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 September 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 sedarplus.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. |
TSX:GWO
- Record base EPS2 of $1.02 on base earnings of $950 million increased by 17% from a year ago.
- Net EPS from continuing operations of $1.01.
- LICAT Ratio increased by 2% to 128%.
- Previously announced strategic transactions remain on track to close this year, deliver expected value and add strategic capabilities.
WINNIPEG, MB, Nov. 8, 2023 /CNW/ - Great-West Lifeco Inc. (Lifeco or the Company) today announced its third quarter 2023 results.
"Lifeco delivered excellent performance in the third quarter, continuing a strong earnings growth trajectory driven by disciplined capital allocation and execution of our strategies," said Paul Mahon, President and CEO, Great-West Lifeco. "These strong results benefit from recent strategic transactions, and operational improvements across our businesses. They are also supported by disciplined expense management as we focus on efficiency and effectiveness across the organization."
Key Financial Highlights
In-Quarter |
Year-to-Date |
||||
Q3 2023 |
Q2 2023 |
Q3 2022 |
2023 |
2022 |
|
Base earnings1,4 |
$950 |
$920 |
$809 |
$2,696 |
$2,424 |
Net earnings from continuing operations |
$936 |
$569 |
$986 |
$2,119 |
$3,150 |
Net earnings |
$905 |
$498 |
$987 |
$1,998 |
$3,144 |
Base EPS2,4 |
$1.02 |
$0.99 |
$0.87 |
$2.89 |
$2.60 |
Net EPS from continuing operations |
$1.01 |
$0.61 |
$1.06 |
$2.28 |
$3.38 |
Net EPS |
$0.97 |
$0.53 |
$1.06 |
$2.15 |
$3.38 |
Base ROE2,3,4 |
16.4 % |
15.9 % |
|||
Net ROE3 |
11.2 % |
11.7 % |
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. |
Record base earnings per common share (EPS) of $1.02 up 17% from $0.87 a year ago. The increase year over year was primarily due to business growth as well as higher average equity markets and interest rates, which resulted in higher fee income and earnings on surplus. The third quarter of 2022 included several larger positive and negative items, including a provision for estimated claims related to Hurricane Ian in Capital and Risk Solutions, favourable tax impacts in Canada, and above average trading gains in Europe.
Base EPS are up 3% compared to $0.99 base EPS in the second quarter of 2023, primarily driven by the Canada and Europe segments. Growth in Canada resulted from strong Group disability results, while growth in Europe primarily stemmed from improved morbidity experience.
Net EPS from continuing operations was $1.01 compared to $1.06 a year ago. Compared to a year ago, the increase in base earnings and favourable impacts of rising long-term interest rates in Canada were offset by lower real estate valuations primarily in Europe, and a contingent consideration provision release related to Personal Capital in 2022. In addition, although actuarial assumption changes implemented in the quarter have a net positive economic and capital impact on the Company, the associated fair value adjustments negatively impacted net earnings in the quarter.
In conjunction with the transition to IFRS 175, the Company made asset/liability management and accounting policy choices to increase the stability of regulatory capital. As a result, a certain amount of additional net earnings sensitivity was accepted in order to balance LICAT capital sensitivity, resulting in more stable capital positions. Over the time frame since transition, cumulative fluctuations in net earnings driven by market experience relative to expectations have been modest and regulatory capital has experienced increased stability, consistent with management's expectations.
Return on equity was 16.4% on base earnings and 11.2% on net earnings in the third quarter of 2023.
Highlights
- The disciplined execution of the Company's strategy continues to drive strong momentum in each of its three value drivers:
Wealth & Asset Management
-
- 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.
Insurance & Risk Solutions
-
- Onboarded a €80 million bulk annuity transaction in Irish Life which is the largest bulk annuity transaction to take place in the Irish market to date in 2023.
Workplace Solutions
-
- Group Life & Health book premiums increased by 13% over the previous quarter, to $17,048 million at September 30, 2023. The increase is from organic growth of in-force business in the Canada and Europe segments, and the addition of the Public Service Health Care Plan in Canada.
- Remain on-track to deliver value from previously announced strategic transactions that will add new capabilities and drive scale:
- Canada Life completed its acquisition of Value Partners Group Inc. (Value Partners) and expects the acquisition of Investment Planning Counsel Inc. to close before the end of 2023. Together, these acquisitions will help advance the Company's goal of being a leading Canadian full-service wealth and insurance platform for independent advisors.
