Great-west Lifeco Inc. · TSX:GWO
Great-west Lifeco — Q1 2023 Earnings Presentation
26 slides from Great-west Lifeco's earnings presentation, 2023
Slide 1: Quarterly Results Presentation Q1 2023
Quarterly Results Presentation Q1 2023 Note: All figures reflect the adoption of IFRS 17 and IFRS 9, unless otherwise stated. Unaudited comparative results for 2022 are included on a restated basis in alignment with the new standards.
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: Summary of Results
SUMMARY OF RESULTS Paul Mahon President & CEO Great-West Lifeco
Slide 4: Highlights
HIGHLIGHTS Canada Life to acquire Successful transition to IFRS 17 Investment Planning Counsel Base EPS1 of $0.87 Empower Personal Wealth Up 14% YoY Net EPS of $0.64 launched LICAT ratio2 of 127% Unio Wealth Management Up 7 points QoQ introduced by Irish Life 1. Base EPS is a non-GAAP financial rati
Slide 5: Value Drivers
VALUE DRIVERS Operating Segments1 Capital and Risk Value Drivers Canada U.S. Europe Solutions Group Life & Health Empower Defined Group Life & Health Workplace Solutions Contribution Group Retirement Group Retirement Empower Personal Wealth & Asset Individual Wealth Wealth Individual Wealth & Manage
Slide 6: Canada
CANADA Group Life & Health Group Retirement • Workplace Solutions Net Book Premium4 (C$m) AUA1,2 and Flows3 (C$m) 451 12,583 • Group Life & Health book premium up 8% YoY, 4% QoQ, 11,645 12,155 178 61,419 2,053 2,430 61,665 58,817 due to general market growth and increased utilization of (201) (1,635
Slide 7: Europe
EUROPE Group Life & Health Wealth (Ex-IO) • Workplace Solutions Net Book Premium4 (C$m) AUA1,2 and Flows3 (C$m) 32 2,230 2,128 2,125 18 ( 26 ) 23 • Group Life & Health book premium up 5% YoY 26 ( 37 ) 49 129,482 127,792 4,233 1,983 1,818 133,095 20 1,035 (2,731) • Strong persistency and pricing disc
Slide 8: U.S. – Empower
U.S. – EMPOWER Empower Defined Contribution AUA1 and Flows2 (US$b) • Workplace Solutions 1,086 1,256 50 62 1,325 • Empower DC AUA of $1.3T, up 22% YoY, with addition (43) of Prudential and positive organic net cash flows partly offset by lower equity markets Q1 2022 Q4 2022 Inflows Outflows Market/O
Slide 9: U.S. – Putnam
U.S. – PUTNAM Putnam • US$23B decrease in ending AUM year-over-year AUM1 and Flows2 (US$b) • Net outflows of $1.7B. 192.3 164.7 3.2 ( 4.5 ) 3.4 169.1 • A $0.7B improvement compared to Q1’22 5.2 ( 5.6 ) 2.7 100.6 • Outflows are primarily in lower-fee fixed income 86.5 88.6 products • Higher-earning f
Slide 10: Capital & Risk Solutions (CRS)
CAPITAL & RISK SOLUTIONS (CRS) Run-Rate Reinsurance • Strong pipeline and business expansion Earnings Drivers1 ▪ Solid new business margins on transactions covering 194 193 183 savings, health and non-life businesses in core 51 48 markets 59 41 39 ▪ Good developments in new markets and new 36 produc
Slide 11: Performance Against Medium-Term Objectives
PERFORMANCE AGAINST MEDIUM-TERM1 OBJECTIVES 4 4 5-Year 5-Year Q1 2023 (2017 - 2022) IFRS 17 (2017 - 2022) IFRS 4 Medium-Term Financial Objectives Base 2 Base 2 Base 2 8-10% base EPS growth p.a 2 14% 8.8% CAGR 8.8% CAGR 16-17% base ROE 2 (IFRS 17) 15.8% 13.6% average - 14-15% base ROE 2 (IFRS 4) - -
Slide 12: Financial Highlights
FINANCIAL HIGHLIGHTS Garry MacNicholas EVP & CFO Great-West Lifeco
Slide 13: EPS and Earnings by Reporting Segment
EPS AND EARNINGS BY REPORTING SEGMENT Earnings per Share (C$m) Earnings (C$m) (Base)1,2 (Net)2 1.43 Canada U.S. Europe CRS Lifeco Lifeco Q1 2023 278 200 178 157 808 595 0.93 0.87 0.76 Q4 2022 260 190 256 181 869 452 0.64 Net 0.48 Q1 2022 224 144 176 171 712 1,334 Base1 YOY 24% 39% 1% (8%) 13% (55%)
Slide 14: Earnings Reconciliation
