.

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

    Great-West Lifeco Inc.

    Great-West Lifeco has reported net income attributable to common
shareholders of $1,867 million for the six months ended June 30, 2008, up 76%,
compared with net income of $1,058 million reported a year ago.
    On April 1, 2008, Lifeco announced that GWL&A had completed the sale of
its health care business, Great-West Healthcare. As a result of the sale, a
gain of $649 million after tax or $0.726 per common share was recorded in net
income.
    The 2008 results also include two non-recurring items that totalled
$118 million after tax or $0.132 per common share. A gain of approximately
$176 million was realized in connection with the termination of a
long-standing assumption reinsurance agreement under which GWL&A had reinsured
a block of U.S. participating policies. This gain was partly mitigated by an
increase in policy reserves to provide for an increase in overhead costs
expected to be absorbed as a result of the sale of Great-West Healthcare.
    Excluding the above, adjusted net income attributable to common
shareholders for the six-month period ended June 30, 2008 was $1,100 million
or $1.230 per share, compared with $1,058 million or $1.186 per share in the
corresponding period of 2007. This represents a 4% increase on a per share
basis.
    For the three months ended June 30, 2008, net income attributable to
common shareholders was $1,213 million or $1.356 per share, compared with
$544 million or $0.610 per share a year ago. Excluding the gain on the sale of
the U.S. health care business, adjusted net income attributable to common
shareholders was $564 million or $0.63 per share.
    Compared to the second quarter of 2007, the increase in the foreign
exchange value of the Canadian dollar opposite Lifeco's major operating
currencies has reduced reported net income in the quarter by approximately
$0.028 per common share or $25 million. On a constant currency basis, adjusted
net income attributable to common shareholders increased 8% over 2007.
    For the six-month and three-month periods ended June 30, 2008, the
contribution from Lifeco to Power Financial's operating earnings was
$773 million and $396 million, compared with $747 million and $384 million for
the corresponding periods in 2007.

    IGM Financial Inc.

    Adjusted net income for the six months ended June 30, 2008 was
$427 million, compared with net income of $426 million in 2007. Adjusted net
income for the six months ended June 30, 2008 excluded $25 million which
represented IGM's proportionate share of Lifeco's after-tax gain on the sale
of Great-West Healthcare. Adjusted earnings per share were $1.61, compared
with earnings per share of $1.59 in 2007. Net income without adjustment for
the six months ended June 2008, was $452 million and earnings per share on
this basis were $1.70.
    Adjusted net income for the three months ended June 30, 2008 was
$216 million, unchanged from 2007. Adjusted earnings per share were $0.81
unchanged from the earnings per share in the prior year.
    For the six-month and three-month periods ended June 30, 2008, IGM
contributed $237 million and $118 million to Power Financial's operating
earnings, compared with $239 million and $121 million in 2007.

    Partjointco N.V.

    Power Financial holds a 50% interest in Partjointco N.V., which in turn
holds a 54.1% interest in Pargesa Holding SA. Pargesa reported operating
earnings of SF438 million in the six-month period in 2008, compared with
SF411 million for the corresponding period in 2007. For the three-month period
ended June 30, 2008, Pargesa's operating earnings were SF363 million, compared
with SF333 million in the corresponding period in 2007. The contribution from
the European affiliate to Power Financial's operating earnings was
$117 million and $100 million, respectively, in the six-month and three-month
periods in 2008, compared with $98 million and $80 million, respectively, in
2007.

    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         October 24, 2008  November 15, 2008   To be determined
                                                           in accordance
                                                           with the articles
                                                           of the
                                                           Corporation
    -------------------------------------------------------------------------
    Series C         October 10, 2008  October 31, 2008    32.50 cents
    -------------------------------------------------------------------------
    Series D         October 10, 2008  October 31, 2008    34.375 cents
    -------------------------------------------------------------------------
    Series E         October 10, 2008  October 31, 2008    32.8125 cents
    -------------------------------------------------------------------------
    Series F         October 10, 2008  October 31, 2008    36.875 cents
    -------------------------------------------------------------------------
    Series H         October 10, 2008  October 31, 2008    35.9375 cents
    -------------------------------------------------------------------------
    Series I         October 10, 2008  October 31, 2008    37.50 cents
    -------------------------------------------------------------------------
    Series J         October 10, 2008  October 31, 2008    29.375 cents
    -------------------------------------------------------------------------
    Series K         October 10, 2008  October 31, 2008    30.9375 cents
    -------------------------------------------------------------------------
    Series L         October 10, 2008  October 31, 2008    31.875 cents
    -------------------------------------------------------------------------

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

    The Board of Directors also declared a quarterly dividend of 33.50 cents
per share on the Corporation's common shares payable October 31, 2008 to
shareholders of record September 30, 2008.