- The sale of Putnam Investments to Franklin Templeton is expected to close in the fourth quarter of 2023. Once complete, the sale will unlock shareholder value and reinforce the Company's focus on the highly attractive U.S. retirement and personal wealth markets through Empower.
- Empower continues its successful integration program related to the Prudential full-service retirement business acquisition, adding scale and capabilities to its DC recordkeeping business. Annualized run-rate synergies of US$66 million have been achieved.
- On November 1, 2023, Irish Life Assurance plc completed the portfolio transfer of segregated funds with a carrying value of approximately €2 billion ($2.9 billion) to Saol Assurance dac (AIB Life), a 50/50 joint venture between Canada Life Irish Holding Company Limited and Allied Irish Banks, p.l.c. The Company expects to recognize a gain related to this transaction in the fourth quarter of 2023.
- The Company continues to pay down acquisition related short-term debt, reducing leverage ratio to 31% at the end of the third quarter, down from 33% at the beginning of 2023.
- Improving operational performance and modernizing the Company's businesses to meet needs of customers and advisors:
- Canada Life successfully completed a five-year journey to migrate eight individual wealth management client administration systems in Canada to a single system that sets the individual wealth business up for long-term success.
- As part of its efforts to improve customer outcomes and achieve more efficient operations, the Company continues to explore next generation artificial intelligence (A.I.) capabilities to determine potential business use cases, while at the same time, deploying traditional A.I. technologies to support the business today.
- The Company maintained its disciplined expense management with an active and continual focus on improving effectiveness and efficiency.
___________________________ |
5 For additional information, refer to the "Transition to IFRS 17 and IFRS 9" section of the interim Management Discussion and Analysis for the period ending September 30, 2023. |
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 third quarter of 2023 interim Management's Discussion and Analysis (MD&A).
In-Quarter |
Year-to-Date |
||||
Q3 2023 |
Q2 2023 |
Q3 2022 |
2023 |
2022 |
|
Segment Base Earnings5 |
|||||
Canada |
$296 |
$283 |
$340 |
$857 |
$904 |
United States |
262 |
265 |
214 |
745 |
522 |
Europe |
206 |
180 |
203 |
564 |
589 |
Capital and Risk Solutions |
198 |
203 |
56 |
558 |
417 |
Lifeco Corporate |
(12) |
(11) |
(4) |
(28) |
(8) |
Total Base earnings6 |
$950 |
$920 |
$809 |
$2,696 |
$2,424 |
Segment Net Earnings from Continuing Operations |
|||||
Canada |
$414 |
$148 |
$274 |
$795 |
$1,079 |
United States7 |
244 |
161 |
154 |
575 |
296 |
Europe |
25 |
102 |
433 |
167 |
1,227 |
Capital and Risk Solutions |
265 |
169 |
126 |
618 |
539 |
Lifeco Corporate |
(12) |
(11) |
(1) |
(36) |
9 |
Total Net earnings from Continuing Operations |
$936 |
$569 |
$986 |
$2,119 |
$3,150 |
Net Earnings from Discontinued Operations8 |
(31) |
(71) |
1 |
(121) |
(6) |
Total Net Earnings |
$905 |
$498 |
$987 |
$1,998 |
$3,144 |
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. |
7 Comparative results are restated to exclude discontinued operations related to Putnam Investments. |
8 Includes divestiture costs in 2023 related to the proposed sales of Putnam Investments. |
CANADA
- Q3 Canada segment base earnings of $296 million and net earnings of $414 million – Base earnings of $296 million decreased by $44 million compared to the same quarter last year. Base earnings before tax grew by 3%, reflecting strong Group disability and mortality results and higher earnings on surplus, however taxes were higher, as 2022 benefited from a number of favourable tax impacts that did not re-occur.
UNITED STATES
- Q3 United States segment base earnings of US$195 million ($262 million) and net earnings from continuing operations of US$182 million ($244 million) – Base earnings for the third quarter of 2023 were US$195 million ($262 million), up US$31 million or 19% from the third quarter of 2022. The increase was primarily due to increased fees driven by higher average equity markets and transaction volumes, partially offset by higher expenses to support business growth.
