Canada NewsWire
WINNIPEG, Feb. 12, 2020
TSX:GWO
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 year ended December 31, 2019, prepared in accordance with International Financial Reporting Standards (IFRS). These reports are available on greatwestlifeco.com under Financial Reports. Additional information relating to Lifeco is available on sedar.com. Readers are referred to the cautionary notes regarding Forward-Looking Information and Non-IFRS Financial Measures at the end of this release. All figures are expressed in Canadian dollars, except as noted.
WINNIPEG, Feb. 12, 2020 /CNW/ - Great-West Lifeco Inc. (Lifeco or the Company) today announced net earnings attributable to common shareholders (net earnings) of $513 million, or $0.55 per common share, for the fourth quarter of 2019 compared to $710 million, or $0.72 per common share, for the same quarter last year. Lifeco's net earnings for the fourth quarter of 2019 included the impact of the revaluation of a deferred income tax asset of $199 million, restructuring charges of $36 million and the net gain of $8 million on the completion of the Scottish Friendly transaction, which resulted in a total net charge of $227 million and reduced earnings per common share by $0.25. Excluding these items, adjusted net earnings were $740 million, or $0.80 per common share, for the fourth quarter of 2019.
Adjusted earnings per common share (EPS) for the fourth quarter of 2019 of $0.80, increased $0.08 or 11% from $0.72 in 2018, reflecting strong operating results in the Europe and U.S. segments, as well as the successful Substantial Issuer Bid share buyback, which was completed in the second quarter of 2019.
"Fourth quarter earnings reflected solid business growth, expense discipline and improvements in markets," said Paul Mahon, President and Chief Executive Officer, Great-West Lifeco Inc. "Our capital position is strong and we have the financial flexibility to execute on our strategic priorities for long-term growth."
Highlights
Dividend increase of 6%
Consolidated assets under administration of $1.6 trillion
Sales performance was strong at $42.0 billion
Capital strength and financial flexibility maintained
Recognized as a leader in carbon and climate risk management by CDP
SEGMENTED OPERATING RESULTS
For reporting purposes, Lifeco's consolidated operating results are grouped into four reportable segments – Canada, United States, Europe and Lifeco Corporate – reflecting geographic lines as well as the management and corporate structure of the Company. For more information, please refer to the Company's 2019 Annual Management's Discussion and Analysis (MD&A).
CANADA
UNITED STATES
EUROPE
QUARTERLY DIVIDENDS
The Board of Directors approved a quarterly dividend of $0.4380 per share on the common shares of Lifeco payable March 31, 2020 to shareholders of record at the close of business March 3, 2020.
In addition, the Directors approved quarterly dividends on Lifeco's preferred shares, as follows:
First Preferred Shares | Record Date | Payment Date | Amount, per share |
Series F | March 3, 2020 | March 31, 2020 | $0.36875 |
Series G | March 3, 2020 | March 31, 2020 | $0.3250 |
Series H | March 3, 2020 | March 31, 2020 | $0.30313 |
Series I | March 3, 2020 | March 31, 2020 | $0.28125 |
Series L | March 3, 2020 | March 31, 2020 | $0.353125 |
Series M | March 3, 2020 | March 31, 2020 | $0.3625 |
Series N | March 3, 2020 | March 31, 2020 | $0.1360 |
Series O | March 3, 2020 | March 31, 2020 | $0.183995 |
Series P | March 3, 2020 | March 31, 2020 | $0.3375 |
Series Q | March 3, 2020 | March 31, 2020 | $0.321875 |
Series R | March 3, 2020 | March 31, 2020 | $0.3000 |
Series S | March 3, 2020 | March 31, 2020 | $0.328125 |
Series T | March 3, 2020 | March 31, 2020 | $0.321875 |
For purposes of the Income Tax Act (Canada), and any similar provincial legislation, the dividends referred to above are eligible dividends.
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 Retirement, Putnam Investments, and Irish Life. At the end of 2019, our companies had approximately 24,000 employees, 197,000 advisor relationships, and thousands of distribution partners – all serving our more than 31 million customer relationships across these regions.
Great-West Lifeco and its companies have over $1.6 trillion in consolidated assets under administration as at December 31, 2019 and are members of the Power Financial Corporation group of companies. Great-West Lifeco trades on the Toronto Stock Exchange (TSX) under the ticker symbol GWO. To learn more, visit greatwestlifeco.com.
Basis of presentation
The consolidated financial statements of Lifeco have been prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise noted and are basis for the figures presented in this release, unless otherwise noted.
