GWLIF - Earnings call transcript Q1 2022

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Great-West Lifeco First Quarter 2022 Results Conference Call. I would now like to turn the conference over to Mr. Paul Mahon, President and CEO of Great-West Lifeco. ahead. go Please

Paul Mahon

afternoon XXXX Good to Lifeco’s Great-West Thanks, call. and quarter conference first Ariel. welcome

Joining call we on the are Chief formal me David today’s Also call Financial President Executive presentation. answer Officer. and and Vice available And your us together, joining will to today’s is deliver Bob on Garry questions Harney, Investment Canada; Jeff and Development; and COO, President and Ed of COO, President Reynolds, Macoun, Arshil CEO President, Jamal, of Europe; and CEO Corporate President Group Strategy, and Murphy, Putnam. Head, and President Empower; MacNicholas,

I first turn which our solid discussion Slide today’s Ukraine, driven start, non-GAAP multiyear Slide global continued Lifeco causing to X. forward-looking momentum backdrop, I tragic part have financial dislocation will notes a saw inflation and human which Please to apply such challenging as and in Before X. central markets. the heightened quarter draw Great-West macroeconomic reaching results invasion of well your to information rates, in the positive senseless on These loss. its volatility cautionary conditions as attention measures highs raising delivering is against These the in ratios by and and materials. regarding banks been presentation

those hearts been separated. many impacted, up Our go families to so including that have

have refugee up business companies attractive staff and opportunities. And and to equity we impacted efforts. solid though resettlement very in as and yield support across with the were business. challenges, have was reflecting actively more market responded benefited are good. than investment Performance the source enhancement strong by resiliency continue strength, first Our gains and our were in engaged and from we Base year-over-year base X% delivered earnings volatility support our diversification $XXX,XXX in earnings segments quarter financial Despite EPS results. macro

priorities on We Capital Personal the At well track. are of and progressing have value advanced Empower, Lifeco. our MassMutual also across creation integrations and

waves X MassMutual. completed of client migration X We of have successfully from

client pleased XXXX and somewhat our tracking remarks. we’re Garry client during including in attrition, with expectations. detail momentum, to fees are our original both of market QX and down his volatility cover from more with more this retention, While line in synergies due expected the timing will cost

With Prudential X, over increases XX transaction the the closing participant of base April Americans. Empower’s on million to

DC advice While we core serving their management and the build-out to are retail strategic digital are Wealth is serve significant In needs leveraging will these we but group, only how in wealth Capital’s needs. focused not I Empower’s see management of on customers, plan the we focus a as wealth accelerating well. for Personal capabilities. of Empower, retirement Europe few broader our minutes, share a Canada strategy, including at opportunity

the the wealth shows our financial notwithstanding Our time by various across and positive market performance strong progress quarter. over is evidenced our to net medium-term turn X. objectives periods. volatility Slide businesses, experienced Please in flows sales This slide and

strategies. performance We are strong continued Lifeco’s as on pleased execute our creation value we with

with other against and base previously As X. continue Please Canada EPS objectives. base up track Life were X% to positively in Lifeco’s to strong group year-over-year, noted, and turn earnings momentum we sales. continued Slide

the couple delivered positive very life wealth wealth cash individual large mid-market was both and a and growth small cases group health particularly in year, Both Excluding strong sales, of and segments. in net last flows. and

services. insurance modern Subsequent support for and the are and Management Life claims in continue Wealth benefits Canada ClaimSecure’s includes client Canada to sustainable attracting the launched fund is Life inflows. for and quarter enhance as such services launches performance end, as to bundled processing ClaimSecure advisers. offering new strategic Canada products, us Life’s focus a portfolios good we SecurePak. new our product This Canada and New

to opportunity many the fourth of this a Life in Brand ClaimSecure. significant expect to Canada sponsors I’m rated be also most plan the first brand that to offering We Finance pleased will and share extend valuable collaborations our see via Canada. we

recognition are efforts in the strong valued deals release We year-over-year amalgamation with turn sales This our reflects last million Canada sales and following of Equity success of in a the Macoun the Healthy congratulate totaling achievement Please bulk to more make in values. Jeff this his was $XXX brand Canadians. to X team the over mortgage than I Life UK for re-branding Europe, growth eyes and our like first annuity in insurance insurance ever it five. population sales Slide of XXXX. top insurance and continued the remarkable company companies supported such to making sustained to X. and on of the property trusted an rising In momentum would annuities million quarter. $XXX aging were doubled three quarter. by with and following

brokers service wealth been our extend to We onshore in also acquired we the and have our smaller presence Europe. to bonds. growing In management offering, partnerships we’ve Ireland our several across recent offshore expand and continue distribution advisers years, for in wealth UK and

IRA success prior technology savings Please positioning Net turn market $XXX the AUM Putnam’s to this group we’re for accounts market, Empower. continue mega retail wealth following Germany, individual billion This strong were year the DC compared growth be billion. outflows the Prudential. year-over-year. grow and important is a contribution were retail number addition, increasingly which access example, more year Slide as end of in space. of Retail are $X.X to In and billion. and investments positive a to with combines flows using pension cover consistent us our experienced Empower sale platform of $X.X due primarily at small digital sale strong included of X. the the segments. line trillion, In wealth new pension to page. building trillion cash billion and this business in $XX on was share I to management, a through our at management XX% the fixed on Slide detail X. median income $XX increased quarter Empower’s overall view to at a Capital, Please as $XX to This defined the remains Morningstar will between in momentum in last had This turn X-year sales the X-star investment the each. levels levels continued at driven basis. Putnam’s sales funds funds as and demonstrated Empower where strong performing above experience billion. highlight both on top strong XX and by business IRAs fee quarter. continued reached to Lipper and to products. this over split Personal we grows retirement on X XX% Empower of performance performance to asset saw ratings known large will quarter. we the lower a in including assets X at by $X.X We’ve outflows grow quarter

