Mr. Paul Mahon reports

GREAT-WEST LIFECO REPORTS FIRST QUARTER 2023 RESULTS AND ENHANCES REPORTING IN-LINE WITH IFRS 17 IMPLEMENTATION

Great-West Lifeco Inc. has released its first quarter 2023 results and successfully implemented IFRS 17 (international financial reporting standards).

"Our strong results reflect the successful execution of our integration programs in the U.S. and continued focus on delivering consistent performance in each of our core businesses," said Paul Mahon, president and chief executive officer, Great-West Lifeco. "With the strategic acquisitions in the U.S. and of IPC in Canada, we are positioning our portfolio to deliver even greater value for clients, advisers and shareholders."

"The successful implementation of IFRS 17 is the culmination of a significant multiyear enterprise-wide initiative. Under this new reporting standard, we're seeing strong base earnings growth, alongside expected increased net earnings volatility," said Garry MacNicholas, executive vice-president and chief financial officer, Great-West Lifeco. "This volatility is driven by the delinking of asset and liability measurement and accounting policy decisions that were made to maintain regulatory capital (LICAT) stability."

Key financial highlights

Base earnings per common share (EPS) for the first quarter of 2023 of 87 cents were up 14 per cent from 76 cents a year ago. The increase was primarily due to Prudential-related base earnings of $69-million ($51-million (U.S.)), higher contributions from investment experience and realized synergies from the MassMutual acquisition, as well as more favourable group insurance long-term disability experience in the Canada segment. These items were partially offset by lower fee income in the United States segment, as well as unfavourable mortality experience in the Canada, Europe, and capital and risk solutions segments. Under the IFRS 17 reporting standard, the positive benefits of longevity gains mainly flow through the contractual service margin and no longer immediately offset the impact of unfavourable mortality in earnings in the period.

Reported net EPS for the first quarter of 2023 was 64 cents, compared with $1.43 a year ago, primarily due to unfavourable experience on non-fixed income assets and declining risk free rates in-quarter compared with positive contributions in the same quarter last year from rising interest rates.

Return on equity was 13.4 per cent on net earnings and 15.8 per cent on base earnings in the first quarter of 2023.

Highlights

New value drivers, with enhanced reporting:

• The company introduced three value drivers for describing its business: workplace solutions, wealth and asset management, and insurance and risk solutions. These value drivers reflect the company's business strategy and provide greater clarity and transparency into how the company is creating value for shareholders and growing the business.

Strategic acquisition to build a leading platform for independent advisers in Canada:

• Subsequent to the first quarter of 2023, on April 3, 2023, Canada Life announced an agreement to acquire Investment Planning Counsel Inc. (IPC), a leading independent wealth management firm, from IGM Financial Inc. This acquisition accelerates the company's strategy of building the leading platform for independent advisers in Canada. With this acquisition, Canada Life will be one of the largest non-bank wealth providers in the country.

Empower launches Empower Personal Wealth:

• Empower launched Empower Personal Wealth with an expanded focus on retail wealth management. Empower is working to make money management simpler, clearer and more accessible by bringing together everything a customer owns and owes in one comprehensive dashboard that the customer and the customer's adviser can leverage to take control of the customer's personal wealth.

Irish Life launches Unio, a new independent, wealth management advisory firm:

• Irish Life combined its recently acquired Irish brands, Invesco, Acumen and APT, under Unio Financial Services Ltd., a single wealth management umbrella. The new firm will provide expert advice for thousands of individuals who are currently either underadvised or not being serviced at all on how to effectively manage their wealth. Underpinned by a market-leading digital platform, Unio will provide personalized client advice and investment solutions to a growing and underserved population.

Successful transition to IFRS 17:

• The company has adopted and successfully implemented IFRS 17 and IFRS 9 effective Jan. 1, 2023. This milestone marks the culmination of a multiyear enterprise-wide initiative. The new reporting regime provides improved visibility as to the strong, underlying economics and diversification of Great-West Lifeco's portfolio through enhanced disclosures and metrics. The transition to the new standards did not have a material impact on the company. The accounting change does not impact the underlying economics of the company's business activities nor change the company's business strategy.

Segmented operating results

For reporting purposes, Great-West Lifeco's consolidated operating results are grouped into five reportable segments -- Canada, United States, Europe, capital and risk solutions, and Great-West Lifeco corporate -- reflecting the management and corporate structure of the company. For more information, refer to the company's first quarter of 2023 interim management's discussion and analysis (MD&A).

