Q1 2022 Power Corporation of Canada Earnings Call

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Power Corp, Q1, 2022 earnings call. At this time, all participants are in a listen-only mode. Afterward, we will conduct a question and answer session, and if you would like to ask a question during that time simply press star one on your telephone keypad. If anyone should require assistance during the conference, please press star zero.

This time, all participants are in a listen only mode. We will conduct a question and answer session and if you would like to ask a question during that time simply press star one on your telephone keypad. And once you get quite assistance during the conference. Please press Star zero.

We will conduct a question and answer session and if you would like to ask a question during that time simply press star one on your telephone keypad. And once you get quite assistance during the conference. Please press Star zero.

And once you get quite assistance during the conference. Please press Star zero.

Operator: Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, Jeffrey Orr, President and Chief Executive Officer. Please go ahead, sir.

I'd now like to hand, the conference over to your speaker today Cathy. President and Chief Executive Officer. Please go ahead Sir.

President and Chief Executive Officer. Please go ahead Sir.

Robert Jeffrey Orr: Thank you very much operator, and welcome everyone to our results call for the first quarter of 2022.

I will turn your attention to the caution versus forward-looking statements and non-IFRS statements on pages two and three of the presentation.

You will see that with me on page four is Greg Tretiak, Executive VP and Chief Financial Officer of the Corporation. And you do have on page six of the presentation various documents related to Power Corp, Great West Life IGM and GBL that you can make reference to regarding recent presentations and our quarterly results.

As Greg <unk> Executive VP, and Chief Financial Officer of the Corporation.

And you do have on page six of the presentation.

Various documents related to power Corp, Great West life I G. M N G. P. L. But you can make reference to regarding recent presentations and our quarterly results.

Turning then to page seven, I would just characterize the quarter overall it was actually a strong quarter. We're on track in terms of our business plans. The underlying earnings of those businesses that are earnings driven were actually very solid. There's a fair bit of noise in the statements with GBL and with some of our assets at the power level but underlying earnings were strong. Markets, overall, don't need to tell anybody on this call, in a downfall at this point. That hurts us in the sense that we have a lot of our fees that are attached to market levels across our businesses. We're happy with that business model, it helps overtime, but you but you also live through it when you go through a downturn in markets, which we're going through right now and that doesn't put us off at all in terms of our strategies or what we're trying to pursue, but it does create some volatility in the earnings. It also affects some of our seed capital and some of the businesses where we do have investments in seed capital.

The underlying earnings of those businesses that are earnings driven.

Actually very solid fair bit of noise in the AR in the statements.

G B L and with some of our.

Our assets at the power level.

Underlying earnings were a strong.

Markets overall don't need to tell anybody on this call.

And a N a downfall at this point that hurts us in the sense that we have a lot of our fees that are attached to market levels across our businesses, we're happy with that business model. It helps overtime, but you but you also.

Lived through it when you go through a downturn to end markets, which we're going through right now and that doesn't.

Let us off at all in terms of our strategies are what we're trying to pursue them, but it does create some volatility in the earnings. It also affects some of our seed capital and some of the businesses, where we do have investments in seed capital.

The big story of course is interest rates that are coming up. Over time that will help Great West Life business. Great West Life runs a pretty matched book, but as we write business on the insurance side of the business at higher rates that will be good for returns. Obviously, we're all like everyone else, hoping that authorities can raise interest rates without throwing the whole economy into a recession and still tame inflation, and we'll wait to see how they do on that front.

At higher rates that will be good for returns.

Obviously, we're all like everyone else, hoping that authorities can raise interest rates without throwing the whole economy into a recession and still tame inflation, and we'll wait to see how they do on that front.

With that, I'll just also point out on the opening page on seven, we remained active in the second bullet point there with a number of announcements during the first part of the year including some transactions at the GBL level, and we were active in our share buyback program, which we announced the start of with 1.1% of the shares having been purchased year to date. 

I'm, putting some transactions at the JBL level.

And we were active in our share buyback program, which we announced this started with a one 1% of the shares having been purchased year to date. So.

Excuse me.

Now, I will turn to page eight. These are numbers you all know. Our business,  when you get in times like this, it really underlies and underscores the need for advice and for well-constructed portfolios and that's what we do across our business, whether it's on the individual side or it's on the group side and so it plays into our hand, it underscores the need that people have. When you have markets going straight up it's easy and people can get pretty confident about what they're doing. When they get into periods of risk, the value advice becomes even more important. I'm going to turn it to Greg Tretiak to cover the next few pages and Greg over to you.

You know.

These are numbers you all know our business when you when you get in times like this.

Really underlies and underscores the need for advice and for well constructed portfolios and that's what we do across our business, whether it's on the individual side or what's on the group side and so it plays into our hand, it underscores the need that people have.

Well you know when you have markets going straight up it's easy and people can can get pretty confident about what theyre, telling me to get into periods of risk the value advice becomes even more important I'm going to turn it to Greg <unk> to cover the next few pages and Greg over to you.

Gregory Dennis Tretiak: Thank you, Jeff. And I'm going to go straight to page nine, I guess it's the first page here and the only point there is the board did declare a dividend yesterday of 49 and a half cents, and with that, I'm going to go to the more detailed slide on the results on page 10.

And I'm going to go straight to page nine I guess is the first page here and are the only point. There is we did Oh the board did declare a dividend yesterday of <unk> 49, and a half since and what's.

That aren't going to go to the more detailed slide on the results on page 10.

And looking at the right-hand panel, as you alluded to earlier on Jeff in your remarks, the earnings at are publicly traded operating companies were strong in the quarter. You can see Life Co. at $5.39, which is up about 9%.

Looking at the right hand panel.

As you alluded to earlier on Jeff in your remarks.

The the earnings that are publicly traded operating companies were strong in the quarter.

You can see life co at $5 39, which.

But up about nine 9%.

