Winnipeg, July 25, 2000 ... Great-West Lifeco Inc. has reported a 19% increase
in net income attributable to common shareholders for the first six months of
2000, to $305 million or $0.81 per share. Net income attributable to common
shareholders before amortization of goodwill was $338 million. The return on
common shareholders' equity was 17.9% for the twelve months ended June 30, 2000.
For the second quarter, net income attributable to common shareholders was
$164 million or $0.43 per share, compared with $137 million or $0.37 per share
in 1999.
Highlights
- Total premiums and deposits were up 34% over the first
six months of 1999. This growth reflects significant increases in sales of investment-related
products, as well as increases in self-funded premium equivalents.
- Earnings
per common share for the first six months of 2000 were up 19% from comparable
1999 levels, to $0.81.
- Return on common shareholders' equity was 17.9% for
the 12 months ended June 30, 2000.
- Quarterly dividends declared increased
1.5¢ to 17¢ per common share for September 30, 2000. Dividends paid on common
shares in the first half of 2000 were 24% higher than a year ago.
- Total assets
under administration increased 11% to $92.2 billion.
Great-West Life
Great-West Lifeco's subsidiary, The Great-West Life Assurance Company, has
reported that net income for the first six months of 2000 reflects significant
increases for both Canadian and United States operations, compared to 1999.
Growth in fee income, strong investment performance and favourable morbidity
experience in both Canada and the United States contributed to the increases,
tempered by reduced reinsurance margins and unfavourable group mortality experience
in the United States.
Canadian Operations
Developments
- Great-West's subsidiary, London Life, announced that it will reorganize and
rebrand its sales organization as "Freedom 55 FinancialTM",
capitalizing on the success of one of the most widely-recognized brands in
Canada's financial services industry.
- In July, Great-West and Freedom
55 Financial joined Manulife Financial in forming a distribution alliance that
will provide each company with access to more products and a larger distribution
network, while keeping their sales forces separate and competing.
- Also in
July, Great-West entered into an agreement with The Maritime Life Assurance
Company to be Maritime's preferred successor carrier on its small group insurance
business. By the end of 2001, this agreement could add 1,100 small group clients
and $25 million in annual premium, to Great-West's current block of small group
business of 19,000 clients and $325 million in premium.
- Great-West's reinsurance
operations through LRG (U.S.) acquired a 51% controlling interest in Health
Reinsurance Management Partnership (HRMP) based in Danvers, Massachusetts. HRMP
had total revenues in 1999 of U.S. $9 million.
"Our strategy is to
supplement our business through selective agreements that allow us to build
on or acquire specialized knowledge and expertise," says Raymond L. McFeetors,
President & Chief Executive Officer. "Our recent initiatives with leading financial
organizations have enlarged our distribution network for core product lines,
given our clients increased access to more of Canada's leading financial services
products, and enhanced our ability to provide Canadians with full financial
security planning."
ResultsNet income attributable to common shareholders from
Canadian operations, was $124 million for the first six months, up 19% from
$104 million in 1999.
Total premium income and deposits increased 31% for the first six months of
2000 compared to a year ago. Guaranteed product premium income increased 15%,
which included a significant increase in reinsurance premiums. For fee-based
products, self-funded premium equivalents (ASO contracts) recorded 7% growth,
individual segregated fund deposits increased 32% and group segregated fund
deposits more than doubled as a result of large case sales.
Fee income increased 26% in the first six months of 2000 compared to 1999,
mainly due to the increase in segregated funds assets under administration.
Total assets under administration increased $4.5 billion or 10% to $50.6 billion
at June 30, 2000 when compared to a year ago. Segregated funds assets increased
31% to $18.3 billion while general funds assets were essentially unchanged,
reflecting continuing consumer preference for segregated funds.
United States
Operations Developments
- Great-West Life & Annuity Insurance Company of Denver
(GWL&A), Lifeco's U.S. subsidiary, was selected to provide recordkeeping services
for the State of Colorado and the City of St. Louis Deferred Compensation Plans.
Together, these plans represent over 15,000 participants and assets in excess
of $495 million. The Company was also awarded the City of Los Angeles Pension
Saving Plan.
