Canada NewsWire
WINNIPEG, May 4, 2017
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 4, 2017 /CNW/ - Great-West Lifeco Inc. (Lifeco or the Company) today announced net earnings attributable to common shareholders of $591 million or $0.598 per common share compared to $620 million or $0.625 per common share for the same quarter last year. Included in Lifeco's net earnings for the first quarter of 2017 were restructuring costs of $28 million, primarily related to the Company's health and retail businesses in Ireland and the completion of integration activities for Empower Retirement. Excluding these costs, net earnings for the first quarter of 2017 were $619 million or $0.627 per common share and were comparable to the same quarter last year as good business performance was offset by currency headwinds, which impacted earnings by $44 million, primarily due to the decline in the British pound.
"First quarter earnings reflect strong sales in our Canadian and European businesses and the benefits of cost reduction initiatives in the U.S.," said Paul Mahon, President and Chief Executive Officer. "While underlying business fundamentals were positive in the quarter, earnings were impacted by currency headwinds and restructuring charges related to business integration activities and right-sizing of our cost base. We remain focused on advancing our business strategies by balancing efficiency gains with necessary investments in future growth across the Company."
Consolidated assets under administration at March 31, 2017 were approximately $1.3 trillion, an increase of $47.4 billion from December 31, 2016.
Highlights – In Quarter
Lifeco reports premiums and deposits growth of 12%
Capital position remains strong
$1 billion hybrid subordinated debt redemption announced
SEGMENTED OPERATING RESULTS
For reporting purposes, Lifeco's consolidated operating results are grouped into four reportable segments - Canada, United States, Europe and Lifeco Corporate - reflecting geographic lines as well as the management and corporate structure of the companies. For more information, please refer to the Company's 2017 Q1 MD&A.
CANADA
UNITED STATES
EUROPE
QUARTERLY DIVIDENDS
At its meeting today, the Board of Directors approved a quarterly dividend of $0.3670 per share on the common shares of Lifeco payable June 30, 2017 to shareholders of record at the close of business June 2, 2017.
In addition, the Directors approved quarterly dividends on Lifeco's preferred shares, as follows:
First Preferred Shares |
Record Date |
Payment Date |
Amount, per share |
Series F |
June 2, 2017 |
June 30, 2017 |
$0.36875 |
Series G |
June 2, 2017 |
June 30, 2017 |
$0.3250 |
Series H |
June 2, 2017 |
June 30, 2017 |
$0.30313 |
Series I |
June 2, 2017 |
June 30, 2017 |
$0.28125 |
Series L |
June 2, 2017 |
June 30, 2017 |
$0.353125 |
Series M |
June 2, 2017 |
June 30, 2017 |
$0.3625 |
Series N |
June 2, 2017 |
June 30, 2017 |
$0.1360 |
Series O |
June 2, 2017 |
June 30, 2017 |
$0.110945 |
Series P |
June 2, 2017 |
June 30, 2017 |
$0.3375 |
Series Q |
June 2, 2017 |
June 30, 2017 |
$0.321875 |
Series R |
June 2, 2017 |
June 30, 2017 |
$0.3000 |
Series S |
June 2, 2017 |
June 30, 2017 |
$0.328125 |
For purposes of the Income Tax Act (Canada), and any similar provincial legislation, the dividends referred to above are eligible dividends.
Selected financial information is attached.
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. Lifeco has operations in Canada, the United States, Europe and Asia through 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). Lifeco and its companies have approximately $1.3 trillion in consolidated assets under administration and are members of the Power Financial Corporation group of companies. To learn more, visit www.greatwestlifeco.com.
Basis of presentation
The consolidated financial statements of Lifeco have been prepared in accordance with International Financial Reporting Standards (IFRS) and are the basis for the figures presented in this release, unless otherwise noted.
