Great-West Lifeco Inc. · TSX:GWO

Great-West Lifeco — Q1 2018 Earnings Presentation

24 slides from Great-West Lifeco's earnings presentation, Dec 24, 2018

  1. Slide 1: Quarterly Information for Analysts and Investors Q1 2018

    Quarterly Information for Analysts and Investors Q1 2018

  2. Slide 2: Cautionary notes

    Cautionary notes CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION This document may contain forward-looking statements. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipa

  3. Slide 3: Summary of Results - Paul Mahon, President & CEO

    Paul Mahon President & CEO Great-West Lifeco Summary of Results 3

  4. Slide 4: Q1 2018 Highlights

    Q1 2018 Highlights  Strong performance with earnings up 18% year-over-year, on an adjusted basis (1) • Solid earnings growth in Canada with strong Group Customer results • U.S. results reflect higher sales and fee income at Empower and lower taxes • Europe saw double-digit earnings growth in the U.

  5. Slide 5: Summary of Results

    Summary of Results Adjusted Net Earnings(1) (C$m) 757 734 731 712  Net earnings of $731m, up 24% YoY 619 582 (2) • Up 18% YoY, on an adjusted basis o Up 15% YoY, in constant currency  Capital strength and flexibility • LICAT ratio at 130% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 o Target range of 1

  6. Slide 6: Summary of Results – Sales

    Summary of Results – Sales Sales (C$b)  Canada 34.6 • Strong Group Customer sales 32.4 29.5 30.3 and lower Individual Customer 25.0 sales YoY  U.S. • Empower sales up 21% YoY in local currency Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 • Higher mutual fund sales at Putnam offset by lower institutiona

  7. Slide 7: Summary of Results – Fee and Other Income

    Summary of Results – Fee and Other Income Fee and Other Income (C$m)  Lifeco fee income up 6% YoY 1,439 • Average equity markets: 1,421 1,400 1,433 1,348 S&P/TSX 1% S&P 500 18% Eurostoxx 50 4%  Canada • Higher average assets and other income which now includes Financial Horizons Q1 2017 Q2 2017 Q3

  8. Slide 8: Summary of Results – Expenses

    Summary of Results – Expenses  Canada Adjusted Expenses(1) (C$m) • $137m pre-tax annualized 1,196 1,217 1,229 1,144 run-rate reductions 1,098 achieved of which $103m relates to the shareholder account  U.S. • Continued focus on expense discipline at Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Empower

  9. Slide 9: Financial Highlights - Garry MacNicholas, EVP & CFO

    Garry MacNicholas EVP & CFO Great-West Lifeco Financial Highlights 9

  10. Slide 10: Financial Highlights - Earnings

    Financial Highlights - Earnings Adjusted Net Earnings per Share(1) 0.766  EPS of $0.74, up 18% YoY (adjusted) 0.719 0.742 0.740 0.627  Canada 0.589 • Favourable experience from LTD repricing and lower insurance claims in Group and lower taxes  U.S. • Higher earnings at Q1 2017 Q2 2017 Q3 2017 Q4

  11. Slide 11: Financial Highlights – Source of Earnings

    Financial Highlights – Source of Earnings Q1/18 Q4/17 Q1/17 For the three months ended Mar.31/18 Canada U.S. Europe Corp. Total Total Total (Adjusted) (Adjusted) Expected profit on in-force business 302 120 293 (4) 711 704 605 Impact of new business (2) (34) (60) - (96) (18) (24) Experience gains an

  12. Slide 12: Book Value per Share and Return on Equity

    Financial Highlights – Book Value per Share and Return on Equity Book Value per Share 21.01 19.99 19.95 19.92 20.11  Lifeco cash at quarter end was $0.8b  Book value up 5% from last year Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Adjusted Return on Equity (Trailing 4 quarters)  Adjusted Return on Eq

