Source: The Canadian Press

Power Financial Corp. (TSX:PWF) said its net profits plummeted nearly 29 per cent to $323 million in the third quarter due to a litigation charge by its insurance subsidiary.

The main operating arm of Montreal-based Power Corp. (TSX:POW) said it earned 42 cents per share for the three months ending Sept. 30, compared to 61 cents a year earlier when it earned $452 million.

Its share of a $225 million litigation provision established by Great-West Lifeco was $144 million or 20 cents per share.

Operating earnings grew 1.1 per cent to $467 million, or 62 cents per share, compared with $455 million or 61 cents in 2009.

Great-West Lifeco (TSX:GWO) said its operating earnings excluding the litigation charge were $479 million, up 7.2 per cent from $445 million in the year-ago period.

The stronger Canadian dollar had a negative $22 million impact on earnings in the quarter. Power Financial’s share of the currency hit was $16 million.

IGM Financial Inc. operating earnings were $178 million in the third quarter, compared to $167 million a year earlier. Net earnings including a $8 million share of the litigation charge was $170 million.

Power Financial’s stake in European-based Pargesa Holding S.A. generated $59 million in operating earnings, down from $72 million in 2009.

Power Financial declared a 35-cents quarterly dividend payable Feb. 1 to shareholders of record Dec. 31.

The litigation charge results from a $455.7 million settlement of a class-action lawsuit over the financing of a 1997 takeover of London Insurance Group.

Nearly two million policyholders of Great-West Lifeco Inc. and its London Life subsidiary could get payouts of an average $300.

A judge in London, Ont., rule that Great-West breached sections of the Insurance Companies Act. when it transferred money from the accounts of subsidiaries London Life Insurance Co. and Great-West Life Assurance Co. to finance the takeover.

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

On the Toronto Stock Exchange, Power Financial shares fell 37 cents to $29.96 in afternoon trading.