Great-west Lifeco Inc. · TSX:GWO
Great-west Lifeco — Q4 2024 Earnings Presentation
33 slides from Great-west Lifeco's earnings presentation, February 2025
Slide 1: Quarterly Results Presentation 4Q24
Great-West Lifeco Quarterly Results Presentation 4Q24
Slide 2: Cautionary Notes
Cautionary Notes CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION This document contains forward-looking information. In addition, in the course of the Company’s Q4 2024 earnings conference call, representatives of the Company may, in their remarks or in responses to questions, refer to forward
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 EVP & CFO SVP & Appointed Actuar
Slide 4: Business Overview
Business Overview Paul Mahon President & CEO Great-West Lifeco
Slide 5: Lifeco delivers record 2024 results
Lifeco delivers record 2024 results Base earnings growth of 14% with strong performances across segments Base ROE1 of 18% above the top end of the range of our medium-term objective Record results at Empower, now our largest segment by base earnings1 Repositioned portfolio delivering strong growth i
Slide 6: Strong performance against medium-term objectives
Strong performance against medium-term objectives Medium-Term Financial Objectives 1-Year 3-Year2 5-Year2 8-10% base EPS1 growth p.a. 14% 8% CAGR 9% CAGR 16-17% base ROE1 18% 17%3 average 17%3 average Target dividend payout ratio 45-55% of base earnings 1 49% 52% average 54% average 1. This metric i
Slide 7: 4Q 2024 results position us well for 2025
4Q 2024 results position us well for 2025 Base Earnings1 Base ROE1 Base EPS1 $1,115M 17.5% $1.20 Up 15% YoY Up 0.9pp YoY Up 15% YoY Net Earnings Net ROE2 Net EPS $1,116M 16.7% $1.20 BVPS2 LICAT ratio3 Leverage Ratio4 $27.17 130% 29% Up 12% YoY 1. This metric is a non-GAAP financial measure/ratio. Re
Slide 8: Canada: Acquisitions and market performance drive strong AUA growth
Canada: Acquisitions and market performance drive strong AUA growth Wealth and Retirement Group Life & Health Insurance & Annuities Average AUA1,2 Book premiums4 Contractual Service Margin (CSM)5 (C$B) (C$B) (C$M) +33% +6% (40%) 182 191 15.2 15.7 1,159 14.8 143 76 Workplace 73 706 690 65 110 114 Ind
Slide 9: Empower: Personal Wealth net flows and favourable markets drive growth
Empower: Personal Wealth net flows and favourable markets drive growth Retirement Wealth and Asset Management Average AUA1,2 Average AUA1,2 (US$B) (US$B) +22% +29% 1,688 82 86 1,619 1,384 53 85 Other4 67 42 1,566 1,603 DC 1,342 4Q23 3Q24 4Q24 4Q23 3Q24 4Q24 Net flows3 (U$B) Net flows3 (U$B) 11.5 (1.
Slide 10: Europe: Double-digit growth across all top line drivers
Europe: Double-digit growth across all top line drivers Wealth and Retirement Group Life & Health Insurance & Annuities Average AUA1,2 Book premiums4 Contractual Service Margin (CSM)5 (C$B) (C$M) (C$M) +23% +11% +13% 246 257 2,613 2,671 3,713 3,664 37 Workplace 2,415 3,255 209 35 30 Wealth & Asset 2
Slide 11: CRS: Strong new business volume in 4Q24
CRS: Strong new business volume in 4Q24 Run-Rate Reinsurance Earnings Drivers1 Reinsurance CSM (Pre-tax, C$M) (C$M) +8% +40% 227 2,436 210 216 2,284 47 45 46 1,745 38 50 53 127 120 127 4Q23 3Q24 4Q24 4Q23 3Q24 4Q24 • Solid new business momentum continuing • CSM growth in 4Q24 due to new business gro
Slide 12: Financial Highlights
Financial Highlights Jon Nielsen EVP & CFO Great-West Lifeco
Slide 13: Global markets have been supportive of asset growth in 2024
Global markets have been supportive of asset growth in 2024 Global equity markets were higher on average in 4Q241 In-quarter average Change 4Q24 4Q24 vs. 4Q24 vs. Market Indices 4Q23 3Q24 4Q24 4Q23 3Q24 1.7 S&P / TSX Composite 19,940 23,032 24,901 25% 8% 1.6 +2.4% 2 S&P 500 4,474 5,552 5,914 32% 7%
Slide 14: Base earnings growth and ROE exceed our medium-term objectives
Base earnings growth and ROE exceed our medium-term objectives Base Earnings1,3 (bars) and Net Earnings2 (diamonds) Base ROE1,3 (bars) and Net ROE2 (diamonds) (C$M) 1,115 17.3% 17.5% 1,116 17.0% 17.2% 1,031 1,061 16.6% 1,038 16.2% 16.7% 978 15.6% 971 1,005 14.6% 859 743 12.9% 4Q23 1Q24 2Q24 3Q24 4Q2
Slide 15: Strong earnings contributions from all segments
Strong earnings contributions from all segments Base Earnings1 (bars) and Net Earnings2 (diamonds) (Post-tax, C$M) Canada U.S.4 Europe Capital & Risk Solutions +7% Base Earnings +36%3 Base Earnings +4%3 Base Earnings (8%)3 Base Earnings 460 336 359 367 317 321 310 301 307 304 261 213 231 236 223 210
Slide 16: Continued strength in underlying business and investment results
