Great-West Lifeco reports third quarter 2012 results
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, MB, Nov. 8, 2012 /CNW/ - Great-West Lifeco Inc. (Lifeco) has reported net earnings attributable to common shareholders of $520 million for the three months ended September 30, 2012, compared to $457 million in the third quarter of 2011. On a per common share basis, this represents $0.547 per common share for the three months ended September 30, 2012, compared to $0.481 per common share for the same period in 2011.
For the nine months ended September 30, 2012, net earnings attributable to common shareholders were $1,462 million, compared to $1,398 million a year ago. This represents $1.539 per common share for the nine months ended September 30, 2012, compared to $1.473 per common share for the same period in 2011.
Consolidated assets under administration at September 30, 2012 were $532 billion, up $30 billion from December 31, 2011.
Highlights
-- In quarter consolidated net earnings of $520 million are up
13.8% from third quarter 2011, with solid earnings growth in
all geographic segments.
-- Total Company premiums and deposits grew by 8% from third
quarter 2011, reflecting continued strong persistency.
-- Total Company sales grew by 13% from third quarter 2011,
notably the following: o In quarter sales in Canada for Individual participating life
insurance were up 34% and Wealth Management group retirement sales
were up 41% compared to the third quarter of 2011. o In quarter sales in U.S. Financial Services were US$2.4 billion, up
46% compared to the third quarter of 2011, reflecting continued
strong sales in both Individual Markets and Retirement Services. o In quarter sales in U.K. Payout Annuity were up 105% compared to
the third quarter of 2011, and are up 31% year to date compared to
2011. o Putnam net asset inflows in third quarter 2012 were US$602 million.
-- During the third quarter, Canada Life's Reinsurance Division
entered into retrocession agreements with a U.K. domiciled
insurance company covering closed blocks of approximately 1.2
million bank distributed protection policies in Spain and
approximately 575,000 bank distributed protection policies in
Portugal.
-- The Company raised $200 million of 4.80% fixed rate perpetual
preferred share capital on October 11, 2012.
-- The Company's ROE continues to lead the industry at 17.1% based
on net earnings and 16.1% based on operating earnings.
-- 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 201% at
September 30, 2012.
-- Credit experience remained favourable. There were no new
impaired securities in the quarter.
-- The Company declared a quarterly common dividend of $0.3075 per
common share payable December 31, 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 third quarter of 2012
were $281 million compared to $235 million in the third quarter of 2011. For
the nine months ended September 30, 2012 net earnings attributable to common
shareholders were $777 million compared to $742 million for the same period in
2011.
Total sales in the third quarter of 2012 were $2.0 billion compared to $1.9
billion in 2011. Individual Insurance product sales increased 17%, Group
sales decreased 43% driven by lower sales in large case markets, Wealth
Management group retirement sales were up 41% and sales of proprietary retail
investments funds were up 12% compared to the third quarter of 2011. Total
sales for the nine months ended September 30, 2012 were $6.6 billion, the same
level as 2011.
Total assets under administration at September 30, 2012 were $136 billion,
compared to $129 billion at December 31, 2011.
UNITED STATES
Net earnings attributable to common shareholders for the third quarter of 2012
were $87 million compared to $75 million in the third quarter of 2011. For
the nine months ended September 30, 2012 net earnings attributable to common
shareholders were $248 million compared to $291 million for the same period in
2011 which included a $55 million release of legal provisions in Putnam.
Financial Services sales in the third quarter of 2012 were US$2.4 billion, up
46% compared to the third quarter of 2011 reflecting increases in both
Retirement Services and Individual Markets. Sales for the nine months ended
September 30, 2012 were US$6.9 billion compared to US$5.3 billion in 2011.
Putnam assets under management at September 30, 2012 were US$127 billion
compared to US$114 billion a year ago. Net asset inflows in third quarter 2012
were US$602 million compared to net outflows of US$1.5 billion for the same
period in 2011. Net asset outflows for the nine months ended September 30,
2012 were US$1.6 billion compared to net inflows of US$2.0 billion a year ago.
Total United States segment assets under administration at September 30, 2012
were $324 billion compared to $303 billion at December 31, 2011.
