8-K 1 gfi8k.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) October 29, 2003 GWL&A FINANCIAL INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) 333-64473 (Commission File Number) 84-1474245 (IRS Employer Identification No.) 8515 East Orchard Road, Greenwood Village, Colorado 80111 ------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (303) 737-3000 (Registrant's telephone number, including area code) -------------------------------------------------------------------------------- ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS Exhibit Number Title 99 Great-West Lifeco Press Release dated October 29, 2003 ITEM 9. REGULATION FD DISCLOSURE On October 29, 2003, Great-West Lifeco Inc., an indirect Canadian parent company of the Registrant, issued a press release regarding its financial results for the third quarter of 2003. The press release includes a discussion of the financial results of the Registrant. A copy of the press release is attached as Exhibit 99 hereto. The dollar amounts referred to in the press release are in Canadian dollars unless otherwise stated. ITEM 12. DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION On October 29, 2003, Great-West Lifeco Inc., an indirect Canadian parent company of the Registrant, issued a press release regarding its financial results for the third quarter of 2003. The press release includes a discussion of the financial results of Great-West Life & Annuity Insurance Company, the operating subsidiary of the Registrant. A copy of the press release is attached as Exhibit 99 hereto. The dollar amounts referred to in the press release are in Canadian dollars unless otherwise stated. This Form 8-K contains forward-looking statements. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. In particular, statements using verbs such as "expect," "anticipate," "believe" or words of similar import generally involve forward-looking statements. Without limiting the foregoing, forward-looking statements include statements which represent the Registrant's beliefs concerning future or projected levels of sales of the Registrant's products, investment spreads or yields, or the earnings or profitability of the Registrant's activities. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Registrant's control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Registrant. Whether or not actual results differ materially from forward-looking statements may depend on numerous foreseeable and unforeseeable events or developments, some of which may be national in scope, such as general economic conditions and interest rates, some of which may be related to the insurance industry generally, such as pricing competition, regulatory developments and industry consolidation, and others of which may relate to the Registrant specifically, such as credit, volatility and other risks associated with the Registrant's investment portfolio, and other factors. Readers are also directed to consider other risks and uncertainties discussed in documents filed by the Registrant and certain of its subsidiaries with the Securities and Exchange Commission. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: October 29, 2003 GWL&A FINANCIAL INC. By: /s/Richard G. Schultz Name: Richard G. Schultz Title: Vice President, Counsel and Associate Secretary TSX:GWO Great-West Lifeco reports nine months 2003 results Toronto, October 29, 2003 ... Great-West Lifeco Inc. (Lifeco) has reported net income attributable to common shareholders, excluding restructuring charges related to the acquisition of Canada Life Financial Corporation (CLFC), of $336 million for the third quarter of 2003, compared to $240 million reported a year ago, an increase of 40%. On a per share basis, this represents $0.771 per common share for the third quarter of 2003, an increase of 18%, compared to a year ago. Net income, after restructuring costs, attributable to common shareholders for the quarter was $324 million or $0.739 per common share. For the nine months ended September 30, 2003, net income attributable to common shareholders, excluding restructuring charges, was $850 million, an increase of 22% compared to $696 million for 2002, or $2.176 per common share, an increase of 15% compared to $1.889 per common share for 2002. Net income, after restructuring costs, attributable to common shareholders was $838 million or $2.144 per common share for the nine months of 2003. The results of CLFC are included from July 10, 2003. Highlights o For the third quarter of 2003, common shareholder net income, excluding restructuring charges, increased 40% and earnings per common share, on the same basis, increased 18% over the third quarter of 2002. o The Canada Life acquisition contributed approximately $0.045 per common share to third quarter earnings, which represents 6.2% accretion in quarter. o Return on common shareholders' equity, excluding restructuring costs, was 21.6% for the twelve months ended September 30, 2003. o Quarterly dividends declared were 29.25(cent) per common share, payable December 31, 2003. Dividends paid on common shares for the first nine months of 2003 were 19% higher than a year ago. Canada Life Acquisition On July 10, 2003, Lifeco completed its acquisition of Canada Life Financial Corporation, the parent company of The Canada Life Assurance Company. Lifeco acquired all outstanding common shares of Canada Life Financial that it did not already beneficially own, for an aggregate transaction value of $7.2 billion. Lifeco immediately transferred the common shares of Canada Life Financial Corporation to its Canadian subsidiary, The Great-West Life Assurance Company (Great-West). Canada Life Financial Corporation is now a wholly-owned subsidiary of Great-West. Consolidated net earnings for Lifeco are the net operating earnings of The Great-West Life Assurance Company, Canada Life Financial Corporation from the date of acquisition, as well as London Life Insurance Company (London Life) and Great-West Life & Annuity Insurance Company (GWL&A), together with Lifeco's corporate results. Canada and International Segment Canada and International consolidated net earnings of Lifeco attributable to common shareholders for the third quarter of 2003 increased 57% to $179 million from $114 million a year ago. For the nine months ended September 30, 2003, earnings were up 32% to $429 million, compared to $325 million at September 30, 2002. The increases were due to both strong operating earnings from Great-West and London Life, as well as the inclusion of Canada and International results for CLFC from date of acquisition - July 10, 2003, which represents earnings of approximately $57 million, net of related finance costs. Total premiums and deposits for the nine months ended September 30, 2003 increased $1.3 billion from 2002 levels, with the third quarter of 2003 up $885 million. The increase reflects the inclusion in 2003 of $1.9 billion of CLFC premiums and deposits, mitigated by lower reinsurance premiums in the third quarter of 2003. Fee income increased $109 million in 2003, of which $98 million was the inclusion of CLFC in 2003. Total assets under administration at September 30, 2003 were $109.0 billion, which includes $50.1 billion attributable to CLFC. United States Segment United States consolidated net earnings of Lifeco attributable to common shareholders for the third quarter of 2003 increased 29% to $163 million from $126 million a year ago. For the nine months ended September 30, 2003, earnings were up 15% to $427 million compared to $371 million at September 30, 2002. The increases were primarily related to favourable morbidity in Healthcare and favourable mortality in Financial Services, for GWL&A, as well as the inclusion of the United States operations for CLFC from the date of acquisition - July 10, 2003, which represents approximately $14 million. Total premiums and deposits for the nine months ended September 30, 2003 decreased US $790 million (CDN $2.2 billion) compared to a year ago. The inclusion of CLFC results from date of acquisition impacted these results by CDN $190 million. As reported earlier this year, the reduction in premiums and deposits in the Employee Benefits segment is attributable to a contraction in health care medical membership. However, as noted above, earnings of the segment increased year-over-year. The reduction in premiums and deposits in the Financial Services segment is primarily due to lower segregated funds deposits resulting from the effects of the U.S. equity markets. The decrease in fee income in 2003 is attributable to both the Group health ASO business and the reductions in segregated funds deposits. Total assets under administration were $48.4 billion at September 30, 2003, including $8.5 billion attributable to the U.S. operations of CLFC. LIFECO CORPORATE Corporate net earnings results for Lifeco, attributable to common shareholders, were a charge of $18 million comprised mostly of restructuring costs of $12 million incurred to September 30, 2003 related to the CLFC acquisition. Quarterly Dividends At its meeting today, the Board of Directors approved a quarterly dividend of $0.2925 per share on the common shares of the Company payable December 31, 2003 to shareholders of record at the close of business December 3, 2003. In addition, the Directors approved quarterly dividends on: o Series D First Preferred Shares $0.293750 per share; o Series E First Preferred Shares $0.30 per share; and o Series F First Preferred Shares $0.36875 per share payable December 31, 2003 to shareholders of record at the close of business December 3, 2003; o Class A, Series 1 Preferred Shares $0.3125 per share payable January 31, 2004 to shareholders of record at the close of business January 3, 2004. Great-West Lifeco Great-West Lifeco Inc. (TSX:GWO) is a financial services holding company with interests in the life insurance, health insurance, retirement savings, and reinsurance businesses. The Company has operations in Canada and internationally through The Great-West Life Assurance Company, London Life Insurance Company and The Canada Life Assurance Company, and in the United States through Great-West Life & Annuity Insurance Company and The Canada Life Assurance Company. Lifeco and its companies, including Canada Life have more than $157 billion in assets under administration. Great-West Lifeco is a member of the Power Financial Corporation group of companies. Forward-looking statements This release may contain forward-looking statements about future operations, financial results, objectives and strategies of the Company. Forward-looking statements are typically identified by the words "believe", "expect", "anticipate", "intend", "estimate" and other similar expressions. These statements are necessarily based on estimates and assumptions that are inherently subject to risks and uncertainties, many of which are beyond the Company's control. Actual results may differ materially due to a variety of factors, including legislative or regulatory developments, competition, technological change, global capital market activity, interest rates and general economic and political conditions in Canada, North America or internationally. Readers are urged to consider these and other such factors carefully and not place undue emphasis on the Company's forward-looking statements. Unless otherwise required by securities laws, the Company does not intend or have any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Further information Financial highlights and the September 30, 2003 interim unaudited consolidated financial statements are attached. The third quarter analyst teleconference for Great-West Lifeco will be held Wednesday, October 29, at 2:00 p.m. (Eastern). The call can be accessed through www.greatwestlifeco.com or by phone, through listen-only lines at: o Participants in the Toronto area: 416-405-9328 o Participants from North America: 1-800-387-6216 o Participants from Overseas: Dial international access code first, then 800-7664-7664. A replay of the call will be available from October 29, until November 3, and can be accessed by calling 1-800-408-3053 or 416-695-5800 in Toronto (passcode: 1487898). - end - For more information contact: Marlene Klassen Director, Media & Public Relations (204) 946-7705 marlene.klassen@gwl.ca FINANCIAL HIGHLIGHTS (unaudited) (in millions of dollars except per common share amounts) For the three months For the nine months ended September 30 ended September 30 ----------------------- -------------------- 2003 2002 % Change 2003 2002 % Change -------------------------------------------------------------------------------- Premiums: Life insurance, guaranteed annuities and insured health products $ 3,064 $ 3,110 -1% $ 8,682 $ 8,307 5% Self-funded premium equivalents (ASO contracts) (1) 2,065 2,369 -13% 6,286 7,198 -13% Segregated funds deposits: (1) Individual products 984 490 101% 1,841 1,829 1% Group products 1,048 878 19% 3,023 3,326 -9% --------------------- ---------------------- Total premiums and deposits 7,161 6,847 5% 19,832 20,660 -4% Bulk reinsurance - initial ceded premiums (2) (5,429) - (5,429) - --------------------- ---------------------- Net premiums and deposits 1,732 6,847 14,403 20,660 --------------------- ---------------------- Fee and other income 498 441 13% 1,330 1,379 -4% Paid or credited to policyholders (2) (2,059) 3,522 -158% 4,222 9,434 -55% Net income attributable to: Preferred shareholders 15 7 114% 27 23 17% Common shareholders before restructuring costs 336 240 40% 850 696 22% Restructuring costs (3) 12 - 12 - Common shareholders 324 240 35% 838 696 20% -------------------------------------------------------------------------------- Per Common Share Basic earnings before restructuring costs $ 0.771 $ 0.653 18% $ 2.176 $ 1.889 15% Restructuring costs (3) 0.032 - 0.032 - Basic earnings 0.739 0.653 13% 2.144 1.889 13% Dividends paid 0.2925 0.2475 18% 0.8325 0.6975 19% -------------------------------------------------------------------------------- Return on common shareholders' equity (12 months): Net income before restructuring costs 21.6% 22.3% Net income 21.4% 22.3% -------------------------------------------------------------------------------- At September 30 Total assets $ 99,083 $ 59,435 67% Segregated funds assets (1) 58,295 34,947 67% ----------------------- Total assets under administration $ 157,378 $ 94,382 67% ======================= Capital stock and surplus 8,518 4,715 81% Book value per common share 16.50 11.40 45%

