Readers are referred to the cautionary notes regarding Forward-Looking Information and Non-IFRS Financial Measures at the end of this release.  All figures are expressed in Canadian dollars, except as noted.

TSX:GWO

WINNIPEG, Aug. 3, 2011 /CNW/ - Great-West Lifeco Inc. (Lifeco) has reported net earnings attributable to common shareholders of $526 million for the three months ended June 30, 2011, compared to $455 million in the second quarter of 2010.  On a per common share basis, this represents $0.553 per common share for the three months ended June 30, 2011, compared to $0.480 per common share for the same period in 2010.

For the six months ended June 30, 2011, net earnings attributable to common shareholders were $941 million, compared to $883 million a year ago.  This represents $0.991 per common share for the six months ended June 30, 2011, compared to $0.932 per common share for the same period in 2010.

Consolidated assets under administration at June 30, 2011 were $497 billion, up $10 billion from December 31, 2010.

Highlights

• Sales in Canada of individual insurance products were up 13% overall in quarter compared to 2010, driven by strong Participating Life insurance sales which were up 18%.  Group insurance sales in Canada were up 26% overall in quarter compared to 2010, driven by strong non-refund sales which were up 23%.
• U.S. Financial Services formally launched an Individual Retirement Account rollover initiative in the second quarter which resulted in year to date sales of US$104 million, an increase of 160% from the prior year.  Also introduced in quarter was a new collective trust investment product aimed at providing large corporate and government plan markets with retirement target date asset allocation investment solutions.
• Putnam net sales for the six months ended June 30, 2011 were US$3.4 billion positive, a US$4.7 billion improvement over the same period a year ago.
• Putnam operating results continue to improve with higher revenues from higher assets under management, resulting in positive core net operating income for the second quarter.  Putnam total contribution to Lifeco includes a $55 million release of a legal provision resulting from a settlement of a lawsuit.
• Europe earnings remained strong for the quarter despite the challenging business environment where consumer confidence remains weak and credit markets are unsettled.
• Credit market experience remains positive for the Company with net recoveries of $3 million after-tax on previously impaired assets for the quarter.  The Company notes that it has no direct exposure to Greece and that its aggregate exposure to Portugal, Ireland, Italy and Spain at $926 million, including government debt and debt issued by financial institutions domiciled in those countries, represents less than four-tenths of one per cent of total general fund assets at June 30, 2011.  During second quarter the Company reduced these exposures by $131 million.  The downgrade of Irish Government securities subsequent to June 30, 2011 will have a minimal impact on the third quarter financial results.
• In June and July 2011, the Company's credit ratings were affirmed with stable outlook by A.M. Best, DBRS, Fitch and Moody's.  Credit ratings have been stable since the acquisition of Canada Life in 2003, with the exception of the Fitch downgrade from AA+ to AA in December 2010.  The Company's ratings remain among the highest for a stock company in the insurance industry which is particularly noteworthy in the recent credit environment.
• Return on common shareholders' equity was 17% based on operating earnings.
• The Company declared a quarterly common dividend of $0.3075 per common share payable September 30, 2011, unchanged from the previous quarter.
• The Company's capital position remains very strong.  Lifeco's Canadian operating subsidiary, The Great-West Life Assurance Company, reported a Minimum Continuing Capital and Surplus Requirements (MCCSR) ratio of 200% at June 30, 2011.

OPERATING RESULTS

Consolidated net earnings for Lifeco comprise the net earnings of The Great-West Life Assurance Company (Great-West Life), Canada Life Financial Corporation (CLFC), London Life Insurance Company (London Life), Great-West Life & Annuity Insurance Company (GWL&A), and Putnam Investments, LLC (Putnam), together with Lifeco's corporate results.

CANADA

Net earnings attributable to common shareholders for the second quarter of 2011 were up 4% to $262 million compared to $252 million in the second quarter of 2010. These results reflect strong earnings growth in Wealth Management, due to growth in fee income on higher average investment fund assets, and higher investment gains on surplus assets in Corporate. For the six months ended June 30, 2011, net earnings attributable to common shareholders were $507 million compared to $489 million in 2010.

Total sales for the quarter were $2.2 billion, consistent with the second quarter of 2010. Total sales of individual insurance products increased 13% and group insurance products increased 26% compared to the second quarter of 2010. Wealth Management sales decreased 2% overall in the quarter compared to 2010.

