SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 29, 2004
----------------
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
-------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 333-1173 84-0467907
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
8515 East Orchard Road, Greenwood Village, Colorado 80111
--------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(303) 737-3000
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit Number Title
99 Great-West Lifeco Press Release dated January 29, 2004
ITEM 9. REGULATION FD DISCLOSURE
On January 29, 2004, Great-West Lifeco Inc., an indirect Canadian parent company
of the Registrant, issued a press release regarding its financial results for
the fiscal year ended 2003. The press release includes a discussion of the
financial results of the Registrant. A copy of the press release is attached as
Exhibit 99 hereto. The dollar amounts referred to in the press release are in
Canadian dollars unless otherwise stated.
ITEM 12. DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On January 29, 2004, Great-West Lifeco Inc., an indirect Canadian parent company
of the Registrant, issued a press release regarding its financial results for
the fiscal year ended 2003. The press release includes a discussion of the
financial results of the Registrant. A copy of the press release is attached as
Exhibit 99 hereto. The dollar amounts referred to in the press release are in
Canadian dollars unless otherwise stated.
This Form 8-K contains forward-looking statements. Forward-looking statements
are statements not based on historical information and which relate to future
operations, strategies, financial results or other developments. In particular,
statements using verbs such as "expect," "anticipate," "believe" or words of
similar import generally involve forward-looking statements. Without limiting
the foregoing, forward-looking statements include statements which represent the
Registrant's beliefs concerning future or projected levels of sales of the
Registrant's products, investment spreads or yields, or the earnings or
profitability of the Registrant's activities. Forward-looking statements are
necessarily based upon estimates and assumptions that are inherently subject to
significant business, economic and competitive uncertainties and contingencies,
many of which are beyond the Registrant's control and many of which, with
respect to future business decisions, are subject to change. These uncertainties
and contingencies can affect actual results and could cause actual results to
differ materially from those expressed in any forward-looking statements made
by, or on behalf of, the Registrant. Whether or not actual results differ
materially from forward-looking statements may depend on numerous foreseeable
and unforeseeable events or developments, some of which may be national in
scope, such as general economic conditions and interest rates, some of which may
be related to the insurance industry generally, such as pricing competition,
regulatory developments and industry consolidation, and others of which may
relate to the Registrant specifically, such as credit, volatility and other
risks associated with the Registrant's investment portfolio, and other factors.
Readers are also directed to consider other risks and uncertainties discussed in
documents filed by the Registrant and certain of its subsidiaries with the
Securities and Exchange Commission.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 29, 2004
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By:/s/ Richard G. Schultz
---------------------------
Name: Richard G. Schultz
Title: Vice President, Counsel and Associate
Secretary
GREAT-WEST LIFECO INC.
RELEASE
Readers are referred to the disclaimer regarding Forward-Looking Information and
Non-GAAP Financial Measures at the end of this Release.
TSX:GWO
Great-West Lifeco reports 2003 results and dividend increase
Winnipeg, January 29, 2004 ... Great-West Lifeco Inc. (Lifeco) has reported net
income attributable to common shareholders, excluding restructuring charges
related to the acquisition of Canada Life Financial Corporation (CLFC), of $365
million for the fourth quarter of 2003, compared to $235 million reported a year
ago, an increase of 55%. On a per share basis, this represents $0.822 per common
share for the fourth quarter of 2003, an increase of 28.2%, compared to a year
ago. Net income, after restructuring costs, attributable to common shareholders
for the quarter was $357 million or $0.806 per common share.
For the twelve months ended December 31, 2003, net income attributable to common
shareholders, excluding restructuring charges, was $1,215 million, an increase
of 31% compared to $931 million for 2002, or $2.998 per common share, an
increase of 18.5% compared to $2.530 per common share for 2002. Net income,
after restructuring costs, attributable to common shareholders was $1,195
million or $2.950 per common share for the twelve months of 2003. The results of
CLFC are included from July 10, 2003.
Highlights
o For the fourth quarter of 2003, common shareholder net income, excluding
restructuring charges, increased 55% and earnings per common share, on the
same basis, increased 28% over the fourth quarter of 2002.
o The Canada Life acquisition contributed approximately $0.115 per common
share to fourth quarter earnings, which represents 16.3% accretion in
quarter.
o Return on common shareholders' equity, excluding restructuring costs, was
20.7% for the twelve months ended December 31, 2003.
o Quarterly dividends declared were 32.25(cent) per common share, an increase
of 3.0(cent) per share, payable March 31, 2004. Dividends paid on common
shares for the twelve months of 2003 were 19% higher than a year ago.
- 2 -
Consolidated net earnings for Lifeco are the net operating earnings of The
Great-West Life Assurance Company, Canada Life Financial Corporation from the
date of acquisition, as well as London Life Insurance Company (London Life) and
Great-West Life & Annuity Insurance Company (GWL&A), together with Lifeco's
corporate results.
