Great-West Lifeco Aktie

Hello, and welcome. Before we begin, I must remind you that members of the media and the press are not authorized to participate in this event. If you are from the media or the press, please disconnect from the call now. The content presented on this conference call is proprietary to and are subject to the copyrights of Jefferies or third parties. You may not externally record transcribe publish or otherwise publicly disclose any portion of this call, including, but not limited to the name or other identifiers of the speakers unless Jefferies [indiscernible] in writing.

Please note, this call is being recorded. By attending this event, you agree to all of these instructions. And I'll pass it off to John to get us started.

Thank you, Katie. Good morning, good afternoon, everyone. Very pleased to have David Harney here with us, who is the CEO of Great-West Lifeco. Great-West just reported their second quarter earnings yesterday and David very happy to have you here. Hopefully, we can have a very good discussion. I'm quite excited about this.

Yes. Thanks very much, John.

Before we begin, just administrative detail. Obviously, being Canadian, I'm going to hog the puck and ask a whole host of questions. But if there is anybody online that actually has something they would like topically like us to discuss. Please e-mail me at [email protected], and we'll see if we can tag that in.

But -- so David, just to start off, you've now been CEO for the group for just over a year. I believe you were appointed shortly after last year's Investor Day. As you sit here today, are there any potential shifts or tweaks that you're viewing in terms of your long-term strategy?

No. Like long-term strategy remains the same. Just within my first year, like I had an incredible first year and I'll have a fantastic team around me. We integrated in the second half 2025, we've had great our first 6 months for this year, when we touched on some of the reasons for that success as we go to each of the segments. But I think if you stand back, like, certainly, one of the reasons for our success as an organization is just our, I think, long-term thinking, the consistency of our strategy.

We like to build scale positions in mature markets. We love our 33 geographies, Canada, the U.S., the 3 businesses that we have in Europe. And then our global reinsurance business alongside that, like we're very committed to those areas have no desire really to be outside of that, very committed to the sort of product lines and markets within those geographies. They're fantastic tailwinds behind retirement insurance wealth.

And I think when you look at our overall portfolio, there's sort of no, sort of, product line or areas that we're in that we don't want to be in. I think we add on sort of adjacencies or scale very well until we get the opportunity when we have a portfolio that's sort of beating our medium-term objectives.

We're very confident on the outlook of that portfolio. And I think having that sort of firmness and steadiness of strategy and the portfolio that's in good shape. I think it just gives us a lot of focus as an organization. And the focus of me and the team is it's just delivering in each of those areas have been as good as we can be. So absolutely, no tweaks, no changes. Our strategy is working, and we remain firmly committed to that.

Fantastic. David, taking this on a different tack, if you go back and take a look at last year's Investor Day deck, is there anything that might have changed in terms of the presentation or the focus of the -- of what you spoke to on the Investor Day?

Yes. I think yes, Yes. [indiscernible] demand in things, I'd say if we went and did our Investor Day next week is to be practically the exact same deck. Now there might be 2 tweaks I made to it, and I touched on that. But it'll be basically the same thing again. And I think even as a team, as we go out and talk to investors, it's not at all, but at the same time, we've been surprised just as the longevity of it and actually how the basis and what we called out in that, I think, is just right. So I think there's a couple of very important things we did just at Investor Day last year, like one was just setting out our ambition, the earnings per share growth of 10%. The capital generation in excess of 80% of earnings the ROE ambition in excess of 19% and then the dividend range. And we've outperformed against those.

We remain very committed to those. But I think beyond that, it was giving, I think, transparency on the capital generation and sort of going into detail on that and also transparency on what is going to deliver that growth and actually breaking that that growth ambition into the different segments. So double-digit growth in the U.S., mid-single-digit plus growth in Europe and reinsurance and then mid-single digits growth in Canada. And going into a reasonable amount of detail in each of the levers are as important in each of the markets to deliver that growth. So I think that transparency on our ambition, that transparency on the growth levers, that transparency on the capital generation, it's been very well received by the investment community adds to that focus I mentioned earlier, for us as an organization as well.

So I think we were holding an Investor Day again today we'd be doing exactly the same. Now I think experience will always be a little bit different than your [indiscernible] growth ambitions. Obviously, we've had a fantastic run in the market. That means the U.S. significantly outperformed its year-on-year growth is 26% in the first half of this year. We're seeing an exceptional spike in demand for capital solution products within the reinsurance business. So its growth is 38% in the first half of this year. I think probably spike of demand for a period. So reinsurance will moderate, albeit off a higher base.

Europe, we've done very well on capital optimization and capital optimization takes surplus capital out of the business that makes earnings targets harder. But even with that, Europe is hitting. And then what we've seen in Canada then is probably a little behind, but just the moderation in long-term visibility experience. And when you look behind that, then there's actually very strong performance there.

So probably the only tweaks if we were setting our ambitions each of the segments, I think, could be the same. I'd probably be a little bit higher on Canada. So it's only that's the one that's behind moderation on the disability experience. But I think when you look behind Canada, we're investing a lot in [indiscernible]. We're investing back in group benefits. We're upping our ambition of the retirement side.

So I'd say we're very close to, sort of, higher ambition in Canada. If we were having an Investor Day again, I think I'd have the same ambition for Canada that I would for Europe and Capital and Risk Solutions. And I think the other thing we would probably talk a little bit more about is it's just amazing -- Investor Day is only last year, we didn't talk about AI at Investor Day. And that's even just a sign of how far AI has come on in such a short period of time. So you would certainly have to be talking about that and just how that's going to assist your strategy as well. So I think the only 2 sort of changes are moderations.

Well, one of the things that I found absolutely fascinating with Great-West is your group ROE has been steadily improving over the past 6 years at basically 1 point a year. And what do you attribute the key drivers to this performance? And is there, at some point, a natural ceiling for your ROE? Or should we -- it's not obviously not going to go to 100%, but at what point does the improvement start to level off?

Yes. That has been a fantastic success story. There's a few different reasons for that. Like the primary reason is the sort of higher growth of the capital-light businesses. So that probably drives 80% of the improvement. And even at Investor Day last year, I think our ROE was 17.5%. We said we expected that to grow to over 19%. It's 19.3% now just at the end of Q2. Like I suppose if you go back, we made large investments, obviously, in the U.S. through the acquisition of the JPMorgan book going back then Prudential and MassMutual and also the adding of Personal Capital. Like they were big investments, but they paid off hugely. Like Ed and the team have done an incredible job in just integrating all of those businesses and building an at-scale platform that is very good at what it does.

So -- and it's sort of that, that has driven the higher growth in the capital-light businesses. And then just the success of that investment is actually what's driving the ROE. So probably 80% of the ROE expansion is coming from the higher growth of the capital-light businesses, largely on the back of successful investments in the U.S., but also wealth businesses and retirement businesses performing well in Canada and Europe.

There's been a little bit of add-on just through optimization, like we talk a lot about just the importance of managing your capital well and capital generation and optimization work. We even touched on that again in Q2 just on the success in Europe. Like as John explained on the call, like we're probably 2/3s of our way through the optimization program. So the boost we've got for that probably moderates a little bit. There's still a little bit more there. But there isn't a natural ceiling, like our capital-light businesses will continue to grow faster than our capital supported businesses. And if we continue to grow our overall earnings in line with our medium-term objectives and a higher portion of that growth is coming from our capital-light businesses, ROE will continue to grow. And really, what we focus on as an organization, there's lots of different targets there. But if we deliver on earnings growth and we deliver on capital generation target, everything else looks after itself.

Well, since it's largely structural, I guess the flip side to that is, do you see any headwinds to profitability, either in terms of macro or anything regulatory or structural that could be coming down the pipeline that we're not aware of?

No. Look, obviously, as an organization, our earnings are linked to the performance of the markets, like particularly like obviously, our wealth and retirement businesses, a high portion of the revenue there is related to the market. So if there was a setback in markets, that would be a setback in our earnings the same way that the sort of run on the markets has meant we've outperformed those objectives. So that's just an obvious one. Other than that, I wouldn't see anything.

The other thing that might pull back ROE, it's not so much headwind that might be there or an event like, say, the market is coming back is if we were to do an acquisition, like our return targets on acquisitions are lower than our ROE. So our minimum return target for an acquisition would be 15%. And that would be if we have practically 100% confidence on execution. It would need to be a little bit -- need to be north of 15% if you were less confident on execution. But even then our sort of toleration for not being confident in execution is very low. But if you had an acquisition where you were hitting 15%, 16%, 17% return, that would be a pullback on ROE for the period. So they're probably the only 2 things.

Fantastic. And then David, in your role as CEO, what is the Board looking at in terms of your own particular KPIs? And is that any different than what your predecessor faced?

No, it's the same, like the structure of sort of my compensation measurement, it's practically -- it's very similar to what Paul has. So we have a balanced scorecard approach. As I mentioned, like probably the 2 key metrics for investors are the earnings growth and the capital generation. If you do those well, everything else looks after itself. Now what you need behind those to do those well is obviously, expense efficiency is important. Delivering for your customers is hugely important, like you cannot have good positions in your markets and grow your earnings if you're not delivering for your customers, that's your ultimate job. And then there'll always be sorts of strategic areas that are important for growth. So it's a balanced scorecard over those areas.

And David, you brought up earlier AI and how it really has changed everything and wasn't really on the top of the list just over a year ago. How are you deploying it across the group? What changes are you seeing in terms of operations? And I guess, specifically, is this having any impact on the distribution channels?

Yes. It's amazing just how embedded AI has become in the organization. And obviously, just been sort of machine learning capability that would have been used more on the actuarial side for over a decade now. But I really mean just the generative AI capability and just how quickly that has entered into the organization. And I'd say we're probably at the start of a 5-year transformation that we're going to see in the business. But sort of where we're seeing it is like in many different areas, but just, I'd say, on the customer service side first, like very much in the call centers, either AI itself taking calls and dealing with calls or assisting agents in dealing with calls, either in preparation in monitoring calls and summarization or even AI itself now starting to take a number of those calls.

And I think that's just going to continue to grow just as capabilities improve. The other area that's very linked to that then is like, obviously, when customers are bringing into call centers or contacting us, they're looking for something to be done. So there's sort of operations and processes that happen behind those requests, whether it's onboarding new customers or paying claims or changing member details or increasing contributions, moving funds. So again, Agentic AI is increasingly being used to automate those processes and improve the sort of speed and turnaround times at which we can implement those. And obviously, AI is incredible now when it comes to coding and programming. So our technology teams are using it just on software development. So that sort of life cycle is being transformed and the amount of throughput that we're getting there is growing and increasing all the time.

The other area then like maybe your investor community wouldn't appreciate it, but anyone working in the industry would is like sort of insurance and banking were organizations that have existed for a long time. We all have legacy systems. We've all run sort of large-scale projects to modernize and upgrade our infrastructure. I think we all have painful war stories on modernization of legacy infrastructure that has happened. And AI is just incredible on that. And just the way that it can go in behind those legacy systems and understand how it interacts with all of the plumbing.

So even behind the scenes, just what it can do and how it can help us modernize and streamline our systems is incredible as well. And I think that will turn into -- just the speed at which we operate as an organization is going to accelerate. Generally, in insurance, our SLAs, they're sort of longer than our customers would be used to dealing with in other industries. And I talked about just to our organization, we tend to operate in days. Other industries operate in minutes and seconds. And I think insurance and financial services will move to be a minutes and seconds type organization. I think that's going to have a phenomenal experience just on our interaction with our customers because our customers, they pick long-term financial services products. They're big decisions for them to make. They need a lot of confidence and trust in organizations that they're dealing with.

And the sort of faster, more seamless we can be in our interaction with customers. It actually goes a long way to build customer trust and confidence. And I think for me, that's probably the most important thing. If we can execute well out of that customer service delivery, I think we're going to help grow the markets at an industry level.

I think on the advice, it's interesting. Like there's a few things AI isn't going to change. So like I think the core need of our customers remains the same. Customers, I still think, like dealing with human organizations and need to trust the organizations that they're dealing with. So we're still going to be -- I always talk about that the business is a group of people providing the service for another group of people. That's sort of not going to change. But it is interesting, will AI start to play a bigger role in maybe advice and distribution. We're certainly seeing that customers are doing more research themselves before they come and talk to us. And that's actually a very positive thing for us because the more customers feel educated themselves and confident themselves, it's much easier for us to help them with the products that they have. So I still think at the end of the day, customers will want a very dominant human interaction with organizations, but AI will play a much bigger part of it.

And we've seen some Canadian financials actually put targets out for the benefits that they're expecting to accrue from AI. For those of us on the outside, though, it's very difficult to ascertain the veracity of that. How do you and your management team think about the benefits or trying to quantify the benefits because I don't believe that Great-West actually has a target that you've got put it publicly.

No, no, we haven't put a target out, and it's something we've debated a lot. I think the benefits I've seen put out by other organizations, I think they're broadly right. Actually, I think even in time, like obviously everything depends on time. But I think in time, actually, those benefits will be outperformed and greatly outperformed. So I think the benefits that people have put out now are reasonable. And I think there's a similar quantum of benefit that I can certainly see within Great-West.

I think the real question for me, though, and probably why we haven't put out a benefits target is it's probably the timeline of the benefits. There's also investment required for those benefits, and what's the scale of the investment. And then ultimately as well as you secure those benefits, and maybe on the back of investments that are required for the benefits, how much of this goes back at customers as well.

So for me, the real question is it's easy to put out a benefits number, but the real question is, well, David, are you upping your medium-term objectives? Are you saying your earnings per share, which are already very confident are going to grow at 8% to 10% per annum over the medium term? Are you saying now that they're going to grow at a higher number than that? And I think my aspiration or sort of our belief as an organization is AI is going to transform our business over the next 5 years, I think, is the time frame. That is going to take investment within the business. I think we will repay that investment certainly within the 5-year period. And then really how successful we are sort of post that period and repayment of that investment is how good a job we do relative to our competitors. But I probably expect in time a lot of this benefit to go back to customers, and that's where it should go.

The price points of all of our products will reduce as we generate these efficiencies. We operate in competitive markets. So these benefits should go back to customers. So what I see is certainly like increased confidence probably on hitting our medium-term objectives. I think they're still the right medium-term objectives for us, but we will actually probably hit those in a more transformative way and a greater improvement of customer experience than we might have imagined before. And I think that just positions us and probably the whole industry in a sort of stronger way in the subsequent periods.

David, we've seen some very strong growth in Capital and Risk Solutions over the last 12 months. And given that you had a leadership position there, do you think that your familiarity with this business makes the overall group a little more comfortable with the risk profile of the segment?

Well, certainly, my familiarity with the business does make me very sort of comfortable with CRS and the sort of risk position of the business and its share of our portfolio. But I wouldn't characterize that as a change in any way, like that's exactly how Dr. Paul felt about the business before me and it's in line with how the overall group and the Board feels about the business as well. So really, the success that you're seeing in CRS now, I'd characterize as continuity rather than any change in view. Like we have an incredible team there running that business that has just fantastic tenure, like Jeff has been there for practically all of his career. All of his team around them have been there for a very long time. So it's a very stable team.

Sort of all of the gating underwriting, review processes that are there in the business are exactly as was there before. We obviously have an executive review committee. Obviously, myself and John are [indiscernible] of you on to that committee, replacing Paul and Gary that were there beforehand. But that broader team is exactly as it was before. The Board then that reviews transactions as well. We have a reinsurance committee of the Board. That's the same committee that's been there for a long time. And even Gary I think was the [indiscernible] Group CFO, has sort of joined on that review committee as well.

So -- and then the sort of other amazing thing is like obviously, we've seen a huge sort of spike in demand for capital solution businesses. But the biggest spike in demand we've seen are for products that we've been actually selling for over a decade and some of them actually for 2 decades. So these are not sort of new products that we brought to the market or an increase in sort of appetite that wasn't there before. Like the core demand is for products that we're very familiar with, and we've been offering to the market for a long period of time. And really, there's a number of reasons why we're just seeing that increase in demand for the product.

Some of it is driven by regulatory changes. That would be more the case in Europe and Asia. And some of it is driven then just by growth in the underlying insurance markets, and that's particularly the case in the U.S., and say that the health insurance industry in the U.S. has seen huge growth over the last number of years, and that drives capital demand.

And then I'd say the other factor that's just driving demand in the reinsurance segment, it's interesting on Investor Day when we went out as an insurance company and we talked about the importance of capital efficiency and set capital generation targets. That sort of maturity and understanding of the importance of capital efficiency and the understanding that's probably -- that's the most equivalent thing insurance companies have to stock within their business.

So like I think all sectors of the insurance industry now are much more focused on capital efficiency. And when it comes to sort of supplying or raising capital. Obviously, you can do it by equity, you can do it by debt, you can do it through reinsurance. But reinsurance is one of the most efficient ways for companies to raise capital and just more and more companies are seeing that. But we've probably seen, I'd say, just a spike probably back on growth in underlying insurance within the U.S. like we expect that to moderate. And so I went -- I said earlier, if we had an Investor Day tomorrow, we probably set the same targets for each of the segments. So Jeff is operating off a higher base. I don't expect Jeff to sort of grow that at 38% every 6 months, that would be just unrealistic. But we do see continued demand that will moderate. But I expect for reinsurance now, we're growing off a higher base.

Yes. I find this very interesting, David, because I was pressing Jeff on the call yesterday about the growth outlook and everything else like that. And I know that you view the businesses as a portfolio, the diversification is a huge benefit. But is there any level of contribution that CRS could have that you start actually pulling back on their growth or the capital allocation? Or are you just allowing this to naturally run its course in terms of where demand goes? And if it continues to grow by leaps and bounds, almost so be it?

Yes. We do like the diversification it brings within the portfolio and having that diversified portfolio and I think the right share within the different segments is important. I think it's important for us that more of our growth comes from capital light, and that's our expectation. And even with the sort of spectacular growth Jeff has seen the -- like that hasn't sort of displayed that growth, like our capital-light earnings in '26 will be similar to '25, but the path going forward is higher on the capital-light earnings.

And maybe if you look at our expectation, I think reinsurance earnings were 19% maybe of earnings in 2025. Like obviously, reinsurance has grown a lot in the first half of this year, but we've had spectacular growth in the U.S. as well, which is our biggest segment. So even with the growth we're seeing in CRS this year, like earnings would probably be maybe 21% of total earnings. Obviously, it depends on how all of the segments do in the second half. But my best guess would be in or around 21% of earnings for the full year. So and then I expect CRS to moderate. So that's in a range that we're very, very comfortable with.

And then, David, you mentioned U.S. also showing very good growth, definitely much more capital-light than CRS. I think you're targeting around 55% of earnings by 2029, if I'm correct. If we're going to look, call it, 10 years out, what proportion of earnings do you see coming from the U.S. segment? And then I guess my follow-on question is that is there any natural cap that you would put on this segment, even though it is one of your stronger growers, one of your capital-light businesses, if it managed to be 80% of the business, is that something that's bridged too far?

Yes. So the 55% would be our share of aggregate retirement and wealth across all of the segments. And then I think the other important thing to add on to the Retirement and Wealth is like Group Benefits is obviously largely an insurance business, but it is capital-light as well. So when we talk about our aggregate capital-light businesses, we talk about the retirement and wealth and the group benefits then across the different segments. And in aggregate, that's 65%, 66% of earnings. And over the next planning period, we expect that to grow to be in excess of 70% of earnings, probably close to 75% of earnings. So the U.S. at the moment is our largest segment. Somebody can probably do the counts there. I think it's about 34%, 35% of earnings at the moment. We indicated at Investor Day that we expect that to grow to close to 40% of earnings within that planning period.

That's still absolutely our expectation. It's our biggest segment, and it's our highest growth segment. So absent any M&A activity within the U.S., we expect that to grow to 40%. It's no secret, we would love to do more acquisition in the U.S. if we can find targets that hit our return requirements and where we'd be very confident on execution. Obviously, if we did that, that would add to that share in the U.S. And we've no sort of limit or barrier on that.

The U.S. retirement is basically one of the key drivers of your U.S. strategy. Can you talk to what differentiates or what you feel differentiates your platform versus the peers or your competitors that you have out there?

Yes. There's a few key ones like there's the scale, there's the open architecture platform that we have, and I'll go into some of those in a moment. Some businesses though are just really good at what they do. And like we've a fantastic team there. They've all worked in this segment of the market through different players for all of their careers. There's a huge passion for the business. So I think when I look to the U.S. and maybe just our brand and some of the sponsorship we've done, like one of our great recent acquisitions has been [indiscernible] Young. He went and had a run at The Players just after we signed them up. He came very close to the masters. He's come very close in the British Open as well. And you could look at Cam Young as like what are his strategic differentiators, if you like, and you could analyze the swing and point to different parts. But at the end of the day, it's just a very good golfer. And it's a bit like that with our U.S. team in the retirement business. They do have very specific advantages, but it is just a fantastic team that is very good at what it does. And just some of the statistics on that, and this is before we even talk about the build out of the wealth business and how important it is and the advantage of having a wealth business that's so adjacent to the workplace business, but I'm just talking about the workplace retirement business here first.

Since we did the Mass Mutual acquisition a number of years ago, we've won almost $200 billion in net plan wins. So that's plan wins deducting off sort of plan losses. But that's a huge win rate over that period of time. And just to give some idea of scale of that, winning that level of plans is equivalent to a sort of top 10 provider in the 401(k) market in the U.S. So that's just a phenomenal win rate from the team. Like another stat that people miss, like obviously, people are very focused on the outflows in the 401(k) market because of that baby boomer dynamic.

I think people sometimes miss just the growth in the number of participants in the market. Like even in the last 12 months, and this is where we haven't done any M&A, like our number of participants in the retirement side has grown from 18.5 million to 19.5 million. So we've just added 1 million customers organically in a 12-month period, that's just phenomenal. So the specific reasons where they have advantages, like obviously, there -- the team did a fantastic job integrating those businesses I talked about a while back. So that's given us a scale position that's only matched by Fidelity.

The big advantage we have versus Fidelity is we have an open architecture platform. We're not trying to bring any sort of our own investment product. Plan sponsors just love that openness and it gives them a lot of sort of independence and freedom on the products that we can put on the platform. I think within the platform, the specific areas that we have like our managed accounts, the incredible job we've done on sort of bringing private markets to 401(k) members. They're sort of unique things we have. And then increasingly, we're building out a sort of broad product set as well, like the add-on of option tracks, the recent add-on of Milliman, we have the health care savings account, we'll have the educational accounts. So all of those things are broadening out the product base as well.

So all of these things start to help us win in the market. But I think the real thing when this team goes in and pitches for business and wins business, it's their passion to go in and educate employees, educate them on how much they need to be saving for retirement, educating them on the diversification of the investment portfolios that they need for safe accumulation of assets. That just comes through when we pitch for business. And that's -- I'd say for me, that's the key reason why we win business.

And what's the outlook for margins on this part of the business? Is there significant price competition out there because of the dynamics of the industry?

There is significant price competition. I'd say if anything, it's moderated. Now it's always going to be there. But like the value for money in the U.S. is already fantastic. It's a very large, very competitive market. It's very difficult to compete if you don't have scale. We have fantastic scale there. And it's not just that we have scale, like we have scale and a very good operating engine. And I think that's why there's been an improvement in the operating margin on both the retirement side and on -- the wealth side is a little bit different and maybe we can come back and talk about that in a moment, but we have a scale operation that is very good at what it does on the workplace retirement side, and we've seen a very significant improvement in operating margin.

Now some of that is because like, obviously, markets have performed very strongly. Like obviously, about 50% of our revenue is linked to market growth. And it's sort of -- because of a well-run scale operation, you've seen a feed-through of that, sort of, additional revenue straight through to the bottom line. Now I think our operating margin on the Workplace retirement side is about 35%. It probably doesn't need to be as good as that, to be honest. And it is a platform we will continue to invest in. I think we've shown we can manage expense growth very well, but we do have room to invest in that. So we're not -- certainly not looking to grow operating margin on the retirement side beyond where it is at the moment. And to be honest, I'd be comfortable even at levels that are a little bit lower than where we are at the moment. I think where we are at the moment is probably the right sort of long-term position or even medium-term position for the business to be in. But I'd say we have some room or flexibility there in the shorter term.

And we'll touch on Millman and the defined contribution -- sorry, defined benefit in a moment. But is there any areas in the defined contribution pension market that you don't operate in? Is there any gaps in the offering at this stage?

Not within the different segments, there are very distinct segments of the defined contribution market, and they're all very different. So there's the mega, mega huge plans. They have their own dynamic services that they need. There's large plans that are different than the mega [indiscernible] again, you get down to the sort of medium, smaller end of the market, that's more in partnership with advisers. There's even sort of government segment, trade union segments that are very different again. The thing about the business in the U.S. is like we're good in all of those different areas. We have different teams as well pointed in each area because the dynamic is different in them all. And we do very well in all of those different segments. And -- and there's different dynamics, different profitability in each, but different sort of customer access as well in each. So we like them all.

So really, the add-ons are more about -- it's not different segments of the market, but just the broadening out of the product shelf. So option trust has been a fantastic add-on. So having stock compensation capabilities alongside 401(k) is very important. I mentioned the add-on of private markets as well, like that's going to be very important, I think, over the next 10 years. Additional sort of areas that sit alongside not within your 401(k) account but sit alongside it like health care savings accounts, education savings accounts, even sort of broader individual sort of ISA brokerage type accounts. All of those are important, and we continue to invest in those capabilities.

And then Milliman brings you into the defined benefit side of the business. Can you talk to the strategic merits of this acquisition and what it brings to the table for [indiscernible]?

Yes. Look, it adds some scale. It adds a great team and capability as well. we really like the Milliman team and the people that we're bringing in. And I think they'll do fantastically well in the overall organization. The scale it like it adds sort of 1.5 million participants. That's split about 50-50 between defined contribution and defined benefit. It adds 130 billion in client assets. The majority of that is defined benefit. It's about 80 billion defined benefit and 50 billion defined contribution. But the real thing it adds is just go-to-market capability. Like if you look at the Fortune 500 companies. I think it's maybe up to about 15% of those companies have both defined benefit and defined contribution. Like obviously, their go-forward pension arrangements are defined contribution, but like a very significant number of large companies have legacy defined benefit arrangements as well.

And increasingly, what we've seen in the market is an appetite when people are looking to pick their retirement provider is to pick a provider that can handle, obviously, both the defined contribution side, but also where it exists, those defined benefit arrangements. So I think it's just -- as I said, we've had a fantastic win rate in the market over the last 5 years or so. But this is just -- this sort of broadens or widens our sort of go-to-market offering, and I think it's going to just strengthen that win rate.

And outside of the exposure defined benefit, did Milliman's platform give you any incremental capabilities or technology that [indiscernible] Power didn't have before?

Well, obviously, they have their own platform behind that defined benefit administration. We were doing some defined benefit administration ourselves through partners rather than sort of our own in-house capabilities. So now we will have that capability, and we will transfer existing arrangements over to that. That platform is very, very good and very, very strong. And we also have some technology then just on benefits administration side. That's a much sort of smaller amount. And I think that's an area we will continue to look at. We'd look to add capability there. That may require sort of further add-ons or might require sort of more investment in the capability that we have there through this acquisition.

But the main technology capability we're getting is that defined benefit administration platform. And then just the team that come with it as well, like this is obviously a sort of very specialist service area, and we're getting a fantastic team of people with that as well.

And then David, moving on to the wealth platform in the U.S. Again, similar to what I was talking about on that, what differentiates your platform versus peers? I mean what's your competitive advantage or go-to-market strategy?

Yes. Look, again, there are specific things that you could pick out like our sort of personalized sort of hybrid model, the value for money that we have, the different sort of products and fund options that are there behind. Our service delivery NPS is just fantastic. But I think the core strategic advantage is the closeness of the wealth business to the retirement workplace business. And that just gives us -- just like this is slightly different than maybe the product proposition for the customer, but it just gives us a customer acquisition cost that I'd say just no other wealth provider can have unless they have an adjacent workplace retirement business as well. So like it's amazing if you look at the build of that wealth business, okay, like it surpassed $100 billion within the last 12 months at the end of Q2, it's at $120 billion.

But it's still a very young business, like it's only a number of years old, and it's at a 40% margin, that's just phenomenal for a business that's that. Now again, similar to the retirement, probably we don't need that business to be at a 40% margin. I think that's probably a good long-term destination for the margin. So we certainly have a lot of room to invest further in that business.

But the key strategic advantage is just the closeness of that business to the workplace business, and that just gives us a customer acquisition cost that is just way cheaper than if you were out looking for those customers cold in the market. I think the other thing that's very important then as well though is -- and this is more from the customer point of view, and it goes even more than just the product offering. Like it is a wealth business, but the core population in this wealth business are people that have retired and have built up wealth savings now that they're going to use to provide them with a lifestyle in retirement. And they're going to draw down an income out of those sort of accumulated savings. That's a very specialist wealth need, if you like, and it's different than the broader wealth market is made up of customers with lots of different needs and requirements. And I think the wealth managers that can best deliver those needs are wealth managers that have grown up in the retirement industry.

Like they understand what people are saving for and they understand that need in retirement and putting sort of products in place to get the best management of continued sort of growth in wealth, but can deliver that retirement income in a safe way, I think our people that are sort of founded out in the retirement industry.

So there's strategically, there's a customer sort of acquisition strength that we have because of the closeness of that business to the workplace business. But there is -- I think people who can deliver best for that group are people that are founded in the retirement industry and just really understand that need.

The adjacency to the retirement administration business, you talked about that as a strategic benefit. But my understanding is that some sponsors don't actually allow you to market directly until they've actually exited the plan. What proportion of the retirement plans are you actually able to market to directly?

Yes. I don't know the percentage now off the top of my head, but it's a very high majority. So -- and then it varies a little bit by segment as well. Certainly, as you get up to the larger end of the segment, it's not even that you're allowed. It's a sort of expectation that you're going in, you're educating employees all the way through their life on just the amount they need to be saving on the diversification of the portfolio and then appropriate strategies that they would go into on the retirement side. So dynamic sort of changes in the -- as you get down to the smaller end of the market. And some of it is maybe access that you're allowed from the plan sponsor.

But some of it is then is well, like there's what happens at the smaller end of the market is there's typically advisers there as well, and that's a very important thing and a very positive thing because we probably don't have the scale where we could reach out to all of those small organizations just through our sort of population of advisers.

So as you actually get down to that end, you need sort of independent advisers that are closer to those. And that just changes the dynamic then about who's giving the advice and all of that. Even where you have access then to the customer base, there's very strict rules because -- and this is probably different to the broader sort of wealth industry. All of these people are coming out of approved retirement products. And there's very sort of strict rules on just the advice delivery around that and the ability to demonstrate that people are going into a very appropriate products as well. So I think that's a very positive thing. So yes, so it's -- we have access in the majority of cases.

We're running close to time. So I'm going to just -- I actually had a couple of questions from clients, and they're all on the same theme. So I'll pull it all together. And it's talking about M&A in the U.S. You mentioned that you are very open to that. Do you see any opportunities for large-scale acquisitions? And what may that look like to scale up your operations in the U.S.

Yes. Again, we get a lot of questions on this and like my answer is boringly same all the time. So just we're not dependent on acquisitions to hit our medium-term objectives. And that just puts us in a very disciplined position when it comes to acquisitions. So any acquisition has to hit our internal requirements, and we have to be very confident on execution. Like we would love to do further acquisitions in the U.S. and in our other segments as well where they would add scale or capability. But like our track record in the U.S. is fantastic. We've done such a fantastic job integrating those businesses. I talked about before that if we got an opportunity for something like that, again, we'd be very confident on the integration and delivering expense synergies and revenue synergies as well.

The sort of difficulties we see are -- the things that were so brilliant about JPMorgan, MassMutual and Prudential, we got to buy sort of clean defined contribution books. There probably isn't anything sort of as clean as that, like there's probably smaller ones that are clean, but there isn't larger ones. So the difficulty as you get into larger ones are with the other parts alongside the defined contribution business. So that's something we would have to get our head around. And then there's always the price then as well, like the price has to be right.

So there may be opportunities. If there are those sort of large-scale opportunities, there are probably smaller opportunities. And then I think the other opportunity set on the U.S. is on wealth capabilities as well. We really are building out a fantastic wealth platform and in time, adding on wealth capabilities, our scale will be important as well. But our preference remains workplace, but it has to be in a way that works for us and then wealth after that and then opportunities in other segments. And I will touch in, I know they are smaller acquisitions, but Milliman option track, they were fantastic acquisitions and just other areas where we can add on capabilities like that are also opportunities for us.

So David, just to make sure I put a fine point on it for myself that if there were opportunities that had other operations, that doesn't necessarily preclude you, but you just got to make sure that, that's not going to impede the IRRs.

Exactly. Yes. It doesn't preclude -- it doesn't rule them out. It obviously makes them more difficult and not as clean as easier as previous ones. So it makes the consideration a little bit more difficult, but it doesn't rule them out.

Well, David, you've been more than generous with your time. Really appreciate it. That was a great dive into the strategy of the operations. Thank you very much for your time. We really appreciate it.

Yes. It's a pleasure. And thanks for supplying the fire behind as well -- behind me and some people will see in the office. So we were true to our fireside chat job.

Fantastic. David, thank you, and enjoy the rest of your summer.

Okay. Bye-bye.

Thank you for standing by. Welcome to the Great-West's Second Quarter 2026 Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Mr. Shubha Khan, Senior Vice President and Head of Investor Relations at Great-West. Please go ahead. .

Thank you, Morgan. Hello, everyone, and thank you for joining the call to discuss our second quarter financial results. Before we start, -- please note that link to our live webcast and materials for this call have been posted on our website at greatwesttlico.com under the Investor Relations tab. Turning to Slide 2. I'd like to draw your attention to the cautionary language regarding the use of forward-looking statements, which form part of today's remarks. And please refer to the appendix for a note on the use of non-IFRS financial measures and important notes on adjustments, terms and definitions used in this presentation.

And turning to Slide 3, I'd like to introduce today's call participants. Joining us today are David Harney, our President and CEO Jon Nielsen, our Group CFO; Ed Murphy, President and CEO, Empower; Davis Mohan, President and CEO, Canada; Lindsey Wixom, CEO of Europe; Jeff Pune, CEO of Capital and Risk Solutions; Linda Carrigan, our appointed Actuary; and John Melbourn, our Chief Investment Officer. We will begin with prepared remarks followed by Q&A.

With that, I'll turn the call over to David.

Thanks, Shubha, and good morning, everyone. Please turn to Slide 5. This quarter, we built on our strong start to 2026, delivering 15% base EPS growth, driven by double-digit growth at both Empower and CRS. We continue to demonstrate strong execution across all of our growth platforms. Empower across the northern milestone, surpassing USD 2 trillion in client assets on its workplace platform. This business will be further strengthened by the acquisition of Milliman's Retirement and Benefits Administration business, which is expected to close later this year. Great-West continues to generate strong risk-adjusted returns with a base ROE of 19.3% this quarter, supported by our ongoing shift to a more capital-efficient business mix as well as balance sheet optimization initiatives.

Lindsey will discuss some of these initiatives in more detail shortly as part of an update on our European operations in this quarterly call. Our strong cash generation and balance sheet continue to provide significant financial flexibility, and we expect total capital deployment through buybacks and M&A in 2026 to be at least as much as was deployed in 2025. Please turn to Slide 6. I -- as I mentioned, we delivered base EPS growth of 15% year-on-year, primarily driven by strong growth in our retirement wealth and reinsurance businesses across markets.

Total retirement and wealth client assets grew 22% year-over-year to more than $3.37 trillion, of which $1.3 trillion represents higher-margin assets under management or advisement. Robust capital generation continues to reinforce our financial position. We continued our share buybacks during the quarter and still ended with a solid capital base, including a LICAT ratio of 128%, Holdco cash of $2.5 billion and a leverage ratio of 27%, down 1 percentage point from Q1.

Please turn to Slide 7. Our results this quarter highlight the benefit of diversification in our portfolio. Our segments are largely delivering on their growth ambitions through the first half of the year despite the impact of more volatile earning drivers. Empower grew base earnings at a double-digit pace year-over-year with strong operating margins and retirement plan wins while delivering impressive growth of 66% in its wealth business through the first half of 2026.

Canada saw a double-digit growth in both Retirement and Wealth earnings on particularly strong margins, though this was offset by moderated insurance experience in the second quarter. In Europe, business performance has been strong across markets year-to-date with robust sales, including $1.2 billion of bulk annuities in the second quarter, continuing to support the outlook. And finally, Capital and Risk Solutions continues to see strong demand for capital solutions across geographies and product lines, driving 38% year-over-year base earnings growth for the first half of the year.

Overall, I am very pleased with our performance at the midpoint of the year. Please turn to Slide 8. We I want to take the opportunity to highlight Empower's recently announced acquisition of Milliman's Retirement and Benefits Administration business. The acquisition further scales our defined contribution platform and more importantly, as a leading defined benefit capability that strengthens our go-to-market offering by adding 1.5 million participants and USD 130 billion in client assets upon closing. Empower's workplace platform will be better positioned to compete for bundled opportunities.

This transaction is expected to be financially attractive and accretive to base earnings in the first year and is available today to address any additional questions on the transaction and the strong outlook for Empower's business overall. .

With that, I will pass over to Lindsey to discuss our European operations, where we have significantly enhanced the risk return profile through sustained new business momentum and balance sheet optimization.

Thank you, David, and good morning. Please turn to Slide 10. In Europe, our base earnings increased 2% year-over-year in the second quarter, primarily driven by higher global equity markets, favorable insurance experience gains and supportive currency movements. These were partially offset by a moderation in trading gains from the exceptionally strong levels recorded in the prior year. For the first half of 2026, base earnings grew 8% year-over-year, better reflecting the solid underlying business performance and successful execution of our strategic priorities.

These results reinforce our confidence in the long-term earnings trajectory of the European business. We continue to benefit from a diversified earnings mix, recurring fee-based revenue streams and strong growth across our lines of business. Turning to Slide 11. Looking more closely at business activity, Europe continues to see robust demand across product lines, providing attractive opportunities for organic investment and a strong foundation for sustained earnings growth at a mid-single-digit pace or higher.

In insurance and annuities, U.K. bulk annuity sales were $1.2 billion this quarter, with year-to-date sales amounting to a fivefold increase from 2025, reflecting robust demand for bulk annuities across the industry and healthy margins, particularly in the SME segment of the market. We continue to deploy capital in a disciplined manner, targeting returns in the mid-teens or higher. Retail annuity sales also remained strong, increasing 54% year-to-date reflecting on consumer demand for guaranteed retirement income solutions amid ongoing retirement planning needs.

Within Group Benefits, in-force premiums increased 9% year-over-year reflecting solid retention, pricing discipline and ongoing growth, particularly encouraging with the performance in wealth as net flows improved significantly from the prior year period to $7.1 billion of net inflows in the first half of 2026. This improvement was driven by continued momentum in retail sales and a rebound in institutional flows. It also underscores the attractiveness of our value proposition as clients continue to seek trusted advice and comprehensive wealth solutions across our European markets. .