EARNINGS RECONCILIATION Q1 2023 Q4 2022 Q1 2022 Post-Tax Post-Tax Post-Tax Per Share (C$) Per Share (C$) Per Share (C$) (C$m) (C$m) (C$m) Base earnings1 808 0.87 869 0.93 712 0.76 Items excluded from base earnings Market experience gains and losses (168) (0.18) (386) (0.41) 686 0.74 Assumption chang
Slide 15: Drivers of Earnings (DOE) [Base Earnings]
DRIVERS OF EARNINGS (DOE) [BASE EARNINGS 1] Q1/23 Q4/22 Q1/22 (C$m) Canada U.S. Europe CRS Corp. Total Total Total Expected insurance earnings (CSM and risk adjustment) 143 18 110 87 - 358 356 361 Impact of new insurance business (1) - - - - (1) (2) (4) Experience gains and losses on medium and long
Slide 16: Book Value per Share, LICAT, ROE and Financial Leverage
BOOK VALUE PER SHARE 1, LICAT 2, ROE 1 and FINANCIAL LEVERAGE 6 Book Value per Share1 (C$) LICAT Ratio2 23.28 23.45 127% 130% 127% 21.65 5 5 10% 8% 119% 120% Q1 2022 Q4 2022 Q1 2023 Q1 2022 Q4 2022 Q1 2023 Return on Equity1 Financial Leverage6 17.2% 15.7% 15.8% 14.7% 14.1% 13.4% 33% 33% 33% Base3 Ne
Slide 17: Questions
GREAT-WEST LIFECO QUESTIONS INVESTMENTS
Slide 18: Appendix
GREAT-WEST LIFECO APPENDIX INVESTMENTS
Slide 19: Earnings by Value Drivers
EARNINGS BY VALUE DRIVERS YoY Canada U.S. Europe CRS LIFECO Value Drivers Base 1 YoY Base 1 YoY Base 1 YoY Base 1 YoY Total 2 Base YoY Workplace Solutions 159 45% 224 58% 58 (16%) - - 441 37% Wealth & Asset Management 61 42% - - 31 (37%) - - 92 (8%) Insurance & Risk Solutions 43 (32%) - - 97 70% 153
Slide 20: Contractual Service Margin (CSM)
CONTRACTUAL SERVICE MARGIN (CSM) Total CSM ($Cm), Non-Par CSM ($Cm), Non-par and Par excluding segregated funds 132 59 75 40 30 (282) 30 (132) 13,123 13,003 13,043 5,904 5,872 5,829 Beginning Total CSM Impact of new CSM recognized for Expected movements Organic CSM Other impacts Ending Total CSM Beg
Slide 21: Invested Assets
INVESTED ASSETS 1 Investment Properties 3% Cash and CD's 3% Gov't, Gov't Related and Invested assets of $226.2 billion Agency Securitized Bonds Stocks 19% 7% Diversified high quality portfolio: Insured Residential and Multi-family Bonds represent 70%: Mortgages • 99% are investment grade 1% • 71% ra
Slide 22: Lifeco Consolidated Bond Portfolio
LIFECO CONSOLIDATED BOND PORTFOLIO * % of Invested Assets Gov't, Gov't Related and Corporate and Non-Agency Country of Domicile Agency Securitized Bonds Securitized Bonds Total Bonds U.S. 2.5% 29.4% 31.9% Canada 7.7% 8.6% 16.3% U.K. 4.8% 5.5% 10.3% Germany 1.1% 1.0% 2.1% Ireland 0.2% 0.3% 0.5% 16.3%
Slide 23: Corporate and Non-Agency Securitized Bonds – Sector Diversification
CORPORATE AND NON-AGENCY SECURITIZED BONDS – SECTOR DIVERSIFICATION * Corporates % of Invested Assets Non-Agency Securitized % of Invested Assets Electric Utilities 7.1% CMBS 2.5% Consumer Products 6.8% RMBS 0.1% Industrial Products 5.4% Other ABS 5.6% Banks 4.1% Total Non-Agency Securitized 8.2% Fi
Slide 24: Lifeco Mortgage Exposures
LIFECO MORTGAGE EXPOSURES * (C$m) Carrying Value Mortgage Holdings by Segment Property Type Total % of Lifeco IA Canada U.S. Europe CRS Insured Non-insured Single Family 1,705 0.8% 1,705 - - - 383 1,322 Equity Release 3,654 1.6% 1,471 - 1,808 375 - 3,654 Multi Family 9,561 4.2% 4,369 4,241 913 38 2,
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures The Company uses several non-GAAP financial measures to measure overall performance of the Company and to assess each of its business units. A financial measure is considered a non-GAAP measure for Canadian securities law purposes if it is presented other than in accordan
Slide 26: Footnotes
Footnotes Slide 4 2. The LICAT Ratio is calculated in accordance with OSFI's guideline - Life Insurance Capital Adequacy Test. For additional details, refer to the "Capital Management and Adequacy" section of the Company’s Q1 2023 MD&A, available for review on SEDAR at www.sedar.com Slide 6 2. Indiv