Great-West Lifeco Inc. · TSX:GWO
Great-West Lifeco — Q1 2013 Earnings Presentation
54 slides from Great-West Lifeco's earnings presentation, 2013
Slide 1: Quarterly Information Q1 2013 For Analysts and Investors
QUARTERLY INFORMATION Q1 2013 For Analysts and Investors
Slide 2: Cautionary Note regarding Forward-looking Information
Q1 2013 Quarterly Information Package Cautionary Note regarding Forward-looking Information This report contains some forward-looking statements about the Company, including its business operations, strategy and expected financial performance and condition. Forward-looking statements include stateme
Slide 3: Overview
Overview D. Allen Loney President & Chief Executive Officer Great-West Lifeco, Great-West Life, London Life, Canada Life
Slide 4: High quality earnings up sharply to $517 million, $0.544 per common share
Q1 2013 Quarterly Information Package High quality earnings up sharply to $517 million, $0.544 per common share Operating earnings were $517 million in the first quarter of 2013, up from $449 million from one year ago Earnings per common share of $0.544 in the quarter, a 15% increase from one ye
Slide 5: Financial and capital position is strong
Q1 2013 Quarterly Information Package Financial and capital position is strong MCCSR of 210% for Great-West Life Assurance Company Holding company cash at quarter end is approximately $600 million, excluding the funding raised for Irish Life acquisition Common shareholder dividend was unchange
Slide 6: Irish Life Acquisition Announcement
Q1 2013 Quarterly Information Package Irish Life Acquisition Announcement On February 19, 2013 Lifeco signed an agreement with the Government of Ireland to acquire Irish Life Group (ILG) through its UK subsidiary, Canada Life Limited Canada Life will pay €1.3 billion ($1.75 billion) for all of t
Slide 7: Irish Life Metrics Remain Positive as Integration Planning Well Advanced
Q1 2013 Quarterly Information Package Irish Life Metrics Remain Positive as Integration Planning Well Advanced Purchase • C$1.75 billion (€1.3 billion) Price and • P/E 2014E: 8.2x(1) Implied Metrics • P/BV (June 30, 2012) 1.3x • Anticipated pre-tax cost savings of €40 million (C$54 million) annually
Slide 8: Irish Life Acquisition Financing Plan Complete
Q1 2013 Quarterly Information Package Irish Life Acquisition Financing Plan Complete On March 12, 2013, Lifeco completed common share issue in the form of subscription receipts in both public and private offerings with aggregate gross proceeds to Lifeco of approximately $1.25 billion On April 18
Slide 9: Quarter Overview – $18 million Positive Impact of Market Conditions
Q1 2013 Quarterly Information Package Quarter Overview – $18 million Positive Impact of Market Conditions (C$MM) Equity Markets Interest Rates Credit Markets Currency $13 $0 $4 $1 Net Earnings Higher than expected Not Material Net recoveries of Not Material asset-based fee impaired Impact in
Slide 10: Lifeco Summary of Results
Lifeco Summary of Results William W. Lovatt Executive Vice President & Chief Financial Officer Great-West Lifeco
Slide 11: Great-West Lifeco Operating Earnings
