Great-west Lifeco Inc. · TSX:GWO
Great-west Lifeco — Q3 2024 Earnings Presentation
35 slides from Great-west Lifeco's earnings presentation, November 2024
Slide 1: Quarterly Results Presentation 3Q24
Great-West Lifeco Quarterly Results Presentation 3Q24
Slide 2: Cautionary Notes
Cautionary Notes CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION This document contains forward-looking information. Forward-looking information includes statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "will", "may", "expe
Slide 3: Conference call participants
Conference call participants Presenters Q&A Participants Paul Mahon David Harney Fabrice Morin Ed Murphy President & CEO President and COO, Europe and Capital President & COO, Canada President and CEO, Empower and Risk Solutions Jon Nielsen Linda Kerrigan Jeff Poulin Raman Srivastava EVP & CFO SVP &
Slide 4: Business Overview
Business Overview Paul Mahon President & CEO Great-West Lifeco
Slide 5: Highlights
Highlights Base EPS up 14% YTD and on track to exceed our medium-term objective in 2024 • Strong underlying momentum across segments; Empower continues to deliver double-digit growth Base ROE above the top end of the range of our medium-term objective • Empower base ROE has increased nearly 300 bps
Slide 6: Strong Q3 results position us well against our medium-term objectives
Strong Q3 results position us well against our medium-term objectives Base Earnings1 Base ROE1 Base EPS1 $1,061M 17.3% $1.14 Up 12% YoY Up 0.9pp YoY Up 12% YoY Net Earnings Net ROE Net EPS $859M 15.6% $0.92 BVPS2 LICAT ratio3 Leverage Ratio4 $25.78 134% 29% Up 7% YoY 1. This metric is a non-GAAP fin
Slide 7: Canada: Strong AUA growth driven by acquisitions and market performance
Canada: Strong AUA growth driven by acquisitions and market performance Wealth and Retirement Group Life & Health Insurance & Annuities Average AUA1,2 Book premiums4 Contractual Service Margin (CSM)5 (C$B) (C$B) (C$M) +43% +3% (39%) 177 182 14.7 14.9 15.2 1,149 1,124 127 70 73 Workplace 706 62 107 1
Slide 8: Europe: Strong top line performance across all value drivers
Europe: Strong top line performance across all value drivers Wealth and Retirement Group Life & Health Insurance & Annuities Average AUA1,2 Book premiums4 Contractual Service Margin (CSM)5 (C$B) (C$M) (C$M) +21% +11% +20% 234 246 2,499 2,613 3,713 35 Workplace 2,348 3,337 203 34 3,104 29 Wealth & As
Slide 9: CRS: Earnings profile strengthened on significant growth in CSM
CRS: Earnings profile strengthened on significant growth in CSM Run-Rate Reinsurance Earnings Drivers1 Reinsurance CSM (C$M) (C$M) +5% +32% 212 216 2,284 205 47 46 46 1,735 1,702 38 38 50 121 127 120 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 • Solid new business momentum continuing; Q3 seasonally slower • CSM i
Slide 10: Empower: AUA growth driven by favourable markets and strong net flows in Personal Wealth
Empower: AUA growth driven by favourable markets and strong net flows in Personal Wealth Retirement Wealth and Asset Management Average AUA1,2 Average AUA1,2 (US$B) (US$B) +25% +16% 76 82 1,535 1,619 1,401 45 53 Other4 66 42 1,359 1,490 1,566 DC 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 Net flows3 (U$B) Net flo
Slide 11: Empower
Empower Ed Murphy President and CEO, Empower
Slide 12: Empower: Solid double-digit growth outlook
Empower: Solid double-digit growth outlook Well-positioned to continue Rising markets may weigh on flows, Added torque from revenue outpacing the industry but are a net positive to asset growth diversification and operating leverage • Organic AUA1 5-year CAGR 14%, 2x industry4 • Rising markets have
Slide 13: Financial Highlights
Financial Highlights Jon Nielsen EVP & CFO Great-West Lifeco
Slide 14: Global markets have been broadly supportive of asset growth in the quarter
Global markets have been broadly supportive of asset growth in the quarter Global equity markets were higher on average in 3Q241 In-quarter average Change 3Q24 3Q24 vs. 3Q24 vs. Market Indices 3Q23 2Q24 3Q24 3Q23 2Q24 1.6 S&P / TSX Composite 20,149 22,016 22,959 14% 4% 1.5 +5.6% 2 S&P 500 4,458 5,24
Slide 15: Double-digit earnings growth and base ROE at the top end of our medium-term objective
Double-digit earnings growth and base ROE at the top end of our medium-term objective Base Earnings1,3 (bars) and Net Earnings2 (diamonds) Base ROE1,3 (bars) and Net ROE2 (diamonds) (C$M) 1,031 1,061 17.2% 17.3% 1,038 17.0% 16.4% 16.6% 16.2% 971 978 950 1,005 15.6% 14.6% 936 859 12.9% 743 11.9% 3Q23
Slide 16: Empower drives strong YoY base earnings growth
Empower drives strong YoY base earnings growth Base Earnings1 (bars) and Net Earnings2 (diamonds) (After-tax, C$M) Canada U.S.4 Europe Capital & Risk Solutions +7% Base Earnings +35%3 Base Earnings (7%)3 Base Earnings +2%3 Base Earnings 460 414 359 322 324 335 317 296 307 265 262 274 206 206 195 115
Slide 17: Continued strength in underlying business and investment results
Continued strength in underlying business and investment results Base earnings – Insurance service result Base earnings – Net investment result (C$M) (C$M) 786 794 777 56 44 18 301 255 41 40 222 13 78 63 83 730 750 759 192 196 148 (22) (14) (40) 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 Expected Earnings on Ins