    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 purpose of presenting
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,
priorities, ongoing objectives, strategies and outlook of the Corporation's
and its subsidiaries' 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 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, business
competition, 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 and integrate acquisitions, 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 any of the Corporation's and its
subsidiaries' 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 concerning the risks and uncertainties associated
with 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.
    Following the announcement in 2007 of GWL&A's sale of its health care
business, which closed on April 1, 2008, the results from Lifeco's U.S. health
care 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, while the Corporation's share
of the gain realized on the sale is included in Other items.
    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
    -------------------------------------------------------------------------
                                                       June 30,  December 31,
                                                          2008          2007
    (in millions of Canadian dollars)               (unaudited)
    -------------------------------------------------------------------------

    Assets
    Cash and cash equivalents                            5,274         5,625
    -------------------------------------------------------------------------
    Investments
      Shares                                             7,192         6,927
      Bonds                                             64,611        65,069
      Mortgages and other loans                         17,520        16,423
      Loans to policyholders                             6,618         6,317
      Real estate                                        2,916         2,549
    -------------------------------------------------------------------------
                                                        98,857        97,285
    Funds held by ceding insurers                       13,676         1,512
    Investment at equity                                 3,476         3,503
    Assets of operations held for sale                       -           697
    Intangible assets                                    5,012         4,946
    Goodwill                                             9,273         9,230
    Future income taxes                                    990           809
    Other assets                                         6,735         6,701
    -------------------------------------------------------------------------
                                                       143,293       130,308
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Policy liabilities
      Actuarial liabilities                            100,462        87,681
      Other                                              4,463         4,385
    Deposits and certificates                              896           857
    Funds held under reinsurance contracts                 162           164
    Liabilities of operations held for sale                  -           428
    Debentures and other borrowings                      5,324         6,791
    Preferred shares of the Corporation                    300           300
    Preferred shares of subsidiaries                     1,311         1,303
    Capital trust securities and debentures                640           639
    Future income taxes                                    740           743
    Other liabilities                                    7,119         6,633
    -------------------------------------------------------------------------
                                                       121,417       109,924
    -------------------------------------------------------------------------
    Non-controlling interests                            7,837         7,519
    -------------------------------------------------------------------------

    Shareholders' Equity
    Stated capital
      Perpetual preferred shares                         1,400         1,400
      Common shares                                        595           594
    Contributed surplus                                     82            69
    Retained earnings                                   11,667        10,504
    Accumulated other comprehensive income                 295           298
    -------------------------------------------------------------------------
                                                        14,039        12,865
    -------------------------------------------------------------------------
                                                       143,293       130,308
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                     CONSOLIDATED STATEMENTS OF EARNINGS
    -------------------------------------------------------------------------
                                      Three months ended    Six months ended
                                             June 30             June 30
    -------------------------------------------------------------------------
    (unaudited) (in millions of
     Canadian dollars, except per
     share amounts)                       2008      2007      2008      2007
    -------------------------------------------------------------------------

    Revenues
      Premium income                     4,523     4,010    21,313     9,352
      Net investment income
        Regular net investment income    1,677     1,491     3,072     2,930
        Change in fair value on
         held-for-trading assets        (1,595)   (1,927)   (2,535)   (2,344)
                                      ---------------------------------------
                                            82      (436)      537       586
      Fee income                         1,455     1,216     2,890     2,409
    -------------------------------------------------------------------------
                                         6,060     4,790    24,740    12,347
    -------------------------------------------------------------------------