Q1 2013 Quarterly Information Package Great-West Lifeco Operating Earnings (C$MM) Lifeco Canada U.S. Europe EPS Except earnings per share $0.546 $0.544 $0.517 $0.512 $0.474 $518 $517 $488 $491 $449 $165 $192 $159 $151 $140 $86 $85 $76 $71 $74 $242 $253 $280 $263 $265 Q1 2012 Q2 2012 Q3 2012 Q4 2012
Slide 12: Great-West Lifeco - Return on Equity - Operating Earnings
Q1 2013 Quarterly Information Package Great-West Lifeco - Return on Equity - Operating Earnings (Trailing 4 Quarters) 22.8% 20.2% 18.9% 16.8% (2.5%) Canada Great-West Putnam Europe Lifeco (2) Financial (1) Average Allocated Equity $4.6 $1.8 $1.7 $3.5 $12.0 (C$bln) (1) Great-West Financial includes U
Slide 13: Great-West Lifeco New Annualized Premiums (Sales)
Q1 2013 Quarterly Information Package Great-West Lifeco New Annualized Premiums (Sales) Premiums & Deposits (C$bln) (C$bln) Canada Great-West Financial Putnam Europe Y/Y $16.7 $16.6 15% Y/Y $15.5 $2.5 $2.2 11% $13.9 23% $14.5 $13.6 $2.4 $1.0 27% $13.2 $1.3 $2.0 $11.9 $11.4 $2.2 $0.9 $0.8 $9.6 $6.7 $
Slide 14: Great-West Lifeco – Fee Income
Q1 2013 Quarterly Information Package Great-West Lifeco – Fee Income (C$MM) Canada Great-West Financial Putnam Europe Y/Y $767 $778 7% $724 $734 $720 $170 $158 9% $145 $158 $145 $191 7% $179 $186 $184 $182 $128 $140 14% $123 $122 $122 $277 $270 $271 $283 $289 4% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 20
Slide 15: Great-West Lifeco – Operating Expenses
Q1 2013 Quarterly Information Package Great-West Lifeco – Operating Expenses (C$MM) Canada Great-West Financial Putnam Europe Corporate Y/Y $708 10% $697 $643 $642 $656 $86 6% $94 $81 $84 $86 $186 12% $192 $166 $164 $170 $114 $128 22% $105 $112 $116 $287 $276 $277 $294 $305 6% Q1 2012 Q2 2012 Q3 201
Slide 16: Great-West Lifeco – Total Assets under Administration
Q1 2013 Quarterly Information Package Great-West Lifeco – Total Assets under Administration (C$bln) General Fund Mutual Fund & Institutional Y/Y Segregated Fund Other AUA $582 11% $532 $546 $523 $524 $174 18% $152 $157 $148 $149 $146 11% $131 $129 $132 $135 $100 $99 $102 $105 $109 9% $144 $147 $148
Slide 17: Invested Assets Update
Invested Assets Update Mark Corbett Executive Vice President & Chief Investment Officer Great-West Lifeco
Slide 18: In-Quarter Developments: Credit Markets
Q1 2013 Quarterly Information Package In-Quarter Developments Credit Markets Credit experience in connection with impairments and rating changes was positive in the quarter Total Credit Impact on Shareholders’ Net Earnings Q1 Q2 Q3 Q4 Total Q1 ($ millions) 2012 2012 2012 2012 2012 2013 Credit (imp
Slide 19: Invested Asset Composition
Q1 2013 Quarterly Information Package Invested Asset Composition* Cash & CD's Loans to 1% Invested assets at March 31, 2013 were Policyholders $133 billion 5% Investment Gov't Bonds Diversified high quality portfolio: Properties 28% 3% − Bonds represent 72% of invested Non‐Insured Residential as
Slide 20: Total Bonds by Issuer Domicile
Q1 2013 Quarterly Information Package Total Bonds by Issuer Domicile* Eurozone ** % of Eurozone bonds by % of Invested ($6.2 billion or 5% of Invested Assets) sector Total Assets Governments 36% 1.7% % of Spain Finland Corporates 38% 1.8% Invested Netherlands Italy Banks 20% 0.9% 5% 3% Issuer Domici
Slide 21: Government Bonds by Issuer Domicile
