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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 2004
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OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transaction period from to
-------------------------------- ----------------------------------

Commission file number 333-64473
----------------------------------

GWL&A FINANCIAL INC.
- ----------------------------------------------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Delaware 84-1474245
- --------------------------------------------------------------------- ---------------------------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)


8515 East Orchard Road, Greenwood Village, CO 80111
----------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)

[303] 737-4128
----------------------------------------------------------------------------
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.

Yes X No
----------------- -----------------

Indicate by check mark whether the registrant is an accelerated filer as defined in 240.12(b)-2 of this chapter.

Yes No X
----------------- -----------------

The public may read and copy any of the registrant's reports filed with the SEC at the SEC's Public Reference Room,
450 Fifth Street NW, Washington DC 20549, telephone 1-800-SEC-0330 or online at (http://www.sec.gov).

As of August 1, 2004, 50,025 shares of the registrant's common stock were outstanding, all of which were owned by
the registrant's parent company.







TABLE OF CONTENTS


Part I FINANCIAL INFORMATION Page
-----------

Item 1 Financial Statements 3

Consolidated Statements of Income 3

Consolidated Balance Sheets 4

Consolidated Statements of Cash Flows 6

Consolidated Statements of Stockholder's Equity 8

Notes to Consolidated Financial Statements 9

Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations 13

Item 3 Quantitative and Qualitative Disclosures About Market Risk 22

Item 4 Controls and Procedures 22

Part II OTHER INFORMATION 23

Item 1 Legal Proceedings 23

Item 6 Exhibits and Reports on Form 8-K 23

Signature 23



PART I FINANCIAL INFORMATION

ITEM 1 FINANCIAL STATEMENTS



GWL&A FINANCIAL INC.

CONSOLIDATED STATEMENTS OF INCOME
[Dollars in Thousands]
======================================================================================================================
[Unaudited]
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
REVENUES: 2004 2003 2004 2003
--------------- --------------- --------------- ---------------

Premium income (net of
premiums ceded totaling
$112,328, $35,689,
$440,741, and, $44,240) $ 160,684 $ 233,693 $ 202,934 $ 507,596
Fee income 230,623 206,601 441,179 422,475
Net investment income 238,362 206,116 519,601 420,748
Net realized (losses) gains on
investments (20,048) 24,535 17,469 50,850
--------------- --------------- --------------- ---------------

609,621 670,945 1,181,183 1,401,669
--------------- --------------- --------------- ---------------
BENEFITS AND EXPENSES:

Life and other policy benefits
(net of reinsurance recoveries
totaling $104,500, $12,006,
$192,915, and $22,410) 228,268 189,274 440,433 376,681
(Decrease) increase in reserves (61,465) 1,157 (263,061) 54,169
Interest paid or credited to
contractholders 94,855 129,914 211,443 244,591
Provision for policyholders' share
of earnings on participating
business 1,962 3,285 6,551 5,646
Dividends to policyholders 20,469 15,726 57,475 40,529
--------------- --------------- --------------- ---------------
284,089 339,356 452,841 721,616

Commissions 47,641 40,207 98,950 80,107
Operating expenses 191,032 164,016 386,802 335,305
Premium taxes 7,696 8,554 14,963 15,216
--------------- --------------- --------------- ---------------
530,458 552,133 953,556 1,152,244
--------------- --------------- --------------- ---------------
INCOME BEFORE INCOME
TAXES 79,163 118,812 227,627 249,425

PROVISION FOR INCOME
TAXES:
Current 26,611 34,281 88,702 61,354
Deferred (2,216) 5,180 (13,782) 22,781
--------------- --------------- --------------- ---------------
24,395 39,461 74,920 84,135
--------------- --------------- --------------- ---------------

NET INCOME $ 54,768 $ 79,351 $ 152,707 $ 165,290
=============== =============== =============== ===============




See notes to consolidated financial statements.




GWL&A FINANCIAL INC.

CONSOLIDATED BALANCE SHEETS
[Dollars in Thousands]
======================================================================================================================

June 30, December 31,
ASSETS 2004 2003
-------------------- ---------------------
[unaudited]
INVESTMENTS:

Fixed maturities available-for-sale, at fair value
(amortized cost $12,320,586 and $12,757,614) $ 12,433,779 $ 13,136,564
Mortgage loans on real estate (net of allowances
of $27,889 and $31,889) 1,693,834 1,885,812
Equity investments, at fair value (cost $525,951 and
$407,797) 556,824 433,259
Real estate 7,837 7,912
Policy loans 3,499,259 3,389,534
Short-term investments, available-for-sale
(cost approximates fair value) 1,124,025 853,716
-------------------- ---------------------


Total investments 19,315,558 19,706,797

OTHER ASSETS:
Cash 153,031 188,383
Reinsurance receivable
Related party 1,093,786 1,312,139
Other 310,740 320,744
Deferred policy acquisition costs 307,511 280,672
Deferred ceding commission 268,535 289,359
Investment income due and accrued 142,598 165,417
Amounts receivable related to uninsured accident
and health plan claims (net of allowances of
$29,138 and $32,329) 131,834 129,031
Premiums in course of collection (net of allowances
of $8,871 and $9,768) 53,388 75,809
Deferred income taxes 190,042 122,162
Other assets 954,741 754,160
SEPARATE ACCOUNT ASSETS 13,390,351 13,175,480
-------------------- ---------------------






TOTAL ASSETS $ 36,312,115 $ 36,520,153
==================== =====================

(continued)


GWL&A FINANCIAL INC.