EUROPE
- Q3 Europe segment base earnings of $206 million and net earnings of $25 million – Base earnings of $206 million increased by $3 million compared to the same quarter last year, primarily due to improved morbidity experience, favourable tax impacts and a positive $20 million impact of currency movement. The third quarter of 2022 included above average positive impacts of trading activity in the U.K. annuity portfolios that normalised in 2023.
CAPITAL AND RISK SOLUTIONS
- Q3 Capital and Risk Solutions segment base earnings of $198 million and net earnings of $265 million – Base earnings of $198 million increased by $142 million compared to the same quarter last year, primarily due to business growth, the impact of higher interest rates and a provision for estimated claims related to Hurricane Ian of $128 million in 2022 that did not re-occur. These items were partially offset by unfavourable mortality 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 December 29, 2023 to shareholders of record at the close of business November 30, 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.
Third Quarter Conference Call
Lifeco's third quarter conference call and audio webcast will be held on Thursday, November 9, at 10:30 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 December 9, 2023 and can be accessed by calling 604-674-8052 or 1-855-669-9658 (passcode: 9668). 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 September 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 recent 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.sedarplus.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 |
||||||||||||
As at or for the three months ended |
For the nine months ended |
|||||||||||
Sept. 30 2023 |
June 30 2023 |
Sept. 30 2022 |
Sept. 30 2023 |
Sept. 30 2022 |
||||||||
Earnings |
||||||||||||
Base earnings1,6 |
$ |
950 |
$ |
920 |
$ |
809 |
$ |
2,696 |
$ |
2,424 |
||
Net earnings from continuing operations3 |
936 |
569 |
986 |
2,119 |
3,150 |
|||||||
Net earnings - common shareholders |
905 |
498 |
987 |
1,998 |
3,144 |
|||||||
Per common share |
||||||||||||
Basic: |
||||||||||||
Base earnings2,6 |
1.02 |
0.99 |
0.87 |
2.89 |
2.60 |
|||||||
Net earnings from continuing operations |
1.01 |
0.61 |
1.06 |
2.28 |
3.38 |
|||||||
Net earnings |
0.97 |
0.53 |
1.06 |
2.15 |
3.38 |
|||||||
Diluted net earnings from continuing |
1.00 |
0.61 |
1.06 |
2.27 |
3.38 |
|||||||
Diluted net earnings |
0.97 |
0.53 |
1.06 |
2.14 |
3.37 |
|||||||
Dividends paid |
0.52 |
0.52 |
0.49 |
1.56 |
1.47 |
|||||||
Book value3 |
24.01 |
23.22 |
22.97 |
|||||||||
Base return on equity2,6 |
16.4 % |
15.9 % |
||||||||||
Return on equity3 |
11.2 % |
11.7 % |
||||||||||
Base dividend payout ratio2,6 |
51.0 % |
52.6 % |
56.5 % |
|||||||||
Dividend payout ratio3 |
53.5 % |
97.4 % |
46.3 % |
|||||||||
Financial leverage ratio4 |
31 % |
31 % |
33 % |
|||||||||
Price/earnings ratio3 |
14.8X |
14.2X |
||||||||||
Price/book value ratio3 |
1.6X |
1.7X |
||||||||||
Total assets per financial statements |
$ |
680,010 |
$ |
690,003 |
||||||||
Total assets under management1 |
1,032,857 |
1,042,373 |
||||||||||
Total assets under administration1 |
2,628,364 |
2,643,378 |
||||||||||
Total contractual service margin (net of |
$ |
13,054 |
$ |
13,063 |
||||||||
Total equity |
$ |
29,529 |
$ |
28,774 |
||||||||
Canada Life Assurance Company |
128 % |
126 % |
||||||||||
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 third 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 contractual service margin (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 third 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. |
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 September 30, 2023.
