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
period ended March 31, 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 $0.87 or $808
million increased by 14% or $96
million from a year ago
- Net earnings EPS of $0.64 or
$595 million compared to $1,334 million a year ago
- The Company introduced three Value Drivers for describing its
business: Workplace Solutions, Wealth & Asset Management and
Insurance & Risk Solutions.
TSX:GWO
WINNIPEG, MB, May 9, 2023
/CNW/ - Great-West Lifeco Inc. (Lifeco or the Company) today
announced its first quarter 2023 results and the successful
implementation of IFRS 17.
"Our strong results reflect the successful execution of our
integration programs in the U.S. and continued focus on delivering
consistent performance in each of our core businesses," said
Paul Mahon, President and CEO,
Great-West Lifeco. "With the strategic acquisitions in the U.S. and
of IPC in Canada, we are
positioning our portfolio to deliver even greater value for
clients, advisors, and shareholders."
"The successful implementation of IFRS 17 is the culmination of
a significant multi-year enterprise-wide initiative. Under this new
reporting standard, we're seeing strong base earnings growth,
alongside expected increased net earnings volatility," said
Garry MacNicholas, EVP and CFO,
Great-West Lifeco. "This volatility is driven by the de-linking of
asset and liability measurement and accounting policy decisions
that were made to maintain regulatory capital (LICAT)
stability."
Key Financial Highlights
Base earnings1 Net earnings
|
Base
earnings1
|
Net
earnings
|
Common Shareholders
|
Q1 2023
|
Q1 2022
|
Q1 2023
|
Q1 2022
|
Segment earnings1
|
|
|
|
|
Canada
|
$278
|
$224
|
$233
|
$443
|
United States
(U.S.)
|
200
|
144
|
151
|
112
|
Europe
|
178
|
176
|
40
|
544
|
Capital and Risk
Solutions
|
157
|
171
|
184
|
234
|
Lifeco
Corporate
|
(5)
|
(3)
|
(13)
|
1
|
Total earnings1
|
$808
|
$712
|
$595
|
$1,334
|
EPS2
|
$0.87
|
$0.76
|
$0.64
|
$1.43
|
Return on equity2,3
|
15.8 %
|
|
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 earnings and common shareholders'
equity.
|
Base earnings per common share (EPS) for the first quarter of 2023
of $0.87 were up 14% from
$0.76 a year ago. The increase was
primarily due to Prudential related base earnings of $69 million (US$51
million), higher contributions from investment experience
and realized synergies from the MassMutual acquisition as well as
more favourable group insurance long term disability experience in
the Canada segment. These items
were partially offset by lower fee income in the U.S. segment as
well as unfavourable mortality experience in the Canada, Europe and Capital and Risk Solutions
segments. Under the IFRS 17 reporting standard, the positive
benefits of longevity gains mainly flow through the Contractual
Service Margin and no longer immediately offset the impact of
unfavorable mortality in earnings in the
period.
Reported net EPS for the first quarter of 2023 was $0.64, compared to $1.43 a year ago, primarily due to
unfavourable experience on non-fixed income assets and declining
risk free rates in-quarter compared to positive contributions in
the same quarter last year from rising interest rates.
Return on equity was 13.4% on net earnings and 15.8% on base
earnings in the first quarter of 2023.
Highlights
New Value Drivers, with enhanced reporting
- The Company introduced three Value Drivers for describing its
business: Workplace Solutions, Wealth & Asset Management and
Insurance & Risk Solutions. These Value Drivers reflect the
company's business strategy and provide greater clarity and
transparency into how the Company is creating value for
shareholders and growing the business.
Strategic acquisition to build a leading platform for
independent advisors in Canada
- Subsequent to the first quarter of 2023, on April 3, 2023, Canada Life announced an agreement
to acquire Investment Planning Counsel Inc. (IPC), a leading
independent wealth management firm, from IGM Financial Inc. (IGM).
This acquisition accelerates our strategy of building the leading
platform for independent advisors in Canada. With this acquisition, Canada Life
will be one of the largest non-bank wealth providers in the
country.
