Winnipeg, January 31, 2001 ... Great-West Lifeco has reported
net income attributable to common shareholders was $643 million or $1.72
per share, an increase of 20% over 1999. Net income attributable to common
shareholders before amortization of goodwill was $708 million. The return
on common shareholders' equity was 18.6% for the twelve months ended December
31, 2000.
For the fourth quarter, net income attributable to common shareholders
was $174 million or $0.47 per share, compared with $143 million or $0.38
per share in 1999, an increase of 24% per share.
Highlights
- Total premiums and deposits were up 35% over 1999. Significant increases
in both sales of investment-related products and self-funded premium
equivalents (ASO contracts) were major contributors to this result.
- Earnings per common share, at $1.72 for the full year 2000, were up
20% from comparable 1999 levels.
- Return on common shareholders' equity was 18.6% for the twelve months
ended December 31, 2000.
- Quarterly dividends were increased 1.5¢ to 18.5¢ per common
share for March 31, 2001. Dividends paid on common shares in 2000 were
23% higher than a year ago.
- Total assets under administration increased 7% to $92.9 billion from
a year ago.
Great-West Life
At December 31, 2000, Great-West Life conveyed ownership of its U.S. subsidiary,
Great-West Life & Annuity Insurance Company (GWL&A), to a newly-formed
subsidiary of Great-West Lifeco. The reorganization completed a process
started in the early 1980s of establishing separate and distinct operations
in Canada and the U.S., to allow a better focus on the respective markets.
Results for the year 2000 are reported in terms of Lifeco's two main operating
subsidiaries, Great-West Life and GWL&A.
Great-West Life
(Canadian Operations)
Developments
- Great-West, London Life and Investors Group, announced an agreement
with the Canadian Imperial Bank of Commerce, under which the three companies
will distribute banking and brokerage services, through their respective
consultant and advisor networks nationwide.
- Great-West and London Life's Group Retirement Services premiered its
new online transactional service for plan sponsors, members and advisors.
The new Web site is an easy-to-navigate, real-time transactional site
providing plan sponsors and members with a wide selection of tools to
manage their retirement plans.
- Great-West and London Life launched Quadrus Investment Services, a
mutual fund dealer offering 40 exclusive mutual funds under Quadrus
Group of Funds. Quadrus has more than 2,000 licensed investment representatives.
- In January, Great-West agreed to participate in an offer by Investors
Group to acquire 100 per cent of the outstanding shares of Mackenzie
Financial Corporation. Great-West agreed to invest $230 million to acquire
9,200,000 treasury common shares of Investors Group.
Results
Great-West Life reported strong earnings growth in 2000, with net income
attributable to common shareholders of $257 million, up 20% from $215
million in 1999.
"2000 saw us strengthen our position in our key business segments,
with particularly strong performance from our group insurance and wealth
accumulation businesses," explains Raymond L. McFeetors, President
& Chief Executive Officer, Great-West Life. "Our success drives
out of our core strengths - low unit cost, efficiency in producing financial
services products, and our very strong advice distribution channels."
Total premium income and deposits increased 26% for 2000 compared to
a year ago. Premiums from guaranteed products increased 15%, mainly due
to increases in reinsurance premiums. For fee-based products, self-funded
premium equivalents (ASO contracts) grew 6%, and individual segregated
funds deposits increased 35%, while group segregated funds deposits more
than doubled as a result of large case sales.
Fee income increased 24% in 2000 compared to 1999, mostly due to the
increase in segregated funds assets under administration.
The net increase in income in 2000 reflected growth in fee income, strong
investment performance and favourable morbidity experience, mitigated
by a deterioration in reinsurance margins.
Shareholders' income in 2000 also reflected a reduction in provisions
for income taxes stemming from federal government announcements in 2000,
offset by a provision related to reducing the Company's exposure in Taiwan.
Total assets under administration increased 8% to $51.8 billion at December
31, 2000 when compared to a year ago. The growth occurred primarily in
segregated funds assets, which increased 19% to $18.7 billion.
Great-West Life & Annuity
(United States Operations)
Developments
- GWL&A's subsidiary, One Health Plan, reduced the contracted rates
on its hospital and physician networks by 8% nationally. As well, GWL&A
introduced 3-tier pricing on its prescription drug programs, offering
customers more pricing options.
- More than 54,000 health plan members have enrolled in One Health Plan's
disease management program since its introduction in February 2000.
Early results are showing positive lifestyle changes among this population.
- GWL&A introduced the first phase of its Internet-based life &
health enrollment program. The new program makes it possible for customers
to enroll quickly and efficiently in the Company's life and health plans.