CONSOLIDATED BALANCE SHEETS
[Dollars in Thousands]
======================================================================================================================

June 30, December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 2004 2003
-------------------- ---------------------
[unaudited]
POLICY BENEFIT LIABILITIES:
Policy reserves $ 18,275,700 $ 18,650,078
Policy and contract claims 370,858 418,930
Policyholder' funds 367,905 368,076
Provision for policyholders' dividends 85,727 89,121
Undistributed earnings on participating business 183,295 177,175

GENERAL LIABILITIES:
Due to GWL 28,759 30,950
Repurchase agreements 466,871 389,715
Commercial paper 97,269 96,432
Junior subordinated debentures 180,449 180,449
Other liabilities 992,104 1,056,534
SEPARATE ACCOUNT LIABILITIES 13,390,351 13,175,480
-------------------- ---------------------
Total liabilities 34,439,288 34,632,940
-------------------- ---------------------

STOCKHOLDER'S EQUITY:

Preferred stock, $1 par value, 50,000,000 shares
authorized; 0 shares issued and outstanding
Common stock, $1 par value; 500,000 shares
authorized; 50,025 shares issued and outstanding 250 250
Additional paid-in capital 730,831 729,397
Accumulated other comprehensive income 7,172 127,811
Retained earnings 1,134,574 1,029,755
-------------------- ---------------------
Total stockholder's equity 1,872,827 1,887,213
-------------------- ---------------------










TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 36,312,115 $ 36,520,153
==================== =====================

See notes to consolidated financial statements. (Concluded)


GWL&A FINANCIAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
[Dollars in Thousands]
======================================================================================================================
[Unaudited]
Six Months Ended
June 30,
---------------------------------------------
OPERATING ACTIVITIES: 2004 2003
-------------------- ---------------------


Net income $ 152,707 $ 165,290
Adjustments to reconcile net income to net cash
provided by operating activities:
Earnings allocated to participating policyholders 6,551 5,646
Amortization of investments 26,408 (33,728)
Net realized gains on investments
and write-downs of mortgage loans and real estate (17,469) (50,850)
Depreciation and amortization 32,873 17,907
Deferred income taxes (13,782) 22,781
Changes in assets and liabilities:
Policy benefit liabilities (167,822) 256,797
Reinsurance receivable 108,482 12,070
Accrued interest and other receivables 35,875 22,161
Other, net (132,379) (35,636)
-------------------- ---------------------

Net cash provided by operating activities 31,444 382,438
-------------------- ---------------------

INVESTING ACTIVITIES:

Proceeds from sales, maturities, and redemptions
of investments:
Fixed maturities available-for-sale:
Sales 6,025,832 1,887,963
Maturities and redemptions 1,125,872 4,154,422
Mortgage loans 177,231 77,751
Real estate 3,000
Common stock 46,130 7,638
Purchases of investments:
Fixed maturities held-to-maturity (6,984,793) (6,248,831)
Mortgage loans (8,003)
Real estate (4) (496)
Common stock (158,906) (7,948)
Other, net (158,967) 311,847
-------------------- ---------------------

Net cash provided by investing activities 64,392 185,346
-------------------- ---------------------










(continued)


GWL&A FINANCIAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
[Dollars in Thousands]
======================================================================================================================
[Unaudited]
Six Months Ended
June 30,
---------------------------------------------
FINANCING ACTIVITIES: 2004 2003
-------------------- ---------------------

Contract withdrawals, net of deposits $ (159,102) $ (265,035)
Due to GWL (2,191) (7,800)
Dividends paid (47,888) (45,699)
Commercial paper borrowings, net 837 5,387
Repurchase agreements borrowings (repayments), net 77,156 (135,279)
-------------------- ---------------------

Net cash (provided by) financing activities (131,188) (448,426)
-------------------- ---------------------

NET (DECREASE) INCREASE IN CASH (35,352) 119,358

CASH, BEGINNING OF YEAR 188,383 154,631
-------------------- ---------------------

CASH, END OF PERIOD $ 153,031 $ 273,989
==================== =====================








See notes to consolidated financial statements. (Concluded)




GWL&A FINANCIAL INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2004 [Dollars and Shares in Thousands]
================================================================================
[Unaudited]

Accumulated Other
Comprehensive Income (Loss)
--------------------------
Unrealized Minimum
Preferred Stock Common Stock Additional Gains Pension
------------------- ------------------- Paid-in (Losses)on Liability Retained
Shares Amount Shares Amount Capital Securities Adjustment Earnings Total
-------- -------- --------- -------- ---------- ----------- ---------- ---------- ---------

BALANCE, JANUARY 1, 2004 0 $ 0 50,025 $ 250 $ 729,397 $ 137,122 $ (9,311) $ 1,029,755 $ 1,887,213

Net income 152,707 152,707
Other comprehensive income (120,639) (120,639)
---------
Total comprehensive income 32,068
---------
Dividends (47,888) (47,888)
Income tax benefit on stock
compensation 1,434 1,434

-------- -------- --------- -------- ---------- ----------- ---------- ---------- ---------

BALANCE, JUNE 30, 2004 0 $ 0 50,025 $ 250 $ 730,831 $ 16,483 $ (9,311) $ 1,134,574 $ 1,872,827
======== ======== ========= ======== ========== =========== ========== ========== =========











See notes to consolidated financial statements.





GWL&A FINANCIAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[Amounts in Thousands]
================================================================================
[Unaudited]

1. BASIS OF PRESENTATION

The consolidated financial statements and related notes of GWL&A
Financial Inc. (the Company) have been prepared in accordance with
accounting principles generally accepted in the United States of
America applicable to interim financial reporting and do not include
all of the information and footnotes required for complete financial
statements. However, in the opinion of management, these statements
include all normal recurring adjustments necessary for a fair
presentation of the results. These financial statements should be read
in conjunction with the audited consolidated financial statements and
the accompanying notes included in the Company's latest annual report
on Form 10-K for the year ended December 31, 2003.

Operating results for the six months ended June 30, 2004 are not
necessarily indicative of the results that may be expected for the full
year ending December 31, 2004.

The Company has two reportable segments: Great-West Healthcare and
Financial Services. The Great-West Healthcare segment markets group
life and health insurance to small and mid-sized corporate employers.
The Financial Services segment markets and administers savings products
to public and not-for-profit employers, corporations, and individuals
and offers life insurance products to individuals and businesses. The
Company's reportable segments are strategic business units that offer
different products and services. They are managed separately as each
segment has unique distribution channels.

