Great-West Lifeco Inc.

Thank you, operator. Good afternoon and welcome to Great-West Lifeco’s third quarter 2014 conference call.

Joining me today is Bill Lovatt, Executive Vice President and Chief Financial Officer for Lifeco; Garry MacNicholas, Executive Vice President, Actuarial and Risk for Lifeco; Mark Corbett, Executive Vice President and Chief Investment Officer at Lifeco; Dave Johnston, President and Chief Operating Officer, Canada; Bob Reynolds, President and Chief Executive Officer, Great-West Lifeco U.S.; Arshil Jamal, President and Chief Operating Officer, Europe; Clare Richer, Chief Financial Officer, Putnam Investments; and Louis Mannello, Chief Financial Officer, Great-West Financial. Before we start, I'll draw your attention to our cautionary notes regarding forward-looking information and non-IFRS financial measures on Slide 2.

These cautionary notes will apply to the discussion you will hear this afternoon, as well as to the presentation material that we have provided. Earlier today, Lifeco reported its third quarter earnings and also declared a quarterly dividend on its common shares unchanged at $0.3075 per share.

Now turning to Slide 4. Lifeco’s third quarter net earnings attributable to common shareholders climbed to $687 million or $0.69 per share compared to $523 million or $0.53 per share for the same period in 2013.

Backing out the impact of restructuring and acquisition charges related to Irish Life, year-over-year growth in net earnings was 19%. These earnings were driven by strong sales, disciplined pricing and ongoing cost efficiencies.

Expected profit on imports business was up across all geographies, growing by 13% overall. And Mr.

MacNicholas will speak to this in more detail later on. Irish Life continued to generate very strong results.

In this quarter Irish Life contributed $82 million to Lifeco’s earnings, up from $57 million in Q2 2014. Moving to Slide 5, assets under administration exceeded $1 trillion at the quarter end, up 45% from one year ago.

I will point out that if you look back to Q4 2011, our assets under administration just topped $500 billion and in only three years through both organic growth and two acquisitions, we’ve seen our AUA double to over $1 trillion. The year-over-year increase was driven by strong organic growth in all of our geographies as well as a $197 million contribution from the J.P.

Morgan Retirement Plan Services acquisition that closed this quarter. Organic growth was 20% in the U.S., 16% in Europe and 10% in Canada.

At Irish Life, assets under administration have increased 23% since the acquisition in Q3 2013. Now continuing on to Slide 6, Lifeco sales continue to grow strongly, up 28% year-over-year or 22% on a constant currency basis.

This was driven mainly by Canada and Great-West Financial. These sales results were accompanied by strong positive net cash flows.

In Canada, insurance sales increased by 32%, primarily reflecting strong results in Group Insurance. Wealth Management sales were up 13% driven by retail investment funds.

Great-West Financial generated very strong sales results this quarter, reaching US$6.2 billion. This was a 180% increase from Q3 2013 with contributions from all business segments.

Putnam sales were US$8.2 billion, down slightly from a very strong third quarter one year ago, but up from Q2 2014. Putnam realized positive net flows of US$1.1 billion in mutual funds as well as positive net flows of US$200 million in institutional funds.

On Slide 7, the Company’s capital position strengthened from last quarter. The MCCSR ratio for the Great-West Life Assurance Company, the regulated entity, was 233% at September 30.

This ratio does not include approximately US$740 million of cash that we hold at Lifeco. Our book value per share continue to increase reaching $16.54, up 15% year-over-year.

Now I would like to focus on some in-quarter business developments. First of all in August, Great-West Financial completed its acquisition of J.P.

Morgan Retirement Plan Services large-market recordkeeping business. Bob Reynolds will provide more details in this call including an exciting branding initiative that was recently announced.

Second, we announced in September that Great-West Life had acquired Plan Direct Insurance Services, a service provider that markets and administers individual health insurance products for Canadians. Third, the Carbon Disclosure Project, or CDP, which grades emissions data of large companies, has awarded our Canadian operations a 98B score for 2014, up from our 2013 score of 67B.

Finally, I will provide more color on our UK sales and annuity segment. Following changes in the UK budget, the new business volumes in this segment have dropped.

In Q3, we issued £98 million of new annuities and that was down 35% from the previous quarter and down 56% from one year ago. Arshil Jamal will provide more details in his comments.

So to summarize, we’ve had a very strong quarter. We continue to grow organically and through acquisition in our target segments and this is supported by a solid capital base, our growth strategy which will continue to produce superior earnings results.

I am now going to turn it over to Bill Lovatt.

Thanks, Paul. On slide nine, third quarter operating earnings reached $687 million or $0.687 a share.

We’ve been adjusting the operating earnings for the impact of the Irish Life related restructuring costs. This represented 18 million in the third quarter and in addition this quarter’s earnings were impacted by $2 million from acquisition charges related to acquiring the J.P.

Morgan Retirement Plan Services. Excluding these items, adjusted operating earnings were $695 million or $0.6960 a share.

Year-over-year growth in adjusted operating earnings was 19%. Turning to Slide 10 where we present our adjusted operating earnings return on common shareholders’ equity on a trailing fourth-quarter basis.

Adjusted ROE was 15.2%, up from 15% in the second quarter. Over the last 12 months, operating earnings have included 44 million of restructuring and acquisition charges related to Irish Life, J.P.