Q1 2013 Quarterly Information Package Government Bonds by Issuer Domicile* ($37.7 billion or 28% of Invested Assets) Eurozone (excluding Peripherals)** ($2.1 billion or 1.6% of Invested Assets) % of Invested Netherlands Issuer Domicile Assets 28% Finland Canada 12% 8% France United Kingdom 7% 14% Au
Slide 22: Corporate and Securitized Bond Diversification
Q1 2013 Quarterly Information Package Corporate and Securitized Bond Diversification* Banks by Issuer Domicile By Industrial Classification ($6.7 billion or 5% of Invested Assets) % of Australia Invested 8% Assets U.S. France Corporates 17% 7% Banks 5% Consumer Products 5% Netherlands Electric Utili
Slide 23: Banks & Other Financial Institutions Bond Holdings – Pricing Trends
Q1 2013 Quarterly Information Package Banks & Other Financial Institutions Bond Holdings – Pricing Trends * (in billions) Covered/ Senior Subordinated Total Banks 3.5 3.2 6.7 Other Financials 4.1 1.3 5.4 7.6 4.5 12.1 *Subordinated includes lower tier 2, upper tier 2, tier 1 and contingent capital 23
Slide 24: Bond Portfolio Unrealized Gains and Losses
Q1 2013 Quarterly Information Package Bond Portfolio Unrealized Gains and Losses Bond Portfolio Unrealized Gains and Losses At Dec 31 Unrealized bond losses have $10B decreased from $6.0 billion at the $7.4B $7.7B $7.6B end of 2008 to $0.5 billion at March 31, 2013 5 Unrealized bond gains have $
Slide 25: Conventional Commercial Mortgages
Q1 2013 Quarterly Information Package Conventional Commercial Mortgages By Issuer Domicile ($13.5 billion or 10% of Invested Assets) Conventional % of Commercial by Invested industry Assets Multi‐family 1% US 23% Retail 3% Office 2% Industrial 3% Canada Europe 56% Other 1% 21% 10% Conventional Mor
Slide 26: Capital & Other
Capital & Other Garry MacNicholas Senior Vice-President, Chief Actuary Great-West Life
Slide 27: Regulatory Capital Ratios Remain Strong
Q1 2013 Quarterly Information Package Regulatory Capital Ratios Remain Strong Great-West Life (Consolidated) MCCSR 210% 207% 205% 205% 205% 205% 204% 204% 203% 202% 202% 202% 201% 200% 200% 200% 200% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2010 2011 2012 2013 Note: 2009 and 2010 are
Slide 28: Great-West Lifeco – Source of Earnings
Q1 2013 Quarterly Information Package Great-West Lifeco – Source of Earnings For the three months ended March 31, 2013 Q1 2012 (C$MM) Canada U.S. Europe Corp Total Total Expected profit on in-force business 256 91 129 (3) 473 409 Impact of new business (6) - 11 - 5 (8) Experience gains and losses 50
Slide 29: Canada
Canada Paul Mahon President & Chief Operating Officer Canada
Slide 30: Canada – Individual Insurance
Q1 2013 Quarterly Information Package Canada – Individual Insurance New Annualized Premiums (Sales) Premiums & Deposits (C$MM) (C$MM) Life Living Benefits $133 Y/Y $123 Y/Y $1,037 $14 $992 $1,001 8% $116 $971 $80 $11 $926 $83 4% $10 $108 $107 (8%) $79 $79 $11 $80 $12 20% $119 $957 $106 $112 $913 $91
Slide 31: Canada – Wealth Management
Q1 2013 Quarterly Information Package Canada – Wealth Management New Annualized Premiums (Sales) Premiums & Deposits (C$MM) (C$MM) Individual Wealth Management Group Retirement Services Y/Y Y/Y $2,630 $2,617 8% $2,418 $2,869 $2,689 8% $581 $649 30% $501 $2,481 $1,906 $1,913 $2,011 $2,021 $409 $406 $
Slide 32: Canada – Group Insurance
