Great-West Lifeco Inc. (Lifeco) has reported net income attributable to common shareholders of $1,213 million for the three months ended June 30, 2008, up 123% compared to net income of $544 million reported a year ago. On a per share basis, this represents $1.356 per common share for the three months ended June 30, 2008, an increase of 122% compared to $0.610 per common share for 2007.
For the six months ended June 30, 2008, net income attributable to common shareholders was $1,867 million compared to $1,058 million reported a year ago. On a per share basis, this represents $2.088 per common share for the six months ended June 30, 2008, an increase of 76% compared to $1.186 per common share for 2007.
The 2008 results include three non-recurring items that totaled $767 million after-tax, or $0.858 per common share, as described in the United States section of this Release. Excluding these items, adjusted net income attributable to common shareholders was $564 million for the three months ended June 30, 2008, up 4% over 2007. On a per share basis, this represents $0.630 per common share for the three months ended June 30, 2008 compared to $0.610 per common share for 2007.
Compared to the second quarter of 2007, the increase in the foreign exchange value of the Canadian dollar opposite the Company's major operating currencies has negatively impacted net income in the quarter by approximately $0.028 per common share, or $25 million. On a constant currency basis, adjusted net income attributable to common shareholders increased 8% over 2007.
Highlights
- Quarterly dividends declared were $0.3075 per common share, an increase of 1.5 cents per common share, or 5.1%, payable September 30, 2008. Dividends paid on common shares for the six months ended June 30, 2008 were 15% higher than a year ago.
- On April 1, Lifeco announced it had completed the sale of its U.S. Healthcare business. On June 26, an affiliated Delaware Limited Partnership issued $500 million of Subordinated Debentures. The proceeds from these two transactions were used to repay in full an outstanding bank bridge facility and, in part, an outstanding bank term loan.
- Adjusted return on common shareholders' equity was 21.4% for the twelve months ended June 30, 2008.
Consolidated net income for Lifeco is comprised of the net income of The Great-West Life Assurance Company (Great-West Life), Canada Life Financial Corporation (CLFC), London Life Insurance Company (London Life), Great-West Life & Annuity Insurance Company (GWL&A), and Putnam Investments, LLC (Putnam), together with Lifeco's corporate results.
CANADA
Net income attributable to common shareholders for the second quarter of 2008 was $275 million compared to $257 million in 2007, an increase of 7%.
For the six months ended June 30, 2008, net income attributable to common shareholders was $524 million compared to $482 million in 2007, an increase of 9%. Individual Insurance & Investment Products earnings at $371 million were up 16% while Group Insurance earnings of $191 million were up 7%. Earnings in the Corporate segment were $20 million lower than 2007 due to the mark-to-market adjustment of two series of Lifeco preferred shares.
Total sales for the six months ended June 30, 2008 were $4,424 million compared to $5,033 million in 2007, a decrease of 12%. The decrease reflects strong segregated and mutual fund sales in 2007 that were not repeated because of a weak market environment in 2008.
Total assets under administration at June 30, 2008 were $102.1 billion, compared to $101.0 billion at December 31, 2007.
UNITED STATES
Net income attributable to common shareholders for the second quarter of 2008 increased to $757 million from $136 million for the second quarter of 2007. For the six months ended June 30, 2008, net income attributable to common shareholders was $994 million compared to $278 million in 2007.
In the six months ended June 30, 2008, three non-recurring items contributed approximately $767 million to earnings. During the second quarter of 2008, the Company realized an after tax gain of $649 million in connection with the sale of its U.S. healthcare business. During the first quarter of 2008, an after tax gain of approximately $176 million was realized in connection with the termination of a long-standing assumption reinsurance agreement under which GWL&A had reinsured a block of U.S. participating policies. This gain was partly mitigated by an increase in policy reserves of approximately $58 million, after tax, to provide for an increase in overhead costs expected to be absorbed as a result of the sale of Great-West Healthcare.
Net income for the quarter includes nil in 2008 and $54 million in 2007 in connection with Lifeco's U.S. healthcare business, which had been designated as discontinued operations prior to completion of its sale.
Compared to the second quarter of 2007, the increase in the foreign exchange value of the Canadian dollar opposite the United States dollar has negatively impacted net income in the quarter by approximately $0.010 per common share, or $9 million. On a constant currency basis, adjusted net income attributable to common shareholders decreased 13% over 2007.
Total sales for the six months ended June 30, 2008 were $26.5 billion compared to $2.8 billion in 2007. Putnam's asset management business is included in the 2008 results.
Total assets under administration at June 30, 2008 were $216.6 billion compared to $231.4 billion at December 31, 2007. Included in assets under administration were $169.8 billion of mutual fund and institutional account assets managed by Putnam.
EUROPE
Net income attributable to common shareholders for the second quarter of 2008 was $187 million compared to $153 million for the second quarter of 2007, an increase of 22%. For the six months ended June 30, 2008, net income attributable to common shareholders was $362 million compared to $300 million in 2007, an increase of 21%.
Compared to the second quarter of 2007, the increase in the foreign exchange value of the Canadian dollar opposite the Company's major operating currencies has reduced net income in the quarter by approximately $0.018 per common share, or $16 million. On a constant currency basis, net income attributable to common shareholders increased 32% over 2007.
Total sales for the six months ended June 30, 2008 were $2,269 million compared to $3,425 million in 2007, a decrease of 34%. Sales of savings and pension products have been hampered by the continuing effect of financial market volatility.
Total assets under administration at June 30, 2008 were $74.1 billion, compared to $61.7 billion at December 31, 2007. -- www.cnxmarketlink.com
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