(1) Segregated funds deposits and self-funded premium equivalents (ASO contracts)The financial statements of a life insurance company do not include the assets, liabilities, deposits and withdrawals of segregated funds or the claims payments related to administrative services only (ASO) Group health contracts. However, the Company does earn fee and other income related to these contracts. Both segregated fund and ASO contracts are an important aspect of the overall business of the Company and should be considered when comparing volumes, size and trends. (2) During the third quarter of 2003, as part of a risk rebalancing program related to the acquisition of Canada Life Financial Corporation (CLFC), a number of bulk reinsurance ceded contracts were executed by The Great-West Life Assurance Company (Great-West) and Great-West Life & Annuity Insurance Company (GWL&A) with third parties. Premiums related to the initial cession of in force policy liabilities were $5,429 million. (3) Following the acquisition of CLFC by the Company, a plan was developed to restructure and integrate the operations of CLFC with its wholly owned subsidiaries Great-West and GWL&A (see note 3 in the Company's 2003 interim financial statements). Shareholder net income for the three months and nine months ended September 30, 2003 includes restructuring of $12 after-tax or $.032 per common share. SUMMARY OF CONSOLIDATED OPERATIONS (unaudited) (in millions of dollars except earnings per common share) For the three months For the nine months ended September 30 ended September 30 -------------------------- -------------------------- 2003 2002 2003 2002 ----------------- ------- -------- --------- Income Premium income $ 3,064 $ 3,110 $ 8,682 $ 8,307 Bulk reinsurance - initial ceded premiums (note 10) (5,429) - (5,429) - -------- ------- -------- ------- (2,365) 3,110 3,253 8,307 Net investment income 1,316 878 3,167 2,704 Fee and other income 498 441 1,330 1,379 -------- ------- ------- ------- (551) 4,429 7,750 12,390 -------- ------- ------- ------- Benefits and Expenses Paid or credited to policyholders and beneficiaries including policyholder dividends and experience refunds (note 10) (2,059) 3,522 4,222 9,434 Commissions 288 166 621 531 Operating expenses 607 413 1,439 1,329 Premium taxes 53 31 115 92 Restructuring costs (note 3) 21 - 21 - Distribution on Capital Trust Securities (note 6) 10 - 19 - ----- ----- ----- ----- Net income before income taxes 529 297 1,313 1,004 Income taxes - current 230 121 474 297 - future (75) (61) (98) (14) ----- ----- ----- ----- Net income before non-controlling interests 374 237 937 721 Non-controlling interests (note 6) 35 (10) 72 2 ---- ----- ----- ----- Net income $ 339 $ 247 $ 865 $ 719 ===== ===== ===== ===== Earnings per common share (note 9) Basic $ 0.739 $ 0.653 $ 2.144 $ 1.889 ======= ======= ======= ======= Diluted $ 0.732 $ 0.646 $ 2.122 $ 1.865 ======= ======= ======= ======= -------------------------------------------------------------------------------- Summary of Net Income Preferred shareholder dividends $ 15 $ 7 $ 27 $ 23 Net income - common shareholders 324 240 838 696 ---- --- ---- ---- Net income $ 339 $ 247 $ 865 $ 719 ===== ===== ===== =====

