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, Aug. 7 /CNW Telbec/ - Power Financial Corporation's operating
earnings for the six-month period ended June 30, 2009 were $694 million or
$0.92 per share, compared with $1,081 million or $1.48 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 $47 million or $0.06 per share for the
six-month period ended June 30, 2009 and consisted mainly of Power Financial's
share of non operating results recorded by Pargesa, as discussed below. For
the six-month period of 2008, other items were earnings of $572 million or
$0.81 per share and consisted of Power Financial's share of non-operating
earnings recorded by Lifeco and Pargesa, also discussed below.
    Net earnings, including other items, for the six-month period ended June
30, 2009 were $647 million or $0.86 per share, compared with $1,653 million or
$2.29 per share in 2008.

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

    For the quarter ended June 30, 2009, operating earnings of the
Corporation were $442 million or $0.60 per share, compared with $590 million
or $0.81 per share in the second quarter of 2008.
    Other items for the second quarter of 2009 were earnings of $10 million
or $0.01 per share, compared with $477 million or $0.68 per share for the same
quarter in 2008.
    Net earnings for the quarter were $452 million or $0.61 per share in
2009, compared with $1,067 million or $1.49 per share in 2008.

    RESULTS OF SUBSIDIARIES AND PARJOINTCO
    --------------------------------------
    Great-West Lifeco Inc.

    Great-West Lifeco reported adjusted net income attributable to common
shareholders of $739 million or $0.783 per share for the six-month period
ended June 30, 2009, compared with $1,100 million or $1.230 per share in the
corresponding period of 2008. For the three-month period ended June 30, 2009,
Lifeco reported adjusted net earnings of $413 million or $0.437 per share,
compared with adjusted earnings of $564 million or $0.630 per share in the
same period in 2008.
    The above amounts exclude the following non-recurring items recorded by
Lifeco in the six-month and three-month periods ended June 30, 2008. In the
first quarter of 2008, Lifeco recorded two non-recurring items totalling $118
million or $0.132 per share after tax consisting of (a) a gain realized in
connection with the termination of a long standing assumption reinsurance
agreement for an amount of $176 million, and (b) a reserve strengthening in
Great-West Life & Annuity Insurance Company's continuing operations for a
charge of $58 million. In the second quarter of 2008, Lifeco recorded a gain
of $649 million or $0.726 per share, representing the gain on the sale of its
U.S. healthcare business.
    Including these non-recurring items, net income attributable to Lifeco's
common shareholders for the six-month period ended June 30, 2009 was $739
million or $0.783 per share, compared with $1,867 million or $2.088 per share
in the corresponding period of 2008. For the three-month period ended June 30,
2009, net income attributable to common shareholders was $413 million or
$0.437 per share, compared with $1,213 million or $1.356 per share in the
corresponding period of 2008.
    Lifeco's contribution to Power Financial's operating earnings was $508
million for the six-month period ended June 30, 2009, compared with $773
million for the corresponding period in 2008. For the three-month period ended
June 30, 2009, Lifeco's contribution to Power Financial's operating earnings
was $284 million, compared with $396 million in 2008.

    IGM Financial Inc.

    Net income for the six months ended June 30, 2009 was $278 million,
compared with adjusted net income of $427 million in 2008. 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 recorded in the second quarter. Earnings per share were $1.05 in
2009, compared with adjusted earnings per share of $1.61 in 2008. Net income
without adjustment for the six months ended June 2008 was $452 million and
earnings per share on this basis were $1.70.
    Net earnings for the three months ended June 30, 2009 were $145 million
or $0.55 per share, compared with adjusted net earnings of $216 million or
$0.81 in 2008.

    For the six-month and three-month periods ended June 30, 2009, IGM
contributed $153 million and $85 million to Power Financial's operating
earnings, compared with $237 million and $118 million in 2008.

