Great-West Lifeco Inc. (GWO) Earnings Call Transcript & Summary

Hello, and good morning, everyone. I hope you found that video just as inspiring as I did. My name is Shubha Khan. I'm Head of Investor Relations at Great-West Lifeco. Welcome to our 2025 Investor Day. I'm very grateful so many of you have showed up here in person to join us for Investor Day today. For those of us joining us via the live webcast, a warm welcome to you as well. Some of you might recall that our more recent Investor Days have generally focused on one line of business or one operating segment. Today, we're taking a different approach. This is the first time since our 2016 Investor Day, in fact, that we will cover the full spectrum of our businesses. We've had a lot of investor queries on all of our operating divisions in the short time that I've been here with the company, and I couldn't be more excited to be here as we discuss the next phase of Lifeco's story. If you look at the backdrop behind me, to the extent you can see it, you will notice that there's a theme to Investor Day today. This is -- this -- the theme today is Driving Growth, Delivering Lasting Value. It signifies the transformation the business has undergone over the years, especially in the last 5. And this is the focus of today on Lifeco's continued evolution towards a more capital-efficient, more cash-generative portfolio of businesses. Over the last 12 months or so, we've made a big effort to equip investors and analysts with the tools to better understand our business, our operations, better understand our financial performance and more fully appreciate our financial outlook. And an example of this is our refreshed supplementary information package, which was released just a few short weeks ago, which -- and it more clearly ties our financial performance to the underlying earnings drivers. And we hope that you find today's presentations to be a continuation of that desire to provide more information, better information and to engage with the investment community more actively. Before we begin, I should highlight one key housekeeping item. In our remarks today, we make statements containing forward-looking information or non-IFRS financial measures. Please refer to the cautionary notes in the presentation, which can also be found in our 2024 year-end disclosures on our website. Rest assured, this is the most boring slide you'll see today. It does contain information -- important information, but the content will become far more compelling after this. And just to underscore that point, I present to you our action-packed agenda for today. We'll start with a presentation from our CEO, Paul Mahon; followed by our CFO, Jon Nielsen. We'll then hear from our -- from the leaders of our 4 operating segments. And I'm sure you'll have plenty of questions throughout the day. We've structured the day to include 3 Q&A segments, so you'll have plenty of opportunity to ask questions. We will wrap up the formal agenda by around 12:30 and hope that those of you here in person today will join us for an informal lunch. And with that said, it's my pleasure to invite our President and CEO, Paul Mahon, to the stage to begin today's session. Thank you.

I am betting that lunch attendance will depend on how wet or dry outside it is at around 12:35. So good morning, everyone. Welcome to our guests here in Toronto, and welcome to those of you who are joining us virtually. Before I get into my formal presentation, I want to share how excited I am about the strength of our team here today. Well, businesses are built over generations. And when you think about an insurance company, they're built over fundamentally generations given the promises we make are sometimes 20, 40, 60, 100 years in the future. What we've accomplished is really on the shoulders of others. But I have to admit, I'm very proud of the work the team here today is doing to unlock value. And I think you'll see evidence of that as we go through the presentations. Well, there's 4 leaders actually presenting today who were not part of our 2023 Investor Day. The first of those actually was Shubha Khan in Investor Relations, who you just heard from, and I'm so glad that Shubha is here. Jon Nielsen, our CFO, Jon joined us about 18 months ago. He's been in place for about a year now. He's up next after me. Fabrice Morin, who leads our Canadian operations, I'm glad to have Fabrice here. And then Lindsey Rix-Broom, who leads our U.K. business, she'll be joining David Harney on stage to provide you with insight into our U.K. operations. Now turning to my presentation. While the focus of today is on how Lifeco is positioned to deliver strong organic growth, I do want to take a moment to reflect on the current external environment. Top of mind for many is the geopolitical backdrop. That includes protectionism, tariff threats and actually all of the uncertainty this creates. And I want to let you know that we take those -- these threats seriously. We respond, we react, but at the same time, we believe we're very well positioned to manage through this uncertainty with strong risk-based disciplines. We're a company that thrived for more than 170 years through major change and challenge. Think of the generations of change we've been through. And through it all, we've maintained an unwavering commitment to our customers, our employees and our partners, and that includes you here today. So from a commercial perspective, we also believe we're well positioned. Consider our portfolio, which is diversified across sectors and geographies. And in fact, we have 40% of our earnings are U.S. dollar-based. Our businesses are predominantly domestic in nature, so we don't deal with the issues of cross-border friction. And our focus is on more stable financial necessities, things like pensions and benefits and retirement and things that people rely on. And generally speaking, as we saw through COVID, during periods of stress, people actually turn to products and services that will give them security. So we believe we're well positioned. The presentations you'll hear today will focus on our current strategies that are delivering strong organic growth and financial performance. We will provide deeper insight into 2 important areas: the steps we've taken across our businesses already that will continue to drive organic growth; and the strength of our overall portfolio driving capital-efficient growth and strong capital and cash generation, and that will be an important theme that Jon will touch on. Across the presentations, you're going to hear some fairly common themes that we have clear strategies to build and extend market leadership positions, that we remain disciplined and risk aware as we think about our capital allocation and that our focus is on organic growth in stable markets supported by secular tailwinds, and that will be a theme you're going to hear about from each of the business leaders. And we'll actually share our financial outlook, including our base earnings growth outlook for each segment, our expectations of a continued shift to more capital-light business and our capacity to deliver strong capital and cash generation. And given this outlook, we're raising and enhancing some of our medium-term objectives. This reflects our confidence in our strategies. It reflects our confidence in our teams, and it reflects our confidence in our ability to execute. Our company has thrived for more than 175 years, responding to opportunity and challenge. Consider today's scale with over $3.1 trillion in assets under administration and over $1 trillion in assets that are either managed or advised. We've earned the trust of millions of customers, and our reach continues to grow. We operate from a position of strength with a strong balance sheet and ratings. And we benefit from our relationship with Power Corporation of Canada. Their long-term majority stake aligns with our focus on long -- the reality is we've done a lot to strengthen our businesses over the last 5 years. Consider the actions taken in the U.S., the wealth-focused acquisition of Personal Capital, our retirement expansion through the acquisitions of MassMutual and Prudential, the dispositions of our U.S. Individual Markets business and Putnam. We now have a very focused Empower strategy in the U.S. It's leveraging retirement leadership, and it's also focused on driving strong growth at Empower Personal Wealth. In Canada, the addition of Investment Planning Counsel and Value Partners positions us for -- with a leading wealth platform well positioned for organic growth. In Ireland, the launch of Unio Wealth and also our joint venture with AIB are each unlocking growth potential. And in the U.K., we actually had both dispositions and acquisitions. We disposed our individual protection and onshore wealth businesses, which has really brought focus to pension risk transfer and group protection, 2 areas of leadership and organic growth for our U.K. operations. And our Capital and Risk Solutions business continues to focus on strong organic growth path, driven by their expertise, their innovation and significant market opportunity. Compared to 5 years ago, we have 4 at-scale business segments. Each are executing clear strategies to unlock value and drive long-term growth. A clear strategy guides our actions and will remain central to our capital allocation. At the core of this strategy is a focus on building leadership positions in attractive markets supported by secular tailwinds. Key to this strategy is in-market leadership driving our customer strategies, complemented by a Lifeco team focused on disciplined capital allocation. Leadership positions represent launching points for business extensions into attractive adjacencies, and you'll hear that as a theme throughout the day. While M&A remains a tool to strengthen leadership positions, investment in brand and capabilities will drive capital-efficient growth. Consider this playbook in the context of Empower, I'll give you an example. We built a market-leading retirement platform with strong organic growth potential. We use that platform as a launching point to move into an extension into the wealth management space, our Empower Personal Wealth business, and we are now investing in brand and capabilities to capture significant organic growth potential in the underserved mass to affluent market segments. While opportunities in each of our segments will differ, the playbook remains central to our value creation. The strategic steps we've taken over the last 5 years are paying off. Our strong base EPS growth reflects solid contributions across all of our businesses, led by Empower, which had both strong organic and inorganic contributions. Our base ROE increase is driven by growth in earnings and a shift to more capital-light mix of business, supported by wealth and retirement growth. Our dividend payout ratio is now squarely in the middle of our target range, delivering increases in line with our business growth. And I should note that this performance reflects the transition to IFRS 17 in 2022, where we had a modest drag on EPS growth and a modest boost to ROE. Our strategy of building leadership positions is playing out as planned across our 4 segments. Leadership positions provide us with the scale to support low-cost operations and the capacity to invest in organic growth. Except for Capital and Risk Solutions, our businesses are domestic in nature, supported by strong in-market brands and local teams with deep insight into their customers, into their distributors and into their competition. Capital and Risk Solutions leverages similar strengths, including deep insight into the challenges facing their clients, top global insurers. A consistent theme that you will hear across our businesses is targeting market sectors with the greatest opportunities for sustainable organic growth and stable margins. Given our businesses operate in more mature markets, our approach to growth and value creation is to target market sectors with outsized growth potential. In some cases, this includes the benefits of scaling businesses in markets that remain fragmented. But more important is our focus on market sectors supported by secular tailwinds that drive higher growth and demand for our products and our services. While our segment leaders will provide deeper insight, I'm going to provide a couple of examples. First, consider aging populations combined with known advice gaps amongst the mass to affluent market segments. This is driving increased demand for retirement and wealth advice, a key driver of our growth. Consider this second example, the challenges that governments face in supporting the health and retirement needs of aging populations. These 2 factors create opportunities in private retirement savings and health care delivery, areas where we participate in a meaningful way. Each of our segment presentations will highlight how secular tailwinds are helping to drive their organic growth. Looking back just 2 years, you can see a notable shift in our mix of business across the 4 lines of business represented here. You will note that we're now breaking out group benefits and retirement to provide greater insight into our performance. Looking forward, we project a continued shift to a more capital-light earnings mix, supported by strong growth in Retirement and Wealth. But at the same time, we're projecting solid growth in Group Benefits and Insurance & Risk Solutions. These lines of business report -- represent important diversification for Lifeco. An underappreciated feature of our portfolio is the capital-generative nature of our earnings. Jon will provide a lot more color on this, including how our changing mix will strengthen this aspect of our performance. While the big-picture strategy is important, execution happens locally. There are some key themes that you will hear from our segment leaders today that I'm going to highlight here so that as you -- as we go into those, you can be focused on that. For Empower, it's about leveraging and strengthening our retirement business while unlocking significant growth potential in Empower Personal Wealth. In Canada, it's about our focus on higher-growth sectors driving organic and extension growth, and our independent wealth platform is a great example of this. In Europe, it's how we're leveraging our strengths combined with secular tailwinds. Two examples are our wealth business in Ireland and bulk annuities in the U.K. And for Capital and Risk Solutions, it's how we're using our deep expertise, our risk discipline and, importantly, trusted relationships with clients to help them manage their growth. There's also some common themes across our businesses. The first is disciplined cost management and taking advantage of operating leverage. A good example is the synergies we captured as part of the acquisitions of MassMutual and Prudential at Empower, where we took out more than 30% of the cost at transition. So that's an example of operating leverage. The second theme is about a focus on investing in areas where we see the greatest opportunity for organic growth. It's about the choices we make. Good examples are wealth extensions we've done in Canada, in Ireland and in the U.S. Focus also means being prepared to either step back or even step away from businesses where we don't see a clear path to leadership. I'm going to provide you a couple of examples. First would be our U.S. individual insurance and our U.K. individual protection businesses where we didn't see a path to leadership. We said that capital is better deployed elsewhere. But more importantly, management's mindset focus can really drive greater things, and we see that happening with Lindsey and her team. Another example would be our GLC asset management in Canada. We looked at that and we said, you know what, we don't see a path to leadership. We think we're better to combine that with an entity and drive a partnership and focus on wealth. And we've been doing this across our platform. So the playbook is not just about the organic actions to drive each business inside of them; it's also about the choices we're making, and we think that's fundamentally important. I would like to highlight 2 key strengths that we believe drive strong performance at Lifeco. First, our segment leadership teams that define and drive our in-market strategies. These teams bring deep in-market experience and insight, the insight required to build strong and highly competitive teams and businesses, and I underline teams and businesses. When you see the strength of the teams we have, that's what drives business strength. Following Jon Nielsen, you'll hear from a number of these leaders about their segment strategies. A second strength is the important role that Lifeco plays at a portfolio level. While Jon will touch on a number of the benefits, I want to highlight the importance of this centralized expertise at Lifeco in areas like M&A, asset liability management and capital and risk management. These are areas where our investments in people and capabilities are really paying off. You will see this play out in the bulk annuity example that Jon will refer to and that Lindsey will actually cover in her comments. Our leadership positions and strong momentum are supported by persistent secular tailwinds that position us for continued growth. This gives us the confidence to raise and enhance some of our medium-term objectives. I'm happy to share that we're raising our base ROE objective to 19% plus, reflecting our growth targets and our continued shift to more capital-light business mix. We're also introducing a new capital generation objective. Jon Nielsen will provide a lot more color on this in his comments. We're maintaining our dividend payout objective of 45% to 55% of base earnings. This provides for attractive shareholder returns while preserving capital for growth and stability. And we're maintaining our medium-term base EPS growth objective of 8% to 10%, which reflects our view of our organic growth potential. Like you've seen over the last few years, we have the real potential to outperform this EPS growth objective through accretive deployment of excess capital. The balance of today's presentations will provide deeper insight into our businesses, how we're positioned to drive organic growth and strong financial performance. The presentations from Jon and the segment leaders will highlight 3 important themes. Our leadership positions are backed by strong secular tailwinds that support long-term organic growth. Our focused strategies are well positioned to deliver for our customers and drive value creation for shareholders. And our strong cash and capital generation across businesses gives us the financial strength to deliver strong shareholder returns while preserving capital for growth. With that, I'm now going to hand it over to Jon, who will take you through the financial performance of our portfolio in more detail. Thank you.

