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
TORONTO, May 3, 2012 /CNW/ - Great-West Lifeco Inc. (Lifeco) has reported net earnings attributable to common shareholders of $451 million for the three months ended March 31, 2012, compared to $415 million in the first quarter of 2011. On a per common share basis, this represents $0.475 per common share for the three months ended March 31, 2012, compared to $0.438 per common share for the same period in 2011.
Highlights
- Consolidated assets under administration grew to $523 billion at March 31, 2012, up $21 billion from December 31, 2011.
- The Company's ROE continues to lead the industry at 17.5% based on net earnings and 16.5% based on operating earnings.
- Sales in Canada for Individual Insurance products were up 17% and Wealth Management group retirement sales were up 46% compared to the first quarter of 2011.
- Sales in U.S. Financial Services were US$2.4 billion compared to US$2.2 billion in the first quarter of 2011 reflecting continued strong sales in both Individual Markets and Retirement Services.
- Putnam assets under management grew by US$7.6 billion during the quarter due to strong market performance. Net in quarter redemptions were US$2 billion.
- The Company raised $250 million of 5.40% fixed rate perpetual preferred share capital in the quarter.
- The Company's capital position remained very strong. The Great-West Life Assurance Company reported a Minimum Continuing Capital and Surplus Requirements (MCCSR) ratio of 205% at March 31, 2012, up from 204% in the previous quarter.
- Credit experience continued to be favourable for the Company during the first quarter resulting in a net positive impact of $13 million. Invested asset exposure to Eurozone peripheral countries continued to decline through both asset disposals and maturities.
- The Company declared a quarterly common dividend of $0.3075 per common share payable June 29, 2012.
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 first quarter of 2012 were $242 million compared to $245 million in the first quarter of 2011.
Total premiums and deposits for the three months ended March 31, 2012 were $5.3 billion, compared to $5.1 billion in 2011. Total sales in first quarter of 2012 were $2.5 billion, the same level as the same period a year ago. Individual Insurance product sales increased 17%, Wealth Management group retirement sales were up 46% and sales of proprietary retail investments funds were down 8% compared to the first quarter of 2011.
Total assets under administration at March 31, 2012 were $132.7 billion, compared to $128.2 billion at March 31, 2011.
UNITED STATES
Net earnings attributable to common shareholders for the first quarter of 2012 were $75 million compared to $88 million in the first quarter of 2011. The decrease was primarily due to abnormally high mortality claims experience in the closed blocks of business.
Total sales for the three months ended March 31, 2012 were $8.1 billion compared to $11.0 billion in 2011. Sales in Putnam were $5.7 billion for the three months ending March 31, 2012 compared to $8.8 billion a year ago. Sales in Financial Services were $2.4 billion for the first quarter of 2012 compared to $2.2 billion in 2011.
Total assets under administration at March 31, 2012 were $318.9 billion compared to $300.2 billion at March 31, 2011.
EUROPE
Net earnings attributable to common shareholders for the first quarter of 2012 were $141 million compared to $86 million in the first quarter of 2011. Included in net earnings for the first quarter of 2011 was the establishment of catastrophe provisions relating to earthquake events in Japan and New Zealand with an after-tax shareholders net earnings impact of $75 million.
Total sales for the three months ended March 31, 2012 were $0.8 billion compared to $1.1 billion in 2011 reflecting challenging current market conditions and economic uncertainty.
Total assets under administration at March 31, 2012 increased to $71.4 billion from $66.8 billion at March 31, 2011.
CORPORATE
Net earnings in the Lifeco corporate segment attributable to common shareholders was a net loss of $7 million in the first quarter of 2012 compared to a net loss of $4 million for the first quarter of 2011.
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 June 29, 2012 to shareholders of record at the close of business June 1, 2012.
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;
- Series N First Preferred Shares of $0.228125 per share; and
- Series P First Preferred Shares of $0.477120 per share
all payable June 29, 2012 to shareholders of record at the close of business June 1, 2012.
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 $523 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" and similar expressions or negative versions thereof. 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 actions by the Company including statements made with respect to the expected benefits of acquisitions and divestitures are also forward-looking statements. Forward-looking statements are based on expectations and projections about future events that were current at the time of the statements 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 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, changes in accounting policies and the effect of applying future accounting policy changes, 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 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 first quarter conference call and audio webcast will be held Thursday, May 3, 2012 at 3:30 p.m. (ET). 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 May 3 to 12, 2012, and can be accessed by calling 1-800-408-3053 or 905-694-9451 in Toronto (passcode: 1367585#). The archived webcast will be available on www.greatwestlifeco.com from approximately 7:00 p.m. (ET) on May 3, 2012 until May 2, 2013.