Cautionary note regarding Forward-Looking Information
This release may contain forward-looking statements. 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 other similar expressions or negative versions thereof. These statements may include, without limitation, statements about the Company's operations, business, financial condition, expected 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. Forward-looking statements are based on expectations, forecasts, predictions, projections and conclusions 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 the reader is cautioned that 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 customer behaviour, the Company's reputation, market prices for products provided, sales levels, premium income, fee income, expense levels, mortality experience, morbidity experience, policy lapse rates, reinsurance arrangements, liquidity requirements, capital requirements, credit ratings, taxes, inflation, interest and foreign exchange rates, investment values, hedging activities, global equity and capital markets, business competition and other general economic, political and market factors in North America and internationally. 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 customer responses to new products, impairments of goodwill and other intangible assets, the Company's ability to execute strategic plans and changes to strategic plans, technological changes, breaches or failure of information systems and security (including cyber attacks), payments required under investment products, 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, catastrophic events, continuity and availability of personnel and third party service providers, the Company's ability to complete strategic transactions and integrate acquisitions and unplanned material changes to the Company's facilities, customer and employee relations or credit arrangements. 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 2016 Annual 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, uncertainties and potential events 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", "assets under management", "assets under administration" and other similar expressions. Non-IFRS financial measures are used to provide management and investors with additional measures of performance to help assess results where no comparable IFRS measure exists. 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. Refer to the appropriate reconciliations of these non-IFRS financial measures to measures prescribed by IFRS.
First Quarter Conference Call
Lifeco's first quarter conference call and audio webcast will be held May 4, 2017 at 3:30 p.m. (ET). The call and webcast can be accessed through www.greatwestlifeco.com or by phone at:
A replay of the call will be available from May 4, 2017 to May 11, 2017, and can be accessed by calling 1-800-408-3053 or 905-694-9451 in Toronto (passcode: 7905788#). The archived webcast will be available on www.greatwestlifeco.com from May 4, 2017 to May 3, 2018.
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 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 | ||||||||
March 31 |
December 31 2016 |
March 31 | ||||||
Premiums and deposits: |
||||||||
Net premium income (Life insurance, |
||||||||
guaranteed annuities and insured |
||||||||
health products) |
$ |
9,365 |
$ |
8,905 |
$ |
7,015 | ||
Policyholder deposits (segregated funds): |
||||||||
Individual products |
3,897 |
3,399 |
3,689 | |||||
Group products |
2,185 |
1,875 |
2,238 | |||||
Self-funded premium equivalents |
||||||||
(Administrative services only |
||||||||
contracts)(1) |
716 |
691 |
698 | |||||