Good morning. I want to welcome you to this beautiful venue. I'm Jon Nielsen, the Group CFO, and I'm excited to share more of the Great-West story. I've been in my role for just over a year now, and I couldn't have joined at a more exciting time. Today, I'm going to walk you through 4 main topics. First, we have a strong track record of delivery, and our shareholders have enjoyed strong returns as a result. We will share our approach for providing more transparency into the attractive businesses and portfolio that we have. I want to walk you through the significant capital our portfolio generates and the financial flexibility and resiliency that we have as a result. Finally, we will cover the significant opportunities we see to drive growth and expand returns, leading to the medium-term objectives that Paul shared with you. These opportunities give us great confidence to continue to deliver strong and sustainable total shareholder returns. As Paul shared, our strategy is playing out as we intended, and it's been delivering outstanding results. We have a great deal of confidence that this will continue. We've outperformed our medium-term objectives for base earnings and ROE by a margin while continuing to deliver an industry-leading dividend payout. We've invested a lot in our businesses for growth and return, and this has enabled us to revisit our medium-term objectives as we look forward to an exciting future. Since joining the company, I've been very pleasantly surprised of just how focused our strategic plans are on delivering total shareholder return. Those results speak for themselves and have translated into attractive returns for our shareholders. Now as you can see here, over 1-, 3- and 5-year periods, our TSR has meaningfully exceeded key benchmarks on the fundamental results of our business. Over this period, the returns we've delivered have benefited from little to no expansion to our earnings multiple. You'll see here, I've also provided an adjusted 5-year period back to December 31, 2019, to extend through COVID to show that this outperformance wasn't driven by the time period. Now we've raised our financial performance ambitions, and achieving these new ambitions would deliver mid-teens sustainable total shareholder returns. I'm very impressed with the business that has been built over the years. And as I've interacted with investors over the last 18 months, I've gained an appreciation that some elements of our business are not as well understood as they should be. And we've been reflective on this. I'm taking further steps to share the strengths of our businesses with the investment community. We're enhancing our disclosures to highlight the significant amount of capital that we generate and the fungibility of that capital in terms of cash remittances. We've taken concrete steps to improve here, and we think we're now industry-leading. I'll be sharing additional enhanced insights into the attractive and growing reinvestment economics of our business and the details of our uses of capital. Further, we've taken an investor-centric approach to disclosing additional details about our business as well as its earnings drivers. And this will provide deeper insight into our operating performance as we look forward. Our segments are growing while, at the same time, expanding the returns. And this is a trend that we expect to continue over time. Later in the day, our leaders will take you through the deliberate actions that they have planned to deliver these outcomes. These plans will drive 8% to 10% growth organically in earnings per share overall as well as generating capital in excess of 80% or more of our base earnings, which will be the focus of the upcoming slides. Now this combination leads to significant opportunities to deploy capital into attractive shareholder-focused actions, which give us comfort that we'll exceed -- meet or exceed our medium-term objective for growth in base earnings per share. As you'll see here, our businesses generate substantial capital. Now let me walk you through some of the details. As you can see, over the last 5 years, we generated approximately $17 billion of earnings -- base earnings. Of that, we invested about $4 billion into organic growth. We enjoy a high fungibility of our capital, and this has resulted in $13 billion of remittances to Lifeco. Over that period, capital generation was between 70% and 75% of base earnings. Now of this amount, we returned about $9 billion to our shareholders, and we invested $4 billion into inorganic opportunities and further strengthening our balance sheet. As we look forward, as Paul mentioned, we've introduced a medium-term objective to generate capital in excess of 80% of our base earnings. Now there are several drivers of how we'll get there, each of which I'm going to cover on the upcoming slides in some detail. These drivers will improve returns on our portfolio while also driving capital efficiency into our organic growth. We will generate significant excess capital after funding our industry-leading dividend payout ratio. And this excess capital of approximately 30% of base earnings enables us to pull multiple levers to maximize total shareholder return as we move forward and is a real contributor to our optimism in driving earnings growth. Now let me take you through in some detail our strong reinvestment economics and the attractive returns that our business generates. Here on this slide, we've illustrated the relative returns on capital for our business. Now this is internally consistent with how we price and how we manage our business, and it factors in the capital that our business consumes. The returns on capital are indicative of our reinvestment economics being the marginal return on capital that we earn from deploying the next dollar of capital into organic growth. As you can see here, these underlying returns are attractive and they're growing, and they're higher than our overall reported ROE. Our retirement and wealth businesses are expected to continue strong growth, and they have higher returns on capital, as you can see, than the remainder of our portfolio. These businesses also benefit as organic growth is highly capital efficient, delivering higher capital generation as a percentage of base earnings. As a result, our overall portfolio returns will be enhanced by both a business mix, a shift in business mix as well as overall margin enhancement. And this is a material lever of the growth in our ROE over time. Now our insurance businesses will also benefit from expense efficiency and capital initiatives leading to improved returns. As we've shared with you in the past, we are focused on driving further expense efficiency and operating leverage across our business, but there's more room to go. The demonstrable progress that we've achieved is evident from the change in our expense -- efficiency ratio over time. Our growth will benefit from continued cost discipline as we have plans to deliver an efficiency ratio below 50%. Here, our plans include modernizing our technology portfolio, including a move to the cloud, which will enable AI, and gaining the efficiencies of a single brand and adviser channel in Canada. These lead to increased automation and productivity. Further, we'll continue to leverage a global workforce with the use of our service centers. Now these initiatives come with an investment in our businesses, and we expect to incur $250 million to $300 million in post-tax transformation charges over the next 36 months to deliver these savings, which we have reflected in our medium-term objective. As with our usual practice, we'll provide updates on our progress in our normal course of reporting to shareholders. We're continuously looking to achieve greater capital efficiency, and this is a capability where we always -- already have strength and we'll continue to get better. Now I want to walk you through just one example of a portfolio of initiatives that we already have underway. In the U.K., we've identified and been pursuing actions that will yield $3 billion of capital benefits. And these include optimizing our ALM, more strategic use of reinsurance and implementing enhanced risk models. To date, our results here have been impressive, and we've already realized $1 billion of capital benefits. We expect to achieve another $1 billion from the identified actions over the next 2 to 3 years, which will benefit our capital remittances and return on capital. These initiatives will also reduce capital strain for our new organic business by an additional $1 billion in the U.K., boosting our competitiveness and allowing us to grow profitably. Lindsey and David are going to share more about their plans in their upcoming presentation. Now let me walk you through how these initiatives lead to delivering meaningful upside to our ROE and result in our revised medium-term objective of 19% or higher. Now in terms of rough percentages, the strategic mix shift towards higher-growth retirement and wealth will deliver about 80% of the increase, with the remainder coming from the expense efficiency and capital actions that our businesses have identified so far. We expect the growth in ROE will be significant in the U.S. given our focus on retirement and wealth and the underlying double-digit growth that we expect to achieve. We'll also see higher returns in Canada and Europe. And as you'll hear from Jeff, CRS is really opportunity dependent, and we plan for some moderation from the strong returns that we've delivered in recent years. Now we have a clear path to deliver a stronger ROE over time, but we're not doing so by taking greater risk. Our approach to risk management has always been deliberately conservative, and we don't intend to have that approach changed. Let me share with you some of what gives me great comfort as CFO. First, we're highly diversified across geographies and lines of business. And this has allowed us to operate nimbly through market cycles. We have a net to base earnings ratio that has been consistently less volatile than our peers, demonstrating the resilient and high quality of earnings and our disciplined ALM. 94% of our portfolio is in investment-grade fixed income, and we have manageable exposures to equity market downturns. We have a diversified product portfolio with well-controlled exposures, and we've had manageable actuarial assumption changes and very strong underwriting experience over time. Now our credit ratings and coverage ratio of over 9x underscore our financial strength and a prudent and resilient balance sheet. This has been a business that's managed successfully through many economic cycles, and this is evident in our ratings being in the top 5% of our peers, and they've been consistent for over 20 years. This has left me very impressed with what I've seen over the last 12 months as CFO. Now as I shared with you so far today, we will generate a significant amount of excess capital. Before I wrap up, let me walk you through our capital allocation priorities. We, of course, will preserve a strong balance sheet, and we'll continue to deliver profitable organic growth at attractive returns that we've shared. Our commitment to a strong dividend payout is long evident, and we'll continue to grow the dividend while maintaining our payout ratio, in line with our medium-term objectives. We have a strong track record of delivering strong returns through inorganic growth, and we'll continue to pursue those opportunities that are accretive and aligned with our strategic priorities. Now there's nothing imminent now, but we're always on, and we'll maintain our disciplined and high standards here. Given our ownership structure, we do recognize the need to maintain sufficient liquidity for our minority shareholders. This results in some limitations on traditional buybacks. But we've shown the ability to execute a substantial issuer bid in the past. And subject to market conditions, this is a tool for larger buybacks while minimizing liquidity implications. Now before we move into a Q&A session, let me share a few concluding remarks. We've built a strong business that has delivered results that have exceeded the objectives we set in the past. This has translated into strong total shareholder returns relative to benchmarks. We have every intention to build on this track record of success. Historically, some of our strengths have not been well communicated. But this is a business with strong and growing returns, and we generate a significant amount of excess capital. We see many opportunities to continue to drive growth and expand returns as we allocate this capital in a very disciplined manner. This all results in a very exciting time ahead as we deliver against the revised medium-term objectives that Paul shared with us, and these include delivering at least 8% to 10% organically in growth in earnings per share, those earnings turning into more than 80% or more in capital generation; a growing ROE of 19% or higher; as well as continuing our industry-leading dividend payout ratio. Now I want to thank you for your time today and the support you've given me over the last 12 months. Paul, Shubha and I will be happy to take some Q&A.

Excellent. So we have approximately 20, 25 minutes for this first Q&A segment. Paul and Jon are in hand for this first session. If you have any questions that relate specifically to one of our operating -- 4 operating segments, I'd recommend that you wait for our second or third Q&A segment. [Operator Instructions] If you have a question, please raise your hand and wait to be recognized. We will then bring a microphone to you. Once you've been recognized, please state your name and your company for the purposes of the transcript. And with that, we're ready to begin.

Any questions from the audience? I believe, Tom, you have the mic. Okay.

Tom MacKinnon, BMO Capital. I noticed one of the -- that in the targets, you didn't have a leverage target. Was there any reason for that? And to what extent do you think that plays in capital generation? I mean one easy way to get a lot of capital is raise a lot of debt, so -- and then remit that back to the holdco. So is there any reason why you didn't have a leverage target? And what is your thinking about leverage?

Yes. Well, one of the things that we always take into consideration and you would have seen at the top of our capital allocation priorities is maintaining our strong ratings. These are sacrosanct, super important to our business. And over the last couple of years, we've got our leverage ratio right where we want it. I think at the last point in time, it was below 30%. We're happy operating in that kind of 25% to 30% level. We have in the past been able to use leverage as a short-term liquidity or funding mechanism in terms of funding M&A. That's something that we'll always consider and we'd have discussions with our rating agencies. But we're certainly committed to the strong ratings that we have. The capital numbers that I've shared here are all liquidity that we get from our subsidiaries. We've had strong fungibility. I just keep going back to fungibility, the importance of getting that capital as you earn it up to Lifeco, and that's really enabled us to reinvest it or return it to shareholders. And I think the track record is very strong there.

Can you just talk about to what extent is the strong ratings are related to your relationship with Power Corporation? Does that help in terms of the overall ratings? It's not -- I mean you...

Yes. Well, maybe you want to start with...

I'll start on that one. I think the stronger ratings are really a function of the strength of the business, the stability, the delivery over the long term. As we think about the relationship with Power, for sure, as I said, that represents, in our minds, stability for us. But ultimately, rating agencies are going to look at the business and its ability to deliver. And that's what I think is underlying our ratings.

And maybe just to add a couple of points. First, we have a cover ratio of over 9x. If you look at our peer set, that's a really advantaged position to be in. And you think of Power, we're somewhere around 2/3 of their earnings. We're probably the anchor of the ratings. Our strength, as I shared with you, high capital generation, prudent balance sheet, really enables us to hold those ratings as a stand-alone. And the broader group, obviously, they look at their balance sheet positions with the rating agencies and have independent discussions.

Meny?

It's Meny Grauman from Scotiabank. First question is just the market assumptions that are underpinning your financial targets. And it strikes me that's particularly important because I noticed mix shift is a big part of the ROE waterfall chart and you're shifting towards market-sensitive businesses, particularly in Empower. So just trying to understand that and the sensitivity if markets don't meet your expectations, how does that change your outlook here?

Yes, yes. So in terms of sensitivity to earnings, a 10% fall in markets is a couple of hundred million dollars overall. Power is about half of that. I think it's -- and Ed is going to share a lot of details on the diversified revenues that we have in Empower. But let me just walk you through a few highlights before he comes up. Half of our earnings are market -- or half of our revenues are market sensitive in Empower. And out of that half, our clients hold a very diversified portfolio. Think of it as about 60% being in S&P, another 20% or so in a wide range of equity securities and international markets and the remainder of 20% in fixed income. The other 50% of our revenues are less market sensitive. They're based upon prevailing interest rates and participant or other fee-based transactions. Ed can, I think, share a lot more details on the composition of those revenues, but we're very comfortable with that diversification and with the overall diversification. I think we mentioned the comment about having a diversified set of earnings. You'll hear more about how we intend to keep that diversification through growing our other segments. And none of these assumptions that we've used to come up with our plans are different than anything that we've used in the past. It's a consistent framework, and we feel confident in our ability to drive growth towards those objectives.

Then the second question is just on that new objective, the 80% of base capital generation. Going from 75% to 80%, why is that a good thing? Why is that important? I think maybe just accelerating the organic investment, especially in a vehicle like Empower Wealth would actually be the better choice given the kind of incremental returns that you highlighted there being so strong. So why is that a good thing?

Yes. Good question, Meny. And I think it's reflective of just the expected trajectory of growth we see in the various businesses. So it is a bit of that mix shift. And it's also -- it's really a function of already strong growth that we've got in those businesses. I would say that we're very minded to making the right investments in our business. We're minded to investing in brand. We're minded to investing in technology. And the reality is, as management brings forward annual plans, if we see opportunity, we will deploy capital. And I think one of the things that Jon outlined is we will have lots of firepower. So we don't feel constrained either in our organic or our inorganic growth opportunities.

Alex?

It's Alex Scott from Barclays. The first question I had is just around the trajectory of hitting this 19%. I know medium term is what you specifically put on the slide. But just given some of it comes from operating leverage, some of it comes from mix shift, some of these things take a while to form, how should we think about what that looks like?

Yes. So I think we ended the year -- got a lot of questions because our previous target was 16% to 17%. And last year, we ended the year closer to 18%. So over time, Paul and I had shared with the market that was something that we needed to revisit in terms of the ROE. We're very minded in setting this that we leave room to grow, that we leave room to deploy capital opportunistically. So we felt landing on the new revised medium-term objective of 19% plus gives us room to grow, gives us room to allocate capital in a very disciplined manner. And we have line of sight pretty clearly of how we get there. If you think of Empower's growth, we shared today it's double digit that we expect organically. That business grows with a -- it's growing with little in terms of capital deployment into it. So over time, that mix shift driven by Empower, our other wealth businesses, as we shared, would give us 80%. And you'll see it incrementally step up over the medium term to that target and potentially beyond as we've shared that our objective is 19% or higher.

As a follow-up, I just wanted to ask around the double digit in the U.S., and you may get more into it later in the discussion here. But many of the peers in the U.S. that you guys compete with, they're growing top line closer to like very low single digits because of the fee compression flow headwinds from the demographics, et cetera. What kind of assumptions are you making around how you're going to capture money going into the Wealth business? Is it a very large ramp up? Like what does that look like?

