Great-West Lifeco reports fourth 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, Feb. 7, 2013 /CNW/ - Great-West Lifeco Inc. (Lifeco) has reported operating earnings attributable to common shareholders of $493 million for the three months ended December 31, 2012, compared to $500 million in the fourth quarter of 2011. Operating earnings per common share for the current quarter were $0.520 ($0.518 diluted) compared to $0.528 ($0.523 diluted) for the same period in 2011.
For the twelve months ended December 31, 2012, operating earnings attributable to common shareholders were $1,955 million compared to $1,898 million a year ago. Operating earnings per common share for the twelve months 2012 were $2.059 ($2.046 diluted) compared to $2.000 ($1.984 diluted) for the same period in 2011.
Operating earnings, a non-IFRS measure, exclude the impact of litigation provision adjustments of $140 million after-tax or $0.147 per common share in the fourth quarter of 2012 as well as the net impact of litigation provisions which increased net earnings in the fourth quarter of 2011 by $124 million after-tax or $0.129 per common share.
Net earnings attributable to common shareholders were $353 million or $0.373 per common share ($0.372 diluted) for the fourth quarter of 2012, compared to $624 million or $0.657 per common share ($0.651 diluted) a year ago. For the twelve months ended December 31, 2012, net earnings attributable to common shareholders were $1,815 million or $1.912 per common share ($1.900 diluted), compared to $2,022 million or $2.129 per common share ($2.112 diluted) a year ago. Net earnings include the impacts of the litigation provisions described above.
Highlights
-- Consolidated assets under administration at December 31, 2012
grew to nearly $546 billion, up $44 billion from December 31,
2011.
-- Total Company in quarter premiums and deposits grew by 17% as
compared to fourth quarter 2011, reflecting strong sales
performance and continued strong persistency.
-- Total Company sales grew by 12% from fourth quarter 2011,
notably the following: o In quarter sales in Canada for Individual Insurance were up 18% and
Wealth Management sales were up 18% compared to the fourth quarter
of 2011. o In quarter sales in United States Great-West Financial Individual
Markets were up 23% compared to the fourth quarter of 2011. Sales
in Individual Retirement Accounts were up 91% compared to the
fourth quarter of 2011, and were up 50% for the full year of 2012
compared to 2011. o In quarter sales in U.K. Payout Annuity were up 187% compared to
the fourth quarter of 2011, and were up 55% for the full year of
2012 compared to 2011. o Putnam's sales increased by US$1.4 billion to US$6.8 billion in the
fourth quarter of 2012 compared to US$5.4 billion in the fourth
quarter of 2011 reflecting strong institutional sales.
-- Return on common shareholders' equity was 15.9% based on
operating earnings and 14.7% based on net earnings.
-- The Company's capital position remained very strong. The
Great-West Life Assurance Company, reported a Minimum
Continuing Capital and Surplus Requirement (MCCSR) ratio of
207% at December 31, 2012.
-- The Company declared a quarterly common dividend of $0.3075 per
common share payable March 28, 2013.
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 (Great-West Financial), and Putnam
Investments, LLC (Putnam), together with Lifeco's corporate results.
CANADA
Net earnings attributable to common shareholders for the fourth quarter of
2012 were $263 million compared to $244 million in the fourth quarter of
2011. For the twelve months ended December 31, 2012, net earnings
attributable to common shareholders were $1,040 million compared to $986
million for the same period in 2011.
Total premiums and deposits for the twelve months ended December 31, 2012 were
$20.8 billion, compared to $19.4 billion in 2011. Total sales for the twelve
months were $9.3 billion compared to $8.9 billion for 2011.
Total assets under administration at December 31, 2012 were $138 billion,
compared to $129 billion at December 31, 2011.
UNITED STATES
Net earnings attributable to common shareholders for the fourth quarter of
2012 were $77 million compared to $79 million in the fourth quarter of 2011.