Base earnings1 and net earnings - common shareholders by segment (unaudited) |
||||||||||||
For the three months ended |
For the nine months ended |
|||||||||||
Sept. 30 2023 |
June 30 2023 |
Sept. 30 2022 |
Sept. 30 2023 |
Sept. 30 2022 |
||||||||
Base earnings (loss)1,4 |
||||||||||||
Canada |
$ |
296 |
$ |
283 |
$ |
340 |
$ |
857 |
$ |
904 |
||
United States4 |
262 |
265 |
214 |
745 |
522 |
|||||||
Europe |
206 |
180 |
203 |
564 |
589 |
|||||||
Capital and Risk Solutions |
198 |
203 |
56 |
558 |
417 |
|||||||
Lifeco Corporate |
(12) |
(11) |
(4) |
(28) |
(8) |
|||||||
Lifeco base earnings1,4 |
$ |
950 |
$ |
920 |
$ |
809 |
$ |
2,696 |
$ |
2,424 |
||
Items excluded from base earnings |
||||||||||||
Market experience relative to expectations2 |
$ |
153 |
$ |
(79) |
151 |
$ |
(94) |
$ |
916 |
|||
Realized OCI gains / (losses) from asset |
— |
(121) |
— |
(121) |
— |
|||||||
Assumption changes and management actions2 |
(106) |
(4) |
85 |
(103) |
52 |
|||||||
Acquisition and divestiture costs3,4 |
(3) |
(91) |
20 |
(94) |
(44) |
|||||||
Restructuring and integration costs |
(22) |
(20) |
(43) |
(61) |
(99) |
|||||||
Amortization of acquisition-related finite life |
(36) |
(36) |
(36) |
(104) |
(99) |
|||||||
Items excluded from Lifeco base earnings |
$ |
(14) |
$ |
(351) |
$ |
177 |
(577) |
$ |
726 |
|||
Net earnings (loss) from continuing operations2 |
||||||||||||
Canada |
$ |
414 |
$ |
148 |
$ |
274 |
$ |
795 |
$ |
1,079 |
||
United States2 |
244 |
161 |
154 |
575 |
296 |
|||||||
Europe |
25 |
102 |
433 |
167 |
1,227 |
|||||||
Capital and Risk Solutions |
265 |
169 |
126 |
618 |
539 |
|||||||
Lifeco Corporate |
(12) |
(11) |
(1) |
(36) |
9 |
|||||||
Lifeco net earnings from continuing |
$ |
936 |
$ |
569 |
$ |
986 |
$ |
2,119 |
$ |
3,150 |
||
Net earnings (loss) from discontinued |
(31) |
(71) |
1 |
(121) |
(6) |
|||||||
Lifeco net earnings - common shareholders |
$ |
905 |
$ |
498 |
$ |
987 |
$ |
1,998 |
$ |
3,144 |
||
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 the Company's third quarter of 2023 interim MD&A 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) as well as acquisitions and divestitures in the Europe and Canada segments. |
4 |
Comparative results are restated to exclude discontinued operations related to Putnam Investments. |
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 nine months |
||||||||||||
Sept. 30 |
June 30 |
Sept. 30 |
Sept. 30 |
Sept. 30 |
|||||||||
Base earnings |
$ |
950 |
$ |
920 |
$ |
809 |
$ |
2,696 |
$ |
2,424 |
|||
Items excluded from Lifeco base earnings |
|||||||||||||
Market experience relative to expectations |
$ |
191 |
$ |
(92) |
$ |
228 |
$ |
(110) |
$ |
1,244 |
|||
Income tax (expense) benefit |
(38) |
13 |
(77) |
16 |
(328) |
||||||||
Realized OCI gains / (losses) from asset |
— |
(158) |
— |
(158) |
— |
||||||||
Income tax (expense) benefit |
— |
37 |
— |
37 |
— |
||||||||
Assumption changes and management |
(125) |
(5) |
96 |
(121) |
60 |
||||||||
Income tax (expense) benefit |
19 |
1 |
(11) |
18 |
(8) |
||||||||
Acquisition and divestiture costs (pre-tax)1 |
(3) |
(116) |
16 |
(119) |
(63) |
||||||||
Income tax (expense) benefit1 |
— |
25 |
4 |
25 |
19 |
||||||||
Restructuring and integration costs (pre-tax) |
(30) |
(28) |
