October 30, 2008 / 5:36 PM / 9 years ago

UPDATE 3-Great-West Life profit dips, but still eyes deals

* EPS C$0.485 vs C$0.48 expected by analysts

* Putnam assets fall 18 pct from end Q2

* CEO says company well capitalized

* Stock closes up 6 Cdn cents at C$25.75 (Adds CEO comment, Putnam assets, closing share price)

By Lynne Olver

TORONTO, Oct 30 (Reuters) - Quarterly profit at Great-West Lifeco (GWO.TO) fell 5 percent as the insurance and wealth management company took charges for impaired assets and the liquidation of a Putnam money market fund, matching analyst expectations.

Great-West, Canada’s second-largest life insurer by market value, remains well capitalized despite market turmoil, and it is still interested in making acquisitions, its chief executive told a conference call Thursday afternoon.

“There are abundant opportunities in the marketplace, we are always on the lookout for acquisitions that would add to our business,” CEO Allen Loney said.

“We also have to attend to our knitting and make sure that our capital position is strong before we do that, (and) as you can see from the results, we are in a pretty strong capital position.”

Great-West said earlier in the day its profit slipped to C$436 million ($357 million), or 48.5 Canadian cents a diluted share, in the three months ended Sept. 30. That was down from C$461 million, or 51.3 Canadian cents, in the year-earlier period.

Analysts had expected earnings of 48 Canadian cents a share before exceptional items, according to Reuters Estimates.

“The reporting was in line with what we thought and was in line with the Street, and that’s nice to see in these volatile markets,” said Tom MacKinnon, an analyst at Scotia Capital. “All in, that’s a pretty encouraging-looking quarter.”

The Winnipeg, Manitoba-based company also said that a key regulatory capital ratio, called the minimum continuing capital and surplus ratio, or MCCSR, was 203 percent on Sept. 30, which was at the upper end of the company’s target range.

Investors and analysts have been closely watching capital ratios, as big swings in financial markets raised the prospect that some insurance companies might have to bolster their capital to keep up reserves.

Manulife Financial Corp (MFC.TO), which reports results next week, has already said that its MCCSR was at the low end of its 180-200 percent target range on Sept. 30.

In Great-West’s Canadian business, net income rose 2 percent to C$251 million on the back of better results in individual insurance and investment products.

But Great-West, which acquired Boston-based money manager Putnam Investments Trust last year, said net income in the United States tumbled 71 percent to C$43 million. It took charges of C$30 million for asset impairment, and C$19 million tied to the liquidation of Putnam’s Prime Money Market Fund.

Putnam said in September it would close and liquidate the fund, after institutional clients suddenly demanded their money back.

Assets under management at Putnam fell to US$136.6 billion at the end of September, from US$166.4 billion the previous quarter, and from US$191 billion a year earlier.

In Europe, Great-West’s net income dropped 13 percent to C$140 million on lower profits from insurance and annuities.

Great-West shares closed at C$25.75 on the Toronto Stock Exchange, up 6 Canadian cents. The stock is down 28 percent year-to-date, which is the best performance among Canada’s four publicly traded life insurers.

The company is controlled by Montreal-based Power Financial (PWF.TO). ($1=$1.22 Canadian) (Reporting by Lynne Olver; editing by Rob Wilson)

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