This earnings news release for Great-West Lifeco Inc. should be
read in conjunction with the Company's Management Discussion &
Analysis (MD&A) and Consolidated Financial Statements for the
periods ended June 30, 2023, prepared
in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board
unless otherwise noted. These reports are available on
greatwestlifeco.com under Financial Reports. Additional information
relating to Great-West Lifeco is available on sedar.com. Readers
are referred to the cautionary notes regarding Forward-Looking
Information and Non-GAAP Financial Measures and Ratios at the end
of this release. All figures are expressed in millions of Canadian
dollars, unless otherwise noted.
- Base earnings1 EPS of $0.99 or $920
million increased by 2% or $17
million from a year ago.
- Net earnings EPS of $0.53 or
$498 million; includes ($0.30) or ($279
million) of losses associated with strategic business
portfolio repositioning and surplus asset rebalancing.
- Executed strategic actions to reposition the portfolio for
sustained growth.
TSX:GWO
WINNIPEG, MB, Aug. 8, 2023
/CNW/ - Great-West Lifeco Inc. (Lifeco or the Company) today
announced its second quarter 2023 results.
"The disciplined execution of our strategy is driving momentum
across our portfolio as reflected in our strong performance this
quarter," said Paul Mahon, President
and CEO, Great-West Lifeco. "Across our operating companies, we
continue to make organic investments and execute on transactions
that will help us deliver on our value creation objectives. This
includes recent transactions across segments that are strengthening
and focusing our workplace and wealth management strategies."
"Net earnings this quarter reflect actions taken to strengthen
our capital position and accelerate our growth strategies,"
continued Mr. Mahon. "Apart from these items, our net earnings
reflect modest market impacts and ongoing integration costs."
Key Financial Highlights
|
In-Quarter
|
Year-to-Date
|
|
Q2 2023
|
Q1 2023
|
Q2 2022
|
2023
|
2022
|
Base
earnings1,4
|
$920
|
$826
|
$903
|
$1,746
|
$1,615
|
Net earnings
|
$498
|
$595
|
$823
|
$1,093
|
$2,157
|
Base
EPS2,4
|
$0.99
|
$0.89
|
$0.97
|
$1.87
|
$1.73
|
Net EPS
|
$0.53
|
$0.64
|
$0.88
|
$1.17
|
$2.32
|
Base
ROE2,3,4
|
15.9 %
|
16.1 %
|
|
Net
ROE3
|
11.7 %
|
13.4 %
|
1
|
Base earnings is a
non-GAAP financial measure. Refer to the "Non-GAAP Financial
Measures and Ratios" section of this document for additional
details.
|
2
|
Base EPS and base
return on equity are non-GAAP ratios. Refer to the "Non-GAAP
Financial Measures and Ratios" section of this document for
additional details.
|
3
|
Base return on equity
and return on equity are calculated using the trailing four
quarters of applicable IFRS 17 earnings and common shareholders'
equity.
|
4
|
Comparative base
earnings results are restated to exclude discontinued operations
related to Putnam Investments.
|
Base earnings per common share (EPS) of $0.99 up 2% from $0.97 a year ago. The increase year over year
was primarily due to higher investment returns; increased fees
driven by higher average equity markets and business growth in the
U.S. segment; and strong results in the Capital and Risk Solutions
segment.
Sequentially, base EPS are up 11% compared to $0.89 base EPS in the first quarter of 2023,
primarily driven by the U.S. and Capital and Risk Solutions
segments. Growth in the U.S. resulted from higher markets and
further synergies realized on the Prudential acquisition. Capital
and Risk Solutions benefited from strong growth in structured
reinsurance business, higher investment results, and improved
mortality experience5.
_________________________________
|
5
|
Under the IFRS 17
reporting standard, mortality experience on life insurance tends to
be recognized into earnings immediately, whereas
mortality/longevity experience on payout annuities and related
businesses, mainly flows through the Contractual Service Margin and
is recognized into earnings over the life of the remaining
contracts.
|
Net EPS was $0.53 and included costs
of $0.30 EPS ($279 million) associated with acquisitions and
divestitures, and surplus asset rebalancing activities. These
costs included transaction costs of $158
million predominantly related to the announced sales of
Putnam Investments and the U.K. individual onshore protection
business, in addition to an indemnity provision related to the U.S.
individual life and annuity business sold in 2019. It also included
$121 million of realized other
comprehensive income (OCI) losses from rebalancing U.K. surplus
assets to capitalize on higher short-term rates and improve future
interest rate sensitivities.
Return on equity was 11.7% on net earnings and 15.9% on base
earnings in the second quarter of 2023.
Highlights
- The Company announced strategic transactions in quarter to
rebalance and focus its business portfolio:
-
- Announced sale of Putnam Investments, unlocking shareholder
value and further focusing U.S. operations on highly attractive
retirement and personal wealth markets.
- Announced complementary acquisitions of Investment Planning
Counsel Inc. (IPC) and Value Partners, which will enable the
Canadian business with new capabilities to offer a leading
end-to-end wealth and insurance platform for independent
advisors.