    Partjointco 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 operating
earnings of SF243 million in the six-month period ended June 30, 2009,
compared with SF438 million for the corresponding period in 2008. The decrease
is mainly due to lower contribution from Imerys and Lafarge. For the
three-month period ended June 30, 2009, Pargesa's operating earnings were
SF312 million, compared with SF363 million in the corresponding period of
2008. Expressed in Canadian dollars, the contribution from the investment at
equity to Power Financial's operating earnings was $68 million for the
six-month period ended June 30, 2009, compared with $117 million for the
corresponding period in 2008. For the second quarter of 2009, the contribution
from Pargesa to Power Financial's operating earnings was $88 million, compared
with $100 million in the second quarter of 2008.

    Non-operating results were a charge of SF195 million in the six-month
period ended June 30, 2009, which essentially consisted of the charge
resulting from the adjustment of the carrying value of Pernod Ricard and
Iberdrola recorded in the first quarter of 2009. This compared with
non-recurring earnings of SF97 million in 2008. As a result, the net earnings
reported by Pargesa were SF47 million in the six-month period ended June 30,
2009, compared with SF535 million in the same period of 2008. For the second
quarter of 2009, Pargesa reported net earnings of SF312 million, compared with
SF402 million in the second quarter 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        October 23, 2009  November 15, 2009   To be determined in
                                                          accordance with the
                                                          articles of the
                                                          Corporation
    -------------------------------------------------------------------------
    Series C        October 9, 2009   October 31, 2009    32.50 cents
    -------------------------------------------------------------------------
    Series D        October 9, 2009   October 31, 2009    34.375 cents
    -------------------------------------------------------------------------
    Series E        October 9, 2009   October 31, 2009    32.8125 cents
    -------------------------------------------------------------------------
    Series F        October 9, 2009   October 31, 2009    36.875 cents
    -------------------------------------------------------------------------
    Series H        October 9, 2009   October 31, 2009    35.9375 cents
    -------------------------------------------------------------------------
    Series I        October 9, 2009   October 31, 2009    37.50 cents
    -------------------------------------------------------------------------
    Series J        October 9, 2009   October 31, 2009    29.375 cents
    -------------------------------------------------------------------------
    Series K        October 9, 2009   October 31, 2009    30.9375 cents
    -------------------------------------------------------------------------
    Series L        October 9, 2009   October 31, 2009    31.875 cents
    -------------------------------------------------------------------------
    Series M        October 9, 2009   October 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 October 30, 2009 to
shareholders of record September 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

    -------------------------------------------------------------------------
                                                           June 30
                                                              2009  December
    (in millions of Canadian dollars)                   (unaudited) 31, 2008
    -------------------------------------------------------------------------
    Assets
    Cash and cash equivalents                                5,270    4,689
    -------------------------------------------------------------------------
    Investments
      Shares                                                 6,014    5,359
      Bonds                                                 68,311   66,801
      Mortgages and other loans                             18,090   18,034
      Loans to policyholders                                 7,416    7,622
      Real estate                                            3,380    3,190
    -------------------------------------------------------------------------
                                                           103,211   101,006
    Funds held by ceding insurers                           11,761    11,447
    Investment at equity                                     2,461     2,814
    Intangible assets                                        4,562     4,659
    Goodwill                                                 8,647     8,613
    Future income taxes                                      1,585     1,766
    Other assets                                             6,067     6,524
    -------------------------------------------------------------------------
                                                           143,564   141,518
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Policy liabilities
      Actuarial liabilities                                100,127    97,895
      Other                                                  4,683     4,732
    Deposits and certificates                                  997       959
    Funds held under reinsurance contracts                     169       192
    Debentures and other borrowings                          5,828     5,658
    Preferred shares of the Corporation                        300       300
    Preferred shares of subsidiaries                         1,296     1,269
    Capital trust securities and debentures                    786       658
    Future income taxes                                        893       768
    Other liabilities                                        6,822     7,254
    -------------------------------------------------------------------------
                                                           121,901   119,685
    -------------------------------------------------------------------------