Total assets under administration at June 30, 2011 were $128.4 billion, compared to $126.9 billion at December 31, 2010.

UNITED STATES

Net earnings attributable to common shareholders for the second quarter of 2011 were $128 million compared to $61 million in the second quarter of 2010.  Included in net earnings for the second quarter of 2011 was a release of a legal provision in Putnam, resulting from a settlement of a lawsuit, which impacted net earnings by $55 million.  For the six months ended June 30, 2011, net earnings attributable to common shareholders were $216 million compared to $126 million in 2010.

In quarter earnings from Putnam core operations were a positive US$3 million compared to a net loss of US$11 million over the same period a year ago primarily due to higher fee revenue on higher assets under management.

Total sales for the quarter were $9.5 billion compared to $6.8 billion in 2010.  Sales in Putnam were $8.1 billion for the second quarter compared to $5.2 billion a year ago primarily reflecting strong institutional sales.  Sales in the Financial Services segment were $1.4 billion for the second quarter compared to $1.6 billion a year ago.

Total assets under administration at June 30, 2011 were $301.5 billion compared to $294.1 billion at December 31, 2010.  Included in assets under administration at June 30, 2011 were $177.8 billion of assets under management, consisting of $124.0 billion of mutual fund and institutional account assets managed by Putnam and $53.8 billion of general account, separate account and proprietary mutual funds managed by Financial Services.

EUROPE

Net earnings attributable to common shareholders for the second quarter of 2011 were $147 million compared to $145 million in the second quarter of 2010.  For the six months ended June 30, 2011, net earnings attributable to common shareholders were $233 million, which included the impact of $75 million of earthquake provisions in first quarter, compared to $275 million in 2010.

Total sales for the quarter were $0.9 billion compared to $1.1 billion in 2010. These results reflect weaker consumer confidence in most of Europe, due to current economic uncertainty in 2011, opposite strong sales performance in 2010.

Total assets under administration at June 30, 2011 were $67.2 billion, compared to $66.0 billion at December 31, 2010.

CORPORATE

Corporate net earnings for Lifeco attributable to common shareholders was a net loss of $11 million in the second quarter compared to a net loss of $3 million for the second quarter of 2010.  For the six months ended June 30, 2011 net earnings for Lifeco attributable to common shareholders was a net loss of $15 million compared to a net loss of $7 million for the second quarter of 2010.

QUARTERLY DIVIDENDS

At its meeting today, the Board of Directors approved a quarterly dividend of $0.3075 per share on the common shares of the Company payable September 30, 2011 to shareholders of record at the close of business September 2, 2011.

For purposes of the Income Tax Act (Canada), and any similar provincial legislation, the dividends referred to above are eligible dividends.

In addition, the Directors approved quarterly dividends on:

• Series F First Preferred Shares of $0.36875 per share;
• Series G First Preferred Shares of $0.3250 per share;
• Series H First Preferred Shares of $0.30313 per share;
• Series I First Preferred Shares of $0.28125 per share;
• Series J First Preferred Shares of $0.3750 per share;
• Series L First Preferred Shares of $0.353125 per share;
• Series M First Preferred Shares of $0.36250 per share; and
• Series N First Preferred Shares of $0.228125 per share

all payable September 30, 2011 to shareholders of record at the close of business September 2, 2011.

Great-West Lifeco

Great-West Lifeco Inc. (TSX:GWO) is an international financial services holding company with interests in life insurance, health insurance, retirement and investment services, asset management and reinsurance businesses.  Great-West Lifeco 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.  Great-West Lifeco and its companies have over $497 billion in assets under administration and are members of the Power Financial Corporation group of companies.

Cautionary note regarding Forward-Looking Information

This release contains some 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, possible future action by the Company including statements made by the Company with respect to the expected benefits of acquisitions or divestitures 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 financial services industry generally, including the insurance and mutual fund industries.  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, including factors set out under "Risk Management and Control Practices" in the Company's 2010 Annual Management's Discussion and Analysis and any listed in other filings with securities regulators, which are 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-IFRS Financial Measures

This release contains some non-IFRS financial measures.  Terms by which non-IFRS financial measures are identified include but are not limited to "operating earnings", "constant currency basis", "premiums and deposits", "sales", and other similar expressions.  Non-IFRS financial measures are used to provide management and investors with additional measures of performance.  However, non-IFRS financial measures do not have standard meanings prescribed by IFRS and are not directly comparable to similar measures used by other companies.  Please refer to the appropriate reconciliations of these non-IFRS financial measures to measures prescribed by IFRS.