So I think we're better to get into the details of that and let Ed take you through his presentation. So he's going to provide a lot of insight into that. But if I was just to provide a bit of perspective, we actually see growth in the retirement business. We've got a leading platform. We're winning more organically at a plan level day after day. There's discussions about -- concerns about outflows, for example, at a plan member level. But if you think about the building blocks of growing that retirement business, we're increasingly providing managed account services and advice in plan. We are winning more business than we're losing at a -- on an organic basis at a plan level. We're adding new products and services like the OptionTrax product we added last year. So we're actually growing revenue at the same time that Ed will talk about cost actions and automation and the benefits of global servicing that will actually widen the margin. So in and of itself, the retirement business has real growth in it. So the only growth play is not wealth. And then you think about wealth, Ed will talk about money in motion and our opportunity to capture that. And I think when you put all that together, we have high confidence in our ability to drive that growth.

Any other questions in the audience? Gabe?

A couple of questions. One, just I like the pictures and all, but it looks like the U.S. and U.S. wealth are going to be key components to getting the business mix that you're targeting. And if I look at your U.S. wealth business today, it's around 5% of your earnings. So are we hitting some sort of a step function where this thing just takes off? It used to be the personal wealth business that was losing money, then you reshuffled a few things, and now it's a more profitable entity, but it's still quite small. So I'm just -- I know Ed is going to have a presentation later, but if you can give me a couple of sound bites there. And then you did mention it's not just acquisitions. You got to look at dispositions and you have in the past getting out of some business lines. I just ask you, why are you in Germany? It's 3% of earnings. I don't think I've ever received a question about Germany. It's small. It makes money, but it seems to me it's like one of those businesses where we would notice it more if you sold it, that some local player paid up for it, like whoa, great, you got a nice little capital uplift there for something nobody cared about. That's just maybe a crude way of putting it, but it is a way of putting it.

Maybe I'll take question 2 first, and then you can maybe provide a bit of color on Empower.

Or we could do an Investor Day there in September. We could do an Investor Day there in the September time frame, that would be great.

October...

Yes, sure. That's why it's -- the reality is when we acquired Canada Life many years ago, that was as part of the portfolio. And we don't look at businesses from the standpoint of how does it fit in the context of the broad market. We tend to look at where are the sectors where we play. And when we look at the broker unitized unit-linked profit market, we actually have a meaningful position there. We tend to lead surveys in terms of our ability to serve that market. The market has seen quite a bit of dislocation with changes to their capital regime, but maybe a little bit similar to the patience we had in Ireland. If you think about -- we had Canada Life Ireland, and Canada Life Ireland probably lined up kind of the way our German business does today, where it was kind of a mid-tier player, had good people, had some real strengths. But we remain patient, and we waited for opportunities where we could see some breakout growth. And if you think about Germany, it's a very large financial services market that's going through quite a bit of structural change where governments are having to offload savings to individuals and to businesses. And we see this as being a lift not only in individual retirement savings, but also group retirement savings. We've invested in systems. We look at it as optionality for growth. At some point, would it be better in combination, but maybe we'll be the organization that will be doing the combining as opposed to someone else. But I would remain focused on the fact that there are structural opportunities there for that business to grow, and we remain patient with it. And we also run it by leveraging the Ireland and Germany as part of the Eurozone, where we can actually get some synergies and managing that synergies in terms of the way we manage it from a talent perspective. So we remain patient in Germany, and I think there are opportunities there.

And when you referenced Canada Life Ireland as a proxy, you're talking about the entity before you had acquired it?

Before we acquired Irish Life, and we combined those businesses, and we ended up with something that has been a massive value driver for us. So patience is sometimes virtuous.

So Gabe, you're a man after my heart. I had the opportunity to live and work in Munich for 3 years. So maybe we'll accept your invitation for the next Investor Day. But in terms of wealth, you're absolutely right, this is an opportunity that's significant. And I don't want to steal the thunder from Carol and Ed, but it's a $1 trillion funnel of opportunity for us to capture over the next 5 years. Now we have a differentiated approach to wealth management, and you're going to hear more about that from Ed and Carol, which is we're going after the mass affluent, where there's less competition, where there's a need for the valued services that we provide. And those services aren't being provided by the rest of the wealth management industry. We do it through a combination of human touch and digital. And we're super excited about the opportunity ahead. As we always say, we're in early innings here, and this could be a business that's much larger than our retirement business in the U.S. over time.

Any other questions?

Paul Holden, CIBC. First question, I guess, for Jon. You articulate that 30% of earnings are basically deployable capital. That's a lot, about $1.2 billion a year by my math. Usually capital deployment, particularly through acquisitions, is a little bit of a competing force on ROE expansion, at least in the short term. So maybe talk a little bit about how you balance the objective of wanting to expand ROE versus all that capital you'll be generating and the need to deploy that.

Yes. It is a balance that we talk about all the time in terms of the different deployment options that we have in terms of that significant amount of capital. This is nothing new, Paul. I mean we've been generating a lot of excess capital over the last 5 years, somewhere probably around the 20% to 25% level. So we were able to deploy that quite significantly and expand ROE over time. We think it's a combination of organic growth. And we've -- I think we've given you all the details that you can see the kind of mixed dollar deployment into organic growth. It's much higher than our portfolio ROC. If you think about deploying 20% into 9% growth, it's an attractive return. Complementing that with a well disciplined -- we shared that we would always look at M&A only if it was accretive, IRR of 15%. But you're right, there is sometimes a transition period to get to the run rate. If we were to do M&A that was more significant, we obviously would articulate the time period in which we would get there. And then we have the opportunity to return capital. This is something that we've done in the past with a substantial issuer bid that we think we continue to look at in the future. Obviously, we pulled the levers of capital return quite hard at our year-end results with the double-digit dividend growth and announcement of a buyback. That's something we're always going to consider as well.

Jon, I might add, if you consider the last 5 years, we deployed about CAD 10 billion into transactions between leverage and capital allocated. And we were very disciplined in paying down that leverage and very disciplined in sort of getting to a point where Empower is actually driving this ROE growth. So there could be some temporary moderation. But if you're focused on value -- accretive value-creating transactions, I think we will get buy-in from our investors that it's the right thing to do.

Second question is with respect to the capital optimization strategy. So Paul, you provided a couple of examples of what has been done. My question is, are there things you're currently reviewing that could be done in the future? If you want to provide examples of what could be done, that's great. Or maybe just give us a sense of whether there is more to do or if that mission is substantially complete.

Yes. So I'll start off, and I'll let Jon add a little bit of color. So we've been building kind of muscle and toolkit around things like ALM, things like capital optimization and management, and that's the tools and the team. And the first area where we've had strong focus on that was in the U.K. because we're looking at this opportunity in the bulk space and we're saying, how do we actually have that be more value creating for us? So we had an area of focus there. But as we think about our portfolio, those opportunities to try and align your asset liability management and your capital management to optimize and to unlock capital, I think they exist right across the portfolio. For sure, the $3 billion that Jon referenced is pretty meaningful in the context of the U.K. business, and it's a fairly capital-intensive business. So from that standpoint, there's opportunity there. But there are opportunities within Canada and the U.S. Jon, do you want to provide a bit of color there?

Yes. And in fact, over the last 12 months, we have a dedicated team that we've established to go through everything in the portfolio, product, investment strategy, use of reinsurance, financial structure. We're being very disciplined in doing that. We have a series of actions, as I mentioned, that are already underway. And they vary the -- up to the $3 billion, but they vary in scale and size from tens of millions to potentially hundreds of millions. Some of those are baked into our numbers here, but I suspect over time, we'll continue to identify more, particularly around risk-adjusted returns. We're using -- let's say, we're providing different lenses in how we measure returns to make sure that we look through economic, regulatory and things like driving a velocity of capital back. So we think there's more room to go, but we've got a reasonable amount of things already underway that will keep us busy over the next 12 to 24 months.

Darko?

I have 2 questions. I'll start with the easy one, I think, Jon. 80% base capital generation, up from 75%, can you just give us a little bit of reference how volatile has that been in the past?

It's been -- well, in terms of capital generation, it's been pretty stable. And as you see, what we actually disclosed for you, Darko, is the cash remittances. So that is the hard facts of how much capital came back. As we look forward, obviously, there's capital actions that we're pulling. I shared some of those actions. So it's a mix shift. We feel very, very comfortable with that target. And as I mentioned, we'll continue to look for optimization actions that could help us outperform. So in terms of volatility, I think it's been fairly stable, and that goes to the disciplined ALM and risk management that we've had. We had to transition, as you remember, through different capital regimes over the last 10 years, Solvency II, OSFI changes. We have a LICAT. We have another one that comes in this quarter. We shared the details. IFRS had some implications there. What we're really excited about is hopefully a more stable period. When you have a stable period of regulatory change or more stable, you can actually get in under the hood and really get at this topic, and that gives us a great deal of confidence as we look forward.

Having said that, Jon, I think the team did an exceptional job in transition to LICAT and in transition to IFRS 17 to set us up for where we are now because if not for having made some of those really important decisions at those moments of transition, we could have a more -- we could have some more volatility in it. I think we've got a stable foundation that we're building off of right now.

And I mean, our volatility disclosures speak for themselves: less than 1% in interest rate and equity, manageable earnings type of volatility and very diversified portfolio, almost 25, 25, 25, whether you look at lines of business or geographies. So I feel very comfortable.

Okay. So that brings me to my real question, which is every time I think about your presentation and an increase in ROE and increase in cash generation, I think about the parent, I think about Power and what Power wants. And I think about -- well, if you have some limitations on your NCIB, can you maybe specifically talk about what it would take for you to do a substantial issuer bid? And then third, why not play at the upper end of the dividend payout ratio and why not raise the dividend payout ratio?

Yes. It's good. We think of all these things, Darko. We consult with our Board. We consult across the different specialty of leaders -- specialists of leaders that we have risk investments actuarial when we think through our capital allocation decisions. We obviously have a range of outcomes. We like the range of dividend payout ratio. As far as I'm aware, our shareholders are very happy with the dividend increases that we've given. That ratio allows us to really maintain a disciplined balance sheet, strong ratings. We could move up in that ratio, obviously, for periods of time if we didn't see ways to deploy capital. We didn't have strong opportunities. But we'd probably more likely move to buybacks as an option. We obviously executed a substantial issuer bid in the past with the support of our shareholder. And we don't see any reason that we couldn't do that in the future, but that would be something we'd have to think through at the appropriate time.

Any other questions in the room? Seeing none and seeing as we are running ahead of schedule, I think that gives us an opportunity for an extended break. We will reconvene at the top of the hour at 10:00. Thank you. [Break]

