<Page>
Exhibit 3.6
GREAT-WEST LIFECO INC.
100 OSBORNE STREET NORTH
WINNIPEG, MANITOBA R3C 3A5
2001 ANNUAL INFORMATION FORM
DATED APRIL 25, 2002
<Page>
GREAT-WEST LIFECO INC.
2001 ANNUAL INFORMATION FORM
TABLE OF CONTENTS
<Table>
<Caption>
Page
----
General Information.......................................................2
Translation of United States dollars...................................2
Incorporation..........................................................2 - 3
General Development of the Business.......................................3
Narrative Description of the Business ....................................4
Products ..............................................................4 - 6
Marketing and Distribution.............................................6 - 7
Selected Consolidated Information......................................8 - 12
Investment Activities .................................................13 - 22
Accounting ............................................................23
Policy Liabilities ....................................................23
Income Taxes ..........................................................23 - 24
Premium Taxes .........................................................24
Management's Discussion and Analysis ..................................24
Market for Securities..................................................24
Glossary of Insurance and Financial Terms..............................24
Directors and Officers.................................................25 - 28
Additional Information ................................................29
</Table>
<Page>
2
GENERAL INFORMATION
Great-West Lifeco Inc. ("Lifeco") is a financial services holding company that
owns 100% of the voting shares of The Great-West Life Assurance Company
("Great-West"), a Canadian life insurance company, and, indirectly, 100% of the
voting shares in Great-West Life & Annuity Insurance Company ("GWL&A"), an
insurance company domiciled in the State of Colorado. Great-West is governed by
the Insurance Companies Act (Canada) (the "ICA"). Under the ICA, financial
statements, unless otherwise specified by the Superintendent of Financial
Institutions, Canada, are to be prepared in accordance with generally accepted
accounting principles.
Certain of the 2000 amounts presented for comparative purposes have been
reclassified to conform with the presentation adopted in the current year.
Unless otherwise specified, the information contained herein is presented as at
December 31, 2001.
TRANSLATION OF UNITED STATES DOLLARS
Throughout this report, United States dollar assets and liabilities are
translated into Canadian dollars at the market rate at December 31. All income
and expense items are translated at an average rate for the year. The rates
employed by year are:
<Table>
<Caption>
December Balance Sheet Operations
-------- ------------- ----------
2001 1.5930 1.5490
2000 1.5000 1.4853
1999 1.4433 1.4856
</Table>
The effective rate for the translation of GWL&A's net income reflects the
translation of U.S. dollar operations at the average daily rate for the period,
together with realized gains and losses associated with forward foreign exchange
contracts used to manage the translation volatility. For the period ended
December 31, 2001, excluding charges related to Alta, the effective rate was
$1.4858 ($1.5135 for the period ended December 31, 2000).
INCORPORATION
Lifeco was incorporated under the Canada Business Corporations Act on November
8, 1979 as 94972 Canada Inc. Its name was changed to Great-West Lifeco Inc. and
its capital structure was reorganized by Certificate of Amendment dated May 15,
1986. Its articles, as further amended, were restated by Restated Certificate of
Incorporation dated August 7, 1997 and were subsequently amended by (i)
Certificate of Amendment dated November 6, 1997 pursuant to which 32,000,000
Class A Preferred Shares were designated as "Non-Cumulative Class A Preferred
Shares, Series 1" and the rights, privileges, restrictions and conditions
attached thereto were established, (ii) Certificate of Amendment dated September
9, 1998 pursuant to which Lifeco's common shares were subdivided on a two for
one basis, and (iii) Certificate of Amendment dated March 3, 1999 pursuant to
which 8,000,000 First Preferred Shares were designated as "Non-Cumulative First
Preferred Shares, Series D" and the rights, privileges, restrictions and
conditions attached thereto were established.
<Page>
3
Lifeco owns 100% of the voting shares of Great-West, and 25.81% of the
non-voting shares of Great-West. The principal subsidiary of Great-West is
London Insurance Group Inc. ("LIG"), a company continued under the Canada
Business Corporations Act. Great-West owns 100% of the voting shares of LIG. LIG
owns 100% of the voting shares of London Life Insurance Company ("London Life")
and Lifeco owns 100% of the non-voting shares of London Life.
On December 31, 2000 Great-West conveyed ownership of GWL&A to a newly-formed
wholly owned subsidiary of Lifeco.
GWL&A, a stock life insurance company organized in 1907, is domiciled in
Colorado.GWL&A is a wholly-owned subsidiary of GWL&A Financial Inc. ("GWL&A
Financial"), a Delaware holding company. GWL&A Financial is an indirect
wholly-owned subsidiary of Lifeco. Lifeco currently has no other holdings and
carries on no businesses or activities that are unrelated to its holdings in
Great-West and GWL&A and their subsidiaries. Lifeco is not restricted to
investing in Great-West and GWL&A, and may make other investments in the future.
GENERAL DEVELOPMENT OF BUSINESS
Through Great-West and its major subsidiary London Life in Canada and GWL&A in
the United States, a wide range of life insurance, health insurance, and
retirement and investment products are offered to individuals, businesses and
other private and public organizations. As well, through its subsidiaries,
Great-West offers specialty reinsurance in specific niche markets.
At December 31, 2001, 55% of Lifeco's total assets under administration were
attributable to its Canadian business, compared to 56% at December 31, 2000, and
45% were attributable to its United States business, compared to 44% at December
31, 2000. Lifeco received 71% of its premium income for risk products in 2001
from Canada and 29% from the United States compared to 66% and 34% respectively
in 2000. See the tables of premiums set forth on pages 10 through 12.
The insurance business in both Canada and the United States is highly
competitive and participants in the industry frequently introduce new products
and utilize new marketing approaches. Great-West, London Life and GWL&A have
been able to compete successfully by identifying specific market niches and
developing specific products so that they have improved and expanded their
product base and market share.
<Page>
4
NARRATIVE DESCRIPTION OF THE BUSINESS
PRODUCTS
The premium income analysis tables (pages 10 - 12) identify the sources of
consolidated premium income from its various products according to the
classifications described below for the three years 1999 to 2001. The amount of
claims paid under Administrative Services Only (ASO) health insurance plans are
considered group health self-funded premium equivalents in assessing the growth
of Great-West's consolidated premium income. Health care costs under ASO plans
are primarily the responsibility of the employer, rather than the insurance
company, which is paid administrative fees for providing the claim payment
facility. This method of managing Great-West and GWL&A's risk exposure reduces
the volatility of income while at the same time provides an acceptable level of
return on invested equity.
As part of their product lines, Great-West, London Life and GWL&A have
segregated investment fund assets under administration which are managed on a
fee basis and total $38.9 billion ($37.2 billion at December 31, 2000). These
funds are predominantly employed to fund retirement savings plan obligations of
group and individual clients. Apart from the death and maturity benefit
guarantees, clients bear the full investment risk of, and receive all the
benefits from, the assets of the funds. The amount of deposits to segregated
fund accounts should be considered in assessing the consolidated premium income
of Lifeco.
The major business units of Great-West in Canada are:
GROUP INSURANCE
Great-West provides a wide range of group insurance products and services under
its own brand to close to 25,000 employers across Canada. The Company has a
significant presence in all market segments - by region, case size and product.
Group insurance products include: life and accidental death and dismemberment
insurance, short and long-term disability insurance, health and drug coverages
not provided by government plans, dentalcare, visioncare and employee assistance
plans.
INDIVIDUAL INSURANCE AND INVESTMENT PRODUCTS
INDIVIDUAL LIFE INSURANCE
Great-West and London Life manufacture and service a wide range of life
insurance products for individuals under their respective brands, including
participating and non-participating whole life, universal life and term
insurance. These products are designed to meet Canadian consumers' evolving
needs ranging from basic life insurance protection to advanced tax and estate
planning.
LIVING BENEFITS
Great-West manufactures and services a range of disability and critical illness
products for individuals under the Great-West brand. The Company's disability
insurance products are designed to meet the unique personal and business needs
of professionals, partners, business owners and employees. Critical illness
insurance is designed to complement disability and life insurance protection by
providing a one-time lump sum benefit to help cover additional expenses
associated with specified critical conditions.