Proprietary mutual funds and institutional |
||||||||
deposits(1) |
17,386 |
15,169 |
16,354 | |||||
Total premiums and deposits(1) |
33,549 |
30,039 |
29,994 | |||||
Fee and other income |
1,305 |
1,345 |
1,254 | |||||
Net policyholder benefits, dividends and |
||||||||
experience refunds |
8,543 |
7,841 |
6,539 | |||||
Earnings |
||||||||
Net earnings - common shareholders |
$ |
591 |
$ |
676 |
$ |
620 | ||
Per common share |
||||||||
Basic earnings |
0.598 |
0.686 |
0.625 | |||||
Dividends paid |
0.367 |
0.346 |
0.346 | |||||
Book value(2) |
19.99 |
19.76 |
19.28 | |||||
Return on common shareholders' equity(3) |
||||||||
Net earnings |
13.6% |
13.8% |
14.0% | |||||
Total assets |
$ |
405,632 |
$ |
399,912 |
$ |
390,245 | ||
Proprietary mutual funds and institutional |
||||||||
net assets(4) |
270,121 |
259,215 |
237,984 | |||||
Total assets under management(4) |
675,753 |
659,127 |
628,229 | |||||
Other assets under administration(5) |
620,064 |
589,291 |
558,290 | |||||
Total assets under administration |
$ |
1,295,817 |
$ |
1,248,418 |
$ |
1,186,519 | ||
Total equity |
$ |
25,372 |
$ |
25,008 |
$ |
24,531 | ||
(1) |
In addition to premiums and deposits reported in the financial statements, the Company includes premium equivalents on self-funded group insurance administrative services only (ASO) contracts and deposits on proprietary mutual funds and institutional accounts to calculate total premiums and deposits (a non-IFRS financial measure). This measure provides useful information as it is an indicator of top line growth. |
(2) |
Certain comparative figures have been adjusted as described in note 33 to the Company's December 31, 2016 financial statements. |
(3) |
Return on common shareholders' equity is detailed within the "Capital Allocation Methodology" section of the Company's March 31, 2017 Management's Discussion and Analysis. |
(4) |
Total assets under management (a non-IFRS financial measure) provides an indicator of the size and volume of the overall business of the Company. Services provided in respect of assets under management include the selection of investments, the provision of investment advice and discretionary portfolio management on behalf of clients. This includes internally and externally managed funds where the Company has oversight over the investment policies. |
(5) |
Other assets under administration (a non-IFRS financial measure) includes assets where the Company only provides administration services for which the Company earns fee and other income. These assets are beneficially owned by clients and the Company does not direct the investing activities. Services provided relating to assets under administration includes recordkeeping, safekeeping, collecting investment income, settling of transactions or other administrative services. Administrative services are an important aspect of the overall business of the Company and should be considered when comparing volumes, size and trends. |
CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) | ||||||||
(in Canadian $ millions except per share amounts) | ||||||||
For the three months ended | ||||||||
March 31 |
December 31 |
March 31 | ||||||
2017 |
2016 |
2016 | ||||||
Income |
||||||||
Premium income |
||||||||
Gross premiums written |
$ |
10,484 |
$ |
9,989 |
$ |
7,926 | ||
Ceded premiums |
(1,119) |
(1,084) |
(911) | |||||
Total net premiums |
9,365 |
8,905 |
7,015 | |||||
Net investment income |
||||||||
Regular net investment income |
1,469 |
1,507 |
1,673 | |||||
Changes in fair value through profit or loss |
735 |
(3,943) |
2,410 | |||||
Total net investment income (loss) |
2,204 |
(2,436) |
4,083 | |||||