    Expenses
      Policyholder benefits,
       dividends and experience
       refunds and change in
       actuarial liabilities             3,484     2,550    19,768     7,891
      Commissions                          549       556     1,090     1,110
      Operating expenses                   883       653     1,781     1,347
      Financing charges                    111        87       251       172
    -------------------------------------------------------------------------
                                         5,027     3,846    22,890    10,520
    -------------------------------------------------------------------------

                                         1,033       944     1,850     1,827
    Share of earnings of investment
     at equity                             100        80       117        98
    Other income, net                        4         3        13         3
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before income taxes
     and non-controlling interests       1,137     1,027     1,980     1,928
    Income taxes                           273       224       461       436
    Non-controlling interests              269       270       369       518
    -------------------------------------------------------------------------
    Earnings from continuing operations    595       533     1,150       974
    Earnings from discontinued
     operations                            472        40       503        81
    -------------------------------------------------------------------------
    Net earnings                         1,067       573     1,653     1,055
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per common share
      Basic                               1.49      0.79      2.29      1.44
    -------------------------------------------------------------------------
      Diluted                             1.48      0.78      2.28      1.43
    -------------------------------------------------------------------------


                            SEGMENTED INFORMATION

    Information on Profit Measure
    -------------------------------------------------------------------------
    Three months ended                                 Par-
     June 30, 2008                Lifeco      IGM  jointco    Other    Total
    -------------------------------------------------------------------------
    Revenues
      Premium income               4,523        -        -        -    4,523
      Net investment income
        Regular net investment
         income                    1,648       56        -      (27)   1,677
        Change in fair value on
         held-for-trading assets  (1,595)       -        -        -   (1,595)
                                 --------------------------------------------
                                      53       56        -      (27)      82
    Fee income                       806      665        -      (16)   1,455
    -------------------------------------------------------------------------
                                   5,382      721        -      (43)   6,060
    -------------------------------------------------------------------------
    Expenses
      Policyholder benefits,
       dividends and experience
       refunds and change in
       actuarial liabilities       3,484        -        -        -    3,484
      Commissions                    330      235        -      (16)     549
      Operating expenses             698      163        -       22      883
      Financing charges               77       22        -       12      111
    -------------------------------------------------------------------------
                                   4,589      420        -       18    5,027
    -------------------------------------------------------------------------
                                     793      301        -      (61)   1,033
    Share of earnings of
     investment at equity              -        -      100        -      100
    Other income (charges), net        -        -        4        -        4
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before income
     taxes and non-controlling
     interests                       793      301      104      (61)   1,137
    Income taxes                     188       85        -        -      273
    Non-controlling interests        223       83        -      (37)     269
    -------------------------------------------------------------------------
    Contribution to consolidated
     earnings from continuing
     operations                      382      133      104      (24)     595
    Contribution to consolidated
     earnings from discontinued
     operations                      472        -        -        -      472
    -------------------------------------------------------------------------
    Contribution to consolidated
     net earnings                    854      133      104      (24)   1,067
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Information on Profit Measure
    -------------------------------------------------------------------------
    Three months ended                                 Par-
     June 30, 2007                Lifeco      IGM  jointco    Other    Total
    -------------------------------------------------------------------------
    Revenues
      Premium income               4,010        -        -        -    4,010
      Net investment income
        Regular net investment
         income                    1,465       45        -      (19)   1,491
        Change in fair value on
         held-for-trading assets  (1,927)       -        -        -   (1,927)
                                 --------------------------------------------
                                    (462)      45        -      (19)    (436)
      Fee income                     554      677        -      (15)   1,216
    -------------------------------------------------------------------------
                                   4,102      722        -      (34)   4,790
    -------------------------------------------------------------------------
    Expenses
      Policyholder benefits,
       dividends and experience
       refunds and change in
       actuarial liabilities       2,550        -        -        -    2,550
      Commissions                    336      237        -      (17)     556
      Operating expenses             485      154        -       14      653
      Financing charges               53       22        -       12       87
    -------------------------------------------------------------------------
                                   3,424      413        -        9    3,846
    -------------------------------------------------------------------------
                                     678      309        -      (43)     944
    Share of earnings of
     investment at equity              -        -       80        -       80