EUROPE
Net earnings attributable to common shareholders for the third quarter of 2012
were $165 million compared to $148 million in the third quarter of 2011. Net
earnings for the third quarter of 2012 include the impact of new life
retrocession agreements of $24 million. For the nine months ended September
30, 2012 net earnings attributable to common shareholders were $466 million
compared to $381 million for the same period in 2011. The 2011 results
include catastrophe provisions of $84 million relating to earthquake events in
Japan and New Zealand.
Sales for the third quarter of 2012 were $866 million compared to $1.3 billion
in 2011. The decrease was due to a decline in single premium savings products
in the Isle of Man reflecting the normal fluctuations in the number of large
cases. This decrease was partially offset by strong sales of payout
annuities in the U.K.
Total sales for the nine months ended September 30, 2012 were $2.4 billion
compared to $3.3 billion in 2011 due mainly to a decline in single premium
savings products in both the U.K. and Isle of Man. This reflects the general
market slowdown and normal fluctuations in the number of large cases in the
Isle of Man. This decrease was partially offset by strong sales of payout
annuities in the U.K.
Total assets under administration at September 30, 2012 increased to $72
billion from $70 billion at December 31, 2011.
CORPORATE
Net earnings in the Lifeco corporate segment attributable to common
shareholders was a loss of $13 million in the third quarter of 2012 compared
to a loss of $1 million for the third quarter of 2011. For the nine months
ended September 30, 2012 net earnings attributable to common shareholders was
a loss of $29 million compared to a loss of $16 million for the same period in
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 December 31,
2012 to shareholders of record at the close of business December 3, 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;
-- Series P First Preferred Shares of $0.3375 per share;
-- Series Q First Preferred Shares of $0.321875 per share; and
-- Series R First Preferred Shares of $0.2663 per share
all payable December 31, 2012 to shareholders of record at the close of
business December 3, 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 $532
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 third quarter conference call and audio webcast will be
held November 8, 2012 at 3:00 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 November 8, 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 November 9, 2012 until November 9, 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 For the nine months ended
September 30 June 30 September 30 September 30 September 30
2012 2012 2011 2012 2011
Premiums and
deposits:
Life insurance,
guaranteed
annuities
and insured health products $ 4,940 $ 4,524 $ 4,392 $ 13,993 $ 12,959
Self-funded premium equivalents (ASO contracts) 631 673 660 1,989 1,994
Segregated funds deposits:
Individual products 1,490 1,436 1,975 4,485 5,516
Group products 1,681 1,595 1,420 5,046 4,340
Proprietary mutual funds and institutional deposits 6,779 4,898 5,892 17,616 23,264
Total premiums and deposits 15,521 13,126 14,339 43,129 48,073
Fee and other income 720 734 704 2,178 2,163
Paid or credited to policyholders 6,607 5,979 6,826 17,329 16,703
Net earnings - common shareholders 520 491 457 1,462 1,398
Per common share
Basic earnings $ 0.547 $ 0.517 $ 0.481 $ 1.539 $ 1.473
Dividends paid 0.3075 0.3075 0.3075 0.9225 0.9225
Book value 13.01 12.97 12.46
Return on common shareholders' equity (trailing four quarters*):
Operating earnings 16.1% 15.8% 16.7%
Net earnings 17.1% 16.8% 16.7%
Total assets $ 249,043 $ 245,297 $ 237,048
Proprietary mutual funds and institutional net assets 131,604 129,028 124,343
Total assets under management 380,647 374,325 361,391
Other assets under administration 151,604 149,258 131,853
Total assets under administration $ 532,251 $ 523,583 $ 493,244
Total equity $ 17,004 $ 16,692 $ 15,837
