GWO to Acquire Milliman's U$130bn Retirement Administration Business

Research evidence excerpt

GWO to Acquire Milliman's U$130bn Retirement Administration Business

TD Cowen Great-West Lifeco Inc.

Global Research June 30, 2026

VALUATION METHODOLOGY AND RISKS

Valuation Methodology

Financial Services - Insurance:

Our target prices are based on forward EPS. Our approach is to establish a group target P/ E

and apply premiums and discounts to the individual life insurers (relative to the group target),

largely based on: 1) business mix (what we expect the market to favour going forward); 2) our

view regarding the potential for positive or negative earnings and ROE estimate revisions;

and 3) historical premiums and discounts. Going forward, our target prices will be especially

sensitive to: a) significant differences between reported and adjusted earnings will drive the

discount we apply; and b) our view regarding the long-term ROE of the company, including and

especially, uses of excess capital to drive ROE improvements.

Investment Risks

Lifeco:

Key risks to our target price include unfavourable changes in FX rates; a sudden spike/decline

in interest rates/deterioration in credit conditions; a significant downturn in equity markets;

regulatory scrutiny into industry sales practices; potential for underpriced business translating

into deterioration of margin; adverse revisions to regulatory capital rules; potential for material

assumption true-ups; and changes in tax regulations that affect the attractiveness of insurance

and annuity products.

P&C:

Key risks to our target price include exposure to the politically sensitive personal auto

insurance markets in Canada; stronger-than-expected/longer-duration downturn in the P&C

cycle; a significant uptick in claims frequency/severity; construction/medical cost inflation;