Great-West Earnings: Solid Performance by Empower as It Benefits From Prior Acquisitions

No-moat-rated Great-West Life’s first-quarter results highlight the benefits of the prior strategic acquisitions made in the Empower business that increased the scale and the competitive positioning of its U.S. business. The results were also impacted by favorable group insurance disability experience in the Canada segment that was partially offset by unfavorable mortality experience in Canada, Europe, and capital and risk solutions segments. The company reported base earnings of CAD 808 million or CAD 0.87 per share in the first quarter versus CAD 595 million or CAD 0.64 per share in the first quarter of the previous year. The first-quarter results equated to an adjusted return on equity of 15.8%. The company paid a quarterly dividend of CAD 0.52 per share starting from the first quarter of 2023, which represents a 5.5% dividend yield as per the current stock price. We are maintaining our CAD 37 fair value estimate for Great-West Life after incorporating the first-quarter results.