- The acquisitions of the group life and health business
of Allmerica Financial Corporation and General American Life Insurance Company
have proceeded according to plan. Operational results on the General American
acquisition were ahead of goal in the second quarter and year to date. On the
Allmerica acquisition, the Company began renewing in-force Allmerica cases on
GWL&A products and administration systems.
- In June, GWL&A introduced the ONE
Northeast Center in Piscataway, NJ, providing, from one regional location, an
integrated approach to medical management and contracting, claim processing,
and customer service for the Company's Northeast Health Plan clients.
- GWL&A
expanded on-line services for its 401(k) customers by introducing on-line participant
enrollment via the Company's Web site.
Results
Net income attributable to common shareholders from United States operations
was $181 million for the first six months, up 19% from $152 million in 1999.
"We are very pleased with the strong performance of both our major lines of
business," says William T. McCallum, President & Chief Executive Officer, Great-West
Life & Annuity (GWL&A). "Our Public/Non-Profit pension business ended June with
920,000 customers compared to 718,000 in June 1999, and our Individual Insurance
mortality continues to be favorable. Second quarter earnings for the Employee
Benefits Division were significantly stronger than the first quarter of this
year. Health care costs continue to escalate but we believe our pricing trends
are running somewhat ahead of cost increases."
Total premium income and deposits increased 36% for the first six months of
2000 compared to a year ago. Guaranteed product premium income increased 14%,
while self-funded premium equivalents (ASO contracts) recorded growth of 63%
due mainly to recent business acquisitions. Individual segregated funds deposits
were more than double last year's level and group segregated fund deposits were
up 4% reflecting the incidence of large case activity.
The 37% increase in fee income for the first six months of 2000 reflects growth
in both ASO business and segregated fund deposits, as well as the impact of
recent business acquisitions.
Total assets under administration increased $4.3 billion or 11% to $41.6 billion
at June 30, 2000 when compared to a year ago. Segregated funds assets increased
21% to $19.4 billion.
Quarterly Dividends
At its meeting today, the Board of Directors approved a quarterly dividend
of $0.17, an increase of $0.015 per share, on the common shares of the Company
payable September 29, 2000 to shareholders of record at the close of business
September 15, 2000.
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 September 30, 2000 to shareholders of record
at the close of business September 15, 2000
- Class A, Series 1 Preferred Shares
$0.3125 per share payable October 31, 2000 to shareholders of record at the
close of business October 17, 2000.
Financial highlights, a summary of consolidated operations, segmented information
and a consolidated balance sheet for the first six months of 2000 are attached.
Great-West Lifeco
Great-West Lifeco Inc. is a financial services holding company with interests
in the life insurance, health insurance, retirement savings, reinsurance
and specialty general insurance businesses, primarily in Canada and the
United States. Its subsidiary, The Great-West Life Assurance Company,
serves the financial security needs of more than 13 million people through
its Canadian operations and London Insurance Group in Canada, and through
Great-West Life & Annuity Insurance Company in the United States. Great-West
Lifeco is a member of the Power Financial Corporation group of companies.
GREAT-WEST LIFECO INC.
