Great-West Lifeco Inc. · TSX:GWO
Great-West Lifeco — Q3 2008 Earnings Presentation
41 slides from Great-West Lifeco's earnings presentation, Nov 25, 2008
Slide 1: Quarterly Information Q3 2008 For Analysts and Investors
Quarterly Information Package | Q3 2008 QUARTERLY INFORMATION Q3 2008 For Analysts and Investors Revised November 25, 2008 On page 16, the Company’s exposure to monoline wrapped assets as at September 30th, 2008 should have read $3.6 billion, instead of $3.1 billion. The page has been revised accord
Slide 2: Cautionary Note regarding Forward-looking Information
Quarterly Information Package | Q3 2008 Cautionary Note regarding Forward-looking Information This report contains some forward-looking statements about the Company, including its business operations, strategy and expected financial performance and condition. Forward-looking statements include state
Slide 3: Cautionary Note regarding Non-GAAP Financial Measures
Quarterly Information Package | Q3 2008 Cautionary Note regarding Non-GAAP Financial Measures This report contains some non-GAAP financial measures. Terms by which non-GAAP financial measures are identified include but are not limited to “earnings before restructuring charges”, “adjusted net income”
Slide 4: Lifeco Overview
Quarterly Information Package | Q3 2008 Lifeco Overview D. Allen Loney President & Chief Executive Officer Great-West Lifeco
Slide 5: Great-West Lifeco – Consolidated Earnings
Quarterly Information Package | Q3 2008 Great-West Lifeco – Consolidated Earnings 3 Months ended Sept 30, Constant 2007 2008 Change Currency (C$MM, except per common share amounts) Net Income - Common 461 436 (5%) (4%) Basic Earnings Per Share $ 0.516 $ 0.487 (6%) (5%) (1)(4) Net Income - Common (Ad
Slide 6: Great-West Lifeco – Common Shareholder Net Income
Quarterly Information Package | Q3 2008 Great-West Lifeco – Common Shareholder Net Income 3 Months ended Sept 30, Constant (4) 2007 2008 Change Currency (C$MM) Canada 245 251 2% 2% (1)(2) United States 150 43 NMF NMF Europe 161 140 (13%) (11%) (3) Lifeco Corporate 2 2 - - Net Income 558 436 (22%) (2
Slide 7: Lifeco – Sales, Premiums & Fee Income
Quarterly Information Package | Q3 2008 Lifeco – Sales, Premiums & Fee Income 3 Months ended Sept 30, 9 Months ended Sept 30, 2007 2008 Change 2007 2008 Change (C$MM) New Annualized Premium Canada 2,038 1,723 (15%) 7,072 6,148 (13%) (1) United States 7,386 (17) NMF 10,542 26,735 154% Europe 1,604 1,
Slide 8: Lifeco - Expenses
Quarterly Information Package | Q3 2008 Lifeco - Expenses 3 Months ended Sept 30, % 9 Months ended Sept 30, % 2007 2008 Change 2007 2008 Change (C$MM) Operating Expenses Canada 252 235 (7%) 750 748 (0%) (1) United States 373 326 (13%) 848 1,037 22% Europe 87 100 15% 267 277 4% Corporate 145 1 NMF 14
Slide 9: Lifeco – Consolidated Assets
Quarterly Information Package | Q3 2008 Lifeco – Consolidated Assets Dec Sept 2007 2008 Change (C$MM) General Fund Canada 52,477 51,940 (1%) United States 29,700 29,571 (0%) Europe 36,017 45,828 27% 118,194 127,339 8% Segregated Fund Net Assets Canada 45,932 42,180 (8%) United States 17,567 16,853 (
Slide 10: Invested Asset Update
Quarterly Information Package | Q3 2008 Invested Asset Update William W. Lovatt Executive Vice President & CFO Great-West Lifeco