Cautionary note regarding Forward-Looking Information
This release may contain 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 "expects", "anticipates", "intends", "plans", "believes", "estimates" and other similar expressions or negative versions thereof. These statements include, without limitation, statements about the Company's operations, business, financial condition, expected financial performance (including revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future actions by the Company, including statements made with respect to the expected benefits of acquisitions and divestitures, expected capital management activities and use of capital, expected cost reductions and savings 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 and mutual fund 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. Material factors and assumptions that were applied in formulating the forward-looking information contained herein include the assumption that the business and economic conditions affecting the Company's operations will continue substantially in their current state, including, without limitation, with respect to customer behaviour, the Company's reputation, market prices for products provided, sales levels, premium income, fee income, expense levels, mortality experience, morbidity experience, policy lapse rates, reinsurance arrangements, liquidity requirements, capital requirements, credit ratings, taxes, inflation, interest and foreign exchange rates, investment values, hedging activities, global equity and capital markets, business competition and other general economic, political and market factors in North America and internationally. 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. Other important factors and assumptions that could cause actual results to differ materially from those contained in forward-looking statements include customer responses to new products, 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, 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 and unplanned material changes to the Company's facilities, customer and employee relations or credit arrangements. 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 2019 Annual MD&A under "Risk Management and Control Practices" and "Summary of Critical Accounting Estimates", 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-IFRS Financial Measures
This release contains some non-IFRS financial measures. Terms by which non-IFRS financial measures are identified include, but are not limited to, "adjusted net earnings", "return on common shareholder's equity", "adjusted return on common shareholder's equity", "core net earnings", "constant currency basis", "impact of currency movement", "premiums and deposits", "sales", "assets under management" and "assets under administration". Non-IFRS financial measures are used to provide management and investors with additional measures of performance to help assess results where no comparable IFRS measure exists. However, non-IFRS financial measures do not have standard meanings prescribed by IFRS and are not directly comparable to similar measures used by other companies. Refer to the "Non-IFRS Financial Measures" section in the Company's 2019 Annual MD&A for the appropriate reconciliations of these non-IFRS financial measures to measures prescribed by IFRS as well as additional details on each measure.
Fourth Quarter Conference Call
Lifeco's fourth quarter conference call and audio webcast will be held February 13, 2020 at 3:30 p.m. (ET). The call and webcast can be accessed through greatwestlifeco.com/news-events/events or by phone at:
A replay of the call will be available from February 13 to March 14, 2020 and can be accessed by calling 1-800-408-3053 or 905-694-9451 in Toronto (passcode: 2398233#). The archived webcast will be available on greatwestlifeco.com.
FINANCIAL HIGHLIGHTS (unaudited)
(in Canadian $ millions except per share amounts)
As at or for the three months ended | For the twelve months ended | ||||||||||
December 31 | September 30 | December 31 | December 31 | December 31 | |||||||
Earnings | |||||||||||
Net earnings - common shareholders | $ | 513 | $ | 730 | $ | 710 | $ | 2,359 | $ | 2,961 | |
Adjustments(1)(4) | 227 | — | — | 426 | 56 | ||||||
Adjusted net earnings - common | |||||||||||
shareholders(1)(4) | 740 | 730 | 710 | 2,785 | 3,017 | ||||||
Per common share | |||||||||||
Basic earnings | 0.552 | 0.786 | 0.719 | 2.494 | 2.996 | ||||||
Adjusted basis earnings(1)(4) | 0.797 | 0.786 | 0.719 | 2.944 | 3.052 | ||||||
Dividends paid | 0.413 | 0.413 | 0.389 | 1.652 | 1.556 | ||||||
Book value | 21.53 | 21.02 | 22.08 | ||||||||
Return on common shareholders' equity(2) | 11.7% | 12.4% | 14.0% | ||||||||
Adjusted return on common shareholders' | |||||||||||
equity(1)(2)(4) | 13.8% | 13.4% | 14.3% | ||||||||