Q1 2013 Quarterly Information Package Canada – Group Insurance New Annualized Premiums (Sales) Premiums & Deposits (C$MM) (C$MM) Y/Y Y/Y $1,880 $1,875 1% $1,855 $1,858 $1,860 $288 115% $153 $154 $134 $82 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 32
Slide 33: Canada – Fee Income
Q1 2013 Quarterly Information Package Canada – Fee Income (C$MM) Segregated Funds ASO Other Y/Y $283 $289 4% $277 $270 $271 $45 $47 12% $42 $41 $41 $37 $37 (3%) $38 $36 $38 $197 $191 $194 $201 $205 4% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 33
Slide 34: Canada – Operating Expenses
Q1 2013 Quarterly Information Package Canada – Operating Expenses (C$MM) Group Insurance Wealth Management Individual Insurance Corporate Y/Y $305 6% $287 $294 $276 $277 $75 $83 2% $81 $74 $74 $90 22% $74 $82 $107 $82 $122 $112 $111 $108 $124 2% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Operating expe
Slide 35: Canada – Operating Earnings
Q1 2013 Quarterly Information Package Canada – Operating Earnings (C$MM) Group Insurance Wealth Management Individual Insurance Corporate Y/Y $280 $263 $265 10% $253 $242 $24 20% $82 $47 $20 $50 $90 32% $68 $69 $80 $83 $11 $67 $56 (16%) $26 $136 $119 $87 $97 $95 9% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1
Slide 36: Great-West Financial
Great-West Financial Mitchell T.G. Graye President & Chief Executive Officer Great-West Financial
Slide 37: Great-West Financial – Sales and Premiums & Deposits
Q1 2013 Quarterly Information Package Great-West Financial – Sales and Premiums & Deposits Sales Premiums & Deposits (US$MM) (US$MM) 401(k) P/NP Individual Markets Institutional Retirement Services Individual Markets Y/Y $1,730 Y/Y $1,659 $1,506 $2,702 $419 $1,420 (6%) $2,492 13% $1,343 $412 $367 $3
Slide 38: Great-West Financial - Fee Income
Q1 2013 Quarterly Information Package Great-West Financial - Fee Income (US$MM) Variable Asset Charges Variable Asset Fees Administrative Fees (all non-variable) Individual Market Fees Y/Y Corporate $138 $140 9% $128 $128 $130 $18 0% $19 $18 $16 $16 $40 (2%) $43 $43 $40 $41 $70 25% $61 $63 $56 $57 $
Slide 39: Great-West Financial – Operating Expenses
Q1 2013 Quarterly Information Package Great-West Financial – Operating Expenses (US$MM) Retirement Services Individual Markets Corporate Y/Y $116 $115 $117 10% $111 $4 $106 $4 $5 $17 13% $5 $18 $15 $14 $15 $96 $99 15% $92 $94 $86 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 39
Slide 40: Great-West Financial - Operating Earnings
Q1 2013 Quarterly Information Package Great-West Financial - Operating Earnings (US$MM) Retirement Services Individual Markets Corporate $96 Y/Y $90 $89 $86 $84 (2%) $62 $56 $48 $55 $43 (10%) $41 $37 $43 $42 $41 0% ($15) Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Note: Net Income in Q1/12 and Q4/12 eac
Slide 41: Putnam Investments
Putnam Investments Robert Reynolds President & Chief Executive Officer Putnam Investments
Slide 42: Putnam - AUM & Flows
Q1 2013 Quarterly Information Package Putnam - AUM & Flows (US$bln) Mutual Funds Institutional $3.6 ($4.3) $3.4 $134.7 $126.9 $128.3 $124.3 $119.7 $3.7 ($3.3) $3.3 $68.5 $60.8 $64.4 $65.8 $59.3 $63.5 $62.5 $62.5 $66.2 $60.4 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Sales Redemptions Market Q1 2013 In-Qtr Avg.
