TSX:GWO 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. WINNIPEG, May 8, 2014 /CNW/ - Great-West Lifeco Inc. (Lifeco) has reported net earnings attributable to common shareholders of $587 million or $0.587 per common share for the three months ended March 31, 2014 compared to $517 million or $0.544 per common share for the same period in 2013, an increase of 13.5%. Consolidated assets under administration at March 31, 2014 grew to $806 billion, up $48 billion from December 31, 2013. Highlights - In Quarter -- Lifeco premiums and deposits during the quarter were $23.9 billion, up 41% from a year ago, including $2.9 billion from Irish Life Group Limited (Irish Life), reflecting continued strong persistency and growth. -- Total Company sales in the first quarter of 2014 were up 43% compared to the same period in 2013: o Canada sales were $3.2 billion, up 6%. o Europe Insurance & Annuities sales were $3.5 billion, up 265%, including sales of $2.6 billion from Irish Life. o Putnam sales were US$9.1 billion, up 23%, driven by an increase in mutual fund sales of US$2.7 billion which were at their highest level since the first quarter of 2003. o Great-West Financial sales were US$2.9 billion, up 16%. -- Irish Life contributed $52 million of net earnings to Lifeco in the first quarter of 2014 up from $44 million in the fourth quarter of 2013. -- On April 3, 2014, the Company announced that Great-West Financial reached an agreement to acquire the J.P. Morgan Retirement Plan Services large-market recordkeeping business. The transaction is scheduled to close in the third quarter of 2014, subject to regulatory approval in the U.S. -- The Company maintained a strong ROE of 16.0% based on net earnings. ROE based on adjusted operating earnings was 15.2%, which excludes the impact of Irish Life related restructuring and acquisition costs and certain litigation provisions. -- The Company's capital position remained very strong. The Great-West Life Assurance Company, Lifeco's major operating subsidiary, reported a Minimum Continuing Capital and Surplus Requirements (MCCSR) ratio of 230% at March 31, 2014. -- The Company declared a quarterly common dividend of $0.3075 per common share payable June 30, 2014. OPERATING RESULTS Consolidated net earnings of Lifeco include the net earnings of The Great-West Life Assurance Company (Great-West Life) and its operating subsidiaries London Life Insurance Company (London Life) and The Canada Life Assurance Company (Canada Life); Great-West Life & Annuity Insurance Company (Great-West Financial), and Putnam Investments, LLC (Putnam), together with Lifeco's Corporate operating results. CANADA The Canada segment of Lifeco includes the operating results of the Canadian businesses operated by Great-West Life, London Life and Canada Life. The three primary business units included in this segment are Individual Insurance, Wealth Management and Group Insurance. The Company provides accumulation, annuity, life, disability and critical illness insurance products to individual and group clients. Net earnings attributable to common shareholders for the first quarter of 2014 were $294 million, up 11% compared to $265 million in the first quarter of 2013. Total sales in the first quarter of 2014 were $3.2 billion, compared to $3.0 billion in the first quarter of 2013. This reflects a 14% increase in Individual Insurance sales and a 12% increase in Wealth Management sales partially offset by lower Group creditor sales. Total Canada segment assets under administration at March 31, 2014 were $153 billion, compared to $149 billion at December 31, 2013. UNITED STATES The United States operating results for Lifeco include the results of Great-West Financial, Putnam and the insurance businesses in the United States branches of Great-West Life and Canada Life, together with an allocation of a portion of Lifeco's corporate results. Great-West Financial provides an array of financial security products, including employer-sponsored defined contribution plans, administrative and record-keeping services, fund management and investment and advisory services. It also provides individual retirement accounts, life insurance and annuity products and executive benefits products. Putnam provides investment management, certain administrative functions, distributions and related services through a broad range of investment products. Net earnings attributable to common shareholders for the first quarter of 2014 were $41 million compared to $71 million in the first quarter of 2013. Great-West Financial reported net earnings of $94 million in the first quarter