FINANCIAL HIGHLIGHTS (unaudited)
(in millions of dollars except per common share amounts)
2000 1999
------------------------ --------------------- %
Canada U.S Total Canada U.S Total Change
For the Six Months
Ended June 30
Premiums:
Life insurance,
guaranteed
annuities and
insured health
products $ 1,946 $ 1,567 $ 3,513 $ 1,868 $ 1,369 $ 3,237 9%
Reinsurance
and property
and casualty 1,207 - 1,207 870 - 870 39%
Self-funded premium
equivalents (ASO
contracts) (1) 548 3,663 4,211 512 2,246 2,758 53%
Segregated funds
deposits: (1)
Individual
products 980 673 1,653 743 319 1,062 56%
Group products 1,124 1,779 2,903 442 1,717 2,159 34%
-------------------------- ------------------------- ---
Total premiums
and deposits $ 5,805 $ 7,682 $13,487 $ 4,435 $ 5,651 $10,086 34%
-------------------------- ------------------------- ---
Fee and other
income 170 623 793 135 454 589 35%
Paid or credited
to policyholders 3,524 1,846 5,370 3,109 1,664 4,773 13%
Net income
attributable to:
Preferred
shareholders 16 - 16 17 - 17 -6%
Common
shareholders 124 181 305 104 152 256 19%
Return on common
shareholders'
equity (12 months) 17.9% 16.3%
Per Common Share
-------------------------------------------------------------------------
Net earnings $ 0.81 $ 0.69 19%
Dividends paid 0.31 0.25 24%
Book value 9.18 8.32 10%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
At June 30
Total assets $32,283 $22,220 $54,503 $32,063 $21,286 $53,349 2%
Segregated funds
assets (1) 18,347 19,370 37,717 14,019 16,018 30,037 26%
-------------------------- ------------------------- ---
Total assets under
administration $50,630 $41,590 $92,220 $46,082 $37,304 $83,386 11%
-------------------------- ------------------------- ---
-------------------------- ------------------------- ---
Capital stock and
surplus $ 3,961 $ 3,625 9%
(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 (unaudited)
(in millions of dollars except earnings per common share)
for the quarter for the six months
ended June 30 ended June 30
------------------- ---------------------
2000 1999 2000 1999
Income
Premium income $ 2,407 $ 2,034 $ 4,720 $ 4,107
Net investment income 922 892 1,806 1,780
Fee and other income 399 291 793 589
--------- --------- --------- ---------
3,728 3,217 7,319 6,476
--------- --------- --------- ---------
Benefits and Expenses
Paid or credited to
policyholders and
beneficiaries including
policyholder dividends
and experience refunds 2,741 2,363 5,370 4,773
Commissions 175 154 340 304
Operating expenses 430 376 891 774
Premium taxes 32 32 61 60
--------- --------- --------- ---------
Net operating income before
income taxes 350 292 657 565
Income taxes - current 137 89 215 172
- future - 18 36 29
--------- --------- --------- ---------
Net income before minority and
other interests 213 185 406 364
--------- --------- --------- ---------
Minority and other interests
of The Great-West Life
Assurance Company and its
subsidiaries
Participating policyholders 15 16 34 41
Preferred shareholder
dividends 8 8 17 17
Minority shareholders'
interest - 2 1 4
--------- --------- --------- ---------
23 26 52 62
--------- --------- --------- ---------
Net income before amortization
of goodwill 190 159 354 302
--------- --------- --------- ---------
Amortization of goodwill 17 14 33 29
--------- --------- --------- ---------
Net income $ 173 $ 145 $ 321 $ 273
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings per common share $ 0.43 $ 0.37 $ 0.81 $ 0.69
--------- --------- --------- ---------
--------- --------- --------- ---------
-------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ 9 $ 8 $ 16 $ 17
Net income - common
shareholders 164 137 305 256
--------- --------- --------- ---------
Net income $ 173 $ 145 $ 321 $ 273
--------- --------- --------- ---------
--------- --------- --------- ---------
Average number of shares 374,093,845
outstanding 373,409,739
United States operating results during the first six months of 2000 have
been included at the average market rate of $1.4670 Canadian compared
with $1.4920 Canadian in 1999.
GREAT-WEST LIFECO INC.
CONSOLIDATED BALANCE SHEET (unaudited)
June 30 (in millions of dollars)
2000 1999
Assets
Bonds $ 29,786 $ 30,413
Mortgage loans 8,870 9,335
Stocks 1,218 754
Real estate 1,171 1,077
Loans to policyholders 5,476 5,174
Cash and certificates of deposit 916 706
Funds withheld by ceding insurers 3,033 2,051
Premiums in course of collection 598 445
Interest due and accrued 536 637
Future income taxes 161 150
Goodwill 1,704 1,658
Other assets 1,034 949
--------- ---------
Total assets $ 54,503 $ 53,349
--------- ---------
--------- ---------
Liabilities
Policy liabilities
Actuarial liabilities $ 40,700 $ 39,987
Provision for claims 837 746
Provision for policyholders' dividends 327 312
Provision for experience rating refunds 403 511
Policyholders' funds 1,887 1,879
--------- ---------
44,154 43,435
Commercial paper and other loans 803 750
Current income taxes 317 217
Other liabilities 2,040 1,720
Repurchase agreements - 122
Net deferred gains on portfolio
investments sold 1,061 1,362
--------- ---------
48,375 47,606
Minority and other interests 2,167 2,118
Capital Stock and Surplus
Capital stock 2,089 2,043
Surplus 1,682 1,405
Provision for unrealized gain on translation
of net investment in foreign operations 190 177
--------- ---------
3,961 3,625
--------- ---------
Liabilities, capital stock and surplus $ 54,503 $ 53,349
--------- ---------
--------- ---------
United States assets and liabilities at June 30 have been translated at
the market rates of $1.4790 Canadian for 2000 and $1.4720 Canadian
for 1999.