Additional information relating to Lifeco, including the most recent interim unaudited consolidated 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 | |||||||||||||
| March 31 | December 31 | March 31 | |||||||||||
| 2012 | 2011 | 2011 | |||||||||||
| Premiums and deposits: | |||||||||||||
| Life insurance, guaranteed annuities and insured health products |
$ | 4,529 | $ | 4,334 | $ | 4,295 | |||||||
| Self-funded premium equivalents (ASO contracts) |
685 | 651 | 670 | ||||||||||
| Segregated funds deposits: | |||||||||||||
| Individual products | 1,559 | 1,829 | 1,905 | ||||||||||
| Group products | 1,770 | 1,777 | 1,493 | ||||||||||
| Proprietary mutual funds and institutional deposits | 5,939 | 5,624 | 9,083 | ||||||||||
| Total premiums and deposits | 14,482 | 14,215 | 17,446 | ||||||||||
| Fee and other income | 724 | 740 | 720 | ||||||||||
| Paid or credited to policyholders | 4,743 | 6,340 | 4,579 | ||||||||||
| Operating earnings - common shareholders |
451 | 500 | 415 | ||||||||||
| Net earnings - common shareholders | 451 | 624 | 415 | ||||||||||
| Per common share | |||||||||||||
| Operating earnings | $ | 0.475 | $ | 0.528 | $ | 0.438 | |||||||
| Basic earnings | 0.475 | 0.657 | 0.438 | ||||||||||
| Dividends paid | 0.3075 | 0.3075 | 0.3075 | ||||||||||
| Book value | 12.69 | 12.61 | 11.50 | ||||||||||
| Return on common shareholders' equity (trailing four quarters*): | |||||||||||||
| Operating earnings | 16.5% | 16.6% | 16.5% | ||||||||||
| Net earnings | 17.5% | 17.6% | 14.6% | ||||||||||
| Total assets | $ | 243,702 | $ | 238,768 | $ | 231,343 | |||||||
| Proprietary mutual funds and institutional net assets | 131,140 | 125,390 | 129,470 | ||||||||||
| Total assets under management | 374,842 | 364,158 | 360,813 | ||||||||||
| Other assets under administration | 148,068 | 137,807 | 134,412 | ||||||||||
| Total assets under administration | $ | 522,910 | $ | 501,965 | $ | 495,225 | |||||||
| Total equity | $ | 16,406 | $ | 16,104 | $ | 14,844 | |||||||
The Company uses operating earnings, a non-IFRS financial measure, which excludes the impact of certain litigation provisions described in note 30 to the Company's December 31, 2011 consolidated financial statements.
*Return on common shareholders' equity is the trailing four quarter calculation of net earnings divided by common shareholders' equity.
| CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) (in Canadian $ millions except per share amounts) |
||||||||||||||||||||
| For the three months ended | ||||||||||||||||||||
| March 31 | December 31 | March 31 | ||||||||||||||||||
| 2012 | 2011 | 2011 | ||||||||||||||||||
| Income | ||||||||||||||||||||
| Premium income | ||||||||||||||||||||
| Gross premiums written | $ | 5,198 | $ | 5,033 | $ | 4,941 | ||||||||||||||
| Ceded premiums | (669) | (699) | (646) | |||||||||||||||||
| Total net premiums | 4,529 | 4,334 | 4,295 | |||||||||||||||||
| Net investment income | ||||||||||||||||||||
| Regular net investment income | 1,439 | 1,365 | 1,427 | |||||||||||||||||
| Changes in fair value through profit or loss | (196) | 1,564 | (187) | |||||||||||||||||
| Total net investment income | 1,243 | 2,929 | 1,240 | |||||||||||||||||
| Fee and other income | 724 | 740 | 720 | |||||||||||||||||
| 6,496 | 8,003 | 6,255 | ||||||||||||||||||
| Benefits and expenses | ||||||||||||||||||||
| Policyholder benefits | ||||||||||||||||||||
| Insurance and investment contracts | ||||||||||||||||||||
| Gross | 4,606 | 4,165 | 4,423 | |||||||||||||||||
| Ceded | (387) | (275) | (333) | |||||||||||||||||
| 4,219 | 3,890 | 4,090 | ||||||||||||||||||
| Policyholder dividends and experience refunds | 364 | 309 | 353 | |||||||||||||||||