IGM had a record first quarter and they were up about 8% with their 135, you did speak of noise in the earnings, and at JBL actually, their cash earnings were up 25%. They were about $28 million at least our share of that was $28 million versus 22 in the prior quarter. And there was some noise obviously from the fair market value of web help going up in this JBL portfolio and with the fair market value of that asset going up there is a liability associated with the non-controlling interests, who have foot rights, and in the quarter that was about $43 million negative so there's a fair amount of noise from JBL's number there. 

Cash earnings were up 25% they were about $28 million at least our share of that was a $28 million versus 22 in the prior quarter.

And the Hum.

There was some noise obviously from the.

The fair.

Fair market value of web help going up in this JV L portfolio and with the fair market value of that asset going up.

there is a liability associated with the non-controlling interests, who have foot rights, and in the quarter that was about $43 million negative so there's a fair amount of noise from JBL's number there. 

There's a fair amount of noise from J P. LS number there all in all though you can see.

All in all though you can see from the publicly traded companies 686 versus 655, so a good strong quarter in terms of earnings. The other area where there was a significant amount of noise with some of our alternative asset management platforms, and that was principally generated by the activities in our China Equity fund, which is managed out of Shanghai under the auspices of power sustainable capital. And there you can see that there was a -$86 million, of that 70 million was from losses realized in the portfolio during the first quarter, and those losses are on a realized basis. These are available for sale securities in accounting language, so only on realization do we book anything through the P&L.

The other area, where there is a significant amount of noise with some of our alternative asset management platforms and that.

That was principally generated by the activities in our China.

Equity fund, which is managed auto Shanghai with under.

Under the auspices of power sustainable capital.

And there you can see that there was a negative $86 million of that 70 million was.

From losses realized in the portfolio during.

The first quarter and those losses are on a realized basis. These are available for sale securities.

In accounting language, so only on realization do we book anything through the P&L.

You can see in the previous year, there was 255 of such gains and earnings, and of that 225 had come from China when the markets were performing and really strong last year at this time.

There was $2 55 of such.

Such gains and earnings and of that.

225 had come from China, when the markets were performing at really strong last year at this time.

The next item, China asset management, a good quarter again with China asset management. The $13 million is the same as prior year, however, there was a seed capital mark in the quarter of about a $2 million, so their earnings were up in the quarter as well. In the corporate operations for those of you who have dug through the MD&A, you'll find that as far as our operating expenses they were about $36 million in the quarter and that's spot on with where we basically got our run-rate to after achieving our $50 million in cost savings last year. So that rounds out I think the comments I'd make on this particular page, and Jeff mentioned, obviously the buyback in the opening comments and you can see that our average shares for the period are 675.8.

The next item China asset management.

A good quarter again with.

With China asset management.

The $13 million is the same as prior year. However, there were some seed capital Mark.

In the quarter.

That's about a $2 million so they're there earnings were up in the quarter as well.

In the corporate operations for those of you who are have dug through the MD&A, you'll find that as.

As far as our operating expenses they were about $36 million in the quarter and that's spot on with where we are basically got a run rate to after are achieving our $50 million in cost savings last year. So that rounds out I think to the comments I had.

On this particular page and Jeff mentioned, obviously the buyback in the opening comments and you can see that our average shares for the period or 675.8.

Go to page 11 quickly, and after three weeks of AGMs and analyst calls, I don't know that there are any surprises here. You would have certainly seen most of these marks through the publicly traded companies for sure.

After three.

Three weeks of Atms and to analyst calls so I don't know that there's any surprises here you would have a.

Certainly seen most of these marks through the publicly traded.

Companies for sure.

I'll just make a couple of comments on geography here because in the later slides, we have more color on each one of these investments and holdings.

In the later slides, we have more color on each one of these.

Investments and holdings.

In the cigar portfolio, of course, it's well simple, and last week at the IGM meeting they had recorded a reduction in their evaluation of a well symbol simple at about 20%, and at our level at PCC for PCC direct holding, that was about 22 cents on the $49.92 net asset value per share number that we have there.

Meeting is a had.

Recorded a reduction in there.

<unk> of our well symbol simple at about a 20% and.

At our level at our PCC for PCC direct holding not so about 22 cents.

On the.

$49 92.

Hum.

Net asset value per share number that we have there.

Power sustainable, the China Equity fund is in that number and it's a little over 50% of that number, and of course it reflects the recent declines in China. And then I think the other one to note is in the standalone businesses and we have a slide on this later too which is Leon and certainly Mark [inaudible] last week spoke about his business constructively, especially the delivery and the supply chain. So with that, Jeff I turn it back to you.

Trying to equity fund is in that number and it's a little over 50% of that number and of course it reflects.

The recent declines in China, and then I think the other would've note is in the Standalone businesses and we have a slide on this later too which is legal and.

Certainly mark but art.

Last week <unk> spoke about his business constructively, especially the delivery and the supply chain, so with that Oh, Jeff I'd turn it back to you.

Robert Jeffrey Orr: Okay, thank you, Greg. The next, I guess pages 12, 13, and 14 I will skip over. Most of you on this call will be well aware of our strategy. Just to remind you, we do keep a few pages in our quarterly earnings deck. Quite a lot of people, who are especially new people to the group and new investors, will go to the latest quarterly result to see what's going on and so having some of the standard pages on our strategy puts everything in context, but for those of you who follow us regularly, it's old hat, but that's why they are there.

The next.

I guess pages 12, 13, and 14 I will skip over most of you on this call will be well aware of our strategy just to remind you. We do keep a few pages in our quarterly earnings deck.

Quite a lot of people, who are especially in new people to the group and new investors and we will go to the latest quarterly result to see what's going on and so having some of the standard pages on our strategy puts everything in context, but for those of you who follow us regularly.

It's old hat, but that's why they are there.

On page 15, just a few more comments on the earnings growth at Great West Life and IGM. As I said, a good strong earnings growth at Great West Life and the integrations are on track across the board. I'll talk more about that about that in a moment. Earnings were a little bit more from Europe and the reinsurance business as opposed to Canada and the US. There's nothing there of any kind of a theme to that. It's just simply the way that the earnings come out in any given quarter, but we believe that we're on track with all of our strategies at Great West Life Co.