GREAT-WEST LIFECO INC.
SEGMENTED INFORMATION (unaudited)
(Amounts in millions of dollars unless otherwise noted)
Consolidated Operations
Six months ended June 30, 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 $ 925 $ 367 $1,207 $ - $2,499 $ 654 $3,153
Net investment income 104 270 198 49 621 472 1,093
Fee and other income 26 138 1 5 170 - 170
------ ------ ------ ------ ------ ------ ------
Total income 1,055 775 1,406 54 3,290 1,126 4,416
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses:
Paid or credited
to policyholders 807 449 1,348 1 2,605 919 3,524
Other 173 200 25 3 401 132 533
------ ------ ------ ------ ------ ------ ------
Net operating income
before income taxes 75 126 33 50 284 75 359
------ ------ ------ ------ ------ ------ ------
Income taxes 31 48 (1) 17 95 49 144
------ ------ ------ ------ ------ ------ ------
Net income before
minority and other
interests 44 78 34 33 189 26 215
------ ------ ------ ------ ------ ------ ------
Minority and other
interests of The
Great-West Life
Assurance Company
and its subsidiaries
Participating
policyholders - - - - - 29 29
Preferred
shareholder
dividends - - - 14 14 - 14
Minority
shareholders'
interest - - 4 - 4 (3) 1
------ ------ ------ ------ ------ ------ ------
- - 4 14 18 26 44
------ ------ ------ ------ ------ ------ ------
Net income before
goodwill amortization 44 78 30 19 171 - 171
------ ------ ------ ------ ------ ------ ------
Amortization of goodwill 12 14 3 2 31 - 31
------ ------ ------ ------ ------ ------ ------
Net income $ 32 $ 64 $ 27 $ 17 $ 140 $ - $ 140
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
-------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ 16 $ 16 $ - $ 16
Net income - common
shareholders 32 64 27 1 124 - 124
------ ------ ------ ------ ------ ------ ------
Net income $ 32 $ 64 $ 27 $ 17 $ 140 $ - $ 140
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Six months ended June 30, 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 $ 905 $ 458 $ - $1,363 $ 204 $1,567 $4,720
Net investment income 65 392 24 481 232 713 1,806
Fee and other income 535 88 - 623 - 623 793
------ ------ ------ ------ ------ ------ ------
Total income 1,505 938 24 2,467 436 2,903 7,319
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses:
Paid or credited to
policyholders 735 696 - 1,431 415 1,846 5,370
Other 632 112 4 748 11 759 1,292
------ ------ ------ ------ ------ ------ ------
Net operating income
before income taxes 138 130 20 288 10 298 657
------ ------ ------ ------ ------ ------ ------
Income taxes 47 44 11 102 5 107 251
------ ------ ------ ------ ------ ------ ------
Net income before
minority and other
interests 91 86 9 186 5 191 406
------ ------ ------ ------ ------ ------ ------
Minority and other
interests of The
Great-West Life
Assurance Company and
its subsidiaries
Participating
policyholders - - - - 5 5 34
Preferred shareholder
dividends - - 3 3 - 3 17
Minority
shareholders'
interest - - - - - - 1
------ ------ ------ ------ ------ ------ ------
- - 3 3 5 8 52
------ ------ ------ ------ ------ ------ ------
Net income before
goodwill amortization 91 86 6 183 - 183 354
------ ------ ------ ------ ------ ------ ------
Amortization of goodwill 2 - - 2 - 2 33
------ ------ ------ ------ ------ ------ ------
Net income $ 89 $ 86 $ 6 $ 181 $ - $ 181 $ 321
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
-------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ - $ - $ - $ 16
Net income - common
shareholders 89 86 6 181 - 181 305
------ ------ ------ ------ ------ ------ ------
Net income $ 89 $ 86 $ 6 $ 181 $ - $ 181 $ 321