Finally, retirement net flows remained positive at approximately $600 million, consistent with the prior year, demonstrating the resilience and stability of our retirement franchise. Taken together, the U.K., Ireland and Germany have a breadth of avenue to drive sustained growth. These drivers are supporting stronger earnings, higher ROE and increased capital generation. while reducing dependence on any single market or product line.

Please turn to Slide 12. Beyond top line growth, we continue to make significant progress in optimizing our balance sheet. At the Investor Day last year, we outlined a series of initiatives designed to improve capital efficiency, enhanced returns and increase financial flexibility. We are pleased to report that we are on track to deliver over $3 billion in capital benefits, exceeding our expectations from a year ago. These benefits were generated through enhanced asset liability management practices, strategic use of reinsurance and modernization of our ALM tools and risk modeling capabilities, improved capital efficiency has translated to more than $2 billion in additional cash remittances and has reduced capital strain on new business by approximately 30%, enhancing capital deployment flexibility across the boarder organization.

The impact of these initiatives is most clearly reflected in our return metrics. Europe's base ROE this quarter reflects a 350 basis point improvement from 2024, demonstrating our ability to translate business growth and capital optimization into greater value creation. Importantly, this improvement has not come from taking additional risk. Rather, it reflects deliberate actions to optimize capital utilization, improve our business mix and increase operating efficiency.

Overall, Europe has delivered a good first half of 2026, marked by strong top line growth and enhanced capital efficiency, enabling the business to drive strong risk-adjusted returns. As we look ahead, -- our focus remains on executing against attractive growth opportunities, maintaining disciplined capital deployment and continuing to enhance returns while preserving the strength and resilience of our balance sheet.

I'll now pass it over to Jon to talk through the broader financial results for the quarter. .

Thank you, Lindsey, and good morning. Please turn to Slide 14. Great-West, again, delivered a strong quarter with double-digit earnings growth driven by sustained momentum across our retirement and wealth businesses and strong new business volume in our CRS business. Base earnings per share growth of 15% year-over-year was also supported by $925 million of share buybacks since the start of the year. These results drove base ROE of 19.3%, in line with our medium-term objective of 19.5% for a second straight quarter, while net earnings in the second quarter were impacted by unfavorable market experience, primarily from interest rate movements, the year-to-date impact of interest rates was largely neutral.

Turning to Slide 15. We are pleased that credit experience for the second quarter was down year-over-year and within our expected range of 4 to 6 basis points on an annualized basis. As a reminder, total credit experience is the aggregate of credit experience shown in our drivers of earnings disclosure as well as our retirement and wealth P&L statements, all of which are included in the supplemental information package.

We continue to expect that under normal conditions, credit experience would be at the lower end of the $80 million to $120 million pretax range that we indicated at the beginning of the year. Turning to our results by segment, starting with Slide 16. Empower delivered an excellent quarter with double-digit growth in base earnings, up 34% in constant currency, reflecting continued organic growth momentum across both the retirement and wealth businesses.

In Retirement, strong equity markets drove double-digit growth in average client assets which now exceeds USD 2 trillion for the first time. Net plan inflows remained strong, and we continue to expect positive net plan flows for the full year 2026. Operating margins also improved by over 600 basis points from a year ago, helped by improved credit experience and underscoring the significant operating leverage in the business.

Empower Wealth performed exceptionally well with base earnings up 67% year-over-year in constant currency. Operating margins were a record 40% this quarter up 10 percentage points year-over-year, demonstrating the scalability of the wealth platform. We intend to further invest in the business in the second half of the year and beyond and as a result, expect the full year operating margin to be in the mid to high 30s.

Overall, the significant momentum in our businesses drove empowers base ROE to a record 22.2% and reinforces the double-digit growth outlook for 2026. Turning to Slide 17. Base earnings in our Canadian operations decreased 9% year-over-year as continued momentum in retirement and wealth was offset by moderated long-term disability experience gains, which can fluctuate from quarter to quarter.

Underlying business growth was solid with group benefit sales up 20% from a year ago. Insurance and Annuity sales up 15% year-over-year and rising equity markets and operating leverage supporting base earnings growth of 26% in the retirement business and 38% in wealth.

Turning to Slide 18. Capital and Risk Solutions continued the strong start to the year with base earnings up 35% on a constant currency basis in the second quarter. This was driven by continued demand for our capital solutions globally, which drove a 54% year-over-year increase in the run rate insurance result in the second quarter. The pipeline in that business remains strong, and we continue to expect new deals through the remainder of 2026.

Turning to Slide 19. As we've highlighted in the past, our organic capital generation is significant and is a key strength of our businesses. In the second quarter, base capital generation exceeded 80% of base earnings, while free cash flow was 86% of base earnings. As we've said before, Great-West Capital is highly fungible, providing significant support for continued capital deployment, while attractive organic growth opportunities and our more capital supported businesses, may impact base capital generation in any given quarter, we expect Great-West to remain highly cash generative.

Turning to Slide 20. Great-West exceptional free cash flow generation has supported significant capital deployment. So far this year, we've repurchased $925 million of common shares and announced the acquisition of Milliman's Retirement and Benefits Administration business in the United States for a total consideration of USD 340 million. Similar to last year, we've amended our existing NCIB, allowing us to repurchase up to 40 million shares in 2026.

We continue to expect that total capital deployed either through share repurchases or M&A will at least be as much as the $1.6 billion deployed in 2025. Our LICAT ratio stood at 128%, down from 129% at the end of the first quarter, driven by a number of individual insignificant items. For the remainder of the year, we expect to maintain a LICAT ratio at or above 125% even if new business volume in our reinsurance business remains elevated.

Our leverage ratio of 27% and Holdco cash balance of $2.5 billion positions us for continued financial flexibility and to pursue strategic capital deployment opportunities. Overall, we've had a great first half in 2026 and are excited about the continued momentum across all our business segments.

With that, I'll turn it back over to David for concluding remarks.

Thank you, Jon. Please turn to Slide 22. I'm really pleased with how well we have continued to execute on our strategy since I took over as CEO a little over a year ago. With double-digit earnings growth through the first half of the year and a base ROE in excess of 19%, the results speak for themselves. This is a testament to the focus and efforts of our people across the organization. I'd also like to note that we are presenting our results for quarter 2 a week earlier than we did last year. And I'd like to thank the finance and related teams for the amazing work to date and accelerating their time lines to facilitate the earlier reporting of these results.

I am confident in the outlook for our business. We remain well positioned to deliver on all our medium-term objectives. And Power is on track once again to generate double-digit organic base earnings growth this year. CRS continues to outperform its growth ambitions with strong demand for its capital solutions expected to persist through 2026. We also demonstrated the strong and improving return profile of the business, supported by our balance sheet optimization efforts, especially in Europe.

I am confident that we will continue to deliver on our strategy and create long-term value for our shareholders in the years ahead. Thank you.

And with that, I'll turn it over to Shubha to start the question-and-answer portion of the call.

Thank you, David. In order to give everyone a chance to participate in the Q&A, we ask that you limit yourselves to 2 questions per person. You can certainly requeue for follow-ups, and we will do our best to accommodate if there's time at the end. Morgan, we are ready to take questions now. .

[Operator Instructions] Your first question comes from John Aiken with Jefferies.

With the Capital Risk Solutions that you mentioned the strong pipeline. As you're seeing demand increase in the segment, -- is this actually having any impact on margins? Are they actually widening out?

That's a good question, John. Thanks for that. We're -- I mean there's always eroding margins on business that's been in the books for a long time. So you can think of capital solutions as innovative and in the early years, you tend to get really good margins. And as others other insurers enter the market then that the margin erodes over time. So we always have a little bit of erosion on our margins on existing transactions over time. And that's the way it works. However, I think what we are seeing right now and what we've seen in the last 18 months or so and continuing to see a lot of demand for some of the solutions that are working.

And it's actually a very diversified portfolio. We've got behavior risk in Europe and in North America, policy behavior risk that people are reinsuring out. And then we're seeing some helped reinsurance demand in the United States, the mass lapse transactions in Europe on savings products. And then some -- a lot of demand on our essentially our capital solutions for non-life products. So it's coming in a very diversified manner. We're very happy with it. However, our business is lumpy and it comes in waves.

I think I highlighted that at the Investor Day last year. So it is a very lumpy business. Right now, we're riding the wave, we're very opportunistic that way. But we remain disciplined. If the margins are no longer there, and we're not getting our returns we're going to move on to other types of products. So it's important for us to continue to get new ideas and new products, and we're working on those, and we've got some pretty good ideas right now. So whether the demand will be there or not for these products is hard to tell. But it's been a good run.

I think it's fair to say, Jeff, that margins on the new business have been good and in line with very very good -- what's driving the growth here is increased demand from the market rather than any change in our competitive posture.

Understood. Understood. And Jeff, just as a follow-on, given your success, how is competition shaping up in your markets?

It's been -- I mean, it's the same usual suspects, right? Like there's the same -- we're the same player. I think that what we've seen, Jon, over the years, I think that reinsurers have shift -- there's been a shift from just a risk partner to capital and planning partner. We've been at the forefront of that, and we're constantly coming up with ideas. So -- we've got extremely good relationships with large insurers in all the markets we're in.

And I think we benefit from the trust that they have in us. There's always some copycats in the market and people that are coming in and trying to get in the market. That will continue to happen. But we have been 1 of the leaders in the capital solutions and intend to continue to be that way. It's a hard market to get in. You need to have experience and the right mindset, and the right balance sheet and backing of a strong company really helps as well. So I think we've got all the right tools in our toolbox to get there.

Your next question comes from Mike Ward with UBS. .

I was just wondering if we could dig into the Milliman deal a little bit. And 1 of the things I was curious specifically about is some of the opportunities beyond sort of the cost synergies, but like, I guess, revenue opportunities, right? The health and welfare benefits kind of administration just because I don't think I don't think that you guys kind of quantified that potential opportunity, but it's an exciting part of that deal, I think.

Ed, do you want to take this?

Sure. Thanks for the question, Mike. Absolutely. I would say unlike some of the other major transactions that we did in Mass Mutual and Peru, in particular, those were really driven in large part by cost synergies. This was very much about a strategic growth opportunity for us. This is a core capability that we were lacking to some degree because we are working through a third party. We're working through a partner.

And we really felt like we needed to own the capability similar to what we did with the acquisition of Option Trax, where we have now an owned and proprietary capability in the equity plan administration category and space. And so we think there's tremendous opportunity, obviously, to cross-sell our DB admin capabilities with our existing customer base, tens of thousands of corporate clients. But also, it puts us in a position to be far more effective in new pursuits when clients and sponsors are typically looking for a multi-product type solution, defined contribution, defined benefit administration and health and welfare administration.

And so we're better positioned -- we will be better positioned once that's successfully integrated to compete for those opportunities. I would say the market has moved to valuing the bundle and that's very much core to our strategy is to build out these capabilities that allow us to establish deeper relationships with existing clients and with prospective clients. And what I would say is in our workplace business, we continue to grow as measured by net new participants -- at 1.5 to 2x the rate of the market.

In fact, this year, without an owned DP admin capability will add close to 1 million participants net to the platform on a base of $20 million. So 5% growth in a market that's growing at 2%, 2.5%. So I think this is a tremendous growth opportunity, obviously, coming out of the transaction. Once it closes, we are establishing a partnership with Milliman. We think there's tremendous consulting opportunities that we can work on with Milliman. So I would just summarize by saying -- this was all about addressing a product gap that we felt like we had, but also very revenue synergistic from the standpoint of being able to have a much more appealing offering across things like DC DB and health and welfare. .

That makes a lot of sense. And then shifting away from the U.S. So the -- you guys spent a good amount of time talking sort of about the capital efficiency and business mix optimization efforts in Europe I'm just kind of wondering like how much more runway you see to further execute on that in Europe and what that could look like? And do you see similar opportunities in other regions?

Yes. Thanks, Mike. We're really happy with the success that we've had in Europe. That's a multiyear project and happy to report back on being ahead of where we expected to be at the Investor Day. And that's really driven the ROE up significantly as we've done that and generated capital for us. I would say we're kind of 2/3 through that work. It does cover all the countries in Europe, although the most significant impact were in the higher capital-intensive business, which is more a part of the U.K. business.

And when I say 2/3 of the way through, we are reflecting what we expect to be the outcome of that work when we've reported back to you and when we set out our initial expectations. So as we continue to deliver that, it will be against those expectations that we've laid out. That's not just a focus in Europe, albeit that was the biggest opportunity for us. 2 years ago, but we're looking across the business and continue to optimize the business mix, the capital intensity and the return and look for opportunities to continue to drive better capital deployment and better IRRs out of our business.

Your next question comes from Tom MacKinnon with BMO.

Two questions. First on the Capital and Risk Solutions. If you mentioned the business comes in waves. It looks like the capital solutions business is largely in terms of short-term business and not really the -- not CSM related. So if demand did fall 10% would we expect those short-term expected earnings to decline 10%. And what is the outlook really for that those short-term expected earnings in CRS going forward through 2026, given the strong demand?

Thanks, Tom. I appreciate the question. I think you could look at some of the capital solution earnings as being a bit stickier than you've said there. It does erode over time either through competition or people don't renew some of their covers. But we tend to replace and expect to replace those earnings with more capital solutions. So the demand is still fairly strong although I think it's tapered off a little bit from the levels we've seen in the first -- the last 18 months, but there's still plenty of demand.

So I would say that the current level of run rate that we have now is very sustainable. And we're probably going to continue to see mid-single-digit plus growth from this standpoint. So that's how I would qualify it. That makes sense.

Great. The second question is with respect to Empower. Ed, we had $14 billion in participant net outflows understand higher markets can sometimes lead to higher net outflows, but that to me would suggest a lot of rollover possibilities yet. I look into U.S. wealth, there was $1.8 billion in net inflows. That's kind of the lowest we've seen in the last 7 quarters, understanding you're doing some transformation initiatives there kind of trying to upgrade your capabilities with respect to rollover capture. But any color you can add on that on the commentary I just made there.

Yes, sure. Tom, I think the 1 thing to take note of is the seasonality of the contributions on the workplace side. So we had roughly $45 billion in contributions in Q1, and that was to be expected because that's when a lot of the company matches and profit-sharing hits. And then that dropped to $32 billion in Q2, and we would see that being relatively constant through the balance of the year from a contribution standpoint. So the disbursement piece of it or the distribution piece of it on the workplace side, was largely just driven by account balance as it wasn't volume per se.

Now to answer the second part of your question, what I would say is, as we shared with you last quarter, we've instituted some changes. We've implemented several changes across the organization made some structural changes, made some personnel changes. And I will say that I have seen improvements starting to take hold. And as I look at Q3 and beyond, we fully expect to see improvement above what we experienced in Q1 and Q2, so a lot of the indicators, I think, are very, very strong. The flow opportunity for us has been fairly constant from quarter-to-quarter in terms of the opportunity set. But as we look forward, we see greater success and higher net new assets in Q3 and Q4. So more to come there, but I feel good about the path that we're on.

Your next question comes from Alex Scott with Barclays.

First one I had is on excess capital. I was wondering if you could talk about capacity you have. I know you've got the Milliman going on. So just maybe talk about your appetite for further M&A and how you're measuring that against buybacks, especially considering your stock price has gotten to a pretty attractive valuation at this point.

Yes. Thanks, Alex. As you know, we're generating significant capital in excess of our target of 80% plus and that's really translated into really strong free cash flow. If you look at this quarter above 85%. And that trend, if you look backwards, was fairly consistent. 2/3 of our business and the growth parts -- the parts of our business that are growing the fastest, do come from capital-light businesses, and we expect that those businesses to continue to outpace the growth of the overall company.

So we're in a good position to see that free cash flow continue at high levels. We did -- as we reported back on, we are in the process of capital optimization on some of those more capital supported businesses and happy with the progress there that's also driving that capital generation. We did end the quarter at around $2.5 billion of cash, and we haven't changed our capital allocation priorities continue to be what's in the best interest of the long-term return of our shareholders and deploying that.

We have the tools available, both through our NCIB program and through an active watch on the M&A market, which we took advantage of this quarter, as you said, with Milliman to deploy that capital, we would expect over time that we wouldn't sit on excess capital in perpetuity, but there may be timing as to when opportunities present themselves in the M&A market. We want to be prepared for those and balance that with our ongoing buyback program. So what we said consistently in this third quarter of the third call of the year is that we will do at least as much capital deployment as last year.

That was $1.6 billion. We deployed $925 million in buybacks and then obviously the $350 million or so into the Milliman acquisition. So we'll continue to evaluate as we head into the second half, we have the tools in place and thankful that Power Corporation has continued to support extending the NCIB program to the same level of shares as last year. Obviously, we probably wouldn't get to the full usage of that NCIB program, but I guess our thought is stay -- have some flexibility.

We still think there's intrinsic value in buybacks and strong earnings growth and cash generation in our stock and we'll balance that against opportunities. As I said, with the thought that we'll deploy that capital, but there may be timing in which we in which we do it and obviously, a balance between the opportunities in the M&A market and buybacks.

Got it. Really helpful. Next one I had is on Empower Retirement. Wanted to see if you could talk a bit more about the margin there. I know I heard you upon on the margin for wealth, I think, in your comments, but could you talk about retirement that the margin has gotten a lot better there. How are you viewing the trade-off further margin improvement or investment in the business in that segment?

Yes. So I think a couple of factors there. Obviously, the market tailwind has been a contributing factor, and that's been positive for sure. But as we've shared with you in the past, we've been on a multiyear journey in terms of transforming the operating environment and driving our unit costs lower and we have a multiyear plan to do that. Obviously, AI is playing a prominent role there, but also just the work that we're doing around straight through processing and automation.

So as we look further out, the scale that we have gives us tremendous operating leverage and I'm confident that we can continue to drive unit cost lower. We can't always rely on the markets but we focus on the things that we can control, which is delivering value for our customers and doing it in a way that's efficient.

So I think our guidance in terms of margins in the workplace business is really sort of in the low to -- as you acknowledge, we've seen really strong improvement in the margins over the last couple of years and in particular, a nice move just over the last couple of quarters. but it's also a business that we are going to continue to invest in as we build out more capabilities.

If you think about the acquisition we did with Milliman that's largely a workplace type transaction. So we're making investments there. But our -- we've got a really strong expense discipline that I think is also a big contributing factor.

Your next question comes from Paul Holden with CIBC World Markets.

First question I want to ask you about is on asset allocation. And in consideration, particularly of corporate spreads were about as tight as we ever have. And the reason I'm asking the question always thought GWO and asset allocation always took advantage of spreads, not just in terms of trading income opportunities, but also just in terms of yield enhancement, right, being an important part of the story over time. So just recent thoughts on asset allocation, how you're dealing with or trying to generate yield enhancement opportunities in a very challenging credit spread environment.

Jon, do you want to comment?

Yes. Thank you. So what I'd say is with respect to where we are in the current credit spread environment, -- we have a conservative, well-diversified portfolio. We are not aggressively chasing or pressing on that given that we are near historical tight spread levels across the board. And I think the strategy remains consistent. We will certainly look for ways to be more capital efficient and have a better balance in all of our businesses with ALM, but we also need to make sure we're market competitive in our product areas.

And so far, we're able to do that. But as you've seen with some of the changes that we've deployed, in some of our segments in terms of becoming more capital efficient and optimizing more effectively. That's likely to continue throughout the portfolio across our various segments. So again, I would say our strategy is to continue to hold the course on our desired risk taking in the portfolio and continue to try and build the portfolio yields through the types of strategies we have been deploying and more efficiency of capital. I'll turn it over to David, if you have any comments?

Yes. I'd just add overall, like our earnings are becoming less dependent on trading gains or a smaller portion. I think even in the current environment, there will continue to be trading gain opportunities. So -- but it's not a line we expect to grow -- we'll have less reliance on this going forward. But even in the current environment, we will continue to be trading gain opportunities.

Given all that sort of putting the trading gains aside, if I just sort of think about the sort of the core net investment income for such a thing as core net investment income. I guess, is skinnier spreads put pressure on that over time, I guess, is really the nature of my question.

Yes, I think it comes through in 2 parts of the business like started in that the capital-intensive business, pricing will reflect where spreads are at. And then so the idea where it comes through with the general account in the U.S., and that's more a straight, the crediting rates will affect where spreads are. So both of those become a little bit more difficult in a tightening spread market, but they reflect true in the underlying business. So...

Okay. Okay. That's good. And then second question is with respect to Europe and the wealth business. So obviously, a lot of positives taking place in Europe. But just kind of curious on well shows good asset growth, good flows, but no growth in earnings over the last year, and that looks to be an expense story. So maybe just kind of walk us through what's happening on the expense line. if that's intended to result in future opportunities? Or how -- basically, how do we understand that lack of earnings growth and the higher expenses versus revenue?

Maybe I'll take a technical factor, and then Lindsey can talk a little bit more about the business. There was a reclassification between wealth and retirement that impacted this year's numbers. We didn't go back and reclassify because it wasn't that significant at the group. So when you kind of look at the growth rate, you might aggregate those 2 together to get a more accurate picture of things. And apologies for that, it just better reflects the margins on each of the business as we see it.

Thanks, Jon. And then just to build from a business point of view, I think, as you say, we're seeing assets increased quarter-on-quarter. And due to just the mix of both client and revenue mix, you kind of see kind of a potential change in terms of how the fee revenue then comes through quarter-on-quarter. So I don't think there's anything else just seeing that other than mix over the course of the year. But we're pleased with the growth that we're seeing across all parts of the business in wealth.

Your next question comes from Doug Young with DesJardins Capital Markets.

I guess this is for Jon. Just wanted to kind of go back to capital for a second, but I just wanted to -- maybe you can quantify how much excess capital you have at the Canadian and U.S. OpCos. I see the cash up the Holdco. Just wondering how much is down at the opco. And then can you kind of define just kind of clear and to find what the debt -- what you see is the debt capacity and then the third part of it is just you said the LICAT was down quarter-over-quarter. There were several smaller items. I just -- I didn't know if there was cash moved up from the opco that had an impact. But what were those smaller items?

Yes, sure. Well, let me take you through the excess capital position overall, and then we can talk about the current trend. So as you indicated, the Holdco cash, the way we context this, that's outside of the LICAT and RBC environment. That's excess capital. We typically keep around a little bit of liquidity there. but you can generally think of it as fully deployable and that was just around $2.5 billion.

I think as I've indicated in the prior couple of calls, that typically we would look at capital above 120% or just over $2 billion as being deployable. And as I indicated, for the right transaction, we could go down to that level, but we'd always balance that decision. And the question is, would we and how would we fund a transaction not could we, but would we go down that low? So that's about $2 billion. In terms of RBC in the U.S. I would think of the U.S. is being highly cash generative for us. On the upper end of where we generate cash as a percent of base earnings.

It's very high given the nature of the business. And whilst we have capital sufficient capital excess there to a degree, there are ongoing developments in RBC and other factors. So -- there may be some there, Doug, but we don't -- we really look at that as more cash into the future. In terms of leverage, so that kind of gets you to $4 billion, $4.5 billion, similar to what I said last quarter. And then you have the leverage capacity, we would see an ongoing rate, again, as I've shared, being 30% as being kind of an ongoing leverage rate this business could run at. So that's another $2 billion. So just around $6 billion of excess capital.

And as I've indicated before, we have for the right transactions, we have gone up temporarily in leverage up to a 35% level and then what we typically have done in the past, and we have a great track record, and I think this helps build why we have this capacity in terms of paying it down quickly. We typically then will pay down that leverage quite quickly, both with the cash flows of any acquired business and our ongoing excess cash flows. That would add another $3.5 billion or $4 billion. So we have a lot of capacity.

Our intention is to continue to generate that, and there's no reason we don't -- excess of 80%. You should assume that we'll continue to have cash flow move up to the holding company at a strong pace. During the quarter, it wasn't quite 1 point, we round to 1 point. So I'll just point out there's a bit of a rounding there number of insignificant items, I would call it, a little bit of market a little bit of timing on capital deployment. There's certain activities that you can align exactly in the time when you deploy capital organically and get everything lined up in terms of what the optimal capital structure for that new business is. So a little bit of timing -- and then just a number of other small things that honestly are not very individually insignificant. Nothing to give me -- nothing that would be something that would be like an ongoing impact to have a concern about. And obviously, then the outflow of capital.

Sure. And yes, okay. And there was a flow of capital left. You haven't quantified that, but you put up the or just Canada.

It is available, and this is one thing that we've done that I think gives you a great view on that. If you look at the SIP, you're able to back into all the numbers, but very transparently on the SIP on Page 17, -- Great-West HoldCo cash at holding company. That gives you a sense of the cash flows of the holding company and its related operations. The money that flowed up and where it went. I'll just say that there's always timing impacts on dividends. You can't some of our entities, you pay the -- typically, you pay it out after you earn it.

And some are annual dividends, some are quarterly. So look at that over the full year, when you always look at it over a full year rolling 4 quarter averages, and that's kind of what -- how we presented.

Okay. And then just second question. Like Canadian Canada, I know you had less favorable group LTD experience, and you talked a bit about that. But you had negative individual insurance experience. And I think it was maybe kind of fleshed out as gained like normal volatility. But I just wanted to get a sense of like the individual -- there was a big swing in the individual insurance line in Canada. Just maybe a little bit of color of what you're seeing there. .

Doug, I think it's Sabres here. Thanks for the question. That's right. We've had overall insurance experience in Q2 that was materially lower than a strong prior year, to mainly to less favorable group long-term disability experience, but there's also other experience factors that outplayed in the lower direction. In individual, as you pointed out, you would have individual disability, which was also unfavorable, although we see it as normal volatility there, and we would have mortality on both the workplace and individual side that are in aggregate unfavorable compared to prior year.

The bulk of it is when we do the year-over-year, the bulk of it is group don't turn disability. I can give just a few details there. It's been mainly around claims recovery where we've seen less good experience than we've had in the past. We've seen the strange trends start to emerge in Q1. We've seen a continuation of it in Q2 -- and we've seen at the industry level others as well, feeling the same pressure. So I think it would be wouldn't be unreasonable to think that may continue into Q3.

But long term, this is a strong business. We've also seen some incidence lower, higher incidents, so lower experience on incidents this period, but this has been quite recent. So we would qualify this as normal volatility. But overall, -- we're very pleased with the performance of our business, our workplace benefits business, the sales momentum is high, as was mentioned in the formal presentation. Same thing in individual insurance. These businesses remain healthy. This doesn't change our strategy. I mentioned group long-term disability. There's a part of it that has emerged in Q1, consumes in Q2 and may go on for a few quarters. The rest of it, I would say it's too early to call. and it doesn't change our strategy, and we've got strong businesses with good momentum.

Your next question comes from Gabriel Dechaine with National Bank Financial.

Just to keep going with that line of questioning, more on the group side. Can you explain like do you think lower recoveries, like what would have changed this year versus last? And then I mean is this preface, I guess, need to reprice the portfolio? How long does that take to restore margins?

Thanks for the question. Yes, lower recoveries as the return to work. So they returned to healthy and productive day for our members and disability. That's a bit slower than historical. So that's the trend that we see there. We have strong case managers. We're, of course, heavily focused on the factors that we can control, and we have good discipline in our case management and up discipline on our case management.

But as I've mentioned, we've seen this trend at the industry level, not just in Canada, but in Canada, primarily. And there can be a number of factors related to that, and this business can be cyclical. One thing that I'd point to is employment growth in Canada has been slower in '25 than '24 and then even slower in '26, almost flat in '26. And when there's not a lot of employment growth, when there's not a lot of demand for labor, the region to work process can be at the margin at the margin, just a little bit more challenging, and we're working through that.

But that's an example of micro factor that we might see in addition to the types of health conditions that we're dealing with. So again, we -- in this business for a long time, we've seen cycles and there's no reason to believe this would change. You talked about pricing there. The business is annually renewable, of course, depending on conditions that we see pricing is part of our toolkit, but I'm not going to expand more on that at this point.

Got you. And that job background answered my second question. So I'll change my second question just for the buybacks. Can you provide some -- another explanation of your appetite for buybacks, those stocks three times book. How does that factor into your decision? And then also, like Milliman was not a big acquisition. So is that even a reason to hold back on buybacks here?

Well, thanks, Gabe. Yes, first, we think there's still significant intrinsic value and upside in our share price, we continue to deliver at or above our medium-term objectives, and that's our intention to meet or beat those objectives and relatively still positive about the outlook on the growth for the organization. continuing at this pace. I wouldn't characterize anything as an outlook change on buybacks. We did $925 million in the first half. We did significant buybacks in the second half of last year.

And we have the commitment from our major shareholder on a continuation of the same level of authorization and buybacks as we had last year. We are always looking for other opportunities that create long-term total shareholder return. And obviously, deploying capital into very accretive transactions, mid IRRs on the Milliman transaction. We bought it at, call it, 10x earnings level. So this is going to be accretive.

And and $350 million isn't necessarily pocket change. We'd like to do more transactions that meet our financial criteria. It's hard for us to time those, right? I mean we can't we can't know when those opportunities come. So we always want to be apprised of being -- having capital available. What we can assure you is as we said on the third call, we're going to do at least as much as we did last year in terms of capital deployment. And we are going to be active in buybacks and hopefully, M&A as we look forward because we generate significant cash flow in excess of our ongoing dividend and other fixed capital needs.

So we will deploy that cash. It will be deployed accretively. We want to do it very carefully. And whether it be through buyback or M&A, you should expect over time that excess capital to be deployed accretively.

Your next question comes from Darko Mihelic with RBC Capital Markets.

I'm looking at two pieces of information. First is, from your shareholders' report, it's on Page 8 proper. And besides that, I have Slide 25 which shows how strong equity markets were, they were exceptionally strong in the quarter. And so my question is how did your equities underperformed your expectations in the quarter.

Well, thanks, Darko, for the question. There was -- obviously, there was some noise from our hedging program on our share price. The Great-West share moved up much in excess of the overall market, obviously, in excess of the long-term return that we assume for our base earnings. This -- the overwhelming amount of our exposure there is hedged, but there are a number of things that go into hedging those programs, including performance -- performance standards, the length of service, the outstanding -- as it relates to active management, all of that is -- all that ineffectiveness on the hedge is fully reflected in our base earnings, but a little bit of noise as it relates to just the sharp increase in price. Probably bring it back up a level in terms of the nonbase earnings impacts during the quarter.

It was principally driven by interest rates. And as you look at the interest rates year-to-date, is a negligible level. And what we always look at in terms of the market experience is not just a quarter not even an annualized level, but more on a long-term trend where we'd expect these to over time, be close -- 0 or close to 0. And so if you look at -- since we've applied IFRS, actually, market experience for -- Great-West has been a slight positive over 5-year period.

What we've seen is higher interest rate levels has caused a bit of a positive in terms of the impacts over that period or let's say, $1 billion of positive on the offset, really, we've seen that interest rate impact our real estate portfolio and offset some of those benefits as you might expect from a cap rate, and in terms of the real estate portfolio, I thought it was important to give some update.

What we've seen is almost 20% decline in that portfolio over the last couple of years. We have not made any active additions to our non-par real estate over the last 2 years, and we wouldn't intend to -- and even since the quarter ended, we've redeployed another $200 million of the real estate into other active asset classes. So we're seeing -- while we've seen some of that noise continue and as the markets adjusted to higher rates what we've done to respond to that is obviously not actively allocate and continue to -- and we've seen a reduction in the real estate of 20%.

So I just wanted to give that context as well as an update to the analyst market.

That's helpful, Jon. Maybe just 2 quick follow-ups, if I may, is the hedging -- I mean, Is this something newer or just -- and given that the hedging was negative against some of the strongest equity markets we've ever seen, -- and given that you're not really looking at increasing sort of other assets like real estate, is it time to revisit the base investment earnings expectations, number one.

And then number two, I don't know if you've ever looked at it this way, but I always look at this as a sort of a spread. There's investment earnings on assets that are backing your liabilities. And throughout this entire period, whereas your results on an actual basis versus expected, maybe slightly better or actually might be slightly positive. Your overall rate of return or spread on these assets, it's much lower than your peers. And so I'm wondering if you're leaving money on the table. And if we should be lowering or if you should be lowering the base investment earnings expectation?

Look, we're always looking at our long-term assumptions, Darko. We think they're consistent with market. And as I said, if anything, our net to base earnings in terms of markets, while it's volatile quarter-to-quarter, year-to-year, having been through a cycle of 4.5 years of quite volatile markets, if you think about that cycle, far higher interest rates, impacts on real estate inflation to come out of that period as a positive.

I think it should give you a lot of confidence in our assumptions should give you a lot of confidence in how we're managing the balance sheet. So I would argue that if anything, we've managed it very well in terms of the transition to IFRS and how we do ALM. I mean, I think the ultimate -- the ultimate answer to that is look at the free cash flow and ROE that we've generated over that time and the improvements there. So we always look at our assumed returns and so forth, there are different approaches that we're taking at IFRS 17 in terms of the transition.

I think Jon articulated well that we -- in terms of our deployment into yield -- we continue to deploy into the fixed income market positively and run it in a very conservative way. So we're very comfortable. We look at it all the time. And if anything, I think go back to were net positive over 4.5 years in terms of the market experience. So I think that's probably the best I can give you.

Your next question comes from Mario Mendonca with TD Securities.

Jon, can you go back to that the public equity markets lost -- the thing Darko was asking about, if you had applied your sensitivities literally and precisely, you'd expect something like close to a $40 million gain. And in fact, it's a $34 million loss. So we're looking at about a swing of $70 million, $75 million in 1 quarter. Now I understand that the hedging and effectiveness, as you described, goes through base earnings. So this would be anything in excess of what you might expect. So it's hard to -- for me to wrap my mind around a $70 million, $75 million ineffectiveness when, in fact, most of it gets recorded in base. So is there more going on there? Are there payments to executive payments to other people within Great-West Life that's incorporated in that million to $75 million. I'm estimating.

It wasn't -- yes, that wasn't -- I think I wouldn't context the volatility in the hedge to be the full gap between expected and actual. There were other performance-related factors in the investment portfolio wasn't the full impact. And there was, as you might expect, their noise in the base as well from the hedging program as I articulated, that is in the base earnings.

So it sounds to me from your response that the repayments here as well, and...

Yes. That's -- I mean, there's a lot of factors that sorry to cut you out, Mario, but there's a lot of factors that go into that hedging program. when people retire, how long they stay with us, performance factors. And when you have -- most of those aren't felt in a quarter where you have a normalized return, but we're really happy with the 35% return in the Great-West share price during the quarter and that accentuated what is a very highly hedged program with very little sensitivity. Single-digit sensitivity to the overall balance of the -- of what we expect to pay on the share-based compensation program.

Okay. Look, I can't help but assume that there are payments here that are part of the $70 million, $75 million swing. So maybe the question I'm really asking is, should we -- is this something we should see going forward, significant charges as payments are made.

I wouldn't anticipate that. As I said, we're highly hedged across the portfolio, very close hedging. But when you have a combination of movements in people and long-term balances in terms of certain on management and a hedging program, it stuck out this quarter. But this hasn't been any -- we haven't changed our position. We've always applied the same accounting. It just happens to be this quarter with a sharp increase. We saw this volatility. So it's not something that would recur.

Different type of question. Jon, you announced the increase from 20 million to 40 million shares in the buyback. But from your response, it doesn't sound like you'd get to $40 million. So my question is are -- is there a set of facts or circumstances that could get you to $40 million? Or is $40 million just highly improbable. And it's just their flexibility in case circumstances warrant it?

Yes. Obviously, there are certain limitations on the use of the NCIB program in terms of volume and so forth. I would context it is improbable. Last year, we didn't even get to $40 million I call it as improbable. Certainly, we have the free cash to get -- to deploy. We have $2.5 billion of cash to deploy into buybacks if we choose to, Mario. We want to make sure that we do the most accretive balance sheet management as possible.

And certainly, 1 of the tools that we're going to actively continue to pull is the buyback tool. When we say we're -- I think we've been consistent at least as much as last year, -- and over time, we will deploy all of that excess capital in one way or the other into accretive transactions. .

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Khan.

Thanks, everyone, for joining us today. Following the call, a telephone replay will be available for 1 week and the webcast will be archived on our website for 1 year. Our 2026 third quarter results are scheduled to be released after market close on Wednesday, November 4, with the earnings call starting at 9:30 a.m. Eastern Time on the following day.

Thank you again, and this concludes our call for today.

This brings today's conference call to a close. You may disconnect your lines at this time. Thank you for participating, and have a pleasant day. .

Good morning, welcome, everyone. The Manitoba offices of both Great West and Canada Life are located in Winnipeg.

So we're holding our annual meeting and hybrid format. So that provides.

[Foreign Language]

.

Board believes that she'll bring great experience. And as a result, we're moving forward to 20 people. And with that as well, the women will represent 35% of the directors on the board with certainly joining the Board. So very pleased about that. Are there any questions or comments from anyone attending today

Gordon, any questions online?

Thank you, Mr. Chair now there are not.

Okay. Then we'll proceed to a vote. The Board of Directors and management are recommending voting for the amendment to Great-West articles. The motion must be approved by at least 2/3 of the boat cast and only -- great West common shareholders or first preferred shareholders or their proxy holders may vote. I should note that while Canada Life policyholders who are attending online will see voting options on their screen, only votes from Great-West Life shareholders or their proxy holders will be -- if you've not already done so, please vote now.

For those attending online, please select a voting option on the voting panel displayed on your screen. And for those who are here in person, please use your Great-West Life ballots. -- and by placing an X in the appropriate box in the section entitled Amend the Articles of the Corporation and you can vote for or against.

[Voting]

And Gordon, you'll advise me how long we should wait.

The next item of business is the election of Great-West Directors still doing okay there, sorry about that. Next item business is the election of Great-West Directors before we vote on the matter. I would really like to take this opportunity to thank my fellow directors for the great dedication and hard work that you provide to the company and to our subsidiaries, many of you are on subsidiary boards and you're a big part, obviously, of the success of the business.

This year, the following individuals are identified in the Great-West Life management proxy circular will be nominated for directors, Michael Amend, Deb Barrett; Robin Binet, Heather Conway, out Andre Demare, Paul Demeritt Jr.; Sally Doer, Gary Doer, Cojan Edu, David Harney, Jake Lawrence, PaulaMadof; Susan McArthur, Jeffrey Orr, James O'Sullivan, Tim Ryan, Dianne Shaw, SimVenaselga and Brian Walsh. Gordon would you please present the related motion?

Thank you, Mr. Chair. I nominate for election as directors of Great-West Lifeco Inc. the individuals listed in -- great West management proxy circular, each for a term ending at the close of the next annual meeting.

Thank you. Does anyone in the room have a question on the election of Great-West Directors.

Any questions online that we've received, Gord?

There are not.

Okay. We'll proceed to a vote. Board and management are recommending going for the director nominees. If you've not already done so, please vote now. I should note, again, that if you're online and you're a Canada like policyholder, you're going to get an opportunity in your screen to vote, but you you can't vote on this matter, only votes from Great-West Lifeco Inc. shareholders and their proxy holders will be counted, and you can vote for or against the election of each nominee by selecting the appropriate boxes on your ballot or on your screen.

For those with paper ballots, you may vote for against nominees by placing an X in the appropriate box above the dotted line. And I'm told you should ignore the column entitled distribution of votes that I don't know why it's there if you should ignore it, but you should wait a moment here.