Canada/Europe Segment
Canada/Europe consolidated net earnings of Lifeco attributable to common
shareholders for the fourth quarter of 2003 increased 72% to $200 million from
$116 million a year ago. For the twelve months ended December 31, 2003, earnings
were up 43% to $629 million, compared to $441 million at December 31, 2002.
The increases were due to both strong operating earnings from Great-West and
London Life, as well as the inclusion of Canada/Europe results for CLFC from
date of acquisition - July 10, 2003, which represents earnings of approximately
$124 million, net of related financing costs.
Total premiums and deposits for the twelve months ended December 31, 2003
increased $3.5 billion from 2002 levels, with the fourth quarter of 2003 up $2.2
million. The increase reflects the inclusion in 2003 of $4.0 billion of CLFC
premiums and deposits, mitigated by lower reinsurance premiums.
Fee income increased $234 million in 2003 to $654 million, including $209
million related to CLFC in 2003.
Total assets under administration at December 31, 2003 were $112.1 billion,
which includes $49.8 billion attributable to CLFC.
united states segment
United States consolidated net earnings of Lifeco attributable to common
shareholders for the fourth quarter of 2003 increased 39% to $166 million from
$119 million a year ago. For the twelve months ended December 31, 2003, earnings
were up 21% to $593 million compared to $490 million at December 31, 2002.
The increases were primarily related to favourable results in Great-West
HealthcareSM and Financial Services, for GWL&A, as well as the inclusion of the
United States operations for CLFC from the date of acquisition - July 10, 2003,
which represents approximately $45 million.
Total premiums and deposits for the twelve months ended December 31, 2003
decreased US$ 784 million from 2002 levels, with fourth quarter of 2003
essentially the same as a year ago. The inclusion of CLFC results from date of
acquisition impacted full year results by US$ 222 million. In-quarter continued
focus on Healthcare profitability resulted in a year-over-year decrease in
revenue which was essentially offset in Financial Services by 401(k) sales.
- 3 -
The decrease in fee income in 2003 is attributable to both the Group health ASO
business and the reductions in segregated funds deposits.
Total assets under administration were $47.1 billion at December 31, 2003,
including $8.3 billion attributable to the U.S. operations of CLFC.
LIFECO CORPORATE
Corporate net earnings results for Lifeco, attributable to common shareholders,
were a net charge of $27 million comprised mostly of restructuring costs of $20
million incurred to December 31, 2003 related to the CLFC acquisition.
Quarterly Dividends
At its meeting today, the Board of Directors approved a quarterly dividend of
$0.3225 per share on the common shares of the Company payable March 31, 2004 to
shareholders of record at the close of business March 3, 2004.
In addition, the Directors approved quarterly dividends on:
o Series D First Preferred Shares $0.293750 per share;
o Series E First Preferred Shares $0.30 per share; and
o Series F First Preferred Shares $0.36875 per share payable March 31,
2004 to shareholders of record at the close of business March 3, 2004;
o Class A, Series 1 Preferred Shares $0.3125 per share payable April 30,
2004 to shareholders of record at the close of business April 2, 2004.
Great-West Lifeco
Great-West Lifeco Inc. (TSX:GWO) is a financial services holding company with
interests in the life insurance, health insurance, retirement savings, and
reinsurance businesses. The Company has operations in Canada and internationally
through The Great-West Life Assurance Company, London Life Insurance Company and
The Canada Life Assurance Company, and in the United States through Great-West
Life & Annuity Insurance Company and The Canada Life Assurance Company. Lifeco
and its companies, including Canada Life have more than $159 billion in assets
under administration. Great-West Lifeco is a member of the Power Financial
Corporation group of companies.
- 4 -
Forward-Looking Information and Non-GAAP Financial Measures
This release may contain forward-looking statements about the Company, including
its business operations, strategy and expected financial performance and
condition. Forward-looking statements include statements that are predictive in
nature, depend upon or refer to future events or conditions, or include words
such as "expects", "anticipates", "intends", "plans", "believes", "estimates" or
negative versions thereof and similar expressions. In addition, any statement
that may be made concerning future financial performance (including revenues,
earnings or growth rates), ongoing business strategies or prospects, and
possible future Company action, is also a forward-looking statement.
Forward-looking statements are based on current expectations and projections
about future events and are inherently subject to, among other things, risks,
uncertainties and assumptions about the Company, economic factors and the
insurance industry generally. They are not guarantees of future performance, and
actual events and results could differ materially from those expressed or
implied by forward-looking statements made by the Company due to, but not
limited to, important factors such as general economic, political and market
factors in North America and internationally, interest and foreign exchange
rates, global equity and capital markets, business competition, technological
change, changes in government regulations, unexpected judicial or regulatory
proceedings, catastrophic events, and the Company's ability to complete
strategic transactions and integrate acquisitions. We caution that the foregoing
list of important factors is not exhaustive. The reader is cautioned to consider
these and other factors carefully and not place undue reliance on
forward-looking statements. The Company has no specific intention to update any
forward-looking statements whether as a result of new information, future events
or otherwise.