<Page>
5
RETIREMENT AND INVESTMENT SERVICES
Great-West and London Life provide long-term savings and investment products for
individuals and employer groups. The companies focus sales and reinvestment
activities on investment funds. These include 250 segregated funds as well as an
exclusive family of 40 mutual funds, the Quadrus Group of Funds(TM), available
through Quadrus Investment Services. The Quadrus Group of Funds include several
manufactured by Mackenzie Financial Corporation.
A subsidiary of London Life, Quadrus Investment Services is a mutual fund dealer
for registered investment representatives associated with both Great-West and
Freedom 55 Financial(TM) (a division of London Life). Quadrus also offers
investment representatives access to about 1,500 third-party mutual funds
through an accommodation service.
REINSURANCE AND SPECIALTY GENERAL INSURANCE
This segment primarily reflects the operations of major subsidiaries of London
Life:
- London Reinsurance Group (LRG) enters into reinsurance contracts which
are agreements in which an insurer transfers certain risks on its
insurance policies to another insurer, called a reinsurer. LRG
reinsures life, property and casualty, accident and health and annuity
business.
- London Guarantee focuses on underwriting specialty insurance products
in niche markets within the property and casualty insurance
marketplace in Canada. London Guarantee was sold on March 21, 2002, to
the St. Paul Companies of Saint Paul, Minnesota.
The major business units of GWL&A in the United States are:
EMPLOYEE BENEFITS
The Employee Benefits division provides a full range of employee benefit
products to more than 13,000 employers across the United States. To better meet
the needs of this variety of employers, GWL&A introduced two units - one focuses
exclusively on the 20 to 500 life employer, and the other on the 500-plus
employer. GWL&A offers these employers the advantage of a strategic benefits
solution - an integrated package of group life and disability insurance, an
attractive managed care portfolio that includes a range of health care options,
flexible spending accounts, and 401(k) savings plans provided by the Financial
Services division.
FINANCIAL SERVICES
The Financial Services Division primarily develops, administers and sells
retirement savings and life insurance products and services for individuals, and
employees of state and local governments, hospitals, non-profit organizations
and public school districts.
GWL&A's core savings business is the public/non-profit (P/NP) pension market,
providing investment products, administrative and communication services to
employees of state and local governments (IRC Section 457 Deferred Compensation
Plans), as well as employees of hospitals, non-profit organizations and public
school districts (IRC Section 401, 403(b), 408 and 457 plans).
In addition, Financial Services is responsible for the 401(k) annuity product,
which is marketed to employers as part of the Employee Benefit strategic
solution and currently has more than 546,000
<Page>
6
participants enrolled. GWL&A offers both guaranteed and variable options to the
employees, with the majority of the cash flow to the separate account variable
option. GWL&A has implemented online enrollment capabilities for 401(k)
participants, as well as an online investment advisor to provide 401(k)
participants with personal investment advice via the internet.
MARKETING AND DISTRIBUTION
CANADA - GREAT-WEST AND LONDON LIFE
Great-West's group insurance products and services are marketed to mid-size and
large organizations primarily through brokers and independent consultants,
affiliated agents, and Great-West and Freedom 55 Financial security advisors
supported by 236 group sales and service representatives located in 15 group
offices across Canada. Sales to small groups (less than 35 employees) are
primarily through Great-West and Freedom 55 Financial security advisors and
intercorporate marketing agreements, supported by 156 employee benefit
specialists and service representatives located in 26 Resource Centres across
Canada.
Great-West's individual life, living benefits (disability income and critical
illness), and individual retirement and investment (guaranteed and segregated
funds) products are marketed by 831 Great-West financial security advisors,
brokers, and representatives of other financial services companies through
special marketing arrangements. The most significant arrangements are with
London Life, through its Freedom 55 Financial division, and Investors Group.
Career support for financial security advisors and product support for all
channels is provided through 29 Resource Centres located in all provinces except
Prince Edward Island.
London Life's individual life and retirement and investment products are
marketed exclusively through Freedom 55 Financial security advisors. Freedom 55
Financial has 2,777 financial security advisors and more than 230 management
staff located in 70 financial centres across Canada.
Group retirement products and services are marketed through Group Retirement
Services sales and service staff located in regions throughout the country.
These products are sold by Freedom 55 Financial and Great-West financial
security advisors, as well as by group retirement brokers and consultants.
Quadrus Investment Services, a wholly owned subsidiary of London Life, provides
broker-dealer services to registered Great-West and Freedom 55 Financial
investment representatives, who also market Quadrus Group of Funds.
Great-West and London Life also have marketing arrangements with other companies
to offer third-party products through the Great-West and Freedom 55 Financial
distribution channels. Alliances with two other leading insurers have expanded
the life insurance and investment products offered by both Great-West and
Freedom 55 Financial security advisors. These products meet client needs where
Great-West or London Life could not otherwise offer sufficiently competitive
products.
INTERNATIONAL - (LIG)
London Insurance Group offers reinsurance products through London Reinsurance
Group (LRG). Reinsurance contracts are legal agreements in which an insurer
transfers certain risks on its insurance policies to another insurer, called a
reinsurer. LRG reinsures life, property and casualty, accident and health and
annuity business. Contracts are custom designed, underwritten and marketed to
major insurance and reinsurance companies around the world, but primarily in the
United States and Europe.
<Page>
7
UNITED STATES - GWL&A
GWL&A is authorized to engage in the sale of life insurance, accident and health
insurance and annuities. It is qualified to do business in all states in the
United States except NewYork, and in the District of Columbia, Puerto Rico, Guam
and the U.S. Virgin Islands. The Company conducts business in New York through
its subsidiary, First Great-West Life & Annuity Insurance Company. GWL&A is also
a licensed reinsurer in the state of New York.
The Company offers employers a total benefits solution - an integrated package
of group life and disability insurance, managed-care programs, 401(k) savings
plans and flexible spending accounts. Through integrated pricing,
administration, funding, and service, the Company helps employers provided
cost-effective benefits that will attract and retain quality employees, and at
the same time, helps employees reach their personal goals by offering benefit
choices, along with information needed to make appropriate choices. Many
customers also find this integrated approach appealing because their benefit
plans are administered through a single company with linked systems that provide
on-line administration and account access, for enhanced efficiency and
simplified plan administration.
The Company's core retirement savings business is in the public/non-profit
pension market. The Company provides investment products, and administrative and
communication services, to employees of state and local governments (Internal
Revenue Code Section 457 plans), as well as employees of hospitals, non-profit
organizations, and public school districts (Internal Revenue code Section 401,
403(b), 408, and 457 plans). The Company provides pension plan administrative
services through a subsidiary company, Financial Administrative Services
Corporation (FASCorp). The Company provides marketing and communication services
through another subsidiary company, BenefitsCorp, Inc., and through BenefitsCorp
Equities, Inc., a broker-dealer subsidiary of BenefitsCorp, Inc. (collectively,
BenefitsCorp).
GWL&A has entered into a marketing agreement with Charles Schwab & Co., Inc. to
sell individual fixed and variable qualified and non-qualified deferred
annuities.
Benefits Communication Corporation ("BenefitsCorp"), a wholly-owned subsidiary
of GWL&A, distributes defined contribution pension products and services to over
1,700 public/non-profit groups, including governmental entities, hospitals and
non-profit organizations and public school districts. There are 15 regional
BenefitsCorp offices with 168 sales personnel. BenefitsCorp sales personnel sell
to employees of public and private sector employers and offer one or more
financial service products to employees through a program arranged with the
employer.
Financial Administrative Services Corporation (FASCorp), formed in 1993, is a
wholly-owned subsidiary of GWL&A with the sole purpose of providing
comprehensive administrative and recordkeeping services for financial
institutions and employer-sponsored retirement plans.
