Great-West Earnings: Improved Product Mix and Favorable Rate Environment Position Firm Well for 2024

No-moat Great-West Life reported a good set of numbers in the fourth quarter as the company benefited from higher interest rates, and underwriting profitability remained resilient. Management has taken various steps to reposition the company’s portfolio over the past three years, which we think bodes well for shareholders of the company. Management's strategy should improve capital efficiency and the long-term growth profile of the company. In 2023, Great-West executed the sale of Putnam to Franklin Templeton at attractive terms, worked toward the integration of Prudential’s full-service retirement services business while achieving USD 80 million of pretax run-rate cost synergies, and completed the acquisition of Investment Planning Counsel and Value Partners Group. In addition to this, management executed several strategic actions to strengthen Great-West’s market position in the European market, including selling a portfolio of existing policies to AIB Life, restricting new business for subscale U.K. onshore wealth business, and reinsured an existing block of annuity business in the U.K. We think that these actions improve the overall product mix of the company’s portfolio and position Great-West well for the upcoming years.