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 For the nine months ended
September 30 June 30 September 30 September 30 September 30
2012 2012 2011 2012 2011
Income
Premium income
Gross premiums written $ 5,645 $ 5,233 $ 5,059 $ 16,076 $ 14,980
Ceded premiums (705) (709) (667) (2,083) (2,021)
Total net premiums 4,940 4,524 4,392 13,993 12,959
Net investment income
Regular net investment income 1,425 1,428 1,330 4,292 4,173
Changes in fair value through profit or loss 1,551 1,106 2,080 2,461 2,600
Total net investment income 2,976 2,534 3,410 6,753 6,773
Fee and other income 720 734 704 2,178 2,163
8,636 7,792 8,506 22,924 21,895
Benefits and expenses
Policyholder benefits
Insurance and investment contracts
Gross 4,137 4,311 3,988 13,054 12,417
Ceded (304) (367) (284) (1,058) (933)
Total net policyholder benefits 3,833 3,944 3,704 11,996 11,484
Policyholder dividends and experience refunds 414 367 385 1,145 1,115
Change in insurance and investment contract liabilities 2,360 1,668 2,737 4,188 4,104
Total paid or credited to policyholders 6,607 5,979 6,826 17,329 16,703
Commissions 441 415 372 1,266 1,139
Operating and administrative expenses 653 637 605 1,930 1,808
Premium taxes 74 72 64 218 188
Financing charges 70 72 72 214 216
Amortization of finite life intangible assets 25 28 24 79 72
Earnings before income taxes 766 589 543 1,888 1,769
Income taxes 141 72 54 270 284
Net earnings before non-controlling interests 625 517 489 1,618 1,485
Attributable to non-controlling interests 75 (2) 8 73 15
Net earnings 550 519 481 1,545 1,470
Perpetual preferred share dividends 30 28 24 83 72
Net earnings - common shareholders $ 520 $ 491 $ 457 $ 1,462 $ 1,398
Earnings per common
share
Basic $ 0.547 $ 0.517 $ 0.481 $ 1.539 $ 1.473
Diluted $ 0.543 $ 0.513 $ 0.478 $ 1.529 $ 1.461
CONSOLIDATED BALANCE SHEETS (unaudited)
(in Canadian $ millions)
September 30 December 31
2012 2011
Assets
Cash and cash equivalents $ 1,871 $ 2,056
Bonds 82,660 78,073
Mortgage loans 17,559 17,432
Stocks 6,929 6,704
Investment properties 3,446 3,201
Loans to policyholders 6,989 7,162
119,454 114,628
Funds held by ceding insurers 10,336 9,923
Goodwill 5,396 5,401
Intangible assets 3,084 3,154
Derivative financial instruments 1,141 968
Owner occupied properties 508 491
Fixed assets 142 137
Reinsurance assets 1,846 2,061
Other assets 4,585 4,283
Deferred tax assets 1,025 1,140
Segregated funds for the risk of
unitholders 101,526 96,582
Total assets $ 249,043 $ 238,768
Liabilities
Insurance contract liabilities $ 117,891 $ 114,730
Investment contract liabilities 759 782
Debentures and other debt
instruments 4,273 4,313
Funds held under reinsurance
contracts 181 169
Derivative financial instruments 269 316
Other liabilities 4,408 4,287
Deferred tax liabilities 936 929
Repurchase agreements 1,444 23
Capital trust securities 352 533
Investment and insurance contracts
on account of unitholders 101,526 96,582
Total liabilities 232,039 222,664
Equity
Non-controlling interests
Participating account surplus in subsidiaries 2,301 2,227
Non-controlling interests in capital stock 4 3
Shareholders' equity
Share capital
Perpetual preferred shares 2,344 1,894
Common shares 5,832 5,828
Accumulated surplus 6,904 6,327
Accumulated other comprehensive income (loss) (443) (233)
Contributed surplus 62 58
Total equity 17,004 16,104
Total liabilities and equity $ 249,043 $ 238,768
Segmented Information (unaudited)
Consolidated Net Earnings
For the three months ended September 30, 2012
United Lifeco
Canada States Europe Corporate Total
Income:
Premium income $ 2,397 $ 879 $ 1,664 $ - $ 4,940
Net investment
income
Regular net investment income 664 332 433 (4) 1,425
Changes in fair value through profit or loss 493 244 814 - 1,551
Total net investment income 1,157 576 1,247 (4) 2,976
Fee and other income 271 304 145 - 720
Total income 3,825 1,759 3,056 (4) 8,636
Benefits and expenses:
Paid or credited to policyholders 2,733 1,246 2,628 - 6,607
Other 629 340 192 7 1,168
Financing charges 31 34 5 - 70