Empower, XX. on a our Personal as metrics, on cost wealth well are to are DC on programs retail growing strategy as in latest pleased all the These another marked manager. with participant We Please acquisition last of and and track. MassMutual pivotal and for X client to transactions month As integration track and including asset Empower leader for achieve three AUA our past and and Prudential retail years. key close of in Slide performance progressing the The retirement both growth, acquisitions it Capital turn earlier, noted the our remain synergy targets are as retention. transformative represented to milestone longer-term a growth

with compared over are XXXX has retail that billion reached made organically to were will and And last Empower recall this sales that We’ve technology sharing $XX over of assets we’ve wealth QX our in on growth up progress over significant seen I increased before management year Empower. Capital’s and empower assets XX% grew last years. today, and QX call strong through and tools. few sales administration XX% capital noted, IRA you come the quarter XX% period, retail Since wealth As by assets on XX% the now take XXXX. by Personal under the growing. strategy then, to last growth up I same billion. X.X at moments update Capital personal we $XX a to second by the are IRA assets management year and build-out Personal leverage able in both under

the staff, rollout new experience The last with the of $X accelerated have digital new sales million May. months, million of to end is opportunity, To leveraging past capabilities. few to in we those hiring, to service quarter. participant plan started growth and by the our now X.X over growing experience Over just Capital’s available at Personal this including we’ve Empower, half retail participants XXX support

now such and its year-over-year, strong result, Risk opportunities part Please and produced fulfill U.S. impacted to in to guidance turn our Capital with by XX. Israel. reinsurance markets Gary? highlights. driven Japan a reinsurance millions quarterly while lead pursue reflecting and industry Slide in I U.S. While costs expansion transactions the these and including over We reinsurance financial will structured advice in we retail for is pipeline well-diversified improved with XX% Israeli longevity remain transaction. Solutions growth And short focused to results business portfolios. confident Gary an need experience. in the reinsurance by The turn U.S. Capital and to review health growth, customers will Risk our call to European on Solutions and we that, are earnings strong from portfolio. new life still business core term, serve. we’re traditional we as work markets as increasing we new both new innovative as solid strong IRA ever-growing has the COVID-XX, in and the line results of and and base the investments increased

Garry MacNicholas

Slide to results Thank this XX. Please quarter. financial you, Paul as Paul. solid Lifeco Overall, produced turn noted,

base spreads, Canadian Compared positive challenges was the reflecting EPS due to levels environment EPS we increase trends stock factors, to in constant broad-based volatility markets higher and year-over-year, business, The to increased currency, was dollar see European against attractive the the and including opportunities business with stock enhancement and addition also underlying stronger up $X.XX In growth mix and X% Rising rates of of impacts. the in several and opportunities. presents. momentum currencies. XX% market yield the reflect across $X.XX, elevated prior by continuing result overall XXXX, others, in and QX inflation outcomes Canada, downward year, were both a widening the in after COVID results results current disability earnings several this impacted $XXX last items to down grew Starting quarter certain a an At business. excluded offset increase X% Experience a periods. was the net were earnings EPS quarters delivering X% businesses group base year. of Insurance Lifeco favorable across level, from were solid a long-term diversified primarily life similar QX the headwind in base due experience and book from with as increase lower in pressures million, claims. with individual and of

policyholder quarter. New business this and behavior lower gain was

However, benefited at In mass supported strong XX% including from of by yield widening enhancement year-over-year, by the retail were another growth strong spreads organic business. from mortgages. and earnings U.S., led base release contribution continuing equity up Canada the volumes Empower,

these more reporting We tightly businesses integrated. as have increasingly for become XXXX they combined in

the will We will will to year-over-year, associated separately earnings program Prudential XXXX Empower starting were later the of costs. integration the this reporting QX, from include which and board synergies XX% U.S. be until report of $XXX in up continue closes synergies business, and unchanged quarter. million on year. base The and comes separate on integration prior out shown for costs

the reminder, growth are in Empower benefited a These markets of the at fees from two-thirds year-over-year. based. asset As about fees

with negatively given accelerated elevated Mass and plan than concentrated Also, repricing were better also as Fees and the note noted up have a from year-over-year earlier, were by in renewal this Paul going very markets QX revenue were the our the anticipated. QX additional expected QX Expenses participants impacted sales attrition is in staff modeling. in acquired by veto in running DC growth steady the in dates. well retention U.S. down line in as the they at impacted support portfolio expenses organic necessary and more so was of which the However, with year. client future retail year-end to drive we acquisition January wealth the would the hires quarters. this growth decline I X build-out with expected far, revenue asset XXXX, is along that strategy client in and little

track to the over annualized is an is year. expense to with tend It and a the Personal basis at calling and the coming are savings base of start and the overhead eliminating broader prior out in from more once on that the program, million $XXX costs platform. front, as the million Empower’s declines synergies the integration duplicate over later capabilities at admin target seed be On to by deliver more quarter. participants worth $XX May. the run are service integration later Putnam early on client systems integration continues market in then agreements X.X with post MassMutual remain earnings on pronounced the and fees QX digital rate this rollout X last impacted at completed having million now Capital plus million board at access Empower due to pace to similar AUM-based losses savings lower to were discontinued savings end conversion of arising year, capital and

very of experience higher. against from QX typically Risk pensions softer In from and appreciation included in quarter year retail QX UK in $X increased with gains, this Solutions, by late up Germany largely base XX% in and a Capital dollar over line block in Base book portfolio, in Europe Canadian a seen group allowing turnaround by were to in base were mortality the growth is the the good Ireland quarter continued X years, year-over-year, QX U.S. reinsurance claims and year. the continues reinsurance earnings results life year-over-year business year-over-year, XX% and business. for experience. sterling. structured insurance well driven earnings had driven in earnings in last continued prior yield the experience. perform or in constant of strong currency, with in base with seasonally As XX% a experience. are Putnam gains year, of also Ark particularly euro million up improvement enhancement the large leases longevity the lower seasonally strong X% close segment a we a earnings growth, mortality up Life, for QXs and The successful earnings acquired XX% renegotiation The have last benefiting

as For expected of not CRM a since better have highlighted as meaningful. several now, quarters we in and trends AUM measure in volume are profit sales growth

source order presenting the period, view expected shortly. that more as back part We this of an of CRS quarter in to the additional period provide to and profit are expanded color to earnings come movement of into details I’ll

