Winnipeg, October 25, 2000 ... Great-West Lifeco Inc. continued to deliver
solid growth in earnings and ROE, as reflected in the Company's results
for the first nine months of 2000. Net income attributable to common shareholders
increased 19% over the first nine months of 1999, to $469 million or $1.25 per
share. Net income attributable to common shareholders before amortization
of goodwill was $518 million. The return on common shareholders' equity was
18.1% for the twelve months ended September 30, 2000.
For the third quarter, net income attributable to common shareholders
was $164 million or $0.44 per share, compared with $137 million or $0.36 per
share in 1999.
Highlights
- Total premiums and deposits were up 36% over the first nine months of 1999.
Driving this growth were significant increases in sales of investment-related products,
as well as self-funded premium equivalents.
- Earnings per common share, at $1.25 for the first nine months of 2000, were up 19% from comparable 1999 levels.
- Return on common shareholders' equity was 18.1% for the twelve months ended September 30, 2000.
- Quarterly dividends declared were 17¢ per common share for December 29, 2000. Dividends paid on common shares in the first nine months of 2000 were 23% higher than a year ago.
- Total assets under administration increased 14% to $94.5 billion from a year ago.
Great-West Life
Great-West Lifeco's subsidiary, The Great-West Life Assurance Company,
has reported that net income for the first nine months of 2000 reflects
growth in both Canadian and United States operations, compared to 1999.
Key drivers were growth in fee income, strong investment performance and
favourable morbidity experience in both Canada and the United States,
offset somewhat by reduced reinsurance margins and unfavourable group
mortality experience in both countries.
Canadian Operations
Developments
- London Life launched a new television advertising campaign supporting
its newly created Freedom 55 Financial™ division. The Company continued
to progress on reorganizing and rebranding London Life distribution
systems under the Freedom 55 Financial brand.
- The first Canadian Diabetes Association Great-West Life and London
Life Young Scientist Award was presented in October. The recipient,
Dr. Pere Santamaria, Associate Professor in Microbiology and Infectious
Disease at the University of Calgary, led a recent study that has shed
light on how type 1 diabetes develops. As well, the Companies received
the United Way's "Thanks a Million" award recognizing staff and corporate
donations of more than $1 million in support of United Way campaigns
across Canada in 1999.
"We are pleased with our continued solid performance; in particular with the strong growth
in net income in our group insurance business and our progress on Freedom 55 Financial,
which recorded excellent sales in all lines," says Raymond L. McFeetors, President & CEO,
Great-West Life. "Our results underscore the value in strategic use of two distribution
models - the exclusive distribution system of Freedom 55 Financial, and the independent
distribution systems used by Great-West."
Results
Net income attributable to common shareholders from Canadian operations, was $189 million
for the first nine months, up 17% from $161 million in 1999.
Total premium income and deposits increased 29% for the first nine months of 2000 compared
to a year ago. Premiums from guaranteed products increased 15%, including a significant
increase in reinsurance premiums. For fee-based products, self-funded premium equivalents
(ASO contracts) grew 7%, and individual segregated fund deposits increased 36%, while group
segregated fund deposits more than doubled as a result of large case sales.
Fee income increased 27% in the first nine months of 2000 compared to 1999, mainly due
to the increase in segregated funds assets under administration.
Total assets under administration increased 12% to $51.8 billion at September 30, 2000
when compared to a year ago. The growth occurred primarily in segregated funds assets,
which increased 35% to $19.0 billion, reflecting continuing consumer preference for
segregated funds over guaranteed investment products.
United States Operations
Developments
- The State of Montana renewed its relationship with the Company, which acts as
administrator for the State's Section 457 employee retirement plan, with over 7,500
participants. The State also selected Great-West as record keeper for a new defined
contribution plan, expected to include up to 10,000 participants when it takes effect in 2002.