compared to $85 million for the same period last year. Putnam reported a net loss of $53 million in the first quarter compared to a net loss of $14 million a year ago. Great-West Financial sales in the first quarter of 2014 were US$2.9 billion, up from US$2.5 billion in the first quarter of 2013 due to positive results from both Retirement Services and Individual Markets. Retirement Services experienced higher sales from the Institutional market's group annuity product and higher transferred assets from plan mergers and participants of existing plans. Individual Markets experienced sales increases in the individual retirement account and the executive benefits markets. Putnam assets under management as at March 31, 2014 were US$153.4 billion compared to US$134.7 billion a year ago, an increase of 14%. Net asset inflows for the first quarter of 2014 were US$1.1 billion compared to net asset outflows of US$0.3 billion for the same period in 2013, driven by mutual fund net inflows of US$2.4 billion, which were their highest level since the first quarter of 2001. Total United States segment assets under administration at March 31, 2014 were $453 billion compared to $421 billion at December 31, 2013. EUROPE The Europe segment comprises two distinct business units: Insurance & Annuities and Reinsurance, together with an allocation of Lifeco's corporate results. Insurance & Annuities provides protection and wealth management products including payout annuities, through subsidiaries of Canada Life in the U.K., Isle of Man and Germany, and through Irish Life in Ireland. Reinsurance operates primarily in the U.S., Barbados and Ireland, and is conducted through Canada Life, London Life and their subsidiaries. Net earnings attributable to common shareholders for the first quarter of 2014 were $259 million, which includes the impact of $5 million of restructuring costs related to the Irish Life acquisition. Excluding these costs net earnings were $264 million for the quarter, including a $52 million contribution from Irish Life, compared to $192 million in the first quarter of 2013. Insurance & Annuities sales for the first quarter of 2014 were $3.5 billion, including $2.6 billion related to Irish Life, up 265% as compared to $961 million a year ago. Total Europe segment assets under administration at March 31, 2014 were $200 billion, up from $188 billion at December 31, 2013. LIFECO CORPORATE The Lifeco Corporate segment includes operating results for activities of Lifeco that are not associated with the major business units of the Company. Net earnings in the Lifeco Corporate segment attributable to common shareholders were a net loss of $7 million in the first quarter of 2014 compared to a net loss of $11 million in the first quarter of 2013. 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 30, 2014 to shareholders of record at the close of business June 2, 2014. 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 L First Preferred Shares of $0.353125 per share; -- Series M First Preferred Shares of $0.3625 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 $0.3000 per share all payable June 30, 2014 to shareholders of record at the close of business June 2, 2014. .…4/ 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 Great-West Life, London Life, Canada Life, Irish Life, Great-West Financial and Putnam Investments. Great-West Lifeco and its companies have $806 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. Material factors and assumptions that were applied in formulating the forward-looking information contained herein include the assumption that the business and economic conditions affecting the Company's operations will continue substantially in their current state, including, without limitation, with respect to market prices for products provided, sales levels, premium income, fee income, expense levels, mortality experience, morbidity experience, policy lapse rates, taxes, inflation, information systems, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, continuity and availability of personnel and third party service providers, and the Company's ability to complete strategic transactions and integrate acquisitions, and that there will be no unplanned material changes to the Company's facilities, customer and employee relations or credit arrangements. Many of these assumptions are based on factors and events that are not within the control of the Company and there is no assurance that they will prove to be correct. Other important factors and assumptions that could cause actual results to differ materially from those contained in