Great-West Lifeco Q2 profit rises 18 per cent to $615 million

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WINNIPEG – Great-West Lifeco Inc.. (TSX:GWO) says it had $615 million of net income in the second quarter, an 18 per cent increase from the same time last year.

The profit amounted to 61.6 cents per common share, up from 54.8 cents a year earlier, and in line with analyst estimates of 62 cents per share.

Irish Life, which was acquired last year by the Winnipeg-based company, contributed $57 million of net income in the three months ended June 30 — compared with $52 million in the first quarter of 2014 ended March 31.

Great-West said its Canadian segment, which includes London Life and Canada Life, contributed $304 million of the quarter’s overall net income, up eight per cent from a year before.

Its U.S. operations, which include Great-West Financial and Putnam Investments, had $69 million of net income down from $73 million. Its European segment, which includes Irish Life, had $246 million of net income up from $178 million a year ago.

Barclays analyst John Aiken said the company’s results were “solid” but “unlikely to generate much investor excitement.”

Successful cost-containment strategies, the acquisition of Irish Life and strong performance in Canada were highlighted as positives in Aiken’s note.

However, Great-West Life’s U.S. operations have reported only marginal earnings, effectively neutralizing growth of its book value. That, said Aiken, could affect Great-West’s stock price in the near future.

“Investors who believe in the Irish Life strategy are already behind the stock and, with only modest profitability improvement in Putnam, there is little in the second quarter’s earnings to reverse the opinion of those who are neutral or negative on the name,” said Aiken.

Great-West’s premiums and deposits totalled $20.35 billion, up from $15.2 billion a year earlier. Fee and other income was $1,11 billion, up from $831 million in the second quarter of 2013.

Great-West Life is part of the Power Corporation (TSX:POW) group of companies, along with IGM Financial (TSX:IGM) and Power Financial Corp. (TSX:PWF). Power Corporation’s Gesca subsidiary is one-third owner of The Canadian Press.

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