- Two GWL&A subsidiaries, One Health Plan of Florida and One Health Plan of Tennessee,
received two-year new plan accreditation from the National Committee for Quality Assurance.
- The Company introduced Medicash, a new product for members of the American Dental
Association (ADA). Medicash provides a lump sum payment for personal expenses if
an insured ADA member becomes disabled.
- Health plan sales through the first nine months of 2000 have been the strongest in the
Company's history, and Section 401(k) sales accompanied by assets transferring to Great-West
are up 372% over a similar period last year. Meanwhile, the Company's new NAV product
has $123 million in sales during the nine months it has been available to the marketplace.
"Our year-to-date sales results of both operating divisions have been very strong,"
says William T. McCallum, President & Chief Executive Officer, Great-West Life & Annuity (GWL&A).
"In particular our Public/Non-Profit sales have been outstanding. In Employee Benefits, rising
medical costs are bringing more cases to market. We are finding that our self-funding
approach to financing health care and our broad product array are well received in the
marketplace with new case sales running well ahead of 1999."
Results
Net income attributable to common shareholders from United States operations was $280 million
for the first nine months, up 21% from $232 million in 1999.
Total premium income and deposits increased 42% for the first nine months of 2000 compared
to a year ago. Premiums from guaranteed products increased 20%, while self-funded premium
equivalents (ASO contracts) grew 69%, reflecting internal growth and business acquisitions.
Individual segregated funds deposits were more than double last year's level and group
segregated fund deposits were up 13%.
The 37% increase in fee income for the first nine months of 2000 reflects growth in both ASO business and segregated fund deposits, as well as recent business acquisitions.
Total assets under administration increased 15% to $42.7 billion at September 30, 2000
when compared to a year ago. Segregated funds assets increased 27% to $20.1 billion.
Quarterly Dividends
At its meeting today, the Board of Directors approved a quarterly dividend of $0.17 per share
on the common shares of the Company payable December 29, 2000 to shareholders of record at
the close of business December 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 December 31, 2000 to shareholders of record at the close of business December 15, 2000
- Class A, Series 1 Preferred Shares $0.3125 per share
payable January 31, 2001 to shareholders of record at the close of business January 17, 2001.
Financial highlights, a summary of consolidated operations, segmented information
and a consolidated balance sheet for the first nine 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 Life Insurance Company 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 Nine Months
Ended September 30
Premiums:
Life insurance,
guaranteed
annuities
and insured
health products $ 2,818 $2,441 $5,259 $ 2,775 $2,033 $4,808 9%
Reinsurance
and property
and casualty 1,806 - 1,806 1,238 - 1,238 46%
Self-funded premium
equivalents
(ASO contracts)(1) 819 5,657 6,476 762 3,355 4,117 57%
Segregated funds
deposits: (1)
Individual
products 1,402 839 2,241 1,033 397 1,430 57%
Group products 1,394 2,770 4,164 590 2,458 3,048 37%
----------------------- ---------------------- ----
Total premiums and
deposits $ 8,239 $11,707 $19,946 $ 6,398 $8,243 $14,641 36%
----------------------- ---------------------- ----
Fee and other income 258 954 1,212 203 696 899 35%
Paid or credited
to policyholders 5,209 2,891 8,100 4,570 2,499 7,069 15%
Net income
attributable to:
Preferred
shareholders 23 - 23 25 - 25 -8%
Common
shareholders 189 280 469 161 232 393 19%
Return on common
shareholders'
equity (12 months) 18.1% 16.5%
-------------------------------------------------------------------------------
Per Common Share
Net earnings $ 1.25 $ 1.05 19%
Dividends paid 0.48 0.39 23%
Book value 9.51 8.57 11%
-------------------------------------------------------------------------------