The United States insurance markets are all extremely competitive. Within the
employee benefit market, GWL&A believes that it has sufficient critical mass; a
highly trained marketing organization; a decentralized and highly cost effective
Benefit Payment Organization; and the necessary managed health care expertise to
grow profitably. GWL&A's pension operations are tightly focused on the voluntary
retirement savings niche, where it is a market leader, and where it expects to
continue to develop this market in the future. GWL&A expects a period of
consolidation to occur and in order to be well positioned when this occurs,
GWL&A continues to closely manage expenses and strengthen its wholesale
distribution channels.
<Page>
8
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following tables set forth certain information concerning Lifeco for the
periods indicated:
<Table>
<Caption>
Compound
For the years ended December 31 Growth
-------------------------------------- Rate (%)
2001(1) 2000 1999 1999-2001
---------- ---------- ---------- ---------
(in millions except per share amounts)
(unaudited)
FOR THE PERIOD
Premium and fee income including risk premiums,
self-funded premium equivalents and segregated
fund deposits
- Life insurance $ 3,925 $ 3,661 $ 3,323 8.7
- Annuities 7,641 8,551 6,373 9.5
- Health insurance 13,205 11,784 8,169 27.1
- Reinsurance 3,359 2,810 2,023 28.9
- Property & casualty insurance 96 68 52 35.9
- Fee & other income 1,858 1,641 1,222 23.3
Net income 546 674 569 (2.0)
Preferred shareholder dividends paid 31 31 33 (3.1)
Net income - common shareholders 515 643 536 (2.0)
Return on common shareholders' equity 13.7% 18.6% 17.1% (10.5)
PER SHARE
Earnings per common share 1.39 1.72 1.43 (1.4)
Book value per common share 10.47 9.81 8.70 9.7
Dividends paid per share
Series A First Preferred - - 0.46875 -
Series B First Preferred 1.8625 1.8625 1.8625 -
Series C First Preferred 1.9375 1.9375 1.9375 -
Series D First Preferred 1.1750 1.1750 0.94805 -
Class A Series 1 1.25 1.25 1.25 -
Common 0.78 0.65 0.53 21.3
AT PERIOD ENDING
Life insurance in force (face amount) 487,216 501,838 471,078 1.7
Annuities in force (funds held) 49,306 48,690 47,255 2.1
Health insurance in force (annualized premiums) 14,045 13,903 9,238 23.3
Total assets under administration 98,026 92,913 87,240 6.0
Long term debt
- Mortgages on real estate 156 158 155 0.3
- Reinsurance debt & other notes payable 25 25 36 (16.7)
- Senior debentures 679 463 352 38.9
---------- ---------- ---------- ----------
860 646 543 25.8
Capital stock and surplus
- Non-cumulative preferred shares 530 530 530 -
- Common shares 1,553 1,556 1,561 (0.3)
- Surplus 2,314 2,094 1,698 16.7
---------- ---------- ---------- ----------
- Total 4,397 4,180 3,789 7.7
---------- ---------- ---------- ----------
Number of employees 15,111 14,565 13,728 4.9
</Table>
(1) Includes two specific non-recurring charges, comprised of a third quarter
claims provision in Canadian Operations of $73 million after-tax in the
shareholder account, from the events of September 11, 2001, and a
second-quarter charge of $165 million in United States Operations
associated with Alta Health and Life Insurance Company.
<Page>
9
SELECTED CONSOLIDATED FINANCIAL INFORMATION (CONT'D)
The following table summarizes the operating results of Lifeco for the periods
indicated:
<Table>
<Caption>
Compound
For the years ended December 31 Growth
-------------------------------------- Rate (%)
2001(1) 2000 1999 1999-2001
---------- ---------- ---------- -----------
(in millions except per share amounts)
(unaudited)
Income
Premium income $ 10,477 $ 9,976 $ 8,526 10.9
Net investment income 3,713 3,649 3,580 1.8
Fee and other income 1,858 1,641 1,222 23.3
---------- ---------- ---------- -----------
16,048 15,266 13,328 9.7
---------- ---------- ---------- -----------
Benefits and expenses
Paid or credited to policyholders
including dividends and experience refunds 12,030 11,374 9,936 10.0
Commissions, expenses and taxes 3,362 3,090 2,640 12.8
---------- ---------- ---------- -----------
15,392 14,464 12,576 10.6
---------- ---------- ---------- -----------
Net income before minority and
other interests $ 656 $ 802 $ 752 (6.6)
Minority and other interests of The Great-West Life
Assurance Company and its subsidiaries
Participating policyholder 20 27 83 (50.9)
Preferred shareholder dividends 22 33 34 (19.6)
Minority shareholder interest 2 3 6 (42.3)
---------- ---------- ---------- -----------
$ 44 $ 63 $ 123 (40.2)
---------- ---------- ---------- -----------
Net income before amortization of goodwill $ 612 $ 739 $ 629 (1.4)
Amortization of goodwill 66 65 60 4.9
---------- ---------- ---------- -----------
Net income $ 546 $ 674 $ 569 (2.0)
========== ========== ========== ===========
SUMMARY OF NET INCOME
Preferred shareholder dividends $ 31 $ 31 $ 33 (3.1)
Net income - common shareholder 515 643 536 (2.0)
---------- ---------- ---------- -----------
Net income $ 546 $ 674 $ 569 (2.0)
========== ========== ========== ===========
Earnings per common share $ 1.39 $ 1.72 $ 1.43 (1.4)
</Table>
QUARTERLY FINANCIAL INFORMATION
<Table>
<Caption>
Total Total Assets Under Net Income Net Earnings
Eight Quarters Revenue Administration Common Shareholder Per Common Share
----------- ------------------ ------------------ ----------------
(in millions except per share amounts)
(unaudited)
2001 Fourth Quarter $ 4,286 $ 98,026 $ 189 $ 0.51
Third Quarter 3,922 93,850 124 0.33
Second Quarter 4,051 93,390 36 0.10
First Quarter 3,789 93,518 166 0.45
2000 Fourth Quarter $ 4,242 $ 92,913 $ 174 $ 0.47
Third Quarter 3,705 94,544 164 0.44
Second Quarter 3,728 92,261 164 0.43
First Quarter 3,591 90,575 141 0.38
</Table>
(1) Includes two specific non-recurring charges, comprised of a third
quarter claims provision in Canadian Operations of $73 million from the
events of September 11, 2001, and a second-quarter charge of $165 million
in United States Operations associated with Alta Health and Life Insurance
Company.
