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Great-West Lifeco Q3 profit up 13 per cent from last year to $826M

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Great-West Lifeco Inc. managed to notch a 13 per cent increase in net earnings during its third quarter, even as it went on a multi-billion-dollar spending spree.

The Winnipeg-based insurer reported $826 million of net earnings during the months leading up to Sept. 30, up from $730 million in the same period last year.

Great-West chief executive Paul Mahon attributed much of the growth to series of acquisitions and a few sales the company made in recent months.

"These actions are focused on broadening and strengthening our businesses to accelerate growth in revenue, earnings per share and shareholder value," Mahon said on a Thursday afternoon earnings call with analysts.

Great-West is expected to earn $145 million by selling subsidiary GLC Asset Management Group Ltd. to Mackenzie Financial Corporation and another $94 million post-tax through the sale of Irish Progressive Services International Limited.

But the company has also been spending plenty of cash this year.

In recent months, Great-West and its subsidiaries reached deals to spend at least $825 million on wealth manager Personal Capital Corporation and $4.4 billion on the retirement services business of Massachusetts Mutual Life Insurance Company. 

It will also take on a non-controlling interest in Northleaf Capital Partners Ltd.

The deals pushed Great-West's net earnings per share to 89 cents in the quarter from 79 cents the year before.

Its base earnings, a form of adjusted profit that excludes certain items, were $679 million or 73 cents per share 

The company was expected to report 69 cents per share of base earnings, according to the financial markets data firm Refinitiv.

Meanwhile, the company's stock inched up 17 cents in to reach $28.16 by the end of the trading day. 

The quarter also saw Canadian health and dental claims, which sank during the onset of the COVID-19 pandemic as people stayed home, approach more normal levels, said Mahon.

While the pandemic has ravaged businesses, he's seen few terminate their insurance plans due to bankruptcies, but noticed group and individual insurance plans sales have slowed.

"While we continue to see COVID-related mortality increases across our business, the balanced nature of our insurance and longevity book greatly reduces the financial impact," added Mahon.

In Europe, where the U.K. is struggling to contain the virus and social distancing requirements have reduced capacity in hospitals, Mahon said sales activity for wealth management continues to be slow.

However, he said he has seen activity pick up in the U.K. bulk annuity market and strong growth of corporate pension sales in Ireland.

Across all markets, Mahon said Great-West is paying attention to investments most vulnerable to the pandemic like real estate and offices.

"While performance continues to be strong, COVID-related pressures exist and as such we are closely monitoring the portfolio."

This report by The Canadian Press was first published Nov. 5, 2020 

Companies in this story: (TSX:GWO)

Tara Deschamps, The Canadian Press

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