Great-West Lifeco Inc. · TSX:GWO

Great-West Lifeco — Q2 2018 Earnings Presentation

24 slides from Great-West Lifeco's earnings presentation, Dec 24, 2018

  1. Slide 1: Quarterly Information for Analysts and Investors Q2 2018

    Quarterly Information for Analysts and Investors Q2 2018

  2. Slide 2: Cautionary notes

    Cautionary notes CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION This document may contain forward-looking statements. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipa

  3. Slide 3: Summary of Results - Paul Mahon, President & CEO

    Paul Mahon President & CEO Great-West Lifeco Summary of Results 3

  4. Slide 4: Q2 2018 Highlights

    Q2 2018 Highlights  Earnings up 17% year-over-year (YoY) on an adjusted basis (1) • Include $60m positive impact from refinancing in U.S. segment  Canada – earnings growth of 7% YoY and an acceleration of digital initiatives  U.S. – stronger sales at Empower and Putnam and lower federal taxes  E

  5. Slide 5: Canada Transformation Update

    Canada Transformation Update  Progressing as planned  Workforce realignment ongoing • Voluntary retirement program, controlled hiring • Delivering on transformation cost savings • On track to achieve $200M target by Q1 2019  Acceleration of digital initiatives in quarter • First agile lab in fina

  6. Slide 6: Summary of Results

    Summary of Results Adjusted Net Earnings(1) (C$m) 831  Net earnings of $831m, up 42% YoY 712 757 734 731 • Up 17% YoY, on an adjusted basis, 582 (2) and up 16% YoY, in constant currency • Include $60m positive impact from refinancing in U.S. segment • Excluding this impact, net earnings of $771m, u

  7. Slide 7: Summary of Results – Sales

    Summary of Results – Sales Sales (C$b)  Canada 34.6 33.1 • Lower Group Wealth and lower 29.5 30.3 Individual Customer sales YoY 25.0 partly offset by higher Group Insurance sales  U.S. • Empower sales up 46% YoY in local currency Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 • Higher institutional and m

  8. Slide 8: Summary of Results – Fee and Other Income

    Summary of Results – Fee and Other Income Fee and Other Income (C$m)  Lifeco fee income up 4% YoY 1,483 • Average equity markets: 1,421 1,400 1,439 1,433 S&P/TSX 3% S&P 500 13% Eurostoxx 50 (2%)  Canada • Higher average assets and the addition of Financial Horizons Group Q2 2017 Q3 2017 Q4 2017 Q1

  9. Slide 9: Summary of Results – Expenses

    Summary of Results – Expenses  Canada Adjusted Expenses(1) (C$m) • $170m pre-tax annualized 1,144 1,217 1,229 1,224 1,098 run-rate reductions achieved of which $131m relates to the shareholder account • Acceleration of digital initiatives and the addition of Financial Horizons Group  U.S. Q2 2017

  10. Slide 10: Financial Highlights - Garry MacNicholas, EVP & CFO

    Garry MacNicholas EVP & CFO Great-West Lifeco Financial Highlights 10

  11. Slide 11: Financial Highlights - Earnings

    Financial Highlights - Earnings Adjusted Net Earnings per Share(1)  EPS of $0.84, up 17% YoY (adjusted) 0.839 0.766 0.742 0.740 • $0.78, up 8% YoY (adjusted) excluding 0.719 U.S. refinancing impact 0.589  Canada • Higher basis changes in Individual Customer and strong morbidity results in Group Cu

  12. Slide 12: Financial Highlights – Source of Earnings

    Financial Highlights – Source of Earnings Q2/18 Q1/18 Q2/17 For the three months ended June 30/18 Canada U.S. Europe Corp. Total Total Total (Adjusted) Expected profit on in-force business 304 121 303 (5) 723 711 681 Impact of new business 4 (29) (33) - (58) (96) (61) Experience gains and losses 64

  13. Slide 13: Financial Highlights – Book Value per Share and Return on Equity

    Financial Highlights – Book Value per Share and Return on Equity Book Value per Share 21.01 21.22 19.95 19.92 20.11  Lifeco cash at quarter end was $0.9b  Book value up 6% from last year Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Adjusted Return on Equity (Trailing 4 quarters) 21.2%  Adjusted Return