<Page>
10
SELECTED CONSOLIDATED FINANCIAL INFORMATION (CONT'D)
The following tables summarize premium income for Lifeco for the periods
indicated:
Premium Income Analysis in Dollars
(unaudited)
<Table>
<Caption>
Compound
For the years ended December 31 Growth
--------------------------------------- Rate (%)
2001 2000 1999 1999-2001
----------- ----------- ----------- -----------
(unaudited)
Business category
Individual $ 2,418 $ 2,663 $ 2,660 (4.7)
Group 4,588 4,435 3,791 10.0
Corporate 16 - - N/A
Reinsurance 3,359 2,810 2,023 28.9
Property & Casualty 96 68 52 35.9
----------- ----------- ----------- -----------
Total 10,477 9,976 8,526 10.9
=========== =========== =========== ===========
Product lines
Life insurance 2,926 3,120 3,026 (1.7)
Annuity 990 991 720 17.3
Health insurance 3,106 2,987 2,705 7.2
Reinsurance 3,359 2,810 2,023 28.9
Property & Casualty 96 68 52 35.9
----------- ----------- ----------- -----------
10,477 9,976 8,526 10.9
=========== =========== =========== ===========
Geographic
Canada 7,451 6,626 5,765 13.7
United States 3,026 3,350 2,761 4.7
----------- ----------- ----------- -----------
Total 10,477 9,976 8,526 10.9
=========== =========== =========== ===========
Segregated Fund Deposits not included above
Canada 2,631 3,490 2,113 11.6
United States 5,019 4,611 3,837 14.4
----------- ----------- ----------- -----------
Total 7,650 8,101 5,950 13.4
=========== =========== =========== ===========
Claims paid under administrative services only
plans not included above
Canada 1,238 1,102 1,039 9.2
United States 8,861 7,695 4,425 41.5
----------- ----------- ----------- -----------
Total 10,099 8,797 5,464 36.0
=========== =========== =========== ===========
Premiums including segregated fund deposits and
claims paid under administrative services only plans
Canada 11,320 11,218 8,917 12.7
United States 16,906 15,656 11,023 23.8
----------- ----------- ----------- -----------
Total $ 28,226 $ 26,874 $ 19,940 19.0
=========== =========== =========== ===========
</Table>
<Page>
11
SELECTED CONSOLIDATED FINANCIAL INFORMATION (CONT'D)
Premium Income Analysis in Percentages
(unaudited)
<Table>
<Caption>
For the years ended December 31
------------------------------------
2001 2000 1999
---------- ---------- ----------
Business category
Individual 23.1 26.7 31.2
Group 43.8 44.4 44.5
Corporate 0.1 - -
Reinsurance 32.1 28.2 23.7
Property & Casualty 0.9 0.7 0.6
---------- ---------- ----------
Total 100 100 100
========== ========== ==========
Product lines
Life insurance 27.9 31.3 35.5
Annuity 9.5 9.9 8.5
Health insurance 29.6 29.9 31.7
Reinsurance 32.1 28.2 23.7
Property & Casualty 0.9 0.7 0.6
---------- ---------- ----------
100 100 100
========== ========== ==========
Geographic
Canada 71 66 68
United States 29 34 32
---------- ---------- ----------
Total 100 100 100
========== ========== ==========
Segregated Fund Deposits not included above
Canada 34 43 36
United States 66 57 64
---------- ---------- ----------
Total 100 100 100
========== ========== ==========
Claims paid under administrative services only
plans not included above
Canada 12 12 19
United States 88 88 81
---------- ---------- ----------
Total 100 100 100
========== ========== ==========
Premiums including segregated fund deposits and
claims paid under administrative services only plans
Canada 40 42 45
United States 60 58 55
---------- ---------- ----------
Total 100 100 100
========== ========== ==========
</Table>
<Page>
12
SELECTED CONSOLIDATED FINANCIAL INFORMATION (CONT'D)
The following tables supplement the foregoing with a detailed breakdown of
premiums generated from business in each of Canada and the United States for the
three years 1999 to 2001.
Premiums Canada & U.S.
<Table>
<Caption>
Premiums - Canada
For the years ended December 31
------------------------------------
2001 2000 1999
---------- ---------- ----------
(in millions)
(unaudited)
Life insurance and annuity premiums
Life insurance
Individual $ 1,589 $ 1,560 $ 1,538
Group 378 370 355
Corporate 16 - -
Annuities
Individual 106 141 157
Group 141 66 151
---------- ---------- ----------
Total $ 2,230 $ 2,137 $ 2,201
Health insurance premiums 1,766 1,611 1,489
Claims paid under administrative services only plans
not included above 1,238 1,102 1,039
Segregated fund deposits not included above 2,631 3,490 2,113
Reinsurance 3,359 2,810 2,023
Property & Casualty 96 68 52
---------- ---------- ----------
TOTAL CANADA $ 11,320 $ 11,218 $ 8,917
========== ========== ==========
</Table>
<Table>
<Caption>
Premiums - United States
For the years ended December 31
------------------------------------
2001 2000 1999
---------- ---------- ----------
(in millions)
(unaudited)
Life insurance and annuity premiums
Life insurance
Individual $ 565 $ 814 $ 838
Group 378 376 295
Annuities
Individual 31 31 16
Group 712 753 396
---------- ---------- ----------
Total $ 1,686 $ 1,974 $ 1,545
Health insurance premiums 1,339 1,376 1,216
Claims paid under administrative services only plans
not included above 8,862 7,695 4,425
Segregated fund deposits not included above 5,019 4,611 3,837
---------- ---------- ----------
TOTAL UNITED STATES $ 16,906 $ 15,656 $ 11,023
========== ========== ==========
TOTAL COMPANY $ 28,226 $ 26,874 $ 19,940
========== ========== ==========
</Table>
<Page>
13
INVESTMENT ACTIVITIES
The consolidated investment income derived from the investment of Lifeco's
consolidated assets makes an important contribution to the results of its
operations. This consolidated investment income has grown over the past three
years reflecting the growth in Lifeco's portfolio of assets.
INVESTMENT INCOME
The following table outlines the composition of consolidated investment income
for the three years 1999 to 2001.
<Table>
<Caption>
For the years ended December 31
--------------------------------------
2001 2000 1999
---------- ---------- ----------
(in millions)
(unaudited)
(i) Investment income earned from:
Bonds $ 2,333.2 $ 2,311.3 $ 2,226.3
Mortgage loans 683.7 655.6 695.9
Stocks 57.6 (10.2) 33.4
Real estate 87.4 73.5 65.2
Loans to policyholders 431.4 387.3 343.5
Other (22.0) 2.8 0.2
---------- ---------- ----------
Sub-total 3,571.3 3,420.3 3,364.5
---------- ---------- ----------
(ii) Amortization of gains and losses:
Bonds 90.8 101.5 128.2
Mortgage loans 18.2 15.7 16.1
Stocks 87.1 109.2 80.6
Real estate 21.0 17.2 9.6
---------- ---------- ----------
Sub-total 217.1 243.6 234.5
---------- ---------- ----------
(iii) Provision for credit losses:
Bonds (8.5) (14.4) -
Mortgage loans 4.3 29.3 16.1
Real estate 0.3 1.3 1.6
---------- ---------- ----------
Sub-total (3.9) 16.2 17.7
---------- ---------- ----------
(iv) Provision for deterioration of
real estate market values - - -
---------- ---------- ----------
(v) Investment expenses (33.8) (30.1) (38.1)
---------- ---------- ----------
(vi) Lifeco entity investment income (37.6) (0.4) 1.8
---------- ---------- ----------
Net investment income 3,713.1 3,649.6 3,580.4
---------- ---------- ----------
Canada 2,251.7 2,186.1 2,193.8
United States 1,461.4 1,463.5 1,386.6
---------- ---------- ----------
Total $ 3,713.1 $ 3,649.6 $ 3,580.4
========== ========== ==========
</Table>
<Page>
14
GENERAL FUNDS INVESTMENTS
Consistent with the nature of its policy obligations, Lifeco's subsidiaries
invest the majority of their general funds in medium to long term fixed income
obligations, primarily bonds. Notwithstanding a continued overall emphasis on
fixed income investments, Lifeco's subsidiaries review investment strategy on an
ongoing basis in light of current market conditions. In addition, close
attention is given to matching cash flows and maturities of investments with
policy liabilities. Further discussion is contained under the heading
"Asset/Liability Management" on pages 21 & 22.
Authority for investment policy rests with the Boards of Directors of Great-West
and GWL&A while operating authority is delegated to the investment officers and
professional staff. The nature of Great-West's investments must comply with the
requirements of the Insurance Companies Act and, as appropriate, with the
Insurance Code of the State of Michigan, Great-West's state of entry in the
United States. The nature of GWL&A's investments must comply with the Insurance
Code of the State of Colorado.
The following table summarizes the composition of the consolidated invested
assets of Lifeco, exclusive of segregated funds, at the dates indicated:
<Table>
<Caption>
December 31
---------------------------------------------------------------
(dollars in millions)
2001 2000 1999
------------------- ------------------- -------------------
$ % $ % $ %
Bonds 32,581.4 64.3 30,326.1 63.5 30,397.3 64.5
Cash and certificates of deposit 837.3 1.7 740.3 1.5 746.6 1.6
Mortgages 8,368.8 16.5 8,787.2 18.4 8,941.8 19.0
Stocks 1,378.5 2.7 1,132.6 2.4 808.8 1.7
Real estate 1,271.7 2.5 1,211.5 2.5 1,105.8 2.3
Loans to policyholders 6,212.7 12.3 5,583.4 11.7 5,161.6 10.9
-------- -------- -------- -------- -------- --------
Total 50,650.4 100.0 47,781.1 100.0 47,161.9 100.0
======== ======== ======== ======== ======== ========
</Table>
<Page>
15
BONDS, CASH AND CERTIFICATES OF DEPOSIT
Fixed rate investments are carried at amortized cost net of any allowance for
credit losses. While estimated market values vary somewhat from book value, it
is expected that, in the absence of circumstances requiring an unusual degree of
liquidity, Great-West and/or GWL&A will not be required to sell a significant
amount of bonds and mortgages before maturity. Investment strategy emphasizes
appropriate matching of asset cash flow with estimated liability requirements.
