Although premiums and deposits were up, Great-West Lifeco's Canadian earnings dropped by 11% in the third quarter of 2016.
Great-West Lifeco released its financial results for Q3 yesterday, and the report shows that Canadian premiums and deposits in the third quarter came to $6.1 billion, up by 7% compared to the same period last year.
Individual insurance sales were up by 15%
Much of this growth was due to booming business in single premium group annuities, which pushed group wealth management sales up by 80%. Individual insurance sales were also up by 15% year-over-year, thanks to a 15% increase in participating life sales and a 45% jump in universal life sales. Gains in these two divisions offset the 64% year-over-year drop the company experienced in group insurance sales and the 8% decline in individual wealth management sales.
The gain in sales did not translate into higher operating earnings, however, which were down across the board in Canada.
Individual insurance earnings in Canada fell by 23%
Individual insurance earnings in Canada fell by 23% year-over-year; the statements pin the blame on "lower contributions from insurance contract liability basis changes, higher new business strain as well as less favourable morbidity and policyholder behaviour experience". Year-over-year, operating earnings in the Canadian wealth management declined by 15% "due to lower contributions from insurance contract liability basis changes and higher operating expenses". As for the Canadian group insurance division, the insurer says its 28% drop in earnings was due mostly to higher income taxes and poor morbidity experience in non-refundable long-term disability.
Great-West Lifeco’s Canadian earnings came to $289 million
In total, Great-West Lifeco’s Canadian earnings came to $289 million in Q3, down from the $327 million reported in Q2 and 11% lower than the $326 million reported in the third quarter of 2015.
The insurer's capital position also eroded slightly. It reported a Minimum Continuing Capital Surplus Requirements (MCCSR) ratio of 227% at September 30, 2016, down from 232% in the previous quarter and 234% in the same period last year.