Slide 18: Strong contribution from all base earnings drivers
Strong contribution from all base earnings drivers 3Q24 Lifeco Drivers of Earnings Includes GMT (C$M) impact of $44M (322) 549 1,305 (212) 1,061 (32) 301 777 859 Base earnings Base earnings – Fee and Non-directly Base Income taxes NCI3, pref divds Base Net earnings – Insurance Net investment spread
Slide 19: Assumption changes reduced net earnings, but drove offsetting increase in CSM
Assumption changes reduced net earnings, but drove offsetting increase in CSM 3Q24 Earnings Reconciliation Interest rate Public equity Real estate and other (Post-tax C$M) and other markets non-fixed income 41 (4) 1,061 22 29 (36) (10) (203) 859 Base Earnings1,2 Market experience Business Amortizati
Slide 20: Positive net economic impact of assumption changes
Positive net economic impact of assumption changes 1,2 Net earnings Assumptions CSM impact Aggregate impact Description (C$M) (post-tax) impact (post-tax) Updates to reflect trends in longevity experience, Longevity 592 (241) 351 primarily on portfolios in the UK (Europe segment) and in CRS Updates
Slide 21: Strong capital position provides substantial financial flexibility
Strong capital position provides substantial financial flexibility LICAT Ratio1 Financial Leverage2 Lifeco Cash (C$B) 134% 31% 130% 128% 1.0 1.1 29% 29% 0.5 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 Footnotes 1-2: Refer to slide 35 21
Slide 22: Closing Remarks
Closing Remarks Paul Mahon President & CEO Great-West Lifeco
Slide 23: Key messages
Key messages Surpassed $3T of assets under administration for the first time Strong momentum with double-digit base earnings growth Substantial and growing financial flexibility Investing to strengthen our market leadership Well-positioned to continue meeting or exceeding our medium-term objectives
Slide 24: Questions
Questions GREAT-WEST LIFECOn« canada EMPOWER S|
Slide 25: Save the date
Save the date Great-West Lifeco Investor Day 2025 April 2, 2025 Toronto 25
Slide 26: Appendix
Appendix GREAT-WEST ——
Slide 27: Impacts of assumption changes under IFRS 17
Impacts of assumption changes under IFRS 17 Types of Non-participating insurance and longevity Pass through and fee-based insurance Short-term business business business business Products • Term life / universal life • Segregated funds • Group life and health • Disability / critical illness • Partic
Slide 28: Contractual Service Margin (CSM)
Contractual Service Margin (CSM) Total CSM (C$M) CSM (C$M), excluding segregated funds and par 301 13,517 143 251 217 6,757 124 13,092 2941 13,008 (286) (24) 180 40 6,246 6,186 (144) (16) Beginning Impact of Expected CSM Insurance CSM with Assumption Impacts of Ending Beginning Impact of Expected CS
Slide 29: Invested Assets
Invested Assets Conservative investment portfolio, predominantly comprised of fixed income instruments – 98% of which are investment-grade • Invested assets of ~$237.1B Invested Asset Distribution Bond Portfolio Quality • Bonds represent 68% Investment Properties Cash and CD's – 98% are investment g
Slide 30: Lifeco Consolidated Bond Portfolio
Lifeco Consolidated Bond Portfolio % of Invested Assets Gov't, Gov't Related and Corporate and Non-Agency Country of Domicile Agency Securitized Bonds Securitized Bonds Total Bonds U.S. 2.8% 27.2% 30.0% Canada 7.6% 8.9% 16.5% U.K. 4.8% 6.3% 11.1% Germany 0.8% 1.1% 1.9% Ireland 0.2% 0.4% 0.6% 16.2% 4
Slide 31: Corporate and Non-Agency Securitized Bonds Sector Diversification
Corporate and Non-Agency Securitized Bonds Sector Diversification Corporates % of Invested Assets Non-Agency Securitized % of Invested Assets Electric Utilities 7.5% CMBS 1.9% Consumer Products 6.6% RMBS 0.1% Industrial Products 5.1% Other ABS 4.8% Financial Services 3.7% Total Non-Agency Securitize
Slide 32: Lifeco Mortgage Exposures
Lifeco Mortgage Exposures (C$m) Carrying Value Mortgage Holdings by Segment Property Type Total % of Lifeco IA Canada Par Canada Non-Par U.S. Europe CRS Insured Non-insured LTV1 DSCR2 WALT3 Single Family 1,334 0.6% 1,041 293 - - - 280 1,054 Equity Release 4,865 2.0% 571 1,416 - 2,306 572 - 4,865 Mul
Slide 33: Lifeco Non-Fixed Income Portfolio
Lifeco Non-Fixed Income Portfolio (C$m) Carrying Value Equity Portfolio by Segment NFI Portfolio by Type Total % of Lifeco IA Canada Par Canada Non-Par U.S. Europe CRS Investment Properties Industrial 3,090 1.4% 1,937 274 - 879 - Office 1,525 0.6% 935 158 21 411 - Multi Family 1,684 0.7% 1,394 265 -
Slide 34: Non-GAAP Financial Measures and Ratios
NON-GAAP FINANCIAL MEASURES AND RATIOS This document contains some non-Generally Accepted Accounting Principles (GAAP) financial measures and non-GAAP ratios as defined in National Instrument 52-112 “Non-GAAP and Other Financial Measures Disclosure”. Terms by which non-GAAP financial measures are id
Slide 35: Footnotes
FOOTNOTES All references to the Company’s Q3 2024 MD&A in the below footnotes are to the Company’s management’s discussion and analysis for the three months ended September 30, 2024, which is available on SEDAR+ at www.sedarplus.com. Slide 6 2. Additional information regarding this financial measure