$XX on see wealth can net Personal which to There various including impact are also MassMutual Slide impacts well Turning million predominantly period. the partly liabilities, assumption acquisitions items, updates These smaller partly overall. in of as the market-related we as space. Capital acquisition-related, the XX, here from impacts excluded Irish to minor actuarial minus and recent the in were

source XX Turning and earnings. slides highlight of next to these the two XX, Slides

sterling X% are higher by X% X% and with contribution the then income markets, from the up with lower earnings quarter prior euro on in to net from First, a down down profit was SOE partially focus higher noted Expected some expected in above higher fees year-over-year notwithstanding earnings a view. expenses base versus the XX, higher CRS and Slide performance and I’ll pressure expected X% at comments reflects on earlier. The net expenses increase earnings a Putnam perspective reminder, currency was profit Expected offset line profit the Canada. fee and and seasonality amounts pretax. down the expenses. also compensation due

in on also seed this on due on these and year Canada XXXX The than $XX gains primarily strain net offset tax in of the financing to higher large costs. next QX slide. year, in tax more term The earnings, Canada in jurisdictional the XX% on on reinsurance. in surplus capital impacts, was the effective minus losses reflects last last business sales business new X% was of to lower million on period. $XX million, mix by positively to Experience case rate and pricing this earnings the Earnings quarter shareholder and I’ll minus is due from contributed this new effective down base pressures Moving earnings detail cover base rate earnings gains was quarter, in and higher business XX%. primarily

on these touched highlight results well experience XX, expand the various Slide to tables quarter, management of in the which as on already. and as to items the we’ve assumptions changes in actions some Turning

As several positively, both of experience impact of portfolio strategic slightly across Ireland. was to generally mortality, in quarter with The and line continued shown and Overall, investments chart investment this forages with in mortality variance in The material steady project was experience neutral, as enhancement were Canada. disability expectations. in and new claims the basis the reflects in left, and in in morbidity Canada in geography. this slide. large actually positive continued health costs in of the and continues acquisition-related both disability volume favorable. positive are our review CRS changes are and just transaction yield in well. higher Credit-related than highlights Ireland. broadly positive more and morbidity Canada recent on positive was Canada lease Ireland the acquisitions that UK by table impacts costs we Overall contribute perform the this diversification positive UK next and liabilities growth, detail the and Canada expense Annuitant to continue I’ll related combined from to impact on no this the consideration and the quarter particularly in quarter provisions on The back offset right UK types there expenses to was with release extensions continuing a and benefit net mortality to period risk the longevity more experience equity in as high-quality

XX. Slide to Moving

have we Risk here, the group into out Capital broken profit earlier Solutions for components. mentioned I as expected two Here, the

catastrophe, which a margins as and these P&C business fees as life result lines growth of in been structured on increasing have reinsurance business. the in and such First,

The as long-tail is as for such reinsurance release second annuities. provisions deviations, known to adverse of life the and which actuarial applies or component margins PFADs, liabilities predominantly

As actuarial our seen margins All else life produces lower on changes PFADs reduced reporting gains. can a will course, balance for coming release released the and traditional of best of the but we PFADs be IFRS we equal, high XXXX. At and of reinsurance. PFAD in in and, into being releases adjustment made to the longevity our margins to estimate be service liabilities other sheet XX, that chart, better have type businesses strengthened level, and replaced Interestingly, the split experience as you being a profit, of contractual top we fees risk expected by with unchanged, see largely more the on will move this that. this margin

position play We share a conceptually, out. would come is to figures are that will how yet in XXXX, it actual but not in this

Moving to operating slide organically up through M&A. year-over-year, this Slide expected, XX are in by the increase expenses business, segment. Expenses highlights given both as and the and

U.S., participants closed currency many noted with the quarters. into movement we expense costs. noted In currency. year-over-year growth in book some Empower In Canada, the up and strategy acquisition our with Ark achieving other earlier Ireland, reflects turn has small monitor with results in case an experiencing Paul was productivity as X% of gains retail X% OCI impact In the at dollar. and growth to block earlier. expenses very the the ClaimSecure DC the year of Slide share by Canadian which but primarily reflecting the are is to in mainly and for acquisition-related earnings, had newer across plan X% business, the operations. costs fees. in investments closely, year-over-year, growth each sub-advisory the area including the year-over-year, primarily strengthening XX. segment. markets. inflationary that a were the The is X% expansion the to This up expenses given is steady is Solutions, is with been year-over-year, in As value QX increasing pressure Europe, Currency in were on were expenses driven focus expenses the the businesses, translation retained off in constant The growth In organic wealth last base, up and an labor growth business per will in modest we aligned and this in Risk due earnings Please a including headwind $XX.XX of organic X strong Life Capital continued in the up increase solid and

produced, quarter, in The compared interest strong economic interest points offsetting in However, our since, in rates, decline with rates The our at was increases, interest last remained pension XXX%. range longer by We from line as LICAT would X formulaic rather describe rate ratio OCI. at the issue ratio the down Canada the sensitivity are largely rise XXX% of general, MD&A. benefits higher gains has in to our target XXX% Life particularly within driven disclosures in business than term at a rates. to

under reminder, interest portion available rose. rates quarter as at this a fair As a is the of which capital value, LICAT, calculated declined

However, the the as did in rates required capital move is defined largely calculated not so at and ASB same by fixed manner.

are smoothing expected I’d an addition, scenario quarters. quarter we lead point is quarter for changes of In four to and scenarios switched the remaining and smoothing next the X LICAT LICAT, that to under per last increase note

convert last Canada you, in Lastly, billion, included the modest points on which to $X.X increase at from X Lifeco quarter to and is ratio. this Back Life’s would cash, about LICAT Paul. ratio, quarter, the ended a not LICAT

Paul Mahon

to Thanks, Gary. Please XX. Slide turn

with enable work This stakeholders. businesses are us, Lifeco to expertise. across positive priorities world the advancing capabilities, impact and delivering on pleased areas and and focused our and Core as that are integrate and our include financial and to in related value making execute digital especially acquired risk capital against investment deployment greater shareholders workplace four create our will represent momentum of and our to medium-term advice, We commitment the believe for We remain discipline strategy successfully the continued first the to of It’s we focus inclusion meeting this areas mindset building will these around relationships reconciliation, we annual corporate journey and social at with three that the our sustainability. Lifeco’s and focus introduced become sustainable and That that purpose where communities this solutions and and more and for These open thrive recognize role help so, We investing for environment, the in a inclusive societal live are of impact our we communities my areas by challenges doing reflective work. that concludes morning. formal remarks. to diversity, the and and and Operator, truth questions. in address execution other more equity strategy. on priorities that inclusive future. on responsibility we quarter of please strength, line objectives value-creating a

Operator

Instructions] Thank Meny of you. [Operator ahead. Our go comes first Please Grauman Scotiabank. from question

Meny Grauman

Hi, good afternoon.