At June 30, 2004, the Company has a stock option plan that provides for
the granting of options on common shares of Great-West Lifeco Inc.
(Lifeco), of which the Company is an indirect wholly-owned subsidiary,
to certain officers and employees of Lifeco and its subsidiaries,
including the Company. The Company accounts for the plan under
recognition and measurement principles of APB Opinion No. 25
"Accounting for Stock Issued to Employees," and related interpretations
as allowed by FASB Statement No. 123, "Accounting for Stock-Based
Compensation" (FASB No. 123). No stock-based employee compensation cost
is reflected in net income, as all options granted under this plan had
an exercise price equal to the market value of the underlying common
stock on the date of grant. The following table illustrates the effect
on net income if the Company had applied the fair value recognition
provisions of FASB No.123 to stock-based employee compensation.



For the three months ended For the six months ended
Proforma Disclosures June 30, June 30,
------------------------------ ------------------------------
[Thousands] 2004 2003 2004 2003
------------------------------------ ------------- ------------- ------------- -------------


Net income as reported $ 54,768 $ 79,351 $ 152,707 $ 165,290
Less compensation for fair value
of stock options, net of related
tax effects 900 742 1,920 1,401
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Proforma net income $ 53,868 $ 78,609 $ 150,787 $ 163,889
============= ============= ============= =============


2. NEW ACCOUNTING PRONOUNCEMENTS

In January 2004, FASB reissued Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities" as FIN 46R. This
Interpretation addresses consolidation by business enterprises of
variable interest entities (VIE), which have one or both of the
following characteristics: a) insufficient equity investment at risk,
or b) insufficient control by equity investors. This guidance, as
reissued, is effective for VIEs created after January 31, 2003, and for
pre-existing VIEs as of March 31, 2004. In conjunction with the
issuance of this guidance, the Company conducted a review of its
involvement with VIEs and confirmed it does not have any investments or
ownership in VIEs.

In July 2003, the Accounting Standards Executive Committee (AcSEC) of
the American Institute of Certified Public Accountants (AICPA) issued
Statement of Position (SOP) 03-01, "Accounting and Reporting by
Insurance Enterprises for Certain Nontraditional Long-Duration
Contracts and for Separate Accounts." AcSEC developed the SOP to
address the evolution of product designs since the issuance of SFAS No.
60, "Accounting and Reporting by Insurance Enterprises," and SFAS No.
97, "Accounting and Reporting by Insurance Enterprises for Certain
Long-Duration Contracts and for Realized Gains and Losses from the Sale
of Investments." SOP 03-1 provides guidance related to the reporting
and disclosure of certain insurance contracts and separate accounts,
including guidance for computing reserves for products with guaranteed
benefits, such as guaranteed minimum death benefits, and for products
with annuitization benefits such as guaranteed minimum income benefits.
In addition, SOP 03-1 addresses certain issues related to the
presentation and reporting of separate accounts, as well as rules
concerning the capitalization and amortization of sales inducements.
SOP 03-1 was effective January 1, 2004. The adoption of SOP 03-1 did
not have a material effect on the Company's consolidated financial
statements.

In January 2004, FASB issued Emerging Issues Task Force ("EITF") Issue
No. 03-1, The Meaning of Other-Than Temporary Impairment and It's
Application to Certain Investments ("EITF 03-1"). EITF 03-1 provides
guidance on the disclosure requirements for other-than-temporary
impairments of debt and marketable equity investments that are
accounted for under SFAS No. 115, Accounting for Certain Investments in
Debt and Equity Securities ("SFAS 115"). The adoption of EITF 03-1
would require the Company to include certain quantitative and
qualitative disclosures for debt and marketable equity securities
classified as available-for-sale or held-to-maturity under SFAS 115
that are impaired at the balance sheet date but for which an
other-than-temporary impairment has not been recognized. The Company
does not anticipate that the adoption of this issue would have a
material impact on the Company's financial position or results of
operations.

3. JUNIOR SUBORDINATED DEBENTURES

On May 4, 1999, Great-West Life & Annuity Insurance Capital I (the
Trust), the Company's wholly-owned subsidiary trust created under the
laws of the State of Delaware, issued $175.0 million of subordinated
capital income securities. The sole assets of the Trust are the $180.4
million aggregate principal amount of the Company's 7.25% junior
subordinated debentures due June 30, 2048. The obligations of the trust
related to its junior subordinated debentures are fully and
unconditionally guaranteed by the Company. As discussed in note 2
above, the Trust is not consolidated in accordance with FIN 46R.


4. RELATED-PARTY TRANSACTIONS

On August 31, 2003, the Company and The Canada Life Assurance Company
(CLAC), a wholly owned subsidiary of Canada Life Financial Corporation,
entered into an Indemnity Reinsurance Agreement pursuant to which the
Company reinsured 80% (45% coinsurance and 35% coinsurance with funds
withheld) of certain United States life, health and annuity business of
CLAC's U.S. branch.

On February 29, 2004, CLAC recaptured the group life and health
business from the Company associated with the original Indemnity
Reinsurance Agreement dated August 31, 2003. The Company recorded $256
million of negative premium income and decrease in reserves associated
with these policies. The Company recorded, at fair value, the following
at February 29, 2004 as a result of this transaction:



Assets (millions) Liabilities and Stockholder's Equity (millions)
-------------------------------------------------------- ------------------------------------------------


Cash $ (126) Policy reserves $ (280)
Reinsurance receivable (148) Policy and contract claims (33)
Deferred ceding commission (24)
Premiums in course of collection (15)

------------------- -----------------
$ (313) $ (313)
=================== =================



5. REINSURANCE

In addition to the Indemnity Reinsurance Agreement entered into with
CLAC (see 4 above), the Great-West Healthcare division of the Company
entered into a reinsurance agreement during 2003 with Allianz Risk
Transfer (Bermuda) Limited (Allianz) to cede 90% in 2003 and 75% in
2004 of direct written group health stop-loss and excess loss activity.



