DBRS Confirms Ratings on Great-West Life Operating Companies

DBRS is today confirming all of its rating on the claims paying abilities, the debt, hybrid capital instruments and the preferred shares of the operating subsidiaries of Great-West Lifeco (GWO or the Company). The respective trends are all Stable. Specifically, this action covers the obligations of The Great-West Life Assurance Company, and its two major subsidiaries, The Canada Life Assurance Company and London Life Insurance Company. In addition to each company operating well on its own terms, there is also an implied level of support for each operating subsidiary from the Great-West and the Power Financial group as a whole, which is a positive component of the ratings.

The ratings on GWO remain Under Review with Developing Implications, where they were placed on February 1, 2007 following the Company’s announcement of its intention to purchase Putnam Investments Trust for cash consideration of $4.56 billion. The resolution of this rating action will largely depend on how GWO proceeds to finance the acquisition cost.

With respect to the existing operating companies, DBRS acknowledges the strong market position of GWO’s affiliated companies in the Canadian life insurance and growing retail wealth management industries. As a group, these three complementary companies operate through three strong brands, diversified distribution channels which tap into every financial advice-seeking market niche, and increasingly efficient and integrated operating and product manufacturing platforms. In addition to strong Canadian operations, there are attractive growth opportunities in Europe which now accounts an increasing portion of the group’s earnings.

Management policies and procedures satisfactorily address the accompanying risks of the insurance business including asset quality, asset-liability management and liquidity. Capitalization for each company is conservative. Moreover, strong growth in segregated funds is shifting the burden of investment performance onto investors and policyholders, while giving each company additional growth opportunities with minimal capital requirements.

Note:
All figures are in Canadian dollars unless otherwise noted.