As I said, a good strong earnings growth at Great West life and it was in the integrations are on track across the board I'll talk more about that about that in a moment.

Earnings were a little bit more from Europe , and the reinsurance business as opposed to Canada and the U S.

There's nothing there of any kind of.

Got it.

Athene.

Our theme to that is just simply the way that the earnings come out in any given quarter, but.

But we believe that we're on track with all of our strategies at Great West Lifeco.

IGM had a strong quarter. The first quarter is one that I find the street tends to overestimate kind of consistently. I might go back and do a study on that, I'm pretty sure I'm right. Fees are collected on a daily basis, compensation and trailers are paid on a monthly basis, there are about two less days in the first quarter. It sounds silly, but that's like several million dollars that can account for a few cents. And then there seed capital, of course, which [inaudible] Mckenzie, so when you've got a down market you get a mark on the seed capital. So that accounts for most of the noise, but basically, from our perspective, it was a strong quarter from an earnings point of view.

<unk> had a strong quarter. The first quarter is one that I find the street.

Tends to under.

As our overestimate kind of consistently like go back and do a study on that I'm pretty sure I'm right.

Fees are collected on a daily basis.

Compensation and trailers are paid on a monthly basis, there's about two less days in the first quarter. It sounds silly, but that's like several million dollars that can account for a few cents.

And then there is seed capital of course, Patricia Mckenzie, So when you've got a down market you get a mark on the on the seed capital.

So that accounts for most of the noise, but basically it.

It was.

In terms of the flows at IGM and the whole industry now, what you'll see from the numbers and not surprisingly given the volatility in the weak markets, you're getting weaker flows into investment products, but IG Wealth continues to progress and we're really pleased with the strength of that franchise. We certainly telegraphed it last year. We thought that there was momentum building and we certainly saw that with continued strong flows relative to the industry overall at IG Wealth, so that's a comment on those two companies. 

Right.

Pleased with the <unk>.

Strength of that franchise.

Telegraphed it last year that we thought that there was momentum building.

We certainly saw that with continued strong flows relative to the industry overall at <unk>. So that's a comment on those two companies a quick comment on the brand.

A quick comment on the brand-I'm on page 16 now- we the Canada life brand not that long ago and in a recent survey of the value of brands it was ranked in the top five brands in terms of value and that's the first time an insurance company has ever been in that position. We're really pleased with the way that we have consolidated the three brands into one and the rollout of that brand and we look for more brand equity being built in the future around Canada Life.

I'm on page 16 now.

And also the Canada life brand not that long ago and in a recent survey of the value of brands. It was ranked in the top five brands in terms of value and.

That's the first time, an insurance company has ever been in that position really pleased with.

The way that we have consolidated the three brands into one and the rollout of that brand and we look for more brand equity being built in the future around Canada life.

On the right-hand side, this is a JD Power Investor Survey and it just points out IG Wealth is doing well and it underscores the comment I just made. It's the highest that I've seen IG Wealth in a long time from an Investor survey, in this case, higher than the full-service branch or full-service investment banks owned by the big five banks in the industry average overall, so it's just another little touchpoint and evidence point of the progress being made at IG Wealth.

This case higher than.

And then the full service branch or full service.

Investment banks.

And by the Big five banks in the industry average overall, so it's just another little touch point, an evidence point at the progress being made at <unk>.

Page 17, obviously, we've been talking a lot about Empower, we're extremely excited about Empower. The quarter was affected by lower markets. It was also affected by a buildup of some expenses on the sales side on the retail side. We are rolling over and integrating the tools from personal capital into Empower's DC business, but also its retail business where they have retail clients that they bring over from the DC platform.

Obviously, we've been talking a lot about empower we're extremely excited about empower.

The quarter was affected by lower markets was also affected by a buildup of some expenses on the sales side on the retail side, we are rolling over and integrating the are integrating the tools from personal capital into empowers DC business, but also it's retail business.

Where they have retail clients that they bring over from the DC platform.

There was a big buildup of sales staff during the first quarter advisors in effect, and without the corresponding revenue so that impacted the business. And I think the company made the point during their call, but just to repeat it, the synergies on the mass mutual transaction are going to be a little bit barbelled. When you first have a transaction closed you have got a number of initial synergies related to staff and other expenses you can save and then you run on multiple systems and the employers and the employees of Mass Mutual migrate in waves. There are eight waves I believe are done over time, and it's not until you migrated everybody that you can turn all of those systems off, and you've got a lot of payments you're making to Mass Mutual for keeping the systems alive. So the synergies tend to be barbelled, but the $160 million that was announced by Great West Life and Empower, the company is right on track with the progress that's being made there.

And without the corresponding revenue so that impacted the business and I think the company made the point during their call, but just to repeat it.

And the synergies on the mass mutual transaction are going to be a little bit barbell. When you first have a transaction closed you haven't got a number of initial surveys related excuse me synergies related to staff and other expenses you can save and then you run on multiple systems and the.

Employers and the employees of mass mutual migrate in waves that there are eight waves I believe.

<unk> done over time, and it's not until you migrate and everybody that you can turn all of those systems off.

And you've got a lot of payments, you're making to mass mutual for keeping the systems alive. So the synergies tend to be buyer belt, but the $160 million that was announced by great West life and empower the company is right on track with the progress that's being made there.

And as I mentioned, the really exciting thing is we're starting to take the personal capital tools and roll them into the Empower DC platform and the Empower retail platform, and they're starting to get turned on which they seem pretty excited about that.

Okay, on page 18 about the retail business of Empower, you can see that on the left-hand side of the page with the acquisition of Prudential, $17 million Americans in our plans, 1.4 trillion US in those plans, about 6% of that is eligible to roll into retail accounts every year by people who changed jobs, who retire, and then you've got the ability to go out and reach into their individual savings and investing accounts that are outside of the plan, and that drives a big potential retail opportunity that we are trying to take advantage of and serve our clients in a more complete way. On the right-hand side of the page and the dark blue, you see the buildup of our efforts in that regard going from $5.5 billion up to 25 billion at the end of Q1 2022. And then in the light blue at the top, you see the addition of the personal capital direct-to-consumer business that we purchased and you'll see we now have a business, which at the end of the first quarter's retail advising wealth management business of $48 billion and you'll see even in the first quarter the markets were down and we had growth in the assets under advisement there. So you can understand there were good strong net flows through the quarter in those businesses.