[Voting]

The next item of business is the appointment of -- great West auditors. It's proposed that the current auditor, Deloitte LLP, be reappointed. Gord, would you please present the motion?

Mr. Chair, I move that Deloitte LLP be appointed auditor of Great-West Lifeco Inc. for the 2026 financial year to hold office until the close of the next annual meeting, its remuneration to be fixed by the Board of Directors.

Thank you. Any questions on this matter in the room,

Any questions online, Gord?

We do have one question. I would ask that Lumi, please connect the caller prior to asking your question, kindly state your name and indicate whether you are a shareholder or a proxy holder. You may proceed.

Hello, can you hear me?

Yes, we can.

Thank you, Mr. Chairman, for allowing me to address the meeting. My name is Jeff Carlson, and I'm a shareholder. As a shareholder, I strongly oppose -- great West proposed special resolution to increase the number of directors from 19 to 20. 20 directors, even 19 directors is too many. All of your peer insurance companies have smaller boards limited to 14 members at most and making govern their companies very well. Irrespective of this fact, Great West is a life insurance company. It's not a technical or manufacturing operation, where there are far more complex moving parts, so to speak.

And very few technical organizations have greater than 12 directors, and they have excellent governance and oversight. In this regard, I see -- Great West proposal to increase the size of its board as irresponsible and wasteful. And I urge shareholders to vote against this special resolution.

All right. Thank you, Mr. Carlson for your comments, and I understand your views and have actually had a number of shareholders over the years, as you can imagine, express those views as they've been governance papers out on what the ideal size of a board is I would tell you that our Board talks about this matter a lot, and we are very, very comfortable with the number and the size of the Board.

Notwithstanding your comparison to technology companies, we actually run a fairly complex organization in different countries. And our governance model has many of our directors, not only act on the Board of Great-West Lifeco in Canada Life, but they go on to the U.S. Board, some directors go on the European boards. They go into various committees and bringing all those directors back together the Great-West Lifeco board brings a far greater connectivity with the businesses that are going on.

And at the same time, the Boards, we review the Board for effectiveness every year. We went through it yesterday actually, there's overwhelming sense on the Board that it's effective, notwithstanding the size, we get effective discussion on issues.

So I appreciate your views. You're not the only one who have expressed it. We talked about it a lot and very comfortable with the recommendations that we've made and with the size of the Board at this time. So thank you for your comments, Mr. Carlson. That matter was a couple of -- it was a couple of items ago. So the current item here is on the auditors one, but I appreciate your input. -- or any other comments?

Well, perhaps just for the benefit of the next person, they pose a question asking whether it was something better addressed at the general Q&A session and the answer to that is Yes, it is. So we'll ensure they get to ask that question later.

Okay. If there are no further questions then on the auditors, I would say we should move to a vote. I haven't lost my -- so the Board management is recommending that we vote for the appointment of Deloitte LLP as auditor and the motion can be approved by -- will be -- needs a majority and can vote for or withhold by selecting appropriate box on your ballot or on your screen.

[Voting]

Okay. So the next order of business is the consideration of an advisory vote on -- Great West's approach to executive compensation. Text is in the management proxy circular. Gord, would you please present the motion.

Mr. Chair, I move that on an advisory basis and not to diminish the role and responsibilities of the Board, the shareholders accept the approach to executive compensation disclosed in Great-West's management proxy circular.

Thank you. Like most companies, our success depends on the strength and the performance of our people, and we have an executive compensation structure and program that's designed to support our strategic priorities. And to tie the executives in with the long-term performance.

And we are very happy with the structure that we have. We believe it aligns our executives with the interests of our stakeholders. So we're asking that you vote on our approach to executive comp -- it's an advisory vote. It is not a binding vote, but the human resource committee would obviously take results into account as they discuss our compensation structures in the future. Anyone in the room have questions on this matter.

Gord, any questions online?

There are not.

Thank you. So we're going to proceed to a vote. And the Board and the management are recommended for you may vote for or against by selecting the appropriate box. And again, we'll give it a minute for people to vote.

[Voting]

Good Okay. So next order business is a consideration of a resolution to approve the adoption of performance restricted share unit plan. The text is in the management proxy circular. And would you, again, Gord present the motion.

Mr. Chair, I move that the adoption of a performance restricted share unit plan approved by the -- great West Board on February 11, 2026, and described in Great-West's management proxy circular be approved.

Any questions in the room? And then online?

There are none.

So we'll proceed to vote on the matter. And again, the management and Board are recommending for and it must be approved by a majority of the votes in this case, you may vote for or against the plan by selecting the appropriate box on your ballot or on your screen. So the polls on Great-West Life matters are going to close shortly. So if you've not voted on all Great-West Life matters, please do so now.

[Voting]

Okay. I declare the voting closed on all Great-West Life manners, and the polls are now open for business for the Canada Life meeting. First item of business for the Canada Life meeting is the election of Kendall Life policyholder directors. The year 9 individuals will be elected as Canada Life policyholder directors. The following individuals Michael Amend, Deb Barrett; Robin BF, Heather Conway, Sally Doer, Gary Doer; Susan McCarthy, Devani Shell and Sean Panacela. Gord, would you please present the motion.

Thank you, Mr. Chair. I nominate for election as policyholders directors of Canada Life, the 9 individuals listed as policyholders directors nominees in Canada Life's management proxy circular, each for a term ending at the close of the next annual meeting.

Okay. Any questions on this in the room or online?

There are none.

So we'll proceed to a vote. Again, the management and the Board are recommending that you vote for the nominees and only Canada Life policyholders or proxy holders are entitled to vote. And it's the Great Waste Life shareholders online turn to have an option to put in front of them that they can't exercise and Canada Life policyholders only, you may vote for or withhold from voting for the nominees by selecting the appropriate boxes.

Those with paper ballots, you may vote or withhold from voting for all 9 nominees by placing an X in the appropriate box or you may withhold for each dominant by placing an X in the appropriate box below the dotted line. This is for the policyholder directors only. I won't note that Great-West Life Co majority shareholder of Canada Life, votes for the shareholder directors. And yesterday, Great-West signed a resolution electing for the shareholder directors and the individuals identified in the Canada Life management proxy circular.

[Voting]

So the next order of business is the appointment of Canada Life's auditors is proposed that the current auditor, Deloitte LLP, be reappointed and Gord, would you make the motion.

Mr. Chair, I move that Deloitte LLP be appointed auditor of the Canada Life Assurance Company for the 2026 financial year to hold off us until the close of the next annual meeting, its remuneration to be fixed by the Board of Directors.

Thank you, Gord. Any questions on the matter? or online Gord.

There are none.

So we'll proceed to a vote and the Board in management are recommending for you may vote for or withhold from voting for the auditor and the whether you are on line, so the Canada Life Board polls will close shortly. So if you have not voted, please do so now. While you're doing it for those who have paper ballots, please pass your ballots to the Computershare representative here in the room who will collect them for their tabulation. And I -- you've got the all Thank you very much. So I declare the Boeing for Canada Life matter is now closed. So that concludes the formal part of the business.

And next on our agenda is we're going to hear from David Harney, President and CEO as of July 1 of last year, David, not surprised me has attacked his role with energy and enthusiasm and vigor and David, pleased to receive you up here and the podium is yours.

Thank you, Jeff, and thank you to our Board for your leadership and continued guidance. I also would like to welcome everybody joining us today, our shareholders, policyholders, advisers, employees, former employees, retirees and partners. Thank you for taking the time to be part of our annual meetings. And I'd also like to say that we are delighted to hold this event again here in Winnipeg, which is our best and favorite venue for the annual meetings. So a special call out and thanks to the team here who've done such a great job preparing for today.

I'm less than a year in the role as Group CEO, which makes me more conscious of the history of the 2 organizations. Great-West is 135 years old, while Canada Life is approaching 180 years. We are built on a legacy of trust, resilience and a deep sense of responsibility. Through wars, economic cycles, demographic change and our rapid technological transformation, this organization has endured because it has remained focused on what matters most, building stronger, financially secure futures. As I said, I complete my first year as CEO on the 1st of July. I want to express my sincere thanks to the Board for its confidence and support, to our leadership team for their partnership and to our employees around the world who deliver for our customers every day.

I'm equally grateful to our advisers, brokers and institutional partners and to you, our shareholders, for your continued trust. The environment our customers are navigating today is changing quickly and becoming more complex. People are living longer. That brings opportunity, but also uncertainty. Retirement decisions are more interconnected than ever before, yet the advice gap continues to widen.

Customers increasingly expect personalized, digitally enabled experiences while still valuing trusted guidance from organizations that will be there for the long term. At the same time, corporate and institutional clients are looking for partners with scale, capital strength and deep risk management expertise. This is where Great-West is particularly well positioned. We have leading positions across all our core markets, supported by strong, well-established brands and growth across each segment. Our diversification is not accidental. It is strategic. It provides resilience, insight and the ability to invest consistently through cycles.

Simply put, we are in the right markets with the right geographies and the right capabilities, not just to support customers today, but to serve them over decades. Our strategy is clear and consistent. We are focused on disciplined growth and capital efficiency. We build on leadership positions in our core franchises while expanding thoughtfully into adjacent areas where customer demand is strong and returns are attractive.

We continue to invest in our brand, our people, our capabilities and our technology to ensure we remain competitive and relevant over the long term. What distinguishes Great-West is not just scale. It is how we deploy capital, how we manage risk and how we align long-term value creation with customer outcomes. That discipline is reflected in the quality and scale of our businesses.

Today, we serve 40 million clients globally with more than $3 trillion in total client assets, including over $1 trillion in assets under management or advisement, placing us among the leading retirement and wealth providers worldwide. Strong positioning only matters when it is matched by disciplined execution. That is why we are focused on 4 clear execution priorities.

First, customer first always. Every decision we make begins with an understanding of our customer needs. Our goal is to simplify complexity, build confidence and deliver long-term value. During the year, we continued to expand Empower's workplace offering, launching private market partnerships, expanding consumer-directed health options and broadening our stock plan administration capabilities.

Second, a digitally driven future leveraging AI. We are using technology and increasingly AI to enable better experiences, smarter operations and more personable and scalable advice. Across the organization, we are already seeing tangible benefits, faster response times, improved accuracy and better outcomes for customers and advisers. These tools are not replacing human judgment, they are amplifying it, allowing our people to focus on higher value, more meaningful interactions. When applied thoughtfully, technology can make experiences not only more efficient, but also warmer, more personal and more human.

During the year, we accelerated AI adoption across the enterprise, launching Cali in Canada to better support workplace plan members, transforming Irish Life's claims process through Cara and using generative AI in Empower's contact centers to elevate service quality.

Third, accelerating operational excellence. We continue to simplify, modernize and streamline how we operate, improving speed, consistency and cost efficiency across the organization.

We are investing hundreds of millions of dollars to build the technology and data foundations required to leverage AI. We realized significant capital benefits through balance sheet optimization and portfolio simplification, and we sharpened the focus of our reinsurance business towards areas with stronger risk-adjusted returns.

And fourth, enabling growth. We are firmly in growth mode in each of our 4 business segments. That means supporting our employees, advisers, partners and businesses with the tools, capital and capabilities they need to compete and win in attractive growth markets. During the year, we strengthened our wealth platforms across markets.

In the United States, Empower Wealth surpassed USD 100 billion of client assets. In Canada, we completed the acquisition of the Thomas Wealth and continued dealer integrations. In Europe, we achieved record retail flows. Together, these 4 execution priorities ensure our strategy translates into results. These results were clearly demonstrated in 2025. We delivered record base earnings of $5.03 per share, an increase of 12% compared to 2024. This strong performance supported by our industry-leading shareholder dividend, which we increased by 10% during the year.

Our balance sheet remains strong, supporting long-term value creation while providing flexibility and resilience. The capital strength allowed us to continue share buybacks, grow our dividend and invest meaningfully in future growth. It also gave us the confidence at Investor Day 2025 to raise our medium-term financial objectives, reflecting both performance momentum and conviction in our strategy. At the same time, we continued disciplined portfolio repositioning, becoming more focused, more capital efficient and better aligned with where we see durable growth opportunities.

Great-West delivered very strong first quarter results in 2026, reflecting our disciplined execution and broad-based momentum across our businesses. Base earnings increased 20% year-over-year with double-digit growth across all business segments, including 23% constant currency growth at Empower. Strong underlying business performance, combined with significant share repurchases drove 23% base EPS growth. And for the first time, we achieved a base return on equity exceeding 19%.

Our robust cash generation and balance sheet continue to support significant financial flexibility as we focus on long-term value creation. None of this is possible without our people. Leadership remains one of Great-West's most important competitive advantage. I am proud of the depth, continuity and experience of our leadership team, including Fabrice Morin in Canada, Ed Murphiatten Power, Lindsay Ricksbroom in Europe; Jeff Plan in Reinsurance; John Nielsen as CFO; John Nelson as CIO; Sharon Garaty as General Counsel; Dervla Tomlin as Chief Risk Officer; and Theresa Kilmartin as Chief Human Resources Officer. This team brings deep experience, strong values and a shared commitment to execution.

Just as importantly, they foster a culture that empowers colleagues to do their best work, innovate responsibly and remain anchored to our purpose. Talent and the culture that sustains it is fundamental to delivering for both customers and shareholders. Our responsibility extends beyond financial performance.

Over the past 10 years, Great-West and our operating companies have contributed more than $170 million to communities around the world. In 2025 alone, this included a $2 million contribution to the National Center for Truth and Reconciliation, reflecting our ongoing commitment to reconciliation and inclusion. Our community investments focus on community revitalization, financial security for underserved populations and support for arts and education. This work reinforces our purpose.

Strong communities are essential to the long-term social and economic resilience and to the well-being of our customers. We are so proud that these endeavors are led by our employees with a passion and enthusiasm for making a difference in the communities they serve. As we look forward, we see significant opportunity across retirement, wealth, insurance and reinsurance. We will continue to deepen client relationships through trusted advice, innovation and better experiences. We will remain disciplined in capital allocation, focused on customer-centered growth and committed to operational excellence.

Above all, I am confident in our people, their ability to adapt, to execute and to deliver long-term value while strengthening the communities we serve. Before I close, I would like to pay tributes to Mr. Jeffrey Ward. Power Corporation recently announced that Mr. James O'Sullivan will be taking over as its CEO this summer and that Jeff will take on the role of Vice Chair.

Subject to the results at today's meeting, Jeff will continue to serve as our Board Chair until the 1st of July, and James will then assume that role. Jeff has served as Chair of the Boards of Great-West and Canada Life since 2013 and served as the Chair of our former Executive Committee from 2008. Jeff's leadership has been instrumental in shaping the organization we are today. Jeff is widely and rightly recognized as a leader of great intellect and integrity, and the organization he has helped shape has delivered superlative returns for our shareholders and value for our customers.

Just as important, though, Jeff is a leader who leads by example. He teaches calmness and thoughtfulness in decision-making that is grounded on close attention to detail and the facts. This unwavering characteristic has served us well in both adversity and opportunity and will be an enduring legacy. We thank Jeff for all he has helped us achieve during his tenure and are grateful that he will continue to serve on our Board and share the benefit of his counsel and experience. Thank you.

And I would also like to welcome James as incoming Chair of the Board. James has served as a Director of Great-West for several years and as a senior leader within Power Corporation Group since 2020. Following Jeff is no easy task, but we've all gotten to know James as a director and seen his exceptional leadership of our sister company, IGM. We are very excited and very confident about this succession, and we look forward, James, to working with you.

In closing, I want to thank our customers, our advisers, our employees, our shareholders and our policyholders. Your trust matters. We take seriously our responsibility to govern well, execute with discipline and think long term. I am optimistic about 2026 and beyond and about Great-West's ability to continue building stronger, more financially secure futures. Thank you.

Thank you, David. I thought parts of your presentation were brilliant. Now we're going to get the question period in a little while, and Paul Mann has threatened to come with some very difficult questions. So I just want to point out that last year, the tribute to Paul listening to David's tribute to me was -- we didn't get all the way through it, but it is on the website, and you should read it, it's fantastic. It talks about all Paul's great qualities. It's been hit on, I think, at least 3 times. Paul, Ann and I, I think, right. you did it twice, right? Yes. Great. Thank you.

Just a word about David's start here. Not surprisingly, David is off to an amazing start. I'm looking at Paul and I remember back when we were looking at the leadership change at Irish Life for CEO, and we said, David Harney has got a lot of potential. Wow, I remember those discussions. And David, to say that you fulfilled them as an understatement has been fantastic.

David has got huge industry knowledge, been like 3.5 decades in the business. He knows the business. He is enthusiastic. He's got energy. He's driven. He is client focused beyond belief, which is fantastic. He's an actuary. He's got the numbers, but he's mostly into the business, and he lets his people do their thing without kind of doing the business for them. He's got it all. I said that at the annual meeting last year as we talked about the announcement and really great to see the start.

And David is the first to give credit to the fact that this -- what he's running and the momentum we're experiencing is from a lot of people over a lot of years. So he is also very humble in that sense. A word about James as well. James is going to be a great Chair. He's also going to be a great CEO of Power. He's got 30 years of experience across many sectors of the financial services industry before joining 6 years ago as the CEO of IGM. He's done a great job at IGM. He's thoughtful. He's smart. He is strategic. He's a listener. He lets his people run just like David, same quality, but he does it within guidelines, and he's not afraid to take decisive action be on people, on strategy, on capital. He's got it all. And I think you're going to really enjoy working with him. He's had 2 years already on the Great-West Life Board, the Canada Life Board, the Empower Board. So he's no stranger to the Great-West Life people, but he is going to do a fantastic job, and I'm really pleased on where we're headed here. James, welcome.

So just before moving to the question period, I'll take just a minute or 2, if you'll pardon me to just talk a little bit about Great-West Life. It has actually been over 40 years that Great-West Life has been an important part of my life. I'm going to go back, and I'm going to do my history in 30 seconds. I won't bore you the chairs.

But as a 25-year-old as a young associate at Nesbet Thompson, the junior bag carrier on the Power Corp team, who was Nesbet's largest. We're always second largest client right up there. I was asked in 1984 to come out in the winter of 1984 to come and write the prospectus for Power Financial. We were launching it as a public company as a pure-play financial. And there was no description of Great-West Life in the prospectus or for Investors Group, which was down at 280 Broadway here.

So I came out bags in hand for a couple of weeks and sat down with Kevin Cavanagh and John Green and Orest Daca and the finance team and wrote -- and I actually -- this is how boring my life can be. I actually looked at it last night as the haves were losing the hockey game, I asked to have it -- the 1984 perspective is 16 pages describing what Great-West Life does, and then it goes on to IG. So I started back then and continued in my 20 years at brings me close to Great-West and to Power. And '01 came here to Investors Group and '05 went to Power Financial. I was on the Board here in '02.

And from '05 on, this is how much of a -- I literally have thought about Great-West Life, I think every day in my life for the last 20 years, even on like Christmas and whatnot. You get a 5-minute break and your mind goes to business and Great-West is 2/3 of Power Corp. So Power Corp doesn't succeed without Great-West Life succeeding. So without going through all the deals and everything, there's only -- the overwhelming memory you keep is not the transactions or the business or the -- it's the people. It's about the people. And that's why I'm so pleased that so many are here. former leaders are here today, current leadership teams, Boards of Directors, past and current.

The quality of the people and the passion and the integrity and the drive and the long-term vision, which starts with Andre and Paul Demara anchoring the whole thing with their long-term vision and their values. It has been such an honor and a pleasure to be part of this. It has just been a fantastic honor and a pleasure, and I'm extremely grateful to have the opportunity to have done this. It's very meaningful to me.

And I want to say, David, and before I turn it over to questions that as we look forward, this is the deepest management team and the best management team we've had ever. And that's not a dis for the previous management team. It's a credit to what's been built. And you look at the momentum of the strategic positions, I could not be more optimistic about the future of Great-West Lifeco. We'll have our ups and downs. There'll be challenges, markets, et cetera, but we continue to execute like this. It's going to be fantastic.

So with that, thank you for indulging me there. And I will then move on to question periods. Paul, I must have dissuaded you from asking a tough question after that. I open the meeting to questions. Any questions here in the room? -- shareholders, policyholders, proxy holders. If you do have a question, please provide your name and state whether you are a shareholder, a policyholder or a proxy holder. We're closing the questions now.

I don't know whether it's a question or comment. But I would like to say, Mr. Chairman, that I am a shareholder of Great-West. I'm a shareholder also through Power Corporation. And I'm quite involved policyholder. I have a lot of policies here, and it's a great company and I'm very proud of that. But I think this was an exceptional day and number one, because it is rare that you have an occasion where you get so many people that have been so important in creating the company that has been created here over the years. And I don't want to signal them all out individually. I'd rather just speak of Ray McFeeters and Paul Mahon and the teams that they ran with were just incredible.

And they laid the foundations of what has made all of this possible. And without wanting to put too much pressure on Mr. Harney and Mr. Sullivan, which, of course, it's our job to do, they are going to have a big shoes to fill. And I have no doubt that they will fill them. So I think that all shareholders should stand and applaud the great management teams that we've had in the past here and how lucky we are to have been able to attract such fabulous people, including yourself and [indiscernible].

Thank you, Andre. Next question -- that was very well said. Thank you. Other questions? Any questions online?

We do have one. They are able to join now. So Lumi, I'd ask you to connect the next caller and please state your name and whether you're a shareholder, proxy holder or -- pardon me, a shareholder or proxy holder.

Great. I'm going to begin talking now. Sorry, the technological aspects of this have been difficult. My name is [ Tiraelpach. ] I work with investors for Paris Compliance. I'm here as a proxy holder on behalf of the Salal Foundation. We've been engaging with Great-West Lifeco on its 2021 net zero commitment for over 2 years, and we want to acknowledge the time management has given us in those conversations.

We come to this AGM hoping the coming year marks a turning point because to date, we have found it difficult to discern Great-West Life's progress on managing climate risk. Our shareholder proposal last year, for example, asked for basic details about Great-West Lifeco's net zero commitment transition activities, which remain vague to this day. The question comes in a couple of sentence. Great-West operates in a sector where the physical consequences of climate change through health outcomes, morbidity trends and actuarial risk are increasingly material.

In a recent engagement, we were told that whether or not the company collects and analyzes climate-related data from policyholder claims is confidential. We would argue that disclosure of whether a risk is being measured at all is a governance question, not a proprietary one. And on that question, shareholders currently have no answer. Against that backdrop, Great-West Lifeco reports approximately $27 billion in fossil fuel investments against $7.7 billion in renewables, the widest gap among its Canadian peers. This is not a peripheral concern.

The Lancet Medical Journal called Climate the single largest health threat of the 21st century. These risks flow directly into policyholder claims. And so my question is, will the coming year bring greater transparency about whether Great-West Lifeco is collecting data on the link between policyholder claims and climate change. Thank you very much for the opportunity to ask this question.

Thank you for your question. The company and the Board share concerns around climate change, but we also balance those concerns with what our obligations are to manage our business, to invest our general account. And we're also part of Canada, which is one of the major energy producers in the world and looks at from a broader point of view, energy security and Canadian economy and other balancing factors, which -- so it's not a one-sided equation in terms of how we think about our investment portfolio.

As to our disclosure, I think that there's always room for improvement. I think the management team would think that we can do -- we need to do more and can continue to do more, but that's true of many issues, and we'll continue to discuss our disclosure and the details of our disclosure as we move forward. But I appreciate your question and bringing it to the Board and to the annual meeting's attention. Thank you. Are there other questions, Gord?

There are none.

Then I think we're at the point for the scrutineers' report. I think we've got the preliminary report. Gord, would you please read the results?

Thank you, Mr. Chair. The preliminary voting results are as follows: the resolution to amend Great-West's Articles of Incorporation to increase the number of directors was approved by more than 98% of the votes cast. Each of the nominees for directors of Great-West Lifeco was elected by more than 92% of the votes cast. The resolution to accept the approach to executive compensation was approved by more than 97% of the votes cast.

The resolution approving the adoption of a performance restricted share unit plan was approved by more than 98% of the votes cast. Each of the 9 nominees for policyholders directors of Canada Life was elected by more than 87% of the votes cast. And each of the resolutions to appoint Deloitte LLP as auditor of Great-West and Canada Life was passed by more than 99% of the votes cast.

In accordance with securities law requirements, the final voting results for Great-West will be posted on the SEDAR+ website. And in accordance with the Toronto Stock Exchange rules, a news release announcing the director election results for Great-West will be issued today.

Thank you, Gord. So I declare all the motions and related resolutions adopted and passed as presented at these meetings. So with that, and in closing, I'd like to thank everyone for attending today's meeting. Again, I would like to thank all of our employees, our management team, the financial advisers we work with, our clients, our policyholders and our shareholders. Thank you so much for your ongoing support and all that you do for the company. And with that, I'm going to also invite you to join us at the top of the escalators for some light refreshments. Thank you. I declare the meeting completed. Thank you.

Hello, everyone, and thank you for standing by, and welcome to Great-West's First Quarter 2026 Results Conference Call. [Operator Instructions]

It is now my pleasure to turn the conference call over to Mr. Shubha Khan, Senior Vice President and Head of Investor Relations at Great-West. Welcome, sir.

Thank you, Jim. Hello, everyone, and thank you for joining the call to discuss our first quarter financial results. Before we start, please note that a link to our live webcast and materials for this call have been posted on our website at greatwestlifeco.com under the Investor Relations tab.

Turning to Slide 2. I'd like to draw your attention to the cautionary language regarding the use of forward-looking statements, which form part of today's remarks. And please refer to the appendix for a note on the use of non-IFRS financial measures and important notes on adjustments, terms and definitions used in this presentation.

And turning to Slide 3. I'd like to introduce today's call participants. Joining us today are David Harney, our President and CEO; Jon Nielsen, our Group CFO; Ed Murphy, President and CEO, Empower; Fabrice Morin, President and CEO, Canada; Lindsey Rix-Broom, CEO, Europe; Jeff Poulin, CEO, Capital and Risk Solutions; Linda Kerrigan, our Appointed Actuary; and John Melvin, our Chief Investment Officer. We will begin with prepared remarks, followed by Q&A.

With that, I'll turn the call over to David.

Thanks, Shubha, and good morning, everyone. Please turn to Slide 5. We delivered a strong start to 2026 with double-digit earnings growth for Great-West in each of our operating segments. These results reflect the structural progress we've made over the past several years, including our shift to a more capital-light business mix, the operating leverage across our platforms and disciplined capital deployment. This quarter, we delivered 20% year-over-year growth in base earnings and 23% growth in base EPS, driven by strong underlying business performance and the continued execution of our capital return strategy.

Q1 marks another important milestone for Great-West as it is the first time we have achieved all our potential objectives we set out at our Investor Day last year. This is the direct result of our focused strategies and disciplined execution, and we are confident in the medium-term outlook for our business. Our strong cash generation and balance sheet continue to provide significant financial flexibility with over $2 billion in Holdco cash at quarter end, even after nearly $600 million of share buybacks during the period.

Please turn to Slide 6. As I mentioned, we delivered base earnings per share growth of 23% year-on-year primarily owing to strong growth in our capital-efficient businesses. Notably, Empower base earnings grew 23% year-over-year in U.S. dollars, driven by strong retirement and wealth growth and operating leverage. While Capital and Risk Solutions saw 41% growth with continued momentum in its capital solutions business, highlighting our position as a leader in retirement services and wealth management.

Great-West saw a 10% year-over-year growth in total client assets to $3.3 trillion, of which more than $1.1 trillion represents higher-margin assets under management or advisement. Robust capital generation continued to reinforce our strong financial position this quarter. Despite continued share buybacks, we ended with a solid capital base including a LICAT ratio of 129%, Holdco cash of over $2 billion and a stable leverage ratio.

Please turn to Slide 7. At our Investor Day last year, we reiterated our objectives for base EPS growth and dividend payout, introduced a new objective for base capital generation and raised our base ROE ambition. Our first quarter results were in line with all our medium-term objectives with base ROE exceeding 19% for the first time this quarter. Our success can be attributed to the market-leading strength of our businesses, the continued shift towards capital-light growth and disciplined capital management.

I am very pleased with the progress we have made as an organization over the past several years to drive stronger returns. While market conditions have been supportive in recent quarters, the structural progress we've made puts us on course to deliver 19% plus base ROE on a sustainable basis.

Please turn to Slide 8. Each of our segments delivered against their growth ambitions in the first quarter. As I mentioned, Empower grew base earnings at a double-digit pace year-over-year with strong operating margins and net flows in Retirement as well as impressive growth of 65% in the Wealth business. Canada saw growth across all lines of business with double-digit growth in both retirement and wealth assets. In Europe, Retirement and Wealth and insurance earnings growth were propelled by strong client asset flows as well as strong retail annuity sales.

In Capital and Risk Solutions, there continues to be solid demand across geographies and product lines for capital solutions, which coupled with strong insurance experience, drove 41% year-over-year base earnings growth. Overall, I am very pleased with the strong start to 2026. Double-digit growth across all four. business segments drives continued confidence for the remainder of 2026.

Before Jon covers our first performance in more detail, I will pass it over to Ed to talk more about Empower's results and the work done by his teams this quarter to meaningfully strengthen the long-term growth profile of the Empower business.

Great. Thank you, David, and good morning, everyone. Please turn to Slide 10. Empower delivered another strong quarter with double-digit base earnings growth reflecting continued momentum across our Retirement and Wealth lines of business. This drove Empower's base ROE to 20.8%, a key contributor in achieving Great-West 19% ROE objective. In our workplace business, strong equity markets drove double-digit year-over-year growth in client assets. Net plan flows exceeded net participant outflows in the quarter and we continue to expect positive net plan flows for the full year 2026.

Operating margins also improved by over 300 basis points from a year ago, helped by improved credit experience and underscoring the strong operating leverage in the business. Empower Wealth continues to see outstanding growth with base earnings up 65% year-over-year. Operating margins held steady at 39% despite increased brand investment in Q1, further demonstrating the scalability of our wealth platform. With significant momentum in our underlying businesses, we are increasingly confident that Empower can capitalize on the growing demand for Retirement and Wealth solutions in the United States.

We were encouraged by recent policy developments to expand access to retirement savings and support long-term financial security, including new Department of Labor safe harbor guidance, the administration's April 30 executive order and growing momentum around solutions such as Trump accounts. Together, these efforts highlight the importance of public-private collaboration and helping more individuals build confidence in their financial futures.

Turning to Slide 11. Empower has built a very strong foundation as the second largest retirement plan provider with $2 trillion in client assets and as a leading wealth manager. We are still in the early stages of deepening the relationship with our 20 million customers. A key theme at Empower is building customers for life. That means being there for our customers throughout their financial journey. We have previously highlighted the value we provide during client rollovers, and it continues to be an important lever of growth for the business. We expect nearly $1 trillion to roll off the platform over the next 5 years. A significant portion of that money in motion will be eligible for rollover, and we are the #1 destination for those assets.

As we look ahead, the opportunity to create value for our customers is much broader. Customers hold roughly 3x more assets off platform than on-platform. We are increasingly focused on building trust with our customers to earn the management of those assets as well. Workplace, rollover and crossover represent highly complementary mutually reinforcing channels. For example, by strengthening engagement, while customers are still in plan and before life events occur, we can increase the likelihood that they stay with Empower when they roll their assets into an IRA or seek out additional financial solutions. Meanwhile, customers that are more actively engaged with our workplace platform are more likely to aggregate their other assets with us.

Please turn to Slide 12. Our strategy is simple, engage customers earlier and more proactively, make it easier to do business with us and then earn their trust and the right to serve them across their entire financial journey. To advance our strategy, we have embarked on our journey to realign the organization to strengthening our offering for customers while ensuring the durability of Empower's growth profile.

In the last few months, we established greater organizational alignment between our Retirement and Wealth businesses and started realigning teams to encourage earlier conversations with customers, drive deeper relationships that support better outcomes. These efforts position us to better serve our customers long term.

Looking ahead, we're focused on executing across several levers to drive continued growth. First, we have built out our product offerings into new areas such as stock plan services and consumer directed health savings, making Empower even more relevant across a broader set of customers and needs.

Secondly, we are expanding access to financial solutions through continued investment in digital and AI tools to support greater personalization and a seamless end-to-end customer experience. We are also building deeper partnerships with plan sponsors and their advisers to drive advocacy, increase engagement and do more for participants to build greater trust. We are highly confident in the outlook for the business and our ability to continue delivering on our growth agenda in the years ahead.

I'll now pass it over to Jon to talk through the broader financial results for the quarter.

Thank you, Ed, and good morning. Please turn to Slide 14. Great-West delivered double-digit base earnings growth across all segments in the first quarter, demonstrating continued execution against our strategic priorities. The first quarter results were driven by strong performance across our Retirement and Wealth businesses, continued momentum in new business volume and favorable insurance experience at CRS as well as improved credit experience across our investment portfolio. These results were achieved despite heightened market volatility, underscoring the strength of our diversified, increasingly capital-light business mix as well as the benefits of disciplined capital deployment. Our capital position remains strong with stable leverage and ample liquidity to support both organic growth and capital deployment.

During the quarter, we repurchased approximately $567 million of common shares contributing to the 23% growth in base earnings per share year-over-year. Great-West also delivered base ROE of 19.1%, an increase of 190 points from the prior year. As David highlighted, we achieved our medium-term objective of 19% plus for the first time. The results this quarter reflect high-quality earnings with close alignment between net and base earnings.

Turning to Slide 15. We are pleased that total credit losses for the first quarter were down year-over-year and lower than our expected range of 4 to 6 basis points on an annualized basis. As a reminder, total credit experience is the aggregate of credit experience shown in our drivers of earnings disclosure as well as in our Retirement and Wealth P&L statements, all of which are included in the supplemental information package. We continue to expect under normal conditions, credit experience would be at the lower end of the range.

Turning now to our results by segment, starting with Slide 16. Base earnings in our Canadian operations increased 11% year-over-year, with robust growth across all lines of business. Retirement and Wealth results were driven by higher fee income as well as improving retirement flows. Group Benefits earnings were driven by strong operating leverage and were impacted by modest insurance experience gains. Finally, insurance and annuity results were supported by higher sales than a year ago, favorable mortality experience and higher net investment results.

Turning to Slide 17. In Europe, base earnings increased 10% year-over-year in constant currency, primarily driven by higher global equity markets, trading gains and strong growth of the Group Benefits in force book. Bulk annuity sales, which tend to be lumpy, did not contribute significantly to the base earnings growth this quarter. However, the second quarter pipeline is very strong, and we expect this to translate to higher insurance earnings in the coming quarters, augmenting solid underlying momentum across all the other lines of business.

Turning now to Slide 18. Capital and Risk Solutions delivered another strong quarter, with base earnings up 43% on a constant currency basis. We continue to see strength in demand for our capital solutions business globally. The pipeline for these solutions remains robust, and we expect new business volume to remain strong through the remainder of 2026. The strong CRS results this quarter were also driven by favorable U.S. mortality experience. Overall, this business will likely exceed our medium-term base earnings objective in 2026.

Turning now to Slide 19. As we've highlighted previously, organic capital generation remains a key strength of our businesses. In the first quarter base capital generation exceeded 80% of base earnings, while free cash flow was 85% of base earnings. We expect both these measures to continue to be strong over time, as the relative earnings contributions from our capital-light businesses grows, while attractive organic growth opportunities in our more capital supported businesses may impact capital generation in any given quarter, we expect Great-West to remain highly cash generative.

Turning to Slide 20. Great-West's strong free cash flow generation continues to support ongoing share repurchases and provides capacity for further capital deployment through the year. During the first quarter, we repurchased $567 million of common shares. We expect the return of capital to shareholders to be at least in line with 2025, especially if compelling strategic M&A opportunities do not materialize in the near term.

Turning to Slide 21. Our LICAT ratio stood at 129%, up from 128% at the end of the fourth quarter, driven by strong capital generation and favorable seasonality in our Reinsurance business. Looking ahead, we expect to maintain the LICAT ratio above 125% and under normal operating conditions, even with elevated Reinsurance new business volume.

The robust capital position, combined with the leverage ratio that remained steady at 28% and a Holdco cash balance of $2.1 billion provides a foundation for continued growth and capital deployment. Overall, we're off to a great start to 2026 and are very excited about the continued strong performance across all of our financial metrics.

With that, I will turn it back over to David for his concluding remarks.

Thank you, Jon. Please turn to Slide 23. The momentum we built in 2025 has continued into 2026, and our first quarter performance reflects the strength and durability of the portfolio we've built. We've achieved our 19% base ROE objective for the first time this quarter. And based on the structural progress we've made across the business, I'm confident in our ability to sustain strong returns in normal market conditions. Looking ahead, we remain well positioned to deliver against all our medium-term objectives.

Empower is on track to again deliver double-digit base earnings growth this year as it continues to expand its leadership position in U.S. Retirement and Wealth. CRS continues to outperform its growth ambitions with strong demand for its capital solutions expected to persist through 2026.

At the portfolio level, our continued shift towards capital-light businesses supports our expectation to generate 70% or more of base earnings from these businesses over the medium term. This, combined with strong organic capital generation provides us with significant flexibility to invest in the business, pursue strategic opportunities and to continue returning capital to shareholders. We've built a well-diversified, capital-efficient organization with strong growth platforms, disciplined capital management and experienced teams across all our businesses. I'm confident in our ability to continue executing on our strategy and creating long-term value as we move through 2026 and beyond.

Thank you. And with that, I'll turn it over to Shubha to start the Q&A portion of the call.

Thank you, David. [Operator Instructions]

Jim, we are ready to take questions now.

[Operator Instructions] We'll hear first from Doug Young at Desjardins.

Question on CRS, I guess for Jeff, can you remind us what's driving the improved outlook for Capital Solutions business? And in the same vein, can you remind what percent of CRS' earnings are from Capital Solutions? I think it was 50% not long ago. I would assume it's kind of tilted more towards that. So -- and I've got a follow-up.

Thanks, Doug. To answer your last question first, the percentage has gone closer to 60% Capital Solution, 40% Risk Solution. And it's the nature of the Reinsurance business, sometimes some products are more in demand than others. And we have seen a lot of demands for products on the capital solutions side. And it's coming from different products in different jurisdictions. So we're seeing a strong demand in Asia right now because they've got new regulations that are putting more capital demand on the companies.

We're seeing it in Europe, where I think the companies are a little strained and then we're seeing it in some segments of the U.S. market. So it's demand across the board, which is a good, a perfect storm from our perspective, that everybody is looking for the types of products we're offering. And it's -- 2025 was an absolute great year from a new business perspective for us and '26 is starting the same way. So the outlook is really good from a new business perspective.

Yes. And we talked on this before. Maybe just -- when I see something growing in the insurance world really, really fast and I somewhat get a little nervous. And we've talked about the risk controls that you have internally. But what's the like simple answer that you would get for someone that would look at this and say, man this is growing really, really fast. And this is a fairly complex business. Like how are you managing this risk so that there isn't any surprises?

Yes. We've got pretty strong controls. There's lots of levels of risk management within our operation. And I think that's what made us very successful over the years. We've got at every level of a transaction, we have a review and we decide to proceed or not proceed not more than 10% of the transactions we look at get closed. So we have a very, very stringent process to look at that. We try to be flexible with the clients, but at the same time, we're very disciplined at the risk reward needs to make sense, hence the great returns we're seeing.

