Great-West Lifeco Inc. · TSX:GWO
Great-West Lifeco — Investor Presentation (March 2023)
27 slides from Great-West Lifeco's investor presentation, March 2023
Slide 1: Investor Presentation Q4 2022
Investor Presentation Q4 2022 Note: All dollar amounts are expressed in Canadian dollars and references to “dollars” or “$” are to Canadian dollars, unless otherwise stated.
Slide 2: Cautionary notes
Cautionary notes CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION This document contains 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", "expe
Slide 3: Diversified Business With Leadership Positions in Key Markets
Diversified Business With Leadership Positions in Key Markets
Slide 4: A global financial services company
A global financial services company Capital & Risk Solutions 21% Canada 175+ Years 6th 35% Largest Life Insurer $3.2B Of History in North America1 Net Earnings4 Europe 31% US $2.5T $1.0T Capital & Risk 14% Assets Under Administration2,3 Assets Under Management2,3 Solutions 17% Canada 36% $3.2B Base
Slide 5: Great-West Lifeco at a glance
Great-West Lifeco at a glance • Great-West Lifeco Inc. is a global Key Performance Metrics Financial Strength Ratings1, Regulatory Capital and Liquidity financial services holding company In $B, unless otherwise noted As at with interests in life insurance, 12 Months Ended 12 Months Ended 12 Months
Slide 6: Diversified, market-leading franchises well-positioned for growth
Diversified, market-leading franchises well-positioned for growth Canada U.S. Europe Capital & Risk Solutions 36% 35% 20% 14% 28% 31% 17% 21% of base earnings1,2,3 of net earnings1,3 of base earnings1,2,3 of net earnings1,3 of base earnings1,2,3 of net earnings1,3 of base earnings1,2,3 of net earnin
Slide 7: Our value creation priorities focus on the customer and leverage risk & investment expertise
Our value creation priorities focus on the customer and leverage risk & investment expertise Advice-centered value Digital capabilities Workplace extensions Risk & investment expertise creation Capture value through Deliver advice and Extend workplace participant Leverage capabilities to advice-base
Slide 8: Our priorities are expected to drive growth across the portfolio
Our priorities are expected to drive growth across the portfolio Higher Lower impact impact Advice-centered value creation Digital capabilities Workplace extensions Risk & investment expertise 8
Slide 9: Our medium-term financial objectives
Our medium-term1 financial objectives target dividend 8-10% base EPS growth p.a 2 . 14-15% base ROE 2,3 45-55% payout ratio, base earnings2 • Organic earnings growth from • Diversified business that drives • Cash generative business supporting market-leading franchises in strong and stable returns a
Slide 10: Performance against medium-term financial objectives
Performance against medium-term1 financial objectives 1-Year 5-Year4 As of December 31, 2022 Medium-Term Financial Objectives Base2 Base2 8-10% base EPS2 growth per year (1.5%) 8.8% CAGR 14-15% base ROE2 13.6% 13.1% average Target dividend payout ratio of 45-55% of base earnings2 56.7% 58.3% average
Slide 11: IFRS 17 expected impacts
IFRS 17 expected impacts IFRS 17 expected impacts June 2022 Current Decrease in shareholder's equity 10 -15% 12% Decrease in Book Value per Share (BVPS) 10 -15% 14% $6.3B non-par CSM Contractual Service Margin (CSM) N/A $2.3B par CSM Canada Life LICAT ratio Positive Impact Approx. +10 points 1,2 Por
Slide 12: Sustainability, DEI and ESG are core to our value creation priorities
Sustainability, DEI and ESG are core to our value creation priorities Environmental Diversity, Equity ESG Stewardship & Inclusion Investing • Objective of achieving net zero • Focused on developing and promoting DE&I • Inclusion of qualitative and quantitative greenhouse gas (GHG) emissions by 2050
Slide 13: Consistent Long-Term Earnings and Strong M&A Track Record
Consistent Long-Term Earnings and Strong M&A Track Record
Slide 14: Earnings expansion underpinned by stable returns on capital
Earnings expansion underpinned by stable returns on capital Net EPS in C$, rounded to the nearest cent $4.00 30.0% 3.46 $3.50 3.37 $3.00 2.77 3.00 3.17 25.0% 6.2% 2.67 10-year EPS CAGR1 2.55 2.49 20.0% $2.50 2.34 2.17 $2.00 1.90 16.6% 15.0% 15.7% 14.7% 14.1% 15.3% 13.8% 14.0% 14.0% 13.6% 13.9% $1.50
Slide 15: History of stable and growing dividends
History of stable and growing dividends Annual dividends per common share1 ‘15 – ‘22 6.3% CAGR 2022 dividend yield2 6.0% 45% - 55% Target dividend payout ratio (base)3 Base3 Net4 56.7% 56.7% 1.23 1.23 1.30 1.38 1.47 1.56 1.65 1.75 1.80 1.96 2022 dividend payout ratio 2013 2014 2015 2016 2017 2018 20
Slide 16: Strong track record of value-enhancing M&A
Strong track record of value-enhancing M&A ACQUISITIONS Retirement Services Business Retirement Health Insurance Plan Services Ireland Ltd. Full-Service L&G International RPS Minority Interest Retirement (Ireland) Ltd. Minority Interest Business 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.S.