- Announced an agreement to sell the individual onshore
protection business of Canada Life U.K. to Countrywide Assured plc.
This follows the Company's announcement that it closed onshore
individual protection insurance to new business in November 2022.
- The disciplined execution of the Company's strategy continues
to drive strong momentum:
-
- Go live with Canadian government's Public Service Health Care
Plan (PSHCP) on July 1, 2023.
- Canada Life was awarded the Canadian government's dental plan
which represents approximately $550
million in annual paid claims and supports the same 1.7
million Canadians as the PSHCP.
- Empower Personal Wealth, launched in the first quarter of 2023,
continued to see strong momentum with 30% growth in assets under
administration year over year.
- Diversified our wealth capabilities and distribution access at
Irish Life with the launch of a new joint venture, AIB Life, in
Ireland.
- Capital and Risk Solutions expanded its international presence
in targeted new markets, including two transactions in Italy.
- The Company hosted an Investor Day to share our strategy for
growth, with a specific focus on our wealth and asset management
businesses in Canada, Europe and the U.S.
SEGMENTED OPERATING RESULTS
For reporting purposes, Lifeco's consolidated operating results
are grouped into five reportable segments – Canada, United States, Europe, Capital and Risk Solutions and Lifeco
Corporate – reflecting the management and corporate structure of
the Company. For more information, refer to the Company's second
quarter of 2023 interim Management's Discussion and Analysis
(MD&A).
|
In-Quarter
|
Year-to-Date
|
|
Q2 2023
|
Q1 2023
|
Q2 2022
|
2023
|
2022
|
Segment Base
Earnings6
|
|
|
|
|
|
Canada
|
$283
|
$278
|
$340
|
$561
|
$564
|
United
States
|
265
|
218
|
164
|
483
|
308
|
Europe
|
180
|
178
|
210
|
358
|
386
|
Capital and Risk
Solutions
|
203
|
157
|
190
|
360
|
361
|
Lifeco
Corporate
|
(11)
|
(5)
|
(1)
|
(16)
|
(4)
|
Total Base
earnings6
|
$920
|
$826
|
$903
|
$1,746
|
$1,615
|
|
|
|
|
|
|
Segment Net
Earnings
|
|
|
|
|
|
Canada
|
$148
|
$233
|
$362
|
$381
|
$805
|
United
States
|
90
|
151
|
23
|
241
|
135
|
Europe
|
102
|
40
|
250
|
142
|
794
|
Capital and Risk
Solutions
|
169
|
184
|
179
|
353
|
413
|
Lifeco
Corporate
|
(11)
|
(13)
|
9
|
(24)
|
10
|
Total Net
earnings
|
$498
|
$595
|
$823
|
$1,093
|
$2,157
|
6
|
Base earnings is a
non-GAAP financial measure. Refer to the "Non-GAAP Financial
Measures and Ratios" section of this document for additional
details.
|
CANADA
- Q2 Canada segment base earnings of $283 million and net earnings of $148 million – Base earnings of $283 million decreased by $57 million compared to the same quarter last
year, primarily due to strong group health morbidity results in
2022 that did not repeat, partially offset by pricing and other
management actions taken, aided by higher interest rates in
2023.
UNITED STATES
- Q2 United States segment
base earnings of US$198 million
($265 million) and net earnings of
US$67 million ($90 million) – United States base earnings for the second
quarter of 2023 were US$198 million
($265 million), up US$70 million or 55% from the second quarter of
2022. The increase was primarily due to improved spreads from
higher interest rates, higher fee income from higher average equity
markets and lower expenses due to synergies achieved on recent
acquisitions.
EUROPE
- Q2 Europe segment base
earnings of $180 million and net
earnings of $102 million – Base
earnings of $180 million decreased by
$30 million compared to the same
quarter last year, primarily due to favourable insurance experience
in Q2 2022 that did not repeat, partially offset by favourable
currency movement and investment earnings.
CAPITAL AND RISK SOLUTIONS
- Q2 Capital and Risk Solutions segment base earnings of
$203 million and net earnings of
$169 million – Base earnings
of $203 million increased by
$13 million compared to the same
quarter last year, primarily due to favourable structured business
earnings and investment earnings, partially offset by unfavourable
experience in the U.S. life business.
QUARTERLY DIVIDENDS
The Board of Directors approved a quarterly dividend of
$0.52 per share on the common shares
of Lifeco payable September 29, 2023
to shareholders of record at the close of business August 31, 2023.
In addition, the Directors approved quarterly dividends on
Lifeco's preferred shares, as follows:
First Preferred Shares
|
Amount, per share
|
Series G
|
$0.3250
|
Series H
|
$0.30313
|
Series I
|
$0.28125
|
Series L
|
$0.353125
|
Series M
|
$0.3625
|
Series N
|
$0.109313
|
Series P
|
$0.3375
|
Series Q
|
$0.321875
|
Series R
|
$0.3000
|
Series S
|
$0.328125
|
Series T
|
$0.321875
|
Series Y
|
$0.28125
|
For purposes of the Income Tax Act (Canada), and any similar
provincial legislation, the dividends referred to above are
eligible dividends.