Further information

Selected financial information is attached.

Great-West Lifeco's second quarter conference call and audio webcast will be held Thursday, August 4, 2011 at 9:00 a.m. (EDT).  The call and webcast can be accessed through www.greatwestlifeco.com or by phone at:

• Participants in the Toronto area:  416-340-8018
• Participants from North America: 1-866-223-7781
• Participants from Overseas:  Dial international access code first, then 800-6578-9898

A replay of the call will be available from August 4 to August 11, 2011, and can be accessed by calling 1-800-408-3053 or 416-695-5800 in Toronto (passcode: 1367585#). The archived webcast will be available on www.greatwestlifeco.com from approximately 1:00 p.m. (ET) on August 4, 2011 until August 3, 2012.

Additional information relating to Lifeco, including the most recent interim unaudited financial statements, interim Management's Discussion and Analysis (MD&A), and CEO/CFO certificates will be filed on SEDAR at www.sedar.com.

FINANCIAL HIGHLIGHTS (unaudited)

(in Canadian $ millions except per share amounts)

		As at or for the three months ended			For the six months ended
		June 30	March 31	June 30	June 30	June 30
		2011	2011	2010	2011	2010
Premiums and deposits:
Life insurance, guaranteed annuities       and insured health products		$ 4,272	$ 4,295	$ 4,215	$ 8,567	$ 8,825
Self-funded premium equivalents        (ASO contracts)		664	670	657	1,334	1,302
Segregated funds deposits:
	Individual products	1,636	1,905	1,633	3,541	3,423
	Group products	1,427	1,493	2,335	2,920	4,065
Proprietary mutual funds and institutional deposits		8,289	9,083	5,389	17,372	11,580
Total premiums and deposits		16,288	17,446	14,229	33,734	29,195
Fee and other income		739	720	703	1,459	1,427
Paid or credited to policyholders		5,298	4,579	5,658	9,877	12,290
Net earnings - common shareholders		526	415	455	941	883
Per common share
	Basic earnings	$ 0.553	$ 0.438	$ 0.480	$ 0.991	$ 0.932
	Dividends paid	0.3075	0.3075	0.3075	0.615	0.615
	Book value	11.75	11.53	11.70
Return on common shareholders' equity (12 months):
	Operating earnings	17.0%	16.4%	n/a
	Net earnings	15.2%	14.5%	n/a
	Total assets	$ 232,159	$ 231,331	$ 221,814
	Proprietary mutual funds and institutional net assets	130,066	129,470	121,147
	Total assets under management	362,225	360,801	342,961
	Other assets under administration	134,822	134,412	120,700
	Total assets under administration	$ 497,047	$ 495,213	$ 463,661
Total equity		$ 15,115	$ 14,880	$ 15,120

The Company uses operating earnings, a non-IFRS financial measure, which excludes the impact of the provision described in note 25 to the Company's December 31, 2010 consolidated financial statements.

CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)

(in Canadian $ millions except per share amounts)

			For the three months ended			For the six months ended
			June 30	March 31	June 30	June 30	June 30
			2011	2011	2010	2011	2010
Income
	Premium income
		Gross premiums written	$ 4,980	$ 4,941	$ 4,887	$ 9,921	$ 10,135
		Ceded premiums	(708)	(646)	(672)	(1,354)	(1,310)
	Total net premiums		4,272	4,295	4,215	8,567	8,825
	Net investment income
		Regular net investment income	1,416	1,427	1,335	2,843	2,752
		Changes in fair value through profit or loss	707	(187)	1,160	520	2,736
	Total net investment income		2,123	1,240	2,495	3,363	5,488
	Fee and other income		739	720	703	1,459	1,427
			7,134	6,255	7,413	13,389	15,740
Benefits and expenses
	Policyholder benefits		3,690	4,090	3,860	7,780	7,748
	Policyholder dividends and experience refunds		377	353	351	730	734
	Change in insurance and investment contract liabilities		1,231	136	1,447	1,367	3,808
	Total paid or credited to policyholders		5,298	4,579	5,658	9,877	12,290
	Commissions		390	377	355	767	718
	Operating expenses		558	645	619	1,203	1,249
	Premium taxes		68	56	62	124	127
	Financing charges		72	72	70	144	144
	Amortization of finite life intangible assets		25	23	24	48	47
Earnings before income taxes			723	503	625	1,226	1,165
Income taxes			161	69	126	230	215
Net earnings before   non-controlling interests			562	434	499	996	950
Attributable to non-controlling    interests			12	(5)	22	7	25
Net earnings			550	439	477	989	925
Perpetual preferred share dividends			24	24	22	48	42
Net earnings - common    shareholders			$ 526	$ 415	$ 455	$ 941	$ 883
Earnings per common share
	Basic		$ 0.553	$ 0.438	$ 0.480	$ 0.991	$ 0.932
	Diluted		$ 0.550	$ 0.436	$ 0.477	$ 0.986	$ 0.927