You past Europe But had most result this recession in be to economists we if expect a strong this year. quarter. overlay expectations, in Europe

implications or wondering on where countries it, less the products more vulnerable as focus the given outlook? you sound for European are And you or you and if So business, your where economic are see what both, you are vulnerable?

Paul Mahon

refer for Thanks, segment. our I’ll hand responsible focused out that start Harney, off I I’d business to who David then to businesses Meny. by in is It’s is needs-based start saying it would very on financial Paul. services. I’ll off and that Europe

of savings we do a lot support. provide So pension

some are in and continue market handle to bulk those payout that that have sort also will things transact a interest rates to regardless we’re organizations to of really of like looking those people Obviously, are transactions an going going vehicles are there be then rising involved on those. and positioned be of impact. make things many environment. payout to more And of But on that are of – sort well the and to annuities lot offload act annuities We’re products and liability, levels of those ways, where annuities. products institutional attractive, like will savings products types in are

and David business financial get cycles, let So it David I’ll view businesses, go but detail, detail. let in into and as our bit David? I I resilient more think into notwithstanding strong, about pretty more a I’ll our is

David Harney

the Yes. point. probably Thanks, repeat same Paul. I’d

as of touch share be again else are than very just position to are this mostly And a little our But there, or the Ireland there and world maybe quarter market share are yield obviously and sentiment strongest. rising Europe almost split proximity I Europe anywhere on we’ve the aside, obviously market there. Ukraine wouldn’t boosted will Europe moment, enhancement. in quarter rest strong Europe. results wouldn’t smaller the from that’s XX% had be pension of like Germany. even market in growing markets, retail concerns and concerns and in in we that a So in fears to to around the I I world. growing that’s region in the probably by particular and concern by had different our recessionary in segments Look, the XX% the interest were say recession have a Like the worried quarter, again good occupation the other and the UK, good around at But we’re inflation there if like to three to some maybe rates, was earnings the about anywhere generous Germany. in we suppose we’ve XX% as but compared a any there segment with this that we’ve

if have we even few Europe Ireland we expect one that the softer and is more economy product showed true called business over the strongly positions mix that little And some of the that UK, mature we then more, perform still to period. had Germany even bit Paul in the within So Ireland talked a in about economies then it’s is Ireland there may move some growth. and I the within very fast-growing not recessionary if it much pressures. of Europe, a were that next UK, which And

some color. gives that hopefully, So

Meny Grauman

investments the switching discussion maybe earlier some And wealth. in if gears, heard I that. then Yes, thanks you there just U.S. for about in was retail correctly, presentation accelerating

wanted sure heard I make to that So I correctly.

the that there. is change like of sounds so investment a And pace in

now? being is I’m it what so accelerated drove Why change? Thanks. And wondering that just

Paul Mahon

Yes.

thinking accelerate, characterize has to I broader into about better had think So, personal would Meny, capital we’d services the about various Prudential now building a actually to that talk additional connect towards off Capital retail with it’s out a once and beyond and when And our business. vision we and when that capabilities be And always out reach we actually the been to were wealth we going at I’ll Personal clients offer opportunity. that start a focus system, the It’s issue. positioned acquisitions, far the rollover we business. looked the to timing MassMutual that. goes the IRA always with and these started a I and integrate to –

now with the give we’ve relative done and let Personal you why why work timing sense context around some Capital. to Ed So I’ll Ed? this makes

Ed Murphy

Thank billion I have, think motion we at retirement, life Paul. look billion our that job every $XX of to you, in we if coming to that’s somewhere $XX Yes, between events. opportunity have year, early money changes, due platform other of Sure. you the off

there a real whether guide process for us so us. opportunity is to party, stay And through roll and participants those third around many with actions of to those work a to to them in plan, the role

So we do needs-based to have a very that. approach

are but can over capabilities adding serve important participants out customers, out and we we have as we continue millions those so that plan. It’s are particularly months business, participant, we of on XX the that the just last build while scaled they of an So, in-plan the not platform. to

in and that We goal help areas, areas, and other emergency Personal it’s opportunity us. for plan objectives, Capital a of whether with our other are savings, it’s where that the work real also capabilities, savings, whether number so that them have creates an of them customers after those other can have a acquisition we in college particularly understanding participants

over approach a just for last for holistic demand years. advice, and appetite guidance, for that’s emerging really few So, significant the been a

in year I seen quarter, to more to business. the and continue particularly growth investment last see here last in more over the and you’ve you’re going so And what the think

support We will be adding more talent to demand. the

Meny Grauman

just you to be regulatory or so move here? the any And any clear, there faster you to are that’s responding any of competitive market, change change to sort of sort out pushing in change

Ed Murphy

guidance to surveys, insatiable a over fact just do People they of a financial to today think and our plan I advice. all Americans it’s suggest plan. They is for somebody. an the XX% retirement No, the have clear that want typically just talk there to aren’t that and have and including surveys what customer appetite don’t on don’t

And so can human adviser capability, but is, guide and sales dynamic, with someone to state-of-the-art a and digitally process. this help human what the so obviously, through them we’re and them the work incorporating out building service that doing also a enabled ability

Meny Grauman

Thank you.

Paul Mahon

well add just we we and actually might I hybrid out MassMutual experience. we Meny, digital about actually position one it revenue beyond also million And for actually both more and about two real we for capture have I revenue we’re us think has thing. But potentially if The instances, to people We capital, the well, opportunity. to team his that vision synergies. this the is we’re about, Pru, and to of actually is out unlock advice. were reaching have there, support talking What digital Americans Ed XX IRA there hybrid talked synergies, part going synergies and that. stepping When help. broadly – in expense the about potentially personal acquisitions the traditional going the talked talked Fred deployment been that is here of value but the of to have have rollover

the we capabilities ramping that so to the retail out to So up unlock need we build start can this wealth management and now is start really timing growth.

Meny Grauman

you. Thank Alright.

Operator

question go Doug Markets. Please ahead. Capital next Young from Desjardin Our comes of

Doug Young

afternoon. Hi, good

you Empower, that $XX million of Just in question, sticking two-pronged a motion, to $XX today... with in capture money how much annual million do

Paul Mahon

Billion.

Doug Young

today? in it more remarks, sorry, rate where a change of the the prepared run think question, how about plan was and second And front cost And talked I to didn’t in annualized bit the you take capturing Billion, million in impactful. quarter-over-quarter. synergies the do billion end And you money $XX motion, are then being that? $X much just

Just hoping rate to would follow-up. you but I color can run get flesh a just synergies from terms in then more that. out MassMutual a – sequentially, little expected annual a have have of And on I little hoping cost bit

Paul Mahon

to respond those. So both think to I well you’re of Ed positioned

Ed Murphy

Well, think, the of expect on end And what I prepared the – $XXX hit the targets run really think million your of the part XXXX. in remarks, synergies I of we rate – would I we’re as second noted, seeing. say our to at pretax that reflect question, we

on with we So, were target conveyed ahead but of on, slightly to what it’s – early we’re plan probably we’ve everyone.

will that approach with service opportunity. signed serve In question acquisition. sponsors, take there. of tools, very we the is needs-based the effectively approach better terms capture to Capital have approach going better the a as take. particularly I XX% institutions had I off plan we the Personal – because your our the through of first Yes, to we that we of on our that and do implement see effectiveness think as more we we’re – believe capabilities, We say much more that see efficiency

understand And want is objectives are. so the what to client’s we we what do

the the them sometimes in they the plan, And retired and get have jobs, though to leave stay where benefit have money institutional they changed even they the pricing. plan to of benefit it’s could a in

they existing not an an an with are have Some working and may adviser. existing roll to and relationship, relationship others

And so help there is an opportunity for them. to us

what think will rates and continue higher we proposition. I have the of capture is value what higher – what strength seen efficiency, effectiveness, we given higher So our to we will see see

Doug Young

obviously, but And and I you And how can a you bit or like I Because have – talked right you about others capturing of of have. others you’re think it, disclosed you have maybe high, that. finer think to be achieving how take that – a where much I think now would on much are it? talked point XX%, know

are. Just you wondering where

Ed Murphy

XX% is pay There the cash they as the in a that all, actually of people there plan, to differently. customers penalty. – I first it’s mentioned, math penalty. do there stay out. customers decide cash large of They percentage and taxes are the Well, out. They that They – pay pay are the

what you So the have it’s really look to at – really numerator is.

I that submit think at upon and they improve rates, we disclose industry-leading we this can point, those at stage, believe this are we them. capture I wouldn’t but would

Doug Young

just… I Can Okay.

Paul Mahon

I our at details what we the going to of at we’re to the disclose just go, – going upside. point double right we’re we’re see we’re exactly actually we where but point now where a to a see Doug, where say, was not going current capture and rate

now had opposed to motion from million we motion. million X Ed is you million billion, better with second is and customer money in XX as have, Empower. more the XX going billion as result upside one $XX is, to people of more go before the satisfied you wanting in R&D digital, money $XX of being to a to participants, And opportunity The buy said, experience then in as first $XX billion where to into

investing business. an that’s to grow significant it’s therefore, think one is we’re opportunity this And we one. that and us So before a

Doug Young

then And second on Okay. Canada. just questions. two I guess

bit which strain First is where surprised was higher, new interest rates was a I business went. given

negative? experience year? what Or disability last Because sounded less it heard what And message you’re we last seeing is favorable sense long-term So negative. was a change. I’m just it of better was experience just the group than there the morbidity to a bit just than dynamic, a sense mix a to the thought different side, of hoping get maybe get group I then morbidity was trying like was quarter.

Paul Mahon

Yes.

his I will world and the high Jeff So insights, one the to America the North perhaps we I share new maybe to with want time. of level. business have that to are claims always we insights best off for on I’ll in off money it the incidents And argue, the group. a take period because nature and know we or the the action a saw we’ve lose this claims talk termination want on start is reduced remind we would Canada the of actually was when we into challenges what business. I’ll may the experience, at stream. in top to No, And business long the in and of this. like one. group you This in the been at did not we because I Gary at rates. But see gains – start

So we it, back responded before. We’ve get and to have seen LTD we volatility on many track. times always

the to at to speak provide Gary the And to LTD a Jeff, So little think issue. then in-period new strain bit maybe of you do – as insight business this in-period I issue. and... we into after speak Gary But that. look an want could could Jeff

Jeff Macoun

at you. I thank Yes, of Paul, – are row least about six just Doug. very, in mean, this business on our was much very reflecting, I think Thanks, quarters a results LTD. the group it’s I I of still say place I’d here. stellar fundamentals been, this think sort gosh, in

business renew and that. We generally above doing or been renewals Our – the the is this at a renewable X-year business. targets, we’ve

in that’s place. So

remained each And took on that our through ‘XX We this in that’s in business pricing system. at our year place. case above. rate we and the careful That’s managing still and target proacted very also The place rate we We’re selection. on adjustments are flowing action early ‘XX persistency in further adjustments this now with well. has or

business. So we on are very bullish this

or coming Paul line, did in we incidents. were small spike terminations but outlined, Doug, As they see off And our a were smaller. quarter claims in on

bullish. there The be business. this fundamentals a we when so, quite about impact And on to and strong continue was but are inflation, small in feel place

Paul Mahon

quarter? on you new in want business do the to comment strain Gary,

Garry MacNicholas

couple comments of just there. a make quick Yes,

market in had term a pressures that and was are was the there as think First end not and off, some towards part rates I business. this Also, the quarter. interest And in the there in I rise tended due, contribution by interest mentioned new Canada, the to of speaking lower back comments, impacted of to that’s the rates. pricing

rising larger noted I of then as But stranded And would interest quarter. so cost Paul that contributes also an wasn’t to it’s think business the that sales correct, I some costs, more as it’s we that that interest in Doug. strain something didn’t So that a benefit will of little in cover the rates, the acquisition think result. acquisition have many the new much are future there This from rates the you calculations the impact quarters.

but concerned overly worse, about. nothing little a we’re So

Doug Young

Okay, thank you.