Net income, basic earnings per common share and return on common shareholders'
equity are presented before restructuring as a measure of earnings performance
excluding acquisition related restructuring charges. These are non-GAAP
financial measures that do not have standard meanings and are not directly
comparable to similar measures used by other issuers.
Further information
Selected financial information is attached.
Great-West Lifeco's fourth quarter analyst teleconference will be held Thursday,
January 29, at 2:00 p.m. (Eastern). The call can be accessed through
www.greatwestlifeco.com or by phone, through listen-only lines at:
o Participants in the Toronto area: 416-405-9328
o Participants from North America: 1-800-387-6216
o Participants from Overseas: Dial international access code first, then
800-7664-7664.
A replay of the call will be available from January 29, until February 5, and
can be accessed by calling 1-800-408-3053 or 416-695-5800 in Toronto (passcode:
1520381).
- end -
For more information contact:
Marlene Klassen
Director, Media & Public Relations
(204) 946-7705
marlene.klassen@gwl.ca
FINANCIAL HIGHLIGHTS
(in millions of dollars except per common share amounts) (unaudited)
For the three months ended For the year ended
December 31 December 31
----------------------------- ------------------------------
----------------------------- ------------------------------
2003 2002 % Change 2003 2002 % Change
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Premiums:
Life insurance, guaranteed annuities
and insured health products $ 3,759 $ 2,880 31% $ 12,441 $ 11,187 11%
Self-funded premium equivalents
(ASO contracts) (1) 1,932 2,366 -18% 8,218 9,564 -14%
Segregated funds deposits: (1)
Individual products 1,193 464 157% 3,034 2,293 32%
Group products 1,487 1,056 41% 4,510 4,382 3%
----------------------------- ------------------------------
----------------------------- ------------------------------
Total premiums and deposits 8,371 6,766 24% 28,203 27,426 3%
Bulk reinsurance - initial ceded premiums (2) 57 - (5,372) -
----------------------------- ------------------------------
----------------------------- ------------------------------
Net premiums and deposits 8,428 6,766 22,831 27,426
----------------------------- ------------------------------
----------------------------- ------------------------------
Fee and other income 501 428 17% 1,831 1,807 1%
Paid or credited to policyholders (2) 4,124 3,159 31% 8,346 12,593 -34%
Net income attributable to:
Preferred shareholders 14 8 75% 41 31 32%
Common shareholders before restructuring 365 235 55% 1,215 931 31%
costs
Restructuring costs (3) 8 - 20 -
Common shareholders 357 235 52% 1,195 931 28%
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Per Common Share
Basic earnings before restructuring costs ($)0.822 $ 0.641 28.2% $ 2.998 $ 2.530 18.5%
Restructuring costs after tax (3) 0.016 - 0.048 -
Basic earnings after restructuring costs 0.806 0.641 25.7% 2.950 2.530 16.6%
Dividends paid 0.2925 0.2475 18.2% 1.1250 0.945 19.0%
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Return on common shareholders' equity (12 months):
Net income before restructuring costs 20.7% 22.9%
Net income 20.4% 22.9%
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
At December 31
Total assets $ 97,451 $ 60,071 62%
Segregated funds assets (1) 61,699 36,048 71%
------------------------------
------------------------------
Total assets under administration $ 159,150 $ 96,119 66%
==============================
==============================
Capital stock and surplus 8,590 4,708 82%
Book value per common share 16.72 11.68 43%
(1) Segregated funds deposits and self-funded premium equivalents (ASO
contracts) The financial statements of a life insurance company do not
include the assets, liabilities, deposits and withdrawals of segregated
funds or the claims payments related to administrative services only (ASO)
Group health contracts. However, the Company does earn fee and other income
related to these contracts. Both segregated fund and ASO contracts are an
important aspect of the overall business of the Company and should be
considered when comparing volumes, size and trends.
(2) During 2003, as part of a risk rebalancing program related to the
acquisition of Canada Life Financial Corporation (CLFC), a number of bulk
reinsurance ceded contracts were executed by The Great-West Life Assurance
Company (Great-West) and Great-West Life & Annuity Insurance Company
(GWL&A) with third parties. Premiums related to the initial cession of in
force policy liabilities were $5,372.
(3) Following the acquisition of CLFC by the Company, a plan was developed to
restructure and exit selected operations of CLFC. Costs of $497 before tax
are expected to be incurred as a result, including approximately $412 that
was recognized as part of the purchase equation of CLFC, and $85 to be
charged to income as it is incurred. Of this latter amount, shareholder net
income for the year ended December 31, 2003 includes restructuring costs of
$20 after tax or $0.048 per common share; shareholder net income for the
quarter ended December 31, 2003 includes restructuring costs of $8 after
tax or $0.016 per common share. Net income, basic earnings per common share
and return on common shareholders' equity are presented before
restructuring as a measure of earnings performance, excluding restructuring
charges related to the acquisition of CLFC, and incurred during the period.