Second Quarter Conference Call
Lifeco's second quarter conference call and audio webcast will
be held on Wednesday, August 9, at
8:30 a.m. ET.
The call and webcast can be accessed through
greatwestlifeco.com/news-events/events or by phone at:
- Participants in the Toronto
area: 416-915-3239
- Participants from North
America: 1-800-319-4610
A replay of the call will be available until September 9 and can be accessed by calling
604-674-8052 or 1-855-669-9658 (passcode: 9667). The archived
webcast will be available on greatwestlifeco.com.
Selected financial information is attached.
GREAT-WEST LIFECO INC.
Great-West Lifeco is an international financial services holding
company with interests in life insurance, health insurance,
retirement and investment services, asset management and
reinsurance businesses. We operate in Canada, the United
States and Europe under the
brands Canada Life, Empower, Putnam Investments, and Irish Life. At
the end of 2022, our companies had approximately 31,000 employees,
234,500 advisor relationships, and thousands of distribution
partners – all serving over 38 million customer relationships
across these regions. Great-West Lifeco trades on the Toronto Stock
Exchange (TSX) under the ticker symbol GWO and is a member of the
Power Corporation group of companies. To learn more, visit
greatwestlifeco.com.
Basis of presentation
The condensed consolidated
interim unaudited financial statements for the periods ended
June 30, 2023 of Lifeco, have been
prepared in accordance with International Financial Reporting
Standards (IFRS) unless otherwise noted and are the basis for the
figures presented in this release, unless otherwise noted.
Cautionary note regarding Forward-Looking
Information
This release 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",
"expects", "anticipates", "intends", "plans", "believes",
"estimates", "objective", "target", "potential" and other similar
expressions or negative versions thereof. Forward-looking
information includes, without limitation, statements about the
Company and its operations, business (including business mix),
financial condition, expected financial performance (including
revenues, earnings or growth rates and medium-term financial
objectives), ongoing business strategies or prospects,
climate-related and diversity-related measures, objectives
and targets, anticipated global economic conditions and possible
future actions by the Company, including statements made with
respect to the expected costs, benefits, timing of integration
activities and timing and extent of revenue and expense synergies
of acquisitions and divestitures (including but not limited to the
proposed acquisition of Investment Planning Counsel (IPC), the
proposed acquisition of Value Partners Group Inc. (Value Partners),
the proposed sale of Putnam Investments (Putnam), and the proposed sale of Canada Life
U.K.'s individual onshore protection business), value creation and
growth opportunities, expected capital management activities and
use of capital, estimates of risk sensitivities affecting capital
adequacy ratios, expected dividend levels, expected cost reductions
and savings, expected expenditures or investments (including but
not limited to investment in technology infrastructure and digital
capabilities and solutions and investments in strategic
partnerships), the timing and completion of the proposed
acquisitions of IPC and Value Partners and the proposed sale of
Putnam and Canada Life U.K.'s individual onshore protection
business, and the impact of regulatory developments on the
Company's business strategy and growth objectives.
Forward-looking statements are based on expectations, forecasts,
estimates, predictions, projections and conclusions about future
events that were current at the time of the statements and are
inherently subject to, among other things, risks, uncertainties and
assumptions about the Company, economic factors and the financial
services industry generally, including the insurance, mutual fund
and retirement solutions industries. They are not guarantees
of future performance, and the reader is cautioned that actual
events and results could differ materially from those expressed or
implied by forward-looking statements. Many of these
assumptions are based on factors and events that are not within the
control of the Company and there is no assurance that they will
prove to be correct. In all cases, whether or not actual
results differ from forward-looking information may depend on
numerous factors, developments and assumptions, including, without
limitation, assumptions around sales, fee rates, asset breakdowns,
lapses, plan contributions, redemptions and market returns, the
ability to integrate recent and proposed acquisitions, the ability
to leverage recent and proposed acquisitions and achieve
anticipated synergies, customer behaviour (including customer
response to new products), the Company's reputation, market prices
for products provided, sales levels, premium income, fee income,
expense levels, mortality experience, morbidity experience, policy
and plan lapse rates, participant net contribution, reinsurance
arrangements, liquidity requirements, capital requirements, credit
ratings, taxes, inflation, interest and foreign exchange rates,
investment values, hedging activities, global equity and capital
markets (including continued access to equity and debt markets),
industry sector and individual debt issuers' financial conditions
(particularly in certain industries that may comprise part of the
Company's investment portfolio), business competition, impairments
of goodwill and other intangible assets, the Company's ability to
execute strategic plans and changes to strategic plans,
technological changes, breaches or failure of information systems
and security (including cyber attacks), payments required under
investment products, changes in local and international laws and
regulations, changes in accounting policies and the effect of
applying future accounting policy changes, changes in actuarial
standards, unexpected judicial or regulatory proceedings,
catastrophic events, continuity and availability of personnel and
third party service providers, the Company's ability to complete
strategic transactions and integrate acquisitions, unplanned
material changes to the Company's facilities, customer and employee
relations or credit arrangements, levels of administrative and
operational efficiencies, changes in trade organizations, and other
general economic, political and market factors in North America and internationally.