Power.

You can see that on the left hand side of the page now with the acquisition of Prudential $17 million.

Americans and our plans one four.

<unk> four trillion U S and those plans about 6% of that is eligible to roll into retail accounts every year by people who changed jobs.

Who retire and then you've got the ability to go out and reach into their individual savings and investing accounts that are outside of the plan and that drives a big potential retail opportunity.

We are trying to take advantage of and serve our clients in a more complete way on the right hand side of the page and the dark Blue you see the buildup of our efforts in that regard.

Going from $5 5 billion up to 25 billion at the end of Q1 2022, and then in the light Blue at the top you see the addition of the personal capital direct to consumer business that we purchased and you'll see we now have.

Business, which at the end of the first quarter's retail advising wealth management business of $48 billion and you'll see even in the first quarter of the markets were down and we had growth in the assets under advisement. There. So you can understand there were good strong net flows through the quarter in those businesses.

We've said in Great West Life on the roll up of the DC platforms that we've been doing, if all we do is create a bigger more profitable DC business, those transactions will be successful strategically and financially. If we can really execute on the wealth management strategy, which will take longer to execute and we have to we have to prove we can do it, then those transactions will have been really terrific value creators for the company.

If all we do is create a bigger more profitable DC business those transactions will be successful strategically and financially. If we can really execute on the wealth management strategy, which will take longer to execute and we have to we have to prove we can do it.

Then those transactions will have been really.

Terrific value creators for the company.

With that, I will turn to page 19. Greg mentioned the point at the top, and I just wanted to emphasize the underlying--from GBL's point of view, they look at cash earnings and NAV. They're not particularly earnings-focused with their own shareholders, but we end up reporting their earnings. The cash earnings were up 25% and they are involved in their own buyback program. And also, their strategy in part is to pivot to more private investments in a number of hydro sectors, including healthcare and they invested $1.75 billion in two private healthcare businesses after the end of the quarter. They were both announced in April. I think 25% of their NAV is now private as opposed to public as a consequence of those investments and what they've been doing in the last couple of years, continued good progress at GBL.

Greg mentioned the point at the top and I was just wanted to emphasize you know the underlying from from <unk> point of view, they look at cash earnings and NAV.

They're not particularly earnings focused with their own shareholders, but we ended up reporting their earnings but the cash earnings were up 25%.

And they are involved in their own buyback program and.

They are also their strategy in part is to pivot to more private investments in a number of hydro sectors, including healthcare and they invested $1 75 billion and two private health care businesses.

After the end of the quarter. They were both announced in April I guess, 25% of their NAV is now private as opposed to public.

As a consequence of those investments and what they've been doing in the last couple of years continued good progress it at GBM.

China asset management, I think you've seen most of this slide. The one thing I will point out is under the first bullet point and if you're on the IGM call they would have talked about it as well. China announced subsequent to year-end, the rollout of their third pillar of their pension system to remind people, first pillar is government provided pension, second pillar is employer-based pensions and they've both been in existence in China, and the third pillar is tax assisted individual savings. So think of RFPs in Canada, think of investment IRAs in the US. And that has not existed here too for China, we think it's going to really open up the market. We think companies like China AMC are going to benefit hugely and they announced rules to roll that out. It will take some time, but they've got a number of pilots going on. We think there are 1 billion individuals who could potentially make contributions. So this is a big deal long-term to the prospects for China AMC.

<unk> seen most of this slide.

Excuse me.

The one thing I will point out.

The first bullet point and if youre on the AGM call you would have they would have talked about it as well.

China announced.

Subsequent to year end.

The rollout of their third pillar of their pension system sort of remind people first.

Our first pillar is government provided pension second pillar is employer based pensions and those both been in existence in China and the third pillar is tax assisted individuals' savings. So think of Rfps in Canada I think of.

Investment Iras and the unit in the U S.

And that has not existed here two four in China, We think it's going to really open up the market. We think companies like China AMC are going to benefit hugely and they announced rules to roll that out it will take some time, but they've got a number of pilots going on.

Is it a 1 billion individuals who could potentially make contributions. So this is a big deal long term to the prospects for China AMC.

On page 21, staying on the China theme, Greg talked about the fact that we had some impairments in our China portfolio. I think the China market, the index was down 20% in the first quarter. I think that's the first quarter, I don't have it in front of me. It might have been the first four months, but down big time. You can see it on the chart and of course, the way we account for that, if there are any realizations or any impairments we don't fully market to market, but those flow through the P&L and so we had some losses as Greg mentioned in the first quarter. But this gives you the history of our initial $50 million investment in 2005. We've taken dividends back to portfolio with some $900 million at the end of the year. It's down from there of course today but this has been a great return for Power Corp. It's also now strategic in that we're bringing third-party investors in and the track record of the team, you can see it referred to above 5% in excess of its benchmark. That is both through security selection, sector selection, and asset allocation. They will go to cash. They have an active asset allocation methodology, so they'll go to cash when they think that the market is overheated.

<unk> had some.

Impairments in our China portfolio I think the I think the China market. The index was down first quarter, 20% in the first quarter I think that's the first quarter I don't have it in front of me it might have been the first four months, but down.

Big time, you can see it on the chart and of course, the way we account for that if if there are any realizations or any impairments.

Fully market to market, but those flow through the P&L and so we had some losses as Greg mentioned in the first quarter, but this gives you the history of our initial $50 million investment in 2005, we've taken dividends back to portfolio with some $900 million at the end of the year, it's down from there of course today.

But this has been a great.

Return for power Corp. It's also now strategic in that we're bringing third party investors and.