Total premiums and deposits(1) | $ | 39,096 | $ | 36,417 | $ | 37,583 | $ | 150,638 | $ | 139,262 | |
Fee and other income | 1,515 | 1,496 | 1,420 | 7,081 | 5,819 | ||||||
Net policyholder benefits, dividends and | |||||||||||
experience refunds | 10,003 | 8,468 | 8,496 | 36,415 | 31,566 | ||||||
Total assets | $ | 451,167 | $ | 446,626 | $ | 427,689 | |||||
Proprietary mutual funds and institutional | |||||||||||
net assets(1) | 320,548 | 308,425 | 281,664 | ||||||||
Total assets under management(1) | 771,715 | 755,051 | 709,353 | ||||||||
Other assets under administration(1) | 857,966 | 841,700 | 689,520 | ||||||||
Total assets under administration(1) | $ | 1,629,681 | $ | 1,596,751 | $ | 1,398,873 | |||||
Total equity | $ | 25,543 | $ | 25,157 | $ | 27,398 | |||||
The Great-West Life Assurance Company | |||||||||||
consolidated Life Insurance Capital | |||||||||||
Adequacy Test Ratio(3) | 135% | 139% | 140% | ||||||||
(1) | This metric is a non-IFRS measure. Refer to the "Non-IFRS Financial Measures" section of the Company's December 31, 2019 Management's Discussion and Analysis for additional details. |
(2) | Refer to the "Return on Equity" section of the Company's December 31, 2019 Management's Discussion and Analysis for additional details. |
(3) | The Life Insurance Capital Adequacy Test (LICAT) ratio is based on the consolidated results of The Great-West Life Assurance Company, Lifeco's major Canadian operating subsidiary. Refer to the "Capital Management and Adequacy" section of the Company's December 31, 2019 Management's Discussion and Analysis for additional details. |
(4) | In 2018, adjustments were $56 of restructuring costs relating to the Company's U.K. operations. The following adjustments were made for the twelve months ended December 31, 2019: |
Segment | ||||||||||||||
2019 Adjustments: | United | Europe | Total | EPS | Annual Financial | |||||||||
Q2 | Net charge on sale, via reinsurance, of a U.S. business | $ | 199 | $ | — | $ | 199 | $ | 0.212 | Note 3 | ||||
Q4 | Revaluation of a deferred tax asset | 199 | — | 199 | 0.215 | Note 27 | ||||||||
Q4 | Restructuring costs | 36 | — | 36 | 0.039 | Note 5 | ||||||||
Q4 | Net gain on Scottish Friendly transaction | — | (8) | (8) | (0.009) | Note 4 | ||||||||
Total Q4 2019 Adjustments | 235 | (8) | 227 | 0.245 | ||||||||||
Total 2019 Adjustments | $ | 434 | $ | (8) | $ | 426 | $ | 0.450 | ||||||
Net earnings - common shareholders (unaudited) | ||||||||||||
For the three months ended | For the twelve months ended | |||||||||||
December 31 2019 | September 30 | December 31 | December 31 | December 31 | ||||||||
Canada | ||||||||||||
Individual Customer | $ | 87 | $ | 85 | $ | 171 | $ | 431 | $ | 685 | ||
Group Customer | 114 | 206 | 144 | 632 | 630 | |||||||
Canada Corporate | (13) | 9 | (5) | (12) | (40) | |||||||
188 | 300 | 310 | 1,051 | 1,275 | ||||||||
United States | ||||||||||||
Financial Services(1) | 100 | 63 | 48 | 278 | 240 | |||||||
Asset Management | 18 | 13 | (29) | 33 | (61) | |||||||
U.S. Corporate(2)(3) | (239) | 1 | — | (236) | 52 | |||||||
Reinsured Insurance & Annuity | ||||||||||||
Business(1)(3) | — | — | 36 | (136) | 157 | |||||||
(121) | 77 | 55 | (61) | 388 | ||||||||
Europe | ||||||||||||
Insurance & Annuities | 334 | 306 | 271 | 1,050 | 1,036 | |||||||
Reinsurance | 124 | 55 | 89 | 353 | 377 | |||||||
Europe Corporate(3) | (6) | (4) | (11) | (13) | (102) | |||||||
452 | 357 | 349 | 1,390 | 1,311 | ||||||||
Lifeco Corporate | (6) | (4) | (4) | (21) | (13) | |||||||
Net earnings - common shareholders | $ | 513 | $ | 730 | $ | 710 | $ | 2,359 | $ | 2,961 | ||
Adjustments(3)(4) | ||||||||||||
Revaluation of a deferred tax asset | 199 | — | — | 199 | — | |||||||
Restructuring costs | 36 | — | — | 36 | 56 | |||||||
Net gain on Scottish Friendly transaction | (8) | — | — | (8) | — | |||||||
Net charge on sale, via reinsurance, of a | ||||||||||||
U.S. business | — | — | — | 199 | — | |||||||
Adjusted net earnings - common | ||||||||||||
shareholders(4) | $ | 740 | $ | 730 | $ | 710 | $ | 2,785 | $ | 3,017 | ||
(1) | Reinsured Insurance & Annuity Business reflects business transferred to Protective Life under an indemnity reinsurance agreement effective June 1, 2019. Comparative figures have been adjusted to reflect current presentation. |
(2) | U.S. Corporate net earnings for the second quarter of 2018 included a net positive impact of $60 arising from refinancing in the U.S. segment completed in the second quarter of 2018. |
(3) | Adjustments to net earnings are included in Corporate business units of the U.S. and Europe segments as well as the Reinsured Insurance & Annuity Business unit. |
(4) | This metric is a non-IFRS measure. Refer to the "Non-IFRS Financial Measures" section of the Company's December 31, 2019 Management's Discussion and Analysis for additional details. |
SOURCE Great-West Lifeco Inc.
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