In the normal course of business Great-West and GWL&A will realize gains and
losses from sales of bonds in its portfolio due to changes in interest rates,
which are considered to be an adjustment of future portfolio yield and amortized
to income over the period to maturity of the security sold. At December 31, 2001
realized unamortized gains totaled $530 million.
The following table shows the consolidated categories of bonds and cash and
certificates of deposit at the dates indicated:
<Table>
<Caption>
For the years ended December 31
------------------------------------
2001 2000 1999
---------- ---------- ----------
(in millions)
(unaudited)
CANADA
Bonds(1)
Government $ 6,124.1 $ 5,741.1 $ 7,623.9
Corporate 10,144.6 9,804.1 8,976.4
Cash and certificates of deposit 388.9 396.0 290.6
---------- ---------- ----------
Total Canada $ 16,657.6 $ 15,941.2 $ 16,890.9
========== ========== ==========
UNITED STATES
Bonds(1)
Government $ 5,012.1 $ 3,609.0 $ 2,870.0
Corporate 11,300.6 11,171.9 10,927.0
Cash and certificates of deposit 448.4 344.3 456.0
---------- ---------- ----------
Total United States $ 16,761.1 $ 15,125.2 $ 14,253.0
========== ========== ==========
TOTAL $ 33,418.7 $ 31,066.4 $ 31,143.9
========== ========== ==========
Market Value $ 34,124.5 $ 31,219.9 $ 30,326.5
========== ========== ==========
</Table>
(1) Investments in bonds are carried at amortized cost net of any allowance for
credit losses.
<Page>
16
MORTGAGES
Great-West carries on its mortgage operations through regional offices in major
cities in Canada and GWL&A in the United States, directly from its Denver head
office. The portfolio of mortgages at December 31, 2001 was comprised of 29,033
residential single family loans totaling $2.5 billion and 1,613 apartment and
commercial loans with a book value of $5.8 billion.
Lifeco's consolidated mortgage investment policy emphasizes a broadly
diversified portfolio of residential, commercial and industrial mortgages. The
following table illustrates the changes in book value of the consolidated
mortgage portfolio by category in Canada and the United States for the dates
indicated.
<Table>
<Caption>
December 31
------------------------------------------------------------------
2001 2000 1999
-------------------- -------------------- --------------------
$ % $ % $ %
-------- -------- -------- -------- -------- --------
(dollars in millions)
CANADA(1)
Residential
- Single Family 2,541.7 30.0 2,927.8 32.9 2,971.2 32.6
- Apartments 2,352.4 27.7 1,928.7 21.7 1,678.5 18.4
Retail and shopping centres 973.6 11.5 1,009.4 11.3 1,096.4 12.1
Office buildings 780.2 9.2 817.7 9.2 883.4 9.7
Industrial 644.3 7.6 722.1 8.1 805.9 8.9
Other 120.7 1.4 143.3 1.6 152.5 1.7
Allowance for credit losses (21.3) - (26.9) - (52.8) -
-------- -------- -------- -------- -------- --------
Total Canada 7,391.6 87.4 7,522.1 84.8 7,535.1 83.4
======== ======== ======== ======== ======== ========
UNITED STATES(1)
Residential
- Single Family - - - - - -
- Apartments 157.1 1.9 196.1 2.2 227.0 2.5
Retail and shopping centres 347.0 4.1 429.9 4.8 452.5 5.0
Office buildings 360.2 4.2 483.6 5.4 526.7 5.8
Industrial 70.1 0.8 105.2 1.2 129.4 1.4
Other 134.7 1.6 142.1 1.6 173.9 1.9
Allowance for credit losses (91.9) - (91.8) - (102.8) -
-------- -------- -------- -------- -------- --------
Total U.S. 977.2 12.6 1,265.1 15.2 1,406.7 16.6
======== ======== ======== ======== ======== ========
Total 8,368.8 100.0 8,787.2 100.0 8,941.8 100.0
======== ======== ======== ======== ======== ========
Market Value 8,794.0 9,112.0 9,058.6
======== ======== ========
</Table>
(1) Investments in mortgage loans are carried at amortized cost net of any
allowance for credit losses.
<Page>
17
In addition to its diversification by type of property, the mortgage portfolio
is diversified geographically as follows:
<Table>
<Caption>
% of value of
portfolio as at
Canada December 31, 2001
- ------ -----------------
Ontario 56.3%
British Columbia 17.0
Quebec 11.6
Alberta 7.5
Manitoba 3.5
Atlantic Provinces 2.9
Saskatchewan 1.1
Territories and out
of Canada 0.1
-----
100.0%
=====
</Table>
<Table>
<Caption>
% of value of
portfolio as at
United States December 31, 2001
- ------------- -----------------
California 29.3%
Michigan 9.3
Ohio 8.5
Illinois 8.5
New Jersey 7.7
Minnesota 5.2
Maryland, Virginia
and District of Columbia 5.1
Florida 4.4
Georgia 3.5
Missouri 3.5
Others (12 states) 15.0
-----
100.0%
=====
</Table>
NON-PERFORMING LOANS
Included in the value of invested assets are the following non-performing loans:
<Table>
<Caption>
December 31
---------------------------------------------------------------
2001 2000 1999
------------------- ------------------- -------------------
(in millions)
(unaudited)
# of # of # of
Loans Amount Loans Amount Loans Amount
-------- -------- -------- -------- -------- --------
Asset Class
Bonds 18 $ 152.3 6 $ 36.3 - $ -
Mortgage loans 60 18.1 47 28.8 82 79.6
Foreclosed real estate 4 16.9 3 7.4 8 16.7
-------- -------- -------- -------- -------- --------
Total 82 $ 187.3 56 $ 72.5 90 $ 96.3
======== ======== ======== ======== ======== ========
Geographic
Canada 68 $ 48.8 49 $ 38.4 80 $ 61.5
United States 14 138.5 7 34.1 10 34.8
-------- -------- -------- -------- -------- --------
Total 82 $ 187.3 56 $ 72.5 90 $ 96.3
======== ======== ======== ======== ======== ========
</Table>
Non-performing loans include non-accrual loans and foreclosed real estate held
for sale. Bond and mortgage investments are reviewed on a loan-by-loan basis to
determine non-performing status. Loans are classified as non-accrual when:
(1) Payments are 90 days or more in arrears, except in those cases where,
in the opinion of management there is justification to continue to
accrue interest; or
(2) The Company no longer has reasonable assurance of timely collection of
the full amount of the principal and interest due; or
(3) Modified/restructured loans are not performing in accordance with the
contract.
Where appropriate, provisions are established or write-offs made to adjust the
carrying value to the net realizable amount. Wherever possible, the fair value
of collateral underlying the loans or observable market price is used to
establish net realizable value.
Non-accrual bonds increased to $152.3 in 2001 from $36.3 the previous year.
<Page>
18
Non-accrual mortgages decreased to $18.1 million at December 31, 2001 from $28.8
million at the previous year-end. The non-performing loans at December 31, 2001
included, in Canada, 55 residential single-family loans totaling $5.3 million,
and 3 commercial loans totaling $4.5 million, and in the United States 2 loans
totaling $8.3 million.
Foreclosed real estate increased to $16.9 million at December 31, 2001
representing 3 properties in the United States. During 2001, 1 property was
sold. There were 2 foreclosures in 2001.
The following table shows the amount and the in year changes of the Allowance
for Credit Losses for the years applicable.