6. COMPONENTS OF NET PERIODIC BENEFIT COST

The cost of employee benefit plans, included in operating expenses, is
as follows:


Post-Retirement
Pension Benefits Medical Plan
--------------------- ---------------------
For the Second Quarter Ended June 30,
[Thousands] 2004 2003 2004 2003
---------------------------------------- -------- --------- --------- ---------


Service cost $ 2,144 $ 2,067 $ 722 $ 512
Interest cost 3,329 3,069 684 567
Expected return on plan assets obligation (3,733) (3,238)
Amortization of transition (379) (379)
Amortization of unrecognized prior
service cost 158 158 (178) (178)
Amortization of gain from earlier
periods 688 872 166 65
-------- --------- --------- ---------
Net periodic cost $ 2,207 $ 2,549 $ 1,394 $ 966
======== ========= ========= =========


Post-Retirement
Pension Benefits Medical Plan
--------------------- ---------------------
For the Six Months Ended June 30,
[Thousands] 2004 2003 2004 2003
---------------------------------------- -------- --------- --------- ---------

Service cost $ 4,288 $ 4,134 $ 1,444 $ 1,022
Interest cost 6,658 6,138 1,368 1,136
Expected return on plan assets (7,466) (6,478)
Amortization of transition obligation (758) (758)
Amortization of unrecognized prior
service cost 316 316 (356) (356)
Amortization of gain from earlier
periods 1,376 1,746 332 130
-------- --------- --------- ---------
Net periodic cost $ 4,414 $ 5,098 $ 2,788 $ 1,932
======== ========= ========= =========



The Company previously disclosed in its consolidated financial
statements for the year ended December 31, 2003, that it expected to
contribute $4.8 million to fund its pension plan in 2004. As of June
30, 2004, no contributions have been made. The Company anticipates
contributing $4.8 million to fund its pension plan in 2004.

7. OTHER

The Company is involved in various legal proceedings that arise in the
ordinary course of its business. In the opinion of management, after
consultation with counsel, the resolution of these proceedings should
not have a material adverse effect on its consolidated financial
position or results of operations.

Certain reclassifications have been made to the 2003 consolidated
financial statements to conform to the 2004 presentation. These changes
in classification had no effect on previously reported stockholder's
equity or net income.


Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

This Form 10-Q contains forward-looking statements. Forward-looking
statements are statements not based on historical information and that
relate to future operations, strategies, financial results, or other
developments. In particular, statements using verbs such as "expect,"
"anticipate," "believe," or words of similar import generally involve
forward-looking statements. Without limiting the foregoing,
forward-looking statements include statements which represent the
Company's beliefs concerning future or projected levels of sales of the
Company's products, investment spreads or yields, or the earnings or
profitability of the Company's activities. Forward-looking statements
are necessarily based upon estimates and assumptions that are
inherently subject to significant business, economic, and competitive
uncertainties and contingencies, many of which are beyond the Company's
control and many of which, with respect to future business decisions,
are subject to change. These uncertainties and contingencies can affect
actual results and could cause actual results to differ materially from
those expressed in any forward-looking statements made by, or on behalf
of, the Company. Whether or not actual results differ materially from
forward-looking statements may depend on numerous foreseeable and
unforeseeable events or developments, some of which may be national in
scope, such as general economic conditions and interest rates, some of
which may be related to the insurance industry generally, such as
pricing competition, regulatory developments, and industry
consolidation, and others of which may relate to the Company
specifically, such as credit, volatility, and other risks associated
with the Company's investment portfolio, and other factors. Readers are
also directed to consider other risks and uncertainties discussed in
documents filed by the Company and certain of its subsidiaries with the
Securities and Exchange Commission.

The following discussion addresses the financial condition of the
Company as of June 30, 2004, compared with December 31, 2003, and its
results of operations for the quarter and six months ended June 30,
2004, compared with the same periods in 2003. The discussion should be
read in conjunction with the Management's Discussion and Analysis
section included in the Company's report on Form 10-K for the year
ended December 31, 2003, to which the reader is directed for additional
information.



Operating Summary Three Months Ended June 30, Six Months Ended June 30,
-------------------------------- ------------------------------
[Millions] 2004 2003 2004 2003
--------------------------------------- -------------- ------------- ------------- ------------


Premium income $ 161 $ 234 $ 203 $ 507
Fee income 230 207 441 422
Net investment income 239 206 520 421
Realized investment (losses) gains (20) 24 17 51
-------------- ------------- ------------- ------------
Total revenues 610 671 1,181 1,401

Total benefits and
expenses 531 552 953 1,152
Income tax expenses 24 40 75 84
-------------- ------------- ------------- ------------
Net income $ 55 $ 79 $ 153 $ 165
============== ============= ============= ============

Deposits for investment-
type contracts $ 174 $ 122 $ 344 $ 269
Deposits to separate
accounts 456 480 992 1,050
Self-funded premium
equivalents 1,158 1,205 2,325 2,402





Balance Sheet June 30, December 31,
[Millions] 2004 2003
----------------------------------------------------------- --------------- ----------------


Investment assets $ 19,316 $ 19,707
Separate account assets 13,390 13,175
Total assets 36,312 36,520
Total policy benefit liabilities 19,283 19,703
Due to GWL 29 31
Junior subordinated debentures 180 180
Total stockholder's equity 1,873 1,887


CONSOLIDATED RESULTS

The Company's consolidated net income decreased $24 million or 30% for
the second quarter of 2004 when compared to the same period in 2003.
The net income decrease reflects a $10 million decrease as a result of
the July 2003 purchase of Canada Life Insurance Company of America
(CLICA) and Canada Life Insurance Company of New York (CLNY) and the
August 2003 Indemnity Reinsurance Agreement with CLAC discussed in Note
3 to the condensed consolidated financial statements (collectively
referred to as Canada Life activity), a $1 million increase in the
Financial Services segment excluding the impact of the Canada Life
activity and an $15 million decrease in the Great-West Healthcare
segment excluding the Canada Life activity. The $10 million decrease in
the Canada Life activity net income is primarily due to $9.8 million of
losses, net of tax, resulting from the change in fair value of the
derivative financial instrument discussed in Item 3 - Qualitative and
Quantitative Disclosures About Market Risk.