Well, it's a pleasure to be here. Thank you for coming. My name is Ed Murphy, and I'm the CEO of Empower, and I look forward to walking you through our story. And I'll be joined by Carol Waddell, who runs our Personal Wealth business. In particular, today, we'll focus a little bit more on personal wealth than our workplace business. I think it's important to acknowledge our foundation to help explain our path forward. Empower was created about a decade ago to disrupt the retirement services market in the United States, which at the time was ripe for improvement and innovation. We believe that we could deliver a greater opportunity to save and invest for investors through outstanding service and a compelling user experience. We've done that. The numbers prove it out. This has led to Empower becoming the second-largest retirement services provider in the United States with tremendous scale advantages. We are today a leading retirement services provider with 19 million customers while growing at more than twice the rate of the market. We've been able to gain tremendous scale advantage and operating leverage to achieve higher returns and sustainable growth. As we march into our 11th year, we believe strongly in what we've created but see an enormous opportunity as we expand our mission to help people manage more of their finances. Our leadership position in the U.S. retirement market is fueling growth in personal wealth. This enables us to extend our reach to provide advice and planning at all levels. As we attract an increasing number of customers, they choose to expand their relationship with us, and our wealth business grows. We are expanding advice-based offerings, delivering comprehensive planning that caters to all customer needs. In our wealth segment, we have grown assets under administration at nearly a 50% compounded annual growth rate over the past 5 years. This highlights our ability to grow and shift towards advice-based solutions powered by technology and combined with skilled advisers. Our model is a hybrid construct where we bring the best of technology together with human capital. Looking ahead, we are targeting double-digit earnings growth in the medium term by expanding our workplace-affiliated initiatives, introducing new value-added products and further expanding into the wealth market. To build on our momentum, we'll continue to lower our cost through automation, operational improvement powered by generative AI and the expansion of our global footprint. Today, we have 3,000 employees in Bangalore and Manila, and we're going to continue to expand and grow that footprint as the business grows. Our mission is to put the customers at the center of everything we do. In our workplace business, we provide solutions to administer both defined contribution, defined benefit and nonqualified plans for employers. In addition to our total retirement services offering, we offer consumer-directed health care, equity plan administration and advice and planning solutions, both for in-plan and, of course, in our wealth business, all of this through an integrated, seamless, elegant, actionable user experience that's been a difference maker for us. We provide retirement services to all types of employers, corporations, public plans, not-for-profits, trade unions. And Empower provides retirement services to more than 88,000 employers of all types through a highly disciplined and focused segmentation model. We serve corporate plans ranging from startups to companies -- in fact, several companies with more than 300,000 employees in the United States. These plans are sold and serviced by highly specialized teams who are experts in their respective market segments. In our personal wealth business, our solutions encompassed personal financial planning and a broad spectrum of goals and objectives that we serve customers through that planning process. There is an immense opportunity in the United States. I can't underscore this enough. If you look at the workplace institutional market, it's a $12 trillion market. And if you look at the individual IRA market, which includes contributor IRAs and rollover IRAs and taxable investments, it's a $60 trillion market. At Empower, we have created a seamless experience that drives engagement and better outcomes for both employers and employees. Looking at the sources of workplace revenue. And this was touched on a bit during Jon and Paul's remarks. We have a diversified revenue stream consisting of asset-based fees, which make up 50% of Empower Workplace, primarily representative of asset-based administration fees that we earn from the employers, asset advisory fees and then product fees. The other 50% of our fees are coming from typically participant, plan and transaction-based fees that occur quite frequently and then also spread-based income that we have through our general account product. While rising equity markets favorably impact our asset-based fees and overall results, it's not a one-for-one relationship, and Jon touched on that a bit. 40% of our asset-based fees and 20% of our overall revenue is correlated to the S&P 500. Our spread income is not directly affected by equity markets but is impacted by interest rates, of course. And we generally see demand for our stable value products in markets like the one we're experiencing, a little bit of uncertainty, a little bit of volatility. You do see some flight to safety there. 50% of our revenue comes from value-added products such as advice and investment solutions, while the other 50% from plan administration. Our revenue diversification leads to stable cash flow, greater resiliency and less sensitivity to just one earnings driver. Let's talk about the personal wealth business. Currently, about 20% of Empower's revenue with 60% of the revenue coming from asset-based fees and the remaining 40% from spread income and customer transaction fees. Approximately 75% of personal wealth revenue is derived from a customer that originally had a workplace relationship with Empower. The other 25% is from what we call a non-affiliated customer, our direct-to-consumer channel, our crossover channel, and Carol will touch on that a little bit later. So here's a snapshot of our growth from 2019 to 2024. You can see individual relationships, and the assets are growing significantly -- or have grown significantly, I should say. But the profitability metrics are growing much quicker due to increasing operating leverage in the business. Our individual relationships grew at a compounded annual growth rate of 15%, while earnings grew at 40%. As the chart illustrates, we have seen robust growth across our main key performance indicators. The assets in the U.S. defined contribution market have grown at 6% compounded annual growth over the past few years, reaching the $12 trillion mark I referenced earlier. We expect overall assets to hit $18 trillion by 2029. So we're projecting a continued growth of about 6%. This reflects both favorable demographics and market returns. Legislation, which Empower is very active in advocating for, is encouraging retirement preparedness among Americans and security. Along with industry innovation, because we've seen a lot of innovation in that micro end of the market, we're seeing more plans be created. And we're seeing greater adoption among small employers, typically companies with less than 10 employees. And we do play in that market. And we think that will continue to grow nicely. In fact, if you look at the numbers, it took the industry in the United States over 40 years to get to 700,000 plans. And we're projecting that in the next 5 years, we'll add roughly 300,000. And we'll eclipse 1 million plans in the United States by 2029. Empower -- as Paul mentioned, Empower has grown consistently faster than the market at a rate of more than twice. I think it's a reflection of our value proposition and the compelling offering that we bring to the marketplace. While the top 3 players account for 50% of the market, Empower's organic growth has grown from 7% to 9% of industry since 2020, and inorganic has reached 13%. Our success in growing our share is reflected in Net Promoter Scores, client retention, which is world class, our client satisfaction metrics and the comprehensive nature of our service offerings. I would note on the workplace side of our business, we offer a multitude of solutions for employers. And the opportunity to grow those relationships with more products and more services is very much a focal point of our team. In fact, if you look at our client base, less than 20% of our employers have more than one product with us. So the opportunity to connect deeper into that customer base represents a significant opportunity for Empower over the next several years. At Empower, I will say advice is at the cornerstone of our value proposition. Whether it's on the workplace side or on the wealth side, we're generally leading with advice. The demand for it is very high. We've delivered advice through multiple channels, in person, through digital enablement. It's also embedded in a lot of our products. Many of you know that target date funds are very common in the United States. In fact, about 60% of our flows go into target date funds. In effect, that is a default advice-type solution. We see this insatiable demand for advice. And what's interesting, it's across all age cohorts and income cohorts. And we are set up to really address that with our service offering and our product offering because it does, in fact, vary from mass market to mass affluent to high net worth. And so we have a segmented approach to the way we serve those customers. So let's turn to our financial performance for a minute. More than 90% of our base earnings convert directly into organic capital generation, funding both future expansion and consistent returns to Lifeco. 29% compounded annual growth rate in base earnings demonstrates our success in scaling up and improving operating leverage in both the retirement business and the wealth segment. We believe we are growing and building a sustainable business model. We are seizing opportunities to meet customers' needs and deepening our relationships with them. By delivering comprehensive, unconflicted advice through the workplace, we can help customers achieve financial security, win their trust and earn the right to be their provider for life. That's the goal. I look at our workplace business as an entity or as a capability that's in many ways fueling our wealth business. Serving customers for life while improving operating efficiency will lead to the double-digit earnings growth that we've shared with you as a goal. Prior to any of the recent acquisitions, the Empower business had approximately 8% of its assets within these advice-based products. The recent large acquisitions, namely MassMutual and Prudential, represent a great opportunity to extend our reach of advice-based solutions. We expect to see higher plan and participant adoption of our advice products over the next several years. It's a key focal point for our teams. What's interesting is we found that those that are enrolled in advice-based offerings engage more often with us. They're more confident in their financial future. But here's the real key point. Their savings rates are 20% higher than those that are not enrolled. So it's very compelling. If you think about what our goal and our mission is, it's to replace the income you made while working. So that's a very compelling value proposition to our employers when we can demonstrate these proof points. A pillar to success on the workplace side is our ability to increase our operating leverage in the business, and we've demonstrated that. We've reduced our cost per participant 15 percentage points over the last 2 years, and we expect to reduce another 10 percentage points in the next few years. Efficiency enables profitable growth. And some of the key drivers over the next few years will be adding volume to the workplace business at a less variable rate, whether organically or inorganically. Investing in technology to achieve greater efficiency through automation, that's been a big focal point for us over the last several years and will continue. Accelerating investment in gen AI. We're deep into gen AI at Empower. It's a big focus for us. We have several things in production now. In fact, if you look at our application development capability, we built in a 25% improvement in capacity in 2025 into our budget, which means we can drive more throughput with all the initiatives that we're trying to bring forward to our sponsors and our individual customers. And then as I referenced earlier, we want to continue to expand our global capabilities. We think there's a real opportunity in Manila. We've invested there. We're expanding there. Our presence in Bangalore dates back to 2015. It's been a complete home run for us, the talent, the skills that we have there. And every single one of my direct reports and every single function in Empower has representation in Bangalore, from internal audit to compliance, to risk, to finance, to marketing. And it's worked exceedingly well. We view that operation as another branch. Whether it's Kansas City, Denver, Boston, it's not an outsourced mechanism. They're very much a part of our team. With that, what I'd like to do is to turn it over to my colleague, Carol Waddell. And she's going to give you an update on personal wealth. Carol?

There we go. Well, thank you. I thought I'd start things off by providing an overview of the Empower Personal Wealth business, how we're positioned and what's really driving our success in the marketplace. We're poised to win in wealth by leveraging the scale and the relationships we've built in the workplace business. We already serve 19 million individuals as a trusted adviser whose reputation and scale enables us to have deeper engagement with customers looking to roll over or consolidate accounts with Empower. And those engagements are often occurring in key life events or moments that matter when people are leaving their employer, either for retirement or actually changing jobs. Our continuous brand building and marketing efforts are amplifying our presence and our visibility as a leading financial services provider versus just a retirement plan or retirement provider, and that's going to enable us to grow share in the wealth market as well. We have a growing team of more than 1,000 skilled advisers. It's quadrupled. That team has quadrupled since 2019, and it underpins our ability to deliver both high touch as well as digital wealth solutions at scale. Growing this team of advisers is one of the ways we're going to achieve operational leverage going forward. Roughly 90% of our rollover opportunities are in the mass affluent segment, which we talked about earlier, and that's a segment that is often not -- there's no presence or focus by some of the traditional wealth management firms in the marketplace. Our average rollover size actually is about $160,000 to $170,000, and we know that many rollover customers have assets above and beyond those retirement assets. And in fact, when we look at our proprietary research, we see that the retirement plan assets actually only represent about 30% to 40% of any individual's investable assets. So we feel like we're very well suited to offer a full slate of solutions to address some of those broader financial needs. We leverage personalized communications to provide individuals with relevant investment advice, creating higher satisfaction and beginning to unlock deeper client relationships. Our personal dashboard is critical. It's the digital financial planning tool that provides a customer with their end-to-end view of both their workplace as well as their personal investments. It's a state-of-the-art offering. It's shared between our advisers and our clients. It's a huge differentiator for Empower, and it serves as the foundation for our planning and our advice interactions. So if we turn to the next slide. I thought it might be helpful to show some examples of our customer types. You can see crossover, rollover and direct-to-consumer. A crossover customer is somebody that is currently working in the plan and might seek advice about their broader financial needs above and beyond the retirement plan. We have a rollover customer. Those are, again, people that are typically in transition. So think about that as individuals that need to think about what to do with their account. Once they're leaving their employer, we have opportunity to provide guidance and advice with that discussion. And then the direct-to-consumer space, those are people that do not have a relationship with Empower today or a retirement account. They are actually typically using our free dashboard and our set of tools. Often, this provides us with the opportunity to engage them with an adviser as well to address those -- address their broader financial needs. So as you can see, we have a wide variety of customers and solutions that are helping them through an evolving set of products that are really meeting people where they are today. And we're able to deliver those products through highly scalable and efficient processes that put our client at the center of everything we do. It's a model we're continuing to optimize, and we'll evolve and grow as our customer needs do as well. So I talked a little bit about crossover, a little bit about rollover and a little bit about direct-to-consumer. I thought I'd really focus on the rollover opportunity now. As Jon mentioned earlier, we have a substantial rollover pipeline. You see about $1 trillion rolling out of our retirement plans over the next 5 years. This presents an enormous opportunity for our wealth business. Rollovers are driven by many of the factors I've mentioned, so changing jobs or retiring. But when you look at the job changers in the U.S., an average customer is going to change jobs 12 times. So that creates a lot of money in motion and opportunities for us to engage with individuals. We look at our growth -- this is going to enable us to grow wealth assets organically from roughly $90 billion today to over $200 billion by 2029. And we're going to do that by improving rollover rates by roughly 30% over the next 5 years, which is actually the improvement we've experienced over the last 5 years. We're going to increase those rollover rates by strengthening relationships. So it's all about beginning early and connecting early with individual participants so that they receive our advice, they trust our advice and they're aware of the services that we provide. We talked a lot about brand. Brand loyalty, brand image and brand preference will be critical in this journey. And then we'll also be expanding our financial solutions, which will enable us to be more effective. We'll really focus on that world-class experience that Ed mentioned earlier, and then we'll be leveraging AI and analytics to help guide our advisers to better engage with individuals. All of those things will help us improve rollover capture. And so with that, I'm going to turn it back to Ed for some closing remarks.

Thanks, Carol. So as you think about the Empower story, there are a few key narratives to consider. The first is that we are very early in the journey and the opportunity for exponential growth is significant. Significant opportunity. I would say, second, we've created a culture comprised of 13,000 associates who bring passion and expertise to their work every day. And that should never be underestimated. I always say it's a labor-intensive business because of the approach that we have, which I would say is very much a client intimate-type model. Yes, we leverage technology, but there's a level of client intimacy that we pursue that I think is a core differentiator for us in the marketplace. The third, we have a very, very powerful sales and acquisition engine. That's reflected in the results that you've seen. It's the envy of the industry in the United States. And I say that with humility. But we've also developed a discipline and an expertise around acquiring and integrating businesses. If you look at the MassMutual transaction, you look at the Prudential transaction, not only did we achieve the cost synergies. We retained 86% of the revenue, which is well above market standard. Fourth, we are going to build a great American brand in the United States. We don't have necessarily the disposable resources to invest hundreds of millions of dollars in the brand, but we've accelerated that investment over the last few years. That is very, very important to drive awareness and consideration. And we've seen the ability to move the needle on that based on the things that we've done over the last 3 to 4 years. So we're really excited about the opportunity there. Finally, I know I speak for all the Empower associates in saying that we are driven and energized to achieve a leadership position in the United States wealth market that mirrors what we've accomplished as a market leader in workplace retirement. Thank you for your attention. And with that, I'm going to turn it over to my colleague, Fabrice Morin, the CEO and Head of Canada. Fabrice?

Thank you, Ed. Good morning, everyone. My name is Fabrice Morin. I lead our Canadian business. I'm pleased to be here today to talk about our Canadian business profile, strategic direction and our plan for the future. There's really 4 key messages I want to talk about today. Number one, I want to talk about our leadership position in key market segments. These segments are growing, and scale matters in these segments. So we believe we're very well positioned in the segments we're in. Number two, I want to talk about the high cash generative nature of our business. Jon talked about it as well. It's been a key feature of Canada in the past, and it's going to continue to be a key feature of Canada in the future. Number three, we've got growth in the business. I want to talk about 3 focused growth opportunities that we have and that we're working hard on where we already see results and we have strong plans for the future. And number four, I want to talk about our efficiency and automation agenda not only to improve ease of doing business and experience for our customers and advisers but also to continue to manage our operating leverage and our unit cost in each of our businesses. But before I talk about where we're going, let me talk a little bit about where we come from because we have a rich history. We have a track record of over 175 years of serving Canadians with strong reputation, strong relationship, strong intermediary adviser relationships in the market, strong discipline. These adviser relationships, in particular, are quite unique. We've had in the past the strongest insurance agency in the country. Now these relationships have changed, but they're still very strong today. In many cases, spanning multiple lines of business. In some cases, spanning multiple generations of advisers. Where does that lead us today? We've got scale. We touch more than 14 million Canadians in our business. And we've got leadership position in a number of areas. Namely, we're #1 in group benefits. We're top 3 in the nonbank wealth management segment. That leads us to what we're aiming for in the future. We have strong conviction that we can drive mid-single-digit earnings growth in Canada with our business today. I'll talk about 3 focused areas of growth that we have. I'll talk about our wealth management plan. I'll talk about our actions to create -- continue to create an attractive platform for entrepreneurial advisers to succeed. And I'll talk about actions that we're taking to do more with some of the 14 million relationships that we have in Canada. Lastly, I'll cover our efficiency agenda. Now before I talk about our business, let me say a few words about the industry we're in. We're in some specific business segments that benefit not only from the stability of the Canadian market but also from secular tailwinds, premium growth, asset growth, employment growth. There's growth in the businesses we're in, and we believe that, that growth is underappreciated. We see that growth. If I take our business segments one by one, starting with group benefits, we have seen in the past 5 years 7% premium growth in the -- at the industry level in the group benefits segment. There's 25 million Canadians who count on their benefit provider for their health services in an environment that's complexifying. And many of them are looking to do more with their benefit provider. We're there for them. In retirement, we've seen 7% asset growth in group retirement, again, at the industry level in Canada. And the retirement industry is less mature than it is in other country. We've been slower as a country than others to move from defined benefits to defined contribution. That leads to some growth in the retirement sector. We're seeing consistently about 1% net flows into retirement -- into the group retirement sector in Canada. In wealth management, as defined by the nonbank entrepreneurial advisory segment, we're seeing growth, 5% AUA growth in that segment of wealth management alone in Canada over the past 5 years. Now what's specific about that segment is there's many experienced advisers. In fact, there's more than 50% of advisers with more than 20 years of experience. They're looking for succession solutions. They're looking for succession to transform their business, and we've got specific solutions for them. What's unique about this segment as well, when I turn south to the U.S., I look at the registered investment adviser, the RIA segment, the independent broker-dealer segment. In the U.S., it's 35% of household financial wealth that is advised by entrepreneurial advisers who live and thrive by the good service that we provide in our regions. In Canada, that segment is only 13% of household financial wealth. So we believe there's room to grow in this segment at the industry level if we do well as an industry. And lastly, in individual insurance, we've seen some growth. We've seen 6% a year premium growth at the industry level, mainly driven by estate planning products and by permanent insurance. Here again, we've got a unique position. So let's talk about our position in these various market segments. That's Canada Life's position in these market segments. In group benefits, we've got a leading position, as I said earlier. We've got that position mainly on the back of strong intermediary relationships. That gives us a very high -- we're the partner of choice, especially to the midsized businesses and the small businesses around the country, but we're active across all size segments of the market. We're also a leader in disability management. That requires scale and it's not easy. Helping an individual facing health challenges to overcome these health challenges and get back to an active and productive life requires resources. We've got a unique model to manage disability, and we've got strong results consistently through cycles. In retirement, we're a top 3 player, and that's a place where scale matters in retirement. We've got, again, here, strong intermediary relationships. And we also have very high-quality and high-performing investment solutions when we benchmark ourselves with others. In wealth management, we've made some acquisitions lately. That gives us a very broad offering. We've got products across segregated funds, mutual funds, security solution that serve clients across the mass affluent sector to the high net worth sector. Lastly, in insurance and risk solutions, we've got the largest participating account in the country. More than half of the participating life insurance assets are in our participating account. Scale makes a difference. Many high net worth Canadians turn to us when they want to look for participating insurance solutions. We're also participating in the protection side and the nonparticipating protection side at the right price with the right risk management. Now that leads me to talk about how we fared financially. As Jon mentioned earlier, across our businesses and certainly in Canada, we've got strong return on regulatory capital. Our return on regulatory capital is higher than the ROE that we publish. And that's a sign of the type of reinvestment economics that we have in each of our business when we grow the cost of that reinvestment and the return that we get on that reinvestment is quite significant. We're a strong source of capital generation. Historically, we've been able to generate 80% to 90% of our base earnings in cash remittances and capital generation. We project to continue to be able to do this in the future with the business mix that we have and with the disciplined management in our business. And lastly, we believe we've got a strong earnings growth engine. Now if I look at the past 2 years, we've grown faster than the economy, but this slide probably underestimates the growth that we've seen in the underlying business. If I look at 2022, you would see significant tax benefits in our base earnings, onetime tax benefits in our base earnings in 2022. If you were to correct for this, we've seen significant underlying growth in the past couple of years. The other thing that I'd mention here is the transition to IFRS 17, we believe, has brought a lot more visibility into the core driver of earnings as it translates into our businesses. And we believe we've got high-quality earnings. So we're well positioned for growth in the new system. Now I said I'd focus on a few opportunities for growth that we have in our business. I said I'd talk about 3 of them. I'll talk about our efforts to grow in wealth. I'll talk about our efforts to expand our platform for entrepreneurial advisers. And I'll talk about our efforts to deepen client relationships. We've got many relationships in the system. We've got opportunities to deepen these relationships. Lastly, I'll talk about our efforts to drive efficiency. Now some of these things, added to the core momentum in our businesses, make us very confident about our plans to grow the business in the future. So let me go through those. In wealth, at our last Investor Day, we had just announced some acquisitions in the wealth space, and we talked about our plans for wealth. Our plans for wealth have not changed. What I'm going to talk about today is very consistent with what I talked about in June 2023. And I'm very proud of the progress we've made on these dimensions since June 2023. First, attracting entrepreneurial advisers. We've got more than $100 billion on our platform in Canada with entrepreneurial advisers, which make us a top 3 nonbank platform for advisers. That's important because scale matters. Technology is more and more important in that space. Secondly, providing high-quality, comprehensive value-add solutions. I mentioned earlier segregated funds, mutual funds. Now with the acquisitions that we've done that gave us scale and capabilities, security solution, we're well positioned. We've got a high penetration of our own solutions with our advisers, and this continues in the future. Lastly and importantly, we've been developing succession solutions for advisers. Now some advisers look to retire. Some advisers look to change their business. And the clients they were serving in the past is not necessarily the clients they're targeting for the future. We have solutions to transition these clients to an institutional service model that we manage that brings high-quality service to the clients. It's good for the advisers. It's good for the client. And that's one of the few areas where we deploy capital on an organic basis in our business. When we do it, we do it at a high return. We have acquired more than $10 billion of adviser assets lately with that strategy. Next, let me talk about our advice platform. As I said earlier, we come from a strong legacy of having the strongest insurance agency in the country and many tied relationships. Now in this day and age, in the channels that we're into, this exclusive contractual exclusivity with advisers doesn't work anymore, and we've been recognizing for a long period of time that it doesn't work. We've been on this transformation journey for many years. It started with us being the first insurer to acquire a managing general agent, Financial Horizons. It was followed by the move to a single brand. And behind that was really the convergence of channels and simplification of value proposition. It was followed by acquisitions in wealth, where we gained not only scale but also capabilities. And it was followed a few weeks ago by the launch of a platform for advisers that we call Advice Canada. What's Advice Canada? It's a platform. It's a value proposition for advisers. It brings together our MGA, the largest managing general agent in the country for insurance solutions, and our wealth platform, a top 3 wealth platform in Canada. Many advisers who work with us do business across wealth and insurance, makes it easy for them to go across and serve their clients across. It's a unique offering in the Canadian market. Lastly, let me talk about what we're doing with some of the 14 million Canadians who work with us. We're doing more with them in each of our lines of business. We're doing this in group benefits, where some of our members, under the right framework, want to do more with us. They want more coverage than what their employer offers in the base plan. We offer voluntary products but also portable products that they can keep with them post period of employment. We've seen significant growth in that space. And when we do it, we do it with a high-value offering that's valued by the member, that's valued by the intermediary, and we're able to drive good results. In retirement, we do the same thing. We allow our members to do more with us during period of employment, similar to Empower, and to do more with us post period of employment and into retirement. Again, we've seen strong growth in that space. And because of the affinity relationship and the high-value solution we bring, we see great results. We do it in wealth. I've talked about our strategies to acquire adviser books of business. We're seeing great retention, great growth in that space, and that's also a productive engine for our business. We do it in individual insurance as well at a different scale. Now in each of these cases, there's often an adviser in the mix, an employer or a sponsor in the mix. We have been very close to adviser and intermediary relationships historically as a company. And when we do these things, we do them in respect and enabling advice relationship and other relationships that are in the system. Now lastly, let me talk about our efforts on efficiency. If I look at the past 2 years, we've been able, if we adjust for our business mix that has changed over the past couple of years, to improve our efficiency ratio. We've been able to grow expenses at a lower rate than inflation for our existing business. And we intend to continue on that journey to capture economies of scale and operating leverage as we look to our midterm ambition. How do we do this? Leveraging economies of scale. We're simplifying our business in many places, and we still have the opportunity to harvest these benefits as we simplify the systems and technology behind the multitude of channels that we had before. We're transforming our technology. We do this to bring better service to our clients and members to make it easier to do business with us but also to continue to manage our unit cost and economies of scale. And lastly, we're driving efficiency even beyond technology and operations. So if I recap, I really have 4 messages today. Number one, we've got leadership position in market segments that are growing and where scale matters. We've got scale in these segments. Number two, we've been a strong cash generator for Lifeco historically. We will continue to be a strong cash generator in the future because we will continue to apply discipline as we manage the business. Number three, beyond the momentum growth of our business, we've got a few focused areas where we see significant growth. We've seen some results lately, and we will continue to see some results in the future. And lastly, we continue to be focused on an efficiency and automation agenda not only for the benefits of our clients and members in making it easy to do business with us but also to manage our unit cost and economies of scale. These 4 things together lead us to have high confidence to our objectives of mid-single-digit earnings growth, of increasing base ROE because our growth is in less capital-intensive areas and increasing our base capital generation. Thank you. I'm looking forward to moving to Q&A.

Okay. So this will be our second Q&A segment. I see a few hands shooting up in the air already. I really appreciate the enthusiasm. We have an expanded Q&A panel on stage. So the focus, if you can, will be on Empower and the Canadian business. As in the -- we'll follow the same protocol as in the first Q&A segment. So if you have a question, please raise your hand. Please wait to be recognized and a mic to be brought to you, and then please state your name and company for the purposes of the transcript. So first question, I believe, comes from Doug Young, who's hands shot up really fast.

Just, I guess, for Ed. On the product side, is there anything that you're missing? And I'm thinking alts or payout structure. And within that, is there a way to do that internally? Do you have to go outside? Do you have to make acquisitions to build that?

Thanks for the question. I don't know if everybody heard, but it was a question about products specifically alt, private assets.

Alts and payouts.

Yes. So actually, I've been pretty outspoken about alternatives. I think Larry Fink and I have probably been the 2 people that have spoken about it mostly in the United States in terms of the appropriateness of alternatives in the defined contribution space. It's going to happen. We are working on partnerships today with best-of-breed providers. We're only going to offer top decile, top quartile-type solutions. I'd say the demand is a bit tepid right now, but it will happen in the U.S. We will not build that capability. It's not our expertise. But needless to say, some of the biggest private equity firms and alternative managers in the United States want to partner with us because of our distribution and our scale. We also do offer alternatives in the personal wealth business through a relationship we have with iCapital. We've seen some adoption there, but I think that will continue to grow over time. On the annuity side or on the distribution phase, we didn't talk a lot about this in the presentation, but I do think in our workplace business, as more and more Americans are turning 65 and starting to draw down on their assets, there's a significant opportunity with products like deferred income annuities and other payout-type products. Heretofore, we've generally partnered in that regard. We announced not too long ago a relationship with TIAA. But I think on a go-forward basis, one of the things that we're evaluating is to offer our own solution as well. So more to come on that.

Yes. I might just add, Ed, that we actually have deep expertise in terms of retirement income solutions in the U.K. We're still active in that market in Canada. So we would view that as an opportunity. And I think it's important when you think about alternatives, Ed said, this idea of partnerships. One of Empower's strengths is this open architecture concept that we do bring best-of-breed asset solutions to the plan. And we wouldn't see ourselves wanting to move away from that. I think it's one of the key strengths that Empower brings to the market.

Okay. And the second question, just on the personal wealth. You have 1,000 advisers. What do you hope to take that to? And do you have to make an acquisition to kind of really build out that side of the adviser side?

Yes. The adviser population will be critical to us going forward. We have scaled rapidly. As I mentioned, we've 4x-ed that group over time. One of the things we're doing is we have created dedicated recruiting teams that are nurturing those relationships so that we can expand the pipeline as necessary. We have a robust onboarding program. So we're bringing people on and retaining them and getting them licensed and up to speed more rapidly. And then we're leveraging technology through knowledge management, coaching as well as supervision to accelerate our efforts there. So I wouldn't say it's a target number. It will grow relative to our growth in assets but certainly an area where we're investing very heavily.

I think I would just add that clearly, distribution presence is a very core part of our strategy to continue to scale that business. And I think looking at M&A that not only brings us the talent and the skill set but also some capabilities that we can leverage more broadly across our platform is definitely something that we would consider as we go forward.

Gabriel?

Just a question on the -- how the business works and then back to the plan, the ROE trajectory thing, but the -- how the business works. So when you're at Empower, you're a plan participant, it's open architecture. If you retire, change jobs and you roll over, you've got the same or more options to invest. I guess it's the same menu?

Yes. We maintain open architecture. So you can invest in a mutual fund solution, much like you might have done in a retirement plan. And it has more than 25 different asset managers underlying that. Or we also offer a highly customizable personal strategy product, which is built in an individual security level. So again, highly customized and includes things like private equity.

Okay. And then my question earlier when you weren't on the stage. Now you are, so I'll ask it. The U.S. and personal wealth, that seems to be the biggest driver of this ROE improvement trajectory. You quantified the $1 trillion money in motion over the next 5 years. Is that -- that's the holy grail of this trajectory, capturing 30% more rollover assets than you are currently, and then that's the key? And maybe if you can add some sizzle to the steak, the margin pickup between when you have a rollover asset versus when they were at Empower. Could you help me understand that?

So there's really 3 channels of opportunity for us. There's the direct-to-consumer channel. So we have about 3.5 million registered users that see value in our tools that are aggregating their assets with us, but they haven't yet hired us to manage their money. So that's one opportunity.

That's the old personal...

That's the direct-to-consumer Empower Personal Wealth. The second channel is the one Carol touched on, which is crossover. So we know that if we can build a relationship with an existing defined contribution participant before they have a life event, then they're more likely to be predisposed to consider us and to roll to us with a job change or retirement. So that's the crossover opportunity. And then there's just those that maybe we don't have a relationship with, a preexisting relationship. That's the rollover where there is an event. And we have to compete for that on our own merits. Some of them may have an existing advisory relationship, and they'll roll to that adviser. Some, particularly in the mass affluent space, don't really have existing relationships. So that creates an opportunity for us. So it's hypercompetitive, and that's why we have to continue to invest in our value proposition. But those are the 3 channels. And then your question around the economics. The economics are far more compelling on the workplace side, particularly if what happens, and this often happens in Carol's business, is the rollover event may be that USD 160,000, USD 170,000. But invariably, what happens is if we deliver on our promise, they aggregate with us. So we don't really view it as a $160,000 account. We view it as a $500,000 account or opportunity, I should say. So that's -- hopefully, that answers your question.

Maybe I didn't ask it the right way. I'm thinking -- maybe this is the old way of thinking, but AUA to AUM. When you're a plan participant, the way I think about it is you go to your screen. You adjust your -- you hit 60. You go to 80% bonds, whatever. But the revenue that you're getting as Empower is maybe a flat fee for that customer. But then when they retire, they take that money, put it into some sort of proprietary product. And you go from a flat fee or whatever it is to something more meaningful. I want to get a sense for what the enhancement is to your economics.

There are some customers that transition to us, as Carol noted, will hire us on an asset -- on a managed account basis. So they're paying roughly 80 basis points in fees, okay? Some roll to us and they say, "You know what, I want to buy treasury bonds or certificates of deposit or individual securities." So we have a brokerage platform that can essentially meet the needs of all of our clients. We also have the spread product inside the personal wealth business as well. So to the extent that people are maintaining some level of liquidity, they're paying fees to us through the spread account. So it really depends on the product and service that people choose. But our goal is to -- you can't build a $1 trillion business if you're a one-trick pony, right? People have different needs. They have different requirements. Part of what we're building is a multidimensional wealth management capability.

But Ed, it's fair to say that what we do with a participant that becomes a direct-to-consumer customer wealth is more. We're doing more. We're advising more. Generally, there's going to be more personalized advice. And the net impact is that the average margin that we're making because of all those services is meaningfully higher in Empower Personal Wealth than it was when they were just a direct -- a retirement client. There's a lift because we do more.

Alex?

It's Alex Scott from Barclays. First one I had for you is just related to distribution and how wealth kind of plays into everything. My understanding from talking to some of the U.S. companies is that they have to be careful with the distribution of the 401(k) or defined contribution and just their desire to control some of the assets that are coming out of 401(k) as people retire. How do you manage that? Is that part of why you've chosen the more mass affluent part of the market as opposed to the wealthier end? Just help me think through what you're doing there.

Yes. Do you want to comment about the sponsor access, advisers...

I'm just going to say, yes, all of the markets we serve are very different. So if you think about corporate plans and government plans and smaller companies that typically have plan advisers that are also sometimes in the wealth management business, so we work with all of them differently and in some areas, really provide more access, provide greater access to our broader capabilities like a high-yield savings account that you could use for emergency service. And in other segments of the market, like in the smaller end of the market where the plan adviser is present, we really partner with plan advisers to help individuals get access to advice at point of transition. So each of the markets, I think, varies, and we approach them differently.

