Power Corp. of Canada Earnings: Performance Remains Steady at Great-West and IGM Financial

Power Corporation of Canada’s POW second-quarter results were largely in line with our expectations, as the performance at its largest subsidiaries Great-West and IGM Financial remained stable. The firm reported adjusted net earnings of CAD 847 million or CAD 1.27 per share, compared with CAD 647 million or CAD 0.97 per share in the prior-year second quarter. The adjusted earnings from the publicly listed operating companies (Great-West, IGM, and GBL) were reported at CAD 842 million, compared with CAD 715 million in the previous year. The company has declared a quarterly dividend of 52.50 cents per share, representing a 5.4% dividend yield as per the current stock price. Power Corporation’s adjusted net asset value stood at CAD 48.86 as of the end of the second quarter, which compares with CAD 46.89 at the beginning of the quarter. We are maintaining our CAD 41.50 fair value estimate for the firm after incorporating results.

Power Corporation’s biggest operating company, Great-West Life, reported decent results. Great-West announced three strategic transactions during the quarter to rebalance its business portfolio. The company announced the sale of Putnam Investments, which has been unprofitable over the past five years. The deal will unlock shareholder value and further focus U.S. operations on more-lucrative retirement and personal wealth markets. The company announced the acquisitions of Investment Planning Counsel and Value Partners, which will enable the Canadian business of the company to offer an end-to-end wealth and insurance platform for independent advisors. Finally, the company also announced an agreement to sell the individual onshore protection business of Canada Life U.K. to Countrywide Assured. This follows the company’s announcement that it closed onshore individual protection insurance to new businesses in November 2022.