Great-west Lifeco Inc. · TSX:GWO
Great-west Lifeco — Q1 2025 Earnings Presentation
39 slides from Great-west Lifeco's earnings presentation, May 2025
Slide 1: Quarterly Results Presentation Q1 2025
Great-West Lifeco Quarterly Results Presentation Q1 2025
Slide 2: Cautionary Notes
Cautionary Notes CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION From time to time, Lifeco makes written and/or oral forward-looking statements within the meaning of applicable securities laws, including in this presentation. In addition, in the course of the Company’s Q1 2025 earnings confere
Slide 3: Conference call participants
Conference call participants PRESENTERS Paul Mahon Jon Nielsen President & CEO EVP & CFO Q&A PARTICIPANTS David Harney Fabrice Morin Ed Murphy President and COO, Europe and President & COO, Canada President and CEO, Empower Capital and Risk Solutions Linda Kerrigan Jeff Poulin SVP & Appointed Actuar
Slide 4: Business Overview
Business Overview Paul Mahon President & CEO Great-West Lifeco
Slide 5: Q1 2025 financial highlights
Q1 2025 financial highlights Base Earnings1 Base ROE1 Base EPS1 Total client assets1 $1,030M 17.2% $1.11 $3.0T Up 5% YoY Up 0.2pp YoY Up 6% YoY Up 13% YoY in constant currency2 Net Earnings Net ROE2 Net EPS AUMA1 $860M 15.6% $0.92 $1.0T BVPS2 LICAT ratio3 Leverage Ratio4 Lifeco Cash $27.61 130% 28%
Slide 6: Continued double-digit base earnings growth in Retirement and Wealth
Continued double-digit base earnings growth in Retirement and Wealth Lifeco - Retirement Lifeco - Wealth Base earnings1 Base earnings1 (C$B) (C$B) +24% +13% +18% in CC4 316 +8% in CC4 166 147 254 1Q24 1Q25 1Q24 1Q25 • Pre-tax base operating margin1 improved by >400 bps to 30.1%, driven by Empower •
Slide 7: Steady performance in insurance businesses despite mortality experience
Steady performance in insurance businesses despite mortality experience Lifeco - Group Benefits Lifeco - Insurance & Risk Solutions Base earnings1 Base earnings1 (C$B) (C$B) +4% (2%) +3% in CC2 204 351 (7%) in CC2 197 344 1Q24 1Q25 1Q24 1Q25 • Europe demonstrated strong premium growth from in-force
Slide 8: Resilient business, well-positioned to withstand tariff-related pressures
Resilient business, well-positioned to withstand tariff-related pressures • Diversified portfolio of businesses in stable geographies, mostly financial necessities • Resilient retirement and wealth businesses • Significant portion of Empower’s earnings is not market sensitive • Strength of advice-ba
Slide 9: Message from Incoming President & CEO
Message from Incoming President & CEO David Harney President and COO Europe and Capital and Risk Solutions
Slide 10: Financial Highlights
Financial Highlights Jon Nielsen EVP & CFO Great-West Lifeco
Slide 11: Strong Q1 results despite elevated market volatility
Strong Q1 results despite elevated market volatility Base Earnings1,3 (bars) and Net Earnings2 (diamonds) Base ROE1,3 (bars) and Net ROE2 (diamonds) (C$M) +5% +0.2pp 1,031 17.2% 1,030 17.0% 978 15.6% 14.6% 860 1Q24 1Q25 1Q24 1Q25 • Base earnings driven by double digit-growth across Wealth and Retire
Slide 12: Favourable insurance experience in aggregate
Favourable insurance experience in aggregate Insurance experience in Base Earnings Insurance experience in CSM2 Insurance experience – Combined (C$M, pre-tax) (C$M, pre-tax) (C$M, pre-tax) 61 47 16 43 14 44 16 45 34 43 1 45 27 + 18 2 10 (17) (29) 1Q24 1Q25 1Q24 1Q25 1Q24 1Q25 Mortality & Longevity M
Slide 13: Empower: Retirement plan wins and Wealth net flows drive double-digit growth
Empower: Retirement plan wins and Wealth net flows drive double-digit growth Base Earnings1,3 (bars) and Net Earnings2 (diamonds) (US$M) Highlights +13% • Base earnings growth driven by net new retirement plans, +21% in C$ 255 participant growth, higher equity markets and operating leverage 225 237
Slide 14: Empower: Significant downside protection
