Great-West Lifeco has reported net earnings attributable to shareholders of $342-million for the first quarter of 2020, a sharp decline compared to $657-million reported in Q1 2019.Base earnings came in at $543-million for the quarter, compared to $569-million reported in the first quarter of 2019.
Market declines driven by pandemic
Base earnings per share, meanwhile, increased two per cent, up $0.01 to $0.59 in the first quarter, thanks to business growth in its Capital and Risk Solutions segment. This was partially offset by unrealized losses on seed capital investments and lower fee income earned as equity markets declined. Reported net earnings per share of $0.37 were also down from $0.67 in 2019, reflecting significant market declines and volatility in the first quarter of 2020, driven by the COVID-19 pandemic.
“The company is monitoring the situation closely, including carrying out stress and scenario testing, and has implemented processes for the continuation of operations,” the company said in a statement issued May 6. “As a result of the decline in equity markets and interest rates since December 31, 2019, primarily driven by COVID-19, the company’s net earnings in the first quarter of 2020 were adversely impacted.”
The company’s Life Insurance Capital Adequacy Test (LICAT) ratio for Canada Life, the company’s major Canadian operating subsidiary, was 133 per cent at March 31, 2020. Consolidated assets under administration decreased to $1.5-trillion, a six per cent decrease from December 31, primarily reflecting market declines.
Sales up in Canada
The company’s Canadian operations reported base earnings of $273-million, up from $257-million in the first quarter of 2019, an increase of six per cent. Net earnings for the quarter were $151-million, down from $283-million, primarily due to COVID-19 market-related impacts. Canadian sales in the first quarter of 2020 were $3.6-billion, up 14 per cent from the first quarter of 2019, led by higher segregated fund, third-party mutual fund and individual insurance sales.
In addition, the company’s board of directors approved a quarterly dividend of $0.438 per common share, payable June 30, 2020 to shareholders of record on June 2, 2020. The company also declared preferred share dividends, ranging from $0.14 per share to $0.37 per share, payable June 30 to shareholders of record at the close of business on June 2.