forward-looking statements include technological change, investment values, payments required under investment products, reinsurance, changes in local and international laws and regulations, changes in accounting policies and the effect of applying future accounting policy changes, unexpected judicial or regulatory proceedings and catastrophic events. The reader is cautioned that the foregoing list of assumptions and factors is not exhaustive, and there may be other factors listed in other filings with securities regulators, including factors set out in the Company's 2013 Annual Management Discussion & Analysis (MD&A) under "Risk Management and Control Practices" and "Summary of Critical Accounting Estimates", which, along with other filings, is available for review at www.sedar.com. The reader is also cautioned to consider these and other factors carefully and not to place undue reliance on forward-looking statements. Other than as specifically required by applicable law, the Company does not intend 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 May 8, 2014 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: 416-340-8061 -- Participants from North America: 1-866-225-0198 -- Participants from Overseas: Dial international access code first, then 800-6578-9898 A replay of the call will be available from May 8, 2014, 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 May 8, 2014 until May 7, 2015. Additional information relating to Lifeco, including the most recent interim unaudited condensed 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 2014 2013 2013* Premiums and deposits: Life insurance, guaranteed annuities and insured $ health products 5,267 $ 5,850 $ 4,931 Self-funded premium equivalents (Administrative services only contracts) 658 649 644 Segregated funds deposits: Individual products 2,946 2,757 1,768 Group products 3,364 1,809 2,006 Proprietary mutual funds and institutional deposits 11,662 11,491 7,642 Total premiums and deposits 23,897 22,556 16,991 Fee and other income 1,059 1,001 798 Paid or credited to policyholders(1) 7,489 5,647 5,560 Operating earnings - common shareholders 587 491 517 Net earnings - common shareholders 587 717 517 Per common share Operating earnings $ 0.587 $ 0.491 $ 0.544 Basic earnings 0.587 0.717 0.544 Dividends paid 0.3075 0.3075 0.3075 Book value 16.05 15.33 12.87 Return on common shareholders' equity: Operating earnings 14.5% 15.0% 16.8% Net earnings 16.0% 16.6% 15.7% Total assets $ 342,860 $ 325,905 $ 261,954 Proprietary mutual funds and institutional net assets 199,921 185,243 145,838 Total assets under management 542,781 511,148 407,792 Other assets under administration 263,113 247,139 174,487 Total assets under administration $ 805,894 $ 758,287 $ 582,279 Total equity $ 20,964 $ 19,999 $ 17,268 The Company uses operating earnings, a non-International Financial Reporting Standards financial measure, which excludes the impact of certain litigation provisions described in note 33 to the Company's December 31, 2013 consolidated financial statements. (1) Paid or credited to policyholders includes the impact of changes in fair values of assets supporting insurance and investment contract liabilities. * Certain comparative figures have been reclassified for presentation adjustments. CONSOLIDATED STATEMENTS OF EARNINGS(unaudited) (in Canadian $ millions except per share amounts) For the three months ended March 31 December 31 March 31 2014 2013 2013 Income Premium income Gross premiums $ 6,111 $ 6,739 $ 5,670 written Ceded premiums (844) (889) (739) Total net premiums 5,267 5,850 4,931 Net investment income Regular net 1,489 1,430 1,362 investment income Changes in fair value 2,122 (225) 465 through profit or loss Total net investment 3,611 1,205 1,827 income Fee and other income 1,059 1,001 798 9,937 8,056 7,556 Benefits and expenses Policyholder benefits Insurance and investment contracts Gross 4,801 4,835 5,027 Ceded (475) (597) (374) Total net policyholder 4,326 4,238 4,653 benefits Policyholder dividends 388 312 375 and experience refunds Changes in insurance 2,775 1,097 532 and investment contract liabilities Total paid or credited 7,489 5,647 5,560 to policyholders Commissions 505 531 432 Operating and 933 929 696 administrative expenses Premium taxes 85 83 74 Financing charges 76 76 67 Amortization of finite 33 33 27 life intangible assets Restructuring and 5 27 4 acquisition expenses Earnings before income 811 730 696 taxes Income taxes 173 128 128 Net earnings before 638 602 568 non-controlling interests Attributable to 22 (148) 18 non-controlling interests Net earnings 616 750 550 Preferred share