Great-West Lifeco Inc. reported base earnings of C$1.15 billion for the second quarter of 2025, an 11% increase from C$1.04 billion in the same quarter of 2024.
The growth was driven by higher contributions from the Wealth and Group Benefits segments, supported by new business growth, improved insurance experience, and favorable equity markets.
Net earnings from continuing operations totaled C$894 million, compared to C$1.01 billion a year earlier. The year-over-year decline was attributed to increased charges related to business transformation initiatives announced earlier in 2025, along with unfavorable market experience.
Base return on equity stood at 17.4%, while total ROE was 14.9%. The company indicated both metrics remain positioned for potential expansion, supported by ongoing share repurchases and growth in its capital-efficient US operations. Lifeco ended the quarter with C$2.1 billion in cash and emphasized its continued ability to allocate capital flexibly.
Total client assets reached C$3.0 trillion, including C$1.0 trillion in higher-margin assets under management or advisement. Within its Retirement and Wealth segments, client assets grew 11% and 16%, respectively. Group Benefits also recorded double-digit base earnings growth, with strong long-term disability experience in Canada cited as a key contributor.
The second-quarter update followed a first quarter in which Lifeco reported base earnings of C$1.03 billion, representing 5% year-over-year growth. Net earnings from continuing operations in Q1 totaled C$860 million, down 17% from the prior year, while the company reported a LICAT ratio of 130% and C$2.5 billion in cash. Book value per share stood at C$27.61, marking a 12% increase.
President and CEO David Harney (pictured above) said the company delivered double-digit base earnings growth during the quarter, led by Wealth and Group Benefits.
"I am particularly pleased with the strong underlying performance at Empower, which remains well positioned to drive double-digit base earnings growth going forward. Overall, we are on track to meet or exceed all our medium-term objectives, supported by our strong capital generation, healthy balance sheet and unrelenting focus on executing against our growth strategies,” Harney said.
In the US segment, base earnings were reported at US$247 million (C$341 million), while net earnings from continuing operations totaled US$222 million (C$305 million). Base earnings remained flat compared to Q2 2024.
Business growth and improved fee income were offset by credit-related impacts totaling US$37 million and lower spread-based income. The prior-year quarter included US$29 million in credit impacts and a US$22 million one-time fee income adjustment.
US base earnings growth, excluding credit and one-time items, was supported by higher average customer account balances and an increase in plan participants. Empower’s Wealth business recorded net flows of US$2.9 billion, up 83% year over year, largely driven by rollover sales. The number of plan participants stood at 18.5 million as of June 30, 2025, reflecting a 3% increase over the previous year.
In line with its strategic direction, Lifeco reaffirmed its medium-term objectives at its 2025 Investor Day, targeting 8%–10% base EPS growth and a dividend payout ratio of 45%–55%. It also raised its Base ROE target to above 19% and introduced a new base capital generation target of 80% or more, signaling an increased focus on profitability and capital efficiency across its business segments.
Empower’s Retirement division is forecasting net plan inflows of at least US$25 billion during the second half of 2025, which the company expects will offset a significant plan termination reported in the second quarter. Empower also expanded its 401(k) product lineup through partnerships with asset management firms to provide access to private markets investments.
In Canada, base earnings were C$375 million, up 4% from the prior-year quarter. Performance was attributed to stable results across business lines and improved insurance experience in Group Benefits. These gains were partially offset by lower surplus income.
Net earnings in Canada were C$255 million, reflecting the impact of business transformation charges aligned with Lifeco’s ongoing restructuring efforts.
Base earnings also included a benefit from adjustments to prior-year tax estimates, offset by C$51 million in post-tax credit-related impacts.
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