Non-bank Buys for Growth & Income

Article Excerpt

GREAT-WEST LIFECO INC. $34 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s largest insurance company, with assets under administration of $197.5 billion. Power Corp. of Canada, through subsidiary Power Financial Corp., controls about 70% of Great-West’s shares. In Canada, the insurance business is mature and concentrated among major insurers and the big five banks. While the strong economy has spurred demand from employers for group insurance, demand for individual policies is sluggish. That’s why Great-West has steadily expanded its operations in the United States and Europe over the past few years. Businesses outside of Canada now account for about 55% of its income. Great-West uses hedging contracts to cut its currency risk. Most of Great-West’s foreign purchases are in niche businesses that complement its existing operations. Economies of scale, such as merging administrative and sales personnel, should help Great-West improve the long-term profitability of these new operations. Great-West tends to increase its dividend every six months. The current rate…

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