TSX:GWO
Readers are referred to the cautionary note regarding Forward-Looking
Information and Non-IFRS Financial Measures at the end of this release.
Not for distribution to U.S. newswire services or for dissemination in
the U.S.
Irish Life is the market leader in life insurance, pensions and investment management in Ireland
-
Transformational to Canada Life in Ireland, significant to Canada Life's
group in Europe and material to Great-West Lifeco on a global basis
-
Canada Life (Ireland) to be combined with Irish Life under the Irish
Life brand, the premier financial brand in Ireland
-
Provides continuity to more than one million Irish Life and Canada Life
customers in Ireland
-
Affirms a long-term commitment to Ireland, where the Canada Life
business has operated since 1903
-
Consistent with Great-West Lifeco's global business strategy of
developing significant market positions in sectors where the Company
participates
WINNIPEG, Feb. 19, 2013 /CNW/ - Great-West Lifeco Inc. today announced
that it has reached an agreement with the Government of Ireland to
acquire, through its subsidiary Canada Life Limited, all of the shares
of Irish Life Group Limited for C$1.75 billion (€1.3 billion).
The Irish Life name will be retained, and the life and pensions
operations of Great-West Lifeco's Irish subsidiary Canada Life
(Ireland) will be combined with the operations of Irish Life.
Established in 1939, Irish Life is the largest life and pensions group
and investment manager in Ireland, with more than one million customers
and €37 billion (C$50 billion) of assets under management.*
"This transaction affirms our long-term commitment to Ireland, where
Canada Life has operated since 1903. Customers of both companies will
have continuity of their products and customer service," said Allen
Loney, President and Chief Executive Officer of Great-West Lifeco. "The
acquisition of Irish Life is transformational for our companies in
Ireland. It allows us to achieve - with a single transaction - the
leading position in life insurance, pensions and investment management,
and is consistent with Great-West Lifeco's global business strategy of
developing significant market positions in the sectors where the
Company participates."
"There is a good culture fit," Loney said, noting that Irish Life has a
strong brand with a broad product offering and wide, multi-channel
distribution, similar to Great-West Lifeco's operations in Canada.
Irish Life employs a similar and consistent strategy to Great-West
Lifeco in that it aims to maximize shareholder returns in a low-risk
and capital efficient manner.
"This transaction reflects a major vote of confidence in Ireland and
Irish Life," said Kevin Murphy, Chief Executive of Irish Life. "It is
very good for the Irish economy, our clients, brokers and employees.
Canada Life is a well respected and long standing business in Ireland.
Combining our businesses will help ensure that Irish Life remains the
leading brand in the Irish financial services market. It will provide
us with a new platform for growth and innovation in the future. It will
also provide our customers with the knowledge that we are part of
Great-West Lifeco, the strongest financial parent in the Irish market,
and the Power Financial Corporation group of companies, which has a
long and successful track record in financial services."
Transaction Highlights
The acquisition represents a compelling in-market merger delivering a
significant position in Ireland. Irish Life is a significant player in
Ireland with an iconic, well-trusted brand. It has maintained resilient
financial performance through challenging markets, testimony to the
strength of Irish Life's broad product footprint and wide,
multi-channel distribution. The majority of Irish Life's assets are
unit-linked, where the investment risk is principally borne by clients.
The transaction is expected to close in July of 2013, and is subject to
customary regulatory approvals, including approvals from the European
Commission under the EU Merger Regulation, and certain closing
conditions.
Once the transaction has closed, the businesses will be fully integrated
over an 18-month period. This process is expected to result in pre-tax
cost savings of €40 million annually, through efficiencies related to
computer systems, relocating Canada Life (Ireland) to Irish Life's
Dublin headquarters and other operational efficiencies. It is
anticipated that any job losses at the two companies will be achieved
on a voluntary basis. The companies are committed to ensuring that all
staff will continue to be treated fairly.
The proposed transaction represents compelling value for Great-West
Lifeco shareholders, and is expected to add approximately C$215 million
or 10% to Great-West Lifeco's consensus earnings** in 2014, the first
full year of ownership. This would be accretive to Great-West Lifeco's
earnings by adding approximately 10 cents or 4% to Great-West Lifeco's
consensus 2014 earnings per share. This is supported by an in-force
book of business that has persisted through recent challenges,
anticipated pre-tax cost savings of C$54 million and including the
impact of issuing C$1.25 billion in common shares. The implied
transaction multiple on a 2014 earnings basis is 8.2x*** and on Irish
Life's June 30, 2012 book value is 1.3x.