SUMMARY OF CONSOLIDATED OPERATIONS
(in millions of dollars except earnings per common share) (unaudited)
For the three months For the year
ended December 31 ended December 31
-----------------------------------------------
-----------------------------------------------
2003 2002 2003 2002
----------- -----------------------------------
----------- -----------------------------------
Income
Premium income $ 3,759 $ 2,880 $ 12,441 $ 11,187
Bulk reinsurance - initial ceded premiums 57 - (5,372) -
----------- -----------------------------------
----------- -----------------------------------
3,816 2,880 7,069 11,187
Net investment income 1,362 934 4,529 3,638
Fee and other income 501 428 1,831 1,807
----------- -----------------------------------
----------- -----------------------------------
5,679 4,242 13,429 16,632
----------- -----------------------------------
----------- -----------------------------------
Benefits and Expenses
Paid or credited to policyholders and
beneficiaries including policyholder
dividends and experience refunds 4,124 3,159 8,346 12,593
Commissions 298 187 919 718
Operating expenses 597 457 2,036 1,786
Restructuring costs 10 - 31 -
Premium taxes 41 17 156 109
Amortization of intangible assets 7 - 7 -
Distribution on Capital Trust Securities 9 1 28 1
----------- -----------------------------------
----------- -----------------------------------
Net income before income taxes 593 421 1,906 1,425
Income taxes- current 254 100 728 397
- future (80) 47 (178) 33
----------- -----------------------------------
----------- -----------------------------------
Net income before non-controlling interests 419 274 1,356 995
Non-controlling interests 48 31 120 33
----------- -----------------------------------
----------- -----------------------------------
Net income $ 371 $ 243 $ 1,236 $ 962
=========== ===================================
=========== ===================================
Earnings per common share
Basic $ 0.806 $ 0.641 $ 2.950 $ 2.530
=========== ===================================
=========== ===================================
Diluted $ 0.800 $ 0.634 $ 2.922 $ 2.499
=========== ===================================
=========== ===================================
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Summary of Net Income
Preferred shareholder dividends $ 14 $ 8 $ 41 $ 31
Net income - common shareholders 357 235 1,195 931
----------- -----------------------------------
----------- -----------------------------------
Net income $ 371 $ 243 $ 1,236 $ 962
=========== ===================================
=========== ===================================
Average number of shares outstanding - basic 405,047,394 367,987,648
Average number of shares outstanding - diluted 408,973,205 372,607,557
CONSOLIDATED BALANCE SHEET
(in millions of dollars) (unaudited)
December 31, December 31,
2003 2002
-------------- -------------
-------------- -------------
Assets
Bonds $ 54,208 $ 33,764
Mortgage loans 15,088 7,850
Stocks 3,199 1,581
Real estate 1,594 1,267
Loans to policyholders 6,566 6,177
Cash and certificates of deposit 2,461 912
Funds withheld by ceding insurers 4,142 4,786
Premiums in course of collection 448 305
Interest due and accrued 882 511
Future income taxes 482 138
Goodwill and intangible assets 6,663 1,687
Other assets 1,718 1,093
-------------- -------------
-------------- -------------
Total assets $ 97,451 $ 60,071
============== =============
============== =============
Liabilities
Policy liabilities
Actuarial liabilities $ 66,999 $ 44,508
Provision for claims 1,092 645
Provision for policyholder dividends 544 363
Provision for experience rating refunds 840 927
Policyholder funds 2,023 1,853
-------------- -------------
-------------- -------------
71,498 48,296
Commercial paper and other loans 2,576 1,012
Current income taxes 619 454
Funds held under reinsurance contracts 4,655 -
Other liabilities 4,355 2,081
Repurchase agreements 503 511
Net deferred gains on portfolio investments sold 2,237 958
-------------- -------------
-------------- -------------
86,443 53,312
Non-controlling interests 2,418 2,051
Capital Stock and Surplus
Capital stock 5,783 1,982
Surplus 2,993 2,382
Provision for unrealized gain on translation
of net investment in foreign operations (186) 344
-------------- -------------
-------------- -------------
8,590 4,708
-------------- -------------
-------------- -------------
Liabilities, capital stock and surplus $ 97,451 $ 60,071
============== =============
============== =============
Segmented Information (unaudited)
Consolidated Operations
For the Three Months Ended December 31, 2003
Canada/Europe
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Shareholder Participating
----------------------------------------------------- --------------------
----------------------------------------------------- ---------
Individual
Insurance & Total
Group Investment Europe/ Canada/
Insurance Products Reinsurance Corporate Total Total Europe
--------- --------- ----------- --------- ----------- --------- ----------
--------- --------- ----------- --------- ----------- --------- ----------
Income:
Premium income $ 674 $ 351 $ 1,546 $ - $ 2,571 $ 513 $ 3,084
Bulk reinsurance - initial
