This article first appeared on GuruFocus .
Release Date: July 29, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Great-West Lifeco Inc ( GWLIF ) delivered 15% base EPS growth year-over-year, driven by double-digit growth at Empower and Capital and Risk Solutions (CRS).
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Empower surpassed $2 trillion in client assets on its workplace platform and announced the acquisition of Milliman's Retirement and Benefits Administration business, expected to be accretive in the first year.
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The company reported a strong base ROE of 19.3%, supported by a shift to a more capital-efficient business mix and balance sheet optimization initiatives.
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Capital and Risk Solutions (CRS) saw 38% year-over-year base earnings growth in the first half of 2026, driven by strong demand for capital solutions across geographies.
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Europe's balance sheet optimization initiatives are on track to deliver over $3 billion in capital benefits, improving the region's base ROE by 350 basis points from 2024.
Negative Points
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Canadian operations saw a 9% year-over-year decline in base earnings due to moderated long-term disability experience gains, which can fluctuate quarter-to-quarter.
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Empower experienced $14 billion in participant net outflows in the quarter, partly attributed to higher market balances and seasonality, though improvements are expected in the second half.
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Net earnings were impacted by unfavorable market experience, primarily from interest rate movements, though the year-to-date impact was largely neutral.
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The company noted that margins on existing Capital and Risk Solutions transactions face erosion over time as competition enters the market.
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Credit spreads are near historical tight levels, creating a challenging environment for yield enhancement and potentially pressuring pricing in capital-intensive businesses.
Q & A Highlights
Here are the key highlights from the Great-West Lifeco Inc ( GWLIF ) Q2 2026 earnings call.
Q: Can you discuss the demand and margins in the Capital and Risk Solutions (CRS) segment, given the strong pipeline? A: Jeff Punin, CEO, Capital and Risk Solutions: The demand is very strong and diversified across behavior risk, health reinsurance, and non-life capital solutions. While margins on existing transactions erode over time due to competition, margins on new business are very good and in line with our expectations. The growth is driven by increased market demand, not a change in our competitive posture. The business is lumpy, but we are currently riding a strong wave while remaining disciplined on returns.
Q: How much runway is left for the capital efficiency and business mix optimization efforts in Europe, and are there similar opportunities in other regions? A: John Nielsen, CFO: We are very happy with the success in Europe, which is a multi-year project. We are roughly two-thirds of the way through the work we outlined at Investor Day, which has significantly driven up the ROE and generated capital. While Europe was the biggest opportunity, we are looking across the entire business to optimize the business mix, capital intensity, and returns to drive better capital deployment.
Q: Can you quantify the total excess capital and debt capacity available for deployment? A: John Nielsen, CFO: We have significant capacity. This includes roughly $2.5 billion in Holdco cash, about $2 billion in deployable capital above our 120% LICAT target, and a further $2 billion in leverage capacity if we move to a 30% leverage ratio. For the right transaction, we could temporarily go to 35% leverage, adding another $3.5-4 billion. In total, we have around $6 billion of readily available capacity and a strong track record of paying down leverage quickly.
Q: What is the outlook for the short-term expected earnings in the CRS segment if demand were to fall? A: Jeff Punin, CEO, Capital and Risk Solutions: The earnings are stickier than you might think. While they erode over time, we expect to replace those earnings with new capital solutions. Although demand has tapered slightly from the last 18 months, it remains strong. We view the current run rate as very sustainable and expect to see mid-single-digit plus growth going forward.
Q: Can you provide more color on the lower net inflows in the US Wealth business and the participant net outflows in Empower Retirement? A: Ed Murphy, President and CEO, Empower: The workplace outflows were largely driven by account balances, not volume. On the wealth side, we have implemented structural and personnel changes to improve rollover capture. While Q2 was lower, I have seen improvements taking hold, and we fully expect to see higher net new assets in Q3 and Q4.
Q: What is driving the lower group long-term disability experience in Canada, and does this require a repricing of the portfolio? A: Fabrice Morin, President and CEO, Canada: The lower experience is primarily due to slower claims recovery (return-to-work), a trend also seen at the industry level. This can be cyclical, potentially linked to slower employment growth. While pricing is part of our toolkit, we view this as normal volatility. The business remains healthy with strong sales momentum, and this does not change our strategy.
Q: How are you managing asset allocation and yield enhancement in the current environment of very tight credit spreads? A: John Melvin, Chief Investment Officer: We have a conservative and well-diversified portfolio and are not aggressively chasing yield at these near-historical tight spread levels. Our strategy is to hold the course on our desired risk-taking and continue to build portfolio yields through more efficient use of capital and ALM optimization, as we have been doing across our segments.
Q: Can you explain the significant swing in the public equity markets line, which showed a loss despite strong markets? A: John Nielsen, CFO: The loss was driven by ineffectiveness in our hedging program for share-based compensation. The sharp 35% increase in Great-West's share price during the quarter accentuated the volatility in a program that is otherwise highly hedged. This was a one-off event due to the specific circumstances of the quarter and is not something we expect to recur.
Q: With the NCIB authorization increased to 40 million shares, is it probable that you will buy back that many shares? A: John Nielsen, CFO: I would characterize reaching the full 40 million shares as improbable, as we didn't even reach that level last year. However, we have the free cash flow to do so. Our priority is to deploy capital in the most accretive way, and buybacks remain an active tool. We are committed to deploying at least as much capital as last year ($1.6 billion) through a combination of buybacks and M&A.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
