Great-West set to increase share of segregated fund market

(March 26, 2003) Great-West Life’s proposed acquisition of Canada Life would strengthen the Winnipeg-based insurer’s already dominant position in the country’s segregated fund marketplace, according to a report by research firm Investor Economics.

Great-West Life (GWL) is Canada’s seg fund market leader, with $10 billion in assets under management as of December 31, 2002. Adding Canada Life’s seg fund assets of $2.5 billion would increase the GWL book by 25%, to $12.5 billion.

“Market share would rise from 26% to 32%,” Investor Economics says. “If all funds were kept intact, GWL’s lineup would expand by 78%, from 112 to 199.”

The Canada Life takeover would have the biggest impact in the international equity arena, boosting GWL’s market share to 27% from 15% “thanks to Canada Life’s stronger position in European and country-specific funds,” says the report.

GWL would also gain a presence in the international balanced fund and international specialty fund categories, where it currently has no products, and would become a leader in global bond seg funds, Investor Economics notes.

In fact, U.S. equities would be the only major seg fund class where GWL would not have a top-three standing, the report concludes.

GWL rival Manulife is ranked second in the segregated fund market, with $6 billion in assets.

Last month, Great-West announced a friendly $7.3 billion takeover bid for Canada Life, trumping an earlier hostile offer from Manulife. The deal is expected to close in the third quarter of this year.

Great-West says it plans to run Canada Life as a subsidiary, maintaining Canada Life’s independent distribution channel, branding and products. GWL employed a similar strategy when it purchased London Life in 1997.

What, if any, will Great-West’s acquisition of Canada Life mean for you and your industry? Good things or bad? Post a message to the “Free for All” forum of the Talvest Town Hall on Advisor.ca on this topic or any other that affects your industry.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca