Great-West Lifeco Inc. · TSX:GWO
Great-West Lifeco — Q1 2017 Earnings Presentation
29 slides from Great-West Lifeco's earnings presentation, 2017
Slide 1: Quarterly Information for Analysts and Investors Q1 2017
Quarterly Information for Analysts and Investors Q1 2017 Delivering on our Commitments Today and Tomorrow
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
Slide 3: Paul Mahon - Summary of Results
Paul Mahon President & CEO Great-West Lifeco Summary of Results 3
Slide 4: Strategic Update
Strategic Update Growth strategies on track – enhanced by efficiency gains • Canadian business transformation underway • Empower integration activities complete • Putnam expense reductions being achieved • Irish Life Health integration delivering synergies Expense discipline balanced with invest
Slide 5: Summary of Results
Summary of Results Earnings (C$m) Adjusted earnings(1) of $619m, flat YoY, and 620 671 674 676 591 up 7% on a constant currency basis Restructuring charges of $28m include $17m for Irish Life and $11m for Empower Retirement Reported earnings of $591m, up 2% on a constant currency basis Q1 2016
Slide 6: Summary of Results – Sales
Summary of Results – Sales Sales (C$b) Canada 48.0 • Higher individual life insurance sales and strong wealth sales 32.4 30.8 U.S. 26.7 24.9 • Empower sales lower YoY due to a mega plan sale in Q1/16 that did not recur in Q1/17 • Putnam sales up YoY and QoQ, Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 20
Slide 7: Summary of Results – Fee and Other Income
Summary of Results – Fee and Other Income Fee Income Y/Y Fee and Other Income (C$m) 4% Lifeco fee income up 4% YoY 1,345 1,305 1,271 1% • Average equity markets: 1,254 1,231 S&P/TSX 21% S&P 500 19% 4% Eurostoxx 50 12% Canada • Higher average AUA driven by 7% higher average equity markets Q1 2016
Slide 8: Summary of Results – Expenses
Summary of Results – Expenses Canada Expenses (C$m) Y/Y • Up 4% YoY largely due to 1,240 1,226 1,175 1,160 planned strategic 1,124 4% investments 15% U.S. (1%) • Putnam expenses down 9% YoY primarily due to lower headcount while 4% GWF expenses up 1% Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 YoY
Slide 9: Garry MacNicholas - Financial Highlights
Garry MacNicholas EVP & CFO Great-West Lifeco Financial Highlights 9
Slide 10: Financial Highlights - Earnings
Financial Highlights - Earnings Adjusted EPS of $0.627, flat YoY Earnings per Share Reported EPS of $0.598 including 0.675 0.682 0.686 0.625 restructuring charge of $0.029 per share 0.598 Canada • Lower YoY due to unfavourable policyholder behaviour experience and lower basis changes partially
Slide 11: Financial Highlights – Source of Earnings
Financial Highlights – Source of Earnings For the three months ended Mar. 31, 2017 Q1/17 Q4/16 Q1/16 Source of Earnings (C$m) Canada U.S. Europe Corp. Total Total Total Expected profit on in-force business 262 100 248 (5) 605 695 653 Impact of new business 17 (34) (7) - (24) (43) (68) Experience gai
Slide 12: Financial Highlights – Book Value per Share and Return on Equity
Financial Highlights – Book Value per Share and Return on Equity Book Value per Share 19.76 19.99 19.28 19.02 19.18 Lifeco cash at quarter end was $1.1b Book value up 4% from last year Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Return on Equity (Trailing 4 quarters) 20.6% 16.9% Return on Equity o
Slide 13: Financial Highlights – Assets under Administration
Financial Highlights – Assets under Administration Assets Under Administration Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 YoY (C$b) General Fund 197 197 202 200 201 2% Segregated Fund 193 193 199 200 205 6% Mutual Fund & Institutional 238 244 257 259 270 14% Other AUA 559 550 571 589 620 11% Total 1,18
Slide 14: Questions
GREAT-WEST ECOne Questions 14
Slide 15: Appendix
Appendix GREAT-WEST ECOne 15
Slide 16: Canada
Canada (In C$m) Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 YoY Sales Individual Customer Individual Insurance 125 155 164 341 275 120% Individual Wealth 2,267 1,907 1,820 2,307 2,585 14% 2,392 2,062 1,984 2,648 2,860 20% Group Customer Group Insurance 283 119 90 180 134 (53%) Group Wealth 593 496 1,043
Slide 17: United States