At September 30
Total assets $ 32,769 $22,647 $55,416 $32,059 $21,292 $53,351 4%
Segregated funds
assets (1) 19,009 20,081 39,090 14,116 15,762 29,878 31%
------------------------- ----------------------- ----
Total assets
under
administration $ 51,778 $42,728 $94,506 $46,175 $37,054 $83,229 14%
------------------------- ------------------------ ----
------------------------- ------------------------ ----
Capital stock
and surplus $4,076 $3,738 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 nine months
ended September 30 ended September 30
---------------------- --------------------
2000 1999 2000 1999
Income
Premium income $ 2,345 $ 1,939 $ 7,065 $ 6,046
Net investment income 941 899 2,747 2,679
Fee and other income 419 310 1,212 899
--------- -------- -------- --------
3,705 3,148 11,024 9,624
--------- -------- -------- --------
Benefits and Expenses
Paid or credited to
policyholders and
beneficiaries
including policyholder
dividends and
experience refunds 2,730 2,296 8,100 7,069
Commissions 171 146 511 450
Operating expenses 442 371 1,333 1,145
Premium taxes 32 28 93 88
--------- -------- -------- --------
Net operating income
before income taxes 330 307 987 872
--------- -------- -------- --------
Income taxes - current 149 93 364 265
- future (17) 24 19 53
Net income before minority
and other interests 198 190 604 554
--------- -------- -------- --------
Minority and other interests
of The Great-West Life
Assurance Company and its
subsidiaries
Participating policyholders 2 20 36 61
Preferred shareholder
dividends 8 8 25 25
Minority shareholders'
interest 1 1 2 5
--------- -------- -------- --------
11 29 63 91
--------- -------- -------- --------
Net income before
amortization of goodwill 187 161 541 463
--------- -------- -------- --------
Amortization of goodwill 16 16 49 45
--------- -------- -------- --------
Net income $ 171 $ 145 $ 492 $ 418
--------- -------- -------- --------
--------- -------- -------- --------
Earnings per common share $ 0.44 $ 0.36 $ 1.25 $ 1.05
--------- -------- -------- --------
--------- -------- -------- --------
--------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ 7 $ 8 $ 23 $ 25
Net income
- common shareholders 164 137 469 393
--------- -------- -------- --------
Net income $ 171 $ 145 $ 492 $ 418
--------- -------- -------- --------
--------- -------- -------- --------
Average number of
shares outstanding 373,828,360 373,672,439
United States operating results during the first nine months of 2000 have been
included at the average market rate of $1.4720 Canadian compared with $1.4900
Canadian in 1999.
GREAT-WEST LIFECO INC.
CONSOLIDATED BALANCE SHEET (unaudited)
September 30 (in millions of dollars)
2000 1999
Assets
Bonds $30,200 $30,635
Mortgage loans 8,799 9,046
Stocks 1,247 763
Real estate 1,199 1,090
Loans to policyholders 5,488 5,162
Cash and certificates of deposit 874 659
Funds withheld by ceding insurers 3,340 2,195
Premiums in course of collection 505 443
Interest due and accrued 633 609
Future income taxes 188 134
Goodwill 1,696 1,687
Other assets 1,247 928
--------- ---------
Total assets $55,416 $53,351
--------- ---------
--------- ---------
Liabilities
Policy liabilities
Actuarial liabilities $41,231 $39,989
Provision for claims 821 702
Provision for policyholders'
dividends 345 329
Provision for experience
rating refunds 599 438
Policyholders' funds 1,827 1,839
--------- ---------
44,823 43,297
Commercial paper and other loans 960 791
Current income taxes 387 270
Other liabilities 1,976 1,708
Repurchase agreements - 119
Net deferred gains on
portfolio investments sold 1,030 1,304
--------- ---------
49,176 47,489
Minority and other interests 2,164 2,124
Capital Stock and Surplus
Capital stock 2,086 2,081
Surplus 1,763 1,483
Provision for unrealized gain
on translation
of net investment in
foreign operations 227 174
--------- ---------
4,076 3,738
--------- ---------
Liabilities, capital stock
and surplus $55,416 $53,351
--------- ---------
--------- ---------
United States assets and liabilities at September 30 have been translated
at the market rates of $1.5070 Canadian for 2000 and $1.4700 Canadian for 1999.