So I think it comes in lumps, this business is like that. We've seen that before. We've wrote a large book of longevity business in the past relatively quickly, and we're still benefiting from it now. I think that it's the nature of the Reinsurance business. Sometimes the demand on a given product is really, really strong. And other times, it's not. So you need to be patient and disciplined.

Okay. And then, Jon, can you define -- I think you did this last quarter, but can you define what you believe Great-West Life's or what you calculate Great-West Life's excess capital to be? And how much is at the Holdco because I know you've got an amount there, but I think you want to hold some liquidity. How much is that the Opco and how much is the U.S. sub? And specifically in the Canadian Opco, when you think about binding constraints, what is that binding constraint there?

Yes. Thanks, Doug. Let me walk you through the different components. First, as you rightly call out, we have about $2 billion -- $2.1 billion of cash at the holding company. We typically like to have a few hundred million of liquidity there through the cycle, but most of that cash would be readily deployable. We didn't have the regulatory excess capital across the regulated entities. I call that about $2 billion. So you're at $4 billion. In terms of the minimum, I would say you'd kind of look at it as 120%, but we typically like to operate north of there in most transactions, but we could go down to 120% for the right opportunity.

So then the other thing I think that we should point out is right now, we're running below kind of a normalized 30% leverage level. So that's another, call it, $1.5 billion, so around $5 billion of capacity there. And then as you're aware, Doug, and special situations for M&A, we have in the past managed to take our leverage ratio up given the exceptional cash flow and capital generation that we have, and we've used that cash flow generation not just from the acquired business, but from our ongoing operations to quickly pay down the leverage, we could see that as another lever to pull and that would be around, call it, $3.5 billion of capacity. So we have got a lot of capacity. But I wouldn't just look at the balance sheet.

Look, I would also look at the point out how strong our capital generation is. It continues to be above 80%. All of our segments are throwing off free cash flow. Our free cash flow was over 85% this year. We're exceeding kind of continue to meet and exceed that medium-term objective. It's fungible cash. You can see it come into the liquidity of the holding company. So we're in a really strong position.

Our next question will come from Tom MacKinnon at BMO Capital Markets.

Yes. The -- when we look at CRS and you see insurance experience gains aligned or that hasn't -- that's kind of just hovered around 0 and then we see $47 million in the quarter. Have you done anything different with respect to your terms and conditions with respect to what you're reinsuring here to, I guess, increase the volatility or what you might get from mortality gains, U.S. mortality gains?

In other words, when you see a $47 million U.S. mortality gain, that's kind of outsized, could we get a $47 million U.S. mortality loss? Or have you -- is there anything to read in here that you've changed anything to increase the volatility associated with that line?

Thanks, Tom. I don't -- I mean, your question is pertinent, but we we've announced last year that we're not in the mortality business anymore. So we really haven't changed the contracts. It's a runoff block at this point. So I think we feel very confident about our assumptions and they should hover around zero. Having said that, I think we had an exceptional quarter from a mortality perspective. It's been very good. We saw another reinsurer -- strong reinsurer in the U.S. announcing the same sort of results yesterday. So I guess mortality was good in the U.S. overall for the quarter and trying to explain volatility on mortality is a difficult thing to do. It will happen.

And -- but you should assume that I think our assumptions are legitimate. I think they -- we feel pretty strongly they are. In the last two years, we're running at about 100% of expected. So we feel pretty strong about that. So it is -- it's big volatility, but it's within the range that we estimate it could be. So no real variance there. And of the $47 million, it's only -- I think it's $35 million that is associated to mortality. There was another $12 million there that is due to our longevity block that we onboarded that have been in the books for a while, but that we have booked to expected. And so we had transacted with the company and they paid us expected cash flows for a while. And then once we trued up to the real cash flows, we got the benefit of that. So it shows that we had strong pricing on that transaction. And it was significant enough that it made a difference for $12 million this quarter. But I mean that's unusual so we don't expect that to happen again.

Okay. And then just with respect to Empower Wealth, Jon, in the -- in your fourth quarter conference call, you had highlighted that the fourth quarter margin for U.S. Wealth at 39.4% was higher than normal on seasonality of marketing expenses. And you said an operating margin of 35% better reflects the near-term margin expectation for U.S. Wealth. So why was it not 35% here that you had sort of guided to in your last conference call? Why was it up at 39%? Was there any more marketing expense timing issue there?

I think I'll hand it over to Ed, but I think we were a little bit lighter on first quarter marketing, and we expect a little bit to come through the fourth quarter. It's not that significant terms. But maybe, Ed, do you want to give some details?

No, I think that's right. It's more deferred spending. We had -- we're embarking on a new campaign and we pushed that out somewhat. I mean I think in terms of the full year expectation will be closer to where we are today, certainly above last year. But it's more timing, Tom.

[Operator Instructions] We'll go to Gabriel Dechaine at National Bank.

I have a couple of questions here or lines of questions rather. First, on the bulk annuities business in the Europe segment, it sounds like you're similarly bullish there on the sales outlook for Q2 anyhow. I'm just wondering how do you factor in or what comments do you have about that competitive environment where there's been a lot of write-ups about the private equity players getting into that business, and you would think that would maybe dampen your outlook, but doesn't sound like it?

And sticking to that topic, just to get a sense for how important it is in that insurance and annuities piece of the pie, how much of that is comprised of bulk annuities versus payout?

Thanks, Gabriel, for the question. And as you say, there is -- there has been increased competition coming to the market over the last 12 months. However, there are still really only 11 players in the market and there's significant demand for bulk annuities, both now and for the future and for the outlook. So we are kind of pleased with where we are.

The pipeline, as you say, for Q2 looks very strong and indeed for the rest of the year. So we're optimistic in the outlook for us. I think we remain disciplined in our pricing, as we've said before, and look to continue to be able to make good returns in this area going forward.

In terms of individual annuities and bulk annuities, we've had a continued strong performance in individual annuities, particularly in the U.K. market. That outlook remains strong and positive as well. So looking for a balanced performance across both bulk annuities and individual annuities for the future.

I'd just add -- just a comment to add on Page 34 of the SIP, you'll be able to see the split of the two categories, individual and bulk. We've done that to be able to monitor the lumpiness of the folks.

Okay. Great. I was looking at the slide deck, but -- yes. So moving over to the Empower and, Ed, you were talking about the regulatory changes, the Trump IRA accounts and all that. And I mean, I don't know how -- if you could size that opportunity, if that's possible? But on the flip side to that, I'm just wondering because this is another topic that's come up is the suitability of some investment classes for retail investors, private equity and private credit, whatever. What sort of guardrails do you have in place or responsibility even for what you offer to the customers such that if there ends up being some sort of an issue with the suitability that doesn't affect you?

So your first question, we see it as a tremendous opportunity. There's different numbers that get referenced, but somewhere between 40 million, 50 million Americans don't have access to workplace savings. So clearly, under the Trump administration, there's been this bipartisan focus both in Congress, but also from a regulatory standpoint to try to drive access and improve coverage. We're right squarely in the middle of that. So we're very active in advocating for those policies. It's hard to size it because at least initially, those are going to be smaller accounts.

But as you think about the matching and the compounding effect, it will grow over time. So I'm pretty sanguine about where we are in terms of coverage and expansion, I think it's very constructive. And as I said, we're very much a part of that.

The second question you had, I think, is a very important one. I do want to make it clear that the role that we play is not a fiduciary role as it relates to the relationships that we have with alternative managers that are on our platform. We don't act in a fiduciary capacity, we essentially are giving access to these investments. But ultimately, the decision as whether to include any investment for that matter, whether it's public equity, the 40-Act mutual fund or whether it's an alternative asset class, that decision is ultimately being made by the plan sponsor and their adviser.

And the other thing I would just add is we are not advocating for -- at this point, we're not supporting stand-alone alternative investments inside the defined contribution plans at Empower. These are all structured as a multi-asset class vehicle through a collective investment trust, and it's supported within our adviser managed account program where there is an adviser, a financial adviser that's attached to each one of these offerings and the typical cap of what might be allocated to that collective investment trust is somewhere around 15% to 20% of the assets. So there's plenty of liquidity, both inside the product itself and then outside where people would be investing in public equities and public debt.

And then I would just add that we have about 1,000 plans right now that are in some form of implementation, either they have implemented a vehicle or in the process of implementing a vehicle. So it's still sort of in a nascent stage. But obviously, the directive that came from the Trump administration, I think gave some sponsors comfort that if they follow ERISA standards that and take a thoughtful and practical approach that they're comfortable in going forward. So that's what we're seeing.

And what about the Individual Wealth business? Are you not a fiduciary there? Is there a similar discussion to be had or differently?

Yes, in the individual wealth business, those investors have to be accredited investors. And yes, so they have to meet the credit investor standards. And in doing so, we do act in advisory capacity. We do offer products through a relationship we have with a third party. That too, I would say, is very much in its nascent stages. And the reason is that the preponderance of our client base tends to fall into that mass affluent category. So many of them don't necessarily meet the credit investor standard. So we haven't seen, at this stage, we haven't seen much in the way of adoption of alternatives inside our wealth business. I think that will change over time for sure, as people look to diversify. But at the moment, that's not the case.

Our next question will come from Darko Mihelic at RBC Capital Markets.

I just wanted to revisit Empower's flow situation because it does -- it sort of does change my model when I think of it. I mean you had positive flows, which is great. But the way you had described it earlier was that just the general nature of the business is one that would typically have outflows. Maybe I think the number you used previously was like 2% and then some of your efforts and work would maybe grind away at that, but generally, you end up in a place where maybe 1% kind of outflows is like the long-term expectations. So I realize you're doing a lot of work there.

Has anything changed and how I should think about the flows and how I should put that into the model?

Yes. I think -- let me start with -- I think what you're referring to is flows in our workplace business, specifically participant flows. Obviously, we saw net plan flows for the quarter, and we expect net plan flows for the full year as we experienced last year. With respect to participant flows, you do have a lot of seasonality in that first quarter because that's when you see very high contributions coming into defined contribution plans. You're seeing profit-sharing contributions and the like. So that's not unusual to see a more favorable result in the first quarter.

That being said, I think as you look out to Q2 and beyond, you're going to see more normalized participant outflows consistent with the guidance that we've given you in the past. In fact, if you look at what the equity markets have done, particularly in the last 30 or 40 days, you've got higher balances. And so disbursement dollars will probably be higher, right, due to market appreciation, you'll have higher balances in those accounts.

So underlying all of this is the sort of demographic dynamic that's playing out in the U.S., where you are seeing net outflows on the participant side across really every provider in the marketplace. We obviously have built what we think is a pretty compelling hetero-s-mid on the wealth side. So we aim to capture some of that money in motion for sure. But the way you should think about this is that there will be a consistent in roughly 1% or so in participant outflows. And I think that will -- you'll see that play out in Q2 and beyond.

And then finally, I would just say we continue to grow the business. So we're adding billions of dollars on to the platform through our institutional sales efforts. Our year in 2026 will look very similar to what we accomplished in 2025 on that institutional side. And then when you layer in the market appreciation, you've seen what's happened to our AUA. In fact, since 2021, our assets under administration in our workplace business has grown at a compounded annual growth rate of 11.5%. I think that may be the highest in the industry.

That's a great answer. And it is -- I mean I think it's 13% year-over-year this quarter in terms of AUM growth, but the revenue growth lagged. Maybe can you touch on that?

Maybe I'll start and then hand it back to Ed. This is Jon. in the quarter, there was a refinement that we made to some data that impacted the classification of certain of the transactional fees so we implemented that in the third quarter. So what it did is it was basically a reallocation between the asset-based fees and the non-asset-based fees. It didn't impact total fees or our financials. But it did reduce asset-based fees and increase the non-asset-based fees. It was about $14 million during the quarter. This had about a 5% impact on the growth rate because we didn't adjust the prior periods. That, Darko, had we applied it. It was about the same amount in the previous -- most recent quarters.

I'll hand it back to Ed to kind of give the business context of the fees as well.

Yes. Thanks, Jon. The other dynamic, and we've talked about this in prior calls, is just what I would call the mix dynamic and how the business is playing out. So if we have a disproportionate amount of large mega corporate clients, those tend to be fixed fee. They're not asset-based pricing with those plans. And that's what we've seen more recently, when we're winning these large mandates, the pricing is a fixed fee pricing versus down market, call it, plans under $50 million in assets or $75 million in assets, those tend to be asset-based fees in terms of the -- how we get paid for the services is being paid through asset-based fees.

I will say in that $75 million space and below, we're #1 in the market, and we have -- we're growing 20%, 25% a year in that pace -- that space. So we're taking business away from the competition. But it does get overshadowed a bit because of the mix issue, as I say, when you win these large corporate and government mandates, which we're winning.

I see. Okay. But your sweet spot is still actually the smaller mandates. So I should be thinking of it as more or less growing in line with AUM with the occasional quarter or two where you get a massive mandate. Is that the way I should think of it?

Well, I guess the one caveat I would say is, so we're competing in all markets, the government market, the large corporate market, the mega corporate market, the small market, the Taft-Hartley Union. So you're going to see some balance there because if you win a $15 billion, $16 billion, $17 billion mandate, that's going to skew and that's a fixed fee arrangement. That's going to skew the mix, if you will, right? So it adds to your AUA, but it's not generating asset-based fees. Now there are other ways we generate asset-based fees which we can get into. But with respect to the record-keeping administration piece of it, that would be a fixed fee type arrangement. So disparity, if you will, because of the fact that we're a diversified player and we're competing in all segments of the market.

And next, we'll hear from Mario Mendonca at TD Securities.

Ed, maybe I'd just stick with you for a moment. Thoroughly the goal here, which I think you've described is to move that rollover rate up to something more in line with where the leaders are, what is your -- and this may ask you to take a kind of a wild guess here, but can that rollover rate for Empower approach the mid-20s over the next couple of years? Or is this a much longer-term endeavor to get it to that level?

I'm not sure over the next couple of years. And I'll tell you why. I mean, I think -- we have 20 million customers. But one of the things that we -- there are several things we need to do. One of the things we need to do is to raise aided awareness and raise consideration to a level of some of the more entrenched players. And that's why we've made a concerted effort to invest in the brand and to invest in advertising, but also to create awareness among those 20 million installed base of clients on the workplace side because there's obviously a meaningful subset of those customers that are not necessarily fully aware of our wealth capability. So it's a work in progress. There's the branding, there's. The awareness element of it.

I think in terms of the offering itself, it's very competitive vis-a-vis the competition. So it's just -- it's something that, obviously, we need to continue to work on -- but as we've said at Investor Day and we've said at other times, the opportunity here is immense. If we build the trust with the sponsors, if we serve those individual investors well while they're an active participant in the plan, they will think about us and they will give us consideration to be their adviser hopefully in perpetuity. So I think the high 20s -- in the mid- to high 20s in the near term is probably too aggressive.

Okay. And then -- and again, this might -- I'm not sure how much you want to get to this. I clearly don't expect you to name names when we're talking about potential acquisition targets and -- but the question is this, is that file sort of active? Like are there active -- are you actively looking at potential acquisitions in this space? Because there are -- there's just so much speculation around the space right now. Is it -- would you call it actively looking? Or is it dormant right now?

Yes. Maybe I'll take that question, Mario. Like yes, you're dead right, we don't comment on individual opportunities. Like obviously, we're alert and very keen on any opportunities to come to the market, and we look at all opportunities. And maybe just to take a step back, and this answer won't surprise anybody we've said it many times before. But just to reiterate, again, our sort of growth targets, our medium-term growth targets are not dependent on acquisition activity. And you can see that just in the very strong performance of the business this quarter and the growth in all of the segments, which is achieving those targets.

But we have firepower as well. And if opportunities come to the market, we will certainly look at them. We've executed very well just on recent acquisitions, both in workplace retirement and on wealth acquisitions. And we're very confident of our capability to execute there again if the opportunities come along. And again, we've been very clear just on the requirements for our acquisition activity. It has to hit our return targets on where we can execute synergies, I think that makes that very possible. And then it has to sort of -- we have to be very confident on execution capabilities. And then the right targets will add scale and will add capability to our businesses, and we're keen to look for opportunities that come along.

Okay. And I'll be really brief on this one. Going back to CRS. There's mortality risk, there's CAT, there's longevity. Those are the three big ones I can think of that you're exposed to in CRS. Am I missing anything? Like is there any concentration that concentrated risk that I'm not picking up on?

I think those are the main risks that we have on the risk business. Yes.

And at this time, we have no further signals from our audience. Mr. Khan, I'm happy to turn the floor back to you, sir, for any additional or closing remarks that you have.

Thanks, everyone, for joining us today. Following the call, a telephone replay will be available for one week, and the webcast will be archived on our website for one year. Our 2026 second quarter results are scheduled to be released after market close on Tuesday, July 28, with the earnings call starting at 9:30 a.m. Eastern Time the following day. Thank you again, and this concludes our call for today.

Ladies and gentlemen, we'd like to thank you all for joining today's Great-West First Quarter 2026 Financial Results Call. You may now disconnect your lines. We hope that you enjoy the rest of your day.

Okay. Welcome to day 2 of the 24th National Bank Financial Services Conference. And for your math folks, that means next year is 25. I'd like to welcome to the stage, David Harney, the Chief Executive Officer of Great-West Lifeco, and he's been in that position since July of last year. So we're glad to have you here and looking forward for this discussion.

Thanks very much.

I do have a list of questions that I prepared ahead of time, but I do want to ask about the global macro. Obviously, it's on everybody's minds. And what -- as the CEO of Great-West Life, what describe to me the reaction and then what you start thinking of from a business standpoint?

Like, obviously, these events have big impacts on economies, the big impacts on customer confidence. Like all of our businesses operate within their economy. So it's all sort of secondary effects for us.

So the main thing we're finding in the business is just a lot of coaching with customers. They have long-term investments with us they shouldn't get overly worried about markets or volatile situations. So most of our efforts now are coaching customers, believe in the products we have and stay the course. We don't have influence over global events. So we focus on the day-to-day business.

Right. So I guess the indirect impact is, of course, more relevant to you. And I'll do the dotted line to the Empower business, which has been an inorganic success story, and an organic success story, and the messaging on growth following a very strong 2025 is still quite optimistic.

My question is if markets aren't as frothy, does that growth outlook -- what does that growth outlook look like in a flatter market environment perhaps?

Yes. No, the growth outlook for Empower is -- continues to be very strong. We expect double-digit growth from that business over the next number of years. Ed Murphy and the team have built a fantastic business there and took a lot of care in integrating the various acquisitions. So like our double-digit growth expectation for Empower is built on normal market growth assumptions. So that might be, say, 8% before taxes for equity-type returns, and maybe 3% or 4% for fixed income returns.

And actually, last year, even though markets were strong, is just a great year to look at the performance of the Empower business. It's the first year, sort of post all of the integration activities. And even though markets did well last year, we had elevated credit losses in the U.S. business. We had a reduction in the spread income from '24 to '25. So if you view, sort of, strong markets, credit losses and that spread income adjustment as, sort of, external economic impacts on the Empower business, the aggregate of the 3 of those was actually neutral in 2025. So that's what I mean.

That's why I say it was a great year to look at the performance of the business. And what we saw for Empower last year was 11% growth, and 25% growth in the Wealth business and 7% growth in the Retirement Workplace business. And that's the type of growth we expect to see from Empower over the next number of years.

And the -- I guess, the elements within your control, one of them, and a big part of the Empower outlook this year and beyond is the rollover strategy Retirement into Wealth. First question is -- and because you stated an objective of 20% capture rate, or however you describe it, of that rollover money, or money motion. How are you progressing against that target?

Yes, very well. Like we said out at Investor Day last year that we explained that we had seen a 30% improvement in that rollover, or capture rate, and we expected a similar improvement over the next planning period, and we're very much on track for that. So what that meant for 2025 was $12.5 billion in net inflows into the Wealth business, USD 12.5 billion into the Wealth business in the U.S. last year. And that was -- just to give some context on that $12.5 billion, that was $12.5 billion on an opening and asset base of USD 87 billion. So to have a business net inflows at 14%, and of your opening balance is just a phenomenal position to be in.

And that's something we will continue to build on over the next number of years. Like we're investing a lot in the Empower brand. That does an awful lot to build confidence among our customers. Golfers in the room might have seen Cameron Young won The Players. People who watch American Football will have seen Empower Field hosting the AFC final. People who watch Formula 1 will see Empower at the Miami Grand Prix.

We're doing a huge amount on product extension as well. We've added health savings accounts. We'll be adding educational savings accounts this year. We continue to develop out our brokerage offering. We work very hard on our managed fund coverage. So all of these things build our relationships, and with customers, and during the lifetime. And that makes us much more likely to retain customers then as they progress into retirement.

And then I suppose if I go back to the fantastic job that Ed and the team did integrating the acquisitions that we did, like that was building the Workplace Retirement business. We bought Personal Capital then, which was the foundation of the Wealth business. But Ed is doing a big job this year now as well, just sort of reorganizing our advisers, our customer service operations into one Empower engine. So we're sort of moving from, if you like, people coming up to Retirement and then trying to persuade them to stay with Empower through our Wealth business post Retirement into sort of getting people to add Wealth products while they're actually in the workplace and saving with us. And again, that just strengthens the relationship. And once we have that Wealth relationship with them before they get to Retirement, they're much more likely to stay with us.

So through all of that work, we will see more and more customers staying with Empower for all of their saving and spending lives in Retirement.

And that rollover strategy is not -- doesn't seem like it would be necessarily impacted by market fluctuations. It's more of a -- people retire, leave their employer in normal course and as long as you're able to identify and pitch properly and...

No, absolutely. Like I think the markets always have an impact. Like obviously, we're trying to build more wealth relationships with people during retirement, people have a little less confidence when there's market disruption and maybe less willing to make new decisions. So you probably see that dampened a little bit.

No. But you're right, like the core force is still people saving coming to a Retirement point and having to make a decision. And people are going to age differently what's going on in the world. Yes.

So I mentioned earlier both an organic growth story that's been good, but it has been influenced by inorganic acquisitions of MassMutual, Prudential. And you've been very transparent in your strategy that if and when another asset of that -- in that business becomes available, you'll look at it and possibly be active.

When we look at potential targets because there's some information out there, is there a particular business mix that's ideal to you? Because you can look at MassMutual and Prudential we're pretty different. You have one with fewer participants, bigger accounts and then vice versa. Is there any -- are you ambivalent? Or is there a preference?

No, like the big acquisitions we did in the U.S. were JPMorgan going back, and then MassMutual and Prudential. And the fantastic thing about all of those acquisitions were -- they were basically defined contribution book acquisitions, which sort of no other business lines alongside it. Now there was different mixes within that, say, a different level of managed accounts, which are a big thing for us, or they're coming off different systems and there's different integration channels. So that will cause the price points to vary.

But generally, any clean book we see like that, that we can get at an attractive price. We've proven we can integrate these businesses and add to the scale. So we'd be very interested in any of those at the right price point. But probably targets that we will need to consider going forward will have those defined contribution books, but maybe other lines alongside it as well. Some of those we may be interested in, some not. So they're the type of things that...

These three, plus what other lines...

Well, businesses will have general accounts alongside it. So how big the general account, what's in the general account will matter. Other companies might have group benefit businesses alongside it. They may have other insurance that we're not interested in. So different businesses will have different mixes.

I think the core point though is Empower, like obviously, it's been built through acquisition and inorganic. But the organic performance of the business is extremely strong. All of the big players, well us, in particular, are winning market share every year. I expect by the end of this year, if we look back over the last 5 years, we'll have written USD 200 billion in new plan acquisition. And just to put that in scale, like that new business acquisition over a 5-year period is of the same size as the 10th biggest player in the U.S. market. So even absent acquisition, we will continue to grow our U.S. business. And all of the targets that we set out to the market, the double-digit growth in the U.S. and the growth in our other segments are not dependent on acquisition activity.

So we have a fantastic portfolio across the segments. We have scale positions in all of our markets. And so we will hit our 8% to 10% earnings per share growth absent acquisition activity. And I think the real strength of that position then is it means we're very disciplined in looking at acquisition targets. If they add strategically, or at scale in our existing segments, and they're at a right price point, we're good to go. But if they're not, that's fine.

And then just to wrap up on this particular business, not that it's a unique risk to this one, but AI is on everybody's minds.

Yes.

How does it play into your management of your existing business and then evaluating future acquisitions? Like capital deployment towards a large acquisition in an industry that may be disrupted, or in a worst-case scenario, obsolete. I mean it's just to be dramatic, but it's stuff we have to think about that we didn't previously, right?

Yes. Look, again, going back, like we're very focused on the markets that we're in. We like to build scale acquisitions in all of our markets. And I think scale is just so important in so many ways, like I talk about the brand building earlier and you can only do that type of thing where you have scale. And it's going to be the same with AI.

Like I think to really leverage AI scale is very important as well. And I think that's probably going to lead to even more consolidation within the market. So the big prize for AI is obviously around productivity and efficiency. But the bigger prize is really what it can do for our interactions with our customers. We all know in different markets, the more people engage with financial services and the more they get financial advice, the better they are at building wealth and their lives are better in the long run.

When we engage with customers, we're engaging on time frames of usually hours, sometimes days. We never engage with customers at a speed that's minutes and seconds. So AI is going to allow us to transform to that. So I think AI gives us the opportunity to become a much more intuitive, easy to interact with business. We say AI can allow us to become a more human business. And hopefully, that will extend our reach.

Now to do that, you have to put in the right infrastructure of data and context to let AI work and make good agents. That takes scale to do that properly. Even as you transform the organization, like there's hundreds and thousands of different tasks within our organization. You can't sort of flick a switch and turn them all on to AI. You need to resource up, you need to transform all of those tasks while you're running your business as usual operations as well, and that takes scale to do.

So we have 20 million participants in the U.S. We have 14 million Canadian customers here in Canada. We have the largest scale position in Ireland. There are 3 core Wealth and Retirement markets. So we have the scale to do that work over the next number of years, and we're very excited about that potential.

Okay. Well, let's move into the Canadian business. The growth was not as strong as it was in the U.S. in the past year. What were some of the primary headwinds? Like I think maybe the morbidity, the disability claims experience might still have been positive, but less positive than it was the prior year. I also think about just the top line growth perhaps, because the employment conditions in Canada are especially strong right now. Is that playing into the performance of the business?

A little bit because like our performance of the Canada business is very strong. Like the U.S. is our leading segment, and it's ahead of Canada, it's ahead of Europe and it's ahead of the U.S. So I wouldn't just benchmark the Canadian business against the U.S.

So what we've seen in the last couple of years in Canada is 7% growth in 2024, and we had 3% growth last year, but a portion of the growth in all of the segments is the earning of the surplus assets. We had lower interest rates in Canada if -- so the real growth in the underlying business in Canada was 6% in 2025. So 7% growth in 2024, 6% growth in 2025. That's really good performance in a very mature position in Canada.

So as we look forward in Canada, our core product line in Canada is our group benefits business. So health and dental that so many Canadians have coverage and then life insurance and disability insurance alongside that. That's a very mature market position. If we continue to grow that at 4%, 5%, that's very good performance. But as I look forward, where I really see the growth potential in Canada is in our Wealth business. We believe we obviously specialize in the independent adviser space. We think there's a lot of growth potential there. As we look at other markets around the world, the independent advisers have a much higher segment than they have in Canada. We think we can lead out growth in that.

And then the Retirement group, Workplace Retirement business in Canada as well. Like we have a lower share there versus what we have in Ireland and the U.S., and it's our ambition to build out. So I see a very strong platform on the group benefits insurance business with very good growth potential in Wealth and Retirement.

The Wealth business in Canada, is that -- like is the tip of the spear, the seg fund business?

It's the seg fund business. It's -- I wouldn't describe it as the tip of the spear. Like it's a very important part for product setup. There's particularly very -- some very attractive features for seg funds for inheritance and state planning, and then there's underlying guarantees there as well that there in the mutual funds. So that's going to be a very important part of our product offering. But I think where we expect to see much stronger growth on the Wealth side is just in the normal mutual fund business.

Right. Now moving on to Europe. A couple of years ago, the message was we needed to make some changes to improve the performance, and that actually improved faster than I expected, the growth rebounded faster rather. But the U.K. looks still a little bit weaker than some of the other markets, especially Ireland. What's going on in the U.K. that's kind of impeding?

Yes. Like our 3 businesses in Europe are performing very well. So Ireland and the U.K., we have a smaller business in Germany, but both U.K. and Ireland performing very well. The one line that was quieter last year in Europe and within the U.K. was the bulk annuity market. So there were, sort of, some legislative changes and it was more for defined benefit schemes potentially bringing those liabilities to the insurance market, and some rule changes around how employers might be able to capture surplus within defined benefit schemes. So that led to a slowdown in that pension risk transfer market last year. So the market from '24 to '25 was down 20%. Our performance was down 20% as well on that product line. So that was a sort of external market impact. So that slowed growth a little bit in the U.K.

But outside of that, like top line growth in all of our different product areas in Europe was very strong last year. I think the other area where we've been working really hard on Europe is just the capital efficiency of the business. So there's been fantastic capital return, and capital generation and cash payback from the European business to Great-West, and that's been a very important driver to our very strong cash position overall. So again, when you -- yes, yes. So when you adjust again those surplus earnings within Europe, we had 7% growth overall in Europe last year. So, yes.

And then I guess, with regards to the bulk and annuities business, what's the outlook for that one?

Yes. We expect that market to return to normal growth this year. So we'll see that over the year. Like the outlook -- the expectation for the pension risk transfer market in the U.K. is like $50 billion of liabilities to transfer from the sort of corporate world to the insurance world over the next decade. So that's a huge market. There are a number of new players in the market, but it's a very, sort of, well-regulated controlled market. That's why it's one that we like to operate in. It sort of fits very well with our, sort of, risk posture. And we like our position there, and we expect to do well.

Okay. The Irish business, which you're very familiar with.

Yes.

What is the potential there? It's been a great growth story, but it's a market of only 5 million people. So it's easy to, kind of, look at it.

It's a very fast-growing economy, one of the fastest population growth in Europe as well. So it is small, but I think it's already 5.5 million, and higher than that. So it's on a path to 6 million, 7 million, but it's always going to be of that size. But it's a very dynamic economy. It's a very fast-growing economy. We have an incredible position there. In some of the product lines, we have 50% market share, like -- I think our lowest sort of market share position there is mid-20%. But most of them are 30%, 40%, 50% market share. So we have an incredible position there.

So -- and again, I think the interesting thing about Ireland is just the transformation that's happened over 40 years. We've gone from being one of the poorest economies in Europe to one of the richest. That means Wealth assets and the Wealth sort of population, if you like, is very young in Ireland. So again, that gives a great -- an even higher growth opportunity for a business like ours than the growth you would expect in the economy. So yes, it's -- Ireland is never going to be as big as Canada or the U.S., but the growth prospects there are very good.

Yes. I know you just had an Investor Day, but might be a good idea to have the next one in Dublin.

Yes, yes. Gabriel was saying to me beforehand, possible family trip to Dublin. So,yes.

Yes. I always have an ulterior motive. I want to wrap up on a couple of capital allocation decisions. The one of the -- I was talking to you earlier and something that I'm guilty of is you pay attention to the stock for a long time, and a company, and how it behaves for a long time, and you get accustomed to -- that's what they usually do and then all of a sudden, something changes. And wait a second, this actually happened. Buybacks were pretty notable from Great-West last year. And just -- the appetite is still there? What changed in the attitude to make you so active, I guess, on buybacks?

Yes. I don't think we're alone in this. I think there's been a maturing in the insurance industry around the importance of capital. It's effectively your stock within the business. You have to manage it very, very efficiently. We're a very flat organization. Great-West sits at the top. We have our 4 segments. Most of our profits -- practically all of our profits are cash. It flows very easily back up to the top. We invest about 20% of that back into new business on our capital support to businesses. The next 50% odd goes on dividends, and then that leaves 30% in spare amounts.

So it's not our intention to build up a large cash stockpile. Like obviously, if there's acquisition activities, it will get diverted towards that. But that leaves at, say, $5.5 billion earnings, or $5 billion earnings, that leaves a good chunk of money every year. So we bought back, I think it was $1.6 billion last year, and we have the facility set up to our normal issuer course bid to do a similar amount this year.

And I guess that you did mention the -- use the acquisition word. And we talked about this earlier, but I just want to go back to it because on the Q4 call, and I take my notes, and I'm like, he's talking a lot about acquisitions. It was -- was there an intent to signal something there, or just...

No, it wasn't an intent to signal something. So like we're very open to acquisition activity. But when I say that, don't interpret that as there's an imminent acquisition. So go back, clearly my earlier comments, like acquisitions have to be relatively clean for us. They have to be a good strategic fit. They have to meet all of our hurdle rates. And our day-to-day focus is really building the organic capability within the business.

So -- like we've lots of firepower if the opportunity comes up. Even with the buybacks, we're sitting on $2.1 billion in cash. And our leverage ratio is much lower than it has been the last number of years at 28%. Our LICAT ratio is 128%. It's above our, sort of, operating range. So if we do a similar level of buybacks this year than we did last year, all of those, sort of, cash positions, ratios stayed the same. So we have lots of firepower, but that does not mean there's an imminent acquisition.

All right. Well, David, thanks for coming to Montreal, and I hope to see you again next year.

Okay. Thanks a lot. Yes.

Good morning, everyone. Thank you for joining us today. I'm happy to have David Harney, the brand new, I guess, maybe not that new, but CEO of Great-West Life. David, thank you for being here.

Yes. Thanks very much, Mario.

Let's get started by just remind me of how you came to be in that seat, the CEO of Great-West Life.

Yes. So I became Group CEO on 1st of July last year. So I've 7 and a bit months in the role now. So I've been with the Great-West organization since 2013. Great-West bought Irish Life in 2013, and I was in that business there. I ran Irish Life from 2016 to 2020. And then from 2020 up until the middle of last year, I ran the European segment and also oversaw our Capital and Risk Solutions segment. And when Paul retired then last year, I was asked to become Group CEO, and I obviously jumped at the opportunity and said, yes.

I can see why. One of the more important institutions in Canada. I'm going to get started with the sort of questions and concerns that have -- just the most frequently asked questions, if you will. As I prepare for something like this, I solicit questions from the large investors, I know, and there are a few very, very consistent ones that came through.

The first has to do with Empower and M&A. And I want to focus direct -- we'll talk about all the other aspects of the business as well, but specifically on M&A, the sense and it's a sentiment that I've expressed that the business really does need M&A to grow, that we can't rely on equity markets to give us that kind of performance every year. How do you address that notion? Because you seem to have a different take on it, didn't really emphasize M&A the way I thought you might.

Yes. So like M&A has been very successful for us in the last number of years, and I can come back to that. But like we were very clear on Investor Day last April, just when we set out our medium-term growth ambitions, they are not dependent on M&A. And our guidance is double-digit growth from the U.S., high single-digit growth in Europe and Capital and Risk Solutions business and then mid-single-digit growth in Europe. And we remain very confident on all of those absent M&A. So I think what people are probably surprised about is how can we be so sure that we're going to get that double-digit growth in the U.S. segment, which is now our largest segment. And can you really do that absent M&A?

And I think if you look at our results for last year, the full year 2025 versus 2024, I think you see the answer to that question. So the first thing I'd say is, 2025 is a great year to judge the Empower business because, okay, market performance was good. But if we look at the aggregate external impacts on the business, they were actually neutral. So market effects were positive. That's an external impact. Credit experience was actually slightly elevated in a negative way. And then our crediting rate on the general account as well was a little bit higher in '25 than '24. So the aggregate of those 3 external events on the U.S. business last year was actually neutral.

And what you saw then in the U.S. business was pretax operating earnings grew 11%, and that was made up of a 7% growth in the Workplace business and a 25% growth in the wealth business. And that dynamic we expect to continue, like what we've done in the workplace business is built an engine now that has substantial scale. People know we have 19 million participants there. That's by far and away the second biggest provider. That gives us a huge scale advantage. We can talk a little bit more about it. But post the acquisitions we've done there, the team have built a fantastic engines of incredible service delivery, great portfolio architecture that's there, open platform.

So they're regularly winning new business. Even since 2022 to now, we've won $150 billion in net plan inflows. And we're very confident about net plan inflows again in 2026. So what that means in a 5-year period, we will win net plan inflows that are about the same size as the 10th biggest provider. So it's a combination of those net plan inflows compensating for that baby boomer outflow that everybody sees in workplace and then leveraging the operating -- leveraging the scale that we have in the business.

So the other thing you will see from Empower from 2024 to 2025 is just an improvement in the operating margin. So that went from 29.1% to 30.2%. And then that's the scale coming to play. It's the scale coming to play in our ability to grow revenue and put in new products, and it's the scale coming to play in reducing our cost per participant. So those dynamics will stay there for workplace like we expect that type of growth again in 2026. And then there's obviously that huge engine from the workflow that is fueling the wealth business.

We're already the #1 destination for our workplace customers when they come to retirement within our wealth business. And that dynamic is going to continue. So absent acquisition activity in the U.S., we expect workplace to grow at the same rate it did in 2025. So that's a 7% level. We expect the wealth business to grow at that over 20% for the next number of years as well.

And so you made an important point there about the net plan flows and how meaningful that number is. Is it your sense that in a more normal market, because I can appreciate that the very strong market performance you've seen has somewhat supercharge the participant outflows. Is it your sense that the planned inflows can actually offset entirely and maybe more than offset the participant outflows in a more normal equity market?

No. In a more normal, they'll compensate, but they won't fully offset. So where everybody starts off in a year is you'll expect participant outflows of about 2% of funds. And that dynamic is going to be there for the next number of years. And that's because the baby boomers are retiring now. They've accumulated large pots. So as those pots transfer into retirement, everybody can expect a 2% outflow. What we do then through our net plan wins, and that's effectively growing market share in the market, we reduced that to 1% or a little bit less than 1%.

If we had an exceptional year, we bring it back to maybe 0.5%. But I think it's better off to think of the industry has this 2% drag because of that baby boomer outflow. Empower will reduce that to about 1% from just winning market share and net plan flows during the year. So that's a 1% drag. So if you think about a normal market, then like a normal market obviously grows to some extent, not as much as it did last year. So think maybe funds growing at, pick your number of 5%, 6%. It's a 1%...

5 and below.

It's a 1% drag off that. So if your model is 5%, that brings that back to 4%. There's obviously -- it's a competitive market. People have to sharpen prices every year. But we're adding new revenue all of the time on to the platform. We get more people into managed accounts every year. So we have this revenue expansion that sort of matches off sort of pricing pressure that's there in a competitive market. And then because of our scale platform and investments we're making, we were able to reduce cost per participant every year. So I think you'll have the similar dynamic continuing. Net plan wins reducing a 2% drag to about a 1% drag. And then what you saw this year was the improvement in the operating margin like from 29.1% to 30.2%. You're going to see that dynamic again for the next number of years. And that's what translates maybe a 4% number to a 7% number.

And that's a really good sort of paradigm to think this through. So you got your 2%, 1% drag. Let's talk about that 1% of planned inflows. And let's talk -- because that's an important number. I mean that's an important number...