Morgan and certain litigation provisions. Based on these operating earnings, in-quarter ROE was 14.9%.

Let’s get to Slide 11. We continue to show a very strong 28% year-over-year sales growth in Q3, 22% on a constant currency basis, growth driven by Canada and Great-West Financial.

On the right hand side of the page, premiums and deposits were up 1% as overall sales growth and strong persistency were offset by a lower contribution from Europe. And we’ll defer to the business leaders to provide additional detail.

So turning to Slide 12. Fee income was up 14% year-over-year, 10% on a constant currency basis, driven by strong growth across all segments.

Fee income grew by 27% at Putnam, 14% at Great-West Financial, 12% in Canada and 7% in Europe. On Slide 13, operating expenses were $876 million in the third quarter, up 2% from last year.

Our operating expenses at Great-West Financial include one month of ongoing operating costs and the onetime costs related to the J.P. Morgan RPS acquisition.

Operating expenses in Europe were up 20%, reflecting a two week shorter impact from Irish Life in Q3 of 2013. Putnam expenses increased this quarter due to higher incentive compensation resulting from improved performance, sales and asset related expenses.

Turning to Slide 14. Our total assets under administration exceeded $1 trillion at the end of the third quarter.

This represents a 45% increase from Q3 2013 driven by the CAD197 billion contribution from the J.P. Morgan Retirement Plan Services.

Strong organic growth across all of our geographies, a favorable impact of currencies against the Canadian dollar. On Slide 15, book value per share $16.54 at September 30th, it was up 15% from year ago.

Year-over-year increase in book value reflects strong earnings growth, capital issuance in Q3 of last year and the favorable impact of currency. Paul?

Thanks, Bill. I’ll now turn it over to Garry MacNicholas who will deal with capital and sources of earnings.

Garry?

Thanks. Starting on Slide 17, at September 30, 2014 Great-West Life’s consolidated MCCSR is 233%, representing a five point increase from June 30th.

Strong earnings performance, net of the normal growth in capital requirements, was the main driver for the improved MCCSR ratio this quarter. While in-quarter currency movements were fairly neutral to the ratio, interest rate declines led to an increase in fair value driven capital requirements negatively impacting ratio by two points.

The point headwind from the IAS19R pension accounting transition continued this quarter, but this will be fully phased in at the end of 2014. And as a reminder, the MCCSR ratio shown here do not include holding company cash, which at September 30th would add approximately 12 points to this ratio.

Turning to sources of earnings display on Slide 18, expected profit of 78 million this quarter over the third quarter 2013, representing a 13% increase year-over-year, led by a 19% jump in the U.S., 15% in Europe and 9% in Canada. The increase was driven by good business growth, higher than expected fee income and favorable currency movement, partly offset by lower expected profit in the Canadian group long-term visibility business.

And a reminder, these are pretax figures. New business impact, which is primarily in Europe, and as noted in earlier quarters, is largely earnings strained from non-deferred sales costs of Wealth Management new business, mostly at Irish Life.

The decline from a positive figure last year to a net negative this year is due to a combination of factors. Canada had very strong new business investment gains in Q3 2013 that were not repeated this quarter and in Europe, Irish Life had a large strain impact this year with an additional two weeks business, whereas the UK saw lower new business gains on reduced annuity sales.

Experience gains contributed 95 million, 7 million higher than last year and down 32 million from the strong gains reported last quarter. The result was driven primarily by investment trading results in Canada and Europe.

Experience gains for mortality, longevity, morbidity and policyholder behavior netted to a modest positive in the quarter helped by strong morbidity results in Ireland and favorable annuity experience in reinsurance. Expense gains in Canada this quarter were offset by special project expenses in Europe, Solvency II related, and in the U.S.

as it repositions and re-brands its retirement business across entities. During the quarter, a number of 2014 assumption reviews were completed, contributing 112 million primarily in the U.S.

and Canada. The positive impact was due to updated provisions for future credit losses in Europe and the U.S., refinements to policyholder behavior provisions in Canada and modeling enhancements in reinsurance.

This was partially offset by the strengthening of provisions for policyholder behavior in reinsurance and longevity provisions in Canada. Consistent with prior treatment, the category other has been used for 10 million of restructuring in other in-quarter costs related to the Irish Life and J.P.

Morgan Retirement Plan Services acquisitions. And lastly, I note, the company is on track to reflect the revisions to the Canadian Actuarial Standards of Practice in regard to economic reinvestment assumption in the fourth quarter of 2014.

While we continue to fine-tune of the assumptions used in our initial estimates and consider what changes if any, will make the scenarios tested in addition to those described, the net earnings impact to the above changes is still estimated to be positive $50 million. And note, this is a post estimate rather than the pretax figures disclosed in the source of earnings.

Back at Paul.

Thanks very much, Garry. I'm now going to ask Mark Corbett to speak to our invested assets update.

Thank you, Paul. Turning to Slide 20, the net impact from credit and rating activity was a negative 3 million in the quarter as is positive 5 million year-to-date which continues to be within our expectations and is very favorable in the context of our $153 billion invested asset portfolio.

Slide 21 highlights the diversification of our invested asset portfolio. Lifeco’s total invested assets were 153 billion at September 30th.

The portfolio is heavily weighted toward fixed income, with bonds comprising 72% and mortgages comprising a further 13%. The quality of the bond portfolio remain very high, with 82% rated to A or higher and 99% rated investment grade.