And the track record of the team you can see it referred to above 5% next year in excess of its benchmark that is both through security selection sector selection and asset allocation. They will go to cash.

They have an active asset allocation methodologies. So they'll go to cash when they think that the market is overheated.

Moving forward, I won't spend any time on 22, you know all of that. It's there kind of as a standard boilerplate on our strategy. On 23 I'll just point out that when you look at our alternative asset management businesses and you focus not on the GPs on the business, but on the seed capital that we have invested which we have about $1 billion nine in AV supporting those strategies, you can break them down in terms of how the earnings get realized through overall group's capital appreciation strategy, so that would be private equity, venture capital, and the China portfolio. And we will tend to realize those gains as they are incurred. The overwhelming way we would recognize the gains is when there's a disposition. There can be impairments, but in the ordinary course, it's going to be episodic when we realize gains on that. And then you've got income strategies at the bottom of the page, private credit, royalties, energy infrastructure, and real estate, and you'll see the targeted returns as well. So just a little bit more on our capital underpinning the seed capital in our commitments and how the earnings will emerge.

Point out that when you look at our alternative asset management businesses and you focus on the not.

Not on the GPS on the on the on the business, but on the seed capital that we have invested which we have about $1 billion nine in any EV.

<unk> those strategies you can break them down in terms of how the earnings get realized.

Through Q2 overall group's capital appreciation strategy, so that would be private equity venture capital and the China portfolio and we will tend to.

Realize those gains as they are incurred over overwhelming our way we would recognize the gains is when theres a disposition there can be impairments, but but but in the ordinary course, it's going to be episodic when we realize.

When we realize gains on that and then you've got income.

Strategies at the bottom of the page private credit royalties. <unk> infrastructure and real estate. See the targeted returns. As well, so just a little bit more on on our part our. Capital underpinning the seed capital in our commitments and how the earnings will emerge.

<unk> infrastructure and real estate.

See the targeted returns.

As well, so just a little bit more on on our part our.

Capital underpinning the seed capital in our commitments and how the earnings will emerge.

And we turn to the alternative asset management business as a business, i.e. the GP, the asset managers themselves where we are looking to earn recurring fees, and you've got in that at the top of the table on the left you've got cigar in the first quarter $34 million in management fees. Not quite a breakeven. There's a little bit of noise in the $38 million on the tax side, actually closer to breakeven on a run-rate basis in the quarter. And then you've got the net carried interest, but we look at that third line kind of how are they doing on fees, less expenses, and then the carry can go up and down depending on realizations or marks, and then you've got the same thing for power sustainable capital.

And you've got in that at the top of the table on the left you've got cigar.

In the first quarter $34 million in management fees.

Not quite a breakeven theres a little bit of noise in the 38 million on a tax either closer to breakeven and then on a run rate basis in the quarter and then you've got the net carried interest, but we look at that that third line kind of how are they doing on fees less expenses and then the carry can go up and down depending on realizations. Our marks and then you've got the St.

For power sustainable capital.

On the right hand side, I think you've seen these charts before, up to 19 billion in funded and unfunded AUM. The fee paying capital is not 19, you've got it on the last bullet point, it's 11.4. As you're probably aware, in these businesses, you don't get paid on the appreciation of the asset value, you get paid on the initial commitments, and in some cases, you get paid on uncommitted, but for the most part, you get paid on committed capital, not uncommitted capital.

Capital is not 19, you've got it on the last bullet point to 11, four as you're probably aware in these.

Businesses, you don't get paid on the appreciation of the asset value you get paid on the initial commitments and in some cases, you get paid on uncommitted, but for the most part you get paid on committed capital not uncommitted capital.

On the bottom right-hand side, you will see the very substantial progress that we've made and the growth of these platforms has come from parties other than Power. In fact, we've reduced our commitments to seed capital for various sales, which is the strategy that we explained to all of you and which we're executing.

The progress that we've made and the growth of these platforms has come from parties other than power in fact, we've reduced our commitments to seed capital for various sales, which is the strategy that we explained to all of you in which we're executing.

And then just very quickly on page 25, second bullet point continued with some good fundraising in the first quarter, $763 million year to date, including the end of the first quarter and you get the breakdown by strategy on the bottom of the page.

On page 26, Leo is one of our standalone businesses in market value on technology companies of course come off for some period of time right now companies that are in development, where they got revenues, but no earnings for the foreseeable future, interest rates are going up, those get discounted back at a lower level and so the market has been turning away from those investments and they've sold off, that's been the case with Leo in terms of its market value. The business, we think is going really well. I think it's a very strong business. At some point, we will look to be realizing value, but at this point, our strategy is to make sure that the company continues to succeed and we realize the appropriate value and they are doing great progress and really continuing to build up their business. So we're pleased with the progress at Leo.

Leo.

It's one of our.

Standalone businesses in market value on technology companies of course come off for some period of time right now companies that are in development, where they got revenues, but no earnings for the foreseeable future interest rates are going up, but let's get discounted back at a lower level and so our market has been turning away from.

Those investments and they've sold off that's been the case with Leo in terms of its market value.

The business, we think is going really well.

I think it's a very strong business at some point we will.

Look to be realizing value, but at this point our strategy is to make sure that the company continues to succeed and we realize the appropriate value and they are doing great progress and really continuing to build up their business. So we're pleased with the progress.

Yeah.

Page 27 talks about buybacks, I think I mentioned earlier in the presentation, we bought back 280 million shares year-to-date, including 105 million subsequent to the quarter-end. We've got $1 billion and two in terms of available cash above the minimum two times fixed charges that we use as a bit of a guideline. IGM has been doing its own buyback and NGBL is also active in doing buybacks.

Bought back 280 million shares.

Year to date.

105 million subsequent to the quarter end, we've got $1 two in terms of available cash above the minimum two times fixed charges that we use as a bit of a guideline ITM has been doing its own buyback and NGL is also active in doing and doing buybacks.