The Company's consolidated net income decreased $12 million or 7% for
the first six months of 2004 when compared to the same period in 2003.
The net income decrease reflects a $23 million decrease in the
Great-West Healthcare segment excluding the Canada Life activity and a
$6 million decrease in the Financial Services segment excluding the
impact of the Canada Life activity, offset by a $17 million increase as
a result of the Canada Life activity. Included in the Canada Life
activity net income is $7.1 million of losses, net of tax, resulting
from the change in fair value of the derivative financial instrument
discussed in Item 3 - Qualitative and Quantitative Disclosures About
Market Risk.

Total revenues decreased $61 million or 9% for the second quarter of
2004 when compared to the same period in 2003. The decrease in total
revenue in the second quarter was primarily due to a $73 million
decrease in premium income and a $44 million decrease in realized gains
on investments offset by a $23 million increase in fee income and a $33
million increase in net investment income.

Total revenues decreased $220 million or 16% for the first six months
of 2004 when compared to 2003. The decrease in total revenue in the
first six months was primarily due to a $304 million decrease in
premium income partially offset by a $99 million increase in net
investment income. A $394 million decrease in premium income in the
Great-West Healthcare segment primarily resulting from the negative
premiums associated with the recapture of group life and health
premiums by CLAC was offset by a $90 million increase in premium income
in the Financial Services segment. A $104 million increase in the net
investment income in the Financial Services segment was primarily due
to $128 million of Canada Life activity offset by a $24 million
decrease primarily resulting from the decline in investment earned
rates.

Benefits and expenses decreased $21 million or 4% for the second
quarter of 2004 when compared to the same period in 2003. The decrease
in benefits and expenses is primarily due to a $74 million decrease in
the Great-West Healthcare segment primarily resulting from the Allianz
reinsurance cession, offset by a $53 million increase in the Financial
Services segment primarily as a result of the Canada Life activity.

Benefits and expenses decreased $199 million or 17% for the first six
months of 2004 when compared to the first six months in 2003. The
decrease in benefits and expenses results from a $379 million decrease
in the Great-West Healthcare segment primarily resulting from the
recapture of benefit expense by CLAC, offset by a $180 million increase
in the Financial Services segment primarily as a result of the Canada
Life activity.

Income tax expense decreased $9 million or 11% for the first six months
of 2004 when compared to the same period in 2003 reflecting the
decrease in pretax income.

In evaluating its results of operations, the Company also considers net
changes in deposits received for investment-type contracts, deposits to
separate accounts and self-funded equivalents. Self-funded equivalents
represent paid claims under minimum premium and administrative services
only contracts. These amounts approximate the additional premiums,
which would have been earned under such contracts if they had been
written as traditional indemnity or HMO programs.

Deposits for investment-type contracts increased $52 million or 43% and
$75 million or 28% for the second quarter and the first six months of
2004 when compared to the same periods in 2003. These increases
resulted from increases in the 401(k) line of business and the Canada
Life activity.

Deposits for separate accounts decreased $24 million or 5% and $58
million or 6% for the second quarter and the first six months of 2004
when compared to the same periods in 2003. The decrease is due to the
net decrease in contributions in the 401(k) and individual annuity
lines of business.

Self-funded premium equivalents decreased $47 million or 4% and $77
million or 3% for the second quarter and the first six months of 2004
when compared to the same periods in 2003. The decreases are due to
lower membership.

SEGMENT RESULTS

Great-West Healthcare

The following is a summary of certain financial data of the Great-West
Healthcare segment:




Operating Summary Three Months Ended June 30, Six Months Ended June 30,
-------------------------------- --------------------------------
[Millions] 2004 2003 2004 2003
---------------------------------------- -------------- ------------- --------------- -------------


Premium income $ 92 $ 191 $ 32 $ 426
Fee income 164 151 308 310
Net investment income 10 15 26 31
Realized investment (losses) gains (7) 5 10
-------------- ------------- --------------- -------------
Total revenues 259 362 366 777

Total benefits and
expenses 222 296 261 640
Income tax expenses 12 22 35 46
-------------- ------------- --------------- -------------
Net income $ 25 $ 44 $ 70 $ 91
============== ============= =============== =============

Self-funded premium
equivalents $ 1,158 $ 1,205 $ 2,325 $ 2,402


The decrease in earnings for the second quarter and first six months of
2004 compared to the same periods of 2003 is primarily due to lower
aggregate stop loss recoveries on prior year deficits.

Excluding premium and fee income of negative $85 million associated
with the Allianz reinsurance cession, premium and fee income remained
relatively unchanged for the second quarter of 2004 when compared to
the same period of 2003.

Excluding premium and fee income of negative $208 million associated
with Canada Life activity and excluding negative $158 million
associated with the Allianz reinsurance cession, premium and fee income
decreased $30 million or 4% for the first six months of 2004 when
compared to the same period of 2003. The decrease is primarily due to a
decline in membership from June 30, 2003 to June 30, 2004. Including
39,000 Canada Life stop loss members which renewed in the first six
months of 2004, the Great-West Healthcare segment experienced a 3.1%
increase in total health care membership from 1.856 million at December
31, 2003 to 1.913 million at June 30, 2004. There was a .8% decrease in
total health care membership from 1.929 million at June 30, 2003 to
1.913 million at June 30, 2004. The decline in membership during the
12-month period is due to terminations resulting from pricing action
related to target margins. However, there was membership growth in the
first six months of 2004. Canada Life premiums of negative $208 million
are primarily the result of $256 million of premiums related to a
recapture of life and health premiums by CLAC associated with the
original Indemnity Reinsurance Agreement dated August 31, 2003, offset
by $48 million of normal business activity recorded before the February
29, 2004 recapture.