Empower launches Empower Personal Wealth
- Empower launched Empower Personal Wealth with an expanded focus
on retail wealth management. Empower is working to make money
management simpler, clearer, and more accessible by bringing
together everything a customer owns and owes in one comprehensive
dashboard that they and their advisor can leverage to take control
of their personal wealth.
Irish Life launches Unio, a
new independent, wealth management advisory firm
- Irish Life combined its recently
acquired Irish brands: Invesco, Acumen and APT under Unio Financial
Services Ltd, a single wealth management umbrella. The new firm
will provide expert advice for thousands of individuals who are
currently either under-advised, or not being serviced at all on how
to effectively manage their wealth. Underpinned by a market-leading
digital platform, Unio will provide personalized client advice and
investment solutions to a growing and underserved population.
Successful transition to IFRS 17
- The Company has adopted and successfully implemented IFRS 17
and 9 effective January 1, 2023. This
milestone marks the culmination of a multi-year enterprise-wide
initiative. The new reporting regime provides improved visibility
as to the strong, underlying economics and diversification of
Lifeco's portfolio through enhanced disclosures and metrics. The
transition to the new standards did not have a material impact on
the Company. The accounting change does not impact the underlying
economics of the Company's business activities nor change the
Company's business strategy.
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 first quarter of 2023 interim Management's Discussion
and Analysis (MD&A).
CANADA
- Q1 Canada segment base
earnings of $278 million and net
earnings of $233 million – Base
earnings of $278 million increased by
$54 million compared to the same
quarter last year, primarily due to more favourable group insurance
long term disability morbidity experience, pricing actions in the
Group Life & Health business as well as higher earnings on
surplus, partially offset by unfavourable individual insurance
mortality experience.
- Items excluded from base earnings were negative $45 million compared to positive $219 million for the same quarter last year.
Market experience losses were $43
million in the first quarter of 2023 due to declining
interest rates compared to gains of $226
million in the same quarter last year due to rising interest
rates.
UNITED STATES
- Q1 Empower base earnings of US$186
million ($251 million) and net
earnings of US$150 million
($202 million) – Empower base
earnings for the first quarter of 2023 were US$186 million ($251
million), up US$67 million or
56% from the first quarter of 2022. The increase was primarily due
to an increase of US$51 million
related to the Prudential acquisition, as well as higher
contributions from investment experience and realized synergies
from the MassMutual acquisition. These items were partially offset
by lower fee income driven by lower average equity markets.
- Items excluded from base earnings were negative US$36 million ($49
million) compared to negative US$26
million ($33 million) for the
same quarter last year, primarily due to higher integration costs
related to the Prudential acquisition, partially offset by the
non-recurrence of integration costs related to the acquisition of
Personal Capital incurred in the same quarter last year.
- Q1 Asset Management base loss of US$20 million ($27
million) and net loss of US$21
million ($29 million) –
Asset Management base loss for the first quarter of 2023 was
US$20 million ($27 million), compared to a base loss of
US$1 million ($2 million) in the first quarter of 2022,
primarily due to lower other-AUM based fee income, partially offset
by higher net investment income and lower volume-driven
expenses.
- Items excluded from base earnings of negative US$1 million ($2
million) were comparable to the same period last year.
EUROPE
- Q1 Europe segment base
earnings of $178 million and net
earnings of $40 million – Base
earnings of $178 million increased by
$2 million compared to the same
quarter last year, primarily due to favourable insurance and
annuity results in the U.K. driven by a favourable reinsurance
settlement gain as well as favourable impact of changes to certain
tax estimates. These items were partially offset by higher
mortality claims experience in Ireland.
- Items excluded from base earnings for the first quarter of 2023
were negative $138 million compared
to positive $368 million for the same
quarter last year. The decrease was primarily due to negative
returns on non-fixed income assets and declining risk free interest
rates in-quarter compared to positive contributions from non-fixed
income assets and rising interest rates in the same quarter last
year.