- The State of Virginia Retirement System selected BenefitsCorp as record
keeper and communicator for its four defined contribution plans. These
plans will add an estimated 22,000 participants to the Company's participant
base in early 2001. Virginia is the thirteenth state to select BenefitsCorp.
- BenefitsCorp was also selected as record keeper for the State of Oklahoma,
a match plan with 31,000 participants, and for a second case in New
York, Doctors Annuity Council, a plan with 2,000 participants.
Results
"The fourth quarter concluded a very strong year for both our operating
Divisions," says William T. McCallum, President & Chief Executive
Officer, Great-West Life & Annuity. "In quarter, our Public Non-Profit
Pension division saw its customer base break through the 1 million mark
while FASCorp approached 2 million customers. Our Employee Benefits Division
continued its strong momentum, selling nearly 3,300 cases, with 401(k)
sales up 20% over 1999 and life and health revenue up more than 60% to
nearly $7 billion - looked at another way, we added about 1 million life
and health customers in 2000."
Total premium income and deposits increased 42% for 2000 compared to
a year ago. Premiums from guaranteed products increased 21%, while self-funded
premium equivalents (ASO contracts) grew 74%, reflecting internal growth
and the impact of recent business acquisitions. Individual segregated
funds deposits were up 55% from last year's level and group segregated
funds deposits increased by 13%.
The increase in fee income for 2000 reflects the growth in both segregated
funds deposits and ASO business.
The positive earnings result was due to a combination of increased fee
income, strong investment performance and favourable morbidity experience,
offset somewhat by unfavourable group mortality experience.
Total assets under administration increased 5% to $41.1 billion at December
31, 2000 when compared to a year ago.
Quarterly Dividends
At its meeting today, the Board of Directors approved a quarterly dividend
of $0.185 per share on the common shares of the Company payable March
30, 2001 to shareholders of record at the close of business March 16,
2001.
In addition, the Directors approved quarterly dividends on the preferred
shares of the Company:
- Series B First Preferred Shares $0.465625 per share;
- Series C First Preferred Shares $0.484375 per share; and
- Series D First Preferred Shares $0.293750 per share
payable March 31, 2001 to shareholders of record at the close of business
March 16, 2001
- Class A, Series 1 Preferred Shares $0.3125 per share
payable April 30, 2001 to shareholders of record at the close of business
April 16, 2001.
Financial highlights, a summary of consolidated operations and a consolidated
balance sheet for 2000 are attached.
Great-West Lifeco
Great-West Lifeco Inc. is a financial services holding company with interests
in the life insurance, health insurance, investment and retirement savings,
reinsurance and specialty general insurance businesses, primarily in Canada
and the United States.
Lifeco's subsidiaries, The Great-West Life Assurance Company and
London Life Insurance Company in Canada and Great-West Life & Annuity
Insurance Company in the United States, serve the financial security needs
of more than 13 million people. Lifeco and its companies have $93 billion
in assets under management. Lifeco is a member of the Power Financial
Corporation group of companies.
GREAT-WEST LIFECO INC.
FINANCIAL HIGHLIGHTS (
(in millions of dollars except per common share amounts)
2000 1999
------------------------ ----------------------- %
Canada U.S Total Canada U.S Total Change
For the Year
Premiums:
Life insurance,
guaranteed
annuities
and insured
health products $ 3,748 $3,350 $7,098 $3,690 $2,761 $6,451 10%
Reinsurance
and property
and casualty 2,878 - 2,878 2,075 - 2,075 39%
Self-funded premium
equivalents
(ASO contracts)(1) 1,102 7,695 8,797 1,039 4,425 5,464 61%
Segregated funds
deposits: (1)
Individual
products 1,817 959 2,776 1,344 618 1,962 41%
Group products 1,673 3,652 5,325 769 3,219 3,988 34%
----------------------- ---------------------- ----
Total premiums and
deposits $ 11,218 $15,656 $26,874 $ 8,917 $11,023 $19,940 35%
----------------------- ---------------------- ----
Fee and other income 346 1,295 1,641 278 944 1,222 34%
Paid or credited
to policyholders 7,423 3,951 11,374 6,547 3,389 9,936 14%
Net income
attributable to:
Preferred
shareholders 31 - 31 33 - 33 -6%
Common
shareholders 257 386 643 215 321 536 20%
Return on common
shareholders'
equity 18.6% 17.1%
-------------------------------------------------------------------------------
Per Common Share
Net earnings $ 1.72 $ 1.43 20%
Dividends paid 0.65 0.53 23%
Book value 9.81 8.70 13%
-------------------------------------------------------------------------------
At December 31
Total assets $ 33,127 $22,627 $55,754 $32,328 $21,184 $53,512 4%
Segregated funds
assets (1) 18,682 18,477 37,159 15,730 17,998 33,728 10%
------------------------- ----------------------- ----
Total assets
under
administration $ 51,809 $41,104 $92,913 $48,058 $39,182 $87,240 7%
------------------------- ------------------------ ----
------------------------- ------------------------ ----
Capital stock
and surplus $4,182 $3,789 10%
(1) Segregated funds deposits and self-funded premium equivalents (ASO contracts)
The financial statements of a life insurance company do not include the
assets, liabilities, deposits and withdrawals of segregated funds
or the claims payments related to administrative services only (ASO) Group
health contracts. However, the Company does earn fee and other income
related to these contracts.