  13. Slide 13: Financial Highlights – Assets under Administration

    Financial Highlights – Assets under Administration Assets Under Administration Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 YoY (C$b) General Fund 201 200 198 203 212 5% Segregated Fund 205 209 208 217 221 8% Mutual Fund & Institutional 270 272 269 279 286 6% Other AUA 620 628 619 651 673 9% Total 1,296

  14. Slide 14: Consolidated LICAT Ratio

    Consolidated LICAT Ratio Regulatory Capital Ratios GWL LICAT Ratio OSFI Minimum 90% Total Regulatory Capital Available Regulatory Required Capital OSFI Supervisory Target 100% $26 Billion GWL Ratio 130% $20 Billion GWL Target Range 110% – 120% 130%  The Great-West Life Assurance Company’s (GWL) con

  15. Slide 15: Questions

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  16. Slide 16: Appendix

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  17. Slide 17: Canada

    Canada (In C$m) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 YoY Sales Individual Customer Individual Insurance 275 100 86 106 76 (72%) Individual Wealth 2,585 2,193 1,947 2,431 2,449 (5%) 2,860 2,293 2,033 2,537 2,525 (12%) Group Customer Group Insurance 134 186 136 161 361 169% Group Wealth 669 754 771

  18. Slide 18: United States

    United States (In US$m) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 YoY GWF Sales Empower Retirement 7,520 4,792 8,222 6,118 9,113 21% Individual Markets 353 294 393 296 285 (19%) Total 7,873 5,086 8,615 6,414 9,398 19% Putnam Sales 10,576 7,552 8,323 8,674 10,504 (1%) Fee and Other Income Empower Retir

  19. Slide 19: Europe

    Europe (In C$m) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 YoY Sales UK / Isle of Man 1,095 873 1,086 809 949 (13%) Ireland / Germany 3,321 3,962 4,276 6,516 4,790 44% Total 4,416 4,835 5,362 7,325 5,739 30% Fee and Other Income UK / Isle of Man 56 57 53 55 56 0% Ireland / Germany 263 285 291 306 304 1

  20. Slide 20: Putnam - AUM and Flows

    Putnam - AUM and Flows (US$b) Mutual Funds Institutional In-Qtr Avg. AUM 20

  21. Slide 21: Putnam – Core Net Earnings

    Putnam – Core Net Earnings Expenses Income Taxes (US$m) Fee & Net Inv Income Operating Margin (Pre-tax) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Core Net Earnings ($1) $7 $15 ($6) ($2) Notes: Q3/17 includes final performance fees and other proceeds from a closed portfolio of US$18m (US$11m after-tax)

  22. Slide 22: Stable Trend Over the Years

    Stable Trend Over the Years (C$m) Experience Gains (Losses), Management Actions, and Changes in Assumptions as a % of Net Income Before Tax 3,347 3,268 3,133 2,874 2,769 2,576 2,633 2,732 2,499 2,504 2,447 2,335 2,237 2005-2017 13 Year 24% 23% 23% 26% 25% 20% 19% 20% 21% 21% Average 18% 20% 11% 20.8

  23. Slide 23: Invested Asset Composition

    Invested Asset Composition(1)  Invested assets of $182.3 billion  Diversified high quality portfolio: − Bonds represent 73%: − 99% are investment grade − 81% rated A or higher − 84% of bond holdings are domiciled in Canada, the U.S. and the U.K. − Mortgage portfolio represents 13%: − Well diversif

  24. Slide 24: Currency (Relative to C$)

    Currency (Relative to C$) Income & Expenses Balance Sheet US$ £ € US$ £ € Q1 2018 1.26 1.76 1.55 1.29 1.81 1.59 Q4 2017 1.27 1.69 1.50 1.26 1.70 1.51 Q3 2017 1.25 1.64 1.47 1.25 1.67 1.47 Q2 2017 1.34 1.72 1.48 1.30 1.69 1.48 Q1 2017 1.32 1.64 1.41 1.33 1.67 1.42 24

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