CAPITAL AND RISK SOLUTIONS
- Q1 Capital and Risk Solutions segment base earnings of
$157 million and net earnings of
$184 million – Base earnings of
$157 million decreased by
$14 million compared to the same
quarter last year, primarily due to unfavourable mortality
experience in the U.S. life business. The decrease was partially
offset by growth in the structured business and improved property
catastrophe product margins.
- Items excluded from base earnings were positive $27 million compared to positive $63 million for the same quarter last year driven
by lower than expected net investment results as a result of
declining interest rates in 2023 compared to rising interest rates
in the same period in 2022 and inflation impacts.
QUARTERLY DIVIDENDS
The Board of Directors approved a quarterly dividend of
$0.52 per share on the common shares
of Lifeco payable June 30, 2023 to
shareholders of record at the close of business May 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.
First Quarter Conference Call
Lifeco's first quarter conference call and audio webcast will be
held on Wednesday, May 10 at
8:00 am ET.
The conference call will be extended by 30 minutes, concluding
at 9:30 am ET, to accommodate review
of the first quarter 2023 results as well as the comparative 2022
results reported for the first time under the adoption of IFRS
17, Insurance Contracts and IFRS
9, Financial Instruments.
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 June 10 and can be accessed by calling
604-674-8052 or 1-855-669-9658 (passcode: 9666). 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 period
ended March 31, 2023 of Lifeco, which
reflects the adoption of IFRS 17, Insurance Contracts, and
IFRS 9, Financial Instruments that resulted in the
restatement of certain comparative amounts, 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's 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
cost, 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) and the acquisition of the
full-service retirement business of Prudential, 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),
the timing and completion of the proposed acquisition of IPC, 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 the acquisitions of Personal Capital and the
retirement services businesses of MassMutual and Prudential, the
ability to leverage Empower's, Personal Capital's, MassMutual's and
Prudential's retirement services businesses 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-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$)" and "assets under administration".
Terms by which non-GAAP ratios are identified include, but are not
limited to, "base earnings per common share (EPS)", and "base
return on equity (ROE)". 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
|
|
|
|
Mar.
31
2023
|
|
Dec. 31
2022
(Restated)
|
|
Mar. 31
2022
(Restated)
|
|
Earnings
|
|
|
|
|
|
|
|
Base
earnings1
|
$
|
808
|
$
|
869
|
$
|
712
|
|
Net earnings - common
shareholders
|
|
595
|
|
452
|
|
1,334
|
|
Per common
share
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
Base
earnings2
|
|
0.87
|
|
0.93
|
|
0.76
|
|
Net
earnings
|
|
0.64
|
|
0.48
|
|
1.43
|
|
Diluted net
earnings
|
|
0.64
|
|
0.48
|
|
1.43
|
|
Dividends
paid
|
|
0.52
|
|
0.49
|
|
0.49
|
|
Book
value3
|
|
23.45
|
|
23.28
|
|
21.65
|
|
|
|
|
|
|
|
|
|
Base return on
equity2
|
|
15.8 %
|
|
15.7 %
|
|
|
|
Return on
equity3
|
|
13.4 %
|
|
17.2 %
|
|
|
|
Base dividend payout
ratio2
|
|
60.0 %
|
|
52.7 %
|
|
64.5 %
|
|
Dividend payout
ratio3
|
|
81.3 %
|
|
102.1 %
|
|
34.3 %
|
|
Financial leverage
ratio4
|
|
33 %
|
|
33 %
|
|
33 %
|
|
Price/earnings
ratio3
|
|
11.7X
|
|
8.9X
|
|
|
|
Price/book value
ratio3
|
|
1.5X
|
|
1.3X
|
|
|
|
|
|
|
|
|
|
|
|
Total assets per
financial statements
|
$
|
691,853
|
$
|
672,206
|
|
|
|
Total assets under
management1
|
|
1,040,214
|
|
1,003,940
|
|
|
|
Total assets under
administration1
|
|
2,596,151
|
|
2,468,463
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual
service margin (net of reinsurance held)
|
|
13,043
|
|
13,123
|
|
|
|
|
|
|
|
|
|
|
|
Total
equity
|
$
|
29,037
|
$
|
28,795
|
|
|
|
|
|
|
|
|
|
|
|
Canada Life
Assurance Company consolidated LICAT
Ratio5
|
|
127 %
|
|
|
|
|
|
Canada Life
Assurance Company consolidated LICAT Ratio -
proforma6
|
|
|
|
130 %
|
|
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 first quarter of 2023 interim MD&A for
additional details on the composition of this measure.