Average number of shares outstanding - basic 390,828,605 368,470,287 Average number of shares outstanding - diluted 394,737,602 373,252,342 CONSOLIDATED BALANCE SHEET (unaudited) (in millions of dollars) September 30, December 31, September 30, 2003 2002 2002 --------------- --------------- ------------- Assets Bonds $ 54,721 $ 33,764 $ 32,428 Mortgage loans 15,091 7,850 8,035 Stocks 3,019 1,581 1,513 Real estate 1,649 1,267 1,258 Loans to policyholders 6,605 6,177 6,123 Cash and certificates of deposit 3,458 912 1,328 Funds withheld by ceding insurers 4,655 4,786 4,538 Premiums in course of collection 560 305 351 Interest due and accrued 945 511 550 Future income taxes 312 138 240 Goodwill and intangible assets (note 4) 6,358 1,687 1,687 Other assets 1,710 1,093 1,384 --------------- --------------- ------------ Total assets $ 99,083 $ 60,071 $ 59,435 =============== =============== ============ Liabilities Policy liabilities Actuarial liabilities $ 68,137 $ 44,508 $ 44,254 Provision for claims 1,126 645 638 Provision for policyholder dividends 597 363 375 Provision for experience rating refunds 946 927 940 Policyholder funds 2,138 1,853 1,818 ------------- --------------- ----------- 72,944 48,296 48,025 Commercial paper and other loans (note 5) 2,999 1,012 1,015 Current income taxes 600 454 525 Funds held under reinsurance contracts (note 10) 4,735 - - Other liabilities 3,614 2,081 1,783 Repurchase agreements 909 511 446 Net deferred gains on portfolio investments sold 2,221 958 1,000 -------------- --------------- ---------- 88,022 53,312 52,794 Non-controlling interests (note 6) 2,543 2,051 1,926 Capital Stock and Surplus Capital stock (note 7) 5,798 1,982 2,082 Surplus 2,817 2,382 2,278 Provision for unrealized gain on translation of net investment in foreign operations (97) 344 355 -------------- --------------- --------- 8,518 4,708 4,715 -------------- --------------- --------- Liabilities, capital stock and surplus $ 99,083 $ 60,071 $ 59,435 =============== ============== ==========

CONSOLIDATED STATEMENT OF SURPLUS (unaudited) (in millions of dollars) For the nine months ended September 30 ---------------------------------------- 2003 2002 --------------- ------------------- Balance, beginning of year $ 2,382 $ 1,951 Net income 865 719 Redemption premium - preferred shares (2) - Common share cancellation excess (72) (112) Dividends to shareholders Preferred shareholders (27) (23) Common shareholders (329) (257) --------------- ------------------- Balance, end of period $ 2,817 $ 2,278 =============== ===================

CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) (in millions of dollars) For the three months For the nine months ended September 30 ended September 30 ------------------------------------------------- 2003 2002 2003 2002 --------- --------- -------- -------- Operations Net income $ 339 $ 247 $ 865 $ 719 Adjustments for non-cash items: Change in policy liabilities (3,685) 738 (3,756) 610 Change in funds withheld by ceding insurers (38) (416) 131 (61) Change in funds held under reinsurance contracts 4,735 - 4,735 - Change in current income taxes payable 88 (26) 145 14 Future income tax expense (75) (61) (98) (14) Other (309) (579) 266 (854) ------- ------- ------- -------- Cash flows from operations 1,055 (97) 2,288 414 Financing Activities Issue of common shares 1,025 2 1,033 14 Purchased and cancelled common shares (33) (53) (86) (127) Redemption of preferred shares (102) - (102) - Issue of debentures - - 600 - Issue (repayment) of commercial paper and other loans 986 (50) 983 (58) Debenture issue costs - - (6) - Dividends paid (146) (98) (356) (280) ------- ------ ------- ------- 1,730 (199) 2,066 (451) Investment Activities Bond sales and maturities 11,852 5,456 26,688 15,944 Mortgage loan repayments 676 405 1,317 1,272 Stock sales 264 148 560 279 Real estate sales 290 - 466 38 Change in loans to policyholders (381) 238 (454) 68 Change in repurchase agreements 663 (55) 466 47 Investment in Canada Life Financial Corporation (1,862) - (1,862) - Investment in subsidiaries 170 - 170 72 Investment in bonds (10,993) (5,112) (27,419) (15,791) Investment in mortgage loans (1,023) (313) (1,329) (922) Investment in stocks (158) (55) (372) (451) Investment in real estate (20) (9) (39) (28) ------- ------ ------- -------- (522) 703 (1,808) 528 Increase in cash and certificates of deposit 2,263 407 2,546 491 Cash and certificates of deposit, beginning of period 1,195 921 912 837 ------ ------ ----- ------- Cash and certificates of deposit, end of period $ 3,458 $ 1,328 $ 3,458 $ 1,328 ======= ======= ======= =======