Continued strength in underlying business and investment results Base earnings – Insurance service result Base earnings – Net investment result (C$M) (C$M) 854 777 806 301 112 42 285 18 41 212 35 19 78 80 72 742 759 764 196 185 168 (14) (15) (47) 4Q23 3Q24 4Q24 4Q23 3Q24 4Q24 Expected Earnings on In
Slide 17: Strong growth in fee and spread income
Strong growth in fee and spread income 4Q24 Lifeco Drivers of Earnings Includes GMT (C$M) impact of $31M (345) 616 1,362 (213) 1,115 1,116 (34) 806 285 Base earnings Base earnings – Fee and Non-directly Base Income taxes NCI3, pref divds Base Net earnings – Insurance Net investment spread income att
Slide 18: Base and net earnings aligned in 4Q24
Base and net earnings aligned in 4Q24 4,192 4,011 4Q24 Earnings Reconciliation Interest rate Public equity Real estate and other (Post-tax, C$M) and other markets non-fixed income Base Earnings Net Earnings 2024 2024 38 84 (30) 1,116 1,115 (37) 30 (45) (1) Base Earnings1,2 Market experience Business
Slide 19: Strong capital position provides substantial financial flexibility
Strong capital position provides substantial financial flexibility LICAT Ratio1 Financial Leverage2 Lifeco Cash (C$B) 134% 130% 30% 2.2 128% 29% 29% 1.1 0.5 4Q23 3Q24 4Q24 4Q23 3Q24 4Q24 4Q23 3Q24 4Q24 Footnotes 1-2: Refer to slide 33 19
Slide 20: Investor Day 2025
Investor Day 2025 Build a deeper understanding of our businesses, focused on strong growth outlooks Demonstrate the strength of capital generation within our businesses Elaborate on Lifeco capital deployment priorities to maximize value Great-West Lifeco Investor Day 2025 April 2, 2025 Toronto 20
Slide 21: Closing Remarks
Closing Remarks Paul Mahon President & CEO Great-West Lifeco
Slide 22: Looking Ahead
Looking Ahead Continue to deliver against our medium-term financial objectives Expect Empower to deliver double-digit earnings growth in 20251 Focus on growth in wealth and retirement businesses Well-positioned to invest in attractive opportunities with strong capital flexibility Continue to deliver
Slide 23: Questions
Questions GREAT-WEST “ —— LIFECOn« canada Sing EMPOWER
Slide 24: Appendix
Appendix GREAT-WEST DP LIFECOne canada empower (luau
Slide 25: Impact of segregated funds assumption updates and 2025 changes in LICAT
Impact of segregated funds assumption updates and 2025 changes in LICAT Impacts from segregated funds with guarantees 1 CSM impact (post-tax, C$M) ~(200) in 4Q24 LICAT impact Modest positive as at January 1, 2025 Run-rate base earnings impact Immaterial (~0.5% of Lifeco’s base earnings) • Assumption
Slide 26: Contractual Service Margin (CSM)
Contractual Service Margin (CSM) Total CSM (C$M) CSM (C$M), excluding segregated funds and par 134 269 42 344 13,676 6,902 13,517 (286) (148) 6,845 (33) 17 13,368 6,757 (18) (23) (34) (325) Beginning Impact of Expected CSM Insurance CSM with Assumption Impacts of Ending Beginning Impact of Expected
Slide 27: Invested Assets
Invested Assets Conservative investment portfolio, predominantly comprised of fixed income instruments – 99% of which are investment-grade • Invested assets of ~$243.8B Invested Asset Distribution Bond Portfolio Quality • Bonds represent 69% Investment Properties Cash and CD's – 99% are investment g
Slide 28: Lifeco Consolidated Bond Portfolio
Lifeco Consolidated Bond Portfolio % of Invested Assets Gov't, Gov't Related and Corporate and Non-Agency Country of Domicile Agency Securitized Bonds Securitized Bonds Total Bonds U.S. 2.6% 27.2% 29.8% Canada 8.0% 9.0% 17.0% U.K. 5.3% 6.1% 11.4% Germany 0.7% 1.0% 1.7% Ireland 0.1% 0.4% 0.5% 16.7% 4
Slide 29: Corporate and Non-Agency Securitized Bonds Sector Diversification
Corporate and Non-Agency Securitized Bonds Sector Diversification Corporates % of Invested Assets Non-Agency Securitized % of Invested Assets Electric Utilities 7.7% CMBS 1.8% Consumer Products 6.4% RMBS 0.1% Industrial Products 5.1% Other ABS 5.0% Financial Services 3.5% Total Non-Agency Securitize
Slide 30: Lifeco Mortgage Exposures
Lifeco Mortgage Exposures (C$m) Carrying Value Mortgage Holdings by Segment 1 2 3 Property Type Total % of Lifeco IA Canada Par Canada Non-Par U.S. Europe CRS Insured Non-insured LTV DSCR WALT Single Family 1,225 0.5% 954 271 - - - 251 974 Equity Release 4,818 2.0% 576 1,373 - 2,279 590 - 4,818 Mult
Slide 31: 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 2,976 1.3% 2,016 287 - 673 - Office 1,629 0.7% 933 164 22 510 - Multi Family 1,994 0.8% 1,692 273 -
Slide 32: 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 33: Footnotes
FOOTNOTES All references to the Company’s 2024 Annual MD&A in the below footnotes are to the Company’s management’s discussion and analysis for the twelve months ended December 31, 2024, which is available on SEDAR+ at www.sedarplus.com. Slide 6 2. 2019, 2020 and 2021 base earnings were calculated b