Bonds rated below investment grade represent only 1.1% of total invested assets and we're pricing around $1.01 at the end of September. The mortgage portfolio is predominantly conventional commercial mortgages, representing 10% of invested assets.

The Canadian portfolio include the component of insured single and multifamily residential and conventional residential. The portfolio is well diversified and well seasoned.

Stocks and investment properties comprised 5% and 3% respectively as we consolidated investment asset portfolio. The stock portfolio is mostly Canadian publicly traded stock.

The investment property portfolio is un-levered and focused on the Canadian and UK markets. Slide 22 details our total Lifeco bond holding by sector and domiciled issuance.

Portfolio is heavily weighted to the four main countries in which we conducted business operations. Our exposure to peripheral Eurozone countries remains small.

Within the broader Eurozone, Germany, France and Netherlands represent our largest holding. As I reported previously, our portfolio of corporate bonds is very well diversified across industrial classification with no single industry class representing more than 6% of invested assets.

On those loans as well, as our UK bank exposure represents 1.5% invested assets. This includes certain global bank that have significant earnings diversification outside of UK.

Paul?

Thanks, Mark. I am now going to ask Dave Johnston to speak for our Canadian operations results.

Dave?

Thank you, Paul. Looking first to the left hand side of Slide 24, insurance sales were 339 million up 32% from the third quarter of 2013.

Individual insurance sales including living benefit sales were 130 million and 8% higher than a year ago reflecting strong participating life sales. Our life sales were up 21% year-over-year.

Group insurance sales of $209 million were up 54% compared to the third quarter, reflecting good growth in the mid and large sized market segments. We also had a large single premium sale in the quarter.

The right hand chart illustrates total insurance premiums and deposits of 3.1 billion, 7% higher than the third quarter of 2013, reflecting strong sales and good persistency on in-force business within both our individual and group business units. Turning to Slide 25, Wealth Management sales were 2.4 billion for the third quarter, up 13% over 2013.

Individual wealth sales were up 19%, reflecting strong segregated and mutual fund sales which increased 26% and 37% respectively compared to the third quarter of 2013. Third quarter 2014 sales of group retirement services products were $492 million, a decrease of 6%.

This reflects lower investment-only sales during the quarter which do tend to be volatile quarter-to-quarter. I would also note that our total Wealth Management Investment funds experienced positive net cash flows of 286 million for the quarter.

Premiums and deposits for Wealth Management grew 9% compared to the third quarter of 2013, reflecting strong persistency and sales. Fee income, as noted slide 26, and for the quarter was up 12%.

The 11% growth in segregated fund fees was driven by positive net cash flows and higher market levels. The 26% growth in other fee income reflects higher mutual fund fees and higher real estate asset management fees, which are up 24% and 69% respectively year-over-year.

ASO fee income is up 3% compared to last year and is consistent with the growth in premiums previously noted. Moving to Slide 27, expenses in Canada were 314 million for the third quarter, 2% higher than last year.

This includes lower pension cost and excluding these pension costs, operating expenses increased by 3.3% in the quarter reflecting continued strong expense management and macro unit cost continue to reduce on a year-over-year basis. Turning to Slide 28, operating earnings in Canada for the third quarter were 330 million, basically flat with 2013.

I would note that the third quarter of 2013 was the highest ever recorded operating earnings for the Canadian segment. On a year-to-date basis earnings are up 6% compared with the first nine months of 2013.

The third quarter results for Canada reflect strong performance in our core business operations, primarily from higher fee income and higher morbidity gains, partially offset by lower investment, mortality and basis change gains. Starting at the bottom of the chart, group insurance reported earnings of 125 million, a 9% increase from 2013.

This increase is primarily due to higher long-term disability morbidity gains as compared to last year. Individual insurance earnings increased 7% to 109 million, reflecting higher basis changes and tax benefits, partially offset by lower investment and mortality gains compared to the same quarter of 2013.

Wealth Management operating earnings were down 16% and this decrease primarily reflects the impact of lower basis changes, reflecting strengthening of provisions for future longevity and lower investment gains partially offset by higher fee income and favorable mortality experience. Corporate earnings in the quarter were comparable.

And as Garry referenced, the moment they go in the source of earnings analysis, expected profit on in-force business in the Canada grew 9% quarter-over-quarter. So all in all we feel a very solid quarter for our Canadian businesses.

And those conclude my comments for the accounting section.

Thanks, Dave. Now Bob Reynolds, President and CEO of Great-West Lifeco U.S., will speak for both the Great-West Financial and the Putnam results.

Bob?

Thank you, Paul. Starting with Slide 30, I would like to first announce the acquisition of J.P.

Morgan Retirement Plan Services, large plan business, was tastefully completed on August 29, 2014, making Great-West Financial the second largest recordkeeper in the U.S. with nearly 7 million participants.

RPS contributed over 200 clients, 2 million in participants and $180 billion in assets under administration. Total Great-West Financial retirement plan assets are now over $400 billion.

In addition to the RPS acquisition, there have also been significant strides made in the integration efforts to bring together the retirement businesses of Great-West Financial, RPS and Putnam Investments. Ed Murphy was named President of this combined retirement organization in early September.