Slide 17: Strong Balance Sheet and Capital Position
Strong Balance Sheet and Capital Position
Slide 18: Diversified, high-quality asset mix
Diversified, high-quality asset mix Conservative investment portfolio, predominantly comprised of fixed income instruments – 99% of which are investment-grade • Invested assets of ~$238B Invested Asset Distribution1 Bond Portfolio Quality1 • Bonds represent 67% – 99% are investment grade – 71% rated
Slide 19: Robust capital and liquidity
Robust capital and liquidity Historical Coverage Ratio2 Historical Financial Leverage Ratio1, 3 Historical LICAT Ratio4 • Liquidity requirements are (x) (%) (%) largely self-funded – Short-term obligations met 129% 124% 120% by internal funds and 33.8% 33.2% 34.4% 9.3x maintaining levels of liquid 8
Slide 20: Strong credit ratings
Strong credit ratings Canada Life Lifeco Outlook (Opco)1 (Holdco)2 A+ Stable AA A (High) Stable AA A Stable Aa3 Stable AA A+ Stable 1. Canada Life’s ratings are financial strength ratings 2. Lifeco’s ratings are senior debt ratings 20
Slide 21: Efficient capital structure
Efficient capital structure Lifeco Finance (Delaware) LP Carrying values as at December 31, 2022, unless otherwise noted, C$m U.S. Senior Debt $930m Lifeco Finance 2018, LP U.S. Senior Debt $1,072m Senior Debentures $2.5b Lifeco U.S. Finance 2020, LP Preferred Shares $2.7b U.S. Senior Debt $672m Eur
Slide 22: Appendix
Appendix
Slide 23: Canada
Canada Overview Earnings1,2 Return on Equity (ROE)1 Individual Customer (IC) and Group Customer (GC) businesses 1,206 1,220 1,187 Life insurance, health insurance, retirement savings and wealth management 1,146 1,116 18.5% Leading market shares in major product 17.2% Base categories 1,070 16.4% 15.0
Slide 24: U.S.
U.S. Overview Earnings1,2 Return on Equity (ROE)1 Financial Services (Empower) Two primary businesses: Empower and Putnam 12.2% Investments 671 652 8.6% 10.9% Empower is the second-largest retirement services 7.9% provider in the U.S.3, serving 81k plans and over 8.7% 5.6% 17.8m4 participants with A
Slide 25: Europe
Europe Segment Overview Earnings1,2 Return on Equity (ROE)1 Operations in the U.K., Ireland and Germany 984 18.5% 976 913 892 17.2% Market leader in group risk, a leading player in 830 payout annuities and a strong competitor in the 16.7% 688 15.7% equity release mortgage market in the U.K. Irish Li
Slide 26: Capital & Risk Solutions (CRS)
Capital & Risk Solutions (CRS) Segment Overview Earnings1,2 Return on Equity (ROE)1 Includes both reinsurance and retrocession 662 614 business transacted directly with clients or 536 532 547 532 44.4% through reinsurance brokers in the U.S., Ireland, Barbados and Bermuda 38.8% Products include trad
Slide 27: Investor Presentation
Investor Presentation Q4 2022 Note: All dollar amounts are expressed in Canadian dollars and references to “dollars” or “$” are to Canadian dollars, unless otherwise stated.
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