GWO stock steadies as Great-West Lifeco highlights capital strength after recent earnings

GWO stock is anchored by Great-West Lifeco Inc.'s capital position and dividend profile following its most recent quarterly results, where the insurer reported higher base earnings and detailed its leverage and LICAT ratios for investors.

Great-West Lifeco Inc. (ISIN CA39138C1068), the Canadian financial services group traded in Toronto under the ticker GWO, underpins GWO stock with a combination of earnings growth, dividend stability, and capital strength based on its most recently reported results in 2024 as disclosed on its investor relations pages and related financial publications.

Base earnings and profit trends

According to Great-West Lifeco's published financial information for the first quarter of 2024 on its investor relations platform and corroborating financial media summaries, the company reported base earnings of approximately CAD 1.08 billion for Q1 2024, compared with about CAD 808 million in the same quarter of 2023, implying an increase of roughly CAD 272 million or around 33.7% year over year for that period.

The same Q1 2024 disclosure indicates that Great-West Lifeco's net earnings attributable to common shareholders reached roughly CAD 987 million, compared with approximately CAD 595 million in Q1 2023, representing growth of about CAD 392 million or near 65.9% year over year, a development that provides a numerical backdrop for how GWO stock is underpinned by expanding profitability.

In that quarter, the company also reported that its base earnings per common share were approximately CAD 1.15, against about CAD 0.86 in the prior-year quarter, indicating an increase of roughly CAD 0.29 per share or close to 33.7%, which broadly mirrors the base earnings growth and signals that earnings expansion is visible on a per-share basis for holders of GWO stock.

Capital ratios and leverage metrics

Great-West Lifeco's investor communications for Q1 2024 highlight that its Life Insurance Capital Adequacy Test, or LICAT, ratio for the consolidated group stood around 129% at the end of that quarter, compared with approximately 124% one year earlier, a rise of about 5 percentage points that suggests stronger capital coverage backing the financial resilience of the business supporting GWO stock.

The same set of disclosures shows that Great-West Lifeco's leverage ratio, defined as debt to total capital, was approximately 24.5% at the end of Q1 2024, down from about 28.5% a year earlier, indicating an improvement of roughly 4 percentage points in the company's capital structure over twelve months.

In addition, management materials summarized for investors indicate that Great-West Lifeco held cash and liquid assets at the holding company level of roughly CAD 1.1 billion as of the Q1 2024 reporting date, compared with approximately CAD 1.0 billion a year earlier, underlining that the firm continued to maintain liquidity buffers while growing earnings that together form part of the fundamental setting for GWO stock.

Dividend and shareholder returns

Great-West Lifeco's board has consistently emphasized dividends as a core element of shareholder returns, and in its 2024 communications the company indicated a quarterly common share dividend of approximately CAD 0.55 per share, up from about CAD 0.52 per share a year earlier, implying an increase of roughly CAD 0.03 per share or close to 5.8% year over year that is relevant for income-focused holders of GWO stock.

According to the companys dividend history summarized by financial data providers, this quarterly payout of about CAD 0.55 per share corresponds to an annualized dividend of around CAD 2.20 per share, and when measured against a share price in the mid CAD 40 range during parts of 2024, this has translated into a dividend yield in the area of 4.5% to 5.0%, underlining the income component associated with GWO stock.

Management commentary accompanying the dividend decisions has pointed to the goal of delivering sustainable, growing cash returns to shareholders supported by earnings and capital ratios, with the 2024 dividend level following earlier upward steps from approximately CAD 0.49 per share to around CAD 0.52 per share, and then to about CAD 0.55, illustrating a stepwise trajectory of dividend increases over recent years.

GWO stock valuation and trading context

Based on quote data from major financial market portals tracking the Toronto Stock Exchange, GWO stock has been trading in a 52-week range that roughly spans from about CAD 36.50 at the lower end to around CAD 43.50 at the higher end, giving investors a sense of the recent price corridor for Great-West Lifeco shares.

At a representative recent trading level in 2024 of roughly CAD 42.00 per share, and using the aforementioned base earnings per common share of approximately CAD 1.15 in Q1 2024, an annualized run-rate of around CAD 4.60 in base EPS would suggest a price-to-earnings multiple in the vicinity of 9.1 times if earnings were simply multiplied by four, though investors typically compare this with reported full-year EPS rather than a run-rate.

Market capitalization figures supplied by financial data platforms indicate that at share prices in the low CAD 40s during 2024, Great-West Lifeco's equity value has been around CAD 39 billion to CAD 41 billion, positioning the group as one of the larger Canadian life and health insurers and asset managers and lending scale to the trading profile of GWO stock on the TSX.

Canada and U.S. segment performance

Within Great-West Lifeco's operating structure, the Canada segment plays a central role, and Q1 2024 figures show that base earnings in this segment were approximately CAD 467 million, compared with around CAD 416 million a year earlier, an increase of about CAD 51 million or roughly 12.3% year over year that contributes to the consolidated base earnings growth behind GWO stock.

In the United States segment, which includes Empower and other activities, base earnings for Q1 2024 were reported at roughly CAD 251 million, versus about CAD 156 million in Q1 2023, an increase of around CAD 95 million or approximately 60.9% year over year, a pace that outstrips the consolidated growth rate and highlights the importance of U.S. operations in the overall earnings mix.

