A.M. Best Affirms Ratings of Great-West Lifeco Inc. and Its Subsidiaries

  A.M. Best Affirms Ratings of Great-West Lifeco Inc. and Its Subsidiaries

Business Wire

OLDWICK, N.J. -- July 3, 2014

A.M. Best has affirmed the financial strength rating of A+ (Superior) and the
issuer credit ratings (ICR) of “aa” of The Great-West Life Assurance Company
(Winnipeg, Manitoba) and its affiliates, London Life Insurance Company
(London, Ontario), The Canada Life Assurance Company (CLAC) (Toronto,
Ontario), Great-West Life & Annuity Insurance Company (GWL&A) (Greenwood
Village, CO) and Great-West Life & Annuity Insurance Company of New York
(White Plains, NY) (together referred to as the Great-West Life Group).
Concurrently, A.M. Best has affirmed the ICR of “a” and the existing debt
ratings of Great-West Lifeco Inc. (Lifeco) (Winnipeg, Manitoba). The outlook
for all ratings is stable. (See link below for a detailed listing of the
companies and ratings.)

The rating affirmations reflect Great-West Life Group’s highly diversified
earnings profile by product and geography, strong market position in its core
business lines, solid regulatory capital levels and the financial strength and
support of its ultimate majority shareholder, Power Corporation of Canada.
Additionally, the Great-West Life Group has continued to achieve significant
and sustainable scale advantages in its core business lines in Canada and the
United States through strategic acquisitions. Given Great-West Life Group’s
diversified insurance, reinsurance and financial services operations, along
with its strong enterprise risk management capabilities, the impact it has
experienced from volatile market conditions and low interest rates has been
relatively modest.

The ratings also consider Lifeco’s adjusted financial leverage position, which
continues to remain within its targeted range. The organization has
consistently generated significant cash flows from operations and has
historically demonstrated its ability to manage its financial leverage and
interest coverage within A.M. Best’s expectations for its current ratings.

Moreover, A.M. Best recognizes Great-West Life Group’s consolidated position
as a market leader in the Canadian individual and group insurance lines, with
superior market positions in the wealth accumulation and protection segments,
stable earnings contributions from its U.S. operations as it grows its
retirement savings business and further diversification derived from the
European business segments, which includes the recent acquisition of Irish
Life Assurance plc. In addition, Lifeco maintains an excellent liquidity
posture supported by high quality investments, credit facilities and stable
sources of earnings.

The Great-West Life Group’s leading market position in Canada has remained
strong over the years, while its conservative pricing discipline and low
expense structure enable it to generate favorable operating results. Moreover,
the Canadian distribution systems of Lifeco and its operating companies
represent the largest in Canada and serve as a significant competitive

In the United States, GWL&A is a well-established player with considerable
strength in the public and non-profit financial services sector and provides a
stable source of earnings for Lifeco. Once the recently announced acquisition
of J.P. Morgan Retirement Services’ large-market record keeping business
closes, GWL&A will have a number two ranking among defined contribution
providers based upon the number of participants. CLAC, which operates in
Canada as well as Europe, is among the top 20 life insurers in the United
Kingdom, with an industry-leading 30% market share in the group life market.

The economic events experienced in recent years have pressured Great-West Life
Group's overall operating performance, although the group’s life insurance
entities have not experienced the same level of earnings sensitivity from
equity market volatility as its competitors. In addition, A.M. Best expects
that the group will continue to face challenges associated with growth in its
core U.S. business segments due to the highly competitive environment, as well
as continued losses from Putnam Investments. As the global economy and
regulatory environment evolves, A.M. Best expects any potential growth
strategies will require a more stringent focus and a longer time horizon to
record meaningful growth over the medium to longer term.

A.M. Best believes that upward rating movement for the Great-West Life Group
is unlikely over the near to medium term. Key factors that could result in
negative rating actions include a significant and sustained decline in the
organization’s risk-adjusted capitalization, operating performance that does
not meet A.M. Best’s expectations over a sustained period and/or financial
leverage or interest coverage that falls materially short of the guidelines
for its current rating level.

For a complete listing of Great-West Lifeco Inc. and its subsidiaries’
financial strength, issuer credit and debt ratings, please visit

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at

A.M. Best Company is the world's oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.

       Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best
Edward Kohlberg
Senior Financial Analyst
(908) 439-2200, ext. 5664
Thomas Rosendale
Assistant Vice President
(908) 439-2200, ext. 5201
Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
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