Power Financial Corporation · TSX:PWF.PF.A
Power Financial — Investor Presentation (September 2018)
29 slides from Power Financial's investor presentation, September 2018
Slide 1: Investor Presentation
Investor Presentation September 2018
Slide 2: Forward looking statements
Forward looking statements In the course of today’s meeting, officers of the By its nature, this information is subject to inherent including management’s perceptions of historical Corporation may make, in their remarks or in response risks and uncertainties that may be general or specific trends, c
Slide 3: Forward looking statements
Forward looking statements All financial information and market data are in Canadian Dollar (C$) as at June 30, 2018, except otherwise noted, with the following abbreviations: millions (M); billions (B). Change in Accounting Policy Effective January 1, 2013, the Corporation adopted revised IAS 19 (I
Slide 4: Table of contents
Table of contents PFC Overview Creating value in a changing environment Appendix 4
Slide 5: Group overview
Group overview Power Financial controls three public companies with a combined market capitalization of $51 billion and has an active program in Fintech MARKET DIVIDEND ASSETS UNDER ASSETS UNDER CAPITALIZATION YIELD MANAGEMENT ADMINISTRATION $22.0B 5.6% $906B $1.6T 70.3%(1) 64.1%(1) 27.8%(1) MARKET
Slide 6: Power Financial path to value creation
Power Financial path to value creation Creating superior shareholder value over the long- term Prudent approach to risk Provide active & management & strong maintain a strong governance financial Build industry oversight of our position leaders with companies attractive growth profiles Take a long-
Slide 7: Value creation over the long-term
Value creation over the long-term Value of $100 Invested(1) Dividend per Share(2) 30-Year TSR(1) $1.73 13.9% $4,902 9.8% 13.9% 11.0% 7.4% CAGR CAGR $100 $0.08 1988 2018 1988 2018 S&P TSX S&P TSX PFC Life & Health (1) Assumes dividend reinvested, pre-tax (2) Annualized Note: Metrics as at June 30; 30
Slide 8: Focused business model in financial services
Focused business model in financial services Two distribution …offering three main …in a limited number of channels product offerings mature markets Group Accumulation Decumulation Advisor Insurance 8
Slide 9: Strong foundations through multi-brand strategy
Strong foundations through multi-brand strategy Best-in-class investment Strong multi-channel management capabilities distribution reach $867B assets under management $1.5T assets under administration Broad capabilities across asset Significant retail distribution in Canada classes, geographies
Slide 10: Leadership across businesses and geographies
Leadership across businesses and geographies Asset Management Wealth & Retirement Insurance Largest Leading asset manager Network of certified #1 Individual insurer financial planners #3 Group insurer 13 million customer relationships #1 #1 Pension provider in Life insurer Ireland #1 Top 4 UK #1 Ret
Slide 11: Earnings are diversified by business line and geography
Earnings are diversified by business line and geography 2017 Group Adjusted Net Earnings (1) Canada (52%) Europe (38%) US (10%) $1,236M $889M $227M Pargesa Individual 15% Customers Retirement Reinsurance 31% Services 14% 46% Group Insurance 34% Insurance and Annuities Individual 71% Markets Asset &
Slide 12: Cash earnings have been stable, diversified and growing
Cash earnings have been stable, diversified and growing Lifeco is the largest source of cash flow IGM & Pargesa provide resilient and stable dividends, contributing a third of cash earnings Historical PFC Cash Earnings (C$M) (1) $1,400 76 $1,300 81 72 $1,200 77 63 333 57 $1,100 333 333 $1,000 32
Slide 13: Table of contents
Table of contents PFC Overview Creating value in a changing environment Appendix 13
Slide 14: Group Strategy
Group Strategy 1. 1 Transform our advisor-based distribution businesses 2. 2 Harness the full potential of our group customers 3. 3 Reshape global asset management 4 Increase the competitiveness/profitability of core insurance businesses 4. 5 Deploy and redeploy group capital 5. 6. 6 Develop a portf
Slide 15: Important forces re-shaping asset, wealth and retirement markets
Important forces re-shaping dynamics in the asset, wealth and retirement markets Challenging Higher regulatory Technology-enabled investment Rise of passive standards of care models environment and transparency • Lower expected market • Increasing market • Emergence of low-cost • Focus on client int
Slide 16: Creating both opportunities and challenges for our businesses