And then finally, before I roll it up to follow our discount here, we're on a a dogged pursuit to continue to simplify and as we do so and continue to create value, get more people who understand what we own, we are convinced that that discount can narrow wind from where it is. It won't go in a straight line, they never do in the market. But we think we've got lots of room to create value through narrowing of the discount. And on page 29, you've seen before, it is a placeholder for overall our strategy. And with that, operator, I will conclude my remarks, and ask you to open it up to questions from people that are on the line. Operator?

We're on a a dogged pursuit to continue to simplify and as we do so and continue to create value.

More people, who understand what we own we are convinced that that discount can narrow wind from where it is it won't go in a straight line they never do in the market.

We think we've got lots of room to create value through narrowing of the discount and page 29, you've seen before is a placeholder for overall, our strategy and with that operator, I will conclude my remarks, and ask you to open it up to questions from people that are on the line operator.

Operator: Thank you, sir. At this time, I would like to remind everyone in order to ask a question, press star one on your telephone keypad. Again, that's star one to ask a question. We have your first question from Graham Ryding with TD Securities. Your line is open.

To ask a question press star one on your telephone keypad again, Thats star one to ask a question.

We have your first question from Graham Ryding with TD Securities. Your line is open.

Graham Ryding: Hi, good morning, or good afternoon. Just maybe some color on given the volatility of the markets does that sort of change your outlook at all for fundraising on your alternative platforms in the near-term headwind, perhaps? And then maybe some color on what are you looking to, what funds, what strategies are sort of activity fundraising this year, and do you have any targets out there. 

Good morning.

Just maybe some color on given the volatility of the markets does that sort of changed your outlook at all for fundraising on your alternatives platform.

But in the near term headwind, perhaps and then maybe some color on what are you looking to.

What funds what strategies are sort of activity fundraising. This year do you have any targets out there.

Yes so. It's a very good question, one we're asking ourselves Graham. Generally speaking when markets are as strong as you know people are putting less capital to work it will be interesting to see on the private side, whether that's true or whether we continue to see a lot of flows into private markets. Most of our strategies with the exception of China. Or in private.

It's a very good question, one we're asking ourselves Graham.

Generally speaking when markets are as strong as you know people are putting less capital to work it will be interesting to see on the private side, whether that's true or whether we continue to see a lot of flows into private markets. Most of our strategies with the exception of China.

Or in private.

Robert Jeffrey Orr: Yes, so it's a very good question, one we're asking ourselves, Graham. Generally speaking, when markets aren't as strong as people are putting less capital to work, it will be interesting to see on the private side whether that's true or whether we continue to see a lot of flows into private markets. Most of our strategies with the exception of China are in private securities. So we're asking ourselves the same question, it's a risk that we get into really weak economic conditions.

So we're asking ourselves the same question, it's a risk that we get into really weak economic conditions.

I think that you want to be putting money to work and historically in total private equity-type strategies when markets are weak, but that doesn't mean investors will necessarily act that way. I do think there'll be some uncertainty in the short term on what's going on in China. So that's a bit of a headwind in terms of fundraising there even though we've got a great track record.

<unk> bear, even though we've got a great track record.

So I guess you're asking me a crystal ball question and I'm not quite sure, we are asking ourselves the same question. It doesn't change what we're going to do. If we end up with choppy markets for a period of time, we'll just navigate through them and drive on with our strategy. Fundraising is going on broadly. At power stable capital we launched a new sustainable AG fund, so there's active fundraising going on right there. Cigar across platforms is fundraising back to power stable capital, they're looking for more assets to roll into the infrastructure fund. So it is pretty broadly based. I don't think I've got any particular comments as to where there's a focus and we'll wait and see how it goes. Sorry, I can't be more specific but--

We're going to do.

Well.

Move through the.

We ended up with choppy markets for a period of time would just navigate through them and drive on with our strategy fund raising is going on broadly.

Launched at power stable capital, we launched a new <unk>.

<unk>.

Sustainable AG fund so there's active fundraising going on right there.

Cigar across platforms is fundraising back to power stable capital, they're looking for more assets to roll into the infrastructure fund. So it is pretty broadly based.

I don't think I've got any particular comments as to where there's a focus and we'll wait and see how it goes.

Sorry, I can't be more specific but.

Graham Ryding: No, that's fine. Would you consider or are you actively looking at potential tuck-in acquisitions that would add scale or maybe further product [inaudible] to that platform or should we expect more just block and tackle organic growth?

Would you consider or are you actively looking at potential. Potential tuck in acquisitions that would add scale or maybe product. Further product, Brian Grad snack platform. Or should we expect more just block and tackle organic growth.

Potential tuck in acquisitions that would add scale or maybe product. Further product, Brian Grad snack platform. Or should we expect more just block and tackle organic growth.

Further product, Brian Grad snack platform. Or should we expect more just block and tackle organic growth.

Or should we expect more just block and tackle organic growth.

Robert Jeffrey Orr: Yes, I think that we did that in cigar holdings, of course with Ever West now that was true Great West, but there was a real synergy there and I think we would be open to getting scale through acquisitions. But having said that, I wouldn't want to create an anticipation that we are about to announce something like that but we are open to that.

We did that in cigar holdings of course with ever West now that was true great West, but there was a real synergy there and I think we would be open to getting scale through acquisitions, but having said that I wouldn't want to create an anticipation that we are about to announce something like that but we are open to that.

When you launch new strategies you go through two years of a J curve, where you've put the people in place and you got losses, and then you get assets and you start to get the fees belting and built up and so you go through losses for two years. If you buy a team with assets or an existing business then you get P&L right off the bat, so it's more friendly from a shareholder point of view and it gives you scale. And so we would look for those opportunities, but they have to be the right opportunities, they have to kind of fit into the product shelf. So we are open to that but we don't have anything pending that I would want to talk about.

It's more friendly from a shareholder point of view and it gives you. <unk> scale. And so we would look for those opportunities, but they're going to be the right opportunity. Surely are they kind of fit into the product shelf. So. We are open to that but we don't have anything pending that I would want to talk about.

