Canada Life Financial Corporation ANNUAL REPORT

Transcription

1 Canada Life Financial Corporation 2007 ANNUAL REPORT

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3 CORPORATE PROFILE Canada Life Financial Corporation (CLFC) was established in CLFC s principal subsidiary, The Canada Life Assurance Company, was founded in 1847 and provides insurance and wealth management products and services in Canada and internationally, primarily in the United Kingdom, Isle of Man, Ireland, and Germany. CLFC and Canada Life are subsidiaries of The Great-West Life Assurance Company, which together with London Life Insurance Company, has more than $166 billion in assets under administration. The companies are members of the Power Financial Corporation group of companies. TABLE OF CONTENTS 1 Corporate Profile 2 Directors Report 4 Management s Discussion and Analysis 5 Consolidated Operating Results 9 Consolidated Financial Position 13 Liquidity and Capital Management and Adequacy 15 Risk Management and Control Practices 23 Summary of Critical Accounting Estimates 24 Accounting Policies 26 Segmented Operating Results 26 Individual Insurance & Investment Products 28 Group Insurance 30 Europe/Reinsurance 36 United States 36 Corporate 37 Other Information 41 Financial Reporting Responsibility 43 Consolidated Financial Statements 43 Summary of Consolidated Operations 44 Consolidated Balance Sheets 45 Consolidated Statements of Surplus 47 Consolidated Statements of Cash Flows 48 Segregated Funds Consolidated Net Assets and Consolidated Statements of Changes in Net Assets 49 Notes to the Financial Statements 76 Auditors Report 76 Appointed Actuary s Report 77 Five Year Summary 78 Subsidiaries of Canada Life Financial Corporation 79 Directors and Officers 80 Shareholder Information Readers are referred to the cautionary notes regarding forward-looking information and non-gaap financial measures on page 4 of this report. Canada Life Financial Corporation Annual Report

4 DIRECTORS REPORT The strong performance of Canada Life Financial Corporation (CLFC) in 2007 reflects solid operating results in all major business segments in Canada and Europe, organic growth, continued acquisitions in the United Kingdom, fixed payout annuity business and a continued focus on expense management across all operations. Important measures of Canada Life Financial Corporation s performance in 2007 include: Common shareholder net income before adjustments increased 31% to $822 million. Premiums and deposits increased 50% to $17 billion, while fee and other income grew 8% to $783 million. Total assets under administration increased 3% to $83 billion. General account assets increased 7% to $52 billion. CANADA CLFC reports that its subsidiary, The Canada Life Assurance Company (Canada Life), together with Great-West Life and London Life, continues to strengthen its position as a leading provider of financial products and services for Canadians. In 2007 in Canada strong sales across all lines of business resulted in strong operating earnings. The Canadian operations continued to focus on distribution support and development, and also maintained focus on expense management. Together, Canada Life, Great-West Life and London Life remain Canada's number one provider of individual life insurance. Canada Life s traditional strength in participating life insurance was enhanced with the introduction of two new participating life insurance products, Estate Achiever and Wealth Achiever. Canada Life, together with Great-West Life, is also a leading provider of disability insurance and critical illness insurance for Canadians. In 2007, a renewed focus on disability insurance resulted in continued sales growth of the Canada Life product. Several new product features were introduced, enhancing the appeal of Canada Life s disability insurance as a product of choice for advisors and their clients. In its investment business, Canada Life s Generations segregated funds were expanded in 2007 to offer different levels of guarantees with associated fee levels, as well as additional fund managers. Clients can choose from over 50 funds available with each Generations product. Canada Life strives to offer competitive products and services designed to help its distribution channels managing general agencies (MGAs), brokers and national accounts meet their clients insurance and investment needs and support their business success. Canada Life continues to focus on making it easy for its distribution channels and their clients to do business through effective processes and service models. Building on the quality service provided through its network of regional marketing consultants and four regional marketing centres, Canada Life enhanced its advisor website and renewed its commitment to value-added products, services and tools for its distribution channels. The creditor insurance business in 2007 focused on enhancing its customer service capabilities through the introduction of additional telephone and web-based services. One example is tele-underwriting, where telephone interviews are conducted with consumers applying for insurance on their loans, rather than relying solely on paper questionnaires. In many cases, the underwriting decision can be finalized with the information gathered from the telephone interview with the consumer. In 2008, Canada Life expects to expand the use of telephone and web-based tools to continue to enhance the efficiency and the quality of the service and information provided to consumers. Canada Life s newly redeveloped public website showcases Canada Life s Canadian product offering, and provides Canadian clients with easy access to secure client services while maintaining a high profile for Canada Life s Europe and Reinsurance operations. EUROPE In Europe prior acquisitions and sales growth, coupled with solid mortality and investment experience, led to strong earnings growth. In 2007 Canada Life had a very successful year in the United Kingdom and the Isle of Man. Our acquisition of fixed payout annuity business from The Equitable Life Assurance Society was completed in early 2007 and we believe it was the largest transfer of a fixed payout annuity portfolio in the U.K. We continue to seek growth opportunities in the annuity marketplace, where we are a market leader. In 2007, for the second consecutive year, Canada Life achieved a five-star service award in the 2007 Financial Service Awards, placing Canada Life among the top ten service providers in the investment arena in the U.K. This reflects continued success in both onshore and offshore single premium investment business. Canada Life continues to be well positioned in each of its market segments in the U.K. and plans to enhance its payout annuity product offering in 2008 with the launch of a new enhanced annuity product. 2 Canada Life Financial Corporation Annual Report 2007

5 Directors Report In Ireland, Canada Life maintained its overall market share in 2007 with a particularly strong performance in the pensions sector. The emphasis in 2008 will be on developing products to address market challenges, strengthening intermediary relationships, creating new channels and expanding distribution capabilities. In Germany, Canada Life operates in the independent broker market which is about 25% of the total market. Despite a decline in the market for regular premium private pensions, sales of its innovative new single premium pension products grew dramatically. In reinsurance, we continued to leverage our financial strength, adaptive products and strong client relationships to achieve strong business results. BOARD OF DIRECTORS The Directors play a key role in Canada Life Financial Corporation s governance and continued success. At Canada Life Financial Corporation s annual meeting in 2007, the number of Directors on the Board increased from 20 to 23 with the election of three new Directors: Marcel R. Coutu, H. David Graves and V. Peter Harder. On behalf of the Board of Directors, it is our pleasure to recognize the professionalism and continuing dedication of the people across Canada Life worldwide who serve our clients and distribution associates. We also thank our clients and distribution associates for their continued support. Robert Gratton Chairman of the Board Raymond L. McFeetors President and Chief Executive Officer Canada Life Financial Corporation Annual Report