<Table>
<Caption>
December 31
--------------------------------------
2001 2000 1999
---------- ---------- ----------
(in millions)
(unaudited)
Balance beginning of year $ 146.9 $ 177.8 $ 203.1
---------- ---------- ----------
Provision for credit losses charged to operations
- normal 4.0 (16.4) (11.6)
- cyclical - - (6.1)
Recoveries of prior write-offs 2.3 9.9 9.1
Write-offs - restructured loans - (4.7) -
Write -offs - other loans (14.5) (58.5) (9.1)
Other - including foreign exchange rate changes 6.8 38.8 (7.6)
---------- ---------- ----------
Balance - end of year $ 145.5 $ 146.9 $ 177.8
========== ========== ==========
Asset Class
Bonds $ 32.3 $ 28.2 $ 21.3
Mortgage loans 113.2 118.7 155.6
Foreclosed real estate - - 0.9
---------- ---------- ----------
Total $ 145.5 $ 146.9 $ 177.8
========== ========== ==========
Geographic
Canada $ 45.8 $ 43.2 $ 56.7
United States 99.7 103.7 121.1
---------- ---------- ----------
Total $ 145.5 $ 146.9 $ 177.8
========== ========== ==========
</Table>
<Page>
19
The allowance for credit losses includes general provisions, established at a
level that together with the provision for future credit losses included in
policy liabilities, reflects Lifeco's estimate of potential future credit
losses.
Included in mortgage investments are the following modified/restructured loans:
<Table>
<Caption>
December 31
------------------------------------
2001 2000 1999
---------- ---------- ----------
(in millions)
(unaudited)
Canada $ 63.2 $ 76.9 $ 102.6
United States 172.8 221.4 230.2
---------- ---------- ----------
Total $ 236.0 $ 298.3 $ 332.8
---------- ---------- ----------
</Table>
These loans are performing in accordance with their current terms.
STOCKS
Investment in stocks at December 31, 2001 totalled $1,252.2 million in Canada
and $126.3 million in the United States, representing approximately 2.7% of
total invested assets. The following table shows the categories of stocks held
by Lifeco at the dates indicated:
<Table>
<Caption>
December 31
------------------------------------
2001 2000 1999
---------- ---------- ----------
(in millions)
(unaudited)
Preferred shares at cost $ 287.7 $ 227.3 $ 212.9
Common, convertible preferred and other shares
at cost 1,059.4 867.0 583.1
Adjustment(1) 31.4 38.3 12.8
---------- ---------- ----------
Total $ 1,378.5 $ 1,132.6 $ 808.8
========== ========== ==========
Market value $ 1,410.3 $ 1,263.3 $ 888.3
========== ========== ==========
</Table>
(1) Adjustment: Investments in stocks are carried at cost plus a moving average
market value adjustment of 15% per annum. Market values for public stocks
are generally determined by the closing sale price of the security on the
exchange where it is principally traded. Market values for stocks for which
there is no active market, are determined by management.
At December 31, 2001 the preferred share portfolio consisted of $127.7 million
of securities of private companies and $160.0 million of public companies; the
common and convertible preferred share portfolio consisted of $171.0 million of
securities of private companies and $888.4 million of public companies.
<Page>
20
REAL ESTATE
The following table shows the real estate assets by category in Canada and the
United States for the dates indicated:
<Table>
<Caption>
December 31
-------------------------------------
2001 2000 1999
---------- ---------- ----------
(in millions)
(unaudited)
CANADA(1)
Head office $ 89.7 $ 89.2 $ 87.2
Income producing 861.2 841.8 785.6
Land and property under development 43.8 42.7 24.5
Acquired by foreclosure - 4.3 2.1
Ground rents 1.7 2.3 2.3
Moving average market value adjustment 75.4 59.5 45.0
---------- ---------- ----------
Sub-total $ 1,071.8 $ 1,039.8 $ 946.7
---------- ---------- ----------
UNITED STATES(1)
Head office $ 184.4 $ 157.1 $ 146.5
Income producing 2.9 5.2 3.9
Land and property under development 0.5 - -
Acquired by foreclosure 16.9 3.2 14.6
Ground rents - - -
Moving average market value adjustment (4.8) 6.3 (5.9)
---------- ---------- ----------
Sub-total $ 199.9 $ 171.8 $ 159.1
---------- ---------- ----------
Total $ 1,271.7 $ 1,211.6 $ 1,105.8
========== ========== ==========
Market Value $ 1,510.5 $ 1,422.7 $ 1,271.5
========== ========== ==========
</Table>
(1) Investments in real estate are carried at cost net of write-downs and
allowances for loss, plus a moving average market value adjustment of 10%
per annum, which represents a portion of the difference between adjusted
book value and year-end market value for real estate properties and ground
rents owned by the company. Market values for all properties are determined
annually by management based on a combination of the most recent
independent appraisal and current market data available. Appraisals of all
properties are conducted at least once every three years by independent
qualified appraisers.
Great-West owns its head office complex located in Winnipeg, Manitoba,
consisting of three connected buildings containing 500,000 square feet situated
on approximately 16.4 acres of land. London Life owns its head office complex
located in London, Ontario which contains a total of 632,000 square feet and a
nearby storage facility with an additional 100,000 square feet.
In the United States, GWL&A owns an office building complex in the Denver,
Colorado area containing 691,000 square feet and an adjoining building
containing approximately 61,000 square feet. These buildings are the
headquarters for GWL&A's operations.
The balance of real estate is held for investment purposes. It is categorized
into the following portfolios: developed income producing properties, land held
for development, properties under development, properties acquired by
foreclosure and ground rents.
Developed income producing real estate consisted of 71 properties in the
Canadian operations and 2 in the United States operation. The total net book
value of these properties was $864 million at December 31, 2001.
<Page>
21
Land held for development and properties under development were carried at a
book value of $43.8 million at December 31, 2001 and consisted of 8 properties
in Canada.
Real estate acquired by foreclosure consisted of 3 foreclosed properties carried
at a book value of $16.9 million in the United States.
POLICY LOANS
Under most permanent individual life insurance policies and some annuities
issued by Great-West, the individual policyowner has the right to obtain a
policy loan on the security of the cash value of the policy. These loans then
become investments of the insurance company. On policies issued prior to 1968,
there are contractual limits on the loan interest rates ranging from 5 to 6%. On
policies issued subsequent to this date, there is no contractual limit on the
interest rate for policy loans. Great-West has an established policy for setting
policy loan interest rates, which takes into account factors such as the current
bank prime rate and industry guidelines on setting policy loan interest rates.
In the United States, policy loan rates are set by state legislation and loan
rates of most newly issued policies may not exceed certain maximum interest
rates as determined by recognized bond indices.
The following table sets out the details of policy loans outstanding at December
31:
<Table>
<Caption>
2001 2000
------------------------------------------- -------------------------------------------
Policy Loans(1) Participating Non-participating Total Participating Non-participating Total
- --------------- ------------- ----------------- ------- ------------- ----------------- -------
(in millions)
Canada $ 1,405 $ 28 $ 1,433 $ 1,339 $ 14 $ 1,353
United States 4,337 443 4,780 3,728 502 4,230
------------- ----------------- ------- ------------- ----------------- -------
Total $ 5,742 $ 471 $ 6,213 $ 5,067 $ 516 $ 5,583
============= ================= ======= ============= ================= =======
</Table>
(1) Loans to policyholders are shown at their unpaid balance and are fully
secured by the cash surrender values of the policies.
ASSET/LIABILITY MANAGEMENT
The asset portfolios of Great-West and GWL&A support the obligations to
customers and contribute returns for both participating policyholders and
shareholders.
The investment objectives of Great-West and GWL&A are safety of the principal
amount of investments and maximization of investment return. Fluctuating
interest rates can materially affect investment returns, as asset and liability
values may respond differently to changes in interest rates. This interest rate
risk is controlled by managing assets and liabilities in relation to each other,
rather than separately.
<Page>
22
Two elements of asset/liability management are cashflow sensitivity management
and cashflow matching.
1) Cashflow Sensitivity Management
In an environment of fluctuating interest rates, the stability of a company's
assets and liabilities can be affected in quite different ways. An increase in
interest rates reduces the market value of fixed income assets. If, during a
time of rising interest rates, customers are in a position to redeem policies at
little or no cost and reinvest the proceeds at higher rates elsewhere, the
company may be forced to raise funds by selling assets at those reduced market
values. The loss involved in this process is an example of adverse sensitivity
to a rise in interest rates. Similarly, during a period of declining interest
rates, if borrowers have the option to prepay their loan, and refinance at lower
yields elsewhere, the company may be faced with reinvestment at lower yields.