|
4
|
The calculation for
financial leverage ratio will include 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 first quarter of 2023 interim MD&A for additional
details.
|
6
|
Proforma estimates of
The Canada Life Assurance Company consolidated LICAT ratio are
estimated based on the retrospective application of the 2023 LICAT
Guideline to 2022 financial results which have been restated to
reflect the adoption of IFRS 17 and IFRS 9. Proforma
LICAT ratios are intended only to provide an estimate of the
direction and magnitude of the impact of adopting the 2023 LICAT
Guideline under IFRS. Refer to the Cautionary Notes at the
beginning of this document for additional information on the use of
proforma estimates.
|
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 Putnam, together with Lifeco's Corporate
operating results.
With the adoption of IFRS 17, the Company has refined the
definition of base earnings (loss), a non-IFRS financial measure.
This is applicable as of January 1,
2023 and has been applied to the restated unaudited 2022
comparative periods. Overall, the Company's principles in defining
base earnings (loss) have remained consistent. Base earnings (loss)
continues to represent 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.
Refer to the "Non-GAAP Financial Measures and Ratios" section of
this document for additional details.
Base
earnings1 and net earnings - common shareholders by
segment (unaudited)
|
|
|
For the three months
ended
|
|
|
Mar.
31
2023
|
|
Dec. 31
2022
(Restated)
|
|
Mar. 31
2022
(Restated)
|
Base earnings
(loss)1
|
|
|
|
|
|
|
Canada
|
$
|
278
|
$
|
260
|
$
|
224
|
United
States
|
|
200
|
|
190
|
|
144
|
Europe
|
|
178
|
|
256
|
|
176
|
Capital and Risk
Solutions
|
|
157
|
|
181
|
|
171
|
Lifeco
Corporate
|
|
(5)
|
|
(18)
|
|
(3)
|
Lifeco base
earnings1
|
$
|
808
|
$
|
869
|
$
|
712
|
|
|
|
|
|
|
|
Items excluded from
base earnings
|
|
|
|
|
|
|
Market experience
gains and losses2
|
$
|
(168)
|
$
|
(386)
|
$
|
686
|
Assumption changes and
management actions2
|
|
7
|
|
(29)
|
|
(18)
|
Transaction costs
related to acquisitions3
|
|
—
|
|
(5)
|
|
(7)
|
Restructuring and
integration costs
|
|
(19)
|
|
(32)
|
|
(12)
|
Tax legislative
changes impact
|
|
—
|
|
63
|
|
—
|
Amortization of
acquisition-related finite life intangibles
|
|
(33)
|
|
(28)
|
|
(27)
|
Items excluded from
Lifeco base earnings
|
$
|
(213)
|
$
|
(417)
|
$
|
622
|
|
|
|
|
|
|
|
Net earnings (loss)
- common shareholders
|
|
|
|
|
|
|
Canada
|
$
|
233
|
$
|
352
|
$
|
443
|
United
States
|
|
151
|
|
142
|
|
112
|
Europe
|
|
40
|
|
(25)
|
|
544
|
Capital and Risk
Solutions
|
|
184
|
|
3
|
|
234
|
Lifeco
Corporate
|
|
(13)
|
|
(20)
|
|
1
|
Lifeco net earnings
- common shareholders
|
$
|
595
|
$
|
452
|
$
|
1,334
|
|
|
|
|
|
|
|
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 transaction 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
in the Europe segment.
