Press Release - JULY 25, 2018

A.M. Best Affirms Credit Ratings of Great-West Lifeco Inc. and Its Subsidiaries; Upgrades Credit Ratings of Reinsurance Entities


CONTACTS:
 Edward Kohlberg
Associate Director
+1 908 439 2200, ext. 5664
edward.kohlberg@ambest.com

Ken Johnson, CFA, CAIA, FRM
Senior Director
+1 908 439 2200, ext. 5056
ken.johnson@ambest.com
Christopher Sharkey
Manager, Public Relations
(908) 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
(908) 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - JULY 25, 2018
A.M. Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” of The Great-West Life Assurance Company (Winnipeg, Manitoba) and its affiliates, London Life Insurance Company (London, Ontario), The Canada Life Assurance Company (CLAC) (Toronto, Ontario), Great-West Life & Annuity Insurance Company (GWL&A) (Greenwood Village, CO) and Great-West Life & Annuity Insurance Company of New York (New York, NY). Concurrently, A.M. Best has affirmed the Long-Term ICR of “a” and the Long-Term Issue Credit Ratings (Long-Term IR) of Great-West Lifeco, Inc. (Lifeco) (Winnipeg, Manitoba). (See below for a detailed listing of the Long-Term IRs.)

Additionally, A.M. Best has upgraded the FSR to A+ (Superior) from A (Excellent) and the Long-Term ICR to “aa” from “a+” of London Life Reinsurance Company (Blue Bell. PA), Canada Life International Re Designated Activity Company (Ireland) and London Life and Casualty (Barbados) Corporation (Barbados) (collectively known as the reinsurance entities). The rating upgrades reflect A.M. Best’s view of the increased strategic importance of the reinsurance entities to Lifeco’s current and future operations, as they contribute a more significant portion of the company’s overall earnings.

The outlook of these Credit Ratings (ratings) is stable.

The ratings of Lifeco’s operating companies reflect their strongest balance sheet strength, as well as their strong operating performance, very favorable business profile and appropriate enterprise risk management.

The rating affirmations also reflect the group’s highly diversified earnings profile by product and geography, strong market position in its core business lines and solid regulatory capital levels. Lifeco maintains diversified insurance, reinsurance and financial services operations, along with its appropriate enterprise risk management capabilities. The organization has consistently generated significant cash flows from operations and has demonstrated its ability to manage financial leverage and interest coverage within A.M. Best’s expectations for its current ratings. In addition, Lifeco maintains an excellent liquidity posture supported by high-quality investments and credit facilities.

Moreover, A.M. Best recognizes Lifeco’s consolidated position as a market leader in Canada’s individual and group insurance lines, with superior market positions in the wealth accumulation and protection segments. The Canadian distribution systems of Lifeco and its operating companies represent the largest in Canada and serve as a significant competitive advantage, while its conservative pricing discipline and scale enables it to generate favorable operating results. The U.S. operation has continued to produce stable earnings contributions, and has grown organically and through strategic acquisitions. The European business segments, which also have grown significantly through acquisitions, provide further diversification.

The ratings also reflect the challenges and risks associated with the current low interest rate environment. Also noted is Lifeco’s large amount of goodwill and intangibles due to strategic acquisitions. In addition, A.M. Best expects that the group will continue to face challenges associated with growth in its core U.S. business segments due to the highly competitive environment.

The following Long-Term IRs have been affirmed with a stable outlook:

Great-West Lifeco, Inc.

— “a” on CAD 500 million 4.65% senior unsecured debentures, due 2020

— “a” on EUR 500 million 2.50% senior unsecured euro bonds, due 2023

— “a” on EUR 500 million 1.75% senior unsecured euro bonds, due 2026

— “a” on CAD 500 million 3.337% senior unsecured debentures, due 2028

— “a” on CAD 200 million 6.74% senior unsecured debentures, due 2031

— “a” on CAD 400 million 6.67% senior unsecured debentures, due 2033

— “a” on CAD 343.788 million 5.998% senior unsecured debentures, due 2039

— “bbb+” on CAD 200 million 4.80% non-cumulative first preferred shares

— “bbb+” on CAD 200 million 5.15% non-cumulative first preferred shares

— “bbb+” on CAD 200 million 5.15% non-cumulative first preferred shares

— “bbb+” on CAD 250 million 5.40% non-cumulative first preferred shares

— “bbb+” on CAD 170 million 5.65% non-cumulative first preferred shares

— “bbb+” on CAD 150 million 5.80% non-cumulative first preferred shares

— “bbb+” on CAD 200 million 5.90% non-cumulative preferred shares (of which $194 million

remains outstanding)

— “bbb+” on CAD 213 million 2.18% non-cumulative rate reset preferred shares

— “bbb+” on CAD 37 million floating rate non-cumulative preferred shares

— “bbb+” on CAD 300 million 5.20% non-cumulative preferred shares

— “bbb+” on CAD 300 million 4.50% non-cumulative preferred shares

— “bbb+” on CAD 300 million 4.85% non-cumulative preferred shares

— “bbb+” on CAD 200 million 5.25% non-cumulative preferred shares

Great-West Lifeco Finance (Delaware) LP

— “a” on USD 700 million 4.15% senior unsecured debentures, due 2047

Great-West Lifeco Finance 2018

— “a” on USD 300 million 4.047% senior unsecured notes, due 2028

— “a” on USD 500 million 4.581% senior unsecured notes, due 2048

Great-West Life & Annuity Insurance Capital, LP

— “bbb+” on USD 175 million 6.625% junior subordinated deferrable debentures, due 2034

The Canada Life Assurance Company

— “a+” on CAD 100 million 6.40% subordinated debentures, due 2028

Canada Life Capital Trust

— “a” on CAD 150 million 7.529% non-cumulative Canada Life Capital Securities (CLiCS), due 2052

The following indicative Long-Term IRs on securities available under shelf registration have been affirmed with a stable outlook:

Great-West Lifeco, Inc.

— “a” on senior unsecured debt

— “a-” on subordinated debt

— “bbb+” on junior subordinated debt

— “bbb+” on preferred shares

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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