* Q3 EPS C$0.471 vs EPS C$0.487 a year earlier
* Just below expectations, shares dip
* Dividend unchanged
TORONTO, Nov 5 (Reuters) - Great West Lifeco (GWO.TO) said on Thursday earnings in the third quarter edged higher despite weaker equity and credit markets, but the results came in just below expectations and shares dropped.
Canada's second-largest life insurer said net income was C$445 million ($420 million), or 47.1 Canadian cents a share, in the third quarter ended Sept. 30. That compares with C$436 million, or 48.7 Canadian cents a share, in the same period last year.
Great West issued C$1 billion of common shares in the fourth quarter of 2008, which diluted earnings per share in the most recent quarter compared with the year before.
Analysts, on average, had expected earnings of 48 Canadian cents a share, according to Thomson Reuters I/B/E/S.
Shares of Great West were down 1.7 percent in midday trade on the Toronto Stock Exchange as gloomy third-quarter results from rival lifecos hit the entire sector.
Return on equity fell to 13.7 percent from 21.4 percent a year earlier
"Although conditions have generally improved in 2009, the 2009 results compared to 2008 reflect the weaker global equity and credit market environment that has existed since 2007," Great West Life said in a statement.
The Winnipeg-based lifeco said a decline in the value of its publicly traded and investment securities lowered the market value of assets invested in the company's segregated and mutual funds.
Great West also took a hit from credit rating downgrades in the quarter, increasing provisions for future credit losses by C$112 million.
The insurer maintained its dividend, as expected.
$1=$1.06 Canadian Reporting by Andrea Hopkins; editing by Peter Galloway