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FOR IMMEDIATE RELEASE
OLDWICK - JULY 08, 2015 01:32 PM (EDT)
A.M. Best has affirmed the financial strength rating of A+ (Superior) and the issuer credit ratings (ICR) of "aa" of The Great-West Life Assurance Company (Winnipeg, Manitoba) and its affiliates, London Life Insurance Company (London, Ontario), The Canada Life Assurance Company (CLAC) (Toronto, Ontario), Great-West Life & Annuity Insurance Company (GWL&A) (Greenwood Village, CO) and Great-West Life & Annuity Insurance Company of New York (White Plains, NY) (together referred to as the Great-West Life Group). Concurrently, A.M. Best has affirmed the ICR of "a" and the existing debt ratings of Great-West Lifeco Inc. (Lifeco) (Winnipeg, Manitoba). The outlook for all ratings is stable. (See link below for a detailed listing of the companies and ratings.)
The rating affirmations reflect Great-West Life Group's highly diversified earnings profile by product and geography, strong market position in its core business lines, solid regulatory capital levels and the financial strength and support of its ultimate majority shareholder, Power Corporation of Canada. Given Great-West Life Group's diversified insurance, reinsurance and financial services operations, along with its strong enterprise risk management capabilities, the impact it has experienced from low interest rates has been relatively modest. The organization has consistently generated significant cash flows from operations and has historically demonstrated its ability to manage its financial leverage and interest coverage within A.M. Best's expectations for its current ratings.
Moreover, A.M. Best recognizes Great-West Life Group's consolidated position as a market leader in the Canadian individual and group insurance lines, with superior market positions in the wealth accumulation and protection segments. The Canadian distribution systems of Lifeco and its operating companies represent the largest in Canada and serve as a significant competitive advantage, while its conservative pricing discipline and low expense structure enable it to generate favorable operating results. The U.S. operation continues to produce stable earnings contributions, with the growth of its retirement savings business augmented by the acquisition of J.P. Morgan Retirement Plan Services. The European business segments provide further diversification, which includes the recent acquisition of Legal & General International (Ireland) Limited. In addition, Lifeco maintains an excellent liquidity posture supported by high quality investments and credit facilities.
In the United States, GWL&A is a well-established player with considerable strength in the public and non-profit financial services sector and provides a stable source of earnings for Lifeco. Following the acquisition of J.P. Morgan Retirement Services' large-market record keeping business in 2014, GWL&A gained a number two ranking among defined contribution providers based upon the number of participants. CLAC, which operates in Canada as well as in Europe, is among the top 20 life insurers in the United Kingdom, with an industry-leading market share in the group life market.
The economic events experienced in recent years have pressured Great-West Life Group's overall operating performance, although the group's life insurance entities have not experienced the same level of earnings sensitivity from equity market volatility as its competitors. In addition, A.M. Best expects that the group will continue to face challenges associated with growth in its core U.S. business segments due to the highly competitive environment, as well as continued losses from Putnam Investments. As the global economy and regulatory environment evolves, A.M. Best expects any potential growth strategies will require a more stringent focus and a longer time horizon to record meaningful growth over the medium to longer term.
For a complete listing of Great-West Lifeco Inc. and its subsidiaries' financial strength, issuer credit and debt ratings, please visit Great-West Lifeco Inc.
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center.
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