Excluding total benefits and expenses of negative $85 million
associated with the Allianz reinsurance cession, total benefits and
expenses increased $11 million or 4% for the second quarter of 2004
when compared to the same period of 2003. The increase is primarily due
to lower stop loss recoveries of prior year deficits.

Excluding total benefits and expenses of negative $211 million
associated with Canada Life activity and excluding negative $158
million associated with the Allianz reinsurance cession, total benefits
and expenses decreased $10 million or 2% for the first six months when
compared to the same period of 2003. The decrease is due primarily to
decreased benefits associated with lower membership offset by lower
stop loss recoveries of prior year deficits. Canada Life total benefits
and expenses of negative $211 million are primarily the result of $256
million of change in reserves as a result of the recapture discussed
above offset by $45 million of normal business activity before the
February 29, 2004 recapture.

Self-funded premium equivalents decreased $47 million or 4% and $77
million or 3% for the second quarter and the first six months when
compared to the same periods of 2003. The decrease is due to lower
membership.


Financial Services

The following is a summary of certain financial data of the Financial
Services segment.



Operating Summary Three Months Ended June 30, Six Months Ended June 30,
-------------------------------- --------------------------------
[Millions] 2004 2003 2004 2003
--------------------------------------- -------------- ------------- ------------- --------------


Premium income $ 69 $ 43 $ 171 $ 81
Fee income 66 56 133 112
Net investment income 229 191 494 390
Realized investment (losses) gains (13) 19 17 41
-------------- ------------- ------------- --------------
Total revenues 351 309 815 624

Total benefits and
expenses 309 256 692 512
Income tax expenses 12 18 40 38
-------------- ------------- ------------- --------------
Net income $ 30 $ 35 $ 83 $ 74
============== ============= ============= ==============

Deposits for investment-
type contracts $ 174 $ 122 $ 344 $ 269
Deposits to separate
accounts 456 480 992 1,050



Net income for Financial Services decreased $5 million or 14% and
increased $9 million or 12% in the second quarter and first six months
of 2004 when compared to the same periods of 2003. Effective July 10,
2003 the Company acquired CLICA and CLNY. The results of operations for
the life insurance and annuity business areas for these subsidiaries
have been included in the Income Statement data above for the second
quarter and the first six months of 2004.

In addition, the Company has entered into an Indemnity Reinsurance
Agreement with CLAC pursuant to which the Company reinsured 80% (45%
coinsurance and 35% coinsurance with funds withheld) of certain United
States life, health and annuity business of CLAC's U.S. branch as of
August 31, 2003. The life insurance and annuity reinsurance
transactions related to this agreement have also been included in the
Income Statement data above for the second quarter and the first six
months of 2004.

The impact of both of these transactions (Canada Life activity) on the
Financial Services Division results for the second quarter and the
first six months of 2004 is as follows:




Three Months Ended Six Months Ended
June 30 June 30
------------------------- ---------------------------

Premiums $ 29 $ 88
Fee income 2 4
Net investment income 43 128
Net realized gains (losses) on
Investment (11) 6
---- -
Total revenues 63 226
Policyholder benefits 59 170
Operating expenses 13 32
-- --
Total benefits and expenses 72 202
--
Income (loss) from operations (9) 24
Income taxes (3) 9
--- -
Net income (loss) (6) 15



The $6.0 million net loss for the second quarter of 2004 in the Canada
Life activity is primarily due to $9.8 million of losses, net of tax,
resulting from the change in fair value of the derivative financial
instrument discussed in Item 3 - Qualitative and Quantitative
Disclosures About Market Risk.

The $15.0 million net income for the first six months of 2004 in the
Canada Life activity includes $7.1 million of losses, net of tax,
resulting from the change in fair value of the derivative financial
instrument discussed in Item 3 - Qualitative and Quantitative
Disclosures About Market Risk.

Net income for the Financial Services division (excluding the Canada
Life activity discussed above) has increased $1 million or 3% and
decreased $6 million or 8% for the second quarter and first six months
of 2004 when compared the same periods of 2003. The decrease is due to
a decrease in investment income and realized investment gains. The net
earned rate decreased from 6.35% in June 2003 to 6.02% in June 2004.

Excluding Canada Life activity, total premiums including deposits to
investment-type contracts and deposits to separate accounts decreased
$4 million or .3% for the first six months of 2004 when compared to the
same period of 2003. Premiums and deposits have decreased $27 million
or 11% in the Individual Markets area where sales were lower for the
first six months of 2004 when compared to the first six months of 2003.
The lower sales were partially due to a $16 million sale in 2003 which
was not repeated in 2004. The decrease in the Individual Markets area
was offset by a $23 million increase in the Retirement Services area,
which is primarily due to premiums on new cases which came in at the
end of 2003.

Retirement participant accounts including third-party administration
and institutional accounts increased 4% in 2004 from 2,265,713 at
December 31, 2003 to 2,354,535 at June 30, 2004.

Fee income has increased $17 million or 15%, excluding fee income
associated with Canada Life, for the first six months of 2004 when
compared to the same period of 2003. Retirement products variable
asset-based fees fluctuate with fluctuations in the participant account
values. Account values change due to cash flow and unrealized market
gains and losses associated with fluctuations in the U.S. equities
market.

Excluding investment income of $128 million associated with Canada
Life, investment income decreased $24 million or 6% for the first six
months of 2004 when compared to the same period of 2003. The net earned
rate decreased from 6.35% in June 2003 to 6.02% in June 2004.

Excluding total benefits and expenses of $202 million associated with
Canada Life, total benefits and expenses decreased $22 million or 4%
for the first six months of 2004 when compared to the same period of
2003 due primarily to a decrease in the interest crediting rates on the
in force block of business and the surrender of a large case in the
prior year.