<unk> scale. And so we would look for those opportunities, but they're going to be the right opportunity. Surely are they kind of fit into the product shelf. So. We are open to that but we don't have anything pending that I would want to talk about.

And so we would look for those opportunities, but they're going to be the right opportunity. Surely are they kind of fit into the product shelf. So. We are open to that but we don't have anything pending that I would want to talk about.

Surely are they kind of fit into the product shelf. So. We are open to that but we don't have anything pending that I would want to talk about.

We are open to that but we don't have anything pending that I would want to talk about.

Graham Ryding: Fair enough. And then have you disclosed or would you disclose what your actual ownership stake is in your alternative platform because I know you have management [inaudible] Great West, probably on the [inaudible]?

And then.

You disclosed or would you disclose what your actual ownership stake is in your alternatives platform because I know you have.

Great West.

Probably on the pizza.

Robert Jeffrey Orr: I'll flip to Greg, I have no problem disclosing it. I want to make sure I don't answer the question if we haven't disclosed it already because I don't want to get ahead of ourselves here on a call like that. Greg, I'm going to ask you the question on our level of disclosure in terms of our ownership. The management ownership is pretty-- A general comment is that public management owns a stake in each of cigar holdings in Paris, Haynesville capital, Great West through the Ever West transaction that came in for, I think it's 8%, so there's some dilution there. Greg, I'm going to ask you to answer the question in terms of the disclosure of our ownership positions in each of our cigar holdings and power sustainable capital.

On our level of disclosure in terms of our ownership the management ownership.

Pretty.

A general comment that is public management owns a stake in each of cigar holdings in Paris, Haynesville capital, great West through the ever West transaction.

Came in for I think it's 8%.

So there's some dilution there Greg I'm going to ask you to answer the question in terms of disclosure of our ownership positions in each of cigar holdings and power sustainable capital.

Gregory Dennis Tretiak: Yes, it's in the MD&A Graham. So I don't know, I don't have a page number for you but I'm sure I could get one; twenty, there you go. So [inaudible] got 6.6 in cigar right now. And of course, management has an interest as well of nine.

Right. It's in the MD&A Graham So I don't know I don't have a page number for you but.

It's in the MD&A Graham So I don't know I don't have a page number for you but.

I'm sure I could get one 'twenty there you go so let.

<unk> got six six and.

In cigar right now.

Of course management.

Has.

And interest as well.

Nine.

Graham Ryding: Perfect. Okay, that's helpful. 

Helpful. Thanks, Greg.

Thanks, Greg.

Robert Jeffrey Orr: Thanks.

Operator: Again, if you would like to ask a question, press star one on your telephone keypad. Again, that is star one to ask a question. We have your next question from Geoff Kwan with RBC capital markets. Your line is open.

Again, if you would like to ask a question press star one on your telephone keypad again that is star one to ask a question.

We have your next question from Geoff Kwan with RBC capital markets. Your line is open.

Geoff Kwan: Hi, good afternoon. I just have one question, maybe expanding a bit on Graham's question on M&A. Jeff you talked, I think it was a little while ago that you felt that the heavy lifting was complete in terms of improving the fundamentals at Great West and IGM and you're being able to focus more time on M&A and so unless you want to offer up some specific things you're looking at, but just how would you describe the progress you've made on potential acquisitions. I know you talked about maybe nothing imminent, but just where you're seeing opportunities and what you've been maybe looking at and also given what we've seen in the markets and interest rate movements, is that impacting any sort of processes you're looking at in terms of acquisition multiples and things like that?

One question, maybe expanding a bit on <unk> question on M&A, because Jeff you talked I think it was a little while ago that.

He felt that the heavy lifting.

Is complete in terms of improving and the fundamentals that great west an AGM and youre being able to focus more time on M&A and so unless you want to offer up some specific things that youre looking at but just how would you describe the progress you've made on on potential acquisitions. I know you talked about maybe nothing imminent, but just you know.

Where youre seeing opportunities and what you've been maybe looking at and also given what we've seen in the markets and interest rate movements.

Is that impacting any sort of proceeds since youre looking at in terms of acquisition multiples and things like that.

Robert Jeffrey Orr: Yeah, good question. So if I start with Great West Life, you go through phases, Jeff when you're looking at M&A, and we spent $10 billion at Empower, $10 billion Canadian over announced deals over 12 and a half months in between, I think it was August of 2020 and August of 2021, and we're now in effect. So that did two things, the team at Empower now has three integrations going on simultaneously, and the leverage ratios at Great West Life need to come down as we get the cash flows from those transactions. So we went through a phase of rapid execution on getting the deals done and now they are by necessity needs to be a period of focus on executing on the transactions and we're executing well, but it's a lot of work on the team. But that would continue to be an area of high priority. We do think that the US, DC, and adjacent wealth management opportunity is the biggest opportunity, I think we have across the group. I do think if we execute on it over time, we'll really change the whole makeup of Great West Life and I'm looking several years out here, not looking in a year or two, but I think it really changes the profile of the company's earnings and we'll end up with I think it'll be a branded franchise in the US if we succeed at it. So that's going to be the priority at Great West.

You go through phases, Jeff when Youre looking at M&A, and we spent $10 billion at empower 10 billion Canadian over announced deals over 12, and a half months there between.

I think it was August of 2020 in August of 2021, and we're now in effect. So that did two things the team at empower now has three integrations going on simultaneously and the leverage ratios that great west life and need to come down as we get the cash flows from those transactions. So we're in if we went through a phase of.

Rapid execution on getting the deals done and now they are by necessity needs to be a period of focus on executing on the transactions and we're executing well, but it's you know it's a lot of work on the team.

And so that.

But that would continue to be an area of high priority. We do think that the U S. D C and adjacent wealth management opportunity is the biggest opportunity I think we have across the group.

I do think if we execute on it over time, we won't really change.

The whole makeup of great West life.

And you know I'm looking several years out here not looking in a year or two but I think it really changes the profile of the company's earnings and we ended up with them I think it'll be a branded franchise.

In the in the U S. If we succeed at it so that's going to be the Pri.

