Source: The Canadian Press

Insurance provider Great-West Lifeco Inc. (TSX: GWO) reported third-quarter net earnings of $275 million on Wednesday, down from a year-ago $445 million as it booked a big cash provision to cover the costs of a recent legal ruling against the company.

Stripping out the effect of the one-time $204-million litigation provision related to the ruling against Great-West, operating earnings were up 7.6% to $479 million, the company based in Toronto said. That amounted to 50.5 cents per share, up from 47.1 cents per share in the prior year period and ahead of analyst consensus estimates for earnings of 48 cents per share.

Earlier this month, an Ontario court awarded payouts to nearly two million Canadians to settle a class-action lawsuit over the financing of a Great-West acquisition that dipped into policyholders’ funds.

A $455.7-million settlement is set to be distributed amongst 1.8 million people after a judge ruled that Great-West breached sections of the Insurance Companies Act when it transferred money from the accounts of subsidiaries London Life and Great-West Life Assurance Co. to finance the 1997 takeover of London Insurance Group.

Great West Life has said it will appeal the decision and that several aspects of the decision are in error.

The company said Wednesday it “continued to achieve solid operating results for the quarter in all business segments despite continued currency headwinds due to the strengthening of the Canadian dollar against the U.S. dollar, British pound and the euro in 2010.”

Consolidated assets under administration at the end of the quarter were $485.7 billion, up $27.1 billion from Dec. 31, 2009.

Individual life insurance sales in Canada rose 21% compared to the third quarter of 2009 and group insurance sales were up 19%. Sales in its U.S. Financial Services business were up 41%.

Great-West, a subsidiary of Power Financial Corp. (TSX:PWF), is involved in life and health insurance, retirement savings, investment management and reinsurance. It operates in Canada, the United States, Europe and Asia.

Shares in the company were down 41 cents or 1.5% at $26.65 on the Toronto Stock Exchange.