Insurer Great-West raises dividend as quarterly profit rises on investments

Great-West Lifeco Inc., Canada’s largest life insurer, reported an increase in profit after Hurricane Florence and one-time tax adjustments, while spending more on marketing and improving technology. RBC Dominion Securities Inc. estimates “the bump…

Insurer Great-West raises dividend as quarterly profit rises on investments

Great-West Lifeco Inc., Canada’s largest life insurer, reported an increase in profit after Hurricane Florence and one-time tax adjustments, while spending more on marketing and improving technology.

RBC Dominion Securities Inc. estimates “the bump in contributions coming from Great-West Lifeco’s key Windsor Group life business will help compensate for the proposed separation of its Groupe ING property and casualty business from the group result.”

For the third quarter, Great-West reported adjusted net income of $507 million, or 90 cents per share, up from $490 million or 85 cents a year earlier.

Adjusted net income — a measure of earnings excluding one-time items and actuarial gains or losses that was upgraded by Barclays PLC in 2017 as a more comparable statistic than net income — amounted to $112 million or 11 cents per share, well above the company’s 15-cent consensus estimate from analysts surveyed by Thomson Reuters Eikon.

“All of our businesses delivered strong results despite the challenges in the market and the hurricanes,” said Gerald McCaughey, president and chief executive of Great-West Lifeco.

“Great-West Lifeco accomplished this with an organic growth focus on expanding our businesses in good markets, and strong expense control. Our financial performance and distribution efficiency gives us the opportunity to raise the company’s quarterly dividend for the first time in six years.”

The net earnings were up from a one-time $139 million income tax benefit and Hurricane Florence related expenses of $83 million in Canada and $13 million in the U.S.

On an adjusted basis, Great-West’s profit increased by 14 per cent to $1.1 billion or $1.72 per share, from $902 million or $1.49 per share a year earlier.

The results also include an after-tax gain of $303 million attributed to the consolidation of the ING Vaya insurance businesses in Belgium and Spain, partially offset by $169 million of loss related to “goodwill adjustments associated with previous strategic acquisitions.”

Great-West Lifeco’s Great West Commercial business saw a small decrease in net income, while earnings increased at its Corporate & Investment Group business and Great-West Life Assurance Co. of Canada, the company’s largest underwriter. The U.S. combined ratio — a measure of operating expenses as a percentage of premiums — was 122.2 per cent, an improvement from 118.2 per cent the previous year.

Great-West Life Assurance Co. paid out $249 million in dividends, up 11 per cent from a year earlier.

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