    Non-controlling interests                                8,526     8,414
    -------------------------------------------------------------------------
    Shareholders' Equity
    Stated capital
      Perpetual preferred shares                             1,575     1,575
      Common shares                                            605       595
    Contributed surplus                                         98        91
    Retained earnings                                       10,921    10,811
    Accumulated other comprehensive income (loss)              (62)      347
    -------------------------------------------------------------------------
                                                            13,137    13,419
    -------------------------------------------------------------------------
                                                           143,564   141,518
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                     CONSOLIDATED STATEMENTS OF EARNINGS

    -------------------------------------------------------------------------
                                        Three months ended  Six months ended
                                              June 30             June 30
    -------------------------------------------------------------------------
    (unaudited) (in millions of
     Canadian dollars, except per
     share amounts)                       2009      2008      2009      2008
    -------------------------------------------------------------------------
    Revenues
    Premium income                       4,664     4,523     9,373    21,313
    Net investment income
      Regular net investment income      1,669     1,678     3,214     3,074
      Change in fair value on
       held-for-trading assets           2,252    (1,595)      276    (2,535)
    -------------------------------------------------------------------------
                                         3,921        83     3,490       539
    Fee income                           1,192     1,455     2,362     2,890
    -------------------------------------------------------------------------
                                         9,777     6,061    15,225    24,742
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits, dividends
     and experience refunds, and change
     in actuarial liabilities            7,473     3,502    10,839    19,786
    Commissions                            528       549     1,007     1,090
    Operating expenses                     889       883     1,801     1,781
    Financing charges                      147       112       257       253
    -------------------------------------------------------------------------
                                         9,037     5,046    13,904    22,910
    -------------------------------------------------------------------------
                                           740     1,015     1,321     1,832
    Share of earnings of investment
     at equity                              87       100        67       117
    Other income (charges), net             10         4       (47)       13
    -------------------------------------------------------------------------
    Earnings from continuing operations
     before income taxes and
     non-controlling interests             837     1,119     1,341     1,962
    Income taxes                           181       255       311       443
    Non-controlling interests              204       269       383       369
    -------------------------------------------------------------------------
    Earnings from continuing operations    452       595       647     1,150
    Earnings from discontinued
     operations                              -       472         -       503
    -------------------------------------------------------------------------
    Net earnings                           452     1,067       647     1,653
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per common share
      - Basic                             0.61      1.49      0.86      2.29
    -------------------------------------------------------------------------
      - Diluted                           0.61      1.48      0.86      2.28
    -------------------------------------------------------------------------


                            SEGMENTED INFORMATION

                        INFORMATION ON PROFIT MEASURE

    -------------------------------------------------------------------------
    Three months ended                               Par-
     June 30, 2009            Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income             4,664         -         -         -     4,664
    Net investment income
      Regular net investment
       income                  1,616        59         -        (6)    1,669
      Change in fair value
       on held-for-trading
       assets                  2,272       (20)        -         -     2,252
    -------------------------------------------------------------------------
                               3,888        39         -        (6)    3,921
    Fee income                   666       549         -       (23)    1,192
    -------------------------------------------------------------------------
                               9,218       588         -       (29)    9,777
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and experience
     refunds, and change in
     actuarial liabilities     7,473         -         -         -     7,473
    Commissions                  353       198         -       (23)      528
    Operating expenses           721       158         -        10       889
    Financing charges            106        28         -        13       147
    -------------------------------------------------------------------------
                               8,653       384         -         -     9,037
    -------------------------------------------------------------------------
                                 565       204         -       (29)      740
    Share of earnings of
     investment at equity          -         -        87         -        87
    Other income (charges),
     net                           -         -        (2)       12        10
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before
     income taxes and
     non-controlling
     interests                   565       204        85       (17)      837
    Income taxes                 122        59         -         -       181
    Non-controlling interests    159        60         -       (15)      204
    -------------------------------------------------------------------------
    Contribution to
     consolidated earnings
     from continuing
     operations                  284        85        85        (2)      452
    Contribution to
     consolidated earnings
     from discontinued
     operations                    -         -         -         -         -
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                    284        85        85        (2)      452
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                        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         -       (26)    1,678
      Change in fair value
       on held-for-trading
       assets                 (1,595)        -         -         -    (1,595)
    -------------------------------------------------------------------------
                                  53        56         -       (26)       83
    Fee income                   806       665         -       (16)    1,455
    -------------------------------------------------------------------------
                               5,382       721         -       (42)    6,061
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and experience
     refunds, and change in
     actuarial liabilities     3,502         -         -         -     3,502
    Commissions                  330       235         -       (16)      549
    Operating expenses           698       163         -        22       883
    Financing charges             77        22         -        13       112
    -------------------------------------------------------------------------
                               4,607       420         -        19     5,046
    -------------------------------------------------------------------------
                                 775       301         -       (61)    1,015
    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                   775       301       104       (61)    1,119
    Income taxes                 170        85         -         -       255
    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

