Fitch Affirms Great-West's Ratings; Outlook Stable.

CHICAGO -- Fitch Ratings affirmed Great-West Lifeco's (TSE:GWO) 'AA-' issuer default rating (IDR), as well as the ratings on all its outstanding debt and preferred stock. Fitch affirmed the 'AA+' insurer financial strength (IFS) ratings of all operating subsidiaries (see below for a complete listing of all ratings). The Rating Outlook is Stable.

GWO's ratings strengths include significant business diversification, with a focus on lower risk product design, and consistently robust earnings performance, which is the result of effective management of key drivers, including persistency, expenses and discipline in pricing. Balance sheet strengths include very solid consolidated risk-based capitalization, superior investment quality and above-average liquidity. Conservative actuarial reserving practices contribute to continued earnings quality and stability.

Rating concerns include increased use of financial leverage for acquisition funding, relatively mature Canadian markets and the need to expand the U.S. strategic position. Since opportunities for growth within the Canadian insurance market are limited, GWO looks to the United States and Europe for acquisitions and partnerships. To this end, in recent months the company has announced or completed two payout annuity transactions in the U.K. and two 401(k) acquisitions and the purchase of a hospital and physician network in the United States.

GWO's Canadian, U.S. and European operations contribute to and benefit from the financial strength and diversity of the whole. Strengths specific to Canadian operations include considerable and sustainable distribution capabilities and leading market positions across all major product and client segments. Strengths specific to U.S. operations include excellent risk-based capitalization, solid market niches and strong administrative capabilities supporting predominately fee-based businesses. Reinsurance operations offer diversification through a complimentary management skill set and European operations provide a solid business platform in faster growing product niches.

Fitch expects GWO's disciplined approach to its markets, and sound management of key earnings drivers to continue to produce strong product margins and earnings performance. Fitch expects GWO to maintain very solid consolidated risk-based capitalization (measured by MCCSR).

Equity-credit-adjusted leverage (under Fitch's new criteria published Sept. 27, 2006) was 9.0% (10.9% when adjusted for 50% of goodwill) at Sept. 30, 2006, and remains within ratings expectations. Fitch assigned a class D designation to the existing hybrids issued by the U.S. intermediate holding company and class E designation to the non-cumulative preferred shares and innovative tier 1 securities issued in Canada. Class D and class E allocate 75% and 100% of the principal to adjusted equity, respectively. Fixed-charge coverage has remained in the 9.0 times(x) to the 10.0x range over the last several years and is also within rating expectations.

Fitch affirms Great-West Lifeco, Inc.'s IDR at 'AA-' and senior debt ratings at 'A+'. The Rating Outlook is Stable. Senior debt affirmations include the following:

--6.75% senior debentures due Aug. 10, 2015;

--6.14% senior debentures due March 21, 2018;

--6.74% senior debentures due Nov. 24, 2031;

--6.67% senior debentures due March 21, 2033.

Fitch affirms Great-West Lifeco, Inc.'s outstanding preferred shares ratings at 'A'. The Rating Outlook is Stable. The affirmations include the following:

--Series D, 4.70% non-cumulative first preferred shares;

--Series E, 4.8% non-cumulative first preferred shares;

--Series F, 5.9% non-cumulative first preferred shares;

--Series G, 5.20% non-cumulative first preferred shares;

--Series H, 4.85% non-cumulative first preferred shares;

--Series I, 4.5% non-cumulative first preferred shares.

Fitch affirms GWL&A Financial Corp.'s IDR at 'AA-' with a Stable Outlook.

Fitch affirms the following trust preferred ratings with a Stable Outlook:

Great-West Life & Annuity Insurance Capital, LP at 'A'

--6.625% deferrable debentures due Nov. 15, 2034.

Great-West Life & Annuity Insurance Capital, LP II

--7.153% subordinated debentures due 2046.

Fitch affirms Canada Life Financial Corporation's IDR at 'AA-' and outstanding preferred shares ratings at 'A'. The Rating Outlook is Stable. Preferred share affirmations include the following:

--Series B, 6.25% noncumulative preferred shares.

Fitch affirms the ratings of Great-West Life Assurance Company with a Stable Outlook as follows:

--Insurer financial strength at 'AA+';

--Issuer default at 'AA';

--Series L, 5.20% noncumulative preferred shares at 'AA-';

--Series O, 5.55% noncumulative preferred shares at 'AA-'.

Fitch affirms the capital trust debentures for Great-West Life Capital Trust at 'AA-' with a Stable Outlook:

--Series A, 5.995% senior debentures due Dec. 31, 2052.

Fitch affirms the ratings of Canada Life Assurance Company with a Stable Outlook as follows:

--Insurer financial strength at 'AA+';

--Issuer default at 'AA';

--5.8% subordinated debentures due Dec. 11, 2013 at 'AA-';

--6.4% subordinated debentures due Dec. 11, 2028 at 'AA-'.

Fitch affirms the capital trust debentures for Canada Life Capital Trust at 'AA-' with a Stable Outlook:

--Series A, 6.679% senior debentures due June 30, 2052;

--Series B, 7.529% senior debentures due June 30, 2052.

Fitch affirms the following insurance subsidiaries' IFS ratings at 'AA+' with a Stable Outlook:

--London Life Insurance Company;

--Great-West Life and Annuity Insurance Company;

--First Great-West Life & Annuity Insurance Company

--Canada Life Insurance Company of America.

Fitch affirms the following insurance subsidiaries' commercial paper issuer ratings at 'F1+':

--London Life Insurance Company;

--Great-West Life and Annuity Insurance Company.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.