Slide 43: Putnam - Fee Income
Q1 2013 Quarterly Information Package Putnam - Fee Income (US$MM) Investment Management Fees Service Fees Underwriting & Distribution Fees Performance Fees Y/Y $189 6% $182 $182 $188 $179 $13 $13 $11 8% $12 $11 $36 $36 6% $34 $36 $36 $131 $129 $132 $137 $139 6% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 201
Slide 44: Putnam - Core Earnings
Q1 2013 Quarterly Information Package Putnam - Core Earnings (US$MM) Expenses Income Taxes Fee & Net Inv Income Operating Margin (Pre-tax) $187 $181 $185 $191 $194 2.2% (2.8%) (2.1%) (1.5%) (3.2%) ($181) ($195) ($197) ($186) ($193) Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Core Earnings ($4) ($2) $2 $
Slide 45: Putnam - Contribution to Lifeco Earnings
Q1 2013 Quarterly Information Package Putnam - Contribution to Lifeco Earnings (US$MM) Core Earnings (After-tax) Financing Expenses Other $3 $2 $1 ($2) ($1) ($2) ($4) ($5) ($6) ($6) ($6) ($5) ($4) ($3) ($5) ($6) ($12) ($14) ($14) ($19) Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 45
Slide 46: Europe
Europe Arshil Jamal President & Chief Operating Officer Canada Life Capital Corporation
Slide 47: Europe – Sales and Premiums & Deposits
Q1 2013 Quarterly Information Package Europe – Sales and Premiums & Deposits Sales Premiums & Deposits (C$MM) (C$MM) UK/Isle of Man Ireland/Germany Reinsurance Y/Y $2,491 $2,380 $2,208 11% $2,168 $1,289 $1,983 $924 Y/Y $190 $1,200 $941 $948 1% $961 27% $936 $866 $116 10% $349 $828 $755 $126 $120 6%
Slide 48: Europe – Fee Income
Q1 2013 Quarterly Information Package Europe – Fee Income (C$MM) UK/Isle of Man Ireland/Germany Reinsurance Y/Y $170 $158 $158 9% $21 $145 $12 $145 $17 31% $13 $12 $84 $89 $83 $84 $93 12% $62 $60 $49 $49 $48 (2%) Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Note: Consolidated totals includes Europe corpo
Slide 49: Europe – Operating Expenses
Q1 2013 Quarterly Information Package Europe – Operating Expenses (C$MM) UK/Isle of Man Ireland/Germany Reinsurance Corporate Y/Y $94 $84 $86 $86 6% $81 $11 $5 $10 $12 $10 (9%) $11 $35 $32 $34 $33 $32 0% $39 $40 $46 $37 $39 5% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Note: Q1 2013 Corporate expense i
Slide 50: Europe - Consolidated Operating Earnings
Q1 2013 Quarterly Information Package Europe - Consolidated Operating Earnings (C$MM) UK/Isle of Man Ireland/Germany Reinsurance Corporate Y/Y $192 37% $165 $151 $159 $55 62% $140 $56 $64 $61 $34 $10 $6 $6 $9 $120 21% $99 $101 $108 $95 ($17) Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Constant Currency
Slide 51: Macro Economic Environment: Equity Markets
Q1 2013 Quarterly Information Package Macro Economic Environment Equity Markets S&P TSX S&P 500 FTSE 100 Close Average Close Average Close Average Q1 2013 12,750 12,721 1,569 1,513 6,412 6,295 Q4 2012 12,434 12,268 1,426 1,418 5,898 5,847 Q3 2012 12,317 11,924 1,441 1,401 5,742 5,745 Q2 2012 11,597
Slide 52: Macro Economic Environment: Interest Rates
Q1 2013 Quarterly Information Package Macro Economic Environment Interest Rates Canada United States United Kingdom A A A 10 Year Rated 10 Year Rated 10 Year Rated Gov’t Corporate Gov’t Corporate Gov’t Corporate Spread(1) Spread(1) Spread(1) Q1 2013 1.76% 1.47% 1.85% 1.21% 1.77% 1.37% Q4 2012 1.80%
Slide 53: Macro Economic Environment: Currency
Q1 2013 Quarterly Information Package Macro Economic Environment Currency Income & Expenses Balance Sheet US$ £ € US$ £ € Q1 2013 1.01 1.56 1.33 1.02 1.54 1.30 Q4 2012 0.99 1.59 1.29 0.99 1.62 1.31 Q3 2012 1.00 1.57 1.24 0.98 1.59 1.26 Q2 2012 1.01 1.60 1.30 1.02 1.60 1.29 Q1 2012 1.00 1.57 1.31 1.0
Slide 54: Questions
GREAT-WEST LIFECOnre Questions