Great-West Lifeco improves Q4 results with help from Irish acquisition

TORONTO – Great-West Lifeco Inc. (TSX:GWO) says profits more than doubled in the fourth quarter, but the insurer fell short of expectations in what analysts perceived as a somewhat underwhelming final three months of the year for insurers.

The Winnipeg-based company reported Thursday that net earnings attributable to common shareholders grew to $717 million or 72 cents per share, propped up largely by the results from the recently-acquired Irish Life.

The results also included $226 million gained from past litigation, and compared with profits of $351 million, or 37 cents per share a year ago.

Excluding acquisition and restructuring costs associated with the purchase of fellow insurer Irish Life, operating earnings were $540 million or 54 cents per share for the quarter.

A survey by Thomson Reuters showed that analysts expected 61 cents per share of earnings.

Barclays analyst John Aiken considered the results a “fairly sizable miss.”

“A decline in contribution from the Canadian operations and continued weakness at (asset manager) Putnam Investments will not likely be viewed favourably by the market,” he wrote in a note.

CIBC World Markets analyst Robert Sedran was also underwhelmed, saying that the weaker results will be mainly seen for their immediate effect by investors, rather than any longer-term perspective.

“Overall, the results came in below expectations, a common thread running through life insurance company results this quarter,” he wrote.

Also Thursday, Manulife Financial Corp. (TSX:MFC) missed analyst expectations when its overall profit was buoyed by the sale of its Taiwan business.

The Toronto-based company, Canada’s largest life insurance business, said its core earnings were $685 million, or 35 cents per share — about three cents below analyst estimates of 38 cents per share, according to Thomson Reuters.

Sun Life Financial Inc. (TSX:SLF) managed to beat expectations late Wednesday when it reported that operating profit nearly doubled to $642 million or $1.05 per share — an increase from 56 cents a year ago and well above analyst expectations of 68 cents.

Shares of Sun Life were the sole gainer of the three insurers on Thursday, with its shares rising two per cent to $38.35 on the Toronto Stock Exchange.

Manulife fell a penny to $20.90 per share, while Great-West Life dropped more than three per cent, or $1.04, to $30.85.

Great West Life chief executive Paul Mahon said the results showed “underlying strength” that included revenue growth and a stronger capital position.

“This was somewhat muted by in period operating challenges,” he said in a conference call.

The results were affected by a higher number of people who contracted illnesses or diseases in Canada, while the number of mortalities in the U.S. were also greater than expected, all together impacting results by about $17 million, it said.

Total premiums and deposits for the quarter were $22.6 billion, up 34 per cent from $16.8 billion a year ago, including $4 billion from Irish Life.

Great-West Life acquired Irish Life, formerly part of a larger group called Irish Life & Permanent, from the Government of Ireland last year for $1.75 billion.

European insurance and annuities sales increased 270 per cent to $4.8 billion in the quarter, including $3.8 billion in sales from Irish Life.

Great-West is one of Canada’s largest insurance and wealth management companies and is part of the Power Corporation (TSX:POW) group of companies, one of Canada’s largest non-bank financial conglomerates.