ceded premium - - - - - - -
--------- --------- ----------- --------- ----------- --------- ----------
--------- --------- ----------- --------- ----------- --------- ----------
674 351 1,546 - 2,571 513 3,084
Net investment income 74 280 230 (14) 570 356 926
Fee and other income 31 133 66 - 230 (1) 229
--------- --------- ----------- --------- ----------- --------- ----------
--------- --------- ----------- --------- ----------- --------- ----------
Total income 779 764 1,842 (14) 3,371 868 4,239
--------- --------- ----------- --------- ----------- --------- ----------
--------- --------- ----------- --------- ----------- --------- ----------
Benefits and Expenses:
Paid or credited to 535 441 1,628 4 2,608 675 3,283
policyholders
Other 183 177 122 1 483 94 577
Restructuring costs - - - - - - -
Amortization of intangible
assets - - - 7 7 - 7
Distribution on Capital
Trust Securities - - - 9 9 - 9
--------- --------- ----------- --------- ----------- --------- ----------
--------- --------- ----------- --------- ----------- --------- ----------
Net operating income
before income taxes 61 146 92 (35) 264 99 363
Income taxes 16 48 2 (20) 46 60 106
--------- --------- ----------- --------- ----------- --------- ----------
--------- --------- ----------- --------- ----------- --------- ----------
Net income before
non-controlling interests 45 98 90 (15) 218 39 257
Non-controlling interests - - - 4 4 39 43
--------- --------- ----------- --------- ----------- --------- ----------
--------- --------- ----------- --------- ----------- --------- ----------
Net income $ 45 $ 98 $ 90 $ (19) $ 214 $ - $ 214
========= ========= =========== ========= =========== ========= ==========
========= ========= =========== ========= =========== ========= ==========
Summary of Net Income
Preferred shareholder $ - $ - $ - $ 14 $ 14 $ - $ 14
dividends
Net income - common
shareholders 45 98 90 (33) 200 - 200
--------- --------- ----------- --------- ----------- --------- ----------
--------- --------- ----------- --------- ----------- --------- ----------
Net income $ 45 $ 98 $ 90 $ (19) $ 214 $ - $ 214
========= ========= =========== ========= =========== ========= ==========
========= ========= =========== ========= =========== ========= ==========
For the Three Months Ended December 31, 2003
United States
-----------------------------------------------------------
-----------------------------------------------------------
Shareholder Participating Total
Financial Total Lifeco
Healthcare Services Corporate Total Total U.S. Corporate Total
------------------ -------- -------------------- ----------------------------
-------- -------- -------- -------------------- ----------------------------
Income:
Premium income $ 193 $ 343 $ - $ 536 $ 139 $ 675 $ - $ 3,759
Bulk reinsurance - initial
ceded premium 12 45 - 57 - 57 - 57
-------- -------- -------- -------------------- ----------------------------
-------- -------- -------- -------------------- ----------------------------
205 388 - 593 139 732 - 3,816
Net investment income 53 252 9 314 120 434 2 1,362
Fee and other income 192 79 1 272 - 272 - 501
-------- -------- -------- -------------------- ----------------------------
-------- -------- -------- -------------------- ----------------------------
Total income 450 719 10 1,179 259 1,438 2 5,679
-------- -------- -------- -------------------- ----------------------------
-------- -------- -------- -------------------- ----------------------------
Benefits and Expenses:
Paid or credited to
policyholders 87 504 (1) 590 251 841 - 4,124
Other 251 89 3 343 14 357 2 936
Restructuring costs - - - - - - 10 10
Amortization of intangible
assets - - - - - - - 7
Distribution on Capital
Trust Securities - - - - - - - 9
-------- -------- -------- -------------------- ----------------------------
-------- -------- -------- -------------------- ----------------------------
Net operating income
before income taxes 112 126 8 246 (6) 240 (10) 593
Income taxes 38 45 (3) 80 (11) 69 (1) 174
-------- -------- -------- -------------------- ----------------------------
-------- -------- -------- -------------------- ----------------------------
Net income before non-controlling
interests 74 81 11 166 5 171 (9) 419
Non-controlling interests - - - - 5 5 - 48
-------- -------- -------- -------------------- ----------------------------
-------- -------- -------- -------------------- ----------------------------
Net income $ 74 $ 81 $ 11 $ 166 $ - $ 166 $ (9) $ 371
======== ======== ======== ==================== ============================
======== ======== ======== ==================== ============================
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ - $ - $ - $ - $ 14
Net income - common
shareholders 74 81 11 166 - 166 (9) 357
-------- -------- -------- -------------------- ----------------------------
-------- -------- -------- -------------------- ----------------------------
Net income $ 74 $ 81 $ 11 $ 166 $ - $ 166 $ (9) $ 371
======== ======== ======== ==================== ============================
======== ======== ======== ==================== ============================
For the Three Months Ended December 31, 2002
Canada