| Change in insurance and investment contract liabilities | 160 | 2,141 | 136 | |||||||||||||||||
| Total paid or credited to policyholders | 4,743 | 6,340 | 4,579 | |||||||||||||||||
| Commissions | 410 | 409 | 377 | |||||||||||||||||
| Operating and administrative expenses | 640 | 142 | 645 | |||||||||||||||||
| Premium taxes | 72 | 76 | 56 | |||||||||||||||||
| Financing charges | 72 | 73 | 72 | |||||||||||||||||
| Amortization of finite life intangible assets | 26 | 28 | 23 | |||||||||||||||||
| Earnings before income taxes | 533 | 935 | 503 | |||||||||||||||||
| Income taxes | 57 | 181 | 69 | |||||||||||||||||
| Net earnings before non-controlling interests | 476 | 754 | 434 | |||||||||||||||||
| Attributable to non-controlling interests | - | 106 | (5) | |||||||||||||||||
| Net earnings | 476 | 648 | 439 | |||||||||||||||||
| Perpetual preferred share dividends | 25 | 24 | 24 | |||||||||||||||||
| Net earnings - common shareholders | $ | 451 | $ | 624 | $ | 415 | ||||||||||||||
| Earnings per common share | ||||||||||||||||||||
| Basic | $ | 0.475 | $ | 0.657 | $ | 0.438 | ||||||||||||||
| Diluted | $ | 0.472 | $ | 0.651 | $ | 0.436 | ||||||||||||||
| CONSOLIDATED BALANCE SHEETS (unaudited) (in Canadian $ millions) |
|||||||||||
| March 31 | December 31 | ||||||||||
| 2012 | 2011 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 1,621 | $ | 2,056 | |||||||
| Bonds | 79,323 | 78,073 | |||||||||
| Mortgage loans | 17,368 | 17,432 | |||||||||
| Stocks | 6,918 | 6,704 | |||||||||
| Investment properties | 3,263 | 3,201 | |||||||||
| Loans to policyholders | 7,013 | 7,162 | |||||||||
| 115,506 | 114,628 | ||||||||||
| Funds held by ceding insurers | 10,127 | 9,923 | |||||||||
| Goodwill | 5,398 | 5,401 | |||||||||
| Intangible assets | 3,124 | 3,154 | |||||||||
| Derivative financial instruments | 930 | 968 | |||||||||
| Owner occupied properties | 501 | 491 | |||||||||
| Fixed assets | 139 | 137 | |||||||||
| Reinsurance assets | 1,983 | 2,061 | |||||||||
| Other assets | 4,409 | 4,283 | |||||||||
| Deferred tax assets | 1,111 | 1,140 | |||||||||
| Segregated funds for the risk of unitholders | 100,474 | 96,582 | |||||||||
| Total assets | $ | 243,702 | $ | 238,768 | |||||||
| Liabilities | |||||||||||
| Insurance contract liabilities | $ | 114,798 | $ | 114,730 | |||||||
| Investment contract liabilities | 763 | 782 | |||||||||
| Debentures and other debt instruments | 4,426 | 4,313 | |||||||||
| Funds held under reinsurance contracts | 169 | 169 | |||||||||
| Derivative financial instruments | 290 | 316 | |||||||||
| Other liabilities | 4,119 | 4,287 | |||||||||
| Deferred tax liabilities | 890 | 929 | |||||||||
| Repurchase agreements | 833 | 23 | |||||||||
| Capital trust securities | 534 | 533 | |||||||||
| Investment and insurance contracts on account of unitholders | 100,474 | 96,582 | |||||||||
| Total liabilities | 227,296 | 222,664 | |||||||||
| Equity | |||||||||||
| Non-controlling interests | |||||||||||
| Participating account surplus in subsidiaries | 2,208 | 2,227 | |||||||||
| Non-controlling interests in capital stock | 3 | 3 | |||||||||
| Shareholders' equity | |||||||||||
| Share capital | |||||||||||
| Perpetual preferred shares | 2,144 | 1,894 | |||||||||
| Common shares | 5,829 | 5,828 | |||||||||
| Accumulated surplus | 6,481 | 6,327 | |||||||||
| Accumulated other comprehensive income (loss) | (319) | (233) | |||||||||
| Contributed surplus | 60 | 58 | |||||||||
| Total equity | 16,406 | 16,104 | |||||||||
| Total liabilities and equity | $ | 243,702 | $ | 238,768 | |||||||
| Segmented Information (unaudited) | ||||||||||||||||||||||
| Consolidated Net Earnings | ||||||||||||||||||||||
| For the three months ended March 31, 2012 | ||||||||||||||||||||||
| United | Lifeco | |||||||||||||||||||||