    -------------------------------------------------------------------------
    Six months ended                                 Par-
     June 30, 2009            Lifeco       IGM   jointco     Other     Total
    -------------------------------------------------------------------------
    Revenues
    Premium income             9,373         -         -         -     9,373
    Net investment income
      Regular net investment
       income                  3,127       117         -       (30)    3,214
      Change in fair value
       on held-for-trading
       assets                    305       (29)        -         -       276
    -------------------------------------------------------------------------
                               3,432        88         -       (30)    3,490
    Fee income                 1,346     1,059         -       (43)    2,362
    -------------------------------------------------------------------------
                              14,151     1,147         -       (73)   15,225
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and experience
     refunds, and change in
     actuarial liabilities    10,839         -         -         -    10,839
    Commissions                  660       390         -       (43)    1,007
    Operating expenses         1,461       317         -        23     1,801
    Financing charges            181        51         -        25       257
    -------------------------------------------------------------------------
                              13,141       758         -         5    13,904
    -------------------------------------------------------------------------
                               1,010       389         -       (78)    1,321
    Share of earnings of
     investment at equity          -         -        67         -        67
    Other income (charges),
     net                           -         -       (59)       12       (47)
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before
     income taxes and
     non-controlling
     interests                 1,010       389         8       (66)    1,341
    Income taxes                 200       111         -         -       311
    Non-controlling
     interests                   302       125         -       (44)      383
    -------------------------------------------------------------------------
    Contribution to
     consolidated earnings
     from continuing
     operations                 508        153         8       (22)      647
    Contribution to
     consolidated earnings
     from discontinued
     operations                   -          -         -         -         -
    -------------------------------------------------------------------------
    Contribution to
     consolidated net
     earnings                   508        153         8       (22)      647
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                        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         -       (43)    3,074
      Change in fair value
       on held-for-trading
       assets                 (2,535)        -         -         -    (2,535)
    -------------------------------------------------------------------------
                                 465       117         -       (43)      539
    Fee income                 1,603     1,319         -       (32)    2,890
    -------------------------------------------------------------------------
                              23,381     1,436         -       (75)   24,742
    -------------------------------------------------------------------------
    Expenses
    Policyholder benefits,
     dividends and experience
     refunds, and change in
     actuarial liabilities    19,786         -         -         -    19,786
    Commissions                  652       470         -       (32)    1,090
    Operating expenses         1,408       330         -        43     1,781
    Financing charges            183        44         -        26       253
    -------------------------------------------------------------------------
                              22,029       844         -        37    22,910
    -------------------------------------------------------------------------
                               1,352       592         -      (112)    1,832
    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                 1,352       592       130      (112)    1,962
    Income taxes                 279       164         -         -       443
    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
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

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


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