Creating both opportunities and challenges for our businesses Asset Management Wealth Management Retirement High and consistent performance Beta: Control of shelf and portfolio Greater scale • Low cost passive puts a high bar on construction • Economies of scale for greater price value creation net
Slide 17: Insurance provides our group with stable earnings in spite of headwinds
Insurance provides our group with stable earnings in spite of headwinds Persistently low interest rates Growing need for mortality protection driven by demographics and global shift from DB to DC Higher capital and operating costs Potential to meet a broader range of client needs in group post-c
Slide 18: Significant progress across our businesses – Great-West Lifeco
Significant progress across our businesses – Great-West Lifeco Strategy Progress Manage and extend core business • Canada transformation in execution phase; on track to • Strengthen positions in targeted regions: Canada, U.S. achieving targeted cost savings and Europe, each with market specific stra
Slide 19: Significant progress across our businesses - IGM Financial
Significant progress across our businesses - IGM Financial Strategy Progress Strategic focus and cultural transformation Significant talent influx into IGM leadership • Create flatter, leaner organization Turnaround and market share gains at Mackenzie • Foster culture of accountability, executio
Slide 20: Power Financial has created long-term shareholder value over decades
Power Financial has created long-term shareholder value over decades Since its launch as a public company in the mid-1980s, Power Financial has been focused on creating long- term shareholder value Foundations Rapid acquisition-led growth Financial crisis Organic growth mid-1980s to 1996 1997-2007 2
Slide 21: Power Financial has an active fintech strategy
Power Financial has an active fintech strategy Power Financial and its group of companies have invested $356M in building leading platforms that will be part of the next generation of financial services, creating opportunities for our incumbent businesses to adopt and integrate new technologies Fint
Slide 22: Pargesa provides Power Financial with a vehicle to create value in Europe
Pargesa provides Power Financial with a vehicle to create value in Europe Shareholding Structure Overview Multi-generational collaboration between the Frère and Frère Desmarais families, with over 25 years of formal partnership Parjointco 50 % 50 % Group • Current agreement is effective until 2029
Slide 23: GBL 5 Strategic Axis
GBL has repositioned its portfolio for future value creation following 5 principles Better balance between growth & yield • Growth assets increased from 15% to 57% 5 Strategic Axis • Energy assets decreased from 54% to 4% Sectorial and geographical diversification • French investments decreased from
Slide 24: Foundations for future value creation
Foundations for future value creation Continued focus on long-term shareholder value creation Growing earnings organically by capitalizing on the scale of our leading franchises in a rapidly changing environment Actively seeking opportunities to deploy capital in accretive acquisitions Pursu
Slide 25: Table of contents
Table of contents PFC Overview Creating value in a changing environment Appendix 25
Slide 26: Upcoming investor events
Upcoming investor events Scotia Financial Summit Toronto, Sept. 5 & 6, 2018 Investor Roadshow U.S., Nov. 13-15, 2018 (schedule to be determined) For further information on the companies in the Group: www.greatwestlifeco.com www.igmfinancial.com www.pargesa.ch p3vc.com www.gbl.be 26
Slide 27: Success founded on the strengths of companies that have joined the Group
Success founded on the strengths of companies that have joined the Group The companies acquired throughout decades have prospered, benefitting employees, local communities, clients and shareholders Montréal, Canada Founded in 1925 Winnipeg, Canada London, Canada Toronto, Canada Boston, USA Dublin, I
Slide 28: Conservative capital structure
Conservative capital structure Power Financial’s prudent approach to managing leverage has contributed to strong and stable credit ratings, throughout economic cycles Power Financial (“A+”) and Great-West Lifeco (“A+”) have had stable S&P credit ratings since the acquisition of Canada Life in 2003
Slide 29: Net earnings, adjusted net earnings, and cash earnings
Net earnings, adjusted net earnings, and cash earnings (C$M) 1996 2000 2005 2010 2013 2014 2015 2016 2017 Net earnings 358 755 1,606 1,468 1,896 2,136 2,319 1,919 1,717 (1) Other items : Great-West Lifeco - - 44 144 (156) - - 31 340 IGM Financial - - - 13 6 44 15 (21) 78 Pargesa (32) (61) (11) - (38
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