| Canada | States | Europe | Corporate | Total | ||||||||||||||||||
| Income: | ||||||||||||||||||||||
| Premium income | $ | 2,365 | $ | 821 | $ | 1,343 | $ | - | $ | 4,529 | ||||||||||||
| Net investment income | ||||||||||||||||||||||
| Regular net investment income | 654 | 324 | 463 | (2) | 1,439 | |||||||||||||||||
| Changes in fair value through profit or loss | (150) | 21 | (67) | - | (196) | |||||||||||||||||
| Total net investment income | 504 | 345 | 396 | (2) | 1,243 | |||||||||||||||||
| Fee and other income | 277 | 302 | 145 | - | 724 | |||||||||||||||||
| Total income | 3,146 | 1,468 | 1,884 | (2) | 6,496 | |||||||||||||||||
| Benefits and expenses: | ||||||||||||||||||||||
| Paid or credited to policyholders | 2,185 | 1,003 | 1,555 | - | 4,743 | |||||||||||||||||
| Other | 647 | 330 | 141 | 4 | 1,122 | |||||||||||||||||
| Financing charges | 34 | 33 | 5 | - | 72 | |||||||||||||||||
| Amortization of finite life intangible assets | 11 | 13 | 2 | - | 26 | |||||||||||||||||
| Earnings before income taxes | 269 | 89 | 181 | (6) | 533 | |||||||||||||||||
| Income taxes | 34 | 9 | 16 | (2) | 57 | |||||||||||||||||
| Net earnings before non-controlling | ||||||||||||||||||||||
| interests | 235 | 80 | 165 | (4) | 476 | |||||||||||||||||
| Non-controlling interests | (6) | 2 | 4 | - | - | |||||||||||||||||
| Net earnings | 241 | 78 | 161 | (4) | 476 | |||||||||||||||||
| Perpetual preferred share dividends | 18 | - | 6 | 1 | 25 | |||||||||||||||||
| Net earnings before capital allocation | 223 | 78 | 155 | (5) | 451 | |||||||||||||||||
| Impact of capital allocation | 19 | (3) | (14) | (2) | - | |||||||||||||||||
| Net earnings - common shareholders | $ | 242 | $ | 75 | $ | 141 | $ | (7) | $ | 451 | ||||||||||||
| For the three months ended March 31, 2011 | ||||||||||||||||||||||
| United | Lifeco | |||||||||||||||||||||
| Canada | States | Europe | Corporate | Total | ||||||||||||||||||
| Income: | ||||||||||||||||||||||
| Premium income | $ | 2,279 | $ | 752 | $ | 1,264 | $ | - | $ | 4,295 | ||||||||||||
| Net investment income | ||||||||||||||||||||||
| Regular net investment income | 616 | 328 | 481 | 2 | 1,427 | |||||||||||||||||
| Changes in fair value through profit or loss | (64) | 31 | (154) | - | (187) | |||||||||||||||||
| Total net investment income | 552 | 359 | 327 | 2 | 1,240 | |||||||||||||||||
| Fee and other income | 276 | 314 | 130 | - | 720 | |||||||||||||||||
| Total income | 3,107 | 1,425 | 1,721 | 2 | 6,255 | |||||||||||||||||
| Benefits and expenses: | ||||||||||||||||||||||
| Paid or credited to policyholders | 2,181 | 950 | 1,448 | - | 4,579 | |||||||||||||||||
| Other | 615 | 335 | 125 | 3 | 1,078 | |||||||||||||||||
| Financing charges | 34 | 33 | 5 | - | 72 | |||||||||||||||||
| Amortization of finite life intangible assets | 10 | 11 | 2 | - | 23 | |||||||||||||||||
| Earnings before income taxes | 267 | 96 | 141 | (1) | 503 | |||||||||||||||||
| Income taxes | 22 | 9 | 38 | - | 69 | |||||||||||||||||
| Net earnings before non-controlling | ||||||||||||||||||||||
| interests | 245 | 87 | 103 | (1) | 434 | |||||||||||||||||
| Non-controlling interests | - | (2) | (3) | - | (5) | |||||||||||||||||
| Net earnings | 245 | 89 | 106 | (1) | 439 | |||||||||||||||||
| Perpetual preferred share dividends | 19 | - | 5 | - | 24 | |||||||||||||||||
| Net earnings before capital allocation | 226 | 89 | 101 | (1) | 415 | |||||||||||||||||
| Impact of capital allocation | 19 | (1) | (15) | (3) | - | |||||||||||||||||
| Net earnings - common shareholders | $ | 245 | $ | 88 | $ | 86 | $ | (4) | $ | 415 | ||||||||||||
Marlene Klassen, APR
Assistant Vice-President, Communication Services
(204) 946-7705
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