DBRS Morningstar Updates Ratings on Great-West Lifeco Inc.’s Subsidiaries Following Amalgamation

DBRS Limited (DBRS Morningstar) notes that following the amalgamation of The Great-West Life Assurance Company (Great-West Life), London Life Insurance Company (London Life) and The Canada Life Assurance Company, as well as their intermediate holding companies, Canada Life Financial Corporation and London Insurance Group Inc. into one legal entity under the name of The Canada Life Assurance Company (Canada Life or the amalgamated entity), DBRS Morningstar transferred the existing AA Financial Strength Rating, AA Issuer Rating, and Pfd-1 Preferred Shares rating of Great-West Life and AA (low) Subordinated Debentures of Canada Life to the amalgamated entity. Concurrently, DBRS Morningstar withdrew the AA Financial Strength Rating on London Life. All ratings have a Stable trend.

The last rating action on these entities was on November 13, 2019, when all ratings were confirmed.

BACKGROUND
On April 3, 2019, Great-West Lifeco Inc. (GWO) announced its intention to amalgamate its three operating insurance companies in Canada — Great-West Life, London Life, and Canada Life — as well as their intermediate holding companies, into one legal entity, to be named The Canada Life Assurance Company.

On October 3, 2019, Great-West Life, London Life, and Canada Life, announced that their respective voting policyholders voted in favour of their amalgamation plans. GWO received final approval from Canada’s Minister of Finance on November 25, 2019.

The simplification of GWO’s operating structure is aligned with their strategic plan and it is designed to leverage their multiple distribution channels approach in the Canadian life insurance market in a cost-effective manner. Although the amalgamation might add additional costs and execution risk initially, it is expected to reduce costs and improve its competitive position in the medium to long term.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodology is the Global Methodology for Rating Life and P&C Insurance Companies and Insurance Organizations (September 2019), which can be found on our website under Methodologies & Criteria.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found on the issuer page at www.dbrs.com

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

This rating is endorsed by DBRS Ratings Limited for use in the European Union. The following additional regulatory disclosures apply to endorsed ratings:

The last rating action on this issuer took place on November 13, 2019, when all ratings were confirmed.

For further information on DBRS Morningstar historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml.

Lead Analyst: Marcos T. Alvarez, Senior Vice President, Global FIG
Rating Committee Chair: Roger Lister, Managing Director, Chief Credit Officer, Global FIG and Sovereign
Initial Rating Date: July 19, 1985

For more information on this credit or on this industry, visit www.dbrs.com.

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