Previously, Ed was Head of Defined Contribution of Putnam Investments and has held a series of senior executive roles in his 30-year financial services career. Lastly on August 30th, Empower Retirement was revealed as the new brand name for these combined businesses and is being very well received in the marketplace.

Empower will deploy its resources, experience and scale to provide the marketplace and millions of working Americans a different framework for planning and preparing for retirement, all geared towards having successful outcomes at the aggregate retirement plan and participant levels. Now moving on to Great-West Financial results for the quarter.

Slide 31, sales in quarter were $6.2 billion compared to 2013 level of $2.2 billion. 401(k) sales were $4.8 billion compared to 1.5 billion a year ago, including one large sale in the amount of $3.2 billion.

In the standard mid-market, there were 554 plan sales in total compared to 597 a year ago. This decrease in the number of plans sold was offset by higher average plan sizes.

Public non-profit sales were up $268 million compared to Q3 2013. This increase was primarily due to four large plan sales in the current year for 220 million.

Annuity sales by our institution partners are up almost $80 million compared to a year ago. In the individual markets, total sales were 640 million, up 147% from 2013, driven by strong COLI-BOLI, retail bank and IRA sales.

Revenue premium in quarter was $1.7 billion, up 2% from 2013 due to higher individual market sales. Individual markets is up 78% primarily due to the sales increase in the COLI-BOLI and the financial institutions product.

Turning to Slide 32, fee income in the quarter was $170 million, up 10% from 2013. Variable fees in total, the bottom two parts of the bar, were up $14 million or 15% due in part to the higher equity market levels, the S&P average level was up 18%, higher asset levels from net cash flow from the last 12 month sales, and the inclusion of $2 million of variable fees from RPS.

Administrative fees were down 2 million year-over-year. There were increases of $12 million due to the inclusion of RPS participants and increase of 1 million due to the growth in existing Great-West Financial participants and an offsetting reduction in fees of $15 million or the elimination of recordkeeping fees charged between Great-West Financial and Putnam.

Individual market fees were up $4 million or 24% due to strong sales and asset growth. Turning to Slide 33, operating expenses in quarter were $127 million, up $6 million or 5% from 2013.

Within retirement services, there were increases of $12 million for the ongoing RPS operating expense. This increase has been substantially offset with a reduction to expenses for the elimination entry for the billing between Great-West Financial and Putnam.

The acquisition and integration expenses related to the RPS transaction was $7 million total in quarter and are included in the acquisition expenses in copper corporate bars within a chart. Moving to Slide 34.

Net income in quarter was $105 million, up 22 million from 2013 level of $83 million. The increase is driven by higher basis changes in the current year.

Growth in the business is contributing to higher fee income, offset with higher expenses. In retirement services, earnings were $48 million, up $6 million or 14% from 2013.

The increase is primarily due to basis changes in the current period. Strong growth in the business is contributing to higher fee income, offset by higher expenses, as discussed earlier.

In individual markets, earnings of $61 million were up 21 million from the last year’s level of 40 million primarily due to higher basis changes in the current period. The corporate area has a loss of $4 million compared to a gain of 1 million in 2013.

The Decrease in earnings is due to the inclusion of approximately $7 million and acquisition and integration expenses in the current period. I’m now going to switch over to Putnam.

Turning to Slide 35, ending assets under management of $157 billion increased 12% from Q3 2013 due to the impact of favorable market conditions, investment performance and positive net asset inflows. Average assets for the quarter were $158 billion, an increase of 14% for the same period a year ago.

With respect to Putnam’s investment performance, for the five years ended September 30, 2014, 86% of Putnam’s funded assets are above the Lipper median compared to just 36% for the five years ended December 31, 2008. Mutual fund new sales in the quarter were $5.4 billion, which while robust, is a decline of 5% from the same period a year ago.

In-quarter net inflows were $1.1 billion, a decline of 400 million for a year ago. Both sales and inflow in the same period a year ago were near their highest levels since 2001.

The strong sales inflows continue to be driven by our results in retail advisory sold channel which includes warehouses, regional broker [indiscernible] and registered investment advisors. Putnam’s sustained performance and efforts in the advisory sold channel continue to drive strong sales and year-to-date September net flows of $5.2 billion are ahead of 2013's full year results of $3.7 billion.

The institutional channels experienced net inflows of 200 million, which is an increase of 600 million from the year ago quarter and 1.7 billion from the previous quarter. Turning to Slide 36, Putnam’s fee income in quarter was $236 million, an improvement of 21% from the same period a year ago due to the impact of higher average assets under management and mix on Putnam’s investment management fees.

Increased service and sales based fees and improved performance fees also drove growth in the period. Turning to Slide 37, Putnam’s free tax operating margin for the quarter of 5.9% was a significant improvement over the same period a year ago.

The year-over-year increase in expenses which generally driven by an increase in compensation cost of $10 million due to sustained superior investment performance and higher sales of asset related expenses of $5 million. Putnam’s after tax core earnings was a loss of 5 million as a result of a one time true-up tax expense of $13 million related to Putnam’s seed capital investments in foreign funds.

Ongoing tax related to these investments is not expected to be material. Excluding the impact of the tax true-up described above, Putnam’s core earnings in the quarter were $8 million, an $8 million increase from the same period a year ago.

Turning to Slide 38, Putnam’s contribution to Lifeco is a loss of 8 million for the quarter. Excluding, the impact of the tax true-up, net earnings of $5 million is a $14 million improvement compared with the same period a year ago.