Paul Mahon

Doug. Thanks,

Operator

next Please go question ahead. MacKinnon Our comes BMO of Capital. from Tom

Tom MacKinnon

much as points A as taking at XXX% and it’s And everyone. Rates in respect on up for quarter. down rise was and at it continue to my LICAT all U.S. afternoon, Thanks to-date, good here. Yes. question if question to quarter-over-quarter X of second the first quarter we almost its rates. look tenure, the rising interest with

LICAT. So conceptually, be hit that basis to another points X could up your on

your kind holdco? you What XXX% from go levers I’ve rates follow-up. as range within XXX% LICAT of And are Thanks. what maintaining your with have to wondering that the thoughts some do respect than up. So downstreaming a to money got continue other to here preferred

Paul Mahon

Tom. Yes, one that to Gary? going to turn okay. Thanks, Gary. I’m right over

Garry MacNicholas

Yes, sure.

our as obviously, we’re pointed out, right end top target the So range. right now, of Tom, you near

So the obviously range within there is room comfortably.

have be four do we adding starting that that from so of are we to points the to to position remind, ratio smoothing those also going And scenarios period.

– us and we rates, keeps interest that look as in those with scenario. that higher at So

four those looking good. points are So

could be mentioned Lifeco that downstream. cash the You

the I think available short-term, to wouldn’t in us. preference points but it be that quarter another at end. our option It’s is an X

this, that, when there beyond minded some has of is terms not at ALM we we I are think is offsetting you’d looking doing XX that, sensitivities. are But suggests in to strategies. IFRS – as So sensitive our be that work

into hear come unfolds the year. to from quarter this think around might rest for in the on where expect OSFI are as of from LICAT – rules that And second so I also OSFI play we the but their transition results,

So where we we’re comfortable at are. this point,

Canadian think point to and and sensitivities on the are euro. thing the And I that you just sterling rates. There one a I out, should bit other the little mentioned largest U.S. We rates. watching are the are

because and longer-term of so bank this those long and insurance European three again, it type primarily. it’s really which we’d the rates be at, paid XX rates, you have and the, you’ve annuities are long those ones it’s is tail that that drive to backing PfAD longer a rates – to up. fair – So like and rates across short-term values got on putting liabilities, main looking really the Canada currencies rate XX-year the is Fed our It’s

Tom MacKinnon

rates capital? the because that Is euro. and longer the with Canada with have LICAT, associated look So best of where respect some you to excess it’s that’s this to at

Garry MacNicholas

insurance That’s where annuity to at fair your actuarial but And against against they our have our books. you capital allows count the PfADs are available margins our in books these we and measured insurance PfADs. are OSFI value.

the euros. is it yes, and Canada long-term So rate for Sterling,

Tom MacKinnon

the the respect and relatively are then but up, as look third, in quarter with And third last and the the quarter year the flat. second, in – Participants if the AUA at substantially the over first, what four have here, a first of for fourth been and follow-up, to second in base last been they dollars Empower year year. Thanks. the has quarter of U.S. this higher fourth the were I quarters, Empower earnings than earnings last

levels. of driven earnings was be by it that at quarter-over-quarter associated if now look year-over-year. from AUA XX% Is – and are poised are would they down like at think with here this are that to we’re down used to participants. substantially here the quarter least that at now over because with going flat there if seasonality the I earnings forward quarter-over-quarter, trend other look to Empower is last any going kind flat those Empower you because So it’s second they down and year, the we third investing is seeing in But business? this and And

Paul Mahon

well, tell integrations. – Tom, – very in I’ll will let I confident we’re feeling actually the acquisition you, quite

better. are expected we clients of percentage the capturing We’re

the to track deliver synergies. on We’re on

Garry going is The a performance. and in earnings. income there forward Empower to equity I’m context ultimately, that. what’s the value So creation, bit because very on confident in Garry? the we is driving relative happening significant with fee provide features thing we’re market control one quarter-to-quarter of little levels But can’t let that

Garry MacNicholas

Paul. Thanks, Yes.

just good types to should types an have things your some and AUA the generally on. of certainly, impact the the to forward. can trending going certain good businesses, and an keep benefit have on the – in impact mean, be AUA – prove metrics you retail a Obviously, can eye of speaking, growth questions versus give – Tom, mix is high-level the and those I on an institutional so specific of So for participants a retail, actually

on and and year. QX you gains the income quarters had in a In QX terms some of quarters this last very last out favorable called discussions and we lesser having surplus specifically, recall to QX extent, the year, may you in both

of strategies. again, – investments these the of Just of in our these our alternatives alternative some some were seasonal. aren’t early They some

at some participants. paying that two little off. AUA just those in realized and We are income straight a looking good the that We gains had higher plan in you quarters bit gave probably than some

This any few There little in surplus stretch. at quarter, but dragged what a quarters that a was headwinds, typically probably example, the might income. for we million. those positive, It if not were anything, down below levels the some FX we were was see in by it

have So, any synergies picking we the And didn’t a again, in obviously, moved income in rest go the growth. coming through. That’s year, we the in, back participants. around to this are synergy can not there synergy be have we are synergies, come as certainly to that’s also the new expect wins But up – this of bit. We period. that we going and those in going would And add. through or of as go to again, attract to gains AUA on top surplus that

Tom MacKinnon

Thanks Garry. helpful. That’s

Operator

comes of Please Dechaine National Financial. Bank go question from Gabriel next Our ahead.

Gabriel Dechaine

business will like as earnings business caused expected afternoon. down, to more What that going to – the earnings you makeup Good a experience your Reinsurance of shift? have but Can little you gains, explanation shift give EPF that. – this something in on the profit the just like are happened me

Paul Mahon

to to Gab. one over going am I turn Garry? Thanks that Garry.