Priority <unk>.

I think we're at a point where as we look elsewhere across Great West life, where do we have capital that is either not earning adequate returns or where the market is not valuing the earnings properly are areas that we would be looking to potentially not have as much capital in. So I've talked about this before as well, we're long-term shareholders, but we have been introducing a discipline to [inaudible] higher emphasis of looking through everything we do through the eyes of the capital markets. So Great West is looking at this portfolio to say do we have too much capital in businesses where the market is not appreciating or it's not prepared to pay for those earnings levels. So that's not a direct answer to your question. So that's all I'm going to say on Great West. We're always looking at tuck-ins across the board. We'll continue to do that whether it's Ireland or the UK, in any market we're always looking for synergistic deals, but the priority is going to be around Empower.

As we look elsewhere across great West life, where do we have capital that is either not earning adequate returns or where the market is not valuing the earnings properly are areas that we would be looking to. Potentially not have as much capital in. So. I've talked about this before as well, we're long term shareholders, but we have been introducing a discipline to FERC. Higher emphasis of looking through everything we do through the eyes of the capital markets. So great West is looking at this portfolio to say or do we have too much capital in businesses, where the market is. As. It was not appreciating or it doesn't it's not prepared to pay for those earnings levels. That's not a direct X. Answer to your question. So that's all I'm going to say on great West We're always looking at tuck ins across the board will continue to do that with island or the U K here. Yeah. Any market, we're always looking for synergistic deals, but the priority is going to be around empower.

Potentially not have as much capital in.

So.

I've talked about this before as well, we're long term shareholders, but we have been introducing a discipline to FERC.

Higher emphasis of looking through everything we do through the eyes of the capital markets. So great West is looking at this portfolio to say or do we have too much capital in businesses, where the market is.

As.

It was not appreciating or it doesn't it's not prepared to pay for those earnings levels.

That's not a direct X.

Answer to your question. So that's all I'm going to say on great West We're always looking at tuck ins across the board will continue to do that with island or the U K here.

Yeah. Any market, we're always looking for synergistic deals, but the priority is going to be around empower.

Any market, we're always looking for synergistic deals, but the priority is going to be around empower.

When I turn it to IGM, IGM is very interested in creating and broadening out its wealth management footprint. So it's got IG Wealth, which is the big money earner right now. It's got ambitious plans for IPC and Blaine [inaudible] has taken over leadership there. And it would like to have a bigger presence in the high net worth market that's completely aside from what IG Wealth management is doing to move upmarket with its consultants, but really in the high net worth market. There to your question multiples have been [inaudible] nuts. I'm not sorry, I don't know if that's a financial term [inaudible] nuts, but it's one we use. They're just trading at multiples that you go, "That's great but like why bother?" So we hope that maybe a down market will bring some of those things back to more realistic levels and we can start to get active.

IGN.

<unk> is very interested in creating.

And broadening out its wealth management footprint. So it's got I G wealth, which is the big money earner right now its got ambitious plans.

For IPC.

Blaine shoot Chuck has taken over at leadership there.

And it would like to have a bigger presence in the high net worth market.

that's completely aside from what IG Wealth management is doing to move upmarket with its consultants, but really in the high net worth market. There to your question multiples have been [inaudible] nuts. I'm not sorry, I don't know if that's a financial term [inaudible] nuts, but it's one we use. They're just trading at multiples that you go, "That's great but like why bother?" So we hope that maybe a down market will bring some of those things back to more realistic levels and we can start to get active.

Like why bother.

So we hope that maybe a down market will bring some of those things back to back to more realistic levels and we can start to get active.

This is not an answer to your question, but I did not mentioned in my comments and I should've on IGM, I mentioned Blaine [inaudible]. In the quarter very significant leadership changes at IGM with the retirement of [inaudible], you've got Luke Gould taking over as head of Mackenzie. He's going to be great and he's been around the company, he's well known to all of you. And then we've got Keith Potter moving in as CFO, and Kelly [inaudible] moving over from Great West as Chief Risk Officer. So lots of good management changes at IGN that we are really pleased about and I neglected to mention that while I was making my comments. Geoff, back over to you.

In the quarter very significant leadership changes at AGM and with the retirement of bearing.

<unk> got Luke Gould, taking over as head of Mackenzie, he's going to be great and it's been around the company is well known to all of you.

And then we've got Keith Potter moving in as CFO , and Kelly <unk> moving over from Great West as Chief risk Officer. So lots of good management changes at IGN, we were really pleased about and I neglected to mention that while I was making my comments, Jeff back over to you.

Geoff Kwan: Perfect, that was all the questions I had.

Robert Jeffrey Orr: Okay, thank you very much.

Operator: Again, if you would like to ask a question, press star one on your telephone keypad. Again, that is star one to ask a question.

Robert Jeffrey Orr: Operator, did we lose you or are there no further questions?

Operator: I'm showing no further questions at this time, please continue.

Robert Jeffrey Orr: Okay, well, I don't have anything else to say. I can talk about what I had for dinner last night, I guess.

Talk about what I had for dinner last night I guess.

Gregory Dennis Tretiak: Or we can go to dinner now. 

Robert Jeffrey Orr: Well, we could go. It's a little early for us.

Gregory Dennis Tretiak: Well, it depends on where you are having dinner, Jeff. 

Robert Jeffrey Orr: That is true. So we can just give it another 30 seconds in case people are trying to get on the line.

Operator: Again, if you would like to ask a question, press star one on your telephone keypad.

Robert Jeffrey Orr: Okay, I think we're good operator. I think if there haven't been any further questions at this point we can probably terminate the call. So I'd like to thank everybody for joining us today and wish you a pleasant afternoon. We'll talk soon. Operator, that would do it for the call.

We can probably terminate the call so I'd like to thank everybody for joining us today and wish you a pleasant afternoon, we'll talk soon.

Operator that would do it for the call.

Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Gregory Dennis Tretiak: Thank you.

Yeah. Okay. Okay. [music].

Okay.

Okay.

[music].