Thank you, Paul.

I’ll now ask Arshil Jamal to speak about our European operations results.

Thank you. Starting on Page 40, Q3 sales in Europe were $2.9 million, a decrease of 12% from the third quarter of 2013 at actual currency exchange rates and a decrease of 17% in constant currency.

UK sales during the quarter dropped by 6% from a year ago. We had strong sales growth in our offshore wealth management business, but this was more than offset by a 56% decrease in UK payout annuity sales.

As Paul noted, the reduction in UK payout annuity sales this quarter reflects the continuing impact of the potential changes that were announced in the 2014 UK budget earlier this year. And I would note that the full effect of these changes won’t begin to take effect until April 2015.

Irish Life contributed to tails fee income, expense and earnings results for the full quarter this year so we have 18 extra days of contribution of Irish Life this quarter compared to the same quarter last year. We had a strong sales quarter in Ireland across each of our retail, corporate and fund management businesses and we recorded over €1 billion of gross fund management tails in Ireland during the quarter.

Despite a strong performance, Irish sales decreased by 17% in local currency terms as we have benefited from an exceptionally high level of institutional client gross fund sales last year. Compared to the second quarter, sales in Europe increased by CAD99 million.

In the UK, the higher level of offshore investment fund sales more than offset the 35% reduction in payout annuity sales. And sales in Ireland increased compared to the second quarter of the year in local currency, but fell modestly in Canadian dollar terms.

Q3 premiums and deposits of 4 billion are 500 million lower from the third quarter of 2013. Premiums and reinsurance decreased by 200 million due to the commutation of a health reinsurance treaty earlier this year, while the lower premiums and deposits in Ireland and the UK were largely driven by the lower sales results.

Turning to fee income on Page 41, Q3 fee income was CAD289 million, up 7% from the 269 million level that we reported in the third quarter of 2013. In constant currency, fee income was up by 1% from the third quarter of 2013, reflecting a higher contribution from Irish Life, offset by lower level of surrender fee in the UK.

Compared to the second quarter of this year, fee income decreased as a result of currency exchange movements and again from a lower level of surrender fees in the UK. On Page 42, Q3 operating expenses were CAD193 million compared to 215 million in the same quarter of last year.

Included in the Q3 2013 operating expenses were 61 million of pretax restructuring and acquisition cost related to Irish Life, while the current quarter expenses include 7 million of pretax Irish Life restructuring costs. Excluding these items, underlying operating expenses were CAD186 million this quarter versus 154 million in the third quarter of 2013, primarily reflecting the additional days of Irish Life operating expenses that are included this year.

We also had an increase in Solvency II and other project related expenses this quarter compared to the same quarter last year. Compared to the second quarter of this year, underlying operating expenses, excluding restructuring costs, decreased by 70 million, reflecting currency exchange rate movements and the achievement of expense synergies in Ireland.

The Irish Life integration continues to progress well. To-date we have achieved just over €35 million of expense synergies and we have incurred just over €36 million of integration costs.

In percentage terms, we have achieved 88% of our targeted expense synergies and utilized 60% of our restructuring costs budget. Irish Life also contributed very strongly to this quarter’s earnings.

On a year-to-date basis, Irish Life has contributed a CAD191 million to operating earnings, ahead of the targets that we set for ourselves at the time of the acquisition. And finally, on Page 44, Q3 earnings for European reinsurance were CAD259 million, up 130 million from the level that we reported in the third quarter of 2013.

Again, this result includes 6 million of after-tax Irish Life restructuring costs this quarter compared 60 million of after-tax restructuring and acquisition costs in the same quarter last year and 8 million of after-tax restructuring costs that were included in the second quarter of this year’s results. Excluding these items, operating earnings during the quarter were CAD265 million, up 76 million from the 189 million level that we reported during the third quarter of 2013.

Earnings were up CAD41 million in Ireland, reflecting the additional 18 days contribution from Irish Life this quarter along with favorable contributions from actuarial liability basis changes, investment experience and expense payments. Earnings were up 33 million in the UK as earnings benefited from positive investment experience and the favorable impact of basis changes which more than offset the lower contribution from pair annuity new business.

Compared to the second quarter of this year, operating earnings were down 13 million in the reinsurance segment and up 25 million in Ireland. Earnings in the reinsurance segment reflected a lower contribution from new business activity this quarter compared to the second quarter of this year.

As well, this quarter’s reinsurance results was negatively impacted by actuarial liability basis changes. Irish Life’s earnings during the quarter benefited from those basis changes which were favorable, along with improved morbidity experience and lower expenses compared to the second quarter of this year.

And in the UK, a favorable impact of third quarter basis changes was offset by lower new business gains and less favorable mortality experience compared to the second quarter of this year.

Thanks, Arshil. I’ll now turn it back to the operator so we can take questions from analysts.

Operator?

My first question is for Arshil. Just, I may have missed this in your commentary, I apologize.

But the Irish Life contribution plan for this year, looks like most of that came this quarter, $20 million to $30 million quarter-over-quarter pickup in Irish Life earnings. Is there anything unusual in that number or is there some real organic growth?

And if it is, what was driving that?

So, we have had a fair degree of organic growth that’s been helping the results all through the year. So we’ve been cash flow positive in our fund management businesses and in our corporate businesses and we’ve been increasing market share in our retail business and our expense levels as we continue our integration activity having falling through the year.

