This earnings news release for
- 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
"Our strong results reflect the successful execution of our integration programs in the
"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
Base earnings1 Net earnings
Base earnings1 | Net earnings | |||
Common Shareholders | Q1 2023 | Q1 2022 | Q1 2023 | Q1 2022 |
Segment earnings1 | ||||
200 | 144 | 151 | 112 | |
178 | 176 | 40 | 544 | |
Capital and Risk Solutions | 157 | 171 | 184 | 234 |
LifecoCorporate | (5) | (3) | (13) | 1 |
Total earnings1 | ||||
EPS2 | ||||
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
Reported net EPS for the first quarter of 2023 was
Return on equity was 13.4% on net earnings and 15.8% on base earnings in the first quarter of 2023.
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
- Subsequent to the first quarter of 2023, on
April 3, 2023 , Canada Life announced an agreement to acquireInvestment Planning Counsel Inc. (IPC), a leading independent wealth management firm, fromIGM Financial Inc. (IGM). This acquisition accelerates our strategy of building the leading platform for independent advisors inCanada . 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 combined its recently acquired Irish brands: Invesco,Acumen and APT underUnio 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 –
- 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.
- Q1 Empower base earnings of
US$186 million ($251 million ) and net earnings ofUS$150 million ($202 million ) – Empower base earnings for the first quarter of 2023 wereUS$186 million ($251 million ), upUS$67 million or 56% from the first quarter of 2022. The increase was primarily due to an increase ofUS$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 negativeUS$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 ofPersonal Capital incurred in the same quarter last year. - Q1 Asset Management base loss of
US$20 million ($27 million ) and net loss ofUS$21 million ($29 million ) – Asset Management base loss for the first quarter of 2023 wasUS$20 million ($27 million ), compared to a base loss ofUS$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.
- 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 theU.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 inIreland . - 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 theU.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
In addition, the Directors approved quarterly dividends on Lifeco's preferred shares, as follows:
First Preferred Shares | Amount, per share |
Series G | |
Series H | |
Series I | |
Series L | |
Series M | |
Series N | |
Series P | |
Series Q | |
Series R | |
Series S | |
Series T | |
Series Y |
For purposes of the Income Tax Act (
First Quarter Conference Call
Lifeco's first quarter conference call and audio webcast will be held on
The conference call will be extended by 30 minutes, concluding at
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
Selected financial information is attached.
Basis of presentation
The condensed consolidated interim unaudited financial statements for the period ended
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
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
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
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 | |||||||
2023 | 2022 | 2022 | |||||
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 | |||
127 % | |||||||
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 |
6 | Proforma estimates of |
BASE AND
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
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 | ||||||
2023 | 2022 | 2022 | ||||
Base earnings (loss)1 | ||||||
$ | 278 | $ | 260 | $ | 224 | |
200 | 190 | 144 | ||||
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 | ||||||
$ | 233 | $ | 352 | $ | 443 | |
151 | 142 | 112 | ||||
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 |
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 | ||||||
|
|
| ||||
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 |
For the three months ended | ||||||
2023 | 2022 | 2022 | ||||
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 |
For the three months ended | ||||||
2023 | 2022 | 2022 | ||||
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 |
For the three months ended | ||||||
2023 | 2022 | 2022 | ||||
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 | ||||||||||
2023 | 2022 | 2022 | ||||||||
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 | ||||||||||
2023 | 2022 | 2022 | ||||||||
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 | ||||
|
| |||
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: |
204-391-8515 | 647-328-2134 |
media.relations@canadalife.com | deirdre.neary@canadalife.com |
SOURCE
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