Great-West Lifeco ((TSE:GWO)) has held its Q3 earnings call. Read on for the main highlights of the call.
Meet Your ETF AI Analyst
- Discover how TipRanks' ETF AI Analyst can help you make smarter investment decisions
- Explore ETFs TipRanks' users love and see what insights the ETF AI Analyst reveals about the ones you follow.
Great-West Lifeco’s recent earnings call presented a generally positive sentiment, underscoring strong financial performance and growth across all segments. The company reported record base earnings and a notable increase in share buyback targets, reflecting a robust outlook. However, potential challenges from the Canadian federal budget and volatility in mortality experience were also acknowledged.
Record Base Earnings and Return on Equity
Great-West Lifeco achieved a remarkable milestone with record base earnings, which increased by 15% year-over-year. The company also reported a base return on equity of 17.7%, highlighting its strong financial performance and efficient capital management.
Strong Segment Performance
All four business segments of Great-West Lifeco showed impressive earnings growth. The U.S., Europe, and Capital and Risk Solutions segments experienced double-digit growth, while the Canadian segment saw mid-single-digit growth, showcasing the company’s diversified strength across different markets.
Increase in Share Buyback Target
Reflecting its strong cash flow and financial flexibility, Great-West Lifeco announced an increase in its 2025 share buyback target by $500 million, bringing the total to $1.5 billion. This move underscores the company’s commitment to returning value to shareholders.
Capital and Risk Solutions Growth
The Capital and Risk Solutions segment reported a 20% year-over-year increase in base earnings. This growth was driven by successful deal closures and a significant 36% increase in run-rate insurance results, highlighting the segment’s robust performance.
Empower’s Milestone and Growth
Empower, a key component of Great-West Lifeco’s portfolio, achieved a significant milestone by crossing USD 100 billion in client assets. The Wealth business also recorded net inflows of USD 3.4 billion, marking a 43% increase over the previous year, indicating strong client engagement and growth.
Potential Impact of Canadian Federal Budget
The Canadian federal budget proposal may pose challenges by potentially increasing the effective tax rate on base earnings by 0.5 percentage points. This change could impact the company’s earnings by about 1%, presenting a potential headwind.
Volatility in Mortality Experience
Great-West Lifeco faced volatility in mortality experience this year, which affected its quarterly insurance results. This unpredictability poses a challenge to maintaining consistent insurance performance.
Forward-Looking Guidance
Looking ahead, Great-West Lifeco remains optimistic about its growth trajectory. The company reported record base earnings and plans to increase its share buyback target, indicating confidence in its financial health. With strong capital and leverage ratios, Great-West Lifeco is well-positioned for future growth and potential mergers and acquisitions.
In conclusion, Great-West Lifeco’s earnings call conveyed a positive sentiment, driven by record earnings and robust segment growth. While challenges such as the Canadian federal budget and mortality volatility exist, the company’s strategic initiatives and financial strength position it well for continued success.