CONSOLIDATED BALANCE SHEETS (unaudited)

(in Canadian $ millions)

	June 30	December 31	January 1
	2011	2010	2010
Assets
Cash and cash equivalents	$ 1,730	$ 1,840	$ 3,427
Bonds	72,376	72,203	66,147
Mortgage loans	16,658	16,115	16,684
Stocks	6,951	6,700	6,442
Investment properties	3,204	2,957	2,613
Loans to policyholders	6,765	6,827	6,957
	107,684	106,642	102,270
Funds held by ceding insurers	9,659	9,856	10,984
Reinsurance assets	2,642	2,533	2,800
Goodwill	5,394	5,397	5,406
Intangible assets	3,064	3,108	3,238
Derivative financial instruments	1,055	984	717
Owner occupied properties	452	439	429
Other assets	4,368	4,482	4,599
Deferred tax assets	1,065	1,141	1,193
Segregated funds for the risk of unit holders	96,776	94,827	87,495
Total assets	$ 232,159	$ 229,409	$ 219,131
Liabilities
Insurance contract liabilities	$ 108,225	$ 107,367	$ 104,988
Investment contract liabilities	775	791	841
Debentures and other debt instruments	4,328	4,288	4,106
Funds held under reinsurance contracts	160	149	331
Derivative financial instruments	176	165	251
Other liabilities	4,452	4,637	4,479
Deferred tax liabilities	747	755	623
Repurchase agreements	871	1,042	532
Capital trust securities	534	535	540
Preferred shares	-	-	199
Investment and insurance contracts on account of unit       holders	96,776	94,827	87,495
Total liabilities	217,044	214,556	204,385
Equity
Non-controlling interests
Participating account surplus in subsidiaries	2,060	2,050	2,050
Preferred shares issued by subsidiaries	-	-	157
Perpetual preferred shares issued by subsidiaries	-	-	147
Non-controlling interests in capital stock	2	2	2
Shareholders' equity
Share capital
Perpetual preferred shares	1,897	1,897	1,497
Common shares	5,822	5,802	5,751
Accumulated surplus	5,865	5,507	5,071
Accumulated other comprehensive income (loss)	(587)	(460)	19
Contributed surplus	56	55	52
Total equity	15,115	14,853	14,746
Total liabilities and equity	$ 232,159	$ 229,409	$ 219,131

Segmented Information  (unaudited)

During the year, the Company established a capital allocation model to better measure the performance of the operating segments.  The segmented information below including the comparative figures reflects the impact of the capital allocation model implemented.

Consolidated Earnings

For the three months ended June 30, 2011
		United		Lifeco
	Canada	States	Europe	Corporate	Total
Income:
Premium income	$ 2,353	$ 602	$ 1,317	$ -	$ 4,272
Net investment income
Regular net investment income	618	328	466	4	1,416
Changes in fair value through profit or loss	315	126	266	-	707
Total net investment income	933	454	732	4	2,123
Fee and other income	277	318	144	-	739
Total income	3,563	1,374	2,193	4	7,134
Benefits and expenses:
Paid or credited to policyholders	2,585	890	1,823	-	5,298
Other	598	251	156	11	1,016
Financing charges	34	34	4	-	72
Amortization of finite life intangible assets	11	12	2	-	25
Earnings before income taxes	335	187	208	(7)	723
Income taxes	69	55	37	-	161
Net earnings before non-controlling
interests	266	132	171	(7)	562
Non-controlling interests	6	2	4	-	12
Net earnings	260	130	167	(7)	550
Perpetual preferred share dividends	18	-	6	-	24
Net earnings before capital allocation	242	130	161	(7)	526
Impact of capital allocation	20	(2)	(14)	(4)	-
Net earnings - common shareholders	$ 262	$ 128	$ 147	$ (11)	$ 526

