Great-West Lifeco (GRWLF)

What Moves the Stock

1. 01Net investment spread compression or expansion driven by interest rate movements (100 bps rate change impacts annual earnings by ~$150-200M)
2. 02Empower Retirement net flows and participant growth (organic growth of 3-5% annually drives fee revenue)
3. 03Equity market performance affecting fee-based revenue and variable annuity hedging costs (10% S&P 500 move impacts quarterly earnings by ~$30-50M)
4. 04Canadian insurance sales momentum and group benefits pricing discipline (market share in employer-sponsored plans)
5. 05Capital deployment through acquisitions (history of bolt-on retirement plan acquisitions) or share buybacks (~$500M annual authorization)
6. 06Retirement plan recordkeeping and administration fees (~35% of earnings, primarily Empower with 13.7 million participants)
7. 07Life insurance premiums and mortality/morbidity spreads (~30% of earnings, Canada Life and Irish Life)
8. 08Annuity products and investment spread income (~20% of earnings)

GRWLF Chart

My Notes

• value and dividend - Attracts income-focused investors with 5%+ dividend yield (current payout ratio ~50% of base earnings…
• High sensitivity with complex dynamics.
• Watch on earnings: 10-year Treasury yield and Canadian government bond yields (primary driver of reinvestment rates and liability discount rates), Credit spreads on investment-grade corporate bonds (impacts portfolio valuation and new money yields), S&P 500 and TSX Composite performance (drives fee-based AUM and variable annuity hedging costs).