Fee and other income |
1,305 |
1,345 |
1,254 | |||||
12,874 |
7,814 |
12,352 | ||||||
Benefits and expenses |
||||||||
Policyholder benefits |
||||||||
Gross |
8,595 |
8,078 |
6,642 | |||||
Ceded |
(610) |
(585) |
(472) | |||||
Total net policyholder benefits |
7,985 |
7,493 |
6,170 | |||||
Policyholder dividends and experience |
||||||||
refunds |
558 |
348 |
369 | |||||
Changes in insurance and investment |
||||||||
contract liabilities |
1,319 |
(3,468) |
3,139 | |||||
Total paid or credited to policyholders |
9,862 |
4,373 |
9,678 | |||||
Commissions |
753 |
853 |
566 | |||||
Operating and administrative expenses |
1,233 |
1,250 |
1,208 | |||||
Premium taxes |
123 |
112 |
92 | |||||
Financing charges |
76 |
75 |
78 | |||||
Amortization of finite life intangible assets |
45 |
44 |
46 | |||||
Restructuring and acquisition expenses |
37 |
35 |
4 | |||||
Earnings before income taxes |
745 |
1,072 |
680 | |||||
Income taxes |
96 |
188 |
24 | |||||
Net earnings before non-controlling |
||||||||
interests |
649 |
884 |
656 | |||||
Attributable to non-controlling interests |
27 |
177 |
5 | |||||
Net earnings |
622 |
707 |
651 | |||||
Preferred share dividends |
31 |
31 |
31 | |||||
Net earnings - common shareholders |
$ |
591 |
$ |
676 |
$ |
620 | ||
Earnings per common share |
||||||||
Basic |
$ |
0.598 |
$ |
0.686 |
$ |
0.625 | ||
Diluted |
$ |
0.597 |
$ |
0.685 |
$ |
0.623 |
CONSOLIDATED BALANCE SHEETS (unaudited) | ||||||
(in Canadian $ millions) | ||||||
March 31 |
December 31 | |||||
2017 |
2016 | |||||
Assets |
||||||
Cash and cash equivalents |
$ |
3,042 |
$ |
3,259 | ||
Bonds |
117,841 |
116,773 | ||||
Mortgage loans |
22,027 |
21,651 | ||||
Stocks |
8,677 |
8,665 | ||||
Investment properties |
4,421 |
4,340 | ||||
Loans to policyholders |
8,436 |
8,467 | ||||
164,444 |
163,155 | |||||
Funds held by ceding insurers |
10,496 |
10,781 | ||||
Goodwill |
5,976 |
5,977 | ||||
Intangible assets |
3,952 |
3,972 | ||||
Derivative financial instruments |
476 |
528 | ||||
Owner occupied properties |
648 |
649 | ||||
Fixed assets |
298 |
304 | ||||
Other assets |
2,384 |
2,263 | ||||
Premiums in course of collection, accounts and interest receivable |
4,776 |
4,311 | ||||
Reinsurance assets |
5,579 |
5,627 | ||||
Current income taxes |
103 |
97 | ||||
Deferred tax assets |
1,834 |
1,845 | ||||
Investments on account of segregated fund policyholders |
204,666 |
200,403 | ||||
Total assets |
$ |
405,632 |
$ |
399,912 | ||
Liabilities |
||||||
Insurance contract liabilities |
$ |
157,319 |
$ |
155,940 | ||
Investment contract liabilities |
2,000 |
2,009 | ||||
Debentures and other debt instruments |
5,688 |
5,980 | ||||
Capital trust securities |
161 |
161 | ||||
Funds held under reinsurance contracts |
326 |
320 | ||||
Derivative financial instruments |
1,880 |
2,012 | ||||
Accounts payable |
2,375 |
2,049 | ||||
Other liabilities |
3,620 |
3,836 | ||||
Current income taxes |
573 |
549 | ||||
Deferred tax liabilities |
1,652 |
1,645 | ||||
Investment and insurance contracts on account of segregated fund policyholders |
204,666 |
200,403 | ||||
Total liabilities |
380,260 |
374,904 | ||||
Equity |
||||||
Non-controlling interests |
||||||
Participating account surplus in subsidiaries |
2,810 |
2,782 | ||||
Non-controlling interests in subsidiaries |
263 |
224 | ||||
Shareholders' equity |
||||||
Share capital |
||||||
Preferred shares |
2,514 |
2,514 | ||||
Common shares |
7,254 |
7,130 | ||||
Accumulated surplus |
11,674 |
11,465 | ||||
Accumulated other comprehensive income |
744 |
746 | ||||
Contributed surplus |
113 |
147 | ||||
Total equity |
25,372 |
25,008 | ||||
Total liabilities and equity |
$ |