  14. Slide 14: Financial Highlights – Assets under Administration

    Financial Highlights – Assets under Administration Assets Under Administration Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 YoY (C$b) General Fund 200 198 203 212 210 5% Segregated Fund 209 208 217 221 221 6% Mutual Fund & Institutional 272 269 279 286 295 9% Other AUA 628 619 651 673 698 11% Total 1,309

  15. Slide 15: Questions

    GREAT-WEST INC. Questions 15

  16. Slide 16: Appendix

    GREAT-WEST INC. Appendix 16

  17. Slide 17: Canada

    Canada (In C$m) Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 YoY Sales Individual Customer Individual Insurance 100 86 106 76 88 (12%) Individual Wealth 2,193 1,947 2,431 2,449 2,165 (1%) 2,293 2,033 2,537 2,525 2,253 (2%) Group Customer Group Insurance 186 136 161 361 251 35% Group Wealth 754 771 1,074

  18. Slide 18: United States

    United States (In US$m) Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 YoY GWF Sales Empower Retirement 4,792 8,222 6,118 9,113 6,979 46% Individual Markets 294 393 296 285 390 33% Total 5,086 8,615 6,414 9,398 7,369 45% Putnam Sales 7,552 8,323 8,674 10,504 11,630 54% Fee and Other Income Empower Retireme

  19. Slide 19: Europe

    Europe (In C$m) Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 YoY Sales UK / Isle of Man 873 1,086 809 949 1,151 32% Ireland / Germany 3,962 4,276 6,516 4,790 4,384 11% Total 4,835 5,362 7,325 5,739 5,535 14% Fee and Other Income UK / Isle of Man 57 53 55 56 57 0% Ireland / Germany 285 291 306 304 334 17%

  20. Slide 20: Putnam - AUM and Flows

    Putnam - AUM and Flows (US$b) Mutual Funds Institutional 5.2 (4.2) 171.5 0.1 172.4 167.8 169.5 162.9 6.5 (5.9) 1.2 92.9 92.0 93.1 87.7 91.0 75.2 76.8 78.6 77.5 79.3 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Sales Redemptions Market Q2 2018 In-Qtr Avg. 161.8 165.2 169.8 173.6 172.8 AUM 20

  21. Slide 21: Putnam – Core Net Earnings

    Putnam – Core Net Earnings Expenses Income Taxes (US$m) Fee & Net Inv Income Operating Margin (Pre-tax) 236 256 239 236 231 9.9% 5.9% 1.2% 2.2% (0.6% ) (222) (231) (236) (237) (226) Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Core Net Earnings $7 $15 ($6) ($2) $5 Notes: Q3/17 includes final performance

  22. Slide 22: Stable Trend Over the Years

    Stable Trend Over the Years (C$m) Experience Gains (Losses), Management Actions, and Changes in Assumptions as a % of Net Income Before Tax 3,347 3,268 3,133 2,874 2,769 2,576 2,633 2,732 2,499 2,504 2,447 2,335 2,237 2005-2017 13 Year 24% 23% 23% 26% 25% 20% 19% 20% 21% 21% Average 18% 20% 11% 20.8

  23. Slide 23: Invested Asset Composition

    Invested Asset Composition(1)  Invested assets of $180.7 billion  Diversified high quality portfolio: Cash & CD's − Bonds represent 72%: 2% − 99% are investment grade Investment Properties Loans to − 80% rated A or higher Policyholders 3% 5% Gov't, Gov't Related and − 85% of bond holdings are domi

  24. Slide 24: Currency (Relative to C$)

    Currency (Relative to C$) Income & Expenses Balance Sheet US$ £ € US$ £ € Q2 2018 1.29 1.76 1.54 1.31 1.73 1.53 Q1 2018 1.26 1.76 1.55 1.29 1.81 1.59 Q4 2017 1.27 1.69 1.50 1.26 1.70 1.51 Q3 2017 1.25 1.64 1.47 1.25 1.67 1.47 Q2 2017 1.34 1.72 1.48 1.30 1.69 1.48 24

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