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Introduction & Market Context
Great-West Lifeco Inc . (TSX:GWO) presented its second quarter 2025 results on August 6, showcasing strong performance across its key business segments. The company’s stock responded positively, rising 3.67% following the announcement, with shares closing at $54.18.
The financial services provider highlighted how favorable market tailwinds are supporting its growth strategy, including demographic shifts from aging populations, increased demand for financial advice among underserved segments, and corporations seeking more sophisticated risk management tools.
"Our strategy is clear, consistent and it’s working," CEO David Harney emphasized during the presentation, pointing to the company’s focused approach in wealth, retirement, and insurance markets.
Quarterly Performance Highlights
Great-West Lifeco delivered record quarterly base earnings of $1,149 million in Q2 2025, representing an 11% increase year-over-year. Base earnings per share reached $1.24, up 12% compared to the same period last year, exceeding analyst expectations of $1.18.
The company’s base return on equity improved to 17.4%, up 0.2 percentage points year-over-year, while net earnings came in at $894 million with a net ROE of 14.9%. Total (EPA:TTEF) client assets grew to $3.0 trillion, representing a 12% increase from Q2 2024.
As shown in the following comprehensive financial overview:
The company’s efficiency ratio improved from 57.5% in Q2 2024 to 56.7% in Q2 2025, reflecting ongoing transformation initiatives and operational discipline. This improvement contributed to the double-digit earnings growth that exceeded the company’s medium-term objective of 8-10%.
Segment Performance Analysis
The Wealth segment delivered particularly strong results, with base earnings of $179 million representing 15% growth year-over-year. This performance was driven by equity market recovery from April lows and strong fund flows, particularly in Europe where retail flows increased threefold compared to the previous year.
The Retirement segment posted more modest growth of 1% year-over-year, reaching $293 million in base earnings. However, excluding credit-related impacts, retirement base earnings grew 12%, showing underlying strength in this core business area.
The following chart illustrates the performance of these key segments:
In the insurance businesses, Group Benefits delivered impressive 17% growth in base earnings, reaching $250 million. This was primarily driven by strong performance in Canada Group Benefits (up 19% year-over-year) reflecting favorable long-term disability experience and disciplined pricing. The Insurance & Risk Solutions segment grew 9% to $370 million, benefiting from Capital Solutions new business volume and improved claims experience.
Empower, the company’s U.S. retirement business, reported base earnings of US$244 million, up from US$205 million in Q2 2024. Excluding credit-related impacts, Empower’s base earnings grew 13% year-over-year. The business saw participant growth of 3% and an 83% increase in net flows driven by higher rollover and crossover sales.
Strategic Initiatives & Outlook
Great-West Lifeco outlined four key priorities to accelerate momentum: putting customers first, building a digital-driven future leveraging AI, accelerating operational excellence, and focusing on talent development. The company also highlighted several product innovations, including Empower’s launch of the first-ever zero-fee S&P 500 Index Fund.
In a strategic shift, the company announced that its Canada Reinsurance Services (CRS) will no longer write new U.S. traditional life mortality reinsurance business, instead focusing on growing its Capital Solutions business.
Looking ahead, Great-West Lifeco reaffirmed its medium-term objectives, targeting 8-10% base EPS growth, base capital generation of 80% or higher, and a base ROE of 19% or more. The company also aims to maintain a base earnings dividend payout ratio of 45-55%.
Ed Murphy, CEO of Empower, projected strong future sales, noting, "We expect net plan sales for the year to be north of $20 billion." The company anticipates a strong pipeline that will drive net plan inflows of US$25 billion or more in the second half of 2025.
Capital Position & Shareholder Returns
Great-West Lifeco maintained a strong capital position, with its LICAT ratio improving to 132%, up 2 percentage points quarter-over-quarter. The company’s leverage ratio stood at 28%, down 1 percentage point year-over-year and unchanged from the previous quarter.
The company’s solid capital generation has enabled increased shareholder returns. After completing $432 million in share repurchases year-to-date, Great-West Lifeco announced its intention to repurchase an additional $500 million in shares during 2025, effectively raising its full-year buyback target to nearly $1 billion.
The following chart illustrates the company’s consistent capital and cash generation:
Despite increased shareholder returns, the company maintains a strong cash position of $2.1 billion, though this represents a decrease of $442 million from the previous quarter. This financial flexibility positions Great-West Lifeco well to pursue strategic growth opportunities while continuing to reward shareholders.
The company’s conservative investment approach was also highlighted, with a portfolio predominantly comprised of investment-grade fixed income assets, providing stability amid market fluctuations.
Full presentation:
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