The lost yield on reinvestment is an example of the adverse sensitivity to a
decline in interest rates. The extent to which a significant change in interest
rates causes the timing of cashflow to be altered to the detriment of the
company is one form of cashflow sensitivity.
Cashflow sensitivity is managed by Great-West and GWL&A using a combination of
measures for both the assets and liabilities.
The stability of liabilities has been improved by designing and marketing
products, particularly annuities, which have a fixed or determinate term or, if
the term is not fixed, that have surrender provisions which reflect current
financial market conditions.
Similarly, the potential for adverse interest rate sensitivity of assets is
minimized by restricting the degree to which call and repayment options are
granted to borrowers. Where options are granted, the asset portfolios are
adjusted as necessary to recognize the increased interest rate sensitivity.
2) Cashflow Matching
Cashflow matching refers to the process of acquiring assets whose cashflows in
amount and timing mirror as much as possible those of the liabilities.
Great-West and GWL&A emphasize cashflow matching at time of liability creation.
As new liabilities are generated or existing liabilities repriced, fixed income
assets are acquired with similar payment characteristics. In practice this
requires the acquisition of short term or floating rate assets to match
short-term liabilities, medium term bonds and mortgages for certain annuity
products, and terms as long as 15 to 20 years for single premium annuities not
subject to withdrawal.
Asset portfolios are also adjusted over time to maintain the desired
relationship between assets and liabilities. The requirement to make such
adjustments will depend on the quality of the initial matching, and on the
degree of cashflow sensitivity to fluctuating interest rates.
Fixed income derivatives are utilized on occasion to adjust interest rate reset
dates of assets to better match that of the liabilities. Their availability
enhances the ability of Great-West and GWL&A to manage exposure to fluctuating
interest rates.
Both Great-West and GWL&A believe their processes and techniques enable them to
reasonably measure the effect of interest rate fluctuations on their business
and to make adjustments to control the identified risks.
<Page>
23
ACCOUNTING
Lifeco, as a Canadian reporting insurance holding company, has adopted the same
accounting practices as its principal operating subsidiary in Canada,
Great-West. Great-West prepares its financial statements in accordance with
generally accepted accounting principles with certain modifications specified by
the Superintendent of Financial Institutions, Canada.
Lifeco's insurance subsidiaries maintain distinct accounts for participating and
non-participating business. Both net income and surplus amounts are attributed
to the participating policyholder and shareholder accounts. A portion, as
restricted by law, of the distributions from the participating account is
credited to the shareholder account.
Lifeco's shareholder surplus from which shareholder dividends are paid is
derived from dividends paid by its subsidiaries together with any other income
earned by Lifeco's net assets.
Accounting methods employed by insurers, the segregation of results between
accounts and the allocation of investment income and expense are closely
monitored through regular supervisory examinations.
POLICY LIABILITIES
In each insurance subsidiary an actuary is responsible for policy liability
determination. For Canadian GAAP, each actuary must follow generally accepted
actuarial practice. Assumptions about future asset yields, timing of cash flows,
rates of mortality, morbidity and other claim contingencies, expense and policy
terminations must be realistic together with an appropriate provision for
adverse deviation. As well, an actuary must comply with any valuation directives
from OSFI.
To the extent that the valuation assumptions employed are more conservative than
the assumptions used in the calculation of premium rates, the initial policy
liabilities will cause an earnings strain because in the year of sale of a
policy, selling expenses and policy liabilities (which must be established in
the first year) will exceed premium income. To the extent the valuation
assumptions prove to be conservative, this first year earning strain is offset
by higher net earnings in the years following.
INCOME TAXES
Lifeco is taxed in Canada on its net income after deducting dividends from
subsidiaries.
Income taxes are payable by life insurers under the Income Tax Act (Canada) and
applicable provincial tax acts on their taxable income from carrying on business
in Canada as determined by special rules relating to life insurers.
Life insurers are required to pay a 15% Investment Income Tax on investment
income deemed to be credited to Canadian life insurance policies. Also, a Large
Corporations Tax, equal to 0.2250% of the Canadian capital and surplus and
Canadian real estate is payable. Capital tax is also payable at the rate of 1.5%
on Canadian capital and surplus. Federal Income tax is creditable against the
capital tax otherwise payable.
In the United States, stock life insurers, including non-resident life insurers,
are taxed upon their gain from operations on United States business (as
determined by special rules relating to life insurers).
<Page>
24
The United States taxable income of non-resident life insurers may include
investment income in excess of the investment income attributed by Great-West to
its United States business.
The United States Revenue Reconciliation Act of 1990 requires that a life
insurance company capitalize expenses equal to the following percentages of
premium income, except premium arising from qualified plans, and amortize those
expenses over 10 years.
<Table>
Annuity Contracts 1.75%
Group Life Insurance Contracts 2.05%
Other Life Insurance and
Non-Cancellable Health Contracts 7.70%
</Table>
For business conducted outside Canada or the United States, Lifeco's
subsidiaries are subject to tax laws and regulations enacted in those
jurisdictions.
PREMIUM TAXES
In Canada, premium taxes are paid on life and health insurance premiums to the
provincial and territorial governments. In the United States, premium taxes are
also extended to certain annuity products and are paid to each state and some
municipalities. The premium tax rate varies and ranges up to 4.27%. Premium
taxes are deductible for income tax purposes.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Management's Discussion and Analysis, set forth on pages 16 through 53 of
Lifeco's 2001 Annual Report, is hereby incorporated by reference.
MARKET FOR SECURITIES
Lifeco's common shares, Non-Cumulative First Preferred Shares, Series "B",
Non-Cumulative First Preferred Shares, Series "C", Non-Cumulative First
Preferred Shares, Series "D", and Non-Cumulative Class A Preferred Shares,
Series 1 are listed and posted for trading on The Toronto Stock Exchange.
GLOSSARY OF INSURANCE AND FINANCIAL TERMS
A Glossary of Insurance and Financial Terms, set forth on pages 95 and 96 of
Lifeco's 2001 Annual Report, is hereby incorporated by reference.
