Great-west Lifeco Inc. · TSX:GWO
Great-west Lifeco — Q1 2021 Earnings Presentation
37 slides from Great-west Lifeco's earnings presentation, Jun 18, 2021
Slide 1: Quarterly Results Presentation Q1 2021
Quarterly Results Presentation Q1 2021
Slide 2: Cautionary notes
Cautionary notes CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION This document may contain 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", "e
Slide 3: Summary of Results
SUMMARY OF RESULTS Paul Mahon President & CEO Great-West Lifeco 3
Slide 4: A solid first quarter
A solid first quarter Strong results across segments Recently acquired businesses performing well Modest financial COVID-related impacts 4
Slide 5: COVID-19 Business Update
COVID-19 BUSINESS UPDATE • Sales and quote activity trending upward; good asset retention • Modest credit-related impacts across bonds and mortgages in quarter • Business momentum and sales pipeline remain strong • Confident in the resiliency of our business 5
Slide 6: Earnings
EARNINGS Earnings per Share (EPS) (C$) Earnings (C$m) 0.98 912 0.80 0.80 0.76 741 739 707 0.59 543 Base1 0.37 342 Base1 Base 1 Net Net Net Q1 2020 Q4 2020 Q1 2021 Q1 2020 Q4 2020 Q1 2021 Base Earnings and EPS Net Earnings and EPS • Base earnings and EPS up 36% from a COVID19-impacted Q1 2020 • Net e
Slide 7: Canada
CANADA Insurance Sales1 (C$m) Wealth Sales1 (C$m) • Solid commercial performance in quarter 385 4,348 3,395 3,502 1,105 • Strong Group Insurance sales due to large 237 227 276 611 684 cases; improved overall persistency 119 111 2,784 2,818 3,243 • Strong asset retention in Group Wealth 118 116 109 •
Slide 8: Empower
EMPOWER Empower Sales1 (ex-Personal Capital) • Led the DC recordkeeping market in growth by both (US$m) 63,833 participants and assets in 2020 • Mega sale drove YoY increase in sales with solid 25,060 growth across other market segments 6,983 • Empower Retail IRA AUA reached US$19b Q1 2020 Q4 2020 Q
Slide 9: Putnam
PUTNAM Sales1 (US$m) • Sales of short duration income products have slowed due to lower yields; equity sales improving 14,664 12,957 12,674 • Net outflows of $2b, mainly institutional 5,453 6,568 5,805 • Outflows from fixed income products 9,211 • Net inflows for equity products 6,389 6,869 • Strong
Slide 10: Europe
EUROPE Insurance & Annuity Wealth Sales1 (C$m) • Individual wealth sales continue to recover and are Sales1 (C$m) 1,078 2,239 close to pre-pandemic levels with growth in Ireland 148 and Germany 62 986 1,599 1,498 597 517 457 281 • No bulk annuity cases or large group wealth 868 211 229 pension manda
Slide 11: Capital and Risk Solutions
CAPITAL AND RISK SOLUTIONS • Strong growth in expected profit, up 21% YoY • Growth in Structured Life and Longevity Expected Profit (C$m) • Solid pipeline of new business to begin 2021 in both Structured Life and Longevity 181 • Announced €4.7B longevity reinsurance 163 agreement with insurance comp
Slide 12: Financial Highlights
FINANCIAL HIGHLIGHTS Garry MacNicholas EVP & CFO Great-West Lifeco 12
Slide 13: Earnings
EARNINGS Earnings per Share (C$m) Base Earnings1 (C$m) (Base)1,2 (Net)2 0.98 Canada U.S. Europe CRS Lifeco Lifeco 0.80 0.80 0.76 Q1 2021 298 104 201 145 739 707 0.59 Q4 2020 348 90 195 124 741 912 0.37 Q1 2020 273 17 132 119 543 342 Base1 Net YOY 9% 512% 52% 22% 36% 107% Constant Q1 2020 Q4 2020 Q1
Slide 14: Source of Earnings [Base]