Slide 11: Credit Market Impact
Quarterly Information Package | Q3 2008 Credit Market Impact Impairment Charges Total Shareholder Par Market After-Tax Value Value (1) Charge (C$MM) (C$MM) Lehman 100.7 $15 44.7 Washington Mutual (Sold @ $40) 2.1 $40 0.9 Bradford & Bingley 33.5 $20 19.3 (2) AIG - Holdco Bond 41.6 $17 24.9 Other Pr
Slide 12: Putnam Prime Money Market Fund
Quarterly Information Package | Q3 2008 Putnam Prime Money Market Fund On September 24, 2008 Putnam Investments announced that it had entered into a transaction with Federated Investors Inc. that would result in the liquidation of Putnam’s US$12.3 billion institutional Prime Money Market Fund. Und
Slide 13: Unrealized Bond Losses & Liquidity
Quarterly Information Package | Q3 2008 Unrealized Bond Losses & Liquidity Unrealized Bond Losses At September 30, 2008, – Gross unrealized bond losses (difference between amortized cost and market value) were $4.3 billion • $4.1 billion classified as Held For Trading • $0.2 billion classified as
Slide 14: Exposure to “in-the-news” Sectors
Quarterly Information Package | Q3 2008 Exposure to “in-the-news” Sectors Exposure to Financials Lifeco exposure to banks and other financials is $9.8 billion Canada (38%), U.S. (16%) and Europe (46%) Combined exposure rated AAA (11%), AA (33%), A (51%), BBB (5%), BB and lower (<1%) Exposure t
Slide 15: Sub-Prime
Quarterly Information Package | Q3 2008 Sub-Prime Lifeco has a $1.26 billion exposure to securitized subprime first mortgage loans. This represents 1.3% of consolidated invested assets $1.2 billion in the United States – Fixed rate residential first mortgage loans – Pre 2005 origination (59%), 2
Slide 16: Exposure to Monolines
Quarterly Information Package | Q3 2008 Exposure to Monolines Lifeco has $3.6 billion in monoline wrapped assets – Canada (6%), U.S. (29%) and Europe (65%) – Ambac (35%), MBIA (32%), FSA (22%), FGIC (10%), XL Capital (1%) – The underlying portfolio is composed of AAA (9%), AA (10%), A (33%), BBB (
Slide 17: Capital Ratios
Quarterly Information Package | Q3 2008 Capital Ratios 2006 2007 2008 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 MCCSR Great-West Life (Consolidated) 210% 213% 211% 209% 204% 205% 204% 205% 203% London Life 264% 253% 239% 246% 252% 234% 239% 224% 235% Canada Life Assurance 227% 242% 244% 222% 223% 226% 220% 215% 21
Slide 18: Equity Market Impact
Quarterly Information Package | Q3 2008 Equity Market Impact GWL’s MCCSR ratio remains strong at 203% – GWL’s MCCSR Required Capital at September 30th 2008 includes $68 million for segregated fund guarantees, compared to zero at June 30th 2008. This represents the present value of future guarantee
Slide 19: Lifeco – Consolidated Source of Earnings
Quarterly Information Package | Q3 2008 Lifeco – Consolidated Source of Earnings YTD September 30, 2008 YTD Sept (C$MM) Canada U.S. Europe Corp Total 2007 Expected profit on in-force business 681 418 406 (4) 1,501 1,486 Impact of new business (6) - 14 - 8 22 Experience gains and losses 280 (161) 271
Slide 20: Translation Rates and Constant Currency Impact
Quarterly Information Package | Q3 2008 Translation Rates 2008 2007 2006 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 U.S. (C$ / US$) Balance Sheet 1.06 1.02 1.03 0.99 1.00 1.06 1.15 1.17 Income & Expenses 1.04 1.01 1.00 0.98 1.05 1.10 1.17 1.13 Europe - Insurance & Annuities (C$ / £) Balance Sheet 1.89 2.03 2.04 1.96 2