Both segregated fund and ASO contracts are a growth aspect of the overall
business of the Company and should be considered when comparing volumes,
size and trends.
GREAT-WEST LIFECO INC.
SUMMARY OF CONSOLIDATED OPERATIONS
(in millions of dollars except earnings per common share)
for the quarter for the year
ended December 31 ended December 31
---------------------- --------------------
2000 1999 2000 1999
Income
Premium income $ 2,911 $ 2,480 $ 9,976 $ 8,526
Net investment income 902 901 3,649 3,580
Fee and other income 429 323 1,641 1,222
--------- -------- -------- --------
4,242 3,704 15,266 13,328
--------- -------- -------- --------
Benefits and Expenses
Paid or credited to
policyholders and
beneficiaries
including policyholder
dividends and
experience refunds 3,274 2,867 11,374 9,936
Commissions 183 151 694 601
Operating expenses 483 405 1,816 1,550
Premium taxes 36 35 129 123
--------- -------- -------- --------
Net operating income
before income taxes 266 246 1,253 1,118
--------- -------- -------- --------
Income taxes - current 176 113 540 378
- future (108) (65) (89) (12)
Net income before minority
and other interests 198 198 802 752
--------- -------- -------- --------
Minority and other interests
Participating policyholders (9) 22 27 83
Preferred shareholder
dividends 8 9 33 34
Minority shareholders'
interest 1 1 3 6
--------- -------- -------- --------
- 32 63 123
--------- -------- -------- --------
Net income before
amortization of goodwill 198 166 739 629
--------- -------- -------- --------
Amortization of goodwill 16 15 65 60
--------- -------- -------- --------
Net income $ 182 $ 151 $ 674 $ 569
--------- -------- -------- --------
--------- -------- -------- --------
Earnings per common share $ 0.47 $ 0.38 $ 1.72 $ 1.43
--------- -------- -------- --------
--------- -------- -------- --------
--------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ 8 $ 8 $ 31 $ 33
Net income
- common shareholders 174 143 643 536
--------- -------- -------- --------
Net income $ 182 $ 151 $ 674 $ 569
--------- -------- -------- --------
--------- -------- -------- --------
Average number of
common shares outstanding 373,548,871 373,890,983
United States operating results for 2000 have been included at the average
market rate of $1.4853 Canadian compared with $1.4856
Canadian in 1999.
GREAT-WEST LIFECO INC.
CONSOLIDATED BALANCE SHEET
December 31 (in millions of dollars)
2000 1999
Assets
Bonds $30,326 $30,397
Mortgage loans 8,787 8,942
Stocks 1,133 809
Real estate 1,212 1,106
Loans to policyholders 5,583 5,162
Cash and certificates of deposit 740 746
Funds withheld by ceding insurers 3,555 2,426
Premiums in course of collection 606 425
Interest due and accrued 558 553
Future income taxes 275 159
Goodwill 1,679 1,694
Other assets 1,300 1,093
--------- ---------
Total assets $55,754 $53,512
--------- ---------
--------- ---------
Liabilities
Policy liabilities
Actuarial liabilities $41,567 $40,036
Provision for claims 747 735
Provision for policyholders'
dividends 335 328
Provision for experience
rating refunds 661 421
Policyholders' funds 1,789 1,913
--------- ---------
45,099 43,433
Commercial paper and other loans 1,032 690
Current income taxes 433 317
Other liabilities 1,982 1,849
Repurchase agreements - 116
Net deferred gains on
portfolio investments sold 1,095 1,189
--------- ---------
49,641 47,594
Minority and other interests 1,931 2,129
Capital Stock and Surplus
Capital stock 2,086 2,091
Surplus 1,868 1,553
Provision for unrealized gain
on translation
of net investment in
foreign operations 228 145
--------- ---------
4,182 3,789
--------- ---------
Liabilities, capital stock
and surplus $55,754 $53,512
--------- ---------
--------- ---------
United States assets and liabilities at December 31, 2000 have been translated
at the market rates of $1.5000 Canadian for 2000 and $1.4433 Canadian for 1999.
