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UPDATE 1-Canadian insurer Great-West's Q2 profit beats estimates on U.S. business, equity markets

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(Adds details, CEO comment)

By Nichola Saminather

TORONTO, Aug 3 (Reuters) - Canadian insurer Great-West Lifeco (Lifeco) on Tuesday beat analyst estimates for second-quarter core profit, which rose from a year earlier driven by strong growth in earnings from its U.S. business and higher equity markets.

Base earnings, which excluded one-off items, were C$826 million ($659.1 million), or 89 Canadian cents a share, in the three months ended June 30, from C$706 million, or 76 Canadian cents, a year earlier. Analysts had expected 79 Canadian cents.

Canada's No.3 life insurer by market value has been expanding its U.S. business in recent years by striking deals. Massachusetts Mutual Life Insurance Co, which Lifeco acquired at the end of December, contributed C$63 million to base earnings, and helped more than double profit from the U.S. to C$190 million, the company said in a statement.

That compared with a 7% drop in base earnings from its Canadian business, primarily due to lower investment contributions, a 3% increase in Europe and a 9% rise in its corporate and risk solutions unit, which includes investment and reinsurance.

Last month, Lifeco's U.S. unit agreed to buy Prudential Financial Inc's full-service retirement business for about C$4.45 billion, which would lift the U.S. contribution to earnings to 30% by 2023.

"We've transformed our portfolio over the last few years by capitalizing on several strategic initiatives and investments," said Lifeco Chief Executive Officer Paul Mahon. "Our business integration activities in the U.S. remain on track to deliver targeted financial results and strong customer retention."

Reported net income attributable to shareholders declined to 84 Canadian cents from 93 Canadian cents a year earlier, due to the positive effects of changes in actuarial assumptions and market-related impacts in the prior period.

Lifeco shares are up 24% this year, compared with a 17% gain in the Toronto stock benchmark.

($1 = 1.2533 Canadian dollars) (Reporting By Nichola Saminather Editing by Chris Reese)

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