The reader is cautioned that the foregoing list of assumptions
and factors is not exhaustive, and there may be other factors
listed in other filings with securities regulators, including
factors set out in the Company's 2022 Annual MD&A under "Risk
Management and Control Practices" and "Summary of Critical
Accounting Estimates" and in the Company's annual information form
dated February 8, 2023 under "Risk
Factors", which, along with other filings, is available for review
at www.sedar.com. The reader is also cautioned to consider
these and other factors, uncertainties and potential events
carefully and not to place undue reliance on forward-looking
information.
Other than as specifically required by applicable law, the
Company does not intend to update any forward-looking information
whether as a result of new information, future events or
otherwise.
Cautionary note regarding Non-GAAP Financial Measures and
Ratios
This release contains some non-Generally Accepted
Accounting Principles (GAAP) financial measures and non-GAAP ratios
as defined in National Instrument 52-112 "Non-GAAP and
Other Financial Measures Disclosure". Terms by which non-GAAP
financial measures are identified include, but are not limited to,
"base earnings (loss)", "base earnings (loss) (US$)", "base
earnings: insurance service result", "base earnings: net investment
result", "assets under management" and "assets under
administration". Terms by which non-GAAP ratios are identified
include, but are not limited to, "base earnings per common share
(EPS)", "base return on equity (ROE)", "base dividend payout ratio"
and "effective income tax rate – base earnings – common
shareholders". Non-GAAP financial measures and ratios are used to
provide management and investors with additional measures of
performance to help assess results where no comparable GAAP (IFRS)
measure exists. However, non-GAAP financial measures and ratios do
not have standard meanings prescribed by GAAP (IFRS) and are not
directly comparable to similar measures used by other companies.
Refer to the "Non-GAAP Financial Measures and Ratios" section in
this release for the appropriate reconciliations of these non-GAAP
financial measures to measures prescribed by GAAP as well as
additional details on each measure and ratio.
FINANCIAL HIGHLIGHTS (unaudited)
(in
Canadian $ millions, except per share amounts)
Selected
consolidated financial information (in Canadian $ millions,
except for per share amounts)
|
|
|
|
|
|
|
|
As at or for the
three months ended
|
|
For the six months
ended
|
|
|
June
30
2023
|
March 31
20236
|
June 30
2022
(Restated)
|
|
June
30
2023
|
June 30
2022
(Restated)
|
|
Earnings
|
|
|
|
|
|
|
|
Base
earnings1,6
|
$
|
920
|
$
|
826
|
$
|
903
|
|
$
|
1,746
|
$
|
1,615
|
|
Net earnings - common
shareholders
|
498
|
595
|
823
|
|
1,093
|
2,157
|
|
Per common
share
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
Base
earnings2,6
|
0.99
|
0.89
|
0.97
|
|
1.87
|
1.73
|
|
Net
earnings
|
0.53
|
0.64
|
0.88
|
|
1.17
|
2.32
|
|
Diluted net
earnings
|
0.53
|
0.64
|
0.88
|
|
1.17
|
2.31
|
|
Dividends
paid
|
0.52
|
0.52
|
0.49
|
|
1.04
|
0.98
|
|
Book
value3
|
23.22
|
23.45
|
22.11
|
|
|
|
|
|
|
|
|
|
|
|
|
Base return on
equity2,6
|
15.9 %
|
16.1 %
|
|
|
|
|
|
Return on
equity3
|
11.7 %
|
13.4 %
|
|
|
|
|
|
Base dividend payout
ratio2,6
|
52.6 %
|
58.7 %
|
50.6 %
|
|
|
|
|
Dividend payout
ratio3
|
97.4 %
|
81.3 %
|
55.7 %
|
|
|
|
|
Financial leverage
ratio4
|
31 %
|
33 %
|
33 %
|
|
|
|
|
Price/earnings
ratio3
|
14.2X
|
11.7X
|
|
|
|
|
|
Price/book value
ratio3
|
1.7X
|
1.5X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets per
financial statements
|
$
|
690,003
|
$
|
691,853
|
|
|
|
|
|
Total assets under
management1
|
1,042,373
|
1,040,214
|
|
|
|
|
|
Total assets under
administration1
|
2,643,378
|
2,596,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual
service margin (net of
reinsurance held)
|
13,058
|
13,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
equity
|
$
|
28,774
|
$
|
29,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada Life
Assurance Company
consolidated LICAT
Ratio5
|
|
126 %
|
|
127 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
This metric is a
non-GAAP financial measure. Refer to the "Non-GAAP Financial
Measures and Ratios" section of this document for additional
details.
