great-west lifeco

TELUS CORP. $40 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 615.5 million; Market cap: $24.6 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.telus.com) continues to expand its health care division, which helps doctors, pharmacies and hospitals convert patient records and other information to electronic formats. The company recently paid an undisclosed sum for ZRx Prescriber, an app that lets doctors write prescriptions through their tablet computers and smartphones. The app can also access a patient’s drug insurance information, which speeds up claims and cuts down on errors. Over 520 clinics in Ontario and Quebec use ZRx Prescriber to process 400,000 prescriptions a month. Telus is a buy....

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ GREAT-WEST LIFECO INC. $32 (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 998.9 million; Market cap: $32.0 billion; Price-to-sales ratio: 1.1; Dividend Yield: 3.8%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is Canada’s secondlargest insurance company after Manulife Financial (Toronto symbol MFC). It also offers mutual funds, retirement planning and wealth management. Power Financial (Toronto symbol PWF) owns 67.0% of Great-West.

As of June 30, 2014, the company had $804.6 billion of assets under administration, up 6.1% from the start of the year.

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Great-West Lifeco and IGM are both in a strong position to profit as baby boomers sign up for retirement planning services and buy supplemental accident and disability insurance. Both companies also trade at low multiples to their earnings and will probably raise their dividends in 2015. They’re also a great way to diversify your Finance sector holdings beyond Canada’s big five banks. If you can accept the added risk, we also like Home Capital (see page 83). GREAT-WEST LIFECO INC. $32 (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 998.9 million; Market cap: $32.0 billion; Price-to-sales ratio: 1.1; Dividend Yield: 3.8%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is Canada’s secondlargest insurance company after Manulife Financial (Toronto symbol MFC). It also offers mutual funds, retirement planning and wealth management. Power Financial (Toronto symbol PWF) owns 67.0% of Great-West....

GREAT-WEST LIFECO $30.65 (Toronto symbol GWO; Shares outstanding: 999.0 million; Market cap: $30.6 billion; TSINetwork Rating: Above Average; Yield: 4.0%; www.greatwestlifeco.com) is Canada’s largest insurance company. It also offers mutual funds and wealth management.

In the quarter ended March 31, 2014, earnings per share rose 9.3%, to $0.59 from $0.54 a year earlier. Great-West has $805.9 billion of assets under administration.

Earnings at the Canadian division (50% of the total) rose 10.9%. The European division (44%)—including Irish Life, acquired in July 2013—saw 34.9% higher profits. Losses widened at the U.S. division’s Putnam mutual fund business, cutting overall U.S. earnings by 42.3%, but the U.S. makes up just 6% of total profits.

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GREAT-WEST LIFECO $30.65 (Toronto symbol GWO; Shares outstanding: 999.0 million; Market cap: $30.6 billion; TSINetwork Rating: Above Average; Yield: 4.0%; www.greatwestlifeco.com) is Canada’s largest insurance company. It also offers mutual funds and wealth management. In the quarter ended March 31, 2014, earnings per share rose 9.3%, to $0.59 from $0.54 a year earlier. Great-West has $805.9 billion of assets under administration. Earnings at the Canadian division (50% of the total) rose 10.9%. The European division (44%)—including Irish Life, acquired in July 2013—saw 34.9% higher profits. Losses widened at the U.S. division’s Putnam mutual fund business, cutting overall U.S. earnings by 42.3%, but the U.S. makes up just 6% of total profits....

POWER CORP. $30.40 (Toronto symbol POW; Shares outstanding: 412.4 million; Market cap: $14.2 billion; TSINetwork Rating: Above Average; Div. yield: 3.8%; www.powercorporation.com) is a diversified holding company. It holds its financial assets through 65.8%-owned Power Financial. These financial assets include 68.1% of Great- West Lifeco, one of Canada’s largest life insurers (see article on Great-West Lifeco in this issue), and 58.7% of IGM Financial, a leading Canadian mutual fund provider. Power Financial also owns 50% of holding company Parjointco, which holds 55.6% of Switzerland- listed Pargesa Holdings SA. Pargesa has 95% of its assets in five large European companies: Imerys (minerals), Total SA (oil), Pernod Ricard (wine and spirits), Suez Environnement (energy, water and waste services) and Lafarge (cement and building materials). Power Corp. also has investments in Asia....

Chubb Corp., $92.70, symbol CB on New York (Shares outstanding: 244.5 million; Market cap: $22.7 billion; www.chubb.com), sells insurance to individuals and businesses through 8,500 independent agents and brokers in the U.S., Canada, Europe, Australia, parts of Latin America and Asia. In 2013, the U.S. accounted for 77% of its total revenue. New Jersey-based Chubb began selling insurance in 1882 and is the 12th-largest insurance company in the U.S. The firm has three main divisions: Chubb Commercial Insurance (43% of premiums written) sells a range of insurance products to businesses; Chubb Personal Insurance (35%) sells home, automobile and health insurance to individuals; and Chubb Specialty Insurance (22%) sells liability insurance to businesses....

GREAT-WEST LIFECO INC. $30 (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 999.2 million; Market cap: $30.0 billion; Price-to-sales ratio: 1.2; Dividend Yield: 4.1%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is one of Canada’s largest insurance companies, with $758.3 billion of assets under administration. It also offers mutual funds, retirement planning and wealth management. Power Financial (Toronto symbol PFC) owns 67.0% of Great-West.

The company continues to benefit from its recent $1.75-billion purchase of Irish Life Group, Ireland’s largest pension manager and life insurance provider.

If you exclude integration costs, Great-West earned $2.05 billion in 2013, including $85 million of profits from Irish Life. The latest earnings are also up 5.4% from $1.95 billion in 2012. Due to more shares outstanding, earnings per share rose 2.9%, to $2.11 from $2.05.
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In our flagship Canadian advisory, The Successful Investor, we recommend that when you select investments in the financial sector, you start by looking at Canada’s big-five banks. But we also recommend diversifying your holdings with non-bank finance stocks. Two weeks ago, we covered one such stock that more aggressive investors might consider, Home Capital (see the article here). Today we examine two conservative non-bank stocks....

We feel that the current global stock market rally could continue for some time, particularly as the U.S. economy picks up steam.

That’s good news for insurance companies like Great-West, which must hold a broad portfolio of securities to cover potential claims....