Fitch Ratings has affirmed its ratings on Great-West Lifeco, with a stable outlook, following its review of GWO’s exposure to the volatile investment and capital market conditions.

The rating agency said that it believes, “GWO’s conservative investment and liquidity policies and practices have sustained a high quality bond portfolio and its business profile is not heavily exposed to the deterioration in the equity markets.”

“The issuance of $1 billion in common equity and $230 million in preferred equity reinforced GWO’s very strong consolidated risk-based capitalization and allowed it to absorb a sizable non-cash charge to earnings from the impairment of its investment in Putnam Investments, LLC,” it added.

Additionally, Fitch said that “consistently strong core earnings performance” continues to be a key component of its rating rationale for the company as it drives and supports the company’s financial flexibility and capital position.

“GWO’s most notable investment exposure is to Upper Tier 2 and capital securities of financial institutions, especially UK banks,” it noted, cautioning that these positions could turn into future credit impairments, although it also said that “future impairments on GWO’s portfolio are likely to remain within manageable levels and ratings expectations.”

Fitch also believes that GWO’s sensitivity to equity markets is lower than many North American peers.

IE