(58) |
(84) |
(135) |
||||||||
Income tax (expense) benefit |
8 |
8 |
15 |
23 |
36 |
||||||||
Amortization of acquisition-related finite life |
(48) |
(49) |
(47) |
(140) |
(131) |
||||||||
Income tax (expense) benefit |
12 |
13 |
11 |
36 |
32 |
||||||||
Total pre-tax items excluded from base |
$ |
(15) |
$ |
(448) |
$ |
235 |
$ |
(732) |
$ |
975 |
|||
Impact of items excluded from base earnings |
1 |
97 |
(58) |
155 |
(249) |
||||||||
Net earnings from continuing operations |
$ |
936 |
$ |
569 |
$ |
986 |
$ |
2,119 |
$ |
3,150 |
|||
Net earnings (loss) from discontinued |
(31) |
(71) |
1 |
(121) |
(6) |
||||||||
Net earnings - common shareholders |
$ |
905 |
$ |
498 |
$ |
987 |
$ |
1,998 |
$ |
3,144 |
|||
1 |
Comparative results are restated to reclassify divestiture costs related to the sale of Putnam Investments to net earnings (loss) from discontinued operations (post-tax). |
Canada |
|||||||||||||
For the three months ended |
For the nine months |
||||||||||||
Sept. 30 2023 |
June 30 2023 |
Sept. 30 2022 |
Sept. 30 2023 |
Sept. 30 2022 |
|||||||||
Base earnings |
$ |
296 |
$ |
283 |
$ |
340 |
$ |
857 |
$ |
904 |
|||
Items excluded from base earnings |
|||||||||||||
Market experience relative to expectations |
$ |
204 |
$ |
(179) |
$ |
(200) |
$ |
(35) |
$ |
163 |
|||
Income tax (expense) benefit |
(57) |
50 |
14 |
10 |
(88) |
||||||||
Assumption changes and management actions |
(34) |
1 |
135 |
(30) |
122 |
||||||||
Income tax (expense) benefit |
10 |
— |
(10) |
9 |
(8) |
||||||||
Amortization of acquisition-related finite life |
(6) |
(6) |
(7) |
(18) |
(19) |
||||||||
Income tax (expense) benefit |
2 |
1 |
2 |
5 |
5 |
||||||||
Acquisition and divestiture costs (pre-tax) |
(1) |
(3) |
— |
(4) |
— |
||||||||
Income tax (expense) benefit |
— |
1 |
— |
1 |
— |
||||||||
Net earnings - common shareholders |
$ |
414 |
$ |
148 |
$ |
274 |
$ |
795 |
$ |
1,079 |
|||
United States |
||||||||||||
For the three months ended |
For the nine months |
|||||||||||
Sept. 30 2023 |
June 30 2023 |
Sept. 30 2022 |
Sept. 30 |
Sept. 30 |
||||||||
Base earnings |
$ |
262 |
$ |
265 |
$ |
214 |
$ |
745 |
$ |
522 |
||
Items excluded from base earnings |
||||||||||||
Market experience relative to expectations |
$ |
27 |
$ |
(4) |
$ |
(18) |
$ |
18 |
$ |
(25) |
||
Income tax (expense) benefit |
(5) |
— |
4 |
(5) |
3 |
|||||||
Restructuring and integration costs (pre-tax) |
(18) |
(28) |
(58) |
(72) |
(135) |
|||||||
Income tax (expense) benefit |
5 |
8 |
15 |
20 |
36 |
|||||||
Amortization of acquisition-related finite life |
(36) |
(37) |
(37) |
(105) |
(101) |
|||||||
Income tax (expense) benefit |
9 |
10 |
9 |
27 |
25 |
|||||||
Acquisition and divestiture costs (pre-tax)1 |
— |
(67) |
21 |
(67) |
(48) |
|||||||
Income tax (expense) benefit1 |
— |
14 |
4 |
14 |
19 |
|||||||
Net earnings from continuing operations |
$ |
244 |
$ |
161 |
$ |
154 |
$ |
575 |
$ |
296 |
||
Net earnings (loss) from discontinued |
(31) |
(71) |
1 |
(121) |
(6) |
|||||||
Net earnings - common shareholders |
$ |
213 |
$ |
90 |
$ |
155 |
$ |
454 |
$ |
290 |
||
1 |
Comparative results are restated to reclassify divestiture costs related to the sale of Putnam Investments to net earnings (loss) from discontinued operations (post-tax). |
Europe |