Slide 21: Lifeco Canada
Quarterly Information Package | Q3 2008 Lifeco Canada Paul Mahon President & Chief Operating Officer, Canada Great-West Life
Slide 22: Canada – Sales (New Annualized Premium)
Quarterly Information Package | Q3 2008 Canada – Sales (New Annualized Premium) 3 Months ended Sept 30, 9 Months ended Sept 30, 2007 2008 Change 2007 2008 Change (C$MM) Individual Insurance & Investment Products (IIIP) Participating Account 23 28 22% 64 84 30% Individual Life 33 34 3% 99 97 (2%) Tot
Slide 23: Canada – Premium & Deposits
Quarterly Information Package | Q3 2008 Canada – Premium & Deposits 3 Months ended Sept 30, 9 Months ended Sept 30, 2007 2008 Change 2007 2008 Change (C$MM) Individual Insurance & Investment Products (IIIP) Participating Account 466 499 7% 1,413 1,519 8% Individual Life 155 169 9% 454 490 8% Total L
Slide 24: Canada – Fee Income
Quarterly Information Package | Q3 2008 Canada – Fee Income 3 Months ended Sept 30, 9 Months ended Sept 30, 2007 2008 Change 2007 2008 Change (C$MM) Canada Segregated Funds 194 195 1% 576 601 4% Administrative Services Only 30 33 8% 94 101 8% Assets under Administration 30 34 14% 93 102 9% Total Can
Slide 25: Canada – Individual Proprietary Investment Funds
Quarterly Information Package | Q3 2008 Canada – Individual Proprietary Investment Funds 4,000 Quadrus 3,000 2,000 1,000 $Millions - (1,000) (2,000) (3,000) 2007A 2008A 2007A 2008A 2007A 2008A 2007A 2008A 2007A 2008A Deposits Withdrawals Net Cash Flow Market Gain Asset Change 2007A 3,353 2,061 1,292
Slide 26: Canada – Expenses
Quarterly Information Package | Q3 2008 Canada – Expenses 3 Months ended Sept 30, 9 Months ended Sept 30, 2007 2008 Change 2007 2008 Change (C$MM) IIIP 132 125 (5%) 390 390 0% Group Insurance 102 98 (4%) 314 316 1% Corporate 18 12 (33%) 46 42 (9%) Total Operating Expenses 252 235 (7%) 750 748 (0%) T
Slide 27: Canada – Net Income
Quarterly Information Package | Q3 2008 Canada – Net Income 3 Months ended Sept 30, 9 Months ended Sept 30, 2007 2008 (1) Change 2007 2008 (1) Change (C$MM) IIIP 147 182 24% 468 553 18% Group Insurance 102 104 2% 281 295 5% Corporate (4) (35) NMF (22) (73) NMF Total Canada 245 251 2% 727 775 7% 1. Q
Slide 28: Lifeco U.S.
Quarterly Information Package | Q3 2008 Lifeco U.S. Mitchell T.G. Graye President & Chief Executive Officer Great-West Life & Annuity Insurance Company
Slide 29: U.S. – Sales (New Annualized Premium)
Quarterly Information Package | Q3 2008 U.S. – Sales (New Annualized Premium) 3 Months ended Sept 30, 9 Months ended Sept 30, (US$MM) 2007 2008 Change 2007 2008 Change GWL&A Financial Services Individual Annuity 52 41 (21%) 166 119 (28%) BOLI (incl. variable/sep. accounts) 107 40 (63%) 343 198 (42%)
Slide 30: U.S. – Premiums & Deposits
Quarterly Information Package | Q3 2008 U.S. – Premiums & Deposits 3 Months ended Sept 30, 9 Months ended Sept 30, (US$MM) 2007 2008 Change 2007 2008 Change GWL&A Individual Markets 281 311 11% 841 890 6% Retirement Services 763 730 (4%) 2,467 2,833 15% Total Financial Services 1,044 1,041 (0%) 3,30
Slide 31: U.S. – Fee Income