dividends 29 33 33 Net earnings - common $ 587 $ 717 $ 517 shareholders Earnings per common share Basic $ 0.587 $ 0.717 $ 0.544 Diluted $ 0.587 $ 0.716 $ 0.544 CONSOLIDATED BALANCE SHEETS (unaudited) (in Canadian $ millions) March 31 December 31 2014 2013 Assets Cash and cash equivalents $ 3,196 $ 2,791 Bonds 95,368 89,914 Mortgage loans 19,882 19,063 Stocks 7,843 8,554 Investment properties 4,481 4,288 Loans to policyholders 7,552 7,332 138,322 131,942 Funds held by ceding insurers 11,322 10,832 Goodwill 5,831 5,812 Intangible assets 3,548 3,456 Derivative financial instruments 547 593 Owner occupied properties 601 590 Fixed assets 213 211 Reinsurance assets 5,444 5,070 Premiums in course of collection, 3,526 3,068 accounts and interest receivable Other assets 2,398 2,220 Current income taxes 193 165 Deferred tax assets 1,225 1,167 Investments on account of segregated 169,690 160,779 fund policyholders Total assets $ 342,860 $ 325,905 Liabilities Insurance contract liabilities $ 137,675 $ 131,174 Investment contract liabilities 851 889 Debentures and other debt 5,778 5,740 instruments Funds held under reinsurance 297 270 contracts Derivative financial instruments 952 744 Accounts payable 1,788 1,583 Other liabilities 3,035 2,807 Current income taxes 825 981 Deferred tax liabilities 842 776 Capital trust debentures 163 163 Investment and insurance contracts 169,690 160,779 on account of segregated fund policyholders Total liabilities 321,896 305,906 Equity Non-controlling interests Participating account surplus in 2,390 2,354 subsidiaries Non-controlling interests in 220 8 subsidiaries Shareholders' equity Share capital Preferred shares 2,314 2,314 Common shares 7,115 7,112 Accumulated surplus 8,328 8,067 Accumulated other comprehensive 514 87 income Contributed surplus 83 57 Total equity 20,964 19,999 Total liabilities and equity $ 342,860 $ 325,905 Segmented Information (unaudited) Consolidated Net Earnings For the three months ended March 31, 2014 United Lifeco Canada States Europe Corporate Total Income: Premium $ 2,613 $ 812 $ 1,842 $ - $ 5,267 income Net investment income Regular net 638 357 498 1,489 investment (4) income Changes in 947 323 852 - 2,122 fair value through profit or loss Total net 1,585 680 1,350 (4) 3,611 investment income Fee and other 344 419 296 - 1,059 income Total income 4,542 1,911 3,488 (4) 9,937 Benefits and expenses: Paid or 3,365 1,298 2,826 - 7,489 credited to policyholders Other* 715 494 310 4 1,523 Financing 29 35 12 - 76 charges Amortization 13 15 5 - 33 of finite life intangible assets Restructuring - - 5 - 5 and acquisition expenses Earnings before 420 69 330 811 income taxes (8) Income taxes 105 23 47 (2) 173 Net earnings 315 46 283 (6) 638 before non-controlling interests Non-controlling 22 1 (1) - 22 interests Net earnings 293 45 284 (6) 616 Preferred share 23 - 6 - 29 dividends Net earnings 270 45 278 (6) 587 before capital allocation Impact of 24 (4) (19) (1) - capital allocation Net earnings - $ 294 $ 41 $ 259 $ (7) $ 587 common shareholders * Includes commissions, operating and administrative expenses and premium taxes. For the three months ended March 31, 2013 United Lifeco Canada States Europe Corporate Total Income: Premium $ 2,515 $ 629 $ 1,787 $ - $ 4,931 income Net investment income Regular net 619 323 427 (7) 1,362 investment income Changes in 56 (6) 415 - 465 fair value through profit or loss Total net 675 317 842 1,827 investment (7) income Fee and other 309 337 152 - 798 income Total income 3,499 1,283 2,781 (7) 7,556 Benefits and expenses: Paid or 2,456 760 2,344 - 5,560 credited to policyholders Other* 653 378 168 3 1,202 Financing 29 34 4 - 67 charges Amortization 12 13 2 - 27 of finite life intangible assets Restructuring - - 4 - 4 and acquisition expenses Earnings before 349 98 259 696 income taxes (10) Income taxes 67 20 43 128 (2) Net earnings 282 78 216 (8) 568 before non-controlling interests Non-controlling 15 3 - - 18 interests Net earnings 267 75 216 550 (8) Preferred share 27 - 6 - 33 dividends Net earnings 240 75 210 517 before capital (8) allocation Impact of 25 (4) (3) - capital (18) allocation Net earnings - $ 265 $ 71 $ 192 $ (11) $ 517 common shareholders * Includes commissions, operating and administrative expenses and premium taxes. SOURCE Great-West Lifeco Inc. Marlene Klassen, APR Assistant Vice-President, Communication Services 204-946-7705 To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/May2014/08/c6577.html CO: Great-West Lifeco Inc. ST: Manitoba NI: INS ERN
Great-West Lifeco reports first quarter 2014 results
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