Empower: Significant downside protection Empower 1Q25 net fee and spread income1 Empower 1Q25 ending client asset composition (Retirement) 26% 30% 51% 50% 20% 23% Asset-based Spread income Other fees U.S. equities Foreign & Capital preservation other equities & fixed income 1. Refer to the Glossary
Slide 15: Canada: Continued growth in Retirement and Wealth client assets
Canada: Continued growth in Retirement and Wealth client assets Base Earnings1 (bars) and Net Earnings (diamonds) Highlights (C$M) • Lower earnings due to reduced CSM recognized resulting from (7%) 391 assumption changes in H2 2024, less favourable Group Benefits mortality experience, and lower earn
Slide 16: Europe: Group Benefits and Wealth drive growth
Europe: Group Benefits and Wealth drive growth Base Earnings1 (bars) and Net Earnings (diamonds) Highlights (C$M) • Excluding net investment income, base earnings grew at a double- digit pace, driven by Group Benefits and Wealth +6% +1% in CC 239 226 Retirement and Wealth 216 • Client assets up 18%,
Slide 17: CRS: Continued strength in Capital Solutions new business volume
CRS: Continued strength in Capital Solutions new business volume Base Earnings1 (bars) and Net Earnings (diamonds) (C$M) Highlights • CRS demonstrated strong growth and benefits of diversification as +4% business growth and favourable experience in Capital Solutions 270 offset unfavourable Risk Solu
Slide 18: Despite uncertainty, global markets largely remain ahead of a year ago
Despite uncertainty, global markets largely remain ahead of a year ago Total Shareholder Return1 1Q25 1.35 In-quarter average Change 1.30 2Q25 YTD 2Q25 QTD 1.25 vs. 2024 vs. 2Q24 Market Indices 1.20 S&P 500 6% 3% 1.15 S&P / TSX Composite 8% 10% 1.10 MSCI Europe 3% (1%) BBG US Agg. Bond 2% 5% 1.05 Cu
Slide 19: Lifeco is resilient to market volatility
Lifeco is resilient to market volatility 1 • Base earnings sensitivities are primarily reflected in asset- (12-month impact) Base earnings based fee income in Retirement and Wealth businesses, earnings on surplus, and general account spread margins. 31-Mar • Sensitivities assume no subsequent change
Slide 20: Solid capital and cash generation contribute to resilience of the business
Solid capital and cash generation contribute to resilience of the business Base Capital Generation1, 1Q25 Free Cash Flow2 by quarter (C$M and % of Base Earnings, Trailing four quarters) (C$M) 1,387 4,244 998 >80% 4 quarter average: 911 857 701 557 Base earnings Organic Base Capital 1Q24 2Q24 3Q24 4Q
Slide 21: Strong capital position provides substantial financial flexibility
Strong capital position provides substantial financial flexibility LICAT Ratio1 Financial Leverage2 Lifeco Cash (C$B) 130% 130% 30% 2.5 29% 2.2 129% 28% 0.9 1Q24 4Q24 1Q25 1Q24 4Q24 1Q25 1Q24 4Q24 1Q25 Footnotes 1-2: Refer to slide 39 21
Slide 22: Closing Remarks
Closing Remarks Paul Mahon President & CEO Great-West Lifeco
Slide 23: Key messages
Key messages Continued shift of business mix toward capital-efficient businesses • Double-digit growth across Retirement and Wealth in Q1 2025 Upside to profitability • Base ROE1 of 17.2% in Q1 2025 and set to expand with higher growth in Wealth and Retirement Highly resilient business that can with
Slide 24: Questions
Questions GREAT-WEST " — THES come eat
Slide 25: Appendix
Appendix GREAT-WEST " — THES come eat
Slide 26: Lifeco's revised medium-term objectives
Lifeco’s revised medium-term objectives Base EPS growth1 Base Capital Base ROE1 Base earnings Generation1 Dividend Payout Ratio1 Revised 8-10% 80%+ 19%+ 45-55% objectives Prior objectives 8-10% N/A 16-17% 45-55% Potential to outperform base EPS growth through accretive deployment of excess capital 1
Slide 27: Earnings diversification across operating segments and lines of business
Earnings diversification across operating segments and lines of business Base Earnings by segment1 Base Earnings by Line of Business1 CRS 19% Retirement Insurance & Risk Solutions U.S. 32% 33% 31% Base earnings Base earnings $1,030 $1,030 Net Earnings Net Earnings 21% $860 $860 Europe 16% 28% 20% We