Notes to Interim Consolidated Financial Statements (unaudited) ($ ams in millions except per share amounts) 1. Basis of Presentation and Summary of Accounting Policies (a) The interim unaudited consolidated financial statements of Great-West Lifeco Inc. (Lifeco or the Company) at September 30, 2003 have been prepared in accordance with Canadian generally accepted accounting principles, using the same accounting policies and methods of computation followed in the consolidated financial statements for the year ended December 31, 2002, except as noted below. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company's annual report dated December 31, 2002. (b) New Accounting Requirements for 2003 Disclosure of Guarantees In February 2003, the CICA issued Accounting Guideline 14 (AcG-14), Disclosure of Guarantees, which identifies disclosure requirements for certain guarantees, for financial statements of interim and annual periods on or after January 1, 2003. In the normal course, the Company may enter into agreements which may contain features which meet the AcG-14 definition of a guarantee, and while the maximum guarantee cannot always be determined, given the nature of the future events which may or may not occur, any such arrangements that were material have been previously disclosed by the Company. Accounting for Costs Associated with Exit and Disposal Activities (Including Costs Incurred in a Restructuring) In March 2003, the CICA issued Emerging Issue Committee (EIC) Abstract EIC-135 Accounting for Costs Associated with Exit and Disposal Activities (Including Costs Incurred in a Restructuring) for restructurings initiated after March 31, 2003. The standard replaces EIC-60 Liability Recognition for Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring) and requires recognition of integration and restructuring costs in income when they are incurred. See note 3 for the impact of these abstracts on the financial statements of the Company. (c) Certain of 2002 amounts presented for comparative purposes have been reclassified to conform with the presentation adopted in the current year. 2. Acquisitions and Disposals (a) Acquisition of Canada Life Financial Corporation On July 10, 2003, the Company acquired all of the outstanding common shares of Canada Life Financial Corporation (CLFC), the parent company of The Canada Life Assurance Company (Canada Life), that were not already beneficially owned by the Company at a price of $44.50 per CLFC common share, representing an aggregate transaction value of $7.2 billion, including estimated transaction costs. The acquisition was completed by way of a capital reorganization of CLFC pursuant to which CLFC shareholders received as consideration one of the following alternatives for each of their CLFC common shares: - $44.50 in cash (to an aggregate maximum of approximately $4.4 billion); or - 1.78 Lifeco 4.80% Non-Cumulative First Preferred Shares, Series E (to an aggregate maximum of 24 million Lifeco Series E Shares); or - 1.78 Lifeco 5.90% Non-Cumulative First Preferred Shares, Series F (to an aggregate maximum of 8 million Lifeco Series F Shares); or - 1.1849 Lifeco common shares (to an aggregate maximum of approximately 56 million Lifeco common shares); or - any combination of the foregoing; in each case subject to election and proration as a result of the stated maximums. After election and proration, Lifeco issued 55,958,505 common shares at a price of $37.556 per common share which represents the weighted-average trading price of Lifeco common shares on the last five trading days prior to February 17, 2003, the effective date of the transaction agreement. Lifeco also issued 23,868,131 Lifeco 4.80% Non-Cumulative First Preferred Shares, Series E and 7,957,006 Lifeco 5.90% Non-Cumulative First Preferred Shares, Series F, both at a price of $25.00 per preferred share. The 607,712 common shares of CLFC that were beneficially owned by the Company had a carrying value of $21 as at the date of the acquisition. Vested stock options on 2,766,834 CLFC common shares, outstanding at acquisition were exchanged for an equivalent number of Lifeco stock options on 3,278,421 Lifeco common shares at exercise prices based on a value of $37.556 for each Lifeco common share and $44.50 for each CLFC common share. These options immediately vested and had an expiry date of August 25, 2003 and were essentially all exercised between July 10 and August 25, 2003. On July 10, 2003, to support the financing of the transaction, Power Financial Corporation invested $800 to purchase 21,301,523 common shares of Lifeco from treasury via private placement. Investors Group Inc. has also invested $100 by purchasing 2,662,690 Lifeco common shares from treasury via private placement. See note 7 for a summary of capital stock activity in connection with the acquistion. Lifeco also entered into an arrangement with a Canadian chartered bank (the "Bank") pursuant to which the Bank agreed to underwrite a credit facility in favour of the Company, Great-West, or one or more of its subsidiaries. The credit facility provides a one year bank facility of up to $1,400, and also up to $600 of five year term financing. The five year term financing is syndicated to a group of international financial institutions. The balances of these facilities on September 30, 2003 were $394 and $600 respectively. Immediately after the acquisition, Lifeco conveyed its ownership of CLFC common shares to its subsidiary, The Great-West Life Assurance Company (Great-West), at cost. The allocation of the purchase price is summarized as follows: Participating Shareholder Account Account Total ----------------------------------------------------- Value of assets acquired: Cash and certificates on deposit $ 251 $ 2,142 $ 2,393 Bonds 4,031 18,569 22,600 Mortgage loans 1,042 6,356 7,398 Stocks 694 757 1,451 Real estate 157 857 1,014 Loans to policyholders 716 339 1,055 Other invested assets 9 447 456 Other assets 121 1,565 1,686 ----------------------------------------------------- $ 7,021 $ 31,032 $ 38,053 ----------------------------------------------------- Value of liabilities assumed: Policy liabilities 6,588 24,881 31,469 Commercial paper and other loans - 592 592 Income taxes payable 39 74 113 Net deferred gains on portfolio investments sold 332 842 1,174 Other liabilities 19 1,483 1,502 Non-controlling interests - 492 492 Participating policyholder surplus 43 - 43 Preferred shares - 162 162 --------------------------------------------------- 7,021 28,526 35,547 --------------------------------------------------- Fair value of net assets acquired $ - $ 2,506 $ 2,506 =================================================== Total purchase consideration: Cash $ 4,219 Lifeco common shares 2,102 Lifeco 4.80% Preferred Shares, Series E 597 Lifeco 5.90% Preferred Shares, Series F 199 Fair value of Lifeco options exchanged for CLFC options 10 Value of CLFC common shares already owned 21 Transaction and related costs (estimated), net of income taxes 36 -------------------- $ 7,184 -------------------- Goodwill and intangible assets on acquisition (1) $ 4,678 ====================

The amounts assigned to the assets acquired and liabilities assumed and associated goodwill and intangible assets may be adjusted when the allocation process has been finalized. Included in other liabilities are accruals for CLFC restructuring costs of $250 for the elimination of duplicate systems, consolidation of operations, staff reductions, employee relocation and closure of facilities (see note 3). (1) The allocation of the purchase price to intangible assets acquired and the assignment of goodwill to theCompany's major reportable segments is expected to be completed in the fourth quarter of 2003. Results of CLFC are included in the Summary of Consolidated Operations from the date of acquisition. Reference should be made to the consolidated financial statements of CLFC for the year ended December 31, 2002. Canada Life offers insurance and other protection and wealth management products and services to individuals and groups, including reinsurance services, primarily in Canada, the United States, the United Kingdom and the Republic of Ireland, and in several other jurisdictions. (b) Sale of Lifestyle Retirement Communities During the third quarter of 2003, London Life completed its previously announced sale of Lifestyle Retirement Communities Ltd., a wholly-owned subsidiary of London Life, which resulted in an after-tax gain of $35 in the participating account and $17 in the shareholder account. 3. Restructuring Costs Following the acquisition of CLFC on July 10, 2003, the Company developed a plan to restructure and integrate the operations of CLFC with its wholly owned subsidiaries Great-West, London Life and GWL&A. The Company expects the restructuring to be substantially completed by the end of 2004. Costs of $450 are expected to be incurred as a result and consist primarily of the consolidation of operations and systems, compensation costs and consolidation of facilities. The costs include approximately $250 that will be charged against the liability for restructuring costs that was recognized as part of the purchase equation of CLFC and costs of approximately $200 that will be charged to income as incurred in accordance EIC-135 Accounting for Costs Associated with Exit and Disposal Activities (Including Certain Costs Incurred in a Restructuring) that was effective April 1, 2003. The following details the amount and status of restructuring costs for the period ended September 30, 2003: Amount utilized in the period Expected future costs ended September 30, 2003 Balance September 30, 2003 ------------------------------------------------------------------------------------------------------- Accrued Expense Accrued Expense Accrued Expense on as on as on as Acquisition Incurred Total Acquisition Incurred Total Acquisition Incurred Total ------------------------------------------------------------------------------------------------------- Costs of eliminating duplicate systems $ 10 $ 25 $ 35 $ 1 $ 4 $ 5 $ 9 $ 21 $ 30 Costs of consolidating operations 15 155 170 1 12 13 14 143 157 Compensation costs 192 20 212 41 5 46 151 15 166 Costs of consolidating facilities 33 - 33 - - - 33 - 33 ------------------------------------------------------------------------------------------------------- $ 250 $ 200 $ 450 $ 43 $ 21 $ 64 $ 207 $ 179 $ 386 ======================================================================================================= Canada $ 218 $ 187 $ 405 $ 43 $ 16 $ 59 $ 175 $ 171 $ 346 United States 32 13 45 - 5 5 32 8 40 ------------------------------------------------------------------------------------------------------- $ 250 $ 200 $ 450 $ 43 $ 21 $ 64 $ 207 $ 179 $ 386 ======================================================================================================= Amount utilized in the period Expected future costs ended September 30, 2003 Balance September 30, 2003 ------------------------------------------------------------------------------------------------------- Accrued Expense Accrued Expense Accrued Expense on as on as on as Acquisition Incurred Total Acquisition Incurred Total Acquisition Incurred Total ------------------------------------------------------------------------------------------------------- Costs of eliminating duplicate systems $ 10 $ 25 $ 35 $ 1 $ 4 $ 5 $ 9 $ 21 $ 30 Costs of consolidating operations 15 155 170 1 12 13 14 143 157 Compensation costs 192 20 212 41 5 46 151 15 166 Costs of consolidating facilities 33 - 33 - - - 33 - 33 ------------------------------------------------------------------------------------------------------- $ 250 $ 200 $ 450 $ 43 $ 21 $ 64 $ 207 $ 179 $ 386 ======================================================================================================= Canada $ 218 $ 187 $ 405 $ 43 $ 16 $ 59 $ 175 $ 171 $ 346 United States 32 13 45 - 5 5 32 8 40 ------------------------------------------------------------------------------------------------------- $ 250 $ 200 $ 450 $ 43 $ 21 $ 64 $ 207 $ 179 $ 386 =======================================================================================================