For the Europe segment, which encompasses operations in the United Kingdom, Ireland, and other markets, the same Q1 2024 report showed base earnings of approximately CAD 319 million, compared with about CAD 235 million a year earlier, representing an increase of around CAD 84 million or roughly 35.7% year over year, illustrating that all major geographic segments have contributed to earnings expansion relevant for GWO stock.

Asset management and AUM growth

Great-West Lifeco's publicly available materials highlight that its total assets under administration, including both insurance and asset management activities, were approximately CAD 2.7 trillion as of the end of 2023, compared with about CAD 2.5 trillion a year earlier, an increase of roughly CAD 200 billion or around 8.0% that underscores the scale of funds overseen by the group.

Within this, assets under management related to investment and wealth solutions have also expanded, with figures in the companys disclosures and financial data providers indicating a rise from roughly CAD 720 billion at the end of 2022 to around CAD 760 billion at the end of 2023, an increase of about CAD 40 billion or close to 5.6% that complements insurance-related balance sheet growth.

This growth in assets under administration and management supports fee-based revenue streams alongside traditional insurance earnings, providing diversification in how Great-West Lifeco generates income that ultimately supports the value of GWO stock for shareholders.

Regulatory capital and risk profile

In addition to the LICAT ratio for the consolidated group, Great-West Lifeco's disclosures point to strong capital positions at its key operating subsidiaries, including Canadian life insurance entities where LICAT ratios have typically been reported above 120%, exceeding regulatory minimums and reflecting buffers intended to absorb market and insurance risk.

The company also reports that its interest rate and equity market sensitivities, measured as the impact of parallel shifts in rates or equity market levels on net earnings or capital ratios, are managed within board-approved risk appetite limits, with sensitivity tables indicating that a 50-basis point upward shift in interest rates would have led to only a modest change in base earnings in recent scenarios.

These risk management disclosures, while technical, are part of the broader picture that underpins how GWO stock is evaluated by investors who look not only at headline earnings and dividends but also at the underlying volatility and capital protection mechanisms.

Dividend policy and payout considerations

Great-West Lifeco has historically targeted a payout ratio range that balances reinvestment needs with shareholder distributions, and commentary around its 2023 and 2024 dividend decisions suggests that the company aims to keep the payout ratio in a zone where dividends grow broadly in line with earnings over the medium term, subject to maintaining capital ratios comfortably above regulatory minima.

Based on the reported base earnings of approximately CAD 4.00 per share for the full year 2023, as referenced in investor materials, and an annualized dividend of about CAD 2.20 per share at the 2024 payout level, the implied payout ratio would be around 55%, which lies in a range that allows for both ongoing dividend increases and retention of earnings to support growth and capital.

For income-oriented investors, this combination of earnings coverage and capital adequacy forms part of the rationale for regarding GWO stock as a potential source of steady cash flows, even though the share price remains exposed to market and interest rate cycles like other insurers.

Peer comparison in Canadian insurance

In the Canadian market, Great-West Lifeco is often compared with other large insurers such as Sun Life and Manulife, whose shares are also listed on the Toronto Stock Exchange, and financial data sources indicate that Great-West Lifeco's market capitalization in the high CAD 30 billion range places it broadly in the same league as these peers in terms of size.

When comparing valuation, investors often look at price-to-earnings ratios and price-to-book ratios across this peer set, and based on 2023 full-year earnings and book values, GWO stock has at times traded at a modest premium to some peers on a price-to-book basis while being closer on a price-to-earnings basis, though these relationships fluctuate with market conditions and company-specific news.

Diversification across life insurance, group benefits, retirement savings, and asset management also plays into peer comparisons, as Great-West Lifeco's mix of earnings from Canada, the United States, and Europe differs from some Canadian peers that have different geographic footprints, influencing how investors weigh GWO stock against alternatives.

Representative product and retirement platform

Among Great-West Lifeco's core offerings is its large retirement and savings platform operated through its North American businesses, where plan assets and participant counts have grown alongside the broader defined contribution and workplace savings markets, supporting fee-based earnings streams.

Company materials and third-party data suggest that the retirement business administered tens of millions of individual participant accounts and oversaw hundreds of billions of dollars in retirement assets as of 2023, making it a significant contributor to ongoing revenue and a strategic focus for technology and service investments.

These retirement and savings solutions, offered to employers and individuals, are representative of the kinds of long-duration, recurring-revenue products that complement traditional individual life and group insurance lines and contribute to the stability of earnings that back GWO stock.

GWO stock price and trading snapshot

On the Toronto Stock Exchange, GWO stock has most recently been quoted around the low CAD 40s per share during 2024 trading sessions, with intraday volumes in the hundreds of thousands of shares that support liquidity for institutional and retail investors.

At a price point of roughly CAD 42.00 per share in a representative recent session in 2024, the share price sits closer to the upper half of the 52-week range between about CAD 36.50 and CAD 43.50, aligning with a period in which earnings and dividends have both trended upward, supported by improved capital ratios and segment earnings.

Key data on GWO stock

• Company: Great-West Lifeco Inc.
• ISIN: CA39138C1068
• Ticker: TSX: GWO
• Trading venue: Toronto Stock Exchange
• Price (as of 16 July 2024, 16:00 ET): 42.00 CAD
• Market capitalization: 40.0 billion CAD (as of 16 July 2024)
• Sector / Industry: Financials / Insurance and Asset Management
• Index membership: S&P/TSX Composite Index
• Next earnings date: 7 August 2024