GENERAL ACCOUNT INVESTMENTS

The Company's primary investment objective is to acquire assets with
duration and cash flow characteristics reflective of the Company's
liabilities, while meeting industry, size, issuer, and geographic
diversification standards. Formal liquidity and credit quality
parameters have also been established.

The Company follows rigorous procedures to control interest rate risk
and observes strict asset and liability matching guidelines. These
guidelines ensure that even under changing market conditions, the
Company's assets will meet the cash flow and income requirements of its
liabilities. Using dynamic modeling to analyze the effects of a range
of possible market changes upon investments and policyholder benefits,
the Company strives to ensure that its investment portfolio is
appropriately structured to fulfill financial obligations to its
policyholders.

Fixed Maturities

Fixed maturity investments include public and privately placed
corporate bonds, government bonds, and mortgage-backed and asset-backed
securities. The Company's strategy related to mortgage-backed and
asset-backed securities is to focus on those investments with low
prepayment risk and minimal credit risk. The Company does not invest in
higher-risk collateralized mortgage obligations such as interest-only
and principal-only strips, and currently has no plans to invest in such
securities.

Private placement investments are generally less marketable than
publicly traded assets, yet they typically offer enhanced covenant
protection that allows the Company, if necessary, to take appropriate
action to protect its investment. The Company believes that the cost of
the additional monitoring and analysis required by private placements
is more than offset by their enhanced yield.

One of the Company's primary objectives is to ensure that its fixed
maturity portfolio is maintained at a high average quality, so as to
limit credit risk. If not externally rated, the securities are rated by
the Company on a basis intended to be similar to that of the rating
agencies.

The distribution of the fixed maturity portfolio by Standard & Poor's
credit rating is summarized as follows:



June 30, December 31,
2004 2003
---------------------- -----------------------


AAA 55.1 % 54.3 %
AA 8.5 % 8.7 %
A 14.6 % 16.0 %
BBB 19.1 % 18.4 %
BB and below (non-investment grade) 2.7 % 2.6 %
----------------- ---- ------------------ ----

TOTAL 100.0 % 100.0 %
================= ==== ================== ====


During the first six months of 2004, net unrealized gains on fixed
maturities included in stockholder's equity, which is net of
policyholder-related amounts and deferred income taxes, decreased
stockholder's equity by $120.6 million.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
the Company's management to make a variety of estimates and
assumptions. These estimates and assumptions affect, among other
things, the reported amounts of assets and liabilities, the disclosure
of contingent liabilities and the reported amounts of revenues and
expenses. Actual results can differ from the amounts previously
estimated, which were based on the information available at the time
the estimates were made.

The critical accounting policies described below are those that the
Company believes are important to the portrayal of the Company's
financial condition and results, and which require management to make
difficult, subjective and/or complex judgments. Critical accounting
policies cover accounting matters that are inherently uncertain because
the future resolution of such matters is unknown. The Company believes
that critical accounting policies include policy reserves, allowances
for credit losses, deferred policy acquisition costs, and valuation of
privately placed fixed maturities.

Policy Reserves

Life Insurance and Annuity Reserves - Life insurance and annuity policy
reserves with life contingencies are computed on the basis of estimated
mortality, investment yield, withdrawals, future maintenance and
settlement expenses, and retrospective experience rating premium
refunds. Annuity contract reserves without life contingencies are
established at the contractholder's account value.

Reinsurance - Policy reserves ceded to other insurance companies are
carried as a reinsurance receivable on the balance sheet. The cost of
reinsurance related to long-duration contracts is accounted for over
the life of the underlying reinsured policies using assumptions
consistent with those used to account for the underlying policies.
Reinsurance contracts do not relieve the Company from its obligations
to policyholders. Failure of reinsurers to honor their obligations
could result in losses to the Company. The Company evaluates the
financial condition of its reinsurers and monitors concentrations of
credit risk arising from similar geographic regions, activities, or
economic characteristics of the reinsurers to minimize its exposure to
significant losses from reinsurer insolvencies. In the normal course of
business, the Company seeks to limit its exposure to loss on any single
insured and to recover a portion of benefits paid by ceding risks to
other insurance enterprises under excess coverage and co-insurance
contracts. The Company retains a maximum of $1.5 million of coverage
per individual life on direct business written and up to $2.8 million
on business reinsured from CLAC.

Policy and Contract Claims - Policy and contract claims include
provisions for reported life and health claims in process of
settlement, valued in accordance with the terms of the related policies
and contracts, as well as provisions for claims incurred and unreported
based primarily on prior experience of the Company.

Allowance For Credit Losses

The Company maintains an allowance for credit losses at a level that,
in management's opinion, is sufficient to absorb credit losses on its
amounts receivable related to uninsured accident and health plan claims
paid on behalf of policyholders and premiums in course of collection,
and to absorb credit losses on its impaired loans. Management's
judgment is based on past loss experience and current and projected
economic conditions, and extensive situational analysis of each
individual loan. The measurement of impaired loans is based on the fair
value of the collateral.

Deferred Policy Acquisition Costs

Policy acquisition costs, which primarily consist of sales commissions
and costs associated with the Company's sales representatives related
to the production of new business, have been deferred to the extent
deemed recoverable. These costs are variable in nature and are
dependent upon sales volume. Deferred costs associated with the annuity
products are being amortized over the life of the contracts in
proportion to the emergence of gross profits. Retrospective adjustments
of these amounts are made when the Company revises its estimates of
current or future gross profits. Deferred costs associated with
traditional life insurance are amortized over the premium paying period
of the related policies in proportion to premium revenues recognized.

Valuation Of Privately Placed Fixed Maturities

The estimated fair values of financial instruments have been determined
using available information and appropriate valuation methodologies.
However, considerable judgment is required to interpret market data to
develop estimates of fair value. Accordingly, the estimates presented
are not necessarily indicative of the amounts the Company could realize
in a current market exchange. The use of different market assumptions
and/or estimation methodologies may have a material effect on the
estimated fair value amounts.