4. Goodwill and Intangible Assets (a) Excluding the acquisition of CLFC, the carrying value of goodwill and changes in the carrying value of goodwill are as follows: For the nine months ended September 30 2003 ----------------------------------------------- Canada and International United States Total -------------- ---------------------------- Balance, beginning of year $ 1,092 $ 66 $ 1,158 Acquisition of subsidiary 3 - 3 Changes in foreign exchange rates - (10) (10) -------------- ------------ ------------ Balance, end of period $ 1,095 $ 56 $ 1,151 ============== ============ ============ 2002 ----------------------------------------------- Canada and International United States Total -------------- ------------ ------------ Balance, beginning of year $ 1,538 $ 66 $ 1,604 Reclassification between goodwill and intangible assets (529) - (529) Reclassification between goodwill and future taxes 86 - 86 Sale of subsidiary (3) - (3) -------------- ------------ ------------ Balance, end of period $ 1,092 $ 66 $ 1,158 ============== ============ ============

(b) Excluding the acquisition of CLFC, the carrying value of intangible assets and changes in the carrying value of intangible assets are as follows: For the nine months ended September 30 2003 -------------- Balance, beginning and end of period ------------------- Indefinite life intangible assets - Brands and trademarks $ 175 - Shareholder portion of acquired future Participating account profits 354 -------------- Total $ 529 ==============

2002 ----------------------------------------------- Balance, Reclassification Balance, beginning of from end of period goodwill period -------------- ------------ ------------ Indefinite life intangible assets - Brands and trademarks $ - $ 175 $ 175 - Shareholder portion of acquired future Participating account profits - 354 354 -------------- ------------ ------------ Total $ - $ 529 $ 529 ============== ============ ============ (c) As a result of the acquisition of CLFC, the carrying value of goodwill and intangible assets are as follows: For the nine months ended September 30 2003 ----------------------------------------------- Canada and International United States Total -------------- ---------------------------- Goodwill before CLFC acquisition $ 1,095 $ 56 $ 1,151 Intangible assets before CLFC acquisition 529 - 529 Goodwill and intangible assets - CLFC acquisition 4,564 114 4,678 -------------- ------------ ------------ Total $ 6,188 $ 170 $ 6,358 ============== ============ ============

The goodwill and intangible assets arising from the CLFC acquisition may be adjusted in terms of both amount and allocation to the Company's major reportable segments once the allocation of the purchase price to the assets acquired and liabilities assumed of CLFC is finalized. 5. Commercial Paper and Other Loans (changes since December 31, 2002 annual report) On March 21, 2003 the Company issued $200 principal amount of 6.14% debentures which mature on March 21, 2018 and $400 principal amount of 6.67% debentures which mature on March 21, 2033. To support the financing of the acquisition of CLFC, the Company entered into a credit with a Canadian chartered bank (see note 2). The credit facility provides a one year bank facility of up to $1,400, and also up to $600 of five year term financing. The five year term financing is syndicated to a group of international financial institutions. The balances of these facilities on September 30, 2003 were $394 and $600 respectively. 6. Non-Controlling Interests The Company controlled a 100% equity interest in Great-West, Canada Life and GWL&A at September 30, 2003. The non-controlling interests of GWL&A, Great-West, Canada Life and its subsidiaries are: a) For the three months For the nine months ended September 30 ended September 30 ------------------------------------------------ 2003 2002 2003 2002 ---------- ------------ ---------------------- Participating policyholder Net income attributable to participating policyholder before policyholder dividends Great-West $ 25 $ 20 $ 75 $ 65 London Life 170 121 458 378 Canada Life 12 - 12 - GWL&A 56 48 145 150 Policyholder dividends Great-West 24 23 69 69 London Life 139 134 404 391 Canada Life 13 - 13 - GWL&A 56 48 143 149 ---------- ------------ ---------------------- Net income 31 (16) 61 (16) ---------- ------------ ---------------------- Preferred shareholder dividends of subsidiaries 4 6 10 17 Non-controlling interests in capital stock and surplus - - 1 1 ---------- ------------ ---------------------- Total $ 35 $ (10) $ 72 $ 2 ========== ============ ====================== Distribution on Great-West Life Capital Trust Securities$ 6 $ - $ 16 $ - Distribution on Canada Life Capital Trust Securities 7 - 7 - Capital Trust units held by consolidated group (3) - (4) - ---------- ------------ ---------------------- $ 10 $ - $ 19 $ - ========== ============ ======================

b) As at September 30, December 31, September 30, 2003 2002 2002 -------------- ------------ ------------- Participating policyholder undistributed surplus Great-West $ 336 $ 330 $ 328 London Life 959 916 902 Canada Life 42 - - GWL&A 211 244 235 -------------- ------------ ------------- 1,548 1,490 1,465 Preferred shareholders of subsidiaries 371 209 459 Non-controlling interests in capital stock and surplus - 2 2 Trust units issued by Great-West Life Capital Trust 350 350 - Trust units issued by Canada Life Capital Trust 491 - - Capital Trust units held by consolidated group (217) - - -------------- ------------ ------------- 624 350 - -------------- ------------ ------------- $ 2,543 $ 2,051 $ 1,926 ============== ============ =============

5. Capital Stock Authorized Unlimited First Preferred Shares, Class A Preferred Shares and Second Preferred Shares Unlimited Common Shares Issued and Outstanding September 30, 2003 September 30, 2002 ------------------------------- ------------------------------- Stated Value Stated Value Number (thousands) Number (thousands) -------------- --------------- -------------- --------------- Preferred Shares: Series B, 7.45% Non-Cumulative First Preferred Shares - $ - 4,000,000 $ 100,000 Series C, 7.75% Non-Cumulative First Preferred Shares - - 4,000,000 100,000 Series D, 4.70% Non-Cumulative First Preferred Shares 8,000,000 200,000 8,000,000 200,000 Series E, 4.80% Non-Cumulative First Preferred Shares 23,868,131 596,703 - - Series F, 5.90% Non-Cumulative First Preferred Shares 7,957,006 198,925 - - Series 1, 5.00% Non-Cumulative Class A Preferred Shares 5,192,242 129,806 5,192,242 129,806 -------------- --------------- -------------- --------------- Balance, end of period 45,017,379 $ 1,125,434 21,192,242 $ 529,806 -------------- --------------- -------------- --------------- Common Shares: Balance, beginning of year 366,376,712 $ 1,551,764 369,459,808 $ 1,553,294 Purchased and cancelled under Normal Course Issuer Bid (2,213,700) (14,325) (3,533,300) (14,901) Issued under Stock Option Plan 727,371 10,978 1,267,438 14,061 Private placement 23,964,213 900,000 - - Issued on acquisition of CLFC 55,958,505 2,101,573 - - Issued and exchanged for vested CLFC options 3,261,645 122,495 - - -------------- --------------- -------------- --------------- Balance, end of period 448,074,746 $ 4,672,485 367,193,946 $ 1,552,454 -------------- --------------- -------------- --------------- Total Capital Stock $ 5,797,919 $ 2,082,260 =============== ===============