Great-West Financial reported earnings of $96 million in the fourth quarter of
2012 compared to $87 million a year ago. Putnam reported a net loss of $19
million in the fourth quarter of 2012 compared to a net loss of $8 million a
year ago.
For the twelve months ended December 31, 2012, net earnings attributable to
common shareholders were $325 million compared to $370 million for the same
period in 2011. Great-West Financial reported earnings of $365 million for the
full year 2012 compared to $355 million a year ago. Putnam reported a net
loss of $40 million for the full year 2012 compared to net earnings of $15
million a year ago.
Great-West Financial sales in the fourth quarter of 2012 were US$2.9 billion
compared to US$3.4 billion in 2011. The fourth quarter of 2011 reflected two
large plan sales for the public/non-profit market which did not repeat in the
fourth quarter of 2012. Sales for the twelve months ended December 31, 2012
were US$9.7 billion compared to US$8.7 billion in 2011.
Putnam assets under management at December 31, 2012 were US$128 billion, up
over 9% as compared to US$117 billion a year ago. Net asset outflows in fourth
quarter of 2012 were US$151 million compared to net outflows of US$1.8 billion
for the same period in 2011. Net asset outflows for the twelve months ended
December 31, 2012 were US$1.8 billion compared to net inflows of US$183
million a year ago.
Total assets under administration at December 31, 2012 were $333 billion
compared to $303 billion at December 31, 2011.
EUROPE
Net earnings attributable to common shareholders for the fourth quarter of
2012 were $152 million compared to $181 million in the fourth quarter of 2011.
While in quarter net earnings reflect strong UK payout annuity new business
margins, favourable investment performance and an additional contribution from
the third quarter's large reinsurance transaction, contributions from
actuarial liability basis changes were significantly lower than the fourth
quarter of 2011. For the twelve months ended December 31, 2012, net earnings
attributable to common shareholders were $618 million compared to $562 million
for the same period in 2011. The 2011 results included catastrophe provisions
of $84 million relating to the earthquake events in Japan and New Zealand.
Total sales for the twelve months ended December 31, 2012 were $3.7 billion
compared to $4.1 billion in 2011.
Total assets under administration at December 31, 2012 increased to $75
billion from $70 billion at December 31, 2011.
CORPORATE
For the three months ended December 31, 2012, Lifeco Corporate had a net loss
of $139 million compared to net earnings of $120 million in the fourth quarter
of 2011. Included in Lifeco Corporate net earnings were litigation
provisions of $140 million in 2012 and net litigation provision releases of
$124 million in 2011. Fourth quarter 2012 results include a decrease in
reserves for uncertain tax positions which positively impacted net earnings
by $20 million, partly offset by the impact of mark-to-market losses related
to a macro balance sheet credit hedge of $8 million.
For the twelve months ended December 31, 2012, Lifeco Corporate had a net loss
of $168 million compared to net earnings of $104 million for the same period
in 2011 largely due to the change in litigation provisions noted above.
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 March 28, 2013
to shareholders of record at the close of business February 28, 2013.
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 $0.33750 per share;
-- Series Q First Preferred Shares of $0.321875 per share; and
-- Series R First Preferred Shares of $0.3000 per share
all payable March 28, 2013 to shareholders of record at the close of business
February 28, 2013.
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 $546
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 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, changes in accounting policies and the
effect of applying future accounting policy changes required under IFRS,
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 fourth quarter conference call and audio webcast will be
held Thursday, February 7, 2013 at 3:30 pm (ET). The call and webcast can be
accessed through www.greatwestlifeco.com or by phone at:
-- Participants in the Toronto area: 416-340-8527
-- Participants from North America: 1-877-240-9772
-- Participants from Overseas: Dial international access code
first, then 800-2787-2090
A replay of the call will be available from February 7 to 14, 2013, and can be
accessed by calling 1-800-408-3053 or 905-694-9451 in Toronto (passcode:
8898149#). The archived webcast will be available on www.greatwestlifeco.com
from February 8, 2013 until February 7, 2014.
