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Tuesday, November 5, 2019

Putnam's Parent's Chief Keeps Looking For Deals and Efficiencies

Reported by InvestmentWires Staff, 

The CEO of Putnam Investments' Canadian parent sees strong investment performance and rising institutional sales at the Boston-based mutual fund firm led by Bob Reynolds.

Paul Anthony Mahon
Great-West Lifeco
President, CEO
Paul Mahon president and CEO of Great-West Lifeco, highlights Putnams' performance on the Winnipeg-based insurer's Q3 2019 earnings call (as transcribed by Seeking Alpha). He states that, "Putnam's pretax operating margin increased to 9.5% in the quarter, driven by an ongoing cost reduction program and very strong fund performance. As of September 30, 2019, approximately 90% and 86% of Putnam fund assets performed at levels above the Lipper median on a three-year and five-year basis, respectively."

Mahon also responds to a question about his interest in U.S. asset management M&A, saying "On the asset management side, we remain active. But again, you'll see that we kind of have a two pronged approach at Putnam. One is to drive out efficiencies to continue to drive our strong performance so that we can improve the margins we've got organically, but we still believe that an acquisition to provide some step rate scale will really unlock more value." Mahon also responds to a question about the pretax margins for Putnam, noting "We're feeling good about where we've got to so far in terms of pretax margin, but we're continuing to look for opportunities for improved relative cost performance and opportunities for greater efficiencies at Putnam. So we're continuing to work."

Reynolds, CEO of Putnam, adds that "performance has gotten better, and that's been an improvement to the bottom line.

"And there has been some headcount adjustment, but that hasn't been the biggest part of it," Reynolds says. "And then we moved headquarters. And during the period to build-out, we were paying rent in both places."

According to Great-West Life's Quarterly Results Presentation, Putnam expense actions and strong fund performance drive continued improvement in pre-tax operating margin to 9.5 percent. Putnam also saw higher institutional and lower mutual fund sales. Sales for Putnam were $10.879 billion, up from $9.258 billion in Q2 2019 and up from $10.785 billion in Q3 2018. Total net earnings for Putnam were $59 million in Q3 2018, down from $87 million in Q3 2018. Assets under management were $174.3 billion for Putnam at the end of Q3 2019, down slightly from $175.2 billion at the end of Q3 2018. Core net earnings for Putnam improved to $9 million from a loss of $6 million in Q3 2018, partially due to lower operating expenses. Putnam saw a 3 percent decrease year-over-year in fees and other income, going from $231 million Q3 2018 to $224 million Q3 2019.

Overall, 'Great-West Lifeco reported earnings per common share (EPS) by non-GAAP EPS of C$0.75 (USD$0.57) and GAAP EPS of C$0.79 (USD$0.60). 

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