|
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 transaction 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; 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
|
|
|
Mar. 31
2023
|
|
Dec. 31
2022
(Restated)
|
|
Mar. 31
2022
(Restated)
|
Base
earnings
|
$
|
808
|
$
|
869
|
$
|
712
|
|
|
|
|
|
|
|
Items excluded from
Lifeco base earnings
|
|
|
|
|
|
|
Market experience
gains and losses (pre-tax)
|
$
|
(209)
|
$
|
(393)
|
$
|
864
|
Income tax (expense)
benefit
|
|
41
|
|
7
|
|
(178)
|
Assumption changes and
management actions (pre-tax)
|
|
9
|
|
(46)
|
|
(19)
|
Income tax (expense)
benefit
|
|
(2)
|
|
17
|
|
1
|
Transaction costs
related to acquisitions (pre-tax)
|
|
—
|
|
(5)
|
|
(8)
|
Income tax (expense)
benefit
|
|
—
|
|
—
|
|
1
|
Restructuring and
integration costs (pre-tax)
|
|
(26)
|
|
(43)
|
|
(17)
|
Income tax (expense)
benefit
|
|
7
|
|
11
|
|
5
|
Tax legislative
changes impact (pre-tax)
|
|
—
|
|
—
|
|
—
|
Income tax (expense)
benefit
|
|
—
|
|
63
|
|
—
|
Amortization of
acquisition-related finite life intangibles (pre-tax)
|
|
(45)
|
|
(37)
|
|
(35)
|
Income tax (expense)
benefit
|
|
12
|
|
9
|
|
8
|
Total pre-tax items
excluded from base earnings
|
$
|
(271)
|
$
|
(524)
|
$
|
785
|
Impact of items
excluded from base earnings on income taxes
|
|
58
|
|
107
|
|
(163)
|
Net earnings -
common shareholders
|
$
|
595
|
$
|
452
|
$
|
1,334
|
Canada
|
|
|
|
|
For the three months
ended
|
|
|
Mar.
31
2023
|
|
Dec. 31
2022
(Restated)
|
|
Mar. 31
2022
(Restated)
|
Base
earnings
|
$
|
278
|
$
|
260
|
$
|
224
|
|
|
|
|
|
|
|
Items excluded from
base earnings
|
|
|
|
|
|
|
Market experience
gains and losses (pre-tax)
|
$
|
(60)
|
$
|
78
|
$
|
298
|
Income tax (expense)
benefit
|
|
17
|
|
(17)
|
|
(72)
|
Assumption changes and
management actions (pre-tax)
|
|
3
|
|
(37)
|
|
(3)
|
Income tax (expense)
benefit
|
|
(1)
|
|
10
|
|
1
|
Amortization of
acquisition-related finite life intangibles (pre-tax)
|
|
(6)
|
|
(7)
|
|
(6)
|
Income tax (expense)
benefit
|
|
2
|
|
2
|
|
1
|
Tax legislative
changes impact (pre-tax)
|
|
—
|
|
—
|
|
—
|
Income tax (expense)
benefit
|
|
—
|
|
63
|
|
—
|
Net earnings -
common shareholders
|
$
|
233
|
$
|
352
|
$
|
443
|
United
States
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
|
Mar.
31
2023
|
|
Dec. 31
2022
(Restated)
|
|
Mar. 31
2022
(Restated)
|
Base
earnings
|
$
|
200
|
$
|
190
|
$
|
144
|
|
|
|
|
|
|
|
Items excluded from
base earnings
|
|
|
|
|
|
|
Market experience
gains and losses (pre-tax)
|
$
|
(5)
|
$
|
—
|
$
|
1
|
Income tax (expense)
benefit
|
|
—
|
|
—
|
|
(1)
|
Restructuring and
integration costs (pre-tax)
|
|
(26)
|
|
(43)
|
|
(17)
|
Income tax (expense)
benefit
|
|
7
|
|
11
|
|
5
|
Amortization of
acquisition-related finite life intangibles (pre-tax)
|
|
(34)
|
|
(22)
|
|
(25)
|
Income tax (expense)
benefit
|
|
9
|
|
6
|
|
6
|
Transaction costs
related to acquisitions (pre-tax)
|
|
—
|
|
—
|
|
(2)
|
Income tax (expense)
benefit
|
|
—
|
|
—
|
|
1
|
Net earnings -
common shareholders
|
$
|
151
|
$
|
142
|
$
|
112
|
Europe
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
|
Mar.