Garry MacNicholas

Sure.

this I well. geography always the also geography the in mind both actually timing has is source business that growing them. the display. to mean keep happened important of of the has lot A out, nothing I and The – to the the This in point is first this And would of that’s earnings is business. been earnings just quite of

we the – had we significant included updated as a And as years and transactions. growth sizable very our if we impacted really longevity ago, going bit business then as in this with we playing you if we UK also, have And couple those brought I longevity or But number have recall, this of both bulk of So, the we have we these experience of steps and the have cases, and actually our those, we wanted risks had assumptions reinsurance. we reduced had, held best the reinsurance it business UK now years. that with we back back reserve releases out acquisitions. had the observe trends new PfADs last a released PfADs you have quite the well estimate made think over to years, on their few had a over in recall, would the see. We that strong given of growth. we seen In longevity some prudent because line lower observed as

earnings last are our same was and other we here. the impact seeing into year Life obviously, strengthened trends estimate. Those basis segment, come have best COVID would what did we the in they given U.S. so time, some had we there our Mortality changes. And At as trends,

gives that estimate, greater in best chance So, a – future gains future the period. higher have losses the lower or chance stronger your you of greater you the

last year. of lot view a didn’t we we and it PfADs and changes So, estimates, make geography the P&L if impact Does source the instance. sense? changing see from – But lighter overall, stronger and for a best that

Gabriel Dechaine

some year? released guess having you maybe profits then have the longevity essentially you front-ended PfADS and excess or last and were I gains release Yes, prior consistent year

Garry MacNicholas

Yes, we would have PfADs year. brought last those earnings into

are we the not quarter them as each getting on goes So, through. DRIP it

Gabriel Dechaine

Got it.

Paul Mahon

have insurance – been talked the but to business business offsetting movement plays of related of about are that COVID, even the of this have right, the one then and we kind longevity things we was Gabe, seeing and we And the to lost?

Gabriel Dechaine

Can you hear me?

Paul Mahon

Can you hear?

Garry MacNicholas

you, hear can We Gabriel. Yes.

Gabriel Dechaine

been have Must you. hear glitch. can a I

Paul Mahon

going saying plays seeing theme longevity with Yes, – this about we talked COVID I was have with to and for life mortality. what’s the challenges, obviously, with on

have So, essentially balance and the risk in we the strength right sure making that following our sheet. were we

Gabriel Dechaine

supplement don’t question know Okay. the I talk I the about group – the do, explanation Canadian are paid we about the claims premium, But I year – at in ever I about in the earnings calls, by low-XXs, a you am ratio. we divided experience business got I look last okay, quarter. in sure so if benefit the look know disability now. you the One, was guess. and at if I the high-XXs, got this never I I but insurance

well, and pressure normalization seeing I benefits what levels, are growth pre-COVID? So, is to I the today looking but that actually pre-COVID to if – mean down group we more had look mid could at mean reasonable it I think, like ratio some and is we in that earnings maybe at ratio be high-XXs. mean normalization the benefits on road

Paul Mahon

instrument. an I would I the like a there start level at benefits blunt overall by saying think ratio is pretty

business of mix have a Our mix can – your business of be significant that. impact can on

So, you for if income. a example, lot growing could are to shifting be case you fee-based business, to opposed large claims-based income your

very Your benefits health ratio have will different than LTD claims a benefits. your

customers. to is is are services we broker competing renewed So, at underneath I sure in and the that we something very want providing front for to a where reality every going always in a with is really for with case value a get making – the good to but on looking like that. are competitive who to that go reality value level – be are that is have a foot, wouldn’t client the to that and market on received, we over on The they

Gabriel Dechaine

Okay. that that. am in revisit the future. looking for I a we nail, just Well, But thanks for number, maybe a hammer

Paul Mahon

Thanks Gabe.

Operator

CIBC. Paul ahead. Holden next from go Please of Our question comes

Paul Holden

regulatory no is question, the sure to that? want you I impact the Can to closing afternoon. my us on make LICAT I on remind go Good want there back Thanks. Prudential first acquisition. I to capital. And guess from discussion

Paul Mahon

to let the I matters, LICAT Yes, speak Garry? Garry will

Garry MacNicholas

There No. impact is closing Prudential. no LICAT

Paul Holden

follow-up what potentially between interesting. that kind got today, and Is correctly. and to XX and of now can question I year discussions asked OSFI your the capital. was issue your when your what rate sure think IFRS a I derivative is sort answer it’s want to that’s to kind is fairly bridge I putting you because significant. thereby Like LICAT there simply then having of answer make next sensitivity in of suggesting And avoid ratio, Perfect. was ALM Clearly, from it with interest the and to being with Okay. before but you unnecessarily strategies implemented gap interpret message,

Paul Mahon

Yes.

broadly, think track. are you on I Paul,

in seen formulaic. we It’s economic. not view Our is really the LICAT that have movement is

are end We have the of our got we – range. at top

XX. we under benefit coming We in. that’s There have today both the makes our IFRS and is of switch got scenario invested the sense assets take actions can that for

of we at look got And so lots have we strength. as it,

do be to when non-economic real on there real our economic not are minded impact money We balance and – is that cost – that we the or impact a wouldn’t something a on going on statement on. income had sheet our

of I would think about that. months. So, the that’s for would probably make way it It period do no nine to sense a

to are the So, manage tools we have we what with are going is to do going we got.

the a of strength we got have the going We are going in to to work business, take are XX. and advantage we really to towards smooth transition IFRS

Paul Holden

Okay.

you but behalf I saying. a understand have does from you view, what really concern position, and I I your on maybe can’t similar OSFI, have appreciate I would speak of I I are OSFI guess the think think

Paul Mahon

behalf I have we OSFI. OSFI, can’t a very speak actually with on good but interaction

have working XX. We them counterparts. I as dynamics industry as right in we of the well. And effectively think sound IFRS place as understand will have They this with our been minds transition land to the

Paul Holden

it. Got

Thank new a business stabilize Okay. it versus would that how Risk we where helpful. That’s guess other quarters? reach next i.e. maybe continue is actually helpful. Does to quarter-over-quarter around question on kind what is to of there accounting be new much fees, can this my equilibrium, to back I question relative for drawdown Capital PfADs Solutions and Paul. us is of you, release that so point and a Like helpful. PfAD for to Where be helpful. Any will of you And more kind disclosure disclosure roughly expect going few QX? characterization that would decline expect does the CSM and you it margin then volumes? can based is provide

Paul Mahon

for sure. That’s Garry? one for Garry

Garry MacNicholas

Yes. Sure.

is get don’t drifting PfADs next few I reinsurance would over And that that the the primarily question, major quarters have changes see to block, the pre the plan the fairly no a there I upwards heart business just – think conversion. really anything It’s and there. to the of business. stable XX for annuity IFRS

other to currencies. be should obviously, that but moves, anything So, not if we But because – impacts, expecting are currency move that there be will in there foreign no, fairly stable.