Just as a follow-up, you all talked about transformation costs, I guess, in the first presentation and the efficiency ratio benefits that you feel across the firm. It feels like a fair amount of that's in the U.S. So just interested if you could give us some more detail on what you're spending money on there with the transformation costs and what the benefits are, if there's a time line to any of that, that we should think about.

You might want to start because it's not necessarily in the U.S.

Yes. Probably about half the costs are in Canada and the residual in Europe and the U.S. A lot of it is technology or people related, about half and half included in technology, some sourcing or procurement opportunities. But a lot of those will come through over the first 2 to 3 years, and we expect run rate savings to be equivalent to the charges.

Maybe I'll go to that side of the room before I come back here. Tom?

Yes, Tom MacKinnon, BMO Capital. Two questions. The first, Carol, you made a comment here growing advisers is one way of achieving increasing operational leverage. Sometimes you think the way you increase your operational leverage is you don't grow your advisers as fast as you grow your assets. So you've talked about growing your advisers as fast as you're growing your assets, and then you talk about increasing the numbers of advisers as improving operational leverage. So just kind of help me square that.

Yes. I wouldn't say as fast as we're increasing our assets, but as we increase our assets, we'd be growing our advisers. But leveraging things like AI and helping us target more work with customers in a more appropriate way like sending the right customer to the right adviser will be critical, and then also preparing them to have those conversations by automating more data into the conversation will be another way that we achieve leverage. So it's not necessarily growing at the same rate.

But it sounds like it's more about increasing the productivity of the advisers is the way of improving the operational leverage. That's the way to interpret that.

And I'd say, Tom, that's the trigger for adding staff, okay? Once you get to that level where you've optimized the productivity, the flows are there. So the opportunity for us is to then -- is to add staff. So we're doing a little bit of both, right? We're driving increases in productivity, and we're adhering to those core metrics, but we're also adding capacity when you have the kind of the volumes that we've shared with you.

And then the second question is if I look at the company, it's got wealth in all the divisions it's kind of in and it's got -- kind of plays in retirement, but it really only does bulk annuity business in Europe and in the U.K. And Fabrice noted that there's an opportunity. It seems with the number of DB plans here in Canada being higher than in other places. Why not do bulk annuity business or pension risk transfer business in Canada or in the U.S., there's lots of opportunities there. Why do you just limit it to that smaller market there or not smaller market, but just a one market?

Yes, it's an obvious opportunity for us. We do -- sorry, just to add and step backwards, our Capital and Risk Solutions has got historical intellectual capacity there as well. So it's deeply embedded in the company. What we look for in Canada at some point is an acceleration towards DC. That could do 2 things for us. One, it could make our DC business grow at a faster pace. And second would be, is there an opportunity to do more in the pension risk transfer. We're looking deeper into that. It's something that we need to be more competitive with in terms of our ALM and risk-adjusted returns. As Ed shared, a natural area and one that there is regulatory bipartisan support for us to introduce retirement income into plan, not at rollover, but the option in plan. And that's something that we're definitely going to look at and we have the right to win 19 million customers. So something that could create an opportunity for further organic growth as we look to the future.

I must add to this that we were in the DB pension risk transfer business in Canada. We have exited that business a few years ago, given the market condition and every market is different. Some market requires more risk on the investment side. Some market offer less returns given where we are. We'll hear from our Capital and Risk Solutions. We look at these markets globally. So we're in a position to take the right market for the right capability that we have, so that's a market where we've decided in Canada that the competitive intensity and the regulatory capital framework is not the right one for us to compete into.

Yes. To sum up, we can meet our risk appetite for that amount for that risk in the opportunity we have within bulk annuities in the U.K. and through Jeff Poulin's business, where he can be very selective. And frankly, we look at the U.S. market and the Canadian market. We don't Like the competitive dynamics and the margins. So we will be very disciplined and selective on where we want to grow and deploy that capital.

Just wanted to know if you can achieve your targets in the Empower business without M&A, both in the workplace and the wealth side?

Yes.

And then also, we talked a little bit about Alts before and -- is that built into the plan? Or would that be additive?

Additive.

Okay. And then just as a follow-up, in terms of -- you mentioned looking at M&A on the wealth side, just your thoughts there in terms of valuation and sort of the state of the market right now? Like is it a market where given current pricing, you would be interested in these types of valuations?

Yes. It's a great question, Meny. The valuations in the U.S. are very, very high as the market continues to consolidate for sure. And I guess I would say sort of given where we are on our journey with personal wealth, if I was asked about sequencing M&A, I'd probably think more about another scale transaction on the workplace side as opposed to doing something in the wealth space over the next 12 months or so. That's kind of the way I sort of think about it. We've got a lot of growth that's occurring in Carol's business today. And if I look at one of the key metrics in our industry is net new assets. And if you look at our net new assets in our wealth business, as a percentage of AUA or AUM however you want to define it, we are a top decile player right now. And so we want to continue to accelerate that growth. We want to continue to build our capabilities, both on the product side and on the distribution side. So that's kind of our focus right now, I would say, on EPW.

Any other questions in the room?

Fabrice, you aren't running the business back in 2016, but I go back to that investor deck. Remember the growth objective for the industry is roughly the same, 5%, 6% so mid-single digits target back then was for Great-West to grow faster than the industry. The impression I come away with today is you're more looking to grow in line with the industry at mid-single digits? Is that incorrect interpretation on what's then changed?

The complexion of our business has changed since 2016. We're in 2 business segments I talked about group benefits accounting for half of our earnings. I talked about the acquisitions we've made in wealth. We're in business segments where we believe there's more momentum today. I would say as well that the transition to IFRS 17 has bring not only more visibility into the earnings driver, but we've had some different presentation and you're able to look at our performance in a different way. And there's been a reset in a number of areas. And on that basis, I believe it's a better basis to look at the growth potential of our business. So I would look at these 2 things that make us confident in the growth potential that we have in addition to the strategic actions that we've taken over the past several years.

The second question is with respect to the Empower rollover. Interesting to see that you've increased it already or improved to 30% to target another 30%. I think it'd probably be helpful for us to understand roughly where you're sitting today in terms of rollover capture rates.

We're in the high teens today.

Any other questions on the floor? Okay, seeing none, we will move on with the next part of our agenda, but I'd like to thank the Q&A panel first.

I'd like to call on to the stage David Harney and Lindsey Rix-Broom to present our European business.

Okay. Good morning, everybody. I'm David Harney, and I run the European segment and I'm here today with Lindsey Rix, who is CEO of Canada Life, U.K. We're delighted to be here with you this morning and to share a very positive update on the outlook for our European business. Now we're not going to cover all aspects of the portfolio this morning. We're going to focus in on Ireland and the U.K. So thanks very much for the question on Germany earlier this morning, which Paul covered well. But the focus for our discussion this morning is Ireland and the U.K. So first, we'll discuss growing and extending our market-leading position in Ireland. And second, we'll talk to you about how we are growing our share of the U.K. bulk annuity market. And then I'll also give an update on actions that we have taken that are translating consistent top line revenue growth in Europe into earnings growth combined with very strong cash generation for Great-West Lifeco. Okay. So our strategy in Europe is anchored into large positions, 1 in Ireland and the other in the U.K. Ireland is the most dynamic and one of the fastest-growing economies in Europe. We are very proud of our market-leading position here. Irish Life touches 50% of the working population, and we are uniquely positioned to serve Ireland's rapidly growing wealth and affluent markets. The U.K. is one of the largest insurance markets in the world. It is well protected and one where it is essential to have an established in-market presence that's respected both by advisers and the regulator. We have a great insurance franchise in the U.K., one which we have recently extended to grow our bulk annuity market share, which Lindsey will cover shortly. These 2 key positions mean that we are very confident of achieving at least mid-single-digit earnings growth for Europe. Not only do we play in these 2 key markets, but they are experiencing strong secular tailwinds. Ireland has successfully established itself as a key strategic gateway for U.S. multinationals. Over 4 decades, Ireland has transformed from one of the poorest countries in Europe to one of the richest. This has created one of the fastest-growing wealth and affluent markets in Europe, but also one that is underserved. Paul talked earlier about the growing need for advice in underserved markets, and this is particularly the case in Ireland. The U.K. is a more mature economy with one of the largest insurance markets in the world. We are all aware of the scale of the U.K. pension risk transfer markets, which has seen rapid growth. And in 2024 alone transferred $80 billion of assets to insurance companies. These volumes will continue for at least the next decade as U.K. corporations transfer legacy defined benefits from their balance sheets to insurance companies. Like the rest of Great-West Lifeco, our European portfolio has a great mix of capital supported and capital-light businesses. And we really like the way our Ireland and U.K. Businesses combine alongside Germany to give a diversified portfolio that is excellently balanced between the Capital Life businesses of group benefits, retirement savings and wealth and the longer-term insurance and annuity businesses that require capital support. We are proud of the long-established position in each of our markets. Our market-leading positions are built on trusted brands, deep expertise and good customer service. Our portfolio will continue to grow in a balanced way between capital-light and capital support to businesses. You really see the benefit of this balanced portfolio when it comes to capital generation. Europe is already and will continue to be a predictable and strong source of capital generation for Great-West Lifeco. Jon mentioned earlier, capital efficiency initiatives, and these include better reinsurance arrangements and the expansion of our PRA-approved matching adjustment fund, which means we get better access to better risk-adjusted asset returns. These initiatives reduce the capital required for new business growth. And this, combined with high growth in capital-light businesses means we can continue to target at least mid-single-digit base earnings growth and still expect ongoing capital generation of close to 90% of base earnings. This focus on capital-efficient growth also means that our incremental returns are higher than our current return on equity, which, therefore, increases future return on equity. I've said already that we are very confident of at least mid-single-digit earnings growth for Europe, and this will be successfully achieved by executing in 3 key areas. Firstly, in Ireland, we will continue to scale and grow our market-leading core business and successfully extend into the nascent Irish wealth market. Secondly, in the U.K., we will continue to grow our bulk annuity franchise to capture a fair and readily achievable share of the large pension risk transfer market. And thirdly, we will continue to limit expense growth and execute on further capital initiatives. We'll now unpack each of these in some more detail. First, turning to Ireland. To recap, Ireland is the most dynamic and one of the fastest-growing economies in Europe. It is a key gateway for U.S. multinationals, and we have an enviable and broad market position. One statistic, which truly underlines our position in Ireland, is that we have an existing business relationship with 28 of the 30 largest multinationals in Ireland. And by that, I mean, we are the provider of their workplace insurance benefits or we work with them to provide their workplace retirement benefits and in many cases, both. We are excellently positioned to capture future growth in the workplace market. We have also worked hard to position ourselves for the new and growing wealth and affluent market in Ireland, continuing to develop our own distribution, successfully launching our joint venture with Allied Irish Bank, Ireland's largest bank and acquiring and integrating large Irish broker companies to launch Unio, Ireland's newest wealth platform. And remember, although Ireland is one of the wealthiest countries in Europe, this wealth is young and new. It is an underserved market poised for high growth. I'll now turn over to Lindsey to talk about the U.K. bulk annuity markets.

Thank you, David, and good morning, everyone. It's a real pleasure to be here with you today. As David mentioned earlier, our U.K. business is a respected leader in the Group Benefits and Annuities markets. Having operated in the U.K. bulk annuity space for a number of years, we've now hired a great team. We've invested in our proposition, developed a track record and built distribution relationships needed to capture ongoing market growth. To achieve this growth, we're targeting the small to medium enterprise pension market, where existing distribution partnerships and fewer competitors are positioning us for accelerated expansion. The bulk annuity sector in the U.K. presents high barriers to entry, and with consistent demand for pension derisking, it also offers us an attractive opportunity for us to continue capitalizing on operational improvements, such as scheme quoting efficiencies. Our ALM expertise, optimize capital allocation and improved in-force portfolio returns enable us to manage both existing and new business with confidence. The good news is that we've already got proof of concept for this approach. So we've grown from under 1% to a 3% market share and project an additional 2 to 4 percentage points over the medium term, demonstrating the success of our approach in seizing high-return bulk annuity opportunities. So we've talked about the big picture, but let's take a closer look at this from a customer's perspective. So if we look at a real-world scenario, Alison exemplifies the type of trustee facing derisking decisions. Her GBP 250 million plan illustrates the real need for secure long-term solutions in the U.K.'s corporate pension market. By transferring pension liabilities off the sponsor's books, bulk annuities free up capital, lower corporate risk exposure and give members greater financial security. We expect that our long-standing history, recognized brand and robust financial standing makes us a top choice for trustees like Alison, who aim to maximize member outcomes. So whilst we've successfully built expertise in the SME market, we do plan to expand our focus long term to larger plans, enhancing capabilities to serve more complex pension schemes. So whilst the Alison example offers a glimpse of the path forward with about 5,000 defined benefit U.K. pension schemes and an estimated USD 1 trillion in liabilities set for derisking over the next decade, we see the bulk annuity space is one that offers ample growth potential for our European segment. And now, I'll pass it back to David.

Thanks very much, Lindsey. And we look forward to winning that case from Alison's. Best of luck with that. Okay. So I suppose Lindsey has given an update on the U.K. market. And in addition to our growth strategies in Ireland and the U.K., the third leg then to secure mid-single-digit earnings growth for Europe is the continued focus on efficiency gains. Now actions already taken have reduced our expense ratio from 2022 to 2024. This focus on operational efficiency includes optimizing third-party expenses, reducing our real estate footprint. And as Ed mentioned earlier, leveraging AI for further process automation. But in Europe, we've also exited subscale businesses and now working through the disposal of these legacy books. Now all of these actions give us operating leverage as we grow. We will see further reductions in our expense ratio, and these reductions will continue to translate to top line revenue growth into earnings growth. So finally, to conclude for Europe. We have attractive market positions in Ireland and the U.K., which are benefiting from strong secular tailwinds. We have taken actions in Europe, and we are very proud to have a well-run business. We are proactive, and we will continue to take further actions to improve the business. We are confident of our forward-looking statements for Europe to achieve at least mid-single-digit earnings growth, 80% to 90% capital generation and an increasing ROE. Thank you very much for your time this morning. And I'll now pass over to Jeff Poulin to talk about our Capital and Risk Solutions business.