GREAT-WEST LIFECO INC.
SEGMENTED INFORMATION
Consolidated Operations
Year Ended December 31, 2000
Canadian Operations
------------------------------------------------
Partici-
pating
Policy-
Shareholders holders
---------------------------------- ------
Indiv- Indiv-
idual idual
Insur- Insur-
ance & ance &
Invest- Reins- Invest-
Group ment urance ment
Insur- Prod- & Speci Corp- Prod- Total
ance ucts alty orate Total ucts Canada
------ ------ ------ ------ ------ ------ ------
Income:
Premium income $1,872 $ 574 $2,878 $ - $5,324 $1,302 $6,626
Net investment income 209 513 412 115 1,249 936 2,185
Fee and other income 51 279 2 14 346 - 346
------ ------ ------ ------ ------ ------ ------
Total income 2,132 1,366 3,292 129 6,919 2,238 9,157
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses:
Paid or credited
to policyholders 1,630 719 3,205 6 5,560 1,863 7,423
Other 354 395 61 11 821 260 1,081
------ ------ ------ ------ ------ ------ ------
Net operating income
before income taxes 148 252 26 112 538 115 653
------ ------ ------ ------ ------ ------ ------
Income taxes 59 95 (10) 24 168 83 251
------ ------ ------ ------ ------ ------ ------
Net income before
minority and other
interests 89 157 36 88 370 32 402
------ ------ ------ ------ ------ ------ ------
Minority and other
interests
Participating
policyholders - - - - - 23 23
Preferred
shareholder
dividends - - - 27 27 - 27
Minority
shareholders'
interest - - (6) - (6) 9 3
------ ------ ------ ------ ------ ------ ------
- - (6) 27 21 32 53
------ ------ ------ ------ ------ ------ ------
Net income before
goodwill amortization 89 157 42 61 349 - 349
------ ------ ------ ------ ------ ------ ------
Amortization of goodwill 23 28 8 2 61 - 61
------ ------ ------ ------ ------ ------ ------
Net income $ 66 $ 129 $ 34 $ 59 $ 288 $ - $ 288
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
-------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ 31 $ 31 $ - $ 31
Net income - common
shareholders 66 129 34 28 257 - 257
------ ------ ------ ------ ------ ------ ------
Net income $ 66 $ 129 $ 34 $ 59 $ 288 $ - $ 288
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Year ended December 31, 2000
United States Operations
-------------------------------------------
Partici-
pating
Policy-
Shareholders holders
--------------------------- ---------
Employ-
ee Finan- Finan-
Bene- cial Corpo- cial Total Total
fits Services rate Total Services U.S. Company
------ ------ ------ ------ ------ ------ ------
Income:
Premium income $1,785 $1,159 $ - $2,944 $ 406 $3,350 $9,976
Net investment income 136 798 42 976 488 1,464 3,649
Fee and other income 1,117 178 - 1,295 - 1,295 1,641
------ ------ ------ ------ ------ ------ ------
Total income 3,038 2,135 42 5,215 894 6,109 15,266
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses:
Paid or credited to
policyholders 1,446 1,650 2 3,098 853 3,951 11,374
Other 1,278 228 24 1,530 28 1,558 2,639
------ ------ ------ ------ ------ ------ ------
Net operating income
before income taxes 314 257 16 587 13 600 1,253
------ ------ ------ ------ ------ ------ ------
Income taxes 106 82 3 191 9 200 451
------ ------ ------ ------ ------ ------ ------
Net income before
minority and other
interests 208 175 13 396 4 400 802
------ ------ ------ ------ ------ ------ ------
Minority and other
interests
Participating
policyholders - - - - 4 4 27
Preferred shareholder
dividends - - 6 6 - 6 33
Minority
shareholders'
interest - - - - - - 3
------ ------ ------ ------ ------ ------ ------
- - 6 6 4 10 63
------ ------ ------ ------ ------ ------ ------
Net income before
goodwill amortization 208 175 7 390 - 390 739
------ ------ ------ ------ ------ ------ ------
Amortization of goodwill 3 1 - 4 - 4 65
------ ------ ------ ------ ------ ------ ------
Net income $ 205 $ 174 $ 7 $ 386 $ - $ 386 $ 674
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
-------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ - $ - $ - $ 31
Net income - common
shareholders 205 174 7 386 - 386 643
------ ------ ------ ------ ------ ------ ------
Net income $ 205 $ 174 $ 7 $ 386 $ - $ 386 $ 674