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Shareholder Participating
--------------------------------------------------------------
--------------------------------------------------------------
Individual
Insurance &
Group Investment Total
Insurance Products Reinsurance Corporate Total Total Canada
--------- -------- --------- --------- --------------------- ----------
--------- -------- --------- --------- --------------------- ----------
Income:
Premium income $ 568 $ 172 $ 1,040 $ 6 $ 1,786 $ 354 $ 2,140
Net investment income 51 118 117 32 318 246 564
Fee and other income 18 81 1 4 104 - 104
--------- -------- --------- --------- --------------------- ----------
--------- -------- --------- --------- --------------------- ----------
Total income 637 371 1,158 42 2,208 600 2,808
--------- -------- --------- --------- --------------------- ----------
--------- -------- --------- --------- --------------------- ----------
Benefits and Expenses:
Paid or credited to 476 180 1,146 8 1,810 493 2,303
policyholders
Other 108 84 8 3 203 64 267
Distribution on Capital
Trust Securities - - - 1 1 - 1
--------- -------- --------- --------- --------------------- ----------
--------- -------- --------- --------- --------------------- ----------
Net operating income
before income taxes 53 107 4 30 194 43 237
Income taxes 19 46 (3) 3 65 26 91
--------- -------- --------- --------- --------------------- ----------
--------- -------- --------- --------- --------------------- ----------
Net income before
non-controlling interests 34 61 7 27 129 17 146
Non-controlling interests - - - 5 5 17 22
--------- -------- --------- --------- --------------------- ----------
--------- -------- --------- --------- --------------------- ----------
Net income $ 34 $ 61 $ 7 $ 22 $ 124 $ - $ 124
========= ======== ========= ========= ===================== ==========
========= ======== ========= ========= ===================== ==========
Summary of Net Income
Preferred shareholder $- $ - $ - $ 8 $ 8 $ - $ 8
dividends
Net income - common
shareholders 34 61 7 14 116 - 116
--------- -------- --------- --------- --------------------- ----------
--------- -------- --------- --------- --------------------- ----------
Net income $ 34 $ 61 $ 7 $ 22 $ 124 $ - $ 124
========= ======== ========= ========= ===================== ==========
========= ======== ========= ========= ===================== ==========
For the Three Months Ended December 31, 2002
United States
--------------------------------------------------------
--------------------------------------------------------
Shareholder Participating Total
Financial Total Lifeco
Healthcare Services Corporate Total Total U.S. Corporate Total
-------- --------- --------- -------- -------- -------- -------- ---------
-------- --------- --------- -------- -------- -------- -------- ---------
Income:
Premium income $ 378 $ 243 $ - $ 621 $ 119 $ 740 $ - $ 2,880
Net investment income 24 197 5 226 144 370 - 934
Fee and other income 238 85 1 324 - 324 - 428
-------- --------- --------- -------- -------- -------- -------- ---------
-------- --------- --------- -------- -------- -------- -------- ---------
Total income 640 525 6 1,171 263 1,434 - 4,242
-------- --------- --------- -------- -------- -------- -------- ---------
-------- --------- --------- -------- -------- -------- -------- ---------
Benefits and Expenses:
Paid or credited to
policyholders 253 351 (1) 603 253 856 - 3,159
Other 292 92 5 389 5 394 - 661
Distribution on Capital
Trust Securities - - - - - - - 1
-------- --------- --------- -------- -------- -------- -------- ---------
-------- --------- --------- -------- -------- -------- -------- ---------
Net operating income
before income taxes 95 82 2 179 5 184 - 421
Income taxes 34 24 2 60 (4) 56 - 147
-------- --------- --------- -------- -------- -------- -------- ---------
-------- --------- --------- -------- -------- -------- -------- ---------
Net income before non-controlling
interests 61 58 - 119 9 128 - 274
Non-controlling interests - - - - 9 9 - 31
-------- --------- --------- -------- -------- -------- -------- ---------
-------- --------- --------- -------- -------- -------- -------- ---------
Net income $ 61 $ 58 $ - $ 119 $ - $ 119 $ - $ 243
======== ========= ========= ======== ======== ======== ======== =========
======== ========= ========= ======== ======== ======== ======== =========
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ - $ - $ - $ - $ 8
Net income - common
shareholders 61 58 - 119 - 119 - 235
-------- --------- --------- -------- -------- -------- -------- ---------
-------- --------- --------- -------- -------- -------- -------- ---------
Net income $ 61 $ 58 $ - $ 119 $ - $ 119 $ - $ 243
======== ========= ========= ======== ======== ======== ======== =========
======== ========= ========= ======== ======== ======== ======== =========
For the Year Ended December 31, 2003
Canada/Europe
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Shareholder Participating
---------------------------------------------------- ---------
---------------------------------------------------- ---------
Individual
Insurance & Total
Group Investment Europe/ Canada/
Insurance Products Reinsurance Corporate Total Total Europe
