Great-West Lifeco ends 2018 on an upswing

By Aurélia Morvan | February 11 2019 09:30AM

Paul Mahon

Great-West Lifeco ended Q4 2018 with net earnings of $710 million. This is equal to growth of 81% compared with the same quarter in 2017, when net earnings were $392 million.

Looking at the insurer’s Canadian sales operations, the results are not as strong. Net earnings were $310 million in Q4 2018, down from $338 million for the same quarter of 2017.

Lifeco explains this 8% drop by two factors: 1) higher business and strategic expenses, and 2) the impact of equity market declines in Q4 2018. The company says that the effect of these two factors was partly offset by strong business results.

2018 more profitable than 2017

Overall, 2018 was more profitable than 2017 for Great-West. Net earnings for the year ended December 31, 2018 were $2.961 billion versus $2,149 billion for 2017, an increase of 38%.

Net earnings for 2018 take into account $56 million in restructuring costs linked to the company’s United Kingdom operations. Net earnings for 2017 factored in net adjustments of $498 million linked to the impact of the US tax reform, and a net charge on the sale of an investment in participating equity and restructuring costs.

In Canada as well, figures for 2018 as a whole were more positive than in 2017. Net earnings were $1.275 billion for the year ended December 31, 2018 versus $1.074 billion for 2017. The company attributes this advance to growth in its group results. Lifeco also benefited from the contribution of insurance contract liability basis changes.

Looking for acquisitions

“I am pleased with Great-West Lifeco’s earnings performance in 2018 which saw growth across our Canadian, U.S. and European segments,” stated Paul Mahon, President and Chief Executive Officer, Great-West Lifeco. “We enter 2019 with significant excess capital, which will be further bolstered by $1.6 billion from the sale of our U.S. life and annuity business. This positions us to actively consider acquisition opportunities to drive growth and long-term value. In addition, we are considering other capital management activities to mitigate the earnings impact from the sale of our U.S. business.”

Premiums up

For Q4 2018, total premiums and deposits of Great-West Lifeco stood at $37.6 billion, 15% higher than in Q4 2017 ($32.6 billion). Year-over-year growth was 13% between fiscal 2018 and 2017. Premiums and deposits totalled $139.3 billion at December 31, 2018, versus $123.1 billion at December 31, 2017.