Thank you, David, and Lindsey. We'll wait for the slide. We saved the best for last here so that's -- it's going to be exciting. So good morning, everyone. My name is Jeff Poulin, I'm in charge of Capital and Risk Solutions. Over the years, we've built a global reinsurer franchise with a good story to tell. We've developed all sorts of opportunities. We're opportunistic. We have good diversification of risk, good returns and great distributable earnings that we've brought to Lifeco over the years. Like all other segments, we concentrate on business, the benefit from the secular tailwinds that have been talked about earlier. And I will show you how we've built our expertise and focus on solutions that help our clients grow. I'd like to start by sharing more of a story about our business, who we are, what we do and how we do it. If we go back a little bit and tell you a story about myself. I've been with this business since 1991. So very early days of the business. I think second year, we were in business. In 1991, there were 7 of us, and we made $1 million. We burned all the capital, the investment income on the capital through expenses, made $1 million. So we were very happy with that result. And then you move back to 2024. We have 370 employees. We've made over $800 million. So it's a really good story. So I'll tell you how we got there. Through those 35 years of history, we've built trusted relationship with our clients and have grown organically to become a global reinsurer. We're a recognized market leader in providing reinsurance solutions to help clients grow. And we do it through optimizing risk and capital for our clients. We have the market reach, the expertise and the discipline to identify attractive reinsurance markets, nimbly enter them and exit them and execute on opportunistic deals. In addition to our expertise, we benefit from Lifeco's financial backing, which makes us a very compelling counterparty. Today, we're recognized as the #1 reinsurer of U.S. health business, and we're the #1 reinsurer of group life business in the U.S. We're also a proven leader when it comes down to capital solutions worldwide. When insurers and brokers are looking for innovative solution to help with solutions on their capital issues, they come to us. We're the destination of choice. Going forward, we'll balance return and risk and will grow to achieve -- we achieve a mid- to single-digit growth of our earnings. We will continue to be opportunistic and find the best way to deploy Lifeco's capital into high-return transactions. So let's unpack our business a bit more. As you can see on the slide, we split our business about 50-50 between capital solutions and risk solutions. Both of these are there to optimize the client's balance sheet. So on the Risk Solutions side, we're dealing with more traditional markets. So we're reinsuring mortality, longevity and catastrophe risk. We tend to be opportunistic and we enter markets when the transactions and the markets are appealing. And we're also showing great discipline by exiting these markets when they get too competitive. On the capital solutions side, it's a little different. So we offer bespoke transaction to help our clients grow. And there, for us to lose money, we're -- like we have contracts and for us to lose money on those contracts, we really have to have a client that's under a stressed position. So we're trying to focus on having -- sorry, having contracts clause that help us to really reduce the risk on these transactions. So we're very, very specific in the way we look at risk and try to be as risk-averse as positive when we do them. For both these types of business, the capital and the risk solutions, we're very lucky that Lifeco has given us the strategic freedom to focus on high return, well-selected transactions rather than volume target base. So this allows us to preserve our very well disciplined underwriting approach. Our right to win lies into innovation, efficiency and relationships. On the innovation side, we continue to deliver a new solution to the ever-changing market conditions. So as I say to my team, we need new mouse traps as the conditions change. We're very efficient. So our business model keeps us at a very low operating cost. That's been a great advantage and I'll touch on that a bit later. Our relationship. So over the last 35 years, our highly technical and well-rounded team has developed a really good reputation that has kept our clients coming back to us. And as these clients and these partners grow, we grow with them. As we pursue opportunities, we look for markets where we see growth and demand. So we are naturally drawn to markets that benefits from current and emerging secular tailwinds that were mentioned by Paul and others earlier. Due to the way we're set up, we can enter and exit these markets swiftly when the opportunities arise. All 3 tailwinds showed on this slide serves as example of the increasing demand for reinsurance of annuities, of savings products, of health insurance and of pension solutions. And our relationships with annuity riders with health insurers and pension risk insurers have helped us capture the growth and the trend -- in these trends that are reshaping the insurance market globally. One of the way we run our business is we're trying to find ways to bring business that diversifies well with Lifeco's portfolio. So CRS diversifies the portfolio by being countercyclical to market. What does that mean? That means when the markets are down, our clients worry about capital and we're there to offer them the right tailored solution to help with their capital and their risk. And that's important. It's to be there for them when they need it. We also have a portfolio that has -- the Lifeco's portfolio has more market and credit risk. You can see that on the right-hand side of the page. And so we help balance the Lifeco portfolio by bringing in more insurance risk. We also provide geographical diversification. 25% to 30% of our business is coming from areas and geographies that other segments of Lifeco are not in. The important takeaway at the bottom of the slide here is that our risk, our contribution to Lifeco's risk is proportional to our base earnings contribution. So we don't add undue risk to Lifeco. We've looked at the benefit of diversification within Lifeco. Let's look at the diversification within CRS. So the first thing is we maintain a diversified portfolio of risk. Capital Solutions and Risk Solutions each contribute 50% of our earnings, and that's spread across a variety of risk without concentration. So on the Risk Solutions side, we carefully manage our risk exposure and have been decreasing our P&C catastrophe exposure relative to the rest of the portfolio, such that it's less than 10% of our earnings overall. The rest of the portfolio on the risk side is well diversified. And there's an embedded benefit there between the mortality and the longevity risk. And we saw that during COVID, where our higher claims due to mortality were offset by benefits on the longevity side. Our Capital Solution is different. Our tailored contracts are such that to incur a loss, I mentioned that earlier, sorry. So we use protection in these contracts to mitigate our risk, all right? So all these contracts, regardless of the risk that we're taking, we're trying to be very specific, very, very keen on having as lower risk as possible, and we protect ourselves in the contracts. This balanced approach between our 2 lines of business ensures that year-over-year, we have consistency of earnings. And I'll show you that in a little bit. All in all, by not relying on a single product or region, we maintain a reliable foundations for sustainable profit. I'm going to spend a bit of time on this slide because that's our secret sauce, right? That's what makes us special. And I think that's the advantage we have over most of our competitors. So we are -- we have a unique expertise. We've got disciplined execution and the desirability of our counterparty. So on the expertise side, we have a unique goal when we look at transactions. We're focused on solving capital issues for our clients, right? It's a solution first situation. We're coming -- we've got lawyers, accountants and reinsurance professionals that are focused on making sure we find solutions for our clients. We're looking at new products and new regulations, and we're trying to find ways to help the clients with that. Our competitors tend to sell off-the-shelf risk solutions to our clients and they often look at capital solutions, but only if they don't compete with their risk solution. What we do is we try to find the right solution for the client, whether it's on the risk side or on the capital side. We're very disciplined. So we have a parent company who wants us to be opportunistic and get the right balance of growth in risk selection. But we have their backing when we see the right transactions, even if it's a really large transaction. So that ensures that we're able to guarantee execution to our client. So that's a big advantage as well. And then the last one, I cannot emphasize enough how important it is for us to have Lifeco as a backing. Their financial strength, their capital support, their diversification and their credit rating is really, really important to us. Both Paul and Jon have talked about that earlier. But it is a well-diversified direct company. Most of our competitors are reinsurers. They're usually concentrated on catastrophe risk and on mortality risk. We're a big diversified company. And all the clients like it, I've asked the accountants to look at our history. And for the last 30 years, Lifeco has not lost money once in a quarter. There's not very many companies in the world who can say that. And maybe it's gone longer, they stopped looking after 30 years. So it's really good and a compelling advantage that we have. You add the 175 years of history that we have, and most of our clients want us on their panel. It really resonates with them. So these 3 drivers have allowed us to build long-term relationships with clients that keep coming back to us for more. And we're offering them solutions that often our clients cannot offer. So some of our competitors have 2 of these attributes or 1 of these attributes, but not all 3. Because we have all of this, we often have relationships with clients who are giving us the first look at transactions, but also come back to us for a last look afterwards to make sure that we're part of the panel. That is a big advantage. So you may wonder like how are we going to continue to fuel this business really. And it's really the demand for our service is going to continue because we've got a constant and evolving change in market conditions in products, in regulation and in other government actions. So these change requires adapting and responding quickly to take advantage of these situations, and that's what we do. So the main drivers I've just highlighted on the previous slide resulted in the great growth that you see on this slide. And it's an impressive growth, but that's not what I wanted to highlight here. What I want to highlight is how there's little volatility in these results, right? Like despite all the catastrophe that we've incurred over the last 15 years and all the economic problems that we've seen, we have produced really, really good results. If you look at the years from '17 to '22, they were really bad years for reinsurers, and we fared really well. You can compare us to others, and you'll see the results there are really good. The other advantage here or the other things I want to highlight is we produce. We constantly convert 60% to 80% of our base earnings into capital. That means we've paid 60% to 80% of our base earnings in dividends back to Lifeco. So this approach has fueled reinvestment for growth. So we've kept some of the profit to keep the growth going. And then we've delivered steady returns to our shareholders. If you look at that slide and if you think about our business, you can think it's easily reproduced, but the world is constantly changing. And being ready with a product that the clients need when the world change is what we do well. This is why we have 50% of our business in -- concentrated in the capital solution. This slide shows example that we have uncovered opportunities during turbulent times. And so you can see these are all examples of us responding to market conditions. I'm going to use the last example to illustrate this because I think it does a good job. So in the last few years, what we've done is what we've seen is we've seen higher interest rates. And that has fueled the new business for fixed annuities in the U.S. We saw that as an opportunity because the annuity writers have a lot of strain on their capital due to this new business. And some people tripled the amount of business they wrote in a given year. So we've come up with the solutions where we're bringing the capital closer to the economic capital of the company, and we've helped these companies be able to grow without undue capital. So that's created good relationships. We have, I think, 6 annuity writers in the U.S. that are dealing with us and still producing new business for us because of this product. So let's dive into our underwriting and our efficiency. So every year, we explore hundreds of potential deals. We've got marketing people, brokers, companies coming directly to us, and we get to see a lot of transactions. We've got a disciplined and focused underwriting process, which allows us to look at these opportunities at various stages of the process. And through this, we eliminate about 90% of the opportunities we initially look at. So that's a very selective process. We also have much lower expense ratio than our peers. We're at 15% of revenue. You could see the median of our peers at 45%. So this advantage comes from 2 main areas. So our business model, we have centers of excellence and we've got our people concentrating and collaborating in these centers of excellence. And that's an advantage over our competitors who have boots on the ground in most of the countries they deal with. We also have a larger proportion of our book on the capital solutions side, which requires less administration than risk solutions. So being extremely selective in having a lean infrastructure enables us to source and execute transactions globally without carrying the overhead that burdens many of our peers. I spent a lot of time focusing on the big picture. So I would like to give you an example of one of the capital solution that we've done. And so we're going to focus on the U.S. health market. You saw that we're #1 in the U.S. health market. And this U.S. health market is growing due to constrained government spending into demographic, people getting older. The capital in the U.S. is directly related to the premium you write. So if you're growing your premium by 20%, your capital grows by 20%. So if you're a health insurer, you have the cost, the claims cost is going up in the high single digit every year. So you've got 8% or 9% growth even if you're not growing your book. That comes from medical inflation. And it comes from the population aging. So having a capital solution for a health company is critical because their premium is growing every year and they need capital to grow as well. So we've come up with a solution that aligns the capital -- the regulatory capital of the seating company more in line with their economic capital, and we've been doing this business for a long time. We get a decent return out of this. It's a diversifying risk for us. We're very selective in the portfolios we look at. And that allows us to get a good return. The client is fueling this growth at a lower cost than if they issue equity or issue debt and it makes it a win-win situation. This has essentially allowed the clients to -- it means the clients tend to come back to us for the same solution. We've been in the health business. We've got clients that have been with us for over 20 years now, and they keep coming back to us. And it often means they will give us the first look and the last look like I've explained earlier. To summarize our plans to continue to create value for Lifeco by nimbly taking advantage of markets with secular tailwinds and other evolving chains like regulations and economic conditions. We will continue to innovate, remain efficient and grow our relationships. We have a balanced set of risks within CRS and then we also diversify Lifeco's portfolio. We will use our unique expertise, our discipline and the strong balance sheet of our parent to continue to produce high return capital generating transactions. And moving forward, we intend to deliver earnings at least the mid-single digits. Thanks for your time. I think we'll have questions.

All right. I'll wait for the Q&A panel to find their seats, and we'll get underway shortly. Same drill as the first 2 segments, Q&A segments. I see a few hands shooting up in the air again. [Operator Instructions] And with that, I'll open up the floor to questions.

So question is, I guess, for David and for Jeff. There's been a lot of change in the U.K. annuity market from a regulatory perspective. Can you talk a bit about what that change is and what the risks are for your business and the opportunities are for the business?

Maybe I'll kick off. Look, I think at a high level, I'd say -- as I said in -- when I was talking, like, it's a very well protected market, and I think that's always been the case. There's very low tolerance from the regulator or the system there for insurance companies not to be able to pay pensioners. And I think there's equally that and very low tolerance for defined benefit schemes not to be able to honor those promises. And that's what creates the pressure on defined benefit schemes to transfer those liabilities to insurance companies in the U.K. So that dynamic has always been there. I think that's why it's so important to have an established in-market presence. It's not easy to get a license to operate in this market. That means there's a small number of insurance companies. They have great brands. They're well respected by the advisers, and it just takes time to build up that position. There have been some changes just on what assets are allowed to back those liabilities and I suppose there's new pressures in the system now that prevents companies sort of offshoring some of the assets that back those liabilities. They need to be held at closer to insurance companies. And that, I suppose, creates a dynamic where we're writing more of this business now within the U.K. within Canada Life U.K. rather than within the reinsurance business so.

Yes, I can add on the reinsurance side. I think these -- the U.K. is a very well-regulated market. And David mentioned the asset mix has to be relatively conservative. We like that. And then I think our creditworthiness makes us a very good counterparty on the reinsurance side. So all these changes that have happened, I think, are going to encourage people to come to us as a reinsurer as well. So we've worked -- we're working right now with 2 of the largest pension insurers, and I think we're going to continue to develop those regulations. But there's an encouragement to have diversified panel of reinsurer, and I think that's why it benefits us.

And then second, Paul, I mean the CRS gives you a pretty good global view of what's going on in the insurance market. Can you talk a bit about the benefits as you sit back and look at what CRS is doing, what's the benefits of having that business just from an intellectual capital perspective?

Really good point. Jeff and his team bring kind of a window on the world beyond our business. Sometimes you can get a bit of -- you get sort of stuck in your own rut and you don't sort of look outside. And so we get competitive perspectives in risk-based businesses. We understand how geographies and other regulatory environments are evolving. And the net impact of that is that Jeff and his team sort of act in 3 ways: strong commercial business. Clearly, it's providing good results. They operate as an internal reinsurer to us. So we'll actually diversify our own risk using them as an internal counterparty and that work, that helps us optimize. And then the third one is they offer sort of intellectual insight and they keep us intellectually honest. Sometimes we can actually kind of get stuck and say, "Well, we think this is a good business." And we'll get a challenge from Jeff and his team. So they'll bring that insight as well.

Tom MacKinnon, BMO Capital. Maybe just continue with the question I asked before, you don't like pension risk transfer in Canada, and you don't like it in the U.S., but you like it in the U.K. So I mean, it's kind of still the same kind of business you buy it and is it because the capital constraints are different in the U.K.? Or is it because somehow people just price with better margin in the U.K. when they do that business? What is it that makes that business good, but U.S. and Canada bad?

