Readers are referred to the cautionary note regarding Forward-Looking
Information at the end of this release.
Lifeco's U.S. focus to be on its financial services businesses
WINNIPEG, Nov. 26, 2007 /CNW/ - Great-West Lifeco Inc. announced today
that its subsidiary, U.S.-based Great-West Life & Annuity Insurance Company,
has signed a definitive agreement to sell its health care business, Great-West
Healthcare, to a subsidiary of CIGNA Corporation. The transaction has an
enterprise value of US $2.25 billion and is expected to close during the first
half of 2008, subject to regulatory and certain other approvals.
"In the United States, Great-West Lifeco will now be entirely focused on
broadening and expanding its financial services business," said Raymond L.
McFeetors, President and Chief Executive Officer of Great-West Lifeco.
Great-West Healthcare provides a variety of medical, dental, vision, life
and disability coverage to approximately 5,200 employer groups and 2.2 million
members across the United States.
"We are committed to working with CIGNA to facilitate a smooth and
efficient transition for Great-West Life & Annuity's current U.S. group health
care customers, distribution systems and employees," McFeetors said.
"In Great-West Healthcare, CIGNA is acquiring a well-run organization
with a strong team and a reputation for quality service and innovation," said
H. Edward Hanway, CIGNA chairman and chief executive officer.
Great-West Life & Annuity will receive US $1.5 billion in cash and will
retain an estimated US $750 million representing the amount of equity invested
in the business as at the anticipated closing date. After payment of taxes and
write-offs associated with intangibles and certain other assets of the
business, the Company will have approximately US $1.6 billion that will be
used to repay bridge financing associated with the acquisition of Putnam
Investments, LLC, which transaction was completed on August 3, 2007.
Goldman, Sachs & Co. acted as Great-West Life & Annuity's financial
advisor for the transaction, and Dewey & LeBoeuf LLP acted as legal counsel.
Great-West Life & Annuity will continue to serve its more than 4 million
financial services customers through its Great-West Retirement Services(R) and
Individual Markets business lines. These business units offer
employer-sponsored defined contribution savings plans and services,
business-owned life insurance products, and individual life insurance and
Through acquisitions and organic growth, Great-West Life & Annuity's
assets under management in its Retirement Services and Individual Markets
businesses have grown to US $127 billion at Sept. 30, 2007 from US $87 billion
at year-end 2005. Great-West Lifeco assets under administration in the U.S.,
including those of Putnam, total US $336 billion.
Great-West Healthcare, a division of Great-West Life & Annuity, is a
national employee benefits provider with expertise in self-funding and health
care management solutions. Nationally, the division operates a health care
network that includes 4,275 hospitals and 578,000 providers and provides
health care services to 2.2 million people.
Great-West Life & Annuity Insurance Company, headquartered in
metro-Denver, serves its customers through a full range of health care plans,
life and disability insurance, annuities, and retirement savings products and
services. It is an indirect, wholly owned subsidiary of Great-West Lifeco Inc.
Great-West Life & Annuity Insurance Company is not licensed to do business in
New York. Products are sold in New York by its subsidiary, First Great-West
Life & Annuity Insurance Company, White Plains, N.Y.
Great-West Lifeco Inc. (TSX:GWO) is a financial services holding company
with interests in the life insurance, health insurance, retirement savings,
investment management and reinsurance businesses. The Company has operations
in Canada, the United States, Europe and Asia through The Great-West Life
Assurance Company, London Life Insurance Company, The Canada Life Assurance
Company, Great-West Life & Annuity Insurance Company and Putnam Investments,
LLC. Lifeco and its companies have over $400 billion in assets under
administration. Great-West Lifeco is a member of the Power Financial
Corporation group of companies.
Analyst Conference Call
The Company will host a conference call on Tuesday, November 27, 2007 at
8:30 am (EST) to discuss this transaction. This call can be accessed by
dialing either Toronto local 416-406-6419; Toll Free 1-888-575-8232; or Global
(Country Code) 800-9559-6849.
Cautionary Note Regarding Forward-Looking Information
This release contains forward-looking statements about the Company,
including its business operations, strategy and expected financial performance
and condition. 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," "intends," "plans,"
"believes," "estimates" or negative versions thereof and similar expressions.
In addition, any statement that may be made concerning future financial
performance (including revenues, earnings or growth rates), ongoing business
strategies or prospects, and possible future Company action, including
statements made in this release by the Company in regards to the expected
closing of the sale of the Great-West Healthcare business to CIGNA and the
expected benefits of the transaction are also forward-looking statements.
Forward-looking statements are based on current expectations and projections
about future events and are inherently subject to, among other things, risks,
uncertainties and assumptions about the Company, economic factors and the
insurance industry generally. They are not guarantees of future performance,
and actual events and results could differ materially from those expressed or
implied by forward-looking statements made by the Company due to, but not
limited to, important factors such as sales levels, premium income, fee
income, expense levels, mortality experience, morbidity experience, policy
lapse rates and taxes, as well as general economic, political and market
factors in North America and internationally, interest and foreign exchange
rates, global equity and capital markets, business competition, technological
change, changes in government regulations, unexpected judicial or regulatory
proceedings, catastrophic events, and the Company's ability to complete
strategic transactions and integrate acquisitions. The reader is cautioned
that the foregoing list of important factors is not exhaustive, and there may
be other factors listed in other filings with securities regulators, including
factors set out under "Risk Management and Control Practices" in the Company's
Management Discussion and Analysis, which, along with other filings, is
available for review at www.sedar.com. The reader is also cautioned to
consider these and other factors carefully and to not place undue reliance on
forward-looking statements. Other than as specifically required by applicable
law, the Company has no intention to update any forward-looking statements
whether as a result of new information, future events or otherwise.
Cautionary note regarding Non-GAAP Financial Measures
This release contains some non-GAAP financial measures. Terms by which
non-GAAP financial measures are identified include but are not limited to
"surplus before taxes and before write-offs associated with the intangibles
and certain other assets of the business", "earnings before restructuring
charges", "adjusted net income", "earnings before adjustments", "premiums and
deposits", "sales", and other similar expressions. Non-GAAP financial measures
are used to provide management and investors with additional measures of
performance. However, non-GAAP financial measures do not have standard
meanings prescribed by GAAP and are not directly comparable to similar
measures used by other companies. Please refer to the appropriate
reconciliations of these non-GAAP financial measures to measures prescribed by
For further information:
For further information: Marlene Klassen, APR, Assistant Vice-President,
Communication Services, Great-West Lifeco Inc., (204) 946-7705; Lisa Gigax,
Director, Corporate Affairs, Great-West Life & Annuity, Insurance Company,