SOURCE OF EARNINGS [BASE] Q1/21 Q4/20 Q1/20 (C$m) Canada U.S. Europe CRS Corp. Total Total Total Expected profit on in-force business 311 177 221 181 (5) 885 842 729 Impact of new business 2 (64) (8) (1) - (71) (86) (86) Experience gains and losses 64 30 19 (29) (1) 83 117 20 Earnings on surplus (in
Slide 15: Earnings Reconciliation
EARNINGS RECONCILIATION Q1 2021 Q4 2020 Q1 2020 Post-Tax Per Share Post-Tax Per Share Post-Tax Per Share (C$m) (C$) (C$m) (C$) (C$m) (C$) Base earnings1 739 0.80 741 0.80 543 0.59 Items excluded from base earnings Actuarial assumption changes and other 5 0.00 (23) (0.03) (52) (0.06) management actio
Slide 16: Source of Earnings [Net]
SOURCE OF EARNINGS [NET] Q1/21 Q4/20 Q1/20 (C$m) Canada U.S. Europe CRS Corp. Total Total Total Expected profit on in-force business 311 177 221 181 (5) 885 842 729 Impact of new business 2 (64) (8) (1) - (71) (86) (86) Experience gains and losses 66 28 (6) (29) (1) 58 93 (195) Management actions an
Slide 17: Source of Earnings – Additional Detail
SOURCE OF EARNINGS – ADDITIONAL DETAIL Experience gains and losses Management actions and changes in assumptions For three months ended Mar. 31/21 For three months ended Mar. 31/21 Pre-Tax Post-Tax Pre-Tax Post-Tax (C$m) (C$m) Yield enhancement and other interest Asset default provision refinements
Slide 18: Expenses
EXPENSES Operating Expenses1,2 (C$m) Operating Expenses By Segment (C$m)1,2 Canada U.S.2 Europe CRS Lifeco1,2 1,527 1,435 Q1 2021 461 741 295 25 1,527 1,333 Q4 2020 471 643 285 25 1,435 Q1 2020 453 570 283 23 1,333 YOY 2% 30% 4% 9% 15% Constant Currency 3 2% 37% 1% 13% 17% Q1 2020 Q4 2020 Q1 2021 •
Slide 19: Book Value per Share and LICAT
BOOK VALUE PER SHARE AND LICAT Book Value per Share (C$) LICAT Ratio 23.36 22.97 22.34 133% 129% 123% Q1 2020 Q4 2020 Q1 2021 Q1 2020 Q4 2020 Q1 2021 •BVPS growth of 5% YoY and 2% QoQ was driven by • LICAT ratio at 123%, down 6 points QoQ, primarily due retained earnings partly offset by currency tr
Slide 20: Looking ahead…
Looking ahead… Continued vigilance around COVID-19 Capitalize on strategic initiatives and investments Focus on the successful integration of acquired businesses 20
Slide 21: Empower Retirement Investor Day June 8, 2021
Empower Retirement Investor Day June 8, 2021 21
Slide 22: Questions
QUESTIONS 22
Slide 23: Appendix
APPENDIX 23
Slide 24: Canada
CANADA (In C$m) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 YoY Sales Individual Insurance 118 98 76 116 109 (8%) Individual Wealth 2,784 1,679 1,852 2,818 3,243 16% Individual Total 2,902 1,777 1,928 2,934 3,352 16% Group Insurance 119 75 109 111 276 132% Group Wealth 611 538 483 684 1,105 81% Group To
Slide 25: Canada
CANADA (In C$m) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 YoY Individual Customer Base Earnings 138 159 123 132 138 0% Items excluded from Base Earnings (126) 36 (4) (141) (12) Net Earnings 12 195 119 (9) 126 950% Group Customer Base Earnings 143 195 134 205 154 8% Items excluded from Base Earnings 4
Slide 26: United States
UNITED STATES1 (In US$m) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 YoY Sales Empower Retirement 25,060 5,196 6,692 6,983 63,833 155% Personal Capital - - 542 1,168 1,399 Total 25,060 5,196 7,234 8,151 65,231 160% Putnam Sales 14,664 15,111 13,809 12,957 12,674 (14%) Fee and Other Income Empower Retire
Slide 27: United States
UNITED STATES (In US$m) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 YoY Empower Retirement Base Earnings 40 48 58 56 95 138% Items excluded from Base Earnings (9) (4) 29 - (8) Net Earnings 31 44 87 56 87 181% Personal Capital Base Earnings - - (5) (5) (11) Items excluded from Base Earnings - - - (2) (2)
