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02:25 PM EDT, 07/19/2022 (MT Newswires) -- Great West Lifeco quantified the impact of IFRS 17 transition on June 28th, 2022. Surprisingly, given a business mix that is relatively short duration and a relatively low amount of New Business gains booked by the company over the years, a book value hit of 10-15% was quantified.The stock reaction was relatively muted, though, as GWO had been underperforming and previous "surprise" disclosures by peers dulled the market reaction. Credit investors, though, will be keeping a close eye on pronouncements by rating agencies with regard to the treatment of the Contractual Service Margin. In Q2/22, GWO reported a somewhat surprising morbidity loss in Q1/22 (National estimates it at $20-$40 million). Management attributed these results to a spike in long term disability claims as well as lower terminations,. Going forward, GWO remains confident that its recent pricing actions (taken in 2021 and early 2022) should alleviate pressure on the business, though National expects another quarter of higher claims costs in Group. In Q1/22, Putnam reported losses of US$5 million compared to National's forecast for US$25 million of gains. Net outflows of US$2.4 billion were reported (retail outflows of US$1.7 billion and institutional outflows of US$0.8 billion), while gross sales were down a combined 18% Y/Y. With markets seeing significant declines in Q2/22 (S&P500 down ~16%, bond indices down ~5%), Putnam could see continued pressure on AUM, net flows and profitability. "We continue to view a sale of Putnam in exchange for a smaller stake in a larger entity as the most attractive option for the business." Sector Perform, $37 TP. Price: 30.86, Change: +0.45, Percent Change: +1.48 |