It's a big number, yes.

It offsets half of the regular outflow. Let's talk about -- a little bit about what Great-West Life does differently or better than your peers to extract that 1%.

Yes. There's a couple of things. So scale is very important. So -- because price is very important, you have to be efficient. So what you'll see in the market is the top 5 players are winning share and all of the other players are struggling to compete. So that dynamic is going to continue. I'd say we're in an even stronger position of that just because of the platform that we've built.

So the platform we have in the U.S. came from our own seed platform, the purchase of the JPMorgan business, the purchase of the potential business and the purchase of the MassMutual business and the add-in then of the Personal Capital business as well. What's different about that platform is it's an open architecture platform. It's fully our own. We're one of the largest technology teams in the industry. So plan sponsors, employers love that open architecture because it gives them a very wide product choice that they can use to construct the offering that they want for their participants. Our service levels are among the best in the industry. And that's why we say 97% client retention. Our Net Promoter Scores are phenomenal. So that's why we win business.

I think the other softer reason is probably just our passion for the business as well. Like the team really -- the sense of mission the way they go to the market. So our job is to help Americans save for retirement, guide them on the right amount that they need to be saving, guiding them well on the investments they need to make. So like all of these things feed into why we're winning in the market. And this isn't a 1-year performance, like this is consistent performance since 2022.

So from 2022 to the end of last year, $150 billion in net plan inflows. We will add to that again this year. We already know we've signed up deals this year. So net plan flows are going to be very strong again this year. And that aggregate 5-year number from 2022, as I say, it's going to be of the order of the size of the 10 biggest player in the market. So that's just a great position to be in.

Let's talk a little bit then about the margin. You were clear in how that expanded in the retirement business. There's 2 sides to that, of course. There's the pressure on the fee side, and we have seen some pressure on the fee side. Can you put a little bit of thinking around what's driving that? Is it just the largest players in the business continuing to drive down expenses and lowering fees? What's -- or is it a mix story that maybe I'm missing?

It's a very big market. You'd expect it to be a very competitive market. The bigger players are going to continue to invest and they'll be driving down their cost per participant. And it's a very competitive market when schemes go out to tender. So if people -- if the bigger players are making those productivity gains, some of that is going to feed back into better pricing.

I'd say it's probably the value for money that participants get and plan sponsors get is already very, very good. So I think we've continued to see a price competitive market and some downward pressure, but no more than we saw in the last number of years, I think.

And what we've been able to do as a business is reduce our costs by more than that. And we've also been able to expand the products that we are selling to people as well. So we're actually seeing an aggregate revenue lift a little bit, and we're seeing a reducing cost. So it's both of those actually contributing to that improvement in the operating margin. So as I said in the workplace, that went from 29.1% to 30.2%. We expect that to continue to improve over the next couple of years even with that pricing pressure that you would expect in the market.

And on the efficiency side, so I think I'm following you on the fees. On the efficiency side, is there anything you can point to some practical things Great-West Life is doing to take down expenses? And I appreciate that it's very scale driven, but is there anything else you could offer?

It's very scale driven. So like our attention over the last number of years went to successfully integrating those acquisitions that we made. And the team did a fantastic job on that. Like we took a lot of care to migrate all of those businesses onto a single platform. We have a very modern technology stack. And what you have now post -- we're in an environment now post those big acquisitions where we have a team that had to work on integrating all of those businesses now fully focused on making that engine as efficient as possible.

And I think what businesses find is if you create a large engine like that and you're fully focused on making that efficient, it's pretty easy now, the team worked very hard to do this. But typically, organizations will try and drive 10% productivity improvement a year on it. And it's just through understanding your processes, mapping your processes, seeing where the inefficiencies are, automating those, taking them out. And AI is starting to help on that now and contribute to it, and we think that's going to probably advance some of those productivity gains in the years ahead as well.

So I started off this question with M&A, but we quickly veered away from M&A and went down the path of organic earnings growth. I want to go back to M&A because a question came through, and it's actually a little different from the way I structured the question. The person asked it this way is, can you explain the economic rationale for buying up a smaller scale retirement platform like paying for that up now versus just waiting for these smaller players to exit the business over time where you can win those flows in the open market. So he's flipped it on its head and said, hey, maybe it's better just let these things wilt away.

Possibly. So that's the dynamic. And I said, we will grow absent M&A. And we're obviously picking up schemes from smaller players that are struggling to compete against the bigger players. So that's a dynamic in our flows every year. We're also winning schemes of bigger players as well that have maybe not quite our scale, but yes, so we win across the market.

So I suppose M&A at the right price, though, where we're very confident of executing is still a very good thing for us to do. So if we can get it at the right price, we're very confident that we can integrate it onto our platform. It just adds scale quicker than that, say, organic gains that we will have from year-to-year. So if we can get it at the right price, we're pretty confident that we can achieve our hurdle rates of return. If we have high level of confidence over execution, which you'd expect us to have on workplace acquisitions in the U.S., we will do it.

And the Empower business.

But I suppose we'll be patient on to -- things have to be at the right price. We're not going to go and chase. Things will probably come to the market rather than us go and chasing. And if they're at the right price, we're very keen to acquire.

And the Empower business, I think you reported a 20.1% ROE, a pretty meaty number...

That's the ROE on the Empower business now, yes. Q4, yes.

Yes. Would you -- do you sort of have a stomach to let that drift a little lower if the right deal came along? Would you think you could sort of massage investors into thinking, hey, this is the right idea. We're going to accept a lower ROE in the near term? Or does that not the math you're doing in your mind?

No, I think we can tell that story very well. Like the guidance we've given on ROE for the aggregate business of the U.S. and the other 3 segments is our medium-term ambition is ROE in excess of 19%. That's grown from 17.4% in 2024 to 18.2%. And then similar growth in earnings this year with the bigger growth coming from the capital-light businesses in all of the segments means we hit that 19% target at the end of this year.

Now that 19% will continue to grow because the capital-light businesses will continue to grow quicker than the other businesses. What will pull back that 19%, and I think this is perfectly right for us to pull it back, if we do an M&A, say that it's above our 15%, but let's say it's at a 16%, 17% return, that's obviously going to pull back that 19%. I still think that makes sense and it's the right thing to do because, okay, we'll pull it back a bit, but that's still going to be a growing ROE number, and then it's on a bigger number. So, yes.

Yes, it's been my experience that the way investors behave around M&A is always -- we look back at the very last big deal and say, did that one go well? And if that one went well, then we can all wrap our minds around the company drifting a little lower on ROE for an important deal. If the last one didn't go well, then we're not so keen to do it. That's just in my experience. And I think...

Yes. I think that's the right way to think about it. And our track record there is very good. So like I talked about JPMorgan, I talked about MassMutual, I talked about Prudential, I talked about the personal capital. All of those 4 have gone spectacularly well. So I think if we're executing in that space, we would have a very high level of confidence on the execution. So it's really just the price right for us?

We've also done some other acquisitions as well that have been very successful. So smaller ones like even in the U.S. And there was the add-on of Optiontrax and that stock compensation plan. That's been a great add-on. So where we see capability add-ons, we look at those. And then we've done a number of wealth acquisitions in Canada and in Europe. And okay, they're smaller than those acquisitions I've talked about in the U.S., but we've executed very well on all of those, too. And again, we'll be open to opportunities in the other segments as well.

I think you're in that sweet spot where you can do something like that without spooking investors too much.

Yes.

Let's talk about something you said on the call around you'd be patient on deals, and you said it again here. And it was in the context of using capital to buy back stock. and the way you described it was the capital is there, if the opportunities don't present themselves, you offered something to the effect of 2026 could see as much buyback activity is 2025. I have to admit that surprised me because '25 was a big year for buybacks. like for folks like myself and investors and analysts that have been around your company as long as we have, that's not normal for great-west to buy $1.6 billion. So I think the first part of the question is, what does that mean? do you have like a date, June 30, no deals for buying back stock? I mean that's a little too rigid. but is there like a time line that you decide, okay, well, we've looked long enough, it's time to buy back stock?

Yes. No, like a time line like that would be very rigid, and it's not the way we think about it. We've become much better at our capital management, and we're much more transparent now with the market on how earnings turn into capital generation and how that capital generation turns into cash.

And maybe I'll just talk about that a little bit because it informs then your question. So we made $4.65 billion in base earnings this year. you can think of that as practically all cash, right? 20% of that then gets invested back into supporting new businesses, those capital supported and new businesses that require capital. So that's in the insurance lines, in the segments and our capital and risk solutions business. So 20% of the earnings goes back into that. about 50% of the earnings then goes to pay the dividends, and we have 30% of earnings then that are left in cash. So they will either add to a cash pile or they will be used for share buybacks absent M&A.

Now if you look at what we have permission to do this year, we have permission to buy 20 million shares, right? Now the cost of that will obviously depend on the share price during the year. I think the consensus target price at the moment is about $70. So that's going to be $1.4 billion. That's very close to the number that we did last year.

And then if you think about the $4.65 billion that we made in 2025, if you take our sort of guidance on eps growth or earnings growth, even go to the lower end of that 8% that turns that $4.65 billion into $5 billion, 30% of that just on the stack that I talked about is 1.5 billion in new cash. So that says, well, these guys could very easily do share buybacks of that level again in 2025.

And we don't think that reduces our firepower when it comes to M&A because at the moment, we're already sitting on $2.1 billion in cash. We're sort of above our operating ratio on LICAT. We're above our RBC risk capital ratio in the U.S., and we're below our leverage target. So depending on what level of liquidity you want to keep in the business, we're probably sitting on firepower of $5 billion or $6 billion. And even if we do $1.4 billion, $1.5 billion of share buybacks this year, we're still sitting on that same firepower at the end of 2026.

Well, Jon put the excess capital, and I do my own math on it at over $6 billion.

So again, it's plenty of. There's a number of factors there. How low would you go on LICAT? How much do you really want -- how much liquidity do you want to keep? But yes, it's of that order.

Yes. And we're going to go back to wealth in a moment. But before we do, there's this -- at the beginning of your presentation, you talk about these 2025 highlights. And I always pay attention to those because if a CEO puts 5 things on a page, clearly, he's telling us those 5 things matter to them. So there's one line in there near the bottom of your 4 or 5 bullets and it says enhanced shareholder focus. And I'm a cynical person. So the first thing I think of when I see enhanced shareholder focus is, well, you're telling me that the previous management team did not have a shareholder focus. Clearly, it's not what you're telling us. But there's a word there, like what does that mean enhanced shareholder focus? What's changed?

Yes. First of all, it's really nice to hear that you read that stuff at the start and you pay close attention to it because sometimes I guess those CEOs wonder, are we talking to ourselves and is anybody really listening and just looking to hear Jon talk about the numbers. So that's very heartening to hear.

None of has read it.

Yes. No, I suppose myself and Jon are new in our roles. But like we inherited a fantastic business. So the management team before us built what we have today. And we have an amazing portfolio across all of our segments. There's no business line that we're in at the moment that we don't want to be in. And that's a credit to the job that Paul and the team did beforehand.

I think where we've gotten better as a business in the last while is just our interactions with the market, our transparency with the market. People always saw it as a prudent and well-run business that delivered good earnings. We've sharpened the focus and the transparency around capital generation and that stock management of capital. We're very responsive on our disclosures as well. So where people are looking for more information. We're continuing to update the supplemental information that goes out with our earnings results like even this quarter, even though we didn't get questions on it, we improved our disclosure around the private assets.

And we're spending a lot more time with the investor community as well. As a team, we really enjoy that dynamic because it's energizing going out talking to investors in the same way that it's energizing going out talking to customers. So I think all of those things contributed to the very strong shareholder returns that we saw in 2025. And like we're very proud of that performance. So when we sort of put in that comment, we're signaling that continued engagement with the investor community, that transparency around how the business is performing, what's driving the business performance.

And even the transparency around, it's not just an aggregate earnings per share growth target that we've set for the business, like we've broken that down in each of the segments in our Investor Day. We've gone into quite a bit of detail on what are the key deliverables for each of the segments to achieve those growth targets. And we're going to continue to be very transparent in that way on the performance of the business because we believe that, that transparency ultimately drives a better performance of the business.

Yes. It just -- it feels so different from what I remember 10, 15 years ago, it does feel quite different. Again...

It also -- I think we've always been very disciplined on sort of acquisitions and M&A opportunities. But that discipline then it continues on new business. We will pull away from markets where we don't like the returns on the new business side. People have seen this year, we've exited the mortality business in the U.S. Through our reinsurance division. And that same discipline then happens on the M&A side as well. Like we have to be confident on execution. We have to hit our hurdle rate of returns. It has to be -- has to add scale or add capability in some ways. So all of those disciplines stay there.

You reminded me of something a moment ago when you talked about discipline and maybe you could talk about this business as well in that context. The P&C reinsurance and retrocession markets look very different this year from last. Can you talk a little bit about what's happened and maybe drive home the point, the discipline point in the context of P&C retrocession?

Yes. It's a very interesting market. So obviously, supply of capital into the insurance companies and the reinsurance companies on the property and casualty side is very important. And they have different sources of capital that supply that need. And just what tends to happen, if you go through a period of low claims and low catastrophe claims, there's effectively more capital there to serve that business because that capital really gets called on when you go through a period of high claims.

So you sort of you'd imagine the market should be very disciplined and pricing is always the same. But you go through periods of a sort of a softer market or a harder market, and it follows the claims period. So if you have a period of elevated claims, some of the capital gets called and it's held against those claims, and that's when you have a harder market. We're going through a soft market at the moment because recent claims experience has been good. That means returns are lower. We will do less in that market segment this year because the pricing is softer, and we make up for that elsewhere.

Yes, it's clearly showing up. Let's focus on another question that came through. It's one I asked on the call, and it relates to ai, both as an opportunity for the company, but also as a threat. So I'm going to go to the question sort of directly. Will new AI options disintermediate power or any part of the business? The power seems the most at risk because it's the retirement administration and the low client touch business.

So you tried to address it on the call, and I pressed you a little bit on this. And I pressed you because that seems to be the question of the day. It's remarkable watching investors shift from AI is real positive and what it could do on expenses to AI is now a giant disruptor. And these shifts are uncomfortable to watch as an equity analyst, but that's the shift of the day. So let's talk about why or why not empower could get disintermediated here.

Yes. I think that's exactly the right way to think about it. And I think everybody can understand the efficiency gain that's there for us and other financial service providers. And we can really see that there as well. So just on the efficiency side, we talk about our sort of expense ratio going down from 57% to below 50% over the next number of years. I think probably the AI opportunity to drive productivity in the business, I think means we can do better than that.

But let's move to the disruption question because that's a pretty interesting one. So if you think about structurally just what we have in the U.S. First is we have a fantastic workplace platform that we've talked about, and that's obviously performing very well. It's hard to see that being disintermediated by AI because I don't think that's what people are talking about. They're really talking about the wealth advice side when people come to retirement.

For the workplace business, employers and plan sponsors have to pick an administrator who's going to run their pension plan. And AI isn't going to take over that. Like those platforms have to be built. They're expensive to build. We have one of those, and we have a scale advantage on that. So I think everyone would see that the administration and delivery of the workplace business is going to continue to be done by the existing players. And if anything, the scale advantage that the biggest players have will even become more important in this world.

Now what those players will use AI for is to drive more productivity improvements that I talked about. And they'll also use AI to improve the customer experience and improve the customer engagement. So we expect that to happen. So we already have very high NPS scores. We already have a great customer contact, but AI is just going to help us do better on that. So I think that's pretty clear on the workplace side.

So what people worry about then is when people come to retirement, what's going to happen? Are we going to get the same flows into the wealth business? Or is that going to be disintermediated in some way? And I don't really see that happening either. Like as I said, we're already the #1 destination now for people when they come to retirement that choose to stay with empower. And that's because they're used to the empower experience. They like the empower experience, and they're very comfortable staying in that environment and continuing on post retirement.

And those people receive advice at the moment from a number of different sources. People talk to family and friends. People get a lot of confidence that their employer in the first place has faced that business with empower. People will talk to advisers that work for us. People will talk to independent advisers. So what we potentially have in the new world then is a new advice channel, which is ai. Some of that AI will exist in those previous advice channels that I talked about. So our own advisers and our own platforms will have ai. Independent advisers will have AI options as well.

And so the disintermediation risk then comes from potentially is there going to be a new independent AI that's going to give people different advice. And I think actually empower and the big players will actually do really well in that independent AI space as well because ultimately, what somebody is going to do is if I'm an empower client, I'm going to say, ask an independent AI agent, should I stay with empower or should I go somewhere else? And if the independent AI agent is given the best advice, it should, which I expect that will, it will say you should stay with empower because it's a scale platform. It's got the best product choice, you're going to get good options on drawing down your income, you're getting good service and where else would you go?

Interesting take on it. This issue, I can assure you, will evolve so many times in the next, I'd say, just by the end of this year, we will have an entirely different take on how AI affects the wealth business. And the reason I say this is the speed with which stories are changing in the market these days is shockingly high. This story could change within the next few months.

It's an amazing area. Like we're putting a huge amount of attention on it. Like I have to accept like that's the scenario I'm laying out. I think it makes sense. But we are in a world now where things are going to change a lot. Like the near things we have to do is we have to make sure we secure those productivity increases. So we have a lot of AI already built into our call centers. We have a lot of AI built into the operating engine behind. We're doing a lot of work on making sure that we have the infrastructure in place to really seize that agentic opportunity and make sure it drives all of those productivity sites.

But as that happens then as well, it's easily moving from call centers into the advice people that we have. So what you'll start to see in 2026 and into 2027 is that hybrid AI advice that people will have access to. And then we have to be open that the world is going to change and that the empower platform, the empower wealth platform is as good as it can be because I think in an independent AI advice world, the requirement to be good and to be the best is going to become even more important.

Sure. Let's move forward to wealth for a moment. Wealth is where all the really impressive growth is going to be. In your presentation or maybe even in this conversation, you made the point that net flows in wealth are running at about 14% of the opening balance. And I think maybe it was in your presentation and 14% is an enormous number. That is because the base is a little smaller, and the base has hit $100 billion. So you also made an important point that the largest destination of those assets out of -- you call it workplace, I call it retirement, but we're talking about the same thing, aren't we?

Yes, we are, yes.

Yes. So the largest destination for those assets is the wealth business. Have you got to the point yet where you talk about what that rollover rate is, where it's come from and what you hope to get it to? Are you offering outlooks like that yet?

Yes. So we talked about that in Investor Day. So we shared that our rollover rate at the moment was mid-teens, just slightly above 15%. We shared that, that was a 30% improvement over the last few years, maybe going back 5 years. And we said we expected to see a further 30% improvement in that rollover rate in the next planning period. So that takes it up to about a 20% level.

And what you're seeing in the performance of the business this year and those net inflows are an improvement in the rollover rate along the guidance that we gave. So that generated net outflows for the wealth business of $12.5 billion last year. And you're right, like our opening value was less than $100 billion, it was $87 billion. So that gives that 14% rate. And we expect that improvement in the rollover rate to continue over the next planning period.

And the key to improving that rollover rate is, again, people come to the retirement point from the retirement business and they have to decide are they going to stay with empower or are they going to go to another wealth provider. And the more we can engage with people while they're in the workplace retirement business through broadening the product offering, engaging them with our advisers, even engaging them with new advice solutions, the more we invest in our brand and become familiar and comfortable with the empower brand, they're all of the things that drive that improvement in the rollover rate. And so that's been on a steady improvement every year, and that's going to continue. So that's what gives us the confidence in the growth that we expect to see in the net inflows into the wealth business and why we expect the wealth business in aggregate then to grow at over 20% over the next 5 years.

Now this is super simple. But if you apply 20% to your $1.9 trillion in workplace, that's a big number. That's like $400 billion. That's 4x what you currently have. Is that far too simple the math? Is there more going on there?

Yes. Look, we expect this to be a $1 trillion business in time. So if you take the U.S. Business at the moment, there's about $2 trillion in that retirement workplace business and there's $100 billion. And we expect that $100 billion to grow in time to be $1 trillion.

Now the numbers you need to work off are there's a $2 trillion workplace retirement business. I mentioned the 2% participant outflows that are there at the start. So that turns that into a $40 billion number. Some people take that in cash as well. So you need to think of about like maybe 75% of that then is in play. You'll win a percentage of that. The other thing then as well, like that's $12.5 billion that I talked about for 2025, that's a net number.

So it's the new business coming in. It's important to remember then as well that people are using that money to draw income out of it as well. So there's going to be maybe a 6% income drag out of that and then some people will move as well. So if that flow in that's going to be much bigger than $12.5 billion, people will be drawing income out. Some people will move to other providers in time. So that's what gives the net number. But you're right, like ultimately, all of this $2 trillion has to move, but it's about 2% of it that moves in any year.

For sure. Yes, it takes...

Sorry, the 2%, sorry, is the net number. So there's a bigger number there on the outflows.

The point though is this business just looks so primed for growth as you drive the rollover rate higher. When you think about the -- who are the -- who are the leaders, what's your best view into what the leaders in the business can generate in terms of a rollover rate? Is it materially higher than 20%?

It is, yes. So everybody knows the leader in the business here. I don't know to say who they are, and they've been doing this for decades and decades. And in fairness, they are very good at it. So they don't disclose numbers, but people think their sort of capture rate at retirement. And we don't like to use the word capture because people have choice, and we really want people to have choice and you want to win this business the right way, but close to 50% stay with that provider. So we're at early days here.

But you won't go from sort of below 20% number to 50% quickly. Like you build this trust and confidence over time, and it's all about service delivery, you have to continue to invest in your brand, increase brand awareness. You have to continue to expand out the product set that you have because if it's just the retirement savings, that's a deduction of your wage. It just goes into account. People might look at it that often.

But as you add in other accounts like the stock plan services that we talked about, the health care savings account, there's going to be some great new products coming out in the next couple of years where people will be able to save for younger kids and things like that, the managed accounts that we have, like they're all the products set that have much higher engagement rates. And so it's very important that you get people to take out and invest in those type of products as well. So that's why you can see it's a gradual journey. But if you're doing well in all of these things, you should expect at that rate to continue to improve over time.

That company we're both referring to -- I mean, the name of that company is ubiquitous. Building that kind of brand takes a lot of money and a lot of time.

It does, yes. And we spend a lot of money on our brand, and we've upped that spend again now, the budget for that in 2026. I think the team are doing a fantastic job on building the brand, and they've been very clever as well in the number of ways that -- what they're doing that. But you're right, like this is a journey over many, many, many years.

Let's talk a little bit about what's happened to the margin in wealth as well because that's a really good story, too. The margin -- you talked about the improving margin in Workplace, but the margin improvement in wealth is also pretty heavy, especially in Q4. Q4 looked especially strong. So maybe talk a little bit about what's happening with the margin. I presume it's scale, of course, but the -- is there more to it now?

There is a bit more to it. So the number is very high in Q4, and that's because some of our spend and particularly our advertising spend, and we talked about brand and that, that's heavier earlier in the year. So I think the number was 39% in Q4. I wouldn't jump to that number. The better number to look at is the full year number for last year. So that was 35%. Now in time, if you have a very good wealth business, I think you can expect a 40% margin. So -- and I think over the next few years, we're on a journey from a 35% margin to a 40% margin.

I think what people are surprised about is like how can a business that's so young and still scaling be already at a 35% margin. So that's surprising. But the reason for that is it goes back to the structural setup that we have in the U.S. And obviously, the source of our customers for the wealth business are people retiring out of the retirement workplace business and people that are also moving jobs and just moving money as they move jobs.

And then we also win just pure new customers that have no prior relationship with Empower. But you won't be surprised to hear the biggest source or the biggest flow are the workplace retirement people that are retiring and moving their money then. That means the cost of acquisition for those customers is much less than it is for a typical wealth manager. That's just an incredible flow or pipeline to have. So that's why even for a business that's really only 3 or 4 years old already has a 35% operating margin, right? That's just a fantastic position to be in.

Yes, you don't expect to see that. We see it at some very large mature companies. Yes. Let's flip over to a sort of odd thing I keep finding in your retirement business, and I don't understand why it keeps showing up there. It's the elevated credit charges showing up in retirement. But I think about all the credit charges we saw in the year, I think it might have been $125 million directly in retirement. It's just odd to see that there. So maybe just logistically, why is retirement eating most of the credit hits?

Yes. For no good reason, I'd say, Mario, I talked about improvements that we're making in our disclosures and how we're continuing to improve this. And this is one of the items actually on our agenda for this year. And that's even why just over the last few quarters of last year, we gave more information out on credit losses and what our expected credit losses are and try to give some guidance on that.

So to be honest, we're a little bit of -- a little bit all over the place at the moment. So when you go outside of the U.S., there's a clear line on credit experience. And then for historical reasons, the nature of the U.S. business is, you're right, some of the credit losses are in the retirement result and some of the credit losses could be actually in the wealth result in the U.S. as well. So one of our hopes for next year is that we will lift out and show the credit experience in a clean line all on its own because you should be judging the retirement business and the wealth business outside of those.

And we'd like to even go a step further than that and get within base earnings maybe an expected credit loss period and have the volatility outside of that because you can -- it's a number that can just move around from quarter-to-quarter. And we think if we can separate that out, it better shows the underlying performance of the business. So this is something that we will return to in time, and it's a work in progress for us at the moment. But what we did in Q4 was even though it's in these different places just in the disclosure, like I think we did aggregate it on one of the slides just to show it more clearly.

I think that the way Great-West Life talks about credit experience on your calls, you can so easily be confused by it, if you weren't really steeped in your disclosure because often we talk about a certain level of certain basis point losses. We immediately think you're talking about the expected credit loss that appears on the face of the drivers of earnings when what you're really talking about is the aggregate. So I think is that where you're going that that's something you could tidy up over time?

No, that's something we really want to tidy that up. So yes, we appreciate this isn't as good as it should be.

Like the reason I followed along with the explanation is because I sort of live and die by these things. But for people that don't, you can easily get confused by that disclosure.

Yes. And then different companies have different approaches as well. So we'd like if the industry could move together a little bit, and we'd all move to a similar approach as well because we're conscious we might have one way of doing it, but you're dealing with other companies as well. So we're not making investors' job easy, if we all have different ways of talking about.

Yes. I follow it, but clearly, it could be a little easier. So one of the things that comes up on discussions around Great-West Life is, has the company put all its eggs in the Empower basket? Like think about this, our conversation has been wide-ranging, but a good portion of it has been about Empower. And it makes me forget sometimes that there are other really important businesses.

But when I looked at the growth in those businesses this year, what I saw was Europe and Canada, low single digit, CRS looks a little better than that. Should I think of, and I fear this is what investors are heading toward is that Great-West Life is all about great growth out of the U.S., pretty good growth out of Capital and Risk Solutions, but we shouldn't expect more than 2% or 3% out of Canada and Europe. Do you have greater aspirations for Canada and Europe than 2% to 3%?

No, we absolutely do. And the performance of both of those businesses is better than that in 2024 and in 2025. So again, we're very transparent, and we've had some currency sort of tailwinds for some of the businesses this year, particularly Capital and Risk Solutions and Europe. So what we showed in Q4 was just the full year performance of all of the businesses, taking out some of those currency benefits. And that's shown, I think, the 3% for Canada and 2% for Europe.

But we were very clear then the underlying performance of the Canadian business was 6%. So there's a sort of surplus amount that's held for the Canadian business. We had 110 basis point drop just on short-term yields during 2025. That had a $55 million impact on Canadian earnings. That's sort of outside the performance of the business. So what we really saw in Canada last year was 6% underlying growth in the performance of the business. That's on the back of 7% growth in 2024. And our guidance out for the Canadian business is mid-single digit, and the performance has been in line with that over the last couple of years.

And then the underlying performance in Europe is it's better than that 2% number. So we've talked again in our Investor Day about the capital optimization program that's underway in Europe and particularly in the U.K. Europe has sent cash of $2 billion back to Lifeco, which is higher than the earnings. And again, you can see that then that fall on the earnings of surplus, but a lot of that has been driven by just cash repatriation back to the parent. So that cash isn't sitting in Europe anymore. And again, when you adjust for that, then the underlying performance of the business in Europe was 7%.

And then again, looking at Europe, like the phenomenal top line growth in Europe, I think, which really surprises people. Everyone knows the bulk annuity market was a little quieter in 2025. But outside of bulk, the sales growth on the underlying was just over 20%. So again, our guidance for Europe is mid-single digit plus, and that growth will come largely from Ireland, where we have a fantastic position and the team continue to do a great job there to leverage that position. And then we have a very good insurance franchise in the U.K. The outlook for the bulk annuity market there is very good, and that will drive growth in the U.K.

And then our Capital and Risk Solutions business, like we were -- the unadjusted currency number there was 13%. We corrected that back to 9% just to take out that favorable currency movement. The momentum in that business is really good. So we've talked over the last number of quarters about the growth in the capital solutions part of that business. That's close to 55% of earnings there. The momentum into that is very strong in 2026 as well. So our guidance for our reinsurance business remains mid-single digit plus. It's outperformed that last year. Chances are it will outperform that again this year.

So the U.S. is clearly our biggest segment. It is our fastest-growing segment, but all of the other segments are doing well. And I think because the U.S. is the biggest and the fastest growing, that's just where the volume of questions go. But we're very happy to spend as much time talking about the other segments. And even with the U.S. being the biggest, it's 34% of earnings. So 66% of earnings still come from the other segments and the growth outlook for the other segments is good.

And I think maybe this answer is too long, stop me. But like the reason we're seeing growth is we talked about this at Investor Day as well is, there's just dynamics that are driving this in each of the markets. So the demographics in the geographies that we're in is very good. These are very important products for people. So people still need advice, and advice is a very important part of the component.

Debt levels in our geographies are high. So that means governments need people to look after this part of their life more and more. And we're seeing corporates then much more conscious about their capital levels, and that feeds into what we're seeing in the reinsurance business. So those dynamics are going to continue to exist in our business. And if you think about aside just from the good product positions we have, but just the overall macro environment, ultimately, that's what's driving the growth in all of the segments.

So we've got a couple of minutes left. I want to take a really big picture now, take a real big step back. Listening to you talk about your business, empowering the rest of the business, you sound pretty content with the way Great-West Life looks the components. I feel like you've really wrapped your mind around every business and how they fit in. Even though sometimes Capital and Risk Solutions doesn't really fit in, I think you've made a pretty good argument in the past in how it does, like diversification benefits.

So you've been in the seat for less than a year. Do you see anything that needs to be addressed? And I mean, structural like stuff that needs to be exited, things you need to add? Or does this look, now that I've kind of wrapped my mind around what Great-West Life looks like, got this Empower business with growth, Canada is stable, Europe stable to grow, Capital and Risk Solutions got some good sort of momentum behind it, is there anything that changes in the next, say, 5 years? Or does that feel really good to you right now?

No, that feels really good to us because the dynamics that are there in each of those markets and because of the positions that we have in each of those markets. Like what we have is like winning positions in our different product lines, great teams working on all of those, positions where we might be quite a market leader, but people see that we clearly have a right to win or a right to play in those markets.

So that's an incredible position for our portfolio to be in. Like as I said earlier in the call, there isn't a single product line we're in at the moment that we don't want to be in. So exiting anything isn't on our agenda. So our full attention is just on making all of those businesses as good as they can be. And we're not going to look at other geographies. There are other geographies that are obviously attractive and growing well. But ultimately, our belief is, no matter where you are, you have to have a scale position, and we are looking -- we have scale positions in the markets that we have, and that's where we're going to continue to focus.

I think sometimes investors get spooked when a CEO sort of openly muses about other geographies. And that's why I asked the question. I wanted to sort of narrow it down a little bit because I don't think investors really are open to big transformational things at this time, especially when, as you described, you seem awfully content with the way things are shaping up. And I think investors generally like it right now.

Yes, I'd probably take awfully content and turn it into excited. Like we have a great portfolio. And the world is very exciting geopolitically, but I think it's more exciting from a technology point. Like we love the AI agenda and what it could do for our business. As good as we are and as good as our market positions, we still measure a lot of our customer experiences and our turnaround times, sometimes in hours, but sometimes in days.

We'd love to be a seconds and minutes business. And we talk a lot internally just about the opportunity with AI and increasing technology in the business. But if that can turn us into minutes and seconds business, it actually makes us a more human intuitive business to deal with for our customers. So like that's what we're really excited about. We're not dreaming of other geographies. We love what we have, and we think we can do a great job in it in the next few years.

Well, David, I appreciate you doing this. I feel like measuring my own confidence level, it's probably ticked up a little bit from this conversation.

That's good. That's good.

And that's all you can really help for, conversations tick up confidence levels. Everything is very small and incremental, but I appreciate you doing this. And thank you to everybody else who joined us.

Thanks for the question on the probing, Mario. So we love the opportunity to talk about our business. So thanks for giving me the time this morning.

Enjoyed it. Thank you. Have a good afternoon, everyone.

Okay. Thanks a lot.

Thank you for standing by. Welcome to the Great-West Lifeco Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions]

I would like to now turn the conference over to Mr. Shubha Khan, Senior Vice President and Head of Investor Relations at Great-West Lifeco. Please go ahead.

Thank you, Morgan. Hello, everyone, and thank you for joining the call to discuss our fourth quarter and full year financial results. Before we start, please note that a link to our live webcast and materials for this call have been posted on our website at great-westlifeco.com under the Investor Relations tab.

Turning to Slide 2. I'd like to draw your attention to the cautionary language regarding the use of forward-looking statements, which form part of today's remarks. And please refer to the appendix for a note on the use of non-IFRS financial measures and important notes on adjustments, terms and definitions used in this presentation.

And turning to Slide 3, I'd like to introduce today's call participants. Joining us today are David Harney, our President and CEO; Jon Nielsen, our Group CFO; Ed Murphy, President and CEO, Empower; Fabrice Morin, President and CEO, Canada; Lindsey Rix-Broom, CEO, Europe; Jeff Poulin, CEO, Reinsurance; Linda Kerrigan, our appointed Actuary; and John Melvin, our Chief Investment Officer.

We will begin with prepared remarks, followed by Q&A. With that, I'll turn the call over to David.

Thanks, Shubha. Please turn to Slide 5. 2025 was a great year for Great-West, marked by strong financial results, further advancement of customer propositions and leadership transitions that position us for continued growth. We delivered record base earnings, up 11% over the previous year and a 12% year-on-year increase in base earnings per share, well above our medium-term objective. The double-digit base earnings growth in Retirement, Wealth and Group Benefits has continued our shift to a more capital-efficient business mix. The strength of our balance sheet gives us substantial financial flexibility. This includes over $2 billion in deployable cash at year-end, virtually unchanged from a year ago despite $1.6 billion of share buybacks. This is a testament to the strong cash generation profile of our business.

We also continue to bring an increased focus on shareholder value during the year. Our record performance, strong balance sheet and our continued commitment to driving shareholder value through disciplined capital deployment have contributed to strong total shareholder return we delivered in 2025.

Please turn to Slide 6. As I already mentioned, we delivered record base earnings per share in 2025, up 12% from the prior year, primarily owing to strong growth in our capital-efficient businesses. This helped drive base ROE of 18.2% with our U.S. business crossing 20% for the first time. We continue to reinforce our position as a leading player in Retirement services and Wealth management, ending the year with total client assets of $3.3 trillion, of which more than $1 trillion represents higher-margin assets under management or advisement.

In 2025, Empower crossed the $2 trillion mark for the first time, highlighting the incredible progress the business has made in attracting and retaining customers. Robust capital generation has supported significant return of capital to shareholders, maintained our LICAT ratio above target levels and reduced leverage. In addition to the $1.6 billion of share buybacks in 2025, we've repurchased $250 million in common shares so far this year and may repurchase up to 20 million shares this year under our renewed normal course issuer bid.

Given our strong results and financial position, we are delighted to announce an increase to our quarterly dividend of 10% to $0.60 per common share.

Please turn to Slide 7. As we reflect upon 2025, it's important to recall that less than a year ago at our Investor Day in Toronto, we unveiled our updated medium-term financial objectives. We reiterated our objectives for base EPS growth and dividend payout, raised our base ROE ambition and introduced a new objective for base capital generation.

Recent growth in base earnings per share has consistently exceeded our objective, supported by strong global equity markets and favorable currency movements. The consistency of these results and the consistency of the delivery from each of our 4 segments makes us very confident of achieving our growth ambitions in 2026 and beyond. With higher growth in the capital-efficient Retirement and Wealth businesses, we are well on track to deliver ROE of over 19% in the medium term. We've maintained our disciplined and consistent approach to dividends all throughout, maintaining a payout ratio around the middle of our range.

And finally, we are pleased that our base capital generation this year exceeded 80% of base earnings, while at the same time, deploying considerable capital in our Capital and Risk Solutions business this past year to take advantage of compelling opportunities in the market.

Please turn to Slide 8. Each of our businesses performed in line with our growth ambitions in 2025. This performance is a credit to our clear strategies, focused execution and commitment to delivering for our customers. The U.S. and CRS comfortably met our medium-term growth ambitions on a constant currency basis.

In Canada, our results were adversely impacted by lower earnings on surplus due to falling yields. Adjusted for this, base earnings increased by 6%, a very strong result on the back of 7% growth in 2024. In Europe, earnings on surplus decreased significantly as a result of the nearly $2 billion in dividends paid to Great-West over the past 24 months, which exceeded the earnings of the business by a significant margin. Adjusted primarily for earnings on surplus, base earnings growth for Europe was 7% in constant currency. Overall, I am pleased with the strong underlying momentum across all 4 business segments, which gives us confidence, as I said, on continued growth in 2026 and beyond.

Please turn to Slide 9. As I shared last August, we're focused on 4 execution priorities in bringing our strategy to life. I am pleased with the significant progress we have made against each of these priorities in just the past year. Let me highlight a few examples. We have continued to strengthen our Wealth platforms, which are seeing the most promising growth opportunities. Empower Wealth exceeded USD 100 billion of client assets, driven by -- driven in large part by increasing rollover sales with net new assets alone driving net flow organic growth of 14%, which added to market growth during the year and increased operating margin drove an increase in base earnings of [ 26% ].

In Canada, we continue to bolster the platform with book acquisitions and greater integration of the dealer network. And in Europe, we achieved record retail net flows of $4.2 billion as Irish Life continues to expand its market presence. We are also deeply committed to delivering best-in-class service for our customers. There is no better example of this than the strides we have made in expanding Empower's workplace offering with the introduction of private market investments for 401(k) participants, expanded consumer-directed health options and a broadened suite of stock plan administration services.

At the same time, we continue to invest in and accelerate the use of new digital technologies, including AI. In Canada, that includes the launch of CaLi, our first AI assistant that is helping to streamline workplace plan member inquiries. And Irish Life is seeing the continued development and utilization of CARA, which has revolutionized the claims process through advanced AI.

And finally, we made tremendous progress in streamlining our operations. This included the ongoing optimization of our balance sheet in the U.K., which has yielded more than $2 billion in capital benefits since the start of the program in 2024. And in 2025, CRS ceased writing new mortality risk reinsurance in the U.S., thereby devoting more resources to Capital Solutions where risk-adjusted returns continue to be significantly more attractive.