So we don't do business in Canada, right? Like we're already a big direct player in Canada, and we tend not to reinsure in Canada. So Canada is not a market we look at. In the U.S., it's a risk issue. I said we're very peculiar about our risk. And the market there is very big, as you mentioned, but the problem is that it's very aggressive right now. And to compete in that market, you have to invest in assets that we may not be interested in investing in. So I think at this point, it's an interesting market. We're looking at it, but we may be just one crisis away from being in it, right? So at this point, that's how I would look at it. It's too aggressive at this point for us to be in it. And I've explained how we get in and out of these markets. And right now, we're out of it.

So I just build a bit on the...

Yes, I mean I was interested why Jeff answered that question when all the bulk annuity stuff does not come through this P&L, but still.

Yes, just to build from a U.K. perspective, I think with the work that we've been doing around capital optimization that Jon and David and I have spoken about earlier on today. You add that with the team that we've built. And as David just said, it's a market that's got high barriers to entry in the U.K. because of the regulation that sits in it, which means that there's actually a small number of insurers that are playing in it. And I think that leads you to a place where actually we can make the pricing work really well for us. So I think we're looking at high-teen returns on this business going forward. So I think we're very happy with the returns that we're making and the forecast that we can have in the U.K. business. So it's a strong market for us to be in it.

But there's no specific kind of capital advantage in, I mean the Solvency II, is that just as onerous as that would have been not as RBC as...

There's no particular capital advantage like we're writing the business directly to Lindsey's company there and there's no internal arbitrage advantage...

Yes. Tom, all the returns we've communicated are on Solvency II. So all the work we've done is to optimize Solvency II bring more liquidity up to the holding company and it's a good return.

Tim Piechowski from ACR Alpine Capital Research. So I guess a question for Jeff and maybe some comments from Paul follow up on it. So the business lines you're in are largely commodity driven, as you say, capital providers are in and out. The retrocession space and catastrophe pricing has been very good for the last several years at this point and the group has chosen to shrink exposure. So kind of 2 questions in that is, one, how can you be a commodity business in that space and be shrinking exposure when pricing is so good. And maybe this is a question for Paul. Is any of that driven by a desire to have consistency in earnings as opposed to perhaps having good one-off earnings in periods where pricing is very strong?

I'll start with the second part of that. I would say we like diversification as much as consistency. And over time, we'll have greater opportunities whether at a point in time, as Jeff said, it was longevity during periods of low interest rates, then you might see some hardening in pricing to get some opportunities there. It's always trying to get back to that point of diversification, making sure that we don't have concentration. When you think about it, Capital and Risk Solutions represents we'll say, 20% of our overall earnings and the P&C cat business is kind of...

9% of the earnings.

Yes, 10% of the 20% so that is that part. But as Jeff said, we also have our structured business that we do on the P&C side. We have structured that we do on things like mortgages. And we just really like that diversification. I think that would be the bigger driver than thinking about it as a concentration risk because it's 2%, right? It's -- the volatility of 2% is not anything that would keep me up at night. And the other point would be when we operate in this P&C space, we have capped losses. So any of those cap losses would not be anything that would, again, keep me up at night. It's more of that diversification that's important to us. Jeff, do you want to speak to the price...

So you're right about pricing going up. It's been really happening in the last few years and that's the result of these years, I talked about '17 to '22 were abysmal years from a P&C perspective. And our approach has been to stay away from that until we know more. Like it may be that the pricing is great, but that we don't know where that's going. So our approach, as Paul mentioned, we've got really good governance on the risk side. We've got limits on how much we can expose the company to, and those limits have not changed, but we've chosen to go higher up in the layers to try to avoid these flood, hail storm, the smaller stuff that has been affecting most of the players. So it's been a conscious way to move away from the risk to try to limit our exposure to fluctuations. And that's what you saw in the graph of earnings as we've done really well with all these potential issues that other reinsurers have dealt with.

Alex Scott, Barclays. First one I had is for Jeff. Can you talk a bit about the competitive environment you're seeing more broadly? You mentioned it in pension risk transfer, but specifically related to private equity-backed reinsurance. I mean it seems like every year, they're going into more products, different kinds of risks. And to your point, they're leveraging asset origination capabilities to be able to -- whether it's price aggressively or priced to the kind of yield that they're expected to get, it seems like they're moving?

Yes. There's been a big trend. You're right that private equities have come in the market and have taken blocks of business. It's almost acquisition-based to get assets. It's not a market we compete in. It's a market we could participate in if the buyer has some capital issues, and we'll look at that, and we have done a little bit on that side, but really have not competed against the asset players, especially in the U.S. I would say on the U.K. side with pension risk transfer, we're looking at asset deals. And again, what we like there is that the asset selection is limited by the regulator, which means less asset risk from our perspective.

That's helpful. And then maybe a follow-up just like a housekeeping item. I think you guys have given a pretty wide range on the wildfires, if I recall. Any extra help as we kind of get closer to the quarter, I want to expect there?

Yes, I'm not going to make comments on that. Like our guys are still looking at it. Well, you'll find out at the end of the quarter. I think that my friend to my right here wouldn't be happy if I said anything, and I don't think we have a final number, yes so.

He can answer too. No, I appreciate that.

Just had a question out of curiosity. Slide 86 shows the deal review process, Jeff, and you showed 10% approved deals. I'm just wondering, is that 10% target that you have? Or just historically, that's what it comes out to?

Historically, that's what we've achieved. I think that we're very risk selective. We've got high governance, and that's the result of that.

And then just a separate question just on M&A. I think the early session. Paul, you mentioned potential for M&A in Germany. Just wondering about perspective in Europe and how you would rank sort of the acquisition appetite in Europe specifically?

Yes. So I would say that our priorities really haven't changed since we've last spoken about that. I'd say our highest priority and opportunity areas would be U.S. in terms of a retirement market that remains fragmented, and that puts pressure on participants companies in the market to sustain their position. So we see that as opportunity. Ed spoke to the idea of a wealth acquisition, either an expansion of our distribution capability. You look at some of the tuck-in things we've done in the U.S. like option tracks. When I turn to Europe, I look to places like Ireland where we've built up a wealth business through acquisition, acquiring brokers. I would see us continuing to think about those. The Irish business itself, we've done a lot of extension off of that business, attractive extensions, building a health business, starting to build a wealth business. So I see opportunities there. The U.K. at this point, I think we've got lots on our plate to take advantage of this bulk annuity opportunity. And if you thought about capital deployment in our plan is a certain amount of capital deployment, and so we'll call that organic. If we were to think about stepping that up because we realize that the rates of the returns were higher, that might be a place for some incremental capital growth. In terms of business extension, I would say we don't have a specific target in mind other than to say that if we could actually extend into an adjacency that added value that we really thought was going to add value, we will be open to it. And as Jon said, we're always on. We look at -- we don't have blinders on saying we're only looking in the U.S. right now. Canada Wealth, there may be pieces that could expand that one. Germany, my comment there was I don't see anything on the horizon in Germany at this point. But I also think patients can really be a virtue from the standpoint of a market that's going through restructuring. So when we talk about U.S. as a priority, I think that's clear. But that doesn't mean we put blinders on. We are looking at opportunities across the portfolio, greater likelihood though U.S. in the medium term, I'd say.

I'll move off of this Germany thing, I don't know why. The CRS business, a couple of questions. One, okay, I got the risk solutions, what you're covering there. But how do you lose money in the capital solutions? Or what are the risks? Is it a regulatory issue that regulator says, "Oh, that's arbitrage so the contract, I don't know what is the risk?" How do you lose money on it?

I don't think you lose money because of the regulators. We have what I would call like sometimes limited risk. We try to limit the risk in our contracts. Like I said, we're very selective. We try to go through very good underwriting. And examples of what we've done, for example, and I had a slide there on the Eurozone crisis. We had a bank that wanted to monetize a portfolio of creditor that was associated with mortgage. And we came up with a way to give them the value on that block business, but at a very attractive cost to us at the time. It was the Eurozone crisis. And so we looked at the risk, we felt, "Hey, we're going to get our money back on this transaction and make it a lot of money in the future." So that's -- and we have, right? We've made the money that we paid them, probably an extra $200 million since then and still making money on the block of business today. So we're very -- we're looking at the risk very specifically in trying to find the right opportunities, the right advantage and the right portfolios for us.

So are you still taking on insurance risk, you're just offering an additional capital benefit too...

We have to...

Generally, Gabe, it's a tail insurance risk and it's something that's way out on the tail. And it's generally dealing with parts of the capital structure that are beyond the pure economic capital. So we're helping people manage their capital planning more than anything else, but there will always be some element of tail risk associated with any transaction.

Okay. And then as far as the risk solutions part, is there any -- I mean it's one of the businesses that's I guess, declining as an earnings contributor over the next few years? Is that a function primarily as the pie is growing, but other parts of it are growing faster. So you're...

Yes. It's not by design. I mean, I'd like to have -- I think we have a right balance now. So I would like to keep it that way. It's just a matter of the market. I said we were very selective if we look at certain markets right now, we don't find them exciting. So we'll sit until they get exciting again. And we've seen that, right? Like the longevity market in the U.K., for example, we've done very well in the early 2000, then and got aggressive, and then it came back again and we got back into it. So that's our approach. And you build big in-force blocks of business to produce earnings for a long time when you write that type of business. So it's our approach, but it's been declining because we've grown the capital solution more than we've grown the risk solution. But that doesn't mean that it's not going to turn around, depending on the opportunities.

And the last one, in terms of decision criteria on like whether or not to take on this new contract or whatever, where does, if at all, being part of Great-West factor in. So Great-West has a lot of longevity risk with the annuities business, with the bulk annuities business. So that constrains your ability to grow in longevity or...

It does. We've got risk governance, like I said, and we're looking for opportunities to grow things that Great-West doesn't have, right? We want to diversify the book the Great-West have. That's how we view ourselves as a division is that we're going to get into things that maybe were not elsewhere.

Yes. I would say a good way to think about our risk diversification is that there is a bottom up each of the business is bringing forward what their greatest opportunities are. And then there's a top down, how do we want to deploy our risk appetite. So when you think about it, the work we're doing in the U.K. on bulks, the work we're doing on -- within the Capital and Risk Solutions business, those both need to be taken into account. And the thing we like about Jeff's business alongside all the other businesses is, it diversifies really well. Where it overlaps, then we have to make decisions on where we want to deploy that capital. Where is the greatest opportunity.

Paul Holden, CIBC. A couple more questions for Jeff. First off, I was looking at a breakdown of the CRS business in 2015, I didn't see health on there. So has that been a major driver of growth over the last 10 years?

It has been, but I think we were in the business back then. I think the first health transaction we did early 2000 or late '90s so we've been in that business for a while. I think it's been developing more as the government have unloaded some of the burden that they have to the private sector. And so that's created a lot of growth and health insurers are coming to us more and more for solutions.

And the second part, I think it would be helpful for us to understand a little bit more the risk profile of that specific business. And I hear things like tail risk, we're not taking on primary health risk, I start thinking about is it comparable to stop loss? I get that it's not a stop loss business, but given the recent example from a competitor, I think that's going to be the question many people are asking, what are the similarities or differences to stop loss?

Yes, in stop-loss business, you take a 1-year risk and like the way we look at the business, we take a longer-term view. And as a result, we tend to have features in our contracts that limit the risk. So I would say for -- I will repeat what we said in the presentation for us to lose money on that line of business, we need the underlying company to be in a very stressed situation. And obviously, we haven't seen that and we have never lost money in the health sector so.

I'll try to put it another way. How sensitive would be the profitability in that business to claims experience?

Well, it obviously affects it, but we have the benefit of some of the features we'll have. We'll concentrate on the best blocks of business that the companies would have. So we try to be very specific in the way we look at the business. So we try to get the best, the cream of the crop, the stuff that diversifies well with us. And obviously, claims go up. It could create problems, but it needs to go up in the long run, the way we're setting up our contracts and I don't want to divulge any secrets here, but they would need to go up and stay up for a long time. So again, it's more a credit risk than it is a sustained claims risk. And these products get repriced every year, right? So I -- that's the advantage of it.

Any other questions in the room. Seeing none, I think that concludes this Q&A session. And I'd like to thank the Q&A panel for participating and I'll ask Paul to stay on the stage to offer some closing remarks.

As Shubha outlined at the beginning, the Investor Days we've done over the last few years, we've actually done a number of them have been sort of business specific. We dealt with Empower a few years back. We dealt with Wealth. Today was really giving you a sense of the whole. And I think one of the powerful things would have sensed the whole is getting a sense of the people that you saw on the stage here. Businesses often think about what is your secret sauce? Do you have a better product. Products are not sustainable. Do you have, I don't know, a specific market opportunity. If you find it, others will find it. So I don't -- I never view those things as sustainable. I think what's sustainable are 2 things. One is, do you get closer to the customer and build trust, that's number one. Because trust is hard to gather, but it's hard to break. So we are in businesses that -- where we fundamentally believe that at the core of that is trust. Trust and advice will build businesses long term. Jeff talked about his business, a very technical business, but so much of that business is built on the trust he's built and the ability for his business to deliver for their clients, those insurers that are their clients. And then the second thing is our people. You saw the quality of the leaders here and the quality of -- when you get high-quality leaders, they attract high-quality teams. And you just see the top of the chart there, but I assure you that the strength of the teams we have globally, the teams we have in the U.S. and Canada and Europe, I would say, are second to none. I would say that is our secret sauce that allows us to attract the teams and then to deliver the business. And that's why I come back to what did we tell you today and why we come to those things with confidence. Strong and focused leadership positions in our businesses with organic growth, and we do believe these secular tailwinds are sustained things that will drive growth. And I get excited about hearing the answers there because our people are intimate with their business as they understand them. We do have a focused organic growth strategy. And I think sometimes there's been a perspective that we are an M&A machine. And actually, we are an M&A machine. We're very good at it when we do it. But we have strong organic growth across our businesses that we're confident in, and that's what we shared with you today. And it is aligned with higher growth markets. We are increasing some of our medium-term objectives, and we're doing that from a position of strength and confidence. The higher ROE objective is reflective of the trajectory of our businesses. The new capital generation objective, it's always been there. We just haven't talked about it. We hadn't done the work to actually unearth it to be able to bring it to you. But we've always understood that. And when you think about the way we've grown over the last 20 years, it's been by leveraging that strength, that capital, whether it's been delivering for our shareholders or whether it's been delivering into value-creating acquisitions. We reiterated our strong dividend payout objective, and I think that's a differentiator. We come back to that 8% to 10% EPS growth objective as an organic objective, knowing that we have strong capital, and we will continue to have strong capital in hand. So with that in mind, I want to close by just saying that, from a personal perspective, I'm very excited about the future. I think we've never been better positioned. The last 5 years have been great. I will tell you that. It's been great sort of getting active, but there's a lot of heavy lifting here. Like we were selling businesses, we were acquiring businesses. We're now positioned with 4 very strong business segments. I think we have an opportunity to do more for our customers, through better products and services, through more advice by getting closer to them. We can do more for our shareholders with continued growth in our business. And ultimately, that will be driven by the team you've met today. So I want to thank you for your time and really look forward to connecting with you next time. Take care.