United States (In US$m) Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 YoY GWF Sales Empower Retirement 20,029 4,438 8,344 5,111 7,520 (62%) Individual Markets 241 246 564 351 353 46% Total 20,270 4,684 8,908 5,462 7,873 (61%) Putnam Sales 9,042 8,236 8,657 8,360 10,576 17% Fee and Other Income Empower Ret
Slide 18: Europe
Europe Constant (In C$m) Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 YoY Currency Sales UK / Isle of Man 651 671 754 591 1,095 68% Ireland / Germany 3,923 4,879 3,891 3,819 3,321 (15%) Total 4,574 5,550 4,645 4,410 4,416 (3%) 6% Fee and Other Income UK / Isle of Man 70 74 59 57 56 (20%) Ireland / German
Slide 19: Putnam - AUM and Flows
Putnam - AUM and Flows (US$b) Mutual Putnam Funds Institutional AUM Flows 5.4 (3.3) 3.4 159.9 153.8 152.1 145.8 147.7 3.1 5.2 (6.0) 85.7 81.5 80.2 72.8 76.1 73.0 71.6 72.3 71.9 74.2 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Sales Redemptions Market Q1 2017 In-Qtr Avg. AUM 141.4 146.7 151.7 151.9 157.4 19
Slide 20: Putnam – Core Net Earnings
Putnam – Core Net Earnings Putnam Net Earnings - Core Earnings Putnam Net Earnings - Core Earnings Income Taxes Expenses Fee & Net Inv. Income Operating Margin (Pre-tax) (US$m) Expenses Income Taxes $250 Income Taxes Expenses Fee & Net Inv. Income Operating Margin (Pre-tax) 35% % of Fee & Net Inv In
Slide 21: Consolidated MCCSR Ratio
240% 239% Consolidated MCCSR Ratio 238% 236% 234% 233% 232% 240% 239% 230% 238% 229% 230% 236% 234% 233% 228% 233% 224% 223% 227% 232% 230% 222% 229% 230% 221% 228% 224% 218% 223% 227% 222% 210% 221% 210% 207% 218% Adjusted MCCSR 205% 205% 204% 201% 210% 210% 200%200%200% 207% 205% 205% 204% 201% 20
Slide 22: Stable Trend Over the Years
Stable Trend Over the Years (C$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 2,633 2,499 2,504 2,447 2,576 2,335 2,237 2005-2016 12 Year 26% 24% 23% 23% 25% 20% 19% 20% 20% 21% Average 18% 11% 20.8% 2005 200
Slide 23: Credit Markets
Credit Markets In-Quarter Developments Credit experience related to impairments and rating changes positively impacted shareholders’ net earnings by $2 million in the quarter Total Credit Impact on Shareholders’ Net Earnings 2016 2017 ($ millions) Q1 Q2 Q3 Q4 Q1 Credit (impairments) / recoveries (
Slide 24: Invested Asset Composition
Invested Asset Composition* Invested assets at March 31, 2017 were $172.8bln Cash & CD's 2% Diversified high quality portfolio: − Bonds represent 73% of invested Loans to assets (99% are investment grade; Investment Properties Policyholders 2% 5% Gov't, Gov't Related and 82% rated A or higher) A
Slide 25: Lifeco Consolidated Bond Portfolio
Lifeco Consolidated Bond Portfolio* Corporate and Non-Agency Securitized Government, Government Related and Other Financial Other Corporate and % of Invested Domicile of Issuer Agency Securitized Banking Institutions and REITs Non-Agency Securitized Assets $ (millions) United States 4.8% 0.7% 1.9% 1
Slide 26: Corporate and Securitized Bonds – Sector Diversification
Corporate and Securitized Bonds – Sector Diversification* % of % of Invested Invested Assets Assets Corporates Non-Agency Securitized Utilities 9.5% ABS 2.0% Consumer Products 6.0% CMBS 1.9% Industrials 4.3% RMBS 0.9% Other Financial Institutions 3.5% Covered 0.7% Banking 3.2% Total Securitized 5.5%
Slide 27: United Kingdom Property Related Exposures
United Kingdom Property Related Exposures Mortgages (C$m) Carrying Value Property Type % of City/Region Multi Family Retail Office Industrial Other Total Lifeco IA Central London 280 821 486 42 80 1,709 1.0% Other United Kingdom 76 652 198 886 308 2,120 1.2% Total United Kingdom 356 1,473 684 928 38
Slide 28: United Kingdom Property Related Exposures
United Kingdom Property Related Exposures Investment Properties (C$m) Carrying Value Property Type % of City/Region Multi Family Retail Office Industrial Other Total Lifeco IA Central London - 27 247 - 37 311 0.2% Other United Kingdom - 1,067 379 612 383 2,441 1.4% Total United Kingdom - 1,094 626 6
Slide 29: Currency (Relative to C$)
Currency (Relative to C$) Income & Expenses Balance Sheet US$ £ € US$ £ € Q1 2017 1.32 1.64 1.41 1.33 1.67 1.42 Q4 2016 1.33 1.66 1.44 1.34 1.66 1.42 Q3 2016 1.31 1.71 1.46 1.31 1.71 1.47 Q2 2016 1.29 1.85 1.46 1.30 1.72 1.44 Q1 2016 1.37 1.96 1.51 1.30 1.87 1.48 29