Company Reports

No-moat-rated Great-West Life reported a good set of numbers in the second quarter as the company benefited from higher interest rates, buoyant equity markets, and the company’s Empower business recording strong growth and profitability. The highlight in 2024 for us is the solid performance of the Empower business which is on course to become the largest segment for the company in the current year. We think that the Empower business has the best growth outlook among the various Great West business segments from a long-term perspective. The cost synergies achieved from the recent acquisitions made under the Empower business also bode well for shareholders.

Great-West Lifeco provides a variety of financial-services products, including life insurance, retirement solutions, and investment management, mainly in the US, Canada, and Europe. Given the maturity of the insurance industry in the company's main markets, we believe that growth will remain modest in the long run. Great-West's strategic priorities include expanding its portfolio of advice-centric wealth and insurance products, investing in digital tools and services, and developing solutions to extend the customer lifetime value of its vast network of workplace participants.

No-moat-rated Great-West Life reported a solid set of numbers in the first quarter as the company benefited from higher interest rates and underwriting profitability remained stable. The highlight of the quarter for us was the strong performance of the Empower business. We are seeing increasing signs of cost synergies from the recent acquisitions made under the Empower business. We believe that the various steps taken by management to reposition the company’s portfolio over the past three years will bode well for the shareholders. Great-West announced that the integration of Prudential’s retirement business has been completed with 94% of assets under administration and 86% of revenue being retained. Management has exceeded its retention target of 83% for the Prudential acquisition. Importantly, the company has also been able to achieve significant cost synergies as the expense base associated with the acquisition has been reduced by about 32%. The inherent synergies baked in to defined-contribution deals make it a win-win for both transacting parties and explain the consolidating nature of the industry.

Great-West Lifeco provides a variety of financial-services products, including life insurance, retirement solutions, and investment management, mainly in the US, Canada, and Europe. Given the maturity of the insurance industry in the company's main markets, we believe that growth will remain modest in the long run. Great-West's strategic priorities include expanding its portfolio of advice-centric wealth and insurance products, investing in digital tools and services, and developing solutions to extend the customer lifetime value of its vast network of workplace participants.

No-moat Great-West Life reported a good set of numbers in the fourth quarter as the company benefited from higher interest rates, and underwriting profitability remained resilient. Management has taken various steps to reposition the company’s portfolio over the past three years, which we think bodes well for shareholders of the company. Management's strategy should improve capital efficiency and the long-term growth profile of the company. In 2023, Great-West executed the sale of Putnam to Franklin Templeton at attractive terms, worked toward the integration of Prudential’s full-service retirement services business while achieving USD 80 million of pretax run-rate cost synergies, and completed the acquisition of Investment Planning Counsel and Value Partners Group. In addition to this, management executed several strategic actions to strengthen Great-West’s market position in the European market, including selling a portfolio of existing policies to AIB Life, restricting new business for subscale U.K. onshore wealth business, and reinsured an existing block of annuity business in the U.K. We think that these actions improve the overall product mix of the company’s portfolio and position Great-West well for the upcoming years.

No-moat-rated Great-West Life reported a decent set of numbers in the third quarter as the company benefited from higher interest rates and underwriting profitability remained solid. The company reported core earnings of CAD 0.95 billion or CAD 1.02 per share in the third quarter versus CAD 0.81 billion or CAD 0.87 per share in the third quarter of the previous year. The third-quarter results equated to an annualized core return on equity of 16.4%, which is in line with the company’s long-term target of 16%-17%. The company paid a quarterly dividend of CAD 0.52 per share in the third quarter of 2023, which represents a 5.2% dividend yield as per the current stock price. We are maintaining our CAD 38 fair value estimate for Great-West Life after incorporating the third-quarter results.

Great-West Lifeco provides a variety of financial-services products, including life insurance, retirement solutions, and investment management, mainly in the U.S., Canada, and Europe. Given the maturity of the insurance industry in the company's main markets, we believe that growth will remain modest in the long run. The company's strategic priorities include expanding its portfolio of advice-centric wealth and insurance products, investing in digital tools and services, and developing solutions to extend the customer lifetime value of its vast network of workplace participants.

No-moat-rated Great-West Life announced three strategic transactions in the second quarter to rebalance and focus its business portfolio. The company announced the sale of Putnam Investments, which has been more unprofitable than it has been profitable over the past five years. The deal will unlock shareholder value and further focus U.S. operations on more lucrative retirement and personal wealth markets. The company announced the acquisitions of Investment Planning Counsel and Value Partners, which will enable the Canadian business of the company to offer an end-to-end wealth and insurance platform for independent advisors. Finally, the company also announced an agreement to sell the individual onshore protection business of Canada Life U.K. to Countrywide Assured.