|
2
|
This metric is a
non-GAAP ratio. Refer to the "Non-GAAP Financial Measures and
Ratios" section of this document for additional
details.
|
3
|
Refer to the "Glossary"
section of the Company's second quarter of 2023 interim MD&A
for additional details on the composition of this
measure.
|
4
|
The calculation for
financial leverage ratio includes the after-tax non-participating
CSM balance in the denominator, other than CSM associated with
segregated fund guarantees. This reflects that the CSM
represents future profit and is considered available capital under
LICAT. These ratios are estimates based on available
data.
|
5
|
The Life Insurance
Capital Adequacy Test (LICAT) Ratio is based on the consolidated
results of The Canada Life Assurance Company (Canada Life),
Lifeco's major Canadian operating subsidiary. The LICAT Ratio
is calculated in accordance with the Office of Superintendent of
Financial Institutions' guideline - Life Insurance Capital Adequacy
Test. Refer to the "Capital Management and Adequacy"
section of the Company's second quarter of 2023 interim
MD&A for additional details.
|
6
|
Comparative results are
restated to exclude net earnings (losses) from discontinued
operations related to Putnam Investments.
|
BASE AND NET EARNINGS
Consolidated base earnings and net earnings of Lifeco include
the base earnings and net earnings of Canada Life (and its
operating subsidiaries), Empower and PanAgora Asset Management,
together with Lifeco's Corporate operating results. Net
earnings also include the earnings from Putnam Investments reported
as discontinued operations.
With the adoption of IFRS 17, the Company refined the definition
of base earnings (loss) in the first quarter of 2023 with
application to 2022 comparative results for an updated
representation of the Company's underlying business performance, as
well as for consistency and comparability with financial services
industry peers.
For a further description of base earnings, refer to the
"Non-GAAP Financial Measures and Ratios" section of this document
and the Company's MD&A for the period ended June 30, 2023.
Base
earnings1 and net earnings - common shareholders by
segment (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
For the six months
ended
|
|
|
June
30
2023
|
March 31
20234
|
June 30
2022
(Restated)
|
|
June
30
2023
|
June 30
2022
(Restated)
|
|
Base earnings
(loss)1,4
|
|
|
|
|
|
|
|
Canada
|
$
|
283
|
$
|
278
|
$
|
340
|
|
$
|
561
|
$
|
564
|
|
United
States4
|
265
|
218
|
164
|
|
483
|
308
|
|
Europe
|
180
|
178
|
210
|
|
358
|
386
|
|
Capital and Risk
Solutions
|
203
|
157
|
190
|
|
360
|
361
|
|
Lifeco
Corporate
|
(11)
|
(5)
|
(1)
|
|
(16)
|
(4)
|
|
Lifeco base
earnings1,4
|
$
|
920
|
$
|
826
|
$
|
903
|
|
$
|
1,746
|
$
|
1,615
|
|
Items excluded from
base earnings
|
|
|
|
|
|
|
|
Market experience
relative to expectations2
|
$
|
(79)
|
$
|
(168)
|
$
|
79
|
|
(247)
|
765
|
|
Realized OCI gains /
(losses) from asset
rebalancing
|
(121)
|
—
|
—
|
|
$
|
(121)
|
$
|
—
|
|
Assumption changes and
management actions2
|
(4)
|
7
|
(15)
|
|
$
|
3
|
$
|
(33)
|
|
Acquisition and
divestiture costs3
|
(158)
|
—
|
(57)
|
|
(158)
|
(64)
|
|
Restructuring and
integration costs
|
(20)
|
(19)
|
(44)
|
|
(39)
|
(56)
|
|
Amortization of
acquisition-related finite life
intangibles
|
(36)
|
(32)
|
(36)
|
|
(68)
|
(63)
|
|
Discontinued
operations - Asset Management4
|
(4)
|
(19)
|
(7)
|
|
(23)
|
(7)
|
|
Items excluded from
Lifeco base earnings
|
$
|
(422)
|
$
|
(231)
|
$
|
(80)
|
|
$
|
(653)
|
$
|
542
|
|
Net earnings (loss)
- common shareholders
|
|
|
|
|
|
|
|
Canada
|
$
|
148
|
$
|
233
|
$
|
362
|
|
$
|
381
|
$
|
805
|
|
United
States
|
90
|
151
|
23
|
|
241
|
135
|
|
Europe
|
102
|
40
|
250
|
|
142
|
794
|
|
Capital and Risk
Solutions
|
169
|
184
|
179
|
|
353
|
413
|
|
Lifeco
Corporate
|
(11)
|
(13)
|
9
|
|
(24)
|
10
|
|
Lifeco net earnings
- common shareholders
|
$
|
498
|
$
|
595
|
$
|
823
|
|
$
|
1,093
|
$
|
2,157
|
|
|
|
|
|
|
|
|
|
1
|
This metric is a
non-GAAP financial measure. Refer to the "Non-GAAP Financial
Measures and Ratios" section of this document for additional
details.
