Quarterly Results Presentation Q4 2019
Cautionary notes CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION This document 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, expected impacts of the Company’s recently completed substantial issuer bid and use of capital and 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 con tinue 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 the Company’s 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 document contains some non-IFRS financial measures. Terms by which non-IFRS financial measures are identified include, but are not limited to, "operating earnings", "adjusted net earnings", "adjusted net earnings (US$)", "adjusted net earnings per common share", "adjuste d return on equity", “adjusted fee or other income”, “adjusted expenses”, "core net earnings", "constant currency basis", "impact of currency movement", "pr emiums and deposits", "pre-tax operating margin", "return on equity - adjusted net earnings", "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 appropriate reconciliations of these non-IFRS financial measures to measures prescribed by IFRS in the Company’s 2019 Annual Management’s Discussion and Analysis (MD&A) and / or the Company’s 2019 Annual MD&A, as appropriate. 2
Paul Mahon President & CEO Great-West Lifeco Summary of Results 3
Earnings Earnings per Share (EPS) ▪ Adjusted EPS up 11% YoY 0.80 0.79 0.72 • Reflects sale of U.S. Individual 0.70 0.67 Markets business and Substantial 0.55 Issuer Bid (SIB) in Q2 2019 Adjusted Net 1 0.49 • Higher earnings in U.S. and Net Europe, lower earnings in Canada ▪ Net earnings include • $ 199m revaluation of a deferred tax Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 asset and $36m restructuring costs at Putnam Earnings (C$m) • $8M gain on sale of heritage block of policies in the U.K. 740 730 710 657 658 ▪ 2019 FY adjusted EPS $2.94 513 Adjusted Net 1 459 ▪ Strong capital position Net • LICAT 135% • Lifeco cash $700m ▪ Dividend increase of 6% Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 1. Adjusted net earnings and adjusted earnings per share (EPS) are non-IFRS measures. Refer to the reconciliations to net earnings and earni ngs per share, respectively, in the Company’s 4 Q4 2019 MD&A.
Strategy update Canada U.S. Europe & Reinsurance ▪ Completed amalgamation of ▪ Record sales year at ▪ Issued long-term longevity life insurance companies Empower in 2019 reinsurance contract covering €12b of pension liabilities under Canada Life name ▪ Superior ratings from ▪ Led the industry in Group Life ▪ Sharpened focus on U.K. retirement plan advisors driving Empower’s pipeline and Health sales in 2019 retirement and group benefits markets with sale of U.K ▪ Enhanced Individual wealth ▪ Strong fund performance and heritage block offering with launch of new expense discipline improving Putnam’s profitability ▪ Expanded distribution in Canada Life segregated funds Ireland and Germany with recent acquisitions 5
Sales Sales 1 (C$b) Canada 90.2 ▪ Industry leader in Group Life and Health ▪ Higher Individual Wealth 42.0 41.5 41.9 U.S. 34.3 ▪ Higher mid and small plan sales at Empower ▪ Positive net flows at Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Putnam Canada U.S. Europe Lifeco Europe Q4 2019 3.6 31.8 6.6 42.0 ▪ Strong fund management sales in Ireland Q3 2019 3.5 31.2 7.1 41.9 ▪ Completed major Q4 2018 3.4 32.1 6.0 41.5 reinsurance transaction YoY 5% (1%) 10% 1% Constant 5% (1%) 13% 2% Currency 2 1. Sales is a non- IFRS measure. Refer to the discussion of this measure in the Company’s Q4 2019 MD&A. 6 2. Constant currency is a non-IFRS measure. Refer to the discussion of this measure in the Company’s Q4 2019 MD&A.
Fee and Other Income Fee and Other Income (C$m) ▪ Strong growth across segments 1,511 1,515 1,496 1,479 1,420 ▪ Lifeco fees up 10%, U.S. up 13%, ex-U.S. Individual Markets in Q4 2018 • Strong market growth • Participant growth at Empower Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 • Higher performance Canada U.S. Europe Lifeco fees at Putnam Q4 2019 457 679 379 1,515 • Positive net flows in U.K., Ireland and Q3 2019 447 665 384 1,496 Germany Q4 2018 428 644 348 1,420 YoY 7% 5% 9% 7% Constant 7% 5% 12% 7% Currency 1 7 1. Constant currency is a non-IFRS measure. Refer to the discussion of this measure in the Company’s Q4 2019 MD&A.
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