--------- -------- --------- ---------- ---------- --------- ----------
--------- -------- --------- ---------- ---------- --------- ----------
Income:
Premium income $2,428 $ 1,054 $ 4,592 $ - $ 8,074 $ 1,681 $ 9,755
Bulk reinsurance - initial
ceded premium (2,716) - - - (2,716) - (2,716)
--------- -------- --------- ---------- ---------- --------- ----------
--------- -------- --------- ---------- ---------- --------- ----------
(288) 1,054 4,592 - 5,358 1,681 7,039
Net investment income 252 766 726 42 1,786 1,219 3,005
Fee and other income 95 412 126 21 654 - 654
--------- -------- --------- ---------- ---------- --------- ----------
--------- -------- --------- ---------- ---------- --------- ----------
Total income 59 2,232 5,444 63 7,798 2,900 10,698
--------- -------- --------- ---------- ---------- --------- ----------
--------- -------- --------- ---------- ---------- --------- ----------
Benefits and Expenses:
Paid or credited to
policyholders (799) 1,289 5,007 13 5,510 2,356 7,866
Other 590 525 282 25 1,422 320 1,742
Restructuring costs - - - - - - -
Amortization of intangible
assets - - - 7 7 - 7
Distribution on Capital
Trust Securities - - - 28 28 - 28
--------- -------- --------- ---------- ---------- --------- ----------
--------- -------- --------- ---------- ---------- --------- ----------
Net operating income
before income taxes 268 418 155 (10) 831 224 1,055
Income taxes 74 110 6 (44) 146 123 269
--------- -------- --------- ---------- ---------- --------- ----------
--------- -------- --------- ---------- ---------- --------- ----------
Net income before non-controlling
interests 194 308 149 34 685 101 786
Non-controlling interests - - 1 14 15 101 116
--------- -------- --------- ---------- ---------- --------- ----------
--------- -------- --------- ---------- ---------- --------- ----------
Net income $ 194 $ 308 $ 148 $ 20 $ 670 $ - $ 670
========= ======== ========= ========== ========== ========= ==========
========= ======== ========= ========== ========== ========= ==========
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ 41 $ 41 $ - $ 41
Net income - common
shareholders 194 308 148 (21) 629 - 629
--------- -------- --------- ---------- ---------- --------- ----------
--------- -------- --------- ---------- ---------- --------- ----------
Net income $ 194 $ 308 $ 148 $ 20 $ 670 $ - $ 670
========= ======== ========= ========== ========== ========= ==========
========= ======== ========= ========== ========== ========= ==========
For the Year Ended December 31, 2003
United States
----------------------------------------------------------
----------------------------------------------------------
Shareholder Participating Total
Financial Total Lifeco
Healthcare Services Corporate Total Total U.S. Corporate Total
--------- --------- -------- --------- --------- -------- ------------------
--------- --------- -------- --------- --------- -------- ------------------
Income:
Premium income $1,299 $ 967 $ - $2,266 $ 420 $2,686 $ - $ 12,441
Bulk reinsurance - initial
ceded premium (563) (2,093) - (2,656) - (2,656) - (5,372)
--------- --------- -------- --------- --------- -------- ------------------
--------- --------- -------- --------- --------- -------- ------------------
736 (1,126) - (390) 420 30 - 7,069
Net investment income 164 834 39 1,037 485 1,522 2 4,529
Fee and other income 848 324 4 1,176 1 1,177 - 1,831
--------- --------- -------- --------- --------- -------- ------------------
--------- --------- -------- --------- --------- -------- ------------------
Total income 1,748 32 43 1,823 906 2,729 2 13,429
--------- --------- -------- --------- --------- -------- ------------------
--------- --------- -------- --------- --------- -------- ------------------
Benefits and Expenses:
Paid or credited to
policyholders 333 (719) (3) (389) 869 480 - 8,346
Other 973 336 16 1,325 40 1,365 4 3,111
Restructuring costs - - - - - - 31 31
Amortization of intangible
assets - - - - - - - 7
Distribution on Capital
Trust Securities - - - - - - - 28
--------- --------- -------- --------- --------- -------- ------------------
--------- --------- -------- --------- --------- -------- ------------------
Net operating income
before income taxes 442 415 30 887 (3) 884 (33) 1,906
Income taxes 154 140 - 294 (7) 287 (6) 550
--------- --------- -------- --------- --------- -------- ------------------
--------- --------- -------- --------- --------- -------- ------------------
Net income before non-controlling
interests 288 275 30 593 4 597 (27) 1,356
Non-controlling interests - - - - 4 4 - 120
--------- --------- -------- --------- --------- -------- ------------------
--------- --------- -------- --------- --------- -------- ------------------
Net income $ 288 $ 275 $ 30 $ 593 $ - $ 593 $(27) $ 1,236
========= ========= ======== ========= ========= ======== ==================
========= ========= ======== ========= ========= ======== ==================
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ - $ - $ - $ - $ 41
Net income - common
shareholders 288 275 30 593 - 593 (27) 1,195
--------- --------- -------- --------- --------- -------- ------------------
--------- --------- -------- --------- --------- -------- ------------------