Transaction Funding
Funding for the transaction will come from the net proceeds of the
issuance of approximately $1.25 billion subscription receipts by way of
a $650 million public bought deal offering as well as concurrent
private placements of subscription receipts to Power Financial
Corporation ($550 million) and IGM Financial Inc. ($50 million). The
balance of the funding will come from a euro-denominated debt issuance
and internal cash resources.
Irish Life Assurance PLC has outstanding €200 million unsecured
subordinated perpetual capital notes with a fixed coupon to February
2017, at which point the notes are callable. The notes will remain
outstanding following completion of this transaction and qualify as
MCCSR capital.****
The acquisition funding structure will ensure that Great-West Lifeco
maintains its strong liquidity position and investment grade credit
ratings, combined with a targeted MCCSR ratio above 210% at transaction
close.
* Assets as at December 31st 2012
**Based on Institutional Brokers' Estimate System (IBES) consensus
earnings estimates
***Includes fully-realized run- rate cost savings, before integration
costs
****Minimum Continuing Capital and Surplus Requirements for The
Great-West Life Assurance Company
Subscription Receipt Offering
Great-West Lifeco has agreed to sell, on a bought deal basis, an
aggregate of 25,300,000 subscription receipts at a price of $25.70 per
subscription receipt for gross proceeds of approximately $650 million.
The subscription receipts will be offered through a syndicate of
investment dealers led by BMO Capital Markets. In addition to and
concurrently with the closing of the public offering, Power Financial
Corporation has agreed to purchase from Lifeco in a private placement
21,410,000 subscription receipts at the public offering price for gross
proceeds of approximately $550 million and IGM Financial Inc. has
agreed to purchase from Lifeco in a private placement 1,950,000
subscription receipts at the public offering price for gross proceeds
of approximately $50 million. In aggregate, the public and private
offerings will result in gross proceeds to Lifeco of approximately
$1.25 billion. BMO Capital Markets is acting as agent to Great-West
Lifeco on the private placements. Each subscription receipt will
entitle the holder thereof to receive, without payment of additional
consideration or further action, upon closing of the acquisition, one
common share of Great-West Lifeco plus an amount equal to the dividends
Great-West Lifeco declares on the common shares, if any, for record
dates which occur during the period from and including the closing date
of the offering to but excluding the date the acquisition closes, net
of any applicable withholding taxes.
The net proceeds from the sale of the subscription receipts will be held
by an escrow agent pending the fulfillment or waiver of all other
outstanding conditions precedent to closing the acquisition, including,
among other things, receipt of all regulatory and government approvals
required to finalize the acquisition. In the event such approvals and
conditions are not satisfied prior to October 31, 2013 or if the
acquisition agreement is terminated prior to such time, or Great-West
Lifeco advises the underwriters or discloses to the public that it does
not intend to proceed with the acquisition of Irish Life, the holders
of the subscription receipts will be entitled to receive an amount
equal to the full subscription price thereof plus their pro rata share
of the interest or other income earned or deemed to be earned on the
proceeds of the offering, net of any applicable withholding taxes.
The subscription receipts will be offered in all provinces and
territories of Canada by way of a short form prospectus. The offering
is subject to the receipt of all necessary regulatory and stock
exchange approvals, including approval of the TSX. Closing of the
offering is expected to occur on or about March 12, 2013, with
completion of each of the public offering and private placements being
conditional upon the closing of the other.
The subscription receipts have not been and will not be registered under
the United States Securities Act of 1933, as amended (the "U.S.
Securities Act") and may not be offered or sold in the United States
absent registration or an applicable exemption from the registration
requirements of the U.S. Securities Act and applicable state securities
laws. This news release shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of the
subscription receipts in the United States or any jurisdiction in which
such offer, solicitation or sale would be unlawful.
About Irish Life
Irish Life is Ireland's largest life, pensions and investment management
business with over one million customers and €37bn of assets under
management. Founded in 1939, it operates almost exclusively in Ireland
and employs just over 2,000 people.
Irish Life is the number one player in the life and pensions market in
Ireland. It has a very strong reputation for service excellence and
product innovation. It has three main business divisions:
-
Retail Life markets a range of life insurance, pension and investment
products to individuals and small business owners. It distributes
through independent brokers, bank branches and direct. In 2012 it
concluded an exclusive distribution deal with AIB, Ireland's largest
retail bank.