No-moat-rated Great-West Life’s first-quarter results highlight the benefits of the prior strategic acquisitions made in the Empower business that increased the scale and the competitive positioning of its U.S. business. The results were also impacted by favorable group insurance disability experience in the Canada segment that was partially offset by unfavorable mortality experience in Canada, Europe, and capital and risk solutions segments. The company reported base earnings of CAD 808 million or CAD 0.87 per share in the first quarter versus CAD 595 million or CAD 0.64 per share in the first quarter of the previous year. The first-quarter results equated to an adjusted return on equity of 15.8%. The company paid a quarterly dividend of CAD 0.52 per share starting from the first quarter of 2023, which represents a 5.5% dividend yield as per the current stock price. We are maintaining our CAD 37 fair value estimate for Great-West Life after incorporating the first-quarter results.

Great-West Lifeco provides a variety of financial services products, including life insurance, retirement solutions, and investment management mainly in the U.S., Canada, and Europe. Given the maturity of the insurance industry in the company's main markets, we believe that growth will remain modest in the long run. The company's strategic priorities include expanding its portfolio of advice-centric wealth and insurance products, investing in digital tools and services, and developing solutions to extend the customer lifetime value of its vast network of workplace participants.

No-moat-rated Great West Life reported middling results in the fourth quarter with base earnings of CAD 892 million or CAD 0.96 per share, up 8.1% compared with CAD 825 million or $0.89 per share in the fourth quarter of the previous year. The fourth-quarter results equated to an adjusted return on equity of 13.6%. The company also announced a 6% increase in its dividend, resulting in a quarterly dividend of CAD 0.52 per share. We are maintaining our CAD 35 fair value estimate for Great West Life after incorporating the latest results.

We are relaunching Great-West Lifeco with a fair value estimate of CAD 35 per share after taking a fresh look at it. Our fair value estimate implies that Great-West Lifeco is slightly undervalued at current prices. Great-West Lifeco provides a variety of financial services products, including life insurance, retirement solutions, and investment management, mainly in the U.S., Canada, and Europe. Given the maturity of the insurance industry in the company's main markets, we believe that growth will remain modest in the long run. We assign a no-moat rating, a stable moat trend, and a Standard capital allocation rating to the company.

Great-West Lifeco provides a variety of financial services products, including life insurance, retirement solutions, and investment management mainly in the U.S., Canada, and Europe. Given the maturity of the insurance industry in the company's main markets, we believe that growth will remain modest in the long run. The company's strategic priorities include expanding its portfolio of advice-centric wealth and insurance products, investing in digital tools and services, and developing solutions to extend the customer lifetime value of its vast network of workplace participants.

Great-West, along with competitors Sun Life and Manulife, make up the “Big Three” in the Canadian life insurance market. Of the three, we believe Great-West is the best run as it has posted the highest returns on equity. The life insurance market is competitive and relatively commodified, so we generally don’t expect such strong returns. We attribute Great-West’s results to disciplined underwriting strategy and expense management.

Great-West Life had a mediocre third quarter with adjusted earnings per share of CAD 0.74 missing the FactSet consensus estimate of 0.79. The culprit is the deteriorating macroenvironment. Weaker asset levels are weighing asset-based fees in both equities and fixed income. Also of note, Great-West took a CAD 130 million provision related to Hurricane Ian as its capital and risk solutions segment provides reinsurance. Expenses continue to be relatively well controlled in our view and were up 4% on an organic constant currency basis. We will maintain our no-moat rating and fair value estimate of CAD 40 on Great-West’s shares.

No-moat-rated Great-West turned in a rather flat second quarter. Adjusted earnings of CAD 830 million were flat from the year-ago period. The firm’s U.S. businesses were the culprit as lower markets affected fee income at Empower and Putnam. Europe and Capital and Risk Solutions or CRS performed well with double-digit constant currency revenue growth. We will maintain our fair value estimate of CAD 40 per share. We are adjusting our Morningstar Uncertainty Rating to Medium from High as we believe that more accurately reflects the risk of Great-West’s shares.

Great-West, along with competitors Sun Life and Manulife, make up the “Big Three” in the Canadian life insurance market. Of the three, we believe Great-West is the best run as it has posted the highest returns on equity. The life insurance market is competitive and relatively commodified, so we generally don’t expect such strong returns. We attribute Great-West’s results to disciplined underwriting strategy and expense management.

Great-West, along with competitors Sun Life and Manulife, make up the “Big Three” in the Canadian life insurance market. Of the three, we believe Great-West is the best run as it has posted the highest returns on equity. The life insurance market is competitive and relatively commodified, so we generally don’t expect such strong returns. We attribute Great-West’s results to disciplined underwriting strategy and expense management.

Great-West Life’s adjusted earnings per share of CAD 0.87 was a touch above the consensus estimate of CAD 0.85. Results were mixed with Canada soft and strength elsewhere. Overall, there was little in Great-West’s earnings release that would alter our long-term view of the no-moat firm and we will maintain our fair value estimate of CAD 40 on the firm’s shares.

Great-West, along with competitors Manulife and Sun Life, make up the “Big Three” in the Canadian life insurance market. Of the three, we believe Great-West is the best run as it has posted the highest returns on equity. The life insurance market is competitive and relatively commodified, so we generally don’t expect such strong returns. We attribute Great-West’s results to disciplined underwriting strategy and expense management.