THE EMPIRE LIFE INSURANCE COMPANY Q3 2020 highlights (compared to Q3 2019)
- Common shareholders' net income of
$51 million compared to$35 million - Earnings per share (basic and diluted) of
$51.91 compared to$35.29 - Return on common shareholders' equity1 ("ROE") of 16.9% compared to 8.7%
Q3 2020 year-to-date highlights (compared to YTD 2019)
- Common shareholders' net income of
$67 million compared to$98 million - Earnings per share (basic and diluted) of
$68.28 compared to$99.33 - Return on common shareholders' equity1 ("ROE") 5.8% compared to 8.4%
The increase in third quarter earnings was primarily a result of the favourable impact from changes in the investments supporting the
"During the past six months we have focused on ensuring the continuity of service to our customers and protecting the safety of our employees. We are pleased that we have been able to maintain the earnings momentum that we experienced in the second quarter of this year. We continue to manage our assets prudently in a challenging low interest rate environment", says
Financial highlights
Third quarter | Year to date | |||||||||||||
(in millions of dollars except per share amounts) | 2020 | 2019 | 2020 | 2019 | ||||||||||
Common shareholders' net income | $ | 51 | $ | 35 | $ | 67 | $ | 98 | ||||||
Earnings per share - basic and diluted | $ | 51.91 | $ | 35.29 | $ | 68.28 | $ | 99.33 | ||||||
Return on common shareholders' equity (quarterly annualized)¹ | 16.9 | % | 8.7 | % | 5.8 | % | 8.4 | % | ||||||
Sources of Earnings¹ | Third quarter | Year to Date | ||||||||||||
(in millions of dollars) | 2020 | 2019 | 2020 | 2019 | ||||||||||
Expected profit on in-force business | $ | 53 | $ | 46 | $ | 159 | $ | 143 | ||||||
Impact of new business | (3) | (13) | (14) | (21) | ||||||||||
Experience gains (losses) | (15) | (1) | (148) | (11) | ||||||||||
Management actions and changes in assumptions | 16 | (1) | 40 | (11) | ||||||||||
Earnings on operations before income taxes | 50 | 30 | 37 | 100 | ||||||||||
Earnings on surplus | 23 | 18 | 62 | 38 | ||||||||||
Income before income tax | $ | 73 | $ | 49 | $ | 99 | $ | 138 | ||||||
Income taxes | 19 | 11 | 21 | 30 | ||||||||||
Shareholders' net income | $ | 55 | $ | 38 | $ | 77 | $ | 108 | ||||||
Dividends on preferred shares | (3) | (3) | (10) | (10) | ||||||||||
Common shareholders' net income | $ | 51 | $ | 35 | $ | 67 | $ | 98 | ||||||
The expected profit on in-force business increased by 15% for the third quarter and by 12% on a year- to-date basis.
The impact of new business was lower in the third quarter of 2020 due to lower new business strain across all lines. Strain from the
Experience losses increased for the third quarter and increased for the year to date in 2020 compared to the same periods in 2019, primarily due to significant strengthening of policy liabilities supporting segregated fund benefit guarantees. This was partially offset by improved asset liability trading gains, improved gains from increased yields on inforce assets backing the life insurance and annuity products and favourable claims experience in the Employee Benefits line.
Management actions and changes in assumptions were higher in the third quarter and year to date in 2020 relative to the same periods in 2019 primarily due to management's ongoing activities to improve the matching of assets and liabilities in the
Earnings on surplus increased for the third quarter and year to date 2020 relative to 2019, primarily due to higher realized fair value gains on Available for Sale (AFS) bond assets in this segment.
Empire Life's Life Insurance Capital Adequacy Test (LICAT) Total Ratio was 132% at
Non-IFRS measures
Empire Life uses non-IFRS measures including return on common shareholders' equity, source of earnings, assets under management, annualized premium sales, gross and net sales for mutual funds, segregated funds and fixed annuities to provide investors with supplemental measures of its operating performance and to highlight trends in its core business that may not otherwise be apparent when relying solely on International Financial Reporting Standards financial measures. Empire Life also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers.
Additional information
All amounts are in Canadian dollars and are based on the unaudited consolidated financial results of Empire Life for the period ended
About Empire Life
Established in 1923, Empire Life is a subsidiary of
SOURCE
© Canada Newswire, source
