Canada Life Announces Embedded Value of $5.0 Billion.Business Editors TORONTO--(BUSINESS WIRE)--June 8, 2001 Canada Life Financial Canada Life Financial Corporation TSX: CL is a Canadian company that offers life, health, and disability insurance for groups and individuals. Founded in 1847, it was acquired by The Great-West Life Assurance Company in 2003, after rejecting a hostile takeover bid by Corporation (NYSE NYSE See: New York Stock Exchange :CLU (language) CLU - (CLUster) An object-oriented programming language developed at MIT by Liskov et al in 1974-1975. CLU is an object-oriented language of the Pascal family designed to support data abstraction, similar to Alphard. )(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CL.) today provided investors with its embedded value Embedded Value A common valuation measure used outside North America particularly in the insurance industry. It is calculated by adding the adjusted net asset value and the present value of future profits of a firm. , which is another method for estimating the Company's economic worth. Embedded value has been an important analytical tool for life insurance companies in the United Kingdom, Europe and Australia for several years. It is an effective way to compare companies with different product mixes and across various jurisdictions. Embedded value is the sum of the value of shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. plus the present value of projected future distributable profits. Because it excludes any value of future new business, embedded value does not represent the full value of the company. Canada Life's embedded value at December 31, 2000 was $5.0 billion or $31.17 per share, an increase of $0.7 billion over the previous year-end. The increase during the year broke down as follows:
Per Share Change
C$ %
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Value at January 1, 2000 26.81
Value added from: New Business 0.80 3.0
: Acquisitions 0.44 1.6
: In-force Business 3.60 13.5
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Value at December 31, 2000 Before
Shareholder Dividends 31.65 18.1
Shareholder Dividends ( 0.48) (1.8)
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Value at December 31, 2000 31.17 16.3
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Before shareholder dividends, the Company increased its embedded value by 18%, with an 80 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. contribution from new business activities during 2000 and a further 44 cents added by business acquisitions. "Our $5.0 billion embedded value is an excellent outcome," said David Nield, Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Canada Life. "It reinforces the significant value of the company's diversified international businesses. The $700 million net addition to value during the year demonstrates that we continue to execute our strategy as we set it out - to grow organically, supplemented by strategic acquisitions, joint ventures and other networking arrangements in chosen markets." The embedded value has been arrived at using methods consistent with the draft guidelines published by the Canadian Institute of Actuaries The Canadian Institute of Actuaries is the national organization of the actuarial profession in Canada. It was incorporated on March 18, 1965. The FCIA designation stands for Fellow of the Canadian Institute of Actuaries. in September 2000. Key assumptions include the discount rate, which was set to reflect prevailing rates in each geographic division (for example, 8.75% in Canada) and required capital of 150% of Minimum Continuing Capital Surplus Requirement (MCCSR MCCSR Minimum Continuing Capital and Surplus Requirements (insurance) ). Other assumptions include rates of inflation, tax, mortality and expected returns from capital markets. The embedded value in currencies other than Canadian dollars was converted at exchange rates prevailing at December 31, 2000. Canada Life will host a conference call at 10:00 a.m. Friday, June 8, at which senior Company executives will talk about the Company's embedded value. In Toronto, call 416-641-6707. Toll Free, North America, call 800-381-9619. Please provide your name, location and organization to the operator. A playback of this call will be available after 12:00 p.m. June 8, 2001, Toronto time until midnight Toronto time on June 15, 2001at 416-626-4140 or toll free in North America at 888-373-3018. The call will be broadcast live on the Internet at www.canadalife.com and a slide presentation supporting additional details used in calculating embedded value is available by clicking on "Investor Relations" and then, "Presentations". The web cast will be archived and available on the web site following the call. The Canada Life Assurance Company, Canada's first domestic life insurance company founded in 1847, has total assets under administration in excess of $62 billion. Headquartered in Toronto, the Company operates in Canada, the United States, the Republic of Ireland, the United Kingdom, Brazil, Germany, Hong Kong and the Caribbean. Canada Life Financial Corporation, established in 1999, is the holding company for The Canada Life Assurance Company and is traded on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbol "CL" and the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol "CLU". |
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