Paul Holden

Understood. last And sales is respect down They insurance year-over-year. were in with individual Canada. then you. XX% question Thank to

due Do headwinds, be some be think there may company should is there? aware anything commentary you that’s So, industry to we specific of? or

Paul Mahon

I that That’s Macoun. Jeff, take the over to question, Paul to you turn that? want will Jeff do

Jeff Macoun

that general, Overall, but I could, mean asking was for the I Sure. in And question. Thanks, just side that up our to and quarter. Group with XX% in we did of and those thanks on if sales pleased significantly, GRS I and XXX% quite Paul. sales businesses call out Health. one-timers on Life on the group were repeat, about didn’t group both on

the – relatively was market. in quarter it’s term sort the And look we as company. high-net XX% business par term a Paul, life, business the year-over-year. up In lumpy worth business business confidence to individual in our upon the I about of On

So, growth quarter. we in had high XX% –

with It’s pleased that. very was So, lumpy business. down. I a par The was

that You not quarter. was I retail on off big term cases up, sort the the did the had the later wealth But back individual come was of par flows. win insurance expectations. quite finish pleased the side, cases year. in I big will by sales We the in of meet net to didn’t good am confident come lumpy. times at circle side. some and – And the with and I lose our life our It’s just

Paul Holden

had. That’s for you. questions I you Thank Okay. the that. Thank all

Paul Mahon

Thanks Paul.

Operator

Please RBC ahead. of Our Darko from [Operator comes Instructions] next Markets. Capital Mihelic go question

Darko Mihelic

this on remain PfAD million $XX stable it’s subsequent just in, it’s releases just a that here it’s to back expected at was get did And more one suggesting smaller slide. also Capital said Thank i.e. to the Solutions you when the $XX will your quarters? profit you million quarter the Hi. three time return you. didn’t for the you were But released, Risk stable and every from I next answer, a okay, quite understand stable block. stable, quarter or mean Garry, block, that

Garry MacNicholas

was the is sort new the to mean decline It run block. would latter. a sales, the I PfAD we It’s rate. that’s block. there natural to But typically, if stable a – have obviously, fairly going of of add

sales new just in-force typically replace down. as So, to your it your runs

is and you can’t to. end quite currency. was using predict can’t good. I your number But you So, stable you predict up But what example is the referring the

Darko Mihelic

I when That’s I me then just of was – your U.S. sounded doing didn’t – best in when block, strikes life helpful. Okay. speak actuarially I in others. Thank language, other one you. say from result, you that as it’s understand you mortality best estimate. that that, well. think we things yes, different as words, what because case, your they to your so on said hear it a are sometimes you I In And way. it strengthened And we it strengthened insurers, the the sound will the Typically, your But increased estimate. other PfAD just

you your estimate? for actually have deviation, not best margin lower adverse would strengthened when did So, your or PfAD you your you built why

Paul Mahon

Garry, you. for definitely that’s

Garry MacNicholas

Sure.

up. the was with top margin estimate – the had already a on So, that. two things first will and strengthening of One, start healthy life good I best we when mortality, U.S. to we clear on our that

estimate, And it’s if percent. of percent as the best it stayed so x x

estimate So, felt that. is move you and quite there the sufficient your margins already strengthened for best we made the we were

the So, estimate. That’s best the margins to important on sit remember. top of

a for temporary kept we What more we we outcome the our come and moved x years, years, margins well, margins, the saw number that Europe, estimate on that, our margin could over we that best percent of that where it I future above we a was higher and referring best had have And our a to in lowered years. of until and reducing top the out. number I for this for the in trends best longevity that’s estimate So, top business, of was a the same. of for to play on the period, has favorable prior was that’s made here, of – kept out estimate and best

And as And COVID said, further, been a last number we we so for we we watching out of – years. year, how just are looking this obviously, have impacted.

beyond we really We are feel our release of some we yes, saying, of range, those. the that higher those and are end

margins release on So, longevity the side. some

of So, for post-COVID world was two of tied it are margins sort other the was there of outlook looking to But in more a U.S. than, – on the not same are the both blocks. obviously, those them. mortality we directly different release at different two decisions

Darko Mihelic

Okay. Understood.

I will the I to just as back well. go it again actuarial to think the on other from leave can I side. make there And I that Prudential But inferences acquisition. two wanted

there on it to ratios, reduce you of hit impact LICAT, I no certainly in managing is leverage does So, which think leverage appreciate flexibility, pro Can talk the after about would forma your us I some but approval? a capital.

Paul Mahon

in a pass take to to have I a And structure Garry a we will very are relation agencies ratios financing balanced Actually, efficient Garry. that. plans. out in our leverage we actually And to point. we down insight that rating over way. as to have used basis. clear clear will I saying not try, with and by we do into a starting have I But Sure. good of who to will – where We have very it start proactive going. allow try Obviously, speak we work sort to the to Pru on will intentions

Garry MacNicholas

Yes.

to So, much near-term. you And up in what end as originally. have to debt the would adding we of part debt adding that we as this cause we financing, would recall, of the short-term go the this. as didn’t as short-term the And up were is leverage we

it had short-term $X $XXX So, I U.S. of out over million we originally million, it up just and ended the think debt. $XXX I think in billion was called terms in

drops its grows, will able promptly. the we as something quite earnings, that’s U.S. down the as be So, that’s and business to pay obviously, that

pop So, leverage ratio the in will our up near-term.

LRCN, short-term then will we I as the all will facilities come into was financing capital notes. recourse with discussed in this part XX% we down that we of you the agencies pay limited may it be well plan the down And short-term, put around our in in large And targets. it year our range. recall, rating a And advance. those think financing that last place have

in agency favorable and treatments. all are the those and So have already – obviously rating and numbers

sleeve. is really it just So, short-term the

Darko Mihelic

Garry. Okay. helpful. That’s very much Thanks very

Paul Mahon

Thanks Darko.

Operator

Mr. to for closing This turn concludes would back over like any the question-and-answer remarks. session. to I conference the Mahon

Paul Mahon

would quarter early feel And we the our call. Please reconnecting to our break. second out care. hope enjoys look Take our bit you Ariel. questions thank everyone a for forward Thanks, an free beginning in to summer spring I reach like team follow-up QX We everyone have. call for that And and of to may IR to August. attending of any at really

Operator

This conference today’s concludes call.

your you for may have disconnect pleasant You participating a lines. Thank and day.

Great-West Lifeco (GWLIF) 8 May 222022 Q1 Earnings call transcript