    Other income (charges), net        -        -        3        -        3
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before income
     taxes and non-controlling
     interests                       678      309       83      (43)   1,027
    Income taxes                     131       93        -        -      224
    Non-controlling interests        203       95        -      (28)     270
    -------------------------------------------------------------------------
    Contribution to consolidated
     earnings from continuing
     operations                      344      121       83      (15)     533
    Contribution to consolidated
     earnings from discontinued
     operations                       40        -        -        -       40
    -------------------------------------------------------------------------
    Contribution to consolidated
     net earnings                    384      121       83      (15)     573
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Information on Profit Measure
    -------------------------------------------------------------------------
    Six months ended                                   Par-
     June 30, 2008                Lifeco      IGM  jointco    Other    Total
    -------------------------------------------------------------------------
    Revenues
      Premium income              21,313        -        -        -   21,313
      Net investment income
        Regular net investment
         income                    3,000      117        -      (45)   3,072
        Change in fair value on
         held-for-trading assets  (2,535)       -        -        -   (2,535)
                                 --------------------------------------------
                                     465      117        -      (45)     537
      Fee income                   1,603    1,319        -      (32)   2,890
    -------------------------------------------------------------------------
                                  23,381    1,436        -      (77)  24,740
    -------------------------------------------------------------------------
    Expenses
      Policyholder benefits,
       dividends and experience
       refunds and change in
       actuarial liabilities      19,768        -        -        -   19,768
      Commissions                    652      470        -      (32)   1,090
      Operating expenses           1,408      330        -       43    1,781
      Financing charges              183       44        -       24      251
    -------------------------------------------------------------------------
                                  22,011      844        -       35   22,890
    -------------------------------------------------------------------------
                                   1,370      592        -     (112)   1,850
    Share of earnings of
     investment at equity              -        -      117        -      117
    Other income (charges), net        -        -       13        -       13
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before income
     taxes and non-controlling
     interests                     1,370      592      130     (112)   1,980
    Income taxes                     297      164        -        -      461
    Non-controlling interests        262      173        -      (66)     369
    -------------------------------------------------------------------------
    Contribution to consolidated
     earnings from continuing
     operations                      811      255      130      (46)   1,150
    Contribution to consolidated
     earnings from discontinued
     operations                      503        -        -        -      503
    -------------------------------------------------------------------------
    Contribution to consolidated
     net earnings                  1,314      255      130      (46)   1,653
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Information on Profit Measure
    -------------------------------------------------------------------------
    Six months ended                                   Par-
     June 30, 2007                Lifeco      IGM  jointco    Other    Total
    -------------------------------------------------------------------------
    Revenues
      Premium income               9,352        -        -        -    9,352
      Net investment income
        Regular net investment
         income                    2,859      108        -      (37)   2,930
        Change in fair value on
         held-for-trading assets  (2,344)       -        -        -   (2,344)
                                 --------------------------------------------
                                     515      108        -      (37)     586
      Fee income                   1,107    1,335        -      (33)   2,409
    -------------------------------------------------------------------------
                                  10,974    1,443        -      (70)  12,347
    -------------------------------------------------------------------------
    Expenses
      Policyholder benefits,
       dividends and experience
       refunds and change in
       actuarial liabilities       7,891        -        -        -    7,891
      Commissions                    676      468        -      (34)   1,110
      Operating expenses           1,007      311        -       29    1,347
      Financing charges              104       44        -       24      172
    -------------------------------------------------------------------------
                                   9,678      823        -       19   10,520
    -------------------------------------------------------------------------
                                   1,296      620        -      (89)   1,827
    Share of earnings of
     investment at equity              -        -       98        -       98
    Other income (charges), net        -        -        3        -        3
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before income
     taxes and non-controlling
     interests                     1,296      620      101      (89)   1,928
    Income taxes                     244      192        -        -      436
    Non-controlling interests        386      189        -      (57)     518
    -------------------------------------------------------------------------
    Contribution to consolidated
     earnings from continuing
     operations                      666      239      101      (32)     974
    Contribution to consolidated
     earnings from discontinued
     operations                       81        -        -        -       81
    -------------------------------------------------------------------------
    Contribution to consolidated
     net earnings                    747      239      101      (32)   1,055
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

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


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