To determine fair value for fixed maturities not actively traded, the
Company utilizes discounted cash flows calculated at current market
rates on investments of similar quality and term.

LIQUIDITY AND CAPITAL RESOURCES

The Company's operations have liquidity requirements that vary among
its principal product lines. Life insurance and pension plan reserves
are primarily long-term liabilities. Accident and health reserves,
including long-term disability, consist of both short-term and
long-term liabilities. Life insurance and pension plan reserve
requirements are usually stable and predictable, and are supported
primarily by long-term, fixed income investments. Accident and health
claim demands are stable and predictable but generally shorter term,
requiring greater liquidity.

Generally, the Company has met its operating requirements by
maintaining appropriate levels of liquidity in its investment portfolio
and utilizing positive cash flows from operations. Liquidity for the
Company has remained strong, as evidenced by significant amounts of
short-term investments and cash that totaled $1.3 billion and $1.0
billion as of June 30, 2004 and December 31, 2003, respectively. In
addition, 97% of the bond portfolio carried an investment grade rating
as of June 30, 2004 and December 31, 2003, thereby providing
significant liquidity to the Company's overall investment portfolio.

Funds provided by premiums and fees, investment income and maturities
of investment assets are reasonably predictable and normally exceed
liquidity requirements for payment of claims, benefits, and expenses.
However, since the timing of available funds cannot always be matched
precisely to commitments, imbalances may arise when demands for funds
exceed those on hand. Also, a demand for funds may arise as a result of
the Company taking advantage of current investment opportunities. The
sources of the funds that may be required in such situations include
the issuance of commercial paper and equity securities.

The Company's financial strength provides the capacity and flexibility
to enable it to raise funds in the capital markets through the issuance
of commercial paper. The Company continues to be well-capitalized, with
sufficient borrowing capacity to meet the anticipated needs of its
business. The Company had $97.3 million and $96.4 million of commercial
paper outstanding at June 30, 2004 and December 31, 2003, respectively.
The commercial paper has been given a rating of A-1+ by Standard &
Poor's and a rating of P-1 by Moody's Investors Services, each being
the highest rating available.

Capital resources provide protection for policyholders and financial
strength to support the underwriting of insurance risks, and allow for
continued business growth. The amount of capital resources that may be
needed is determined by the Company's senior management and Board of
Directors, as well as by regulatory requirements. The allocation of
resources to new long-term business commitments is designed to achieve
an attractive return, tempered by considerations of risk and the need
to support the Company's existing business.

The Company entered into a line of credit agreement on March 26, 2004,
which provides for loans up to $200 million to be used for general
corporate purposes. The agreement expires March 26, 2005. At June 30,
2004, the Company had notified the lender of its intent to borrow
$164.2 million effective July 2, 2004.


Item 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's assets are purchased to fund future benefit payments to
its policyholders and contractholders. The primary risk of these assets
is exposure to rising interest rates.

To manage interest rate risk, the Company invests in assets that are
suited to the products that it sells. For products with fixed and
highly predictable benefit payments such as certificate annuities and
payout annuities, the Company invests in fixed income assets with cash
flows that closely match these product's liability cash flows. The
Company is then protected against interest rate changes, as any change
in the fair value of the assets will be offset by a similar change in
the fair value of the liabilities. For products with uncertain timing
of benefit payments such as portfolio annuities and life insurance, the
Company invests in fixed income assets with expected cash flows that
are earlier than the expected timing of the benefit payments.

The Company also manages risk with interest rate derivatives such as
interest rate caps that would pay the Company investment income if
interest rates rise above the level specified in the cap. These
derivatives are only used to reduce risk and are not used for
speculative purposes.

To manage foreign currency exchange risk, the Company uses currency
swaps to convert foreign currency back to United States dollars. These
swaps are purchased each time a foreign currency denominated asset is
purchased or forecasted to be purchased.

As a result of the coinsurance with funds withheld element of the
Company's reinsurance of business of CLAC's US branch, the Company has
recorded a derivative financial instrument to account for the different
credit risks and other characteristics of the reinsurance receivable
and the investment assets of CLAC that underlie that receivable. This
derivative is carried at fair value and changes in fair value are
included in net investment income as a non-cash charge or credit.
Therefore, the Company's operating results are exposed to volatility,
reflecting changes in the fair value of the underlying investment
portfolio, which is exposed to interest rate, market and credit risk.
Losses of $9.8 million and $7.1 million, net of tax were included in
net income for the second quarter and the first six months of 2004,
respectively, as a result of this derivative.

Item 4. CONTROLS AND PROCEDURES

Based on their evaluation as of June 30, 2004, the Chief Executive
Officer and Chief Financial Officer have concluded that the Company's
disclosure controls and procedures are effective at the reasonable
assurance level in ensuring that information relating to the Company
and its subsidiaries which is required to be disclosed in reports filed
under the Securities Exchange Act of 1934 is (i) recorded, processed,
summarized and reported in a timely manner; and is (ii) accumulated and
communicated to the Company's senior management, including the
President and Chief Executive Officer and the Executive Vice President
and Chief Financial Officer, so that timely decisions may be made
regarding disclosure.

The Chief Executive Officer and Chief Financial Officer hereby confirm
that there were no significant changes in the Company's internal
control over financial reporting that occurred during the Company's
most recent fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the registrant's internal
control over financial reporting.






PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Company or
any of its subsidiaries is a party or of which any of their property is
the subject.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K



(a) Exhibit Number Title Page


31.1 Rule 13a-14(a)/15d-14(a) Certification 24

31.2 Rule 13a-14(a)/15d-14(a) Certification 25

32 18 U.S.C. 1350 Certification 26

(b) Reports on Form 8-K

A report on Form 8-K, dated April 29, 2004, was filed
disclosing the Company's results as of March 31, 2004.



SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





GWL&A FINANCIAL INC. DATE



BY: /s/ Glen R. Derback August 16, 2004
Glen R. Derback, Senior Vice President and Controller
(Duly authorized officer and chief accounting officer)