Shareholders attending Great-West Life's annual meeting in Winnipeg on Thursday were greeted with the surprise news of a major management change.
Longtime CEO Ray McFeetors, 64, has become chairman of the board, succeeding longtime chairman Robert Gratton. The announcements were made with the two titans of the industry visibly choked up.
Raymond McFeetors has been appointed chairman of the board.
"This was a lot easier to write than it is to say," said McFeetors as he struggled unsuccessfully to hold back tears while acknowledging Gratton's contributions to the company. "One of the characteristics of great companies is their ability to manage and initiate major change."
The company's chief actuarial officer, Allen Loney, will take over from McFeetors in charge of the holding company, Great-West Lifeco, and the Canadian insurance operations -- Great-West Life Assurance Co., London Life and Canada Life.
"Succession has to happen," said Gratton, who has been the chief representative on Great-West Life's board for the controlling shareholder, Power Financial Corp. ,for 18 years. "The time for change is right. We have the skills and strengths to grow the business and profits faster than the competition."
McFeetors is expected to be voted onto the board of Power Financial Corp. next week and become its vice-chairman.
The timing of the senior management reorganization was also the occasion of the release of a relatively weak first-quarter result for the country's second-largest insurance company.
Not counting $118 million of non-recurring items, the company's profit rose a modest four per cent to $536 million. Currency exchange issues cost the company about $46 million in lost profits and weak equity markets meant individual segregated fund deposits were down 25 per cent and group deposits were down 10 per cent.
The company's total assets under administration at the end of March was just shy of $400 billion at $398.1 billion, up $4 billion from the end of 2007. But increasing redemptions and poor equity markets meant assets at Boston-based Putnam Investment Trust, acquired by Great-West Life in August, were down $10 billion from the fourth quarter of 2007.
"All asset managers, given the market environment, are struggling with net outflows," McFeetors said. "There is more volatility in asset management than there is insurance. We know that. But we also know there is lots of demand in asset management."
McFeetors said the addition of Putnam and its close to $200 billion in assets under administration was made at a bargain price with the knowledge it would require intense management attention to make it more profitable.
"This is an investment you do not measure quarter to quarter or year to year," he said. "You have to look back to over a decade to see how you did. It is a longer cycle."
With its international operations based out of Winnipeg, Great-West Life is the third-largest private-sector employer in Winnipeg with more than 2,000 employees, mostly based in a two-building head office campus on Osborne Street.
New CEO Allen Loney declined to be interviewed on Thursday. Loney is a longtime Canada Life executive (Great-West Life acquired Canada Life in 2003) and is based in Toronto. Early indication is he will remain based in Toronto.
In other management changes announced Thursday, Bill Acton was named president and CEO of Canada Life Capital Corp., Great-West Lifeco's European operation. Mitchell Graye was named president and CEO of the U.S. operation, Great-West Life & Annuity.
Winnipegger Paul Mahon was named president and chief operating officer for Canada replacing Denis Devos who is retiring.
Shares of Great-West Lifeco closed up 31 cents on Thursday to $31.60. Its 52-week high was $37.60.
martin.cash@freepress.mb.ca
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