So all of those things are good underlying progress and the external environment is also recovering and we’re seeing that the economy expands and penetration also expands. So those are all good development that are sustainable and ongoing.

During this period, during the third quarter exceptionally, we have favorable actuarial liability basis change impacts and we also had a particularly strong contribution from our investments experienced results. We had some trading activity in our surplus accounts related to French government bonds that generated OCI gains.

And we also had a recovery, while it’s earlier in this year, morbidity experience were under a long-term disability block. So that’s a relatively small block in Ireland and we have seen some volatility in the results there.

So earlier in the year, the LTE block in Ireland was a bit of a drag and in the third quarter we saw that improve and turn back around. So there were a number of factors there, but we’re very happy with the full year performance of 191 million and we’re looking forward to having the expense synergies that we’re achieving this year and get fully reflected for the full year in our earnings next year.

And are those three items that were somewhat unusual, what was the total roughly basis change, the investment experience, the recovery?

I think cumulatively, those three things were on the order of between CAD25 million and CAD30 million after tax.

While I've got you, just want to ask if there's been any change to our outlook for the payout annuity sales? There were some updates to the budget at the end of September, including removing of the tax on pension thoughts completely.

Is that – and a few other items -- are you still anticipating the decline of sales in the 50% to 70% range which we saw this quarter?

I think we’ve been highlighting -- I think the consensus view is that the market will fall on the order of 75% by the time the changes fully take effect next year and I think we’ve indicated that our results today have been consistent with that. So we saw some slowdown in Q1 almost immediately after the budget came in and that’s all through by reductions in Q2 and into Q3.

And our Q3 result was 56% reduced compared to the same quarter in the prior year. So, certainly we’re expecting the market to be significantly smaller as the full impact of the changes take hold.

But then we’re cautiously optimistic that we’ll see growth from that reduced level going forward.

I guess my next question, actually a quick one for Mr. Reynolds there.

Robert, can you just tell me what the profitability of J.P. Morgan RPS business is on an annual basis?

Well, we’re in the process of integrating that business. For the first month we had 14 million of fees and 12 million in expenses.

But we’re working through that whole process right now, because over time we’re bringing it on to the Great-West platform. So it's a work in progress.

And when you do get it on the Great-West platform, what’s your expectation of annual?

That’s still being worked on.

And my last question for Paul, just on the capital, your MCCSR is solid. You’ve got lots of holdco cash.

Your leverage ratio is a little bit elevated, but kind of trending down organically. I’ve always kind of thought, like some comments you’ve made in the past made it sound like you were potentially looking at debt repayments to reduce leverage.

I am wondering if that's still -- or if that is the case, we might see some of those activities or you’ll just let the leverage ratio go down organically and use your excess capital to fund business growth instead or maybe some solid acquisitions?

Range of different opportunities. Obviously, we love the strong capital position.

I will let Bill speak to the whole fee leveraging and the starting point. Bill?

I guess as you observed, the regulatory capital positions are strong. The cash position at the holding company is also quite robust.

And that gives the company a number of options to consider with respect to deployment of that capital. And as you observed, our leverage ratio is a little elevated from I think where we’d like to see it and where some of the rating agencies would like to see it.

There are some instruments that we can get out the deals at. So we are currently in the processing of assessing that.

Garry, your discussion of strain, I guess you noted a number of moving parts including more Ireland and less UK in terms of the business mix. Is the level that was reported this quarter something closer than to what we should expect going forward, especially given the less UK seems to be the trajectory that it's headed on?

Obviously any given quarter is going to depend on the circumstances right in the quarter. I would notice, I did note in the comments that the contribution in Canada was lower than last year.

This quarter we would have less new business investment gains than we would typically have, probably 10 million less than our run rate whereas last year we probably had 10 million more than our run rate. So that is a 20 million swing year-over-year.

So the Europe I think is a bit more reflective, the Irish Life coming on. Again, those are very strong sales.

I would -- given that sales level, as the integration synergies come more online, that would tend to improve the strain number because we will reduce those acquisition costs, so a bit of a potential push there. In the UK, we are seeing a lower level, this year’s new business gain.

We still have new business gains in the UK payouts, but are on a 5 million level versus a 15 million or 16 million number last year, all those figures being pretax.

And Arshil, when I look at the payout annuities numbers and you mentioned you figured that it will drop and then hopefully grow from there. Is there a prospect at some point if this becomes a close walk of business, is there a level of unit costs at which you would have to change pricing?

I mean are there any considerations to a more substantive action than what’s been taken to date or is it still too early to have that kind of conversation?

We have from an expense perspective already have the task that’s associated with the new business processing in our annuity shopping in the UK. And I would note the expenses are relatively small proportion of the overall charge to the clients on payout annuities.

So I don’t think that we get back into a closed box situation. So as long as the market and the marketplace and as long as the investment opportunity are there, we intend to participate rigorously in the payout annuity market in the UK going forward.

And just one housekeeping. Thank you for that.

One quick housekeeping question and Bill, you probably answered this in the past and I apologize. But when I see financing expenses go positive on the Putnam side, can you just explain what that is, please?

What there is, is there is – part of the acquisition plan into Putnam involves tax favored structures and we hold reserves against those and once a year we essentially clean audit and that releases some of those reserves, it mitigates the in-quarter fees. You'll notice that that occurred in the third quarter in 2014 and was repeated from the third quarter of 2013.