Canada:

• Q1 Canada segment base earnings of $278-million and net earnings of $233-million: Base earnings of $278-million increased by $54-million compared with the same quarter last year, primarily due to more favourable group insurance long-term disability morbidity experience, pricing actions in the group life and health business, as well as higher earnings on surplus, partially offset by unfavourable individual insurance mortality experience.
• Items excluded from base earnings were negative $45-million, compared with positive $219-million for the same quarter last year. Market experience losses were $43-million in the first quarter of 2023, due to declining interest rates, compared with gains of $226-million in the same quarter last year due to rising interest rates.

United States:

• Q1 Empower base earnings of $186-million (U.S.) ($251-million) and net earnings of $150-million (U.S.) ($202-million): Empower base earnings for the first quarter of 2023 were $186-million (U.S.) ($251-million), up $67-million (U.S.) or 56 per cent from the first quarter of 2022. The increase was primarily due to an increase of $51-million (U.S.) related to the Prudential acquisition, as well as higher contributions from investment experience and realized synergies from the MassMutual acquisition. These items were partially offset by lower fee income driven by lower average equity markets.
• Items excluded from base earnings were negative $36-million (U.S.) ($49-million), compared with negative $26-million (U.S.) ($33-million) for the same quarter last year, primarily due to higher integration costs related to the Prudential acquisition, partially offset by the non-recurrence of integration costs related to the acquisition of Personal Capital incurred in the same quarter last year.
• Q1 asset management base loss of $20-million (U.S.) ($27-million) and net loss of $21-million (U.S.) ($29-million): Asset management base loss for the first quarter of 2023 was $20-million (U.S.) ($27-million), compared with a base loss of $1-million (U.S.) ($2-million) in the first quarter of 2022, primarily due to lower other-AUM-based (assets under management) fee income, partially offset by higher net investment income and lower volume-driven expenses.
• Items excluded from base earnings of negative $1-million (U.S.) ($2-million) were comparable with the same period last year.

Europe:

• Q1 Europe segment base earnings of $178-million and net earnings of $40-million: Base earnings of $178-million increased by $2-million compared with the same quarter last year, primarily due to favourable insurance and annuity results in the United Kingdom, driven by a favourable reinsurance settlement gain as well as favourable impact of changes to certain tax estimates. These items were partially offset by higher mortality claims experience in Ireland.
• Items excluded from base earnings for the first quarter of 2023 were negative $138-million, compared with positive $368-million for the same quarter last year. The decrease was primarily due to negative returns on non-fixed income assets and declining risk free interest rates in-quarter compared with positive contributions from non-fixed income assets and rising interest rates in the same quarter last year.

Capital and risk solutions:

• Q1 capital and risk solutions segment base earnings of $157-million and net earnings of $184-million: Base earnings of $157-million decreased by $14-million compared with the same quarter last year, primarily due to unfavourable mortality experience in the U.S. life business. The decrease was partially offset by growth in the structured business and improved property catastrophe product margins.
• Items excluded from base earnings were positive $27-million, compared with positive $63-million for the same quarter last year, driven by lower-than-expected net investment results as a result of declining interest rates in 2023, compared with rising interest rates in the same period in 2022 and inflation impacts.

Quarterly dividends

The board of directors approved a quarterly dividend of 52 cents per share on the common shares of Great-West Lifeco, payable June 30, 2023, to shareholders of record at the close of business May 31, 2023.

In addition, the directors approved quarterly dividends on Great-West Lifeco's preferred shares, as shown in the attached table.

For purposes of the Income Tax Act (Canada) and any similar provincial legislation, the dividends referred to above are eligible dividends.

First quarter conference call

Great-West Lifeco's first quarter conference call and audio webcast will be held on Wednesday, May 10, 2023, at 8 a.m. ET.

The conference call will be extended by 30 minutes, concluding at 9:30 a.m. ET, to accommodate a review of the first quarter 2023 results as well as the comparative 2022 results reported for the first time under the adoption of IFRS 17, Insurance Contracts, and IFRS 9, Financial Instruments.

The call and webcast can be accessed through the company's website or by phone at one of the following numbers.

Participants in the Toronto area:  416-915-3239

Participants from North America:  1-800-319-4610

A replay of the call will be available until June 10, 2023, and can be accessed by calling 604-674-8052 or 1-855-669-9658 (passcode 9666). The archived webcast will be available on the company's website.

Selected financial information is attached.

About 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. The company operates in Canada, the United States and Europe under the brands Canada Life, Empower, Putnam Investments and Irish Life. At the end of 2022, the company had approximately 31,000 employees, 234,500 adviser relationships and thousands of distribution partners -- all serving over 38 million customer relationships across these regions. Great-West Lifeco trades on the Toronto Stock Exchange under the ticker symbol GWO and is a member of the Power Corp. group of companies.

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