I'll pass now to Jon to provide more detail and insights into our performance.

Thank you, David, and good morning. Please turn to Slide 11. Lifeco delivered record base earnings for a third consecutive quarter. Results in the fourth quarter were supported by strong new business volumes, constructive global equity markets and approximately $0.04 per share of tax benefits. Base earnings grew 12% year-over-year with double-digit growth across the U.S., Canada and Capital and Risk Solutions. In addition, we repurchased nearly $1 billion of common shares during the quarter, contributing to the 13% growth in base earnings per share. As a result, Lifeco's base ROE increased to 18.2%, up 70 basis points from the prior year and well on track towards our medium-term objective of 19% plus. In the fourth quarter, net earnings were principally impacted by the previously announced restructuring plans and unfavorable market experience from interest rates.

Please turn to Slide 12. We are pleased that total credit losses were marginally lower than our expected annual range of 4 to 6 basis points. This quarter's credit experience was primarily attributable to a single commercial property in the United States. As a reminder, total credit experience is the aggregate of credit experience shown in our drivers of earnings disclosure as well as our retirement and Wealth P&L statements, all of which are included in the supplemental information package. Going forward, we continue to expect annualized credit experience to be in the range of 4 to 6 basis points and under normal conditions to be at the low end of this range.

Now turning to our results by segment, starting with Slide 13. Empower delivered double-digit growth with base earnings up 17% year-over-year in constant currency, reflecting continued organic growth momentum across both Retirement and Wealth. In retirement, strong equity markets drove double-digit growth in average client assets. Planned flows for the second half of 2025 were USD 29 billion, exceeding the USD 25 billion expectation we shared in the second quarter.

Looking forward, we expect continued positive net planned flows in 2026, which should dampen the impact of ongoing participant outflows. The retirement results in the fourth quarter were impacted by increased share-based incentive compensation in line with the strong results delivered by Empower, which accounted for most of the increase in operating expenses. We do not expect this to recur in the next quarter.

Empower Wealth continued to perform exceptionally well with base earnings up 43% year-over-year in constant currency. Rollover sales drove record net inflows of USD 3.4 billion. In fact, Empower Wealth drove an industry-leading growth in net new assets of 14%. The pretax operating margin was a record 39% this quarter, up 5 percentage points year-over-year. We continue to demonstrate the attractiveness and scalability of our wealth platform. While margins were strong in the fourth quarter, there is seasonality in marketing expenses, and we would expect the first quarter of 2026 to see increased investment in building our brand, consistent with our results in 2025. As such, the full year operating margin of 35% better reflects the near-term margin expectation for the Wealth business.

Overall, the performance across the business drove a 200 basis point improvement in Empower's base ROE, which ended the year above 20% for the first time, and we remain confident in our double-digit base earnings growth outlook into 2026.

Turning to Slide 14. Base earnings in our Canadian operations increased 10% year-over-year, primarily due to strong insurance experience gains, which more than offset the impact of lower yields from earnings on surplus. Group Benefits continued to deliver solid organic growth as well as favorable health, life and long-term disability experience. The profitability of this business in recent quarters reflects our continued pricing discipline. Retirement and Wealth results were supported by higher fee income due to stronger equity markets and IPC's acquisition of the Wealth business of De Thomas.

Turning to Slide 15. In Europe, full year base earnings surpassed $1 billion for the first time, benefiting from favorable currency movements. In constant currency, Europe delivered growth of base earnings of 7%, adjusting principally for the reduced earnings on surplus resulting from increased dividends to Lifeco, thanks to the capital optimization initiatives that we announced at our recent Investor Day. These initiatives have resulted in higher aggregate remittances of dividends than aggregate base earnings over the last 2 years. This has driven an increase in ROE for Europe of over 250 basis points and also additional capital flexibility for Lifeco overall. We expect this trend to continue into 2026.

In contrast to the full year result, fourth quarter base earnings declined 2% year-over-year due to unfavorable mortality experience and significantly lower trading gains, both of which can vary quarter-to-quarter. More notably, insurance experience remained favorable on a full year basis. The underlying sales momentum within each of the principal lines of business continued to be strong with growth in sales of over 25% across all products, if you exclude bulk annuities.

The Wealth and Retirement businesses benefited from higher fee income driven by favorable equity markets and healthy net asset flows. The Group Benefits in-force book grew by 6% in constant currency, in part due to strong new business volume at Irish Life. We delivered a particularly strong sales quarter with a record $1.5 billion of bulk annuity sales, in the U.K., which reflected an industry-wide rebound in deal flow. Anticipated regulatory changes had temporarily dampened activity in the first half of 2025. Overall, for the year, our sales of bulk annuities declined in line with the overall market. With those regulatory changes now firmly in the rearview mirror, we expect bulk annuity volumes to return to growth in 2026.

Turning now to Slide 16. Capital and Risk Solutions delivered a strong quarter with base earnings up 9% year-over-year in constant currency. This was once again driven by our Capital Solutions business, where continued strength in demand drove a 46% year-over-year increase in run rate insurance result in the fourth quarter and 29% for the full year. The pipeline remains robust, and we expect to remain active in the coming quarters.

In Risk Solutions, we maintained a disciplined underwriting approach, prioritizing risk-adjusted returns and long-term value creation in the face of competitive market conditions. We continue to decrease our exposure to P&C catastrophe risk, which accounted for less than 8% of our run rate insurance results in the fourth quarter.

Now turning to Slide 17. As we've highlighted before, organic capital generation of our businesses remained a significant source of strength. For the full year, base capital generation exceeded 80% of base earnings and free cash flow represented approximately 90% of base earnings as a result of our capital optimization efforts. This high degree of capital fungibility provides strong support for continued capital deployment while maintaining balance sheet strength.

Turning to Slide 18. Lifeco's strong free cash flow continues to provide us with significant financial flexibility. In 2025, we repurchased 28 million shares for over $1.6 billion and renewed our NCIB, which allows us to repurchase up to 20 million shares in 2026. As always, we will continue to balance capital deployment through buybacks with other strategic opportunities that enhance long-term shareholder value. So far in 2026, we bought back shares for $250 million, and we would expect to return a similar amount of capital to shareholders in 2025 if compelling M&A opportunities do not emerge.

Turning to Slide 19. Lifeco's capital position remains robust despite strong growth from capital deployment in our CRS business and the substantial share repurchases throughout 2025. Our LICAT ratio stood at 128% down from 131% at the end of the third quarter. As we mentioned on our third quarter call, we expected a 1- to 2-point decrease in LICAT due to seasonality in the reinsurance business. Market conditions also supported very strong new business volume in CRS at attractive risk-adjusted returns for the second consecutive quarter.

New business in the second half of 2025 reduced LICAT by approximately 2 points. In 2026, we expect to maintain the LICAT ratio above 125% in normal operating conditions, even if new business volume in our reinsurance business remains elevated. Our leverage ratio increased by 1 percentage point quarter-over-quarter to 28%, reflecting nearly $1 billion in share buybacks. Lifeco's cash balance of $2.1 billion positions us for continued growth, financial flexibility and to pursue strategic opportunities, including any compelling M&A opportunities that emerge.

Now before turning it back over to David for his comments on the business outlook, I'd like to make a few observations about our expectations for the year ahead. Our 2025 base earnings included approximately $0.10 per share of tax benefits, resulting in an effective tax rate of less than 16%. We expect this to be approximately 18% in 2028, primarily as a result of the growing share of earnings from Empower and recent or proposed tax changes in Canada.

Earlier in my remarks, I noted that we expect credit experience to be in the range of 4 to 6 basis points as a share of fixed income assets and at the low end of this range in normal operating conditions. In 2026, this would translate to a range of $70 million to $100 million post tax, given the current size and composition of our portfolio.

With that, I'll turn it back over to David for his concluding remarks.

Thank you, Jon. Please turn to Slide 21. As we close out 2025, I reflect on the impressive results we delivered over the past year. Our segments have a clear opportunity to continue their growth trajectories by delivering on their focused strategies. At a portfolio level, Great-West has substantial financial flexibility, thanks to a strong balance sheet and continued cash generation.

With this strong foundation, we are well positioned to deliver base earnings in line with medium-term growth objectives. This includes our expectation that Empower will deliver double-digit earnings growth in 2026. Our confidence in the outlook for Empower is rooted in the scalability of the platform and strong rollover sales momentum. From a portfolio perspective, we remain on track to generate 70% plus of base earnings from capital-light businesses and drive base ROE of over 19% over the medium term. And we retain significant financial capacity for strategic opportunities to further strengthen the portfolio. If compelling opportunities are slow to emerge, we will continue to return capital to shareholders as we did in 2025.

With the announcement of a 10% increase in our quarterly dividend and the option to repurchase up to 20 million common shares through our NCIB, we are well positioned to continue driving attractive shareholder returns. As I begin my first full year as CEO, I am energized by the strength of our businesses, the momentum we have in delivering against our strategy and the highly motivated teams we have in place to deliver for our customers. I'm confident that we can deliver on our ambitions and continue to drive exceptional value for our shareholders.

And with that, I'll turn it over to Shubha to start the Q&A portion of the call.

Thank you, David. [Operator Instructions] Morgan, we are ready to take your questions right.

[Operator Instructions] Your first question comes from Alex Scott with Barclays.

First one I had for you is on the potential for AI to offer up risks, but also opportunities. And just in light of some of the stock movement in the U.S. and concerns around disruption of wealth managers and things like that, would be interested in your take on it. And what are some of the things that you're going to look to do to take advantage of your scale and efficiency across Empower and Empower Wealth.

Yes. So on AI, like certainly top of mind and has been for a number of years now in the organization and I think the way you frame it is right. There are opportunities and risks. And like the big opportunity is around efficiency and AI industrialization of financial services and I think that's pretty well understood. We're going to see AI having a big impact on all of our customer touch points and on the operations behind those within the back end of the business.

Last year, at our Investor Day, like we guided on improvement in our overall efficiency ratio from 57% down to 50% or below. That was in advance of, I think, full appreciation of the AI efficiency opportunity that's ahead of us. And at this point, we're very comfortable on exceeding and going below that 50% level, and we'll share more during the year on how we expect to deliver I think, further efficiency gains beyond that. I think the thing that's more top of mind for people now is around the risk and just how AI might change advice. I will say that sort of hybrid advice, AI-assisted advice is well up and running in financial services already. It's in use in all of our call centers. It's gathering information in the background to help agents and advisers. It's monitoring advisers, it's prompting advisers, and it's racking up calls. So that AI-assisted advice is already in existence. And I think there's a lot of parallels to that AI-assisted advice and say, the AI-assisted driving that we're all used to now.

So -- but I think what people are wondering about is can we move to full AI advice and how that might impact on models. I think the jury is still out a little bit on that. Our view is still that people will look for human in the loop advice. But it is possible some people will be more comfortable with AI-only advice. And again, I think from our point of view, the most important thing is that people get good advice. People are saving for retirement. These are complex decisions and people get good advice. It is interesting if you go into ChatGPT and tell ChatGPT, I'm a 401(k) participant, I've saved 400,000 and I'm retiring in 6 months.

What should I do? It will have a very good conversation with you on withdrawal rates that you should be thinking about from your fund. It will have a very good conversation with you on the asset allocation you should have. It will have a very good conversation with you as well around equity and market risk and explaining the most important thing is not necessarily a fall in the market, but when it happens, that's what we call sequencing risk, and it explains that very well. It will have a very good conversation then on strategies around that, whether it's bucketing, whether it's partial annuitization or whether it's just your overall asset portfolio.

But at the end of the day, what it says then when it comes to picking is you need to pick a platform that has basically access to all of those product propositions. It will talk about the importance of price and it will talk about the importance of good service. And for that, increasing scale just becomes more and more important. And we have that in all of our markets, but particularly in the U.S., what we've built is a large open architecture efficient platform that has the best access to different product propositions, has the best service delivery and has the best price. So we will continue to believe that advice will be very important, and we're very comfortable on the different routes that people get to that advice. So I could pick any of these segments, but Ed, you might just want to share a little more on the work that's been done on AI within the U.S.

Yes. Thanks, David. I appreciate the question, Alex. I would just echo some of David's comments. I would say, in general, we're very constructive on AI in terms of the impact that we think it can have, particularly on our Wealth business. We've always subscribed to the hybrid model. If I think back to the acquisition of Personal Capital in 2020, that was at the time, the preeminent digital hybrid wealth management platform in the U.S. And if you look at our Personal Wealth business today, there's multiple use cases of AI that are currently being deployed across the personal Wealth business. We're using AI to improve sales and service supervision. We have over 1,000 advisers. So think about it from a regulatory standpoint, the requirements that we have to supervise every single call to catalog every single call and then to provide qualitative coaching back to those individual advisers and the training associated with that.

So that -- it's being leveraged there from a sales coaching and training standpoint. We're also using it to -- for prospect targeting and identifying opportunities with existing customers. I mean, think about our business, we have 900,000 customers. So when you think about the deployment of advice, particularly in the mass market where you have clients that are less complex, their needs are less complex to be able to leverage AI as an advice delivery mechanism is powerful, teeing up that next best step for customers. So again, I'm encouraged by the early results that we're seeing. My expectation is that it should free up capacity and lead to deeper conversations between advisers and clients that build trust, loyalty and ultimately, over time, greater share of wallet, right? I mean the whole intent here is to earn their trust so that they will aggregate more of their assets with Empower versus somebody else. So that's sort of where we are on the journey. It's still early days, but I'm very optimistic about the impact AI can have on our business.

Yes. I just add that's 900,000 wealth customers with a pipeline of 19 million customers in our businesses.

Yes, that's all really helpful. Second question and connected in ways to the last conversation is just the M&A interest you have. Could you help us frame anything around the amount of dry powder you have available and that sort of thing as well as what is of interest maybe geographically or the types of businesses, et cetera?

Yes. So maybe I'll just explain where our interest lies. Jon can follow up and just give some numbers on our dry powder, if you like. I think the first thing to say just standing back from an acquisition interest is, as we explained at Investor Day, we're very confident around our medium-term financial objectives. And to achieve those, we're not dependent in any way on acquisition, and that's totally the right place to be. So that means we can have a very high bar, which we do when it comes to looking at any potential acquisition. So there have to be a strategic fit to our existing 4 segments. So that means they have to add scale or capability to our existing strong market positions. They have to deliver on our internal return requirements and they have to add to future EPS growth and capital generation. And then we have to be very, very confident on execution, just our ability to execute on those.

So we look at opportunities across all of the 4 segments. We look at many opportunities. We follow-through only on a minority of those because of the high bar that we put in place. But when we do follow-through then our track record on implementing and integrating acquisitions is like it's 100% over the last number of years. Like it won't be a surprise that our main interest is in the U.S. because, obviously, where we have most confidence given our recent track record is in workplace and our ability to integrate those businesses. But we do look in other segments as well. We've made recent 12 acquisitions in Europe and in Canada and across the different segments, we've done other types of acquisitions as well. So we look across all of the segments. We're patient on waiting for the right opportunities. And I would say maybe just on order, if we did move ahead with an acquisition outside of the U.S., we wouldn't see that as a barrier in any way to future acquisition opportunities in the U.S. So Jon, you might want to give some color just on our dry powder.

Yes. Thank you, David. Alex, we -- obviously, we have about $2 billion of excess cash at the holding company that's been fairly consistent. And if you look at our medium-term group objectives, what we've indicated is we're going to be highly cash and capital generative. So we're going to continue to see significant cash flowing to the holding company that gives us a lot of flexibility as you look forward. We've been generating free cash flow in excess of our capital generation as we've optimized -- gone through some of those optimization activities. We usually like to keep around $500 million of cash at the holding company. So that's about $1.5 billion. Then if you look at the excess capital that we have in our Canadian Life operation -- Canada Life operations, that's about $2 billion. Our U.S. business also has excess capital of about $1 billion.

So before you look at any balance sheet capacity from a leverage, and we worked this down significantly, we're around $5 billion of excess capital. And then if you look at what we've kind of said in the past, a 30% leverage ratio wouldn't be unusual for us. That gets you to $6.5 billion. And in exceptional cases, for the right acquisition, we've been able to go above north of that 30% leverage. And then as you will recall, pay it down quite quickly. So that would add more capacity. So we're well positioned. We're pulling on all the -- as we shared our capital allocation framework, we're pulling all the levers, maintaining a strong balance sheet, investing in strong new business. We deployed about 2 points of capital, growing the dividend double digit and then obviously, continuing to look at M&A opportunities. So we're pulling all those capital allocation levers, and we have plenty of capacity if something comes up.

Your next question comes from Mike Ward with UBS.

I was wondering if we could just touch on the potential pace of capital return. I just thought the $250 million year-to-date was pretty strong.

Yes. Thanks, Mike. As we indicated, we continue to buy back shares into the first quarter, it's $250 million. As I just shared, we're going to generate quite a bit of free cash flow this year. That free cash flow, we're not going to let -- let's say, we will park it temporarily. So you -- in the event that there aren't compelling M&A opportunities, there's no reason to believe we wouldn't return in order of what we did last year, which was about $1.6 billion in terms of buybacks. But that may not be a straight line. Obviously, we're always looking at market opportunities. Last year, it was back-end weighted. We did $1 billion in the fourth quarter. But in the event that we don't see anything compelling, and I think David laid out the thought process, the bar is high for M&A. If we don't see anything compelling, there's no reason to believe we wouldn't return as much as we did at least last year.

Okay. And then I was just wondering if you could sort of comment on the competitive environment for actual retirement blocks out there in the U.S.? I know we've kind of [indiscernible] touched on the competition and the developments on the Wealth side. Just kind of wondering about like actual retirement competition.

Yes. So maybe on the workplace first, and Ed can follow up maybe on just closer observations from the U.S., and like it's probably a little more competitive than when we made our recent bigger acquisitions, but not hugely so, I would say. So more our point of view is like, obviously, it has to be a right price, but it will be just the mix of business that's in any target and just how clean it is. So that's probably a bigger consideration than price. And then as you go down, further down the scale, then there's smaller opportunities. Again, it's really around cleanness and ease of integration. So prices are probably a little bit above, are more historic -- our recent historic transactions, but not substantially so.

Ed, I don't know if there's anything you want to add to that?

No, I might just say that clearly, we're one of the few strategic acquirers in the market. These opportunities really don't lend themselves to financial sponsors typically. And we're obviously a very credible buyer and have delivered on expectations. So for someone that's looking to sell that wants to get their employees and their clients in the right place with the right provider, I think we represent a very attractive option. So -- and I think in some ways, we stand alone as a core strategic acquirer on the space.

Your next question comes from Doug Young with Desjardins Capital Markets.

Maybe just starting with CRS for Jeff. I mean there was a pullback, I guess, in the P&C retrocession market. Can you talk a bit about that, the financial impact that it had maybe this quarter or what you're expecting going forward? And then you're pulling back from this business, you pulled back from U.S. mortality. Any other changes or any other pressure points that you see kind of on the horizon across your businesses? And I know this Capital Solutions business is doing well. I'm more thinking about the areas of pullback.

Thanks, Doug. Yes, it's a good question. So on the P&C market, the last 3 years, like maybe explaining the market wherein we're doing retrocession business. So our customers are reinsurers and they're looking for cover in case of very big catastrophe. We tend to cover business in the U.S., Europe and Japan, the three big insured markets. So that's really what we're trying to focus on. Earthquake and windstorms are the main perils. And so in the last 3 years, there hasn't been very many catastrophe in the market. Our portfolio has not been touch much. We had a small loss on the California fires last year. But for the most part, it's been pretty quiet. So what we saw at renewals is the rate that the clients were offering were about 20% lower than the prior year. So those rates are less attractive to us. And I think it's cyclical, right? Like that market is cyclical. You get a few claims and all of a sudden, the premiums go up again.

So this market has been good to us. We've been in it for over 20 years. It's diversifying. So I still like the market, but we -- this year, we lowered our exposure to it. We've got a certain limit internally that we're not disclosing, but that we didn't put all that limit to work this year, and we reduced our exposure. We like our core clients, so we back them up and then we use them, and then we use the rest of our capacity just when it made sense for us to use it. So we're going to see less earnings or less expected earnings from that business going forward. Having said that, we had a great capital solution year. Last year was fantastic, and we're seeing that continuing in the first quarter. So I think we should be making up the earnings missing on that line from that.

Doug, that's -- the mortality business is a different decision. We've tried for many years and the returns were never good in that business, so we stopped writing the new business there. I'm not looking to stop writing any of the other lines of business that we're in. I think we like to be diversified and we remain opportunistic. If you look back 7 years, we wrote a lot of longevity, and we're very happy, and we have a book of maybe $35 billion of underlying liabilities that's producing good earnings for us. Now that Capital Solutions are hot and that this is where we see the opportunity, so we're focused on that.

But as a group, I think we see our role as being very opportunistic in picking the right opportunities that are bringing good returns to this group. So we're not going to do business if the returns are less than 17% or 18%. We see our role as deploying capital in really good attractive opportunities. So that's the way we're looking at it. I'm expecting longevity to eventually come back and certainly that the catastrophe market should come back, too. So we're not talking about growing the catastrophe market, but I like the diversification it brings. Does that make sense?

Yes. No, it all kind of fits with the way we've talked about it before. And I guess from the earnings giving up in the P&C retro, what I'm kind of getting is like don't worry about it, like you're doing well in other businesses. And so within that 5% base earnings growth target, like this does not impact any of your guidance?

No, I think we're still in the mid- to high single digit. And the way things are going, hoping it's going to be closer to the high single digit than the mid-single digit.

Yes. Okay. And then second question, just on Europe. There's a drag from negative insurance experience and just hoping you can unpack what you're seeing there. And then, Jon, you talked about pulling $2 billion out of Europe. I mean that's a lot of money. What does that signal strategy-wise, if anything, for the European operation?

Maybe Linda, do you want to talk on insurance experience and give some broader color on insurance experience as well. And then, Jon, you can talk about the capital.

Yes, sure. So on the insurance experience in Europe, we're really seeing volatility quarter-to-quarter, and it's really driven by the Group Benefits business and particularly this year on mortality experience. And we do expect overall at the Lifeco level when you look at all our mortality lines to continue to see volatility, mortality. But I think the key point in terms of Group Benefits business in Europe, which is the key driver of insurance experience in Europe. And I think the key point is that if you look at the full year, we were actually in insurance experience gain territory.

Yes. And Doug, on the second question, I don't think it means anything strategically. It's an operational and financial lever that we're pulling to -- as you would expect, to maximize the returns we get from all of our businesses. I think, in particular, Europe, we found those opportunities to raise capital returns. We've continued to grow the business. I think in my script, I mentioned a very strong quarter in the fourth quarter for both annuity sales, combined with a really strong year across all of -- if you look at all the other lines of business in Europe, 25% growth in all the other sales combined. So we've seen really strong growth there. So we're continuing to deploy capital to grow Europe.

We're confident if you -- when you adjust for -- principally for that capital return that, that mid-single-digit objective over the medium term is a good target. And we should continue to see the returns or the ROE grow from that business both from the residual efforts that we still have to go on capital optimization and also from the -- over time, you see the growing more capital-light businesses, our Wealth and Retirement businesses in Europe combined with our other businesses. So really happy with that. And we've just made the business much more efficient from a financial perspective.

Yes. I think that's a good point on the top line growth. Lindsey, you might want to just add some color just to the top line performance we've seen recently and the outlook.

Yes. Thanks, David. Yes, I think we have -- as Jon said, I think we're really pleased with the strong sales performance that we've seen across the year, particularly in Wealth and Retirement. Obviously, we saw a bit more of a subdued first 3 quarters in bulk annuities due to some known potential regulatory changes. When that went away, we saw the pipeline come through in Q4 and saw a very strong quarter for bulk annuity. So I think we're optimistic about 2026 and continuing on the growth in all of the product lines that we've got across the businesses in Europe and continuing as well to push on with our bulk annuity business as the market returns to a bit more normality.

Your next question comes from Gabriel Dechaine with National Bank Financial.

I just want to revisit this buyback and M&A dance, I suppose. You did reference that last year, your buyback was back-end loaded. Is that how we're going to find out if you find a deal or not that you'll have maybe modest activity until later in the year? And then just on M&A, it sounds you are being a bit explicit about it, which we appreciate and the criteria description was also appreciated. Let me ask you this about scale in existing businesses. Is there also an appetite for adding complementary businesses? So let's take the U.K., for instance, you're a group insurance provider and you have the payout annuities business. Would there be a fit for a business that's more in the group pensions like active employee group pensions market that sort of fits in with that would be sort of similar to what you'd -- not really, but kind of to what you do with Empower in that retirement accumulation and then rollover business? I know that was a lot of words, but I think you know where I'm going with that.

Yes, it's not hard to get to where you're going with that, all right. And like my overall comments on acquisition targets would be just very similar to what I said earlier, like we have a high bar. We're not under pressure to do any acquisitions. When we talk about strategic fit, though, we do talk about adding scale to existing market positions, and we have very strong market positions in all of our 4 segments. But strategic fit also covers adding capability, and that could be along the example that you gave and certainly adding workplace in the U.K. would add a capability that sits alongside the existing business segments. They can operate very well without that workplace capability, but it would add to it. But all of the other hurdles have to be met. And as I said, the most obvious place for us to execute well remains workplace in the U.S., but we would look at all of the segments, as I said earlier.

Got it. And on the buyback stuff. Jon, I suppose?

Yes. I mean, Dave, we don't necessarily have a set buyback target for each quarter in 2026 at this point. We've got off to a strong start and wanted to continue the momentum that we had at the end of the year. We renewed our NCIB program in January 2026. It gives us initial capacity of 20 million shares. Obviously, there's some flexibility if we would need to, to go back and increase that as well. But we just evaluate the environment. We evaluate the attractiveness of the share price and any opportunities in the market. And I would just stick back to what we said here in the event there aren't compelling M&A opportunities in 2026, you should expect us to return at least as much capital as we did in 2025 and timing being considerate of numerous factors, including the cash flow that we have from our companies and when we get it, the share price opportunities in the market and so forth.

Your next question comes from Paul Holden with CIBC World Markets.

I want to go back to the discussion on Capital and Risk Solutions and the change in earnings mix. So I fully appreciate the opportunistic nature of the business and pursuing where margins are best at a point in time. I would have thought maybe that would translate to higher ROE, but ROE roughly flat year-over-year. So is that something that could change in '26 as you've shifted mix more through '25, maybe it becomes more obvious than the ROE number in '26? Or is there another way we can kind of see the margin improvement in the business?

That's a good question. I think that ROEs are already pretty high at 40%. So I think that -- and a lot of that comes from the Capital Solutions business. So we have deployed a fair bit of capital. This capital comes back relatively quickly when we deploy it. So that's the advantage of a 40% return. So if these transactions stay on the books long enough, it could improve the returns a little bit. But there's also some fluctuations from quarter-to-quarter. I think depending on the way we structured the deal, there might be some higher capital in the fourth quarter than there is in the -- fourth and the first than there is in the second and third quarter. So we see some of these fluctuations a little bit too and that might be what you're seeing there. But yes, I would expect that it would go up a bit because the mix is going towards Capital Solutions, which tends to have slightly higher capital -- higher return.

And maybe if I just add, I mean, deploying capital in new business, even if it isn't at the current ROE can be quite attractive from an overall Lifeco perspective. So we have high hurdles for new business, and we're getting great returns on that new business, but it may not be incremental to the 40% ROE, but still be very, very attractive, Paul.

Understand. In another perspective just to look at the benefits of the change in mix there, is maybe ROE doesn't change a lot, but the earnings volatility should be lower. Is that a fair conclusion?

Yes. I think that's right. There's less -- there's probably less experience change with the Capital Solutions business. There is sometimes reserve. We're depending on the experience we're getting, we could set up reserves. And then the volatility usually comes from renewal or termination, right? So you have these transactions that terminate, then you lose these earnings going forward. So that's where most of the volatility comes. But generally speaking, it's a more stable block.

Yes. Okay. My second question is for Jon. I think some of the numbers you gave us on how to look at excess capital across the business are new. I just want to be clear like on the -- I call it the fungibility of capital. So say, the $2 billion of excess capital in Canada Life, for example, like if you were to do a deal, in the U.S. Workplace Solutions, which is clearly where you've pointed to is the highest probability. Like could you actually extract that $2 billion from Canadian Life as an example, to use it for U.S. Workplace Solutions business? Or would that has to be used within the Canadian Life regulated entity?

I think we have a lot of financial flexibility, and we've done that. And we've shown the fungibility of our capital. Would we go down to 120% in a transaction, we could. Would we is a different discussion. We're just trying to articulate how much excess capital there is and how would we look at the framework. We have various funding sources, as you're aware. We have funding sources that are in the U.S. and within Canada Life. We have borrowing capacity. We feel very comfortable, Paul, that we have the capacity to fund most of any transactions with our current balance sheet.

Okay. I think I understand what you're saying is, given the type of opportunities you're looking at, you wouldn't need to issue equity. Okay. I'll leave it there.

Your next question comes from Tom MacKinnon with BMO Capital Markets.

Just a question on Empower Retirement. If I'm looking at average client assets both in quarter and for the whole year of 2025, they're up 12%, but the net fee and spread income, which is kind of a bit more of a revenue item, I guess, is only up 4% in 2025 and just up 5% in -- year-over-year in the first quarter or in the fourth quarter of '25. So -- and even if we look at the asset-based fee income, it's only up 5% last year despite the 12% growth in average client assets. So maybe you can talk a little bit about why -- what you're seeing in terms of marketplace? Why is this phenomenon that I'm pointing out happening? Is there higher competition with respect to this business going forward? And what should the outlook be with respect to net fee and spread income growth going forward?

Okay. Maybe I'll pass that over to you, Edmund, if you just want to talk about sort of mix of the revenue and just how that can change.

Yes, in terms of the mix, if you go back a few years ago, we were far more concentrated on asset-based fees. And I think over time, what we've seen is less dependency on asset-based fees as we broaden out the revenue stream. So you're seeing a good mix of spread income. You're seeing good contribution from non-asset-based fees. So the percentage of asset-based fees have come down. You're also seeing some compression in the business, which is to be expected, which is why we're very focused on continuing to lower unit cost. We had another strong year in 2025 and lowering our fully allocated unit cost, and we expect that to continue over time. So asset-based fees as a percentage of total revenue have come down as we've expanded the different sources of revenue, particularly as we've added additional product capabilities. And I think you're going to continue to see that play out going forward.

Your next question comes from Mario Mendonca with TD Securities.

If I could just follow up on that line of questioning. In U.S. Retirement, there's been negative operating leverage in 2 of the last 4 quarters. And what I'm trying to wrap my mind around is if we continue to see this compression, doesn't it sort of argue for what other folks on this call are asking about, like you really do need to grow this business through M&A. And that sort of is in contrast to what you said, David, early on, where you said you don't really need M&A to reach your targets. I mean these numbers would suggest that you do because it really is hard to grow this business if you're generating negative operating leverage. Do you know where I'm going with this?

Yes, I do and I disagree. I think if you look at the full year of 2025, it's just -- it shows clearly how we can grow Empower absent acquisition at double-digit plus. And that comes from just high single-digit growth of the Retirement business and over 20% growth of the Wealth business. And the two things that makes me just very confident about the Retirement business in the U.S. are we're in positive net plan flow, which means we're winning market share every year, and that's adding to the scale of the business.

And the other thing that you're seeing post the integration of all of the businesses and the building of that open architecture platform that I talked about is just the increasing scalability of the business. So operating margin has improved from, I think it's 29-point-something percent to over 30% this year. So we've had 110 basis point improvement in the operating margin of the Wealth business, and that scale advantage is just going to continue. So we expect to see very similar performance overall for Empower in '26 that we saw in 2025. So that's double-digit growth again, absent acquisition.

If I could just add, if you think about the acquisitions that we've made, particularly the option tracks back in late 2024, where we're providing equity plan administration. We have far more revenue levers on the workplace side than we've had historically, which I think speaks to what we talked about earlier in terms of broadening out the revenue base and the sources of revenue. I'm actually tremendously optimistic about our ability to drive stronger penetration with services like health savings accounts, flexible spending accounts, equity plan admin, actuarial consulting across our 90,000 corporate sponsors.

Including in that would be executive services, where we're taking a lot of our personal wealth capabilities and we're bringing them to the workplace, offering advice and financial planning. And that's still very much in the early days. So I would concur with David. I mean, obviously, M&A would be additive and accretive when we do it well and we know how to extract the synergies. But we can continue to grow the workplace business very attractively provided we can execute on this multiproduct approach that we've been pursuing. So again, I'm pretty optimistic.

So let me pursue that just a little bit longer. You offered us an outlook that planned flows would be positive in 2026. That's good, but it's not a particularly ambitious outlook, though, considering that participant outflows over the last 4 quarters have been $39.4 billion. So you're going to need an awful lot of plan inflows to offset that if markets aren't giving you what they gave you in 2025. So I mean, how do you address the notion that calling plan outflows positive in 2026 isn't all that ambitious?

It's a market dynamic just with baby boomers that the overall workplace market has that 2% outflow, and that's going to persist for the next couple of years. So that's the starting point for all players. As I said, we win market share every year. So that means our net plan inflows are positive. For us, most years, that has that outflow of 2, so it brings it down to 1 or less than 1. And then you have market growth and just growth in our participant numbers that offset that. And then we have just the scale advantage that we have, which is adding that improvement in our operating margin. And then there's the revenue scale that Ed talked about. So that dynamic you talked about has been there in the last 2 years, and we've delivered on that growth in that market environment in 2025, and we expect to do the same again in 2026.

Okay. Can I just go to one other quick top...

I think, participant outflows, I agree with you on participant outflows. Frankly, it's not something we're preoccupied with. I mean if you just look at the facts, participant outflows are largely driven by higher balances, 75% of it is rate related. The people that are taking distributions typically have higher balances than the new participants that you're bringing on the platform. We added $37 billion in assets under administration in the fourth quarter. We added $230 billion for the year. And we also added net 500,000 participants to the platform in 2025. So despite the net participant outflows, the business remains strong. The pipeline is robust, and we continue to take share from the competition.

And I would also note that we did roughly $7 billion in gross sales in our Wealth business in the fourth quarter of 2025, where that was predominantly coming from the workplace business. So some of it is certainly leaving the complex, but some of it's staying in the complex as well. And so I think the real issue is, are you able to continue to take share and grow the business organically at a rate faster than the market? And the answer to that is yes. Historically, we've done it, and we'll continue to do it going forward.

All right. A quick other topic. Earlier on in this call, David, in addressing a question around AI and let's call it, disintermediation or disruption, you gave us that interesting example where you go on ChatGPT and you ask a question. And you made points like and you can have a very good conversation with ChatGPT about asset allocation and everything else. And as you were going through that, just I can't think of myself, like is David making an argument for why AI, precisely the argument for why AI could disrupt this business. So help me understand what point were you trying to make there that AI is a problem? Or help me -- just help me understand what point you're making there?

The point I'm making is there's lots of different avenues for advice at the moment, like we have our own employed advisers, people can go and get independent advice. So both of those are human forms of advice, if you like. And I think they will be increasingly AI assisted and will become more efficient. But there will be an avenue of AI-only advice. And I suppose the point I'm making is the nature of that advice at the end of the day, even though it's AI-driven, is not any different to the best human advice that you get at the moment. And ultimately, that advice is going to point you to an open architecture platform that has good access to product propositions, has the best price in the market and has the best service in the market. And Power is going to do very well in that environment.

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Khan.

Thanks, everyone, for joining us today. Following the call, a telephone replay will be available for 1 week, and the webcast will be archived on our website for 1 year. Our 2026 first quarter results are scheduled to be released after market close on Wednesday, May 6, with the earnings call starting at 9:30 a.m. Eastern Time the following day. Thank you again, and this concludes our call for today.

This brings today's conference call to a close. You may disconnect your lines. Thank you for participating, and have a pleasant rest of your day.

Thank you for standing by. Welcome to the Great-West Lifeco Third Quarter 2025 Results Conference Call. [Operator Instructions] The conference is being recorded.

[Operator Instructions] I would like to turn the conference over to Mr. Shubha Khan, Senior Vice President and Head of Investor Relations at Great-West Lifeco. Please go ahead.

Thank you, Morgan. Hello, everyone, and thank you for joining the call to discuss our third quarter financial results. Before we start, please note that a link to our live webcast and materials for this call have been posted on our website at greatwestlifeco.com under the Investor Relations tab.

Turning to Slide 2. I'd like to draw your attention to the cautionary language regarding the use of forward-looking statements, which form part of today's remarks. And please refer to the appendix for a note on the use of non-IFRS financial measures and important notes on adjustments, terms and definitions used in this presentation.

And turning to Slide 3. I'd like to introduce today's call participants. Joining today -- joining us today are David Harney, our President and CEO; Jon Nielsen, our Group CFO; Jeff Poulin, CEO, Reinsurance; Ed Murphy, President and CEO, Empower; Fabrice Morin, President and CEO, Canada; Lindsey Rix-Broom, CEO, Europe; Linda Kerrigan, our appointed Actuary; and John Melvin, our new Chief Investment Officer.

We'll begin with prepared remarks, followed by Q&A. With that, I'll turn the call over to David.

Thanks, Shubha. Please turn to Slide 5. We had a great third quarter delivering very strong results and executing effectively on our strategic priorities. Base earnings reached a new record high, but more importantly, I am very pleased that we saw good earnings growth in all our 4 segments, including double-digit base earnings growth in the U.S., Europe and Capital and Risk Solutions and mid-single-digit base earnings growth in our Canadian business.

This performance underscores the strength of our market positions and the ability of our teams to meet evolving customer needs. This quarter also [Technical Difficulty] and continued to return capital to shareholders through our normal course issuer bid. Given our robust cash flows and balance sheet flexibility, we are announcing a further increase to our target repurchases for 2025.

Today, in addition to remarks from myself and Jon Nielsen, Jeff Poulin will provide more insights on our Capital and Risk Solutions business, a strongly performing business and a key contributor to Great-West's ongoing success.

Please turn to Slide 6. As I said, we are pleased to report a strong third quarter, driven by solid execution across our business. We achieved record base earnings up 15% year-over-year and a base return on equity of 17.7%, also a new high for Great-West. Our financial position remains very strong with solid capital and leverage ratios, giving us significant financial flexibility to enable future growth.

As at November 5, we had repurchased just under $1 billion in common shares. And given the strength of our business, we are raising our total 2025 target buyback by $500 million to $1.5 billion. Jon Nielsen will elaborate on this shortly.

Please turn to Slide 7. Our results reflect successful execution of growth strategies in Wealth, Retirement, Group Benefits and Insurance. We are proud to serve over 40 million customers globally, and we work hard to deepen these relationships.

In the U.S., our Retirement business had a fantastic quarter with net plan inflows of USD 30 billion which I'm sure we will discuss later in the Q&A. Empower's Wealth business also achieved a very significant milestone, crossing USD 100 billion in client assets reflecting the continued momentum of the business since its launch in January 2023.

In Canada, continued investments in technology and digital capabilities are enhancing customer and adviser experiences, improving operational efficiency and positioning us for further growth in Group Benefits, Wealth and Retirement.