-------------------------------------------------------------------------------- Preferred Shares: The Series C 7.75% Non-Cumulative First Preferred Shares were redeemed September 30, 2003 for a price of $25.50 per share. On acquisition of CLFC the Company issued 23,868,131 Series E, 4.80% Non-Cumulative First Preferred Shares for a value of $597 or $25 per share. The shares are redeemable or convertible to common shares of the Company at the option of the Company on or after September 30, 2009, and are convertible to common shares of the Company at the option of the holder on or after September 30, 2013. On acquisition of CLFC the Company issued 7,957,006 Series F, 5.90% Non-Cumulative First Preferred Shares for a value of $199 or $25 per share. The shares are redeemable at the option of the Company on or after September 30, 2008. Common Shares: On July 10, 2003, to support the financing of the acquisition of CLFC, 21,301,523 common shares were issued from treasury via private placement to Power Financial Corporation for a value of $800 or $37.556 per share and 2,662,690 common shares were issued from treasury via private placement to Investors Group Inc. for $100 or $37.556 per share. On acquisition of CLFC 55,958,505 common shares were issued to CLFC common shareholders for a value of $2,102 or $37.556 per share. During the third quarter Lifeco issued 3,261,645 common shares under stock options granted to vested CLFC option holders (see note 8) for a value of $122 or $37.556 per share. 8. Stock-Based Compensation and Other Stock-Based Payment Under the Company's stock option plan 367,000 options were granted during the first quarter, 131,750 options were granted during the second quarter, and 1,361,500 options were granted during the third quarter of 2003 (26,000 options were granted during the second quarter, and 148,500 options were granted during the third quarter of 2002). The weighted-average fair value of options granted during the nine months ended September 30, 2003 was $9.94 per option ($9.76 during the nine months ended September 30, 2002). The fair value of each option granted was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions used for the options granted for the nine months ended September 30, 2003 and September 30, 2002 respectively: dividend yield 2.813% (2.450%), expected volatility 26.21% (25.97%), risk-free interest rate 4.473% (5.065%), and expected life of 7 years (7 years). On July 10, 2003, 2,766,834 vested stock options of CLFC, outstanding at acquisition, were exchanged for an equivalent number of Lifeco stock options to purchase an aggregate of 3,278,155 Lifeco common shares at exercise prices based on a value of $37.556 for each Lifeco common share and $44.50 for each CLFC common share. These options were essentially all exercised between July 10 and August 25, 2003. The value ascribed to the options, which was included in the purchase price of CLFC (as described in note 2), represents the difference in exercise price between the Lifeco options issued, which immediately vested and had an expiry date of August 25, 2003, and the vested CLFC options at the date of the exchange. In accordance with the intrinsic value based method of accounting, no compensation expense has been recorded for options granted under the Company's plan. Had the fair value based method of accounting been applied, compensation expense, net of tax, would have been recorded for the options granted under the Company's plan since January 1, 2002 based on the fair value of the options granted, amortized over the vesting period. The Company's net income for the nine months ended September 30, 2003 on this basis would have been reduced by less than $1 million and earnings per common share would have been reduced by $0.002 (less than $0.001 in 2002). 9. Earnings Per Common Share The following table provides the reconciliation between basic and diluted earnings per common share: For the three months For the nine months ended September 30 ended September 30 ----------------------- ----------------------------- 2003 2002 2003 2002 ----------- ----------- -------------- -------------- a) Earnings Net income - common shareholders $ 324 $ 240 $ 838 $ 696 =========== =========== ============== ============== b) Number of Common Shares at September 30 Average number of common shares outstanding 390,828,605 368,470,287 Add: -Potential exercise of outstanding stock options 3,908,997 4,782,055 -------------- -------------- Average number of common shares outstanding - diluted basis 394,737,602 373,252,342 ============== ============== Earnings per Common Share ( a) divided by b) ) Basic $ 0.739 $ 0.653 $ 2.144 $ 1.889 =========== =========== ============== ============== Diluted $ 0.732 $ 0.646 $ 2.122 $ 1.865 =========== =========== ============== ==============

