western financial group q1 2008 financial results conference call may 9, 2008
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Western Financial GroupQ1 2008 Financial Results
Conference Call
May 9, 2008
Forward-Looking StatementsThis presentation contains certain forward-looking statements. Forward-looking statements include, without limitation, statements regarding the future financial position, business strategy, budgets, litigation, projected costs, capital expenditures, financial results, taxes and plans and objectives of or involving Western Financial Group Inc. (the “Company”) or its subsidiaries. Many of these statements can be identified by looking for words such as ‘‘believe’’, ‘‘expects’’, ‘‘expected’’, ‘‘will’’, ‘‘intends’’, ‘‘projects’’, ‘‘anticipates’’, ‘‘estimates’’, ‘‘continues’’ or similar words. The Company believes the expectations reflected in such forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties only some of which are described herein. Many factors could cause the Company’s actual results, performance or achievements to, or future events or developments to, differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the risk factors, which are discussed in greater detail in the ‘‘Risk Factors’’ section of the prospectus. Any forward-looking statements are made as of the date hereof and the Company does not assume any obligation to publicly update or revise such statements to reflect new information, subsequent events or otherwise.Non-GAAP MeasuresThroughout this presentation, the Company may use the term ‘‘operating income’’ to refer to earnings, including investment income, before interest expense, taxes, depreciation and amortization of intangible and capital assets, excluding gain (loss) from the sale of assets and income (loss) from equity investments. The Company uses ‘‘operating income’’ to assist it in measuring corporate performance before the costs of capital and amortization of capital and intangible assets. Operating income is not a measure recognized by GAAP and does not have a standardized meaning prescribed by GAAP. Therefore, this measure may not be comparable to similar measures presented by other issuers and investors are cautioned that it should not be used as an alternative to ‘‘net income’’ or other measures of financial performance calculated in accordance with GAAP.
TSX: WES3
Today’s Remarks• Operational Progress in Q1
• Strategic Events in Q1
• Financial Update
• Priorities for Q2
Operational Progressin Q1 2008
TSX: WES5
WFG Agency Network
• Same store customer count 3.4% YTDA
• Same store sales 8.5%
• Soft market continues – AB Auto Increase?
• “Insurance to Value” initiative building revenue.
• Acquisition of Southern Insurance Lethbridge, AB
TSX: WES6
Western Life Assurance
• Creditor Life still strong
• Certificate count and growth highest ever 13% over Q1/07
• Bolt-on product for network is at 5,088 policies. Target of 20,000 by Q2/08 revised to be Q2/ 09.
TSX: WES7
Bank West
• Negative portfolio growth in Q1, Summer funding season expected to be slower than 2007
• Portfolio target for 2008 - $320 million
• Very low specific provisions in Q1, credit quality solid
Strategic Events in Q1
TSX: WES9
Q1 Strategic Events
• Agency acquisition pipeline filling
• Loan portfolio acquisition opportunities
• Business development discussions with Partners are underway
• Employment market in Alberta is turning – we are at full employment
Financial Update
TSX: WES11
Total Revenue
120114
20
64
334228
22
83
020406080
100120140
2000
2001
2002
2003
2004
2005
2006
2007
Q1
2008
LTM
($ M
illi
on
s)
CAGR 28.0%
TSX: WES12
Earnings Per Share
0.24 0.23
0.08 0.08
0.18
0.11
0.17
0.03
0.22
0
0.05
0.1
0.15
0.2
0.25
0.3
2000
2001
2002
2003
2004
2005
2006
2007
Q1 2008
LTM
CAGR 32%
TSX: WES13
Overall
2008 2007
Revenue ($) 30,102 24,559
Income from Equity Investments ($) 613 762
Net Income ($) 2,386 2545
Earnings per share ($)
Basic
Diluted
0. 05
0. 04
0.06
0.05
TSX: WES14
The Network
2008 2007
Commission & other customer revenue ($) 16,489 14,544
Operating expenses ($) 12,639 10,162
Operating income ($) 3,850 4,382
TSX: WES15
Bank West
2008 2007
Interest & investment income ($) 4,942 2,560Net interest & investment income ($) 1,546 922
Operating & provision expenses ($) 849 634
Operating income ($) 697 288
TSX: WES16
Western Life Assurance
2008 2007
Premium income ($) 7,172 6,260
Investment income ($) 832 630
Policyholder benefits ($) 3,705 3,409
Operating expenses ($) 3,123 2,648
Operating income ($) 1,176 833
TSX: WES17
Corporate & All Other
2008 2007
Other revenues ($) 667 565
Operating expenses ($) 2,397 2,180
Operating loss ($) (1,730) (1,615)
TSX: WES18
Western Financial GroupHistorical Consolidated ROE
1.9
8.99.4
5.6
7.28.37.5 8.1
8.4
0123456789
10
2000
2001
2002
2003
2004
2005
2006
2007
Q1
LTM
Per
cen
t
CAGR 28%
TSX: WES19
Western Financial GroupDebt to Equity Ratio
1617
131
19
115
173
8159
020406080
100120140160180200
2001
2002
2003
2004
2005
2006
2007
Q1
2008
LTM
Per
cen
t
Priorities for Q2
TSX: WES21
Q2 Priorities
• Agency acquisitions
• Ubiquity Bank / Wealthview integration
• Network/Life WFGO
Questions
…because we live here.
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