Additional information relating to Lifeco, including the 2012 audited
consolidated financial statements, Management's Discussion and Analysis
(MD&A), Annual Information Form (AIF), and CEO/CFO certification 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 twelve months ended
December 31 September 30 December 31 December 31 December 31
2012 2012 2011 2012 2011
Premiums and
deposits:
Life insurance,
guaranteed
annuities
and insured health products $ 4,827 $ 4,940 $ 4,334 $ 18,820 $ 17,293
Self-funded premium equivalents (Administrative services only contracts) 677 631 651 2,666 2,645
Segregated funds deposits:
Individual products 2,072 1,490 1,829 6,557 7,345
Group products 2,216 1,681 1,777 7,262 6,117
Proprietary mutual funds and institutional deposits 6,880 6,779 5,624 24,496 28,888
Total premiums and deposits 16,672 15,521 14,215 59,801 62,288
Fee and other income 767 720 740 2,945 2,903
Paid or credited to policyholders 5,122 6,607 6,340 22,451 23,043
Operating earnings -
common shareholders 493 520 500 1,955 1,898
Net earnings - common shareholders 353 520 624 1,815 2,022
Per common share
Operating earnings $ 0.520 $ 0.547 $ 0.528 $ 2.059 $ 2.000
Basic earnings 0.373 0.547 0.657 1.912 2.129
Dividends paid 0.3075 0.3075 0.3075 1.2300 1.2300
Book value 13.18 13.01 12.61
Return on common shareholders' equity (trailing four quarters*):
Operating earnings 15.9% 16.1% 16.6%
Net earnings 14.7% 17.1% 17.6%
Total assets $ 253,718 $ 249,043 $ 238,768
Proprietary mutual funds and institutional net assets 134,598 131,604 125,390
Total assets under management 388,316 380,647 364,158
Other assets under administration 157,455 151,604 137,807
Total assets under administration $ 545,771 $ 532,251 $ 501,965
Total equity $ 17,586 $ 17,004 $ 16,104
The Company uses operating earnings, a non-International Financial Reporting
Standards financial measure, which excludes the impact of certain litigation
provisions described in note 30 the Company's December 31, 2012 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 For the years
ended December 31 ended December 31
2012 2011 2012 2011
Income
Premium income
Gross $ 5,763 $ 5,033 $ 21,839 $ 20,013 premiums written
Ceded (936) (699) premiums (3,019) (2,720)
Total net 4,827 4,334 18,820 17,293 premiums
Net investment income
Regular 1,361 1,365 5,653 5,538 net investment income
Changes 182 1,564 2,643 4,164 in fair value through profit or loss
Total net 1,543 2,929 8,296 9,702 investment income
Fee and other 767 740 2,945 2,903 income
7,137 8,003 30,061 29,898
Benefits and expenses
Policyholder benefits
Insurance and investment contracts
Gross 4,377 4,174 17,431 16,591
Ceded (399) (284)
(1,457) (1,217)
Total net 3,978 3,890 15,974 15,374 policyholder benefits
Policyholder 292 309 1,437 1,424 dividends and experience refunds
Change in 852 2,141 5,040 6,245 insurance and investment contract liabilities
Total paid or 5,122 6,340 22,451 23,043 credited to policyholders
Commissions 515 409 1,781 1,548
Operating and 642 142 2,572 1,950 administrative expenses
Premium taxes 75 76 293 264
Financing 71 73 285 289 charges
Amortization of 24 28 103 100 finite life intangible assets
Earnings before 688 935 2,576 2,704 income taxes
Income taxes 98 181 368 465
Net earnings before 590 754 2,208 2,239 non-controlling interests
Attributable to 205 106 278 121 non-controlling interests
Net earnings 385 648 1,930 2,118
Preferred share 32 24 115 96 dividends
Net earnings - common $ 353 $ 624 $ 1,815 $ 2,022 shareholders
Earnings per common
share
Basic $ 0.373 $ 0.657 $ 1.912 $ 2.129