In Europe, we consolidated asset management operations, increasing its scale and competitiveness, which is an important enabler to our strongly growing Wealth and Retirement businesses in Europe. And our CRS business continues to capitalize on global opportunities delivering tailored solutions and attractive returns. Jeff Poulin will discuss further in a moment.

And finally, I'd like to welcome John Melvin, who joined us on first of October as our new Chief Investment Officer. John's experience and expertise will help shape our global investment operation, and we're delighted to have him on board the Great-West team.

Please turn to Slide 8. I am particularly pleased that the results this quarter reflect the strong market positions in each of our 4 segments. We are delivering on our medium-term growth ambitions through organic growth. Our teams are working hard to meet the retirement, wealth and insurance needs of customers, and our market-leading positions continue to be well placed to benefit from favorable demographics, socioeconomic, commercial and public policy tailwinds.

I'll pass it now to Jeff to speak to our Capital and Risk Solutions business in a bit more detail.

Thank you, David, and good morning, everyone. Please turn to Slide 10. The Capital and Risk Solutions experienced a very strong quarter with base earnings up 20% year-over-year. This was primarily fueled by our Capital Solutions business where we closed several deals in the quarter. The capital we invested to underwrite these transactions drove a 36% increase in the run-rate insurance results for our Capital Solutions business. The pipeline in that business remains strong, and we continue to expect new deals in the coming quarters. Favorable mortality experience in our U.S. traditional life portfolio also supported strong earnings growth in the quarter.

Turning to Slide 11. In recent years, our business mix has increasingly shifted to Capital Solutions or structured reinsurance, as it's often called in the industry. This business helps clients to more closely align their capital to the inherent risk of the underlying business and at a more reasonable cost relative to alternative solutions.

Demand for Capital Solutions has increased significantly over time. In the last 30 years, the reinsurance market has evolved from one purely focused on risk sharing to one where primary insurance carriers are increasingly looking for help with capital management. More recently, insurance markets around the world have experienced increased inflationary pressures with premiums rising to offset the increase in claims. As required capital is sometimes directly proportional to premiums, these pressures have further spurred demand for Capital Solutions. And CRS has been able to capitalize on this opportunity.

By contrast, our Risk Solutions business, which involves more traditional reinsurance transactions, has grown at a more measured pace of late. Margins on certain types of business have become less attractive due to increased supply of traditional risk transfer solutions. We have, therefore, pivoted Capital Solutions -- to Capital Solutions in recent years, where market conditions are significantly more favorable.

Turning to Slide 12. I want to take this opportunity to demonstrate how we create value through Capital Solutions given the particularly strong growth in that business this quarter. Each transaction is unique, and we look to help clients with their capital needs by identifying opportunities to more closely match their capital with the inherent risk of the underlying business.

Traditional financing solutions such as raising debt or equity capital are less efficient. They improve available capital at a potentially higher cost of financing than solutions that more closely align capital to risk. By contrast, Capital Solutions involves optimizing required capital which has a more favorable impact on capital ratios and returns on a per dollar basis. Since insurers hold a multiple of their required capital, it is more efficient to reduce the required capital and to add to available capital. Overall, this makes our products more attractive to clients than traditional forms of financing.

CRS is a very experienced team that tailors each transactions to the clients' needs. We spend time with clients and use a variety of treaty mechanisms to transfer risk in a managed way that provide capital relief at an attractive price. The goal is to have structures that transfer the risk to CRS but allow the client to retain more of the underwriting economics of the business reinsured.

Turning to Slide 13. CRS is well positioned to capture a meaningful share of the growing demand for Capital Solutions, thanks to several competitive advantages. These include support from Lifeco and a strong credit rating, both of which make us a reliable counterparty, deep and enduring customers relationships, having helped clients manage through insurance cycles and changing regulatory environments for more than 3 decades and an opportunistic and selective approach to new business, reflecting a strong risk management culture. Combined with the favorable market outlook for Capital Solutions, our competitive strengths may give me confidence that CRS will continue to deliver earnings growth in the mid-single-digit range or better over the medium term and continue to be significantly accretive to the ROE of Lifeco overall.

With that, I will turn it to Jon to discuss Lifeco's results for the quarter.

Thanks, Jeff. Please turn to Slide 15. Lifeco again delivered record base earnings in the third quarter, supported by constructive global equity markets, strong new business volume, insurance experience gains and modest credit experience. Base earnings grew 15% year-over-year with all lines of business growing double digits. This helped drive base ROE to 17.7%, up 40 basis points year-over-year. Earnings quality continues to be high as net earnings were within 5% of base earnings largely on account of modest impacts from assumption changes and management actions as well as favorable market experience.

Please turn to Slide 16. Exceptionally strong insurance experience and modest credit experience bolstered results this quarter. Insurance experience gains were $112 million, nearly twice the 4-quarter average of $58 million. This was primarily driven by mortality gains across all operating segments. As you recall, in the first quarter, we experienced exceptionally weak mortality experience, and we would expect this volatility to continue. Additionally, credit experience was minimal this quarter and well below our 10-year average of 3 basis points.

Going forward, we expect credit experience as a percentage of non-par fixed income assets to be in the range of 4 to 6 basis points post tax on an annual basis, based upon long-term industry-wide loss experience. In normal conditions, we'd expect credit experience to be at the low end of this range. However, we would expect volatility period-to-period as a result of idiosyncratic events.

Turning now to our results by segment, starting with Slide 17. Empower saw double-digit growth with base earnings up 10% year-over-year in constant currency. This reflected strong organic growth in both the Retirement and the Wealth business. The Retirement business capitalized on strong markets as well as USD 30 billion in plan inflows this quarter, which more than offset participant activity. We continue to expect plan inflows for the second half of 2025 to be largely in line with the USD 25 billion that we shared on the second quarter earnings call.

Empower Wealth delivered base earnings growth of 39% year-over-year. This was driven by record net inflows of USD 3.4 billion, up 43% over last year, reflecting continued strength and rollover sales. We remain well on track to improve our rollover rate by 30% over the medium term. Both the Retirement and Wealth businesses achieved record operating margins in the quarter, highlighting the scalability of our platforms and reinforcing the double-digit growth outlook for Empower.

Turning to Slide 18. Base earnings in our Canadian operations increased 4% year-over-year due to continued momentum in Group Benefits and Retirement. Group Benefits saw strong organic growth and insurance experience gains, while equity markets and improved segregated fund flows supported Retirement and Wealth results. Underlying growth in our Canadian operations was strong with base earnings up 9% year-over-year, excluding earnings on surplus, which have been impacted by lower yields over the last 12 months.

And turning to Slide 19. Base earnings in our Europe segment increased 12% year-over-year on a constant currency basis. As in Canada, this was driven by robust growth of the Group Benefits in-force book as well as strong insurance experience and higher fee income in Wealth and Retirement due to strong global equity markets.

Turning to Slide 20. As we have said in the past, the organic capital generation of our businesses is significant but underappreciated. For the last 12 months, base capital generation exceeded 80% of base earnings and would have been higher if not for the very strong new business growth in CRS this quarter. We continue to have a high degree of fungibility in the capital we generate. In fact, the cash remitted by the segments to Lifeco exceeded 100% of base earnings for the trailing 12-month period. We expect remittances in the fourth quarter to be in line with our 4-quarter average. This is the result of our business mix as well as the contributions from initiatives to optimize our balance sheet that we highlighted at our recent Investor Day.

Turning to Slide 21. Lifeco's strong free cash flow gives us tremendous flexibility for continued capital deployment. As of today, we have largely completed the previously announced $1 billion of share buybacks and have announced our intention to repurchase an additional $500 million before the end of the year.

Turning to Slide 22. Despite strong new business volume in our reinsurance business, ongoing dividend payments and substantial share repurchases this year, Lifeco's financial position has continued to strengthen and remain robust against the backdrop of elevated market and economic volatility.

Our LICAT ratio remained strong at 131%, only decreasing 1 percentage point from the prior quarter, primarily due to the increased organic reinvestment in CRS. Given the seasonality of the reinsurance business in the fourth quarter, we expect the ratio to decline by 1 to 2 percentage points through the end of the year. Our leverage ratio decreased by 1 percentage point quarter-over-quarter to 27%, reflecting the maturity of a bond, Lifeco's financial position, including the cash balance of $2.5 billion, positions us for continued financial flexibility, including for any compelling M&A opportunities that emerge.

With that, I'll turn it back over to David for concluding remarks.

Thank you, Jon. Please turn to Slide 24. As we closed out the third quarter and look to finish the year strong, we have high-performing teams that are delivering against focused strategies in their markets. Our performance in Q3, including record base earnings reflect strong execution against our strategic priorities. All 4 of our business segments are delivering base earnings growth in line with or ahead of our stated ambitions.

Our continued financial strength and flexibility are key enablers of our success, allowing us to navigate changing market conditions with confidence while continuing to invest in future growth. Together, we are on track to meet or even exceed our medium-term financial objectives, all while continuing to deliver lasting value for our stakeholders. And finally, I know many from our teams are listening to the call today, and I want to thank you all for your continued commitment to Great-West.

And with that, I'll turn over to Shubha to start the Q&A portion of the call.

Thank you, David. In order to give everyone a chance to participate in the Q&A, we would ask that you limit yourselves to 2 questions per person, and you can certainly requeue for follow-ups, and we'll do our best to accommodate if there's time at the end. Morgan, we are ready to take questions now.

[Operator Instructions] Your first question comes from John Aiken with Jefferies.

I wanted to take a look at the U.S. operations, both the protection as well as Wealth -- sorry, the Empower business as well as Wealth Management. We saw strong top line growth driven by the growth in the assets. But what I was particularly interested in was the improvement in the margins that we saw. Now obviously, I believe this is talking about the scale that you're generating in businesses. But moving forward, are we going to need to see incremental investments in technology? Can you remind me in terms of what we should expect in terms of expense growth moving forward?

Maybe I'll pass over to Ed.

Sure. Thanks for the question, John. I would say on the investment side in technology, we're continuing to invest in efficiency. We have a transformation effort that's underway that's driven very low unit cost over the last several years. And if we look out over the next 4 to 5 years, we continue to see lower unit cost in the business. Much of this is being funded by the tech budget that we have as we continue to redirect more dollars into AI and automate more of our processes. As you know, we have a pretty substantial presence from a global standpoint in terms of application development, operations and the like.

So as I look forward, I think we're going to continue to see similar margins. I think that they'll definitely be sustainable on an annual basis. Obviously, there's some seasonality variances. It's more acute in the Wealth business, where we tend to upweight the marketing spend in Q1. But I think if markets hold and we don't experience further impairments, we should see continuous improvements in our margins annually based on the investments that we're making to improve the customer experience and drive unit costs lower.

Your next question comes from Alex Scott with Barclays.

The first one I have for you is to just see if you could extrapolate on some of the things you're doing from a technology standpoint. I mean defined contribution, in particular, seems like a good area where maybe you could really drive even more operational efficiency with some of the new tools that are out there. So I'd just be interested in what are some of the things you're working on there.

Yes. Look, I'd like to -- sorry, maybe I'll cover on just a particular question, Alex, is just on the business overall rather than any particular segment?

Yes, I'd be interested in the business overall, but particularly interested in Empower and how you can maybe leverage your ability to consolidate the market, but maybe supercharge that with some of the technology investments that you're making?

Yes. Maybe I'll start overall and then Ed, if you want to add some color on Empower. Like there's big technology opportunity across all of the business, like we're investing a lot in just the foundational capabilities in each of the business. I think workflow systems and capturing all of our efforts within that are very important foundational tools. And as we continue to invest in that, then AI is going to be a big opportunity in driving efficiency in each of the businesses.

We're already deploying AI a lot within our call centers. It's operating behind the scenes to help agents and improve their productivity. And then in each of the operational areas, all of the operation engines behind are starting to use AI capabilities to automate and improve productivity there. And that's going to be a continued journey over the next, I would say, 3 to 5 years and is going to drive down unit costs. So, Ed, I don't know if there's anything you want to call out on the defined contribution business.

Yes, just in general, not just defined contribution, but in general, Alex, I would say that we've been an early adopter of AI, and we have several tangible use cases that are in production right now where we're seeing meaningful benefit. I'll give you an example. If you look at our application development efforts, we've taken advantage of the global capability for a while now. We have 2,700 people in Bangalore across all of our functions, including operations and application development, but all of the functions. But if you look at what we've done deploying AI with our app dev team, we're seeing anywhere between 25% to 30% lift in productivity, which is meaningful.

We've been driving a lot more throughput as it relates to a very aggressive investment agenda that we have in both the Wealth business and the workplace business. So we think we'll continue to see further lift there. We're also deploying it in terms of customer interactions. So whether it's through our client service managers, automating a lot of what they previously done -- did, which was either by phone or by paper, all those tests are being automated using AI.

And to David's point, we've taken our interactive voice response capabilities to a whole new level and leveraging AI there as well. So rep-assisted calls are down dramatically, and it's a much better experience for the customer. So we stood up an innovation lab at Empower about 3 years ago, and we're driving a lot of these efforts forward. And I think to the earlier question that John asked, I think this is very core to our long-term goal of continuing to drive our unit cost lower. And I agree with your hypothesis that as we look out over the next few years, I'm confident we can drive those costs lower than we currently have in our multiyear plan.

Got it. Very helpful. Thanks for humoring me, add more detail there. I guess the second one I had for you is on the Capital Risk Solutions business. It seems like you're getting a lot of growth. Could you maybe take us into some of the things that you see as good opportunity out there and just how you're viewing the competitive environment for those type of products? And maybe also this quarter, too, if you could talk at all about whether P&C and catastrophes being lower had any impact?

Okay. I'll hand it over to Jeff.

Thanks, Alex. Good question, obviously. We -- on the Capital Solutions side, we see a lot of opportunities both in the United States, in Europe and even in Asia for that matter, the changing requirement or changing regulatory requirements there are going to generate more opportunities for us. We've been very, very good at looking at where we think capital is tight, where people are finding or needing what we're offering for them. And so it's been very good because we've been marketing to the right places, and we're seeing the fruit of that this quarter.

I think we've added $80 million of annualized earnings in the quarter in terms of new business in Capital Solutions. So it's been a good quarter. We see that trend continuing. There's a lot of change in regulations. There's a lot of demand for these products. Premiums in a lot of the markets have gone up quite a bit, as I said earlier, and that's generating more required capital. So if you have a book of any business, your premium has grown 20% because it didn't perform very well and you need to make it up the next year, you require typically in most countries, 20% more capital to do that. So we've been helping these companies. We help companies grow and that's what we're focused on. So I feel pretty positive about the outlook for our business.

I think your second part was about the current -- the P&C and catastrophe that we feel sorry for the poor people in Jamaica. Our heart goes to them. It was -- it's a big hurricane, big loss. The early -- it's early for us to tell whether we're going to be impacted or not, but the early estimate of the insured loss are such that we don't think we're going to have an effect on it. I think over the last few years, we've been telling you, we've been derisking or getting further away from the risk, so we have been doing that and the result of that is we see less claims as a result. I hope that I didn't miss anything here.

Your next question comes from Paul Holden with CIBC.

So again, thanks for all the additional color and commentary on the CRS business. And I do have a follow-up question then for Jeff is you just mentioned that you added $80 million of annual, I think, expected earnings for the business. But -- and then you talked about all the opportunities and why Great-West is well positioned to capture those opportunities, which is clear in the results. So my question really is like why the mid-single digit annualized earnings growth rate? Like why not something higher? And I guess it's mid-single digits plus, but why not put it something higher at least in the medium term?

Thanks for the question, Paul. I -- we obviously want to do better than mid-single digit. I mean, I think that's -- if anybody knows me, that's the goal here. But at the same time, you can look at our historical run rate on the business, and you'll see that we will overachieve that. But the reality is our strength come from the fact that we don't have the pressure to write the business. We want to be very disciplined and very choosy, if you will, in terms of making sure that we only write business that is above our target ROEs. And only when we see those opportunities, will we bring them to the group. If we had much higher targets, I think we would feel compelled sometime to write business that we may not like as much. And so I think that's been the strength of our business and the reason why we haven't had very many hiccups over the years. And we've created a very big diversified portfolio that's running really well, and that's what we want to continue to do.

Okay. And another way to frame the question is, is the growth in Capital Solutions is it being offset sufficiently by the P&C reinsurance and the exit of life mortality such that will bring the growth rate down to mid-single digits. Is it fair to look at it that way? I don't think shrinking those other businesses is -- versus the Capital Solutions will bring me down to mid-single digits, but that's another thing, another angle, I just wanted to explore.

No, that's not how we look at it. I think that our mortality business has been pretty flat for a long time. So we've grown despite that, and I think the P&C business is the same way. I think the earnings have been relatively flat on that. So as a result, I'm not sure -- I think we're still looking for Risk Solutions products and Capital Solutions products that are going to help us grow. And we're just very opportunistic in the way we look at it. Right now, on the Risk Solutions side, we don't see anything attractive, and so we're staying away but that could change over time. So it's a matter of being ready when the opportunities come.

Got it. Okay. And then second question, hopefully, it's a quick one. I was just going back and looking at the Putnam transaction and noted that there was a contingent payment of up to $375 million tied to revenue growth target. So wondering if anyone has an update on where that stands, given market performance has clearly been quite strong since then. And I imagine the revenue associated with Putnam likely has been strong.

Yes. Jon can give an update on that.

Thanks, Paul. Really happy with the relationship. As you know, it's a strategic relationship, a partnership. We're working with Franklin to benefit both parties. We're tremendously happy with that relationship. It continues to grow. During the current quarter, our capital generation doesn't include any benefit from contingent capital being reflected from that relationship. And we still see that relationship generating a level of contingent capital over the medium term, but it's not in our numbers this quarter.

Sorry, just when could we expect it to flow through? Is this something that could be reoccurring for a period of time? Or is it kind of on a set end date?

I'd call it over the next 2 to 3 years we should start to see some fruits of that relationship.

Your next question comes from Doug Young with Desjardins Capital Markets.

I guess a question for Jeff or maybe for David. Are you -- maybe back to the CRS, like how -- are you willing to let CRS become a bigger part of Great-West? And I know there's been some parameters you thought about on that front. How has your view changed on that? And I guess the limitation on that is how fast all your other businesses grow in terms of how much base earnings from CRS can grow to keep it kind of in line. But I'm just wondering, like top level, are you willing to let CRS become a bigger part of the overall business?

No, I think we like to share that it has at the moment. So it's around 20% of earnings. And I think that's a good share to give us a diversified portfolio. But obviously, our capital-light businesses, particularly in the U.S. are growing stronger overall than our insurance businesses, and we expect that to be the continued direction of the group over the planning period.

Like there will be times when CRS, as Jeff explained, does better than the medium-term ambitions that we've set out, and we're going through one of those periods at the moment where there's just attractive opportunities for us in the market, and we expect that to continue into next year as well. But there will be times just over our planning period where opportunities may not be attractive, and we like to give the business room to stand back and not be under pressure to grow when we enter into those time periods. And we expect cycles like that over the next 5 years.

It's Jeff. I just wanted to add one more thing. I know you and I have talked about this before, but I think one of the big advantage we have in the market is we're part of this big diversified group here with a really strong rating. And you can't undermine that, that's a really big advantage we have in the market. If you compare us to other reinsurers that are very, very dependent on the next catastrophe or very -- like their earnings and their solvability is dependent on the next catastrophe or the next pandemic, we're diversified. We don't have that. And a lot of our clients like that. So I think that we like it where we are. We are a big diversified group, and it's good to be part of that.

Yes. So I just wanted to confirm like the philosophy hasn't changed, and that I guess what my question is.

No. No.

Okay. Yes. Perfect. And then Slide 16, I just want to go back to that, maybe this is for Linda. Like -- it looks like you're guiding to high $50 million like on average positive insurance experience quarterly, that's kind of like your historical trend. And I get that you've done well historically on reserving and positive insurance experience. But why should we expect positive insurance experience? And why should we not expect you to adjust your actuarial assumptions to bring this back closer to 0? Is it just a philosophy? Or am I missing something? Just wanted to kind of explore that.

Sure, yes. Thank you. So when we're -- well, first of all, yes, we would definitely be looking at the 4-quarter average. As Jon said earlier, we are seeing volatility in the mortality results this year between Q3 and Q1. And then when you're looking at that 4-quarter average, really, what we're seeing there is a continuing strong contribution from our group morbidity line in Canada. And their experience gains have some interest rate sensitivity, and they are impacted by the cycle of morbidity. That said, cycles can be long. So over the near term, we're not really seeing any factors that could have a material impact on the Group Benefits experience relative to the levels we're seeing this year.

Okay. So it really is hinging on the group side in Canada and what you're seeing in terms of outlook on that business that's giving you confidence in going back to normal, but still remaining somewhat positive.

That's correct.

That's fair.

Okay. just one quick last one on credit. I just -- everyone seems to do something different. And I just kind of want to understand on the credit side, the guidance that you're giving, Jon, is that net of your unwind in the investment line? Or is that gross of that?

That's gross of it, Doug. And we think the industry has had some volatility in its results due to idiosyncratic events. We wanted to give some perspective on what you would have seen over the longer term, not reflective of our own underwriting, which has been positive. But if you just look at the industry-wide losses over a 50-year period and then look at a normal kind of conditions, what you might expect. And what we indicated was that's about 4 to 6 basis points post tax annually, and we would expect kind of in most of those years in normal conditions, it to be at the lower end of the range. But quarter-to-quarter, what you've seen in our results is it had some variability.

Yes. And then net of the unwind, like that would be basically your best estimates. So net of the unwind, net-net, it would be 0. Is that the way to think about it?

It would be -- well, the unwind would be more significant than the 4 to 6 points because it has inherent accounting prudence or conservatism and -- so it would be much higher than that. And you can see that in our expected investment earnings.

Your next question comes from Tom MacKinnon with BMO Capital Markets.

Yes. Jon, just continuing on this credit thing. It looks to be maybe about this 4% to 6% might be somewhere in the area of maybe $80 million to $120 million annually. Do I have that kind of right? Does that seem to be your 4 to 6 basis points after tax?

Very close, around $70 million to $100 million, Tom, would be -- we wanted to get basis points because over time, the portfolio will change so that you can continue to think of it in that terms. Yes.

And where does this kind of lie because -- in what segments? Is it largely in Empower? Because that's -- there's no unwind going on in Empower. It's a different accounting construct there. So you don't get offset from unwind there. So if you can tell us where the $70 to $100 million kind of lies.

I mean it's proportionate to the portfolio and how much credit is in each of the segments. Empower is the largest of the segments in terms of credit assets. We hold some sovereign type risks in some of our other portfolios for duration purposes. So if you think of the number, you can think of it as around 60% reflective of Empower and the other 40% in the other portfolios, most of that being evenly split between Canada and Europe.

Okay. That's good. And obviously, the 60% that's in Empower has no unwind offset, right?

Well, inherently, there is in the spread that we manage to. As you're aware, we earn an interest and we credit a spread. So as we price those products, develop those products, inherently in the spread, we manage to an expectation of credit from prior experience.

Inherent in your pricing spread, is that right?

Spread, yes.

Okay. Got it. Has -- there's no discount or anything like IFRS 17 stuff would be on that.

Yes, because those are IFRS 9.

Yes. Okay. Now then just a question just with respect to rollover recapture. I think is the rollover recapture rate somewhere around 15%? Do I have that right? Is that what it would be in the quarter? Or where you're kind of running?

Yes. We don't disclose rollover capture rates. They are improving and shares are above 15%. Like the better metric to track just the performance of the Wealth business is the net inflows. They've performed very strongly year-over-year and quarter-over-quarter. And I think why that's a better measure is it obviously captures the business that's coming out of the Retirement business. It captures business that we're winning elsewhere. It captures crossover sales. And it also reflects the retention within the Wealth business. So I think the key metric to look at in assessing the Wealth business is those net inflows, and we're performing very strongly on that.

And would -- is the money in motion? I think you've kind of -- out of Empower that you'd be able to recapture, is that somewhere around 8% of Empower's total assets? Would that be a correct gauge of looking at that?

And we don't disclose that. But like for the mature sort of DC business, and I think what all of the players would see in the U.S. like disbursements typically are about 10%.

Okay. And would all of those be potential rollovers or would some of it not be rollovers?

Ed can add on this. Like we -- I suppose one of the things we're very proud of in the U.S. is we have an open platform. Sponsors, participants are free to make choice while they're saving for retirement and then they have a full range of options once they come to retirement or when they're moving jobs. So like we have to work very hard and have a very good offering to capture our share of that, and that's what we're doing at the moment. So Ed, you might want to add some more color?

The only thing I would say is, no, that's not the numerator. It would be less than that due to cash outs and de minimis type accounts. So it would -- that's not the numerator, it would be less than that.

Would it be more like 6% to 8%, Ed?

I think that's a good marker, somewhere in that range, yes. Yes. You have people that just take cash, right? They're just going to take cash. They're -- they've got bills to pay or if they're under 59, they have to pay a penalty, they pay a 10% penalty and then they pay ordinary income taxes on it. But -- so you will get some cash outs for sure.

The plan participant outflows are pretty heavy in the quarter. Do you think it's just because the amounts were high? Or were people like just saying, okay, maybe I'm feeling pressure taking money out?

No, it's pretty rate driven. The markets had a good run, as you know, Tom. And so if we look at the outflows, 90% of it is rate driven, only 10% volume driven. So we haven't seen a marked increase in volume. It's been more rate. We also had a couple of large institutions in the quarter that had what I would characterize as sort of de minimis small account cash out type efforts that contributed to the flows in the quarter, which were $12.8 billion, so up from Q3. So there was sort of a onetime event there. But if you look in general, it's largely driven by the fact that the account balances are much higher due to the increases in the market.

Your next question comes from Mario Mendonca with TD Securities.

Can we go back to Capital and Risk Solutions? The business -- what I'm asking about now is the duration of the business because I can appreciate that the new business you've written is driving some pretty strong growth. But it really depends on how long this business is on the books for. I appreciate you can always generate new business, and I think that's the message you're offering us. But the existing business, this -- the business that's put on more recently, what is that duration of that business before you'd have to sort of regenerate even more new business to keep that trend going?

Thanks for the question. It's a good one. It's one I explain internally all the time. So it is shorter-term business. We typically look at it like we lose 10% to 20% of it every year. And so we have to replace it every year before we start growing. That's why you need a big diversified block of business. And obviously, the Risk Solution business is better from a long-term perspective. The Capital Solutions bring much higher returns. But I would say, if you use 10% to 15% has been really the run rate that we've seen on how much we lose every year. So that gives you an idea of what we need to replace to start growing every year. Does that make sense?

That's a longer duration out -- it does. But it's just longer than I would have expected. Like -- so you're saying that some of these capital solutions could run out for 5 to 10 years then?

Well, it's probably duration would be shorter, like I say, it's maybe 4, 5 years might be typical, but then certain cases will renew and just continue on and then you have a percentage that [ falls off. ]

[indiscernible] 1-year deals, they renew. There's -- on average, I would say they're 4 or 5 years deals, as Dave said. But we have clients coming back and renew them. So that -- so some of them tend to last 15, 20 years.

I see. So you were quoting more of like an effective duration, including the sort of expected renewals when you offered that outlook?

That's right. Yes.

Okay. If we could go to the U.S. now, clearly, the Empower business is delivering, as you described at your Investor Day and in previous discussions. I'm looking back, though, a few years to Q2 '22, when a large deal, and I've forgotten which one it was, whether it was Mass or whether it was -- I've just -- I've forgotten, back in Q2 '22, $310 billion of new assets brought on. And I kind of thought that was going to be one of the important themes of this business that you'd continue to add. So what I'm getting at is, given this more aggressive pace of buybacks, are you signaling that its organic growth from here in this business? Or is there still opportunities to add $200 billion, $300 billion of assets of this business through acquisitions?

Yes. So like on our Investor Day ambitions they can all be achieved through organic growth, like we continue to invest in the business to position ourselves very strongly and that's just a great position for us to be in. So we're very confident about the organic growth in the U.S. and the Empower business. But clearly, there's opportunities for further add-ons, and we will continue to look at that.

I guess we're doing share buybacks at the moment, but we have a lot of financial flexibility and strength and if opportunities come up, and we like them, we're ready to move on them. Like we're very disciplined when it comes to M&A. We have our internal return targets. They need to be earnings accretive within a very short period of time, and we continue to measure and look at opportunities against those targets. But certainly, we're in a great position, I think, to further add-ons, if we can get opportunities at the right price.

But do you believe, David, that there are still opportunities in that $200 billion to $300 billion range in this business? Or have those been consolidated away?

No, there's still a number of large opportunities, I would say, and lots then of smaller opportunities that you could add up. So yes, it's still a very spread market with, I think, further consolidation to come.

Your next question comes from Gabriel Dechaine with National Bank.

Similar line of questioning, but maybe from a different angle here. You've got $2.5 billion of cash at the holdco. In the U.S. sub, you're paying down $690 million debt instrument, can you give me a sense of what cash resources you have, including excess cash in the U.S. and then whatever appropriate figure would be from that holdco cash that you would want to retain, I guess?

Yes. Thanks, Gabe. As you might expect, when it gets to the holdco, it's very fungible from a shareholder capital allocation perspective. Historically, we've usually kept about $500 million for liquidity purposes. That's varied a little bit over time. So the remainder at the holdco is clearly available and flexible from a capital allocation. I'd also call out that we have reduced our leverage. First, we've repaid all of the acquisition leverage that we took on and committed to repay, and now we started to buy into the ongoing leverage of the group. And our equity is growing over time. So there's a reasonable amount of flexibility we have from a capital instrument perspective.

And then you rightly point out, we do manage to generate all this cash flow, retaining good, healthy regulatory capital positions, both in our LICAT-based regulated entities as well as our U.S. regulated entities. In terms of the U.S., we like to stay around or just north of 400% in terms of an RBC ratio. And what we're really pleased with, and I shared this on the last call is if you look back 5 years, we had 3 really nice businesses in the U.S., they were contributing a level of capital, but nowhere near the business that we have now. The U.S. has sent back cash this year or will send back nearly in line with its base earnings, and that's driving, as we shared, more than 80% of our earnings turns into cash. And as we also shared this quarter, we will remit over 100% of our earnings in cash flow to Lifeco this year. So that puts us in a very advantaged position.

Okay. All right. And then just the budget that came out -- the Canadian budget that came out this week, there was some section there on, I forget what they call it, tax fairness or something like that. There was a component aimed at reinsurance transactions, I guess. And my question is not for CRS, but is there any -- what are your early thoughts on how the Feds are looking at Canadian risks being reinsured offshore and the earnings that those generate in those offshore entities. I don't know if there's anything to note there with regards to your business.

Gabe, it's an excellent question. And there -- we continue to evaluate the federal budget. It's obviously new. We haven't been able to get through the thing in deep detail. But -- so we're evaluating any financial impacts from that. But we would note the budget does propose to tax any investment income on assets that are held by foreign affiliates and back Canadian insurance risk.

If you assume -- and this is early stages that, that proposal is passed as written, we'd expect the impact on our base earnings to be immaterial, but roughly around 1% or $0.03 per share with an increase in about 0.5 percentage point in our effective tax rate on our base earnings and that would be related to our Canadian operations. So that's what we know so far as we evaluate all the provisions of the budget. And that's an early estimate. So we had to go through further work on it, but I appreciate that you asked the question.

Okay. Great. It doesn't sound like it's too big of a deal, but I appreciate that it's still early.

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Khan.

Thanks, everyone, for joining us today. Following the call, a telephone replay will be available for 1 week, and the webcast will be archived on our website for 1 year. Our 2025 fourth quarter and full year results are scheduled to be released after market close on Wednesday, February 11, with the earnings call starting at 9:30 a.m. Eastern the following day. Thank you again, and this concludes our call for today.

This concludes today's call. Thank you for attending. You may now disconnect and have a wonderful rest of your day.

All right. We will get the next session started here. First thing I'd like to do is thank John Nielsen for being here, CFO, Great-West. You all -- I know them better as Empower for my 401(k) plan, but fantastic to have you here. I can't wait to jump into the conversation.

I wanted to start with a broad strategy update type of question here. I mean you all hosted an Investor Day not too long ago. You provided a lot more disclosure on your business, which is very appreciated from the outside. What are the things you're most focused on as we think through this more medium-term plan? What are the things you're most focused on over the next 12 to 24 months? What is the beginning part of that execution look like for you all?

Yes. Well, first, thanks for inviting us, Alex. We really appreciate the opportunity to meet with investors here at this great event and really appreciate the opportunity you've given us to join you here today on the stage. So yes, we did host an investor event. It was a -- we call it across the waterfront view of all of our businesses. The composition of our portfolio over the last 10 years have changed quite materially. We went through a period of consolidation, so to speak, in terms of our focuses.

We totally transformed our U.S. business by selling off our interest in Putnam, selling off our life insurance business and reinvesting into becoming the second-largest retirement provider in the U.S. And that was done both with a significant amount of organic investment to our U.S. business as well as some pretty strategic and large transactions that's given us this incredible position. So what we wanted to do at the Investor Day is rearticulate both the strengths and the market shares. What we like is develop markets, we know well, significant brands, deep penetration, top 3 market positions. So we wanted to bring forth the strength of those businesses. We thought a number of things were underappreciated and part of that was on us telling our story better, but also part of it was giving enhanced disclosure.

We wanted our investors to know better just the strength of our capital generation, the strength of the positions in the market. And that then led to changing and reaffirming and upgrading some of our targets. So out of that came moving from 8% earnings growth to a range of 8% to 10%, raising our ROE target from 16% to 17% to 19% plus and reiterating our yield payout ratio of 45% to 55% and also introducing capital generation and really clear disclosures around how much capital we generate and the fungibility of that capital. So what we said is we're going to generate over the medium term 80% plus of capital as a percent of earnings. How did we get -- I mentioned the strategic positioning we like, but it's also a fundamental change in -- over time in our business mix. So we're about 2/3 capital -- what we call capital-light businesses now. That's Retirement. That's Wealth. That's Group Benefits. We have leading positions in our geographies in those businesses.

They are the businesses that have the highest organic growth rates. And so we'd see those capital-light businesses becoming 70%, 75% without any inorganic deployment over the medium term. And that kind of leads to those higher targets that we've laid out. In terms of execution priorities over the next 2 to 3 years to get there, in most of our markets, all of our markets, we're in the position that we like to be in. We've disposed of market positions that we don't have leading franchises in. We have good deep customer bases. So many of those are continuing to execute very strong, growing with the market, taking market share organically. I guess, in terms of where do you see the most change, it would be Empower.

And so over the next 2 to 3 years, I would say our biggest opportunities expanding our wealth business in the U.S. organically principally. Right now, we capture -- we've increased our capture rate at rollover by 30% over the last 3 to 5 years. Our targets anticipating increasing that by another 30%. That would take us to 20% rollover capture. That's a far distance from where we hope to get over time. In comparison, we see best-in-class being 40% to 50%. So a long road, it's a multi-year, multi-decade journey. But our principal focus in the U.S. is getting that rollover capture up over the next 5 years.

Great. Maybe I'll dig in there on Empower a little bit. I thought one of the positives from the earnings call was you all talked about potentially getting as much as $25 billion of flows into Empower. And this is an industry where it's not maybe overall industry positive flows. So quite a feat to be able to potentially do that in the back half. What -- what's the underlying driver there? What are the things you're doing that are working?

So I think it goes back 10 years and the team that set out our strategy recognized that structurally, the U.S. retirement market was an outflow for a period of time with the baby boomers demographically exceeding new entrants into the into the retirement platforms into the 401(k) market, and they anticipated that. And they saw that as a strength to build on because it said this market is going to have to consolidate. There's going to be less providers as you go through that demographic change.

And what they identified were 3 -- what I call almost 3 winning levers of the strategy. One is you have to have a top-notch tech platform that you own that delivers very cost-efficient processes, and you have to have a cost advantage. And through the transactions that we've done, I think we've proven that cost advantage. We're able to take out 30% to 40% of the cost base of books that we bring in onto our platform. There are some variable costs, obviously, you have more contact points with customers. But there's a lot of fixed costs that need to be maintained, brand, tech and so on. So we think we have a winning hand on the cost side, driven that we own our own tech. We're very efficient. We've been -- it took a long time to do this. And if we look at public traded comparables, you can -- we can see that cost advantage in the numbers. So that was one -- one part of the strategy.

The second was to be open architecture. Do not rely on manufacturing asset management products to be, if you want to call it, the Switzerland of asset management and partner with best-in-class providers. We thought that played into the Department of Labor's fiduciary responsibilities very well. It didn't leave us dependent upon asset management margins to meet our targets, and it allows us to partner with the best-in-class asset providers. I think the third thing was we saw that the team that built this saw the advantage that digital would bring to wealth over time and knowing that mass affluent middle-class people need wealth advice as well, can't be provided only with human touch. We knew human touch would be both ends of our business for the long term, but you can enable advice to be provided to many, many more Americans on a hybrid basis, using a combination of human and digital. And that's our model. And our model is right now to attack those people with somewhere between $200,000 and $2 million in retirement assets and bring a wealth-based advice model, best-in-class asset managers and focus on asset allocation, financial planning and getting people to save more for the retirement and stay safe. So that's our model, and it's worked out well for us now. I would say we're in the early innings of that wealth build out. And those were the tenants that led us to where we are today and what we think is a winning hand.

Next, you discuss the earnings sensitivity to equity markets in that business. And the reason I ask is markets are clearly up a lot from at least where the average level was in 2Q. I would think that would be a reasonably good tailwind for the part of your fees that are AUM-based. And the additional question I want to ask is, well, what do you do with that additional flexibility? Is that something that you leverage it to invest more in the business? Is there some of it that will fall to the bottom line and benefit your capital base? Just trying to understand the way you approach it.

Yes. So we do like this profile of earnings that we have, and let me just dive into that. About 50% of our revenues are kind of asset-based fee linked revenues. Another 25% or so, 30% are, call it, fixed fee or transactional-based fees, so they're not dependent on any type of markets. And then the residual is spread based from our stable value products. So this is a very diversified set of revenues. Over time, what we really like is we found new sources within those categories of revenue to continue to diversify and build our revenue base. This provides, along with cost, a competitive position that allows us to really compete strong on organic growth in the retirement sector that you touched on. So very diversified, very broad-based set of fees that we like that profile.

In terms of -- you're right, it should provide tailwind to continue to show great earnings growth. In terms of investment, I would say our principal investment is going into the wealth side of the business. You'll see that the margins of both businesses are quite similar, 30% type of EBITDA margins. In the long run, we'd expect our wealth margin to increase to be a higher margin than the retirement. Why is that the case? Well, we're about $100 billion of out-of-plan assets in the wealth. We're growing, net flows in the wealth business are $12 billion plus this year. If we increase that capture rate, that business is going to grow very nicely. That leads to the double-digit earnings guidance that we've given for the U.S. business. So wealth is growing at a very healthy rate to get to double digit.

We would say our retirement earnings would grow at mid-single digits plus type of levels over time. So investment is going to be principally on driving up that organic rate. What we need to do and what we think is the winning hand is to build a deeper relationship with the clients while they're in plan. So if you look at best-in-class, why do they win at higher levels of rates? Will they have multiproduct relationships with clients while they're in plan? We've announced that we're moving deeper into the health care savings account business. There are other things that we can do, whether it's retail brokerage, education savings accounts that we think will deepen our relationship with clients while they're in plan. And that will give us the right to win and move up that capture rate over the medium to longer term. And that's where our investment is going.