For the three months ended June 30, 2010
		United		Lifeco
	Canada	States	Europe	Corporate	Total
Income:
Premium income	$ 2,228	$ 675	$ 1,312	$ -	$ 4,215
Net investment income
Regular net investment income	570	327	434	4	1,335
Changes in fair value through profit or loss	199	398	563	-	1,160
Total net investment income	769	725	997	4	2,495
Fee and other income	255	307	141	-	703
Total income	3,252	1,707	2,450	4	7,413
Benefits and expenses:
Paid or credited to policyholders	2,279	1,241	2,138	-	5,658
Other	568	338	128	2	1,036
Financing charges	31	35	4	-	70
Amortization of finite life intangible assets	10	13	1	-	24
Earnings before income taxes	364	80	179	2	625
Income taxes	93	18	13	2	126
Net earnings before non-controlling
interests	271	62	166	-	499
Non-controlling interests	22	1	(1)	-	22
Net earnings	249	61	167	-	477
Perpetual preferred share dividends	18	-	4	-	22
Net earnings before capital allocation	231	61	163	-	455
Impact of capital allocation	21	-	(18)	(3)	-
Net earnings - common shareholders	$ 252	$ 61	$ 145	$ (3)	$ 455

 

For the six months ended June 30, 2011
		United		Lifeco
	Canada	States	Europe	Corporate	Total
Income:
Premium income	$ 4,632	$ 1,354	$ 2,581	$ -	$ 8,567
Net investment income
Regular net investment income	1,234	656	947	6	2,843
Changes in fair value through profit or loss	251	157	112	-	520
Total net investment income	1,485	813	1,059	6	3,363
Fee and other income	553	632	274	-	1,459
Total income	6,670	2,799	3,914	6	13,389
Benefits and expenses:
Paid or credited to policyholders	4,766	1,840	3,271	-	9,877
Other	1,213	586	281	14	2,094
Financing charges	68	67	9	-	144
Amortization of finite life intangible assets	21	23	4	-	48
Earnings before income taxes	602	283	349	(8)	1,226
Income taxes	91	64	75	-	230
Net earnings before non-controlling
interests	511	219	274	(8)	996
Non-controlling interests	6	-	1	-	7
Net earnings	505	219	273	(8)	989
Perpetual preferred share dividends	37	-	11	-	48
Net earnings before capital allocation	468	219	262	(8)	941
Impact of capital allocation	39	(3)	(29)	(7)	-
Net earnings - common shareholders	$ 507	$ 216	$ 233	$ (15)	$ 941

For the six months ended June 30, 2010
		United		Lifeco
	Canada	States	Europe	Corporate	Total
Income:
Premium income	$ 4,496	$ 1,501	$ 2,828	$ -	$ 8,825
Net investment income
Regular net investment income	1,175	658	914	5	2,752
Changes in fair value through profit or loss	622	699	1,415	-	2,736
Total net investment income	1,797	1,357	2,329	5	5,488
Fee and other income	511	624	292	-	1,427
Total income	6,804	3,482	5,449	5	15,740
Benefits and expenses:
Paid or credited to policyholders	4,960	2,540	4,790	-	12,290
Other	1,125	681	286	2	2,094
Financing charges	67	70	7	-	144
Amortization of finite life intangible assets	19	25	3	-	47
Earnings before income taxes	633	166	363	3	1,165
Income taxes	132	37	43	3	215
Net earnings before non-controlling
interests	501	129	320	-	950
Non-controlling interests	20	3	2	-	25
Net earnings	481	126	318	-	925
Perpetual preferred share dividends	35	-	7	-	42
Net earnings before capital allocation	446	126	311	-	883
Impact of capital allocation	43	-	(36)	(7)	-
Net earnings - common shareholders	$ 489	$ 126	$ 275	$ (7)	$ 883

 

 

 

 

 

For further information:

Marlene Klassen, APR
Assistant Vice-President, Communication Services
(204) 946-7705