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Six months ended June 30, 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 $ 873 $ 330 $ 891 $ - $2,094 $ 644 $2,738
Net investment income 101 306 181 46 634 450 1,084
Fee and other income 23 107 1 4 135 - 135
------ ------ ------ ------ ------ ------ ------
Total income 997 743 1,073 50 2,863 1,094 3,957
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses:
Paid or credited to
policyholders 784 453 992 5 2,234 875 3,109
Other 174 188 33 6 401 129 530
------ ------ ------ ------ ------ ------ ------
Net operating income
before income taxes 39 102 48 39 228 90 318
------ ------ ------ ------ ------ ------ ------
Income taxes 16 39 4 (2) 57 57 114
------ ------ ------ ------ ------ ------ ------
Net income before
minority and other
interests 23 63 44 41 171 33 204
------ ------ ------ ------ ------ ------ ------
Minority and other
interests of The Great-
West Life Assurance
Company and its
subsidiaries
Participating
Policyholders - - - - - 37 37
Preferred shareholder
dividends - - - 14 14 - 14
Minority shareholders'
interest - - 5 2 7 (4) 3
------ ------ ------ ------ ------ ------ ------
- - 5 16 21 33 54
------ ------ ------ ------ ------ ------ ------
Net income before
goodwill amortization 23 63 39 25 150 - 150
------ ------ ------ ------ ------ ------ ------
Amortization of goodwill 11 14 4 - 29 - 29
------ ------ ------ ------ ------ ------ ------
Net income $ 12 $ 49 $ 35 $ 25 $ 121 $ - $ 121
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
-------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ 17 $ 17 $ - $ 17
Net income - common
shareholders 12 49 35 8 104 - 104
------ ------ ------ ------ ------ ------ ------
Net income $ 12 $ 49 $ 35 $ 25 $ 121 $ - $ 121
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Six months ended June 30, 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 $ 807 $ 361 $ - $1,168 $ 201 $1,369 $4,107
Net investment income 62 399 25 486 210 696 1,780
Fee and other income 390 66 (2) 454 - 454 589
------ ------ ------ ------ ------ ------ ------
Total income 1,259 826 23 2,108 411 2,519 6,476
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses:
Paid or credited to
policyholders 628 635 12 1,275 389 1,664 4,773
Other 504 90 - 594 14 608 1,138
------ ------ ------ ------ ------ ------ ------
Net operating income
before income taxes 127 101 11 239 8 247 565
------ ------ ------ ------ ------ ------ ------
Income taxes 45 35 3 83 4 87 201
------ ------ ------ ------ ------ ------ ------
Net income before
minority and other
interests 82 66 8 156 4 160 364
------ ------ ------ ------ ------ ------ ------
Minority and other
interests of The Great-
West Life Assurance
Company and its
subsidiaries
Participating
policyholders - - - - 4 4 41
Preferred shareholder
dividends - - 3 3 - 3 17
Minority shareholders'
interest - - 1 1 - 1 4
------ ------ ------ ------ ------ ------ ------
- - 4 4 4 8 62
------ ------ ------ ------ ------ ------ ------
Net income before
goodwill amortization 82 66 4 152 - 152 302
------ ------ ------ ------ ------ ------ ------
Amortization of goodwill - - - - - - 29
------ ------ ------ ------ ------ ------ ------
Net income $ 82 $ 66 $ 4 $ 152 $ - $ 152 $ 273
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
-------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ - $ - $ - $ 17
Net income - common
shareholders 82 66 4 152 - 152 256
------ ------ ------ ------ ------ ------ ------
Net income $ 82 $ 66 $ 4 $ 152 $ - $ 152 $ 273
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
