Great-West Lifeco’s Aggressive Share Repurchase Strategy: A Catalyst for EPS Growth and Shareholder Value

Great-West Lifeco Inc. has made headlines in 2025 with a bold move to double the size of its share repurchase program, signaling confidence in its capital position and a commitment to enhancing shareholder value. By expanding its Normal Course Issuer Bid (NCIB) to allow the repurchase of up to 40 million common shares—equivalent to 4.29% of its outstanding shares as of June 30, 2025—the insurer is prioritizing capital returns in a strategic bid to boost earnings per share (EPS) and reward long-term investors [1]. This aggressive repurchase strategy, paired with a robust balance sheet and disciplined capital allocation framework, raises critical questions about its long-term sustainability and implications for investors.

Strategic Capital Allocation: Repurchases, Debt Management, and Growth

Great-West Lifeco’s 2025 capital allocation strategy is a multi-pronged approach that balances share repurchases, debt management, and growth investments. The company has already repurchased 9.79 million shares under the current NCIB, with an additional $500 million in buybacks announced in August 2025—bringing the total repurchase target for the year to $1 billion [3]. This focus on buybacks is underpinned by a strong financial position: the company holds $2.1 billion in cash reserves and maintains a Liquidity Coverage Ratio (LICAT) of 132%, ensuring flexibility to fund repurchases without compromising solvency [1].

However, share repurchases are not the sole pillar of its strategy. The company has simultaneously exited low-margin U.S. life reinsurance markets to redirect capital toward higher-margin opportunities in its Retirement and Wealth segments [2]. Client assets in these segments grew by 11% and 16%, respectively, in Q2 2025, with Empower’s Retirement division forecasting net inflows of at least US$25 billion in the second half of the year [1]. This dual focus on capital efficiency and growth underscores a balanced approach to long-term value creation.

EPS Growth and Shareholder Value: The Math Behind the Buybacks

The expanded NCIB is poised to deliver a direct boost to EPS. By repurchasing 40 million shares—representing a 4.29% reduction in the share count—Great-West Lifeco could see a meaningful increase in earnings per share, assuming net income remains stable. For context, the company spent $321 million to repurchase 6.3 million shares in Q2 2025 alone [3]. At this pace, the $1 billion repurchase target could reduce the share count by approximately 8.5%, amplifying EPS growth without requiring additional earnings.

This strategy is particularly compelling given the company’s stated rationale: it views its shares as undervalued. As noted in a report by AINvest, the buybacks reflect “disciplined capital management” and a belief that returning capital to shareholders through repurchases is more effective than deploying it in low-return opportunities [3].

Dividend Payouts and Balance Sheet Resilience

While share repurchases dominate the headlines, Great-West Lifeco has maintained a consistent dividend policy in 2025. Quarterly dividends of $0.61 per share were declared on February 5, May 7, and August 5, with the next payment expected on September 30 [1]. These payouts, combined with the buyback program, highlight a dual commitment to returning capital to shareholders.

Importantly, the company’s balance sheet remains resilient. With $2.1 billion in cash and a LICAT ratio well above regulatory requirements, Great-West Lifeco has the financial flexibility to sustain both dividends and buybacks while investing in growth areas [1]. This contrasts with companies that over-leverage to fund short-term returns, potentially jeopardizing long-term stability.

Long-Term Implications and Risks

The aggressive repurchase strategy is not without risks. Critics may argue that prioritizing buybacks could divert capital from innovation or market expansion. However, Great-West Lifeco’s decision to exit unprofitable segments and focus on high-margin capital solutions—such as its Retirement and Wealth offerings—suggests a calculated trade-off [2].

Moreover, the company’s ability to sustain this pace of repurchases depends on maintaining strong cash flows and a favorable stock valuation. If market conditions deteriorate or earnings falter, the current strategy could become untenable. For now, though, the combination of a robust balance sheet, disciplined capital allocation, and a clear focus on shareholder returns positions Great-West Lifeco as a compelling case study in strategic value creation.

Conclusion

Great-West Lifeco’s 2025 share repurchase program is more than a short-term tactic—it is a strategic lever to drive EPS growth and reinforce shareholder value. By doubling down on buybacks while maintaining financial discipline and investing in high-margin segments, the company is demonstrating a nuanced approach to capital allocation. For investors, the key takeaway is clear: in a low-growth environment, companies that can efficiently return capital to shareholders while investing in sustainable growth are likely to outperform. Great-West Lifeco’s actions suggest it is well-positioned to deliver on that promise.

Source:
[1] Great-West Lifeco reports record base earnings and announces intention for additional $500 million in share buybacks [https://finance.yahoo.com/news/great-west-lifeco-reports-record-210100889.html]
[2] Great-West Lifeco: A Pillar of Resilience and Growth in ... [https://www.ainvest.com/news/great-west-lifeco-pillar-resilience-growth-dynamic-financial-landscape-2508/]
[3] Great-West Lifeco Q2 base earnings rise on wealth and ... [https://www.insurancebusinessmag.com/ca/news/life-insurance/greatwest-lifeco-q2-base-earnings-rise-on-wealth-and-benefits-growth-545386.aspx]