Standard & Poor’s Ratings Services today affirmed all the ratings on Power Financial Corp., its parent, Power Corp. of Canada, and subsidiary Great-West Lifeco Inc. The outlook for all three firms has been revised to stable from negative, largely on the strength of GWL’s successful acquisition of Canada Life.

The outlook revision reflects GWL’s progress in strengthening its balance sheet in the past two years since it acquired Canada Life Financial Corp., S&P explains. The revision also reflects the continuation of the strong and stable operating performance of the group’s Canadian mutual fund operations, IGM Financial Inc.

“The stable outlook reflects our expectation that Power will maintain its stable operating earnings profile and prudent level of financial leverage,” it says, noting that Power’s outlook will continue to remain dependent on the ratings and outlooks of GWL and IGM given the relative size of these investments.

The ratings on Power and Power Financial reflect the diversity of the companies’ holdings, the steady dividend stream from their major subsidiaries, high level of balance-sheet liquidity, strong core earnings positions, and demonstrated success in creating value through their various subsidiaries, S&P says.

S&P says it anticipates that the Power group of companies will continue to strengthen their balance-sheet positions in the short to medium term, to position themselves for continued consolidation in the North American financial services sector, and to allow for the expansion of their investment portfolios in Europe and the Far East.

Additionally, S&P says that the financial strength ratings on the various operating subsidiaries of GWL reflect the continued success of these companies in building and maintaining their leading business positions in Canada, the U.S., and Europe; their very strong and consistent operating performance; and the improving capital adequacy level of the consolidated group. These strengths are partially offset by the continued softness in the franchise strength of the U.S. health care business, although steps continue to be taken to remedy the situation.

S&P says that GWL enjoys a very strong franchise position in all of its primary markets, although additional scale in the U.S. would be of benefit. Its operating performance is very strong, and S&P now views the level of capital adequacy as appropriate for both the Canadian and U.S. operating companies. The integration of Canada Life continues to progress as planned with expense synergies exceeding expectations (June 2005 actual of $394 million versus the original plan of $290 million). Finally, the quality of GWL’s investment portfolio is viewed as very strong, and liquidity is viewed as extremely strong.

S&P expects GWL will maintain its positive top-line growth in line with its peers, achieve a return on assets of 2% (pre-tax), a total debt and hybrid to total capital ratio of less than 30%, and a fixed-charge coverage ratio of more than eight times.