31
2023
|
|
Dec. 31
2022
(Restated)
|
|
Mar. 31
2022
(Restated)
|
Base
earnings
|
$
|
178
|
$
|
256
|
$
|
176
|
|
|
|
|
|
|
|
Items excluded from
base earnings
|
|
|
|
|
|
|
Market experience
gains and losses (pre-tax)
|
$
|
(155)
|
$
|
(268)
|
$
|
463
|
Income tax (expense)
benefit
|
|
16
|
|
6
|
|
(75)
|
Assumption changes and
management actions (pre-tax)
|
|
6
|
|
(14)
|
|
(11)
|
Income tax (expense)
benefit
|
|
(1)
|
|
7
|
|
—
|
Amortization of
acquisition-related finite life intangibles (pre-tax)
|
|
(5)
|
|
(8)
|
|
(4)
|
Income tax (expense)
benefit
|
|
1
|
|
1
|
|
1
|
Transaction costs
related to acquisitions (pre-tax)
|
|
—
|
|
(5)
|
|
(6)
|
Income tax (expense)
benefit
|
|
—
|
|
—
|
|
—
|
Net earnings -
common shareholders
|
$
|
40
|
$
|
(25)
|
$
|
544
|
Capital and Risk
Solutions
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
|
Mar.
31
2023
|
|
Dec. 31
2022
(Restated)
|
|
Mar. 31
2022
(Restated)
|
Base
earnings
|
$
|
157
|
$
|
181
|
$
|
171
|
|
|
|
|
|
|
|
Items excluded from
base earnings
|
|
|
|
|
|
|
Market experience
gains and losses (pre-tax)
|
$
|
22
|
$
|
(201)
|
$
|
97
|
Income tax (expense)
benefit
|
|
5
|
|
18
|
|
(29)
|
Assumption changes and
management actions (pre-tax)
|
|
—
|
|
5
|
|
(5)
|
Income tax (expense)
benefit
|
|
—
|
|
—
|
|
—
|
Net earnings -
common shareholder
|
$
|
184
|
$
|
3
|
$
|
234
|
Lifeco
Corporate
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
|
Mar.
31
2023
|
|
Dec. 31
2022
(Restated)
|
|
Mar. 31
2022
(Restated)
|
Base earnings
(loss)
|
$
|
(5)
|
$
|
(18)
|
$
|
(3)
|
|
|
|
|
|
|
|
Items excluded from
base earnings (loss)
|
|
|
|
|
|
|
Market experience
gains and losses (pre-tax)
|
$
|
(11)
|
$
|
(2)
|
$
|
5
|
Income tax (expense)
benefit
|
|
3
|
|
—
|
|
(1)
|
Net earnings (loss)
- common shareholder
|
$
|
(13)
|
$
|
(20)
|
$
|
1
|
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
|
|
|
|
|
|
|
Mar. 31
2023
|
|
Dec. 31
2022
(Restated)
|
Total assets per
financial statements
|
$
|
691,853
|
$
|
672,206
|
Other AUM
|
|
348,361
|
|
331,734
|
Total
AUM
|
$
|
1,040,214
|
$
|
1,003,940
|
Other AUA
|
|
1,555,937
|
|
1,464,523
|
Total
AUA
|
$
|
2,596,151
|
$
|
2,468,463
|
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
|
204-391-8515
|
647-328-2134
|
media.relations@canadalife.com
|
deirdre.neary@canadalife.com
|
SOURCE Great-West Lifeco Inc.