Diluted $ 0.372 $ 0.651 $ 1.900 $ 2.112
CONSOLIDATED BALANCE SHEETS (unaudited)
(in Canadian $ millions)
December 31
2012 2011
Assets
Cash and cash equivalents $ 1,895 $ 2,056
Bonds 82,536 78,073
Mortgage loans 17,875 17,432
Stocks 7,098 6,704
Investment properties 3,525 3,201
Loans to policyholders 7,082 7,162
120,011 114,628
Funds held by ceding 10,537 9,923
insurers
Goodwill 5,397 5,401
Intangible assets 3,115 3,154
Derivative financial 997 968
instruments
Owner occupied properties 514 491
Fixed assets 154 137
Reinsurance assets 2,064 2,061
Other assets 4,893 4,283
Deferred tax assets 1,088 1,140
Investments on account of 104,948 96,582
segregated fund
policyholders
Total assets $ 253,718 $ 238,768
Liabilities
Insurance contract $ 119,919 $ 114,730
liabilities
Investment contract 739 782
liabilities
Debentures and other debt 4,283 4,313
instruments
Funds held under 335 169
reinsurance contracts
Derivative financial 342 316
instruments
Other liabilities 4,579 4,287
Deferred tax liabilities 868 929
Repurchase agreements - 23
Capital trust securities 119 533
Investment and insurance
contracts on account of
segregated fund
policyholders 104,948 96,582
Total liabilities 236,132 222,664
Equity
Non-controlling interests
Participating 2,505 2,227 account surplus in subsidiaries
Non-controlling 5 3 interests in subsidiaries
Shareholders' equity
Share capital
Preferred 2,544 1,894 shares
Common shares 5,848 5,828
Accumulated surplus 6,954 6,327
Accumulated other (330) (233) comprehensive loss
Contributed surplus 60 58
Total equity 17,586 16,104
Total liabilities and $ 253,718 $ 238,768 equity
Segmented Information (unaudited)
Consolidated Net Earnings
The major reportable segments of the Company are Canada, United States, Europe
and Lifeco Corporate. These segments reflect the Company's management
structure and internal financial reporting and are aligned to its geographic
operations. Each of these segments operates in the financial services
industry and the revenues from these segments are derived principally from
life, health and disability insurance, annuity products, investment management
services, savings products and life, property and casualty, accident and
health reinsurance. Business activities that are not associated with the
specific business units are attributed to the Lifeco Corporate segment.
Transactions between operating segments occur at market terms and conditions
and have been eliminated upon consolidation.
The Company has established a capital allocation model to better measure the
performance of the operating segments. This segmented information is
presented below.
For the three months ended
December 31, 2012
United Lifeco
Canada States Europe Corporate Total
Income:
Premium income $ 2,468 $ 984 $ 1,375 $ - $ 4,827
Net investment
income
Regular net 603 326 441 (9) 1,361 investment income
Changes in (97) 34 245 - 182 fair value through profit or loss
Total net 506 360 686 (9) 1,543 investment income
Fee and other 283 314 170 - 767 income
Total income 3,257 1,658 2,231 (9) 7,137
Benefits and expenses:
Paid or 2,171 1,163 1,788 - 5,122 credited to policyholders
Other 502 368 219 143 1,232
Financing 32 34 4 1 71 charges
Amortization 12 10 2 - 24 of finite life intangible assets
Earnings before 540 83 218 688 income taxes (153)
Income taxes 69 (1) 52 98
(22)
Net earnings
before
non-controlling
interests 471 84 166 590
(131)
Non-controlling 206 4 (5) - 205
interests
Net earnings 265 80 171 385
(131)
Preferred share 21 - 5 6 32
dividends
Net earnings 244 80 166 353
before capital (137)
