August 5, 2011 / 3:03 PM / in 6 years

UPDATE 3-Power Financial profit climbs on insurance

* Q2 EPS C$0.72 vs analyst estimate of C$0.62

* Higher profit at insurance, mutual fund units

* Parent Power Corp also tops estimates (Adds price target cut, wraps in Power Corp results)

TORONTO, Aug 5 (Reuters) - Power Financial Corp’s (PWF.TO) quarterly profit rose 20 percent due to stronger results at its insurance and mutual fund subsidiaries, the company said on Friday.

The Winnipeg-based holding company’s results also contributed to a doubling of profit at its parent, Power Corp (POW.TO), which also reported second-quarter results on Friday.

Both are part of the financial and communications empire controlled by Montreal’s Desmarais family.

Power Financial earned a net C$507 million ($517 million), or 72 Canadian cents a share, in the quarter. That was up from C$422 million, or 60 Canadian cents a share, a year earlier.

The result, driven mainly by gains at insurance subsidiary Great-West Lifeco (GWO.TO), topped analysts’ expectations of a profit of 62 Canadian cents per share.

Power Financial owns 68 percent of Great-West and also holds 57 percent of IGM Financial (IGM.TO), Canada’s largest mutual fund company.

Despite the stronger profit, analyst Andre-Philippe Hardy of RBC Capital Markets cut his 12-month share-price target on the company to C$33 from C$35 to reflect expectations of lower earnings from Great-West and IGM in 2012.

Power Corp. earned C$356 million, or 77 Canadian cents a share, up from C$165 million, or 36 Canadian cents a share, in the year-before quarter.

The result topped analysts’ expectations of a profit of 59 Canadian cents a share.

Power Financial’s shares eased 1 Canadian cent at C$27.19 on the Toronto Stock Exchange on Friday, while Power Corp slipped 6 Canadian cents to C$24.12.

$1=$0.98 Canadian Reporting by Cameron French; editing by Peter Galloway

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