But it doesn’t change sort of the annual look at this?

No, it doesn’t change it overall. The number of questions is about [indiscernible].

Just a question regarding your Canadian business. You mentioned you had another strong quarter for PAR Life Insurance sales.

Two questions on that. Some of your peers don’t look at PAR in quite the same way as I imagine you guys do.

Can you give us a brief overview of why that product is profitable for Great-West? And then talk about why demand has shifted into PAR and how sustainable that is?

The PAR marketplace is Canada is not as competitive as other individual insurance lines in Canada, the universal life or the term, there is not as many players. So that’s a positive attribute that we see.

We have a very large PAR block between Great-West Life, London Life is the largest and Canada Life is certainly growing. So we certainly see significant benefits from scale and the leveraging of the expenses that we allocate to the PAR Life help us certainly in developing our distribution channels, our distribution reach.

Generally we are happy with the PAR transfer from a earnings standpoint. It supports our capital.

There's just a lot of positives that we see with PAR insurance and we are very pleased with it. We don’t have all our eggs in the PAR basket.

We are strong in the other areas as well. But we like PAR and we like the fact that there aren't very many players in the marketplace and that allows us to grow with these good results.

Does your scale give you a – is your scale basically a barrier to entry?

I would think that it certainly helps us in that area.

And why are people flocking to this product?

I think that the product offers a stability of return over the long-term. And I think what people have gone through in their investments over the past five years, six years , seven years, eight years, it just causes unease and concern.

When you look at the track record of PAR and the returns that those people get, it’s really quite attractive. So think the stability of return is something that is of appeal and it’s tax-effective as well.

So, it’s really a wonderful product.

Yeah, it's Paul. I might also add, Dave, that that product also features quite favorably in kind of the state planning, high net worth markets.

And I think what that does is it gives our advisors access to clients to want to acquire other products and services from us. So it’s not just on its own, it’s not just an arrow in your quiver, I think it’s a really important one if you really want to access that high net worth market.

A question maybe for Paul or for Bill. There are a lot of puts and takes this quarter.

It’s kind of difficult to pull them all together and making assessment about the sustainability. When you look at the $0.70 number this quarter, up materially from just last quarter, I think, how do you look at it?

Does this seem like a normal quarter for Great-West Lifeco or do you think maybe you’ve over-earned potential at least in the near term?

Bill, I’ll let you take the first.

I think when you look at it, it’s a good result. When we look at the fundamentals within our business, things like mobility, mortality, fundamentals of the business are performing well.

The sales results were very strong. There wasn’t a lot of noise from investment, the contribution, in terms of credit defaults or quality provinces in the portfolio.

So, I think we look at the fundamental results as being a very strong operating result. I’d also add to that, the 5.9% margin in our pretax core in Putnam which is as strong as we've had for a while.

If you start looking at the one-offs, there's a fairly significant contribution from basis change that Garry spoke to on the [indiscernible] side. On the other hand, we've got trading gains from quarter-to-quarter and there was a lower contribution from trading gains as well.

So there has been a puts and takes there. We did get a bit of a push from tax.

We have a lower tax rate particularly in the European segment and that was a result of the mix of some of the basis changes that we did. On the other hand we put back about 13 million in Putnam in tax in the quarter.

So it's a mixed view I think on the one-offs, but I think the fundamental operating result was quite strong.

I would add to that. I think it’s a – we do tend to have – we complete our actuarial studies in the second quarter and we tend to take any action.

So we’re talking about the point in the cycle when that can either be a contributor or it can be a drag if our studies indicated different things. But fundamentally, I go back to what Bill said that we’ve had really strong and solid mortality, morbidity, we’re managing our expenses very well and I think we have solid investment performance.

So the underlying trends are there. And then this is the natural point where we do complete reserve studies.

So, maybe it will be fair to say that those reserve studies contributed slightly to the quarter, but you’re totally content with the underlying result?

I think that’s a fair assessment. Just one last comment I would make is that Irish Life was a bigger contributor.

Like, so that business was coming on stream, but that business will be there going forward. Unlike any acquisition, it’s coming on stream and we’re learning about it, we're getting good insight into it.

So, it's a big differential year-over-year for us.

I’m sorry, just net-net on Putnam, you would say Putnam was clearly, excluding the tax issue, was clearly in positive territory this quarter. Would it be fair to call it above $5 million?

I think that’s a fair assessment.

I was just going follow up on that tax thing. That was the question I was actually going to say.

The tax rate seemed to be quite 15.5% and I think you've probably been running closer to something like 20%. What should we be thinking about in terms of the tax rate going forward?

And I've got a couple of follow-ups.

I wouldn’t necessarily adjust just a fall of the [indiscernible] 15% this quarter, 19% last quarter, 20%, 17%, 14%. So 15% this quarter probably would play against 14%.

It varies pretty much by the operating division. If you look at Canada, it was 17% this quarter versus 17% year-over-year quarter.

More than we talked about is in Europe, this quarter we were down 5%, which was a bit of a gain, whereas we historically were around only 13%, 14%, 12%. There may be a slight bias in the quarter.

But the issue that we're trailing in Europe was a bit of an anomaly in that we were strengthening the reserves within our reinsurance segment and we were doing it in different tax jurisdictions. So what we ended up with was -- in effect we strengthened reserves or our target earnings in the U.S.

