Great-West Lifeco ((TSE:GWO)) has held its Q4 earnings call. Read on for the main highlights of the call.
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During the recent earnings call, Great-West Lifeco expressed a generally positive sentiment, highlighting strong performance across most segments. Record earnings and substantial growth in Empower and European markets were emphasized, showcasing the company’s resilience even amidst challenges such as net outflows in Empower Workplace and the impacts of California wildfires. The firm’s robust capital position and strategic initiatives, including a dividend increase and share repurchase, underscore its potential for sustained growth.
Record Performance Across Segments
Great-West Lifeco reported record base earnings for the sixth consecutive quarter, with a remarkable year-over-year increase of 15%, reaching $1.1 billion. This success is mirrored in the base EPS, which also saw a 15% rise, attaining $1.20.
Empower Segment Growth
The Empower segment in the U.S. experienced a standout record quarter, with base earnings growth reaching 36%. The segment’s base ROE increased by over 400 basis points over the past year, demonstrating significant progress and leadership in the market.
Dividend Increase and Share Repurchase
In a show of confidence, the Board approved a 10% increase in dividends to $0.61 per common share and announced plans to repurchase an additional $500 million in shares under the current NCIB, signaling a strong commitment to returning value to shareholders.
Strong Capital Position
Great-West Lifeco’s capital strength is reflected in its LICAT ratio, which remains robust at 130%. Additionally, the leverage ratio improved, showing a 2-point year-over-year decrease to 29%.
Growth in Personal Wealth
Empower Personal Wealth reported a 30% increase in average AUA compared to the previous year, with net flows contributing to 12% asset growth. This reflects the platform’s strong capability and appeal in the market.
European Market Success
The company’s European businesses achieved record performance, with average AUA growing by 23% year-over-year. Strong net flows in the wealth and retirement segments further highlight this success.
Net Outflows in Empower Workplace
Despite the positive trends, Empower Workplace faced continued net outflows as planned members withdrew higher account balances, echoing a trend seen across the industry.
Wildfires in California
The Capital and Risk Solutions business anticipates modest impacts from the California wildfires, with current loss estimates ranging between $10 million and $50 million after tax.
Moderation in Insurance Experience
Insurance service results saw a year-over-year decline due to a moderation in favorable experience from the previous year’s elevated levels.
Forward-Looking Guidance
Looking ahead, Great-West Lifeco remains optimistic, reporting record base earnings of $1.1 billion and base EPS of $1.20, both reflecting a 15% increase over the prior year. The base ROE rose to 17.5%, while the book value per share increased by 12%. The company’s strong capital position, coupled with favorable equity markets and strategic acquisitions, positions it well for continued success.
In conclusion, Great-West Lifeco’s earnings call highlighted a robust performance across various segments, driven by significant growth in Empower and European markets. Despite industry-wide challenges, the company’s strategic initiatives and strong capital position suggest promising prospects for the future, making it a compelling consideration for investors.