Slide 28: Europe
EUROPE (In C$m) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 YoY Insurance and Annuity Sales U.K. Insurance and Annuity 451 644 284 996 522 16% Ireland Insurance and Annuity 60 52 63 75 68 13% Germany Insurance and Annuity 6 6 7 7 7 17% Total 517 702 354 1,078 597 15% Wealth Management Sales U.K. Wealth
Slide 29: Europe
EUROPE (In C$m) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 YoY Fee and Other Income U.K 39 44 42 43 46 18% Germany 105 111 111 119 116 10% Ireland 189 185 189 189 191 1% Total 333 340 342 351 353 6% Operating Expenses U.K 79 83 85 77 86 9% Germany 35 36 37 40 41 17% Ireland 166 160 151 163 164 (1%) Cor
Slide 30: Europe
EUROPE (In C$m) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 YoY U.K. Base Earnings 72 88 78 96 120 67% Items excluded from Base Earnings 19 21 (11) 60 (12) Net Earnings 91 109 67 156 108 19% Ireland Base Earnings 27 53 70 62 43 59% Items excluded from Base Earnings (43) 48 126 (8) 3 Net Earnings (16) 10
Slide 31: Capital and Risk Solutions
Capital and Risk Solutions (In C$m) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 YoY Fee and Other Income Reinsurance 3 2 3 3 2 (30%) Operating Expenses Reinsurance 21 23 23 23 23 10% Corporate & Par 2 1 2 2 2 Total 23 24 25 25 25 9% Reinsurance Base Earnings 120 138 157 124 146 22% Items excluded from B
Slide 32: Putnam – Core Net Earnings
PUTNAM – CORE NET EARNINGS (US$m) Expenses Fee & Net Investment Income1 Income Taxes Core Margin (Pre-tax) 1. Fee & net investment income includes US$23m pre-tax ($17m after tax) of institutional performance fees in Q4 2020. 2. Core net earnings (loss) (a non-IFRS financial measure) is a measure of
Slide 33: Invested Assets
INVESTED ASSETS 1 Loans to Investment Properties Policyholders Cash and CD's 3% Invested assets of $209.1 billion 3% 4% Gov't, Gov't Related and Agency Securitized Bonds Stocks 24% Diversified high quality portfolio: 6% Bonds represent 71%: Insured Residential • 99% are investment grade and Multi-fa
Slide 34: Lifeco Consolidated Bond Portfolio
LIFECO CONSOLIDATED BOND PORTFOLIO * % of Invested Assets Gov't, Gov't Related and Agency Corporate and Non-Agency Country of Domicile Securitized Bonds Securitized Bonds Total Bonds U.S. 3.0% 23.8% 26.8% Canada 9.3% 9.4% 18.7% U.K. 7.3% 7.5% 14.8% Germany 1.2% 0.9% 2.1% Ireland 0.3% 0.3% 0.6% 21.1%
Slide 35: Corporate and Non-Agency Securitized Bonds – Sector Diversification
CORPORATE AND NON-AGENCY SECURITIZED BONDS – SECTOR DIVERSIFICATION * Corporates % of Invested Assets Non-Agency Securitized % of Invested Assets Electric Utilities 7.4% CMBS 1.9% Consumer Products 6.4% RMBS 0.1% Industrial Products 4.6% Other ABS 4.0% Financial Services 3.9% Total Non-Agency Securi
Slide 36: Lifeco Mortgage Exposures
LIFECO MORTGAGE EXPOSURES* (C$m) Carrying Value Mortgage Holdings by Segment Property Type Total % of Lifeco IA Canada U.S. Europe CRS Insured Non-insured Single Family 2,035 1.0% 2,035 - - - 513 1,522 Equity Release 2,034 1.0% 790 - 1,244 - - 2,034 Multi Family 7,437 3.6% 4,284 2,433 680 40 3,211 4
Slide 37: Currency (relative to C$)
CURRENCY (RELATIVE TO C$) Income & Expenses Balance Sheet US$ £ € US$ £ € Q1 2021 1.27 1.75 1.53 1.26 1.73 1.47 Q4 2020 1.3 1.72 1.55 1.27 1.74 1.55 Q3 2020 1.33 1.72 1.56 1.33 1.72 1.56 Q2 2020 1.39 1.72 1.53 1.36 1.68 1.52 Q1 2020 1.34 1.72 1.48 1.4 1.74 1.55 37