10. Reinsurance Transactions During the third quarter, Great-West, London Life, and GWL&A reinsured certain blocks of individual non-participating life insurance on a yearly renewable term reinsurance basis and group life, long term disability and group annuity business, on a coinsurance/funds withheld basis. The ceded premiums of $5,429 associated with the transaction have been recorded on the Summary of Consolidated Operations as a reduction to premium income with a corresponding reduction to the change in actuarial liabilities and provision for claims. For the Consolidated Balance Sheet, this transaction resulted in a reduction in policyholder liabilities of $4,735 and an increase in funds held under reinsurance contracts of the same amount. 11. Segmented Information Following the acquisition of CLFC on July 10, 2003, the Company's major reportable segments are Canada and International, and United States operations reflecting the management structure and organization of the Company. In the Canada and International segment, the Company operates primarily in Canada, the United Kingdom, Ireland and Germany through Great-West and its wholly owned subsidiaries CLFC and LIG. In the United States, the Company operates primarily through GWL&A and CLFC. In addition, a Lifeco Corporate segment has been established to record Lifeco holding company activities and transactions that are not directly attributable to measurement of the business segments of the Company. (A) Consolidated Operations : For the Three Months Ended September 30, 2003 Canada and International ----------------------------------------------------------------------------------------- Shareholder Participating ---------------------------------------------------------------- ------------- Individual Insurance & Group Investment International Total Canada Insurance Products & Reinsurance Corporate Total Total & Internationa ----------- ---------- ------------- ----------- ------------- ------------ ------------ Income: Premium income $ 595 $ 308 $ 898 $ (6) $ 1,795 $ 451 $2,246 Bulk reinsurance - initial ceded premium (2,716) - - - (2,716) - (2,716) ----------- ---------- ------------- ----------- ------------- ------------ ------------ (2,121) 308 898 (6) (921) 451 (470) Net investment income 77 262 211 - 550 372 922 Fee and other income 26 112 60 9 207 1 208 ----------- ---------- ------------- ----------- ------------- ------------ ------------ Total income (2,018) 682 1,169 3 (164) 824 660 ----------- ---------- ------------- ----------- ------------- ------------ ------------ Benefits and Expenses: Paid or credited to policyholders(2,286) 409 984 (7) (900) 666 (234) Other 172 162 145 5 484 88 572 Restructuring costs - - - - - - - Distribution on Capital Trust Securities - - - 10 10 - 10 ----------- ---------- ------------- ----------- ------------- ------------ ------------ Net operating income before income taxes 96 111 40 (5) 242 70 312 Income taxes 29 25 5 (15) 44 36 80 ----------- ---------- ------------- ----------- ------------- ------------ ------------ Net income before non-controlling interests 67 86 35 10 198 34 232 Non-controlling interests - - - 4 4 34 38 ----------- ---------- ------------- ----------- ------------- ------------ ------------ Net income $ 67 $ 86 $ 35 $ 6 $ 194 $ - $ 194 =========== ========== ============= =========== ============= ============ ============ Summary of Net Income Preferred shareholder dividends $ - $ - $ - $ 15 $ 15 $ - $ 15 Net income - common shareholders 67 86 35 (9) 179 - 179 ----------- ---------- ------------- ----------- ------------- ------------ ------------ Net income $ 67 $ 86 $ 35 $ 6 $ 194 $ - $ 194 =========== ========== ============= =========== ============= ============ ============ 15. (A) Consolidated Operations : For the Three Months Ended September 30, 2003 United States ------------------------------------------------------------------------ Shareholder Participating Total ---------------------------------------------- ------------ Employee Financial Total Lifeco Benefits Services Corporate Total Total U.S. Corporate Total ----------- ---------- ----------- ----------- ------------ ----------------------------------- Income: Premium income $ 451 $ 259 $ - $ 710 $ 108 $ 818 $ - $3,064 Bulk reinsurance - initial ceded premium (575) (2,138) - (2,713) - (2,713) - (5,429) ----------- ---------- ----------- ----------- ------------ ---------------------- ------------ (124) (1,879) - (2,003) 108 (1,895) - (2,365) Net investment income 46 214 11 271 123 394 - 1,316 Fee and other income 206 82 1 289 1 290 498 ----------- ---------- ----------- ----------- ------------ ---------------------- ------------ Total income 128 (1,583) 12 (1,443) 232 (1,211) - (551) ----------- ---------- ----------- ----------- ------------ ---------------------- ------------ Benefits and Expenses: Paid or credited to policyholders (249) (1,794) (2) (2,045) 220 (1,825) - (2,059) Other 257 96 6 359 15 374 2 948 Restructuring costs - - - - - - 21 21 Distribution on Capital Trust Securities - - - - - - - 10 ----------- ---------- ----------- ----------- ------------ ---------------------- ------------ Net operating income before income taxes 120 115 8 243 (3) 240 (23) 529 Income taxes 43 39 (2) 80 - 80 (5) 155 ----------- ---------- ----------- ----------- ------------ ---------------------- ------------ Net income before non-controlling interests 77 76 10 163 (3) 160 (18) 374 Non-controlling interests - - - - (3) (3) - 35 ----------- ---------- ----------- ----------- ------------ ---------------------- ------------ Net income $ 77 $ 76 $ 10 $ 163 $ - $ 163 $(18) $ 339 =========== ========== =========== =========== ============ ====================== ============ Summary of Net Income Preferred shareholder dividends $ - $ - $ - $ - $ - $ - $ - $ 15 Net income - common shareholders 77 76 10 163 - 163 (18) 324 ----------- ---------- ----------- ----------- ------------ ---------------------- ------------ Net income $ 77 $ 76 $ 10 $ 163 $ - $ 163 $(18) $ 339 =========== ========== =========== =========== ============ ====================== ============ 15. (A) Consolidated Operations : For the Three Months Ended September 30, 2002 Canada and International ---------------------------------------------------------------------------------------- Shareholder Participating --------------------------------------------------------------- ------------ Individual Insurance & Group Investment International Total Canada Insurance Products & ReinsuranceCorporate Total Total & Internationa ----------- ---------- ------------------------- ------------- ------------ ------------ Income: Premium income $ 575 $ 167 $ 1,227 $ 3 $ 1,972 $ 335 $ 2,307 Net investment income 52 112 103 29 296 215 511 Fee and other income 16 81 - 5 102 - 102 ----------- ---------- ------------ ------------ ------------- ------------ ------------ Total income 643 360 1,330 37 2,370 550 2,920 ----------- ---------- ------------ ------------ ------------- ------------ ------------ Benefits and Expenses: Paid or credited to policyholders 481 194 1,345 11 2,031 503 2,534 Other 107 88 7 7 209 64 273 ----------- ---------- ------------ ------------ ------------- ------------ ------------ Net operating income before income taxes 55 78 (22) 19 130 (17) 113 Income taxes 21 32 2 (53) 2 (1) 1 ----------- ---------- ------------ ------------ ------------- ------------ ------------ Net income before non-controlling interests 34 46 (24) 72 128 (16) 112 Non-controlling interests - - - 6 6 (16) (10) ----------- ---------- ------------ ------------ ------------- ------------ ------------ Net income $ 34 $ 46 $ (24) $ 66 $ 122 $ - $ 122 =========== ========== ============ ============ ============= ============ ============ Summary of Net Income Preferred shareholder dividends $ - $ - $ - $ 8 $ 8 $ - $ 8 Net income - common shareholders 34 46 (24) 58 114 - 114 ----------- ---------- ------------ ------------ ------------- ------------ ------------ Net income $ 34 $ 46 $ (24) $ 66 $ 122 $ - $ 122 =========== ========== ============ ============ ============= ============ ============ For the Three Months Ended September 30, 2002 United States --------------------------------------------------------------------- Shareholder Participating Total ---------------------------------------------- ---------- Employee Financial Total Lifeco Benefits Services Corporate Total Total U.S. Corporate Total ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- Income: Premium income $ 416 $ 312 $ - $ 728 $ 75 $ 803 $ - $ 3,110 Net investment income 26 200 3 229 138 367 - 878 Fee and other income 253 86 - 339 - 339 - 441 ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- Total income 695 598 3 1,296 213 1,509 - 4,429 ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- Benefits and Expenses: Paid or credited to policyholders 346 434 1 781 207 988 - 3,522 Other 262 80 (9) 333 4 337 - 610 ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- Net operating income before income taxes 87 84 11 182 2 184 - 297 Income taxes 22 25 10 57 2 59 - 60 ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- Net income before non-controlling interests 65 59 1 125 - 125 - 237 Non-controlling interests - - - - - - - (10 ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- Net income $ 65 $ 59 $ 1 $ 125 $ - $ 125 $ - $ 247 ========== ========== ========== =========== ========== ========== ========== ========== Summary of Net Income Preferred shareholder dividends $ - $ - $ (1) $ (1) $ - $ (1) $ - $ 7 Net income - common shareholders 65 59 2 126 - 126 - 240 ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- Net income $ 65 $ 59 $ 1 $ 125 $ - $ 125 $ - $ 247 ========== ========== ========== =========== ========== ========== ========== ========== For the Nine Months Ended September 30, 2003 Canada and International ------------------------------------------------------------------------------------------ Shareholder Participating ---------------------------------------------------------------- ------------------------ Individual Insurance & Group Investment International Total Canada Insurance Products & ReinsuranceCorporate Total Total & International ----------- ---------- --------------------------------------- ----------- ------------ Income: Premium income $1,754 $ 703 $3,046 $ - $ 5,503 $ 1,168 $ 6,671 Bulk reinsurance - initial ceded premium (2,716) - - - (2,716) - (2,716) ----------- ---------- ------------ -------------------------- ----------- ------------ (962) 703 3,046 - 2,787 1,168 3,955 Net investment income 178 486 496 56 1,216 863 2,079 Fee and other income 64 279 60 21 424 1 425 ----------- ---------- ------------ -------------------------- ----------- ------------ Total income (720) 1,468 3,602 77 4,427 2,032 6,459 ----------- ---------- ------------ -------------------------- ----------- ------------ Benefits and Expenses: Paid or credited to policyholders (1,334) 848 3,379 9 2,902 1,681 4,583 Other 407 348 160 24 939 226 1,165 Restructuring costs - - - - - - - Distribution on Capital Trust Securities - - - 19 19 - 19 ----------- ---------- ------------ -------------------------- ----------- ------------ Net operating income before income taxes 207 272 63 25 567 125 692 Income taxes 58 62 4 (24) 100 63 163 ----------- ---------- ------------ -------------------------- ----------- ------------ Net income before non-controlling interests 149 210 59 49 467 62 529 Non-controlling interests - - 1 10 11 62 73 ----------- ---------- ------------ -------------------------- ----------- ------------ Net income $ 149 $ 210 $ 58 $ 39 $ 456 $ - $ 456 =========== ========== ============ ========================== =========== ============ Summary of Net Income Preferred shareholder dividends $ - $ - $ - $ 27 $ 27 $ - $ 27 Net income - common shareholders 149 210 58 12 429 - 429 ----------- ---------- ------------ -------------------------- ----------- ------------ Net income $ 149 $ 210 $ 58 $ 39 $ 456 $ - $ 456 =========== ========== ============ ========================== =========== ============ For the Nine Months Ended September 30, 2003 United States ------------------------------------------------------------------------ Shareholder Participating Total ------------------------------------------------------------ Employee Financial Total Lifeco Benefits Services Corporate Total Total U.S. Corporate Total ----------- ----------------------- ------------------------ ----------- ----------- ------------ Income: Premium income $1,106 $ 624 $ - $ 1,730 $ 281 $ 2,011 $ - $8,682 Bulk reinsurance - initial ceded premium (575) (2,138) - (2,713) - (2,713) - (5,429) ----------- ----------------------- ------------------------ ----------- ----------- ------------ 531 (1,514) - (983) 281 (702) - 3,253 Net investment income 111 582 30 723 365 1,088 - 3,167 Fee and other income 656 245 3 904 1 905 - 1,330 ----------- ----------------------- ------------------------ ----------- ----------- ------------ Total income 1,298 (687) 33 644 647 1,291 - 7,750 ----------- ----------------------- ------------------------ ----------- ----------- ------------ Benefits and Expenses: Paid or credited to policyholders 246 (1,223) (2) (979) 618 (361) - 4,222 Other 722 247 13 982 26 1,008 2 2,175 Restructuring costs - - - - - - 21 21 Distribution on Capital Trust Securities - - - - - - - 19 ----------- ----------------------- ------------------------ ----------- ----------- ------------ Net operating income before income taxes 330 289 22 641 3 644 (23) 1,313 Income taxes 116 95 3 214 4 218 (5) 376 ----------- ----------------------- ------------------------ ----------- ----------- ------------ Net income before non-controlling interests 214 194 19 427 (1) 426 (18) 937 Non-controlling interests - - - - (1) (1) - 72 ----------- ----------------------- ------------------------ ----------- ----------- ------------ Net income $ 214 $ 194 $ 19 $ 427 $ - $ 427 $ (18) $ 865 =========== ======================= ======================== =========== =========== ============ Summary of Net Income Preferred shareholder dividends $ - $ - $ - $ - $ - $ - $ - $ 27 Net income - common shareholders 214 194 19 427 - 427 (18) 838 ----------- ----------------------- ------------------------ ----------- ----------- ------------ Net income $ 214 $ 194 $ 19 $ 427 $ - $ 427 $ (18) $ 865 =========== ======================= ======================== =========== =========== ============ For the Nine Months Ended September 30, 2002 Canada and International ---------------------------------------------------------------------------------------- Shareholder Participating ---------------------------------------------------------------- ------------ Individual Insurance & Group Investment International Total Canada Insurance Products & ReinsuranceCorporate Total Total & Internationa ----------- ---------- ------------ ------------ ------------- ------------ ------------ Income: Premium income $ 1,652 $ 490 $ 2,882 $ 11 $ 5,035 $ 1,023 $ 6,058 Net investment income 154 345 357 66 922 663 1,585 Fee and other income 50 251 1 14 316 - 316 ----------- ---------- ------------ ------------ ------------- ------------ ------------ Total income 1,856 1,086 3,240 91 6,273 1,686 7,959 ----------- ---------- ------------ ------------ ------------- ------------ ------------ Benefits and Expenses: Paid or credited to policyholders 1,392 561 3,192 29 5,174 1,501 6,675 Other 318 281 20 19 638 192 830 ----------- ---------- ------------ ------------ ------------- ------------ ------------ Net operating income before income taxes 146 244 28 43 461 (7) 454 Income taxes 55 93 5 (58) 95 10 105 ----------- ---------- ------------ ------------ ------------- ------------ ------------ Net income before non-controlling interests 91 151 23 101 366 (17) 349 Non-controlling interests - - 1 17 18 (17) 1 ----------- ---------- ------------ ------------ ------------- ------------ ------------ Net income $ 91 $ 151 $ 22 $ 84 $ 348 $ - $ 348 =========== ========== ============ ============ ============= ============ ============ Summary of Net Income Preferred shareholder dividends $ - $ - $ - $ 23 $ 23 $ - $ 23 Net income - common shareholders 91 151 22 61 325 - 325 ----------- ---------- ------------ ------------ ------------- ------------ ------------ Net income $ 91 $ 151 $ 22 $ 84 $ 348 $ - $ 348 =========== ========== ============ ============ ============= ============ ============

