A number of major changes are coming to Great-West Lifeco, the financial holding company, known for its health and life insurance arms, has revealed.
Chief among the changes is how the US Tax Reconciliation Act affects the company’s business. The legislation, which took effect at the start of this year, reduces the US corporate federal tax rate from 35% to 21%. Due to this, Great-West Lifeco is expecting to take a charge of US$216 million (US$0.22 per share) when it reports its fourth quarter results next week, February 08, 2018. The company is expecting the lower tax rate to benefit future net earnings.
During Q4 2017, Great-West Lifeco (through subsidiary Putnam Investments) also agreed in principle to sell an equity investment in Nissay Asset Management Corporation, a subsidiary of Nippon Life Insurance Company, to Nippon. Concurrently, Great-West Lifeco will acquire Nippon’s minority stake in institutional asset manager PanAgora, a majority-owned subsidiary of Putnam. A release said that Nippon and Putnam intend to continue their collaboration.
According to a press release, the sale of the Nissay shares will result in a “gain on sale offset by a non-cash write-off of an associated indefinite life intangible asset” when Great-West Lifeco acquired Putnam back in 2007. The projected net impact of the sale is a charge of US$122 million ($0.12 per share), to be included in the company’s net earnings for the fourth quarter of 2017.
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