Net income $ 288 $ 275 $ 30 $ 593 $ - $ 593 $(27) $ 1,236
========= ========= ======== ========= ========= ======== ==================
========= ========= ======== ========= ========= ======== ==================
For the Year Ended December 31, 2002
Canada
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Shareholder Participating
Individual
Insurance &
Group Investment Total
Insurance Products Reinsurance Corporate Total Total Canada
--------- -------- --------- --------- ----------- -------- -----------
--------- -------- --------- --------- ----------- -------- -----------
Income:
Premium income $ 2,220 $ 662 $ 3,922 $ 17 $ 6,821 $ 1,377 $ 8,198
Net investment income 205 463 474 98 1,240 909 2,149
Fee and other income 68 332 2 18 420 - 420
--------- -------- --------- --------- ----------- --------------------
--------- -------- --------- --------- ----------- --------------------
Total income 2,493 1,457 4,398 133 8,481 2,286 10,767
--------- -------- --------- --------- ----------- --------------------
--------- -------- --------- --------- ----------- --------------------
Benefits and Expenses:
Paid or credited to
policyholders 1,868 741 4,338 37 6,984 1,994 8,978
Other 426 365 28 22 841 256 1,097
Distribution on Capital
Trust Securities - - - 1 1 - 1
--------- -------- --------- --------- ----------- --------------------
--------- -------- --------- --------- ----------- --------------------
Net operating income
before income taxes 199 351 32 73 655 36 691
Income taxes 74 139 2 (55) 160 36 196
--------- -------- --------- --------- ----------- --------------------
--------- -------- --------- --------- ----------- --------------------
Net income before non-controlling
interests 125 212 30 128 495 - 495
Non-controlling interests - - 1 22 23 - 23
--------- -------- --------- --------- ----------- --------------------
--------- -------- --------- --------- ----------- --------------------
Net income $ 125 $ 212 $ 29 $ 106 $ 472 $ - $ 472
========= ======== ========= ========= =========== ====================
========= ======== ========= ========= =========== ====================
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ 31 $ 31 $ - $ 31
Net income - common
shareholders 125 212 29 75 441 - 441
--------- -------- --------- --------- ----------- --------------------
--------- -------- --------- --------- ----------- --------------------
Net income $ 125 $ 212 $ 29 $ 106 $ 472 $ - $ 472
========= ======== ========= ========= =========== ====================
========= ======== ========= ========= =========== ====================
For the Year Ended December 31, 2002
United States
-----------------------------------------------------------
-----------------------------------------------------------
Shareholder Participating Total
Financial Total Lifeco
Healthcare Services Corporate Total Total U.S. Corporate Total
--------- --------- ---------- ------- ---------- -------- ---------- -------
--------- --------- ---------- ------- ---------- -------- ---------- -------
Income:
Premium income $ 1,577 $ 1,016 $ - $ 2,593 $ 396 $ 2,989 $ - $ 11,187
Net investment 98 813 17 928 561 1,489 - 3,638
income
Fee and other 1,036 350 1 1,387 - 1,387 - 1,807
income
--------- --------- ------------------ ---------- ---------------------------
--------- --------- ------------------ ---------- ---------------------------
Total income 2,711 2,179 18 4,908 957 5,865 - 16,632
--------- --------- ------------------ ---------- ---------------------------
--------- --------- ------------------ ---------- ---------------------------
Benefits and Expenses:
Paid or credited to
policyholders 1,208 1,484 (2) 2,690 925 3,615 - 12,593
Other 1,139 347 9 1,495 21 1,516 - 2,613
Distribution on Capital
Trust Securities - - - - - - - 1
--------- --------- ------------------ ---------- ---------------------------
--------- --------- ------------------ ---------- ---------------------------
Net operating income
before income taxes 364 348 11 723 11 734 - 1,425
Income taxes 121 107 5 233 1 234 - 430
--------- --------- ------------------ ---------- ---------------------------
--------- --------- ------------------ ---------- ---------------------------
Net income before non-controlling
interests 243 241 6 490 10 500 - 995
Non-controlling interests - - - - 10 10 - 33
--------- --------- ------------------ ---------- ---------------------------
--------- --------- ------------------ ---------- ---------------------------
Net income $ 243 $ 241 $ 6 $ 490 $ - $ 490 $ - $ 962
========= ========= ================== ========== ===========================
========= ========= ================== ========== ===========================
Summary of Net Income
Preferred shareholder
dividends $ - $ - $ - $ - $ - $ - $ - $ 31
Net income - common
shareholders 243 241 6 490 - 490 - 931
--------- --------- ------------------ ---------- ---------------------------
--------- --------- ------------------ ---------- ---------------------------
Net income $ 243 $ 241 $ 6 $ 490 $ - $ 490 $ - $ 962
========= ========= ================== ========== ===========================
========= ========= ================== ========== ===========================