405,632 |
$ |
399,912 |
Segmented Information (unaudited) | ||||||||||||
Consolidated Net Earnings | ||||||||||||
For the three months ended March 31, 2017 | ||||||||||||
Canada |
United States |
Europe |
Lifeco Corporate |
Total | ||||||||
Income |
||||||||||||
Total net premiums |
$ |
3,295 |
$ |
1,229 |
$ |
4,841 |
$ |
— |
$ |
9,365 | ||
Net investment income |
||||||||||||
Regular net investment income |
613 |
455 |
402 |
(1) |
1,469 | |||||||
Changes in fair value through profit or loss |
375 |
102 |
258 |
— |
735 | |||||||
Total net investment income (loss) |
988 |
557 |
660 |
(1) |
2,204 | |||||||
Fee and other income |
387 |
594 |
324 |
— |
1,305 | |||||||
4,670 |
2,380 |
5,825 |
(1) |
12,874 | ||||||||
Benefits and expenses |
||||||||||||
Paid or credited to policyholders |
3,245 |
1,552 |
5,065 |
— |
9,862 | |||||||
Other (1) |
1,028 |
686 |
386 |
9 |
2,109 | |||||||
Financing charges |
30 |
34 |
12 |
— |
76 | |||||||
Amortization of finite life intangible assets |
17 |
21 |
7 |
— |
45 | |||||||
Restructuring and acquisition expenses |
— |
17 |
20 |
— |
37 | |||||||
Earnings (loss) before income taxes |
350 |
70 |
335 |
(10) |
745 | |||||||
Income taxes (recovery) |
65 |
11 |
23 |
(3) |
96 | |||||||
Net earnings (loss) before non-controlling |
||||||||||||
interests |
285 |
59 |
312 |
(7) |
649 | |||||||
Non-controlling interests |
29 |
(1) |
(1) |
— |
27 | |||||||
Net earnings (loss) |
256 |
60 |
313 |
(7) |
622 | |||||||
Preferred share dividends |
26 |
— |
5 |
— |
31 | |||||||
Net earnings (loss) before capital allocation |
230 |
60 |
308 |
(7) |
591 | |||||||
Impact of capital allocation |
25 |
(4) |
(19) |
(2) |
— | |||||||
Net earnings (loss) - common shareholders |
$ |
255 |
$ |
56 |
$ |
289 |
$ |
(9) |
$ |
591 | ||
(1) Includes commissions, operating and administrative expenses and premium taxes. | ||||||||||||
For the three months ended March 31, 2016 | ||||||||||||
Canada |
United States |
Europe |
Lifeco Corporate |
Total | ||||||||
Income |
||||||||||||
Total net premiums |
$ |
2,861 |
$ |
1,380 |
$ |
2,774 |
$ |
— |
$ |
7,015 | ||
Net investment income |
||||||||||||
Regular net investment income |
736 |
454 |
483 |
— |
1,673 | |||||||
Changes in fair value through profit or loss |
537 |
481 |
1,392 |
— |
2,410 | |||||||
Total net investment income |
1,273 |
935 |
1,875 |
— |
4,083 | |||||||
Fee and other income |
362 |
571 |
321 |
— |
1,254 | |||||||
4,496 |
2,886 |
4,970 |
— |
12,352 | ||||||||
Benefits and expenses |
||||||||||||
Paid or credited to policyholders |
3,301 |
2,112 |
4,265 |
— |
9,678 | |||||||
Other (1) |
817 |
686 |
359 |
4 |
1,866 | |||||||
Financing charges |
29 |
37 |
12 |
— |
78 | |||||||
Amortization of finite life intangible assets |
16 |
22 |
8 |
— |
46 | |||||||
Restructuring and acquisition expenses |
— |
3 |
1 |
— |
4 | |||||||
Earnings (loss) before income taxes |
333 |
26 |
325 |
(4) |
680 | |||||||
Income taxes (recovery) |
51 |
(40) |
13 |
— |
24 | |||||||
Net earnings (loss) before non-controlling |
||||||||||||
interests |
282 |
66 |
312 |
(4) |
656 | |||||||
Non-controlling interests |
5 |
1 |
(1) |
— |
5 | |||||||
Net earnings (loss) |
277 |
65 |
313 |
(4) |
651 | |||||||
Preferred share dividends |
26 |
— |
5 |
— |
31 | |||||||
Net earnings (loss) before capital allocation |
251 |
65 |
308 |
(4) |
620 | |||||||
Impact of capital allocation |
25 |
(2) |
(21) |
(2) |
— | |||||||
Net earnings (loss) - common shareholders |
$ |
276 |
$ |
63 |
$ |
287 |
$ |
(6) |
$ |
620 | ||
(1) Includes commissions, operating and administrative expenses and premium taxes. |
SOURCE Great-West Lifeco Inc.
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