Amortization of finite life intangible assets 11 11 3 - 25
Earnings before income taxes 421 128 228 (11) 766
Income taxes 66 38 40 (3) 141
Net earnings
before
non-controlling
interests
355 90 188 (8) 625
Non-controlling
interests 73 (1) 3 - 75
Net earnings
282 91 185 (8) 550
Perpetual
preferred share
dividends 21 - 6 3 30
Net earnings
before capital
allocation 261 91 179 (11) 520
Impact of
capital
allocation 20 (4) (14) (2) -
Net earnings -
common
shareholders $ 281 $ 87 $ 165 $ (13) $ 520
For the three months ended September 30, 2011
United Lifeco
Canada States Europe Corporate Total
Income:
Premium income $ 2,229 $ 952 $ 1,211 $ - $ 4,392
Net investment
income
Regular net investment income 535 324 465 6 1,330
Changes in fair value through profit or loss 824 304 952 - 2,080
Total net investment income 1,359 628 1,417 6 3,410
Fee and other income 269 296 139 - 704
Total income 3,857 1,876 2,767 6 8,506
Benefits and expenses:
Paid or credited to policyholders 2,950 1,433 2,443 - 6,826
Other 579 311 148 3 1,041
Financing charges 34 33 5 - 72
Amortization of finite life intangible assets 10 11 3 - 24
Earnings before income taxes 284 88 168 3 543
Income taxes 47 11 (5) 1 54
Net earnings before non-controlling
interests 237 77 173 2 489
Non-controlling interests 3 - 5 - 8
Net earnings 234 77 168 2 481
Perpetual preferred share dividends 18 - 6 - 24
Net earnings
before capital
allocation 216 77 162 2 457
Impact of
capital
allocation 19 (2) (14) (3) -
Net earnings - $ $ $ $
common
shareholders 235 75 148 (1) $ 457
For the nine months ended September 30, 2012
United Lifeco
Canada States Europe Corporate Total
Income:
Premium income $ 7,113 $ 2,406 $ 4,474 $ - $ 13,993
Net investment
income
Regular net 1,939 983 investment income 1,373 (3) 4,292
Changes in 755 442 fair value through profit or loss 1,264 - 2,461
Total net 2,694 1,425 investment income 2,637 (3) 6,753
Fee and other 818 912 income 448 - 2,178
Total income 10,625 4,743
7,559 (3) 22,924
Benefits and expenses:
Paid or 7,599 3,274 credited to policyholders 6,456 - 17,329
Other 1,912 1,003 482 17 3,414
Financing 99 101 charges 14 - 214
Amortization 33 38 of finite life intangible assets 8 - 79
Earnings before 982 327 income taxes 599 (20) 1,888
Income taxes 143 69
63 (5) 270
Net earnings
before
non-controlling
interests 839 258
536 (15) 1,618
Non-controlling 63 (1)
interests 11 - 73
Net earnings 776 259
525 (15) 1,545
Perpetual 58 -
preferred share
dividends 17 8 83
Net earnings 718 259
before capital
allocation 508 (23) 1,462
Impact of 59 (11)
capital
allocation (42) (6) -
Net earnings - $ 777 $ 248
common
shareholders $ 466 $ (29) $ 1,462
For the nine months ended
September 30, 2011
United Lifeco
Canada States Europe Corporate Total
Income:
Premium income $ 6,861 $ 2,306 $ 3,792 $ - $ 12,959
Net investment
income
Regular net investment income 1,769 980 1,412 12 4,173
Changes in fair value through profit or loss 1,075 461 1,064 - 2,600
Total net investment income 2,844 1,441 2,476 12 6,773
Fee and other income 822 928 413 - 2,163
Total income 10,527 4,675 6,681 12 21,895
Benefits and expenses:
Paid or credited to policyholders 7,716 3,273 5,714 - 16,703
Other 1,792 897 429 17 3,135
Financing charges 102 100 14 - 216
Amortization of finite life intangible assets 31 34 7 - 72
Earnings before income taxes 886 371 517 (5) 1,769
Income taxes 138 75 70 1 284
Net earnings
before
non-controlling
interests
748 296 447 (6) 1,485
Non-controlling
interests 9 - 6 - 15
Net earnings
739 296 441 (6) 1,470
Perpetual
preferred share
dividends 55 - 17 - 72
Net earnings
before capital
allocation 684 296 424 (6) 1,398
Impact of
capital
allocation 58 (5) (43) (10) -
Net earnings - $ $ $ $
common
shareholders 742 291 381 (16) $ 1,398
Marlene Klassen, APR Assistant Vice-President, Communication Services
204-946-7705
SOURCE: Great-West Lifeco Inc.
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CO: Great-West Lifeco Inc.
ST: Manitoba
NI: INS ERN CONF DIV
-0- Nov/08/2012 18:11 GMT
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