For the Nine Months Ended September 30, 2002 United States ---------------------------------------------------------------------- Shareholder Participating Total ---------------------------------------------- ----------- Employee Financial Total Lifeco Benefits Services Corporate Total Total U.S. Corporate Total ----------- ---------- ----------- ---------- ----------- ----------- --------------------- Income: Premium income $ 1,199 $ 773 $ - $ 1,972 $ 277 $ 2,249 $ - $ 8,307 Net investment income 74 616 12 702 417 1,119 - 2,704 Fee and other income 798 265 - 1,063 - 1,063 - 1,379 ----------- ---------- ----------- ---------- ----------- ----------- --------------------- Total income 2,071 1,654 12 3,737 694 4,431 - 12,390 ----------- ---------- ----------- ---------- ----------- ----------- --------------------- Benefits and Expenses: Paid or credited to policyholders 955 1,133 (1) 2,087 672 2,759 - 9,434 Other 847 255 4 1,106 16 1,122 - 1,952 ----------- ---------- ----------- ---------- ----------- ----------- --------------------- Net operating income before income taxes 269 266 9 544 6 550 - 1,004 Income taxes 87 83 3 173 5 178 - 283 ----------- ---------- ----------- ---------- ----------- ----------- --------------------- Net income before non-controlling interests 182 183 6 371 1 372 - 721 Non-controlling interests - - - - 1 1 - 2 ----------- ---------- ----------- ---------- ----------- ----------- --------------------- Net income $ 182 $ 183 $ 6 $ 371 $ - $ 371 $ - $ 719 =========== ========== =========== ========== =========== =========== ===================== Summary of Net Income Preferred shareholder dividends $ - $ - $ - $ - $ - $ - $ - $ 23 Net income - common shareholders 182 183 6 371 - 371 - 696 ----------- ---------- ----------- ---------- ----------- ----------- --------------------- Net income $ 182 $ 183 $ 6 $ 371 $ - $ 371 $ - $ 719 =========== ========== =========== ========== =========== =========== =====================

GWL&A FINANCIAL INC 8-K