Great-West Lifeco Inc. announced on Aug. 1 net earnings of $831 million for the second quarter of 2018, up from $585 million for Q2 2017.
Excluding 2017 restructuring costs, Lifeco's adjusted net earnings in the second quarter of 2017 were $712 million. Q2 2018 net earnings were up $119 million or 17 per cent compared to Q2 2017 adjusted net earnings.
Lifeco's net earnings for Q2 2018 included “a net positive impact of $60 million after-tax, or $0.061 per common share, from the restructuring of U.S. financing as a consequence of U.S. tax reform and the refinancing of certain debt instruments,” reported the company.
Adjusted return on equity (ROE) for the second quarter of 2018 was 14.2 per cent. The adjusted ROE excludes the impact of U.S. tax reform, a net charge on the sale of an equity investment and restructuring costs included in the prior year results, says the company.
Accelerating investments in digital
"The company saw solid operating performances and strong earnings growth in the second quarter," stated Paul Mahon, President and Chief Executive Officer, Great-West Lifeco. "We are accelerating investments in digital to drive customer experience and operational effectiveness and taking strategic actions across our businesses to bolster growth in core markets."
Q2 2018 highlights include sales of $33.1 billion. This is an increase of 32 per cent compared to the same quarter last year “driven by a 45 per cent increase in the U.S. and a 14 per cent increase in Europe,” says Lifeco.
The company also reported a Life Insurance Capital Adequacy Test (LICAT) ratio of 133 per cent at June 30, 2018.
Canada segment net earnings
Lifeco’s Q2 2018 Canada segment net earnings were $334 million compared to adjusted net earnings of $311 million for Q2 2017, an increase of 7 per cent.
GWL also reported that the Canadian operations made progress on the previously announced targeted annual expense reductions of $200 million pre-tax. “As of June 30, 2018, the company has achieved approximately $170 million pre-tax in annualized expense reductions; approximately $131 million related to the common shareholders' account and $39 million related to the participating accounts,” says the company.