|
2
|
Refer to the "Glossary"
section of this document for additional details on the composition
of this measure.
|
3
|
The acquisition and
divestiture costs relate to acquisitions in the U.S. segment (the
full-service retirement business of Prudential, Personal Capital
and the retirement services business of MassMutual), the agreement
to sell Putnam Investments as well as acquisitions and divestitures
in the Europe and Canada segments.
|
4
|
Comparative results are
restated to exclude net earnings (losses) from discontinued
operations related to Putnam Investments from base
earnings.
|
NON-GAAP FINANCIAL MEASURES AND RATIOS
Non-GAAP Financial Measures
The Company uses several
non-GAAP financial measures to measure overall performance of the
Company and to assess each of its business units. A financial
measure is considered a non-GAAP measure for Canadian securities
law purposes if it is presented other than in accordance with
generally accepted accounting principles (GAAP) used for the
Company's consolidated financial statements. The consolidated
financial statements of the Company have been prepared in
compliance with IFRS as issued by the IASB. Non-GAAP
financial measures do not have a standardized meaning under GAAP
and may not be comparable to similar financial measures presented
by other issuers. Investors may find these financial measures
useful in understanding how management views the underlying
business performance of the Company.
Base earnings (loss)
Base earnings (loss) reflect
management's view of the underlying business performance of the
Company and provides an alternate measure to understand the
underlying business performance compared to IFRS net
earnings.
Base earnings (loss) exclude the following items from IFRS
reported net earnings:
- Market-related impacts, where actual market returns in the
current period are different than longer-term expected returns on
assets and liabilities;
- Assumption changes and management actions that impact the
measurement of assets and liabilities;
- Acquisition and divestiture costs;
- Restructuring and integration costs;
- Material legal settlements, material impairment charges related
to goodwill and intangible assets, impacts of income tax rate
changes and other tax impairments, net gains, losses or costs
related to the disposition or acquisition of a business; net
earnings (loss) from discontinued operations and
- Other items that, when removed, assist in explaining the
Company's underlying business performance.
The definition of base earnings (loss) has been refined (in 2023
and applied to 2022 comparative results) to also exclude the
following impacts that are included in IFRS reported net earnings
for an improved representation of the Company's underlying business
performance, as well as for consistency and comparability with
financial services industry peers:
- Realized gains (losses) on the sale of assets measured at fair
value through other comprehensive income (FVOCI);
- The direct equity and interest rate impacts on the measurement
of surplus assets and liabilities; and
- Amortization of acquisition related finite life intangible
assets.
Lifeco
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
For the six months
ended
|
|
|
June 30
2023
|
March 31
2023
|
June 30
2022
(Restated)
|
|
June 30
2023
|
June 30
2022
(Restated)
|
|
Base
earnings
|
$
|
920
|
$
|
826
|
$
|
903
|
|
$
|
1,746
|
$
|
1,615
|
|
|
|
|
|
|
|
|
|
Items excluded from
Lifeco base earnings
|
|
|
|
|
|
|
|
Market experience
relative to expectations
(pre-tax)
|
$
|
(92)
|
$
|
(209)
|
$
|
152
|
|
$
|
(301)
|
$
|
1,016
|
|
Income tax (expense)
benefit
|
13
|
41
|
(73)
|
|
54
|
(251)
|
|
Realized OCI gains /
(losses) from asset
rebalancing (pre-tax)
|
(158)
|
—
|
—
|
|
(158)
|
—
|
|
Income tax (expense)
benefit
|
37
|
—
|
—
|
|
37
|
—
|
|
Assumption changes and
management
actions (pre-tax)
|
(5)
|
9
|
(17)
|
|
4
|
(36)
|
|
Income tax (expense)
benefit
|
1
|
(2)
|
2
|
|
(1)
|
3
|
|