<Page>
25
DIRECTORS AND OFFICERS
DIRECTORS
<Table>
<Caption>
Name and Municipality Director Principal Occupation
of Residence Since within the Five Preceding Years
- ------------------------------------ ----------------- -------------------------------------------------
Gail S. Asper(1) April 23, 1998 Corporate Secretary, CanWest Global
Winnipeg, Manitoba Communications Corporation (an international
media company); President, CanWest Global
Foundation (a private charitable foundation)
James W. Burns, O.C.(2)(3) May 15, 1986 Chairman of the Boards of Lifeco, Great-West,
Winnipeg, Manitoba LIG, and London Life; Deputy Chairman,
Power Corporation of Canada (a holding and
management corporation)
Orest T. Dackow(3) April 22, 1992 Corporate Director; formerly President and
Castle Rock, Colorado Chief Executive Officer, Lifeco
Andre Desmarais(3) April 22, 1992 President and Co-Chief Executive Officer,
Westmount, Quebec Power Corporation of Canada (a holding and
management corporation); Deputy Chairman,
Power Financial Corporation (a holding
corporation with substantial interests in the
financial services industry)
The Honourable May 15, 1986 Chairman of the Executive Committee,
Paul Desmarais, P.C., C.C. Power Corporation of Canada (a holding and
Westmount, Quebec management corporation)
Paul Desmarais, Jr.(2)(3) May 15, 1986 Chairman and Co-Chief Executive Officer,
Westmount, Quebec Power Corporation of Canada (a holding and
management corporation); Chairman, Power
Financial Corporation (a holding corporation
with substantial interests in the financial
services industry)
Robert Gratton(2)(3) April 25, 1990 President and Chief Executive Officer,
Outremont, Quebec Power Financial Corporation (a holding
corporation with substantial interests in the
financial services industry); Chairman of the
Board, GWL&A
</Table>
<Page>
26
DIRECTORS
<Table>
<Caption>
Name and Municipality Director Principal Occupation
of Residence Since within the Five Preceding Years
- ------------------------------------ ----------------- -------------------------------------------------
Charles H. Hollenberg, M.D., O.C.(3) May 15, 1986 Senior Consultant, Cancer Care Ontario
Toronto, Ontario
Daniel Johnson April 22, 1999 Of Counsel to McCarthy Tetrault LLP
Montreal, Quebec (Barristers and Solicitors) since 1998; Prime
Minister of Quebec in 1994 and Leader of
the Opposition from 1994-1998
Kevin P. Kavanagh(3) May 15, 1986 Corporate Director;
Winnipeg, Manitoba Chancellor, Brandon University
J. Blair MacAulay(2)(3) May 15, 1986 Of Counsel to Fraser Milner Casgrain LLP
Oakville, Ontario (Barristers & Solicitors)
The Right Honourable January 27, 1994 Corporate Director and Business Consultant
Donald F. Mazankowski, since June, 1993; previously Member of the
P.C., O.C.(3) Parliament of Canada, Deputy Prime
Vegreville, Alberta Minister and Minister of Finance
William T. McCallum(3) April 28, 1993 Co-President and Chief Executive Officer of
Cherry Hills, Colorado Lifeco since April 2000;
President and Chief Executive Officer,
GWL&A
Raymond L. McFeetors(3) April 28, 1993 Co-President and Chief Executive Officer of
Winnipeg, Manitoba and Lifeco since April 2000;
London, Ontario President and Chief Executive Officer of
Great-West, LIG and London Life
Randall L. Moffat(1) May 15, 1986 Corporate Director; formerly Chairman and
Winnipeg, Manitoba President, Moffat Communications Limited
(television and cable broadcasting)
Jerry E. A. Nickerson(1)(2)(3) May 15, 1986 Chairman of the Board, H. B. Nickerson &
North Sydney, Nova Scotia Sons Limited (a management and holding
company)
Gordon F. Osbaldeston, P.C., C.C. April 23, 1998 Corporate Director; former Clerk of the
London, Ontario Privy Council and Secretary to the Canadian
Cabinet; former Under-Secretary of State for
Economic Development
</Table>
<Page>
27
DIRECTORS
<Table>
<Caption>
Name and Municipality Director Principal Occupation
of Residence Since within the Five Preceding Years
- ----------------------------------- ----------------- -------------------------------------------------
The Honourable May 15, 1986 Vice-Chairman, Power Corporation of
P. Michael Pitfield, P.C., Q.C. Canada (a holding and management
Westmount, Quebec corporation); Member of the Senate of
Canada
Michel Plessis-Belair, F.C.A.(1)(3) April 25, 1990 Vice-Chairman and Chief Financial Officer,
Town of Mount Royal, Quebec Power Corporation of Canada (a holding
and management corporation); Executive
Vice-President and Chief Financial Officer,
Power Financial Corporation (a holding
corporation with substantial interests in the
financial services industry)
H. Sanford Riley November 26, 1997 Chairman of the Board, Investors Group
Winnipeg, Manitoba Inc. (a financial services corporation);
formerly President and Chief Executive
Officer, Investors Group Inc.
Guy St-Germain, C.M.(1)(3) April 24, 1991 President, Placements Laugerma Inc. (a
Outremont, Quebec private holding company)
Gerard Veilleux, O.C.(1) April 23, 1998 Vice-President, Power Corporation of
Montreal, Quebec Canada (a holding and management
corporation)
</Table>
All directors are elected to hold office until the close of the next annual
meeting of shareholders.
Lifeco has an Audit Committee, a Stock Option Plan Administrative Committee and
an Executive Committee. Those directors designated by "(1)" are members of the
Audit Committee, those directors designated by "(2)" are members of the Stock
Option Plan Administrative Committee, and those directors designated by "(3)"
are members of the Executive Committee.
<Page>
28
EXECUTIVE OFFICERS
<Table>
<Caption>
Name and Municipality Principal Occupation
of Residence within the Five Preceding Years
- ---------------------------------- -----------------------------------------------------
Raymond L. McFeetors Co-President and Chief Executive Officer, Lifeco
Winnipeg, Manitoba and since April 2000; President and Chief Executive
London, Ontario Officer of Great-West, LIG and London Life
William T. McCallum Co-President and Chief Executive Officer, Lifeco
Cherry Hills, Colorado since April 2000; President and Chief Executive
Officer, GWL&A
Mitchell T. G. Graye Vice-President, Finance, United States, Lifeco;
Castle Rock, Colorado Executive Vice-President and Chief Financial
Officer, GWL&A
D. Craig Lennox Vice-President, Counsel and Secretary, United
Englewood, Colorado States, Lifeco; Senior Vice-President, General
Counsel and Secretary, GWL&A
William W. Lovatt Vice-President, Finance, Canada, Lifeco; Executive
Winnipeg, Manitoba Vice-President and Chief Financial Officer, Great-
West, LIG and London Life
Sheila A. Wagar, Q.C. Vice-President, Counsel and Secretary, Canada,
Winnipeg, Manitoba Lifeco; Senior Vice-President, General Counsel and
Secretary, Great-West, LIG and London Life
</Table>
Unless otherwise indicated, all of the directors and officers have been engaged
for not less than five years in their present principal occupations or in
another executive capacity with the companies or firms identified.
As of March 8, 2002, the directors and officers of Lifeco, as a group,
beneficially owned, directly or indirectly, 1,009,093 shares or 0.27% of the
voting securities of Lifeco.
Mr. Paul Desmarais and associates have voting control of Power Corporation of
Canada. As of March 8, 2002, Power Financial Corporation, a subsidiary of Power
Corporation of Canada, controlled, directly or indirectly, 303,691,244 common
shares or 82.35% of the outstanding common shares of Lifeco, representing
approximately 64.99% of the voting rights attached to all of the outstanding
voting shares of Lifeco.
<Page>
29
ADDITIONAL INFORMATION
When the securities of Lifeco are in the course of a distribution under a
preliminary short from prospectus or a short form prospectus, Lifeco will
provide any person, upon request to the Vice-President, Counsel and Secretary,
Canada, 100 Osborne Street North, Winnipeg, Manitoba, R3C 3A5, with one copy of:
(a) Lifeco's latest Annual Information Form, together with one copy
of any document, or the pertinent pages of any document,
incorporated by reference in the Annual Information Form;
(b) the comparative financial statements of Lifeco for its most
recently completed financial year for which financial statements
have been filed, together with the accompanying report of the
auditor and one copy of the most recent interim financial
statements of Lifeco that have been filed for any period after
the end of its most recently completed financial year;
(c) the Management Proxy Circular of Lifeco in respect of its most
recent annual meeting of shareholders that involved the election
of directors; and
(d) any other documents that are incorporated by reference into the
preliminary short form prospectus or the short form prospectus
that are not provided under clauses (a), (b) or (c) above.
At any other time, Lifeco will provide any person, upon request in the manner
set out above, with a copy of the documents referred to in clauses (a), (b) and
(c) above, provided that Lifeco may require the payment of a reasonable charge
if the request is made by a person who is not a security holder of Lifeco.
Additional information in respect of Lifeco, including directors and officers
remuneration and indebtedness, principal holders of its securities, options to
purchase securities and interests of insiders in material transactions, where
applicable, is contained in Lifeco's Management Proxy Circular for its most
recent annual meeting of shareholders that involved the election of directors.
Additional financial information is provided in Lifeco's comparative financial
statements for its most recently completed financial year.
TRADEMARK INFORMATION
Great-West Life and key design are trademarks of The Great-West Life Assurance
Company
London Life, Freedom 55, Freedom 55 Financial, London Insurance Group, London
Reinsurance Group and LRG, London Guarantee and London Guarantee Insurance
Company are trademarks of London Life Insurance Company.
Quadrus Investment Services Ltd. and design, Quadrus and Quadrus Group of Funds
are trademarks of Quadrus Investment Services Ltd.