GREAT-WEST LIFECO INC.
SEGMENTED INFORMATION (unaudited)
(Amounts in millions of dollars unless otherwise noted)
Consolidated Operations
Nine months ended September 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 $1,398 $ 448 $1,806 $ - $3,652 $ 972 $4,624
Net investment income 157 397 321 80 955 712 1,667
Fee and other income 38 210 2 8 258 - 258
------ ------ ------ ------ ------ ------ ------
Total income 1,593 1,055 2,129 88 4,865 1,684 6,549
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses:
Paid or credited
to policyholders 1,218 571 2,038 (2) 3,825 1,384 5,209
Other 260 297 41 9 607 204 811
------ ------ ------ ------ ------ ------ ------
Net operating income
before income taxes 115 187 50 81 433 96 529
------ ------ ------ ------ ------ ------ ------
Income taxes 47 71 1 31 150 67 217
------ ------ ------ ------ ------ ------ ------
Net income before
minority and other
interests 68 116 49 50 283 29 312
------ ------ ------ ------ ------ ------ ------
Minority and other
interests of The
Great-West Life
Assurance Company
and its subsidiaries
Participating
policyholders - - - - - 31 31
Preferred
shareholder
dividends - - - 21 21 - 21
Minority
shareholders'
interest - - 4 - 4 (2) 2
------ ------ ------ ------ ------ ------ ------
- - 4 21 25 29 54
------ ------ ------ ------ ------ ------ ------
Net income before
goodwill amortization 68 116 45 29 258 - 258
------ ------ ------ ------ ------ ------ ------
Amortization of goodwill 17 21 6 2 46 - 46
------ ------ ------ ------ ------ ------ ------
Net income $ 51 $ 95 $ 39 $ 27 $ 212 $ - $ 212
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
-------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ 23 $ 23 $ - $ 23
Net income - common
shareholders 51 95 39 4 189 - 189
------ ------ ------ ------ ------ ------ ------
Net income $ 51 $ 95 $ 39 $ 27 $ 212 $ - $ 212
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Nine months ended September 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 $1,360 $ 802 $ - $2,162 $ 279 $2,441 $7,065
Net investment income 100 591 35 726 354 1,080 2,747
Fee and other income 820 134 - 954 - 954 1,212
------ ------ ------ ------ ------ ------ ------
Total income 2,280 1,527 35 3,842 633 4,475 11,024
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses:
Paid or credited to
policyholders 1,120 1,166 1 2,287 604 2,891 8,100
Other 937 166 6 1,109 17 1,126 1,937
------ ------ ------ ------ ------ ------ ------
Net operating income
before income taxes 223 195 28 446 12 458 987
------ ------ ------ ------ ------ ------ ------
Income taxes 75 65 19 159 7 166 383
------ ------ ------ ------ ------ ------ ------
Net income before
minority and other
interests 148 130 9 287 5 292 604
------ ------ ------ ------ ------ ------ ------
Minority and other
interests of The
Great-West Life
Assurance Company and
its subsidiaries
Participating
policyholders - - - - 5 5 36
Preferred shareholder
dividends - - 4 4 - 4 25
Minority
shareholders'
interest - - - - - - 2
------ ------ ------ ------ ------ ------ ------
- - 4 4 5 9 63
------ ------ ------ ------ ------ ------ ------
Net income before
goodwill amortization 148 130 5 283 - 283 541
------ ------ ------ ------ ------ ------ ------
Amortization of goodwill 3 - - 3 - 3 49
------ ------ ------ ------ ------ ------ ------
Net income $ 145 $ 130 $ 5 $ 280 $ - $ 280 $ 492
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
-------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ - $ - $ - $ 23
Net income - common
shareholders 145 130 5 280 - 280 469
------ ------ ------ ------ ------ ------ ------
Net income $ 145 $ 130 $ 5 $ 280 $ - $ 280 $ 492