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Year Ended December 31, 1999
Canadian Operations
------------------------------------------------
Partici-
pating
Policy-
Shareholders holders
---------------------------------- ------
Indiv- Indiv-
idual idual
Insur- Insur-
ance & ance &
Invest- Reins- Invest-
Group ment urance ment
Insur- Prod- & Speci Corp- Prod- Total
ance ucts alty orate Total ucts Canada
------ ------ ------ ------ ------ ------ ------
Income:
Premium income $1,742 $ 667 $2,075 $ - $4,484 $1,281 $5,765
Net investment income 206 597 379 97 1,279 915 2,194
Fee and other income 49 220 2 7 278 - 278
------ ------ ------ ------ ------ ------ ------
Total income 1,997 1,484 2,456 104 6,041 2,196 8,237
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses:
Paid or credited to
policyholders 1,550 895 2,309 21 4,775 1,772 6,547
Other 344 372 50 13 779 274 1,053
------ ------ ------ ------ ------ ------ ------
Net operating income
before income taxes 103 217 97 70 487 150 637
------ ------ ------ ------ ------ ------ ------
Income taxes 43 82 13 2 140 94 234
------ ------ ------ ------ ------ ------ ------
Net income before
minority and other
interests 60 135 84 68 347 56 403
------ ------ ------ ------ ------ ------ ------
Minority and other
interests
Participating
Policyholders - - - - - 63 63
Preferred shareholder
dividends - - - 28 28 - 28
Minority shareholders'
interest - - 10 2 12 (7) 5
------ ------ ------ ------ ------ ------ ------
- - 10 30 40 56 96
------ ------ ------ ------ ------ ------ ------
Net income before
goodwill amortization 60 135 74 38 307 - 307
------ ------ ------ ------ ------ ------ ------
Amortization of goodwill 23 28 8 - 59 - 59
------ ------ ------ ------ ------ ------ ------
Net income $ 37 $ 107 $ 66 $ 38 $ 248 $ - $ 248
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
-------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ 33 $ 33 $ - $ 33
Net income - common
shareholders 37 107 66 5 215 - 215
------ ------ ------ ------ ------ ------ ------
Net income $ 37 $ 107 $ 66 $ 38 $ 248 $ - $ 248
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Year Ended December 31, 1999
United States Operations
-----------------------------------------
Partici-
pating
Policy-
Shareholders holders
--------------------------- -------
Employ- Finan- Finan-
ee cial cial
Bene- Serv- Corpo- Serv- Total Total
fits ices rate Total ices U.S. Company
------ ------ ------ ------ ------ ------ ------
Income:
Premium income $1,542 $ 818 $ - $2,360 $ 401 $2,761 $8,526
Net investment income 123 796 38 957 429 1,386 3,580
Fee and other income 817 132 (4) 945 (1) 944 1,222
------ ------ ------ ------ ------ ------ ------
Total income 2,482 1,746 34 4,262 829 5,091 13,328
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses:
Paid or credited to
policyholders 1,235 1,344 22 2,601 788 3,389 9,936
Other 989 194 11 1,194 27 1,221 2,274
------ ------ ------ ------ ------ ------ ------
Net operating income
before income taxes 258 208 1 467 14 481 1,118
------ ------ ------ ------ ------ ------ ------
Income taxes 89 69 (20) 138 (6) 132 366
------ ------ ------ ------ ------ ------ ------
Net income before
minority and other
interests 169 139 21 329 20 349 752
------ ------ ------ ------ ------ ------ ------
Minority and other
interests
Participating
policyholders - - - - 20 20 83
Preferred shareholder
dividends - - 6 6 - 6 34
Minority shareholders'
interest - - 1 1 - 1 6
------ ------ ------ ------ ------ ------ ------
- - 7 7 20 27 123
------ ------ ------ ------ ------ ------ ------
Net income before
goodwill amortization 169 139 14 322 - 322 629
------ ------ ------ ------ ------ ------ ------
Amortization of goodwill 1 - - 1 - 1 60
------ ------ ------ ------ ------ ------ ------
Net income $ 168 $ 139 $ 14 $ 321 $ - $ 321 $ 569
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
-------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ - $ - $ - $ 33
Net income - common
shareholders 168 139 14 321 - 321 536
------ ------ ------ ------ ------ ------ ------
Net income $ 168 $ 139 $ 14 $ 321 $ - $ 321 $ 569
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