Acquisition and
divestiture costs (pre-tax)
|
(208)
|
—
|
(71)
|
|
(208)
|
(79)
|
|
Income tax (expense)
benefit
|
50
|
—
|
14
|
|
50
|
15
|
|
Restructuring and
integration costs (pre-tax)
|
(28)
|
(26)
|
(60)
|
|
(54)
|
(77)
|
|
Income tax (expense)
benefit
|
8
|
7
|
16
|
|
15
|
21
|
|
Amortization of
acquisition-related finite life
intangibles (pre-tax)
|
(49)
|
(43)
|
(49)
|
|
(92)
|
(84)
|
|
Income tax (expense)
benefit
|
13
|
11
|
13
|
|
24
|
21
|
|
Total pre-tax items
excluded from base
earnings
|
$
|
(540)
|
$
|
(269)
|
$
|
(45)
|
|
$
|
(809)
|
$
|
740
|
|
Impact of items
excluded from base earnings
on income taxes
|
122
|
57
|
(28)
|
|
179
|
(191)
|
|
Discontinued
operations - Asset Management
(post-tax)
|
(4)
|
(19)
|
(7)
|
|
(23)
|
(7)
|
|
Net earnings -
common shareholders
|
$
|
498
|
$
|
595
|
$
|
823
|
|
$
|
1,093
|
$
|
2,157
|
|
Canada
|
|
|
|
|
|
|
|
For the three months
ended
|
|
For the six months
ended
|
|
|
June
30
2023
|
March 31
2023
|
June 30
2022
(Restated)
|
|
June
30
2023
|
June 30
2022
(Restated)
|
|
Base
earnings
|
$
|
283
|
$
|
278
|
$
|
340
|
|
$
|
561
|
$
|
564
|
|
|
|
|
|
|
|
|
|
Items excluded from
base earnings
|
|
|
|
|
|
|
|
Market experience
relative to expectations
(pre-tax)
|
$
|
(179)
|
$
|
(60)
|
$
|
65
|
|
$
|
(239)
|
$
|
363
|
|
Income tax (expense)
benefit
|
50
|
17
|
(30)
|
|
67
|
(102)
|
|
Assumption changes and
management actions
(pre-tax)
|
1
|
3
|
(10)
|
|
4
|
(13)
|
|
Income tax (expense)
benefit
|
—
|
(1)
|
1
|
|
(1)
|
2
|
|
Amortization of
acquisition-related finite life
intangibles (pre-tax)
|
(6)
|
(6)
|
(6)
|
|
(12)
|
(12)
|
|
Income tax (expense)
benefit
|
1
|
2
|
2
|
|
3
|
3
|
|
Acquisition and
divestiture costs (pre-tax)
|
(3)
|
—
|
—
|
|
(3)
|
—
|
|
Income tax (expense)
benefit
|
1
|
—
|
—
|
|
1
|
—
|
|
Net earnings -
common shareholders
|
$
|
148
|
$
|
233
|
$
|
362
|
|
$
|
381
|
$
|
805
|
|
United
States
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
For the six months
ended
|
|
|
June
30
2023
|
March 31
2023
|
June 30
2022
(Restated)
|
|
June 30
2023
|
June 30
2022
(Restated)
|
|
Base
earnings
|
$
|
265
|
$
|
218
|
$
|
164
|
|
$
|
483
|
$
|
308
|
|
|
|
|
|
|
|
|
|
Items excluded from
base earnings
|
|
|
|
|
|
|
|
Market experience
relative to expectations
(pre-tax)
|
$
|
(4)
|
$
|
(5)
|
$
|
(8)
|
|
$
|
(9)
|
$
|
(7)
|
|
Income tax (expense)
benefit
|
—
|
—
|
—
|
|
—
|
(1)
|
|
Restructuring and
integration costs (pre-tax)
|
(28)
|
(26)
|
(60)
|
|
(54)
|
(77)
|
|
Income tax (expense)
benefit
|
8
|
7
|
16
|
|
15
|
21
|
|
Amortization of
acquisition-related finite life
intangibles (pre-tax)
|
(37)
|
(32)
|
(39)
|
|
(69)
|
(64)
|
|
Income tax (expense)
benefit
|
10
|
8
|
10
|
|
18
|
16
|
|
Acquisition and
divestiture costs (pre-tax)
|
(159)
|
—
|
(67)
|
|
(159)
|
(69)
|
|
Income tax (expense)
benefit
|
39
|
—
|
14
|
|
39
|
15
|
|
Discontinued
operations - Asset Management
(post-tax)
|
(4)
|
(19)
|
(7)
|
|
(23)
|
(7)
|
|
Net earnings -
common shareholders
|
$
|
90
|
$
|
151
|
$
|
23
|
|
$
|
241
|
$
|
135
|
|
Europe
|
|
|
|
|
|
|
|
For the three months
ended
|
|
For the six months
ended
|
|
June
30
2023
|
March 31
2023
|
June 30
2022
(Restated)
|
|
June
30
2023
|
June 30
2022
(Restated)
|
Base
earnings
|
$
|
180
|
$
|
178
|
$
|
210
|
|
$
|
358
|
$
|
386
|
|
|
|
|
|
|
|
Items excluded from
base earnings
|
|
|
|
|
|
|
Market experience
relative to expectations
(pre-tax)
|
$
|
100
|
|
(155)
|
$
|
70
|
|
$
|
(55)
|
$
|
533
|
Income tax (expense)
benefit
|
(16)
|
16
|
(16)
|
|
—
|
(91)
|
Realized OCI gains /
(losses) from asset
rebalancing (pre-tax)
|
(158)
|
—
|
—
|
|
(158)
|
—
|
Income tax (expense)
benefit
|
37
|
—
|
—
|
|
37
|
—
|
Assumption changes and
management actions
(pre-tax)
|
(1)
|
6
|
(8)
|
|
5
|
(19)
|
Income tax (expense)
benefit
|
—
|
(1)
|
1
|
|
(1)
|
1
|
Amortization of
acquisition-related finite life
intangibles (pre-tax)
|
(6)
|
(5)
|
(4)
|
|
(11)
|
(8)
|
Income tax (expense)
benefit
|
2
|
1
|
1
|
|
3
|
2
|
Acquisition and
divestiture costs (pre-tax)