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Nine months ended September 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 $1,301 $ 490 $1,268 $ - $3,059 $ 954 $4,013
Net investment income 151 449 285 75 960 681 1,641
Fee and other income 33 164 2 4 203 - 203
------ ------ ------ ------ ------ ------ ------
Total income 1,485 1,103 1,555 79 4,222 1,635 5,857
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses:
Paid or credited to
policyholders 1,160 665 1,434 9 3,268 1,302 4,570
Other 257 273 50 8 588 196 784
------ ------ ------ ------ ------ ------ ------
Net operating income
before income taxes 68 165 71 62 366 137 503
------ ------ ------ ------ ------ ------ ------
Income taxes 28 63 7 9 107 85 192
------ ------ ------ ------ ------ ------ ------
Net income before
minority and other
interests 40 102 64 53 259 52 311
------ ------ ------ ------ ------ ------ ------
Minority and other
interests of The Great-
West Life Assurance
Company and its
subsidiaries
Participating
Policyholders - - - - - 57 57
Preferred shareholder
dividends - - - 21 21 - 21
Minority shareholders'
interest - - 7 1 8 (5) 3
------ ------ ------ ------ ------ ------ ------
- - 7 22 29 52 81
------ ------ ------ ------ ------ ------ ------
Net income before
goodwill amortization 40 102 57 31 230 - 230
------ ------ ------ ------ ------ ------ ------
Amortization of goodwill 17 21 6 - 44 - 44
------ ------ ------ ------ ------ ------ ------
Net income $ 23 $ 81 $ 51 $ 31 $ 186 $ - $ 186
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
-------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ 25 $ 25 $ - $ 25
Net income - common
shareholders 23 81 51 6 161 - 161
------ ------ ------ ------ ------ ------ ------
Net income $ 23 $ 81 $ 51 $ 31 $ 186 $ - $ 186
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Nine months ended September 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 $1,206 $ 558 $ - $1,764 $ 269 $2,033 $6,046
Net investment income 94 596 31 721 317 1,038 2,679
Fee and other income 601 98 (3) 696 - 696 899
------ ------ ------ ------ ------ ------ ------
Total income 1,901 1,252 28 3,181 586 3,767 9,624
------ ------ ------ ------ ------ ------ ------
Benefits and Expenses:
Paid or credited to
policyholders 964 965 11 1,940 559 2,499 7,069
Other 746 134 - 880 19 899 1,683
------ ------ ------ ------ ------ ------ ------
Net operating income
before income taxes 191 153 17 361 8 369 872
------ ------ ------ ------ ------ ------ ------
Income taxes 67 53 2 122 4 126 318
------ ------ ------ ------ ------ ------ ------
Net income before
minority and other
interests 124 100 15 239 4 243 554
------ ------ ------ ------ ------ ------ ------
Minority and other
interests of The Great-
West Life Assurance
Company and its
subsidiaries
Participating
policyholders - - - - 4 4 61
Preferred shareholder
dividends - - 4 4 - 4 25
Minority shareholders'
interest - - 2 2 - 2 5
------ ------ ------ ------ ------ ------ ------
- - 6 6 4 10 91
------ ------ ------ ------ ------ ------ ------
Net income before
goodwill amortization 124 100 9 233 - 233 463
------ ------ ------ ------ ------ ------ ------
Amortization of goodwill 1 - - 1 - 1 45
------ ------ ------ ------ ------ ------ ------
Net income $ 123 $ 100 $ 9 $ 232 $ - $ 232 $ 418
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
-------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ - $ - $ - $ 25
Net income - common
shareholders 123 100 9 232 - 232 393
------ ------ ------ ------ ------ ------ ------
Net income $ 123 $ 100 $ 9 $ 232 $ - $ 232 $ 418
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
