Western Financial Group reported a lower annual profit for 2008 as the downturn in global stock markets reduced the income from the firm’s investment portfolio.

Net Income for the year ended Dec. 31 declined to $6.5 million from $12.2 million a year ago, arising from fourth quarter losses due to reductions in income from, and values of, the company’s private and public equity portfolio, WFG said Thursday.

WFG reported a 9% increase in annual revenues to $125 million for the year. Each of the company’s three business units achieved modest growth in operating income.

“Our investment portfolio in the fourth quarter of 2008 suffered along with everyone else’s,” said Scott Tannas, president and CEO.

“Accordingly, our investment income in 2008 is less than we expected and we have decided to be proactive and adjust the recorded values of our investment portfolios at Western Life, Jennings Capital, and the holding company. In addition, we have decided to write down the value of one of our private investments,” he said.

WFG Agency Network completed a solid year, with operating income improving by 4.6%. Same store sales increases were an impressive 8.9% higher for the year.

Bank West posted a modest improvement in operating income. Non-performing loans remain within acceptable levels at 1.2% of total loans.

Premium revenue at Western Life grew by 14.5% to $31.3 million, while operating income increased to $4.23 million. Western Life suffered a decline in value in their equity portfolio, resulting in a $2.5 million charge to income. As of Dec. 31, 2008 Western Life’s MCCSR stands at 230%, one of the strongest capitalized insurers in Canada.

WFG’s insurance-related partnerships performed well in 2008, with each contributing higher income than prior years. However, the company said it will shoulder its share of a one-time loss at Jennings Capital, the result of the disruption in capital markets in the second half of the year. Overall, the partnership portfolio contributed $2.2 million in 2008 unchanged from 2007.