allocation
Impact of 19 (3) (14) (2) -
capital
allocation
Net earnings - $ 263 $ 77 $ 152 $ (139) $ 353
common
shareholders
For the three months ended
December 31, 2011
United Lifeco
Canada States Europe Corporate Total
Income:
Premium income $ 2,424 $ 820 $ 1,090 $ - $ 4,334
Net investment
income
Regular net 701 331 479 1,365 investment (146) income
Changes in 778 (7) 793 - 1,564 fair value through profit or loss
Total net 1,479 324 1,272 2,929 investment (146) income
Fee and other 266 304 170 - 740 income
Total income 4,169 1,448 2,532 8,003
(146)
Benefits and expenses:
Paid or 3,255 956 2,129 - 6,340 credited to policyholders
Other 415 343 157 627
(288)
Financing 34 34 4 1 73 charges
Amortization 10 12 6 - 28 of finite life intangible assets
Earnings before 455 103 236 141 935 income taxes
Income taxes 114 23 26 18 181
Net earnings before non-controlling
interests 341 80 210 123 754
Non-controlling 99 (1) 8 - 106 interests
Net earnings 242 81 202 123 648
Preferred share 18 - 6 - 24 dividends
Net earnings 224 81 196 123 624 before capital allocation
Impact of 20 (2) (15) (3) - capital allocation
Net earnings - $ 244 $ 79 $ 181 $ 120 $ 624 common shareholders
For the twelve months ended
December 31, 2012
United Lifeco
Canada States Europe Corporate Total
Income:
Premium income $ 9,581 $ 3,390 $ 5,849 $ - $ 18,820
Net investment
income
Regular net 2,542 1,309 1,814 5,653 investment (12) income
Changes in 658 476 1,509 - 2,643 fair value through profit or loss
Total net 3,200 1,785 3,323 8,296 investment (12) income
Fee and other 1,101 1,226 618 - 2,945 income
Total income 13,882 6,401 9,790 30,061
(12)
Benefits and expenses:
Paid or 9,770 4,437 8,244 - 22,451 credited to policyholders
Other 2,414 1,371 701 160 4,646
Financing 131 135 18 1 285 charges
Amortization 45 48 10 - 103 of finite life intangible assets
Earnings before 1,522 410 817 2,576 income taxes (173)
Income taxes 212 68 115 368
(27)
Net earnings
before
non-controlling
interests 1,310 342 702 (146) 2,208
Non-controlling 269 3 6 - 278
interests
Net earnings 1,041 339 696 1,930
(146)
Preferred share 79 - 22 14 115
dividends
Net earnings 962 339 674 1,815
before capital (160)
allocation
Impact of 78 (14) (56) (8) -
capital
allocation
Net earnings - $ 1,040 $ 325 $ 618 $ (168) $ 1,815
common
shareholders
For the twelve months ended
December 31, 2011
United Lifeco
Canada States Europe Corporate Total
Income:
Premium income $ 9,285 $ 3,126 $ 4,882 $ - $ 17,293
Net investment
income
Regular net 2,470 1,311 1,891 5,538 investment (134) income
Changes in 1,853 454 1,857 - 4,164 fair value through profit or loss
Total net 4,323 1,765 3,748 9,702 investment (134) income
Fee and other 1,088 1,232 583 - 2,903 income
Total income 14,696 6,123 9,213 29,898
(134)
Benefits and expenses:
Paid or 10,971 4,229 7,843 - 23,043 credited to policyholders
Other 2,207 1,240 586 3,762
(271)
Financing 136 134 18 1 289 charges
Amortization 41 46 13 - 100 of finite life intangible assets
Earnings before 1,341 474 753 136 2,704 income taxes
Income taxes 252 98 96 19 465
Net earnings before non-controlling
interests 1,089 376 657 117 2,239
Non-controlling 108 (1) 14 - 121 interests
Net earnings 981 377 643 117 2,118
Preferred share 73 - 23 - 96 dividends
Net earnings 908 377 620 117 2,022 before capital allocation
Impact of 78 (7) (58) - capital (13) allocation
Net earnings - $ 986 $ 370 $ 562 $ 104 $ 2,022 common shareholders
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
-0- Feb/07/2013 18:03 GMT
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