-
Corporate Business markets group risk and group defined contribution
pension solutions to companies through pension advisory consultants and
independent brokers. Ireland's positive demographic profile and the
shift towards defined contribution pensions are two very positive
dynamics for this business.
-
Irish Life Investment Managers (ILIM) is the leader in its market. Total
assets under management at end 2012 were €37bn of which approximately
60% were managed on behalf of institutional clients and 40% linked to
the core insurance business. It has a particularly strong reputation
for indexed asset management and fixed income/Liability Driven
Investments type solutions.
In addition to the core life, pension and investment businesses Irish
Life also has the following subsidiaries; Cornmarket (100%) - Ireland's
largest independent broker which specializes in affinity arrangements
for public service employees; IPSI (100%) - an outsource provider of
life administration services to international life companies.
It has also invested in the following joint ventures; Allianz (30%) -
Ireland's 3rd largest non-life / general insurance business; and Glo Health (49%) -
the newest entrant to Ireland's private health market.
About Canada Life (Ireland)
Canada Life is one of Ireland's leading life, pension and investment
providers, with over 150,000 customers. Established in Ireland in 1903,
the Canada Life Group has grown to be a modern and dynamic
international financial services business.
The Canada Life Group -- which employs more than 600 people in Ireland
and is already the largest Canadian employer in Ireland -- serves as a
hub for the company's expanding presence in Europe. Its products are
distributed through a network of over 1,500 independent brokers as well
as more than 100 sales associates nationwide.
The company's German business, Canada Life Europe, headquartered in
Ireland, is recognised as one of the leading international providers of
pension products in Germany.
Setanta Asset Management, its primary investment manager, manages funds
for Irish, German and Canadian clients with a consistent strong fund
performance record.
Also based in Dublin are Canada Life's European Information Services
Division, providing the main data centre for its European businesses
and the European headquarters of Canada Life Reinsurance, its
international reinsurance business.
Great-West Lifeco
Great-West Lifeco Inc. (TSX:GWO) is an international financial services
holding company with interests in life insurance, health insurance,
retirement and investment services, asset management and reinsurance
businesses. Great-West Lifeco has operations in Canada, the United
States, Europe and Asia through The Great-West Life Assurance Company,
London Life Insurance Company, The Canada Life Assurance Company,
Great-West Life & Annuity Insurance Company and Putnam Investments,
LLC. Great-West Lifeco and its companies have $546 billion in assets*
under administration and are members of the Power Financial Corporation
group of companies.
*Assets as of December 31, 2012
Conference call and audio webcast
A conference call and audio webcast with senior executives to discuss
the transaction will be held today, February 19, 2013 at 9:00 a.m. ET.
The call and webcast can be accessed through www.greatwestlifeco.com or by phone in listen-only mode (passcode: 9890810#) by calling the following numbers:
-
Participants in the Toronto area: 416-641-6150
-
Participants from North America: 1-800-952-5114
-
Participants from Overseas Dial international access code first, then 800-6578-9818
-
A slide presentation will be accessible on Great-West Lifeco's website
in advance of the conference call, along with a printer-friendly
version of the slide presentation, at www.greatwestlifeco.com.
Conference call and audio webcast archive
The call will be archived and can be accessed later as follows:
-
By calling 1-800-408-3053 or 905-694-9451 in Toronto, or dial
international access code first then, 800-3366-3052 for overseas
callers, passcode 8198900# from approximately 11:30 a.m. ET on February
19, 2013 to 11:59 p.m. on February 28, 2013; and
-
From the www.greatwestlifeco.com website from approximately 11:00 a.m. ET on February 19, 2013 to
February 18, 2014.
Cautionary Note Regarding Forward-Looking Information
This release contains some forward-looking statements about Great-West
Lifeco, including its business operations, strategy and expected
financial performance and condition. Forward-looking statements
include statements that are predictive in nature, depend upon or refer
to future events or conditions, or include words such as "expects",
"anticipates", "intends", "plans", "believes", "estimates" and similar
expressions or negative versions thereof. In addition, any statement
that may be made concerning future financial performance (including
revenues, earnings or growth rates), ongoing business strategies or
prospects and possible future action by Great-West Lifeco, including
statements with respect to the expected benefits of acquisitions or
divestitures, are also forward-looking statements. Forward-looking
statements are based on expectations and projections about future
events that were current at the time of the statements and are
inherently subject to, among other things, risks, uncertainties and
assumptions about Great-West Lifeco, economic factors and the financial
services industry generally, including the insurance and mutual fund
industries. Material factors or assumptions that were applied in
formulating the forward-looking information contained herein include
the assumption that the business and economic conditions affecting
Great-West Lifeco's and Irish Life's respective operations will
continue substantially in their current state, including, without
limitations, with respect to industry conditions, general levels of
economic activity, market prices for products provided, business
competition, continuity and availability of personnel and third party
service providers, local and international laws and regulations,
foreign exchange rates and interest rates, inflation, taxes, and that
there will be no unplanned material changes to Great-West Lifeco's or
Irish Life's facilities, customer and employee relations and credit
arrangements.