Can you talk about the competitive environment in the Empower Retirement business. I guess I'm interested, what are you seeing out there in terms of pricing competition? And also maybe if you could opine on is price usually what wins for you? Or is it more on the capability side, like just how price elastic is that process?

Yes. It's a great question. And it goes back to the original strategy. The strategy of being a cost leader where you can invest in the retirement business, while still maintaining strong margins. And what we would say is we viewed the smaller players what would force their hands on consolidation is the inability to invest into the retirement platform and make it best-in-class. If you have earnings guidance, you're a public company and you're in an outflow. It's a bit of a -- what do you want to say a treadmill that you're on. Ultimately, they would need to curtail investments. Most of those providers rent their tech from third-party software providers that are also unwilling to invest substantially in service and in integrating wealth into the retirement platform. We own our -- we own our tech, we can do that.

We can invest and still grow. So we believe in order to make our inorganic strategy successful, we needed to win organically. And if you look at the last 3 to 4 years, we've taken $135 billion of planned flows from other providers. We would say us and the #1 company in the industry are the 2 that are taking market share at the expense of the remaining parts of the industry. So winning market share organically is a testament to the product that we offer, the service and standards that we hold and that we're providing financial wellness to companies at a time when financial issues are typically what keeps the workforce from being highest productive. So we continue to win market share.

Is there some price compression? Of course. I guess our view would be we'll outrun that with continued enhancements on the back office and the ability to invest into better solutions for our clients. So do we feel price competition? Yes. Do we always win on price? No. I'd say more times than not, it's on the service, the broader offering that we bring to our clients than price.

That's helpful. One of the key topics at the Investor Day that you already touched on a little bit was just the cash generation, how much capital you're generating. You're returning some of it. There's also some buildup that's occurring, a good problem to have. But just listening to you talk about how fragmented it still is out there and some of these providers can't invest in their businesses, it seems rational that many of them would make the decision to sell. Is that accurate? Like how impactful could that be for you? I know it has been a big part of the strategy, but will it be as big a part of the strategy for the next few years?

We certainly want to be opportunistic and be prepared for those opportunities when they come. We will maintain quite strict price discipline and make sure that the transactions meet our financial strategy and our incremental where we allocate capital, and we want to be prepared for that. You mentioned that period of time. We obviously took advantage of our strong balance sheet, strong credit rating to lever up the balance sheet, make those transactions. And now we're back in really good shape. So we -- you typically see us around 30% leverage. We're down to 27%. We have really strong capital, regulatory capital levels despite the capital generation. So very strong there. And where we have more than $2 billion of cash sitting at the holding company.

What we also have done actively while we wait for the right opportunity is we started to return cash through buybacks. And we've announced 2 buybacks this year. We have that capacity. And we will balance that return on capital with those financial opportunities, strategic opportunities that come up. We think the market needs to consolidate more. We think with our cost advantage and the ability to provide wealth services, which many of these retirement providers are nowhere near our capabilities, it makes industrial logic to consolidate the market more, and we think it will happen. It's a matter of when. So we're waiting, and we'll be ready to go when the right opportunity comes. We think it will consolidate down quite substantially from where it is over time, and we'll be there when the right transaction comes.

Maybe just probably a touch further. I mean, do you envision more of this industry consolidation or at the micro level where it's like smaller businesses that really can't invest? Or are there still pretty large opportunities out there where there's still a very big scale play for you as well?

Yes. Well, the good thing is we have -- I think the good thing is we're very successful in our integration. So if you look at the larger ones that we've done, Prudential, MassMutual, JPMorgan, those were the largest transactions that we did with very -- some of which have very large clients, Fortune 500 that are very picky about these transactions. It's never easy. So nobody actually wants to change 401(k) if you're in the HR because you've got to send out passwords to thousands of people, disrupt your employees. So it's a very sticky nature of business, only about 3% of plans. We have [ 97% ] retention rate. But when you do a transaction, you're at your weakest point, right, because you actually have to force all your clients to move platforms, send out new passwords, change what they do.

We had priced those transactions at a level we're comfortable with and we way overperformed the retention. And we think that's, again, a sign -- you can see we disclosed revenue and participants. So you can see what revenue shrinkage we had to do to retain those, and it was both in excess of our targets. It was high 80s percent despite being disrupted. So we were very successful on that, much better than everybody else. So we have experience in the large integrations, but we've done smaller ones as well over time. So whether it's large or small, there's a lot of the things you do that are the same, meaning we see it as being easier to integrate 1 versus 3. But we can do it either way, and we've done it both ways.

So what's our preference? Our preference would naturally be to do 1 versus 3 because there is some synergies from larger customer bases, but we could do either way. We think the pressure will be across the sector. I mean, if you think of -- let me probably lay out the market. If you think of the #1 provider, which I think everybody knows who it is. It's -- they're about 30 million lives. We're about 20 million participants. We're adding 600,000 to 700,000 new participants a year. They're adding proportionally a lot of participants every year. The next largest players are, call it, 5 million to 7 million lives. So -- so we're already 3x as large. And there's 2 or 3 of those, and then there's a whole host of people with 1 million or 2 lives. So we think that pressure is across everybody -- everybody but the 2 largest. The acute pressure will obviously be the smaller you are, the more cost pressure you're going to have. We suspect there's a lot of fixed costs.

Makes sense. Okay. Can we have a similar conversation around the wealth side of the business? And I guess maybe just to add into the fold like are you -- is there still a focus on doing some M&A within wealth? How does that compare to maybe just doing team lifts? When I think about some of the publicly traded ones in the U.S. that have built our wealth management businesses, I think team lifts has been a really big part of it. How does that all fit into your strategy?

I think our wealth strategy is probably a little different than they the RIA roll-up strategy. Obviously, we're very familiar with that strategy in Canada, our home market, and in Europe, where we're also building independent financial adviser roll-ups. We're not pursuing the same thing in the U.S. today. Our advisers, there's 1,200 of them. We're growing that organically. They're principally salaried based advisers, the remote partial -- as I mentioned, there's a hybrid -- human digital hybrid advice channel. So we're not competing with other RIAs for team lift-outs or consolidation. It's really an organic strategy. And I would say, to build the business, there is a distribution component.

We need to continue to attract salaried advisers. We're on track to do that. There hasn't been any -- let's say, we've been able to do that commensurate with the ability to deliver that rollover percentage upwards. I'd say the big investments are brand. Everybody has now seen Empower all over CNBC, but we're only about a 50% aided awareness of the brand right now. Big providers are 80% to 90%. So that's going to take time, right? It needs to become a household brand name. Number two, it's product. I mentioned, entering HSA market, we need to bring other products to our in-plan customers. We already capture more customers off our platform than anybody else. So we're already #1 of our platform. But if -- where we typically lose isn't to the RIA of the world because those -- they're looking for 2 million-plus accounts.

We are losing to the big financial services providers, the Vanguards, the Schwabs, the Fidelities. So building that product suite and that deeper relationship, we think moves the dial on the rollover rate. And then the third thing is just customer experience. We are very good at this, but we need to become better. We need to make it easier to roll over to us. We need to be a one-stop shop in terms of the customer experience for other products. So I'd say in the medium term, are we going to buy distribution in the wealth side? Could be, but probably it's more likely we invest organically on the wealth side. Are there skills or products or complementary spaces that could accelerate that build probably? But pricing right now is quite aggressive. And we're not necessarily competing against RIAs for teams right now. So I'd say that's probably more likely organic and if we were to deploy material inorganic capital into the U.S., it would be further consolidation in the retirement sector.

Makes sense. We pivot a little bit over to Canada. I wanted to see if you could talk about the Group Benefits, specifically what you're seeing in terms of top line growth production, maybe if there's any initiatives that are going on right now that we should be thinking about? And how you're viewing the performance of the margins in the business as well?

Yes. So while we're a retirement wealth player in the U.S. and the leading one, our international presence, we're strong in retirement and wealth in Canada and Europe as well. But we are a leading Group Benefits provider, #1 in Canada. Our historical focus has been on the small, medium sector where we see the great margins. We've also started to move into larger -- the larger scale market. We have the heft and the scale to compete there stronger than we have in the past. The margins have been very strong. They've always been pretty strong in Canada. Competition is quite rational in Canada. At the edges, you see some heightened competition. Nothing that really gives us pause.

Disability margins are very strong right now. That's driven by a good experience as well as higher rates. The higher rate environment at the medium term -- term structure of the interest rate cycle is helpful to us. Obviously, you're discounting present value back lower. Nothing that gives us real pause. The -- while unemployment is up in Canada, the economy is slow. We actually are hopeful that the future is more positive for the Canadian economy than we might have hoped 12 months before. The government is going to invest substantially in infrastructure, military spending. There is a lot of investment that will happen in Canada. And we're hopeful that, that will lead to better economic growth as we look out 2 to 3 years than where we are -- where we're sitting today. So there's nothing in that sector that says that -- it's really a battle of the 3 big companies there, but pretty rational competition. So nothing that gives us real pause right now.

If we move over to the U.K., could you talk a bit about bulk annuities? I think that was something you highlighted is a good opportunity in the last Investor Day. So I just wanted to see if you could update us there on some of the things you're doing?

So as you think of Great-West, we talked a lot about Empower, #2 in retirement. Canada Life in Canada, we're 1, 2 or 3 in every sector of the insurance business, #1 in Group Benefits, obviously, very strong in the other. Our European franchise is really principally made up of a very strong position in Ireland, which is the strongest growing economy in the EU. It's benefited from Brexit, obviously. It's benefited from being very close to the U.S. and Canadian economies. So lots of employers make their European base in Ireland. So in Ireland, you can think of us as a 40% market share in almost all of the nonretail banking financial sector, but it's a small but growing population.

U.K. is really the place where we're not top 3 in the country across all segments. It's more of a targeted position where we're one of the last foreign insurers in the U.K., but we have targeted positions. So we're #2 in Group Benefits. Again, we're very good at Group Benefits, life, disability and so forth. And we've always been very strong in the retail annuity market. So English, I think I heard on the last stage, the Department of Labor wants more retirement income products in the U.S. And I think that will happen at some point. The U.K. has been the opposite, very defined benefit, very fixed income retirement streams. So we've always competed very well and with good reasonable margins in the retail sector.

The U.K. is going through -- corporates are going through a derisking of their balance sheets. Higher interest rates right now is helpful, but they are going to derisk $100 billion or $1 trillion of on-balance sheet defined benefit obligations to the private sector over the next 10 years. We know this sector both through our retail annuity. We've also been a big player through our reinsurance division and longevity transactions in Europe, more on an institutional basis by supporting other providers in this pension risk transfer business. So we know it well. We're only a couple of percent market share in bulk annuities or pension risk transfer.

I wouldn't think that we're going to be a major player, but we think we can do better than we've done before. We think we can grow that market share to a degree and provide some growth given all the skills that we have in underwriting longevity. Why do we think it's attractive right now? A couple of things have happened. First, Solvency II limits the asset allocation through the capital structure, the options that you have. So it's not like pension risk transfer in the U.S. where you can kind of move it to Bermuda and invest any way you like, or let's say, in a really broad perspective, they limit the asset choice. It's pretty limited because of the high capital stream into more conservative investments, but illiquids provide some yield.

And the second thing that's happened is they said, you can't move these assets offshore. And so you can't just do what the U.S. market has done, underwrite these pension risk transfers and move them to Bermuda. They allow maybe 20% offshore, but they're requiring a substantial amount of your risk to stay onshore. There's only half a dozen plus people in the market. So by limiting reinsurance in us being onshore, we think it makes the margins a little better than if they would allow offshore. And we're -- we typically compete in the small case market. So think of pension risk transfer of $50 million, $100 million, maybe $200 million. We're not competing in the $1 billion transactions at this stage. And we like the margins in that.

And then I'll say that secondarily, our Reinsurance division benefits because it can be where you do take advantage of 20% offshore in this market, what the U.K. regulator said is you can't just place it all with one provider. You need to split your reinsurance, you need to have a diversification. So naturally, they have to come to us. It's a AA provider. So I'd say it's an opportunity. I wouldn't overstate it in terms of the equity story of our company. If we can underwrite that business at mid- to high digit IRRs, we'll do it in a limited capacity. If we don't see that good margin, we're not dependent upon it. We will pull back our capital. We'll reallocate it to other sectors. So it's a nice opportunity to have, but not something we're dependent on.

Got it. Next, if we could go to the productivity initiatives that you've got going on. Could you remind us of some of the things you're doing the efficiency ratio improvements that you're anticipating? And maybe even just sort of geographically, now that you've got this more thorough disclosure that you've laid out, where should we expect to see the benefits that they come through?

Yes. So -- so we did indicate that we saw some efficiencies coming through the business, and we're making some investments into that. So we announced about $250 million to $300 million charge. Let me lay out where we see that coming geographically and how it will benefit us over the long run. Most of it is targeted at Canada. So if you think back, Great-West really consolidated -- or started the consolidation of Canadian industry into these 3 great companies that exist now. Obviously, there's -- I'd say 3 major companies that control 80% of the market share.

There's other great companies in the market that have found their niches and grown really nicely too. They're quite a consolidated industry. When we did that, we maintained 3 brands up until about 3 or 4 or 5 years ago. We had Canada Life, we had London Life, and we had Great-West. That was the right strategy for a period of time. We always had the best -- we felt the best distribution. It gave affiliated people who affiliated one of the brand and brands higher, the opportunity to work with them. But we decided the best thing to do in the long run is leverage one of the best brands in Canada, Canada Life.

So if you look at brand awareness in Canada, you know Tim Hortons, you know Air Canada and you know Canada Life, right? This was just the right decision at the right time. When we made that switch, we were quite focused on the U.S. integration and so forth. We've now turned our attention to leveraging that brand, building a better customer experience in Canada, trying to throw around our heft better behind the Canada Life brand being -- having a better customer experience and becoming more efficient in Canada. So most of that investment goes into Canada. It prepares us -- it puts in place a better platform to enable AI over time.

So a lot of it is moving to the cloud so that we can enable AI over the longer term better. And it's really to modernize our tech platform and kind of integrate it into a tech-enabled environment. The U.S., that's already been done. Ireland, that's already been done. They are really prepared for the advent of the AI. They're on the cloud largely. So most of it goes there. There are some, I'd say, smaller investments into the U.S. and U.K. as part of that. If you look at our -- how we get from, call it, 56%, 57% efficiency ratio down to 50%, sub-50%, I'd call it, 75% just comes from revenue growth. The other 25% comes from efficiency initiatives that we announced. And we think over the medium term or towards the end of the medium term, AI will be a real enabler that we need to be prepared for that will potentially drive even more efficiency over the long run. And that's what we're getting prepared for with those charges.

Got it. That's helpful. So it looks like we have time for maybe one more here. So why don't we hit on the ROE target that you've laid out? And I wanted to ask you about this because you've got a more capital-efficient business. We could almost debate whether ROE is even the right way to think about it a little bit. And so the nice thing about that is you're generating all this capital. As you put that to work, does it just naturally continue to be upside to those ROEs that you've laid out? Could we end up seeing more actual earnings growth as a result of just the redeployment, whether it's -- you've been doing more buybacks but also some of the M&A. I mean I'm just trying to think through whether -- I mean, the ROE sounds great where it is, but is it also just sort of missing the point of like this thing is going to keep chugging itself into more redeployment, more earnings growth, too.

Yes. So I think the -- I mean, I think it's natural to continue to have an ROE target. And it's -- it really goes -- why is it increasing? Really goes to the nature -- fundamental nature of the redeployment of capital into inorganic growth, right -- or organic growth, excuse me. 66% of our business is effectively capital light, meaning mix dollar deployment of growth doesn't require additional investment that's not already built into their earnings. We're investing in tech and so forth in marketing, but that's in the earnings. It's not, call it, distribution costs to get that next dollar of growth, commissions and reserves that you need to set aside. These are capital-light businesses.

So if you look at the return on next dollar deployed of capital to grow, it's very high because of the nature of the mix of our earnings and the growth rates of those earnings. So we moved the target up to 19% plus. We wanted to leave room for inorganic growth. We didn't want to not have the ability to consolidate the market or invest into things that were strategically important over the long run and financially attractive, that might, let's say, temporarily set us back on ROE, and we think we got the right -- we think we got the right place at 19% plus.

If you look at our prior guidance, we said 16% to 17%. And by the time we changed it, it was where we are today about going on 18%. If you look at -- in the long run, we think our wealth business in the U.S. can be as big as our retirement business. And the wealth business is a high ROE business, much higher than the 19% guidance. And I wouldn't think that we would deploy capital into more capital-intensive insurance businesses as we look forward. Organically, we left aside 20% of our earnings to invest in those. But I don't think you'd see a change in strategy where we didn't organically reenter higher capital businesses. So just gravity and growth over time should get us to that 19% plus, and we'll continue to evaluate all our targets regularly. And if need be, and we're able to overachieve the 19% plus or we need to reguide, we'll do that in due time.

Great. Well, thank you for being here. It's been fantastic. Thanks, everybody, in the audience. And we'll see you back here tomorrow.

Thank you, and thanks for the time, Alex.

And with that, I'll introduce our next guest, David Harney, President and Chief Executive Officer of Great-West. David?

Good morning, Mike.

Thanks for joining us. Pleasure to have you.

Yes. Pleasure to be here.

So first order of business, obviously, a big congrats on your appointment. You've been with the company for a while, with Irish Life for a while. Maybe just talk a little bit about some of your near-term priorities, just to remind investors what you're focused on for Great-West?

Yes. So maybe just a brief introduction. Many people in the room won't know me. So yes, I'm in the role now since 1st of July. I became part of the Great-West Group in 2013 when Great-West bought Irish Life. That was during the global financial crisis. It was a great acquisition for Great-West, but a fantastic acquisition for Irish Life as well, and they've prospered within the group since that acquisition. I ran Irish Life from 2016 to 2020, ran the European business then for the last 5 years and more recently oversaw the Reinsurance business and I'm in this role now since 1st of July.

So I feel very lucky like I'm inheriting and coming into a portfolio that's in fantastic shape. We talk about our geographies, our markets and then our positions. So we believe we're in the right geographies at the moment. We're in great markets, and we have fantastic positions in all of those. So we really like our positions here in Canada. Obviously, we'll talk about our position in the U.S. and Europe, global reinsurance. Our 3 market areas are retirement, wealth and insurance. And then we have great positions in each of those.

So we set out our stall very clearly on Investor Day. There's no change in that since I've come into the role on 1st of July. So our targets are 8% to 10% earnings per share growth. We expect our ROE to grow over 19%. We're within touching distance of that already. We have fantastic capital generation at the moment. So we expect 80% plus capital generation, and then we have a dividend ratio of 45% to 55%. So all of those targets will come from organic growth. They are not in any way dependent on M&A activity. So my priorities are really around the organic growth and making the engine as strong as possible in that way.

So we've 4 execution priorities that I'm really focused on. So the most important part of organic growth is your customers and what you're doing for those. So we really have to continue to have that relentless customer focus. AI and digital is going to be huge over the next 5 years. It's going to transform all of our businesses. And to really leverage off that, you have to have a very strong operational platform and you need to invest to make sure that you have that in place. And what AI will do is interesting. It will make us actually a more human organization. There'll be all AI in the middle, but there'll still be people at both ends of it. So focus on talent and our people is still critically important.

Awesome. So it sounds like continuity, everything is fitting in the right place. You're not looking to make any -- no meaningful changes. No need to make any meaningful changes, I guess, is the argument?

No, like we're very happy with the markets we're in. I think it's very unusual for a portfolio to be in a strong position as ours. Like there's no market or product subset within our portfolio at the moment that we don't want to be in. Like Paul has done a fantastic job before me just putting that in shape. So it's really execution of that position. Like we've tilted the portfolio to capital-light as well. Like in 2024, 62% of our earnings were on capital-light rather than the capital-supported business. And that's where the higher growth will be as well over the next 5 years. So within this planning period, we expect our capital-light businesses to grow to 72% of base earnings, yes. So me coming into the job is just a continuation of the playbook that's worked very well for us for the last few years.

Awesome. I'd love to touch on some of your different business lines. Empower, I think that's the one that investors are probably most excited about. If you take a bit of the noise out of last quarter's numbers in the prior year, I think you had 13% year-over-year growth on a clean basis. Obviously, a lot of great things in terms of growth organically, pressure on the smaller players in the market. You've got that M&A dynamic. You're obviously a consolidator as the #2 player in that space. Maybe talk about those 2 dynamics, the organic growth, is it going to continue at comfortably above industry levels. And then is the M&A dynamic -- is it getting more intense? Is it -- like how -- what's the competitive dynamic? Is it more conducive to M&A for Great-West for Empower versus what it might have been in the past?

Yes. Look, I suppose, first of all, yes, we're very excited about Empower as well. I think we've built an incredible business there. Ed and the team have just done a great job there the last few years. And that's been through the acquisitions and successfully integrating those. And we've taken time and care in that to put them on a single platform and really executed those integrations really well, and that's what's given us the position that's there at the moment.

When it comes to organic and inorganic, I think it's -- like I think of organics like the [indiscernible] and maybe M&A, the icing on the cake. So organic is the most important because your organic engine has to be right. And then if that's right, it's easy to add on to it. Like you're right, we've had recent double-digit growth in the U.S. business, and that is going to continue. So we have 2 businesses in the U.S. through Empower, like the dominant one is the 401(k), the Workplace. That's over 80% of earnings. And then the Wealth business at the moment is just a little less than 20%. So we are doing better than anybody in the workplace market in the U.S.

We have a fantastic open architecture platform. We have a great product set behind that. We're really passionate about the job that we do for 401(k) participants. I think we work harder than anybody getting them to save more and getting them into the right asset products. And that's the reason we've won $135 billion in net plan sales in the last 3 years. So even though like our total assets under administration, just to give some context, are $1.8 trillion, but $135 billion of that has come from net plan sales just in the last 3 years. So we have a fantastic organically growing Workplace business in the U.S. And that makes us very confident of a sort of mid-single-digit plus growth platform in the U.S.

And the reason then that goes to double-digit growth is the amount of growth that we're seeing in the Wealth business. And obviously, that growth in the Wealth business is coming from people retiring out of the Workplace business. At the moment, that business is only $100 billion compared to the $1.8 trillion in the Workplace. But over time, we expect that Wealth business to be as big as our Workplace business. And that's what makes us very confident about double-digit growth the U.S.

And then we can certainly add on to that. The 401(k) market is still very fragmented. There are a number of reasonable sized players, much smaller than ourselves and Fidelity, but still of reasonable size. And then you go down below that, and there are lots of small players. So I don't think the M&A dynamic or whatever has changed that much. It's still pretty similar to the time when we did our recent acquisition. So there's good opportunities for us to execute synergies if we can get some more at the right price. So it will be organic first and then fantastic organic engine makes M&A a very likely target for us in the U.S.

Okay. Great. So the 80-20 split and then obviously, the wealth side seems to have a lot of growth potential. You've added some capabilities with private markets, ETFs. Maybe talk about that dynamic and how that changes things for the Wealth business?

Yes. It's very important. The wealth business is interesting because obviously, what you're trying to do is capture as much of your 401(k) participants as they retire. We're already the #1 -- our Wealth business is already the #1 destination for our 401(k) participants when they come to retire. So we capture, at the moment mid-teens, maybe around 15% of those into rollover. But that can be a lot better. Like that's improved by -- that's improved from about 10% a few years ago. That's on a journey to 20%. When it gets to 20%, it's going to be on a journey to 25%. And when we get to 25%, it's going to be on a journey to 30%.

So the key to getting that -- increasing that rollover rate is absolutely the key to making the Wealth business in time as large as the Workplace business. So as I said, it's $100 billion at the moment, Workplace is $1.8 trillion. So maybe it's going to take a decade to get as big, maybe a little longer, maybe a little shorter, but it will get as big. And the key to that, as I said, is getting that rollover rate up. And then obviously, to get the rollover rate up, you have to have a fantastic experience for the member as they come to retirement, and we already have that in place. But really, the battle is sort of lost or won before a member gets to retirement. It's all about the engagement and the work that you do with them while they're saving for retirement.

And that's all about the way we combine our digital tools and our adviser population to coach people as to save for retirement. It's all about having the widest product set possible just up the engagement. So that goes to our stock option plans that we have at the moment, our individual savings account, the health savings accounts that we've added, the private markets that we've added, zero-based funds that we've added for BlackRock.

So the more of these things you can put in place, the more engagement opportunities you're creating for people. Brand then is hugely important as well, like our unaided brand awareness in the U.S. is only 50%. We're investing a lot in brand at the moment, but that needs to get up to 80%. So all of these things combine then to driving up that rollover rate, and then that's what fuels the growth in the Wealth business.

Okay. And are you able to touch on that rollover rate, maybe not the absolute numbers, but what direction is it going in? What sort of momentum are you seeing now as you've made some more investments in your capabilities on the way?

Yes. So we've -- we're improving our disclosures on this all of the time. So we've improved that rollover rate by 30% in the last 5 years. So it's gone from sort of north of -- just north of 10% of retiring members going to our platform to 15% at the moment, and we expect to get to 20%, maybe a little bit more within the next planning period. And just to give some context, like obviously, within the market in the 401(k) space, we're the #2 player after Fidelity. They have 30 million-odd participants. We have 20 million participants now. This is just in Workplace. They do an incredible job and have been doing this for a long time on that rollover rate. So 50% is what they capture after retirement. So we have a long way to go to get to that.

Now we're doing all the right things, and we're on the right journey. And I don't mind saying that we're sort of copying the Fidelity playbook, and they've really showed people how to do this. So obviously, we're not going to get to 50% overnight, but an aspiration of getting to 20% first and then making that 20% to 30% is very realistic.

Okay. That's very interesting. Maybe switching over to the Europe business and maybe talk about the different areas that you're in. Obviously, Irish Life, you're a dominant player. You've got the bulk annuities in the U.K., maybe Germany. Maybe just touch on the different business lines that you operate in and how you sort of see the opportunity?

Yes. So maybe -- I suppose the overall portfolio is reasonably balanced. The U.S. is our biggest segment now. That's just over 30% that passed out Canada last year, which is also 30%. And then our European business is 20% and our Global Reinsurance business, 20%. So that just gives you an idea of just the shape of the overall portfolio. So within Europe then, we've a very targeted position. So it's not a broad position across the whole European market.

So we have our business in Ireland, which is a broad-based waterfront business, incredible market share position there, like over 30% in nearly all product lines, over 40% in some. We have more of an insurance franchise than in the U.K. and a smaller position in Germany. And again, we don't really intend to go into any other geographies within Europe. We're very happy with those 3 core positions. So within Ireland, then like Ireland is small, very dynamic economy, very fast-growing economy. So to have the business that we have there is just great.

Like obviously, we have to maintain and defend that position, which we're doing well. And then that allows us to benefit from the growth that we see in Ireland, and that economy is continuing to grow strongly even in the current global environment. And within the U.K. then, so our biggest -- our 2 big positions in Europe are Ireland and the U.K. The U.K. then is very much an insurance franchise. We have a great group risk business, very similar to the group benefits business that we have here in Canada. And then we're a good player in the annuity market there, both in the individual annuity market and the bulk annuity market. And if we're targeting a growth for -- well, we are targeting growth in the U.K. So that would be on obviously continuing to do very well in the group risk and the individual annuity market, but we expect to see growth in the bulk annuity market.

And in Germany, small presence there.

It's a small presence there. Like as was the -- our European position came from the Great-West acquisition of Canada Life in 2003, and Canada Life had those positions in the U.K., owned a smaller company in Ireland, which was added on to with the acquisition of Irish Life in 2013. And then just a small position in Germany that's built up. And I think what we expect to see in time in Germany is reform of the markets. There's a lot of reform going on in Germany at the moment across lots of different industries, even the way they're opening up their debt levels and things like that.

So Germany is a very interesting economy at the moment. But on the financial services side, it's still a little bit conservative. So I think we have a nice position there. We've quite a modern platform there. And I think as Germany reforms, there's opportunities for growth there. But our main engines in Europe will continue to be that insurance franchise in the U.K. and that position that we have in Ireland.

So not looking to get into any other jurisdictions in Europe or will you be opportunistic if something does seem interesting?

No. I think what we have in Europe is perfectly good. We expect mid-single-digit plus growth in Europe. It's very complicated to go into another geography in Europe, even though it's a single market, like when you get into insurance and retirement products, they're very linked to the social security systems, the individual tax systems, which still vary by country. So there's no real easy way to sort of extend out from what you have. And then if you stand back and look at the 2 big economies in Europe are the U.K. and Germany. The fastest-growing economy in Europe is Ireland. So like we're in just a very nice position where we are. Yes.

Got it. Maybe switching over to Canada. Obviously, Empower is your growth engine. Europe has some upside. Maybe talk a bit about Canada. When I look at high-level industry, the Life business tends to grow at right around nominal GDP, the health business, a little bit better than nominal GDP and then retirement solutions would be better of a growth driver just given the demographics in Canada. Maybe talk about how you see Canada in your strategy and how it sort of -- how do you tie that into the 19% ROE? I would assume it's a very profitable business for Great-West. Just talk about the Canada business and your thoughts there?

Yes. Look, Canada is obviously our home market. The U.S. is our biggest market now, but Canada is our home market. And I suppose Great-West is a global group now and has that balanced portfolio that I talked about. But all of that was possible just because of the amazing business that we have here in Canada. Canada Life is one of the great brands here. So obviously, we want to grow all of our markets, and we have ambition in all of our markets.

But there's something special about being a Canadian company and winning here in Canada. So it's still probably the most important -- well, most important is may be wrong. But I think winning in Canada maybe gives us a little bit more satisfaction than winning in other markets. And with a brand like Canada Life, our aspirations and ambitions here in Canada are very strong. So if you look at the business we have in Canada, like our Group Benefits business is very strong. And obviously, there's some of our competitors here today, and we enjoy competition, and that's great for customers. But we have a great Group Benefits business.

You're right, that's quite a mature business and probably its growth -- mirrors the growth in the overall economy. But I think where I'm excited about growth in Canada is on the Wealth side and on the Retirement side. Like obviously, the Wealth market, there's lots of different players and lots of different sectors to it. We operate in the individual adviser space within the Wealth market. And I think there's an opportunity for that segment to actually grow quicker maybe than some of the other segments within the Wealth market. And we've invested quite a lot in that over the last number of years through a number of acquisitions, and we're making some big investments at the moment on the platform then to serve those independent advisers.

So growth in that market will be a number -- a jump ahead of economic growth. So that should outperform economic growth. I mean, in Canada, maybe 4%, 5% or something like that. And then on the Retirement side, I think it's interesting just looking in, I think the defined contribution markets could benefit from some reform here and maybe is poised for higher growth as well. I think economies or governments all around the world are encouraging people to save more. We're #3 in that market here, which is not a natural position for us. Our aspiration would be to be #1. Now that takes a bit of time, but we're incredible at this in the U.S., like we're on track to catch up with Fidelity in time.

So we're already the #2, see ourselves fighting to be #1 in the U.S., and that's the natural position for us to have here. So that will take time to invest. So we have equal ambitions across all of the markets. It's double-digit growth in the U.S., but just because of that rapid acceleration that we're poised to get in the Wealth business, it's mid-single-digit plus in Europe and in Reinsurance. And then it's mid-single digit in Canada. And maybe that's just a little bit lower at the moment because we're giving that business some room for investment, particularly on the Wealth side, and I want to see more investment in the Retirement space as well.

Okay. And then in Canada, just maybe an oddball question, but pricing power, I'm imagining is pretty good. We often hear it with the Canadian banks, but Lifeco has obviously had very dominant positions in the Canadian space. So very good dynamic on the pricing side. You don't tend to see pressures and you can easily reprice when you need to?

Yes, it's yearly -- well, it varies a little bit by product, but yes, it's repriceable business. Like it's competitive, people get good value for money, but it's a sensible rational market, yes.

Got it. Got it. Maybe switching to the CRS business. Just in terms of how it plays a role in your sort of capital-light strategy. Maybe just talk about that dynamic, the capital needed to run that business?

Yes. So yes, we have a great Reinsurance business which has grown very strongly over the last number of years. Maybe to stand back, as I said, just on our overall portfolio, like it's -- as I said, it's the U.S., it's Canada, it's Europe, it's reinsurance. And 62% of our earnings at the moment are in capital-light and then 28% are in capital supported. And that capital-supported business is mostly our Reinsurance division and then the annuity business that we write, which is mostly in the U.K.

Now because of just the growth that we see in the U.S., the capital-light businesses will grow faster than the capital supported. So that will grow to 72% of earnings within the next planning period. But that capital-supported business is still very important for us. It gives us great diversification across the portfolio. We earn very good returns on it. I think the great thing about our Reinsurance business is that it's a global reinsurance business. Obviously, the reinsurance market is huge through the support it gives to insurance companies, large corporates and even just deals that to do within themselves.

It's a share of our portfolio, which means we can sort of shop around, if you like, and go to areas where we like. And we're not -- it's only ever going to be a share of our earnings. So we're not looking to aggressively target growth there. So that means we're very selective about the areas we go after and the risks that we go after. And that's why I think our underwriting experience and returns on that business are so strong. And what we've seen in the Reinsurance business is that over the last few years is a move to more, what we call, capital support products.

So that's where we're working very hard with insurance companies to help them get their regulatory capital closer to their economic capital. I think we've been one of the most successful players just in growth in that segment in the last few years. And that business has done very well for us and contributed well to earnings. And I think the key to success there is it's very much a relationship business, like we have a team.

Maybe it's because we're part of an insurance company, we have a team that just understands very much the needs of insurance companies that go all around the world meeting, building up relationships and just putting themselves in a position to offer those capital support type solutions. So even though the capital supported is going to become a lower percentage of our overall earnings, it's not that we're -- it's not that it's not growing. It's just not growing as quick as the capital-light, and it's a great diversifier in our overall portfolio and gives very good returns.

Okay. Let's talk a bit about capital. You just increased your NCIB. So you've got more capacity there and obviously, a very solid capital position that you're sitting on with the LICAT. Maybe talk about your priorities. It sounds like it's not going to be any different from your predecessor, but just remind investors where your priorities are and why the decision to raise the NCIB?

Yes. I suppose, yes, the short answer, the decision to raise that is just because we are in such a strong capital position at the moment. Like there our -- like just going back to our geographies first on our markets, we've mature positions in all of our markets and our capital generation is very high. So like our capital generation is if you start at the top is 100% of our base earnings. We have quite a flat structure. All of that money flows up from the businesses into Lifeco.

And we typically set 20% of that aside to support those capital-supported businesses. So of that 100%, 20% gets invested back into new business. Our dividend payout ratio target is 45% to 55%. So think of the next 50% then going to dividends and then that leaves 30% surplus. So that's there if the right M&A opportunities are there. And obviously, we've done very well on M&A in the last few years, both in the U.S. and smaller wealth acquisitions here in Canada and some in Europe as well.

But then if there's no imminent M&A activity, we're not going to be sort of hoarders of cash, and that's the motivation by the -- for the NCIB that we see at the moment. And I suppose just on our overall capital position, our target LICAT ratio is 125%. We're up at 130% or a little above that at the moment. We've been reducing our debt. So our leverage ratio is coming down. And we're sitting on, I think, over $2 billion of cash at the moment. So even with this buyback of $1 billion at the moment, it's actually quite modest relative to our overall capital position. And again, if the right M&A activity comes up, which we would love to see in the U.S., we're still in a position where we could finance that.

Okay. I'd like to ask you about the efficiency ratio as well. It looks like you're targeting sub 50% currently at just under 57%. You did talk about wanting to invest in Canada Life for some growth initiatives there. And then you're obviously investing in Empower for sure, Wealth side in particular. And then Europe, maybe also, it's not quite the expense push that would necessarily change the expense ratio meaningfully. So how do you sort of look at that in the context of wanting to get that expense ratio down versus your -- or your efficiency ratio down versus your wanting as to keep investing in your...

Yes. Look, obviously, it's very important to be efficient and have your expense ratio in a good position. But it probably comes more just from the strong market positions that we have and that expense target actually mirrors in a lot of ways our ROE target. So we like our markets. We're in very strong positions. We have good scale positions. And a lot of those can grow without capital. So that's what drives up the ROE. But similarly, it's mostly growth that actually drives the improvement in the expense ratio.

So we will be investing for efficiencies, but a lot of that reduction just in the expense ratio is just going to come from the scale positions that we have and growth -- and revenue growth in those markets that's just going to outpace cost. On the efficiency side then, like as you mentioned, we are investing in Canada just to get better positions on the Wealth side and the Retirement side. So that strengthens our market positions, but will allow for savings as well. And then I think the big thing that's coming on the expense side is AI.

Like there's already a lot of AI in financial services and insurance companies that people are not seeing. So if you take call centers, maybe, for example, like obviously, AI isn't doing conversation and interactions with customers yet, but all of the preparation of material and information to help a call agent is being done on AI. AI is monitoring calls and in some cases, given live coaching on calls. And then all of the wrap-up at the end, AI is doing as well.

And then another dynamic within financial services on the operational side, like we move around huge amounts of information and text language type information, and there's a lot of reasoning needed within that, that only people have been able to do up to now, AI can now do that. So what we're starting to see, and we've done it already is full automation of core operational processes. And that is only going to get bigger. I think maybe within 60 months, all core operational processes will be fully AI automated within financial services.

So if you think of that, like this 58% to 50% on the efficiency side is a very actual modest target, and we've probably -- maybe we're not being ambitious enough in what we've set out on that. And then I think the other thing that's just fantastic about that, and maybe it goes back to just all of that, the organic growth, like I suppose this is great from an efficiency point of view, but where it's really going to be fantastic is just the customer experience that's going to come from it as well because it's going to be quicker, it's going to be simpler, it's going to be a lot more intuitive.

And really, what we're trying to do as a business is get people to save for retirement or put more money aside for protection. And people know themselves they should be doing this. We're not trying to sell people products that they know are bad for them or anything like that. People know that they're good for them. But for whatever reason, people get a little bit dawn to buy it, they tend to procrastinate. So the more we can make just our products simple, quick, intuitive, the more people are likely to take them. And you'll still need the humans, as I said, either side and advice will continue to be critically important because people need the energy to make that jump. So we think AI in a way, can make us a more human and easy business for customers.

Okay. I'd like to turn it over to you, David. Any final thoughts, key messages for investors you'd like to leave?

No, just I'm delighted to be in position as since 1st of July. I've relocated from Dublin to Toronto. I'm having a great time here. I think it's a fantastic city.

Until the winter hits.

I've been here during the winter as well. And we have winter in Europe as well. So it's not -- that's not completely new to me. No, but I love it here. And Canada is an amazing country and country with fantastic potential. So it's just it's -- I have to pinch myself sometimes that I have the job here. So I'm just loving it.

Awesome. Thank you very much for joining us, Dave, and all your great insights. Really appreciate your time, and thanks for coming.

Okay. Thanks a lot, Mike.

Yes. Thank you, David.