35% tax jurisdiction and we actually had gains or weakened our reserves in Ireland where we’re operating in the 5.5% tax jurisdiction. And the net of those two movements in the quarter affected the tax by about $25 million, CAD27 million.

So I am going to argue that that was kind of an unusual anomaly. We reserved after all the actuarial was going to achieve in the quarter.

So it's really going to be [indiscernible] in Putnam and we took away half of that.

Okay, thanks. And just remind me on Slide 38 what the other -- I forgot what the other part was in terms of the Putnam contribution to Lifeco.

The other was largely – you'll remember the share-based compensation, it is covered off in the note. So you'll recall we use liability accounting and so that was driving those very large green markers particularly in the fourth quarter of '13 and the fourth quarter of '14, numbers were at the bottom of the page.

It changed the basis of accounting and so there is another smaller items now that go through other, but that is removed. And the year-over-year comparison, just to complete the thought, in the minus 10 last year, I think was most 7 million – yeah, it's actually $7 million versus there is only about 1 million in the current quarter this year.

So what’s the other three? Is that’s just the base accounting of it?

So amortization of intangible assets during the acquisition is another piece to the puzzle and it truly displays [Multiple Speakers].

And if that all just continues, we should be thinking of this number like running in the four to five range?

I would say that’s probably true. The shift -- there is $1 million of share-based compensation adjustment that will fade out over the next couple of years.

And then the financing expenses should be running negative seven on top of that, is that -- or is it – was it just you will look at that stuff [Multiple Speakers] going forward, right?

Yes, we expect those to be running 7 million or 8 million a quarter on a normal basis.

And it wasn't an anomaly? That was a positive this quarter?

Should we just – was that…

As I was explaining earlier, we hold some tax reserves opposite those financings and each year we clear a year of tax and so we free up those reserves. So on that basis we kind of have an incoming pickup of about 7 million and you’ll see that that happens in the same quarter last year as that of this year.

Okay. So maybe on an – it gets lumpy over the quarter, but it would be on an annual basis, is that right?

That’s correct.

So it may have skewed the results this quarter, but we should be looking at on an annual basis?

Yes.

And then finally questions for Garry, just in terms of the MCCSR. Things would be up nicely quarter-over-quarter and I am just trying to get a handle as to what you think the -- and that’s despite I think headwinds associated with what might have been interest rates.

So I am trying to think what -- should we be looking at five points increase in the MCCSR each quarter? Why is it going up so much just in the quarter?

I didn't think that this company could generate MCCSR capital that rapidly.

There's a couple of things this quarter. It really tends to go up each quarter as the [indiscernible] relative to the dividend we have with the regulated insurance companies.

So, this quarter we tended to – we guided one from strong earnings growth within the Great-West Lifeco group of companies. So that was the strength from the European and Canadian operations came through there, i.e.

things like the Irish Life health performance is going to help. And also the other thing, it's a little more subtle, but it does occur, which is the mix of business.

So some of our businesses are more capital intensive than others. And so for example you know we have very strong PAR sales.

PAR just doesn’t attract the same capital as some of the non-PAR contracts. So, the mix of business combined with the strong earnings happen to have slightly higher this quarter, but it will tend to go up each quarter.

And is there any way we could -- do you think of how much we should go up a quarter, should it go up a couple of points a quarter or is this just a little bit more than…

That's a bit of a guess and I hate to guess. In terms of our our quarter, it wouldn't surprise me a bit [indiscernible].

First a numbers question, I want to make sure I got this right, for Arshil or Bill. You mentioned the low tax rate in Europe this quarter and I wanted to make sure I tie that in with the Irish Life increased earnings.

Was the tax savings specifically related to that business or is that non-Irish Life portion of the operation?

The tax rate of Irish Life is 4.5% and that will occur on our rate of earnings in the normal course. The [toughest] item we were talking about this quarter occurred within our Reinsurance segment which operates in many global jurisdictions that has different tax rates.

So that was basically the difference between business that we had on the Reinsurance segment in the United States of the 35% tax rate and Reinsurance business that we had in Ireland at 12.5% tax rate.

So in other words, a lot of things went well for Irish Life this quarter to get the 80 plus million but taxes wasn’t part of that story?

That’s correct.

And then my other question is related to the flows performance, the net flows performance in Putnam. It's obviously been much better as of late and you’ve certainly discussed the investments the company has made in both distribution and performance.

We have heard from some other asset managers about the impact the shift in market conditions as quickly had the flow outlook and I was hoping you could talk to us about maybe what you’ve seen in the last little while in terms of flows? And whether you’re expecting any kind of change in the momentum that Putnam has been generating in terms of new business?

I think we’ve benefited in flows both on equity, fixed income and our global asset allocation products. We’ve had excellent performance across the board.

So we’ve participated in all asset categories. Going forward, we look to see flows continue to increase because of our, as you know, in [indiscernible] we were the second top performing issue fund family over the last five years and that performance record continues.

And I think by consistently performing very, very well, it will just continue to generate more flows. So we’re looking for continuing flows to be very positive.

Thank you very much, operator. I’d like to thank the analysts and other listeners in for participating today.

We appreciate you taking the time. And we look forward to talking to you at the end of the fourth quarter.

Thank you very much.