Quarterly Information Package | Q3 2008 U.S. – Fee Income (US$MM) 3 Months ended Sept 30, 9 Months ended Sept 30, 2007 2008 Change 2007 2008 Change GWL&A Segregated Funds 45 42 (7%) 154 140 (9%) Administrative Services Only 177 - NMF 535 164 NMF Assets under Administration 64 60 (6%) 190 182 (4%) 28
Slide 32: U.S. – Expenses
Quarterly Information Package | Q3 2008 U.S. – Expenses 3 Months ended Sept 30, 9 Months ended Sept 30, (US$MM) 2007 2008 Change 2007 2008 Change GWL&A (1) Financial Services 80 82 2% 239 245 3% Healthcare - Discontinued Operations 129 - NMF 380 115 (70%) Corporate 3 1 (67%) 8 6 (25%) Total Insuranc
Slide 33: U.S. – Shareholder Net Income
Quarterly Information Package | Q3 2008 U.S. – Shareholder Net Income (1) 3 Months ended Sept 30, 9 Months ended Sept 30, (US$MM) 2007 2008 (2) Change 2007 2008 (2) Change GWL&A Individual Markets 48 27 (44%) 133 111 (17%) Retirement Services 33 35 6% 105 116 10% Total Financial Services (3) 81 62 (
Slide 34: Putnam
Quarterly Information Package | Q3 2008 Putnam Robert Reynolds President & Chief Executive Officer Putnam Investments
Slide 35: U.S. – Asset Management (Putnam) - Assets Under Management
Quarterly Information Package | Q3 2008 U.S. – Asset Management (Putnam) - Assets Under Management Average Assets under Management (US$Bln) 2007 FY Aug 3 to 2008 Average AUM Q1 Q2 Q3 Q4 2007 Dec 31, 2007 Q1 Q2 Q3 Mutual Fund 118.8 119.6 113.4 109.2 115.2 110.0 95.7 92.7 82.1 Institutional 68.1 71.7
Slide 36: U.S. – Asset Management (Putnam) Net Asset Flows
Quarterly Information Package | Q3 2008 U.S. – Asset Management (Putnam) Net Asset Flows (US$Bln) 2007 2008 AUM Continuity 2005 2006 2007 Q3 Q3 Beginning Balance 213.3 188.8 192.1 192.8 166.4 Sales (1) 20.5 27.1 28.4 6.3 7.3 Redemptions (52.8) (46.6) (40.7) (8.9) (10.7) Net Flows Excl. PMM (32.3) (1
Slide 37: U.S. – Asset Management (Putnam) Operating Results
Quarterly Information Package | Q3 2008 U.S. – Asset Management (Putnam) Operating Results 3 Months ended Sept 30, 9 Months ended Sept 30, 2007 (1) 2008 2007 (1) 2008 (US$MM) Fee and net investment income 202 229 202 762 Operating & other expenses 147 241 147 693 Core Operating Results (pre-tax) (2)
Slide 38: Lifeco Europe
Quarterly Information Package | Q3 2008 Lifeco Europe William L. Acton President & Chief Executive Officer Canada Life Capital Corporation
Slide 39: Europe – Sales, Premiums & Deposits
Quarterly Information Package | Q3 2008 Europe – Sales, Premiums & Deposits 3 Months ended Sept 30, 9 Months ended Sept 30, (Local Currency MM) 2007 2008 Change 2007 2008 Change Sales - (New Annualized Premium) UK / Isle of Man - £ 643 626 (3%) 1,910 1,578 (17%) Ireland / Germany - € 172 97 (44%) 56
Slide 40: Europe – Fee Income
Quarterly Information Package | Q3 2008 Europe – Fee Income 3 Months ended Sept 30, 9 Months ended Sept 30, (Local Currency MM) 2007 2008 Change 2007 2008 Change Fee Income UK / Isle of Man - £ 28 28 0% 80 83 4% Ireland / Germany - € 69 64 (7%) 208 187 (10%) Reinsurance - US$ 3 6 100% 7 15 114% Fee
Slide 41: Europe – Net Income & Expenses
Quarterly Information Package | Q3 2008 Europe – Net Income & Expenses (C$MM) 3 Months ended Sept 30, Constant 9 Months ended Sept 30, Constant (1) (1) Net Income 2007 2008 Change Currency 2007 2008 Change Currency Insurance & Annuities 120 101 (16%) (13%) 364 391 7% 17% Reinsurance 31 47 52% 52% 92