Great-West Lifeco

Great-West Lifeco is an insurance centered financial holding company (corporation) that operates in North America (USA and Canada), Europe and Asia through 5 wholly owned, regionally focussed subsidiaries. Many of the companies it has indirect control over are part of its largest subsidiary The Great-West Life Assurance Company; the others (Great West Life & Annuities Financial Inc and Putnam Investments, LLC) are managed by US based subsidiary Great-West Lifeco US Inc. Great-West Lifeco is indirectly controlled by Montreal billionaire Paul Desmarais through his stake in the Power Corporation of Canada (owned by the family since 1968) which owns 72% (down slightly from 74.6% in 2005) of Great-West Lifeco.^[4][5] In the first half of 2011 premium income made up 63.99% of total revenue up from 56.07% hoh.^[2] The hyphen in the company's name was originally a typesetter's error.^[6]

On June 30, 2011, bonds accounted for 67% of current assets (up from 64.7% on January 1, 2010) and 31.2% of all assets while mortgage loans were the second biggest contributor to assets at 7.2% (stocks are at 3%). Assets under administration amount to $497.1 billion (up from $485.7B in September 2010) $301.5B of which is in the USA (up from $294.1B in Dec'10 and $295.7B in Sept'10), $128.4B in Canada (up from $126.9B in Dec'10, $122.4B in Sept'10), and $67.2B in Europe (compared to $66B in December and $67.6B in September). In Canada, net income for the first six months of 2011 was $505M (up 5%) on sales (including fund deposits which account for more than half) of $4.7B while in the USA net income was $216M (up from $126M) on sales of $20.5B (up from $18.4B) while net income in Europe fell to $233M (down from $275M because of $75M lost from earthquakes) on sales of $2B (down slightly).^[2] During the third quarter (2010) UK sales showed the most growth with sales up 45% followed closely by the USA financial services business (up 41%).^[7]

In 2009 100% owned subsidiary London Life ranked 14th among Canada's largest private companies.^[8]

History

The earliest roots of any of the companies under its management were set in 1847 Hamilton, Ontario by subsidiary Canada Life (then known as Canada Life Assurance Company); Current Canada Life parent The Great-West Life Assurance Company began in 1891 in Winnipeg. Its second oldest company London Life was founded in 1874 and taken over by Great-West in 1997, one year after it purchased the Canadian operations of the Prudential Insurance Company of America^[9] The original name of Canada Life included the word Assurance in place of insurance, something that was more common among British companies.^[10]

When created in 1890-1891, thirty-one of the 40 insurance companies in Canada were foreign-owned and none of the Canadian-based ones were managed from Western Canada. Great-West's founder started the company as an attempt to raise capital needed locally to develop farm land and retail businesses.^[1] Great-West's first president was Winnipeg mayor Alexander Macdonald who took on that role in 1892; the founder Jeffrey Hall Brock was managing director. Its first death claim was in 1893 for $1000, and in 1912 two Titanic policyholders were covered.^[11] In 1906 Great-West entered the American market starting in Fargo, North Dakota, followed by Michigan and Minnesota in 1920 and later Indiana, Missouri, Ohio, Kansas, California, and Pennsylvania in the early 1940s. Within its first decade it successfully entered Eastern Canada, had market exposure in every Canadian province and became one the industry's leading companies in terms of growth and size; by 1896 it was present throughout Canada. Brock got sick and was forced to leave Great-West in 1912, three years before he died. He was succeeded as CEO by C.C. Ferguson in 1915. During the next twenty years the company's finances were negatively affected by World War I, the 1918 flu epidemic and the great depression but its market position remained strong; the stock market crash of 1929 and World War II had a positive impact on the company. The company was highly diversified, with investments spread amongst mortgages and government bonds. Great-West's early success in Western Canada was due in part to high insurance rates and a lack of financing available to farmers.^[11] In 1979, US and Canadian operations became separate due mostly to rapid US growth. In 1969 Great-West was purchased by Power Corporation, which made it into a wholly owned subsidiary. In 1982, Great-West began offering a universal life policy which differed from those offered by competitors. Two years later, in 1984, the Power Financial Corporation was created to be a holding company for Great-West and its numerous businesses.^[6]

Great-West Lifeco began an acquisitions spree on February 17, 2003 when it purchased Canada Life Financial for US$4.7 billion followed by Indiana Health Network incIHN three years later in 2006 and Putnam Investment Trust on August 3, 2007 for $3.9 billion (from Marsh & McLennan Companies).^[12] On April 1, 2008 subsidiary Great-West Life & Annuity Insurance Company sold Denver based Great-West Healthcare to CIGNA for about US$1.9 billion.^[13] With the transaction Great-West Lifeco lost about 1.9 million customers (about three quarters of them medical employers).

Other acquisitions include the 2006 takeover of US Bancorp's retirement plans business which added $104 billion in assets at the time ^[14] and more retirement plans the same year but from MetLife.^[15]

Founder

Jeffry Hall Brock born in Guelph, Ontario received his education at Montreal's McGill College. Prior to Great-West he was a salesman in St. Louis, Missouri and later worked for R. G. Dunn & Company of New York followed by Ogilvie & Company. In 1876 he married Louisa Adelaide Clara, the daughter of a priest. He moved back to Winnipeg in 1877 and helped start W. R. Brock & Brother. He established the Great-West Company in 1892, the first insurance company in Western Canada.^[1]

Companies

Great West Life & Annuity Insurance Company - provides individuals and businesses in all of the USA's states with life insurance, retirement benefits (which are paid for by employers) and annuities distributed by its own brokers and institutions. This division began operations in the USA on May 28, 1997.^[5]

The Great West Life Assurance Company - Has over 12 million customers making it Canada's biggest insurance company. The subsidiary became Canada's leader in 2003 when it paid Cdn$7.3 billion (US$4.7 billion) for Canada Life Financial.^[4][16] Products include trust securities.

• Canada Life was founded in 1847 and operates in Ireland, Canada, the UK, Germany, and the Isle of Man. Business focusses on insurance (life, disability, creditor and critical illness) and wealth management. European business goes back to 1903 and provides different regions with different products (insurance and savings are offered in every region except the UK (where annuities and group insurance are provided) and Germany (where business comes from pensions and critical illness).

London Life - 130 year old business currently serving 2 million Canadians. Operates under the banners Great-West, Freedom 55 (savings, investments, retirement, insurance and mortgages), Quadrus Investment Services Ltd. (mutual funds), London Reinsurance Group (international business).

Putnam Investments (net sales up $4.7B in the first half of 2011 to $3.4B; sales up 35% in the third quarter of 2010) - Money manager in the business of fixed income equity, asset allocation in addition to other types of equity. customers include institutional investors. Putman accounts for 44.4% of total assets in the USA (in the form of mutual funds and institutional assets)^[7] and $124B worth of American mutual fund and institutional account assets under administration.^[2]

References