Slide 28: Lifeco efficiency ratio has improved 120 bps YoY
Lifeco efficiency ratio has improved 120 bps YoY Efficiency Ratio1 (%) -120 bps 57.9% 57.5% 57.1% 56.7% 56.7% • Efficiency ratio of 56.7% achieved in 1Q25, down 1.2pp from 1Q24 • Efficiency driven primarily by further scale at Empower • Business Transformation costs of $10M were incurred in 1Q25 1Q2
Slide 29: Diversified investment portfolio with resilient commercial mortgage portfolio
Diversified investment portfolio with resilient commercial mortgage portfolio Lifeco Invested Assets Lifeco Mortgage Portfolio (excluding Participating Account) (excluding Participating Account) Cash and CDs Commercial - Other Single Family Investment properties Stocks 2% 5% Gov’t and 6% 1% Equity R
Slide 30: Bond portfolio focused on lower tariff-risk sectors and high-quality credit
Bond portfolio focused on lower tariff-risk sectors and high-quality credit Bond portfolio Industry Exposure Bond Portfolio Quality (excluding Participating Account) (excluding Participating Account) BB & Lower Trade-related industries1 1% AAA Government 18% 16% & agency BBB 29% 27% Non-Par Bonds No
Slide 31: Invested Assets
Invested Assets Conservative investment portfolio, predominantly comprised of fixed income instruments – 99% of which are investment-grade • Invested assets of ~$247.8B • Bonds represent 69% Invested Asset Distribution Bond Portfolio Quality Investment Properties Cash and CD's – 99% are investment g
Slide 32: Lifeco Consolidated Bond Portfolio
Lifeco Consolidated Bond Portfolio % of Invested Assets Gov't, Gov't Related and Corporate and Non-Agency Country of Domicile Agency Securitized Bonds Securitized Bonds Total Bonds U.S. 4.1% 26.6% 30.7% Canada 7.6% 9.0% 16.6% U.K. 5.1% 6.3% 11.4% Germany 0.7% 1.0% 1.7% Ireland 0.1% 0.4% 0.5% 17.6% 4
Slide 33: Corporate and Non-Agency Securitized Bonds Sector Diversification
Corporate and Non-Agency Securitized Bonds Sector Diversification Corporates % of Invested Assets Non-Agency Securitized % of Invested Assets Electric Utilities 7.7% CMBS 1.7% Consumer Products 6.4% RMBS 0.1% Industrial Products 5.1% Other ABS 4.5% Financial Services 3.7% Total Non-Agency Securitize
Slide 34: Lifeco Mortgage Exposures
Lifeco Mortgage Exposures (C$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 1,154 0.5% 900 254 - - - 234 920 Equity Release 5,097 2.1% 603 1,417 - 2,454 623 - 5,097 Mult
Slide 35: Lifeco Non-Fixed Income Portfolio
Lifeco Non-Fixed Income Portfolio (C$m) Carrying Value Equity Portfolio by Segment NFI Portfolio by Type Total % of Lifeco IA Canada Par Canada Non-Par U.S. Europe CRS Investment Properties Industrial 2,760 1.1% 2,032 292 - 436 - Office 1,629 0.7% 932 165 17 515 - Multi Family 2,093 0.8% 1,796 260 -
Slide 36: Contractual Service Margin (CSM)
Contractual Service Margin (CSM) Total CSM (C$M) CSM (C$M), excluding segregated funds and par 129 221 7,150 231 13,666 208 44 143 18 13,425 10 47 6,919 10 13,368 6,845 (298) (160) Beginning Impact of New Expected CSM Insurance CSM with Assumption Impacts of Ending Beginning Impact of New Expected C
Slide 37: Reconciliation of Base Earnings to Net Earnings
Reconciliation of Base Earnings to Net Earnings 1Q25 Earnings Reconciliation Real estate and other non- (Post-tax, C$M) Public equity markets fixed income Interest rate and other 1,030 (15) (38) (38) (91) (10) (37) (32) 860 Base Earnings1,2 Market experience Business transformation Amortization of i
Slide 38: 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”. Non-GAAP financial measures and ratios are used t
Slide 39: Footnotes
FOOTNOTES All references to the Company’s Q1 2025 MD&A in the below footnotes are to the Company’s management’s discussion and analysis for the three months ended March 31, 2025, which is available on SEDAR+ at www.sedarplus.com. Slide 5 2. Additional information regarding this metric has been incor