|
(46)
|
—
|
(4)
|
|
(46)
|
(10)
|
Income tax (expense)
benefit
|
10
|
—
|
—
|
|
10
|
—
|
Net earnings (loss)
- common shareholders
|
$
|
102
|
$
|
40
|
$
|
250
|
|
$
|
142
|
$
|
794
|
Capital and Risk
Solutions
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
For the six months
ended
|
|
|
June
30
2023
|
March 31
2023
|
June 30
2022
(Restated)
|
|
June
30
2023
|
June 30
2022
(Restated)
|
|
Base
earnings
|
$
|
203
|
$
|
157
|
$
|
190
|
|
$
|
360
|
$
|
361
|
|
|
|
|
|
|
|
|
|
Items excluded from
base earnings
|
|
|
|
|
|
|
|
Market experience
relative to expectations
(pre-tax)
|
$
|
(9)
|
$
|
22
|
$
|
11
|
|
$
|
13
|
$
|
108
|
|
Income tax (expense)
benefit
|
(21)
|
5
|
(23)
|
|
(16)
|
(52)
|
|
Assumption changes and
management actions
(pre-tax)
|
(5)
|
—
|
1
|
|
(5)
|
(4)
|
|
Income tax (expense)
benefit
|
1
|
—
|
—
|
|
1
|
—
|
|
Net earnings -
common shareholders
|
$
|
169
|
$
|
184
|
$
|
179
|
|
$
|
353
|
$
|
413
|
|
Lifeco
Corporate
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
For the six months
ended
|
|
|
June
30
2023
|
March 31
2023
|
June 30
2022
(Restated)
|
|
June
30
2023
|
June 30
2022
(Restated)
|
|
Base earnings
(loss)
|
$
|
(11)
|
$
|
(5)
|
$
|
(1)
|
|
$
|
(16)
|
$
|
(4)
|
|
|
|
|
|
|
|
|
|
Items excluded from
base earnings (loss)
|
|
|
|
|
|
|
|
Market experience
relative to expectations
(pre-tax)
|
$
|
—
|
$
|
(11)
|
$
|
14
|
|
(11)
|
19
|
|
Income tax (expense)
benefit
|
—
|
3
|
(4)
|
|
3
|
(5)
|
|
Net earnings (loss)
- common shareholders
|
$
|
(11)
|
$
|
(13)
|
$
|
9
|
|
$
|
(24)
|
$
|
10
|
|
Assets under management (AUM) and assets under administration
(AUA)
Assets under management and assets under
administration are non-GAAP measures that provide an indicator of
the size and volume of the Company's overall business.
Administrative services are an important aspect of the overall
business of the Company and should be considered when comparing
volumes, size and trends.
Total assets under administration includes total assets per
financial statements, proprietary mutual funds and institutional
assets and other assets under administration.
Lifeco
|
|
|
|
|
June 30
2023
|
March 31
2023
|
|
Total assets per
financial statements
|
$
|
690,003
|
$
|
691,853
|
|
Other
AUM1
|
352,370
|
348,361
|
|
Total
AUM1
|
$
|
1,042,373
|
$
|
1,040,214
|
|
Other AUA
|
1,601,005
|
1,555,937
|
|
Total
AUA1
|
$
|
2,643,378
|
$
|
2,596,151
|
|
|
|
|
|
|
|
1
|
Figures include assets
held for sale and other AUM related to the discontinued operations
of Putnam Investments.
|
NON-GAAP RATIOS
A non-GAAP ratio is a financial measure in the form of a ratio,
fraction, percentage or similar representation that is not
disclosed in the financial statements of the Company and has a
non-GAAP financial measure as one or more of its components.
These financial measures do not have a standardized definition
under IFRS and might not be comparable to similar financial
measures disclosed by other issuers.
The non-GAAP ratios disclosed by the Company each use base
earnings (loss) as the non-GAAP component. Base earnings
(loss) reflect management's view of the underlying business
performance of the Company and provides an alternate measure to
understand the underlying business performance compared to IFRS net
earnings.
- Base dividend payout ratio - Dividends paid to common
shareholders are divided by base earnings (loss).
- Base earnings per share - Base earnings (loss) for the
period is divided by the number of average common shares
outstanding for the period.
- Base return on equity - Base earnings (loss) for the
trailing four quarters are divided by the average common
shareholders' equity over the trailing four quarters. This measure
provides an indicator of business unit profitability.
For more information:
Media Relations
Contact:
|
Investor Relations
Contact:
|
Liz Kulyk
|
Deirdre
Neary
|
204-926-5012
|
647-328-2134
|
media.relations@canadalife.com
|
deirdre.neary@canadalife.com
|
SOURCE Great-West Lifeco Inc.