|||||||||||
For the three months ended |
For the nine months |
||||||||||
Sept. 30 2023 |
June 30 2023 |
Sept. 30 2022 |
Sept. 30 2023 |
Sept. 30 2022 |
|||||||
Base earnings |
$ |
206 |
$ |
180 |
$ |
203 |
$ |
564 |
$ |
589 |
|
Items excluded from base earnings |
|||||||||||
Market experience relative to expectations |
$ |
(152) |
$ |
100 |
$ |
295 |
$ |
(207) |
$ |
828 |
|
Income tax (expense) benefit |
24 |
(16) |
(43) |
24 |
(134) |
||||||
Realized OCI gains / (losses) from asset |
— |
(158) |
— |
(158) |
— |
||||||
Income tax (expense) benefit |
— |
37 |
— |
37 |
— |
||||||
Assumption changes and management actions |
(45) |
(1) |
(8) |
(40) |
(27) |
||||||
Income tax (expense) benefit |
8 |
— |
(6) |
7 |
(5) |
||||||
Amortization of acquisition-related finite life |
(6) |
(6) |
(3) |
(17) |
(11) |
||||||
Income tax (expense) benefit |
1 |
2 |
— |
4 |
2 |
||||||
Acquisition and divestiture costs (pre-tax) |
(2) |
(46) |
(5) |
(48) |
(15) |
||||||
Income tax (expense) benefit |
— |
10 |
— |
10 |
— |
||||||
Restructuring costs |
(12) |
— |
— |
(12) |
— |
||||||
Income tax (expense) benefit |
3 |
— |
— |
3 |
— |
||||||
Net earnings - common shareholders |
$ |
25 |
$ |
102 |
$ |
433 |
$ |
167 |
$ |
1,227 |
|
Capital and Risk Solutions |
||||||||||||
For the three months ended |
For the nine months |
|||||||||||
Sept. 30 2023 |
June 30 2023 |
Sept. 30 2022 |
Sept. 30 2023 |
Sept. 30 2022 |
||||||||
Base earnings |
$ |
198 |
$ |
203 |
$ |
56 |
$ |
558 |
$ |
417 |
||
Items excluded from base earnings |
||||||||||||
Market experience relative to expectations |
$ |
112 |
(9) |
$ |
147 |
$ |
125 |
$ |
255 |
|||
Income tax (expense) benefit |
— |
(21) |
(51) |
(16) |
(103) |
|||||||
Assumption changes and management actions |
(46) |
(5) |
(31) |
(51) |
(35) |
|||||||
Income tax (expense) benefit |
1 |
1 |
5 |
2 |
5 |
|||||||
Net earnings - common shareholders |
$ |
265 |
$ |
169 |
$ |
126 |
$ |
618 |
$ |
539 |
||
Lifeco Corporate |
||||||||||||
For the three months ended |
For the nine months |
|||||||||||
Sept. 30 2023 |
June 30 2023 |
Sept. 30 2022 |
Sept. 30 2023 |
Sept. 30 2022 |
||||||||
Base earnings (loss) |
$ |
(12) |
$ |
(11) |
$ |
(4) |
$ |
(28) |
$ |
(8) |
||
Items excluded from base earnings (loss) |
||||||||||||
Market experience relative to expectations |
$ |
— |
$ |
— |
$ |
4 |
$ |
(11) |
$ |
23 |
||
Income tax (expense) benefit |
— |
— |
(1) |
3 |
(6) |
|||||||
Net earnings (loss) - common shareholders |
$ |
(12) |
$ |
(11) |
$ |
(1) |
$ |
(36) |
$ |
9 |
||
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 |
|||||||
Sept. 30 |
June 30 |
||||||
Total assets per financial statements1 |
$ |
680,010 |
$ |
690,003 |
|||
Other AUM1 |
352,847 |
352,370 |
|||||
Total AUM1 |
$ |
1,032,857 |
$ |
1,042,373 |
|||
Other AUA |
1,595,507 |
1,601,005 |
|||||
Total AUA1 |
$ |
2,628,364 |
$ |
2,643,378 |
|||
1 |
Figures include assets held for sale and other AUM related to the discontinued operations of Putnam Investments. |
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.
SOURCE Great-West Lifeco Inc.
Media Relations Contact: Liz Kulyk, 204-926-5012, [email protected]; Investor Relations Contact: Deirdre Neary, 647-328-2134, [email protected]
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