This release contains statistical data, market research and industry
forecasts that were obtained from Irish Life publications and
statements, industry and governmental publications, studies and reports
or are based on estimates derived from same and Great-West Lifeco's
knowledge of, and experience in, the markets in which its subsidiaries
operate. Actual outcomes may vary materially from those forecast in
such publications, studies or reports, and the prospect for material
variation can be expected to increase as the length of the forecast
period increases and as the length of time since the date of the
original publication increases. While Great-West Lifeco believes this
data to be reliable, Great-West Lifeco has not independently verified
any of the data from Irish Life and third party sources referred to in
the presentation or ascertained the underlying assumptions relied upon
by such sources. Accordingly, Great-West Lifeco does not guarantee, and
takes no responsibility for, the accuracy, currency and completeness of
this information.
They are not guarantees of future performance, and actual events and
results could differ materially from those expressed or implied by
forward-looking statements due to, but not limited to, important
factors such as sales levels, premium income, fee income, expense
levels, mortality experience, morbidity experience, policy lapse rates,
taxes, general economic, political and market factors in North America
and internationally, interest and foreign exchange rates, global equity
and capital markets, business competition, technological change,
changes in government regulations, changes in accounting policies and
the effect of applying future accounting policy changes, unexpected
judicial or regulatory proceedings, catastrophic events, and Great-West
Lifeco's ability to complete strategic transactions and integrate
acquisitions. The reader is cautioned that the foregoing list of
important factors is not exhaustive, and there may be other factors,
including factors set out under "Risk Management and Control Practices"
and "Summary of Critical Accounting Estimates" in Great-West Lifeco's
2012 Annual Management's Discussion and Analysis and any listed in
other filings with securities regulators, which are available for
review at www.sedar.com. The reader is also cautioned to consider these and other factors
carefully and to not place undue reliance on forward-looking
statements. Other than as specifically required by applicable law,
Great-West Lifeco does not intend to update any forward-looking
statements whether as a result of new information, future events or
otherwise.
Cautionary Note Regarding Non-International Financial Reporting
Standards ("IFRS") Financial Measures
This release may contain some non-IFRS financial measures. Terms by
which non-IFRS financial measures are identified include but are not
limited to "operating earnings", "constant currency basis", "premiums
and deposits", "sales", and other similar expressions. Non-IFRS
financial measures are used to provide management and investors with
additional measures of performance. However, non-IFRS financial
measures do not have standard meanings prescribed by IFRS and are not
directly comparable to similar measures used by other companies.
Please refer to the appropriate reconciliations of these non-IFRS
financial measures to measures prescribed by IFRS.
This document does not constitute a prospectus within the meaning of
Part 5 of the Investment Funds, Companies and Miscellaneous Provisions
Act 2005 of Ireland. No offer of shares to the public is made, or will
be made, that requires the publication of a prospectus pursuant to
Irish prospectus law (within the meaning of Part 5 of the Investment
Funds, Companies and Miscellaneous Provisions Act 2005 of Ireland) in
general, or in particular pursuant to the Prospectus (Directive
2003/71/EC) Regulations 2005 of Ireland (as amended). This document
has not been approved or reviewed by or registered with the Central
Bank of Ireland. This document does not constitute investment advice or
the provision of investment services within the meaning of the European
Communities (Markets in Financial Instruments) Regulations 2007 of
Ireland (as amended) or otherwise.
This document does not constitute an offer to sell or an invitation to
subscribe for, or a solicitation of an offer to subscribe or buy any
securities to the public in the United Kingdom. No prospectus has been
or will be approved in the United Kingdom in respect of the securities
referred to herein.
SOURCE: Great-West Lifeco Inc.
Attention News Editors: Photo(s) to be uploaded to www.newswire.ca later today.
To view headshots and bios from Great-West Lifeco, please visit: http://www.greatwestlifeco.com/008/home/corporateinformation/biographiesandphotos/index.htm