Mr. Paul Mahon reports

GREAT-WEST LIFECO REPORTS SECOND QUARTER 2023 RESULTS

Great-West Lifeco Inc. (Lifeco) today released its second quarter 2023 results.

"The disciplined execution of our strategy is driving momentum across our portfolio as reflected in our strong performance this quarter," said Paul Mahon, president and chief executive officer, Great-West Lifeco. "Across our operating companies, we continue to make organic investments and execute on transactions that will help us deliver on our value creation objectives. This includes recent transactions across segments that are strengthening and focusing our workplace and wealth management strategies.

"Net earnings this quarter reflect actions taken to strengthen our capital position and accelerate our growth strategies," continued Mr. Mahon. "Apart from these items, our net earnings reflect modest market impacts and ongoing integration costs."

This earnings news release for Great-West Lifeco should be read in conjunction with the company's management's discussion and analysis (MD&A) and consolidated financial statements for the periods ended June 30, 2023, prepared in accordance with international financial reporting standards (IFRS) as issued by the International Accounting Standards Board unless otherwise noted. These reports are available on the company's website under financial reports. Additional information relating to Great-West Lifeco is available on SEDAR. Readers are referred to the non-GAAP (generally accepted accounting principles) financial measures and ratios at the end of this news release. All figures are expressed in millions of Canadian dollars, unless otherwise noted.

• Base earnings (a non-GAAP financial measure) of 99 cents per share or $920-million increased by 2 per cent or $17-million from a year ago;
• Net earnings of 53 cents per share or $498-million include losses of 30 cents or $279-million associated with strategic business portfolio repositioning and surplus asset rebalancing;
• Executed strategic actions to reposition the portfolio for sustained growth.

Base earnings per common share (EPS) of 99 cents were up 2 per cent from 97 cents a year ago. The increase year over year was primarily due to higher investment returns, increased fees driven by higher average equity markets and business growth in the United States segment, and strong results in the capital and risk solutions segment.

Sequentially, base EPS is up 11 per cent compared with a base EPS of 89 cents in the first quarter of 2023, primarily driven by the U.S. and capital and risk solutions segments. Growth in the U.S. resulted from higher markets and further synergies realized on the Prudential acquisition. Capital and risk solutions benefited from strong growth in structured reinsurance business, higher investment results, and improved mortality experience. (Under the IFRS 17 (international financial reporting standards) reporting standard, mortality experience on life insurance tends to be recognized into earnings immediately, whereas mortality/longevity experience on payout annuities and related businesses, mainly flows through the contractual service margin and is recognized into earnings over the life of the remaining contracts.)

Net EPS was 53 cents and included costs of 30 cents per share ($279-million) associated with acquisitions and divestitures, and surplus asset rebalancing activities. These costs included transaction costs of $158-million predominantly related to the announced sales of Putnam Investments and the U.K. individual onshore protection business, in addition to an indemnity provision related to the U.S. individual life and annuity business sold in 2019. It also included $121-million of realized other comprehensive income (OCI) losses from rebalancing United Kingdom surplus assets to capitalize on higher short-term rates and improve future interest rate sensitivities.

Return on equity was 11.7 per cent on net earnings and 15.9 per cent on base earnings in the second quarter of 2023.

Highlights:

• The company announced strategic transactions in quarter to rebalance and focus its business portfolio:
  • Announced sale of Putnam Investments, unlocking shareholder value and further focusing U.S. operations on highly attractive retirement and personal wealth markets;
  • Announced complementary acquisitions of Investment Planning Counsel Inc. (IPC) and Value Partners, which will enable the Canadian business with new capabilities to offer a leading end-to-end wealth and insurance platform for independent advisers;
  • Announced an agreement to sell the individual onshore protection business of Canada Life U.K. to Countrywide Assured PLC. This follows the company's announcement that it closed onshore individual protection insurance to new business in November, 2022.
• The disciplined execution of the company's strategy continues to drive strong momentum:
  • Go live with Canadian government's public service health care plan (PSHCP) on July 1, 2023;
  • Canada Life was awarded the Canadian government's dental plan, which represents approximately $550-million in annual paid claims and supports the same 1.7 million Canadians as the PSHCP;
  • Empower Personal Wealth, launched in the first quarter of 2023, continued to see strong momentum with 30-per-cent growth in assets under administration year over year;
  • Diversified wealth capabilities and distribution access at Irish Life with the launch of a new joint venture, AIB Life, in Ireland;
  • Capital and risk solutions expanded its international presence in targeted new markets, including two transactions in Italy.
• The company hosted an investor day to share its strategy for growth, with a specific focus on its wealth and asset management businesses in Canada, Europe and the U.S.

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 Lifeco corporate -- reflecting the management and corporate structure of the company. For more information, refer to the company's second quarter of 2023 interim management's discussion and analysis (MD&A).

Canada:

• Q2 Canada segment base earnings of $283-million and net earnings of $148-million: Base earnings of $283-million decreased by $57-million compared with the same quarter last year, primarily due to strong group health morbidity results in 2022, which did not repeat, partially offset by pricing and other management actions taken, aided by higher interest rates in 2023.

United States:

• Q2 U.S. segment base earnings of $198-million (U.S.) ($265-million) and net earnings of $67-million (U.S.) ($90-million): U.S. base earnings for the second quarter of 2023 were $198-million (U.S.) ($265-million), up $70-million (U.S.) or 55 per cent from the second quarter of 2022. The increase was primarily due to improved spreads from higher interest rates, higher fee income from higher average equity markets and lower expenses due to synergies achieved on recent acquisitions.

Europe:

• Q2 Europe segment base earnings of $180-million and net earnings of $102-million: Base earnings of $180-million decreased by $30-million compared with the same quarter last year, primarily due to favourable insurance experience in Q2 2022, which did not repeat, partially offset by favourable currency movement and investment earnings.

Capital and risk solutions:

• Q2 capital and risk solutions segment base earnings of $203-million and net earnings of $169-million: Base earnings of $203-million increased by $13-million compared with the same quarter last year, primarily due to favourable structured business earnings and investment earnings, partially offset by unfavourable experience in the U.S. life business.

Quarterly dividends

The board of directors approved a quarterly dividend of 52 cents per share on the common shares of Great-West Lifeco, payable Sept. 29, 2023, to shareholders of record at the close of business on Aug. 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 in the attached table are eligible dividends.

Second quarter conference call

Great-West Lifeco's second quarter conference call and audio webcast will be held on Wednesday, Aug. 9, at 8:30 a.m. ET.

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 Sept. 9 and can be accessed by calling 604-674-8052 or 1-855-669-9658 (passcode 9667). The archived webcast will be available on the company's website.

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, Great-West Lifeco's companies 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.

Basis of presentation

The condensed consolidated interim unaudited financial statements for the periods ended June 30, 2023, of Great-West Lifeco have been prepared in accordance with international financial reporting standards unless otherwise noted and are the basis for the figures presented in this news release, unless otherwise noted.

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