Great-West Lifeco Inc. announced on July 31 net earnings attributable to common shareholders (net earnings) of $459 million or $0.49 per common share for the second quarter of 2019 compared to $831 million or $0.84 per common share for the same quarter last year.
The company’s Q2 net earnings included a net charge of $199 million relating to the sale of the U.S. individual life insurance and annuity business, which reduced earnings per common share by $0.21.
Adjust net earnings drop
Adjusted net earnings, which exclude this charge, were $658 million or $0.70 per common share. Adjusted net earnings in the second quarter of 2019 decreased $173 million from the prior year reflecting lower contributions from insurance contract liability basis changes and the impact of U.K. retail related investment impairments. In addition, Great-West’s net earnings for the second quarter of 2018 included a net positive impact of $60 million, or $0.06 per common share, arising from refinancing in the U.S. segment.
“We continued to make progress on our strategic priorities in the quarter and business fundamentals remained solid despite the decline in net earnings,” said Paul Mahon, president and Chief Executive Officer, Great-West Lifeco Inc. “We continue to invest in new products and digital capabilities to drive better customer and advisor experiences and our capital position remains strong.”
Canadian division net earnings fall 16%
The Canadian division had second-quarter net earnings of $280 million compared to $334 million in the second quarter of 2018, a drop of 16%. The decrease was primarily due to large contributions from insurance contract liability basis changes in 2018 that did not recur. This was partially offset by strong investment results in the second quarter of 2019.
Plans to move ahead with amalgamation of Great-West Life, London Life and Canada Life are now subject to regulatory and policyholder approval and are expected to be completed by January 1, 2020.
European net earnings for the second quarter were down 21% from the same period last year, mainly due to lower contributions from insurance contract liability basis changes and lower contributions from investment experience primarily driven by U.K. retail related investment losses partly offset by the favourable impact of new business from U.K. bulk annuity sales.